Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-07037/USCOURTS-caDC-98-07037-0/pdf.json

Parties Involved:
Continental Airlines Corporation, Inc.
Appellant
Winnie Tunison
Appellee

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 1998 Decided December 22, 1998

No. 98-7037

Winnie Tunison,

Appellee

v.

Continental Airlines Corporation, Inc.,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 96cv02554)

John Longstreth argued the cause for appellant. With him

on the briefs was William Gray Schaffer.

Sunil H. Mansukhani argued the cause for appellee. With

him on the brief was Douglas L. Parker.

Before: Silberman, Sentelle and Henderson, Circuit

Judges.

Opinion for the court filed by Circuit Judge Sentelle.

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Sentelle, Circuit Judge: Winnie Tunison, who is blind and

deaf, filed this action in the United States District Court for

the District of Columbia, alleging that Continental Airlines

("Continental"), by refusing to allow her to fly alone, violated

the Air Carrier Access Act, 49 U.S.C. s 41705 ("ACAA"), and

pursuant regulations. The jury found that Continental had

violated the Act, but awarded Tunison no damages. The

district court entered an empty judgment in Tunison's favor,

and awarded her costs. Continental appeals from the award

of costs, arguing that because Tunison received no relief, she

should not be considered a prevailing party for the purposes

of awarding costs under Fed. R. Civ. P. 54(d)(1), and that

because she refused a pretrial offer of judgment more favorable than her ultimate award, under Fed. R. Civ. P. 68,

Tunison should be required to pay Continental's post-offer

costs. We hold that because Tunison obtained no relief under

the judgment, and Continental was found to have violated the

Act, neither party should be considered a prevailing party

presumptively entitled to costs under Rule 54(d)(1). However, we agree with Continental that the offer of judgment

Tunison rejected was more favorable than the judgment she

ultimately obtained. Accordingly, we reverse the award of

costs to Tunison and remand the case to the district court for

an award of Continental's allowable post-offer costs.

I. Background

Winnie Tunison is a forty-two-year-old blind and deaf woman who is a wife, mother, college student and motivational

speaker. She is able to communicate by touching the hands

of a person performing sign language, or by having letters

traced in her palm. According to Tunison, she regularly

travels by air alone without difficulty.

In August 1996, Ms. Tunison scheduled air travel on Continental Airlines for a round trip between Washington, D.C.

and Providence, with a change of planes in Newark. The

initial leg, from D.C. to Newark, was uneventful. Tunison

received the safety instructions through letters traced on her

palm, and traveled unaccompanied. After changing planes in

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Newark with the assistance of a Continental employee, Tunison was again given the safety instructions, this time by a

Continental employee who knew sign language. Although

Ms. Tunison had understood the safety instructions, the pilot

and flight crew, after consulting Continental manuals, did not

feel comfortable allowing her to travel unaccompanied. The

flight was delayed while flight personnel came to Tunison's

seat on the plane and asked her to get off the plane and wait

until they could find someone to fly with her. When Tunison

refused, Continental found an off-duty flight attendant to

accompany her.

Ms. Tunison claims that she was humiliated and embarrassed by this episode, which took place in front of the other

passengers. She did not want to make the return flight if she

would be required to have an attendant. Accordingly, before

her return flight, her daughter spoke by telephone to a

Continental employee, who told her that Tunison would be

allowed to fly home alone. However, when Tunison arrived

at the airport, she was met by a Continental gate agent, who

accompanied her all the way back to Washington, D.C.

Ms. Tunison sued alleging that Continental's actions violated the Air Carrier Access Act, 49 U.S.C. s 41705,1 and

__________

1 The statute provides that:

In providing air transportation, an air carrier may not discriminate against an otherwise qualified individual on the following grounds:

(1) the individual has a physical or mental impairment that

substantially limits one or more major life activities.

(2) the individual has a record of such an impairment.

(3) the individual is regarded as having such an impairment.

