Court Opinion

ID: 2829739
Source: CourtListenerOpinion
Date Created: 2015-08-21 21:00:26.058937+00
Date Added: 2024-06-11T13:40:12.013014
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 14-2347

                    WALESKA GARAYALDE-RIJOS,

                      Plaintiff, Appellee,

                               v.

                    MUNICIPALITY OF CAROLINA,

                      Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

         [Hon. Francisco A. Besosa, U.S. District Judge]

                             Before

                  Lynch, Thompson, and Kayatta,
                         Circuit Judges.

     Francisco Medina Medina and Pedro E. Ortiz-Alvarez, LLC, on
brief for appellant.
     Juan M. Frontera-Suau, Carlos J. Jimenez-Torres, and Frontera
Suau Law Offices, PSC, on brief for appellee.

                         August 21, 2015
             LYNCH, Circuit Judge.      This case comes to us once again

from the District of Puerto Rico.              Earlier, we reversed the

dismissal of the action.            Garayalde-Rijos v. Municipality of

Carolina, 747 F.3d 15 (1st Cir. 2014).               The issue this time is

whether the defendant's offer of judgment under Federal Rule of

Civil Procedure 68 was properly accepted by the plaintiff such

that the district court did not err in entering judgment for the

plaintiff.       No    issue   concerning    Rule    68(d)'s     cost-shifting

provision is presented.

                                      I.

             On September 26, 2011, Waleska Garayalde-Rijos filed a

complaint against the Municipality of Carolina (Carolina) in the

federal     district   court   of   Puerto   Rico,    alleging    gender-based

employment discrimination and retaliation.            After we remanded the

case, the trial date was set for December 1, 2014.

             The key date for the purpose of this appeal is November

24, 2014.     At 12:48 PM that day, Carolina extended to Garayalde-

Rijos what it explicitly labeled a Rule 68 offer of judgment for

$25,000.1     At 5:13 PM, Carolina informed the district court by

     1 The parties allege several subsequent events: Carolina
offers an email that suggests that Garayalde-Rijos extended a
counteroffer to Carolina at 2:25 PM.     Garayalde-Rijos, for her
part, offers an email that suggests that Carolina responded to the
counteroffer by renewing its original offer at 3:54 PM. Carolina
claims that, in a subsequent phone call at 4:33 PM, Garayalde-
Rijos rejected the original offer. However, because none of this

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electronic filing that no settlement had been reached.                       This was

followed closely by a 5:38 PM motion by Garayalde-Rijos informing

the district court that she was accepting Carolina's Rule 68 offer

of judgment.      Carolina then made a motion to clarify, which asked

the    district   court    to    withhold       judgment   on   the     basis      that

Garayalde-Rijos     had    not     been    willing   to    accept     some    of   its

conditions and thus no agreement had been reached between the

parties.      The district court denied that motion and entered

judgment for Garayalde-Rijos on November 25, 2014.                  Carolina then

made a motion for reconsideration on December 2, 2014, claiming

that because Garayalde-Rijos had rejected the offer prior to

purportedly accepting it, the offer should have been considered

withdrawn.    The district court denied that motion later that same

day.     This appeal followed.

                                          II.

             Carolina     argues    that    the    district     court    erred      in

entering judgment because Garayalde-Rijos had already rejected the

offer of judgment prior to informing the court of her acceptance.

Meanwhile, Garayalde-Rijos argues that she never rejected the

offer.     We need not wade into this contested factual issue to

resolve this appeal because even an express rejection does not

information was presented to the district court, we do not consider
these events in this appeal.

                                      - 3 -
terminate a Rule 68 offeree's power to accept the offer within a

fourteen-day period.2

          Rule 68 provides that "[a]t least 14 days before the

date set for trial, a party defending against a claim may serve on

an opposing party an offer to allow judgment on specified terms,

with the costs then accrued."     Fed. R. Civ. P. 68(a).   If the offer

is accepted, "either party may then file the offer and notice of

acceptance, plus proof of service," at which time the clerk must

enter judgment.     Id.   A party's decision not to accept a Rule 68

offer of judgment comes with consequences: if the judgment that

the offeree ultimately obtains is not more favorable than the

unaccepted offer, the offeree is on the hook for the offeror's

post-offer costs.    Id. 68(d).

          This rule was designed to encourage the settlement of

private disputes.     Marek v. Chesny, 473 U.S. 1, 5 (1985).       Its

mechanism for doing so is its cost-shifting provision, which

enables an offeror to put pressure on the offeree to evaluate the

likely value of her claim and "'think very hard' about whether

continued litigation is worthwhile."      Id. at 11.   In return, Rule

68 guarantees the offeree fourteen days to contemplate the offer,

as though the offeree had paid for a fourteen-day option.          See

     2 Although it is not clear what standard of review we should
apply to the district court's entry of judgment, we need not decide
that question because there was no error by the district court.

                                  - 4 -
Richardson v. Nat'l R.R. Passenger Corp., 49 F.3d 760, 765 (D.C.

Cir. 1995).   If the offeror were able to revoke the offer at any

time, the offeror would be able to exert even greater settlement

pressure than the Rule contemplates, throwing off the Rule's

"rather finely tuned" balance.       See id.    As a result, a number of

federal courts have suggested that Rule 68 offers should be treated

as irrevocable fourteen-day option contracts.        Id. at 764 ("[T]he

few federal courts that have considered the revocability of offers

under Rule 68 . . . have treated Rule 68 offers as at least

generally irrevocable during the [14]-day period."); see also

Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1240 (4th Cir.

