The Offer of Judgment Revisited
| Jurisdiction | Kansas,United States |
| Citation | Vol. 66 No. 04 Pg. 28 |
| Pages | 28 |
| Publication year | 1997 |
66 J. Kan. Bar Assn. April, 28 (1997). THE OFFER OF JUDGMENT REVISITED
April, 1997
Daniel B. Boatright [FNaa1]
Copyright (c) 1997 Kansas Bar Association; Michaela M. Warden, Daniel B. Boatright
Introduction
Rule 68 of the Federal Rules of Civil Procedure was enacted more than 50 years [FN1] ago for the purposes of encouraging settlement and avoiding protracted litigation. [FN2] In 1949, the Kansas Legislature implemented a nearly identical statutory provision. The current version of that rule, K.S.A. 60-2002(b), is contained in the statutory section dealing with taxation of costs. [FN3] One court placed Rule 68 "among the most enigmatic of the Federal Rules." [FN4] Given the current emphasis on mediation, alternative dispute resolution and other avenues of resolving conflict short of trial, attorneys should revisit this sometimes perplexing rule, especially in cases in which attorney's fees are defined as "costs" by the substantive statutory law.
*29 The rule under Kansas and federal law
In both Kansas and Federal courts, a prevailing party is generally entitled to recover its costs, although awarding costs remains discretionary with the trial court. [FN5] This general rule is altered when a plaintiff [FN6] refuses to accept an offer of judgment and subsequently obtains a judgment less favorable than the offer. In such cases, Rule 68 and K.S.A. 60-2002(b) require the plaintiff to pay the costs that accrued after the service of the offer of judgment. These rules thus deprive the trial court of discretion to award post-offer costs to a prevailing plaintiff who fails to receive a judgment more favorable than the amount of a refused offer of judgment. [FN7]
Because Kansas case law construing offers of judgment is virtually non-existent, Kansas litigants seeking guidance on this topic should look to federal law and decisions from other jurisdictions with similar rules. [FN8]
The scope of the offer and acceptance
An offer of judgment may propose any relief that could be ordered by the court, monetary or nonmonetary. [FN9] The offer may specify that it either includes or excludes any element (i.e., damages, attorney's fees, etc.), so long as it does not implicitly or explicitly provide that accrued costs will not be paid by the defendant. [FN10] It is critical, however, that the offer of judgment specify the elements that it covers. The phrase "with costs then accrued," which is a key clause in both Rule 68 and the Kansas statute, requires special care in drafting, as attempts to circumvent costs can be fatal. As a first step in considering an offer of judgment, a defendant should determine whether "costs" in the case are defined by the cause of action to include attorney's fees. [FN11]
The Ninth Circuit has held that an offer of judgment that limits itself to the language of Rule 68 and refers only to "costs now accrued" satisfies the requirement of a "clear and unambiguous" limitation on attorney's fees, such that post-offer fees are not recoverable. In Holland v. Roeser, [FN12] however, the defendant's offer contained additional language that the court held to be ambiguous. The offer in that case was limited to "costs now accrued and reasonable attorney's fees as determined by the court." [FN13] The plaintiff accepted the offer, and then petitioned the court for an award of attorney's fees incurred both before and after the offer. The Ninth Circuit concluded that ascertaining the effect of the attorney's fees phrase was a matter of contract interpretation, and dictated that ambiguities be construed against the drafter. [FN14] The court held that the offer did not limit the attorney's fee award to those fees incurred prior to the offer.
An offer of judgment is not filed with the court at the time it is extended. [FN15] Both Rule 68 and the Kansas analog state that "a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken." The use of the term "serve" is an implicit requirement that the offer be in writing. [FN16] An offer of judgment must be accepted by written notice within 10 days after it is served. [FN17]
Page 30
Thereafter, the offer is deemed withdrawn.
Although there is considerable case law directing parties to interpret the terms of an offer of judgment in the context of traditional contract law principles, not all aspects of contract law apply. [FN18] For example, it appears that, absent "exceptional factual circumstances," an offer may not be revoked during the period permitted for acceptance by the offeree. [FN19] If the offeror discovers a mistake in the written offer before the 10-day period has run, the offer of judgment may not be withdrawn to cure the problem.
A party may, however, seek relief from a judgment entered pursuant to Rule 68 by moving to alter, amend, or vacate the judgment. In Stubblefield v. Windsor Capital Group, [FN20] a race discrimination case under Title VII, defendants offered judgment "in the amount of $15,000.00 plus reasonable costs to date" and "reserved the right to object to any costs in connection with the acceptance of their offer of judgment." [FN21] Plaintiff accepted in writing and requested that the district court enter judgment in his favor "in the amount of $15,000.00 plus his reasonable costs to date." In his acceptance, plaintiff also asked the court to "establish the time frame for submitting the requests for payment of his compensable and recoverable costs, which by law are to include reasonable attorney's fees pursuant to his claims." Plaintiff then submitted a bill of costs for $34,000.00 in attorney's fees. Before the district court ruled on the attorney's fees, defendants moved to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e) or, in the alternative, to vacate the judgment pursuant to Rule 60(b). [FN22]
The district court denied the motion to alter or amend the judgment but granted the motion to vacate the judgment on the grounds that it resulted from "mistake, inadvertence, surprise or excusable neglect." [FN23] The court concluded that there had been no "meeting of the minds" under basic contract law principles and that the settlement agreement therefore was void, citing Radecki v. Amoco Oil Company [FN24] to support its application of contract principles. Noteworthy is the district court's comment that "the inclusion of attorney's fees in the amount of $33,772.75 in a case worth only $15,000.00 can fairly be understood as a material change in the terms of the offer." [FN25]
In Richardson v. National Railroad Passenger Corporation, [FN26] the District of Columbia Circuit faced a similar issue. During the 10-day period after making an offer of judgment, defendant Amtrack notified plaintiff that it had revoked its offer. Amtrack was acting on new information that Richardson had a tear to his rotator cuff instead of shoulder impingement syndrome. [FN27] When Amtrack had a physician review the work of plaintiff's operating surgeon, the second expert told Amtrack that there had never been a torn rotator cuff nor a surgery, and that the whole case was a hoax. The day after that deposition and after obtaining results from MRI testing of the plaintiff, Amtrack sought to withdraw its offer of judgment. The plaintiff accepted the offer the next day. [FN28] Amtrack filed a "motion to set aside plaintiff's purported acceptance" on the grounds that the offer had been withdrawn. [FN29] Amtrack later established, and in fraud hearings presented uncontested evidence, that plaintiff's expert had misrepresented his educational attainments, hospital privileges and medical associations. [FN30] The court's central determination was that even if plaintiff's expert's testimony had been false, Amtrack failed to show that plaintiff had been privy to any deception. Without...
To continue reading
Request your trial