Amicus Curiae Brief — Delta Air Lines, Inc. v. August

II.

III.

i

QUESTIONS PRESENTED

Whether the offer of judgment failed to

comply with the requirements of Rule

68?

Whether the District Court and the

Court of Appeals abused their discre-

tion in denying Delta's motion for

costs?

Whether the Court of Appeals erred in

examining and balancing the policies

of Title VII of the Civil Rights Act

of 1964 and Rule 68 of the Federal

Rules of Civil Procedure?

ii

TABLE OF CONTENTS

Questions Presented

Table of

Table of

Opinions

Contents

Authorities

Below

Jurisdiction

Statutes

and Rules Involved

Statement of the CAse

Summary of Argument

Argument

Re

II.

III.

The Offer of Judgment

Failed to Comply With

the Requirements of

Rule 68

Neither the District

Court Nor the Court of

Appeals Erred in Denying

Delta Recovery of

Litigation Costs

Rule 68 Cannot Be

Viewed Alone But

Must Be Construed With

Title VII of the Civil

Rights Act of 1964

ii

iv

10

14

ii

Principles of Statutory

Construction Require

Examination of Policies

Underlying Conflicting

Statutes 14

The Courts Below Correctly

Examined the Policies of

Rule 68 and title VII 20

Decisions of State Courts

Allow Review of Offers of

Judgment 26

The Decision of the Court

of Appeals Promoted the

Purpose of Rule 68 36

TABLE OF AUTHORITIES

Cases

Albermarle Paper Company v. Moody, 422

U.S. 405 (1975)

Benda v. Fana, 10 Ohio St. 2d 259 (1967)

Bertilacci v. Avery, 42 Mich. App. 483

(1972)

Christiansburg Garment Co. v. EEOC, 434

U.S. 412 (1978) 13, 22-24,

Colby v. Larson, 297 P.2d 1073 (Ore.

1956) 26, 29,

Cotton v. Hinton, 559 F.2d 1326 (5th

Cir. 1977)

Escoe v. Zerbst, 295 U.S. 490 (1935)

Fanning v. United Fruit Company, 355 F.2d

147 (4th Cir. 1966)

French v. Edwards, 80 U.S. (13 Wall.)

506 (1872)

Herring-Hall-Marvin Safe Co. v. Balliet,

44 Nev. 94 (1920)

Hickman v. Taylor, 329 U.S. 495 (1945)

Honea v. Crescent Ford Truck Sales, Inc.,

394 F. Supp. 201 (E.D. La. 1975)

Howard v. Farley, 29 How. Prac. 4 (1865)

Insurance Company of North America v.

Twitty, 319 So.2d 141 (Fla. App. 1975)

Johnson v. Chapman, 223 N.Y.S. 515 (App.

Div. 1927)

35

33

19

18

34

=

Leeming v. Leeming, 87 Nev. 530 (1971) 35

Manatee County, Florida v. Train, 583 F.2d

179 (5th Cir. 1978) 17

Mr. Hangar, Inc. v. Cut Rate Plastic Hangars,

Inc., 63 F.R.D. 607 (E.D.N.Y. 1974) 7-8

Myers v. Hollister, 226 F.2d 346 (D.C. Cir.

1955) 17, 19

Oliver v. Kalamazoo Board of Education,

346 F. Supp. 766 (W.D. Mich), aff'd per

Curiam, 448 F.2d 635 (6th Cir. 1972) 25

Perkins v. New Orleans Athletic Club, 429

F, Supp. 661 (E.D. La. 1976) 25

Public Bank of New York City v. Birnbaum,

117 N.Y.S. 237 (App. Div. 1909) 34

Ralpho v. Bell, 569 F.2d 607 (D.C. Cir.

1977) 18

Scheriff v. Beck, 452 F. Supp. 1254 (D.Colo.

1978) 7, 9

Schnute Hoffman Co. v. Sweeney, 136 Ky. 773

(Ky. App. 1919) 35

Sierra Club v. Train, 557 F.2d 485 (5th

Cir. 1977) 17

Train v. Colorado Public Interest Research

Group, Inc., 426 U.S. 1 (1976) 17

United States v. American Trucking Associa-

tion, 310 U.S. 534 (1940) 17

United States v. Dunn, 545 F.2d 1281 (10th

Cir. 1976) 19-20

United States v. Mortenson, 11 F.R.D. 516

(D. Neb. 1951) 9

United States v. Reeb, 433 F.2d 381 (9th Cir.

1970) 17

—————————

vi

Vroman v. Kempke, 34 Wis. 2d 680 (1967) 31

Wilshire Oil Company of California v.

Costello, 348 F.2d 241 (9th Cir. 1965) 16

Statutes

42 U.S.C. §1983 9

42 U.S.C. §1988 9-10, 20

42 U.S.C. §§2000e, et seg., as

Amended passim

Federal Rules of Civil Procedure

Fed. R. Civ. P. 68 passim

State Rules of Civil Procedure

Mich. GCR 1963, 519.1 33

Or. Rev. Stat. §17.055 27-28

Or. Rev. Stat. §20.080 27-30

Wisc. Stat. §269.02 31-32

Miscellaneous

6 Moore's Federal Practice, Vol. 6

(2d ed. 1976) 6, 9

Sutheralnd, Statutory Construction

(4th ed. 1973) 18

Wright and Miller, Federal Practice and

Procedure (Rev. ed. 1973) 6, 9, 16, 25

vii

MISCELLANEOUS

6 Moore's Federal Practice, Vol. 6

(2d ed. 1976) 6, 9

Sutherland, Statutory Construction

(4th ed. 1973) 18

Wright & Miller, Federal Practice &

Procedure, (Rev. ed. 1973) 6, 9, 16, 25

In the

Supreme Court of the United States

October TERM, 1979

No. 79-814

DELTA AIR LINES, INC.,

Petitioner,

vB.

