Equitable, Case-By-Case Approach Prevails, With Substantial Costs Award Going Bye-Bye.
Here is how this opinion began: “Given the complexities of litigation and the escalating magnitude of attorneys’ fees, it is no surprise that appellate review of attorney’s fees and costs has focused overwhelmingly on fees. [Parenthetical--yep, reason for this blog.] Nonetheless, costs also can add up to a considerable amount and because fees are not always available by contract, statute or otherwise, an award of costs can take on heightened importance.” [Another parenthetical--we agree, because we also blog on costs issues, and they can be high given the high costs of modern litigation.]
With this as a backdrop, Otay Land Co. v. United Enterprises Ltd., Case No. 10-55550 (9th Cir. Mar. 14, 2012) (for publication) focused on what factors does a district judge properly consider when determining “just costs” under 28 U.S.C. § 1919, which allows the court discretion to “order the payment of just costs” when a suit is dismissed for lack of jurisdiction.
Here, after a trip up and back to the Ninth Circuit, an environmental dispute was ordered dismissed based on ripeness, with the district court ordered, on remand, to determine whether defendants were entitled to costs under section 1919 against plaintiff. (That occurred after the district court found the defense to be the prevailing party and awarded $271,990.56 in costs at an earlier stage, albeit under a different statute.) Well, on remand, the district judge again awarded all these same costs to the defense under section 1919, ostensibly finding that the defense “prevailed.”
The Ninth Circuit vacated and remanded the substantial costs award.
No one doubted that section 1919 is a discretionary cost-shifting statute that applied. However, any award under it had to be driven by equity on a case-by-case approach, which the federal appellate panel did not believe was achieved due to application of an inapt prevailing party presumption. Here are the factors that the Ninth Circuit articulated as needing to be considered on remand, none being dispositive in nature: (1) costs are discretionary, not mandatory in nature; (2) hardship or exigent circumstances, but they are not threshold requirements; (3) strength of plaintiff’s jurisdictional claim (legitimate factor, but not definitive); and (4) significance of pending parallel litigation in state court (again, not a determinative factor).
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