# Amicus Curiae Brief — Marek v. Chesny

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_1355%3A10

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1985
- **Citation:** 473 U.S. 1

## Text

_

No. 83-1437

4 SEP 12 1934

IN THE
Supreme Court of the United States

OCTOBER TERM, 1984

~

JEFFREY MAREK, THOMAS WADYCKI and

LAWRENCE RHODE, .
Petitioners,

—

ALFRED W. CHESNY, INDIVIDUALLY, AND AS ADMINISTRATOR
OF THE ESTATE OF STEVEN CHESNY, DECEASED,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SEVENTH CIRCUIT

BRIEF BY THE COMMITTEE ON THE FEDERAL
COURTS ON BEHALF OF THE ASSOCIATION
OF THE BAR OF THE CITY OF NEW YORK

AS AMICUS CURIAE SUPPORTING RESPONDENT

SHELDON H. ELSEN*

MICHAEL W. SCHWARTZ

SIDNEY S. ROSDEITCHER

EDMUND H. KERR

JOHN G. KOELTL

The Association of the Bar
of the City of New York

42 West 44th Street

New York, New York 10036

(212) 382-6600

Attorneys for The Association of
the Bar of the City of New York,
amicus curiae

*Counsel of Record
for amicus curiae

’ ‘ —~
27 \%0

TABLE OF CONTENTS

I er a

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RR PUN lal Bu ng eee Anse y

Statement
Summary
Argument

Point |

a ek 8 a Ad Soe

ova cad ecg een ddl cubes bees

THE WORD “COSTS” IN RULE 68 IS IN-
TENDED TO BE CONSTRUED UNIFORMLY

TO

ENCOMPASS ONLY THOSE ITEMS TAXA-

BLE AS COSTS IN ALL CIVIL ACTIONS.....

A.

The language and purpose of Rule 68 establish
that the term “costs” was intended to encom-
pass only those items traditionally taxable as
costs by the clerk of the court under Rule
DE ci dewn se savkekakeseawikestebeasuns

The various statutes allowing awards of attor-
neys’ fees were not intended to define “costs”
EG ee kee the 4b shade kes eu ecbedes ed

The recent Advisory Committee proposal to
amend Rule 68 confirms that present Rule 68
does not restrict statutory fee awards........

. The Rules Enabling Act precludes a construc-

tion of Rule 68 that would bar an otherwise
appropriate award of attorneys’ fees under
Section 1988 and similarly worded statutes...

17

21

23

Point II

THE FUNDAMENTAL CIVIL RIGHTS POLI-
CIES SERVED BY SECTION 1988 WERE NOT
INTENDED TO BE OVERRIDDEN BY THE
MANDATORY “COSTS”-SHIFTING PROVI-
Ee Ee CEE Ge sve ccewcecccnccsscceceses

a a a a

PAGE

TABLE OF AUTHORITIES

Cases PAGE
Albemarle Paper Co. v. Moody, 422 U.S. 405 (1975)... 26
Alyeska Pipeline Co. v. The Wilderness Society, 421
CS Re ee 14, 17fn, 27
American Tobacco Co. v. Patterson, 456 U.S. 63 (1982)... .7,
13, 17
Blum v. Stenson, 52 U.S.L.W. 4377 (1984) ........... 27
Chesny v. Marek, 547 F.Supp. 542 (N.D. Ill. 1982).... = 3fn
Chesny v. Marek, 720 F.2d 474 (7th Cir. 1983). ..... 3fn, 26fn
Christiansburg Garment Co. v. EEOC, 434 U.S. 412
ett heen ke hacayeeecuekeuseeedeves 26

Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981). .5, 6, 7,
10, 11, 16, 25

Dodwell v. City of Apopka, 698 F.2d 1181 (11th Cir.

ti stiateedh ies idence osheseeecendecences lifn
Fitzpatrick v. Bitzer, 427 U.S. 445 (1976). ............ 23
Fulps v. City of Springfield, 715 F.2d 1088 (6th Cir.

ee eee ie ba ib6 6660006 ch ebeen see 4fn
Hensley v. Eckerhart, 51 U.S.L.W. 4552 (1983) .......25, 27
Hutto v. Finney, 437 U.S. 678 (1978) ................ 6, 15
Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968).... 20fn
Maine v. Thiboutot, 448 U.S. 1 (1980)............... 25
Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400

Lee eeee ee See eee bere ses éévseodousees 26

Northcross v. Memphis Board of Education, 412 U.S.
ceed nciinedagkiennsnesadeacens< 26

iv
PAGE

Roadway Express Inc. v. Piper, 477 U.S. 752 (1980) 4, 5, 12,

13, 14, 16

Sibbach v. Wilson & Co., 312 U.S. 1 (1941) .......... 23fn
White v. New Hampshire Department of Employment

SE, GE Sis Gee GED oo bc ccccscecsséseseus lifn

White v. New Hampshire Department of Employment
Security, 629 F.2d 697 (ist Cir. 1980), rev’d on other

erate, Gao UB. GED GIG 6 oc he eccccccccscccces lifn
Statutes
Agricultural Fair Practices Act of 1967, 7 U.S.C.

INT 4.00 Gin ne dearer wigd eat macid amicus 17fn
Bank Holding Company Act Amendments of 1970, 12

as OF Sab abdasaesunsasseeonnaedenensues 17fn
Civil Rights Act of 1964, 42 U.S.C. § 2000a-3(b) (Title

Il), 42 U.S.C. § 2000e-(k) (Title VII) .............. 14
The Civil Rights Attorneys’ Fees Awards Act of 1976, 42

Sees GE, SN I co cctcddeneduectececuwad passim
The Clean Air Act, 42 U.S.C. § 7622(e)(2) ........... 17fn
Commodity Futures Trading Commission Act of 1974, 7

See Sen bd ch dhnonuneenuseeeeaanenessbeas 17fn

Consumer Product Safety Act, 15 U.S.C. §§ 2051-2083 18
Equal Credit Opportunity Act, 15 U.S.C. § 169le(d)... 17fn
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692a-

Se caneseunssdinnedebnedbieuseoateaueahaake 19fn
Fair Housing Act, Title VIII, Civil Rights Act of 1968,
Gr Gn: SP sc cuvuédecaddaceuneessenusenas 7,19

Fair Labor Standards Act of 1938, 29 U.S.C. § 216(b) 20, 21

Federal Mine Safety and Health Act of 1977, 30 U.S.C.
I eS ak die i el eS 7 eee 18fn

PAGE
Magnuson-Moss Warranty—Federal Trade Commission
Improvement Act, 15 U.S.C. §§ 2301-2312 ......... 19fn
Motor Vehicle Information and Cost Savings Act, 15
ee, eben eesededds es 18
National Mobile Home Construction and Safety Stan-
dards Act of 1974, 42 U.S.C. § 5412(b) ............ 17fn
National Traffic and Motor Vehicle Safety Act, 15
ec cnddvdbedudtdecenedinseceneans 17fn
Outer Continental Shelf Lands Act, 43 U.S.C.
PE ici cdnébsed sensed esesopesedunteces 18fn
Outer Continental Shelf Lands Act, 43 U.S.C.
PR ks ee emeh enneheketnenKes 18fn
Railway Labor Act of 1926, 45 U.S.C. § 153 ......... 20, 21
Real Estate Settlement Procedures Act of 1974, 12
Oe ois ie cndcenoedeceaseeeseses 13, 17fn
Rules Enabling Act, 28 U.S.C. § 2072........... 5, 8, 23, 24
Toxic Substances Control Act, 15 U.S.C. §§ 2618(d),
BERTIE, FE oo cccccccccccccecccccesees 17fn
Voting Rights Act amendments of 1975, 42 U.S.C.
Dn cidccudadWdbdé’dscensedéndscvesteteedees 15
OPE os dn Se dkGbb dees dndes dates denceedes 11, 21
EL, ED bo cddddawddeteddedbeocdsesetenctind 12, 13
ee SE on ic ceenddabadeuespaenseateons 20
Ge OF ED in dddwetesduedecnsesn cbdesctessnns 3
Rules
NS RS | a rere Tre re 5, 12
i OM Min os on eens enueeeweeedeneeeaeedanes 11
en on re . ceeded deeeeoedeauesseondees 11

vi
PAGE
re Or Ey 6 ode bubble endéencdccedeeeuacdes 11
i oc cinicigadencatbusbinadaeastes 11
Oe Oe ei netenneunseseedcdhideeshheus 11
Pe is es Oe an encencnccnsece 5, 6, 10, 11, 12, 17, 23
Ce, CE cece lie eeicednséedeeccsbeatual passim

