Marilyn Campbell v. Rainbow City Alabama

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-12451 November 30, 2006
Non-Argument Calendar THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 00-02080-CV-UWC-NE
MARILYN CAMPBELL,
JOSEPH R. CAMPBELL,
Plaintiffs-Appellees,
versus
RAINBOW CITY, ALABAMA,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(November 30, 2006)
Before ANDERSON, DUBINA and HULL, Circuit Judges.
PER CURIAM:
Before taking a previous appeal in this case, defendant-appellant Rainbow
City obtained a supersedeas bond to secure a judgment against it exceeding $1
million. Rainbow City thereby became entitled to a stay on appeal under Fed. R.
Civ. P. 62(d). The appeal was successful, and the judgment was reversed. The
district court then held that Rainbow City and not the plaintiff-appellee Campbells
should bear the cost of the premiums on that supersedeas bond. In this case we
must decide whether the district court’s decision was improper.
The previous appeal was from a jury verdict in favor of the Campbells on
their 42 U.S.C. § 1983 claims against Rainbow City. Rainbow City obtained a
supersedeas bond to take advantage of Fed. R. Civ. P. 62(d), which provides for a
stay of a district court judgment during appeal when the appellant posts a bond to
cover the amount of the judgment. The total cost of the bond premiums during the
pendency of the appeal was over $36,000. Rainbow City did not ask the district
court to stay the judgment without requiring a bond, as the district court had the
authority to do. See United States v. Certain Real & Pers. Prop. Belonging to
Hayes, 843 F.2d 1292, 1296 (11th Cir. 1991).
On appeal, this Court reversed the trial court judgment and directed the trial
court to enter a judgment in favor of Rainbow City and its co-defendants.
Campbell v. Rainbow City, 434 F.3d 1306 (11th Cir. 2006). Rainbow City filed a
bill of costs in the appellate court, which was granted. That bill did not deal with
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any of the costs “taxable in the district court” under Fed. R. App. P. 39(e). Back
in the district court, Rainbow City moved to have those costs taxed to the
Campbells. The district court taxed the Campbells with the costs of the appellate
filing fee, court reporter fees, copying charges, and other costs, but declined to tax
them with the cost of the premiums on the supersedeas bond, for three reasons..
First, it had not required Rainbow City to obtain the bond. Second, the district
court believed it did not have the authority to tax the premiums because they were
not included in the list of costs enumerated in 28 U.S.C. § 1920. Finally, citing
Golden Door Jewelry Creations, Inc. v. Lloyds Underwriters Non-Marine Ass’n,
117 F.3d 1328 (11th Cir. 1997), the district court believed it did not have the
authority to tax the premiums because the appellate court had not taxed them.
Rainbow City argues that the district court had no discretion to decline to
tax the bond premiums. Fed. R. App. P. 39 provides, in pertinent part,
(a) Against whom assessed. The following rules apply unless the
law provides or the court orders otherwise:
...
(3) if a judgment is reversed, costs are taxed against the appellee. . .
...
(e) Costs on appeal taxable in the district court. The following
costs on appeal are taxable in the district court for the benefit of the
party entitled to costs under this rule:
...
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(3) premiums paid for a supersedeas bond or other bond to preserve
rights pending appeal. . .
Rainbow City concedes that the Court of Appeals, pursuant to the “court orders
otherwise” language in 39(a), may decline to tax the losing appellee with the cost
of the bond. But Rainbow City argues that if the appellate court does not make a
cost allocation, the district court is required to tax the premiums “against the
appellee” pursuant to Rule 39(a)(3).
We believe Rainbow City’s reading of Rule 39 is incorrect. Rule 39(a)
restricts the parties the district court may tax. If the judgment is reversed, for
example, 39(a)(3) prevents the district court from taxing the appellant with any of
the costs on appeal (unless the appellate court orders otherwise). But the district
court then does have discretion under 39(e) to decline to tax the enumerated costs
against the appellee. The language of 39(e) is permissive, not mandatory. It
provides that the enumerated costs “are taxable,” not that they “must be taxed,” as
Rainbow City would have it.
Our reading of 39(e) is reinforced by the fact that a district court generally
does have discretion to award or not award costs to prevailing parties. See Fed. R.
Civ. P. 54(d); Farmer v. Arabian Am. Oil Co., 379 U.S. 227, 235, 85 S. Ct. 411,
416 (1964). We see no reason to adopt a different interpretation of the Rule 39(e)
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costs “taxable” in the district court. Thus, although the district court has no
discretion to tax a party that prevailed at the Court of Appeals (pursuant to 39(a)),
it does have the discretion not to tax the losing party with all the costs enumerated
in 39(e).
The other Courts of Appeals agree with our interpretation of Rule 39. The
seven courts to face the issue have not held that the district court must
automatically tax the Rule 39(e) costs to the losing party. Rather, they have all
reviewed a district court’s decisions under 39(e) for abuse of discretion. See
Magers v. Bonds, No. 03-1292, 2003 U.S. App. LEXIS 17767, at *3 (4th Cir.
