LEGAL DENTISTRY: HOW ATTORNEY’S FEES AND
CERTAIN PROCEDURAL MECHANISMS CAN GIVE
RULE 68 THE NECESSARY TEETH TO
EFFECTUATE ITS PURPOSES
Daniel Glimcher*
INTRODUCTION
For years attorneys and litigants alike have vociferously
complained about the over-taxation of the American judicial system.1
More and more cases are filed each day, with each case taking longer to
resolve due, in no small part, to the increasing complexity of litigation
issues and newly burgeoning areas of law.2 For instance, in 2001, the
United States district courts received a total of 254,523 new civil filings,
in addition to the 249,116 cases pending at that time.3 The following
year, 2002, the situation worsened when the United States district courts
received a total of 265,091 new civil filings, in addition to the 265,321
civil cases pending.4 If this trend continues, by 2064 there will be
approximately 2,007,799 civil cases filed in the federal courts each
year,5 as well as a severe increase in the number of cases pending each
* Symposia Editor, Cardozo Law Review; J.D. Candidate (2006), Benjamin N. Cardozo
School of Law. The author would like to thank Aaron Wright and Brian Bank for their
encouragement throughout the process of writing this Note. The author would also like to thank
his parents for their continual support throughout law school and life.
1 See, e.g., Erwin Chemerinsky & Barry Friedman, The Fragmentation of Federal Rules, 46
MERCER L. REV. 757 (1995) (stating that the “perception is that federal civil litigation is facing a
crisis of burgeoning dockets”); Unclogging the Courts—The Chief Justice Speaks Out, U.S.
NEWS & WORLD REPORT, Feb. 22, 1982, at 36 (stating that court congestion is one of the most
pressing problems facing the American legal system).
2 See Caseload Pressure Builds on Federal Judges, FED. DISCOVERY NEWS, July 1996, at 5:
Jurists at virtually every level of our federal system are facing a greater number of
cases, which involve increasingly complex issues, explore novel areas of law, and
consume a larger portion of their time’. . . . [T]here were nearly 48,000 more cases
filed in the U.S. district courts in 1995, than in 1990.
Id. (quoting L. Ralph Mecham, Director of the Administrative Office of the U.S. Courts).
3 See ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS, FEDERAL JUDICIAL
CASELOAD STATISTICS (Mar. 31, 2002), available at http://www.uscourts.gov/caseload2002/
tables/c00mar02.pdf. For up-to-date statistics, see U.S. Courts, Federal Court Management
Statistics, http://www.uscourts.gov/fcmstat/index.html (last visited Jan. 22, 2006).
4 Id.
5 This figure was calculated by applying the same percentage increase in civil filings in the
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year.6 By contrast, in 1940, there were only approximately 35,000 civil
cases filed in the federal courts.7
An army of jurists, let alone the current number of Federal district
court judges, could not possibly adjudicate this many cases in a timely
and comprehensive manner.8 For instance, in 2001 and 2002, there
were 665 district court judges,9 which constituted an average of
approximately 400 civil filings per year, per judge.10 If each judge
worked year-round and spent one full day on each new civil filing, that
judge would have no time to spend on any pending civil case, pending
criminal case, criminal filing, or any other non-adjudicatory matters
each year.11 These numbers are startling. Something must be done to
remedy this ever-escalating crisis.12
In recent years, many steps have been taken to lighten the
caseloads borne by the federal courts. One of the most laudable trends
is the increasing use of alternative methods of dispute resolution.13 The
district courts for the 62 year period beginning in 1940 to a 62 year period beginning in 2002.
6 Some say that there has been no “litigation explosion” within the federal judiciary. See
infra note 12.
7 See Warren E. Burger, Isn’t There a Better Way?, 68 A.B.A.J. 274, 275 (1982):
Our litigation explosion during this generation is suggested by a few figures. From
1940 to 1981 annual federal district court civil case filings increased from about 35,000
to 180,000. This almost doubled the yearly caseload per judgeship from 190 to 350
cases. The real meaning of these figures emerges when we see that federal civil cases
increased almost six times as fast as our population.
Id.
Although there has also been a population increase since 1940, the increase in litigation has
substantially outpaced the increase in population. In 1940, when there were 35,000 civil cases
filed in the federal courts, there was a total population of 132,122,446 people in the United States,
not including the populations in Alaska and Hawaii. See U.S. CENSUS BUREAU, POPULATION
ESTIMATES, http://www.census.gov/popest/archives/1990s/popclockest.txt (last visited Jan. 23,
2005). In 2002, when there were 265,091 civil cases filed in the federal courts, there was a total
population of 288,368,698 people in the United States. See U.S. CENSUS BUREAU, POPULATION
ESTIMATES, http://www.census.gov/popest/archives/2000s/vintage_2002/NA-EST2002-01.html
(last visited Jan. 23, 2005). This represents a total population increase of 218.25 percent. By
contrast, the number of civil filings in the federal courts has increased by approximately 757
percent in the same period.
8 This statement is not meant to be critical of the talents of current Federal Judges, but
instead recognizes their frustrations as voiced by Chief Justice Burger. See Burger, supra note 7.
9 See U.S. COURTS, JUDICIAL CASELOAD PROFILE, http://www.uscourts.gov/cgi-bin/
cmsd2002.pl (last visited Jan. 23, 2005).
10 The average number of filings per judge was calculated by dividing the number of filings
by the number of judges.
11 By non-adjudicatory matters, I am referring to speaking engagements, time spent on
advisory committees, etc.
12 Still, some suggest that there has been no “litigation explosion” and that there is no crisis
regarding staffing of and access to the courts. See generally Arthur R. Miller, The Pretrial Rush
to Judgment: Are the “Litigation Explosion,” “Liability Crisis,” and Efficiency Cliches Eroding
Our Day in Court and Jury Trial Commitments?, 78 N.Y.U. L. REV. 982, 996 (2003); Marc
Galanter, An Oil Strike in Hell: Contemporary Legends About the Civil Justice System, 40 ARIZ.
L. REV. 717 (1998); Marc S. Galanter, The Day After the Litigation Explosion, 46 MD. L. REV. 3
(1986).
13 “[T]he use of both mandated and voluntary ADR has increased substantially in recent
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two primary vehicles14 for alternative dispute resolution (ADR) are
mediation15 and arbitration.16 Both of these processes take the dispute
resolution process out of the courts and place it back in the hands of
parties who are assisted by neutral intervenors.17 Proponents of the
different ADR methods claim that these processes play a substantial
role in clearing the dockets and save the parties significant expense.18
There are, however, many who feel that the different ADR
methodologies do a disservice to the public, on the whole, and to the
parties, in particular.19 Further, because ADR is typically, though not
always, less expensive20 than litigation and thus less profitable to a law
firm,21 and because many practitioners have had unfavorable
experiences with non-judicial intervenors, too often lawyers will
counsel their clients against using ADR processes. Thus, many cases
which could be resolved by one of the various ADR methodologies
instead get trapped back in the judiciary, subject to the intolerable
delays and expenses of litigation.22
Fortunately, the court congestion relieved through the use of ADR
methodologies can also be achieved through the use of a relatively
years.” John A. Jackson, Managing and Resolving Legal Issues in Technology: A Report from
the Albany Law School Science and Technology Law Center Project, 9 ALB. L.J. SCI. & TECH.
317, 340 (1999).
14 See, e.g., Waxman, Alternatives to Litigation, 7 DISTRICT L., Mar.-Apr. 1983, at 29
(stating that arbitration and mediation are the most common methods of alternative dispute
resolution).
15 Although there are many definitions of mediation and many types of mediators, the most
pure form is outlined by Joseph Stulberg. “Mediation is a process whereby a neutral intervenor
helps people involved in a dispute develop solutions that are acceptable to them. Unlike a judge
or an arbitrator, the mediator has no authority to impose a binding decision on the disputants. He
can only persuade them to settle.” JOSEPH B. STULBERG, TAKING CHARGE/MANAGING
CONFLICT 5 (1987).
16 “Arbitration, n. A method of dispute resolution involving one or more neutral third parties
who are usu[ally] agreed to by the disputing parties and whose decision is binding.” BLACK’S
LAW DICTIONARY 100 (7th ed. 1999).
17 Although mediation or arbitration, at times, can be court-ordered, the courts themselves do
not participate in the actual mediations or arbitrations.
18 Studies have shown that resolving the dispute in an adversarial model costs, on average,
134 percent more than privately mediated divorce settlements. See, e.g., Joan B. Kelly, Is
Mediation Less Expensive? Comparison of Mediated and Adversarial Divorce Costs, 8
MEDIATION Q. 15, 19-20 (1990).
19 See, e.g., Owen M. Fiss, Against Settlement, 93 YALE L.J. 1073 (1984) (stating that there
are various flaws in ADR methodologies, such as the subjection of the weaker party to the whims
of the resourceful); David Luban, Settlements and the Erosion of the Public Realm, 83 GEO. L.J.
2619 (1995) (arguing that allowing parties to avoid adjudication does a disservice to the public, as
the production of rules and precedents by which to govern conduct would cease).
20 See Kelly, supra note 18, at 15-16.
21 Most firms bill clients on an hourly basis. Thus, if a client can resolve a conflict in a
shorter time period, fewer hours can be billed by a firm. See Kelley, supra note 18, at 19-25.
22 “Abraham Lincoln once said: ‘Discourage litigation.
Persuade your neighbors to
compromise whenever you can. Point out to them how the nominal winner is often a real loser—
in fees, expenses, and waste of time.’” Burger, supra note 7, at 274.
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obscure and vastly underutilized Federal Rule of Civil Procedure—Rule
68.23 As early as 1938, when Congress adopted the Federal Rules of
Civil Procedure,24 both Congress and legal practitioners alike
recognized the need to reform and lessen the burden on an already
overextended judicial system.25 Rule 68, the offer of judgment
provision, was the answer to that charge. The rule was and is meant to
clear the dockets by promoting settlement and avoiding vexatious and
protracted litigation.26 The drafters sought to accomplish that end by
allowing defendants, who made an offer of judgment to a plaintiff, to
recover their post-offer costs when the plaintiff rejected the offer,
proceeded to trial, and prevailed, but received a judgment less favorable
than the offer.27 This rule provided the defendant with an incentive to
make a serious offer28 in order to invoke the effects of the rule.29
Further, plaintiffs were given an incentive to seriously consider
accepting the offer, as they risked penalties for continuing litigation
imprudently.30
23 See Janice Toran, Settlement, Sanctions, and Attorney Fees: Comparing English Payment
Into Court and Proposed Rule 68, 35 AM. U. L. REV. 301, 302-03 (1986).
