UNITED STATES DISTRICT COURT 


NORTHERN DISTRICT OF FLORIDA 


Victor Manuel CELORIO, Gainesville Division 

PRO SE Plaintiff, 

-against­ 1: 11-CV-79-RV IGRJ 

GOOGLE, INC., et alL Jury Trial Requested 

DEFENDANTs. 

Plaintiff Celorio Opposition to Defendants Motion for Taxation of Costs 

1. 	 Plaintiff Celorio, Pro se, respectfully moves this court to deny the Defendant's Motion 

for Taxation ofCosts under Rule 68 ofthe Federal Rule of Civil Procedure. 

2. 	 The Defendant filed said motion in violation of the Rule I I (b)(1)(2) of the Federal 

Rules of Civil Procedure, since the Defendant is fully aware that the United States Supreme 

Court, in Delta Air Lines, Inc. v. August. 450 U.S. 346 (1981), made perfectly clear that the 

attachment of costs under rule 68 of the Federal Rule of Civil Procedure would apply only in 

case the plaintiff had won the case, but received a judgment for an amount less than the one 

offered by Defendant. 

3. 	 The issue in Delta Air Lines was whether a defendant could use Rule 68 cost shifting 

against a plaintiff who lost at trial. The Court held that Rule 68 applied only to a winning 

plaintiff, because a losing plaintiff, even though failing to improve on the offer, was not a 

party who "fmally obtained a judgment" within the meaning ofRule 68. (See attachment). 

"Held: Federal Rule of Civil Procedure 68 -- which provides that, if a 
plaintiff rejects a defendant's formal settlement offer "to allow judgment to 

be taken against him," and if "the judgment fmally obtained by the offeree 

is not more favorable than the offer," the plaintiff "must pay the costs 

incurred after the making of the offer" -- does not apply to a case in which 

judgment is entered against the plaintiff-offeree and in favor of the 

defendant-offeror." Pp. Delta Air Lines, Inc. v. August. 450 U. S. 350-361. 

See also HESCOITv. City ofSaginaw, Dist. Court, ED Michigan 2013 "In 

that case, the Supreme Court held Rule 68 did not apply "because it was the 

defendant," and not the plaintiff, "that obtained the judgment."" 

See also Broussard v. MARTIN OPERATING PARTNERSHIp, La: Court of 

Appeals, 3rd Circuit 2012 "Veoh can recover Rule 68 costs only if it is not a 

prevailing defendant." "the Supreme Court held that Rule 68 "applies only 

to offers made by the defendant and only to judgments obtained by the 

plaintiff," and "therefore is simply inapplicable [where] it was the defendant 

that obtained the judgment." 

See also Goldberg v. Pac. Indem. Co., 627 F.3d 752, 755 (9th Cir.201O) 

("Rule 68 does not allow a defendant to recover costs when judgment is 

entered in the defendant's favor. "). 

See also IN RE LAFRANCHISE, Bankr. Court, D. Massachusetts 2012 "[T] 

he plain language of Rule 68 confmes its effect to ... [a] case... in which the 

plaintiff has obtained a judgment for an amount less favorable than the 

defendant's settlement offer." 

See also Dell v. Board ofEduc., 918 F. Supp. 212 - Dist. Court, ND Illinois 

1995 "Rule 68 requirement that plaintiff pay costs incurred after the making 

of an offer by defendant to have judgment taken against him, if plaintiff 

rejects that offer and subsequently wins less favorable judgment, does not 

apply where judgment is entered against plaintiff-offeree and in favor of 

defendant-offeror. " 

See also Hercules, Inc. v. AIU Ins. Co., 784 A. 2d 481 - Del: Supreme Court 

2001 "-the United States Supreme Court ruled that where, as here, the 

plaintiff obtains no judgment from the defendant seeking costs (ie, 

judgment is for the defendant), Rule 68 does not apply" 

See also Ruminer v. General Motors Corporation, Dist. Court, ED Arkansas 

2 
2006 "The rule has been interpreted as creating a presumption that costs are 

to be awarded to the prevailing party. " 

See also Tidemann v. Nadler Golf Car Sales, Inc .• 224 F. 3d 719 - Court of 

Appeals, 7th Circuit 2000 "-the Court held that Rule 68 costs are available 

only to a plaintiff who obtains judgment in her favor, but recovers less than 

the settlement offer." 

See also Warr v. Williamson, 195 SW 3d 903 - Ark: Supreme Court 2004 

"As the Supreme Court noted in Delta Air Lines, the general rule of 

discretion established in Rule 54( d) is best protected by limiting the 

application of Rule 68 "only to offers made by the defendant and only to 

judgments obtained by the plaintiff. tI" 

4. 	 The Defendant made this motion in bad faith because as a lawyer with more that 

twenty years of experience, he is fully aware that Rule 68 does not apply to the instant case. 

5. 	 The fact that the Defendant decided to file the motion at all, is further evidence that the 

Defendant believes the rules do not apply to him and that the court will not hold him 

accountable for even the most outrageous behavior and conduct. 

6. Plaintiff submits respectfully. that the Defendants motion be denied. 

7. 	 Furthermore. that the motion be denied with prejudice for being in violation of the 

Rule 11 of the Federal Rules of Civil Procedure. and thus be subject to any sanctions the court 

may find appropriate under its inherent power and under Rule 11(3) of the Federal Rules of 

Civil Procedure. 

Respectfully submitted this 12th day ofNovember, 2013. 

3 
UNITED STATES DISTRICT COURT 


NORTHERN DISTRICT OF FLORIDA 


Victor Manuel CELORIO, Gainesville Division 

PRO SE Plaintiff, 

-against­ 1: ll-CV-79-SPMJGRJ 

GOOGLE, INC., et all. Jury Trial Requested 

DEFENDANTs. 

CERTIFICATE OF SERVICE 

I, Victor Celorio, do hereby CERTIFY that a true and correct copy of the foregoing has been 

furnished via US First Class Mail, on the 12th day ofNovember, 2013, to: 

Adam B. Landa 


Greenberg Traurig, P.A. 


450 So. Orange Avenue, Suite 650 IOrlando, FL 32801 


I,andaA!jlgtlaw.COID 

PROSE 

VICTOR MANVEL CELORIO 

/2300 NW 56THAn;: 

GAINESVILLE, FL. 32653 

352 332 IJll 

I'C7@llfstDboolc.lfid 

4 
450 U.S. 346 https:llbulk.resource.org/courts.gov/clUSl450/450.US.346.79-814... 

« up 450 U.S. 346

101 S.Ct. 1146 

67 L.Ed.2d 287 

DELTA AIR UNES, INC., Petitioner, 

v. 


RosemaIY AUGUST. 


No. 79-814. 

Argued Nov. 12, 1980. 


Decided March 9, 1981. 


Syllabus 

Held: Federal Rule of Civil Procedure 68-which provides that if a plaintiff rejects a defendant's 

formal settlement offer Mto allow judgment to be taken against him," and if "the judgment finally 

obtained by the offeree is not more favorable than the offer," the plaintiff "must pay the costs 

incurred after the making of the offerft-does not apply to a case in which judgment is entered 

against the plaintiff-offeree and in favor of the defendant-offeror. Pp. 350-361. 

(a) This interpretation is dictated by Rule 68's plain language-"judgment finally obtained by the 

offeree ... not more favorable than the offer"-which confines the Rule's effect to a case in which the 

plaintiff has obtained ajudgment for an amount less favorable than the defendant's settlement offer. 

Moreover, because the Rule contemplates that a '1udgment taken" against a defendant is one 

favorable to the plaintiff, it follows that ajudgment "obtained" by the plaintiff is also a favorable one. 

Pp. 350-352. 

(b) Such interpretation of Rule 68 is also consistent with the Rule's purpose to encourage the 

settlement of litigation, since the Rule provides an inducement to settle those cases in which there is 

a strong probability that the plaintiff will obtain ajudgment but the amount of recovery is uncertain. 

It could not have been reasonably Intended on the one hand affirmatively to grant the district judge 

discretion to deny costs to the prevailing party under Rule 54(d)-which provides that costs shall be 

allowed to the prevailing party unless the trial court otherwise directs-and then on the other hand to 

give defendants and only defendants-the power to take away that discretion by performing a token 

act of making a nominal settlement offer. In both of the situations in which Rule 68 does not applyjudgments in the defendant's favor or in the plaintiff's favor for an amount greater than the 

settlement offer-the trial judge retains his Rule 54(d) discretion. Rule 68's plain language makes it 

unnecessary to read a requirement into the Rule that only a reasonable settlement offer triggers the 

rule. A literal interpretation avoids the problem of sham offers, because such an offer will serve no 

purpose, and a defendant will be encouraged to make only realistic settlement offers. Pp. 352-356. 

(c) The above interpretation of Rule 68 is further compelled by its history-the state rules upon which 

the Rule was modeled, the cases interpreting those rules, and the view of the commentators, 

including the members of the Advisory Committee. Pp. 356-361. 

7 Cir., 600 F.2d 699, affirmed. 

E. Allan Kovar, Chicago, ilL, for petitioner. 

Susan M. Vance, Chicago, ilL, for respondent. 

Elinor H. Stillman, Washington, D. C, for the United States, as amicus curiae, by special leave of 

Court. 

Justice STEVENS delivered the opinion of the Court. 

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Pursuant to Rule 68 ofthe Federal Rules ofCivil Procedure, if a plaintiff rejects a defendant's fonnal settlement 

« up 'er, and if "the judgment finally obtained by the offeree is not more favorable than the offer," the plaintiff "must 

pay the costs incurred after the making ofthe offer."1 The narrow question presented by this case is whether the 

words "judgment finally obtained by the offeree" as used in that Rule should be construed to encompass a judgment 

against the offeree as well as a judgment infavor ofthe offeree. 

