Opinion ID: 184720
Heading Depth: 2
Heading Rank: 3

Heading: The Delta Air Lines Case

Text: 33 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, 101 S.Ct. 1146, 67 L.Ed.2d 287 (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, 101 S.Ct. 1146. As Justice Powell's concurrence 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, 101 S.Ct. 1146 (Powell, J., concurring). 34 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, 101 S.Ct. 1146 (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, 101 S.Ct. 1146. 35 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 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. 36 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.