Third District Finds Miller Rule Also Applies to Prevailing 998 Defendant.
In Miller v. Union Pacific Railroad Co., 147 Cal.App.4th 451 (2007), the Third District Court of Appeal decided that the availability of expert witness costs in a Federal Employers Liability Act (FELA) action involving an injured railroad employee filed in state court is a substantive issue controlled by federal law. Miller involved a prevailing plaintiff who normally would have been entitled to costs after beating plaintiff’s own 998 offers; however, federal law did not allow for recovery because F.R.Civ. P. 68 (998’s federal counterpart) only applies to defense offers that are rejected under certain conditions.
However, does the same rule apply to prevailing defendants? Yes, it does, the Third District recently decided in Kinsey v. Union Pacific Railroad Co., Case No. C056561 (3d Dist. Oct. 9, 2009) (certified for publication).
Kinsey involved a defendant who obtained a complete defense verdict against plaintiff, who had previously rejected defendant’s 998 offer. The trial court awarded defendants its costs, including expert witness fees, of more than $142,000. After asking for supplemental briefing on the federal “preemption” issue, the Third District reversed in a 3-0 decision authored by Acting Presiding Justice Nicholson.
Federal law determines the availability of costs in a FELA state court action, given that federal and state courts have concurrent jurisdiction. Nevertheless, based on Erie principles, state law determines resolution of procedural issues unless its application results in denial of a congressionally granted right, while federal law governs the resolution of substantive issues. (Lund v. San Joaquin Valley Railroad, 31 Cal.4th 1, 607 (2003).)
F.R.Civ. P. 68 did not allow recovery of defense costs under the circumstances. Why, you ask? Because recovery of postoffer costs applies to defense offers “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer …” Rule 68 only allows a defendant to recover postoffer costs when a plaintiff/offeree obtains an award that is less than the defense offer of judgment, not when the plaintiff/offeree loses the suit in its entirety. (Park Manor, Ltd. v. U.S. Dept. of HHS, 495 F.3d 433, 437 (7th Cir. 2007); Pittari v. American Eagle Airlines, 243 F.R.D. 317, 318 (W.D.Ark. 2007).) In this case, judgment was obtained by the offeror, not the offeree, such that federal law did not allow the prevailing railroad to recover postjudgment costs (except for routine witness fees).
BLOG OBSERVATION—Under the right circumstances, however, a defendant might be able to receive postoffer costs, if plaintiff rejects a 998 offer and then obtains some judgment that is below the pretrial settlement offer—if we reading Kinsey correctly.
Comments