49 U.S.C. s 41705 (1998).

This court has not previously addressed whether there is an

implied private right of action under the ACAA, and the issue is not

before us in this case. The court below "presumed" there was a

private right of action under the ACAA given holdings to that effect

in the 5th and 8th Circuits and Continental's failure to argue to the

contrary. See Shinault v. American Airlines, Inc., 936 F.2d 796,

pursuant regulations which limit the situations in which individuals may be required to have an attendant.2 She sought

compensatory damages for the emotional distress she suffered as a result of Continental's actions, as well as punitive

damages and injunctive relief requiring Continental to revise

its policies to comply with the ACAA.

Tunison's claims for punitive and injunctive relief were

dismissed by the district court at the summary judgment

stage. Her claim for compensatory damages proceeded to

trial. On August 13, 1997, Continental submitted an offer of

judgment for $1,000 pursuant to Fed. R. Civ. P. 68. Tunison

did not accept this offer. After trial, the jury returned a

special verdict finding that Continental had violated the

ACAA on each of the three flights on which it had required

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an attendant. However, the jury awarded Tunison no damages. The court entered judgment for Tunison, with no

damages.

Both Tunison and Continental filed Bills of Costs. The

district court concluded without discussion that Ms. Tunison

was the prevailing party for the purposes of Fed. R. Civ. P.

__________

800 (5th Cir. 1991); Tallarico v. Trans World Airlines, Inc., 881

F.2d 566, 570 (8th Cir. 1989).

2 The pertinent regulation, 14 C.F.R. s 382.35, reads in relevant

part as follows:

(a) Except as provided in this section, a carrier shall not

require that a qualified individual with a disability travel with

an attendant as a condition of being provided air transportation....

(b) A carrier may require that a qualified individual with a

disability meeting any of the following criteria travel with an

attendant as a condition of being provided air transportation, if

the carrier determines that an attendant is essential for safety:

* * *

(4) A person who has both severe hearing and severe vision

impairments, if the person cannot establish some means of

communication with carrier personnel, adequate to permit

transmission of the safety briefing required by 14 CFR

121.571(a)(3) and (a)(4) or 14 CFR 135.117(b).

54(d)(1), then considered the effect of the offer of judgment

under Fed. R. Civ. P. 68. The court reasoned that while the

$1,000 offer of judgment was more than the damages awarded

($0), the appropriate comparison was between the offer

amount and the damages awarded plus pre-offer costs. Since

Tunison's pre-offer costs were $1,788.70, the court concluded

that the offer of judgment was not more than the ultimate

award. Hence Tunison was awarded both pre-and post-offer

costs, totaling $3,190.85. Continental appeals from this

award of costs.

II. The Prevailing Party Determination

Rule 54(d)(1) provides that "[e]xcept when express provision therefor is made either in a statute of the United States

or in these rules, costs other than attorneys' fees shall be

allowed as of course to the prevailing party unless the court

otherwise directs." In its order regarding costs in this case,

the district court quoted Rule 54(d)(1), but did not pause to

discuss who was the prevailing party. Instead, the court

simply noted that "the jury found in favor of Tunison," and

then proceeded to treat her as the prevailing party in analyzing the Rule 68 issues.

Tunison argues that she was a prevailing party because she

was the "judgment winner." This approach to the prevailing

party determination is not without support. Wright and

Miller note that "[u]sually the litigant in whose favor judgUSCA Case #98-7037 Document #404436 Filed: 12/22/1998 Page 4 of 15
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ment is rendered is the prevailing party for purposes of Rule

54(d)." 10 Wright, et al., Federal Practice and Procedure

s 2667, at 204 (1998). Tunison has cited several cases with

language suggesting that a party who receives a judgment is

considered prevailing under Rule 54(d)(1). See, e.g., K-2 Ski

Co. v. Head Ski Co., 506 F.2d 471, 477 (9th Cir. 1974); Green

Constr. Co. v. Kansas Power & Light Co., 153 F.R.D. 670, 674

(D.Kan.1994). However, with the exception of one district

court decision, the cases Tunison cites did involve some relief,

and hence did not test whether a judgment alone is enough.

