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Rodriguez v. Whiting Farms, Inc.

Court: Court of Appeals for the Tenth Circuit
Date filed: 2004-02-10
Citations: 360 F.3d 1180
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27 Citing Cases

                                                                       F I L E D
                                                                 United States Court of Appeals
                                                                         Tenth Circuit
                                         PUBLISH
                                                                        FEB 10 2004
                       UNITED STATES COURT OF APPEALS
                                                                     PATRICK FISHER
                                                                             Clerk
                                      TENTH CIRCUIT



 ELADIO RODRIGUEZ, individually;
 MARTIN GOMEZ, individually,

           Plaintiffs - Appellants,                    No. 02-1483

 vs.

 WHITING FARMS, INC.; THOMAS
 WHITING, individually,

           Defendants - Appellees.


            APPEAL FROM THE UNITED STATES DISTRICT COURT
                    FOR THE DISTRICT OF COLORADO
                        (D.C. No. 99-RB-2490 (CBS))


Patricia L. Medige, Colorado Legal Services, Denver, Colorado, for Plaintiffs -
Appellants.

Sam D. Starritt (and Michael C. Santo, on the brief), Dufford, Waldeck, Milburn
& Krohn, L.L.P., Grand Junction, Colorado, for Defendants - Appellees.


Before KELLY, HARTZ, Circuit Judges and CASSELL *, District Judge.


KELLY, Circuit Judge.




       The Honorable Paul G. Cassell, United States District Judge for the
       *

District of Utah, sitting by designation.
      Plaintiffs-Appellants Eladio Rodriguez and Martin Gomez brought this suit

against their former employer, Thomas Whiting and Whiting Farms, Inc.

(hereinafter collectively referred to as “Whiting Farms”), claiming Whiting Farms

failed to pay them overtime as required under the Fair Labor Standards Act (the

“FLSA” or the “Act”). Whiting Farms argues it is exempt from paying Rodriguez

and Gomez overtime under the FLSA agricultural exemption, which provides an

exemption to the overtime wage requirements for “any employee employed in

agriculture.” 29 U.S.C. § 213(b)(12). Rodriguez and Gomez filed a motion for

summary judgment on the issue of whether they performed nonagricultural jobs

and thus were entitled to overtime pay under the FLSA. Whiting Farms also

moved for summary judgment on all issues. The district court determined

Rodriguez and Gomez were engaged in agricultural work and therefore were not

entitled to overtime under the agricultural exemption. The district court granted

Whiting Farms’s motion for summary judgment and awarded costs to Whiting

Farms. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.



                                    Background

      The facts in this case are not disputed. Thomas Whiting is the president

and owner of Whiting Farms, Inc. Whiting Farms breeds and raises chickens for

their feathers, which are removed in pelts, packaged, and sold to a distributor for

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eventual use in fly-tying. All of the poultry production takes place on four

ranches owned or leased by Whiting Farms, Aplt. Br. at 7, and Whiting Farms

only processes chickens raised on its own farms, Aplee. Br. at 3. In 2000,

Whiting Farms processed 120,000-125,000 chickens. Id. at 4.

      Whiting Farms breeds the chickens, pedigrees the eggs, hatches them,

broods the chickens, and raises them for approximately one year, after which the

chickens are processed for their feathers. Aplt. Br. at 6. Once the chickens have

reached approximately fifty weeks old, they are euthanized, left to cool overnight,

and processed. Skinners first cut off the necks and heads of the chickens, which

are then washed and dried. Fifteen to twenty percent of the pelts are dyed at this

stage, before the necks are skinned. After washing and spinning, the necks are

skinned by removing the skin and attached feathers (known as a “cape”). The

capes are placed on cardboard sheets and placed in a room that is between

seventy-five and eighty degrees to cure for two weeks. Id. at 9-10.

      While the heads and necks are washed and dried, the skinners skin the back

of the bird, known as the “saddle.” The saddles are also placed on cardboard by

“putter-uppers.” The saddles are cured for one to two weeks in a heated room

prior to washing, and overall they are cured between three and four months. The

saddles are cured in a hotter room for a longer period due to the higher overall fat

content. Id. at 10-11.


                                         -3-
       After curing, the saddles are trimmed by “trimmers” to remove peripheral

skin. The capes are also trimmed into a rounder shape and excess feathers are

removed. Both capes and saddles are graded and either packaged individually or

placed in bulk storage. Aplt. Br. at 11. The pelts, also called “hackle,” have an

almost indefinite shelf life when stored properly. Whiting Farms produces hackle

year round, with some decrease in production during the late summer and early

fall. Id.

