Court Opinion

ID: 3020392
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:22:45.623387+00
Date Added: 2024-06-11T13:12:54.149546
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                 _____________

                                  No. 97-2959
                                 _____________

James Perkins,                         *
                                       *
            Appellee,                  * Appeal from the United States
                                       * District Court for the
      v.                               * District of Nebraska.
                                       *
U S West Communications,               *
                                       *
            Appellant.                 *
                                 _____________

                                Submitted: January 12, 1998
                                    Filed: March 5, 1998
                                 _____________

Before BOWMAN and BRIGHT, Circuit Judges, and JONES,1 District Judge.
                         _____________

BOWMAN, Circuit Judge.

      U S West Communications, Inc., appeals from the amended judgment entered
by the District Court2 pursuant to Federal Rule of Civil Procedure 59(e) in favor of
James Perkins based on U S West's Federal Rule of Civil Procedure 68 offer of
judgment. We affirm.

      1
      The Honorable John B. Jones, United States District Judge for the District of
South Dakota, sitting by designation.
      2
      The Honorable Lyle E. Strom, United States District Judge for the District of
Nebraska.
       On November 19, 1996, U S West moved for summary judgment in this Title
VII sex discrimination case. On March 18, 1997, while the summary judgment motion
was pending and in the absence of a trial date, U S West made a Rule 68 offer of
judgment.3 Two days later, on March 20, 1997, the District Court, having no
knowledge of U S West's offer of judgment, granted summary judgment in favor of
U S West and dismissed Perkins's complaint. On March 21, 1997, counsel for Perkins,
having learned of the District Court's adverse grant of summary judgment, faxed to
counsel for U S West a notice of acceptance of the March 18 offer of judgment.
Counsel for Perkins filed with the District Court a notice of acceptance of the offer of
judgment on March 24, 1997, in compliance with Rule 68. Finally, on March 31, 1997,
Perkins moved to amend the District Court's March 20 judgment under Rule 59(e) to
conform with the offer of judgment.4 The District Court granted Perkins's motion to
amend the court's earlier judgment in favor of U S West on June 11, 1997, entering
judgment instead in favor of Perkins in the amount of $3,000, plus costs, interest, and
attorney fees, as contemplated by U S West's Rule 68 offer of judgment.

       U S West appeals, arguing that the District Court erred in holding that a Rule 68
offer of judgment remains valid for the statutorily prescribed ten-day period despite an
intervening entry of summary judgment in favor of the party making the offer of

      3
       Federal Rule of Civil Procedure 68, titled "Offer of Judgment," provides in
pertinent part:

      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 allow
      judgment to be taken against the defending party. . . . If within 10 days
      after the service of the offer the adverse party serves written notice that
      the offer is accepted, either party may then file the offer and notice of
      acceptance . . . and thereupon the clerk shall enter judgment.
      4
       Federal Rule of Civil Procedure 59(e), titled "Motion to Alter or Amend
Judgment," provides, "Any motion to alter or amend a judgment shall be filed no later
than 10 days after entry of the judgment."

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judgment. U S West further argues that the District Court erred in amending its earlier
grant of summary judgment in favor of U S West and entering judgment in favor of
Perkins under Rule 59(e) and in accordance with the Rule 68 offer of judgment.

                                             I.

       The District Court's entry of amended judgment in favor of Perkins was based
on its conclusion that Rule 68 mandates that any offer made under the Rule remains
valid for ten days, regardless of an intervening entry of summary judgment. Because
this conclusion is a legal interpretation of the Federal Rules of Civil Procedure, we
review de novo. See Jordan v. Time, Inc., 111 F.3d 102, 105 (11th Cir. 1997) (noting
that proper interpretation of Rule 68 is legal question that is reviewed de novo); 13
James Wm. Moore et al., Moore's Federal Practice § 68.10 (3d ed. 1997).

