Lentomyynti Oy v. Medivac, Inc.

• Decision Date: 01 July 1993
• Docket Number: No. 10114F,N,No. 10114FF,Nos. 92-2150,10114F,10114FF,s. 92-2150
• Citation: 997 F.2d 364
• Parties: , 39 Fed. R. Evid. Serv. 187 LENTOMYYNTI OY, a Finnish Corporation, individually, Gan Incendie Accidents, Compagnie D'Assurances Maritimes, Aeriennes Et Terrestres S.A., Assurances Generales De France Iart, Per Westminster Aviation Insurance Group, and all other insurance companies signatory to CertificateC. Haydon, individually and as representative of all Underwriters at Lloyd's signatory to Certificate, as subrogee of Lentomyynti Oy, Plaintiffs-Appellants, v. MEDIVAC, INCORPORATED and Larry W. Whipple, Defendants-Appellees. & 93-1371.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 364

997 F.2d 364

26 Fed.R.Serv.3d 303, 39 Fed. R. Evid. Serv. 187

LENTOMYYNTI OY, a Finnish Corporation, individually, Gan

Incendie Accidents, Compagnie D'Assurances Maritimes,

Aeriennes Et Terrestres S.A., Assurances Generales De France

Iart, Per Westminster Aviation Insurance Group, and all

other insurance companies signatory to Certificate No.

10114FF, N.C. Haydon, individually and as representative of

all Underwriters at Lloyd's signatory to Certificate No.

10114FF, as subrogee of Lentomyynti Oy, Plaintiffs-Appellants, v. MEDIVAC, INCORPORATED and Larry W. Whipple, Defendants-Appellees.

Nos. 92-2150 & 93-1371.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 21, 1993.

Decided July 1, 1993.

John B. Austin (argued), Robert C. Von Ohlen, Jr., Kevin Murphy, Adler, Kaplan &amp Begy, Chicago, IL, Thomas J. Brunner, Jr., Paul J. Peralta, Baker & Daniels, South Bend, IN, for plaintiffs-appellants.

John S. Hoff, Brandt R. Madsen, Chicago, IL, for defendants-appellees.

Before COFFEY and KANNE, Circuit Judges, and HOLDERMAN, District Judge. ^*

KANNE, Circuit Judge.

This consolidated appeal challenges both the judgment on the merits and the post-judgment award of costs. Having concluded that we have jurisdiction over the appeal on the merits, we affirm the judgment of the district court entered in favor of the defendants. However, we remand the case for a new costs award.

I. Jurisdiction

The defendants contend that because the plaintiffs' appeal of the merits is untimely, we lack jurisdiction to hear it. ¹ We do not have jurisdiction to hear an appeal unless an appellant files a timely notice of appeal. Lac Du Flambeau Band of Lake Superior Chippewa Indians v. Wisconsin, 957 F.2d 515, 517 (7th Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 91, 121 L.Ed.2d 53 (1992); Varhol v. National R.R. Passenger Corp., 909 F.2d 1557, 1561 (7th Cir.1990). Federal Rule of Appellate Procedure 4(a)(4) states that a notice of appeal filed before the district court disposes of a Federal Rule of Civil Procedure 59(e) motion "shall have no effect." Therefore, if a valid Rule 59(e) motion was pending before the district court when this appeal was filed, we do not have jurisdiction over the plaintiffs' appeal. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 103 S.Ct. 400, 74 L.Ed.2d 225 (1982). According to the defendants, this is exactly the situation before us.

Judgment for the defendants, based on a jury verdict, was entered on April 16, 1992. ² On April 27, 1992, the defendants filed a "Motion to Amend Judgment." ³ In this document, the defendants moved the district court, pursuant to Rule 59(e), to alter the April 16th judgment to include, "in addition to those awarded under 54(d), any and all costs, expenses, and fees allowable under FRCP Rule 68." ⁴ This motion was still pending when the plaintiffs filed their notice of appeal to this court on May 14, 1992.

The events described require us to decide whether a post-judgment motion to recover Rule 68 costs is properly considered a Rule 59(e) motion. We start with the premise that merely titling a document a Rule 59(e) motion does not make it one. Lac Du Flambeau Indians, 957 F.2d at 517; Charles v. Daley, 799 F.2d 343 (7th Cir.1986). Genuine Rule 59(e) motions are used to request "reconsideration of matters properly encompassed in a decision on the merits." White v. New Hampshire Dept. of Employment Security, 455 U.S. 445, 451, 102 S.Ct. 1162, 1166, 71 L.Ed.2d 325 (1982). Thus, we must examine the request made in the document and decide whether its disposition would truly alter the merits of the judgment or whether it addresses a matter wholly collateral to the judgment on the merits.