       Rodriguez and Gomez worked for Whiting Farms as skinners and trimmers.

They regularly worked more than forty hours per week and were not paid time-

and-one-half, or overtime, for those hours over forty worked in a single

workweek. Rodriguez and Gomez brought this suit against Thomas Whiting and

Whiting Farms, Inc. seeking payment of past overtime wages.

       After granting summary judgment for Whiting Farms, the court awarded

Whiting Farms costs under Fed. R. Civ. P. 54(d)(1). Aplt. Br., Ex. A at 19. The

court clerk taxed costs of $3,128.18 against Rodriguez and Gomez and entered

judgment for that amount. They filed a motion seeking retaxation of costs, citing

“their indigence and the close and difficult nature of the questions presented by

this case as bases for their request.” Id., Ex. C at 1. The court denied the motion

but stayed the collection of costs pending appeal. Id. at 3.

       Rodriguez and Gomez assert the district court erred in (1) holding Whiting


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Farms exempt under the agricultural exemption to the FLSA and (2) awarding

costs to Whiting Farms.



                                    Discussion

A. Application of the Agricultural Exemption

      Summary judgment is appropriate when there are no genuine issues of

material fact and the moving party is entitled to judgment as a matter of law. Fed.

R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). We review a

grant of summary judgment de novo, applying the same legal standards applied by

the district court. Byers v. City of Albuquerque, 150 F.3d 1271, 1274 (10th Cir.

1998). In addition, exemptions under the FLSA “are to be narrowly construed

against the employers seeking to assert them and their application limited to those

establishments plainly and unmistakably within their terms and spirit.” Arnold v.

Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); see also Sanders v. Elephant

Butte Irrigation Dist., 112 F.3d 468, 471 (10th Cir. 1997). Thus Whiting Farms

bears the burden of showing its processing activities fit “plainly and

unmistakably” within the terms and spirit of the agricultural exemption.

      1. The Fair Labor Standards Act and the Agricultural Exemption

      The Fair Labor Standards Act establishes various labor requirements, such

as a minimum wage and overtime pay, for employees “in those workweeks when


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they are engaged in interstate or foreign commerce or in the production of goods

for such commerce.” 29 C.F.R. § 780.1. One of the Act’s requirements is the

payment to employees of “one and one-half times the regular rate” for hours

worked in excess of forty in a single workweek. 29 U.S.C. § 207(a)(1); see also

id. § 215(a)(2) (making it unlawful for any person to violate the provisions of §

207). Employers must satisfy the Act’s requirements unless the Act provides an

applicable exemption. One such exemption exists for “any employee employed in

agriculture.” Id. § 213(b)(12). Agriculture is defined at 29 U.S.C. § 203(f)

(emphasis added):

      “Agriculture” includes farming in all its branches and among other
      things includes the cultivation and tillage of the soil, dairying, the
      production, cultivation, growing, and harvesting of any agricultural
      or horticultural commodities . . . , the raising of livestock, bees, fur-
      bearing animals, or poultry, and any practices (including any forestry
      or lumbering operations) performed by a farmer or on a farm as an
      incident to or in conjunction with such farming operations, including
      preparation for market, delivery to storage or to market or to carriers
      for transportation to market.

      This definition of agriculture contains two distinct branches, and “includes

farming in both a primary and a secondary sense.” Bayside Enters., Inc. v.

NLRB, 429 U.S. 298, 300 (1977); see Farmers Reservoir & Irrigation Co. v.

McComb, 337 U.S. 755, 762-63 (1949); NLRB v. Karl’s Farm Dairy, Inc., 570

F.2d 903, 905 (10th Cir. 1978); 29 C.F.R. § 780.105. The first contains the

primary meaning of agriculture, which includes “farming in all its branches” and


                                         -6-
includes “the raising of . . . poultry.” 29 U.S.C. § 203(f). The definition also

includes a second, broader meaning of agriculture. This secondary meaning

includes other practices that do not themselves fit within the primary meaning of

agriculture, but that are nevertheless “performed by a farmer or on a farm as an

incident to or in conjunction with such farming operations.” Id. The agricultural

exemption was meant to apply broadly and to “embrace the whole field of

agriculture,” but “it was meant to apply only to agriculture;” thus the critical issue

is what is and what is not included within that term. Maneja v. Waialua Agric.