        The purpose of Rule 68 is to promote the compromise and settlement of
litigation. See Delta Airlines, Inc. v. August, 450 U.S. 346, 352 & n.8 (1981); Mallory
v. Eyrich, 922 F.2d 1273, 1277 (6th Cir. 1991). "The Rule prompts both parties to a
suit to evaluate the risks and costs of litigation, and to balance them against the
likelihood of success upon trial on the merits." Marek v. Chesny, 473 U.S. 1, 5 (1985).
Under Rule 68, if the offeree rejects the offer of judgment made by the defendant, and
if "the judgment finally obtained by the offeree is not more favorable than the offer,"
the district court must order that the offeree pay the costs incurred by the defendant
after the offer was made. Fed. R. Civ. P. 68. This provision shifts the risk of going
forward with a lawsuit to the complainant, who becomes exposed to the prospect of
liability for a part of the substantial expense of trial, and allows for no discretion in the
district court to excuse the complainant from the imposition of costs. In addition, Rule
68 leaves no discretion in the district court to do anything other than enter judgment
once an offer of judgment has been accepted. By directing that the clerk shall enter
judgment after proof of offer and acceptance has been filed, the explicit language of the
Rule indicates that the district court possesses no discretion to alter or modify the

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parties' agreement.5 Although Rule 68 is silent on the issue, many courts have held that
an offer of judgment made under Rule 68 is irrevocable for the statutorily prescribed
ten-day period, except for good cause. See, e.g., Colonial Penn Ins. Co. v. Coil, 887
F.2d 1236, 1240 (4th Cir. 1989) (permitting revocation of offer of judgment induced
by fraud); Fisher v. Stolaruk Corp., 110 F.R.D. 74, 76 (E.D. Mich. 1986) (permitting
revocation when amount of offer obviously calculated under mistake of law and
defendant notified plaintiff of mistake before service of acceptance).

       Neither the parties, the District Court, or our own research has found a federal
case directly addressing the issue before us. State courts, however, have addressed this
issue in the context of their comparable state rules regarding offers of judgment.

        In Centric-Jones Co. v. Hufnagel, 848 P.2d 942 (Colo. 1993) (en banc), two
defendants made a joint offer of judgment pursuant to Colorado's equivalent to Rule 68
while one defendant's summary judgment motion was pending before the trial court.
The trial court granted summary judgment in that defendant's favor within ten days of
the joint offer of judgment. The defendants attempted to withdraw the offer of
judgment, but the plaintiff, who had knowledge of the adverse summary judgment
ruling, accepted the offer of judgment. The Colorado Supreme Court held that offers
of judgment are irrevocable by the offeror for the entire ten-day statutory period and
that an intervening summary judgment ruling did not void an offer of judgment. The
Court reasoned:

      "The defendants . . . certainly knew of the pending summary judgment
      motion when the offer of judgment was made. At that time, they could
      have chosen to make a private offer of settlement with a caveat as to the
      outcome of the summary judgment motion. . . . Here, [the defendants]

      5
       The district court will not, of course, enter judgment pursuant to a Rule 68 offer
of judgment that contemplates illegal activity, regardless of the parties' agreement. See,
e.g., Kasper v. Board of Election Comm'rs, 814 F.2d 332, 338 (7th Cir. 1987).

                                           -4-
assumed the calculated risk that a favorable decision of the pending summary judgment
motion might negate the need for settlement, and they lost their gamble.

Centric-Jones, 848 P.2d at 948.

       In Hernandez v. United Supermarkets of Oklahoma, Inc., 882 P.2d 84 (Okla. Ct.
App. 1994), the Oklahoma Court of Appeals relied on Centric-Jones to hold that an
intervening summary judgment has no effect on a plaintiff's right to accept an offer of
judgment. "The acceptance of [an] offer of judgment, along with its attendant
mandatory judgment, displaces an intervening summary judgment, which remains
interlocutory for the length of the acceptance period." Id. at 89. The court concluded
that the offer of judgment was not extinguished by the trial court's intervening entry of
summary judgment.