2 Respondent Rosemary August (plaintiff) filed a complaint against petitioner Delta Air tines, Inc. (defendant), 

alleging that she had been discharged from her position as a flight attendant solely because of her race in violation of 

Title VII ofthe Civil Rights Act of1964,42 U.S.C. § 2000e et seq. She sought reinstatement, approximately $20,000 

in backpay, attorney's fees, and costs. A few months after the complaint was filed, defendant made a formal offer of 

judgment to plaintiffin the amount of $450.2 The offer was refused, the case was tried, and plaintiff lost. The 

District Court entered judgment in favor ofdefendant and directed that each party bear its own costs. Defendant 

then moved for modification ofthe judgment, contending that under Rule 68 the plaintiff should be required to pay 

the costs incurred by defendant after the offer ofjudgment had been refused. The District Court denied the motion 

on the ground that the $450 offer had not been made in a good-faith attempt to settle the case and therefore did not 

trigger the cost-shifting provisions of Rule 68.3 The Court ofAppeals affirmed on the same ground. 600 F.2d 699 

(CA7 1979), holding that Rule 68 applied only ifthe defendant's settlement offer was sufficient "to justify serious 

consideration by the plaintiff." 4 

3 In finding a reasonableness requirement in the Rule, the Court ofAppeals did not confront the threshold question 

whether Rule 68 has any application to a case in which judgment is entered against the plaintiff-offeree and in favor 

ofthe defendant -offeror. Our resolution ofthe case, however, turns on that threshold question. The answer is 

dictated by the plain language, the purpose, and the history of Rule 68. 

4 * Rule 68 prescribes certain consequences for formal settlement offers made by "a party defending against a 

claim." 5 The Rule has no application to offers made by the plaintiff. The Rule applies to settlement offers made by 

the defendant in two situations: (a) before trial, and (b) in a bifurcated proceeding, after the liability ofthe defendant 

has been determined ''by verdict or order orjudgment.It In either situation, ifthe plaintiff accepts the defendant's 

offer, "either party may then file the offer ... and thereupon the clerk shall enterjudgment." If, however, the offer is 

not accepted, it is deemed withdrawn "and evidence thereof is not admissible except in a proceeding to detennine 

costs." The plaintiffs rejection ofthe defendant's offer becomes significant in such a proceeding to detennine 

costs·6 

5 Under Rule 54(d) ofthe Federal Rules ofCivil Procedure, the party prevailing after judgment recovers costs unless 

the trial court otherwise directs.7 Rule 68 could conceivably alter the Rule 54(d) presumption in favor ofthe 

prevailing party after three different kinds ofjudgments are entered: (1) a judgment in favor ofthe defendant; (2) a 

judgment in favor ofthe plaintiffbut for an amount less than the defendant's settlement offer; or (3) a judgment for 

the plaintiff for an amount greater than the settlement offer. The question presented by this case is which ofthese 

three situations is described by the words "judgment finally obtained by the offeree ... not more favorable than the 

offer." 

6 Obviously those words do not encompass the third situation-a judgment in favor ofthe offeree that is more 

favorable than the offer. Those words just as clearly do encompass the second, for there can be no doubt that a 

judgment in favor ofthe plaintiffhas been "obtained by the offeree." But inasmuch as the words "judgment ... 

obtained by the offeree"-ratherthan words like "any judgment"-would not nonnally be read by a lawyer to describe 

a judgment in favor ofthe other party, the plain language ofRule 68 confines its effect to the second type of 

case-one in which the plaintiff has obtained a judgment for an amount less favorable than the defendant's 

settlement offer. 

7 This reading ofthe plain language ofthe Rule is supported by other language contained in the Rule. The Rule 

applies when the defendant offers to have "judgment ... taken against him." Because the Rule obviously 

contemplates that a "judgment taken" against a defendant is one favorable to the plaintiff, it follows that a judgment 

"obtained" by the plaintiff is also a favorable one. 

8 In sum, ifwe limit our analysis to the text ofthe 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. 

II 

Our interpretation ofthe Rule is consistent with its purpose. The purpose ofRule 68 is to encourage the settlement 

oflitigation.8 In all litigation, the adverse consequences of potential defeat provide both parties with an incentive to 

settle in advance oftrial. Rule 68 provides an additional inducement to settle in those cases in which there is a strong 

probability that the plaintiff will obtain a judgment but the amount ofrecovery is uncertain. Because prevailing 

plaintiffs presumptively will obtain costs under Rule 54(d), Rule 68 imposes a special burden on the plaintiff to 

whom a formal settlement offer is made. Ifa plaintiff rejects a Rule 68 settlement offer, he will lose some ofthe 

benefits ofvictory ifhis recovery is less than the offer.9 Because costs are usually assessed against the losing party, 

9 

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bility for costs is a normal incident ofdefeat. Therefore, a nonsettling plaintiff does not run the risk ofsuffering 

« up ditional burdens that do not ordinarily attend a defeat, and Rule 68 would provide little, if any, additional 

incentive ifit were applied when the plaintiff loses. 

10 Defendant argues that Rule 68 does provide such an incentive, because it operates to deprive the district judge of 

the discretion vested in him by Rule 54( d). According to this reasoning, Rule 68 is mandatory, and a district judge 

must assess costs against a plaintiff who rejects a settlement offer and then either fails to obtain a judgment or 

recovers less than the offer. Therefore, nonsettling plaintiffs could not reject settlement offers in the expectation that 

the judge might exercise his discretion to deny the defendant costs if the defendant wins. 1 0 

11 If we were to accept this reasoning, it would require us to disregard the specific intent expressed in Rule 54( d) and 

thereby to attribute a schizophrenic intent to the drafters. If, as defendant argues, Rule 68 applies to defeated 

plaintiffs, any settlement offer, no matter how small, would apparently trigger the operation ofthe Rule.11 Thus 

any defendant, by performing the meaningless act of making a nominal settlement offer, could eliminate the trial 

judge's discretion under Rule 54(d). We cannot reasonably conclude that the drafters of the Federal Rules intended 

on the one hand affirmatively to grant the district judge discretion to deny costs to the prevailing party under Rule 

54( d) and then on the other hand to give defendants-and only defendants the power to take away that discretion by 

performing a token act. 1 2 

12 Moreover, ifthe Rule operated as defendant argues, we cannot conceive of a reason why the drafters would have 

given only defendants, and not plaintiffs, the power to divest the judge of his Rule 54(d) discretion. See Simonds v. 

Guaranty Bank & Trust Co., 480 F.Supp. 1257, 1261 (D.C.Mass.1979). When Rule 68 is read literally, however, it is 

evenhanded in its operation. As we have already noted, it does not apply to judgments in favor ofthe defendant or to 

judgments in favor of the plaintiff for an amount greater than the settlement offer. In both ofthose extreme 

situations the trial judge retains his Rule 54( d) discretion. In the former his discretion survives because the Rule 

applies only to judgments n obtained by the offeree"; in the latter, it survives because the Rule does not apply to a 

judgment "more favorable than the offer." 1 3 Thus unless we assume that the Federal Rules were intended to be 

biased in favor of defendants, we can conceive of no reason why defendants-and not plaintiffs- should be given an 

entirely risk-free method of denying trial judges the discretion that Rule 54(d) confers regardless ofthe outcome of 

the litigation. 1 4 

1 3 The Court ofAppeals, perceiving the anomaly ofallowing defendants to control the discretion ofdistrict judges by 

making sham offers, resolved the problem by holding that only reasonable offers trigger the operation of Rule 68. 

But the plain language ofthe Rule makes it unnecessary to read a reasonableness requirement into the Rule. A literal 

interpretation totally avoids the problem of sham offers, because such an offer will serve no purpose, and a 

defendant will be encouraged to make only realistic settlement offers. 1 5 The Federal Rules are to be construed to 

"secure the just, speedy, and inexpensive determination ofevery action," Fed.Rule Civ.Proc. 1. Ifa plaintiff chooses to 

reject a reasonable offer, then it is fair that he not be allowed to shift the cost of continuing the litigation to the 

defendant in the event that his gamble produces an award that is less than or equal to the amount offered. But it is 

hardly fair or evenhanded to make the plaintiffs rejection of an utterly frivolous settlement offer a watershed event 

that transforms a prevailing defendant's right to costs in the discretion of the trial judge into an absolute right to 

recover the costs incurred after the offer was made. 1 6 

III 

14 This interpretation ofthe language ofthe Rule and its clear purpose is further compelled by the history of Rule 68­

Rule 68 is an outgrowth of the equitable practice of denying costs to a plaintiff "when he sues vexatiously after 

refusing an offer ofsettlement."17 The 1938 Advisory Committee Notes to the original version ofthe Rule merely 

cited three state statutes as illustrations of the operation of the Rule. 1 8 These three statutes, from Minnesota, 

Montana, and New York, mandated the imposition ofcosts on a plaintiff who rejected settlement offers and failed to 

obtain a judgment more favorable than the offer. 1 9 All three States had other provisions, similar to Rule 54(d), 

providing for the recovery of costs by a prevailing party.20 Therefore the only purpose served by these state offerof-judgment rules was to penalize prevailing plaintiffs who had rejected reasonable settlement offers without good 

cause.21 As defendant notes, other States have or had similar rules.22 But with one exception all ofthe cases cited 

by plaintiff, defendant, and the EEOC as amicus involving state cost-shifting rules were cases in which the plaintiff 

prevailed.23 

1 5 The commentators, including the members ofthe Advisory Committee, have agreed with our interpretation of the 

Rule. 2 4 At a symposium held shortly after the Rules were issued in 1938, one of the members of the Advisory 

Committee presented the Rule as "a means for stopping the running ofcosts where the defendant admits that part of 

the claim is good but proposes to contest the balance. "25 The Advisory Committee Notes to the 1946 Amendment to 

the Rule indicate that the Rule was designed to "save" a defendant from having to reimburse the plaintiff for costs 

incurred after the offer was made and not to make mandatory the court's discretionary power to tax costs against the 

plaintiffin the event the defendant prevails. 2 6 The fact that the defense bar did not develop a practice ofseeking 

costs under Rule 68 by making nominal settlement offers is persuasive evidence that trial lawyers have interpreted 

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~ Rule in accordance with its plain language.27 Thus the state rules upon which Rule 68 was modeled, the cases 

« UPerpreting those rules, and the commentators' view ofthe Rule are all consistent with, and in fact compel, our 

reading of its plain language. 

