In Stender v. Archstone-Smith Operating Trust, No 18-1432, 2020 WL 2109208 (10th Cir. May 4, 2020), the Tenth Circuit considered whether a federal court sitting in diversity can award costs under a state law when those same costs aren’t recoverable under Federal Rule of Civil Procedure 54(d). Applying the U.S. Supreme Court’s decision in Shady Grove Orthopedic Associates, P.A. v. Allstate Insurance Company, 559 U.S. 393 (2010), the Tenth Circuit concluded that the Federal Rule takes precedence.

The Background

In this diversity action, the parties litigated over a corporate merger for a little over a decade. Plaintiffs were minority shareholders who brought a class action, raising claims for breach of contract and fiduciary duties. Stender, 2020 WL 2109208, at *1. Ultimately the defendants prevailed, and the district court awarded them about $480,000 in costs, including $230,500 for electronic legal research and attorney travel and lodging. Id. On appeal, the plaintiff-appellants challenged that award.

Federal and State Law on Costs

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