Amicus Curiae Brief — Marek v. Chesny

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Svareme Court, 0.3,

FILED

STEVAS,

Fi ; In the

Supreme Court of the United States

» Ocroser Term, 1984

TEREREY Agi THOMAS WADYCKI and

LAWRENCE MAODE,

Petitioners,

vs.

ALFRED W. CHESNEY, Individually and as Adminis-

trator of the Estate of STEVEN CHESNY, deceased,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Seventh Circuit

BRIEF FOR. AMERICAN CIVIL LIBERTIES

UNION AND. ROGER BALDWIN FOUNDATION

OF THE CIVIL LIBERTIES UNION AS

AMICUS “SUPPORTING RESPONDENTS

Micnart L. Bropy

Rocer PAscan

Burt NEUBORNE

E. Ricwarp Larson

American Civil Liberties

Union Foundation

_ 1382 West 48rd Street

New York, New York 10036

_ (812) 876-1000

(212) 944-9800

“Harvey GrossMan

Roger Baldwin Foundation

of the American Civil

Liberties Union

220 S. State Street

Room 816

Chicago, Tlinois 60604

(312) 427-7339

BEST AVAILABLE COPY

QUESTIONS PRESENTED

1. Whether Rule 68 can be construed

in a way which cuts off a civil rights

plaintiff's right to § 1988 attorneys

fees and imposes liability on such a

plaintiff for defendant's fees regardless

of the reasonableness of the offer of

judgment at the time it was made or the

productiveness of the post-offer work of

plaintiff's counsel?

2. Whether an offer of judjment

which lumps together plaintiff's damages

and plaintiff's § 1988 attorneys fees is:

a valid offer under Rule 68?

TABLE OF CONTENTS

Interest of the American Civil

Liberties Union and the Roger

Baldwin Foundation of the

American Civil Liberties Union...

Summary of Argument. .....2.+s-s

Argument:

A rule 68 offer of judgment cannot

destroy the right of a prevailing

civil rights plaintiff to recover

his or her attorneys fees under the

provisions of 42 U.S.C. § 1988 ...

The plain meaning of the

term “costs” in Rule 68

precludes application of

that Rule to shift the

parties’ responsibil-

ties for attorneys'fees. .

A. The plain, long-

standing, and well

litigated meaning of

"costs" in the

American system does

not include attor-

neys fees. ...+.+s-s

B. The plain meaning

of Rule 68 was

not abrogated

by the statutory

formula employed

am § 1906 . «© © © @

—_ ee te F

II.

IIl.

The construction of

Rule 68 urged by

petitioner would

raise serious consti-

tutional questions

about the separation

of powers by evi-

scerating § 1988

without materially

enhancing the policy

served by Rule 68...

The construction

of Rule 68 urged

by petitioners

would eviscerate

2. ee ee

The rule urged

by petitioners

would not materi-

ally enhance

the policy served

by Rule 68... .

The rule urged

by petitioners

raises serious

separation of

powers problems .

An offer of judgment

which includes both

plaintiff's damages

and plaintiff's § 1988

attorneys fees is

not proper for the

purposes of Rule 68. .

An offer of

judgment which

includes § 1988

attorneys fees

is too uncertain

to be valid under

Rule 68 ...«. -

B. An offer of

judgment which

includes attor-

neys fees is

unethical and

creates a con-

flict of interest

between plaintiff

and his lawyer. .... 58

Conclusion o . s . ° . s e @ . ° * . * 63

TABLE OF AUTHORITIES

Cases:

Alyeska P li Service Co.

v. W " 1 U.S.

240 (1975) *eeee ee # e# #® @e® @#® # @ 47,49

Arcambel v. Wiseman, 3 Dall.

306, 1 L.Ed. 613 (1796) ° ° ° . o e ° © 17,47

i v. Cent S n

Wire Ut 717 F.2d 1160 (7th

cr. 1 83) oe e eo eo eo eo e eo — @ * o @ eo 25

B v. U S D -

ment of Justice, 684 F.2d 999

(D.C. Cir. 1982) o J @ oe e — — 7 > s @ 25

Baird v. Bellotti, 724 F.2d

1032 (9th Cir. 1982) . . 2. «© «© «© «© «© « 22

Benitz v. Collazo, 571 F.Supp.

246 (D. P.R. 1983) ° e ° . ° . . . . ° 61

Bob Jones University v. United

S t S, U.S. ey 103 S.Ct.

SIT ues. om’. wt ee 44

Brown v. Palmetto, 681 F.2d

Been teem Gale BPOOP ec ec oo ee eo oe Cee

-iii-

Chadha ve tS es 943s

Pp Ct. 764 (1943) >» @ « « 48

Christiansberg Garment Company

v. EEOC, 434 U.S. 412 (1978) ..... 23,34

| Croker _v. Boeing Co., 662 F.2d

975 (3d Cir. 1981) eee @8 8@# @# @# @ @ 25

Cross _v. General Motors, 721 F.2d 7

: 1152 (8th Cir. 1983) ° e ° ° ® e . . e 24

D Air L A ,

450 U.S. 346 (1981). . « «© «© «© «© «© «© «© 20,30,35,

38,39,52,53,

54,55,61

peste Air Lines v. Colbert,

°692 F.2d 489 (7th Cir. 1982) ..... 24

Dual _ v. Cleland, 79 F.R.D. 696

(D.D.C. 1978) eo eo eo @ eo oe oe e oe oe @ @ @ 36

Flei D

v. Maier Brewing Co., 386 U.S.

