FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: THE EXXON VALDEZ, 

GRANT BAKER; SEA HAWK

SEAFOODS, INC.; COOK INLET

PROCESSORS INC.; SAGAYA CORP.;

WILLIAM MCMURREN; PATRICK L.

MCMURREN; WILLIAM W. KING;

No. 04-35182 GEORGE C. NORRIS; HUNTER CRANZ;

RICHARD FEENSTRA; WILDERNESS D.C. No.  SAILING SAFARIS; SEAFOOD SALES, CV-89-00095-HRH

INC.; RAPID SYSTEMS PACIFIC LTD.; OPINION

NAUTILUS MARINE ENTERPRISES INC.;

WILLIAM FINDLAY ABBOTT, JR.,

Plaintiffs-Appellees,

v.

EXXON MOBIL CORP.; EXXON

SHIPPING CO.,

Defendants-Appellants. 

7079
In re: THE EXXON VALDEZ, 

GRANT BAKER; SEA HAWK

SEAFOODS, INC.; COOK INLET

PROCESSORS INC.; SAGAYA CORP.;

WILLIAM MCMURREN; PATRICK L.

MCMURREN; WILLIAM W. KING;

GEORGE C. NORRIS; HUNTER CRANZ; No. 04-35183

RICHARD FEENSTRA; WILDERNESS  D.C. No. SAILING SAFARIS; SEAFOOD SALES,

INC.; RAPID SYSTEMS PACIFIC LTD.; CV-89-00095-HRH

NAUTILUS MARINE ENTERPRISES INC.;

WILLIAM FINDLAY ABBOTT, JR.,

Plaintiffs-Appellants,

v.

EXXON MOBIL CORP.; EXXON

SHIPPING CO.,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Alaska

H. Russel Holland, District Judge, Presiding

Argued and Submitted

December 15, 2008—Pasadena, California

Filed June 15, 2009

Before: Mary M. Schroeder, Andrew J. Kleinfeld and

Sidney R. Thomas, Circuit Judges.

Opinion by Judge Schroeder;

Partial Concurrence and Partial Dissent by Judge Kleinfeld

7080 IN RE THE EXXON VALDEZ
COUNSEL

Jeffrey L. Fisher, Davis Wright Tremaine LLP, Stanford, California, for the plaintiffs-appellees-appellants.

Jonathan Hacker, O’Melveny & Myers LLP, Washington,

DC, for the defendants-appellants-appellees.

OPINION

SCHROEDER, Circuit Judge:

This epic punitive damage litigation arising from the 1989

wreck of the Exxon Valdez is before us once again. This time

it is after the United States Supreme Court remanded the case

to us to decide issues related to interest and appellate costs.

Order in Exxon Shipping Co. v. Baker, No. 07-219 (S. Ct.

filed June 25, 2008). The remand followed the Court’s 5-3

decision that, under maritime law, the maximum ratio of punitive damages to compensatory damages is 1-1. Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 2633 (2008). On the issue

of the availability of vicarious liability for punitive damages

under maritime law, the Court was evenly divided and thus

left in place our 2001 decision that punitives are available

under precedents binding on this court. Id. at 2616; see In re

Exxon Valdez, 270 F.3d 1215,1233-36 (9th Cir. 2001) (citing

The Amiable Nancy, 16 U.S. (3 Wheat) 546 (1818)); Protectus Alpha Navigation Co., Ltd. v. N. Pac. Grain Growers,

Inc., 767 F.2d 1379 (9th Cir. 1985)). 

The parties have now stipulated to the entry of judgment

against the defendant Exxon and in favor of the plaintiffs

IN RE THE EXXON VALDEZ 7083
Baker et al. in the amount of $507.5 million, representing the

amount the plaintiffs were awarded as compensatory damages

for the income they lost as a result of the massive oil spill.

This judgment achieves the 1-1 ratio the Supreme Court

deemed appropriate. We delayed issuance of the mandate at

the parties’ request and asked for supplemental briefing and

argument on the issues the Supreme Court left unanswered:

interest and costs. 

Interest

[1] The issue with respect to interest is whether interest on

the $507.5 million should run from the date of the original

judgment, entered in 1996, or whether interest should run

only from the 2008 date that we entered judgment for plaintiffs in the wake of the Supreme Court’s decision. Exxon, of

course, argues for the later date; plaintiffs, for the earlier.

[2] There is no dispute that post-judgment interest must be

awarded, because 28 U.S.C. § 1961 provides that interest:

shall be allowed on any money judgment in a civil

case recovered in a district court . . . . Such interest

shall be calculated from the date of the entry of the

judgment, at a rate equal to the coupon issue yield

equivalent (as determined by the Secretary of the

Treasury) of the average accepted auction price for

the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of the

judgment.

28 U.S.C. § 1961 (1994 & Supp. II 1996). The Supreme Court

has explained that the “purpose of post-judgment interest is to

compensate the successful plaintiff for being deprived of

compensation for the loss from the time between the ascertainment of the damage and the payment by the defendant.”

Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827,

7084 IN RE THE EXXON VALDEZ
835-36 (1990) (quoting Potelo v. Consol. Rail Corp., 826

F.2d 1270, 1280 (3d Cir. 1987)).

[3] The issue here arises because the final $507.5 million

judgment of punitive damages represents a substantial reduction of the original district court judgment. Where a damages

award has been remitted, Federal Rule of Appellate Procedure

37(b) gives an appellate court discretion as to whether to

allow interest to run from the date of the original judgment,

or from the date of the remitted judgment. Rule 37(b) specifically provides as follows: “If the [appellate] court modifies or

reverses a judgment with a direction that a money judgment

be entered in the district court, the mandate must contain

instructions about the allowance of interest.” Fed. R. App. P.

