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

Background

The dispute began when the city of San Antonio sued popular online travel companies on behalf of a class of 173 Texas municipalities, claiming the companies underpaid hotel occupancy taxes by using wholesale rates instead of retail rates. After a jury verdict of about $55 million, the travel companies obtained large supersedeas bonds to stay enforcement of the judgment; those bonds were negotiated with and approved by the district court. The court of appeals reversed and ruled for the travel companies. Back in the district court, the companies sought more than $2.3 million in costs, mainly premiums on the supersedeas bonds, and the district court taxed just over $2.2 million; San Antonio objected, and the court of appeals affirmed the award.

Reasoning

The central question was whether a district judge can refuse to tax or reduce appellate costs listed in Rule 39(e), such as bond premiums. The Court held that Rule 39 gives the courts of appeals the power to allocate appellate costs and that the phrase “taxable in the district court” simply names where those costs are collected, not a second chance for district judges to reallocate them. The Court explained that Rule 39(a) allows an appeals court to “order otherwise,” including dividing costs based on parties’ relative success, and that allowing district courts to relitigate allocations would undercut the appeals court’s directions. The opinion also noted that appeals courts can delegate taxation to district courts if they choose, while district courts ensure cost amounts are correct and comply with the rules.

Real world impact

As a result, parties cannot rely on a district judge to overturn or reduce an appeals court’s allocation of appellate costs, including expensive supersedeas bond premiums; instead, parties must pursue cost allocation before or in the court of appeals. The decision clarifies who decides cost splits and affects how litigants recover appellate expenses.