ROSEMARY AUGUST,

Respondent.

ON WRIT OF CERTIORARI TO TITE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT

AMICUS CURIAE BRIEF OF THE LAWYERS’

COMMITTEE FOR CIVIL RIGHTS UNDER LAW

=aj«

OPINIONS BELOW

The opinion of the Court of Appeals

for the Seventh Circuit (Jt. App. pp. 2-7)1

is reported at 600 F.2d 699. The decision

of the District Court (Jt. App. pp. 8-14)

is not officially reported.

JURISDICTION

The judgment of the Court of Appeals

was entered on July 6, 1979. On August

28, 1979 Delta's timely petition for rehearing

and suqgestion for rehearing en banc was

denied. (Jt. App. p. 1). Delta's petition

for a writ of certiorari was filed within

ninety days thereafter and was granted on

April 21, 1980.

STATUTES AND RULES INVOLVED

The relevant statutes and rules are

Title VII of the Civil Rights Act of 1964,

42 U.S.C.§2000e, et seg. and Rule 68 of the

Federal Rules of Civil Procedure.

s Jt. App. refers to the Joint Appendix

filed with the Court by Delta Air Lines, Inc.

and Rosemary august as provided in Rule 30

of the Rules of the Court.

@2-

STATEMENT OF THE CASE

Amicus curiae, the Lawyers' Committee for

Civil Rights Under Law (“Lawyers' Commit-

tee"), concurs with petitioner's statement of

the case as to the sequence of events. It

does not concur in petitioner's description

of the decisions of the District Court and

the Court of Appeals below. The District

Court, in denying petitioner's motion for

costs pursuant to Rule 68 of the Federal

Rules of Civil Procedure ("Rule 68") decided

that in order for an offer of judgment to

trigger the provisions of Rule 68, the offer

must be “at least arguably reasonable" and a

good faith attempt to settle the parties’

litigation. (Jt. App. p. 11) The District

Court considered the time at which the offer

was made, approximately four months after the

institution of the suit, the amount of the

offer, $450 to include all costs and attorneys'

fees incurred to the date of the offer, the

decision of the Equal Employment Opportunity

=-3-

Commission which encouraged August to bring

Suit, and the relief sought by the respon-

dent. The District Court concluded that the

offer of $450 could only have been effective

if respondent's claim were totally lacking in

merit, a situation which was not before it in

this case. (Jt. App. p. 12) The offer,

therefore, was not an effective offer under

all the circumstances, compelling the

application of Rule 68.

The Court of Appeals for the Seventh

Circuit, affirming the District Court, relied

on the significant national policies embodied

in Title VII, 42 U.S.C. §§2000e, et seq. It

rejected a technical interpretation of Rule

68,a procedural rule, which would have the

effect of chilling the pursuit of those

overriding objectives. (Jt. App. p. 6) The

Court of Appeals ruled that, at least in

Title VII cases, the trial judge may exercise

threshold discretion in ruling on a motion

for costs pursuant to Rule 68 and may

consider factors such as the time the offer

Eee

eee

~

was made, the final outcome of the case,

and the qood faith and reasonable relation-

ship of the offer to the issues, litigation

risks, and expenses involved in the case.

The Court also warned that a literal reading

of Rule 68 would encourage bad faith offers

by defendants, and thereby deniqrate Rule 68

itself and its policy of encouraging

settlements. (Jt. App. p. 35)

aS

SUMMARY OF ARGUMENT

The respondent's offer of judgment in

the instant case failed to comply with the

requirements of Rule 68 of the Federal Rules

of Civil Procedure in that it did not encom-

pass the relief prayed for by respondent,

nor did it include an adequate amount for

attorneys' fees, a part of costs in employment

discrimination cases. Neither the District Court

nor the Court of Appeals erred in denying

respondent's motion for costs, particularly

in view of the significant national policies

underlying Title VII. Further, by reviewing

the policies underlying both provisions, the

Court of Appeals promoted the policies of the

Federal Rules of Civil Procedure and Rule 68.

ARGUMENT

I. The Offer of Judgment Failed to Comply

with the Requirements of Rule 68

In order to trigger the cost-shifting

provisions of Rule 68, an offer of judgment

must reascnably encompass the relief prayed

for. Moore's Federal Practice §6804 (2d ed.

1975); Wright & Miller, Federal Practice &

Procedure, §3001 (1973). The nee for careful

analysis of an offer of judgment in a Title

VII case is particularly compelling when the

nature of the relief sought is considered.

One element of relief in a Title VII suit

is equitable relief to remedy past discrimi-

nation and to prohibit future discrimination.

