Unanimous court rejects district court discretion to reduce appellate cost awards

Thursday’s decision in Metropolis of San Antonio v. Lodges.com crisply fixed what would seem to be a primary procedural query: how courts must come to a decision the “costs” that the prevailing occasion on appeal can recover from the shedding occasion. Justice Samuel Alito’s viewpoint for a unanimous court tells us the reply: the court that fixed the appeal decides, not the district court.

The circumstance involves the costs of appellate litigation. Beneath the “American Rule,” the prevailing occasion in litigation in the United States ordinarily have to pay back its possess attorney’s service fees, absent some statute that phone calls for a unique end result. Conversely, the prevailing occasion usually is reimbursed for lots of of the other costs of litigation. Rule 39 of the Federal Principles of Appellate Course of action governs the approach of awarding all those costs for appellate litigation in the federal courts. Initially, Rule 39(a) record 4 unique default regulations for how to detect the prevailing occasion, which is entitled to recover all those costs “unless … the [appellate] court orders usually.” 2nd, Rule 39(e) lists 4 classes of costs that “are taxable in the district court for the gain of the occasion entitled to costs beneath this rule.” Of relevance here is the third product, “premiums paid out for a bond or other safety to preserve rights pending appeal.” That handles the expense of a “supersedeas” bond: If an desirable occasion desires to prevent a judgment from going into influence although it problems the judgment on appeal, it obtains a supersedeas bond, which stays the judgment till the stop of the appeal.

The unique circumstance right before the justices involved a dispute in between the town of San Antonio and a assortment of on the web vacation providers (like respondent Lodges.com). San Antonio persuaded the demo court that the providers had been underpaying lodge occupancy taxes. The providers appealed, submitting a supersedeas bond so they would not have to pay back the taxes immediately. Eventually, the providers prevailed on appeal and so were entitled to costs beneath Rule 39. The distinct dispute involves the expense of that bond, a lot more than $2 million. San Antonio asked the district court to lessen the quantity it would have to pay back, and the district court refused to do so, relying on a decision of the U.S. Court docket of Appeals for the fifth Circuit that reported district courts have no discretion to lessen or remove any of the costs mentioned in Rule 39(e).

Alito’s brisk viewpoint firmly agrees with the fifth Circuit’s tactic, rejecting the opposite approaches of most of the other decreased courts. Alito perceives “a cohesive scheme for taxing appellate costs” in Rule 39. That scheme’s “default rules” move from the “venerable presumption that prevailing parties are entitled to costs,” matter to the authority of the appellate court to buy usually.

Alito rejects San Antonio’s argument that the appellate court can come to a decision “who can receive costs” but lacks “authority to divide up costs.” For Alito, it “cuts decisively” versus San Antonio that the rule immediately “states that the court of appeals need not abide by the default regulations.” That is most apparent from the default rule for a judgment that is affirmed in aspect and reversed in aspect, which delivers that “costs are taxed only as the court [of appeals] orders.” He provides an illustration: If “the appellant wins what is in essence a seventy five% victory, the appellant can be awarded seventy five% of its costs.” So, for the other subdivisions (full victory for 1 occasion or the other), “where the default regulations allocate a hundred% of the costs to the winning occasion, it is normal to fully grasp the court of appeals’ authority to ‘order otherwise’ to contain the authority to make a unique allocation.”

For Alito, Rule 39(e) “points in the exact same path.” By referring to “the occasion entitled to costs beneath this rule,” he writes, the rule refers to the occasion recognized by the court of appeals beneath Rule 39(a). That occasion therefore “has a appropriate to get them and not merely request them — when a correct software is built in the district court.” To summarize, Alito tells us that “Rule 39 offers discretion in excess of the allocation of appellate costs to the courts of appeals,” which leaves no space in the district courts for “a 2nd layer of discretion.” He provides one more illustration, in which the court of appeals “awards the prevailing appellee 70% of its costs.” For Alito, a district court decision to “reduce all those costs by half,” meaning that “the appellee would receive only 35% of its costs,” would be a “direct violation of the court of appeals’ instructions.”

San Antonio’s principal textual argument is that the reference to the costs in Rule 39(e) as “taxable” in the district court signifies that they are “something that may perhaps, but need not necessarily be, taxed.” Alito explains that this signifies only that the prevailing occasion will not get the costs except if it delivers the required “verification” of the quantity of the costs to which it is entitled. Additionally, he explains, the “real work” of the provision is to specify that the district court is the spot in which all those costs are basically “taxed.” And that “makes superior sense” because it signifies that costs incurred in the court of appeals (printing appellate briefs and the like) are taxed in the court of appeals, while the distinct classes of costs incurred in the district court (preparing of the file, service fees for filing an appeal, and the like) are taxed in the district court. The most crucial of that latter group often is the expense of a bond, which is appropriately taxed in the district court because the district court previously will have accredited the bond beneath Federal Rule of Civil Course of action sixty two.

Alito’s viewpoint closes by rejecting various realistic arguments that San Antonio interposes. For illustration, San Antonio argues that appellate courts are not properly positioned to make expense allocations that could count on factual disputes Alito regards that worry as “overblown,” because appellate costs are so “readily estimable, not often disputed, and frankly not large sufficient to engender contentious litigation in the wonderful the vast majority of cases.” The significant exception, he acknowledges, is the expense of supersedeas bonds, but all those will have been “negotiated by the parties, as happened here.” And although the bond costs seem large in hindsight, Alito factors out that “San Antonio admits that it was mostly knowledgeable of the costs of the bonds in this circumstance when they were accredited.”

The most troubling problem San Antonio raises is the risk that “parties will be not able to get overview of their objections to Rule 39(e) costs if the district court cannot deliver relief right after the matter returns to that court.” Alito acknowledges that “the present-day Principles and the applicable statutes could specify a lot more obviously the method that these a occasion must abide by to convey their arguments to the court of appeals, but this does not lead to the conclusion that a district court can reallocate all those costs.” Instead, he factors to a assortment of regulations that could use and implies that courts of appeals could adopt nearby regulations if the problem persists.

For me, this circumstance very obviously falls in the group of issues for which the clarity of the reply is considerably a lot more crucial than what the reply is. And on that point, Alito’s decisive interpretation of Rule 39 looks to deliver the advice decreased courts must want.

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