16 Although defendant's petition for certiorari presented the question ofthe District Judge's abuse of discretion in 

denying defendants costs under Rule 54(d), that question was not raised in the Court ofAppeals and is not properly 

before us. We therefore affirm the judgment ofthe Court ofAppeals. 

1 7 It is so ordered. 

18 Justice POWELL, concurring in the result. 

1 9 I agree with most of the views expressed in the dissenting opinion ofJustice REHNQUIST, and do not agree with 

the Court's reading ofRule 68. It is anomalous indeed that, under the Court's view, a defendant may obtain costs 

under Rule 68 against a plaintiff who prevails in part but not against a plaintiff who loses entirely. 

20 I nevertheless concur in the result reached by the Court because I do not think that the terms of the offer made in 

this case constituted a proper offer ofjudgment within the scope ofRule 68. 

21 .. Rule 68 provides, in pertinent part: 

22 "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 allowjudgment to be taken against him for the money or property orto the effect specified 

in his offer, with costs then accrued" (emphasis added). 

23 In Title VII cases, the scope of "costs" is defined in the statute itself. Except in unusual circumstances, Title VII 

requires that a prevailing plaintiff receive "a reasonable attorney's fee as part ofthe costs." 42 U.S.C. § 2000e-5(k); 

see Christiansburg Gannent Co. v. EEOC, 434 U.S. 412, 416-417, 98 S.Ct. 694, 697-698, 54 L.Ed.2d 648 (1978); 

Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 401-402, 88 S.Ct. 964,965-966, 19 L.Ed.2d 1263 (1968). 

We held last Tenn in Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2575, 65 L.Ed.2d 653 (1980), that a claim 

to an attorney's fee is not weakened ifthe plaintiff prevails by "settlement rather than through litigation." 

24 A Rule 68 offer ofjudgment is a proposal ofsettlement that, by definition, stipulates that the plaintiff shall be 

treated as the prevailing party. It follows, therefore, that the "costs" component of a Rule 68 offer ofjudgment in a 

Title VII case must include reasonable attorney's fees accrued to the date ofthe offer. Scheriffv. Beck, 452 F.Supp. 

1254,1260 (CoIO.1978) (offer of $2,200 together with costs, not including attorney's fees, was "fatally defective 

because it excludes attorney's fees then accrued"). 

25 The purposes ofTitle VII and Rule 68 each would be served by this plain-language construction ofthe relationship 

between the statute and the Rule. To be sure, Title VII's fee provision was designed to enable plaintiffs to vindicate 

their rights through litigation. Piggie Park, supra, at 401-402,88 S.Ct., at 965-966. On the other hand, parties to 

litigation and the public as a whole have an interest-often an overriding one-in settlement rather than exhaustion 

of protracted court proceedings. Rule 68 makes available to defendants a mechanism to encourage plaintiffs to settle 

burdensome lawsuits. The Rule particularly facilitates the early resolution ofmarginal suits in which the defendant 

perceives the claim to be without merit, and the plaintiff recognizes its speculative nature. 1 

26 An offer to allowjudgment that does not cover accrued costs and attorney's fees is unlikely to lead to settlement. 

Many plaintiffs simply could not afford to accept such an offer. It may be, also, that the plaintiffs lawyer instituted 

the suit with no hope of compensation beyond recovery of a fee from the defendant. Such a lawyer might have a 

conflict of interest that would inhibit encouraging his client to accept an otherwise fair offer. It therefore seems clear 

that the relevant interests-ofboth parties and the public-will be served by construing Title VII and Rule 68 in 

accordance with their plain language.2 

II 

27 Delta's offer in this case did not comply with the terms of Rule 68. 

When a plaintiff prevails in a litigated Title VII suit, the court awards a reasonable attorney's fee. The primary 

factors relevant to setting the fee usually are the time expended and a reasonable hourly rate for that time.3 Thus, a 

court is not bound by the prevailing attorney's proposed hourly rate or by the bill submitted. The fee itself must be 

reasonable. 

28 

The same practice should be followed in Title VII cases in which the prevailing party is established by a Rule 68 

offer ofjudgment. Cf. Maher v. Gagne, supra. In such a case, the offer ofjudgment consists oftwo components: (i) 

the substantive relief proposed, which may be a sum ofmoney or specific relief such as reinstatement or promotion, 

and (ii) costs, including a reasonable attorney's fee. The offer should specify the first component with exactitude. But 

the amount ofthe fee is within the discretion ofthe court ifthe offer is accepted.4 

29 

Assessed by these standards, Delta's putative offer ofjudgment simply did not comply with the tenns ofRule 68. 

In pertinent part, the offer provided: 

30 

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'Pursuant to Rule 68 ofthe Federal Rules ofCivil Procedure, defendant hereby offers to allow judgment to be 

« up ;en against it in this action, in the amount of$450, which shall include attorney's fees, together with costs accrued 

to date" (emphasis added). 

32 Delta's offer would have complied with Rule 68-and the company now would be entitled to the costs it seekss -if 

the offer had specified some amount ofsubstantive relief, plus costs and attorney's fees to be awarded by the trial 

court. But the offer did not So specify. 

33 Accordingly, I concur in the result. 

34 Justice REHNQUIST, with whom THE CHIEF JUSTICE and Justice STEWART join, dissenting. 

35 Ofthe several remarkable aspects ofthe Court's opinion in this case, not the least is that, save for the docket 

number and the name ofthe case, it bears virtually no resemblance to the judgment and opinion ofthe Court of 

Appeals for the Seventh Circuit which we granted certiorari to review. The question presented by the petition for 

certiorari, albeit in somewhat laborious form, is best captured in the first ofthe three questions: 

36 "Whether the [C]ourt of [A]ppeals erred in nullifying the clear and unambiguous mandatol)' imposition of costs 

under Rule 681" Pet. for Cert. 2 

37 The Court states that "[t]he narrow question presented by this case is whether the words 'judgment obtained by 

the offeree' as used in that Rule should be construed to encompass a judgment against the offeree as well as a 

judgment in favor ofthe offeree." Ante, at 348. After reciting the procedural histol)' ofthe case in the lower courts, 

the Court criticizes the Court ofAppeals for its failure to confront "the threshold question whether Rule 68 has any 

application to a case in which judgment is entered against the plaintiff-offeree and in favor ofthe defendant-offeror." 

Ante, at 350. The Court's resolution ofthe case turns on that threshold question and it finds that the answer "is 

dictated by the plain language, the purpose, and the histol)' of Rule 68." Ibid. 

38 Though the ultimate result reached by the Court is the same as that ofthe Court ofAppeals, the difference in 

approach ofthe two opinions could not be more striking. The Court ofAppeals began its opinion by stating that 

"[t]he issue presented in this appeal is whether the awarding of costs under Rule 68 of the Federal Rules of Civil 

Procedure is mandatol)' or discretional)' if thefinaljudgment obtained by plaintiffis not more favorable than the 

defendant's offer." 600 F.2d 699. 699-700 (1979) (emphasis supplied). The Court ofAppeals relied primarily on the 

ground that this was a private action under Title VII ofthe Civil Rights Act of 1964, and it was not willing "to permit 

a technical interpretation of a procedural rule to chill the pursuit ofthat high objective." Id., at 701. The court 

explained that a $450 offer in a case such as this made the semantically mandatol)' language of Rule 68 discretional)' 

and permitted, but did not require, the District Court to award costs when, "viewed as ofthe time ofthe offer along 

with consideration of the final outcome of the case, the offer can be seen to have been made in good faith and to have 

had some reasonable relationship in amount to the issues, litigation risks, and expenses anticipated and involved in 

the case." Id., at 702. The Court ofAppeals reasoned that this "liberal" not "technical" reading of Rule 68 is justified, 

at least in a Title VII case, and that it did not need to decide whether the same approach should be taken in other 

types of cases. Ibid. To the Court ofAppeals, the mandatol)' language of Rule 68, at least in a Title VII case, is only 

discretional)' where the offer is not "reasonable" and in "good faith" (neither ofwhich qualifications are found in 

Rule 68). But to this Court, the Court ofAppeals was entirely in error in even reaching that question because Rule 68 

has no applicability to a case in which a judgment is entered againstthe plaintiff-offeree and infavor afthe 

defendant-offeror. Totally ignoring the common-sense maxim that the greater includes the lesser, the Court 

concludes that its answer is "dictated by the plain language, the purpose, and the histol)' of Rule 68." 

39 Two of the three reasons advanced by the Court ofAppeals in support ofits opinion permitting the District Court 

not to impose costs on respondent in this case are squarely negated by the reasoning of the Court's opinion. The 

"plain language" of the Rule refers neither to an exception for Title VII cases nor to a requirement that an offer be 

"reasonable" or made "in good faith. " 

40 Although Title VII provides for elaborate conciliation macl1inel)' before suit, the plaintiff who receives a "right to 

sue" letter from the EEOC is simply authorized to sue the employer in the appropriate United States district court. 