Co., 349 U.S. 254, 260 (1955).

      2. Application of Exemption to Whiting Farms

      Rodriguez and Gomez do not dispute that the handling of live chickens on

Whiting Farms constitutes agricultural work under the primary definition of

agriculture. Aplt. Br. at 5. By definition, the statute includes the raising of

poultry, 29 U.S.C. § 203(f), which includes the “breeding, hatching, propagating,

feeding, and general care of poultry.” 29 C.F.R. § 780.125(b); see also Holly

Farms Corp. v. NLRB, 517 U.S. 392, 399 (1996) (“Primary farming includes the

raising of poultry.”). Rodriguez and Gomez argue, however, that the processing

of hackle following slaughter is not included under the definition of agriculture,

and thus the agricultural exemption is inapplicable. It is true “[s]laughtering,

which is the antithesis of ‘raising,’ is not included” in the primary definition of


                                         -7-
agriculture. § 780.125(b). Slaughtering nevertheless will constitute agriculture if

it comes “within the secondary meaning of the term ‘agriculture.’” Id. Thus

Whiting Farms argues the skinning and trimming of chickens on its farm fits

within the secondary definition of agriculture.

      To constitute secondary farming, the practice must be (1) “performed by a

farmer or on a farm,” and (2) the practice must be “incident to or in conjunction

with such farming operations.” 29 U.S.C. § 203(f). Preparation for market is

included in secondary farming. Id.; see 29 C.F.R. §§ 780.150-.151. The chicken

processing at issue occurs on Whiting Farms and neither party disputes that the

practice is performed “on a farm.” Thus we must address the central issue of

whether the skinning and trimming of chickens in this case is “incident to or in

conjunction with such farming operations.” 29 U.S.C. § 203(f).

      As the Supreme Court has recognized, “‘[t]he line between practices that

are and those that are not performed ‘as an incident to or in conjunction with’

such farming operations is not susceptible of precise definition.’” Holly Farms,

517 U.S. at 408 (quoting 29 C.F.R. §780.144); see also 29 C.F.R. § 780.145 (“The

character of a practice as part of the agricultural activity or as a distinct business

activity must be determined by examination and evaluation of all the relevant

facts and circumstances in the light of the pertinent language and intent of the

Act.”). The regulations and case law have eschewed a “mechanical application of


                                          -8-
isolated factors or tests” and instead look at the overall circumstances. 29 C.F.R.

§ 780.145; see Maneja, 349 U.S. at 265-69. Nevertheless, the regulations set out

various factors to consider when determining whether a practice is performed as

an incident to or in conjunction with the farming operations. See 29 C.F.R. §

780.145.

      In addition to considering the common understanding of farming,

competitive factors, and the prevalence of the practice by farmers, courts may

also consider: (1) the “size of the operations and respective sums invested in

land, buildings and equipment for the regular farming operations and in plant and

equipment for performance of the practice;” (2) “the amount of the payroll for

each type of work;” (3) “the number of employees and the amount of time they

spend in each of the activities;” (4) “the extent to which the practice is performed

by ordinary farm employees and the amount of interchange of employees between

the operations;” (5) “the amount of revenue derived from each activity;” (6) “the

degree of industrialization involved;” and (7) “the degree of separation

established between the activities.” Id.; see also Maneja, 349 U.S. at 264-65

(considering similar factors). The district court considered these factors and

concluded that this is a “borderline case” in which the factors do not “provide a

conclusive resolution of the question.” Aplt. Br., Ex. A at 14. Upon a thorough

review of the facts in this case, we agree.


                                         -9-
      Whiting Farms’s investment in facilities for live production is far greater

than its processing and packaging facilities, which make up only 11.8% of its

total investment. Aplt. Br., Ex. A at 13. Processing labor costs totaled

approximately 18% in 1997 and 1998. Aplt. Br. at 12. Approximately the same

number of labor hours were spent in both processing and live poultry in the same

period. Id. at 13. Approximately one-third of the workers at Whiting Farms are

employed in processing, id., and they are paid a somewhat higher wage, id. at 12.

There is little interchange between those workers involved in the production of

chickens and those involved in the processing of hackle on Whiting Farms. Id. at

15. Whiting Farms processes its own chickens and sells only the final processed

pelts, and thus nearly all of Whiting Farms’s revenue is derived from the sale of

the final processed pelts. 1 Finally, the skinning and trimming of chickens, while

it does require skill, is not done by factory workers in a highly industrialized

setting, but by a small number of workers using common tools such as scissors,

paring knives, and scalpels on the farm itself. Aplee. Br. at 7, 8.