The goal of this relief is to make a victim of

discrimination "whole," as expressed by this

Court in Albermarle Paper Company v. Moody,

422 U.S. 405 (1975):

It is also the purpose of Title VII

to make persons whole for injuries

suffered on account of unlawful

employment discrimination. Where

racial discrimination is concerned,

"the [district] court has not merely

the power but the duty to render a

decree which will so far as possible

eliminate the discriminatory effects

-/]-

cf the past as well as bar like

discrimination in the future.”

Louisiana v. United States, 380 U.S.

145, 154, 422 U.S. at 418.

In addition, Title VII authorizes awards of

back pay, reinstatement, and costs, which

include attorneys' fees. 42 U.S.C. §2000e-

5(k).

Petitioner Delta's offer of judgment was

not in an amount adequate to cover costs,

including attorneys' fees, to the date of the

offer. It failed to offer any equitable relief

It expressly disclaimed liability, offered no

back pay, and did not offer reinstatement.

Thus, Delta's offer was not an “offer of

judgment" within the meaning of Rule 68.

Although there are but a few cases which

deal with offers of judgment under Rule 68,

two recent cases are helpful regarding suffi-

ciency of the relief offered, Mr. Hangar, Inc.

v. Cut Rate Plastic Hangers, Inc., 63 F.R.D.

607 (E.D.N.Y. 1974), and Scheriff v. Beck, 452

F. Supp. 1254 (D. Colo. 1978). In Mr. Hangar,

Inc., Supra, the most oft-cited case dealing

with Rule 68, the plaintiff sought both legal

-8-

infringement of its hanger design. The

defendants made an offer of judgment of $25 in

damages, an acknowledgement of the plaintiff's

rights, an admission of the infringment, and a

promise to cease its infringing practices.

The offer was rejected, and the trial resulted

in a judgment for defendant. Following

defendant's motion for costs from the date of

the offer, the district court reviewed the

terms of the offer, holding:

If costs are to be imposed

pursuant to the provisions

of Rule 68 a preliminary

finding is required that an

appropriate offer of judgment

has been made in compliance

with that rule. 63 F.R.D.

at 610.

The court found that the defendants' offer of

judgment was reasonable because, while it only

offered $25 in damages, it acknowledged the

plaintiff's rights, admitted the infringement,

and promised to cease the infringing prac-

tices. 63 F.R.D. at 610. The offer afforded

plaintiff substantially all the relief prayed

for in the complaint, and thus, complied

with Rule 68.

In Scheriff v. Beck, supra, the district

court examined an offer of judgment in a civil

rights action under 42 U.S.C. §1983. The

plaintiff rejected the defendants' offer of

judgment of $2,200, with costs but not includ-

ing attorneys' fees, but recovered only $500

following the trial. The district court

reviewed the offer, and found it insufficient

because the offer failed to include attorneys'

fees. “Rule 68 does not permit an offeror to

choose which accrued custs he is willing to

pay." 452 F. Supp. at 1260.

The Scheriff court was correct. The

relief offered must include all costs then

incurred by the plaintiff. Wright & Miller,

Federal Practice & Procedure, §3002, Moore's

Federal Practice, §68.04, United States v.

Mortenson, 11 F.R.D. 516, 517 (D. Neb. 1951).

In civil rights actions, attorneys' fees are a

recognized part of costs. §706(k) of Title

VII, 42 U.S.C. §2003-5(k) and the Civil Rights

Attorneys' Fees Award Act of 1976 42 U.S.C.

ii eee

20g ne eeeEEoEoE——E—EeeVOOOowre™™r. rl OE

~10

§19RA, as well as some ninety federal attorneys’

fees statutes, direct that attorneys’ fees he

Asseaaed ac costa, |

In the inetant case, the purported offer

of judament made by Delta did mot fulblidd the

requirements of Rule GAL The failure of

Delta to inelude in ite of fer of Judgment any

egnitable relief, backpay or reinstatement,

any colorably reasonable amount for costs,

includina attorneys’ fees, and the failure ta

admit liability cansed the offer to fail as a

Proper Rule GR of fer of Jndament. Thus, the

ruoliynae of both the Dietriet Conrt and the

Conrt oof Appeals should be upheld.

aa Neither the District Court Nor the

Court of Appeals Frred in Denying Delta

Recovery of Littaation Costs

lt has been generally recognized that the

1 see e.g. Freedom of Information Act,

S ULS.LC. §552(a) (4) (BE) (1976); Bankruptcy

Act, 11 U.S.C. §104(a) (1) (1970); Clayton

15 U.S.C. §15 (1976)

a} 9

District Court in Title VIT action is parti

culary stited to perform the task of deter-

mining the reasonableness of settlement

agreements. Cotton v. Hinton, 559 F.2d 1326,

1330 (5th Cir. IDI). While the decision

of the Fifth Cireuit was directed toward

settlement agreements, the principle is no

less applicable in cases where the district

court is cabled upon to review the sufficiency

of of fers of judgment. The District Court

herein was in the hest position to determine

whether any proposed settlement, or offer of

judgment, met the “make whole” remedial

policies of Title VIT Litigation. The

District Court properly reviewed the contents

of the offer, the time at which the offer was

made, the merits of respondent August's case,

and the remedial policies of Title Vil. The

District Court coneluded that there was

e.idence supporting August's claim of racial

bias, and that August had neen encouraged by

the findings of the Equal Empioymen-s

Opportunity Commission. August sought

eo

~-1?

damauges in her complaint, not ineluding

Attey neys' fees and custs, of S20,000 in

backpay, reinstatement, and a prohibition

auainet future Aicerimination at the time the

offer was made. After the litigation was) fen

monthe old, Delta offered the sum of S450,

which amount was te inmelude coste and

attorneye’ fees tes Aate, an of fer which the

Ayetriet court noted would hardly be

enffiecient te cover coate and attorneys! fees

WNenrved te the date of offer, Vhe district

court eonecluded that respondent Ananet acted

yeasenably wn refusing petitioner's offer.