714 (1967) eee ee #e# # @® @® @ @# @#® @# @ 18

Flint v. Haynes, 651 F.2d 970

(4th Cir. 1981) eee 8 @8 @ @ @ #@ @ @ 25

Gates v. Collier, 616 F.2d

1268 (5th Cir. 1980) ..... + «© « «© 27

Gautreux v. Chicago Housing

Authority, 690 F.2d 610 (7th

Cir. 1982) @ oe oe @o J @ eo eo o — @ * e oe 21

vy. B , 733 F.2d

1551 (llth Cir. 1984)... 2. «© « «© « « 25

Hensley v. Eckerhart, U.S.

~__, 103 S.Ct. 1933 (19863) ...... 33,34,36,41,

43,53

-iv-

Hugaes v. Rowe, 449 U.S. 5

) @ eo ° gf oe @ @ e * . * . . * _ 23,34

| Hutto v. Finney, 437 U.S. 678

(1978) ° ° ° ° ° ° ° ° ° ° ° e ° © ° e 27,29

| In re General Motors Engine

Interchange Litigation, 594 F.2d

1106 (7th Cir. 1973), cert.

denied 444 U.S. 870 (1980) ...... 26

Jones v. Orange Housing Author-

ity, 559 F.Supp. 1379 (D. N.J.

| 1983). 7 © J — — eo oe eo oO e J — e . * ° 61

Knight v. Watkins, 616 F.2d

795 (Sth Cir. 1980). . «© «© «© © © «© © «© 22

Leftwich v. Harris-Stowe State

Collece, 702 F.2d 686 (8th

Cir. 1983) ° * * eo . 7 o . * > a 7 o . 21

Liberty Mutual Insurance v. EEOC,

691 P-3a 438 (9th Cir. 1982) ..... 38

Lisa v. Snider, 561 F. Supp. 724

(N.D. Ind. 1983) o oe o . * J ee * * . * 60

Mendoza v. United States, 623

F.2d 1338 (9th Cir. 1980). ....-.. 60

Metcalf v. Borvoa, 681 F.2d

hes (oem Cif. 1902) - © ec ec ec ec eo 0 ow Bb bS

Montgomer v. Yell F

System, Inc., 671 F.2d 412

(lLOth 4 TF 1982) o — — — o o J . . oe — 24

Moore v. Hughes Helicopters,

Inc.,708 F.2d 492 (9th Cir.

1583

Oe ee ae a ae a ee oe

Mr. Hanger, Inc. v. Cut Rate

Plastic Hangers, Inc., 63 F.R.D.

607 (E.D. N.Y. 1974) ° . . . . . ° . . 36

-V~-

eee ae

New York Gas raant Club v. Carey,

4 U. @ ( ) e e s e @ oe e @

Obin v. District No. 9, Inter-

national Association of Machin-

ists, 651 F.2d 574 (8th Cir.

1981) @ o * e s s sd eo ° s @ o s . .

P. Mastrippolito and Sons v.

Joseph, 692 F.2d 1384 (3d Cir.

1982) ° ° ° o ° e ° e ° ° ° . e ° °

Poe v. John Deere Co., 695 F.2d

1103 (8th Cir. 1982) @ 6 * s * -_ *

Prandini v. National Tea Co.,

557 F.2d 1015 (3d Cir. 1977) ...

Regalado v. Johnson, 79 F.R.D.

447 (N.D. Ill. 1978) J oe 7 o o & @

Roadway Express v. Piper, 447 U.S.

752 (1980) @ — eo — oe oe oe eo J @ @ eo

Seyler v. Seyler, 678 F.2d 29

(5th Cir. 1982) e ° . . ° e e ° ° °

Sprague v. Ticonic National

Bank, 307 U.S. 161 (1939) ° ° . ° °

White v. New Hampshire, 455 U.S.

445 (1982) i 7 oe eo ss oe o eo @ o * eo

Wrighten v. Metropolitan Hospi-

tals, 726 F.2d 1152 (9th Cir.

1984) ef © © © © @# © @ @ ° ° *. 8 @

Statutes and Rules:

og A el)

a aes 1 ween @ « 6 © «8 6 6

-vi-

22,60

24,60

59,61

17,18,19,

29,30,47

22,62

15 U.S.C. § 1117 . 2. © © we ww

15 U.S.C. § 2310(d). ......

28 U.S.C. § 1920 . . ~. © «© we «

28 U.S.C. § 1927 . . «© «© «© @ « ©

28 U.S.C. § 2071 . . «~~ we ww

28 U.S.C. § 2072 . . «© «© «© « ©

42 U.S.C. § 1988 . . . «© « «© « ew

42 U.S.C. § 3612 . . «. «© «© «© «

Fed. R. Civ. P.:

Rule ll . «. « «© «© © © © @ «

Rule 37(a)(4) . .. 2... -

Rule 37(b). . « « «© «© «© « «

Rule 54 . . « © «© © «© «© @ «

Rule 68 oe s o oe sd . e sd s a

Miscellaneous:

Secondary Sources

Moore's Federal Practice, 41.46.