37(b). 

[4] Interest accrues on the reduced amount, not on the

higher amount that was vacated or remitted. Planned Parenthood of Columbia/Willamette Inc. v. Am. Coal. of Life, 518

F.3d 1013 (9th Cir. 2008). In Planned Parenthood, we

explained the framework for determining the allowance of

interest: 

Post-judgment interest must run from the date of a

judgment when the damages were supported by the

evidence and meaningfully ascertained. We may

reverse and remand a judgment without concluding

that it is erroneous or unsupported by the evidence.

When the legal and evidentiary basis of an award is

thus preserved, post-judgment interest is ordinarily

computed from the date of [the judgment’s] initial

entry.

Id. at 1017-18 (internal quotation marks and citations omitted)

(alterations in original). Planned Parenthood thus makes it

clear that interest ordinarily should be computed from the date

of the original judgment’s initial entry when the evidentiary

and legal bases for an award were sound. Id.

IN RE THE EXXON VALDEZ 7085
Exxon contends that the legal basis for an award was not

sound in 1996, arguing that until the Supreme Court handed

down its 2008 decision in this case, the law did not allow

vicarious liability for punitive damages in maritime cases.

Yet, an evenly divided Supreme Court left in place our 2001

opinion that punitives were recoverable, and we in turn relied

on Supreme Court and Ninth Circuit precedent of long standing. See In re Exxon Valdez, 270 F.3d at 1233-36 (citing The

Amiable Nancy, 16 U.S. 546, and Protectus Alpha Navigation, 767 F.2d 1379). 

[5] We therefore conclude that plaintiffs’ entitlement to

punitives was “meaningfully ascertained” when the original

district court judgment was entered in 1996. Neither the evidentiary basis for the award nor the legal foundation for an

award has been disturbed after nearly a dozen years of subsequent litigation. We see no reason to depart from Planned

Parenthood’s general rule in this case. The plaintiffs are entitled to interest from that date on the principal amount they

ultimately are entitled to receive, $507.5 million. 

As to the rate, the parties agree that the “average accepted

auction price for the last auction of fifty-two week United

States Treasury bills” was 5.9% on September 12, 1996. See

28 U.S.C. § 1961(a) (1994 & Supp. II 1996). We have no discretion to deviate from § 1961’s instructions on the calculation of interest. See Ford v. Alfaro, 785 F.2d 835, 842 (9th

Cir. 1986). Interest on the $507.5 million judgment shall,

therefore, run from September 24, 1996 at the rate of 5.9%.

Costs

Costs have become a point of contention in this case

because of the size of the supersedeas security bond that

Exxon posted to sustain its appeals, and also because of the

length of time the case has taken to reach what we hope is

now its conclusion. Thus, Exxon’s total costs approach $70

million. Although Exxon has succeeded in reducing an origi7086 IN RE THE EXXON VALDEZ
nal jury verdict of $5 billion by about 90%, it remains liable

for a far-from-nominal punitive award of more than $500 million.

[6] The controlling rule is Federal Rule of Appellate Procedure 39(a)(4), which provides that where “a judgment is

affirmed in part, reversed in part, modified or vacated, costs

are taxed only as the court orders.” Plaintiffs point to the last

time we issued a mandate on punitives in this case, in 2001,

when we ordered each party to bear its own costs. In re Exxon

Valdez, 270 F.3d at 1254. The punitive damages award had

been remitted at that time as well. Plaintiffs also stress that,

in a case of mixed judgment, where each side wins something,

this Court usually orders each party to bear its own costs. 

Exxon contends that it is essentially the winner of the litigation and that plaintiffs should bear all, or at least 90%, of

Exxon’s appellate costs. With some 20/20 hindsight, Exxon

now characterizes the course of this case as having been all

about the amount of money Exxon would have to pay in punitives. Having reduced that amount by 90%, it declares itself

the winner. Yet this ignores the hard-fought, even relentless,

battle Exxon waged to avoid any liability for punitives, a battle that resulted in an evenly divided decision by the Supreme

Court in 2008 leaving in place our 2001 decision on vicarious

liability. Exxon Shipping Co., 128 S. Ct. at 2616.

To bolster its position, Exxon points to the fact that the

Supreme Court awarded Exxon its costs. But the default rule

before the Supreme Court is that when the lower judgment is

vacated, the petitioner gets costs “unless the Court otherwise

orders.” Sup. Ct. R. 43.2. Rule 39 contains no such presumption: when a judgment is modified, “costs are taxed only as

the court orders.” Fed. R. App. P. 39(a)(4). The dissent does

not recognize the difference. 

[7] In this case, neither side is the clear winner. The defendant owes the plaintiffs $507.5 million in punitives — accordIN RE THE EXXON VALDEZ 7087
ing to counsel at oral argument the fourth largest punitive

damages award ever granted. Yet that award represents a

reduction by 90% of the original $5 billion. In light of this

mixed result, and mindful that the equities in this case fall

squarely in favor of the plaintiffs — the victims of Exxon’s

malfeasance — we exercise our discretion by requiring each

party to bear its own costs. 