See Mary M. v. North Lawrence Community Sch. Corp., 951

F.Supp. 820, 828 (S.D. Ind.) (finding party to be prevailing

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despite the fact that no damages were awarded), rev'd on

other grounds, 131 F.3d 1220 (7th Cir. 1997).

Continental argues that Tunison is not prevailing by relying on Supreme Court cases regarding who is a prevailing

party entitled to attorneys' fees under 42 U.S.C. s 1988.

Tunison questions the relevance of these attorneys' fees cases

to the prevailing party issue under 54(d). While there may be

reason in some cases to construe the term "prevailing party"

differently depending on whether attorneys' fees or only costs

are at issue, see Friends for All Children, Inc. v. Lockheed

Aircraft Corp., 725 F.2d 1392 (D.C. Cir. 1984), we agree with

Continental that the "prevailing party" determination is generally the same in the two contexts. See Farrar v. Hobby,

506 U.S. 103, 119 (1992) (O'Connor, J., concurring) (pointing

out that attorneys' fees under s 1988 are awarded "as part of

the costs," and thus suggesting that the prevailing party

standard for s 1988 and 54(d) are the same); Manildra

Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1180 n.1

(Fed. Cir. 1996) ("[T]he meaning of prevailing party is the

same in either context."); Institutionalized Juveniles v. Secretary of Pub. Welfare, 758 F.2d 897, 926 (3d Cir. 1985) ("The

use of the same test will appropriately simplify the litigation

of disputes concerning cost and fee awards."); Studiengesellschaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 132

(5th Cir. 1983) (s 1988 case has applicability in 54(d) case

because both require determination of who is prevailing party). See also Hensley v. Eckerhart, 461 U.S. 424, 433 n.7

(1983) (noting in s 1988 case that the "standards set forth in

this opinion are generally applicable in all cases in which

Congress has authorized an award of fees to a 'prevailing

party' ").

The Supreme Court has consistently required that to be

considered a prevailing party under s 1988, a party must

receive some affirmative relief. In Hewitt v. Helms, 482 U.S.

755, 760 (1987), the Court observed that "[r]espect for ordinary language requires that a plaintiff receive at least some

relief on the merits of his claim before he can be said to

prevail." In Rhodes v. Stewart, 488 U.S. 1, 4 (1988), the

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Court refused to award prisoners attorneys' fees even though

the prisoners obtained a declaratory judgment against prison

officials, noting that a declaratory judgment will only constitute relief for the purposes of s 1988 where it "affects the

behavior of the defendant toward the plaintiff." In Texas

State Teachers Association v. Garland Independent School

District, 489 U.S. 782, 792 (1989), the Court concluded that to

be considered the prevailing party under s 1988, the plaintiff

"must be able to point to a resolution of the dispute which

changes the legal relationship between itself and the defendant."

The decision in Farrar v. Hobby, 506 U.S. 103 (1992), is

particularly instructive. In that case, the Court considered

whether a civil rights plaintiff who receives nominal damages

is a prevailing party eligible to receive attorneys' fees under

42 U.S.C. s 1988. The Court concluded that while such a

party was "prevailing," the attorneys' fee award could appropriately be quite low, based on the degree of the plaintiff's

overall success. The Court held that to qualify as a prevailing party under s 1988, a plaintiff "must obtain an enforceable judgment against the defendant from whom fees are

sought." Id. at 111. The award of nominal damages, the

Court concluded, was such an enforceable judgment, because

"[a] plaintiff may demand payment for nominal damages no

less than he may demand payment for millions of dollars."

Id. at 113. The Court made clear, however, that " 'the moral

satisfaction [that] results from any favorable statement of

law' cannot bestow prevailing party status." Id. at 112

(quoting Hewitt, 482 U.S. at 762).