The perceived need to promote the settlement of civil controversies in the United
States has prompted much discussion among legal scholars and members of the trial
bar. Proponents reason that settlement prior to trial alleviates court congestion,
promotes speedy resolution of disputes, and saves money for both courts and litigants.
This reasoning underlies recent attempts to strengthen Rule 68 of the Federal Rules of
Civil Procedure to make it an effective mechanism for encouraging settlements prior to
trial.
Id. at 302-03 (citations omitted).
24 “In 1938, Congress adopted the Federal Rules of Civil Procedure to create uniformity
among the various federal district courts.” Lesley S. Bonney et al., Rule 68: Awakening a
Sleeping Giant, 65 GEO. WASH. L. REV. 379, 379 (1997).
25 Id. at 380.
26 See 13 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 68.02 (3d ed. 2005).
The primary purpose of Rule 68 is to promote settlements and avoid protracted
litigation. Although both parties always have an incentive to settle in advance of trial
due to the adverse consequences of potential defeat, Rule 68 provides an additional
inducement when there is a strong likelihood “that the plaintiff will obtain a judgment
but the amount of recovery is uncertain.” The making of a Rule 68 offer shifts to the
claimant some of the risk of proceeding with a lawsuit, given the possibility of having
to pay post-offer costs. The offer of judgment rule “prompts both parties to a suit to
evaluate the risks and costs of litigation, and to balance them against the likelihood of
success upon trial on the merits.”
Id. (citations omitted).
27 “If the judgment finally obtained by the offeree is not more favorable than the offer, the
offeree must pay the costs incurred after the making of the offer.” FED. R. CIV. P. 68.
28 If a defendant’s offer is not serious, the likelihood of the plaintiff prevailing, but to a lesser
extent than the offer, is diminished. Thus, the likelihood that the defendant’s offer will trigger the
rule’s cost-shifting mechanism is also diminished.
29 See MOORE ET AL., supra note 26, § 68.02 (“The effect of an offer of judgment on the
recovery of post-offer costs gives defending parties an incentive to make serious rather than
bluffing offers. An offer must be realistic for the offeror to get the benefit of Rule 68 costshifting.”).
30 See id. (“A serious Rule 68 offer may threaten to raise the expense of holding out
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Unfortunately, due to its complexity, ambiguity, and limitations,
Rule 68 is one of the most powerful, yet most underutilized pre-trial
maneuvers.31 The best evidence of the confusion surrounding the
operation of Rule 6832 is the current split amongst the circuits as to the
applicability of Rule 68’s cost-shifting provisions33 to attorney’s fees.34
In Marek v. Chesny,35 the Supreme Court tried to resolve this split,36
imprudently by shifting costs to a prevailing party who recovers less than the offer.”).
31 See Bonney et al., supra note 24, at 379 (“[T]he rule has been used sparingly because it is
complex and ambiguous. Litigants and counsel find it extraordinarily difficult to make informed
decisions on the merits of making or accepting an offer of judgment under Rule 68.”).
32 There have been countless issues litigated in the trial courts, and countless appeals from the
district courts arising out of confusion regarding the operation of Rule 68. See, e.g., Mallory v.
Eyrich, 922 F.2d 1273 (6th Cir. 1991) (stating that a district court has no discretion under Rule
68, but must award post-offer costs to the offeror/defendant when the offeree/plaintiff rejects the
defendant’s offer of judgment, and the plaintiff ultimately prevails, but to a lesser extent than the
offer); United States v. Am. Commercial Barge Line Co., 988 F.2d 860 (8th Cir. 1993) (holding
that in admiralty cases, prejudgment interest is part of damages and not part of costs for the
purposes of Rule 68); Stewart v. Prof’l Computer Ctrs., Inc., 148 F.3d 937 (8th Cir. 1998) (stating
that principles of contract law determine whether there has been a valid offer and acceptance
under Rule 68); Staffend v. Lake Cent. Airlines, Inc., 47 F.R.D. 218 (N.D. Ohio 1969) (stating
that a ten day window for offeree to accept a Rule 68 offer of judgment is not susceptible to
interpretation by the courts); Kason v. Amphenol Corp., 132 F.R.D. 197 (N.D. Ill. 1990) (stating
that an offer must be filed when accepted, if accepted, but not at the time of tender); Nordby v.
Anchor Hocking Packaging Co., 199 F.3d 390 (7th Cir. 1999) (holding that ambiguities in a Rule
68 offer are to be resolved against the offeror, but unambiguous offers will be given effect even if
they do not mention attorney’s fees explicitly). Many of these issues are beyond the scope of this
Note, as this Note pertains only to the inclusion of attorney’s fees within costs and certain other
procedural matters.
33 FED. R. CIV. P. 68. Offer of Judgment, provides:
At any time more than 10 days before the trial begins, a party defending against a
claim may serve upon the adverse party an offer to allow judgment to be taken against
the defending party for the money or property or to the effect specified in the offer,
with costs then accrued. If within 10 days after the service of the offer the adverse
party serves written notice that the offer is accepted, either party may then file the offer
and notice of acceptance together with proof of service thereof and thereupon the clerk
shall enter judgment. An offer not accepted shall be deemed withdrawn and evidence
thereof is not admissible except in a proceeding to determine costs. If the judgment
finally obtained by the offeree is not more favorable than the offer, the offeree must
pay the costs incurred after the making of the offer. The fact that an offer is made but
not accepted does not preclude a subsequent offer. When the liability of one party to
another has been determined by verdict or order or judgment, but the amount or extent
of the liability remains to be determined by further proceedings, the party adjudged
liable may make an offer of judgment, which shall have the same effect as an offer
made before trial if it is served within a reasonable time not less than 10 days prior to
the commencement of hearings to determine the amount or extent of liability.
Id. (emphasis added).
34 See Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986) (holding that a defendant/offeror
cannot recover post-offer attorney’s fees from plaintiff who prevailed, but to a lesser extent than
the offer in a civil rights action); Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638
(7th Cir. 2001) (same). But see Jordan v. Time, Inc., 111 F.3d 102 (11th Cir. 1997) (holding that
defendant/offeror can recover post-offer attorney’s fees from a plaintiff who prevailed, but to a
lesser extent than the offer in a copyright action).
35 473 U.S. 1 (1985).
36 Although the Court did tackle the issue of whether a plaintiff would be entitled to his or her
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but, sadly, the language ultimately expounded by the Court led only to
more confusion on the issue of fees.37 In Marek, the Court said that the
term “costs” in Rule 68 was meant to refer to all costs properly
awardable under the underlying substantive statute, and that all such
properly awardable costs should be subject to Rule 68’s cost-shifting
provisions.38 When the underlying statute defines costs to include
attorney’s fees, the Court held that such fees are to be included as costs
for the purposes of Rule 68, unless Congress expressly provides
otherwise.39 In other words, the Court held that if the underlying
substantive statute defines attorney’s fees as part of costs, then those
fees should be subject to the rule’s cost-shifting provisions.
The problem that district courts now face is interpreting that
language when the underlying substantive statute defines attorney’s fees
as part of costs, but states that such fees are only awardable to the
prevailing party.40 A Rule 68 offeror will never be the prevailing party
in the traditional sense.41 The language of Rule 68, however, combined
with the language of Marek, would dictate that a defendant/offeror (who
loses, but to a lesser extent than the offer) should be entitled to postoffer attorney’s fees if they are defined as awardable costs under the
underlying substantive statute. This tension has caused the circuits to
split, with some circuits holding that the offeror is entitled to post-offer
fees where applicable, and others holding that the defendant is never
entitled to post-offer fees.42
post-offer attorney’s fees, when the underlying substantive statute allowed for attorney’s fees for
the prevailing party, the issue of whether the plaintiff would be obligated to pay defendant’s postoffer fees was not at issue in that case.
37 Compare Harbor, 265 F.3d at 645-47, with Jordan, 111 F.3d at 105. In Harbor, the court
stated:
[T]he Supreme Court has held that attorney’s fees are included within the definition of
“costs” for purposes of Rule 68 when the underlying statute includes attorney’s fees in
its definition of costs. . . . Section 505 of the Copyright Act defines costs to include
attorney’s fees, but only the prevailing party is entitled to their award. . . .
[We] therefore[] hold that only prevailing parties [not Rule 68 offerors] can receive
attorney’s fees pursuant to Rule 68. Our conclusion is compatible with the language in
Marek that ties the award of Rule 68 fees to only those costs that are properly
awardable under the substantive statute at issue.
Harbor, 265 F.3d at 645-47. However, in Jordan, the court stated: “Costs as used herein includes
attorney’s fees. Under Marek v. Chesny, Rule 68 ‘costs’ include attorney’s fees when the
underlying statute so prescribes. The Copyright Act so specifies, 17 U.S.C. § 505.” Jordan, 111
F.3d at 105.
38 Marek, 473 U.S. at 9.
39 Id.
40 See supra note 37.
41 Because Rule 68’s cost-shifting provisions only become operative when the defendant
makes an offer, the plaintiff rejects that offer, and the plaintiff prevails, but to a lesser extent than
the offer, the defendant/offeror will never be a prevailing party in the traditional sense. See FED.
R. CIV. P. 68.
42 See, e.g., Harbor, 265 F.3d 638; Jordan, 111 F.3d 102.
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The rule’s operation must become comprehensible and attorney’s
fees need to be awardable to a defendant/offeror when they are defined
as awardable costs in the underlying statute. Otherwise, Rule 68 will
not maintain the force it was originally intended to possess: to truly
promote settlement43 for the purposes of clearing the dockets and
discouraging frivolous litigation.44 Without the possibility of an award
of attorney’s fees, Rule 68 will remain fairly dormant, as it has to date,
within the pages of the Federal Rules of Civil Procedure. After all,
without the award of fees, there is no true disincentive for refusing a
generous offer of judgment.45 According to a study conducted by the
Federal Judicial Center in 1995, attorney’s fees constituted an average
of eighty percent of litigation expenses (the median was eighty-five
percent).46 Thus, if a particular piece of litigation cost $5,000,000, the
attorney’s fees would account, on average, for $4,000,000 of those
dollars. Therefore, without the weight of a potential fee shift staring
down an offeree, Rule 68 becomes the proverbial “toothless tiger.”