Our decision is in accord with our usual practice when each

side wins something and loses something. This court has consistently ordered each party to bear its own costs on appeals

where punitive damages are upheld, but reduced. See, e.g.,

Mendez v. Cty. of San Bernardino, 540 F.3d 1109, 1133 (9th

Cir. 2008); Planned Parenthood, 422 F.3d at 967; Bains LLC

v. Arco Prods. of Atl. Richfield Co., 405 F.3d 764, 777 (9th

Cir. 2005). We have even done so during the course of this

litigation, under similar circumstances. See In re Exxon

Valdez, 270 F.3d at 1254. 

We are aware of two cases concerning reduced punitive

damages where a court of appeals affirmed a district court’s

divided cost award. See Republic Tobacco Co. v. N. Atl. Trading Co., 481 F.3d 442, 449 (7th Cir. 2007); Emmenegger v.

Bull Moose Tube Co., 324 F.3d 616, 626-27 (8th Cir. 2003).

Whether a district court abuses its discretion in awarding

costs under similar circumstances is quite different from the

question of whether we should exercise our own discretion in

that manner. Moreover, if we were to apportion costs on the

basis of Exxon’s proposed mathematical formula, i.e., to

match the costs awarded to the percentage reduction of damages achieved during the appellate process, we would be

inviting increased and wasteful litigation over the apportionment of costs. We see no reason to enter such a thicket, and

that the dissent has found only one thirty-year-old out-ofcircuit case adopting a similar approach validates our decision

that it would be unwise to do so.

7088 IN RE THE EXXON VALDEZ
Conclusion

Because the evidentiary and legal bases for the original

judgment of punitive damages have not been overruled, we

award interest on the final judgment of $507.5 million, at the

statutorily set rate of 5.9%, to run from the date of the original

judgment, September 24, 1996. Because the amount of the

original $5 billion judgment has been substantially reduced,

we order that each party bear its own costs.

[8] The case is remanded to the district court for entry of

the final judgment in accordance with this opinion.

KLEINFELD, J., concurring in part and dissenting in part:

I concur in the majority decision insofar as it rules in favor

of the plaintiffs on interest. Plaintiffs should indeed have the

benefit of interest from when they became entitled by judgment to punitive damages, September 24, 1996, at the rate

they properly claim, 5.9%.1 Exxon has had a half billion dollars of the plaintiffs’ money ever since the district court

entered judgment in their favor. Interest is required to compensate the plaintiffs for the delay in paying the plaintiffs

their money.

I am unable to concur regarding costs. Satisfying though it

may be to shovel money from a large corporation to those

whom it wronged, respect for the Supreme Court decision in

this case and precedent in other circuits obligates us to award

Exxon most, but not all, of its costs for its mostly successful

appeal. As this case proceeded, the district court initially

upheld all,2 and on remand, nearly all,3 of the punitive dam1

See 28 U.S.C. § 1961 (1994 & Supp. II 1996). 

2

See In re Exxon Valdez (Exxon I), 236 F. Supp. 2d 1043, 1068 (D.

Alaska 2002) (noting the district court’s rejection of Exxon’s original

motion for reduction or remittitur of the jury’s $5 billion award). 

3

Id. at 1068-69 (reducing the award from $5 billion to $4 billion); In re

IN RE THE EXXON VALDEZ 7089
ages the jury awarded to the plaintiffs. We agreed with the

plaintiffs that they were entitled to punitive damages,4 and

held that half of the original award ($2.5 billion) was not too

high.5 We turned out to be mistaken. The Supreme Court held

that a tenth of the original award was as high as anyone — us,

the district court, or the jury — could go.6 After overturning

our decision, the Supreme Court awarded costs to Exxon.7

Due respect for the Supreme Court’s decision obligates us, as

a lower court, to exercise our discretion regarding costs in

accord with how the Supreme Court exercised its discretion.

The majority says that Exxon “declares itself the winner,”

but it was really the Supreme Court of the United States that

declared Exxon the winner. Our liability ruling in favor of the

plaintiffs was indeed left “undisturbed,” but only because the

Court’s tie vote on liability left our decision in place as to that

issue.8 The Court took pains to point out that leaving our decision in place did not mean we were correct.9

Exxon Valdez (Exxon III), 296 F. Supp. 2d 1071, 1110-11 (D. Alaska

2004) (reducing the award from $5 billion to $4.5 billion following an

additional remand for reconsideration in light of State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003)). 

4

In re Exxon Valdez (Exxon II), 270 F.3d 1215, 1226, 1233-36 (9th Cir.

2001) (upholding punitive damages award).

5See id. at 1243, 1246-47 (remanding for reduction of the punitive damages award); In re Exxon Valdez (Exxon IV), 472 F.3d 600, 602, 623-25

(9th Cir. 2006) (per curiam) (reducing the punitive damages award to $2.5

billion). 

6Exxon Shipping Co. v. Baker, 128 S. Ct. 2605, 2633-34 (2008) (holding that the “maximum” punitive damages award was $507.5 million). 

7

Judgment, Exxon Shipping Co. v. Baker, No. 07-219 (Aug. 12, 2008).

8Exxon Shipping, 128 S. Ct. at 2616. 

9

Id. (“[I]t should go without saying that the disposition here is not precedential on the derivative liability question.”). An evenly divided decision does not expressly or impliedly approve of the lower court’s

reasoning, and does not require other circuits to follow it. Neil v. Biggers,

409 U.S. 188, 192 (1972) (quoting Durant v. Essex Co., 74 U.S. (7 Wall.)

107, 112 (1869)). 