968.04

Opinion No. 80-94 of the Com-

mittee on Professional and

Judicial Ethics of the New

York City Bar Association, 36

Record of N.Y.C.B.A. 507 (1981)

Payne, Costs in Common Law

Actions in the Federal Courts,

21 Va. L. Rev. 397 (1935)... .

-vii-

47,49

47,48,49

Passim

19-24

52,54,55

Legislative History

Attorneys Fees Awards: Hearings

on S 585 Before the Subcommittee

on the Constitution of the

Senate Committee on the Judi-

ciary, 97th Cong., lst Sess.

(1981) _—_——— -— -— -« «© © & € @ 68 ®@

H.R. Rep. No. 1558, 94th Cong.,

2d Sess. (1976) eee e# # # @# @

Legal Fees Equity Act: Hearings

on S. 2802 Before the Subcom-

mittee on the Constitution of

the Senate Committee on the

Judiciary, 98th Cong., 2d Sess.

(1984) oe ff © &© © @©& @© @© © @ @ ©

Municipal Liability Under 42

U.S.C. §1983: Hearings on S.

585 Before the Subcommittee on

the Constitution of the Senate

Comittee on the preggers: €

97th Cong., lst Sess. (1981) ..

S. 141, 98th Cong., lst Sess.

(1983) e . o ° @ . ° ° ° ° ° . .

S. 585, 97th Cong., lst Sess.

(1981) se s o o 7 eo eo o * ° o . .

S. 2802, 98th Cong., 2d Sess.

(1984) . . * . . . . . . . . . .

S. Rep. No. 1011, 94th Cong.,

2d Sess. (1976) . ° . . ° . . .

-viii-

23,27,34,

36,48

INTEREST OF AMICI*

This case raises the question of

whether Federal Rule of Civil Procedure

68 may be applied in a manner which de-

prives a prevailing civil rights plain-

tiff of his attorneys fees and make him

liable for the attorneys fees of a losing

defendant. It also raises the question

of whether a Rule 68 offer of judgment

may lump together plaintiff's damages

and attorneys fees.

The American Civil Liberties Union

("ACLU") and the Roger Boldwin Foundation

of the ACLU ("ACLU Illinois") frequently

represent civil rights litigants. Indeed,

such representation is, in some ways,

the central purpose of both organiza-

tions. Moreover, the receipt of fee

* The parties have consented to the

filing of this amicus brief. Their writ-

_ ten consents have been filed with the

Clerk of Court under Rule 36.2 of the

Rules of this Court.

— ee en

ee eS ea

awards in successful lawsuits of this

type is an important source of funding

for both organizations. The construction

of Rule 68 proposed by petitioner, in

addition to being contrary to the plain

meaning of that Rule, would make vigorous

enforcement of the civil rights laws by

organizations like amici virtually impos-

sible, for it would give civil rights

defendants a settlement weapon of such

potency as to permit the virtual dictation

of settlement terms.

As to the second question raised by

this case, whether an offer of judgment

combining fees and damages is proper,

the course of conduct pursued by this

petitioner would, if endorsed by this

Court and generally pursued by civil

rights defendants, create grave ethical

problems for amici and, indeed, for ail

civil rights attorneys. The problem

arises from the fact that § 1988 attorneys

fees are not determinate in amount, but,

instead, are normally fixed by the trial

judge in a complex balancing process

which may raise the fee above or drop it

below the attorney's normal hourly rate.

Given the inherent uncertainty of this

process, an attorney who is asked to

evaluate a Rule 68 offer which lumps

damages and fees will have a strong incen-

tive to overvalue the fee component of

the offer, where his client's interest

' would favor predominance of the damages

component. The procedure followed by

_ these petitioners guarantees that such

conflicts will be faced by the ACLU and

| the ACLU of Illinois in numerous future

cases.

a ee ae,

Accordingly, for all of the fore-

going reasons, the ACLU and the ACLU

' submit the following brief in support of

respondent.

SUMMARY OF ARGUMENT

Petitioners urge this Court to con-

strue Rule 68's use of the term "costs"

as including attorneys fees in those

cases covered by the provisions of 42 U.S.C.

§ 1988. This proposed construction is

based on the happenstance that § 1988

provides that prevailing civil rights

eS Se rr me 4

litigants will receive their reasonable

fees "as part of costs". Petitioners'

position, however, is inconsistent with

the plain meaning of Rule 68 and it

threatens to gut the effectiveness of

§ 1988. Additionally, the offer of judg-

ment employed in this case -- an offer

which lumped together plaintiff's damages

and his fees -- was so indefinite as to

be improper for Rule 68 purposes and, in

addition, it had the potential to create

severe ethical problems for plaintiff-

respondent's counsel

tee?

a Ot

er ee er

{

;

I.A. For almost two hundred years

since its decision in Arcambel v. Wiseman,

3 Dall. 306, 1 L.Ed. 613 (1796), this

Court has recognized the sharp distinction

drawn in the American system between

"costs" on the one hand, and attorneys

fees on the other. As a result, this

Court has consistencly construed statutory

use of the term "costs" without any fur-

ther specification to exclude attorneys

fees. This distinction between fees and

costs is particularly evident and well

articulated in the Federal Rules of Civil

Procedure. Where the Rules intend to

refer to both costs and fees, they do

so. E.g., Rules 11, 37. In contrast,

where the Rules refer to "costs" simpli-

citer, they are normally construed as

referring to costs exclusive of fees.