The Court of Appeals upheld these findinuas

Vetryutrvener now claims that the offer «of

JuGament was reasonable because that coneept

"mav only be measured in terms of the

results, not the expectations of litigation;

the vesult and iudament proved that Delta'ts

offer was more than reasonable," (Pet.

Brief, p. 24) This Court has explicitly and

unequivecably rejected this unrealistic

interpretation of the term “reasonableness.

at 3a

In discussing whether the institution of a

Title VII action was reasonable, this Court

stated in Christianburg Garment Co. v. EEOC,

444 Vi.S. 412 (1978):

['}t is important that a district

court resist the understandable

temptation to engage in post hoc

reasoning by concluding that because

the plaintiff did not ultimately

prevail, his action must have been

unreasonable or without foundation.

This kind of hindsight logic could

discourage all but the most air-

tight claims, but seldom can a

prospective plaintiff be sure of

ultimate success. No matter how

honest one believes that he has

been the victim of discrimination,

’ no matter how meritorious one's

claim may appear at the outset,

the course of litigation is rarely

predictable, Decisive facts may

not emerge until discovery or trial.

The law may change or clarify in

the midst of Litigation. Even when

the law or facts appear unquestion-

able or unfavorable at the outset,

a party may have entirely reasonable

ground for bringing suit. 434 U.S.

at 421-422.

The uncertainties surrounding the decision to

bring an action apply equally to the decision

to accept or reject an offer of judgment.

Because an action results in a judgment for

defendant, it does not follow that bringing

the action was unreasonabie. Likewise,

ee

_14-

hecanece a plaintiff rejecte an offer of

indument and eventually recovers less than

the offer, it deee not follow that the

rejertion wae unreaconable The cetandard «of

reviewing the reaeonablenece of an offer of

jndament cannet be reenlt oriented, Rather,

that etandarad te a fumetion of the time at

which the effer wae made and ite eontent, in

relation te the merite of the plaintiff's

wace Verng thie etandard., ineludinda the

relief eenaht by the plaintiff, the Pietuiet

Cen eemeluded that Weltate offer was

unrveaceonable Theee findings were examined

and upheld by the Court of Appeals and should

mest be dveturbed

111 Role 68 Cannest Re Viewed Alone, Put

Moet Re Cenetrued With Title Vil «of

the Civil Riahts Act of 1964

A Pirnerples of Statutory Construction

Require Fxaminatiron of Polieres

Underlyrne Conflicting Statutes

—

o}§-

The offer of judqment made to August

failed to meet the requiremente of Rule 68,

and there was no abuse of discretion by

either court below in examining the terms of

the offer to determine its propriety under

Pole GA. However, to the extent that the

provisions of Tithe VIT and Rule 68 conflict

in the instant case, the District Court and

the Court oof Appeals correctly examined the

policies of both statutes and construed them

tro best effectuate the provisions of both.

In the Rrief for petitioner, Delta Air

hines ("Delta"), deals at length with the

apparently unquestionable lanquaqe of Pule

OH, Delta's view, however, is somewhat

myopic, isolating the rule from interaction

with any other statutory provisions. In

addition, Delta's approach to Pule 68 95

entirely inflexible, a construction which was

not intended by the drafters of the Federal

Rivleec «vf tivil Porevcodire

Ve example, Delta aqrates that there rs

omby ome meanind fea the weed “moat,” Cblat it

canoomtly be interpreted aa an timperat ive

Many compte, bowen, have taken the persrtten

that terme whieh are general ly mamlatory may

evsmetimec be directery and terme whith are

venerally oometried ae Avrerteory may, br cete

Ce aAces Ire owaredatert y Wilebtine eal Company ov

ealrvedaynva A eovatelle, ah Fi ad 241, 24

iYthyouve lua) lmleed, aa this Cervnet

recvunizedd forty Five years auc, larmguade «of

ecedma ye pends Vlec a eyaguafrecant, QC Yycevsegty orvest

eosydvest bavra feet of the mandatory character

Wole oat the Federal Rules af Cava

Pivwcedoure requrres the cane toocenetrue the

pales Viaberalls te promete the ends of lsttee

and facilitate decrsrens on the merarts,

rather: than determiunat rons on technicalrvtves

Hrveckman \ Tayless VQ ULB, GAN (UI),

wi yah XN Miller Yederal Vr actice 6 Procedure,

SVOHIA (196)

1.

of a statutory provision, Escoe v. Zerbst,

295 ULS, 490, 494 (1935). The interpretation

of mandatory and directory terms depends also

Hpon the background circumstances, the

context im whieh the words are used, and the

intention of the legislature, United States

Vv. Reet, 443 Fl 2d VRE, thd (9th Cir. 1970).