7090 IN RE THE EXXON VALDEZ
The liability determination, which squeaked by in the

Supreme Court, was merely a stepping stone on the way to the

destination. The destination was money. On the money, it

turned out that we were way off. The Supreme Court held that

our decision, which reduced the award to $2.5 billion, was

still $2 billion too high and 5 times more than could properly

be awarded.10 The Court concluded that the “upper limit” on

the ratio of punitive damages to actual damages was 1 to 1.11

Exxon thus obtained at least a 90% reduction in the punitive

damages it owed.12 After the Supreme Court handed down its

decision, Exxon and the plaintiffs agreed to a punitive damages award of $507.5 million. We accepted this partial settlement, so the amount of punitive damages is established at that

amount.

The majority is correct that Exxon fought a “relentless . . .

battle” until the Supreme Court vacated the award for being

far too high, but draws the wrong inference from the duration

and intensity of that fight. Exxon was not obligated to accept

our decision. Litigants have the right to appeal and petition

for certiorari when in good faith they think a lower court has

erred.13 Exxon appealed and fought. The Supreme Court

determined that Exxon was largely correct, more right than

we were. The law requires Exxon to be compensated in part

for that battle, not punished for it, because it turned out that

Exxon was largely entitled to prevail, despite our opinions to

the contrary. Humility requires us to accept that.

Federal Rule of Appellate Procedure 39 governs the award

of costs on appeal. Under the rule, how well or how poorly

10Exxon Shipping, 128 S. Ct. at 2634. 

11See id. at 2633-34. 

12“[W]e take for granted the District Court’s calculation of the total relevant compensatory damages at $507.5 million. A punitive-tocompensatory ratio of 1:1 thus yields maximum punitive damages in that

amount.” Id. at 2634 (citation omitted). 

13See Fed. R. App. P. 3; Sup. Ct. R. 10. 

IN RE THE EXXON VALDEZ 7091
a party does on appeal determines whether that party may collect any money from its opponent to cover the costs of the

appeal.14 It implements “the principle . . . that all cost items

expended in the prosecution of the proceeding should be

borne by the unsuccessful party.”

15 This ancient principle was

set out in the Statute of Gloucester in 1275.16 It has been modified only in the details since its establishment. Neither the

principle, nor our rule, use “costs” to mean what something

actually cost. “Costs” means the certain listed expenditures a

party has incurred for which it may seek reimbursement from

the opposing party.17 Exxon is not entitled to seek reimbursement under Rule 39 of the fortune it undoubtedly spent on

attorneys’ fees.18 Allowable costs under Rule 39, for preparation and transmission of the record, for the reporter’s transcript, and for filing a notice of appeal ($455), are relatively

small.19 But the one remaining element of allowable costs,

14Fed. R. App. P. 39(a). 

15Fed. R. App. P. 39 advisory committee’s note; see United States v.

Imperial Irrigation Dist., 595 F.2d 525, 532 (9th Cir. 1979) (explaining

that “parties should be allowed costs [under Rule 39] in the case in which

they prevailed”); see also Am. Auto. Mfrs. Ass’n v. Comm’r, Mass. Dep’t

of Envtl. Prot., 31 F.3d 18, 28 (1st Cir. 1994) (noting that “[p]revailing

parties are normally entitled to costs” under Rule 39); Studiengesellschaft

Kohle mBH v. Eastman Kodak Co., 713 F.2d 128, 131-32 (5th Cir. 1983)

(same); In re Penn Cent. Transp. Co., 630 F.2d 183, 189 (3d Cir. 1980)

(same); Delta Air Lines, Inc. v. Civil Aeronautics Bd., 505 F.2d 386, 387

-88 (D.C. Cir. 1974) (same). 

16Arthur L. Goodhart, Costs, 38 Yale L.J. 849, 852-53 (1929); Imperial

Irrigation Dist., 595 F.2d at 532 (“It has long been recognized that prevailing parties may be awarded costs on appeal . . . .”); Waterman S.S.

Corp. v. Gay Cottons, 419 F.2d 372, 373 (9th Cir. 1969) (applying Rule

39 to civil actions in admiralty). 

17See Johnson v. Pac. Lighting Land Co., 878 F.2d 297, 298 (9th Cir.

1989); 10 Charles Alan Wright et al., Federal Practice and Procedure

§ 2666 (3d ed. 1998 & Supp. 2009) (discussing costs under the analogous

Federal Rule of Civil Procedure 54). 

18See Fed. R. App. P. 39(e); Johnson, 878 F.2d at 298 (holding that

allowable costs are limited to the items authorized in Rule 39). 

19Fed. R. App. P. 39(e)(1), (2), (4); U.S. Court of Appeals for the Ninth

Circuit, Updated Fee Schedule Effective April 9, 2006, http://www.ca9.

uscourts.gov/datastore/general/2009/03/25/FeeSchedule0306.pdf. 

7092 IN RE THE EXXON VALDEZ
“premiums paid for a supersedeas bond or other bond to preserve rights pending appeal,” can be, and was in this case, huge.20

If this appeal were, as the majority suggests in justifying

the denial of costs, primarily for the principle of the thing,

Exxon need not have posted a supersedeas bond. Exxon could

have pursued its appeal for no more than a few thousand dollars in record preparation expenses and filing fees, plus unrecoverable attorneys’ fees.21 But had Exxon appealed without

posting a supersedeas bond, Exxon would have had to pay the

plaintiffs all of the original judgment ($5 billion) in 1996,

including the $4.5 billion that the Supreme Court held it did

not owe. Given the practical difficulties of trying to get the

money back over a decade later, at best the appeal would have

generated a very expensive piece of paper saying that Exxon

had overpaid by $4.5 billion.

