Goldberg v. Pacific Indemnity Co.
627 F.3d 752
9th Cir.2010Background
- Defendants seek expert witness fees and double costs under Arizona Rule 68 after offering judgment under Federal Rule 68 and prevailing at trial and on appeal.
- Plaintiffs alleged insurance breach and bad-faith denial of raze/rebuild, with district court later granting summary judgment on bad faith and trial on breach of contract.
- Defendants offered judgment under Fed. R. Civ. P. 68 for $1.25 million; offer lapsed after plaintiffs did not respond.
- District court granted summary judgment to defendants on bad faith but denied costs; concluded Fed. Rule 68 applied and precluded costs.
- Court held that Arizona Rule 68 conflicts with Federal Rule 68 in a federal diversity action where the defendant cannot recover costs under Fed. R. 68, so Arizona Rule 68 does not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Arizona Rule 68 applies in federal diversity when defendant cannot recover under Fed. Rule 68. | Goldberg argues Arizona Rule 68 applies to offeror defendants. | Pacific/Federal argue federal rule occupies field; no conflict. | Arizona Rule 68 does not apply; direct conflict with Fed. Rule 68 when defendant offers and cannot recover costs. |
Key Cases Cited
- Erie R.R. Co. v. Tompkins, 304 F.2d 367 (U.S. 1938) (federalism principles; state law substantive, federal procedural)
- Delta Air Lines v. August, 450 U.S. 346 (U.S. 1981) (rule 68 purpose to promote settlement; conflict when procedures clash)
- Burlington Northern R.R. Co. v. Woods, 480 U.S. 1 (U.S. 1987) (field of operation; direct conflict analysis)
- Shady Grove Orthopedic Assoc. v. Allstate Ins. Co., 559 U.S. 393 (U.S. 2010) (conflict analysis in Erie framework)
- Garcia v. Wal-Mart Stores, Inc., 209 F.3d 1170 (10th Cir. 2000) (state rule sanctions vs. federal rule 68; no direct conflict when rule applies to defendants)
- Ganapolsky v. Keltron Corp., 823 F.2d 700 (1st Cir. 1987) (Puerto Rico Rule 35.1 vs. Federal Rule 68; direct conflict noted)
- MRO Commc'ns, Inc. v. Am. Tel. & Tel. Co., 197 F.3d 1276 (9th Cir. 1999) (distinguishes attorney’s fees vs. costs under Rule 54(d))