Opinion ID: 184720
Heading Depth: 2
Heading Rank: 1

Heading: Comparison of the Offer and the Judgment Obtained

Text: 19 We must now determine what application, if any, Rule 68 has in this case. The Rule provides in relevant part that 20 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. 21 Fed.R.Civ.P. 68. 22 Here, Continental offered that a judgment may be taken against it, and in favor of plaintiff, on all claims in the above-captioned 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. 23 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. 24 The starting point for determining whether a Rule 68 offer should be viewed as including costs is Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 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 25 [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 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. 26 Id. at 6, 105 S.Ct. 3012 (internal citations omitted). 27 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, 105 S.Ct. 3012. 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 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. 28