To hold onto the money until the courts determined

whether the $5 billion judgment was correct, Exxon had to

secure payment of the judgment, guaranteeing that the money

would be there for the plaintiffs if Exxon lost. Under Federal

Rule of Civil Procedure 62(d), an appellant can stay execution

of a money judgment by posting a supersedeas bond approved

by the district court. Exxon obtained such a stay by posting

a bond that secured the entire $5 billion judgment, plus interest.22

Had Exxon not posted a supersedeas bond, the plaintiffs

would have been entitled to take Exxon’s money, all $5 billion of the punitive damages award plus interest, 10 days after

the district court entered judgment in the plaintiffs’ favor.23

20Fed. R. App. P. 39(e)(3). 

21Fed. R. App. P. 3, 4; see also Fed. R. Civ. P. 62(a), (d). 

22The supersedeas bond was amended each time the amount of the judgment changed. See Order Continuing Stay of Execution of Money Judgment, In re Exxon Valdez, No. A89-095 CIV (HRH) (D. Alaska Feb. 3,

2009) (Document No. 8969). 

23Fed. R. Civ. P. 62(a); United States v. $2,490.00 in U.S. Currency,

825 F.2d 1419, 1420-21 (9th Cir. 1987). 

IN RE THE EXXON VALDEZ 7093
The plaintiffs would then have been free to spend the money

in the 13 intervening years as the appeals and remands

dragged on.

The rationale for a supersedeas bond is that there can be no

certainty about who is in the right until the appeals are done;

the party that lost should not have to pay the winner until the

district court’s decision is finally affirmed, but in the meantime, the party that won in district court should not be at risk

of the money disappearing.24 To protect the winner from the

risk that the loser will not have money if and when the judgment is affirmed, the bond is ordinarily secured by property

or by surety. The surety, such as a bank or insurance company, obligates itself to pay the judgment creditor. In this

case, the $5 billion judgment was secured by several banks

(the judgment was apparently too big for one bank). The

banks authorized an irrevocable25 letter of credit,26 which

authorized the clerk of court to request payment of the judgment for the benefit of plaintiffs. To pay out the billions of

dollars to the plaintiffs, all the clerk needed to do was sign a

form saying “pay as directed in the attached order of the District Court,” like endorsing a traveler’s check or cashier’s

check. 

2411 Charles Alan Wright et al., Federal Practice and Procedure § 2905

(2d ed. 1995 & Supp. 2009); see, e.g., Celotex Corp. v. Edwards, 514 U.S.

300, 301-02 (1995); Lunn v. F.W. Woodworth Co., 210 F.2d 159, 159-60

(9th Cir. 1954). 

25I.e., the banks cannot withdraw from the undertaking. 

26Warner Bros. Int’l TV. Distrib. v. Golden Channels & Co., 522 F.3d

1060, 1062-63 (9th Cir. 2008) (“A letter of credit creates ‘an absolute,

independent obligation and payment must be made upon presentation of

the proper documents regardless of any dispute between the buyer and

seller concerning their agreement.’ Like a Travelers Check (which is a letter of credit), it enables international business to be done safely and

securely because the vendor need only rely on the financial strength of the

issuing bank, and not on the financial strength and willingness to pay of

the vendee.” (internal citations omitted)). 

7094 IN RE THE EXXON VALDEZ
Sureties do not commit their credit for free. To hold onto

the $5 billion until the appeals finished, Exxon had to pay the

banks $60.6 million. Exxon paid 90% percent of this money,

about $54.5 million dollars, for the right to hold onto the $4.5

billion plus interest that the Supreme Court concluded Exxon

did not owe. Only 10% percent, about $6.1 million, bought

the right to delay paying money that Exxon turned out to owe

the plaintiffs. In other words, Exxon had to spend about $6

million to secure money it did owe, and over $50 million to

shield money it did not owe, while it pursued its appeals.

The Supreme Court awarded costs in favor of Exxon

against the plaintiffs, even though it rendered a split decision

that left the plaintiffs with up to 10% of their victory.27 The

majority does not follow the Supreme Court’s determination.

Instead, the majority pretends that Exxon did not win, punishes it for fighting so long and hard, and denies Exxon any

costs at all. Because Exxon won 90% percent of its case and

paid 90% of the $60.6 million to hold onto money it ultimately did not owe, Exxon ought to recover 90% of its allowable supersedeas bond costs. The $60.6 million was the price

of Exxon’s train ticket to victory. The rules, in place with little change for many centuries, say that a party that wins on

appeal is entitled to have the loser reimburse the price of that

train ticket.28

Had Exxon won the case entirely, we would still have had

discretion to deny costs, because Rule 39 says “unless . . . the

court orders otherwise.”

29 The strong presumption in favor of

awarding costs to the prevailing party would have made such

an exercise of discretion unlikely.30 When a court has discre27Judgment, Exxon Shipping Co. v. Baker, No. 07-219 (Aug. 12, 2008).

The Court stated that the “maximum punitive damages award” was $507.5

million. Exxon Shipping, 128 S. Ct. 2605, 2615-16, 2634 (2008).

28Fed. R. App. P. 39(a), (e) & advisory committee’s note; cf. Fed. R.

Civ. P. 54(d). 

29Fed. R. App. P. 39. 