Of special significance in this

regard is the construction given Rule

54(d). Rule 54(d) provides that a pre-

;

vailing party will be allowed his or her

costs “as of course," a result which

Rule 68 was specifically intended to

alter when the prevailing party has re-

jected, and failed to better, an offer

of judgment. The framers’ understanding

of the use of the term "costs" in Rule

54(d), as evidenced by the Notes of the

Advisory Committee and the authorities

referred tO therein, clearly distinguished

between Rule 54(d) costs and attorneys

fees. This distinction has been preserved

in contemporary procedure under the Rule,

as is evidencec by the numerous decisions

which distinguish between the procedures

for assessing Rule 54(d) costs and those

for assessing attorneys fees. The dis-

tinction between Rule 54(d) costs and

§ 1988 attorneys fees is further etched

with particular clarity by the presumption

that costs go to the prevailing party--

regardless of whether that be plaintiff

or defendant--as a matter of course.

Section 1988 fees are not routinely shifted

in this way, and it is well established

that a prevailing civil rights defendant

must establish that plaintiff's suit was

"clearly frivolous, vexatius or brought

for harrassment" before he may recover

fees from a defeated plaintiff. Hughes

v. Rowe, 449/U.S. 5, 14-16 (1980). Thus,

Rule 54(d) costs” cannot be construed

as including fees if the rule is to be

read harmoniously with Hughes and § 1988.

B. The mere fact that § 1988 states

that fees will be assessed in favor of a

prevailing party “as part of costs" does

not alter the plain meaning of the term

as it is us in Rule 68. The “as part

of costs" formula was used by Congress

for purposes that have nothing to do

with the policy of settlement served by

Rule 68. Because the same is true of

Other statutes which award attorneys

fees and characterize them as “part of

costs," the construction of Rule 68 urged

by petitioners would result in a crazy

quilt scheme of fee shifting, and judicial

application of the Rule in this manner

would comprise precisely the sort of

"standardless judicial rulemaking" es-

chewed by this Court in Roadway Express

v. Piper, 447 U.S. 752, 761-762 (1980).

II. In addition to being contrary

to its plain meaning, the construction

of Rule 68 urged by petitioners would

create an insupportable conflict between

that Rule and § 1988. The conflict is

not required by the policies underlying

Rule 68, and it poses serious separation

of powers problems.

A. Section 1988 was enacted in

order to “ensure ‘effective access to

the judicial process’ for persons with

civil rights grievances." Hensely v.

Eckerhart, U.S. , 103 S.Ct.

1933, 1937 (1983). A construction of

Rule 68 which would include § 1988 fees

would be wholly contrary to this purpose.

Because the Rule applies mechanically --

that is, regardless of whether the rejec-

tion of the offer was justified and re-

gardless of whether counsel's post-offer

work was productive -- counsel will be

forced to risk their compensation on his

ability to foresee and accurately predict

all of the numerous contingencies that

affect any litigation. This problem

will be’particularly acute where the

offer of judgment comes at an early stage

in the case, before any serious discovery.

Additionally, the fact that Rule 68 makes

a plaintiff potentially liable for his

opponent's st-offer costs means that

civil rights plaintiffs will on petitioners’

theory, be posed to potentially ruinous

fee liability for failing to guess right.

When faced with any offer of judgment

that has even the remotest possibility

of accurately predicting the outcome at

trial, civil rights plaintiffs will be

virtually compelled to capitulate, and

§ 1988 wili effectively be transformed

from a key to the courthouse to a lock

barring entry.

B. This result is not demanded by

the policy favoring settlement. Pre-

vailing civil rights plaintiffs are only

entitled to their "reasonable" attorneys

fees. Thus, presumably, an unreasonabl

rejection of an offer of judgment which

results in little or no productive post-

offer work will be a factor considered

by a court reviewing a fee petition.

This case, however, offers no insight

into the significance of such considera-

tions. Here, there has never been any

assessment as to the reasonableness of

Plaintiff's conduct. Thus, for all any-

-10-

one knows, plaintiff's rejection of the

offer of judgment was perfectly justified

and the effort that went into the case

after the offer was productive. Accordingly,

there is no reason to believe that the

pesicy favoring settlement demands that

this plaintiff be denied his post-offer

fees.

C. Given this intense and unnecessary

conflict between the proposed construction

of Rule 68 and the policies underlying

§ 1988, separation of powers doctrine

dictates that Rule 68 be construed in a

manner which harmonizes its provisions

with Congress' considered decision to

implement its policy judgments in the

form of § 1988. This Court's authority

to formulate rules of practice is derived

either from its inherent powers or from

the Rules Enabling Act. It is well esta-

blished that this Court will not exercise

its inherent powers in a manner which

“lle

upsets Congress’ considered decisions in

the attorneys fees area. Alyeska Pipeline

Service Co. v. Wilderness Society, 421 U.S.