Committee on Rules of Practice and Procedure, Prelimi-
nary Draft of Proposed Amendments to the Federal
Rules of Civil Procedure, 98 F.R.D. 339 (1983) ...2, 21, 22

Legislative Reports

S. Rep. No. 872, 88th Cong. 2d Sess. (1964).......... 15
H.R. Rep. No. 914, 88th Cong. 2d Sess. (1964) ....... 15
S. Rep. No. 835, 92d Cong. 2d Sess. (1972) .......... 19
H.R. Rep. No. 1158, 92d Cong. 2d Sess. (1972)....... 19
S. Rep. No. 985, 92d Cong. 2d Sess. (1972) .......... 19
H.R. Rep. No. 1198, 92d Cong. 2d Sess. (1972)....... 19
S. Kep. No. 151, 93d Cong. Ist Sess. (1974) .......... 19fn
H.R. Rep. No. 1107, 93d Cong. Ist Sess. (1974)....... 19fn
S. Rep. No. 295, 94th Cong. Ist Sess. (1975). ......... 15
H.R. Rep. No. 196, 94th Cong. Ist Sess. (1975)....... 15
S. Rep. No. 1011, 94th Cong. 2d Sess. (1976) . .14, 25, 26, 27
H.R. Rep. No 1588, 94th Cong. 2d Sess. (1976) ...... 14
S. Rep. No. 382, 95th Cong. Ist Sess. (1977).......... 19in

H.R. Rep. No. 131, 95th Cong. Ist Sess. (1977)....... 19fn

Vil

Other Authorities
3 Derfner & Wolf, Court Awarded Attorney Fees (1983)

Ely, The Irrepressible Myth of Erie, 87 Harv. L. Rev.
Di schateeeadkeubattouehunscedhedetetuans

Ethics Opinion No. 80-94, Ethics Committee, Associa-
tion of the Bar of the City of New York............

7 J. Moore, Moore’s Federal Practice, € 68.01 (2d ed.
eS os ca neuennenedadnddecesaness

Letter of the Acting Deputy Attorney General to the
Chairman of the Committee on Rules of Practice and
Procedure (February 28, 1984) ............2e-eeee-

PAGE

17fn

27fn

IN THE
Supreme Court of the United States
OCTOBER TERM, 1984
No. 83-1437

—>-

JEFFREY MAREK, THOMAS WADYCKI and

LAWRENCE RHODE, we
Petitioners,

—_—V—
ALFRED W. CHESNY, INDIVIDUALLY, AND AS ADMINISTRATOR

OF THE ESTATE OF STEVEN CHESNY, DECEASED,
Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SEVENTH CIRCUIT

<—_>—

BRIEF BY THE COMMITTEE ON THE FEDERAL
COURTS ON BEHALF OF THE ASSOCIATION
OF THE BAR OF THE CITY OF NEW YORK

AS AMICUS CURIAE SUPPORTING RESPONDENT

Preliminary Statement

This brief is respectfully submitted by the Committee on the
Federal Courts of the Association of the Bar of the City of
New York (the “Association”), on behalf of the Association as
amicus curiae, in support of affirmance of the Court of
Appeals’ decision below. The Association believes that the
Court of Appeals correctly held that the mandatory “costs”-
shifting provision of Rule 68, Fed. R. Civ. P., was not intended
to deprive the District Courts of their discretion to determine
the amount of a reasonable attorneys’ fee under The Civil
Rights Attorneys’ Fees Awards Act of 1976, 42 U.S.C. (Supp.
V) § 1988 (“Section 1988”). .

Interest of the Amicus

The Association was established in 1871 “for the purposes of
cultivating the science of jurisprudence, promoting reforms in
the law, facilitating the administration of justice, [and] elevat-
ing the standard of integrity, honor and courtesy in the legal
profession. . . .” (Charter, April 28, 1871). The Committee
on the Federal Courts is one of the Association’s standing
committees. It monitors developments affecting the adminis-
tration of the federal courts and develops proposals for im-
provements.

The Committee has recently studied Rule 68 in reviewing
amendments to it proposed by the Committee on Rules of
Practice and Procedure. 98 F.R.D. 339, 361-67 (1983). Those
proposals would change Rule 68 by, among other things,
empowering the District Courts to award attorneys’ fees as
well as “costs” against a litigant or defendant who rejects an
offer of settkement which proves superior to the ultimate
judgment. Because the power to shift fees—rather than only
“costs,” as at present—would substantially raise the “stakes”
under Rule 68, the proposal would also eliminate the manda-
tory character of the present Rule; fee-shifting would be
subject to consideration of various discretionary factors, to
avoid what the Advisory Committee called “the Draconian
impact of an ‘all-or-nothing’ rule.” /d. at 365.

The Association’s review of the Advisory Committee pro-
posals gave il an Opportunity to study in depth a number of the
Rule 68 issues r: ised by the First Question Presented in the
petition herein.' The Association believes that its views may be
helpful to the Court in resolving those Rule 68 issues, and this
brief is being filed with the consent of the parties.’

I This brief does not address, and the Association does not take a
position with respect to, the Second Question Presented by the petitioners.

2 The parties’ letters of consent to the filing of this brief have been
filed with the Clerk of this Court.

Statement of Facts”

Petitioners Marek, Wadycki and Rhode, police officers in
the Village of Berkley, Illinois, shot and killed respondent’s
son, Steven. Respondent brought this action against the police-
men, the Village, and others, under 42 U.S.C. § 1983.

Thereafter petitioners submitted an offer of judgment which
offered to settle three elements of the case: liability, “costs”
and attorneys’ fees. The offer read:

Pursuant to Federal Rule of Civil Procedure 68, the
defendants [Marek, Wadycki and Rhode] hereby offer to
allow judgment to be taken against them by the plaintiff
for a sum, including costs now accrued and attorneys’
fees, of One Hundred Thousand ($!00,000) Dollars.

Respondent rejected the offer. The record does not reflect the
reasons for respondent’s rejection. There has been no judicial
determination as to the reasons why the offer was rejected.

After a three-week trial, the jury returned a verdict for
respondent. The jury awarded compensatory damages and
punitive damages against the police officer defendants. The
total amount of the verdict was $60,000, the jury having
decided not to award any amount as compensation for loss of
the decedent’s future earnings, notwithstanding uncontradicted
expert testimony that he would have left his parents an estate
having a present value in excess of $500,000.

Pursuant to Section 1988, the District Court awarded re-
spondent attorneys’ fees of $32,000, for legal services rendered
prior to the offer of judgment. The District Court refused to
consider any award of fees for services rendered after the date
of the Rule 68 offer. The District Court held that Rule 68’s
requirement that respondent pay all “costs” incurred subse-
quent to rejection of the offer precluded the award of attor-

3 This Statement of Facts is based on the record and on the decisions
below. They are reported at 547 F. Supp. 542 (N.D. Ill. 1982) and 720 F.2d
474 (7th Cir. 1983).

4

neys’ fees to which respondent might otherwise have been
entitled under Section 1988.*

The Court of Appeals for the Seventh Circuit reversed,
holding that Rule 68 did not preclude an award of fees
otherwise appropriate. It ordered the case remanded to the
District Court for determination under Section 1988 of a
reasonable fee for services rendered after the Rule 68 offer.°

The Court of Appeals reasoned that Rule 68 is not intended
to cut off the possibility of a Section 1988 fee award. Relying
upon this Court’s recent decision in Roadway Express Inc. v.
Piper, 447 U.S. 752 (1980), the Court of Appeals held that
proper construction of the word “costs” depends upon the
context in which the word is used.° With reference to the

4 Section 1988 provides, in pertinent part:

In any action or proceeding to enforce a provision of Section 1981,
1982, 1983, 1985 and 1986 of this Title, Title 9 of Public Law 92-318,
or Title 6 of the Civil Rights Act of 1964, the Court in its discretion
may allow the prevailing party, other than the United States, a
reasonable attorneys’ fee as part of the costs.