      These facts generally illustrate that more money and labor is invested in the

live production of chickens, and that the processing is a smaller but significant

part of Whiting Farms’s operation. There is a separation between the various


      1
       This does not lead to the conclusion, however, that the processing alone
gives value to the pelts, as Rodriguez and Gomez argue. Aplt. Br. at 35. The
feathers are in substantially the same condition prior to removal.

                                        - 10 -
activities, but the skinning and trimming of the pelts is not highly industrialized

and is subordinate to the farming activities themselves. Thus, as in Maneja, we

must “add to the factors above some consideration of what is ordinarily done by

farmers with regard to this type of operation.” 349 U.S. at 265; see also Mitchell

v. Budd, 350 U.S. 473, 475 (1956).

      The regulations state that, generally, “a practice performed in connection

with farming operations is within the statutory language only if it constitutes an

established part of agriculture, is subordinate to the farming operations involved,

and does not amount to an independent business.” 29 C.F.R. § 780.144. Whether

a “practice is ordinarily performed by farmers incidentally to their farming

operations” has a “direct bearing on whether a practice is an ‘established’ part of

agriculture.” Id. § 780.146. Thus a comparison with “what is ordinarily done by

farmers with regard to this type of operation” has a “direct bearing” on whether

the practice of skinning and trimming is really incident to farming. Maneja, 349

U.S. at 265-66.

      If a comparison is made between Whiting Farms and all other poultry

producers, as Rodriguez and Gomez urge, Whiting Farms’s pelt processing would

be found unusual and outside of the exemption as in Maneja and Mitchell. Such a

broad comparison, however, would discourage unique farming practices. The

Supreme Court has specifically recognized that the exemption “includes


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‘extraordinary methods’ of agriculture as well as the more conventional ones.”

Mitchell, 350 U.S. at 480-81. The evidence suggests raising chickens for their

feathers is a different farming operation than raising chickens for their meat, and

therefore it is logical to limit the comparison to farmers who also raise chickens

for their pelts to determine what is the ordinary and established practice. See

Wirtz v. Tyson’s Poultry, Inc., 355 F.2d 255, 258 (8th Cir. 1966) (considering

what is ordinary for “egg processing” rather than considering the whole poultry

industry).

      The record in this case indicates there are only a handful of hackle farmers

in the United States who raise chickens for the sole purpose of producing quality

pelts. Aplee. Br. at 39. As the district court noted, Aplt. Br., Ex. A at 15, it is

uncontroverted that those producers raise their own chickens and process the

hackle on the farm using methods similar to those used by Whiting Farms. Aplee.

Br. at 39. Whiting Farms’s practices thus fit within “what is ordinarily done by

farmers with regard to this type of operation.” Maneja, 349 U.S. at 265. Thus it

appears the skinning and trimming of chicken pelts is an established part of

agriculture and subordinate to other chicken raising practices.

      In addition to ordinary practices, courts have placed great weight on the

type of product that results from the practice. A change to the “raw or natural

state of the commodity . . . may be a strong indication that the practice is not


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within the scope of agriculture,” 29 C.F.R. § 780.147; Mitchell, 350 U.S. at 481-

82, but is “more akin to manufacturing.” 29 C.F.R. § 780.129; Maneja, 349 U.S.

at 265 (finding processing of sugar cane into sugar more akin to manufacturing).

Manufacturing and industrial operations are not included in secondary farming.

29 C.F.R. § 780.129. During Senate debates regarding the Act, one strong

supporter considered the change in the product as “marking the dividing line”

between agricultural function and manufacturing. Maneja, 349 U.S. at 268.

      Some change from the raw or natural state in preparation for market must

be included in secondary farming based on the examples in the regulations.

Preparation of fruits and vegetables includes “[a]ssembling, ripening, cleaning,

grading, sorting, drying, preserving, packing, and storing.” 29 C.F.R. §

780.151(b). Preparation of tobacco for market includes “[h]andling, grading,

drying, stripping from stalk, tying, sorting, storing, and loading.” Id. §

780.151(i). However, in Mitchell, the Supreme Court held the tobacco bulking

process “substantially changes the physical properties and chemical content of the

tobacco,” and thus found this aspect of the tobacco growing enterprise outside the

scope of the agricultural exemption. 350 U.S. at 475. In Maneja, the Supreme

Court held the processing of sugar cane changed the sugar cane from its raw or

natural state, making it outside the agricultural exemption. 349 U.S. at 268. Thus

we must look at the degree of change to determine if the skinning and trimming of


                                         - 13 -
pelts constitutes manufacturing.

