The Costs of Litigation: A Proposal to Amend Federal Rule of Appellate Procedure 39(a)(4)

Abstract

In 2009, the Ninth Circuit Court of Appeals wrote the concluding chapter in the Exxon Valdez litigation, which had spanned more than twenty years from the date of the oil spill on March 24, 1989. The concluding chapter related to appellate costs. Over the course of the nearly two decades of appellate litigation, Exxon paid approximately $70 million in costs, the majority of which went to secure a bond on the original $5 billion in punitive damages. The Ninth Circuit had to determine whether the plaintiffs should pay any of these costs. The U.S. Supreme Court was silent on the issue, and the applicable Federal Rule of Appellate Procedure — Rule 39(a)(4) — merely directed the judges to award costs "only as the court orders." The result: an angry dialogue between the majority, which thought each party should shoulder its own costs, and the dissent, which would have the plaintiffs pay most of Exxon's costs. This Article proposes that the current costs rule in mixed result cases provides insufficient guidance and that it should be amended so that courts know what to analyze in apportioning costs. In particular, this Article advocates that the rule be amended to provide that, in the ordinary case, each party bear its own costs, but where that would prove inequitable, courts should consider a variety of factors including the following: (1) which party prevailed, (2) the public interest, (3) the parties' ability to pay, (4) the parties' arguments and positions throughout the litigation, (5) attempts to settle, (6) the reasonableness of the costs, (7) the amount of costs, (8) federal statutes in related areas, (9) related state-court rules, and (10) the interests of justice.

Keywords: Costs, Appellate Costs, Civil Procedure, Federal Rules of Appellate Procedure