Tunison v. Continental Airlines Corp.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 1998 Decided December 22, 1998

No. 98-7037

Winnie Tunison,

Appellee

v.

Continental Airlines Corporation, Inc.,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 96cv02554)

John Longstreth argued the cause for appellant. With him
on the briefs was William Gray Schaffer.

Sunil H. Mansukhani argued the cause for appellee. With
him on the brief was Douglas L. Parker.

Before: Silberman, Sentelle and Henderson, Circuit
Judges.

Opinion for the court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Winnie Tunison, who is blind and
deaf, filed this action in the United States District Court for
the District of Columbia, alleging that Continental Airlines
("Continental"), by refusing to allow her to fly alone, violated
the Air Carrier Access Act, 49 U.S.C. s 41705 ("ACAA"), and
pursuant regulations. The jury found that Continental had
violated the Act, but awarded Tunison no damages. The
district court entered an empty judgment in Tunison's favor,
and awarded her costs. Continental appeals from the award
of costs, arguing that because Tunison received no relief, she
should not be considered a prevailing party for the purposes
of awarding costs under Fed. R. Civ. P. 54(d)(1), and that
because she refused a pretrial offer of judgment more favor-
able than her ultimate award, under Fed. R. Civ. P. 68,
Tunison should be required to pay Continental's post-offer
costs. We hold that because Tunison obtained no relief under
the judgment, and Continental was found to have violated the
Act, neither party should be considered a prevailing party
presumptively entitled to costs under Rule 54(d)(1). Howev-
er, we agree with Continental that the offer of judgment
Tunison rejected was more favorable than the judgment she
ultimately obtained. Accordingly, we reverse the award of
costs to Tunison and remand the case to the district court for
an award of Continental's allowable post-offer costs.

I. Background

Winnie Tunison is a forty-two-year-old blind and deaf wom-
an who is a wife, mother, college student and motivational
speaker. She is able to communicate by touching the hands
of a person performing sign language, or by having letters
traced in her palm. According to Tunison, she regularly
travels by air alone without difficulty.

In August 1996, Ms. Tunison scheduled air travel on Conti-
nental Airlines for a round trip between Washington, D.C.
and Providence, with a change of planes in Newark. The
initial leg, from D.C. to Newark, was uneventful. Tunison
received the safety instructions through letters traced on her
palm, and traveled unaccompanied. After changing planes in

Newark with the assistance of a Continental employee, Tuni-
son was again given the safety instructions, this time by a
Continental employee who knew sign language. Although
Ms. Tunison had understood the safety instructions, the pilot
and flight crew, after consulting Continental manuals, did not
feel comfortable allowing her to travel unaccompanied. The
flight was delayed while flight personnel came to Tunison's
seat on the plane and asked her to get off the plane and wait
until they could find someone to fly with her. When Tunison
refused, Continental found an off-duty flight attendant to
accompany her.

Ms. Tunison claims that she was humiliated and embar-
rassed by this episode, which took place in front of the other
passengers. She did not want to make the return flight if she
would be required to have an attendant. Accordingly, before
her return flight, her daughter spoke by telephone to a
Continental employee, who told her that Tunison would be
allowed to fly home alone. However, when Tunison arrived
at the airport, she was met by a Continental gate agent, who
accompanied her all the way back to Washington, D.C.

Ms. Tunison sued alleging that Continental's actions violat-
ed the Air Carrier Access Act, 49 U.S.C. s 41705,1 and
__________
1 The statute provides that:

In providing air transportation, an air carrier may not dis-
criminate against an otherwise qualified individual on the fol-
lowing grounds:

(1) the individual has a physical or mental impairment that
substantially limits one or more major life activities.
(2) the individual has a record of such an impairment.
(3) the individual is regarded as having such an impairment.