240 (1975). Similarly, the power dele-

gated to this Court under the Rules En-

abling Act must be exercised in a manner

"consistent" with Congress' statutes 28

U.S.C. 2071. Accordingly, since the

construction of Rule 68 urged by peti-

tioners would put that Rule in confiict

with § 1988, that construction must be

rejected.

III. In addition to the shortcomings

of petitioners' proposed construction of

the term "costs," the Court of Appeals

should be affirmed for the reason that

the offer of judgment made in this case

was not proper

A. In order to be valid, a Rule 68

offer of judgment must be sufficiently

-12-<-

determinate to permit the offeree-plain-

tiff to meaningfully evaluate the likeli-

hood that he will better the offer by

pursuing the case to judgment. Where,

as here, an offer of judgment combines

attorneys fees and damages in one lump

sum, the plaintiff will only be able to

evaluate to the offer to the extent that

he can specify the size of the fee com-

ponent and thereby determine his net

recovery. Section 1988 fees, however,

are so indeterminate as to preclude such

analysis. Such fees are not fixed by

counsel's hourly rate, but are determined

on the basis of a complex 12 factor bal-

ancing process which is left to the dis-

cretion of the trial court and which may

result in an award that is above or below

the hourly figure. Given this indeter-

minacy, an offer of judgment which lumps

-13-

fees and damages is not suitable for

Rule 68 purposes.

B. Moreover, such an offer raises

serious ethical problems. Because the

plaintiff will look to his attorney to

evaluate such an offer of judgment, and

because the attorney will always have a

strong pecuniary interest in maximizing

the fee component of an offer of this

sort, tender of such an offer always

runs the risk that a conflict of interest

will arise. This is not to say that

such conflicts are inevitable, and it is

not to say that ethical counsel will

never be able to resolve them, but it is

to say that the risk of insoluble con-

flicts and less than resolute counsel is

inevitable, and that a construction of

Rule 68 which invites such ethical dilemmas

should be avoided if at all possible.

-14-

AR NT

A RULE 68 OFFER OF JUDGMENT CANNOT

DESTROY THE RIGHT OF A PREVAILING

CIVIL RIGHTS PLAINTIFF TO RECOVER

HIS OR HER ATTORNEYS FEES UNDER

THE PROVISIONS OF 42 U.S.C. §1988.

Section 1988 of Title 42 entitles

prevailing civil rights plaintiffs to

recover their "reasonable" attorneys

fees. Petitioners herein have argued

that this statutory right can be negated

by a defendant's shrewd use of the cost-

shifting provisions of Federal Rule of

Civil Procedure 68. This argument is at

odds with the plain meaning of the term

"costs" as it is used in Rule 68 and as

it has been used by this court for close

to two centuries. Further, the con-

Struction of Rule 68 proposed by peti-

tioner would unconstitutionally seek to

apply this Court's rulemaking authority

in a manner which would eviscerate the

carefully considered Congressional policy

decisions embodied in 42 U.S.C. §1988

-15-

without materially enhancing the policies

served by Rule 68. Finally, the argument

proposes a vi el strategem which

introduces such ambiguity into Rule 68

offers as to make them unsuitable to the

purposes of the Rule and, in many circum-

stances, one which creates insuperable

ethical problems for plaintiffs’ counsel.

I. The Plain Meaning of the Term “Costs”

in Rule 68 Precludes Application of

that Rule To Shift the Parties’

Responsibilities for Attorneys Fees.

Rule 68 provides that a plain-

tiff who fails to better defendant's

formal offer of judgment by carrying a

case through to judgment will not be

entitled to all of the “costs” normally

awarded to “prevailing parties” wnder

Rule 54(d), and, further, that, such a

plaintiff will be obligated to pay the

post-offer costs incurred by the defen-

dant-offeror. It is petitioner's position

that a fortuity of the drafting of § 1988 --

the decision to characterize a fee award

-16-

as "part of the costs" -- had the effect

of expanding Rule 68's cost-shifting

scheme to include the shifting of fees

in civil rights cases. This conclusion

is inconsistent with Rule 68's plain

meaning.

A. The Plain, Longstanding, and

Well Litigated Meaning of "Costs"

in the American System Does

Not Include Attorneys Fees.

Since at least 1796 it has

been the consistent view of this Court

that "attorneys fees Ordinarily are not

among the costs that a winning party may

recover," Road''ay Express vy. Piper, 447

U.S. 752, 759, (1980); relying on Arcambel

v. Wiseman, 3 Dall. 306, 1 L.Ed. 613

(1796). Accordingly, this Court has

normally had little trouble in recognizing

that, whatever else the term "costs" may

include, it does not, absent an express

Statutory provision to the contrary,

include attorneys fees. This Court has

@l7-

specifically so held with respect to the

unmodified use of the term in the Lanham

Act, 15 U.S.C. §1117, Fleischman Distil-

ling Corporation v. Maier Brewing Co.,

386 U.S. 714, (1967), and with respect

to its similarly unadorned use in Sec-

tion 1927 of Title 28, Roadway, at 447

U.S. 757-763.