30See United States v. Imperial Irrigation Dist., 595 F.2d 525, 530 (9th

Cir. 1979); Fed. R. App. P. 39 advisory committee’s note (explaining that

IN RE THE EXXON VALDEZ 7095
tion, ordinarily the question is whether the court has abused

its discretion. Not infrequently this court reverse district

courts for abusing their discretion. Likewise, we ourselves

must not abuse our discretion. We do so here, unfortunately,

by denying all costs whatsoever.

What persuades me that we are abusing our discretion is the

Supreme Court’s exercise of its discretion in this case. The

Supreme Court awarded costs entirely in favor of Exxon, even

though it left our liability decision standing on a tie vote and

allowed for a half billion punitive damages award in favor of

the plaintiffs on remand.31 Just as the Supreme Court’s decision binds us, its exercise of discretion should guide us. The

Supreme Court concluded that Exxon prevailed to so great a

degree as to deserve costs. As a lower court implementing the

Supreme Court’s decision on remand, we abuse our discretion

by pretending otherwise. 

The majority evades this obligation by arguing that there is

a substantive, and not merely verbal, difference between the

Supreme Court rule on costs and ours. There is not. The

Supreme Court’s rule says “[i]f the Court reverses or vacates

a judgment, the respondent or appellee shall pay costs unless

the Court otherwise orders.”

32 Our rule says that “if a judgment is affirmed in part, reversed in part, modified, or

vacated, costs are taxed only as the court orders.”

33 From the

tone of the language, one might (the majority does not) tease

out a theory that the Supreme Court rule connotes a somewhat

more favorable inclination toward costs than our rule, but

Rule 39 implements the “principle” that costs “should be borne by the

unsuccessful party”); 16AA Charles Alan Wright et al., Federal Practice

and Procedure § 3985 (4th ed. 2008 & Supp. 2009); cf. Fed. R. Civ. P.

54(d)(1); 10 Wright et al., supra note 17, § 2668. 

31Judgment, Exxon Shipping Co. v. Baker, No. 07-219 (Aug. 12, 2008).

32Sup. Ct. R. 43(2) (emphasis added). 

33Fed. R. App. P. 39(a)(4) (emphasis added). 

7096 IN RE THE EXXON VALDEZ
such an inference would be too gossamer, and any attendant

presumption too weak, in the face of plainly discretionary language for both courts. 

For both our rule and the Supreme Court’s rule, the words

are discretionary, “unless the Court otherwise orders” in the

Supreme Court,34 “only as the court orders” here.35 In substance the rules are the same, leaving costs to the court’s discretion. They do so against the background of our legal

system, which has, for the better part of a millennium,36

awarded costs to prevailing plaintiffs, and for about half a

millennium to whichever party prevailed.37 As for who the

prevailing party is, we have in all our decisions been much

closer to plaintiffs’ view of the case, but the Supreme Court

disagreed and is, after all, supreme. 

The Second Circuit addressed the similarity of the costs

rules in its scholarly opinion, Furman v. Cirrito.

38 In that case,

as here, the Supreme Court had reversed the court of appeals.

On remand, the party that won costs in the Supreme Court

under its Rule 4339 sought them in the court of appeals under

34Sup. Ct. R. 43(2). 

35Fed. R. App. P. 39(a)(4). 

36See Goodhart, supra note 16, at 852-60. 

37See Fed. R. App. P. 39 advisory committee’s note; Buckhannon Bd.

& Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S.

598, 606 n.8 (2001) (noting that “by the long established practice and universally recognized rule of the common law . . . the prevailing party is

entitled to recover a judgment for costs” (quoting Mansfield, Coldwater &

Lake Mich. Ry. Co. v. Swan, 111 U.S. 379, 387 (1884) (alteration omitted)); Goodhart, supra note 16, at 851-54; Philip M. Payne, Costs in Common Law Actions in the Federal Courts, 21 Va. L. Rev. 397, 403 (1935);

cf. Fed. R. Civ. P. 54(d)(1) (“Unless . . . a court order provides otherwise,

costs — other than attorney’s fees — should be allowed to the prevailing

party.”). 

38782 F.2d 353 (2d Cir. 1986). 

39Sup. Ct. R. 43(2). 

IN RE THE EXXON VALDEZ 7097
Rule 39.40 Furman holds that despite the slight verbal differences, “[t]he language of the district, circuit, and Supreme

Court rules that confer discretion to award costs is almost

identical,” so a Supreme Court reversal and award of costs

“entitles” the victor there to costs in the court of appeals.41

The Second Circuit explained that just as a district court on

remand must follow a circuit court’s decision when taxing

costs, a circuit court’s award of costs should be consistent

with the Supreme Court’s decision.42 Since the Supreme Court

reversed the Second Circuit and awarded costs under its rule

to the appellants, Furman held that proper deference to the

Supreme Court’s decision meant the appellants should also be

considered prevailing parties for the purposes of Rule 39,

entitling them to appellate costs.43 Because neither our rule,

nor the factual circumstances before us, differ materially from

those before the Supreme Court, our decision on costs should,

like Furman, be consistent with the Supreme Court’s decision. The Supreme Court awarded costs in favor of Exxon,

and we abuse our discretion by defying its judgment.

The only distinction that could arguably be drawn between

Furman and our case is that Furman was not a decision that

left each side with something. But both our cases and those

of our sister circuits have addressed what is to be done in that

circumstance as well. Costs go to the “prevailing party.”

44 Our

40Fed. R. App. P. 39. 

41Furman, 762 F.2d at 355-56. 