49 U.S.C. s 41705 (1998).

This court has not previously addressed whether there is an
implied private right of action under the ACAA, and the issue is not
before us in this case. The court below "presumed" there was a
private right of action under the ACAA given holdings to that effect
in the 5th and 8th Circuits and Continental's failure to argue to the
contrary. See Shinault v. American Airlines, Inc., 936 F.2d 796,

pursuant regulations which limit the situations in which indi-
viduals may be required to have an attendant.2 She sought
compensatory damages for the emotional distress she suf-
fered as a result of Continental's actions, as well as punitive
damages and injunctive relief requiring Continental to revise
its policies to comply with the ACAA.

Tunison's claims for punitive and injunctive relief were
dismissed by the district court at the summary judgment
stage. Her claim for compensatory damages proceeded to
trial. On August 13, 1997, Continental submitted an offer of
judgment for $1,000 pursuant to Fed. R. Civ. P. 68. Tunison
did not accept this offer. After trial, the jury returned a
special verdict finding that Continental had violated the
ACAA on each of the three flights on which it had required
an attendant. However, the jury awarded Tunison no dam-
ages. The court entered judgment for Tunison, with no
damages.

Both Tunison and Continental filed Bills of Costs. The
district court concluded without discussion that Ms. Tunison
was the prevailing party for the purposes of Fed. R. Civ. P.
__________
800 (5th Cir. 1991); Tallarico v. Trans World Airlines, Inc., 881
F.2d 566, 570 (8th Cir. 1989).

2 The pertinent regulation, 14 C.F.R. s 382.35, reads in relevant
part as follows:

(a) Except as provided in this section, a carrier shall not
require that a qualified individual with a disability travel with
an attendant as a condition of being provided air transporta-
tion....

(b) A carrier may require that a qualified individual with a
disability meeting any of the following criteria travel with an
attendant as a condition of being provided air transportation, if
the carrier determines that an attendant is essential for safety:

* * *
(4) A person who has both severe hearing and severe vision
impairments, if the person cannot establish some means of
communication with carrier personnel, adequate to permit
transmission of the safety briefing required by 14 CFR
121.571(a)(3) and (a)(4) or 14 CFR 135.117(b).

54(d)(1), then considered the effect of the offer of judgment
under Fed. R. Civ. P. 68. The court reasoned that while the
$1,000 offer of judgment was more than the damages awarded
($0), the appropriate comparison was between the offer
amount and the damages awarded plus pre-offer costs. Since
Tunison's pre-offer costs were $1,788.70, the court concluded
that the offer of judgment was not more than the ultimate
award. Hence Tunison was awarded both pre-and post-offer
costs, totaling $3,190.85. Continental appeals from this
award of costs.

II. The Prevailing Party Determination

Rule 54(d)(1) provides that "[e]xcept when express provi-
sion therefor is made either in a statute of the United States
or in these rules, costs other than attorneys' fees shall be
allowed as of course to the prevailing party unless the court
otherwise directs." In its order regarding costs in this case,
the district court quoted Rule 54(d)(1), but did not pause to
discuss who was the prevailing party. Instead, the court
simply noted that "the jury found in favor of Tunison," and
then proceeded to treat her as the prevailing party in analyz-
ing the Rule 68 issues.

Tunison argues that she was a prevailing party because she
was the "judgment winner." This approach to the prevailing
party determination is not without support. Wright and
Miller note that "[u]sually the litigant in whose favor judg-
ment is rendered is the prevailing party for purposes of Rule
54(d)." 10 Wright, et al., Federal Practice and Procedure
s 2667, at 204 (1998). Tunison has cited several cases with
language suggesting that a party who receives a judgment is
considered prevailing under Rule 54(d)(1). See, e.g., K-2 Ski
Co. v. Head Ski Co., 506 F.2d 471, 477 (9th Cir. 1974); Green
Constr. Co. v. Kansas Power & Light Co., 153 F.R.D. 670, 674
(D.Kan.1994). However, with the exception of one district
court decision, the cases Tunison cites did involve some relief,
and hence did not test whether a judgment alone is enough.
See Mary M. v. North Lawrence Community Sch. Corp., 951
F.Supp. 820, 828 (S.D. Ind.) (finding party to be prevailing

despite the fact that no damages were awarded), rev'd on
other grounds, 131 F.3d 1220 (7th Cir. 1997).

