Fed. R. App. P. 7 and Costs on Appeal

A recent Eighth Circuit decision serves to clarify what expenses may qualify as “costs on appeal” under Fed. R. App. P. 7.

In In re: Target Corp. Customer Data Sec. Breach Litigation, a settlement was reached in a putative class action arising out of a data breach at Target Stores. Four objectors appealed from the district court order approving the settlement, and the district court ordered the objector-appellants to post a bond for $49,156, representing $2,284 in “direct” appeal costs, and $46,872 in administrative costs said to represent the “financial harm” the class would incur as result of the delay caused by the appeal. Counsel for one of the objector-appellants posted the bond.

In the Eighth Circuit, the objector-appellants argued that delay-related administrative costs could not be included in the bond, because no statute or rule would allow the appellees to recover those costs even if they prevailed. The appellees cited a number of unpublished opinions that held otherwise.

Reviewing de novo the legal question of what costs were allowable in the bond, and citing decisions from other circuits, the Eighth Circuit squarely held that “‘costs on appeal’ for Rule 7 purposes include only those costs that the prevailing appellate litigant can recover under a specific rule or statute applicable to the case at hand.” The appeal was remanded to district court, with instructions that the bond be reduced “to reflect only those costs the Appellees will recover should they succeed” on appeal.

While the issue of “administrative costs” will most likely arise in class-action appeals, the Eighth Circuit’s holding establishes a bright-line rule that is likely to reduce the bond required in many large cases. Accordingly, appellate counsel requesting a bond under Fed. R. App. P. 7 will want to limit their requests to an amount permitted under applicable statutes and rules.

In re: Target Corp. Customer Data Sec. Breach Litig., MDL No. 14-2522 (PAM/JJK) (D. Minn. Jan. 29, 2016), reversed, 847 F.3d 608 (8th Cir. 2017).

_{Josh Jacobson is with the Law Office of Josh Jacobson, P.A. in Minneapolis, Minnesota.}

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