Aug. 26, 2003) (unpublished); Emmenegger v. Bull Moose Tube Co., 324 F.3d
616, 626 (8th Cir. 2003); Dana Corp. v. IPC Ltd. Pshp., No. 90-1443, 1991 U.S.
App. LEXIS 1080, at *8 (Fed. Cir. Jan. 25, 1991) (unpublished); Berthelsen v.
Kane, 907 F.2d 617, 623 (6th Cir. 1990); Johnson v. Pac. Lighting Land Co., 878
F.2d 297, 298 (9th Cir. 1989); Bose Corp. v. Consumers Union of U.S., Inc., 806
F.2d 304, 305 (1st Cir. 1986); Lerman v. Flynt Distrib. Co., 789 F.2d 164, 166 (2d
Cir. 1986).
Our decision in Golden Door Jewelry Creations, Inc. v. Lloyds Underwriters
Non-Marine Ass’n, 117 F.3d 1328 (11th Cir. 1997) is not to the contrary. In that
case, the Court of Appeals vacated the district court judgment rather than
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reversing it. That meant the case fell under Fed. R. App. P. 39(a)(4), which
provides that in cases where the Court of Appeals affirms in part, reverses in part,
vacates, or modifies the district court judgment, “costs are taxed only as the court
orders.” In Golden Door, this Court held that in 39(a)(4) situations, a district court
may order only those costs that the appellate court orders, and if the appellate
court order fails to explicitly grant a class of costs, the district court “must
interpret that silence as a rejection of those costs.” Id. at 1340. In essence, in
cases under Rule 39(a)(4), only the appellate court retains discretion to award or
not award costs.
This case is far different. The judgment was reversed, so Rule 39(a)(3)
controls, not Rule 39(a)(4). Rule 39(a)(3) does not have a similar provision
limiting the cost award to what the appellate court orders. The district court’s
discretion under 39(e) is therefore not qualified, and it may choose not to tax the
losing party with those costs “taxable” in the district court. Here, the costs could
only be taxed to the Campbells, but the district court retained discretion under
39(e) to determine which costs the Campbells had to bear.1
1
Rainbow City’s other proffered case (an unpublished panel decision from the Fifth
Circuit) is also inapposite. Like Golden Door, the case deals with a case that fell under 39(a)(4),
not 39(a)(3). See In re Sioux, Ltd. Sec. Litig., No. 87-6167, 1991 U.S. App. LEXIS 25550, at *1
(5th Cir. March 4, 1991) (unpublished).
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The operative question, then, is whether the district court abused its
discretion when it declined to tax the Campbells with the supersedeas bond
premiums. See, e.g., Johnson v. Pac. Lighting Land Co., 878 F.2d 297, 298 (9th
Cir. 1989) (reviewing taxation of costs under 39(e) for abuse of discretion). As
under Fed. R. Civ. P. 54(d), the district court must have and state a sound reason
for declining to tax costs to the losing party. See Chapman v. AI Transport, 229
F.3d 1012, 1039 (11th Cir. 2000) (stating that Rule 54 “establishes a presumption
that costs are to be awarded to a prevailing party,” and “[t]o defeat the
presumption and deny full costs, a district court must have and state a sound basis
for doing so.”).
Two of the district court’s reasons were not sound. First, the court cited
Golden Door, holding that because the appellate court had not taxed the cost of the
bond, the district court was not authorized to do so. As we discussed above,
Golden Door was not on point. Pursuant to Rule 39(a)(3) and 39(e), the district
court did have discretion to tax the cost of the bond to the Campbells, and Golden
Door did not constitute a good reason for declining to do so.
Second, the district court held that it was not authorized to tax the cost of
the supersedeas bond because it is not one of the costs mentioned in 28 U.S.C. §
1920, a statute that authorizes taxation of certain costs. But the language of §
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1920 is permissive, not restrictive. This Court held in Adsani v. Miller, 139 F.3d
67, 75 (11th Cir. 1998) that § 1920 does not exhaust the class of costs that may be
taxed in the district courts. Rule 39(e) is an independent source of authority
giving the district court discretion to tax supersedeas bond premiums. The district
court thus had discretion to tax the cost to the Campbells, and the district court’s
perceived lack of authority did not constitute a reason to decline to do so.
The district court also, however, declined to tax because “a bond to
supercede the judgment was not required by this Court.” We find that this was a
sufficient reason for declining to tax the Campbells with the premiums. Rainbow
City procured the bond on its own, without being required to do so by the district
court to obtain a stay on appeal. Moreover, because Rainbow City is a
municipality with ample assets, insurance, and little likelihood of defaulting on the
judgment, the court likely would have waived the bond requirement if it had been
asked. See United States v. Certain Real & Pers. Prop. Belonging to Hayes, 843
F.2d 1292, 1296 (11th Cir. 1991) (noting that bond requirement may be waived in
discretion of district court); Dillon v. City of Chicago, 866 F.2d 902, 904 (7th Cir.
1988) (finding abuse of discretion where district court refused to waive bond
requirement for municipal defendant). As a result, the district court did not abuse
its discretion in determining that the bond was unnecessary and the premiums
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should not be borne by the unsuccessful appellees. The district court’s order is
therefore
AFFIRMED.
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