Otay Land Co. v. United Enterprises

Under 28 U.S.C. § 1919, when a case is dismissed for lack of jurisdiction, a court may award “just costs,” which are to be determined by an analysis of what is fair and equitable under the totality of the circumstances.

Otay Land Company and Flat Rock Company, LLC (collectively, “Otay”) filed a federal action against a number of shooting range owners and operators (collectively, “United Enterprises”), alleging that United Enterprises was responsible for the removal of pollutants on property purchased by Otay. The district court granted United Enterprises’ motions for summary judgment and awarded costs. Otay then filed an identical action in California state court. On appeal, the Ninth Circuit vacated the judgment and remanded, noting the case was not yet ripe and directing the district court to determine if costs were appropriate under 28 U.S.C. § 1919. The district court awarded costs to United Enterprises as “necessarily incurred in defending the action,” using 28 U.S.C. § 1920 as a guide. On the second appeal, the Court distinguished § 1919 from Federal Rule of Civil Procedure 54(d), which awards costs to the prevailing party, and found § 1919 is based on an 1875 congressional act intended to grant courts the power to award costs in suits that fail for lack of jurisdiction. Congress was silent as to the definition of “just costs,” but the Supreme Court later characterized the congressional act as balancing the objectives of deterring removals unnecessarily prolonging litigation with that of affording the general right to remove. The Court noted the “just costs” determination is wholly discretionary, but provided several factors to consider, including exigent circumstances, reasonableness of the jurisdictional claim, and parallel litigation in state court. The Court held the district court abused its discretion by using § 1920 to define “just costs” as necessary costs. Rather, it held proper determination of “just costs” under § 1919 focuses on a case-by-case analysis of what is fair and equitable under the circumstances. VACATED and REMANDED.