Against this background, the

plain meaning of Rule 68's "cost" shifting

provisions is that they apply only to

"costs" as that term has been understood

for close to two centuries; that is, to

costs exclusive of fees. Certainly other

provisions of the Federal Rules of Civil

Procedure support this conclusion. Thus,

where the Rules intend to include attor-

neys fees among costs or expenses, they

Specifically so state. E.g., Rules ll,

37(a) (4), 37(b) ("reasonable expenses,

including attorneys fees").

-18-

In contrast, where the term

"costs" is used without any such amplify-

ing language, it has generally been ccn-

strued as not including fees. Most signi-

ficantly, this is the case with Rule

54(d), the very provision whose cost

allocation formula -- "costs shall be

allowed as of course to the prevailing

party” -- is altered by the application

of Rule 68. Thus, the 1938 Advisory

Committee which drafted Rule 54 was cuite

explicit that ‘t intended for the Rule

to be read harmoniously with; inter alia,

former section 830 (currently section

1920) of Title 28, F.R.Civ.P. 54(d),

Notes of Advisory Committee, a statute

which, as this court has recently noted,

defines "costs" as not including attor-

neys fees, Roadway, supra. Moreover,

one of the authorities cited by the 1938

Advisory Committee as descriptive of

"the present rule [governing costs] in

common law actions," see F.R.Civ.P. 54(d),

Advisory Committee Notes, specifically

recognized that, "In the federal courts,

the practice is based upon the fundamen-

tal, essential, and common law doctrines

and distinctions as to costs and fees."

Payne, Costs in Common Law Actions in

the Federal Courts, 21 Va. L.Rev. 397,

at 381-398, 404-405, (1935) (emphasis in

Original). This "contemporaneous under-

standing" of the cost-fee distinction

is, of course, strong evidence that the

unmodified use of the term "costs" by

Rule 54's drafters was advised, and was

not intended to include fees. Delta Air

Lines, Inc. v. August, 450 U.S. 346, 377

(1981) (Rhenquist, J., dissenting).

Moreover, several courts have

gone so far as to specifically hold that

§ 1988 attorneys fees are not the sort

of "costs" taxable under Rule 54(d), and

have, as a result, sharply distinguished

-20-

between the procedural rules applicable

to fee prtitions on the one hand and

bills of cost on the other. Thus, for

example, several courts have held that

fee petitions are not subject to local

rule time limits governing the filing of

bills of costs. See, e.q., Leftwich v.

Harris-Stowe State College, 702 F.2d 686

(8th Cir. 1983); Gautreaux v. Chicago

Housing Authority, 690 F.2d 601 (7th

Cir. 1982); Brown v. Palmetto, 681 F.24

1325 (llth Cir. 1982); Metcalf v. Borba,

681 F.2d 1183 (9th Cir. 1982); cf. Seyler

v. Seyler, 678 F.2d 29 (Sth Cir. 1982)

(an application for appellate fees is

not subject to the 14-day time limit in

Rule 39 of the Fed. R. App. P. applicable

to appellate costs).* Similarly, it is

* In fact, this Court has apparently

endorsed this distinction with its ob-

servation that “district courts remain

free to adopt local rules establishing

(Continued on next page)

-2)-<-

well established that, when it exists, a

party's right to attorneys fees is a

right to something above and beyond Rule

54 "costs" which is independently action-

able and, thus, not dependent Rule 54's

provision for the taxation of "costs."

New York Gaslight Club, Inc. v. Carey,

447 U.S. 54 (1980); Sprague v. Ticonic

National Bank, 307 U.S. 161 (1939).

Indeed, this distinction be-

tween Rule 54(d) "costs" and § 1988 "fees"

is compelled by § 1988's legislative

history and by this Court's decisions as

(Continued from previous page)

claims for attorney's fees." White v.

New Hampshire Department of Employment

eestityy 455 U.S. 445, 454 (1982) (foot-

note omitted). See also, e.g., Baird v.

Bellotti, 724 F.2d 1032, 1037 & n.6 (list

Cir. 1984); Metcalf v. Borba, 681 F.2d

1183, 1187-88 (9th Cir. 1982); White v.

New Hampshire Department of Employment

Security, 679 F.2d 283, 285 (lst Cir.

1982); Obin v. District No. 9, Int'l

Association of Machinists, 651 F.2d 574,

583 (8th Cir. 1981); Knighton vy Watkins,

616 F.2d 795, 798 n.2 (5th Cir. 1980).

-22-

to the statute's operation. The contrary

rule -- treating fees as an item of Rule

54(d) costs in civil rights actions --

would make fees taxable "as a matter of

course” not only on the part of prevailing

plaintiffs, but also on the part of pre-

vailing civil rights defendants. Such a

result was manifestly not intended by

Congress, which was careful to explain

that § 1988 fees would not "ordinarily"

be awarded to prevailing defendants, and

that a civil rights plaintiff “could be

assessed with his opponent's fees only

where it is shown that his suit was clear-

ly frivolous, vexatious or brought for

harrassment purposes." S. Rep. No. 1011,

94th Cong. 2d. Sess. 5 (1976) Reprinted

in 1976 U.S. Code Cong. & Ad. News, 5012.

Since this standard was squarely endorsed

by this Court in Hughes v. Rowe, 449 U.S.

