On January 20, 2022, the Tennessee Supreme Court issued an order in Milan Supply Chain Solutions Inc. v. Navistar Inc., No. W2018-0084, awarding Navistar over $1.3 million in disputed costs (in addition to $141,000 in unopposed costs) under Tennessee Rule of Appellate Procedure 40.
Navistar, which was represented in the case by Bulso PLC attorneys Gino Bulso and Paul Krog as well as attorneys from Latham & Watkins LLP, had sought approximately $1.5 million in recoverable appellate costs after prevailing in the Supreme Court’s merits decision on August 2, 2021. Tennessee Rule of Appellate Procedure 40 entitles prevailing parties on appeal to recover costs, which “include” expenses incurred preparing the record, obtaining copies of transcripts, duplicating briefs, clerk’s fees, and “the premiums paid for bonds to preserve rights pending appeal.”
The Appellate Court Clerk, who decides claims for costs in the first instance, awarded Navistar $141,283.44 in costs for various expenses, but denied $1.368 million in fees Navistar had needed to pay to obtain the letter of credit required to secure its appeal bond. As permitted by Rule 40, Navistar sought the Supreme Court’s review of the Clerk’s decision, arguing that the fees were recoverable under Rule 40’s terms, which provides a nonexhaustive, illustrative list, not a complete catalogue, of recoverable costs. As the fees were, like the bond premiums expressly mentioned, necessary to maintain the status quo pending appeal, they ought to have been recoverable under the Rule’s plain terms, Navistar argued.
The Supreme Court agreed. Deciding an issue of first impression, but following its own authority on statutory interpretation, the Court concluded that Rule 40 permitted recovery of the fees, because the word it employs, includes, is a “term of enlargement not of restriction.” Adopting an argument advanced in Navistar’s briefing, the Court found support for this conclusion in the advisory commission comments accompanying Rule 40: “This subdivision [Tenn. R. App. P. 40(c)] makes costs taxable based on the principle that all items of cost expended in the prosecution of a proceeding should be recoverable by the successful party.” The Court accordingly approved the award of the $1.368 million in additional appellate costs by Navistar.
The Supreme Court’s ruling on the costs issue represents the culmination of an appellate process that began in the fall of 2017 following the entry of a $31 million judgment against Navistar in the Circuit Court for Madison County. Following the appeal, that judgment was vacated in its entirety, and awards of costs and attorney’s fees collectively in excess of $2 million have been entered against the plaintiff and in favor of Navistar and its codefendant, Volunteer International Inc.