Continental argues that Tunison is not prevailing by rely-
ing on Supreme Court cases regarding who is a prevailing
party entitled to attorneys' fees under 42 U.S.C. s 1988.
Tunison questions the relevance of these attorneys' fees cases
to the prevailing party issue under 54(d). While there may be
reason in some cases to construe the term "prevailing party"
differently depending on whether attorneys' fees or only costs
are at issue, see Friends for All Children, Inc. v. Lockheed
Aircraft Corp., 725 F.2d 1392 (D.C. Cir. 1984), we agree with
Continental that the "prevailing party" determination is gen-
erally the same in the two contexts. See Farrar v. Hobby,
506 U.S. 103, 119 (1992) (O'Connor, J., concurring) (pointing
out that attorneys' fees under s 1988 are awarded "as part of
the costs," and thus suggesting that the prevailing party
standard for s 1988 and 54(d) are the same); Manildra
Milling Corp. v. Ogilvie Mills, Inc., 76 F.3d 1178, 1180 n.1
(Fed. Cir. 1996) ("[T]he meaning of prevailing party is the
same in either context."); Institutionalized Juveniles v. Sec-
retary of Pub. Welfare, 758 F.2d 897, 926 (3d Cir. 1985) ("The
use of the same test will appropriately simplify the litigation
of disputes concerning cost and fee awards."); Studiengesells-
chaft Kohle mbH v. Eastman Kodak Co., 713 F.2d 128, 132
(5th Cir. 1983) (s 1988 case has applicability in 54(d) case
because both require determination of who is prevailing par-
ty). See also Hensley v. Eckerhart, 461 U.S. 424, 433 n.7
(1983) (noting in s 1988 case that the "standards set forth in
this opinion are generally applicable in all cases in which
Congress has authorized an award of fees to a 'prevailing
party' ").

The Supreme Court has consistently required that to be
considered a prevailing party under s 1988, a party must
receive some affirmative relief. In Hewitt v. Helms, 482 U.S.
755, 760 (1987), the Court observed that "[r]espect for ordi-
nary language requires that a plaintiff receive at least some
relief on the merits of his claim before he can be said to
prevail." In Rhodes v. Stewart, 488 U.S. 1, 4 (1988), the

Court refused to award prisoners attorneys' fees even though
the prisoners obtained a declaratory judgment against prison
officials, noting that a declaratory judgment will only consti-
tute relief for the purposes of s 1988 where it "affects the
behavior of the defendant toward the plaintiff." In Texas
State Teachers Association v. Garland Independent School
District, 489 U.S. 782, 792 (1989), the Court concluded that to
be considered the prevailing party under s 1988, the plaintiff
"must be able to point to a resolution of the dispute which
changes the legal relationship between itself and the defen-
dant."

The decision in Farrar v. Hobby, 506 U.S. 103 (1992), is
particularly instructive. In that case, the Court considered
whether a civil rights plaintiff who receives nominal damages
is a prevailing party eligible to receive attorneys' fees under
42 U.S.C. s 1988. The Court concluded that while such a
party was "prevailing," the attorneys' fee award could appro-
priately be quite low, based on the degree of the plaintiff's
overall success. The Court held that to qualify as a prevail-
ing party under s 1988, a plaintiff "must obtain an enforce-
able judgment against the defendant from whom fees are
sought." Id. at 111. The award of nominal damages, the
Court concluded, was such an enforceable judgment, because
"[a] plaintiff may demand payment for nominal damages no
less than he may demand payment for millions of dollars."
Id. at 113. The Court made clear, however, that " 'the moral
satisfaction [that] results from any favorable statement of
law' cannot bestow prevailing party status." Id. at 112
(quoting Hewitt, 482 U.S. at 762).