42Id.

43Id.

44See United States v. Imperial Irrigation Dist., 595 F.2d 525, 530 (9th

Cir. 1979); see also Am. Auto. Mfrs. Ass’n v. Comm’r, Mass. Dep’t of

Envtl. Prot., 31 F.3d 18, 28 (1st Cir. 1994) (noting that “[p]revailing parties are normally entitled to costs” under Rule 39); Studiengesellschaft

Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 131-32 (5th Cir. 1983)

(same); In re Penn Cent. Transp. Co., 630 F.2d 183, 189 (3d Cir. 1980)

(same); Delta Air Lines, Inc. v. Civil Aeronautics Bd., 505 F.2d 386, 387

-88 (D.C. Cir. 1974) (same). 

7098 IN RE THE EXXON VALDEZ
case law holds that a party “need not prevail on every issue,

or even on the ‘central issue’ in the case, to be considered the

prevailing party.”

45 A party “prevails” when it wins substantial relief; the amount of the cost award is determined by

looking at the extent of the party’s success.46 As far as awards

of appellate costs go, we have awarded costs to the party that

“substantially and primarily prevailed on appeal.”

47

Likewise, the Seventh and Eighth Circuits both treat a

defendant’s success in substantially reducing the size of the

damages award as meriting costs for amounts paid to obtain

supersedeas bonds. The Eighth Circuit held in Emmenegger v.

Bull Moose Tube Co.48 that when the defendants succeeded in

knocking several million dollars off the plaintiffs’ recovery,

the defendants were properly awarded costs for the premiums

on a supersedeas bond they paid to shield the money while

they appealed.49 The costs defendants got in Emmenegger

45Hashimoto v. Dalton, 118 F.3d 671, 677 (9th Cir. 1997) (emphasis

added and citation omitted); Stivers v. Pierce, 71 F.3d 732, 751 (9th Cir.

1995) (“If the plaintiff is only partially successful in seeking the relief, and

achieves only some of the benefit sought by the litigation, he is still considered the prevailing party.”); see A&M Records, Inc. v. Napster, Inc.,

239 F.3d 1004, 1029 (9th Cir. 2001) (awarding costs to party that “substantially and primarily prevailed on appeal”); 10 Wright et al., supra note

17, § 2667 (discussing analogous Federal Rule of Civil Procedure 54). 

46See Hensley v. Eckerhart, 461 U.S. 424, 440 (1983); see also Aguirre

v. L.A. Unified Sch. Dist., 461 F.3d 1114, 1121 (9th Cir. 2006) (remanding

for apportionment of fees in accord with party’s “degree of success”); cf.

Comedy Club, Inc. v. Improv W. Assocs., 553 F.3d 1277, 1294 n.18 (9th

Cir. 2009) (awarding costs only on the issues on which the party prevailed

pursuant to an arbitration agreement which provided for the award of costs

to the “prevailing party”); Cancellier v. Federated Dep’t Stores, 672 F.2d

1312, 1320 (9th Cir. 1982) (awarding attorneys’ fees on appeal to reflect

party’s partial success on appeal), abrogated on other grounds, Gilchrist

v. Jim Slemons Imps., Inc., 803 F.3d 1488, 1494 (9th Cir. 1986). 

47A&M Records, 239 F.3d at 1029; see also Mills ex rel. Mills v. Freeman, 118 F.3d 727, 734-35 (11th Cir. 1997) (citing Furman with

approval). 

48324 F.3d 616 (8th Cir. 2003). 

49Id. at 626-27. 

IN RE THE EXXON VALDEZ 7099
were for the portion of the supersedeas bond securing the portion of the judgment the defendants got erased, not the whole

thing.50 We should exercise our discretion consistently with

the Eighth Circuit’s approach.

The Seventh Circuit in Republic Tobacco Co. v. North

Atlantic Trading Co.51 likewise upheld an award of costs for

supersedeas bond expenses in a partial defense victory. Even

though the plaintiffs wound up with $3 million out of a $18.6

million jury verdict (retaining a larger percentage of the original award than the plaintiffs in this case), the Seventh Circuit

held that it was a proper exercise of discretion to tax the full

costs incurred for the supersedeas bond.52 The Seventh Circuit

suggested a better exercise of discretion would be the Eighth

Circuit’s approach, awarding as costs the amount spent to

secure the portion of the judgment vacated on appeal.53

The majority argues for disregarding the Seventh and

Eighth Circuit cases because they speak to exercises of discretion by district courts, instead of exercises by appellate courts.

But the discretionary authority of district courts, circuit

courts, and the Supreme Court to award costs is conferred by

rules that, as Furman holds, are in substance the same at all

three levels.54 We, like district courts and the Supreme Court,

have a duty to exercise our discretion fairly and not abuse it.

These precedents explain how that discretion may be properly

exercised with regard to supersedeas bond costs and split

decisions on appeal.

The D.C. Circuit exercised its own discretion, and did not

merely analyze a district court’s exercise of discretion, in A

50Id.

51481 F.3d 442 (7th Cir. 2007). 

52Id. at 448-49. 

53Id.

54782 F.2d at 355; see Fed. R. Civ. P. 54(d); Fed. R. App. 39; Sup. Ct.

R. 43. 

7100 IN RE THE EXXON VALDEZ
Quaker Action Group v. Andrus,

55 a case that had gone up five

times on appeal and resulted in a partial victory for each side.56

Though neither party prevailed entirely, the D.C. Circuit

made cost awards under Rule 39 in favor of the “predominately prevailing party.”

