Thursday, March 15, 2012

Otay Land Co. v. United Enterprises Ltd.

Mar 14: In the U.S. Court of Appeals, Ninth Circuit, Case No. 10-55550. Appeal from the United States District Court for the Southern District of California. The Appeals Court indicates that, "Given the complexities of litigation and the escalating magnitude of attorneys' fees, it is no surprise that appellate review of attorneys' fees and costs has focused overwhelmingly on fees. Nonetheless, costs also can add up to a considerable amount and because fees are not always available by contract, statute or otherwise, an award of costs can take on heightened importance."
    The Appeals Court said, "Under 28 U.S.C. § 1919, when a suit is dismissed for lack of jurisdiction, the court "may order the payment of just costs." This case requires us to parse the term "just" and consider what constitutes "just costs." Here, the district court awarded costs to defendants on the ground that they were necessarily incurred in defending the action. Because the district court implied a presumption of award of costs that is absent in the permissive statute, and because it equated incurred costs with "just costs," we conclude that the court abused its discretion under § 1919."
    By way of background, the Appeals Court explains that Otay's Third Amended Complaint alleged that United Enterprises, comprised of former owners and operators of a shooting range in Chula Vista, California, was responsible under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act and § 7002 of the Resource Conservation and Recovery Act for removing lead and other pollutants from the real property in question, now owned by Otay. The complaint also included a claim under the California Hazardous Substances Account Act, as well as other state causes of action.
    On remand, at a hearing on costs, the district court advised the parties: "Counsel, I have to tell you, I have reviewed the case pretty thoroughly. I don't see any reason why costs should not be imposed in this case. Even though there is, perhaps, no prevailing party, it does certainly appear to me that just cause [sic] should be awarded to the defendants. It appears that this action was filed prematurely, and so, therefore, you know, it just makes sense to me to award costs to the defendants."
    In conclusion, the Appeals Court says, ". . .we conclude that the district court's standard is inadequate and erroneous. The award of costs may well have been appropriate here. But we do not take a position on the ultimate award of costs, a decision we leave to the district court. Rather, we reiterate that while § 1920 may be helpful in determining what costs to award once other relevant factors have been considered, its enumeration of cost items is not a substitute for determining whether an award of costs is 'just' under § 1919. Nor can the award of costs be presumed simply because a party was successful on a threshold ground and the costs were incurred. We vacate the cost award and remand to the district court to consider the 'just costs' issue consistent with the considerations outlined in this opinion."
    Access the complete opinion (click here). [#Remed, #CA9]
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