While acting as Plaintiff’s counsel, our firm has recently received a flurry of offers of judgment from competent defense counsel in federal cases. Why? I thought I would answer this question and provide a handy chart for employment, copyright and a few other types of cases we handle as plaintiff’s counsel.
A party defending a claim may make an Offer of Judgment under Rule 68 of the Federal Rules of Civil Procedure (the “Offer”), specifying the terms and amount of the Offer. Rule 68’s language means Defendant is typically the party making the offer and the Plaintiff is usually the party that accepts or rejects it. When the Defendant makes the Offer, the trial court has no discretion to decide whether or not to enter it if it is accepted by Plaintiff. But if the Offer is rejected, and Plaintiff ultimately prevails but receives a damages award lower than the Offer, Plaintiff’s counsel may not receive statutory attorneys’ fees. That may ultimately make the Offer more attractive, precisely the effect desired by defense counsel when making the Offer.
The relevant portion of Rule 68 reads “If 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). Clever defense counsel try to craft the Offer to be just high enough to entice an acceptance but still low enough to be a good result for their client. Counsel must be sure to indicate that costs are included in the total amount of the Offer, or else defendant may be responsible for the plaintiff’s costs after the date of the Offer, even if the plaintiff’s recovery is less than the amount in the Offer, .
In recent cases our firm has handled, many practitioners have argued that a Rule 68 Offer of Judgment unequivocally cuts off attorneys’ fees in all cases. That’s often true, but not always true. As a general rule, attorneys’ fees are cut off as of the date of an Offer ONLY IF the statute governing the underlying claim defines attorneys’ fees as part of costs. If the statute does not include attorneys’ fees as a part of costs, the party making the Offer may still be liable for paying the Plaintiff’s attorneys’ fees even if the amount recovered is less than the amount offered.
As always, start with the statute.
|
Statute |
Are fees defined as part of costs? |
|
Copyright Act |
Yes |
|
Lanham Act |
Unclear; Attorney fees may only be awarded in “exceptional cases” |
|
§ 1983 |
Yes |
|
Americans with Disabilities Act |
Yes |
|
Fair Labor Standards Act |
No |
|
Title VII |
Yes |
|
§ 1988 |
Yes |
|
ERISA |
No |
|
FMLA |
No |