There is no intimation in the Federal Rules of Civil Procedure or Title VII that such lawsuit will not be conducted in 

accordance with the Federal Rules ofCivil Procedure. In fact, Rule 1 ofthe Federal Rules specifically provides that 

"[t]hese rules govern the procedure in the United States district courts in all suits of a civil nature whether cognizable 

as cases at law or in equity, or in admiralty, with the exceptions stated in Rule 81." Rule 81 sets forth a list of 

exceptions including bankruptcy proceedings and proceedings in copyright brought under Title 17 ofthe United 

States Code, but proceedings brought under Title VII are not included. Presumably, the "plain language" ofthe 

Federal Rules and in particular Rule 68, as well as the "plain language" ofthe applicable provisions ofTitle VII, 

would bring the Court to reject any special treatment with respect to costs for a Title VII lawsuit. 

41 In my view, there is also no basis for reading into Rule 68 any additional conditions for bringing the Rule into play 

other than those which are specifically contained in the provisions ofthe Rule itself. I assume that the Court would 

agree with this approach in view ofits fondness for the "plain meaning" canon of statutOI)' construction. Therefore, 

the best and shortest response to the Court ofAppeals' suggestion that a Rule 68 offer must be "reasonable" and 

made in "good faith" is that Rule 68 simply does not incorporate any such requirement; it deprives a district court of 

its traditional discretion under Rule 54 to disallow costs to the prevailing party in the strongest verb ofits type 

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own to the English language-"must": « up 

4l 'Ifthe judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs 

incurred after the making ofthe offer....n Fed. Rule Civ.Proc. 68. (Emphasis added.) 

43 Over a half century ago the Court ofAppeals for the Sixth Circuit said "the word 'must' is so imperative in its 

meaning that no case has been called to our attention where that word has been read 'may.' .. Berg v. Merchant, 15 

F.2d 990 (1926), cert. denied, 274 U.S. 738, 47 S.Ct 575, 7I L.Ed. 1317 (1927). To import into the mandatory 

language ofRule 68 a requirement that the tender ofjudgment must be "reasonable" or made in "good faith" not 

only rewrites Rule 68, but also puts a district court in the impossible position of having to evaluate such uncertain 

and nebulous concepts in the context of an "offer ofjudgment" that in many cases may have been made years past. 

44 Since the Court relies on the "plain meaning" of Rule 68, it may be well to set that Rule out verbatim before 

analyzing its argument. Rule 68 provides in pertinent part: 

45 "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 allowjudgment to be taken against him for the money or property or to the effect specified 

in his offer, with costs then accrued. Ifwithin 10 days after the service ofthe offer the adverse party serves written 

notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proofof 

service thereof and thereupon the clerk shall enterjudgment.... Ifthe judgment finally obtained by the offeree is 

not more favorable than the offer, the offeree must pay the costs incurred after the making ofthe offer." (Emphasis 

added.) 

46 The Court asserts that the result reached by, if not the reasoning of, the Court ofAppeals is correct because Rule 

68, by its "plain language," applies only in cases in which a "judgment [is] finally obtained by the offeree." The Rule, 

therefore, does not apply in a case such as this where the defendant prevailed-i. e., because no judgment was 

"obtained by the offeree." IfRule 68 does not apply, the determination regarding costs is governed by Federal Rule of 

Civil Procedure 54(d), which grants a district court the discretion to award the defendant costs as the "prevailing 

party, " but does not require it to do so. The Court argues that the "plain language" ofRule 68, its "history," and 

"policy" reasons support this interpretation ofthe Rule. 

4 7 I read both the "plain language" ofthe Rule and its history quite differently than does the Court. According to it, a 

plaintiff-"offeree" under the terms of Rule 68-must win in the trial court in order to "obtain" a "judgment" within 

the meaning of that Rule. But we may call upon the various canons ofstatutory construction to pass before us in 

review as many times as we choose without being reduced to this anomalous conclusion. 

48 The term "judgment" is defined in Rule 54(a) ofthe Federal Rules of Civil Procedure to mean a "decree and any 

order from which an appeal lies. " Unquestionably, respondent "obtained" an "order from which an appeal lies" when 

the District Court entered its judgment in this case. Certainly, respondent did not subscribe to the Court's reasoning 

because she immediately souglIt review in the Court ofAppeals of the "judgment" which had been entered agaiust 

her. Rule 68, when construed to include a traditional "take nothing" judgment, see, Appendix to Fed.Rules Civ.Proc., 

Forms 31 and 32, 28 U.S.C.App., p. 530, as well as a judgment in favor ofthe plaintiff but less than the amount ofthe 

offer, thus fits with the remaining parts of the Federal Rules ofCivil Procedure pertaining to judgments and orders in 

a manner in which the drafters ofthe Rule surely must have intended. To circumscribe Rule 68 in the manner in 

which the Court does is to virtually cut it adrift from the remaining related portions ofthe Federal Rules ofCivil 

Procedure, a construction which could be justified only by the strongest considerations ofhistory and policy. Our 

cases do not support the proposition that such a construction will never be given to a rule or statute, but they do 

indicate that only the strongest support in the legislative history warrants such a result. Chemehuevi Tribe ofIndians 

v. FPC, 420 U.S. 395,95 S.Ct. 1066,43 L.Ed.2d 279 (1975). 

49 I think my reading ofthis part ofRule 68 is entirely consistent with the Rule's history. When the Federal Rules of 

Civil Procedure were adopted in 1938, the pertinent part of Rule 68 read: 

50 "Ifthe offer is not so accepted it shall be deemed withdrawn and evidence thereofis not admissible. Ifthe adverse 

partyfails to obtain a judgment more favorable than that offered, he shall not recover costs in the district court 

from the time ofthe offer but shall pay costs from that time." (Emphasis supplied.) 

51 Obviously, the event that "triggered" the operation ofthe original Rule 68 was the failure ofthe plaintiffto obtain a 

judgment more favorable than that offered. Just as obviously, the plaintiff in this case did not meet her burden of 

obtaining a judgment more favorahle than the $450 she was offered. The operation of Rule 68 was not intended to 

change when this part of the Rule was amended in 1948 to its present form. The Advisory Committee Notes to the 

1948 amendment explain the reasons for the amendment-none of which give any indication that Congress decided 

to take away the benefits ofthe Rule to a defendant who made a Rule 68 offer but later prevailed on the merits.1 

52 As noted by the Court, the 1938 Advisory Committee Notes to the original version ofthe Rule cite to three state 

statutes as illustrations ofthe operation of the Rule. These three statutes, like the text ofthe original Rule 68, all 

mandated imposition of costs on a plaintiff who rejected an offer ofjudgment and then later failed to recover a 

judgment more favorable than the offer.2 This is the identical situation which the plaintiff here finds herself in. 

Moreover, in each ofthese three States, the general statutes providing for recovery of costs by prevailing defendants 

was, unlike Rule 54(d), mandatory. See, e. g., 4 Mont.Rev.Codes Ann. §§ 9787, 9788 (1935); 2 Minn.Stat. § 9471 

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53 

54 

55 

56 

57 

58 

:ason 1927); and N.Y.Civ.Prac.Law §§ 1470-1475 (Thompson 1939). As a result, the state cases cited by the Court 

«up not address the situation in which a defendant has prevailed on the merits because in that situation the shifting of 

costs was mandatory under state law. It is, therefore, difficult for me to understand how it can be argued that 

Congress, seeking to pattern Rule 68 after the procedure used in these three States, could have possibly intended to 

inlmunize plaintiffs from the operation ofthe Rule and the concomitant costs it imposes simply because they lost 

their cases on the merits. Itis also noteworthy that the lower court cases that have confronted the situation of a 

prevailing defendant seeking to recover its costs under Rule 68 have all concluded that such recovery is permissible. 

See Dual v. Cleland, 79 F.R.D. 696 (DC 1978); Mr. Hanger, Inc. v. Cut Rate Hangers, Inc., 63 F.R.D. 607 (BDNY 

1974); Gay v. Waiters' &Dairy Lunchmen's Union, Local No. 30,86 F.R.D. 500 (ND Cal.1980).3 

Contrary to the view ofthe Court, I think that Rule 68 and Rule 54( d) are entirely consistent with one another 

when read in a manner faithful to their actual language; indeed, the language ofthese Rules must be twisted virtually 

beyond recognition, and that of Rule 68 parsed virtually out of existence, to say that the latter Rule does not apply in 

a situation such as this simply because the petitioner prevailed. Rule 54(d) itself contemplates the removal from the 

trial judge ofthe discretion of awarding costs when by its express terms it excepts situations where "express 

provision therefor is made ... in these rules." It cannot be doubted that the mandatory language of Rule 68 is as 

clear a case of "express provision" as could be inlagined. 

While I do not think it necessary to address the "policy" considerations relied upon by the Court when the intent of 

the drafters ofthe Rule is as plain as it is here, I do think it appropriate to note that no policy argument will convince 

me that a plaintiff who has refused an offer under Rule 68 and then has a "take nothing" judgment entered against 

her should be in a better position than a similar plaintiff who has refused an offer under Rule 68 but obtained a 

judgment in her favor, although in a lesser amount than that which was offered pursuant to Rule 68. The 

construction of Rule 68 urged by the Court would place in a better position a defendant who tendered $10,000 to a 

plaintiffunder Rule 68 in a case where the plaintiff was awarded $5,000 than where the same tender was made and 

the plaintiffwas awarded nothing. 

One final argument that has been pressed as a reason for affirmance ofthe Court ofAppeals merits response. Rule 

68 requires a party defendant against a claim to serve upon the adverse party "an offer to allow judgment to be taken 

against him for the money or property orto the effect specified in his offer, with costs then accrued." A literal 

reading ofthe Rule appears to entitle a plaintiff to all costs accrued at the time ofthe offer. Ifthe offer is accepted, 

the defendant must pay whatever costs the court determines were taxable at the time ofthe offer. Thus, a valid Rule 

68 offer cannot be made ifit limits or excludes any ofthe costs accrued on the date ofthe offer. 

