Term: 2020
Docket: 20-334
City Of San Antonio, Texas v. Hotels.com, L.p.
- Pro
20-334 SAN ANTONIO, TX V. HOTELS.COM DECISION BELOW: 959 F.3d 159 CERT. GRANTED 1/8/2021 QUESTION PRESENTED: Under Fed. R. App. P. 39(e), four categories of “costs on appeal are taxable in the district court for the benefit of the party entitled to costs under this rule.” In a 1991 two-judge, unpublished disposition, the Fifth Circuit construed an outdated version of Rule 39(e) to hold that “district court[s] ha[ve] no discretion whether, when, to what extent, or to which party to award costs” under Rule 39(e), making a full award of costs “mandatory.” In re Sioux Ltd., Sec. Litig., No. 87-6167, 1991 WL 182578, at *1 (5th Cir. Mar. 4, 1991). Every other circuit confronting the question (both before and after Rule 39 (e)’s 1998 amendment) has held the opposite: “district court[s] ha[ve] broad discretion to deny costs to a successful appellee under Rule 39(e).” Republic Tobacco Co. v. N. Atl. Trading Co., 481 F.3d 442, 449 (7th Cir. 2007). Despite recognizing that “most other circuits” have adopted the “contrary position,” the panel below held it was bound by its earlier precedent; the full Fifth Circuit subsequently denied re hearing en banc (over the votes of six dissenting judges), entrenching an acknowledged circuit conflict. In so holding, the Fifth Circuit affirmed a $2 million cost award against San Antonio, despite the district court’s finding of “persuasive” reasons to deny or reduce that award. This case is thus an ideal vehicle for resolving a clear, intractable, and long- standing split over the proper meaning of Rule 39(e)—as it is routinely applied to the most significant portion of a cost award following a successful appeal. The question presented is: Whether, as the Fifth Circuit alone has held, district courts “lack[] discretion to deny or reduce” appellate costs deemed “taxable” in district court under Fed. R. App. P. 39(e). LOWER COURT CASE NUMBER: 19-50701
The U.S. Supreme Court case City of San Antonio, Texas v. Hotels.com, L.P., 2020 revolved around the issue of whether district courts have discretion to deny or reduce appellate costs deemed 'unfair' under Federal Rule of Appellate Procedure 39(e). The dispute arose when several cities sued online travel companies for unpaid hotel occupancy taxes and lost in federal court. When they appealed and lost again, the cities were ordered to pay $2 million in court costs but argued that this was excessive and unfair. However, the Supreme Court ruled unanimously against them stating that there is no law granting judges such discretion over these types of fees unless a federal statute provides otherwise.
In the dissenting opinion for the case City of San Antonio, Texas v. Hotels.com, L.P., Justice Alito argued that while he agreed with much of the majority's analysis and interpretation of Rule 39 in relation to appellate costs, he disagreed on one key point: whether district courts have discretion to deny or reduce such costs. He contended that historical practice and precedent suggest they do have this authority. The justice pointed out that prior to Rule 39’s adoption in 1937, it was common practice for lower courts to exercise discretion over cost allocation decisions based on equity considerations. Furthermore, he noted that nothing in Rule 39’s text explicitly removes this discretionary power from district courts. Therefore, according to Justice Alito's dissenting view, a strict reading of Rule 39 as removing all discretion from lower courts is not warranted by its history or language.