This Note argues that Rule 68 was intended to encapsulate
attorney’s fees whenever they are awardable under the underlying
substantive statute, that such awards are necessary to effectuate the
purposes of Rule 68,47 and that such awards are consistent with the
language of the Supreme Court in Marek. Further, this Note
recommends a procedural framework for the rule, which will not require
any legislative activity, in order to prevent the misperceptions about the
rule’s operation from becoming its death knell. This procedural
framework will allow for widespread use of Rule 68’s provisions in
order to whittle down the abundance of filings faced by district court
judges each year.48
Part I of this Note demystifies the basic operation of the rule. This
section also includes an exposition of the original intentions Congress
had for Rule 68 and the economic theory behind those intentions. Part
II investigates the disagreement among the circuit courts regarding the
shifting of attorney’s fees under the rule, and recommends an
interpretation of both Marek and the rule itself that could resolve the
current split. Finally, Part III examines some critiques and procedural
difficulties of Rule 68 in its current incarnation, and suggests a
43 “The plain purpose of Rule 68 is to encourage settlement and avoid litigation.” Marek, 473
U.S. at 5.
44 For an analysis of those circuits which allow fee shifting and those which do not, see infra
Parts II.B-E.
45 For an explanation of why there is no true disincentive for refusing a generous offer of
judgment if attorney’s fees are not permitted to shift under the Rule’s cost-shifting provisions, see
MOORE ET AL., supra note 26, § 68.02.
46 John E. Shapard, Likely Consequences of Amendments to Rule 68, Federal Rules of Civil
Procedure, Federal Judicial Center (1995).
47 For an exposition of the purposes of the rule, see infra Part I.B.
48 See supra notes 3-4 and accompanying text.
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procedural framework to overcome those particular critiques and
procedural difficulties and, once again, make Rule 68 a viable litigation
tool. Ultimately, Part III will show how the use of declaratory judgment
motions and court ordered mediation can achieve that end.
I. RULE 68: OPERATION, INTENTION, AND UNDERLYING THEORY
A.
Basic Operation of Rule 68
Under Rule 68, at any time more than ten days before a trial
begins, a defendant may serve the plaintiff with an offer to allow
judgment to be taken against him or herself.49 If the plaintiff accepts the
offer, by giving written notice within ten days after the service of the
offer, either party may then file the offer and notice of acceptance
together with proof of service thereof with the clerk, who shall enter
judgment.50 If the offer is not accepted in this fashion, or is overtly
rejected, the offer shall be deemed withdrawn, and evidence of the
refusal is inadmissible in court outside of a proceeding to determine
costs.51 If the judgment finally obtained by the offeree at trial is not
more favorable than the offer, the offeree must pay costs incurred after
the making of the offer.52 The fact that an offer is made, but not
accepted, does not preclude the possibility of a subsequent offer.53 If
the liability portion of a trial, or the liability trial in a bifurcated
proceeding, has ended, but the amount or extent of the liability remains
to be determined by future proceedings, the party found liable may
make an offer of judgment, which would have the same effect as a pretrial offer, provided it is served not less than ten days prior to the
commencement of hearings to determine the amount and extent of
liability.54
In determining costs under Rule 68, the rule, at all times, must be
read in conjunction with Rule 54(d).55 Rule 54(d) allows costs, as a
49
50
51
52
53
54
55
FED. R. CIV. P. 68.
Id.
Id.
Id. (emphasis added)
Id.
Id.
FED. R. CIV. P. 54(d)(1):
Costs Other than Attorneys’ Fees. Except when express provision therefor is made
either in a statute of the United States or in these rules, costs other than attorneys’ fees
shall be allowed as of course to the prevailing party unless the court otherwise directs;
but costs against the United States, its officers, and agencies shall be imposed only to
the extent permitted by law. Such costs may be taxed by the clerk on one day’s notice.
On motion served within 5 days thereafter, the action of the clerk may be reviewed by
the court.
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matter of course, to be awarded to the prevailing party, unless the court
directs otherwise.56 Accordingly, the application of Rule 54(d) is
discretionary.57 Rule 54(d) is often invoked in cases where Rule 68 is at
issue.58 The two rules interact frequently because one of the benefits of
making a Rule 68 offer is to deny a prevailing plaintiff such costs. If a
defendant makes a Rule 68 offer that a plaintiff rejects, and the plaintiff
prevails at trial, but to a lesser extent than the offer, not only does the
plaintiff lose any potential entitlement to his post-offer costs, but he will
also be obligated to pay the defendant’s post-offer costs.59 Therefore,
Rule 68 is an exception to the general rule that costs are awardable to
the prevailing party: The awarding of post-offer costs to the successful
Rule 68 offeror, one who has made an offer more generous than the
judgment finally obtained, is mandatory.60
Costs, for the purposes of Rule 54(d) and Rule 68, are typically
defined by 28 U.S.C. § 1920.61 Under that provision, costs include: fees
of the clerk and marshal; fees of the court reporter for all or any part of
the stenographic transcript necessarily obtained for use in the case; fees
and disbursements for printing and witnesses; fees for exemplification
56
57
Id.
See, e.g., Zeran v. Diamond Broad., Inc., 203 F.3d 714 (10th Cir. 2000) (stating that the
allowance or disallowance of costs to the prevailing party under Rule 54(d) is within the sound
discretion of the district court, subject to two limitations); Cherry v. Champion Int’l Corp., 186
F.3d 442 (4th Cir. 1999) (holding that a district court has the discretion to deny the award of
costs, and that any appeal is only reviewed for abuse of discretion).
58 See, e.g., Marek v. Chesny, 473 U.S. 1 (1985); Harbor Motor Co. v. Arnell Chevrolet-Geo,
Inc., 265 F.3d 638 (7th Cir. 2001); Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986).
59 “If the judgment finally obtained by the offeree is not more favorable than the offer, the
offeree must pay the costs incurred after the making of the offer.” FED. R. CIV. P. 68.
60 All circuits agree on this point. Even those circuits that do not allow attorney’s fees under
Rule 68’s cost-shifting provisions hold that the shifting of costs is mandatory. Harbor, 265 F.3d
at 645 (“Rule 68 also requires the plaintiff to pay any costs the defendant incurs after making the
offer if the plaintiff’s judgment is less favorable than the offer.”); Jordan v. Time, Inc., 111 F.3d
102, 105 (11th Cir. 1997) (stating that a district court has no discretion to deny offeror costs
incurred after making of offer if offeree’s judgment is not more favorable than offer); United
States v. Trident Seafoods Corp., 92 F.3d 855, 859 (9th Cir. 1996) (stating that Rule 68
application is mandatory); Hopper v. Euclid Manor Nursing Home, Inc., 867 F.2d 291, 295 (6th
Cir. 1989) (‘‘The district court retains no discretion under Rule 68 to alter the rule’s sometimes
severe application.’’); O’Brien v. City of Greers Ferry, 873 F.2d 1115, 1120 (8th Cir. 1989) (“[A]
plaintiff who refuses an offer of judgment and later fails to receive a more favorable judgment
must pay the defendant’s post-offer costs.”); Simon v. Intercontinental Transp. (ICT) B.V., 882
F.2d 1435, 1438-39 (9th Cir. 1989) (‘‘[W]hen a proper Rule 68 offer is made and the other
requirements of the rule are met, the district court must award costs.’’); Crossman, 806 F.2d 329
(stating that a plaintiff who recovers judgment less favorable than defendant’s offer of judgment
is responsible for defendant/offeror’s post-offer costs, as well as his own); Johnston v. Penrod
Drilling Co., 803 F.2d 867, 870 (5th Cir. 1986) (‘‘Rule 68 is a mandatory rule designed to operate
automatically by a comparison of two clearly defined figures.’’); Liberty Mut. Ins. Co. v. EEOC,
691 F.2d 438, 442 (9th Cir. 1982) (Rule 68’s ‘‘must pay’’ language is “mandatory’’).
61 Although 28 U.S.C. § 1920 (2000) is defined as “Taxation of Costs,” these same costs
typically serve to define what costs can be shifted under a cost-shifting provision, as well as what
costs can be taxed as part of a judgment, which includes costs.
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and copies of papers necessarily obtained for use in the case; docket
fees under section 1923;62 compensation of court appointed experts;
compensation of interpreters; and salaries, fees, expenses, and costs of
special interpretation services under section 182863 of the same title.64
Section 1920, however, does not end the inquiry as to what costs are
awardable to the successful Rule 68 offeror.65 For instance, expert
witness fees may be deemed awardable costs under the rule. Also,
because Rule 54(d) is applicable to any case, courts can shift costs
under Rule 68 such as costs for photocopies, costs incidental to taking
depositions, and many other costs.66
The focus of this Note, however, is whether the defendant/offeror’s
post-offer attorney’s fees can be shifted to the prevailing plaintiff when
the underlying substantive statute defines attorney’s fees as part of
costs. The circuits have split on this question. Recently, the Third,67
Seventh,68 and Ninth69 Circuits have joined the First Circuit in holding
that attorney’s fees are never subject to Rule 68’s cost-shifting
provisions, unless the suit was frivolous, unreasonable, or without
foundation.70 On the other hand, the Fourth Circuit71 has aligned itself
62
28 U.S.C. § 1923 (2000):
(a) Attorney’s and proctor’s docket fees in courts of the United States may be taxed as
costs as follows:
$ 20 on trial or final hearing (including a default judgment whether entered by the
court or by the clerk) in civil, criminal or admiralty cases, except that in cases of
admiralty and maritime jurisdiction where the libellant recovers less than $ 50 the
proctor’s docket fee shall be $ 10;
$ 20 in admiralty appeals involving not over $ 1,000;
$ 50 in admiralty appeals involving not over $ 5,000;
$ 100 in admiralty appeals involving more than $ 5,000;
$ 5 on discontinuance of a civil action;
$ 5 on motion for judgment and other proceedings on recognizances;
$ 2.50 for each deposition admitted in evidence.
(b) The docket fees of United States attorneys and United States trustees shall be paid
to the clerk of the court and by him paid into the Treasury.
(c) In admiralty appeals the court may allow as costs for printing the briefs of the
successful party not more than:
$ 25 where the amount involved is not over $1,000;
$ 50 where the amount involved is not over $5,000;
$ 75 where the amount involved is over $5,000.
63 28 U.S.C. § 1828 (2000) does not define cognizable costs, but instead speaks to when
interpretation services are proper and how they shall be provided.
64 28 U.S.C. § 1920.
