Document: 450 U.S. 346 101 S.Ct. 1146 67 L.Ed.2d 287 DELTA AIR LINES, INC., Petitioner,v.Rosemary 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 defendant's formal settlement offer "to allow judgment to be taken against him," and "the finally obtained by the offeree is not more favorable than offer," "must pay costs incurred after making offer"—does apply case in which entered plaintiff-offeree favor defendant-offeror. Pp. 350-361. (a) This interpretation dictated 68's plain language—"judgment . offer"—which confines Rule's effect has for an amount less offer. Moreover, because contemplates "judgment taken" defendant one plaintiff, it follows "obtained" also one. 350-352. (b) Such 68 consistent with purpose encourage litigation, since inducement settle those cases there strong probability will obtain but recovery uncertain. It could have been reasonably intended on hand affirmatively grant district judge discretion deny prevailing party under 54(d)—which shall allowed unless trial court otherwise directs—and then other give defendants only defendants—the power take away performing token act nominal In both situations does apply—judgments or plaintiff's greater offer—the retains his 54(d) discretion. language makes unnecessary read requirement into reasonable triggers rule. A literal avoids problem sham offers, such serve no purpose, encouraged make realistic offers. 352-356. (c) The above further compelled its history—the state rules upon was modeled, interpreting rules, view commentators, including members Advisory Committee. 356-361. 7 Cir., 600 F.2d 699, affirmed. E. Allan Kovar, Chicago, Ill., petitioner. Susan M. Vance, respondent. Elinor H. Stillman, Washington, D. C., United States, as amicus curiae, special leave Court. Justice STEVENS delivered opinion 1 Pursuant Rules Procedure, offer, offer."1 narrow question presented this whether words offeree" used should construed encompass well offeree. 2 Respondent Rosemary August (plaintiff) filed complaint petitioner Delta Air Lines, Inc. (defendant), alleging she had discharged from her position flight attendant solely race violation Title VII Rights Act 1964, 42 U.S.C. § 2000e et seq. She sought reinstatement, approximately $20,000 backpay, attorney's fees, costs. few months filed, made $450.2 refused, tried, lost. District Court directed each bear own Defendant moved modification judgment, contending required refused. denied motion ground $450 good-faith attempt therefore did trigger cost-shifting provisions 68.3 Appeals affirmed same ground. 699 (CA7 1979), holding applied sufficient justify serious consideration plaintiff."4 3 finding reasonableness Rule, confront threshold any application Our resolution case, however, turns question. answer language, history 68. 4 * prescribes certain consequences offers "a defending claim."5 plaintiff. applies two situations: before trial, bifurcated proceeding, liability determined "by verdict order judgment." either situation, accepts "either may file thereupon clerk enter If, accepted, deemed withdrawn "and evidence thereof admissible except proceeding determine costs." rejection becomes significant costs.6 5 Under recovers directs.7 conceivably alter presumption three different kinds judgments are entered: (1) defendant; (2) offer; (3) these described offer." 6 Obviously do third situation—a Those just clearly second, can doubt "obtained offeree." But inasmuch offeree"—rather like "any judgment"—would normally lawyer describe party, second type case—one reading supported contained Rule. when him." Because obviously 8 sum, we limit our analysis text itself, clear simply inapplicable judgment. II 9 purpose. litigation.8 all adverse potential defeat provide parties incentive advance trial. additional plaintiffs presumptively 54(d), imposes burden whom made. If he lose some benefits victory offer.9 usually assessed losing normal incident defeat. Therefore, nonsettling run risk suffering burdens ordinarily attend defeat, would little, any, were loses. 