Article, Clear as Crystal, Slippery as Ice
| Jurisdiction | United States,Federal |
| Citation | Vol. 32 No. 1 Pg. 22 |
| Pages | 22 |
| Publication year | 2019 |
January, 2019
The importance of clarity to avoid potential pitfalls in an offer under Federal Rule 68
by Peter J. Strand.
Introduction to Rule 68
Under Federal Rule of Civil Procedure 68, “Offer of Judgment,” a defendant can make an offer of judgment to the plaintiff up to fourteen days before trial. The plaintiff then has fourteen days during which to accept the offer and serve a written notice of acceptance. See Fed. R. Civ. P. 68(a). If the plaintiff does, then either side may request the clerk of the court to enter the judgment, and it becomes the judgment of the court. Id. If the plaintiff chooses to reject the offer and eventually obtains a judgment that is less favorable than the offer, the plaintiff then must pay the costs incurred after the offer was made. See Fed. R. Civ. P. 68(d). While initially thought to mean that the plaintiff would be responsible for its own costs, the courts have clarified this rule to require that the plaintiff would be responsible for the defendant’s costs from the offer forward. Crossman v. Marcoccio, 806 F.2d 329, 333 (1st Cir. 1986).
It is widely understood that the principal purpose of Federal Rule of Civil Procedure 68 is to encourage settlement and avoid litigation. Lang v. Gates, 36 F.3d 73, 75 (9th Cir. 1994). As tools go, this rule seems poorly built to serve that function. Its asymmetrical language provides an advantage to only one party, absent specific provisions to increase the “costs,” its penalty is too small to encourage settlement, and the very language of the rule requires a judgment instead of a settlement agreement. As to that last point, it is worth noting that, as a general rule, an accepted offer of admission is not an admission of responsibility or prima facie evidence of wrongdoing. Johnson v. Hyatt Hotels Corp., No. 2:15-cv-03175-DCN, 2017 U.S. Dist. LEXIS 165850 (D.S.C. Oct. 6, 2017).
Regardless of its purpose, in Rule 68, defendants get a powerful tool with which to beat back aggressive plaintiffs. The rule demands an exacting analysis of the plaintiff’s claim’s worth, along with a settlement or the risk of having to pay costs. In some cases, a plaintiff may use excessive demands to avoid a settlement in order to put the burden of costs on the defendant. When faced with such a case, the defendant can shift some of the burdens of costs onto the plaintiff by making an offer of...
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