Varticularly, where two statutes conflict, as

here, the court should examine the purposes

of each statute through the extrinsie aids

available. Train ov. Colorado Public Interest

Research toterest Group, 426 U.S. 1, 10

(19/6); United States ve. American Trucking

Assoctation, to uss. 944, 543-544 (1940), as

quoted im Myers v. Hollister, 226 F.2d 346,

46 (D.C. Cie. 29957 Tf that examination

reveals a convineindgd arqument to the

contrary, terms which are generally considered

mandatory may be directory only. Manatee

County, Florida v. Train, 583 F.2d 179, 182

(Sth Car. 1978); Sierra v. Train, 557 F.2d

485, 489 (Sth Cit. 1977); ©. Sands,

Sutherlands Statutory Construction, §25.04

(4th ed. 1973).3

A convincing argument was made by both

the District Court and the Court of Appeals in

the instant case that the seemingly mandatory

language of Rule 68 must not be applied

mechanically. Unthinkingly applying a

mandatory rule that a plaintiff should be

charged with defendant's costs in the event

that the judgment finally secured by plaintiff

is less favorable than defendant's offer of

judgment, would thwart the policies behind

Title VII of the Civil Rights Act of 1964, 42

U.S.C. §§2000e, et seq., and lead to absurd and

harsh results. The Court of Appeals correctly

ruled that Rule 68 cannot be allowed to defeat

3° In statutes which guide the discharge

of a governmental official's duties terms which

propose to secure order and dispatch in pro-

ceedings are usually construed as directory,

whether or not worded in the comparative,

especially when in the alternative is harshness

or absurdity. French v. Edwards, 80 U.S. (13

Wall.) 506, 511 (1872); Ralpho v. Bell, 569

F.2d 607, 627 (D.C. Cir. 1977) (policy of

Micronesian Claims Act to redress damage claims

during World War II overrode provisions in

statute calling for end to agency's handling

af claims. )

one of the primary purposes of Title VII, that

of encouraging victims of discrimination to

seek private redress in the courts. Myers v.

Hollister, 226 F.2d 346, 348 (D.C. Cir. 1955).

Contrary to Delta's argument that the District

Court erred in examining the sufficiency of

Delta's offer, the District Court took the only

action possible in light of the conflict

presented.

Faced with two conflicting statutes, the

District Court and the Court of Appeals

properly looked to the purposes underlying both

enactments. Fanning v. United Fruit Company,

355 F.2d 147, 149 (4th Cir. 1966). The Court

of Appeals for the Tenth Circuit was faced with

a Similar problem in United States v. Dunn,

5945 F.2d 1281 (10th Cir. 1976), in which the

court emphasized:

The problem is one of construing

two statutes, neither enacted in

any obvious contemplation of the

other, but each bearing upon the

other when both are involved in

the factual situation presented.

In such circumstances, we should

seek a solution which avoids

violence to the terms of either

but which brings both into

_——————————————— —

~~ ho SO

correlation, since to construe

either in isolation from the

other would thwart the intention

of Congress. 545 F.2d at 1282.

B. The Court Below Correctly Examined the

Policies of Rule 68 and Title VII

The Civil Rights Act of 1964, including

Title VII, is designed to encourage private

redress of civil rights violations. Relief

which may be sought by victims of discri-

mination includes injunctive relief against

employers to right past wrongs and prohibit

future discrimination, reinstatement of jobs,

and back pay. In addition, to encourage

private enforcement, Congress provided for the

award of attorneys’ fees and costs to

prevailing parties.4 Congress thus recognized

that one of the greatest obstacles to private

Suits to eliminate discrimination was the cost

of litigation and representation by competent

counsel.

4 See, e.g. §706(k) of Title VII, 42

U.S.C. §200e-5(k); Attorneys’ Fees Award Act

of 1976, 42 U.S.C. §1988.

oe

When a plaintiff brings an action under

[Title II] he cannot recover damages.

If he obtains an injunction he does

so not for himself alone but also

as a “private attorney general" vindicatin

a policy that Congress considered of

the highest priority. If successful

plaintiffs were routinely forced to

bear their own attorneys' fees,

few aggrieved parties would be in a

position to advance the public interest

by invoking the injunctive powers of

the Federal courts. Congress therefore

enacted the provision for counsel fees.

to enconrage individuals injured by

racial discrimination to seek judicial

relief under Title II. Newman v.

Piggie Park sorerprises, Inc., 390

U.S. 400, 402 (1968).

The irony of Delta's position in the

instant case is that even successful plaintiffs,

though they may be entitled to an award of

attorneys' fees and costs as prevailing

parties against defendants, may also be

subject to an award to defendants of costs,

including attorneys' fees, where defendants

make an offer of judgment which exceeds the

eventual judgment recovered by plaintiff.

Such a result is untenable. More importantly,

Delta's position flies in the face of the

express intent of Congress to promete access

to the courts in civil rights cases. Congress

could not have intended one of the Federal

i

Rules of Civil Procedure, meant to effectuate

swift and fair adjudication of lawsuits, to

thwart the intent of an entire body of law

designed to promote private actions for

redress of civil rights violations.

Under Delta's reading of Rule 68, a

nominal offer by a defendant, even if

admittedly unreasonable or in bad faith,

would submit a plaintiff to the risk of a

substantial financial burden. This form of

“cheap insurance" cannot be permitted. The

case is rare, indeed, that counsel or a party

can accurately forecast the precise outcome

of litigation. The fear of a mandatory

monetary award could unduly pressure a

plaintiff to opt for an unreasonable offer of

judgment, or worse, to abandon the cause of

action altogether and quite apart from the

merits of a cleim. As this court noted

recently, in Christiansburg Garment Co. v.