Unlike the award of nominal damages at issue in Farrar, a

judgment with no damages at all is not an "enforceable

judgment"--there is simply nothing to enforce. While an

empty judgment may provide some moral satisfaction, such a

judgment carries no real relief and thus does not entitle the

judgment winner to be treated as a prevailing party. See

Robinson v. City of St. Charles, 972 F.2d 974, 976 (8th Cir.

1992) (holding that unlike a civil rights plaintiff receiving

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ed); Nissim v. McNeil Consumer Prod. Co., 957 F.Supp. 604,

607 (E.D. Pa. 1997) (holding that where the jury found in

favor of plaintiff on Title VII discrimination and retaliatory

discharge claims but awarded no back pay or compensatory

damages, plaintiff was not prevailing). Cf. Johnson v. Eaton,

80 F.3d 148, 150 (5th Cir. 1996) (where plaintiff demonstrated

a violation of the Fair Debt Collection Practices Act but did

not prove damages, she was not entitled to attorneys' fees

under the statute which required a "successful action to

enforce the [claimed] liability"); PH Group Ltd. v. Birch, 985

F.2d 649, 652 (1st Cir. 1993) (where jury found that defendant

breached implied covenant of good faith and fair dealing but

awarded plaintiff zero damages, plaintiff was not a "prevailing

party" entitled to attorneys' fees under agreement between

licensor and licensee).

Tunison does not claim to have demonstrated any "material

alteration of the legal relationship" between herself and Continental. See Texas State Teachers Ass'n, 489 U.S. at 792.

Instead, Tunison argues that we should remand in order for

her to demonstrate that her lawsuit was the impetus for

changes in Continental's policies. We need not decide whether such a demonstration, if made, would have entitled Tunison

to be considered the prevailing party. If such a change in

policies is relevant to the question now, it was also relevant

earlier. Tunison's proffer is too far outside the record. We

therefore conclude that Tunison is not a prevailing party

presumptively entitled to costs under Rule 54(d)(1).3

We also conclude that Continental has not established any

right to be treated as the prevailing party. Although in the

bulk of cases, there will be a prevailing party for Rule 54

purposes, a number of courts have recognized that this need

not always be the case. In Schlobohm v. Pepperidge Farm,

806 F.2d 578 (5th Cir. 1986), for example, a franchisee and

franchisor arbitrated the value of the franchise pursuant to

__________

3 Conceivably the verdict against Continental on the liability issue

might work an issue preclusion in some future litigation, but that

theoretical possibility does not make Tunison a prevailing party in

the present case, in which she has obtained no identifiable relief.

contract. The district court confirmed the arbitrator's determination, and held the franchisee to be the prevailing party.

The Fifth Circuit held that neither party was prevailing

under Rule 54, noting that the arbitrator's award was more

than what the franchisor offered, but significantly less than

what the franchisee requested. Cf. Hohensee v. Basalyga, 50

F.R.D. 230 (M.D. Pa. 1969) (no prevailing party in a quiet

title action); Northbrook Excess v. Proctor & Gamble, 1989

WL 65156 (N.D. Ill.) (no prevailing party in commercial

dispute where each party required to bear certain losses).

Courts have also found no party prevailing for the purposes

of awarding costs in situations involving a claim and a counterclaim, and recovery on neither. See, e.g., Srybnik v.

Epstein, 230 F.2d 683 (1956); Magee v. McNany, 11 F.R.D.

592 (W.D. Pa. 1951). Cf. Lovejoy v. O'Berto, 1987 WL 27415

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(N.D. Ill.) (where recovery on plaintiff's claim partially offset

by recovery against him on counterclaim, court finds no

prevailing party); All West Pet Supply v. Hill's Pet Products,

153 F.R.D. 667 (D. Kan. 1994) (awarding no costs where each

party prevailed on some claims).

