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Angela Flick, Individually and On Behalf of All Others Similarly v. American Financial Resources

January 3, 2012

ANGELA FLICK, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED AND ON BEHALF OF THE AMERICAN FINANCIAL RESOURCES, INC. 401K PLAN, PLAINTIFF,
v.
AMERICAN FINANCIAL RESOURCES, INC., COREY DUBNOFF, AMERICAN FINANCIAL RESOURCES, INC., AS PLAN ADMINISTRATOR OF THE AMERICAN FINANCIAL RESOURCES, INC. 401(K) PLAN, AND AMERICAN FINANCIAL RESOURCES REALTY LLC, DEFENDANTS.



The opinion of the court was delivered by: A. Kathleen Tomlinson, Magistrate Judge:

I. PRELIMINARY STATEMENT

ORDER

On December 28, 2010, Defendant American Financial Resources, Inc. ("AFR" or "Defendant") moved to have this Court confirm the validity of its November 12, 2010 Offer of Judgment which was served on Plaintiff pursuant to Fed. R. Civ. P. 68. See DE 37. Due to a procedural error in the Offer of Judgment, the Court denied Defendant's motion and declared that the Offer of Judgment was void since it did not comply with Rule 68.*fn1 DE 96. On April 11, 2011, AFR served another Offer of Judgment on Plaintiff which, other than curing the prior procedural defect, was essentially identical to the prior Offer of Judgment. Plaintiff rejected the Offer of Judgment and maintained that it was invalid, and, as such, did not trigger the cost-shifting provisions of Rule 68. In light of Plaintiff's position, Defendant now moves to have this Court confirm the validity of the April 11, 2011 Offer of Judgment. See DE 119. For the reasons set forth below, Defendants' motion is hereby GRANTED.

II. BACKGROUND

The April 11, 2011 Offer of Judgment provides for judgment to be entered against AFR in "the sum [of] $5000.00 to satisfy all of Flick's claims for relief" and "hereby additionally offers costs and reasonable attorneys fees if applicable as determined by the Court." Baldini Decl. in Supp. of Ltr. Mot., Ex. A. On April 22, 2011, Plaintiff rejected the Offer of Judgment claiming that it was "vague, ambiguous and impermissibly conditional" and asserted that the offer was invalid since it left undetermined the amount of reasonable attorneys' fees and costs. Id., Ex. B. Plaintiff also contended that the Offer of Judgment was "not enough to satisfy the recovery of Plaintiffs' representative claims that include retaliation and its related provisions for compensatory and punitive damages" as well as the claims brought on behalf of the 401(k) Plan for equitable and injunctive relief.

In its motion, AFR argues that there was no ambiguity in the Offer of Judgment since it specifically indicated that the Offer included a sum of $5,000 and costs and reasonable attorneys' fees if applicable as determined by the Court. AFR claims that the Offer of Judgment clearly indicates that it offered $5,000 to satisfy all of Plaintiff's claims. Therefore, Defendant contends that whether or not Plaintiff believes that this amount is enough to redress her claims is immaterial to the question of whether the Offer of Judgment is valid.

Plaintiff's opposition, portions of which are duplicative of the arguments raised in her rejection letter to AFR, reiterates that $5,000 is an insufficient sum to compensate Plaintiff for the damages associated with all of her claims, which include back pay, front pay as well as compensatory and punitive damages.*fn2 Similarly, Plaintiff argues that the Offer of Judgment does not provide Plaintiff with the injunctive and equitable relief sought or any relief associated with the ERISA claims that were the subject of a motion to amend, then pending before Judge Wexler.*fn3 Aside from these two arguments, Plaintiff dedicates the remaining portion of her opposition to discussing why the then pending ERISA claims should be added and why she has standing to assert the ERISA claims alleged.

III. LEGAL STANDARD

"Rule 68 is a cost-shifting rule designed to encourage settlements without the burdens of additional litigation." Reiter v. MTA N.Y. City Transit Auth., 457 F.3d 224, 229 (2d Cir. 2006). Pursuant to Rule 68 of the Federal Rules of Civil Procedure, "[a]t least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued." Fed. R. Civ. P. 68(a). Rule 68 continues, "[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made." Fed. R. Civ. P. 68(d). The Second Circuit has determined that Rule 68 offers of judgment are to be "construed according to ordinary contract principles." See Goodheart Clothing Co. v. Laura Goodman Enters., 962 F.2d 268, 272 (2d Cir. 1992). Should some ambiguity exist in the language of a Rule 68 offer, that ambiguity must be resolved against the defendant. See Shapiro v. Credit Prot. Ass'n I, Inc., 53 F. Supp. 2d 626, 628 (S.D.N.Y. 1999).

IV. DISCUSSION

Before addressing the merits of the pending motion, the Court is compelled to first address the manner in which this dispute has been presented to the Court. The relief Defendant is seeking is for an order confirming the validity of its April 11, 2011 Offer of Judgment. After extensive research the Court was unable to find a case in which similar relief was sought by a defendant. The likely reason for this is that "the validity and effect of Rule 68 offers is usually not determined until the close of the suit and the filing of attorney's fee applications." Boorstein v. City of New York, 107 F.R.D. 31, 34 (E.D.N.Y. 1985). However, this is not to say that Defendant's motion is improper. The Court has found at least two instances in this Circuit where the validity of a Rule 68 offer was decided by a court after the time to accept the offer had run, but prior to the close of the suit, albeit on motion by the plaintiff seeking to strike the offer of judgment.*fn4 See Christian v. R. Wood Motors, Inc., No. 91-CV-1348, 1995 WL 238981, at *1 (N.D.N.Y. Apr. 21, 1995); Boorstein, 107 F.R.D. at 33. The Court sees no reason why it should not logically follow that a defendant, looking to avail itself of the cost-shifting provisions of Rule 68, cannot petition the Court in order to confirm that its Rule 68 Offer of Judgment is valid.

Turning to the specifics of the pending motion, the Court finds no merit to the arguments proffered by the Plaintiff to support her contention that the April 11, 2011 Offer of Judgment was invalid. In Marek v. Chesny, 473 U.S. 1, 5, 105 S. Ct. 3012, 87 L. Ed. 2d 1, the seminal case regarding Rule 68 offers of judgment, the Supreme Court was faced with the contention that an offer of judgment was invalid since the offer lumped the proposal for damages with the proposal for costs. In finding that lump-sum offers were appropriate, the Supreme Court held that "[w]e do not read Rule 68 to require that a defendant's offer itemize the respective amounts being tendered for settlement of the underlying substantive claim and for costs." Id. at 6. In so holding, the Supreme Court reasoned:

The critical feature of this portion of the Rule is that the offer be one that allows judgment to be taken against the defendant for both the damages caused by the challenged conduct and the costs then accrued . . . . If 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 obligated 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. In either case, however, the offer has allowed judgment to be entered against the defendant both for damages caused by the challenged conduct and for costs. Accordingly, it is immaterial whether the offer recites that costs are included, whether it specifies the amount the defendant is allowing for costs, or, for that matter, whether it refers to costs at all. As long as the offer does not implicitly or explicitly provide that the judgment not include costs, a timely offer will be valid.

Id. (emphasis in original). The Marek case clearly indicates that an offer of judgment is valid whether or not the offer provides a ...


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