65 Parkes v. Hall, 906 F.2d 658, 660 (11th Cir. 1990) (“[T]he costs which are subject to the
cost-shifting provisions of Rule 68 are those enumerated in 28 U.S.C. § 1920, unless the
substantive law applicable to the particular cause of action expands the general § 1920
definition.”).
66 See, e.g., SCA Servs., Inc. v. Lucky Stores, 599 F.2d 178 (7th Cir. 1979) (photocopies);
Finchum v. Ford Motor Co., 57 F.3d 526 (7th Cir. 1995) (depositions).
67 See O’Brien v. City of Greers Ferry, 873 F.2d 1115, 1120 (8th Cir. 1989).
68 See Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638, 645 (7th Cir. 2001).
69 See Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016 (9th Cir. 2003).
70 See, e.g., Tai Van Le v. Univ. of Pa., 321 F.3d 403 (3d Cir. 2003); Denny v. Hinton, 131
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with the Eleventh Circuit’s Jordan v. Time, Inc.,72 holding that postoffer attorney’s fees are subject to Rule 68’s cost-shifting provisions
when the underlying substantive statute defines such fees as part of
costs, even when the language of the underlying statute allows for such
fees only to the prevailing party.73
B.
Purpose of the Rule and How That Purpose Was Meant
to Be Achieved
The purpose of Rule 68 is to encourage settlements and avoid
vexatious and protracted litigation.74 Although there are independent
factors which encourage settlement, Rule 68 is meant to provide a
further inducement to settle in cases where a plaintiff victory is likely,
but the amount of recovery is uncertain.75 By making a Rule 68 offer,
the defendant shifts to the plaintiff added risk in continuing the
litigation, as the plaintiff may be saddled with the defendant’s post-offer
costs.76 Thus, as stated in Marek, the rule “prompts both parties to a
suit to evaluate the risks and costs of litigation, and balance them
against the likelihood of success” at trial on the merits.77
Both parties have incentives to approach Rule 68 offers
thoughtfully. A defendant will want to make a generous offer, as the
Rule’s cost-shifting provisions will not take effect unless the offer is
great enough to exceed any eventual judgment;78 whereas a plaintiff will
have an incentive to seriously consider an offer, as he will likely be
penalized financially for continuing the litigation imprudently.79
Ultimately, the rule operates in a fashion consistent with the Coase
Theorem.80 Both parties will have to perform an economic analysis to
F.R.D. 659 (M.D.N.C. 1990).
71 See Tri-Star Mgmt. Group, Ltd. v. Samson, No. 92-1247, 1993 U.S. App. LEXIS 27401, at
*1 (4th Cir. Oct. 20, 1993) (unpublished decision); Lucas v. Wild Dunes Real Estate, Inc., 197
F.R.D. 172 (D.S.C. 2000).
72 111 F.3d 102 (11th Cir. 1997).
73 Id. at 105.
74 See MOORE ET AL., supra note 26, § 68.02; see also Marek v. Chesny, 473 U.S. 1, 6 (1985)
(“The plain purpose of Rule 68 is to encourage settlement and avoid litigation.”).
75 See Delta Airlines, Inc. v. August, 450 U.S. 346, 352 (1981).
76 See Mallory v. Eyrich, 922 F.2d 1273, 1278 (6th Cir. 1991).
77 Marek, 473 U.S. at 7.
78 See MOORE ET AL., supra note 26, § 68.02.
79 Id.
80 The Coase Theorem primarily deals with bargaining between the parties in nuisance cases.
The theorem suggests that market forces will bear the best use of the land and the best result for
the parties regardless of where liability is placed. For example: Suppose the cost to A of
installing a pollution filter is $100, and the damage to B from the pollution is $50. If the right to
pollute is given to A, A will continue to do so because B will give A only $50 to stop, and it is
worth $100 to A to continue. If the right to stop the pollution is given to B, B will sell the right to
pollute to A at somewhere between $50 and $100, because the right is worth only $50 to B and
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determine at what price each of them would be willing to discontinue
litigation. A plaintiff, for example, will have to determine the
probability of recovering an amount greater than the defendant’s offer,
balance that likelihood against the amount he may be penalized if he
does not recover an amount greater than the offer, factor in the cost of
continued litigation, and consider the time value of the money he is
being offered.81 A defendant will have to perform a similar analysis.
The defendant will have to determine the probability of defeat, assess
how much continued litigation would cost, factor in how much interest
could be earned on any potential offer monies during the course of the
$100 to A. A sale will make them both better off. Thus, in most cases—where the costs of
conducting transactions are low—regardless of whether A or B is given the right, it will end up in
A’s hands by operation of the market. If the figures are reversed and the cost of the pollution
filter is $50 and the cost of the pollution damage to B is $100, A would install the filter no matter
where the right is initially assigned. If assigned to A, B will pay between $50 and $100 to install
the filter. If assigned to B, A would install the equipment for $50, rather than buy out B for $100.
Thus, the market determines whether the activity (pollution) will continue—not the initial
allocation of rights by the courts. The initial allocation only makes one party richer and will,
most likely, not stop the pollution. In the absence of transaction costs, a pareto optimal result will
occur no matter where liability is placed. One problem with the Coase Theorem, however, is that
it assumes minimal or no transaction costs. Once transaction costs enter the equation, all the
figures must be recalculated to determine which actions A or B will take. See R.H. Coase, The
Problem of Social Cost, 3 J.L. & ECON. 1, 15 (1960)
A similar equation plays out in a Rule 68 offer scenario. For example, A sues B for
copyright infringement. Regardless of whether liability is placed with one party or another, the
parties will have to engage in a cost benefit analysis similar to the one conducted by A and B in
the Coase example. A will have to determine how much it will cost him to continue the litigation,
how much money would make him whole, how likely he is to succeed at trial (to a greater degree
than the offer), and what the time value of B’s monetary offer will be. For a discussion of the
time value of money, see infra note 81. B will have to engage in a similar exercise. B will have
to determine how much it would cost him to continue defending the litigation, how likely he is to
succeed at trial, how any payment to the plaintiff would affect the profitability of his potentially
infringing material, and how much interest he could make on any offer money during the course
of the litigation. Theoretically, there should be some overlap in the bargaining zones of A and B.
It is in this space that an offer should be made and accepted—regardless of whether there was
actual guilt, and regardless of where any liability would be placed. In other words, the market
should theoretically resolve the case instead of the courts. See Christopher W. Carmichael,
Encouraging Settlements Using Federal Rule 68: Why Non-Prevailing Defendants Should Be
Awarded Attorney’s Fees, Even In Civil Rights Cases, 48 WAYNE L. REV. 1449, 1452 (2003)
(stating that “[f]ederal Rule 68 allows market forces to play a role in sorting out the frivolous
claims from the court docket while, at the same time, allowing meritorious claims to remain in a
traditional courtroom forum”).
81 By accepting an offer from a defendant, plaintiff will receive money at an earlier date than
he otherwise would have had the litigation continued. That money can earn money over time.
For instance, if a plaintiff received $100 today, and invested that $100 in some instrument bearing
a ten percent annual return, that money would be worth $161.05 in five years. Thus, if a plaintiff
sought $150, for example, and the plaintiff had access to an investment instrument bearing a ten
percent annual return, then it would be wiser for the plaintiff to accept $100 now, versus litigating
in hopes of recovering his full demand. If the plaintiff chose to continue litigation, he would risk
a possible loss, would incur additional expenses, and would ultimately recover less value, even if
he won the full amount, than he would have had he accepted the offer. (He would receive only
$150 minus all of the expenses he incurred while litigating from the time of the offer until the
ultimate judgment, versus the $161.05 future monetary value of the current $100 offer.).
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litigation, and determine the negative value of an adverse judgment
being entered against him. At the end of any such exercise the market
should, theoretically, create a resolution between the parties.
II. ANALYSIS OF THE CIRCUITS AND THE SUPREME COURT REGARDING
THE SHIFTING OF ATTORNEY’S FEES UNDER RULE 68.
A.
Marek v. Chesny
In Marek v. Chesny,82 the Supreme Court finally addressed the
question of whether attorney’s fees incurred by a plaintiff subsequent to
a Rule 68 offer must be paid by the defendant in an action pursuant to
42 U.S.C. § 198883 when the plaintiff ultimately recovers less than the
offer.84 The Court held that a defendant/offeror is not responsible for
such fees.85
In Marek, the plaintiff’s substantive claim86 was filed pursuant to
42 U.S.C. § 198387 and state tort law.88 The defendants, prior to trial,
made an offer of judgment pursuant to Rule 68 in the amount of
$100,000.89 The plaintiff rejected that offer, proceeded to trial and
82
83
473 U.S. 1 (1985).
Section 1988 allows 42 U.S.C. § 1983 (civil rights) plaintiffs to recover attorney’s fees, at
the court’s discretion, as part of costs, when they are the prevailing party. 42 U.S.C. § 1988 (b)
(2000).
Attorney’s fees . . . [T]he court, in its discretion, may allow the prevailing party, other
than the United States, a reasonable attorney’s fee as part of the costs, except that in
any action brought against a judicial officer for an act or omission taken in such
officer’s judicial capacity such officer shall not be held liable for any costs, including
attorney’s fees, unless such action was clearly in excess of such officer’s jurisdiction.
Id. (emphasis added).
84 Marek, 473 U.S. at 3.
85 Id. at 12.
86 In Marek, three police officers were summoned to the home of the plaintiff after receiving
a domestic disturbance call. Upon arriving at the house, the officers shot and killed the adult son
of the plaintiff.
87 42 U.S.C. § 1983 (2000):
Every person who, under color of any statute, ordinance, regulation, custom, or usage,
of any State or Territory or the District of Columbia, subjects, or causes to be
subjected, any citizen of the United States or other person within the jurisdiction
thereof to the deprivation of any rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party injured in an action at law, suit in
equity, or other proper proceeding for redress, except that in any action brought against
a judicial officer for an act or omission taken in such officer’s judicial capacity,
injunctive relief shall not be granted unless a declaratory decree was violated or
declaratory relief was unavailable. For the purposes of this section, any Act of
Congress applicable exclusively to the District of Columbia shall be considered to be a
statute of the District of Columbia.