5 A threshold issue considered by the Court of Appeals was whether
petitioners’ offer of judgment for a liquidated sum, “including costs now
accrued and attorneys’ fees,” was valid under Rule 68. The Court of Appeals
concluded that the form of petitioners’ offer was proper. The issue of the
validity of the offer is not raised in the petition for certiorari. However, it
may be noted that the language of the offer was directly at odds with the
position petitioners now take, that “costs” includes attorneys’ fees: the offer
separated those two items out and treated them as if fees were not included in
“costs.” See page 3, supra.

6 The Court of Appeals distinguished the decision of the Court of
Appeals for the Sixth Circuit in Fulps v. City of Springfield, 715 F.2d 1088
(6th Cir. 1983). Fulps did not involve the issue presented here, whether a
plaintiff who rejects a Rule 68 offer is barred from receiving any award for
fees incurred after rejection of the offer. In Fulps, plaintiff had accepted the
offer of judgment which, unlike petitioners’ here, was silent on the subject of
fees. The Court of Appeals for the Sixth Circuit held that the acceptance of
the offer did not preclude a further application for fees by the plaintiff.
Some of its reasoning towards this conclusion is contrary to that of the Court
of Appeals below.

5

particular context in which “costs” must be construed here, the
Court of Appeals reasoned that allowing the automatic, man-
datory “costs”-shifting provisions uf Rule 68 to be used to
preclude a fee award under Section 1988 would be inconsistent
with the Congressional policy underlying Section 1988, which
grants the District Courts broad discretion over fee awards.
The Court also noted that, if Rule 68 were construed to
produce a result which would differ from that produced by
Section 1988, a question of the Rule’s validity might arise
under the Rules Enabling Act, 28 U.S.C. § 2072.

Thereafter, before any further proceedings could be had in
the District Court under Section 1988, petitioners sought re-
view of the Rule 68 issue in this Court.

Summary of Argument

1. A. The Court of Appeals correctly held that “costs” in
Rule 68 is limited to the items traditionally taxable by the clerk
of the court under Rule 54(d), Fed. R. Civ. P. As this Court
made clear in Delta Air Lines, Inc. v. August, 450 U.S. 346
(1981), Rule 68 deters rejection of settlement offers by denial
of Rule 54(d) “costs” to a prevailing plaintiff. “Costs” in Rules
54(d) and 68 was not meant to be construed one way if a fee
award statute is involved and another way if one is not. The
Rules themselves make no such distinction and the Federal
Rules should be construed uniformly as to “every civil action.”
Fed. R. Civ. P. 1.

This Court’s recent decision in Roadway Express Inc. v.
Piper, 447 U.S. 752 (1980), precludes subjecting lawyers in
different areas of practice to differing sanctions for dilatory
conduct. /d. at 763. This would be the result of a reversal here:
rejection of a settlement offer in a commercial case would
result in the relatively modest sanction of denial of Rule 54(d)
costs, while similar rejection in a civil rights action would
result in a Draconian forfeiture of fees. Compare id. at 762-63.

Petitioners (and the Government as amicus curiae) confuse
two different issues: whether Rule 68 precludes any award of
fees after rejection of a Rule 68 offer and, on the other hand,

6

whether Section 1988 permits a District Court to diminish a fee
award for services rendered after a reasonable settlement offer
has been rejected in bad faith. These are two entirely different
questions, analytically and practically. De/ta Air Lines teaches
that Rule 68 involves no concept of “reasonableness” or “good
faith”—if a defendant’s settlkement offer was more than the
plaintiff’s verdict, the plaintiff must bear the costs, while if his
offer turns out to be less, the defendant must bear the costs.

Thus petitioners’ (and the Government’s) repeated refei-
ences to the need to encourage “good faith” consideration of
“reasonable” settlement offers are really arguments that bad
faith rejection of a reasonable settlement offer should be a
factor which the District Courts may consider under Section
1988 in deciding on the amount of a reasonable fee. However,
that question is not presented on the present record in this
Court. As noted above, the District Court never considered the
matter under Section 1988, having ruled that Rule 68 precluded
any consideration of an award of post-offer fees.

The wording of Section 1988 was not intended to change the
operation of Rule 68. The legislative history of Section 1988
makes it clear where the phrase “as part of the costs” comes
from: Congress simply “tracked” the language of earlier civil
rights fee award statutes. It adopted the language to promote
uniformity among the civil rights statutes and, as this Court
explained in Hutto v. Finney, 437 U.S. 678 (1978), to assure
that attorneys’ fees could be recovered against a state notwith-
standing the Eleventh Amendment. There is no indication in
the history of Section 1988 that it was intended to define
“costs” for purposes of Rules 54(d) and 68.

B. The existence of numerous other fee award statutes,
some worded like Section 1988, some worded differently,
confirms that “costs” in Rules 54(d) and 68 cannot be con-
strued by reference to such statutes. In enacting fee-award
statutes, Congress’ practice has been sometimes to describe
attorneys’ fees as “costs” in fee award statutes, sometimes not
to do so, sometimes to. use different such formulations even in
a single statute, and sometimes to use language which omits the

word “costs” altogether—all according to no consistent pat-
tern. Thus attorneys’ fees are said to be “part of the costs”
under Section 1988, but not, for example, under the Fair
Housing Act, Title VIII, Civil Rights Act of 1968, 42 U.S.C.
§ 3612(c). Petitioners have suggested no reason why fees
should be at risk under Section 1988 but not under the latter
Statute (and dozens of others which are similarly worded).

Adoption of petitioners’ proposed construction of Rule 68
would lead to untenable distinctions between and among cases
arising under the numerous fee award statutes. It would
contravene basic principles of statutory construction to read
Rule 68 as producing such “untenable distinctions.” American
Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982).

Petitioners (and the Government) miss the point by their
emphasis upon those statutes which (like Section 1988) are
worded to authorize a fee award “as part of the costs.” To
sustain their proposed construction of Rule 68, they would
have to show that Congress had some reason to distinguish
between, for example, the Fair Housing Act, 42 U.S.C.
§ 3612(c) and Section 1988, and to punish non-settling plain-
tiffs in Section 1988 cases far more severely than non-settling
plaintiffs in cases under the Fair Housing Act or the numerous
other statutes which are worded to allow an award of fees in
addition to costs. They have made no such showing. It defies
common sense that Congress had any such intention.

C. The recent Advisory Committee proposals to amend
Rule 68 underscore how inappropriate it would be to single out
cases under Section 1988 (and similarly-worded fee award
statutes) for the application of present Rule 68 in the manner
contended for by petitioners (and the Government). The Advi-
sory Committee proposals seek to increase materially the
incentives for settlement by using fee-shifting as a punishment
for rejection of a settlement offer. But the Advisory Committee
would do so only after supplying safeguards absent from the
present Rule and, under Delta Air Lines, not to be implied
into it.

Thus, even advocates of these proposals recognize that the
present Rule cannot fairly be used to change the incidence of
attorneys’ fees. This should be no less true in cases where a
reasonable fee award would otherwise be appropriate than in
cases not arising under a fee award statute.

D. Finally, a construction of the Federal Rules which pre-
cluded an award of fees under Section 1988 and similarly
worded statutes would raise the most serious questions under
the Rules Enabling Act, 28 U.S.C. § 2072. The Court of
Appeals below was correct in construing Rule 68 to avoid such
questions.

Il. The Court of Appeals also correctly held that the District
Courts’ discretion under Section 1988 was not intended to be
ousted by Rule 68. The legislative history of Section 1988
makes clear that the District Courts were entrusted with broad
discretion to award reasonable fees, and contains no indication
that the mandatory “costs”-shifting provisions of Rule 68 were
intended to deprive them of that discretion.

