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Note: In appealing an adverse judgment in favor of Dr. Gaus (Plaintiff) to the US Court of Appeals for the Second Circuit, Conair Corporation (Applicant) was required to post security. It posted a US$10,000,000 supersedeas bond and a US$18,500,000 standby LC. On having prevailed in its appeal, Applicant moved in the trial court to recover the costs of the bond and the LC. The United States District Court for the Southern District of New York, Maas, J., granted Applicant's motion. Plaintiff moved for reconsideration of the order as it related to the US$286,210.35 cost of the LC which was denied.

In granting the Applicant's motion, the court cited decisions of the Second Circuit that permitted recovery of the costs of a standby LC securing judgment pending appeal (Trans World Airlines, Inc. v. Hughes, 515 F.2d 173, 178 (2d Cir. 1975)) as clarified by Lerman v. Fynt Distrib. Co., 789 F.2d164, 166 (2d Cir. 1986) which ruled that the "Trans World Airlines decision was limited to circumstances where the letter of credit served the same purpose as a supersedeas bond, the arrangement was agreed to by the opposing party and approved by the Court, and the alternative arrangement cost less than a supersedeas bond would have cost."

In applying this standard, the court noted that "The actual $ 286,210.35 combined cost of the $ 18 million letter of credit ($220,599.35) and the $ 10 million supersedeas bond ($ 65,611) was substantially lower than the likely cost of a $ 28 million supersedeas bond. As such, Applicant is entitled to recover from Plaintiff the $220,599.35 in fees it spent on the $ 18.5million letter of credit."

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