Pending Fed. R. Civ. P. 68 Offer of Judgment Not Terminated by Intervening Grant of Summary Judgment, Holds Ninth Circuit

In Kubiak v. County of Ravalli, No. 21-35542 (9th Cir. May 3, 2022), the Ninth Circuit holds that a Fed. R. Civ. P. 68 offer of judgment remained open for fourteen days for the plaintiff to accept, even after the district court granted summary judgment (but did not enter final judgment) while the time was running.

“Robert Kubiak brought a civil rights suit against the County of Ravalli, the Ravalli County Sheriff’s Office, and others. The County filed a motion for summary judgment on all claims. Several weeks later, while its motion was still pending, the County made Kubiak a Rule 68 offer of judgment for $50,000 plus costs and attorney’s fees. Before Rule 68’s fourteen-day window had closed, the District Court—which did not know the County had made the offer—granted the summary judgment motion. But the Court did not enter final judgment. Rather, it said that judgment would be entered ‘in due course’ after it issued a reasoned opinion. Within an hour of the entry of this order, Kubiak accepted the County’s offer of judgment. The District Court held that, under Rule 68, it was bound by the offer of judgment. Judgment was thus entered for Kubiak in the amount of $50,000 plus costs and fees.”

The Ninth Circuit affirms. The defendant County argued that the summary judgment order terminated the pending Rule 68 offer. But the Ninth Circuit holds that under the plain language of the rule, the plaintiff gets the benefit of the full fourteen days to accept the offer without exception. “[T]he text of the rule [does not] admit of exceptions to the fourteen-day period during which an offer of judgment remains open. Rule 68 simply provides that ‘[i]f, within 14 days after being served, the [plaintiff] serves written notice accepting the offer,’ the acceptance may be filed and judgment must be entered, Fed. R. Civ. P. 68(a); ‘[a]n unaccepted offer is considered withdrawn,’ Fed. R. Civ. P. 68(b).”

“According to the rule’s text, then, an offer must remain open for fourteen days, and it may be either accepted or rejected. No other outcome (such as negotiation or revocation) is contemplated. If the parties file a notice that the plaintiff has accepted the offer, the clerk ‘must then enter judgment.’ Fed. R. Civ. P. 68(a). The rule contains no exception for the entry of a non-final order granting summary judgment on all claims, and we decline to create one.” The panel finds support for this position in cases decided in the D.C., Eighth, and Eleventh Circuits.

The County presented its own “plain language” argument that because the offer of judgment is made by “a party defending against a claim,” once summary judgment was entered the County was no longer “defending” a claim because “there was nothing left to defend.” But the panel observes that the “County certainly was “defending against a claim” when it made the offer of judgment, before summary judgment had been granted, and the rule does not state or imply that the defendant must be in the same position during the entire pendency of the offer.”

It also rejects a contract-law-based argument by the County that the offer of judgment lacked consideration because “when the summary judgment order was entered, the consideration evaporated.” Holds the panel, “offers of judgment differ from ordinary contracts in key ways, so we do not import contract law wholesale into a Rule 68 analysis . . . . [T]he district court clerk ‘must . . . enter judgment’ when a party files an accepted Rule 68 offer—the court may not stop to decide whether there is consideration. Fed. R. Civ. P. 68 (a) . . . . Therefore, Montana contract law does not overcome the mandatory operation of Rule 68.”

Finally, the panel placed some important markers for future consideration. “We conclude with a brief note about what we do not decide today. First, as we have made clear, we express no view on whether an entry of final judgment would nullify an outstanding Rule 68 offer. And second, we do not decide the fate of Rule 68 offers in ‘exceptional factual situations,’ such as when the plaintiff’s claim is fraudulent . . . . This appeal does not present those issues, so we do not consider them.”

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