Dissent Believes Exxon Was Entitled To Costs For Large Damages Reduction.
Almost one year after the wreck of the Exxon Valdez, the parties stipulated to entry of a $507.5 million judgment against Exxon, after the punitive damages award was reduced by 90% after several journeys through the federal appeals courts (including the U.S. Supreme Court). Now, the Ninth Circuit has held, in a 2-1 opinion, that both sides should bear routine federal costs, which were hefty—given that Exxon had to pay banks $60.6 million to post a supersedeas bond to cover the original $5 billion judgment. (The supersedeas bond expense is an allowable costs item under Rule 39(e)(3).) The case is In re Exxon Valdez, Case No. 04-35182 (9th Cir. June 15, 2009) (for publication).
The majority, in a decision by Circuit Judge Schroeder, found that Federal Rule of Appellate Procedure 39(a)(4) controlled, which provides that where “a judgment is affirmed in part, reversed in part, modified or vacated, costs are taxed only as the court orders.” The majority determined that no side was a clear winner, with Exxon still owing $507.5 million and “the equities in [the] case fall[ing] squarely in favor of plaintiffs.”
In dissent, Circuit Judge Kleinfeld characterized Rule 39—the principle of which was traced back to the Statute of Gloucester in 1275—as generally imposing costs on the unsuccessful party. He believed that to be plaintiffs, whose punitive damages award was reduced by 90%. Because Exxon had to spend $60.5 million to stay judgment execution (its “train ticket to victory”), it was “entitled to have the loser reimburse the price of that train ticket.” He ended his dissent by making this colorful observation: “The champagne corks that popped after the Supreme Court reversed us were doubtless on Exxon’s side, not the plaintiffs.”