959 F.3d 159
5th Cir.2020Background
- A class of 173 Texas municipalities, led by the City of San Antonio, sued online travel companies (OTCs) asserting their service fees are part of the taxable "retail rate" for hotel occupancy taxes.
- The district court and a 2011 jury sided with the municipalities; a Texas state appellate court in a related Houston case reached the opposite conclusion.
- The district court entered a multi‑million dollar judgment; the OTCs obtained large supersedeas bonds to stay enforcement and appealed. Bonds were increased as post‑judgment delays accrued.
- In 2017 the Fifth Circuit reversed and rendered judgment for the OTCs, issuing a mandate that costs on appeal be taxed by the Clerk of the Court.
- Back in district court the OTCs sought Rule 39(e) costs, including over $2 million in premiums for the supersedeas bonds; the district court taxed those costs against San Antonio, concluding it lacked discretion to deny or reduce them.
- San Antonio appealed, arguing the appellate mandate and Rule 39 amendments limited or left to discretion the district court’s award of supersedeas bond premiums; the Fifth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which Rule 39 subsection governs allocation of appellate costs (39(a)(3) vs 39(a)(4))? | San Antonio: 39(a)(4) applies because the appellate mandate used "vacated" and limited costs to those taxed by the Clerk. | OTCs: 39(a)(3) applies because the appellate disposition effectively reversed and OTCs clearly prevailed. | 39(a)(3) applies; substance of appellate disposition (reversal and rendered judgment) controls, not decretal wording. |
| Did the appellate mandate limit taxable appellate costs to those taxed in the court of appeals? | San Antonio: Mandate language limited costs to those taxed by the Clerk of the Court (i.e., appellees should only get appellate clerk costs). | OTCs: Mandate did not preclude district‑court Rule 39(e) costs; such costs are properly sought in district court. | Mandate did not limit Rule 39(e) costs; district court was authorized to tax appellate bond premiums. |
| Do district courts have discretion to deny or reduce Rule 39(e) costs (supersedeas bond premiums) after the 1998 stylistic amendment to Rule 39(e)? | San Antonio: The 1998 amendment made Rule 39(e) permissive and district courts retain discretion to deny or reduce such awards. | OTCs: Under Fifth Circuit precedent district courts lack discretion and must award enumerated Rule 39(e) costs to the party entitled to costs. | Fifth Circuit follows binding precedent (Sioux); district courts lack discretion to deny or reduce Rule 39(e) costs where a party is entitled to costs. |
| Standard of review for district court interpretation of Federal Rules of Appellate Procedure? | San Antonio: (implicit) argues for de novo review. | OTCs: agrees de novo review appropriate. | Court applies de novo review to district court's interpretation of the appellate rules. |
Key Cases Cited
- City of San Antonio v. Hotels.com, 876 F.3d 717 (5th Cir. 2017) (appellate reversal rendered judgment for OTCs)
- Basha v. Mitsubishi Motor Credit of Am., Inc., 336 F.3d 451 (5th Cir. 2003) (de novo review of rule interpretation)
- Studiengesellschaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128 (5th Cir. 1983) (Rule 39 allocation follows disposition on the merits)
- Saunders v. Washington Metro. Area Transit Auth., 505 F.2d 331 (D.C. Cir. 1974) (substance of appellate disposition controls allocation of costs)
- Republic Tobacco Co. v. N. Atl. Trading Co., 481 F.3d 442 (7th Cir. 2007) (discussing district court discretion to award appeal bond costs)