Offer of Judgment: Fed.R.Civ.Proc. 68

Federal and State Rules of Procedure provide cost and sometimes attorney's fee shifting mechanisms for defendants to attempt to force plaintiffs/consumers to accept proposed settlements. This forum provides a source of information for how these rules may impact the litigation.

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David A. Szwak
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Joined: Thu Jul 13, 2006 11:19 pm

Offer of Judgment: Fed.R.Civ.Proc. 68

Post by David A. Szwak »

As of the date of this posting, there are no federal apppellate court opinions addressing Federal Rule of Civil Procedure 68 Offers of Judgment in Fair Credit Reporting Act cases. The following is an analysis of why Rule 68 should never shift the defendant's attorney's fees to the plaintiff/consumer.

Rule 68 provides that an Offer of Judgment made by a defendant to a plaintiff can shift the defendant's costs to the plaintiff from the date of the offer forward if the plaintiff rejects or fails to accept the offer and then does not do better than the offer. In some statutes, attorney's fees are included in the definition of costs, and therefore there is a potential for the defendant's attorney's fees to offset the plaintiff's award and even create a liability if the costs exceed the award. However, under the FCRA, only the plaintiff/consumer can recover attorney's fees, regardless of whether the court views fees as part of costs. See sec. 16n, 16o and 16p for the attorney's fees and costs provisions of the FCRA that entitle only the successful plaintiff/consumer to recover his or her attorney's fees from the other side. Therefore, the argument is that the defendant's fees can never affect the plaintiff's recovery in an FCRA case because the defendant's fees are never part of the defendant's costs.

The attorney's fee shifting statute in civil rights cases, 28 USC sec. 1988, provides additional authority for this argument. It permits shifting of attorney's fees to a "prevailing party" as part of costs--making a prevailing party's fees part of costs regardless of whether it is the plaintiff or defendant. However, the courts have imposed a requirement called the Christianburg standard that says defendants in civil rights cases, defendants may not recover attorney's fees against a plaintiff unless the lawsuit was frivolous. Where a plaintiff gets a verdict, which is the only way a Rule 68 offer can have an impact, the courts deem the claim not frivolous. See Le v. University of Pennsyvania, 321 F.3d 403, 411 (3d Cir. 2003), for an excellent discussion and good authority for this position. Other courts have followed the Le opinion. Also see, Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986), cert. den., 481 US 1029, 107 S.Ct. 1955 (1987).
David Szwak
Chairman, Consumer Protection Section, Louisiana State Bar Association
Bodenheimer, Jones & Szwak
509 Market Street, 7th Floor
Mid South Tower
Shreveport, Louisiana 71101
318-221-6444
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