10 argues incentive, operates deprive vested him 54(d). According reasoning, mandatory, must assess who fails reject expectation might exercise wins.10 11 accept require us disregard specific intent expressed thereby attribute schizophrenic drafters. argues, defeated plaintiffs, matter how small, apparently operation Rule.11 Thus defendant, meaningless eliminate judge's We cannot conclude drafters defendants—and act.12 12 operated conceive reason why given defendants, divest See Simonds v. Guaranty Bank & Trust Co., 480 F.Supp. 1257, 1261 (D.C.Mass.1979). When literally, evenhanded operation. As already noted, extreme former survives offeree"; latter, "more offer."13 assume biased plaintiffs— entirely risk-free method denying judges confers regardless outcome litigation.14 13 Appeals, perceiving anomaly allowing control resolved totally offers.15 "secure just, speedy, inexpensive determination every action." Fed.Rule Civ.Proc. 1. chooses fair shift cost continuing litigation event gamble produces award equal offered. hardly utterly frivolous watershed transforms right absolute recover made.16 III 14 outgrowth equitable practice "when sues vexatiously refusing settlement."17 1938 Committee Notes original version merely cited statutes illustrations Rule.18 These statutes, Minnesota, Montana, New York, mandated imposition rejected failed offer.19 All States provisions, similar providing party.20 Therefore served offer-of-judgment penalize without good cause.21 notes, rules.22 exception EEOC involving prevailed.23 15 Committee, agreed Rule.24 At symposium held shortly issued 1938, means stopping running where admits part claim proposes contest balance."25 1946 Amendment indicate designed "save" having reimburse mandatory court's discretionary tax prevails.26 fact defense bar develop seeking persuasive lawyers interpreted accordance language.27 commentators' with, compel, language. 16 Although petition certiorari Judge's abuse raised properly us. affirm Appeals. 17 so ordered. 18 POWELL, concurring result. 19 I agree most views dissenting REHNQUIST, Court's anomalous indeed that, view, prevails loses entirely. 20 nevertheless concur result reached think terms constituted proper within scope 21 provides, pertinent part: 22 "At time days begins, money property specified accrued " (emphasis added). 23 cases, "costs" defined statute itself. Except unusual circumstances, requires receive fee 2000e-5(k); see Christiansburg Garment Co. EEOC, 434 412, 416-417, 98 694, 697-698, 54 648 (1978); Newman Piggie Park Enterprises, Inc., 390 400, 401-402, 88 964, 965-966, 1263 (1968). last Term Maher Gagne, 448 122, 129, 100 2570, 2575, 65 653 (1980), weakened "settlement rather through litigation." 24 proposal definition, stipulates treated party. follows, therefore, component include fees date Scheriff Beck, 452 1254, 1260 (Colo.1978) (offer $2,200 together costs, "fatally defective excludes accrued"). 25 purposes plain-language construction relationship between To sure, VII's provision enable vindicate their rights litigation. Park, supra, at S.Ct., 965-966. On hand, public whole interest—often overriding one—in exhaustion protracted proceedings. available mechanism burdensome lawsuits. particularly facilitates early marginal suits perceives merit, recognizes speculative nature.1 26 An cover unlikely lead settlement. Many afford be, also, instituted suit hope compensation beyond defendant. conflict interest inhibit encouraging client seems relevant interests—of public—will construing language.2 27 Delta's comply 28 litigated suit, awards fee. primary factors setting expended hourly rate time.3 Thus, bound proposed bill submitted. itself reasonable. 29 followed established Cf. supra. consists components: (i) substantive relief proposed, sum reinstatement promotion, (ii) specify first exactitude. accepted.4 30 Assessed standards, putative part, provided: 31 "Pursuant hereby action, $450, date" 32 complied 68—and company now entitled seeks5—if relief, plus awarded court. specify. 33 Accordingly, 34 THE CHIEF JUSTICE STEWART join, dissenting. 35 Of several remarkable aspects least save docket number name bears virtually resemblance Seventh Circuit granted review. certiorari, albeit somewhat laborious form, best captured questions: 36 "Whether [C]ourt [A]ppeals erred nullifying unambiguous 68?" Pet. Cert. 37 states "[t]he 'judgment offeree' Ante, 348. After reciting procedural lower courts, criticizes failure defendant-offeror." 