It is argued that because "costs" are nowhere defined in the Federal Rules ofCivil Procedure it is necessary to look 

elsewhere to determine the types of costs which are assessable under Rule 68. Title VII does not contain a general 

definition ofthe term "costs," but it does specify that a court, in its discretion, shall allow the "prevailing party" a 

"reasonable attorney's fee as part ofthe costs...." 42 U.S.C. § 200De-5(k). This Court has interpreted this provision 

to mean that a prevailing plaintiff shall receive her costs "except in unusual circumstances," and we held last Term 

that a claim to an attorney's fee is not defeated ifthe plaintiff prevails by "settlement rather than through litigation." 

Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 2575, 65 L.Ed.2d 653 (1980). Because a Rule 68 offer of 

judgment is a proposal which by definition stipulates that the plaintiff shall be treated as the prevailing party, as the 

argument runs, the cost component ofRule 68 in a Title VII case must include a component for plaintiffs reasonable 

attorney's fees accrued as ofthe date ofthe offer. Petitioner's offer in this case under this theory did not technically 

comply with Rule 68 because it limited the amount ofattorney's fees to be recovered by the respondent and thus did 

not provide for the recovery of all costs accrued at the date ofthe offer-4 

This argument, although superficially appealing, does not survive careful scrutiny. Our analysis must focus on the 

meaning ofthe word "costs" contained in Rule 68 and we are aided in this analysis by our decision only last Term in 

Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). There we were confronted 

with the question ofwhether the word "costs" contained in 28 U.S.C. § 1927 included attorney's fees in the context of 

a civil rights lawsuit. Section 1927 provides that lawyers who multiply court proceedings vexatiously may be assessed 

the excess "costs" they create. However, § 1927, like Rule 68, did not define the critical word-"costs." A District 

Court had concluded that because the civil rights statutes allow a prevailing party to recover attorney's fees as part of 

the costs oflitigation. it was authorized to award attorney's fees as part ofthe sanction it imposed under § 1927. We 

rejected this conclusion and in so doing we stated that in construing the term "costs" it was appropriate to look to the 

contemporaneous understanding ofthe term when the statute was enacted. We then assumed that Congress followed 

the recognized "American rule" that attorney's fees were not included within the definition of "costs" when it enacted 

§ 1927.447 U.S., at 759, 100 S.Ct., at 2460. Without any evidence that Congress wished to alter or amend the 

definition of "costs" by the passage ofthe civil rights fee-shifting statutes, 42 U.S.C. §§ 1988 and 2000e-5(k), we were 

unwilling to expand its historical definition. 

A conclusion similar to that reached in Roadway Express is equally sound here when detennining whether "costs" 

as used in Rule 68 include attorney's fees in the context ofa civil rights suit. Certainly, the "contemporaneous 

understanding" of "costs" when the Federal Rules of Civil Procedure were promulgated in 1938 did not include 

attorney's fees any more than it did in 1813 when the predecessor to § 1927 was enacted. The legislative history of 

Rule 68 indicates no intent to deviate from the common meaning of costs and this conclusion is bolstered by the fact 

that when the authors ofthe Rules intended that attorney's fees be recovered, such fees were specifically mentioned. 

See, e. g., Fed. Rule Civ.Proc. 37, which allows "reasonable expenses ... including attorney's fees," as a sanction for 

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:covery abuses. « up 

5 9 There is likewise no evidence of any congressional intent to alter the meaning ofthe word "costs" in Rule 68 by the 

passage ofthe civil rights statutes. Nothing in the fee-shifting provisions of these statutes or their legislative history 

has come to my attention which would suggest that Congress intended to amend Rule 68 by adding attorney's fees to 

otherwise taxable"costs" under that Rule. 

60 It is also worth noting that the logic that would include attorney's fees as recoverable costs under Rule 68 would 

also allow a similar recovery of attorney's fees in other litigation under statutes which permit the award of attorney's 

fees. In 1975, this Court noted in Alyeska Pipeline Co. v. Wilderness Society, 421 U.8. 240, 958.Ct. 1612,44 L.Ed.2d 

141, that 29 statutes allow federal courts to award attorney's fees in certain suits. [d., at 260-261, n. 33, 95 8.Ct. at 

1623, n. 33. Some ofthese statutes define attorney's fees as an element of costs while others separate fees from other 

taxable costs. To construe Rule 68 to allow attorney's fees to be recoverable as costs would create a two-tier system of 

cost-shifting under Rule 68. Plaintiffs in cases brought under those statutes which award attorney's fees as costs and 

who are later confronted with a Rule 68 offer would find themselves in a much different and more difficult position 

than those plaintiffs who bring actions under statutes which do not have attorney's fees provisions. No persuasive 

justification exists for subjecting these plaintiffs to differing penalties for failure to accept a Rule 68 offer and no 

persuasive justification can be offered as to how such a reading of Rule 68 would in any way further the intent ofthe 

Rule which is to encourage settlement. 

61 Finally, ifthe term "costs" in Rule 68 includes attorney's fees, then Title VII plaintiffs who reject Rule 68 offers 

may find themselves in the unenviable position of having to absorb a defendant's attorney's fees ifthey fail to recover 

ajudgment as favorable as the defendant's offer. This could seriously undermine the purposes behind the attorney's 

fees provisions of the Civil Rights Act, and yet there is no principled way to allow attorney's fees to be recovered as 

costs under Rule 68 in some Title VII situations while prohibiting such recovery in others. As we noted in Roadway 

Express in a similar context, to select on an ad hoc basis those features of § 1988 and § 2000e-5(k) that should be 

read into Rule 68 would not only fundamentally alter the nature of Rule 68 but would also constitute standardless 

judicial law-making. Accordingly, in my view the offer made by the petitioner in this case fully complied with the 

terms of Rule 68 even though it attempted to place a limit on the ultimate amount of attorney's fees to be recovered. 

Because the "costs" provision in Rule 68 does not encompass attorney's fees, those fees are just as susceptible to 

compromise and settlement as are other inchoate consequences ofliability such as compensatory damages or 

backpaY.5 

62 In sum, I would reject the "plain meaning" basis ofthe Court's opinion interpreting Rule 68 because, in my view, 

the Rule must be read not only contrary to its "plain meaning" but also woodenly and perversely in order to reach the 

conclusion that a prevailing defendant who had made an offer pursuant to Rule 68 should be placed in a worse 

position than one who has lost to the plaintiffand had a judgment entered against him accordingly, but for an 

amount less than the amount tendered under Rule 68. This is "plain meaning" with a vengeance; a vengeance which 

neither the Rules Committee, this Court, nor Congress in their various roles in the adoption ofthe Rules could have 

contemplated. 

63 It may be said that to read the Rule according to its plain meaning as I see it will place barriers in the way of 

plaintiffs' suing defendants. The short answer to this argument is that any provisions such as Rule 68 designed to 

promote settlement, rather than litigation, of claims is bound to make a plaintiff take a look at his ''hole card." By the 

same token, the availability ofsuch a procedure is bound to make the defendant take a look at his "hole card" in 

order to make certain that he is using every means available to both avoid costly protracted litigation and possible 

loss ofthe case ifit goes to trial. The Rule interpreted in accordance with its "plain meaning" offers a defendant a 

method for preventing further accrual oftaxable costs in the case of inflated or "nuisance" lawsuits; ifthe plaintiff is 

ofthe opinion that the offer is too low to be worth acceptance or even serious consideration, he need not even 

respond to it and the case will, unless settled in some other manner, go to trial. By following such a course, a plaintiff 

who obtains a judgment in excess ofthe defendant's Rule 68 offer loses absolutely nothing; a plaintiff against whom 

a "take nothing" judgment is entered loses only the possibility that a district court might exercise its discretion and 

not award costs to the prevailing defendant. Although the vast increase in the amount of litigation in this Nation 

today is not a valid reason for twisting rules or statutes in order to reduce such volume, ifthe plain meaning of a rule 

may have a tendency to encourage settlement rather than trial, this is surely not an unfortunate mishap in our 

system of administering justice. 

1Rule 68, as amended in 1966, provides: 

"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 allowjudgment to be taken against him for the money or property or to the effect 

specified in his offer, with costs then accrued. Ifwithin 10 days after the service ofthe offer the adverse party 

serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance 

together with proof ofservice thereof and thereupon the clerk shall enterjudgment. An offer not accepted shall 

be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs. Ifthe 

judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs 

incurred after the making ofthe offer. The fact that an offer is made but not accepted does not preclude a 

subsequent offer. When the liability ofone party to another has been determined by verdict or order or 

judgment, but the amount or extent ofthe liability remains to be determined by further proceedings, the party 

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adjudged liable may make an offer ofjudgment, which shall have the same effect as an offer made before trial if « up it is served within a reasonable time not less than 10 days prior to the commencement of hearings to determine 

the amount or extent ofliability." 

2The formal offer ofjudgment submitted by the defendant to the attorney for the plaintiff read as follows: 

"Pursuant to Rule 68 ofthe Federal Rules ofCivil Procedure, defendant hereby offers to allowjudgment to be 

taken against it in this action, in the amount of $450 which shall include attorney's fees, together with costs 

accrued to date. This offer ofjudgment is made for the purposes specified in Rule 68, and is not to be construed 

either as an admission that the defendant is liable in this action, or that the plaintiffhas suffered any damage." 

ApP·34. 

3Senior District Judge Hoffman stated: 

"While there is little authority on the point, this Court is satisfied that in order to be effective, a Rule 68 offer 

must be made in a good faith attempt to settle the parties' litigation and, thus, must be at least arguably 

reasonable. 