1989).   Commentators have also endorsed this rule.         See, e.g., 12

C. Alan Wright et al., Federal Practice and Procedure § 3004 (3d

ed. 2014); Simon, Jr., The Riddle of Rule 68, 54 Geo. Wash. L.

Rev. 1, 5 n.13 (1985); Udall, May Offers of Judgment Under Rule 68

Be Revoked Before Acceptance?, 19 F.R.D. 401, 406 (1957).

           Federal   courts   have    applied    ordinary   contract   law

principles to determine whether there has been a valid offer and

acceptance under Rule 68. See, e.g., Andretti v. Borla Performance

Indus., Inc., 426 F.3d 824, 837 (6th Cir. 2005); Arbor Hill

Concerned Citizens Neighborhood Ass'n v. Cty. of Albany, 369 F.3d
91, 95 (2d Cir. 2004) (per curiam); Stewart v. Prof'l Computer

Ctrs., Inc., 148 F.3d 937, 939 (8th Cir. 1998); Radecki v. Amoco

Oil Co., 858 F.2d 397, 400 (8th Cir. 1988); see also Wright et

                                 - 5 -
al., supra, § 3002.         Under ordinary contract law principles, the

irrevocable nature of a Rule 68 offer has particular significance:

neither a rejection nor a counteroffer terminates the offeree's

ability to accept a Rule 68 offer within the fourteen-day period.

Restatement (Second) of Contracts § 37 (Am. Law Inst. 1981); 1 A.

Linton Corbin, Corbin on Contracts § 3.38 (rev. ed. 1993); 1 E.

Allan Farnsworth, Farnsworth on Contracts § 3.23 (3d ed. 2004);

see also Kirkland v. Sunrise Opportunities, 200 F.R.D. 159, 162

n.3 (D. Me. 2001); Pope v. Lil Abner's Corp., 92 F. Supp. 2d 1327,

1328 (S.D. Fla. 2000); Butler v. Smithfield Foods, Inc., 179 F.R.D.
173, 176 (E.D.N.C. 1998); United States v. Hendricks, No. 92 C

1461, 1993 WL 226291, at *2 (N.D. Ill. June 24, 1993).                   This

conclusion is consistent with the language of Rule 68 itself, which

recognizes only two types of offers -- offers accepted within

fourteen days and offers not accepted within fourteen days -- and

does       not   even   contemplate   a   counteroffer   or   an   affirmative

rejection within the fourteen-day period.           Because Garayalde-Rijos

filed a timely acceptance, the district court's entry of judgment

was correct regardless of what took place in the contested series

of exchanges between the parties in the time between the offer of

judgment and Garayalde-Rijos's acceptance.3

       3
       In certain situations, an          offeror's detrimental reliance on
the offeree's rejection of the            offer may terminate the power of
acceptance, Farnsworth, supra,             § 3.23, or an offer should be
considered revocable because it           was induced by fraudulent conduct

                                      - 6 -
          Carolina argues that this conclusion is foreclosed by

the text of Rule 68(b), which says that "[a]n unaccepted offer is

considered withdrawn."   Fed. R. Civ. P. 68(b).   However, the rule

that a rejection or counteroffer does not terminate the offeree's

power of acceptance does not contravene the text of the Rule, which

merely says that an offer is considered withdrawn if not accepted

within the fourteen-day period.    Carolina also claims that our

conclusion is at odds with the Supreme Court's opinion in Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (2013). Specifically,

Carolina points to the statement that "the recipient's rejection

of an offer 'leaves the matter as if no offer had ever been made.'"

Id. at 1533 (Kagan, J., dissenting) (quoting Minneapolis & St. L.

Ry. Co. v. Columbus Rolling-Mill Co., 119 U.S. 149, 151 (1886)).

However, that statement comes from a part of Justice Kagan's

dissent discussing a completely unrelated issue: an offeree's

rejection of a Rule 68 offer that would have afforded her complete

relief and that rejection's effect on the continued existence of

a live controversy.      Id. at 1533–34.   A cherry-picked quote,

particularly from a dissent that does not even remotely address

the issue at hand, does not persuade us to reach the opposite

conclusion.

by the offeree, Colonial Penn Ins. Co., 887 F.2d at 1240. Also,
an offeror may in some circumstances clarify an offer after making
it.   See Radecki, 858 F.2d at 402–03.     However, none of those
exceptions are relevant here.

                               - 7 -
                                 III.

            In a further attempt to backtrack on its offer, Carolina

argues that its offer should not have been considered a proper

Rule 68 offer, despite the fact that it was Carolina itself that

labeled its November 24, 2014, offer a Rule 68 offer of judgment.

Specifically, Carolina argues that because its offer was not made

"[a]t least 14 days before the date set for trial," Fed. R. Civ.

P. 68(a), the offer should have been considered a garden-variety

settlement offer that could not have led to entry of judgment

without a joint request for settlement.   However, this argument is

waived because it was not raised in the district court in any of

Carolina's motions objecting to Garayalde-Rijos's acceptance of

the offer, or in its motion for reconsideration of entry of

judgment.   See Curet-Velázquez v. ACEMLA de Puerto Rico, Inc., 656
F.3d 47, 53 (1st Cir. 2011) ("It is hornbook law that theories not

raised squarely in the district court cannot be surfaced for the

first time on appeal." (quoting McCoy v. Mass. Inst. of Tech., 950
F.2d 13, 22 (1st Cir. 1991))).    As a result, Carolina's attempt to

take back its offer is to no avail.

                                  IV.

            For the reasons stated, the judgment is affirmed.   Costs

are awarded against Carolina.

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