EEOC, 434 U.S. 412 (1974), because a

plaintiff does not ultimately prevail, it

does not follow that the action was unreason-

able or without some foundation.

That §706(k) [42 U.S.C. §2000e-5 (k) J]

allows fees awards only to prevailing

private plaintiffs should assure

this statutory provision will not

in itself operate as an incentive

to the bringing of claims that have

little chance of success. [Footnote

omitted.] To take this further step

of assessing attorneys' fees against

plaintiffs simply because they do not

finally prevail will substantially

add to the risks inhering in most

litigation and would undercut the

efforts of Congress to promote the

vigorous enforcement of provisions

of Title VII. Hence, a plaintiff

Should not be assessed his Opponent's

attorneys' fees unless a court

finds that his claim was frivolous,

unreasonable, or groundless, or that

the plaintiffs continued to litigate

after it clearly became so. [Emphasis

in original] 434 U.S. at 422.

In Christiansburg Garment Co. v. EEOC,

Supra, this Court adopted the rationale of

the Courts of Appeals for the Fourth and

Second Circuits”? that attorneys' fees should

only be awarded to prevailing defendants

where the plaintiff's action was found to be

unreasonable, frivolous, meritless or

5 United States Steel Ct. v. United

States, 519 F.2d 359 (4th Cir. 1977); Carrion

v. Yeshiva University, 535 F.2a@ 522 (2d Cir.

1977).

-24-

vexatious. In this decision, the Court

interpreted the “unambiguous” statutory

language of §706(k) of Title VII, 42 u.8.C.

§2000e-5(k), authorizing reasonable attorneys'

fees to the prevailing party in a Title VII

action. The petitioner company in Christiansburg

argued that in the absence of any statutory

language regarding fees awards to prevailing

defendants fees should ordinarily be recover-

able by prevailing defendants unless special

circumstances would render the award unjust.

This Court rejected that mechanical appli-

cation of §706(k) because it would detract

from the express policy underlying Title VII

actions. Similarly, this Court, for the same

reason, should now reject a mechanical

application of Rule 68.

Petitioner's interpretation of Rule 68

would not only wreak havoc with Title VII,

but also would destroy any incentive to make

a genuine offer of judgment. The purpose of

Rule 68 is to encourage settlement, to

encourage defendants to offer the amount

=Z092

plaintiffs "might reasonably be expected to

recover." Wright & Miller, Federal Practice

& Procedure, §3001 (1969); Perkins v. New

Orleans Athletic Club, 429 F, Supp. 661, 666

@.D. La. 1976) (defendant can shift costs to

plaintiff by offering what is realiy due);

Honea v. Crescent Ford Truck Sales, Inc., 394

F. Supp. 201, 202 (E.D. La. 1975) (Rule 68

Operates if a reasonable offer is Spurned).

Discretion is the keystone to the

effective functioning of the federal rules.

Oliver _v. Kalamazoo Board of Education, 346

F. Supp. 766, 789, n.l, (W.D. Mich. 1972),

aff'd per curiam, 448 F.2d 635 (6th Cir.

1972), citing Wright & Miller, Federal

Practice & Procedure, §1029 (1969):

The rules will remain a workable

System only as long as trial court

judges exercise their discretion

intelligently on a case by case

basis; application of arbitrary

rules of law to Particular

Situations only will have a

debilitating effect on the overall]

system,

ms & Vv

Only by allowing the district court discre-

tion to examine the terms of a purported

offer of judgment to decide if the cost

shifting provisions of Rule 68 are applicable,

can the ends of justice be furthered.

C. Decisions of State Courts Allow

Review of Offers of Judgments

As noted by petitioner, several states

have rules similar to the federal offer of

judgment rule. Contrary to Delta's asser-

tion, however, that these rules are applied

strictly and literally, several courts have

arrived at the same result as the District

Court and Court of Appeals in the instant

case. Those cou ts examined the terms of the

offer to determine the applicability of an

offer of judgment rule.

In Colby v. Larson, 297 P.2d 1073

(Ore. 1956), the Supreme Court of Oregon had

the opportunity to consider the effectiveness

of a defendant's offer of judgment where the

defendant tendered to the clerk of the court

the exact amount sought by plaintiff, $372.59.

Both parties sought costs against the other,

defrendant on the basis of the Oregon offer of

judgment statute,® and plaintiff on the basis

of the Oregon statute governing claims less

than $500.7 The court recognized the

6 The defendant may, at any time

before trial, serve upon the

plaintiff an offer to allow judg-

ment or decree to be given against

him for the sum, or the property, or

to effect therein specified. —

If the offer is not accepted. . .and

if the plaintiff fails to obtain a

more favorable judgment or decree,

he shall not recover costs, but the

defendant shall recover of him costs

and disbursements from the time of

the service of the offer. ORS 17.055.

