August v. Delta Air Lines, Inc.

• Citation: 600 F.2d 699
• Decision Date: 06 July 1979
• Docket Number: No. 78-2312,78-2312
• Parties: 21 Fair Empl.Prac.Cas. 642, 20 Empl. Prac. Dec. P 30,072 Rosemary AUGUST, Plaintiff-Appellee, v. DELTA AIR LINES, INC., Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 699

600 F.2d 699

21 Fair Empl.Prac.Cas. 642,

20 Empl. Prac. Dec. P 30,072

Rosemary AUGUST, Plaintiff-Appellee, v. DELTA AIR LINES, INC., Defendant-Appellant.

No. 78-2312.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 20, 1979.

Decided July 6, 1979.

Carole K. Bellows, Susan Margaret Vance, Chicago, Ill., for defendant-appellant.

E. Allan Kovar, Chicago, Ill., for plaintiff-appellee.

Before SPRECHER, TONE and WOOD, Circuit Judges.

HARLINGTON WOOD, Jr., Circuit Judge.

The issue presented in this appeal is whether the awarding of costs under Rule 68 of the Federal Rules of Civil Procedure is mandatory or discretionary if the final judgment obtained by plaintiff is not more favorable than the defendant's offer. In January 1977 the plaintiff-appellee Rosemary August, after receipt of a right to sue letter from the Equal Employment Opportunity Commission, initiated an action against the defendant-appellant Delta Air Lines, Inc., alleging, Inter alia, that she was discharged from her position as flight attendant solely because she was black. The plaintiff sought reinstatement, back pay, benefits, other equitable relief, and attorneys' fees and costs pursuant to Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e Et seq.

On May 12, 1977, after discovery had commenced, the defendant made an offer of judgment to plaintiff in the amount of $450, including costs and attorneys' fees accrued to date, pursuant to Rule 68 of the Federal Rules of Civil Procedure. ¹ Plaintiff rejected the offer.

After an extended 25-day bench trial on the discrimination charge, the district court held that although the plaintiff had produced some evidence tending to show racial discrimination, she had failed to carry the burden of proving racial discrimination in accordance with International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977) and McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). ² Accordingly, the trial judge entered judgment in favor of the defendant and ordered each party to bear its own costs of litigation.

Pursuant to Rule 68 the defendant then filed a motion for costs incurred after the date of the Rule 68 offer. The motion was denied. ³ We affirm and add only a few comments in support of Judge Hoffman's holding. At the time the offer was timely tendered, the plaintiff's alleged actual damages from the loss of her employment for the preceding 19 months exceeded $20,000, not including attorneys' fees and costs. Plaintiff also anticipated possible reinstatement as a flight attendant. Although plaintiff did not succeed in her discrimination claim, it was not frivolous. Plaintiff presented some evidence suggesting racial bias. The trial judge found that plaintiff, although guilty of poor and unacceptable performance, rendered good service on occasion. Her file revealed a record of some company awards and compliments from co-workers and passengers.

Against that general background, the Rule 68 offer of judgment of less than $500 before trial is not of such significance in the context of this case to justify serious consideration by the plaintiff. At oral argument the defendant urged that even an offer of $10 would have met the requirements of Rule 68 and served the purpose of shifting cost liability. If that were so, a minimal Rule 68 offer made in bad faith could become a routine practice by defendants seeking cheap insurance against costs. The useful vitality of Rule 68 would be damaged. ⁴ Unrealistic use of the rule would not encourage settlements, avoid protracted litigation or relieve courts of vexatious litigation.

The defendant's arguments to the contrary that the allowance of costs is automatic and non-discretionary evidences that the issue is not free from doubt. The defendant points to the language of the rule where there is no specific requirement that the offer be "reasonable" or in "good faith." If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree "must" pay the costs incurred after the making of the offer. Fed.R.Civ.P. 68. The defendant contends that it is entitled to the benefit of the rule if the technical requisites of the rule have been observed.

The defendant claims that, unless Rule 68 is rigidly followed, the rule will overlap the trial judge's express discretion under Rule 54(d), which provides costs to the prevailing party unless the court directs otherwise. In spite of the force of these arguments, we are not persuaded.

Title VII embodies a basic national policy given a high priority by Congress and contains an authorization for the award of attorney's fees intended to encourage aggrieved individuals to seek redress for violations of their civil rights. Christianburg Garment Co. v. Equal Employment Opportunity Commission, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1977); Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 88 S.Ct. 964, 19 L.Ed.2d 1263 (1968). In considering the counsel fee provision under Title II of the Civil Rights Act of 1964, 42 U.S.C. § 2000a-3(b), similar to the present provision of Title VII, 42 U.S.C. § 2000e-5(K), the Supreme Court in Newman v. Piggie Park Enterprises, Inc., explained that the counsel fee provision was "to encourage individuals injured by racial discrimination to seek judicial relief." 390 U.S. at 402, 88 S.Ct. at 966. We do not propose to permit a technical interpretation of a procedural rule to chill the pursuit of that high objective.

The other cases which have considered this Rule 68 issue are limited. Defendant relies on Mr. Hanger, Inc. v. Cut Rate Plastic Hangers, Inc., 63 F.R.D. 607 (E.D.N.Y.1974), and Dual v. Cleland, 79 F.R.D. 696 (D.D.C.1978). In Mr. Hanger The plaintiff was unsuccessful in a patent infringement suit and was assessed with the defendant's defense costs. There the plaintiff argued that the Rule 68 offer was a "tactical sham," unreasonable and in bad faith. Although the court considered Rule 68 as mandatory, the district court nevertheless pointed out that the offer afforded the plaintiff substantially all the relief prayed for in the complaint and was not a sham.

In Dual the district court in a Title VII case ruled in favor of defendants after a trial on the merits. The court considered the application of Rule 54(d) which specifically provides for the exercise of discretion and Rule 68 which does not. Viewing the rule as automatic, the district court allowed costs to the defendant under Rule 68 but not under Rule 54(d). The issues of reasonableness and good faith apparently were not raised in Dual, although the court noted that the plaintiff, albeit unsuccessful, had a good faith claim.

The plaintiff argues that her position is supported by Perkins v. New Orleans Athletic Club, 429 F.Supp. 661 (E.D.La.1976), and Honea v. Crescent Ford Truck Sales, Inc., 394 F.Supp. 201 (E.D.La.1975), but that support is at best only inferential.

For the considerations stated above, we believe that a liberal, not a technical, reading of Rule 68 is justified, at least in a Title VII case. We need not decide whether this same approach should be taken in other kinds of cases. In a Title VII case the trial judge may exercise his discretion and allow costs under Rule 68 when,...