Crossman v. Marcoccio, 86-1058

Citation806 F.2d 329
Decision Date08 October 1986
Docket NumberNo. 86-1058,86-1058
Parties, 6 Fed.R.Serv.3d 721 Donna CROSSMAN, Et Al., Plaintiffs, Appellants, v. Michael MARCOCCIO, Et Al., Defendants, Appellees. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Roy D. Simon, Jr., Washington University, St. Louis, Mo., with whom Milton Stanzler, Jonathan L. Stanzler and Abedon, Michaelson, Stanzler & Biener, Providence, R.I., were on brief for plaintiffs, appellants.

Lynette Labinger, Roney & Labinger, Providence, R.I., E. Richard Larson and Burt Neuborne, American Civil Liberties Union Foundation, New York City, on brief for American Civil Liberties Union and The Rhode Island Affiliate of the ACLU, amici curiae.

Joseph F. Penza, Jr. with whom Olenn & Penza and Martin W. Aisenberg, Asst. City Sol., Providence, R.I., were on brief for defendants, appellees.

David Crump, Legal Foundation of America, Houston, Tex., Daniel B. Hales, Peterson, Ross, Schloerb & Seidel, Chicago, Ill., William C. Summers, International Ass'n of Chiefs of Police, Inc., Gaithersburg, Md., Jack E. Yelverton, National Dist. Attys. Ass'n, Inc., Fred E. Inbau, Northwestern University School of Law, Wayne W. Schmidt, Americans for Effective Law Enforcement, Inc., and James P. Manak, General Counsel, Americans for Effective Law Enforcement, Inc. and Executive Editor, National Dist. Attys. Ass'n, Inc., Chicago, Ill., on brief for Americans for Effective Law Enforcement, Inc., The International Ass'n of Chiefs of Police, Inc., The Legal Foundation of America and The National Dist. Attys. Ass'n, Inc., amici curiae.

Before COFFIN, BREYER and TORRUELLA, Circuit Judges.

COFFIN, Circuit Judge.

In this case we confront the novel question of whether prevailing civil rights plaintiffs must pay their opponents' costs and attorney's fees after refusing to accept a pretrial offer of judgment that exceeds the amount they ultimately recover at trial. The court below, relying upon Fed.R.Civ.P. 68 and Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), awarded defendants their taxable costs plus almost $11,000 in post-offer attorney's fees because plaintiffs ultimately recovered an amount less than defendants' offer of judgment. Crossman v. Marcoccio, 108 F.R.D. 433 (D.R.I.1985). We affirm the district court's award of taxable costs, but reverse that portion of its order pertaining to post-offer attorney's fees.

I. Factual Setting.

The facts of this case are not in dispute. On August 7, 1984, appellants Donna and Daryl Crossman initiated a civil rights action pursuant to 42 U.S.C. Sec. 1983 on behalf of themselves and their two minor children against five Providence police officers, the chief of police, and the Providence Police Department. 1 On August 29, 1984, the named defendants answered the complaint and, in accordance with Fed.R.Civ.P. 68, simultaneously filed with the court an offer of judgment in the amount of $26,000, inclusive of all costs, interest, and attorney's fees accrued to that date. The Crossmans opted to refuse the settlement offer and proceed to trial.

Although the Crossmans later entered a stipulation dismissing the claims against the department and the chief of police, the case against the five individual officers, appellees here, was tried before a jury in district court. Following the trial, the court entered judgment in favor of the Crossmans and against all five officers in the total amount of $5,010, nearly $21,000 less than defendants' offer of judgment. Before judgment was entered, therefore, the officers filed a bill of costs pursuant to 28 U.S.C. Sec. 1920 and Rule 68. This bill included a request for $880.50 of post-offer taxable costs and $10,902.50 of post-offer attorney's fees. The district court, reasoning that defendants' post-offer attorney's fees should be characterized as "costs" under Rule 68, awarded defendants the full amounts set forth in their bill of costs. Crossman, 108 F.R.D. at 437.

The decision below raises two distinct issues on appeal. First, does Rule 68 compel appellants to pay appellees' post-offer costs? Second, if the first question is answered affirmatively, are appellees' post-offer attorney's fees part of the Rule 68 "costs" that become appellants' responsibility? We address each issue in turn.

