Commercial Litigation and Arbitration

District Court May Impose Costs Pursuant to FRAP 39(a)(4) & (e) without Prior Appellate Itemization — Cost of Letter of Credit to Stay Execution — De Novo Review of District Court Interpretations of FRAP

From L-3 Commc’ns Corp. v. OSI Sys., Inc., 607 F.3d 24 (2d Cir. 2010):

Appellant OSI Systems, Inc. ("OSI") appeals from an April 27, 2009, order of the United States District Court for the Southern District of New York (Crotty, J.) upholding the district court clerk's decision to tax to OSI, pursuant to Federal Rule of Appellate Procedure ("Rule") 39(e), the costs incurred by Appellee L-3 Communications Corporation ("L-3") in obtaining a letter of credit to preserve rights pending appeal. OSI argues that even when this Court has ordered appellate costs to be taxed to a party pursuant to Rule 39(a)(4), a district court is nevertheless without authority to tax any particular item of such appellate costs pursuant to Rule 39(e) unless this Court has expressly authorized the taxing of that item. We disagree. We conclude that this Court's order granting without limitation L-3's motion to tax costs pursuant to Rule 39(a)(4) entitled L-3 to seek from the district court any and all permissible items of appellate costs properly taxed by that court pursuant to Rule 39(e). ***

On March 2, 2007, after a jury trial on OSI's fraud and breach of fiduciary duty claims, the district court entered an award against L-3 for over $ 125 million in compensatory and punitive damages.... The parties agreed to stay the district court's judgment while L-3 appealed the judgment to this Court, but OSI required L-3 to secure the judgment. L-3 obtained a letter of credit in the amount of $138,750,000, incurring costs of over $ 1.5 million. On June 27, 2008, this Court decided by summary order that the district court had erred in concluding as a matter of law that L-3 owed OSI a fiduciary duty. Accordingly, this Court reversed the judgment of the district court as to OSI's breach of fiduciary duty and constructive fraud claims; it also vacated the district court's judgment as to the actual fraud claim and remanded to the district court for a new trial solely on this claim. ***

Although our standard of review of a district court's interpretation of the Federal Rules of Appellate Procedure appears to be a question of first impression in this Circuit, we now hold that the question whether a district court has properly interpreted such a rule is a question of law that this Court reviews de novo. bbbbbbIt is settled law that this Court reviews de novo questions of statutory interpretation, including a district court's interpretation of the Federal Rules of Civil Procedure. ***In this context, we see no reason to treat the Federal Rules of Appellate Procedure any differently than the Federal Rules of Civil Procedure. ***

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