§68.6 Analysis

• Jurisdiction: Washington

§68.6 ANALYSIS

This section provides an analysis of CR 68 and FED. R. CIV. P. 68.

(1) Equitable cost-shifting and avoidance

Only a "party defending" may make an offer of judgment under CR 68. Nevertheless, the rule theoretically provides a fair and just procedure with respect to all the parties involved. Because the postoffer costs can be avoided only if the judgment ultimately recovered is more than the offer, the defendant will not generally benefit by making an offer for less than a reasonable sum. To be effective, a CR 68 offer should be realistic. The defendant benefits by avoiding and shifting subsequent court costs. The plaintiff benefits by obtaining a reasonable offer before trial and an inducement to settle. The courts benefit through reduction in time-consuming litigation.

Comment: When an offer of judgment is refused, generally the side that more realistically evaluated the worth of the claim will benefit This is in accord with the intended purpose of the rule and forces both sides to conduct an honest evaluation of the respective positions and claims. Note, Rule 68: A "New" Tool for Litigation, 1978 Duke L.J. 889 (1978).

(2) Explication of costs

"Costs" refer to those expenses ordinarily awarded to the prevailing party under CR 54(d). CR 54(d) directs that costs be determined in accord with Chapter 4.84 RCW, or any other applicable statute. CR 68 alters the operation of CR 54(d), however. Roy D. Simon, Jr., The Riddle of Rule 68, 54 Geo. Wash. L. Rev. 1, 5 (1985). This alteration is mandatory—the trial court must award costs when appropriate under CR 68. Waters v. Heublein, Inc., 485 F. Supp. 110, 113 (N.D. Cal. 1979).

(a) Generally

It is generally accepted that "costs" include such items as fees and charges required by law to be paid to the court (e.g., filing and service fees) and the costs of those depositions or portions thereof used at trial. RCW 4.84.010. Under CR 68, the costs must be incurred after making an offer of judgment. See Hickok-Knight v. Wal-Mart Stores, Inc., 170 Wn.App. 279, 325-26, 284 P.3d 749 (2012), review denied, 176 Wn.2d 1014 (2013) (the prevailing party incurs the costs when it initially obtains reports and records, not when admitted into evidence at trial). CR 60(b) may be a defendant's only avenue for relief when counsel fails to include costs in a rule 68 offer. Webb v. James, 147 F.3d 617, 622 (7th Cir. 1998).

Under the Mandatory Arbitration Rules, a party making an offer of judgment is not ending the case, thus the offer is not equivalent to a voluntary withdrawal. Do v. Farmer, 127 Wn.App. 180, 187, 110 P.3d 840 (2005). The party accepting the offer of judgment is entitled to mandatory attorney fees as provided by MAR 7.3. Id.; see also Lassek v. Jenbere, 169 Wn.App. 318, 324, 279 P.3d 969, review denied, 175 Wn.2d 1028 (2012) (a party may include in a CR 68 offer of judgment attorney fees that would be awardable under the Mandatory Arbitration Rules if the plaintiff failed to improve on the offer at a trial de novo).

(b) Attorney fees as costs

Whether attorney fees are considered "costs" depends on the language of the statute applicable in the suit. Unless precisely specified as "costs" by statute, costs do not include attorney fees in Washington. Hodge v. Dev. Servs. of Am., 65 Wn.App. 576, 581, 828 P.2d 1175 (1992). CR 68 itself does not give rise to an entitlement to attorney fees. CR 68 is a cost-shifting, not a fee-shifting, device. Eagle Point Condo. Owners Ass'n v. Coy, 102 Wn.App....