57 Quaker Action held that the plaintiffs should recover 30% of their costs for the fifth appeal and

75% of their costs for the fourth appeal.58

Like the Seventh and Eighth Circuits, the D.C. Circuit

awarded partial costs to the partial victor. Since the D.C. Circuit exercised its own discretion to award appellate costs in a

split decision, the majority is simply cavilling when it suggests that the Seventh and Eighth Circuit decisions only speak

to how circuit courts should review exercises of discretion.

The majority would disregard Quaker Action Group because

it is a “thirty-year-old out-of-circuit case.”

59 Indeed it is. But

our legal system has no sunset provision for precedents.60 We

use decades-old and centuries-old precedents to achieve consistency over time. 

The majority rejects the “mathematical” approach to supersedeas bond costs as a “thicket,” and says that awarding a partial victor the percentage of its supersedeas bond costs equal

to the percentage of its victory would generate “wasteful litigation.”61 The D.C. and Eighth Circuits had no trouble with

arithmetic. Spending many thousands to litigate about $60.6

million is not “wasteful,” and taking 90% of a number is

fourth grade arithmetic. This percentage approach is no more

55559 F.2d 716 (1977) (per curiam). 

56Id. at 718 n.1, 719. 

57Id. at 719. 

58Id.

59Maj. op. 7088. 

60See Roe v. Wade, 410 U.S. 113 (1973); Marbury v. Madison, 5 U.S.

(1 Cranch) 137 (1803). 

61Maj. op. 7088. 

IN RE THE EXXON VALDEZ 7101
complicated than calculating a tip, not much of a “thicket.”

Those who find it challenging could always use a calculator.

All the majority cites to support its exercise of discretion

are cases in which we have not spoken to this issue at all.

Every case the majority cites62 is a split decision in which we

said, “[e]ach party shall bear its own costs on appeal.” Each

case says that without explanation and without any indication

that the costs were even disputed. None contain a holding

about the apportionment of supersedeas bond expenses. None

even mention Rule 39, let alone discuss when or how a court

should award appellate costs under it. There are, of course,

numerous split decisions in which we did the opposite and

awarded costs, rather than required each party to bear their

own.63

The problem is that majority uses these citations as decoration, as opposed to how citations are meant to be used, to

assure that like cases are treated alike. We look to precedent

because fairness requires that like cases be treated alike,

instead of being treated differently according to how the

62Mendez v. County of San Bernardino, 540 F.3d 1109, 1133 (9th Cir.

2008); Planned Parenthood of Columbia/Willamette, Inc. v. Am. Coal. of

Life Activists, 422 F.3d 949, 967 (9th Cir. 2005); Bains LLC v. Arco

Prods. Co., 405 F.3d 764, 777 (9th Cir. 2005). 

63See, e.g., McCoy v. Chase Manhattan Bank, USA, 559 F.3d 963, 972

(9th Cir. 2009); Nigg v. U.S. Postal Serv., 555 F.3d 781, 790 (9th Cir.

2009); Merrifield v. Lockyer, 547 F.3d 978, 992 (9th Cir. 2008); AmerisourceBergen Corp. v. Roden, 495 F.3d 1143, 1154 (9th Cir. 2007);

Swartz v. KPMG LLP, 476 F.3d 756, 767 (9th Cir. 2007); Alperin v. Vatican Bank, 410 F.3d 532, 563 (9th Cir. 2005); Smith v. Pac. Props. & Dev.

Corp., 358 F.3d 1097, 1107 (9th Cir. 2004); Theofel v. Farey-Jones, 359

F.3d 1066, 1079 (9th Cir. 2004); Carpinteria Valley Farms, Ltd. v. County

of Santa Barbara, 344 F.3d 822, 832 (9th Cir. 2003); Freeman v. San

Diego Ass’n of Realtors, 322 F.3d 1133, 1157 (9th Cir. 2003); Lyons v.

England, 307 F.3d 1092, 1119 (9th Cir. 2002); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1029 (9th Cir. 2001); Saridakis v. United Airlines, 166 F.3d 1272, 1279 (9th Cir. 1999); San Pedro Hotel Co. v. City

of L.A., 159 F.3d 470, 479 (9th Cir. 1998). 

7102 IN RE THE EXXON VALDEZ
judges feel. For guidance as to how costs should be awarded

in this instance, there is no more analogous precedent than the

Supreme Court’s award of costs in this very case. In the face

of the Supreme Court’s decision overturning us, the majority

chooses to not award costs, even though the United States

Supreme Court chose to award them, to Exxon.

The plaintiffs were victims of Exxon’s malfeasance. They

had to wait much too long for the punitive damages award.

That wait is why they are entitled to interest.64 But Exxon had

to pay for a supersedeas bond to secure $4.5 billion it did not

owe. That is why Exxon is entitled to recover that portion of

its costs under Rule 39.65 Whether we like it or not, Exxon got

us overturned, and saved 90% of what the jury thought it

should pay and 80% of what we thought it should pay by winning in the Supreme Court. The prevailing party has for many

centuries been entitled to its costs. As for who in large part

won the case in the Supreme Court, there cannot be serious

doubt. The champagne corks that popped after the Supreme

Court reversed us were doubtless on Exxon’s side, not the

plaintiffs. 

64See 28 U.S.C. § 1961 (1994 & Supp. II 1996). 

65Fed. R. App. P. 39(a)(4), (e). 

IN RE THE EXXON VALDEZ 7103