In Watchorn v. Town of Davie, 795 F.Supp. 1112 (S.D. Fla.

1992), the court addressed a cost award in a factual situation

similar to that here. In that case, an arrestee brought a

s 1983 action, and won only a zero dollar verdict in his favor.

The court first concluded that the arrestee was not prevailing

for purposes of attorneys' fees. Defendants asserted that

they should be entitled to costs under Rule 54(d). The court

refused to award the defendants' costs, and instead awarded

no costs, noting the "slight, though de minimis, success" of

the plaintiff.

In this case, Continental was found to have violated the Air

Carrier Access Act on three separate occasions, and had

judgment entered against it. It has cited no case in which a

party against whom judgment was entered was held to be

prevailing, and has suggested no justification for such a

treatment. Thus on the facts of this case, we hold that

neither party has established that it is a prevailing party

presumptively entitled to costs under Rule 54(d)(1).

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III. Post-Offer Costs and Rule 68

A.Comparison of the Offer and the Judgment Obtained

We must now determine what application, if any, Rule 68

has in this case. The Rule provides in relevant part that

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.

Fed. R. Civ. P. 68.

Here, Continental offered that "a judgment may be taken

against it, and in favor of plaintiff, on all claims in the abovecaptioned case in the amount of One Thousand Dollars

($1,000)." Given our holding that Tunison was not prevailing

under Rule 54(d)(1), she should not have been awarded any

costs. Accordingly, the Rule 68 comparison should have been

between the amount finally obtained ($0) and the amount of

the offer. Thus on any interpretation of the offer, the offer

was more favorable.

Because it viewed Tunison as a prevailing party entitled to

costs under Rule 54(d)(1), the district court's treatment of the

Rule 68 comparison was more complicated. The court reasoned that while $1,000 was clearly more than the $0 damage

award, the appropriate comparison was to the damage award

plus Tunison's pre-offer costs of $1,788.70. Thus the court

concluded that the offer of judgment was for less than the

amount finally awarded. The approach used by the district

court would be correct if the offer of judgment on "all claims"

were for $1,000 total, including costs. In such a situation,

since the offer includes pre-offer costs, the amount of judgment used for comparison must include pre-offer costs as

well, if they are to be awarded. See Goos v. National Ass'n

of Realtors, 68 F.3d 1380, 1382 n.1 (D.C. Cir. 1995). However, the district court failed to inquire into whether the offer of

judgment on "all claims" should in fact be interpreted as

including costs.

The starting point for determining whether a Rule 68 offer

should be viewed as including costs is Marek v. Chesny, 473

U.S. 1 (1985). The Court there sanctioned the use of "lump

sum" offers, holding that a defendant need neither include a

specific amount for costs nor leave the amount of costs to be

specified by the court, but may instead simply specify the

total amount of the offer. The Court provided guidance

regarding whether such an offer would be viewed as including

costs

[i]f an offer recites that costs are included or specifies an

amount for costs, and the plaintiff accepts the offer, the

judgment will necessarily include costs; if the offer does

not state that costs are included and an amount for costs

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is not specified, the court will be obliged by the terms of

the Rule to include in its judgment an additional amount

which in its discretion it determines to be sufficient to

cover the costs.

Id. at 6 (internal citations omitted).

Tunison argues that Continental's offer on "all claims"

should be interpreted as including costs. Plaintiff cites Blumel v. Mylander, 165 F.R.D. 113, 116 (M.D. Fla. 1996), where

an offer "to settle all pending claims" was construed as being

inclusive of costs. At a minimum, Tunison argues that the

offer was ambiguous, and should therefore be construed

against the drafter, which in this case means construing the

offer as being inclusive of costs. However, given the language of Marek, "all claims" is not ambiguous. The Supreme