      In this case, there is some change from the raw or natural state. Although

the pelts are changed in the process of skinning and trimming, and although a

small percentage are dyed, the changes to the product are not substantial and the

pelt itself is preserved in much the same state as it was prior to processing. The

analogy to preparation of fur for market, which is considered agricultural under

the regulations, is particularly persuasive. Preparation of fur for market includes

“[r]emoving the pelt, scraping, drying, putting on boards, and packing.” 29

C.F.R. § 780.151(m). Similarly, Whiting Farms removes, washes, dries, trims,

and packages the pelts. This type of processing appears to fall directly in line

with the preparation for market considered incidental to farming under the

regulations.

      Rodriguez and Gomez argue that an analogy to the removal and treatment

of pelts from fur-bearing animals is inappropriate because there are specific

poultry regulations that are determinative. See 29 C.F.R. § 780.125. Because the

poultry regulations do not reference the processing of chickens for their pelts,

Rodriguez and Gomez argue such processing is not included. We decline to read

the regulations as the limit of covered activities under the exemption. The fur

regulations provide insight into the type of preparation for market that is

considered incidental to farming, and we find it persuasive. The regulations


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themselves recognize that the exemptions, “because of their relationship to one

another, should be construed together insofar as possible so that they form a

consistent whole.” 29 C.F.R. § 780.9. Because the amount of change is similar

to that which is acceptable under the regulations, it appears the skinning and

trimming of pelts is more akin to agriculture than manufacturing.

      Despite the above analysis, Rodriguez and Gomez argue we should defer in

our analysis to an opinion letter from the Department of Labor in which Michael

Ginley, Director of Enforcement Policy at the U.S. Department of Labor,

concluded Whiting Farms’s processing activities were not agricultural and

therefore outside the scope of the exemption. Aplt. Br. at 51-52. The letter was

written in response to an inquiry by Rodriguez and Gomez based on the facts as

they laid them out. Whiting Farms has also produced a Department of Labor

report in which a local wage/hour investigator conducted an investigation of

Whiting Farms, including a visit to the farm, and concluded the operations were

covered under the exemption. Aplee. Br. at 52. Whiting Farms also offers forth a

phone conversation with the Department of Labor in which an investigator

similarly concluded Whiting Farms was exempt. Thus we have conflicting

opinions that are each arguably more or less persuasive than the other.

      It is true under Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), that we

may look to such opinions for guidance. Such interpretations are “‘entitled to


                                        - 15 -
respect.’” Christensen v. Harris County, 529 U.S. 576, 587 (2000) (quoting

Skidmore, 323 U.S. at 140). However, “[t]he weight of such a judgment in a

particular case will depend upon the thoroughness evident in its consideration, the

validity of its reasoning, its consistency with earlier and later pronouncements,

and all those factors which give it power to persuade, if lacking power to

control.” Skidmore, 323 U.S. at 140; see also United States v. 162 MegaMania

Gambling Devices, 231 F.3d 713, 719 (10th Cir. 2000); Brennan v. S. Davis

Cmty. Hosp., 538 F.2d 859, 863 & n.4 (10th Cir. 1976). We agree with the

district court that neither letter presents an analysis that is “particularly

persuasive.” Aplt. Br., Ex. A at 12. Given our analysis, the Ginley letter does not

tip the scale in favor of finding the exemption inapplicable.

      Rodriguez and Gomez advance several additional arguments to support

their appeal, all of which do not change the strong support for application of the

exemption above. The various NLRB cases presented do not support a different

conclusion. See, e.g., NLRB v. C&D Foods, 626 F.2d 578 (7th Cir. 1980)

(discussing the processing, by 200 employees in a dressing plant, of ducks raised

by local contractors). Rodriguez and Gomez also argue a review of the legislative

history illustrates that the policy reasons behind the exemption–to allow for

fluctuations in seasonal work and increased work due to perishable

commodities–do not apply here. The regulations do not limit the exemption to


                                          - 16 -
those practices that fluctuate seasonally, however, and this should not be

determinative. Finally, although it is an arguably “close case,” and the exemption

should be construed narrowly, the weight of the analysis supports the conclusion

that Whiting Farms’s processing operations fit within the exemption. The

agricultural exemption was meant to apply broadly and “embrace the whole field

of agriculture.” Maneja, 349 U.S. at 260. If a practice is found to fit within the

definition of agriculture, the agricultural exemption should apply.

