Article

Note: In response to a motion by the U.S. Federal Trade Commission, an agency charged with monitoring trade practices, to hold telemarketing executives, H.G. Kuykendall, Sr. and C.H. Kuykendall (Defendants), in contempt for the violation of a permanent injunction against the continuation of deceptive and misleading business practices, Defendants were found in contempt and assessed damages of US$39,000,000. In order to appeal this ruling, Defendants were required to post security in the form of a US$5,000,000 standby LC in lieu of a supersedeas bond.

After succeeding in the appeal, Defendants moved for recovery of expenses pursuant to 28 U.S.C. §2412(b) including US$161,000 in fees for the standby LC. The U.S. District Court for the Western District of Oklahoma, Miles-LaGrange, J., awarded costs to Defendants (including the US$161,000 associated with the standby LC). On cross appeals, the U.S. Appeals Court for the 10th Circuit, Tocha, Chief C.J., reversed as to the award of costs.

Because the costs were to be awarded against the U.S. government, the court considered the extent to which it had waived its sovereign immunity under the Equal Access to Justice Access to Justice Act, 28 U.S.C. §1920, 2412. The court rejected Defendants' arguments that the statute should be interpreted to cover the use of a standby LC in lieu of supersedeas bond in order to fulfill the legislative intent of a putting the private party on equal footing with the U.S. government. Although it noted that the U.S. Court of Appeals for the 9th Circuit had ruled that the statute "authorizes any costs that could be assessed against an ordinary citizen", Commodity Futures Trading Comm'n v. Frankwell Bullion Ltd., 99 F.3d 299, 305 (9th Cir. 1996), and had assumed that LC costs could be assessed against the U.S. on a successful appeal, the 10th Circuit panel concluded that a waiver of immunity must "unequivocally expressed." It concluded that the "most natural reading" of the statute limited taxable costs to those included in the statute and not other costs.

[JEB/bain]

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