7? plaintiff sought recovery of costs

and attorneys' fees pursuant to ORS 20.080,

which provided:

In any action for damages for an

injury Or wrong to the person or

property, or both, of another where

the amount recovered is $500 or less,

there shall be taxed and allowed to

the plaintiff as part of the costs

of the action, a reasonable amount

to be fixed by the court as attorneys'

fees for the prosecution of the action,

if the court finds that written demand

for the payment of such claim was

made on the defendant not less than

ten days before the commencement of the

action; provided, that no attorneys'

fees shall be allowed to the plaintiff

if the court finds that the defendant

tendered to the plaintiff, prior to the

commencement of the action, an amount

not less than the damages awarded to

the plainti‘f.

eee eee a. _ _ a_=_aaSaaaoa_rS

-28-

conflict between the two sections. If the

plaintiff made a written demand upon the

defendant more than ten days before the

commencement of the action and the defendant

did not tender an amount equal to the demand

prior to the commencement of the action,

plaintiff was entitled to costs, including

attorneys’ fees. On the other hand, if the

defendant offered to allow judgment to be

taken against him for the sum demanded by the

plaintiff after the commencement of the

action but before trial, the defendant was

entitled to costs.

The court held that, assuming that a

proper demand was made by plaintiff, if it

adopted the defendant's position, the

legislative purpose of ORS 20.080 would be

defeated. A defendant could ignore the

plaintiff's demand before commencement of the

action, later, make an offer of judgment in

the amount demanded, and

-29-

[Be] secure in the knowledge that

if action should be brought he

could escape payment of an attorney's

fee and other costs by offering

before trial to allow judgment to

be given against him as provided in

ORS 17.055. 297 P.2d at 1975.

Rejecting the defendant's construction, the

Oregon Supreme Court ruled that this was a

Clear case for applicati: 1 of the rule that

where there is a conflict between two statutes,

both of which would otherwise have full force

and effect, and the provisions of one are

particular, special and specific, and those

of the other are general, the specific

provision must prevail over the general provision

297 P.2d at 1075.

The Court also looked to the general

purposes underlying the two statutory provisions.

The Oregon offer of judgment statute was a

general statute, applicable to every kind of

case at law or in equity and had been a part

of the Oregon law since 1862. On the other

hand, ORS 20.080 was a special statute passed

in 1947, to address a particular situation.

It applied only to tort actions involving

OOO EEE EE EE

-30-

injury in the amount of $500 or less, and was

undoubtedly enacted to encourage settlement

without litigation of meritorious claims

involving small sums.

Frequently the injured person

might forego action upon a small

claim because he realized that,

after paying his attorney, his

net recovery would not be worth the

time and trouble of a vexatious

lawsuit. The legislature may have

found that tortfeasors or their

insurance carriers frequently

rejected meritorious claims of

this kind because of this known

reluctance of injured persons to

litigate. Claims which in

honesty and fairness should have

been paid were not paid, and it

was to remedy this evil that the

statute was passed. 297 P.2d at

1075.

Colby v. Larson, supra, is analogous

to the instant case. Title VIi, like ORS 20.080

was enacted for a specific purpose. The Colby

Court refused to allow plaintiffs to carry the

burden of litigation by the use of the offer

of judgment statute. Nor would the Court allow

the earlier, general statute to override the

specific, later policies enunciated by the

legislature. This same rationale is applicable

-3l-

in the instant case. Defendants should not be

allowed to use the earlier, more general

provisions of Rule 68 to ride roughshod over

later express Congressional intent.

In addition, several courts have allowed

the trier of fact to examine the facts

Surrounding the offer to determine its

reasonableness. In Vroman v. Kempke, 34 Wis.

2d 680, 150 N.W. 2d 423 (Wis. 1967), the

Supreme Court of Wisconsin had the opportunity

to examine an offer of judgment as to its

reasonableness at the time it was made.

The Wisconsin statute in effect at the time,

§269.02, Stats., provided that "(1) after

issue is joined but before trial the defendant

may serve upon the plaintiff a written offer

to allow judgment to be taken against him. . ."

Thereafter, if the offer is rejected and

the plaintiff fails to recover a more

favorable judgment, defendant shall recover

costs.

-32-

In this personal injury action, the

defendant made an offer of judgment shortly

before selection of the jury on the day of ©

trial. The judgment secured by plaintiffs at

trial was less than the amount offered by

defendant. Following the trial, defendant

moved for costs. The trial court held that

the offer of judgment was not timely made.

The Supreme Court of Wisconsin agreed with the

trial court, again, cosentins defendant's

mechanical application of the offer of

judgment rule. The Court acknowledged that

the defendants had made their offer of

judgment before the commencement of trial, in

compliance with the terms of §269.02. The

Court ruled, however, that the section required

a defendant who-sought its benefits to make

his offer at a reasonable time before trial,

not the last minute before trial.

Nor is it an uncommon practice to allow

the trial court discretion to determine if the

offer of judgment is, in fact, more favorable

than the judgment finally obtained. In

-33-

Beitilacci v. Avery, 42 Mich. App. 483, 202

N.W.2d 331 (1972), the court used an equitable

formula to determine if, and in fact, the

offer of judgment was more favorable than the

judgment finally obtained.8 The offer of

judgment in that case was for $3,000, plus

.$500 as costs and attorneys' fees. The

judgment finally obtained by the Plaintiff was

in the amount of $3,000 plus costs and

interest. The court ruled that the judgment

finally obtained was more favorable than the

offer, primarily because of the inclusion of

interest.