Unlike the award of nominal damages at issue in Farrar, a
judgment with no damages at all is not an "enforceable
judgment"--there is simply nothing to enforce. While an
empty judgment may provide some moral satisfaction, such a
judgment carries no real relief and thus does not entitle the
judgment winner to be treated as a prevailing party. See
Robinson v. City of St. Charles, 972 F.2d 974, 976 (8th Cir.
1992) (holding that unlike a civil rights plaintiff receiving
nominal damages, a plaintiff receiving no damages is not a
prevailing party simply because a violation was demonstrat-

ed); Nissim v. McNeil Consumer Prod. Co., 957 F.Supp. 604,
607 (E.D. Pa. 1997) (holding that where the jury found in
favor of plaintiff on Title VII discrimination and retaliatory
discharge claims but awarded no back pay or compensatory
damages, plaintiff was not prevailing). Cf. Johnson v. Eaton,
80 F.3d 148, 150 (5th Cir. 1996) (where plaintiff demonstrated
a violation of the Fair Debt Collection Practices Act but did
not prove damages, she was not entitled to attorneys' fees
under the statute which required a "successful action to
enforce the [claimed] liability"); PH Group Ltd. v. Birch, 985
F.2d 649, 652 (1st Cir. 1993) (where jury found that defendant
breached implied covenant of good faith and fair dealing but
awarded plaintiff zero damages, plaintiff was not a "prevailing
party" entitled to attorneys' fees under agreement between
licensor and licensee).

Tunison does not claim to have demonstrated any "material
alteration of the legal relationship" between herself and Con-
tinental. See Texas State Teachers Ass'n, 489 U.S. at 792.
Instead, Tunison argues that we should remand in order for
her to demonstrate that her lawsuit was the impetus for
changes in Continental's policies. We need not decide wheth-
er such a demonstration, if made, would have entitled Tunison
to be considered the prevailing party. If such a change in
policies is relevant to the question now, it was also relevant
earlier. Tunison's proffer is too far outside the record. We
therefore conclude that Tunison is not a prevailing party
presumptively entitled to costs under Rule 54(d)(1).3

We also conclude that Continental has not established any
right to be treated as the prevailing party. Although in the
bulk of cases, there will be a prevailing party for Rule 54
purposes, a number of courts have recognized that this need
not always be the case. In Schlobohm v. Pepperidge Farm,
806 F.2d 578 (5th Cir. 1986), for example, a franchisee and
franchisor arbitrated the value of the franchise pursuant to

__________
3 Conceivably the verdict against Continental on the liability issue
might work an issue preclusion in some future litigation, but that
theoretical possibility does not make Tunison a prevailing party in
the present case, in which she has obtained no identifiable relief.

contract. The district court confirmed the arbitrator's deter-
mination, and held the franchisee to be the prevailing party.
The Fifth Circuit held that neither party was prevailing
under Rule 54, noting that the arbitrator's award was more
than what the franchisor offered, but significantly less than
what the franchisee requested. Cf. Hohensee v. Basalyga, 50
F.R.D. 230 (M.D. Pa. 1969) (no prevailing party in a quiet
title action); Northbrook Excess v. Proctor & Gamble, 1989
WL 65156 (N.D. Ill.) (no prevailing party in commercial
dispute where each party required to bear certain losses).
Courts have also found no party prevailing for the purposes
of awarding costs in situations involving a claim and a coun-
terclaim, and recovery on neither. See, e.g., Srybnik v.
Epstein, 230 F.2d 683 (1956); Magee v. McNany, 11 F.R.D.
592 (W.D. Pa. 1951). Cf. Lovejoy v. O'Berto, 1987 WL 27415
(N.D. Ill.) (where recovery on plaintiff's claim partially offset
by recovery against him on counterclaim, court finds no
prevailing party); All West Pet Supply v. Hill's Pet Products,
153 F.R.D. 667 (D. Kan. 1994) (awarding no costs where each
party prevailed on some claims).