This point goes only to the proper construction of Rule 68.
It may be that under Section 1988 or other particular fee award
statutes, a court can properly consider bad faith rejection of a
reasonable settlement offer in deciding what is a “reasonable
fee.” But that result cannot be reached by applying the me-
chanical cut-off of “costs” effected by Rule 68, and that issue
cannot be resolved on the record in this case, where no
determination under Section 1988 was ever made by the Dis-
trict Court.

9
Argument

Point I

THE WORD “COSTS” IN RULE 68 IS INTENDED TO BE

CONSTRUED UNIFORMLY TO ENCOMPASS ONLY

THOSE ITEMS TAXABLE AS COSTS IN ALL CIVIL
ACTIONS

A. The language and purpose of Rule 68 establish that the
term “costs” was intended to encompass only those items
traditionally taxable as costs by the clerk of the court
under Rule 54(d).

Rule 68 provides that if a defending party makes an offer of
judgment that is refused, and the plaintiff thereafter obtains a
judgment “not more favorable than the offer,” the plaintiff
must pay post-offer costs.’ The Rule is automatic and me-

7 Rule 68: Offer of Judgment.

At any time more than 10 days before the trial begins, the party
defending against a claim may serve upon the adverse party an offer to
allow judgment to be taken against him for the money or property or
to the effect specified in his offer, with costs then accrued. If within ten
days after 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 together with proof of service thereof and
thereupon the clerk shall enter judgment. An offer not accepted shall
be deemed withdrawn and evidence thereof is not admissible except in
a proceeding to determine costs. If the judgment finally obtained by
the offeree is not more favorable than the offer, the offeree must pay
the costs incurred after the making of the offer. The fact that an offer
is made but not accepted does not preclude a subsequent offer. When
the liability of one party to another has been determined by verdict or
order or judgment, but the amount or extent of the liability remains to
be determined by further proceedings, the party adjudged liable may
make an offer of judgment, which shall have the same effect as an
offer made before trial if it is served within a reasonable time not less
than ten days prior to the commencement of hearings to determine the
amount or extent of liability.

The Rule has been amended only twice in its 46-year history, and remains
largely unchanged from its original form. See 7 J. Moore, Moore's Federal
Practice, ¢ 68.01 (2d ed. 1983 & Supp. 1984).

10

chanical in its operation; it looks solely to the respective
amounts of the offer and the verdict. If the offer exceeds the
verdict, the plaintiff “must pay the costs incurred after the
making of the offer.” Although the Advisory Committee's
brief note to the Rule contains no express statement of its
purpose, Rule 68 has been understood to encourage plaintiffs
to accept settlement by supplying a modest deterrent to rejec-
tions of a defendant’s offer. Delta Air Lines, Inc. v. August,
450 U.S. 346, 352 (1981).

In Delta Air Lines, this Court’s first consideration of Rule
68 since its adoption in 1938, this Court made several rulings
which are of importance to the present case. First, this Court
held that Rule 68 must be construed in pari materia with Rule
54(d), Fed. R. Civ. P., and indeed that failure so to construe it
would be “to attribute a schizophrenic intent to the drafters.”
Id. at 353-56. This Court stated that Rule 68 was intended to
“alter the Rule 54(d) presumption” that a prevailing party
recovers the “costs” referred to in Rule 54(d). /d. at 351. It was
in part based on this holding that this Court concluded that the
Rule denies “costs” only where the plaintiff recovers a judg-
ment and has no application where the plaintiff recovers
nothing. /d. at 354-55.

Second, this Court held that Rule 68 did not contain “a
reasonableness requirement.” The lower court decision re-
versed by this Court had held that “only reasonable offers
trigger the operation of Rule 68.” This Court rejected that
interpretation, and declined to “read a reasonableness require-
ment into the Rule.” /d. at 355.

In sum, this Court stated that the purpose of Rule 68 is the
relatively narrow one of “provid[ing] an additional inducement
to settle in those cases in which there is a strong probability
that plaintiff will obtain a judgment but the amount of
recovery is uncertain.” Jd. at 352.* The particular “additional

8 This Court’s reference to “an additional inducement” reflected its
recognition of the fact that, “In all litigation, the adverse consequences of
potential defeat provide both parties with an incentive to settle in advance of
trial.” Delta Air Lines, 450 U.S. at 352.

inducement” which Rule 68 supplies is the relatively narrow
one of depriving the plaintiff of Rule 54(d) costs.

It is clear from the language and structure of Rules 54(d) and
68 that the “costs” to which they refer do not include attor-
neys’ fees in cases arising under the fee award statutes.” Rule
54(d) provides that costs may be taxed by the clerk of the court
on one day’s notice. This provision clearly refers to “costs” of
the sort specified in 28 U.S.C. § 1920—routine, readily deter-
minable charges which it would be appropriate to leave to a
clerk, and as to which a single day’s notice of settlement is
appropriate."” The conclusion that “costs” refers only to
charges taxable by a clerk is confirmed by the fact that when
particular Federal Rules are meant to provide for attorneys’
fees as expenses, the inclusion is explicit and the authority to
award fees is expressly granted to the Court, not the clerk. See
Rules 11, 16(f), 26(g), 30(g), 37, Fed. R. Civ. P.'' The Court of
Appeals correctly adopted a construction of “costs” which
respects this clear, consistent usage in the Federal Rules. It
correctly rejected a proposed construction which, because of
the interrelation of Rules 68 and 54(d) explained in this Court’s
Delta Air Lines decision, would lead to the result that the

9 This Court has expressly reserved the question whether “costs” in
Rule 54(d) incorporates Section 1988. White v. New Hampshire Department
of Employment Security, 455 U.S. 445, 454-55 n.17 (1982). That question
must be decided here. It should be decided against such incorporation.

10 In applying Rule 54(d), the lower Federal Courts have consistently
used the particular fees and other items listed in § 1920 as the definition of
the term. See, e.g., White v. New Hampshire Dep't of Employment Security,
629 F.2d 697, 701-03 (ist Cir. 1980), rev'd on other grounds, 455 U.S. 445
(1982); Dodwell v. City of Apopka, 698 F.2d 1181, 1188-89 & n.12 (ith. Cir.
1983). This reliance on § 1920 is consistent with the “uniform structure
established by the 1853 Act” which adopted § 1920. Roadway Express, 447
U.S. at 761.

11 These rules all involve sanctions for deliberate misconduct, and are
penal in nature. By contrast, Rule 68, although designed to encourage
settlement and avoid the needless expense of a trial, does not apply only
where misconduct or bad faith has been shown.

12

C lerk of the Court could rule on fee applications on one day’s
notice.

As the Court of Appeals correctly stated, this Court’s recent
decision in Roadway Express Inc. v. Piper, 447 U.S. 759
(1980), strongly supports the decision below. In Roadway
Express this Court was faced with determining Congress’
intent in enacting 28 U.S.C. § 1927 which also uses the term
“costs” without further definition. There, too, petitioner con-
tended that “costs” should be read to include attorneys’ fees
where a fee award statute provides that fees should be awarded
“as part of the costs,” but not be so read where a fee statute
did not apply.

Rejecting that position, this Court held that the word
“costs” should be construed uniformly:

. . . Roadway’s statutory construction would create a
two-tier system of attorney sanctions. A number of fed-
eral statutes permit the award of attorneys’ fees. See
Alveska Pipeline Co. v. Wilderness Society, 421 U.S. at
200, n. 33. Under Roadway’s view of § 1927, lawyers in
cases brought under those statutes would face stiffer
penalties for prolonging litigation than would other attor-
neys. There is no persuasive justification for subjecting
lawyers in different areas of practice to differing sanc-
tions for dilatory conduct. A court’s processes may be as
abused in a commercial case as in a civil rights action.
Without an express indication of congressional intent, we
must hesitate to reach the imaginative outcome urged by
Roadway, particularly when a more plausible construction
flows from the original enactments in 1813 and 1853.

—447 U.S. at 762-63
(emphasis added).