8 The Michigan statute in effect at the

time was GCR 1963, 519.1:

+ bf the judgment finally obtained

by the offeree is not more favorable

than the rejected offer, the

offeree must pay the taxable costs

incurred after the making of the

offer. [Emphasis added. ]

—-34-

Similarly, in Herring-Hall-Marvin Safe

Co. v. Balliet, 44 Nev. 94, 190 P. 76 (1920),

the Supreme Court of Nevada ruled that whether

or not a judgment is “more favorable" in a

particular case within the meaning of the

statute is a question to be determined by the

trial court.

We are of the opinion that the term

"more favorable" must be construed

with reference to the facts and

circumstances of each particular

case. While we do not go to the

extent of holding that this court

is without the power or authority

to correct the abuse of the power

conferred by this statute, we do

hold that whether or not a judgment

is “more favorable" in the

particular case must be left to the

csound discretion of the district

court. 190 PB. at 77.

See also Howard v. Farley, 29 How. Prac. 4

(1865) (the amount of judgment is not the only

test of whether a judgment is more favorable

than an offer).

State courts with similar offer of

judgment statutes have also considered the

comprehensiveness or validity of an offer of

judament. In Johnson v. Chapman, 223 N.Y.S.

515 (1927), and in Public Bank of New York

New York courts held that an offer of judqment

which did not include interest up to the time

of the offer of judqment was insufficient to

operate as a valid offer of judqment. In

fact, the Nevada Supreme Court, in Leeming v.

Leeming, 87 Nev. 530 490 P.2d 342 (1971),

refused to apply Nevada's offer of judqment

statute at all to a divorce proceeding,

holding that divorce cases were not the kind

of action to which this rule should apply.

Other courts have required that an offer

must be fair and reasonable. Benda v. Fana,

10 Ohio St. 2d 259, 227 N.F.2d 197 (Ohio 1967)

(the purpose of offer of judqment statute is

termination of litigation where defendant

tenders to plaintiff a fair offer). In other

cases, the courts simply refused to award

costs to either party. Insurance Company

(Fla. App. 1975); Schnute Hoffman Co. v.

Sweeney, 136 Ky. 773, 125 S.W. 180 (Ky. App.

1910).

Thus, it is hardly a novel or uncommon

phenomenon for courts to review offers of

edenent before blindly awarding costs to

defendants who made more favorable offers than

the judgments finally obtained. Rather, it is

the duty of courts to assess all factors,

legal and factual, and arrive at a just

determination of the conflict between the

parties. This duty was fulfilled by the

courts below.

D. The Decision of the Court of

Appeals Promoted the Purpose

of Rule 68

Petitioner raises the in terrorem

argument that the decisions of the courts

below will deprive defendants of the

pessibility of any pretrial resolution in

Title VII actions. (Pet. Brief, p. 16) This

would suggest that offers of judgment are

frequently used by defendants in discrimi-

nation cases to terminate litigation. This

contention is belied by the paucity of case

law interpreting Rule 68 and Title VII. The

fact is, that Rule 68 has been used only

infrequently, especially in employment

discrimination cases. Acceptance of

petitioner's position, however, would result

in a substantial increase in the use of offers

of judgment, particularly nominal offers which

every defense counsel wiki oaks,

In any event, the Lawyers' Committee does

not suggest, nor did the Court of Appeals

decide, that Rule 68 would be inapplicable in

Title VII cases. Rather, the Court of Appeals

decided, and the Lawyers' Committee concurs,

that the District Court should exercise its

discretion and review the terms of the offer

of judgment to determine if in fact, it is a

fair and effective offer of judgment. The

Lawyers' Committee is not asking this Court to

relieve any plaintiff of the "known conse-

quence of his or her own conduct." (Pet.

Brief, p. 16) The Lawyers' Committee is

asking this Court to relieve plaintiffs of the

burden cf lizbility for defendants' costs when

bad faith offers of judgment are used as

"cheap insurance." It does not logically

follow that because the District Court awarded

i CtCCCCi(N...Ud.eeeee

-356-

judgment to defendant in the instant case that

respondent August was a “obdurate" plaintiff.

Where such a plaintiff is encountered,

however, and an action is vexatious or

meritless, a nominal offer of judgment and an

award of costs to defendants may be entirely

proper, just as an award of attorneys' fees

pursuant to the Court's decision in

Christianburg Garment Co. v. EEOC, Supra, may

also be proper.

Finally, petitioner's suggestion that the

policies underlying Title VII will not be

undercut because Rule 68 does not effect the

initiation of litigation is patently absurd.

(Pet. Brief, p. 18) Title VII was not meant

to increase the number of cases in court, but

to encourage private redress of civil rights

violations. Title VII was not designed to

encourage institution of meritless suits. The

outcome of litigation is unpredictable even

for those with meritorious claims. By

punishing those plaintiffs who reject

insufficient offers of judgment, regardless of

the relative merits of the Claim, the national

goal of eliminating civil rights violations

will never be attained.

CONCLUSION

For all the foregoing reasons, the

decision of the Court of Appeals should

be affirmed.

Respectfully submitted,

MARTHA A. MILLS

SUE A. HERRMANN

COTTON, WATT, JONES,

KING & BOWLUS

One IBM Plaza

Suite 4750

Chicago, Ulinois 60611

SYBILLE C. FRITZSCHE,

Executive Director

Tne Lawyers’ Committee For

Civu. Riguts Unper Law

53 West Jackson Street

Chicago, Ilinois 60604

Attorneys for Amicus Curiae