***** 

"Ifthe purpose of the rule is to encourage settlement, it is impossible for this Court to concede that this purpose 

can be furthered or aided by an offer that is not at least arguably reasonable. 

***** 

"Finally, while the Court did ultimately find itself constrained to enter its judgment for the defendant, the Court 

certainly did not find the plaintiff's claim to be wholly specious. In the opinion of this Court and in the particular 

facts and circumstances of this case, an offer of only the sum of $450 could only have been effective were the 

plaintiff's claim totally lacking in merit or were there present additional factors which would mitigate in favor of 

the defendant." Id., at 11-12. 

4"Against that general background, the Rule 68 offer ofjudgment ofless than $500 before trial is not of such 

significance in the context ofthis 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. Ifthat 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. 

Unrealistic use ofthe rule would not encourage settlements, avoid protracted litigation or relieve courts of 

vexatious litigation." 600 F.2d, at 701. (Footnote omitted.) 

SIn multiclaim litigation, such a party may, ofcourse, be defending against a counterclaim or a cross-cIaim, but 

the effect ofthe Rule can most readily be explained by reference to cases involving a single claim by one plaintiff 

against one defendant. For that reason, as well as the fact that this case involves such a claim, we simply refer to 

the parties as "plaintiff" and "defendant." 

6No issue is presented in this case concerning the amount or the items ofcosts that defendant seeks to recover. 

7Rule 54(d) provides, in relevant part: 

"(d) Costs. 

"Except when express provision therefor is made either in a statute of the United States or in these rules, costs 

shall be allowed as ofcourse to the prevailing party unless the court otherwise directs ...." 

8Advisory Committee's Notes on Fed.Rule Civ.Proc. 68, 28 U.S.C..App., p. 499; 12 C. Wright & A. Miller, Federal 

Practice and Procedure § 3001, p. 56 (1973); 7 J. Moore & J. Lucas, Moore's Federal Practice 11 68.02, p. 68-4 

(1979). 

9This incentive is most clearly demonstrated by the situation in which the defendant's liability has been 

established "by verdict or offer ofjudgment"-or perhaps by an admission-and the only substantial issue to be 

tried concerns the amount ofthe judgment. In that context, the opportunity to avoid the otherwise almost 

certain liability for costs should motivate realistic settlement offers by the defendant, and the risk oflosing the 

right to recover costs provides the plaintiff with an additional reason for preferring settlement to further 

litigation. 

1ODelta argues that this additional incentive provided by Rule 68 is taking on increased importance as more 

district judges, like the District Judge here, are exercising the discretion granted by Rule 54( d) to deny costs to 

prevailing defendants. 

11 Defendant contended at oral argument that a settlement offer of one penny should trigger the cost-shifting 

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provision ofthe Rule if the defendant prevails. Tr. of Oral Arg. 5. «up ______________________________________________________________________________ 

12Defendant argues that our construction of the Rule is anomalous because under Rule 68, a defendant who 

prevails is in a less favorable position than if he had lost the case but for an amount less than the offer. Reply 

Brief for Petitioner 10. The argument is applicable, however, only in a narrowly limited category of cases. First, 

because the prevailing defendant normally recovers costs, the argument is relevant only in the relatively few 

cases in which special circumstances may persuade the district judge to exercise his discretion to deny costs to 

the prevailing party. And second, even within that small category, the argument is only valid if the settlement 

offer is for an amount less than the recoverable costs. For ifthe plaintiff obtains a judgment for an amount less 

than the offer but greater than the cost bill, the net liability ofthe defendant will be greater than the burden of 

paying his own costs after a victory on the merits. The fact that a defendant may obtain no benefit from a 

settlement offer for an amount less than his probable taxable costs is surely not a sufficient reason to disregard 

the plain language of the Rule, or to question its efficacy in motivating realistic settlement proposals in cases in 

which the defendant recognizes a significant risk that the plaintiff will obtain a judgment. 

In sum, the effect ofa literal interpretation of Rule 68 is to attach no practical consequences to a sham or token 

offer by the defendant. Since there is no reason to encourage such token offers, the Rule quite sensibly leaves the 

parties in the same position after such an offer as they would have been in if no such offer had been made. See n. 

21, infra. 

1 3Moreover, because Rule 68 has no application at all to offers made by the plaintiff, the plaintiff may not divest 

the district judge of his Rule 54( d) discretion by making a sham offer. 

14Defendant also argues that it should be permitted to use Rule 68 to recover costs in this manner because district 

judges have recently been exercising their discretion to deny prevailing defendants costs in too many cases. 

Reply Brief for Petitioner 8; Tr. ofOral Arg. 14. Since Rule 68 was promulgated prior to this alleged 

misapplication of Rule 54( d), it surely was not intended to remedy a problem that had not yet surfaced. 

Ofcourse, there really is no reason to assume that district judges are repeatedly abusing their Rule 54( d) 

discretion. Ifwe make the more probable assumption that they are denying costs to the prevailing party only 

when there would be an element of injustice in a cost award, the burden of defendant's argument is not only that 

a special privilege should be granted to defendants but also that its primary effect will be to thwart the 

administration ofjustice. 

1 5See Note, Rule 68: A "New" Tool for Litigation, 1978 Duke L.J. 889,895: 

"An offer by a defendant often dollars at the beginning of a difficult and complex case, or of a case based on a 

novel legal theory, is not likely to produce an early settlement of the case, which is the purpose ofthe rule. Yet, if 

the rule is not limited to cases in which the plaintiff prevails, the ten dollar offer will have the effect of assuring 

that the defendant is awarded practically all ofhis costs ifhe prevails, even ifthere are good reasons why the 

defendant should not be awarded his costs. This is clearly not the result that the rulemakers envisioned. If 

interpreted to require that the plaintiff secure at least some relief, the rule would insure that token offers will not 

be made because nothing would be gained by them. In most cases, the defendant, as the prevailing party, will be 

entitled to costs under rule 54( d). When the defendant is not so entitled, he ought not be able to employ rule 68 

to override the discretion that the court would otherwise have, in order to compel the awarding of costs." 

16Moreover, because the defendant's settlement offer is admissible at a proceeding to determine costs, a defendant 

could use a reasonable settlement offer as a means of influencing the judge's discretion to award costs under 

Rule 54(d). 

1712 C. Wright &A Miller, Federal Practice and Procedure § 3001, p. 56 (1973). 

1 BOne ofthe members ofthe Advisory Committee, Robert G. Dodge, indicated at a symposium on the new Rules 

that the Rule was based on "statutes which are widely prevalent in the states ...." American Bar Association, 

Rules of Civil Procedure for the District Court ofthe United States with Notes as prepared under the direction of 

the Advisory Committee and Proceedings of the Institute on Federal Rules, Cleveland, Ohio 337 (1938) 

(hereinafter Institute on Federal Rules). 

192 Minn.Stat. § 9323 (Mason 1927) provided: 

"At least ten days before the term at which any civil action shall stand for trial the defendant may serve on the 

adverse party an offer to allow judgment to be taken against him for the sum, or property, or to the effect therein 

specified, with costs then accrued. Ifwithin ten days thereafter such party shall give notice that the offer is 

accepted, he may file the same, with proof ofsuch notice, and thereupon the clerk shall enter judgment 

accordingly. Otherwise the offer shall be deemed withdrawn, and evidence thereof shall not be given; and if a 

more favorable judgment be not recovered no costs shall be allowed, but those ofthe defendant shall be taxed in 

his favor." 

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«up 4 Mont.Rev.Codes Ann. § 9770 (1935) provided: 

"The defendant may, at any time before the trial or judgment, serve upon the plaintiff an offer to allow judgment 

to be taken against him for the sum or property, or to the effect therein specified. Ifthe plaintiff accept the offer, 

and give notice thereof within five days, he may file the offer, with proof of notice of acceptance, and the clerk 

must thereupon enter judgment accordingly. Ifthe notice of acceptance be not given, the offer is to be deemed 

withdrawn, and cannot be given in evidence upon the trial; and if the plaintiff fail to obtain a more favorable 

judgment, he cannot recover costs, but he must pay the defendant's costs from the time of the offer." 

N.Y.Civ.Prac.Law § 177 (Cahill 1937) provided: 

"Before the trial, the defendant may serve upon the plaintiffs attorney a written offer to allow judgment to be 

taken against him for a sum, or property, or to the effect, therein specified, with costs. Ifthere be two or more 

defendants, and the action can be severed, a like offer may be made by one or more defendants against whom a 

separate judgment may be taken. Ifthe plaintiff, within ten days thereafter, serve upon the defendant's attorney 

a written notice that he accepts the offer, he may file the summons, complaint, and offer, with proof of 

acceptance, and thereupon the clerk must enter judgment accordingly. If notice of acceptance be not thus given, 

the offer cannot be given in evidence upon the trial; but, if the plaintiff fail to obtain a more favorable judgment, 

he cannot recover costs from the time of the offer, but must pay costs from that time." 

20See 2 Minn.Stat. §§ 9471-9473 (Mason 1927); 4 Mont.Rev.Codes Ann. §§ 9787, 9788 (1935); N.Y.Civ.Prac.Law 

§§ 1470-1475 (Cahill 1937). 

21 In each of these States, the general statute providing for recovery of costs by prevailing defendants was, unlike 

Rule 54(d), mandatory. See, e. g., 4 Mont.Rev.Code Ann. §§ 9787-9788 (1935); 2 Minn.Stat. § 9471 (Mason 

1927); N.Y.Civ.Prac.Law §§ 1470-1475 (Cahill 1937). Inasmuch as those statutes did not give trial judges 

discretion to deny costs to prevailing defendants, the state antecedents of Rule 68 did not perform any 

cost-shifting function in cases in which the defendant prevailed. In those States-as is true under Rule 68-a 

sham settlement offer had no practical consequences; it left the parties in the same situation as if no offer had 

been made. See n. 12, supra. Therefore the state offer-of-judgment statutes provide support for the view that 

Rule 68 applies only to prevailing plaintiffs. 

