Only a "prevailing" party can be entitled to costs, pursuant to Federal Rule of Civil Procedure 54(d)(1), and the District Court can find that none of the parties are entitled to costs, because its judgment did not materially change the legal relationships of the litigants. The plaintiff, RBC Nice Bearings Inc., and its affiliates sued the defendant, SKF USA Inc. The District Court dismissed RBC's claims and SKF's counterclaims. The litigants requested that the District Court approve bills of costs. The District Court found that none of the parties qualified as the "prevailing party," pursuant to Federal Rule of Civil Procedure 54(d)(1), because its judgment dismissing claims and counterclaims did not "materially alter[] the legal relationship between the parties." The 2nd Circuit reviewed de novo. Federal Rule of Civil Procedure 54(d)(1) provides, "Unless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." A decision about whether to award costs under Rule 54(d) "is committed to the sound discretion of the district court, and is accordingly reviewed for abuse of discretion," pursuant to the 2nd Circuit's 1991 decision, ARP Films Inc. v. Marvel Entertainment Group Inc. In Srybnik v. Epstein, a 1956 decision, the 2nd Circuit wrote, "[W]here the defendant counter-claims for affirmative relief and neither party prevails on its claim, it is quite appropriate to deny costs to both parties." The parties failed to prove that the District Court abused its discretion. "Even assuming arguendo that the district court erred in finding that neither party was a prevailing party," wrote the 2nd Circuit, "neither party has offered any ground for us to conclude that the district court exceeded the bounds of its discretion in refusing to award costs." The 2nd Circuit affirmed the judgment of the District Court, Hall, J.

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