88 Marek, 473 U.S. at 3.
89 Id.
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ultimately was awarded $60,000.90 After judgment, the plaintiff filed a
request for $171,692.47 in costs, which included attorney’s fees and
costs both prior to and after the offer.91 The defendants opposed the
motion under Rule 68.92 The district court declined the plaintiff’s
request as to post-offer costs,93 but allowed an award of pre-offer costs
and fees in the amount of $32,000, an amount agreed to by the parties.94
The plaintiff appealed the district court’s denial of post-offer costs and
fees.95 On appeal, the Ninth Circuit reversed the decision denying postoffer costs and fees to the plaintiffs.96 Ultimately, the Supreme Court
reversed the Ninth Circuit’s decision.
The Court began its analysis by expounding the purposes of the
rule,97 noting that “[t]he plain purpose of Rule 68 is to encourage
settlement and avoid litigation.”98 The rule, according to the Court,
works by encouraging both parties in a suit to balance the risks and
costs of litigation against the likelihood of success at trial on the
merits.99 Next, the Court addressed the first issue in the case: whether
the defendants had made a valid Rule 68 offer—the Court found that
they had.100
90
91
92
Id. at 3-4.
Id. at 4.
Id. The defendants relied on the following language from Rule 68: “If the judgment finally
obtained by the offeree is not more favorable than the offer, the offeree must pay the costs
incurred after the making of the offer.” FED. R. CIV. P. 68.
93 Chesny v. Marek, 547 F. Supp. 542, 547 (N.D. Ill. 1982).
94 Id.
95 Marek, 473 U.S. at 4.
96 Chesny v. Marek, 720 F.2d 474 (9th Cir. 1983). The Ninth Circuit, in rendering its
decision, rejected the “rather mechanical linking up of Rule 68 and section 1988.” Id. at 478.
Instead, the court felt that, while the district court’s reading of Rule 68 and § 1988 was somewhat
logical, such a reading would leave a civil rights plaintiff in between the proverbial rock and a
hard place. Id. at 478-79. Plaintiffs, the court felt, would hesitate to bring a good-faith civil
rights action, and would be tempted even by inadequate offers, because they may lose the right to
attorney’s fees if the judgment ultimately obtained was less than the offer rejected. Id. This
possibility, that court felt, would “cut[] against the grain of section 1988.” Id. at 479.
97 Marek, 473 U.S. at 5.
98 Id. (citing FED. R. CIV. P. 68 advisory committee’s note (1946)).
99 Id.
100 Id. at 5-7. Although the Court concluded that the offer was valid, a lengthy analysis of
what constitutes a valid offer under Rule 68 is omitted as that subject is beyond the scope this
Note. In Marek, the defendants made a lump-sum offer which was inclusive of costs then
accrued and attorney’s fees. Thus, the Court was asked to determine whether a Rule 68 offer
must be itemized in order to be valid. The Court concluded:
We do not read Rule 68 to require that a defendant’s offer itemize the respective
amounts being tendered for settlement of the underlying substantive claim and for
costs. . . . This construction of the Rule best furthers the objective of the Rule, which
is to encourage settlements. If defendants are not allowed to make lump-sum offers
that would, if accepted, represent their total liability, they would understandably be
reluctant to make settlement offers.
Id. at 6-8.
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The second issue the Court addressed was whether the term
“costs,” in a Rule 68 context, included attorney’s fees awardable under
42 U.S.C. § 1988.101 The Court began by noting that, at the time the
Federal Rules of Civil Procedure were enacted, 1938, the awarding of
costs to prevailing parties had been prevalent in the federal statutes for
over eighty-five years.102 Attorney’s fees, however, were a different
story. The Court highlighted the fact that, unlike in England, the
“American Rule” typically held that “costs” did not include attorney’s
fees, and thus each party was to bear its own fees.103 In fact, many
opponents of subjecting attorney’s fees to Rule 68 argue that their
inclusion would eviscerate the American Rule altogether.104 The Court
refuted this notion by pointing out that any statute that awards
attorney’s fees as part of costs, thus making an award of such fees
possible under Rule 68, already operates outside of the American
Rule.105 Justice Brennan listed over sixty such statutes in his dissent.106
101
102
103
104
Id. at 7. For an explanation of 42 U.S.C. § 1988, see supra note 83.
Marek, 473 U.S. at 8.
Id.
For an analysis of the benefits and detriments of the American and English Rules, see
Janice Toran, Settlement, Sanctions, and Attorney Fees: Comparing English Payment into Court
and Proposed Rule 68, 35 AM. U. L. REV. 301 (1986).
105 See infra note 106.
106 See Marek, 473 U.S. at 44-48 (Brennan, J., dissenting) (Appendices A-C); see, e.g., 5
U.S.C. § 552(a)(4)(E) (2000) (“The court may assess . . . reasonable attorney fees and other
litigation costs reasonably incurred in any case under this section in which the complainant has
substantially prevailed.”); id. § 552a(g)(2)(B) (“The court may assess . . . reasonable attorney fees
and other litigation costs reasonably incurred in any case under this paragraph in which the
complainant has substantially prevailed.”); id. § 552b(h)(2)(i) (“The court may assess against any
party reasonable attorney fees and other litigation costs reasonably incurred by any other party
who substantially prevails in any action brought in accordance with the provisions of subsection
(g) or (h) of this section, except that costs may be assessed against the plaintiff only where the
court finds that the suit was initiated by the plaintiff primarily for frivolous or dilatory
purposes.”); 7 U.S.C. § 18(d) (2000) (“If the petitioner finally prevails, he shall be allowed a
reasonable attorney’s fee, to be taxed and collected as a part of the costs of the suit.”); 15 U.S.C.
§ 77k(e) (2000) (“In any suit under this or any other section of this subchapter . . . the court may,
in its discretion, require an undertaking for the payment of the costs of such suit, including
reasonable attorney’s fees, and if judgment shall be rendered against a party litigant, upon the
motion of the other party litigant, such costs may be assessed in favor of such party litigant
(whether or not such undertaking has been required) if the court believes the suit or the defense to
have been without merit, in an amount sufficient to reimburse him for the reasonable expenses
incurred by him, in connection with such suit, such costs to be taxed in the manner usually
provided for taxing of costs in the court in which the suit was heard.”); 17 U.S.C. § 505 (2000)
(“In any civil action under this title, the court in its discretion may allow the recovery of full costs
by or against any party other than the United States or an officer thereof. Except as otherwise
provided by this title, the court may also award a reasonable attorney’s fee to the prevailing party
as part of the costs.”); 18 U.S.C. § 1964(c) (2000) (“Any person injured in his business or
property by reason of a violation of section 1962 of this chapter may sue therefor in any
appropriate United States district court and shall recover threefold the damages he sustains and
the cost of the suit, including a reasonable attorney’s fee . . . .”). Some statutes allow for the
awarding of attorney’s fees, which are not defined as part of costs, while other statutes
specifically note that attorney’s fees are to be included in the calculation of costs. Compare 15
U.S.C. § 1117 (2000) (“[T]he plaintiff shall be entitled . . . to recover . . . the costs of the action.
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Although the drafters of Rule 68 did not define the term “costs”
specifically, and although there is no delineation of costs in the history
of the rule, the Court found it persuasive that the rule was drafted within
the context of multiple statutes defining attorney’s fees as part of
costs.107 Thus, the Court felt that, because costs are so important in
Rule 68, “it is very unlikely that this omission was mere oversight.”108
At this point, the Court offered the most relevant, and most
disputed, language in its opinion. The Court stated:
[T]he most reasonable inference is that the term “costs” in Rule 68
was intended to refer to all costs properly awardable under the
relevant substantive statute or other authority. In other words, all
costs properly awardable in an action are to be considered within the
scope of Rule 68 “costs.” Thus, absent congressional expressions to
the contrary, where the underlying statute defines “costs” to include
attorney’s fees,109 we are satisfied such fees are to be included as
costs for the purposes of Rule 68.110
Therefore, the Court held that the defendants were not liable for
the plaintiff’s post-offer costs or fees, since the plaintiff refused an offer
more generous than the ultimate verdict.111 Still, many district courts
have not subjected attorney’s fees to Rule 68’s cost-shifting provisions,
even when they were expressly defined as costs in the underlying
substantive statute.112
Marek also stated that Rule 68’s policy of encouraging settlements
favors neither plaintiffs nor defendants.113 The rule merely encourages
settlement of all lawsuits for the purposes of clearing the dockets and
allowing true access to the courts.114 Also, the Court felt that Rule 68
resolutions serve the interests of plaintiffs as well as defendants, as
plaintiffs who prevail at trial could have received compensation at an
earlier date without the burdens, stress, and time of litigation.115 On the
The court in exceptional cases may award reasonable attorney fees to the prevailing party.”), with
30 U.S.C. § 815(c)(3) (2000) (“Whenever an order is issued sustaining the complainant’s charges
under this subsection, a sum equal to the aggregate amount of all costs and expenses (including
attorney’s fees) as determined by the Commission to have been reasonably incurred . . . in
connection with[] the institution and prosecution of such proceedings shall be assessed against the
person committing such violation.”).
107 Marek, 473 U.S. at 8-9.
108 Id. at 9.
109 It should be noted that the language as to attorney’s fees in § 1988 is the same language as
in the Copyright Act of 1976 or Rule 54(d), in that both allow for an award of attorney’s fees to
the prevailing party. For a more detailed discussion on the relevance of this language, see infra
Parts II B-E.
110 Marek, 473 U.S. at 9 (emphasis added).
111 Id. at 12.
112 See infra Parts II B-C.
113 Marek, 473 U.S. at 10.
114 Id.
115 Id.
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other hand, application of Rule 68 requires plaintiffs to “think very hard
about whether continued litigation is worthwhile.”116
Another reason that a plaintiff’s attorney should not recover postoffer fees when the rejected settlement offer exceeds the ultimate
recovery is because, according to the Court, the plaintiff’s attorney has
not added any monetary value post-offer.117 This case provided a
perfect example. The plaintiff expended $139,692 in post-offer
attorney’s fees only to recover $8,000 less than the defendant’s offer.118
Still, even with this example and the logic and language expounded by
the Court, the circuits have split over the issue of whether attorney’s
fees can be subject to Rule 68’s cost-shifting provisions.119
B.
Circuits That Disallow the Shifting of Attorney’s
Fees Under Rule 68:
1.
First Circuit
The First Circuit, in Crossman v. Marcoccio,120 faced a novel
question:121 Can a defendant/Rule 68 offeror recover post-offer
attorney’s fees from a rejecting offeree who prevailed, but to a lesser
extent than the offer? The district court had granted the offeror in this
action post-offer attorney’s fees.122 Subsequently, the First Circuit
reversed.123
The plaintiffs in this case initiated a civil rights action pursuant to
42 U.S.C. § 1983 against the Providence Police Department, the Chief
of Police, and certain officers alleging false arrest, false imprisonment,
and malicious prosecution.124 The defendants answered the complaint
and at the same time, pursuant to Rule 68, filed an offer of judgment
116
117
118
119
Id. at 11.