5, 14-16 (1980), see also Christiansberg

-23-

Garment Co. v. EEOC, 434 U.S. 412 (1978)

(Title VII attorneys fees), a reading of

Rule 54(d) which includes fees among

Rule 54 "costs" is foreclosed.* Because

there is nothing to indicate that Rule

68 "costs" were intended to be different

from Rule 54 "costs." Rule 68 should be

read consistently with Rule 54, and its

terms should not be construed in a manner

which shifts responsibility for § 1988

attorneys fees.

* Indeed, the courts of appeals have

uniformly held that losing civil rights

plaintiffs whose lawsuits were not frivo-

lous, unreasonable or without foundation,

cannot be held liable for the winners'

fees though they are presumptively lia-

ble for the winners‘ Rule 54(d) costs.

See, e.g., Wrighten v. Metropolitan Hos-

pitals, 726 F.2d 1346 (9th Cir. 1984);

Cross v. General Motors Corp., 721 F.2d

1152 (8th Cir. 1983); Moore v. Hughes

Helicopters, Inc., 708 F.2d 492 (9th

Cir. 1983); Poe v. John Deere Co., 695

F.2d 1103 (8th Cir. 1982); P. Mastrippo-

lito and Sons, Inc. v. Joseph, 692 Fa

1384 (3d Cir. 1982); Delta Air Lines,

Inc. v. Colbert, 692 F.2d 489 (7th Cir.

1982); Montgomery v. Yellow Freight Sys-

tem, Inc., 671 F.2d 412 (10th Cir. 1982);

(Continued on next page)

-24-

Notwithstanding the two hundred

years of precedent distinguishing between

costs and fees, petitioners and amicus,

the Solicitor General, argue that the

plain meaning of the term "costs" was

altered by Congress' enactment of the

Attorneys Fees Awards Act of 1976, 42

U.S.C. § 1988. As the Solicitor General's

Brief acknowledges, however, the infer-

ence that a statutory provision works an

""abrogation' of a [Federal] [R]ule [of

Civil Procedure] is ‘inappropriate' ab-

sent a 'clear expression of Congressional

intent.'" Amicus Br. at 28, paraphrasing

(Continued from previous page)

Croker v. Boeing Co., 662 F.2d 975 (3d Cir.

1981); Flint v. Haynes,

651 F.2d 970 (4th Cir. 1981); see also,

Gilchrist v. Bolger, 733 F.2d 1551 (llth

Cir. 1984); Badillo v. Central Steel ¢

Wire Co., 717 F.2d 1160 (7th Cir. 1983);

cf. Baez v. United States Department of

Justice, 684 F.2d 999 (D.C. Cir. 1982)

(en banc) (same rule as to appellate

costs under Rule 39 of the Fed. R. App. P.).

=-25-

In re General Motors Engine Interchange

Litigation, 594 F.2d 1106, 1134-1135

n.50 (7th Cir. 1979), cert. denied, 444

U.S. 870 (1980). Section 1988 contains

no “clear expression of [Congressional]

intent" sufficient to "abrogate" the

plain meaning of Rule 68.

B. The Plain Meaning of Rule 68

was not Abrogated by the

Statutory Formula Employed

in § 1988.

The argument that Rule 68 costs

include § 1988 attorneys fees rests on

the happenstance characterization of

such fees as "part of the costs" to be

awarded a prevailing party in a civil

rights action. No legislative history

has been cited -- and none exists -- to

suggest that this particular statutory

formula was intended to have the effect

urged. Indeed, the only effect intended

by Congress through its use of the "part

of the costs" formula was to give § 1988

-26-

the broadest possible application by

circumventing potential Eleventh Amendment

problems in civil rights claims brought

against the states. As the Fifth Circuit

has concluded, "the legislative history

makes clear that this was done for one

reason and one reason only: to ensure

that the Eleventh Amendment is no bar so

that these fees are recoverable against

Government officials acting in their

official capacity." Gates v. Collier,

616 F.2d 1268, 1276 (5th Cir. 1980),

modified on other grounds on rehearing,

636 F.2d 942 (5th Cirs1981). See, also,

S. Rep. No. 1011, 94th Cong., 2d Sess. 5

n.6 (1976); H.R. Rep. No. 1558, 94th

Cong., 2d Sess. 7 n.14 (1976); see gener-

ally Hutto v. Finney, 437 U.S. 678 (1978).

Thus, it is not surprising that, as the

Solicitor General candidly admits, he does

"not contend that Congress chose this

-27-

language specifically envisioning its

. effect in conjunction with Rule 68."

Amicus Br., at 9-10.

But if Rule 68, in the absence

of the § 1988 formula, has a clear and

unambiguous meaning which does not include

attorneys fees, then it is impossible to

see how the inadvertant interplay between

the statute and the rule evidences the

"clear expression of Congressional intent”

which is required to “abrogate” that

meaning.* Indeed, there are strong reasons

for doubting that any such intent --

clear or otherwise -- is inferable.

* Petitioners also argue that "costs,"

as the term was used by the drafters of

Rule 68, was intended to include fees

because, at the time of its formulation,

there were numerous statutes which autho-

rized attorneys fees "as part of costs."

