141 S.Ct. 1628
U.S.2021Background
- City of San Antonio (on behalf of a class of 173 Texas municipalities) won a district-court judgment against several online travel companies (OTCs) for underpaid hotel-occupancy taxes; judgment grew (post-trial) to roughly $84 million after interest and motions.
- OTCs obtained supersedeas bonds (to stay enforcement) with large premiums; they appealed and the Fifth Circuit reversed, vacating the district judgment in favor of the OTCs.
- Under Federal Rule of Appellate Procedure 39(d) the OTCs obtained modest appellate costs (docketing/printing) taxed by the circuit; they then sought >$2.3 million in district-court costs under Rule 39(e), primarily supersedeas bond premiums.
- San Antonio objected and asked the district court to exercise equitable discretion to deny or reduce those 39(e) costs; the district court, citing circuit precedent, taxed most of the requested costs and said it lacked discretion to reallocate an appellate court’s cost allocation.
- The Fifth Circuit affirmed; the Supreme Court granted certiorari and held that Rule 39 vests allocation authority in the courts of appeals and that district courts may not alter a court-of-appeals allocation of Rule 39(e) costs (though district courts still must tax and verify the correctness/necessity of claimed amounts).
Issues
| Issue | Plaintiff's Argument (San Antonio) | Defendant's Argument (OTCs) | Held |
|---|---|---|---|
| Whether a district court may alter an allocation of appellate costs made by the court of appeals under Rule 39 | "Taxable" is permissive; district court has equitable discretion to deny or reduce 39(e) costs | Court of appeals may apportion costs and that allocation is binding; district court only taxes amounts awarded | Courts of appeals have discretion to allocate all Rule 39 appellate costs; district courts may not reallocate those amounts |
| Whether the phrase "taxable in the district court" vests substantive discretion in the district court | The word "taxable" implies costs may or may not be awarded by the district court | "Taxable in the district court" specifies the forum for taxing costs; allocation comes from the court of appeals | "Taxable" refers to where costs are taxed; allocation is determined by the court of appeals, not by district courts (district court ensures compliance and correctness) |
| Whether practical considerations (factual disputes, large bond premiums) justify district-court reallocation | Appellate courts are ill-suited to resolve factual disputes about necessity, financial condition, or allocation; district courts are better placed | Appellate courts routinely and effectively allocate costs and may delegate allocation to district courts if appropriate | Practical concerns overstated; appellate courts can allocate and may delegate to district courts if they choose |
| Whether parties lacking district-court relief will have an adequate path for review of objections to Rule 39(e) costs | If district court cannot alter costs, parties will lack practicable review and relief | Parties can seek an order from the court of appeals under Rule 39(a) via Rule 27 motion and other procedures (rehearing, merits briefing, objections) | District courts still cannot reallocate; parties may seek court-of-appeals orders (Rule 27) or other appellate procedures for review |
Key Cases Cited
- Baker Botts L.L.P. v. ASARCO LLC, 576 U.S. 121 (2015) (discusses the American Rule on attorney fees)
- Marx v. General Revenue Corp., 568 U.S. 371 (2013) (recognizes presumption that prevailing parties are entitled to costs)
- Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992) (discusses meaning of being "entitled" to a right or benefit)
- Crawford Fitting Co. v. J. T. Gibbons, Inc., 482 U.S. 437 (1987) (interpretation of Rule 54(d) and taxable costs under statute)
- Taniguchi v. Kan Pacific Saipan, Ltd., 566 U.S. 560 (2012) (Rule 54(d) gives courts discretion to award costs authorized by statute)
- Emmenegger v. Bull Moose Tube Co., 324 F.3d 616 (8th Cir. 2003) (example of a court of appeals delegating cost-allocation responsibility to the district court)
- The Exxon Valdez v. Exxon Mobil Corp., 568 F.3d 1077 (9th Cir. 2009) (illustrates large supersedeas-bond-premium awards handled under Rule 39)