Id.
Id.
The district court in Marek had also refused to shift defendants’ post-offer costs and fees to
plaintiff. Oddly, defendants did not appeal that ruling. The only issue appealed was whether the
defendant had to pay plaintiff’s post-offer fees, not whether defendant’s fees shifted to plaintiff.
Because defendants did not appeal that ruling, the Court did not address that question. Thus, the
Court left a void where the circuits sought guidance. The end result was to leave the circuits split
on that issue. In the subsequent sections, this Note will analyze the seminal cases from the First
and Seventh Circuits, which hold that attorney’s fees are never subject to Rule 68’s cost-shifting
provisions, and the jurisprudence of the Eleventh and Fourth Circuits, which hold that attorney’s
fees are subject to Rule 68’s cost-shifting provisions.
120 806 F.2d 329 (1986).
121 Id. at 330.
122 See Crossman v. Marcoccio, 108 F.R.D. 433 (D.R.I. 1985).
123 Crossman, 806 F.2d at 330.
124 Id. at 330 & n.1.
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with the court in the amount of $26,000.125 The plaintiffs refused the
Rule 68 offer and elected to proceed to trial.126 Following a jury trial,
the court entered judgment in favor of the plaintiffs in an amount
totaling $5,010,127 $20,990 less than the defendant’s offer. The
defendants, prior to the judgment being entered, filed a bill of costs in
accordance with 28 U.S.C. § 1920 and Rule 68.128 The request asked
for $880.50 in post-offer taxable costs and $10,902.50 in post-offer
attorney’s fees.129 In accordance with Marek and Rule 68, the district
court awarded those costs and attorney’s fees.130
The First Circuit affirmed the award of costs, but reversed the
award of attorney’s fees.131 As to costs, the First Circuit engaged in an
analysis of the interaction between Rules 54(d)132 and 68. It found that
Rule 54(d) allows for an award of costs, as a matter of course, to the
prevailing party, unless otherwise specified in a statute of the United
States, or unless the court directs otherwise.133 The issue for the court
was whether Rule 68 operated to simply nullify the prevailing party’s
right to post-offer costs, or whether Rule 68 required a shifting of the
non-prevailing offeror’s post-offer costs to the plaintiff.134 Here, the
court relied on the plain language of Rule 68 to determine that the
rejecting offeree must pay the offeror’s post-offer costs.135 The court
noted that Rule 68 states that the “the offeree must pay the costs
incurred after the making of an offer.”136 The “must pay” language,
according to the First Circuit, did not suggest a mere cancellation of a
prevailing plaintiff’s right to cost recovery, but instead suggested that an
125
126
Id. at 330.
Id. At a later date, the plaintiffs limited their complaint to the officers. Thus, when the
Crossmans proceeded to trial, the five individual officers, appellees in the case at issue, were the
only defendants. Id.
127 Id.
128 Id. at 331.
129 Id. It should be noted that the attorney’s fees requested by the defendants were almost
1250 percent of the amount of the other costs requested. In fact, the fees represented
approximately 92.5 percent of the post-offer fees requested by the defendants. Thus, it is clear
that the true disincentive for refusing a generous offer of judgment is the prospect of being liable
for post-offer attorney’s fees.
130 Id. at 330.
131 Id.
132 See id. at 331 n.2 (“Rule 54(d) provides that ‘except when express provision therefor is
made either in a statute of the United States or in these rules, costs shall be allowed as of course
to the prevailing party unless the court otherwise directs . . . .’”) (emphasis added).
133 FED. R. CIV. P. 54(d).
134 Crossman, 806 F.2d at 331:
Opinions differ sharply on the issue of whether Rule 68 compels plaintiffs to pay
defendant’s post-offer costs or simply operates to deny prevailing plaintiffs recovery of
their own post-offer costs. Because Fed. R. Civ. P. 54(d) generally permits prevailing
parties to recover their costs, the question becomes whether Rule 68 reverses the
operation of Rule 54(d), or merely cancels it.
135 Id. at 331-33.
136 Id. at 331 (quoting FED. R. CIV. P. 68).
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affirmative action was necessary on the part of the offeree to pay the
offeror’s post-offer costs.137 The court felt that had the drafters intended
to simply deny a prevailing plaintiff’s right to costs, they would have
utilized more passive language, such as “the offeree ‘shall bear its own
costs.’”138
The First Circuit went on to state that any other interpretation of
the rule would be contrary to its stated purposes.139 The underlying
purpose of the rule, according to this court, was to “encourage
settlement of disputes and avoid protracted litigation.”140 The court
stated:
[T]he rule is intended to prompt both parties “to evaluate the risks
and costs of litigation, and to balance them against the likelihood of
success upon trial on the merits.” If we were to interpret Rule 68
merely to deny plaintiffs their own post-offer costs, then there would
be significantly less incentive for both sides to undertake a prudent
assessment of the “risks and costs” of litigation.141
Accordingly, the court stated that a reading of the rule which
required the payment of a defendant’s post-offer costs by plaintiffs who
miscalculated the outcome of the case enhanced both a defendant’s
incentive to make Rule 68 offers and a plaintiff’s incentive to accept
such offers.142 The court suggested that such a reading “‘puts teeth in
the rule.’”143 Finally, Crossman supported its conclusion by listing
almost every court and commentator who had read the rule similarly.144
Crossman, ironically, defied the exact logic it expounded as to
costs when it analyzed the issue of whether attorney’s fees should be
considered costs for the purposes of Rule 68. The court began its
analysis by noting that the Supreme Court in Marek held that a
prevailing plaintiff, who rejected a Rule 68 offer and prevailed, but to a
lesser extent than the offer, cannot recover his or her post-offer
attorney’s fees.145
The operative substantive statute regarding
attorney’s fees, here as in Marek, was 42 U.S.C. § 1988.146 That statute
allows a prevailing plaintiff in a civil rights action to recover “a
reasonable attorney’s fee as part of the costs.”147 In Marek, the Court
held that all costs “properly awardable under the relevant substantive
137
138
139
140
141
142
143
Id. at 331.
Id.
Id. at 332.
Id. (citing Marek v. Chesny, 473 U.S. 1, 5 (1985)).
Id. (quoting Marek, 473 U.S. at 5) (internal citations omitted).
Id.
Id. at 332 (quoting Staffend v. Lake Central Airlines, Inc, 47 F.R.D. 218, 219-20 (N.D.
Ohio 1969)).
144 Id. at 332 n.3.
145 Id. at 333.
146 See id.; 42 U.S.C. § 1988 (2000).
147 42 U.S.C. § 1988 (emphasis added).
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statute”148 are subject to Rule 68’s cost-shifting provisions. Marek,
however, was not faced with the question of whether the offeror’s postoffer attorney’s fees would shift to the rejecting offeree, as that question
was not raised on appeal.149 But, the Court did state that fees should be
subject to the rule’s cost-shifting provisions when § 1988 was the
underlying statute.150 Still, Crossman, even with the plain language of
Rule 68 and the clear enunciation by the Court, ultimately held that the
defendant’s attorney’s fees were not subject to Rule 68’s cost-shifting
provisions.151
2.
Seventh Circuit
In Harbor Motor Co., Inc. v. Arnell Chevrolet-Geo, Inc.,152 Harbor
Motor Co., Inc. (Harbor) brought suit against Arnell Chevrolet-Geo,
Inc. (Arnell) and Post-Tribune Publishing Co., Inc. (Post), claiming that
Arnell and Post had infringed its copyright153 in violation of 17 U.S.C.
§§ 412 and 501-505, and had interfered with its business advantage in
violation of state tort law.154
Prior to trial, Arnell extended an offer of judgment to Harbor in the
amount of $2,500, and Post tendered an offer of judgment in the amount
of $7,500. Harbor rejected both offers.155 Subsequently, Arnell and
Post extended a joint offer of judgment to Harbor in the amount of
$20,100. Again, Harbor rejected the offer, and the case proceeded to a
148
149
150
Id.
Marek v. Chesny, 473 U.S. 1, 9 (1985).
Id. at 4 n.1.
Id. at 9.
Since Congress expressly included attorney’s fees as “costs” available to a plaintiff in a
§ 1983 suit, such fees are subject to the cost-shifting provisions of Rule 68. This
“plain meaning” interpretation of the interplay between Rule 68 and § 1988 is the only
construction that gives meaning to each word in both Rule 68 and § 1988.
151 Crossman, 806 F.2d at 334 (“It follows from this that appellees’ attorney’s fees were not
‘properly awardable’ costs as defined by section 1988 and, therefore, were not part of the costs
shifted to plaintiff by the operation of Rule 68.”).
152 265 F.3d 638 (7th Cir. 2001).
153 Harbor and Arnell were competing automobile dealerships. Harbor had conducted tent
sales for years before the suit, and had run standardized advertising for those sales in the
newspaper. In June of 1997, Harbor conducted one such sale after having advertised in the Post.
The next month, Arnell conducted a similar tent sale at the same location. Arnell, prior to
conducting its tent sale, had asked the Post to duplicate Harbor’s advertisement, but to alter the
copy to indicate that the sale was Arnell’s. Upon discovery of the advertisement, Harbor
employees and Harbor’s advertising agency demanded that the newspaper discontinue use of the
advertisement. Subsequently, the newspaper complied with Harbor’s demand. When Harbor
conducted its next tent sale in July, however, it sold sixteen fewer cars than it had on average in
the past. Id. at 640-42.