Court provided that "if the offer does not state that costs are

included," they will be added. Marek, 473 U.S. at 6. The "all

claims" language used in Continental's offer does not specify

anything at all about costs, and therefore cannot be read to

include costs. Had the offer been accepted, a court would

have been compelled by Marek to treat the offer as one for

$1,000 plus costs then accrued. See Webb v. James, 147 F.3d

617 (7th Cir. 1998) (where lump-sum Rule 68 offer did not

mention costs, court required payment of an additional

amount, notwithstanding offeror's post-acceptance insistence

that he meant the offer to be all inclusive). There is no

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justification for interpreting the offer differently because it

was rejected. We therefore conclude that the offer was for

$1,000 plus pre-offer costs. Thus even under the district

court's conclusion that Tunison should be awarded costs

under Rule 54(d)(1), the appropriate comparison under Rule

68 would have been between $1,000 plus pre-offer costs and

$0 plus pre-offer costs. Hence the offer was more favorable

than the ultimate award.

B.Applicability of Rule 68 to Defendant's Costs

Having concluded that Continental's offer of judgment was

more favorable than the amount finally obtained by Tunison,

we consider what application Rule 68's cost-shifting provision

has in this case. Because we have concluded that Tunison did

not prevail under Rule 54(d)(1), on remand, she will not be

entitled to any of her costs. Thus to the extent that Rule 68

merely limits the costs which a plaintiff may be awarded

where she has turned down a more favorable offer, the Rule

has no application, since Tunison is entitled to no costs in any

case.

The issue argued to us is whether Rule 68, in addition to

limiting the costs that can be recovered by a plaintiff who has

rejected a more favorable offer, requires such a plaintiff to

pay the offeror's post-offer costs. Rule 68 provides that "[i]f

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." Continental argues

that the Rule's language requires a plaintiff who fails to

receive a judgment more favorable than a previously rejected

offer to pay all post-offer costs, including the offeror's, and

that Tunison is therefore required to pay Continental's costs

incurred after the offer of judgment was made. Tunison

argues that the Rule's prescription that the offeree pay "the

costs incurred after the making of the offer" should be read

as requiring only payment of the "offeree's costs," despite the

absence of any limiting language in the Rule. We have not

squarely faced this issue before, but have noted in dicta that

"if the plaintiff declines the offer or allows it to expire, he

runs the risk of paying the defendant's subsequent costs of

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trial." Richardson v. National R.R. Passenger Corp., 49

F.3d 760, 762 (D.C. Cir. 1995). Several circuits have held

that Rule 68 does shift a defendant's costs. See Crossman v.

Marcoccio, 806 F.2d 329 (1st Cir. 1986); O'Brien v. City of

Greers Ferry, 873 F.2d 1115, 1117-18 (8th Cir. 1989); Knight

v. Snap-On Tools Corp., 3 F.3d 1398, 1405 (10th Cir. 1993).

See also Dual v. Cleland, 79 F.R.D. 696, 697 (D.D.C. 1978).

Tunison cites no case to the contrary.

Tunison's reading of Rule 68 is not only unsupported by the

language of the Rule, it is inconsistent with 1938 Advisory

Committee Notes to the original enactment of Rule 68, which

cited three state statutes as illustrations of the operation of

the Rule. See Delta Air Lines, Inc. v. August, 450 U.S. 346,

356-58 (1981). Both the Minnesota and Montana statutes

cited by the Committee Notes explicitly provided for payment

of the defendant's costs, while the New York statute used

wording similar to that in Rule 68. See 2 Minn. Stat. s 9323

(Mason 1927); 4 Mont. Rev. Code Ann. s 9770 (1935); N.Y.

Civ. Prac. Law s 177 (Cahill 1937).

Tunison argues that if a defendant's costs can be shifted,

defendants will have little reason to minimize their post-offer

litigation costs. This argument is wholly unconvincing. A

defendant will not know at the time its costs are incurred that

the costs can be shifted to the plaintiff, because the defendant

will not know what judgment, if any, the plaintiff will obtain.