In Watchorn v. Town of Davie, 795 F.Supp. 1112 (S.D. Fla.
1992), the court addressed a cost award in a factual situation
similar to that here. In that case, an arrestee brought a
s 1983 action, and won only a zero dollar verdict in his favor.
The court first concluded that the arrestee was not prevailing
for purposes of attorneys' fees. Defendants asserted that
they should be entitled to costs under Rule 54(d). The court
refused to award the defendants' costs, and instead awarded
no costs, noting the "slight, though de minimis, success" of
the plaintiff.

In this case, Continental was found to have violated the Air
Carrier Access Act on three separate occasions, and had
judgment entered against it. It has cited no case in which a
party against whom judgment was entered was held to be
prevailing, and has suggested no justification for such a
treatment. Thus on the facts of this case, we hold that
neither party has established that it is a prevailing party
presumptively entitled to costs under Rule 54(d)(1).

III. Post-Offer Costs and Rule 68

A.Comparison of the Offer and the Judgment Obtained

We must now determine what application, if any, Rule 68
has in this case. The Rule provides in relevant part that

a party defending against a claim may serve upon the
adverse party an offer to allow judgment to be taken
against the defending party for the money or property or
to the effect specified in the offer, with costs then
accrued.... 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.

Fed. R. Civ. P. 68.

Here, Continental offered that "a judgment may be taken
against it, and in favor of plaintiff, on all claims in the above-
captioned case in the amount of One Thousand Dollars
($1,000)." Given our holding that Tunison was not prevailing
under Rule 54(d)(1), she should not have been awarded any
costs. Accordingly, the Rule 68 comparison should have been
between the amount finally obtained ($0) and the amount of
the offer. Thus on any interpretation of the offer, the offer
was more favorable.

Because it viewed Tunison as a prevailing party entitled to
costs under Rule 54(d)(1), the district court's treatment of the
Rule 68 comparison was more complicated. The court rea-
soned that while $1,000 was clearly more than the $0 damage
award, the appropriate comparison was to the damage award
plus Tunison's pre-offer costs of $1,788.70. Thus the court
concluded that the offer of judgment was for less than the
amount finally awarded. The approach used by the district
court would be correct if the offer of judgment on "all claims"
were for $1,000 total, including costs. In such a situation,
since the offer includes pre-offer costs, the amount of judg-
ment used for comparison must include pre-offer costs as
well, if they are to be awarded. See Goos v. National Ass'n
of Realtors, 68 F.3d 1380, 1382 n.1 (D.C. Cir. 1995). Howev-
er, the district court failed to inquire into whether the offer of
judgment on "all claims" should in fact be interpreted as
including costs.

The starting point for determining whether a Rule 68 offer
should be viewed as including costs is Marek v. Chesny, 473
U.S. 1 (1985). The Court there sanctioned the use of "lump
sum" offers, holding that a defendant need neither include a
specific amount for costs nor leave the amount of costs to be
specified by the court, but may instead simply specify the
total amount of the offer. The Court provided guidance
regarding whether such an offer would be viewed as including
costs

[i]f an offer recites that costs are included or specifies an
amount for costs, and the plaintiff accepts the offer, the
judgment will necessarily include costs; if the offer does
not state that costs are included and an amount for costs
is not specified, the court will be obliged by the terms of
the Rule to include in its judgment an additional amount
which in its discretion it determines to be sufficient to
cover the costs.

Id. at 6 (internal citations omitted).

Tunison argues that Continental's offer on "all claims"
should be interpreted as including costs. Plaintiff cites Blu-
mel v. Mylander, 165 F.R.D. 113, 116 (M.D. Fla. 1996), where
an offer "to settle all pending claims" was construed as being
inclusive of costs. At a minimum, Tunison argues that the
offer was ambiguous, and should therefore be construed
against the drafter, which in this case means construing the
offer as being inclusive of costs. However, given the lan-
guage of Marek, "all claims" is not ambiguous. The Supreme
Court provided that "if the offer does not state that costs are
included," they will be added. Marek, 473 U.S. at 6. The "all
claims" language used in Continental's offer does not specify
anything at all about costs, and therefore cannot be read to
include costs. Had the offer been accepted, a court would
have been compelled by Marek to treat the offer as one for
$1,000 plus costs then accrued. See Webb v. James, 147 F.3d
617 (7th Cir. 1998) (where lump-sum Rule 68 offer did not
mention costs, court required payment of an additional
amount, notwithstanding offeror's post-acceptance insistence
that he meant the offer to be all inclusive). There is no