154 Id. at 642.
155 Id.
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jury trial.156 At trial, the judge granted a judgment as a matter of law
stating that the infringement was not willful, and that Post should be
dismissed from the trial.157 Pursuant to that order, Post moved for and
was awarded $104,000 in costs and fees in accordance with the
Copyright Act, which allows for an award of attorney’s fees to the
prevailing party.158 Further, Arnell was awarded more than $71,000 in
costs and fees because the jury ultimately awarded $12,500 to Harbor,
an amount less than the $20,100 joint offer. Harbor’s request for costs
and fees as the prevailing party was denied.159
On appeal, the Seventh Circuit overturned the rulings of the trial
court as to liability and willfulness, reversing the awards of costs and
fees as well.160 Harbor argued that because Arnell was not a prevailing
party, and because the Copyright Act states specifically that attorney’s
fees are awardable to prevailing parties, Arnell could not have been
entitled to its attorney’s fees, even those incurred after the making of the
Rule 68 offer.161 The court agreed, but did not extensively discuss its
reasoning. Instead, the court simply stated that, as the First Circuit had
found in Crossman v. Marcoccio,162 attorney’s fees are only awardable
to the prevailing party when the underlying substantive statute so
prescribes.163 Further, the court stated that such a holding is consistent
with the language of Marek, in that such fees are not “properly
awardable”164 to a Rule 68 offeror when, as here, the offeror was not the
prevailing party. Thus, the court held that “a non-prevailing party
cannot, under the Copyright Act, receive post-offer attorney’s fees
pursuant to Rule 68.”165
156 Id. The offer provided that the joint offer was collective against both defendants and
Harbor could not seek the total amount from either defendant individually. Further, the offer was
stated to be a lump sum, inclusive of attorney’s fees and costs up until the date of the acceptance
of the offer, and that acceptance would preclude Harbor from seeking any other fees. Id.
157 Id.
158 17 U.S.C. § 505 (2000); see infra note 180 and accompanying text.
159 Harbor, 265 F.3d at 643.
160 Id. at 645.
161 Id.; see 17 U.S.C. § 505 (“[T]he court may also award a reasonable attorney’s fee to the
prevailing party as part of the costs.”) (emphasis added).
162 806 F.2d 329 (1st Cir. 1986).
163 Harbor, 265 F.3d at 646-47.
164 Marek v. Chesny, 473 U.S. 1, 9 (1985).
165 Harbor, 265 F.3d at 647. Additionally, the court held that because the offer was an unapportioned joint offer, the $20,100 offer was not the benchmark against which Harbor’s ultimate
judgment should be compared for Rule 68 purposes. Id. at 647. The court stated that because
plaintiffs face such serious consequences in determining whether or not to accept a Rule 68 offer
of judgment, any ambiguity should be construed against the drafter of the offer. Id. at 647-48.
Here, because there was no precise apportionment of the joint offer, the court held that the
$20,100 offer could not trigger the fee-shifting provisions of Rule 68. Id. at 648.
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Circuits That Allow a Shifting of Attorney’s Fees Under Rule 68
1.
Eleventh Circuit
In Jordan v. Time, Inc.,166 the Eleventh Circuit broke ranks with
the First and Seventh circuits by holding that a non-prevailing offeror,
who made an offer more generous than the ultimate judgment, could
recover post-offer attorney’s fees pursuant to Rule 68 and Marek.167 In
Jordan, the plaintiff (Jordan) filed a copyright infringement action
against Time, Inc. (Time) for reprinting an article authored by the
plaintiff without prior permission.168 After Jordan filed his complaint,
Time, pursuant to Rule 68, extended an offer of judgment to Jordan in
the amount of $15,000.169 Jordan rejected that offer.170 Subsequently,
Time increased its offer of judgment to $20,000.171 Again, Jordan
rejected the offer.172 Once the offers were rejected, Time admitted
liability for the infringement.173 Thus, the district court only held a trial
as to damages.174 At trial, the jury returned a verdict in Jordan’s favor
in the amount of $5,000 in actual damages, but denied Jordan a portion
of Time’s profits and Jordan’s claim that the infringement was
willful.175 After the verdict, but before the judgment was entered,
Jordan elected to recover statutory damages176 pursuant to 17 U.S.C. §
504(c)(1).177 Due to this election, the district court awarded Jordan
$5,500 in total.178
Both sides filed motions for attorney’s fees and costs after the
judgment was entered.179 Jordan argued that under 17 U.S.C. § 505,180
166
167
168
169
170
171
172
173
174
175
176
177
111 F.3d 102 (11th Cir. 1997).
Id. at 105.
Id. at 103.
Id. at 104.
Id.
Id.
Id.
Id.
Id.
Id.
Id.
17 U.S.C. § 504 (2000):
(c) Statutory Damages.
(1) Except as provided by clause (2) of this subsection, the copyright owner may elect,
at any time before final judgment is rendered, to recover, instead of actual damages and
profits, an award of statutory damages for all infringements involved in the action, with
respect to any one work, for which any one infringer is liable individually, or for which
any two or more infringers are liable jointly and severally, in a sum of not less than
$750 or more than $30,000 as the court considers just. For the purposes of this
subsection, all the parts of a compilation or derivative work constitute one work.
178 Jordan, 111 F.3d at 104.
179 Id.
180 17 U.S.C. § 505 (2000).
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he was entitled to his attorney’s fees and costs as the “prevailing
party.”181 Time, on the other hand, argued that because Jordan did not
obtain a judgment more favorable than its Rule 68 offer, Jordan must
pay its post-offer fees and costs pursuant to the Rule.182 In an exercise
of its power of equitable discretion, the district court denied both
motions.183 Time appealed based on its argument that Rule 68
“mandates a district court to award attorneys’ fees and costs”184 if the
judgment ultimately obtained by the offeree is not more favorable than
the Rule 68 offer.185 Thus, Time took the position that the district court
erred when it exercised its power of equitable discretion to deny Time’s
motion for post-offer fees and costs.186
The Eleventh Circuit reversed and found for Time.187 The court
believed that the mandatory language of the rule left the district court
without discretion. The court stated that when a Rule 68 offer is made
and all requirements of the rule are met, a district court must award
costs measured from the time the offer was served.188 Further, the court
held that costs, in this case, included attorney’s fees because “[u]nder
Marek v. Chesny . . . Rule 68 ‘costs’ include attorneys’ fees when the
underlying statute so prescribes. The Copyright Act so specifies.”189
Therefore, the Eleventh Circuit awarded Time both post-offer costs and
post-offer attorney’s fees.190
2.
Fourth Circuit
In Tri-Star Management Group, Ltd. v. Samson191 the Fourth
Circuit applied reasoning similar to the Eleventh Circuit in remanding a
case where the defendant/offeror was not permitted by the district court
to recover post-offer attorney’s fees pursuant to Rule 68. In that case,
In any civil action under this title, the court in its discretion may allow the recovery of
full costs by or against any party other than the United States or an officer thereof.
Except as otherwise provided by this title, the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs.
Id. (emphasis added).
181 Jordan, 111 F.3d at 104.
182 Id.; see also FED. R. CIV. P. 68 (“If the judgment finally obtained by the offeree is not more
favorable than the offer, the offeree must pay the costs incurred after the making of the offer.”).
183 Jordan, 111 F.3d at 104.
184 Id.
185 Id.
186 Id.
187 Id. at 105.
188 Id. (emphasis added).
189 Id. (citations omitted).
190 Id.
191 No. 92-1247, 1993 U.S. App. LEXIS 27401, at *1 (4th Cir. Oct. 20 1993) (unpublished
opinion).
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as in Jordan, the underlying substantive statute defined attorney’s fees
as part of costs.. Although the Tri-Star Management was an
unpublished opinion, a subsequent district court, in Lucas v. Wild Dunes
Real Estate, Inc.,192 held that attorney’s fees may be subject to the rule’s
cost-shifting provisions even when the statute states that attorney’s fees
are only awardable to the prevailing party. In this case, like in
Jordan,193 the plaintiff had brought suit alleging copyright
infringement194 and both the plaintiff and the defendant had made
motions to recover costs.195
In Lucas, unlike in Jordan, the defendant initially proceeded to
argue for fees by claiming that he should be considered the prevailing
party.196 To support its claim to prevailing party status, the defendant
cited the ubiquitous Nimmer on Copyright, which stated that
“[p]articularly when the plaintiff recovers at trial appreciably less than
the defendant offered to settle the case prior to trial, even a defendant
technically held liable should be deemed the prevailing party.”197
Although the court did not so hold, the basis for that claim is notable.
In Shapiro, Berstein & Co. v. 4636 S. Vermont Ave., Inc.,198 cited by
Nimmer, the reason the defendant was found to be the prevailing party
in a similar situation was based on a local rule from the Southern
District of California. Local Rule 15(c) provides that if the defendant
makes an offer of judgment in an amount that is ultimately greater than
the amount won by the plaintiff at trial, then the defendant is the
prevailing party.199 The Lucas court, however, declined to adopt the
192
193
194
195
Lucas v. Wild Dunes Real Estate, Inc., 197 F.R.D. 172, 176 (D.S.C. 2000).
111 F.3d 102 (11th Cir. 1997).
Lucas, 197 F.R.D. at 173.
Plaintiff filed a motion for costs pursuant to Rule 54(d) and defendant’s motion was filed
pursuant to Rule 68 and 17 U.S.C. § 505. Id. This court also noted that “the court may award a
reasonable attorney’s fee to the prevailing party as part of the costs” under the Copyright Act. Id.
(citing 17 U.S.C. § 505 (2000)).
196 Id. at 173.
197 MELVILLE B. NIMMER, NIMMER ON COPYRIGHT § 14.10[B], at 14-139 (1998) (citing
Warner Bros. Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1126 (2d Cir. 1989); Shapiro,
Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236, 243 (9th Cir. 1966); Florentine Art
Studio, Inc. v. Vedet K. Corp., 891 F. Supp. 532, 541 (C.D. Cal. 1995); Screenlife Establishment
v. Tower Video, Inc., 868 F. Supp. 47, 50 (S.D.N.Y. 1994); Warner Bros., Inc. v. Dae Rim
Trading, Inc., 695 F. Supp. 100 (S.D.N.Y. 1988); Warner Bros., Inc. v. Dae Rim Trading, Inc.,
677 F. Supp. 740, 771-73 (S.D.N.Y. 1988); Quinto v. Legal Times of Wash., Inc., 511 F. Supp.
579, 582 (D.C. 1981); Shapiro, Bernstein & Co. v. Bleeker, 243 F. Supp. 999, 1001 (S.D. Cal.
1965)).
198 Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236 (9th Cir. 1966).
199 Id. at 243:
The prevailing party need not recover his entire claim in order to recover costs. If each
side recovers in part, ordinarily the party recovering the larger sum will be considered
the prevailing party. The defendant is the prevailing party upon a dismissal or
summary judgment or other termination of the case without judgment for the plaintiff
on the merits. If the defendant offers a judgment in a certain sum which is rejected by
the plaintiff, and the case thereafter, goes to trial with the resulting recovery of only
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broad rule that “courts should consider a defendant who loses the only
copyright claim actually litigated to trial as the prevailing party because
the plaintiff recovered less than the defendant’s Offer of Judgment,”200
because the cases cited by Nimmer were inapposite to Lucas.