350. finds "is 68." Ibid. 38 Though ultimate difference approach opinions striking. began stating issue appeal awarding final 699-700 (1979) supplied). relied primarily private action willing permit technical rule chill pursuit high objective." Id., 701. explained semantically permitted, require, when, "viewed along seen faith issues, risks, expenses anticipated involved case." 702. reasoned "liberal" "technical" justified, need decide types cases. 68, "reasonable" "good faith" (neither qualifications found 68). Court, error even reaching applicability Totally ignoring common-sense maxim includes lesser, concludes "dictated 39 Two reasons advanced support permitting impose respondent squarely negated reasoning opinion. "plain language" refers neither nor "in faith." 40 elaborate conciliation machinery receives "right sue" letter authorized sue employer appropriate There intimation lawsuit conducted Procedure. fact, specifically "[t]hese govern procedure courts civil nature cognizable law equity, admiralty, exceptions stated 81." 81 sets forth list bankruptcy proceedings copyright brought Code, included. Presumably, particular applicable VII, bring treatment respect lawsuit. 41 my basis conditions bringing play fondness meaning" canon statutory construction. shortest response Appeals' suggestion incorporate requirement; deprives traditional disallow strongest verb known English language—"must": "If ." (Emphasis added.) 43 Over half century ago Sixth said word 'must' imperative meaning called attention 'may.' Berg Merchant, 990 (1926), cert. denied, 274 738, 47 575, 71 L.Ed. 1317 (1927). import tender rewrites puts impossible evaluate uncertain nebulous concepts context "offer judgment" many years past. 44 Since relies set out verbatim analyzing argument. 45 accrued. service serves written notice acceptance proof 46 asserts by, of, correct language," [is] prevailed—i. e., apply, regarding governed grants "prevailing party," so. "history," "policy" quite differently it, plaintiff—"offeree" 68—must win "obtain" "judgment" call various canons pass review times choose being reduced conclusion. 48 term 54(a) mean "decree lies." Unquestionably, "order lies" case. Certainly, subscribe immediately her. "take nothing" see, Appendix Fed.Rules Civ.Proc., Forms 32, U.S.C.App., p. 530, thus fits remaining parts pertaining orders manner surely intended. circumscribe cut adrift related portions justified considerations policy. proposition never statute, they legislative warrants Chemehuevi Tribe Indians FPC, 420 395, 95 1066, 279 (1975). 49 history. adopted read: 50 accepted admissible. offered, time." supplied.) 51 Obviously, "triggered" Just obviously, meet obtaining change amended 1948 present form. amendment explain amendment—none indication Congress decided later prevailed merits.1 52 noted cite offer.2 identical situation here herself in. general was, unlike mandatory. See, e. g., Mont.Rev.Codes Ann. §§ 9787, 9788 (1935); Minn.Stat. 9471 (Mason 1927); N.Y.Civ.Prac.Law 1470-1475 (Thompson 1939). result, address merits shifting law. is, difficult me understand argued Congress, pattern possibly immunize concomitant lost merits. noteworthy confronted concluded permissible. Dual Cleland, 79 F.R.D. 696 (DC 1978); Mr. Hanger, Cut Rate Hangers, 63 607 (EDNY 1974); Gay Waiters' Dairy Lunchmen's Union, Local 30, 86 500 (ND Cal.1980).3 53 Contrary another faithful actual language; indeed, twisted recognition, parsed existence, say latter prevailed. removal express excepts "express therefor rules." doubted provision" imagined. While necessary here, note policy argument convince refused better favor, although lesser offered pursuant urged place tendered $10,000 $5,000 nothing. 55 One pressed affirmance response. "an accrued." appears entitle whatever determines taxable valid limits 56 nowhere look elsewhere assessable contain definition "costs," court, discretion, party" "reasonable 2000e-5(k). "except circumstances," (1980). runs, Petitioner's theory technically limited recovered offer.4 57 argument, superficially appealing, survive careful scrutiny. focus aided decision Roadway Express, Piper, 447 752, 2455, 488 1927 included Section multiply excess create. However, 1927, define critical word—"costs." sanction imposed 1927. conclusion doing contemporaneous understanding enacted. assumed recognized "American rule" enacted U.S., 759, 2460. Without wished amend passage fee-shifting 1988 2000e-5(k), unwilling expand historical definition. 