justification for interpreting the offer differently because it
was rejected. We therefore conclude that the offer was for
$1,000 plus pre-offer costs. Thus even under the district
court's conclusion that Tunison should be awarded costs
under Rule 54(d)(1), the appropriate comparison under Rule
68 would have been between $1,000 plus pre-offer costs and
$0 plus pre-offer costs. Hence the offer was more favorable
than the ultimate award.

B.Applicability of Rule 68 to Defendant's Costs

Having concluded that Continental's offer of judgment was
more favorable than the amount finally obtained by Tunison,
we consider what application Rule 68's cost-shifting provision
has in this case. Because we have concluded that Tunison did
not prevail under Rule 54(d)(1), on remand, she will not be
entitled to any of her costs. Thus to the extent that Rule 68
merely limits the costs which a plaintiff may be awarded
where she has turned down a more favorable offer, the Rule
has no application, since Tunison is entitled to no costs in any
case.

The issue argued to us is whether Rule 68, in addition to
limiting the costs that can be recovered by a plaintiff who has
rejected a more favorable offer, requires such a plaintiff to
pay the offeror's post-offer costs. Rule 68 provides that "[i]f
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." Continental argues
that the Rule's language requires a plaintiff who fails to
receive a judgment more favorable than a previously rejected
offer to pay all post-offer costs, including the offeror's, and
that Tunison is therefore required to pay Continental's costs
incurred after the offer of judgment was made. Tunison
argues that the Rule's prescription that the offeree pay "the
costs incurred after the making of the offer" should be read
as requiring only payment of the "offeree's costs," despite the
absence of any limiting language in the Rule. We have not
squarely faced this issue before, but have noted in dicta that
"if the plaintiff declines the offer or allows it to expire, he
runs the risk of paying the defendant's subsequent costs of

trial." Richardson v. National R.R. Passenger Corp., 49
F.3d 760, 762 (D.C. Cir. 1995). Several circuits have held
that Rule 68 does shift a defendant's costs. See Crossman v.
Marcoccio, 806 F.2d 329 (1st Cir. 1986); O'Brien v. City of
Greers Ferry, 873 F.2d 1115, 1117-18 (8th Cir. 1989); Knight
v. Snap-On Tools Corp., 3 F.3d 1398, 1405 (10th Cir. 1993).
See also Dual v. Cleland, 79 F.R.D. 696, 697 (D.D.C. 1978).
Tunison cites no case to the contrary.

Tunison's reading of Rule 68 is not only unsupported by the
language of the Rule, it is inconsistent with 1938 Advisory
Committee Notes to the original enactment of Rule 68, which
cited three state statutes as illustrations of the operation of
the Rule. See Delta Air Lines, Inc. v. August, 450 U.S. 346,
356-58 (1981). Both the Minnesota and Montana statutes
cited by the Committee Notes explicitly provided for payment
of the defendant's costs, while the New York statute used
wording similar to that in Rule 68. See 2 Minn. Stat. s 9323
(Mason 1927); 4 Mont. Rev. Code Ann. s 9770 (1935); N.Y.
Civ. Prac. Law s 177 (Cahill 1937).