This ruling is directly germane here. Federal Rules 54(d) and
68, like § 1927, are meant to be applied uniformly to all civil
actions. Like all the Federal Rules, they are expressly intended
to “secure the just, speedy, and inexpensive determination of
every action.” Fed. R. Civ. P. | (emphasis added). A construc-
tion of Rules 54(d) and 68 that would include attorneys’ fees as

ee ee

13

“costs” where Section 1988 or a similarly-worded fee award
statute was involved, but not include them where no such
statute was involved, would abrogate the uniform application
of Rule 68 to all civil actions. Indeed, the relatively modest
impact which Rule 68 has “in a commercial case” —to use the
example mentioned by this Court in the passage quoted
above—would stand in starkest contrast to the life-or-death
effect it could have “in a civil rights case” or certain other
fee-award cases. The “imaginative outcome” rejected in Road-
way Express must likewise be rejected here.

Like the argument rejected in Roadway Express, petitioners’
(and the Government’s) construction of Rule 68 would create a
“two-tier system” of cost-shifting. Indeed, closer analysis of
the fee award statutes reveals that a fhree-tier system would
result: for while cases arising under some fee-award statutes
would be affected—those which use the phrase “as part of the
costs”—cases arising under dozens of other fee award stat-
utes—those which use a different form of words, such as the
Real Estate Settlement Procedures Act, 12 U.S.C.
§ 2607(d)(5)—would not be so affected. See Point 1.B., infra.
Introducing these kinds of “untenable distinctions” into the
construction of the Federal Rules of Civil Procedure would
violate first principles of statutory construction. American
Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982).

Roadway Express is directly relevant for another reason as
well. In that decision, this Court specifically addressed the
question whether Section 1988 made any change in the mean-
ing of the word “costs” in § 1927 or in the Congressional
policy of uniformity in defining “costs.” This Court held that
it did not:

[Petitioner] insists, however, that its recovery should
not be restricted to the costs listed in § 1920. It argues
that since courts look to § 1920 to determine the costs

taxable under § 1927, they should be equally free to
define costs according to other statutes that may be
involved in a lawsuit. [Petitioner] emphasizes that the civil
rights statutes allow the award of attorneys’ fees “as part

14

of the costs” of the litigation . . . . This superficially
appealing argument cannot survive careful consideration.
. * .

[Petitioner] offers no evidence that Congress intended
to incorporate those attorneys’ fee provisions into § 1927.
[Section 1988] makes [no] mention of attorney liability
for costs and fees. [Petitioner] identifies nothing in the
legislative records of those provisions that suggests that
Congress meant to control the conduct of litigation.

—447 U.S. at 758, 761
(footnote and citations

omitted)(emphasis
added).

The “superficially appealing argument” from the language
of Section 1988 that was rejected in Roadway Express likewise
“cannot survive careful consideration” in this case. Here, too,
petitioners “identify nothing” in the legislative history of
Section 1988 indicating that Congress even considered Rule 68
when it included attorneys’ fees “as part of the costs” in
enacting Section 1988. There is no reference to Rule 68 in the
Senate Report on Section 1988, S. Rep. No. 1011, 94th Cong.
2d Sess. (1976), reprinted in 1976 U.S. Code Congressional
and Administrative News 5908, or the House Report, H.R.
Rep. No. 1588, 94th Cong. 2d Sess. (1976). The House Report
does not even mention the phrase “attorneys’ fee as part of the
costs” in its description of the “key features” of Section 1988.
H.R. Rep. No. 1588, 94th Cong. 2d Sess. 6 (1976).

The legislative history of Section 1988 indicates that the use
of the phrase “attorneys’ fee as part of the costs” had nothing
to do with Rule 68. Rather, Section 1988 was designed to foster
uniformity in the fee award process and to overcome A/yeska
Pipeline Service Co. v. The Wilderness Society, 421 U.S. 240
(1975), which had precluded an award of attorneys’ fees
without express Congressional authorization. The specific lan-
guage which Congress chose therefore “tracked” the explicit
fee award provisions already included in Titles I] and VII of
the 1964 Civil Rights Act, 42 U.S.C. § 2000a-3(b) (Title II), 42

15

U.S.C. § 2000e-5(k) (Title VII), and § 402 of the 1975 Voting
Rights Act amendments, 42 U.S.C. § 1973(e), whose vatidity
this Court had consistently upheld. The House Report states:

Existing «‘atutes allowing fees in certain civil rights cases
[provide for] discretionary awards for any prevailing
party. Keeping with that pattern, section 1988 tracks the
language of the counsel fee provisions of [the statutes
cited in text above].

H.R. Rep. No. 1588, 94th Cong. 2d Sess. 5 (1976) (emphasis
added). The legislative history of those earlier statutes likewise
contains no reference to Rule 68. S. Rep. No. 872, 88th Cong.
2d Sess. (1964), H.R. Rep. No. 914, 88th Cong. 2d Sess.
(1964), reprinted in 1964 U.S. Code Congressional and Ad-
ministrative News 2355; S. Rep. No. 295, 94th Cong. Ist Sess.
(1975), H.R. Rep. No. 196, 94th Cong. Ist Sess. (1975),
reprinted in 1975 U.S. Code Congressional and Administrative

News 774.
In Hutto v. Finney, 437 U.S. 678 (1978), this Court held that

Congress described attorneys’ fees as “costs” under Section
1988 not for any reason associated with Rule 68, but rather to
permit an award of such fees against a state notwithstanding
the Eleventh Amendment. This Court stated:

Just as a federal court may treat a state like any other
litigant when it assesses costs, so also may Congress
amend its definition of taxable costs and have the
amended class of costs apply to the states, as it does to all
other litigants, without expressly stating that it intends to
abrogate the states’ Eleventh Amendment immunity.

—437 US. at 696.

Moreover, this Court in Hutto attached significance to the
phrase “as part of the costs” only after finding clear, affirma-
tive indications in the legislative history of Section 1988 sup-
porting that interpretation. See 437 U.S. at 693-95. However,
as set forth above, there is no indication in the legislative
history that Congress’ use of the phrase “as part of the costs”
was intended to bring the mandatory “costs”-shifting provi-
sions of Rule 68 into play.

16

Neither petitioners nor the Government comes to grips with
the holding of Delta Air Lines, with the inter-relationship
between Rules 54(d) and 68, with the Roadway Express deci-
sion, or with the fact that there is no legislative history to
support their argument that Section 1988 was meant to define
“costs” in Rule 68. Instead, they argue repeatedly the “policy”
contention that their construction would foster “good faith”
consideration of “reasonable” settlement offers. E.g., Peti-
tioner’s Brief at 24-26; Brief of the United States at 18-19. But
these contentions simply ignore that this Court held in Delta
Air Lines that Rule 68 contains no “reasonableness require-
ment” and that one should not be read into it. See Delta Air
Lines, 450 U.S. at 355-56. Such judicial legislation would be
equally inappropriate here.

Equally misplaced is the Government’s reliance on cases in
the lower courts that have apparently held that Section 1988
permits consideration of whether a plaintiff has in bad faith
rejected a reasonable settlement offer. E.g., Brief of the United
States at 22. The issue of whether Section 1988 permits such
consideration in determining a “reasonable” fee is not pre-
sented in this case: neither the District Court nor the Court of
Appeals ever addressed that question, and no determination
has been made that respondent acted in bad faith in rejecting
petitioners’ offer.'’ The only issue in this case is whether Ru/e
68 precludes any consideration of a fee award for services
rendered after rejection of an offer, even if that rejection was
perfectly justified by the facts at the time. Rule 68 has no such
preciusive effect.

12 The Court of Appeals had remanded the case for determination of a
reasonable tee for services rendered :fter the Rule 68 offer was made, and
the circumstances of the settlement offer, and of its rejection, might have
been litigated in making that determination. But the petition filed in this
Court prevented that determination. There is thus no way to tell from the
present record what factors existed at the time the Rule 68 offer was rejected,
nor what conditions might have changed from that date to the date of the
verdict.

