Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_03-cv-05472/USCOURTS-caed-1_03-cv-05472-7/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 07:499 Agricultural Commodities Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

EXPORTADORA ACONCAGUA, CASE NO. CV-F-03-5472 LJO

LTDA,

 ORDER ON DEFENDANT’S MOTION 

TO MODIFY JUDGMENT (Doc 61)

vs.

HERITAGE PRODUCE SALES,

INC., 

Defendant.

 /

AND RELATED CROSS-ACTION.

___________________________________/

By notice filed on October 24, 2005, Defendant Heritage Produce Sales, seeks an order to modify

the judgment to grant defendant Heritage’s costs pursuant to Rule 68. Plaintiff Exportadora Aconcagua,

LTDA filed an opposition on November 3, 2005. Heritage filed a reply on November 29, 2005. The

matter came on regularly for hearing on December 2, 2005 in Department 6 of the above-entitled court.

Plaintiff Exportadora Aconcagua LTDA appeared by telephone by counsel Craig A. Stokes, Santos

Stokes LLP. Defendant Heritage Produce Sales, Inc. appeared by counsel Joseph Uremovic, Law

Offices of Joseph A. Uremovic.. Having considered the moving, opposition, and reply papers, as well

as the arguments of counsel and the Court’s file, the Court issues the following order.

FACTUAL AND PROCEDURAL BACKGROUND

On April 17, 2003, Plaintiff Exportadora Aconcauga (“Aconex”) filed its complaint alleging that

it shipped grapes to defendant Heritage from Chile in 2002 and that defendant failed to sell the grapes

in a timely fashion, sold them at prices substantially below market price and dumped them. The

complaint sought $146,450.99, and attorneys fees, costs and prejudgment interest.

Case 1:03-cv-05472-LJO Document 64 Filed 12/02/05 Page 1 of 4
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Heritage filed a cross complaint seeking the overpayment of advances and the value of a truck

owned by Heritage in Chile that was converted by Aconex. On June 9, 2004, Heritage made a Rule 68

offer of judgment to allow judgment to be entered in favor of plaintiff in the amount of $20,000. The

offer of judgment was not accepted.

The Court trial began on June 14, 2005 and ended on June 17, 2005. The Court issued Findings

of Fact and Conclusions of Law on June 29, 2005 in which the Court stated, as pertinent to this motion:

“The Plaintiff, Exportadora, has failed to meet its burden of proof

on either liability or damages. It is awarded nothing on its complaint.

“The Cross-Defendant, Heritage, has failed to meet its burden of

proof on damages. It is awarded nothing on its cross-complaint.

“The vast majority of the discovery, the motions and the pleadings

in this case involve BOTH the complaint and the cross-action. Since

neither side prevailed in their efforts at affirmative relief, each side is to

bear its own costs and attorney fees.” (Doc. 55, Findings of Fact and

Conclusions of Law, p. 10-11.)

Thus, the Court concluded that neither side should recover its fees or costs. Judgment was entered

accordingly on June 29, 2005.

Heritage submitted a Bill of Costs on July 11, 2005. The Bill of Costs was denied by minute

order on July 12, 2005, citing to the Findings of Fact and Conclusions of Law. (See Doc. 60, “MINUTE

ORDER: (TEXT ONLY) Bill of Costs is DENIED - See Doc. 55 Findings of Fact & Conclusions of

Law, page 11, lines 5-6.”) 

Heritage filed this motion on October 24, 2005.

ANALYSIS AND DISCUSSION

Defendant argues that it had made a timely Rule 68 offer of judgment. It argues that, thereafter,

it prevailed against plaintiff and as such, an award of its post offer costs is mandatory. 

Rule 68 is Inapplicable

Rule 68 states, in pertinent part:

“At any time more than 10 days before the trial begins, a party defending

against a claim may serve upon the adverse party an offer to allow

judgment to be taken against the defending party for the money or

property or to the effect specified in the 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. 

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Neither party addressed the following line of controlling case authority. The Supreme Court has

held that Rule 68 is inapplicable where plaintiff loses and judgment is entered against plaintiff. Delta

Air Lines, Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146, 1150 (1981). In Delta Air Lines, Inc.,

plaintiff sued defendant for employment discrimination. Defendant timely made a Rule 68 offer of

judgment, which plaintiff refused. Plaintiff later lost at trial and judgment was entered for each party

to bear its own costs. Id. at 348-349. Defendant moved to modify the judgment contending that under

Rule 68 the plaintiff should be required to pay defendant’s costs incurred after the offer of judgment had

been refused. For reasons unrelated to the instant case (i.e., whether the offer was made in good faith),

the district and appellate court found that the cost shifting provisions of Rule 68 did not apply. On

appeal to the Supreme Court, the Court stated that “the threshold question [is] whether Rule 68 has any

application to a case in which judgment is entered against the plaintiff-offeree and in favor of the

defendant-offeror.” Id. At 350. Construing the plain language of Rule 68, the Supreme Court held:

“In sum, if we limit our analysis to the text of the Rule itself, it is clear

that it applies only to offers made by the defendant and only to judgments

obtained by the plaintiff. It therefore is simply inapplicable to this case

because it was the defendant that obtained the judgment.” Delta Air

Lines, Inc., 450 U.S. at 352.

Thus, the Court held that Rule 68 is inapplicable to the situation where a judgment is entered against

plaintiff. Instead, the trial judge retains his discretion to award costs under Rule 54. Id. at 353 (rejecting

defendant’s argument to the contrary).

Similarly, in MRO Communications, Inc. v. American Tel. & Tel. Co., 197 F.3d 1276, 1280 (9th

Cir. 1999), cert. denied, 529 U.S. 1124, 120 S. Ct. 1995 (2000), the Ninth Circuit held, “Federal Rule

68 is inapplicable in a case in which the defendant obtains judgment. Where a defendant prevails after

making an offer of judgment, the trial judge retains his Rule 54(d) discretion,” citing Delta Air Lines,

Inc. v. August, 450 U.S. 346, 352, 101 S.Ct. 1146 (1981). Accordingly, where a defendant prevails after

making an offer of judgment, Rule 68 does not apply and the trial judge retains discretion under Rule

54(d) regarding costs.

Since Rule 68 does not apply to the situation because plaintiff did not prevail, the costs

considerations fall under Rule 54. Under Rule 54, this Court retained discretion to deny costs.

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4

Timeliness of the Motion

Plaintiff argues that the motion is untimely, an improper reconsideration or statutorily improper.

While these arguments may be worthy of consideration, the issues are moot in light of the inapplicability

of Rule 68 in the context of this case.

CONCLUSION

For the foregoing reasons, defendant Heritage Produce Sales’ motion to modify the judgment

is DENIED.

IT IS SO ORDERED.

Dated: December 2, 2005 /s/ Lawrence J. O'Neill 

b9ed48 UNITED STATES MAGISTRATE JUDGE

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