        U S West draws our attention to a number of cases in support of its argument
that the District Court erred in concluding that the offer of judgment remained valid for
the full ten-day period. These cases, however, involve offers of judgment that were
determined by the courts to be unenforceable under Rule 68 or its state equivalent as
a result of the start or conclusion of trial, and therefore fail to support U S West's
position. See Stoebe v. Merastar Ins. Co., 554 N.W.2d 733, 736 (Minn. 1996)
(refusing to enforce offer of settlement not accepted prior to trial); Larson v. A.T.S.I.,
859 P.2d 273, 274-75 (Colo. Ct. App. 1993) (refusing to apply Centric-Jones to allow
plaintiff to accept offer after entry of jury verdict); Hanzelik v. Grottoli & Hudon Inv.
of America, Inc., 687 So. 2d 1363, 1366 (Fla. Ct. App. 1997) (holding party may not
accept offer of judgment after trial has commenced); O'Brien v. Russell, 698 So. 2d
642, 643 (Fla. Ct. App. 1997) (rejecting plaintiff's attempt to accept offer of judgment
after trial); Braham v. Carncross, 514 So. 2d 71, 73 (Fla. Ct. App. 1987) (refusing to
allow acceptance of offer after jury verdict rendered).

                                           -5-
       We conclude that the plain language of Rule 68 mandates that an offer of
judgment remain valid and open for acceptance for the full ten-day period outlined in
the Rule despite an intervening grant of summary judgment by the district court. The
Rule contemplates invalidity of the offer only in instances where the offer is made less
than ten days before the commencement of trial. Here, however, no trial date had been
set and, despite a pending summary judgment motion and despite the absence of any
exigencies associated with an impending trial date, U S West made a strategic decision
to make an offer of judgment under Rule 68. Because the offer was not conditioned
upon the District Court's not granting U S West's motion for summary judgment prior
to Perkins's acceptance of the offer, U S West assumed the risk that the District Court
would rule favorably on U S West's summary judgment motion during the ten-day
period for acceptance of its Rule 68 offer. U S West took the chance that it could bring
an end to this litigation for $3,000 (plus costs, interest, and attorney fees) pursuant to
its Rule 68 offer and was unpleasantly surprised to find that, had it waited for the
District Court's ruling on the summary judgment motion, it could have brought an end
to this litigation for much less. The District Court did not err in concluding that the
offer of judgment remained open for the full ten-day period despite the intervening
grant of summary judgment.

                                           II.

       Having determined that the District Court did not err in its resolution of the Rule
68 issue, we now turn to the District Court's entry of amended judgment in favor of
Perkins under Rule 59(e). We review a district court's grant or denial of a Rule 59(e)
motion to alter or amend a judgment for abuse of discretion. See Twin City Const. v.
Turtle Mountain Band of Chippewa Indians, 911 F.2d 137, 139 (8th Cir. 1990). "An
abuse of discretion will only be found if the district court's judgment was based on
clearly erroneous factual findings or erroneous legal conclusions." Mathenia v. Delo,
99 F.3d 1476, 1480 (8th Cir. 1996), cert. denied, 117 S. Ct. 2518 (1997); see also
International Ass'n of Machinists and Aerospace Workers, Dist. Lodge No. 19 v. Soo

                                           -6-
Line R.R., 850 F.2d 368, 374 (8th Cir. 1988) (en banc), cert. denied, 489 U.S. 1010
(1989) (same).

       As noted above, the mandatory operation of Rule 68 required the District Court
to enter judgment as contemplated by U S West's offer of judgment. Consequently, we
hold that the District Court did not abuse its discretion by entering amended judgment
in favor of Perkins pursuant to Rule 59(e).

                                         III.

      The judgment of the District Court is affirmed.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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