17

B. The various statutes allowing awards of attorneys’ fees
were not intended to define “costs” in Rule 68.

Congress did not intend that the various statutes authorizing
the award of attorneys’ fees would govern the definition of
“costs” in Rules 54(d) and 68. As is clear from review of the
fee award statutes, which now number over 100, if these
statutes (including Section 1988) were used to define “costs” in
Rule 68, Congress would have created an inconsistent, irra-
tional scheme based upon “untenable distinctions.” Rule 68
must be interpreted to avoid such a result. American Tobacco
Co. v. Patterson, 456 U.S. 63, 71 (1982).

Congress has enacted numercus statutes expressly authoriz-
ing the award of attorneys’ fees." What is especially important
here is that some of these statutes define “costs” to include
attorneys’ fees,'* while others authorize attorneys’ fees in
addition to “costs.”'* Even within distinct legislative areas,
such as consumer safety and environmental protection, Con-
gress has been inconsistent as to whether attorneys’ fees are or
are not a part of “costs.”'° Further, some fee award statutes do

13 There are presently over 100 such fee award statutes. A compilation
is found in 3 Derfner & Wolf, Court Awarded Attorney Fees, chs. 29-45
(1983). The number of these statutes proliferated after this Court's decision
in Alveska Pipeline Service Company v. The Wilderness Society, 421 U.S.
240 (1975), which held that the federal courts could not award attorneys’ fees
absent express statutory authorization.

14 See, e.g., The Clean Air Act, 42 U.S.C. § 7622(e2); Commodity
Futures Trading Commission Act of 1974, 7 U.S.C. § 18(f); Agricultural Fair
Practices Act of 1967, 7 U.S.C. § 2305(a); and the Bank Holding Company
Act Amendments of 1970, 12 U.S.C. § 1975.

15 See, e.g., Fair Labor Standards Act of 1938, 29 U.S.C. § 216(b);
The Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2607(d)(2);
Equal Credit Opportunity Act, 15 U.S.C. § 169le(d); National Traftic and
Motor Vehicle Safety Act, 15 U.S.C. § 1400(b); National Mobile Home
Construction and Safety Standards Act of 1974, 42 U.S.C. § 5412(b); Toxic
Substances Control Act, 15 U.S.C. §§ 2618(d), 2619(c)(2), 2620(b)4)(C).

16 Compare the Fair Labor Standards Act of 1938, 29 U.S.C. § 216(b)
(“a reasonable attorneys’ fee to be paid by the defendant, and costs of the

18

not use the word “costs” at all;'’ and in at least one instance, a
single statute uses both a “costs” and a non-“costs” formula-
tion.'* Consequently, a senseless scheme would result from
attempting to define “costs” in Rule 68 by reference to the
various fee award statutes. A few examples make the point.

Two consumer safety statutes, the Motor Vehicle Informa-
tion and Cost Savings Act, 15 U.S.C. §§ 1901-2012 (the “Mo-
tor Vehicle Act”), and the Consumer Product Safety Act, 15
U.S.C. §§ 2051-2083, are similar in purpose and structure.
Both authorize the promulgation of safety standards—bumper
standards under the Motor Vehicle Act, and consumer product
safety standards under the Consumer Product Safety Act.
Both were enacted in the same Congressional session. Both
expressly authorize private causes of action for violations of
the statute. And both contain provisions granting attorneys’
fees to prevailing plaintiffs. The Motor Vehicle Act, however,
authorizes the recovery of “costs and reasonable attorneys’
fees. . .” (15 U.S.C. § 1918(a)) while the Consumer Product
Safety Act authorizes the recovery of “the costs of suit,
including reasonable attorneys’ fees.” 15 U.S.C. §§ 2072(a),
2073.

If the fee award statutes were deemed to define “costs” for
Rule 68 purposes, a successful plaintiff would, where the
requirements of Rule 68 were otherwise met, be barred from
recovering attorneys’ fees for a defective toaster (under the
Consumer Product Safety Act), but not for a defective bumper
(under the Motor Vehicle Act). Nothing in the legislative

action”) with the Federal Mine Safety and Health Act of 1977, 30 U.S.C.
§ 815(c)(3) (“a sum equal to the aggregate amount of all costs and expenses
(including attorneys’ fees)”). Compare also the Toxic Substances Control
Act, 15 U.S.C. § 2619%c)(2) (“costs of suit and reasonable fees for attorneys
and expert witnesses”) with Outer Continental Shelf Lands Act, 43 U.S.C.
§ 1349(a)(S) (“costs of litigation, including reasonable attorney and expert
witness fees”).

17 E.g., Outer Continental Shelf Lands Act, 43 U.S.C. § 1349(b)(2).

18 Compare Outer Continental Shelf Lands Act, 43 U.S.C.
§ 1349(b)(2), with id., § 1349(a)(5).

|
t
1
:
-
:

19

history of either Act indicates a Congressional intent to pro-
duce this anomalous result. S. Rep. No. 835, 92d Cong. 2d
Sess. (1972), H.R. Rep. No. 1158, 92d Cong. 2d Sess. (1972),
reprinted in 1972 U.S. Code Congressional and Administrative
News 4573, 4596; S. Rep. No. 985, 92d Cong. 2d Sess. (1972),
H.R. Rep. No. 1198, 92d Cong. 2d Sess. (1972), reprinted in
1972 U.S. Code Congressional and Administrative News
4472."

Moreover, if Rule 68 significance were attached to the phrase
“as part of the costs” in Section 1988, the anomalous situa-
tions just described would also exist among the civil rights
statutes. Thus, while Section 1988 follows some civil rights
statutes in including attorneys’ fees “as part of the costs,” the
Fair Housing Act, Title VIII, Civil Rights Act of 1968, 42
U.S.C. § 3612(c), allows the court to award court costs and
reasonable attorneys’ fees to a prevailing plaintiff under cer-
tain circumstances. If the variously worded fee award statutes
governed the definition of “costs” under Rule 68, a plaintiff
who brought a fair housing claim under the Fair Housing Act
would not risk his attorneys’ fees by the operation of Rule 68,

19 Likewise, inexplicably inconsistent results would result under the
Magnuson-Moss Warranty—Federal Trade Commission Improvement Act,
15 U.S.C. §§ 2301-2312 and the Fair Debt Collection Practices Act, 15
U.S.C. §§ 1692a-16920. Both Acts protect the consumer from deceptive
practices, the former by prescribing standards governing the content and
appearance of warranties, the latter by prohibiting abusive, deceptive and
unfair debt collection practices. Both also create an express cause of action
for injured consumers and grant the courts discretion to award attorneys’
fees to a prevailing plaintiff. The Acts differ, however, in their phrasing of
this right. The Magnuson-Moss Act allows “costs and expenses (including
attorneys’ fees),” 15 U.S.C. § 2310(d)(2), while the Fair Debt Collection Act
grants a prevailing plaintiff the “costs of the action, together with a
reasonable attorneys’ fee.” 15 U.S.C. § 1682(k)(a)(3). There is nothing in the
legislative history to justify the conclusion that Congress intended to pre-
clude a Magnuson-Moss Act plaintiff from an award of fees in the face of a
valid Rule 68 offer, but to allow such an award to a Fair Debt Collection Act
plaintiff. S. Rep. No. 151, 93d Cong. Ist Sess. (1974), H.R. Rep. No. 1107,
93d Cong. Sess. (1974), reprinted in 1974 U.S. Code Congressional and
Administrative News 7702; S. Rep. No. 382, 95th Cong. Ist Sess. (1977),
H.R. Rep. No. 131, 95th Cong. Ist Sess. (1977), reprinted in 1977 U.S. Code
Congressional and Administrative News 1695.

