Breslaw

This appeal requires us to consider the claims of both parties that the district court wrongfully denied them “prevailing party” status and, accordingly, an award of costs under Rule 54(d) of the Federal Rules of Civil Procedure. In the litigation that spawned this appeal, Zenith Insurance Company (“Zenith”) sued Drs. Leonard Breslaw, Jamshid Azari, Mehdi Khademi, Marvin Santos, and Lloyd Tom (collectively “the doctor defendants”) for alleged violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-68 (1994). An eight-day trial yielded a special jury verdict that found a RICO conspiracy by some of the doctor defendants, but found no legal injury to Zenith and awarded it no damages. The district court held that neither party had prevailed and ordered each party to bear its own costs. The doctor defendants appeal, and Zenith cross-appeals.

Zenith’s complaints below alleged a scheme to create, submit, and prosecute fraudulent workers’ compensation claims. Zenith also alleged that the doctor defendants worked as employees of or independent contractors for the Scheffield Medical Group (“Scheffield”) and that Scheffield was a RICO enterprise. The…