San Antonio v. Hotels.com, L.P.

Justia (with opinion) · Docket · oyez.org

Argued on Apr 21, 2021.
Decided on May 27, 2021.

Petitioner: City of San Antonio, Texas, On Behalf of Itself and All Other Similarly Situated Texas Municipalities.
Respondent: Hotels.com, L.P., et al..

Advocates:

• Daniel L. Geyser (for the Petitioner)

Facts of the case (from oyez.org)

In 2006, the City of San Antonio, Texas, filed a class-action lawsuit against various online travel companies (OTCs), such as Hotels.com, Hotwire, Orbitz, and Travelocity, alleging that the service fees those companies charged constitute the “cost of occupancy” and therefore are subject to municipal hotel tax ordinances. After extensive litigation, the U.S. Court of Appeals for the Fifth Circuit ruled in favor of the OTCs, reasoning that the hotel occupancy tax applied only to the discounted room rate paid by the OTC to the hotel.

Toward the end of litigation, the OTCs moved for "an order entering Final Judgment in favor of the OTCs, releasing all supersedeas bonds, and awarding costs to the OTCs as the prevailing parties." The OTCs’ proposed order stated that "costs shall be taxed against the Cities in favor of the OTCs pursuant to 28 U.S.C. § 1920, Fed. R. Civ. P. 54, and Fed. R. App. P. 39." San Antonio did not object, so the district court entered the OTC’s proposed order.

Then the OTCs filed a bill of costs in the district court seeking over $2.3 million, which included over $2 million for “post-judgment interest” and “premiums paid for the supersedeas bonds.” San Antonio objected and asked the district court to refuse to tax, or to substantially reduce, the appeal bond premiums sought by the OTCs. The district court concluded that it lacked the discretion to reduce taxation of the bond premiums. The Fifth Circuit affirmed, despite that every other circuit confronting the question has held the opposite.

Question

Do district courts have the discretion to deny or reduce appellate costs deemed “taxable” in district court under Federal Rule of Appellate Procedure 39(e)?

Conclusion

Federal Rule of Appellate Procedure 39 does not permit a district court to alter a court of appeals’ allocation of the costs listed in subdivision (e) of that Rule. Justice Samuel Alito authored the unanimous opinion of the Court.

Rule 39 gives the courts of appeals discretion over the allocation of appellate costs, setting default rules that apply unless the court “orders otherwise.” These default rules and the language and structure of Rule 39 suggest that the appeals court makes all determinations as to the costs. This comprehensive scheme leaves no room for the district court to modify the appeals court’s allocation of costs, and indeed to read the Rule as giving the district court such power would undermine the authority of the appeals court to make the determination in the first place.