The argument, apparently, is that because

"costs" as used in Rule 68 was not given

an express definition at any point in

the Federal Rules, it therefore has no

independent meaning at all, functioning

instead as a kind of placeholder whose

(Continued on next page)

-28-

Section 1988 was enacted to

encourage the prosecution of meritorious

civil rights claims and, as such, it is

"acutely sensitive to the merits of an

action and to antidiscrimination policy."

Roadway, 447 U.S. at 762, 100 S.Ct. 2455.

The use of the "parts of costs" formula

was merely intended to further this end.

Hutto, Supra. In contrast, Rule 68 was

(Continued from previous page)

whose value changes depending on the

cause Of action being litigated. For

the reasons already given, the notion

that there was, in 1938, some sort of

ambiguity as to whether or not "costs,"

absent express statutory provision to

the contrary, included fees is absurb.

The fact that Congress, as of 1938, had

enacted numerous pieces of legislation

in which the definition of "costs" had

been expressly expanded, shows, if any-

thing, that Congress was quite aware of

the difference between costs and fees

and that it was careful to state that

"costs" included fees when that is what

it meant. Thus, the background of attor-

neys fees statutes which colors Rule 68

Suggests that Rule 68 costs include tra-

ditional costs and nothing else. If

Congress had meant to expand the scope

of the term, it would have done so expli-

citly as it had on so many other occasions.

-29-

not enacted for this purpose, but solely

in order to foster settlement of disputes.

Delta Air Lines yv. August, 450 U.S. 346,

352 (1980). The notion that Congress

inended to expand the scope of a rule

intended to serve one Purpose when it

was drafting statutory language intended

to serve a wholly different Purpose is

dubious at best. Indeed, carried to its

logical conclusion, the argument presented

to this court would "result in virtually

random application of [Rule 68] on the

basis of other laws that do not address

the problem" of fostering the settlement

of disputes. Roadway, 447 U.S. at 761-

762. This Court has resoundingly rejected

such invitations to "standardless ju-

dicial rulemaking" in previous fee cases.

id. It should do so again here.

The "random" and "standardless"

Character of petitioners' approach is

evident from the appendix attached to

-30-

the Solicitor General's Brief. There it

is revealed that, if Rule 68 "costs"

are permitted to include fees on the

basis of the underlying statutory formu-

lae, fees will be shifted under the Rule

in most civil rights cases, but not in

fair housing litigation. 42 U.S.C. § 3612(c)

(costs listed separately from fees).

Similarly, fees will shift under Rule 68

in actions involving stock manipulation

and false securities filings, 15 U.S.C.

78i(e), 78r(a), ("costs (including attor-

neys fees)"), but not in actions arising -

from other material misrepresentations

made in connection with securities trans-

actions. Or, again, Rule 68 will apply

to fees in Magnuson-Moss warranty actions,

15 U.S.C. § 2310(d), but not in diversity

actions brought under the warranty pro-

visions of the Uniform Commercial Code.

It is impossible to infer any deliberate

decision as to the proper scope of Rule 68

from such a crazy quilt of fee-shifting.

=3)<-

In short, the plain meaning of

"costs" as that term is used in Rule 68

precludes an application of the Rule to

cut off a successful civil rights plain-

tiff's right to attorneys fees. Sec-

tion 1988's characterization of such

fees as “part of costs" does not consti-

tute the sort of "clear" Congressional

intent that is required to alter Rule 68's

plain meaning.

II. The Construction of Rule 68 Urged

by Petitioner Would Raise Serious

Constitutional Questions about the

Separation of Powers by-Eviscerating

§ 1988 without Materially Enhancing

the Policy Served by Rule 68,

In addition to being contrary

to its plain meaning, the construction

of Rule 68 urged by petitioner puts that

Rule squarely in conflict with the policy

determinations embodied by Congress in

§ 1988. For reasons set forth above,

this conflict between statute and rule

is not required by the plain language of

either. Neither is it required by the

@32<

policy underlying Rule 68, since thought-

ful judicial application of Section 1988

will suffice to assure that its fee award

provisions do not insulate plaintiffs

from the need to be realistic partici-

pants in the settlement process. In the

absence of any compelling need to read

Rule 68 in a way which conflicts with

§ 1988, this Court's authority to do so

must be viewed as highly suspect under

traditional separation of powers doctrine.

| Accordingly, for this reason as well,

the construction of Rule 68 urged by

petitioners cannot be accepted.

ee ntti

A. The Construction of Rule 68

Urged by Petitioners Would

Eviscerate § 1988.

The policy underlying § 1988

| is no mystery. It is, "to ensure '‘effec-

tive access to the judicial process' for

persons with civil rights grievances."

Hensley v. Eckerhart, U.S. ’

-33-

103 S.Ct. 1933, 1937 (1983). In conse-

quence, the presumption is that a success-

ful civil rights plaintiff will "“ordinar-

ily" be entitled to recover reasonable

fees, and this presumption will only be

overcome under "special circumstances."

Hensley, supra, quoting S.Rep. No. 1011,

at 4(1976), 1976 U.S. Code Cong. & Ad.

News 1976, 5912. Moreover, because the

primary focus of the statute is plain-

tiff's ability to gain access to the

courts, prevailing defendants receive

§ 1988 fees only if plaintiff's suit was

"frivolous, unreasonable, or without

foundation." Hughes, 449 U.S. at 14-16,