58 Express equally sound determining suit. "contemporaneous understanding" promulgated 1813 predecessor indicates deviate common bolstered authors recovered, mentioned. 37, allows fees," discovery abuses. 59 likewise congressional statutes. Nothing come suggest adding 60 worth noting logic recoverable fees. 1975, Alyeska Pipeline Wilderness Society, 421 240, 1612, 141, federal suits. 260-261, n. 33, 1623, 33. Some element while others separate construe create two-tier system Plaintiffs find themselves much actions provisions. No justification exists subjecting differing penalties way 61 Finally, unenviable absorb fail seriously undermine behind Act, yet principled prohibiting others. context, select ad hoc features 2000e-5(k) fundamentally constitute standardless judicial law-making. fully though attempted recovered. susceptible compromise inchoate compensatory damages backpay.5 62 because, contrary woodenly perversely reach placed worse accordingly, vengeance; vengeance roles adoption contemplated. according barriers plaintiffs' suing defendants. short promote settlement, claims "hole card." By token, availability card" using avoid costly possible loss goes preventing accrual inflated "nuisance" lawsuits; too low consideration, respond will, settled manner, go following course, obtains absolutely nothing; possibility vast increase Nation today twisting reduce volume, tendency unfortunate mishap administering justice. 1966, provides: preclude subsequent extent remains proceedings, adjudged liable prior commencement hearings liability." submitted attorney follows: date. admission suffered damage." App. 34. Senior Judge Hoffman stated: "While little authority point, satisfied effective, parties' and, thus, arguably concede furthered "Finally, ultimately constrained certainly wholly specious. facts circumstances effective lacking merit mitigate defendant." 11-12. "Against background, $500 significance oral $10 met requirements liability. so, minimal bad become routine cheap insurance useful vitality damaged. Unrealistic use settlements, relieve vexatious F.2d, (Footnote omitted.) multiclaim may, counterclaim cross-claim, readily reference single For reason, involves claim, refer "plaintiff" "defendant." concerning items seeks recover. "(d) Costs. "Except course directs Committee's 499; C. Wright A. Miller, Practice 3001, (1973); J. Moore Lucas, Moore's ¶ 68.02, 68-4 (1979). demonstrated judgment"—or perhaps admission—and substantial tried concerns opportunity almost motivate preferring provided taking increased importance judges, exercising contended penny prevails. Tr. Oral Arg. 5. Reply Brief Petitioner 10. applicable, narrowly category First, relatively persuade And small category, bill, net paying benefit probable efficacy motivating proposals attach practical sensibly leaves 21, infra. permitted recently 8; 14. alleged misapplication remedy surfaced. really repeatedly abusing assumption injustice award, privilege thwart administration Note, 68: "New" Tool Litigation, 1978 Duke L.J. 889, 895: "An ten dollars beginning complex based novel legal theory, likely produce Yet, prevails, dollar assuring practically rulemakers envisioned. secure insure nothing gained them. entitled, ought able employ override have, compel influencing (1973). Robert G. Dodge, indicated new "statutes widely prevalent .." American Bar Association, prepared direction Proceedings Institute Rules, Cleveland, Ohio 337 (1938) (hereinafter Rules). 9323 1927) stand property, therein specified, thereafter same, notice, accordingly. Otherwise withdrawn, given; allowed, taxed favor." 9770 (1935) "The specified. five days, acceptance, given, trial; 177 (Cahill 1937) "Before effect, severed, taken. thereafter, summons, complaint, but, 9471-9473 1937). Mont.Rev.Code 9787-9788 Inasmuch antecedents perform function States—as true 68—a consequences; left plaintiffs. Cal.Civ.Code 998 (West 1980); Yeager Campion, 70 Colo. 183, 197 P. 898 (1921); Wordin Bemis, Conn. 216 (1866); Prather Pritchard, Ind. West Springfield Fire Marine Ins. 105 Kan. 414, 185 (1919); Wachsmuth Orient Neb. 590, N.W. 935 (1896); Herring-Hall-Marvin Safe Balliet, Nev. 94, 190 76 (1920); Hammond Northern Pacific R. Or. 157, 299 (1892); Sioux Falls Adjustment Penn. Soo Oil S.D. 77, 220 146 (1928); Newton Allis, Wis. (1862). 