Indeed, interpreting Rule 68 to require payment of a defendant's costs where the judgment obtained by the plaintiff is

less favorable than an earlier offer simply requires the plaintiff to be responsible for all costs accrued as a result of his

own decision to reject the offer. This is entirely consistent

with Rule 68's purpose of encouraging settlement, as it enhances both defendants' incentive to extend Rule 68 offers

and plaintiffs' incentive to accept them. Crossman, 806 F.2d

at 332.

C.The Delta Air Lines Case

As a final matter, we note that the shifting of Continental's

post-offer costs to Tunison in this case is not precluded by

Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981). In that

case, defendant Delta Air Lines had prevailed in a Title VII

claim against it by a former employee, but the district court,

exercising its discretion under Rule 54(d)(1), had directed

that each party bear its own costs. Delta argued that

because the plaintiff had refused a $450 offer of judgment,

the award of Delta's post-offer costs was mandatory under

Rule 68. The Court disagreed, and held that the district

court retained its Rule 54(d)(1) discretion regarding all of

Delta's costs. The Court did not suggest that Rule 68 did not

apply to shift a defendant's costs in any case, but instead

reasoned that since Rule 68's mandatory cost-shifting provisions are triggered only when "the judgment finally obtained

by the offeree is not more favorable than the offer," the Rule

did not apply when the offeree did not obtain a judgment at

all. Id. at 347-48, 352. As Justice Powell's concurrence

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noted, the Court's holding implies that "a defendant may

obtain costs under Rule 68 against a plaintiff who prevails in

part but not against a plaintiff who loses entirely." Id. at 362

(Powell, J., concurring).

Given Rule 68's reference to "the judgment finally obtained

by the offeree," the Delta Court was understandably hesitant

to apply the Rule in a situation where the judgment was

entered in favor of the defendant. Justice Rehnquist argued

in dissent that even when a plaintiff fails altogether, he

essentially "obtains" a "take nothing" judgment, and thus

urged that such situations were within Rule 68. Id. at 370-71

(Rehnquist, J., dissenting). The Court, however, disagreed,

reasoning that applying Rule 68 in such a situation would

transform the district judge's discretionary award of costs

under Rule 54 into a mandatory award of post-offer costs

under Rule 68, an outcome the Court considered unacceptable. Id. at 353.

The concerns which precluded Rule 68's application in

Delta are inapplicable in the present case. In contrast to the

situation in Delta, the judgment here was for Tunison, the

offeree. Thus there was a "judgment finally obtained by the

offeree," and this situation is squarely within the language of

the Rule. Furthermore, unlike in Delta, application of Rule

68 in this case does not strip the district court of any Rule 54

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discretion in awarding defendant costs. Indeed, Rule 54

would provide the district court no basis for awarding Continental its pre- or post-offer costs, since Continental is not a

prevailing party for Rule 54 purposes.

This is not a situation in which damages were clear and the

real question was liability, so that the offer of judgment

served to interfere inappropriately with the district court's

Rule 54 discretion after a finding of no liability. Indeed, as

illustrated by the jury's finding of zero damages, the case for

damages was uncertain. In such a case, where a plaintiff's

case for damages is weak, encouraging a plaintiff to carefully

consider an offer of judgment is particularly important, and

application of Rule 68's cost-shifting provisions effectuates

that purpose. Because application of Rule 68 here is consistent with the language and purpose of the Rule, we conclude

that Rule 68 applies to shift Continental's costs. Thus on

remand, the district court's award of Continental's allowable

post-offer costs is mandatory.

IV. Conclusion

The district court erred in treating Tunison as the prevailing party under Rule 54(d)(1) despite the lack of any enforceable judgment in her favor. Furthermore, because Tunison

failed to obtain a more favorable judgment than the offer of

judgment she rejected, Rule 68 mandates that she pay Continental's post-offer costs. We therefore reverse the award of

costs to Tunison and remand to the district court for a

determination and award of Continental's allowable post-offer

costs.

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