Tunison argues that if a defendant's costs can be shifted,
defendants will have little reason to minimize their post-offer
litigation costs. This argument is wholly unconvincing. A
defendant will not know at the time its costs are incurred that
the costs can be shifted to the plaintiff, because the defendant
will not know what judgment, if any, the plaintiff will obtain.
Indeed, interpreting Rule 68 to require payment of a defen-
dant's costs where the judgment obtained by the plaintiff is
less favorable than an earlier offer simply requires the plain-
tiff to be responsible for all costs accrued as a result of his
own decision to reject the offer. This is entirely consistent
with Rule 68's purpose of encouraging settlement, as it en-
hances both defendants' incentive to extend Rule 68 offers
and plaintiffs' incentive to accept them. Crossman, 806 F.2d
at 332.

C.The Delta Air Lines Case

As a final matter, we note that the shifting of Continental's
post-offer costs to Tunison in this case is not precluded by
Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981). In that

case, defendant Delta Air Lines had prevailed in a Title VII
claim against it by a former employee, but the district court,
exercising its discretion under Rule 54(d)(1), had directed
that each party bear its own costs. Delta argued that
because the plaintiff had refused a $450 offer of judgment,
the award of Delta's post-offer costs was mandatory under
Rule 68. The Court disagreed, and held that the district
court retained its Rule 54(d)(1) discretion regarding all of
Delta's costs. The Court did not suggest that Rule 68 did not
apply to shift a defendant's costs in any case, but instead
reasoned that since Rule 68's mandatory cost-shifting provi-
sions are triggered only when "the judgment finally obtained
by the offeree is not more favorable than the offer," the Rule
did not apply when the offeree did not obtain a judgment at
all. Id. at 347-48, 352. As Justice Powell's concurrence
noted, the Court's holding implies that "a defendant may
obtain costs under Rule 68 against a plaintiff who prevails in
part but not against a plaintiff who loses entirely." Id. at 362
(Powell, J., concurring).

Given Rule 68's reference to "the judgment finally obtained
by the offeree," the Delta Court was understandably hesitant
to apply the Rule in a situation where the judgment was
entered in favor of the defendant. Justice Rehnquist argued
in dissent that even when a plaintiff fails altogether, he
essentially "obtains" a "take nothing" judgment, and thus
urged that such situations were within Rule 68. Id. at 370-71
(Rehnquist, J., dissenting). The Court, however, disagreed,
reasoning that applying Rule 68 in such a situation would
transform the district judge's discretionary award of costs
under Rule 54 into a mandatory award of post-offer costs
under Rule 68, an outcome the Court considered unaccepta-
ble. Id. at 353.

The concerns which precluded Rule 68's application in
Delta are inapplicable in the present case. In contrast to the
situation in Delta, the judgment here was for Tunison, the
offeree. Thus there was a "judgment finally obtained by the
offeree," and this situation is squarely within the language of
the Rule. Furthermore, unlike in Delta, application of Rule
68 in this case does not strip the district court of any Rule 54

discretion in awarding defendant costs. Indeed, Rule 54
would provide the district court no basis for awarding Conti-
nental its pre- or post-offer costs, since Continental is not a
prevailing party for Rule 54 purposes.

This is not a situation in which damages were clear and the
real question was liability, so that the offer of judgment
served to interfere inappropriately with the district court's
Rule 54 discretion after a finding of no liability. Indeed, as
illustrated by the jury's finding of zero damages, the case for
damages was uncertain. In such a case, where a plaintiff's
case for damages is weak, encouraging a plaintiff to carefully
consider an offer of judgment is particularly important, and
application of Rule 68's cost-shifting provisions effectuates
that purpose. Because application of Rule 68 here is consis-
tent with the language and purpose of the Rule, we conclude
that Rule 68 applies to shift Continental's costs. Thus on
remand, the district court's award of Continental's allowable
post-offer costs is mandatory.

IV. Conclusion

The district court erred in treating Tunison as the prevail-
ing party under Rule 54(d)(1) despite the lack of any enforce-
able judgment in her favor. Furthermore, because Tunison
failed to obtain a more favorable judgment than the offer of
judgment she rejected, Rule 68 mandates that she pay Conti-
nental's post-offer costs. We therefore reverse the award of
costs to Tunison and remand to the district court for a
determination and award of Continental's allowable post-offer
costs.