So the history of this case, is that San Antonio loves their taxes. Online travel companies (OTCs) will help you book a hotel room, then charge you a small fee for arranging everything. San Antonio has a tax on occupancy fees, which basically means, that you have to pay a tax on the hotel’s fee if you stay in a hotel room.
However, San Antonio was also applying that tax to the OTCs fees. So the OTCs were like, “WTF, San Antonio?” Aren’t you part of Texas, the land of the free and lower taxes? Why you fucking us up the ass like this? Our fees are brokerage fees, not fees for them occupying a hotel room.”
So the OTCs sued, and won, and San Antonio was no longer taxing their fees.
In America, if you go to court, it’s generally assumed that you pay for your attorney, and I’ll pay for mine. Well, the OTCs were like, “We’re glad you sided in our favor and all, but we racked up millions of dollars in legal expenses fighting this shit, and we think you should have to pay that too.”
Within this framework is Federal Rule 39. As laid out by SCOTUSBLOG, it says:
Subsection (a) describes who should pay the costs, explaining in relevant part that “unless the law provides or the court orders otherwise … if a judgment is reversed, costs are taxed against the [losing party].” Subsection (e), in turn, provides that “[t]he following costs on appeal are taxable in the district court for the benefit of the party entitled to costs under this rule,” and then lists four types of costs that are available: costs of preparing the record, costs of preparing the transcript, the fee for filing the notice of appeal, and premiums associated with any bond pending appeal. Posting an appeal bond allows a defendant who loses in the district court to prevent the plaintiff from executing on the judgment while the appeal is pending.
The original costs and filing fees were $350k, and San Antonio agreed to pay that. But then, the OTCs dropped $2M in premiums on the appeals, and San Antonio was like, “Wait a fucking minute, we ain’t paying that.” Based on the rule above, even though the district court kinda saw San Antonio’s points as valid, as to why they shouldn’t be on the hook for that two million, they felt the rule dictated they had to award the OTCs. It does say “taxed against the losing party” after all.
These arguments are petty and procedural at best. San Antonio is arguing that “Hey, long ago, rule 39 had mandatory wording that said, “Shall be taxed” but now the wording is “taxable” which seems to indicate they meant to leave it up to the court’s discretion.
But the OTCs argue that this language merely means that the district court is where the tax should be applied.
In a unanimous decision, SCOTUS ruled in favor of Hotels.com. Let freedom fucking ring. Texas is on the hook for all these fees. Rule 39 allows appellate courts to determine the costs for appeals, and so they did. Which means that they were within their power to make Texas pay for the costs they determined were reasonable for Hotels.com to claim.
Hear oral arguments or read about the case here.