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Ninth Circuit:
Judge Can’t Bar Entry of Judgment Pursuant to Settlement, Ninth Circuit Declares
By a MetNews Staff Writer
U.S. District Court Judge Percy Anderson of the Central District of California improperly ordered a clerk not to enter a judgment pursuant to a stipulation, the Ninth U.S. Circuit Court of Appeals has held in an opinion that speaks both in terms of an abuse of discretion and a lack of discretion.
Defendant Kazmo, LLC made an offer to plaintiff Rafael Arroyo Jr. on March 4, 2020, pursuant to Federal Rules of Civil Procedure, rule 68(a) which provides:
“At 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. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.”
The offer provided for a payment to Arroyo of $5,000 and a pledge to remove barriers to handicapped persons at its Lakewood premises.
Dismissal Ordered
The following day, Anderson ordered dismissal of the action without prejudice due to a failure to prosecute Kazmo’s action, brought under the Americans with Disabilities Act and California’s Unruh Civil Rights Act.
On March 10, Arroyo accepted the offer, and Arroyo moved for entry of judgment pursuant to the agreement, insisting that its acceptance of the offer within the 14-day period rendered entry of the agreed-upon judgment obligatory, and that the March 5 judgment had to be vacated.
Kazmo opposed the motion, arguing that the March 5 judgment “is final and cannot be modified.” The opposition continues:
“The final judgment ended the litigation and left nothing for the Court to do. Once final judgment was entered, the action was brought to a close.”
Anderson’s Reasoning
Anderson denied the motion on April 9, explaining:
“Because Rule 68(a) provides that the ‘clerk must then enter judgment,” but the clerk is not empowered to modify a Judgment previously entered by the Court, the Court’s entry of a Judgment precludes operation of Rule 68(a). That is, once the Court has entered a Judgment, only the Court, and not the Clerk, may enter an Amended Judgment.”
Amending the judgment is not appropriate, he said, declaring:
“The parties did not do the work required of them, and the Court reasonably and justifiably dismissed this action without prejudice as a result of their failures to prosecute the action and comply with the Court’s Civil Trial Scheduling Order. At least in these circumstances. Plaintiffs acceptance of an Offer of Judgment after the Court had already entered a Judgment dismissing the action does not justify the “extraordinary remedy” of issuing an Amended Judgment.”
Reversal came Friday in a memorandum opinion by Judges Consuelo M. Callahan and Kenneth Kiyul Lee and Senior Judge Richard C. Tallman. They quote the circuit’s 1982 opinion in Liberty Mutual Insurance Co. v. EEOC as saying of Rule 68: “[W]here the rule operates, it leaves no room for district court discretion.”
(That holding came in connection with a cost provision in §68(d).)
Friday’s opinion sets forth:
“The district court’s March 5 Judgment did not preclude the operation of Rule 68. Rather, Arroyo had a 14-day statutory window to accept the Offer, notwithstanding the district court’s unawareness of the then-pending Offer….The plain language of the rule—including its use of the mandatory modal verb ‘must’—required the clerk of court to enter judgment as agreed to by Arroyo and Kazmo.”
It adds:
“As a matter of statutory construction, the plain meaning of Rule 68, read as a whole, allowed Arroyo to stipulate to a judgment with Kazmo (settling the claims and avoiding further litigation) at least 14 days before the date set for trial. The parties did just that. All that remained was execution of the clerk’s mandatory duty to enter the judgment agreeable to the parties. The district court abused its discretion in concluding otherwise.”
The matter was remanded, ordering that the District Court direct the clerk to enter a judgment pursuant to the settlement.”
The case is Arroyo v. Kazmo, LLC, 20-55392.
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