Delta Air Lines, Inc. v. August
Headline: Civil litigation settlement rule narrowed: Court limits Rule 68 cost-shifting, holding a defendant cannot force a losing plaintiff to pay post-offer costs when the defendant wins outright.
Holding: The Court held that Rule 68 applies only to defendant offers when a plaintiff later obtains a judgment no more favorable than the offer, so it does not require a plaintiff to pay costs when the defendant wins.
- Bars defendants from using token Rule 68 offers to force plaintiffs to pay post-offer costs.
- Encourages realistic settlement offers; sham offers have no effect under Rule 68.
- Affects cost risk calculations for federal civil plaintiffs and defense lawyers.
Summary
Background
Rosemary August sued Delta Air Lines under Title VII, seeking reinstatement, about $20,000 in back pay, attorney's fees, and costs. Delta offered $450 in a formal Rule 68 offer; August refused, the case went to trial, and the jury returned judgment for Delta. The District Court denied Delta's request for post-offer costs, finding the $450 offer was not made in good faith, and the Court of Appeals affirmed on that ground.
Reasoning
The narrow legal question was whether Rule 68’s phrase "the judgment finally obtained by the offeree" includes a judgment against the offeree (a defendant-winning result) as well as a judgment obtained by the offeree (a plaintiff-winning result). The majority read the Rule literally and in light of its purpose and history, concluding Rule 68 applies only to offers made by defendants and only when a plaintiff later obtains a judgment no more favorable than the offer. Because Delta obtained the judgment, the Court held Rule 68 did not apply and affirmed the lower courts’ judgment.
Real world impact
The decision means defendants cannot use Rule 68 to strip district judges of discretion over costs when the defendant wins outright. Token or sham offers therefore do not shift cost liability; the ruling encourages realistic settlement offers and preserves the ordinary cost rules for prevailing defendants. The case does not decide the specific amount of costs or fee items here.
Dissents or concurrances
Justice Powell concurred in the result but argued Delta's offer failed Title VII norms because it did not properly specify attorney's fees; Justice Rehnquist dissented, arguing Rule 68 should apply when defendants win and that the majority misreads history.
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