20

while, if he brought the same claim under 42 U.S.C. § 1982. he
would run that risk.’
The Government points to the existence of fee award stat-
utes in 1938 when Rule 68 was adopted to show that Congress
intended the word “costs” in the Rule to be construed accord-
ing to those statutes. Brief of the United States at 12-13, and
Appendix. But the same senseless scheme that would result
under different fee award statutes adopted since 1938 would
exist under the statutes cited by the Government. For example
the Railway Labor Act of 1926, 45 U.S.C. § 153, and the Fair
Labor Standards Act of 1938, 29 U.S.C. § 216,?' are both
designed to protect employees. The Fair Labor Standards Act
establishes maximum hour and minimum wage guidelines,
whereas the Railway Labor Act creates the National Railway
Adjustment Board to mediate disputes between carriers and
railroad employees concerning rates of pay, rules, or working
conditions. Both Acts expressly authorize private causes of
action for violations of the statute. Both Acts also contain
provisions granting attorneys’ fees to prevailing plaintiffs. But
the Fair Labor Standards Act awards prevailing plaintiffs “a
reasonable attorney’s fee and costs of the action,”

20 42 U.S.C. § 1982 provides: “All citizens of the United States shall
have the same right, in every state and territory, as is enjoyed by white
citizens thereof to inherit, purchase, lease, sell, hold, and convey real and
personal property.” In Jones v. Alfred H. Mayer Co., 392 U.S. 409 (1968)
this Court noted that while the coverage of Section 1982 differs from that of
Title VIII, both Acts prohibit all racial discrimination, private as well as
public, in the sale of rental property. As a consequence, litigants can bring
housing discrimination suits under both statutes. Giving substance to the
otherwise inexplicable differences in phrasing could, in an action which
raised claims under both statutes, lead to the result that a plaintiff could be
denied post-offer fees if he prevailed under the Section 1982 claim—because
fee awards would then be governed by Section 1988—but be awarded fees if
he prevailed under the Title VIII claim.

21 The Government indicates that this statute was enacted prior to Rule
68. In fact the statute was enacted on June 25, 1938, whereas Rule 68 became
effective in January, 1938. In any event, it is plain that at the time Congress
was considering Rule 68, it had before it statutes that were inconsistent
concerning whether awards of attorneys’ fees were a part of costs.

~

21

whereas the Railway Labor Act awards a prevailing plaintiff
“a reasonable attorney’s fee to be taxed and collected as part
of the costs of the suit.”

To argue that Rule 68 should be construed by reference to
existing fee award statutes is to suggest that Congress intended
that a successful Railway Labor Act plaintiff would be barred
from recovering his post-offer fees where the requirements of
Rule 68 were otherwise met, while a successful Fair Labor
Standards Act plaintiff could recover all of his fees. Such a
distinction is untenable.

In sum, careful analysis of the fee award statutes shows that,
in approving Rule 68, Congress did not intend that the Rule
would be construed differently depending on the different
language of the different fee award statutes.” Certainly it
makes more sense to think that Congress intended Rule 68 to
be construed by reference to 28 U.S.C. § 1920, thereby pro-
ducing a consistent and uniform statutory scheme.

C. The recent Advisory Committee proposal to amend Rule
68 confirms that present Rule 68 does not restrict statu-

tory fee awards.

That present Rule 68 does nor affect the incidence of
attorneys’ fees is also evident from the recent proposals to
amend the Rule advanced by the Committee on Rules of
Practice and Procedure. See 98 F.R.D. 339, 361-67 (1983). As
the Court of Appeals below correctly noted, the very making
of those proposals suggests that the Advisory Committee was

22 It is no answer to say, as the Government repeatedly does, that the
fee award statutes using the phrase “as part of the costs” are “important,”
the implication being that the other statutes that do not use the phrase are
less “important.” E.g., Brief of the United States at 11. The Government
suggests no criterion by which the determination of “importance” should or
could be made by the District Courts. It bears emphasis that among the
statutes that do not use the “as part of the costs” formulation are the Fair
Labor Standards Act of 1938, 29 U.S.C. § 216(b), and the National Traffic
and Motor Vehicle Safety Act of 1966, 15 U.S.C. § 1400(b). It would
certainly come as a surprise to Congress that the Government is suggesting tv
this Court that those statutes are in some sense not “important.”

22

at least uncertain that present Rule 68 could properly be
construed to produce the result sought by petitioners (and the
Government).”°

Indeed, it is evident from the Advisory Committee’s pro-
posals that it did not consider the present Rule well-adapted to
fee-shifting. Thus, as noted above, the Advisory Committee
was concerned about what it called the “Draconian impact of
an ‘all-or-nothing’ [fee-shifting] rule,” id. at 365, and therefore
would eliminate the mandatory character of the Rule in its
present form and give the District Courts discretion not to shift
fees. Id. at 365-66. The Advisory Committee would also make
the Rule apply even-handedly to plaintiffs and defendants
alike. Id. at 364.

Including attorneys’ fees as part of “costs” under the present
rule would rave the “Draconian impact of an ‘all-or-nothing’
rule” in cases under those fee award statutes worded like
Section 1988. Because present Rule 68 is mandatory—‘“the
plaintiff must bear the costs” —a District Court would have no
discretion to award the plaintiff any post-offer fees even if the
circumstances clearly indicated that plaintiff was not reckless,
or even blameworthy, in rejecting the offer.

Moreover, the Advisory Committee proposals would change
the present Rule to make it a “two-way street” —defendants
who reject settlement offers would be liable to the fee-award

23 After full consideration by the Committee on the Federal Courts,
the Association has recommended against the Advisory Committee’s pro-
posals, because, among other reasons, the Association believes that the
shifting of attorneys’ fees to penalize non-settling litigants seems too severe a
sanction for failing accurately to predict the outcome of a trial. Moreover,
the Association concluded that the proposals would tend unduly to dis-
courage novel theories of law and have an unfair impact on less affluent
litigants. The Association also believes that the proposals would foster
collateral litigation over the reasonableness of a settlement rejection, which
would be undesirable in itself and would almost certainly force the District
Courts to inquire into confidential attorney-client discussions.

In light of the Government's decision to participate on the side of
petitioners in this case, it should be noted that the Government also opposed
the Advisory Committee proposals, for many of the same reasons. See Letter
of the Acting Deputy Attorney General to the Chairman of the Committee
on Rules of Practice and Procedure (February 28, 1984).

7

23

sanction as much as non-settling plaintiffs. But the present
Rule is a “one-way street”—only plaintiffs are at risk. It is
inconsistent and unfair, as the Advisory Committee implicitly
recognized, to raise the “stakes” by including fees in the
“costs” covered by Rule 68 but subject only one party, the
plaintiff, to the risk of this sanction. This is, of course,
particularly true where only a “sub-class” of plaintiffs—those
otherwise entitled to fee awards under particular fee award
statutes which are worded to make attorneys’ fees “part of the
costs” —would be affected.

D. The Rules Enabling Act precludes a construction of Rule
68 that would bar an otherwise appropriate award of
attorneys’ fees under Section 1988 and similarly worded
Statutes.

Finally, as the Court of Appeals below properly noted, an
interpretation of “costs” in Rule 68 to deny fees which a
prevailing civil rights plaintiff would otherwise receive might
put Rule 68 beyond the rule-making power granted by the
Rules Enabling Act, 28 U.S.C. § 2072. That statute provides in
part that the Rules “shall not abridge, enlarge or modify any
substantive right.”

Rule 68 is procedural in that its aim is to contribute to more
efficient litigation; conventionally applied to deny Rule 54(d)
“costs” to a prevailing plaintiff, it is sanctioned by the Rules
Enabling Act.** However, to apply it to preclude a fee award
expressly authorized by Congress in legislation adopted under
Section 5 of the Fourteenth Amendment would, at the very
least, raise a serious question whether it abridged or modified a
substantive right. It would be hard to think of a policy area of
greater national importance than the civil rights area, and it is
well-settled that Congress’ powers under Section 5 are the
broadest legislative powers it possesses. Fitzpatrick v. Bitzer,
427 U.S. 445, 455-56 (1976). Accordingly, if the “substantive

24 See Sibbach v. Wilson & Co., 312 U.S. 1 (1941), which has for many
years been the leading case on the validity of federal rules under this
provision of the Act.

24

rights” limitation in the Rules Enabling Act has any meaning
at all, it must at the least raise a serious question under the
Enabling Act if a Rule would be in direct conflict with a
Section 5 statute—i.e., foreclosing a Section 1988 fee awaid
that might otherwise be appropriate.”

Any construction raising a question of compliance with the
Rules Enabling Act should be avoided. Given the absence of a
clear indication—or any indication—that Congress understood
that its Section 5-based statute, and the fee awards which it
authorized, would be cut off by Rule 68, the Court of Appeals
was correct in holding that Rule 68 should not be construed as
petitioners contend.