22See, e. g., Cal.Civ.Code Civ.Proc. Ann. § 998 (West 1980); Yeager v. Campion, 70 Colo. 183, 197 P. 898 (1921); 

Wordin v. Bemis, 33 Conn. 216 (1866); Prather v. Pritchard, 26 Ind. 65 (1866); West v. Springfield Fire & 

Marine Ins. Co., 105 Kan. 414, 185 P. 12 (1919); Wachsmuth v. Orient Ins. Co., 49 Neb. 590, 68 N.W. 935 

(1896); Herring-Hall-Marvin Safe Co. v. Balliet, 44 Nev. 94, 190 P. 76 (1920); Hammond v. Northern Pacific 

R. Co., 23 Or. 157, 31 P. 299 (1892); Sioux Falls Adjustment Co. v. Penn. Soo Oil Co., 53 S.D. 77, 220N.W. 146 

(1928); Newton v. Allis, 16 Wis. 197 (1862). 

2 3 See cases cited in n. 22, supra; see also Miklautsch v. Dominick, 452 P.2d 438 (Alaska 1969); Brown v. Nolan, 

98 Cal.APP.3d 445, 159 Cal.Rptr. 469 (1979); Schnute Holtman Co. v. Sweeney, 136 Ky. 773, 125 S.W. 180 

(1910); Watkins v. W. E. Neiler Co., 135 Minn. 343, 160 N.W. 864 (1917); Petrosky v. Flanagan, 38 Minn. 26,35 

N.W. 665 (1887); Woolsey v. O'Brien, 23 Minn. 71, 72 (1876); Morris-Turner Live Stock Co. v. Director General 

ofRailroads, 266 F. 600 (Mont.1920); Margulis v. Solomon & Berck Co., 223 App.Div. 634, 229 N.Y.S. 157 

(1928); Smith v. New York, O. & W. R. Co., 119 Misc. 506, 196 N.Y.S. 521 (1922); McNally v. Rowan, 101 

App.Div. 342, 92 N.Y.S. 250, affd, 181 N.Y. 556, 74 N.E. 1120 (1905); Ranney v. Russell, 10 N.Y.Super. 689, 690 

(1854); Benda v. Fana, 10 Ohio St.2d 259, 227 N.E.2d 197 (1967); but see Terry v. Burger, 6 Ohio App.2d 53, 

216 N.E. 383 (1966). 

24Some commentators assume that the Rule, even when applicable, operates to deny costs to a prevailing plaintiff 

and not to impose liability for defendants' costs on that plaintiff. Wright and Miller's treatise indicates: 

"Rule 68 is intended to encourage settlements and avoid protracted litigation. It permits a party defending 

against a claim to make an offer ofjudgment. Ifthe offer is not accepted, and the ultimate judgment is not more 

favorable than what was offered, the party who made the offer is not liable for costs accruing after the date of the 

offer. 

''This device was entirely new to the federal courts when the Federal Rules were adopted in 1938. But it was 

familiar in state practice. And the general principle, that a party may be denied costs when he sues vexatiously 

after refusing an offer ofsettlement, and recovers no more than he had been previously offered, has been held 

to be within the powers of an equity court regardless of the existence of a rule such as this one. 

"Although the privilege of an offer of settlement is extended only to the party defending against a claim, it 

furnishes a just procedure to all parties concerned. It is fair to the claimant because it does the defending party 

no good to make an offer ofjudgment that is not what the claimant might reasonably be expected to recover ; 

he will not free himself of the costs ifthe judgment recovered is more than the offer. It is certainly fair to the 

defending party because it allows him to free himself of the court costs by offering to make a settlement. It is of 

great benefit to the court because it encourages settlements and discourages vexatious suits and thus diminishes 

the burden oflitigation." (Footnotes omitted.) (Emphasis supplied.) 12 C. Wright & A. Miller, Federal Practice 

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and Procedure § 3001, p. 56 (1973). « up 

Moore uses similar language in his treatise, stating that an offer ofjudgment will "operate to save [the 

defendant] the costs from the time of that offer ifthe plaintiffultimately obtains ajudgment less than the sum 

offered." 7 J. Moore & J. Lucas, Moore's Federal Practice 168.06, p. 68-13 (1979) (emphasis supplied). See also 

Dobie, The Federal Rules ofCivil Procedure, 25 Va.LRev. 261, 304, n. 195 (1939) ("[I]fthe offer is not accepted, 

it, of course, relieves the offering defendant of the burden of future costs, thereby constituting an inducement to 

the making ofsuch offers"). 

2SMr. Dodge stated: 

"This rule is based upon statutes which are widely prevalent in the states, and it affords a means for stopping the 

running of costs where the defendant admits that part ofthe claim is good but proposes to contest the balance. 

He may then make an offer ofjudgment of the amount which he conceives is due, and unless the plaintiff 

recovers more than that the plaintiff gets no costs accruing after that offer ofjudgment." Institute on Federal 

Rules 337 (emphasis supplied). 

26The Advisory Committee's Notes state: 

"It is implicit, however, that as long as the case continues whether there be a first, second or third trial-and the 

defendant makes no further offer, his first and only offer will operate to save hint the costs from the time of that 

offer ifthe plaintiff ultimately obtains a judgment less than the sum offered. In the case of successive offers not 

accepted, the offeror is saved the costs incurred after the making of the offer which was equal to or greater than 

the judgment ultimately obtained." 28 U.S.C.App., p. 499. 

27It was not until 1974 that any federal court even suggested that Rule 68 could be interpreted to apply to a case in 

which the defendant 

prevails. See Mr. Hanger, Inc. v. Cut Rate Plastic Hangers, Inc., 63 F.R.D. 607 (E.D.N.Y.1974). 

Apart from the case at bar and Mr. Hanger, Inc., there are only two other reported cases in which a defendant 

attempted to recover his own costs under Rule 68 after obtaining a judgment in his favor. In Dual v. Cleland, 79 

F.R.D. 696 (D.C.1978), the court followed Mr. Hanger and reluctantly granted defendant an award of costs 

under Rule 68, after stating that it would not have allowed costs to defendant as the prevailing party under Rule 

54(d). In Gay v. Waiters' and Dairy Lunchmen's Union, Local No. 30,86 F.R.D. 500, 503-504 (N.D.Cal.1980), 

the court assumed that Rule 68 applied to prevailing defendants but refused to apply the Rule to impose costs 

on the named plaintiffs in a Title VII class action. The court noted that if Rule 68 applied in class actions, the 

disproportionate risk imposed on the class representatives would discourage the filing ofTitle VII suits. 

All the other reported cases involving Rule 68 were either cases in which the plaintiff had prevailed or cases in 

which the court intplicitly assumed that the Rule was limited to such a situation. See, e. g., Mason v. Belieu, 177 

U.S.App.D.C. 68, 75, 543 F.2d 215, 222 (plaintiffs not awarded costs because they failed to file a bill of costs and 

defendant thus did not know which costs to object to as being incurred after the offer was made), cert. denied, 

429 U.S. 852, 97 S.Ct. 144,50 L.Ed.2d 127 (1976); Home Ins. Co. v. Kirkevold, 160 F.2d 938,941 (CA9 1947) 

(plaintiff still entitled to recover costs where defendant did not prove that its offer ofjudgment was served 

within 10 days of trial); Truth Seeker Co. v. Durning, 147 F.2d 54, 56 (CA21945) ("[D]efendant could have 

stopped the running offurther costs by an offer ofjudgment under F.R.C.P. 68"); Cover v. Chicago Eye Shield 

Co., 136 F.2d 374 (CA7) (defendant not liable for fees of master and court reporter where plaintiff recovered less 

than offer), cert. denied, 320 U.S. 749, 64 S.Ct. 53, 88 L.Ed. 445 (1943); Staffend v. Lake Central Airlines, Inc., 

47 F.R.D. 218, 220 (ND Ohio 1969) (a defendant may "escape the imposition of further costs where the plaintiff 

does not eventually secure a judgment exceeding the offer"); Tansey v. Transcontinental & Western Air, Inc., 97 

F.Supp. 458, 459 (DC 1949) (an offer that was not for a sum certain will not prevent the court from considering 

plaintiffs costs thereafter incurred); Maguire v. Federal Crop Ins. Corp., 9 F.R.D. 240, 242 (WD La. 1949) 

(defendant cannot "escape" paying the plaintiffs costs because offer was not properly fonnalized), affd in part 

and rev'd in part, 181 F.2d 320 (CAs 1950); FDICv. Fruit Growers Service Co., 2 F.D.R. 131, 133 (ED Wash. 

1941) (after taxing certain disputed costs against defendant, court noted that the costs could have been avoided 

by taking advantage of Rule 68); Nabors v. Texas Co., 32 F.Supp. 91, 92 (WD La. 1940) (a defendant may "save 

himself in the matter of costs if the recovery does not exceed what was tendered" if he proves that he made an 

offer ofjudgment). See also Scheriffv. Beck, 452 F.Supp. 1254 (COIO.1978); Waters v. Heublein, Inc., 485 

F.Supp. 110 (N.D.Cal.1979). 

1 Unfortunately, the cost oflitigation in this country furthered by discovery procedures susceptible to gross 

abuse-has reached the point where many persons and entities simply cannot afford to litigate even the most 

meritorious claim or defense. See Amendments to the Federal Rules of Civil Procedure, 446 U.S. 995,999-1001 

(1980) (POWELL, J., with whom STEWART and REHNQUIST, JJ., joined, dissenting); ACF Industries, Inc. v. 

