Ninth Circuit: Anticipated Attorney Fees on Appeal Can be Considered in Calculation of Appeal Cost Bond — Sometimes

In Azizian v. Wilkinson, case no. 05-15847 (August 23, 2007), the Ninth Circuit faced, for the first time,  an issue on which other circuits have split: “whether, or under what circumstances, appellate attorney’s fees are ‘costs on appeal’ that a district court may require an appellant to secure in a bond ordered under Federal Rule of Appellate Procedure 7.”  It provides its conclusion at the outset of the opinion:

We conclude that a district court may require an appellant to secure appellate attorney’s fees in a Rule 7 bond, but only if an applicable fee-shifting statute includes them in its definition of recoverable costs, and only if the appellee is eligible to recover such fees.

Appellant Wilkinson is a class member who objected to the class action settlement approved by the district court between the certified class of consumers and a number of retail stores accused of antitrust violations with respect to cosmetics.  She appealed from the order approving the settlement.

Plaintiffs sought a bond under FRAP 7 of nearly $13 million, which included a $600,000 component for twice the plaintiffs’ anticipated attorney fees on appeal.  FRAP 7 provides that the district court “may require an appellant to file a bond or provide other security in any form and amount necessary to ensure payment of costs on appeal.”

The district court ordered a bond of only $42,000, but it included a $40,000 appellate attorney fee component.  It reasoned that appellate attorney fees could be considered “costs” on appeal because: “(1) the fee-shifting provision in Section 4 of the Clayton Act, 15 U.S.C. § 15, defines attorney’s fees as among the costs recoverable, and (2) ‘the Court of Appeals [was] likely to find that the instant ppeal[ ] [was] frivolous.’”

Regarding the district court’s first justification, the court goes through a very detailed analysis of the cases from other circuits, then states that “[w]e agree with the Second, Sixth, and Eleventh Circuits and hold that the term ‘costs on appeal’ in Rule 7 includes all expenses defined as ‘costs’ by an applicable fee-shifting statute, including attorney’s fees.” The court gave four reasons for its holding:

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