II. Cost Shifting.

Rule 68, entitled "Offer of Judgment," provides in relevant part:

At any time more than 10 days before the trial begins, a party defending a claim may serve upon the adverse party an offer to allow judgment to be taken against him for the money or property or to the effect specified in his offer, with costs then accrued.... 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 (emphasis supplied). This rule, designed to encourage the settlement of private disputes, has long been among the most enigmatic of the Federal Rules of Civil Procedure because it offers imprecise guidance regarding which post-offer costs become the responsibility of the plaintiff. Opinions differ sharply on the issue of whether Rule 68 compels plaintiffs to pay defendant's post-offer costs or simply operates to deny prevailing plaintiffs recovery of their own post-offer costs. Because Fed.R.Civ.P. 54(d) generally permits prevailing parties to recover their costs, 2 the question becomes whether Rule 68 reverses the operation of Rule 54(d), or merely cancels it. See Simon, The Riddle of Rule 68, 54 Geo.Wash.L.Rev. 1, 6 n. 18 (1985). This is an issue of first impression in this circuit. See Garrity v. Sununu, 752 F.2d 727, 731 (1st Cir.1984).

Appellants, relying solely on a footnote in Justice Stevens' opinion for the Court in Delta Air Lines, Inc. v. August, 450 U.S. 346, 359 n. 24, 101 S.Ct. 1146, 1153 n. 24, 67 L.Ed.2d 287 (1981), contend that Rule 68 cancels the operation of Rule 54(d) and relieves the defendant from paying plaintiff's post-offer costs. To support this position, however, Justice Stevens offers only the ambiguous commentary contained in the treatise by Professors Wright and Miller, Moore's Federal Practice, and a 1939 Virginia Law Review article. See Delta Air Lines, 450 U.S. at 359, 101 S.Ct. at 1153 n. 24. Even a cursory glance at these sources demonstrates that they are not dispositive of the issue. Indeed, others have interpreted these sources in an entirely different manner. See, e.g., Marek, 105 S.Ct. at 3023 & n. 14 (Brennan, J., dissenting); Delta Air Lines, 450 U.S. at 374 & n. 3, 101 S.Ct. at 1161 n. 3 (Rehnquist, J., dissenting).

Our own analysis of the language and purpose of Rule 68, which parallels the analysis performed by most courts and commentators, persuades us that appellants' position lacks merit. First, the language of Rule 68 provides that "the offeree must pay the costs incurred after the making of an offer." Fed.R.Civ.P. 68 (emphasis supplied). There is no language in the Rule limiting the scope of the term "costs" to "the offeree's own costs." Furthermore, the Rule stresses that the offeree must pay the costs incurred, thus suggesting an affirmative action. The drafters, had they meant to adopt the position urged by appellants, could easily have employed more passive language providing that the offeree "shall bear its own costs" or "shall not be entitled to recover costs under Rule 54(d)," but apparently they chose otherwise. As Justice Brennan has explained, appellants' interpretation of Rule 68 is not supported by the "plain language" of the Rule. Marek, 105 S.Ct. at 3023 (Brennan, J., dissenting) (emphasis in original).

The historical roots of Rule 68 also buttress our conclusion that appellants' interpretation of Rule 68 is incorrect. The original language of Rule 68 provided that a plaintiff who failed to obtain a judgment more favorable than the offer "shall not recover costs in the district court from the time of the offer but shall pay costs from that time." See Fed.R.Civ.P. 68, reprinted in 1 F.R.D. LXIII, CXXXIV (1941) (emphasis supplied). When the rule took its present form in 1946, the drafters did not indicate an intent to change the cost-shifting mechanism of the original rule. Instead, as one commentator has perceptively noted, "the change was made for other reasons." Simon, The Riddle of Rule 68, 54 Geo.Wash.L.Rev. 1, 6 n. 18 (1985) (citing advisory committee note accompanying the 1946 amendments to Rule 68). There is nothing in the genesis of Rule 68, therefore, to indicate that the language of the current rule should be interpreted in the limited fashion favored by appellants.

Furthermore, the purpose animating Rule 68 also counsels in favor of adopting the broader interpretation of the rule urged by appellees. It is undisputed that the underlying purpose of Rule 68 is to encourage settlement of disputes and avoid protracted litigation. Marek, 105 S.Ct. at 3015; Delta Air Lines, 450 U.S. at 352, 101 S.Ct. at 1150. As the Supreme Court recognized in Marek, moreover, the rule is intended to prompt both parties "to evaluate the risks and costs of litigation, and to balance them against the likelihood of success upon trial on the merits." Marek, 105 S.Ct. at 3015. If we were to interpret Rule 68 merely to deny plaintiffs their own post-offer costs, then there would be significantly less incentive for both sides to undertake a prudent assessment of the "risks and costs" of litigation. Reading Rule 68 to require the payment of defendants' post-offer costs by miscalculating plaintiffs enhances both defendants' incentive to extend Rule 68 offers of judgment and plaintiffs' incentive to accept such offers. As explained by the court in Staffend v. Lake Central Airlines, Inc., 47 F.R.D. 218 (N.D. Ohio 1969), "[t]he provision in the rule which imposes costs upon a party who refuses an Offer of Judgment and who later recovers no more than the offer ... puts teeth in the rule and makes it effective by encouraging...

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