EEOC, 439 U.S. 1081, 1086-1088, 99 S.Ct. 865, 868-869, 59 L.Ed.2d 52 (1979) (POWELL, J., dissenting from 

denial of certiorari); Janofsky, A.B.A. Attacks Delay and the High Cost of Litigation, 65 A.B.A.J. 1323, 1323-1324 

(1979). Cf. Herbert v. Lando, 441 U.S. 153, 177, 99 S.Ct. 1635, 1650, 60 L.Ed.2d 115 (1979)· 

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«up 2In Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.a. 2455, 65 L.Ed.2d 488 (1980), we held that the term 

"costs," as it is used in 28 U.S.C. § 1927, does not incorporate by reference the definition ofcosts used in Title 

VII. Nothing in that case is inconsistent with my reasoning here. In Roadway Express, a party sought costs, 

including an attorney's fee, under § 1927 from opposing counsel who had unreasonably and vexatiously delayed 

an employment discrimination lawsuit. We concluded that the attorney's fee could not be recovered under § 

1927, because Congress intended that section to include only those costs specified in a corresponding section, 28 

U.S.C. § 1920. In this case, by contrast, the entitlement to "costs," including an attorney's fee, arises under Rule 

68 ofthe Federal Rules ofCivil Procedure. In approving the Federal Rules, Congress appears to have 

incorporated the definition of costs found in the substantive statute at issue in the litigation. Cf. Fed.Rule 

Civ.Proc.54(d). 

3In Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (1976) (en banc), 

the Court ofAppeals for the Third Circuit held that the primary determinant of a court-awarded fee-the 

"lodestar"-should be the amount oftime reasonably expended on the matter multiplied by a reasonable hourly 

rate. The "lodestar" is subject to adjustment based on, inter alia, the quality ofthe work and the results 

obtained. Id., at 117-118; accord, Furtado v. Bishop, 635 F.2d 915,920-924 (CA 11980); Copeland v. Marshall, 

205 U.S.App.D.C. 390, 403-404, 641 F.2d 880,893-894 (1980) (en banc). Cf. Johnson v. Georgia Highway 

Express, Inc., 488 F.2d 714 (CA 5,1974). 

4	It may be, ofcourse, that the parties will settle the issue of costs and attorney's fees after the acceptance ofthe 

offer, without the need to involve the trial judge. Nothing in this opinion should be read to discourage that 

practice. But the terms ofthe offer ofjudgment must permit the prevailing plaintiff to request the trial judge to 

award a reasonable fee. 

SContrllIY to the suggestion in Justice REHNQUISTs dissenting opinion, post, at 378-379, nothing herein 

requires prevailing defendants to receive attorney's fees as part oftheir costs under Rule 68 when a plaintiff 

rejects an offer ofjudgment and then ultimately loses on the merits. As I have stated, it is the province ofthe 

trial judge to determine the entitlement to, and amount of, an attorney's fee. See n. 3, supra, and accompanying 

text. Prevailing plaintiffs are entitled to attorney's fees except in unusual circumstances. Newman v. Piggie Park 

Enterprises, Inc., 390 U.S. 400, 401-402, 88 S.a. 964, 965-966, 19 L.Ed.2d 1263 (1968). A prevailing 

defendant, on the other hand, is entitled to attorney's fees as part ofthe costs only when the lawsuit is "frivolous, 

unreasonable, or without foundation." Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421,98 S.Ct. 694, 

700, 54 L.Ed.2d 648 (1978). 

1The 1948 amendment to Rule 68 added the following two sentences: 

"Ifthe judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the 

costs incurred after the making ofthe offer. The fact that an offer is made but not accepted does not preclude a 

subsequent offer." The Advisory Committee Notes explain that the two new sentences were added to assure "a 

party the right to make a second offer where the situation permits-as, for example, where a prior offer was not 

accepted but the plaintiffs judgment is nullified and a new trial ordered, whereupon the defendant desires to 

make a second offer." Advisory Committee Notes on Amendment to Rules ofCivil Procedure, 28 U.S.CApp., pp. 

499-500,5 F.R.D. 433, 483 (1946); 7 J. Moore & J. Lucas, Moore's Federal Practice '1168.01, p. 68-3 (1979). The 

change in the language ofthe Rule had nothing to do with whether or not it was intended to operate in a 

situation where the defendant prevailed. 

2The Minnesota statute referred to by the 1938 Advisory Notes, 2 Minn.Stat. § 9323 (Mason 1927), provided: 

"At least ten days before the term at which any civil action shall stand for trial the defendant may serve on the 

adverse party an offer to allowjudgment to be taken against him for the sum, or property, or to the effect therein 

specified, with costs then accrued. Ifwithin ten days thereafter such parties shall give notice that the offer is 

accepted, he may file 

the same, with proofof such notice, and thereupon the clerk shall enterjudgment accordingly. Otherwise the 

offer shall be deemed withdrawn, and evidence thereofshall not be given; and ifa more favorable judgment be 

not recovered no costs shall be allowed, but those ofthe defendant shall be taxed in his favor." (Emphasis 

supplied.) 

The Montana statute, 4 Mont.Rev.Codes Ann. § 9710 (1935), provided: 

"'The defendant may, at any time before the trial orjudgment, serve upon the plaintiff an offer to allow judgment 

to be taken against him for the sum or property, or to the effect therein specified. Ifthe plaintiff accept [sic] the 

offer, and give [sic] notice thereofwithin five days, he may file the offer, with proof ofnotice of acceptance, and 

the clerk must thereupon enterjudgment accordingly. Ifthe notice of acceptance be not given, the offer is to be 

deemed withdrawn, and cannot be given in evidence upon the trial; and ifthe plaintifffail [sic] to obtain a more 

favorable judgment, he cannot recover costs, but he must pay the defendant'S costs from the time ofthe offer." 

(Emphasis supplied.) 

The New York Statute, N .Y.Civ.Prac.Law § 177 (Thompson 1939), provided: 

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«up 	 "Before the trial, the defendant may seIVe upon the plaintiffs attorney a written offer to allow judgment to be 

taken against him for a sum, or property, or to the effect, therein specified, with costs. Ifthere be two or more 

defendants, and the action can be severed, a like offer may be made by one or more defendants against whom a 

separate judgment may be taken. Ifthe plaintiff, within ten days thereafter, seNe [sic] upon the defendant's 

attorney a written notice that he accepts the offer, he may file the summons, complaint, and offer, with proof of 

acceptance, and thereupon the clerk must enter judgment accordingly. If notice of acceptance be not thus given, 

the offer cannot be given in evidence upon the trial; but, ifthe plaintifffail [sic] to obtain a more favorable 

judgment, he cannot recover costs from the time ofthe offer, but must pay costsfrom that time." (Emphasis 

supplied.) 

3It should be noted that the commentators on which the Court relies so heavily either do not support its position 

or simply fail to address it. Contrary to its suggestion, Wright and Miller's treatise assumes that Rule 68 

operates in a manner that would allow a prevailing defendant the benefits ofthe Rule. Their treatise provides: 

"Ifthe offer is not accepted, and the ultimate judgment is not more favorable than what was offered, the party 

who made the offer is not liable for costs accruing after the date of the offer." 12 C. Wright &A. Miller, Federal 

Practice and Procedure § 3001, p. 56 (1973) (emphasis supplied). Thus, Wright and Miller envisioned that costs 

would be shifted unless the plaintiff recovered a judgment more favorable than the offer-a hurdle that 

respondent here was unable to clear. 

4The actual text of the offer made by the petitioner to the respondent in this case reads in pertinent part as 

follows: 

"Pursuant to Rule 68 of the Federal Rules of Civil Procedure, defendant hereby offers to allow judgment to be 

taken against it in this action, in the amount of $450, which shall include attorney's fees, together with costs 

accrued to date." 

5The nearly 100 Rules of Federal Civil Procedure have numerous and often differing purposes, but it bears 

repeating that the purpose behind Rule 68, which this case involves, is to promote settlement and thereby 

diminish the number oftrials necessary to resolve the cases which are filed in the federal courts. Were we to 

hold that attorney's fees were not subject to settlement and compromise (in the same way as the issues of 

liability, damages, and other remedies) as a part of a Rule 68 offer, we would frustrate the purpose of this Rule. 

The defendant would be put in the unenviable position of having to make an offer ofjudgment without knowing 

what his potential liability in terms of attorney's fees would be over and above the amount ofthe Rule 68 offer. 

While traditional "costs" can never be known to a certainty at the time of the making of a Rule 68 offer, 

knowledgeable counsel for both defendant and plaintiff can assess at least their order of magnitude. Attorney's 

fees, however, are a different breed of cat, not only because they can be extraordinarily extensive compared to 

traditional items of costs, but also because neither the plaintiff nor the defendant can know with any degree of 

certainty how much ofthe attorney's fees a prevailing plaintiff seeks will be allowed by a trial court exercising its 

discretion pursuant to Rnle 54. Thus to hold that such fees were by definition open-ended and not subject to 

compromise would mean that an attorney representing a defendant and convinced that an offer pursuant to 

Rule 68 might well result in a settlement of the case if attorney's fees were subject to settlement and 

compromise could never confidently persuade his client that it would be in the client's best interest to make such 

an offer because he would of necessity have to advise the client in cases where attorney's fees are recoverable 

that such recovery would be over and above the amount ofthe Rule 68 offer. Such a caveat in the attorney's 

recommendation will most likely prove to deter the client from making a Rule 68 offer in the first place, with the 

result that fewer suits will be settled and more will be tried. Such a construction of Rule 68, therefore, hardly 

furthers the purposes behind the Rule . 

.

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