22, supra ; Miklautsch Dominick, P.2d 438 (Alaska 1969); Brown Nolan, Cal.App.3d 445, 159 Cal.Rptr. 469 (1979); Schnute Holtman Sweeney, 136 Ky. 773, 125 S.W. 180 (1910); Watkins W. Neiler 135 Minn. 343, 160 864 (1917); Petrosky Flanagan, 26, 665 (1887); Woolsey O'Brien, 71, 72 (1876); Morris-Turner Live Stock Director General Railroads, 266 F. (Mont.1920); Margulis Solomon Berck 223 App.Div. 634, 229 N.Y.S. 157 Smith O. 119 Misc. 506, 196 521 (1922); McNally Rowan, 342, 92 250, aff'd, 181 N.Y. 556, 74 N.E. 1120 (1905); Ranney Russell, N.Y.Super. 689, 690 (1854); Benda Fana, St.2d 259, 227 N.E.2d (1967); Terry Burger, App.2d 53, 383 (1966). commentators defendants' Miller's treatise indicates: "Rule settlements permits what accruing "This device 1938. familiar practice. principle, previously powers equity existence "Although extended furnishes concerned. claimant expected free himself offering great encourages discourages diminishes (Footnotes uses treatise, "operate [the defendant] offered." 68.06, 68-13 Dobie, Va.L.Rev. 261, 304, 195 (1939) ("[I]f relieves future constituting offers"). Dodge states, affords balance. He conceives due, gets state: "It implicit, long continues first, trial—and operate successive offeror saved obtained." 499. until 1974 suggested Plastic (E.D.N.Y.1974). Apart reported favor. (D.C.1978), Hanger reluctantly 500, 503-504 (N.D.Cal.1980), named class action. actions, disproportionate representatives discourage filing implicitly situation. Mason Belieu, U.S.App.D.C. 75, 543 215, 222 (plaintiffs know object made), 429 852, 97 144, 127 (1976); Home Kirkevold, 938, 941 (CA9 1947) (plaintiff still prove trial); Truth Seeker Durning, 147 54, (CA2 1945) ("[D]efendant stopped F.R.C.P. 68"); Cover Chicago Eye Shield 374 (CA7) (defendant master reporter offer), 320 749, 64 445 (1943); Staffend Lake Central Airlines, 218, 1969) (a "escape eventually exceeding offer"); Tansey Transcontinental Western Air, 458, 459 1949) (an prevent considering incurred); Maguire Crop Corp., 242 (WD La. "escape" formalized), aff'd rev'd (CA5 1950); FDIC Fruit Growers Service F.D.R. 131, 133 (ED Wash. 1941) (after taxing disputed avoided advantage 68); Nabors Texas 91, 1940) "save exceed tendered" proves judgment). 1254 (Colo.1978); Waters Heublein, 485 110 (N.D.Cal.1979). Unfortunately, country procedures gross abuse—has point persons entities litigate meritorious defense. Amendments 446 995, 999-1001 (1980) (POWELL, J., JJ., joined, dissenting); ACF Industries, 439 1081, 1086-1088, 99 865, 868-869, denial certiorari); Janofsky, A.B.A. Attacks Delay High Cost A.B.A.J. 1323, 1323-1324 Herbert Lando, 441 153, 177, 1635, 1650, 115 VII. inconsistent here. fee, opposing counsel unreasonably delayed employment discrimination section corresponding section, 1920. contrast, entitlement arises approving incorporated Lindy Bros. Builders, Radiator Standard Sanitary 540 102 (1976) (en banc), Third determinant court-awarded fee—the "lodestar"—should multiplied rate. "lodestar" subject adjustment on, inter alia, quality work results obtained. 117-118; accord, Furtado Bishop, 635 915, 920-924 (CA Copeland Marshall, 205 390, 403-404, 641 880, 893-894 banc). Johnson Georgia Highway 714 5, 1974). involve judge. request REHNQUIST's opinion, post, 378-379, herein stated, province to, 3, accompanying text. Prevailing circumstances. "frivolous, unreasonable, foundation." 421, 700, (1978). added sentences: sentences assure permits—as, example, nullified ordered, whereupon desires pp. 499-500, 433, 483 (1946); 68.01, 68-3 Minnesota referred Notes, 1927), Montana (1935), [sic] York Statute, 1939), heavily it. suggestion, assumes Their (1973) Miller envisioned shifted offer—a hurdle unable clear. reads date." nearly numerous often purposes, repeating involves, diminish trials resolve courts. Were hold (in issues liability, damages, remedies) frustrate put knowing over certainty knowledgeable magnitude. Attorney's breed cat, extraordinarily extensive compared degree 54. open-ended representing convinced confidently client's necessity advise caveat recommendation deter place, fewer tried. furthers

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