Point ll

THE FUNDAMENTAL CIVIL RIGHTS POLICIES

SERVED BY SECTION 1988 WERE NOT INTENDED TO

BE OVERRIDDEN BY THE MANDATORY “COSTS”-
SHIFTING PROVISION OF RULE 68

The Court of Appeals was also correct that the legislative
history of Section 1988, and the policies underlying it, indicate
that the phrase “as part of the costs” in Section 1988 was not
intended to bring into play the mandatory “costs”-shifting
provision of Rule 68. The broad discretion which Section 1988
expressly confers on the District Courts to award a reasonable
attorneys’ fee “[i]n any action or proceeding” was not intended
to be ousted by the defendant’s conduct in making a settlement
offer which proves, in hindsight, to have been more advan-
tageous than the ultimate judgment. The Court of Appeals
correctly held that Congress did not intend the fundamental

25 See Ely, The irrepressible Myth of Erie, 87 Harv. L. Rev. 693.
724-25 (1974): “The most helpful way, it seems to me, of defining a
substantive rule—or more particularly a substantive right, which is what the
Act refers to—is as @ right granted for one or more nonprocedural reasons,
for some purpose or purposes not having to do with the fairness or efficiency
of the litigation process.” (Citations omitted; emphasis added.) This, of
course, is precisely what Section 1988 is about.

25

national civil rights policies which Section 1988 fee awards
advance to be subjected to the automatic “costs”-shifting
effect of Rule 68.

Congress’ clear purpose in Section 1988 was to foster private
civil rights litigation in order to complement Government
enforcement. By contrast, Rule 68’s purpose is “to encourage
settlement of litigation.” Delta Air Lines, Inc., 450 U.S. at
352. Thus, Section 1988 and Rule 68 are aimed at different
objectives: the former aims at facilitating suit by private
plaintiffs in an area of fundamental national policy while the
latter raises the stakes for any plaintiff who presses his case,
regardless of its nature. Congress deemed Section 1988 “essen-
tial” to the enforcement of constitutional rights. S. Rep. No.
1011, 94th Cong. Ist Sess. 2 (1976), reprinted in 1976 U.S.
Code Congressional and Administrative News 5910. As fully
set forth at pp. 13-15 above, the legislative history contains no
reference whatever to Rule 68.

This Court has repeatedly recognized that Section 1988 is
intended to “ensure effective access to the judicial process.”
Hensley v. Eckerhart, 51 U.S.L.W. 4552 (1983). To the same
effect, in Maine v. Thiboutot, 448 U.S. 1, 11 (1980), this Court
stated that “Congress viewed the fees authorized by § 1988 as
‘an integral part of the remedies necessary to obtain’ com-
pliance” with the civil rights laws (citing S. Rep. No. 1011,
94th Cong. 2d Sess. 5 (1976)).

Application of Rule 68 as contended for by petitioners
would penalize plaintiffs who prevail in protecting their civil
rights, simply because the defendant has forced them to a guess
as to the amount of his liability and they prove to have guessed
incorrectly. Such a penalty is entirely inappropriate in civil
rights cases and would frustrate the purpose of Section 1988.
As this Court has recognized:

No matter how honest one’s belief that he has been a
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

26

midst of litigation. Even when the law or the facts appear
questionable or unfavorable at the outset, a party may
have an entirely reasonable ground for bringing suit.

Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422
(1978). Because of the mechanical, mandatory operation of
Rule 68, the reading of Rule 68 contended for by petitioners
(and the Government) would place in the hands of civil rights
defendants, subject to no judicial review, the power to subvert
important litigation by making offers which indigent plaintiffs
(or their attorneys) might well hesitate to reject.

Recognizing Congress’ important goal in fee-award statutes,
this Court has declared repeatedly that a prevailing civil rights
plaintiff “should ordinarily recover an attorney’s fee unless
special circumstances would render such an award unjust.”
Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402
(1968) (awards under Title II of the 1964 Civil Rights Act);
Northcross v. Memphis Board of Education, 412 U.S. 427
(1974) (the Emergency School Aid Act of 1972); Albemarle
Paper Co. v. Moody, 422 U.S. 405 (1975) (Title VII of the 1964
Civil Rights Act); Hensley v. Eckerhart, 51 U.S.L.W. 4552
(1983) (Section 1988). Such “special circumstances,” which are
unusual in successful civil rights suits, can only be determined
by the District Courts in reviewing a fee application: but Rule
68, if construed as petitioners (and the Government) read it,
would preclude any such judicial determination, just as has
_ happened in this case.

Further, to an unusual degree, the rights of third parties
hang in the balance in civil rights cases. As this Court and
Congress have agreed, when a civil rights plaintiff prevails, “he
does so not only for himself but also as a ‘private attorney
general’ vindicating a policy that Congress considered of
h@&hest importance.” Newman v. Piggie Park Enterprises, Inc.,
390 U.S. at 402, cited in S. Rep. No. 1011, 94th Cong. Ist Sess.
3 (1976). The application of Rule 68 in the manner contended
for by petitioners (and the Government) would separate the
named plaintiff's interests from those of other unnamed par-
ties who could benefit from a full prosecution of the case. (It is

=u

27

noteworthy in this connection that the Advisory Committee’s
proposals to amend Rule 68, see Point 1.C., supra, would not
apply Rule 68 to class or derivative actions, where the rights of
absent parties are also in the balance. See 98 F.R.D. 339, 367.)

Moreover, if Rule 68 barred the award of post-offer fees in
civil rights cases, it would tend to create a conflict between the
interests of the plaintiff’s attorney and those of his client. This
would be particularly inappropriate in the civil rights context,
where as this Court recently affirmed, the need to “attract
competent counsel” was one of Congress’ concerns in drafting
Section 1988. Blum v. Stenson, 52 U.S.L.W. 4377 (1984) (citing
S. Rep. No. 1011, 94th Cong. 2d Sess. 6 (1976)). The Court of
Appeals’ decision in this case properly avoids subjecting coun-
sel to the ethical problems that would tend to result.”

Finally, the mandatory nature of Rule 68 is fundamentally
incompatible with the discretionary nature of Section 1988. As
this Court has noted, “the range of discretion of the courts in
making [attorneys’ fees] awards are matters for Congress to
determine [footnote omitted].” Alveska Pipeline Co. v. The
Wilderness Society, 421 U.S. 240, 262 (1975). Under Section
1988, that discretion is very broad, as this Court recently
stressed in discussing the factors which the District Courts
should consider in determining the amount of fee awards.
Hensley v. Eckerhart, 51 U.S.L.W. 4552 (1983). In the Con-
gressional scheme of broad discretion over fee awards, the
automatic, non-discretionary operation of Rule 68 has no
place.

26 The Court of Appeals did not consider these ethical problems
particularly serious. Chesny v. Marek, 720 F.2d 474, 477-78. However, it is
surely anomalous to adopt a reading of Rule 68 which would create any
ethical problem for lawyers who bring a class of cases which Congress
specifically intended to foster and encourage. Moreover, in its Ethics Opinion
No. 80-94, this Association concluded that it would be unethical to require a
plaintiff's attorney to forgo as part of a settlement a statutorily-authorized
fee award. The Association’s Ethics Committee reasoned that this would
place the attorney in an untenable position, having to bargain over his own
fee while bargaining over a settlement for his client. Any interpretation of
Rule 68 that allows fees to be precluded would create the same problems.

28

Conclusion

The judgment and mandate of the Court of Appeals should
be affirmed.

Dated: New York, New York
September 11, 1984

Respectfully submitted,

SHELDON H. ELSEN
(Counsel of Record)

MICHAEL W. SCHWARTZ

SIDNEY S. ROSDEITCHER

EDMUND H. KERR

JOHN G. KOELTL

The Association of the Bar
of the City of New York

42 West 44th Street

New York, New York 10036

(212) 382-6600

Attorneys for The Association of
the Bar of the City of New York,
amicus curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_1355%3A10. Public record. Not legal advice.