      Whiting Farms breeds chickens and raises them for approximately a year

prior to processing. Whiting Farms only processes those chickens it has raised.

The pelts are removed and dried so they may be shipped or stored. As with the

other commodities included in the regulations, such as fur, dried fruit, and honey,

Whiting Farms is merely isolating the product it has produced and preparing it for

market. Compare NLRB v. Karl’s Farm Dairy, Inc., 570 F.2d 903, 906 (10th Cir.

1978) (processing of milk by dairy farmer included because in order to be sold the

milk must be processed), with NLRB v. Tepper, 297 F.2d 280, 281-82 (10th Cir.

1961) (processing of milk by an employer who was primarily a processor and

processed milk from other farms not included under exemption). After

considering the various factors laid out by the regulations and case law, we

conclude the skinning and trimming of chickens is a “subordinate and necessary

task incident to [Whiting Farms’s] agricultural operations.” Maneja, 349 U.S. at


                                        - 17 -
263. The skinning and trimming of pelts on Whiting Farms fits within the

definition of secondary agriculture, and therefore Whiting Farms is exempt under

the FLSA’s agricultural exemption from paying Rodriguez and Gomez overtime.

B. Award of Costs under Federal Rule of Civil Procedure 54(d)

      Federal Rule of Civil Procedure 54(d) provides that “[e]xcept when express

provision therefor is made either in a statute of the United States or in these rules,

costs other than attorneys’ fees shall be allowed as of course to the prevailing

party unless the court otherwise directs.” Rodriguez and Gomez appeal the

imposition of costs in favor of Whiting Farms, arguing that their indigent status

and the close and difficult question presented by this case justify a waiver of

costs. We review the district court’s grant of costs under Rule 54(d) for an abuse

of discretion. AeroTech, Inc. v. Estes, 110 F.3d 1523, 1526 (10th Cir. 1997).

      Whether or not a prevailing party shall be awarded costs is “within the

court’s sound discretion.” Homestake Mining Co. v. Mid-Continent Exploration

Co., 282 F.2d 787, 804 (10th Cir. 1960). Nevertheless, Rule 54 creates a

presumption that the district court will award the prevailing party costs. Cantrell

v. Int’l Bhd. of Elec. Workers, 69 F.3d 456, 458-59 (10th Cir. 1995). Thus the

established rule is that costs are generally awarded to the prevailing party. Zeran

v. Diamond Broad., Inc., 203 F.3d 714, 722 (10th Cir. 2000); AeroTech, 110 F.3d

at 1527; Klein v. Grynberg, 44 F.3d 1497, 1506-07 (10th Cir. 1995); Serna v.


                                         - 18 -
Manzano, 616 F.2d 1165, 1167-68 (10th Cir. 1980). The burden is on the non-

prevailing party to overcome this presumption. Cantrell, 69 F.3d at 459. When a

district court exercises its discretion and denies costs to a prevailing party, it must

provide a valid reason for the denial. Id.

      The district court concluded that the plaintiffs were indigent, and that the

case did present a “close and difficult question.” Aplt. Br., Ex. C at 2-3. The

court nevertheless concluded there was no reason “defendants should be penalized

by reducing the award of costs.” Id. at 3. Other circuits have recognized that the

indigent status of the non-prevailing party and the presentation of issues that are

close and difficult are both “circumstances in which a district court may properly

exercise its discretion under Rule 54(d) to deny costs to a prevailing party.”

Cantrell, 69 F.3d at 459; see also AeroTech, 110 F.3d at 1526. However, as the

district court noted, the denial of costs is “in the nature of a severe penalty,” and

“there must be some apparent reason to penalize the prevailing party if costs are

to be denied.” Klein, 44 F.3d at 1507; see also AeroTech, 110 F.3d at 1526-27.

The burden is on Rodriguez and Gomez, and they have not offered any reason

why Whiting Farms should be penalized in this case. It was not an abuse of the

court’s discretion to award costs to Whiting Farms as the prevailing party.

      AFFIRMED.




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