While the Supreme Court has not decided whether a motion for Rule 68 costs is a valid Rule 59(e) motion, other cases by the Court provide significant guidance. In Buchanan v. Stanships, Inc., 485 U.S. 265, 108 S.Ct. 1130, 99 L.Ed.2d 289 (1988), judgment for the defendants was entered following a bench trial; the judgment made no mention of costs. The following day the plaintiffs filed a notice of appeal. Two days later, the defendants filed a document asking that the judgment be changed to reflect that the defendants were " 'entitled to recover taxable costs' ": the document was titled "Motion to Alter or Amend Judgment" and specifically referred to Rule 59(e). Id. at 266, 108 S.Ct. at 1130-31. The Court held that the motion was a Rule 54(d) motion for costs, not a Rule 59(e) motion, because "a request for costs raises issues wholly collateral to the judgment in the main cause of action, issues to which Rule 59(e) was not intended to apply." Id. at 268-69, 108 S.Ct. at 1132.

In White v. New Hampshire Department of Employment Security, the Court held that post-judgment motions for attorneys' fees were not proper Rule 59(e) motions because they raised an issue collateral to a decision on the merits of a case. 455 U.S. at 451, 102 S.Ct. at 1166. In a related case, the Court held that a decision was final under 28 U.S.C. § 1291 even though an unresolved issue of attorneys' fees remained. Budinich v. Becton Dickinson and Co., 486 U.S. 196, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). The Budinich court specifically noted that questions of attorneys' fees should not delay an appeal because they indisputedly are not part of the case's merits, but instead are the equivalent of costs "which are not generally treated as part of the merits judgment." Id. at 200, 108 S.Ct. at 1721.

Most recently, the Court reaffirmed and distinguished the foregoing cases in Osterneck v. Ernst & Whinney, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989). In Osterneck, the Court held that motions for prejudgment interest were proper Rule 59(e) motions because unlike "motions for costs, a motion for discretionary prejudgment interest does not 'rais[e] issues wholly collateral to the judgment in the main cause of action.' " Id. at 175, 109 S.Ct. at 991 (quoting Buchanan, 485 U.S. at 268, 108 S.Ct. at 1132). The Court explained that because district courts are required to examine matters involved in the underlying action in order to decide prejudgment interest, it is appropriate to characterize such motions as Rule 59(e) motions. Id., 489 U.S. at 176, 109 S.Ct. at 991.

In addition to Supreme Court precedent, our research reveals that two other circuit courts have addressed the precise issue before us, each reaching a different conclusion. In Munden v. Ultra-Alaska Associates, 849 F.2d 383, 385 (9th Cir.1988), the defendants filed a motion entitled "Motion to Amend Form of Judgment" in which they asked the court to apply Rule 68 and relieve them of the judgment order to pay the plaintiff's costs. Despite the fact that the defendants did not even mention Rule 59(e) in their original motion, the Ninth Circuit held that the document was a proper Rule 59(e) motion, and thus the plaintiff's notice of appeal was premature. Id. The court reasoned:

The district judge deliberated over a new issue raised by the motion (whether to include post-offer interest in determining if the offer of judgment exceeded [the plaintiff's] actual recovery). The defendant's motion sought substantive, not merely ministerial or clerical, relief.

Id. at 387. The court did not discuss any of the relevant Supreme Court cases.

In contrast, the Third Circuit held that a defendant's motion for costs under Rule 68 was not a proper Rule 59(e) motion. Fincher v. Keller Industries, Inc., 905 F.2d 691 (3rd Cir.1990). The Fincher court reviewed much of the Supreme Court precedent outlined above and concluded that a motion for Rule 68 costs was "wholly collateral to the judgment on the merits." Id. at 693. We find the Third Circuit's analysis more persuasive and more in line with recent Supreme Court precedent. ⁵

The defendants suggest a few ways to avoid the seemingly inevitable outcome under these cases. First, the defendants point out that Buchanan involved costs under Rule 54(d) and that their motion cannot be said to involve 54(d) costs because those had already been awarded in the original April 16th judgment. The defendants are correct as a matter of fact; however, this only explains why we are even discussing the issue instead of simply holding that we have jurisdiction and citing Buchanan. This "argument" does not speak to why motions for Rule 68 costs should be treated any differently from motions for Rule 54(d) costs. In addition, the Fincher court specifically rejected this attempt to distinguish Buchanan. 905 F.2d at 693.

Second, the defendants direct us to Charles, which they claim stands for two propositions: (1) a motion to clarify judgment may qualify as a proper Rule 59(e) motion; and (2) all substantive motions filed within 10 days of judgment are presumed to be Rule 59(e) motions. 799 F.2d at 347. Again, the defendants' assertions are essentially correct, though not particularly helpful to their position. In Charles, we concluded that the party's motion to clarify was "substantive" because it requested the court to alter the parties affected by the judgment. Id. Costs simply were not at issue in Charles. Citing Charles merely begs the question of whether we should treat Rule 68 costs motions as "substantive."

Ignoring the clear distinction between the instant case and Charles, the defendants appear to argue that their motion for Rule 68 costs is "substantive" for two reasons: its disposition requires consideration of substantive matters, such as the reasonableness of their settlement offers, and its disposition could have a significant effect because a substantial amount of money is at stake. The defendants' latter argument is meritless. Whether a motion is "substantive" for Rule 59(e) purposes has nothing to do with whether it involves a "substantial" amount of money. Rather, we look to whether the motion is related to the merits of the case or a collateral matter. Buchanan, 485 U.S. at 268-69, 108 S.Ct. at 1132.

The...