The prevailing party in a suit has a right to recover costs on appeal. The right to recover costs may be provided under statute or court rule. For instance, Cal. R. Ct. 26(c) provides that a party awarded appellate costs may recover only the premium on any surety bond procured by the party recovering costs, unless the court to which the remittitur is transmitted determines that the bond was unnecessary.[i]
The United States Supreme Court Rules stipulate that if the Court affirms a judgment, the appellant shall pay costs and if the Court reverses or vacates a judgment, the appellee shall pay costs unless the Court otherwise orders.[ii]
Common law states that the prevailing party is entitled to recover judgment for costs. Courts generally and United States Supreme Court in particular, under Supreme Court Rule 43.2, have a presumptive rule for costs which court in its discretion may vary.[iii]
The parties to an appeal may mutually agree that costs on appeal will be allocated in a manner different from that prescribed by federal or state rule.
Also, a litigant may be excluded from bill of costs when he/she has unequivocally waived the entitlement.[iv]
A court may enter an order staying further proceedings until costs taxed in an earlier proceeding have been paid.[v] The aptness of staying proceedings until costs of a previous proceeding are paid is provided in Fed. R. Civ. P. 41(d), which states: “if a plaintiff who has once dismissed an action in any court commences an action based upon or including the same claim against the same defendant, the court may make such order for the payment of costs of the action previously dismissed as it may deem proper and may stay the proceedings in the action until the plaintiff has complied with the order.” Fed. R. Civ. P. 41(d) applies to cases involving involuntary dismissals also. [vi]
Law stipulates that the prevailing parties should be allowed costs.[vii] Disposition of appeal is deciding factor in assessment of appellate costs and appellate costs have no relationship to trial costs.
The United States Supreme Court has formulated a two-fold inquiry of whether a plaintiff is a “prevailing party” under Fed. R. Civ. P. 54(d)(1). This is done “by separating eligibility for fees, based on meeting the definition of “prevailing party,” from the discretionary decision to actually award fees. As to the first issue, a plaintiff “prevails” when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff. Because a judgment for damages in any amount modifies defendant’s behavior to plaintiff’s benefit, a plaintiff who wins nominal damages is a prevailing party.” Even if the court found that plaintiff eligible to receive fees, reviewing courts nonetheless may affirm lower courts’ decisions to deny fees. The degree of plaintiff’s overall success goes towards the reasonableness of the fee award and courts may award minimal fees or no fees after taking into account the amount and nature of the plaintiff’s success.[viii]
[i] Geldermann, Inc. v. Bruner, 10 Cal. App. 4th 640 (Cal. App. 1st Dist. 1992)
[ii] USCS Supreme Ct R 43
[iii] Buckhannon Bd. & Care Home v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (U.S. 2001)
[iv] Saunders v. Washington Metropolitan Area Transit Authority, 505 F.2d 331, 334 (D.C. Cir. 1974)
[v] Sanderson v. Ford Motor Co., 90 F.R.D. 375, 376 (N.D. Ala. 1981)
[vi] World Athletic Sports Corp. v. Pahlavi, 267 F. Supp. 160 (S.D.N.Y. 1966)
[vii] United States v. Imperial Irrigation Dist., 595 F.2d 525 (9th Cir. Cal. 1979)
[viii] Manildra Milling Corp. v. Ogilvie Mills, 76 F.3d 1178 (Fed. Cir. 1996)