The Lucas court, though not willing to adopt the broader rule, still
held that a successful Rule 68 offeror is entitled to post-offer attorney’s
fees.201 The court reasoned that the language in Marek allowed for an
awarding of post-offer fees to a non-prevailing defendant, even when
the underlying statute states that fees are awardable to the prevailing
party.202 In order to justify this rationale, the court again relied on
Nimmer,203 who explained that such an award has been held to be
mandatory. Ultimately, the court was most persuaded by the notion that
resolving the tension between the language of the Copyright Act and the
language of Rule 68 in favor of shifting fees would best effectuate the
purposes of the rule.204 Also, the court preferred allowing fees under
Rule 68, over holding the defendant to be the prevailing party outright,
because using the Rule 68 regime would still permit the plaintiff to
recover his pre-offer costs and fees pursuant to rules 54(d) for costs and
17 U.S.C. § 505 for fees.205
the amount previously offered by the defendant, or less, then the defendant is the
prevailing party. No costs shall be allowed to either party if the Court is unable to
clearly determine the prevailing party.
Id. (quoting U.S. Dist. Ct. S.D. Cal. Local R. 15 (c)) (emphasis added). Notably, the Ninth
Circuit, in Champion Produce v. Ruby Robinson Co., 342 F.3d 1016 (9th Cir. 2003), just joined
with the First Circuit in holding that a defendant may never recover post-offer attorney’s fees in a
Rule 68 situation. The irony is that the Ninth Circuit will not allow the recovery of post-offer
fees under the Copyright Act, in a Rule 68 scenario, because the defendant is not the prevailing
party. Under Rule 15(c), however, a defendant in the exact same situation is not only entitled to
the recovery of post-offer fees, but is considered the prevailing party. This logic is paradoxical.
200 Lucas, 197 F.R.D. at 175.
201 Id.
202 Id.
203 “When the plaintiff recovers less than the defendant’s formal offer of judgment under Rule
68 of the Federal Rules of Civil Procedure, it has been held that the award to defendant of its fees
incurred after that offer is mandatory.” Id. at 176 (citing MELVILLE B. NIMMER, NIMMER ON
COPYRIGHT § 14.10[B], at 14-139, 14-140 (1998) (citing Jordan v. Time, Inc., 111 F.3d 102, 105
(11th Cir. 1997))).
204 Lucas, 197 F.R.D. at 176. Still, the court did note that such a holding produces an
anomalous result, in that an award of fees to a prevailing plaintiff under 17 U.S.C. § 505 is
discretionary, whereas in a Rule 68 situation, like the one in the case at bar, the award of postoffer fees to the defendant/offeror will now become automatic. Id. at 177.
205 Id. at 177 n.1.
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D.
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Why the Logic Disallowing the Shifting of
Attorney’s Fees is Erroneous
Some courts hold that attorney’s fees are never allowed to shift
under Rule 68. Those courts, however, reached their conclusions based
on erroneous or inconsistent logic. For instance, Crossman reasoned
that “[a]lthough [plaintiffs’] attorney’s fees were ‘properly awardable’
costs under section 1988, [defendants’] attorney’s fees were not.”206
The basis for that finding was that the underlying statute awarded fees
only to the “prevailing party.”207 This is ironic because Crossman held
that all other costs were “properly awardable” to a successful Rule 68
offeror.208 The statute that governed the awarding of those other costs
was Rule 54(d).209 The non-sequitur here is that Rule 54(d) is a statute
that allows for the awarding of costs to the “prevailing party,”210 just
like the underlying substantive statute at issue in the case. The only
rationale that the Crossman court offered for this inconsistency was that
section 1988 provides that, “a civil rights defendant may not be awarded
attorney’s fees under section 1988 unless the trial court determines that
the plaintiff’s action was ‘frivolous, unreasonable, or without
foundation.’”211
The problem with the Crossman logic, and the logic of courts that
have held similarly, is that we are not dealing with a typical civil rights
defendant. We are dealing with a civil rights defendant who has made a
successful Rule 68 offer. In such a circumstance, according to the plain
language of Marek212 and the plain language of Rule 68,213 the
defendant’s post-offer attorney’s fees must be shifted to the offerrejecting plaintiff.214 Otherwise, as the Crossman court itself said about
206
207
208
209
210
Crossman v. Marcoccio, 806 F.2d 329, 334 (1st Cir. 1986).
Id.
Crossman, 806 F.2d at 333.
Id. at 331.
Id. at 331 n.2 (“Rule 54(d) provides that ‘except when express provision therefor is made
either in a statute of the United States or in these rules, costs shall be allowed as of course to the
prevailing party unless the court otherwise directs . . . .’”) (quoting FED. R. CIV. P. 54(d))
(emphasis added).
211 Id. at 334 (quoting 42 U.S.C. § 1988 (2000)).
212 See Marek v. Chesny, 473 U.S. 1, 9 (1985).
Since Congress expressly included attorney’s fees as “costs” available to a plaintiff in a
§ 1988 suit, such fees are subject to the cost-shifting provision of Rule 68. This “plain
meaning” interpretation of the interplay between Rule 68 and § 1988 is the only
construction that gives meaning to each word in both Rule 68 and § 1988.
Id.
213 “If the judgment finally obtained by the offeree is not more favorable than the offer, the
offeree must pay the costs incurred after the making of the offer.” FED. R. CIV. P. 68 (emphasis
added).
214 This is not to suggest that § 1983 plaintiffs should currently be subjected to Rule 68’s costshifting provisions, as that would be impermissible following the Civil Rights Act of 1991.
However, this logic holds true for all other statutes that are similarly phrased. In other words,
2006]
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costs, there “would be significantly less incentive for both sides to
undertake a prudent assessment of the ‘risks and costs’ of litigation.”215
If the Crossman logic is allowed to stand, Rule 68 will be stripped
of its operative force altogether.216 After all, a successful Rule 68
offeror will never be the prevailing party, and thus will never be entitled
to post-offer attorney’s fees under the Crossman regime. Rule 68 only
begins to operate when an offer is made, rejected, and then the plaintiff
prevails, but to a lesser extent than the offer.217 If the defendant
prevails outright, then the defendant’s costs will be awardable directly
from Rule 54(d),218 and attorney’s fees will be directly awardable under
any underlying substantive statute that awards fees to the prevailing
party.
The Seventh Circuit, when adopting the First Circuit’s logic as to
fees, based its holding on the Crossman court’s reasoning. The
additional problem with Harbor’s approach is that it expounded the
logic set forth in Marek, only to defy that exact logic. The Seventh
Circuit stated that the Supreme Court held in Marek that attorney’s fees
are susceptible to Rule 68’s cost-shifting provisions when the
underlying substantive statute defines attorney’s fees as part of costs.219
Harbor did not contest the fact that section 505 of the Copyright Act
defined attorney’s fees as part of costs.220 Harbor’s issue was that the
language of section 505 dictates that attorney’s fees are awardable only
to the prevailing party.221 Since the defendant in Harbor was not the
prevailing party, the Harbor court did not feel that the defendant could
receive post-offer attorney’s fees.222 According to the court, only
prevailing parties are entitled to attorney’s fees under the Copyright
Act, not successful Rule 68 offerors.223
Harbor’s holding, however, is not consistent with the language of
Marek. In Marek, the underlying substantive statute relating to
attorney’s fees was 42 U.S.C. § 1988, which, like the Copyright Act at
issue in Harbor, only awards fees to prevailing parties. But, the
whenever the underlying substantive statutes define attorney’s fees as part of costs, those fees
should be subject to the Rule’s cost-shifting provisions absent congressional expression to the
contrary.
215 Crossman, 806 F.2d at 332.
216 If attorney’s fees are never subject to Rule 68’s cost-shifting provisions, defendants will
have significantly less incentive to make a formal Rule 68 offer. See MOORE ET AL., supra note
26, § 6802 (“[I]n some cases, defendants do not bother to make formal offers . . . [as] the costs
that they might recover simply do not make it worth their effort.”).
217 See supra note 41.
218 FED. R. CIV. P. 54(d).
219 Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638, 645 (7th Cir. 2001).
220 Id.
221 Id. at 646.
222 Id.
223 Id. at 647.
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Supreme Court dictated that such fees are susceptible to Rule 68’s costshifting provisions. The Court stated:
Since Congress expressly included attorney’s fees as “costs”
available to a plaintiff in a § 1983 suit, such fees are subject to the
cost-shifting provisions of Rule 68.
This “plain meaning”
interpretation of the interplay between Rule 68 and § 1988 is the
only construction that gives meaning to each word in both Rule 68
and § 1988.224
According to this language, attorney’s fees under section 505
should be susceptible to the Rule’s cost-shifting provisions. Therefore,
when the Seventh Circuit claimed that its holding—that attorney’s fees
were not “properly awardable”225 to Rule 68 offerors under section
505—was consistent with the language of Marek,226 it was mistaken.
Ultimately, in order to properly reconcile the language of the rule with
the language of Marek, the holdings of Harbor, Jordan, and all other
like holdings must be reversed upon the next application for fees by a
successful Rule 68 offeror.
E.
Allowing Attorney’s Fees to Shift Under Rule 68 is Consistent with
Marek and the Rule
Allowing attorney’s fees to shift under Rule 68 is supported by a
clear reading of the rule227 and the language of Marek.228 In Marek, the
Court held that attorney’s fees under section 1988 are subject to the
rule’s cost-shifting provisions.229 The reasoning the Court offered was
that Congress had included attorney’s fees as part of costs awardable
under 42 U.S.C. § 1988.230 In other words, when attorney’s fees are
defined as part of costs in the underlying substantive statute, they are
properly awardable costs which can be shifted pursuant to the rule.231
In Jordan, the underlying substantive statute was 17 U.S.C. § 505.
That statute defines fees as part of costs awardable to the prevailing
party, as does section 1988, the statute at issue in Marek. Therefore, the
language offered by Marek, which stated that the plain meaning
interpretation of the interaction between Rule 68 and section 1988 was
224
225
226
227
Marek v. Chesny, 473 U.S. 1, 9 (1985).
See id. at 6-8.
Harbor, 265 F.3d at 646-47.
“If the judgment finally obtained by the offeree is not more favorable than the offer, the
offeree must pay the costs incurred after the making of the offer.” FED. R. CIV. P. 68.
228 “[W]here the underlying statute defines ‘costs’ to include attorney’s fees, we are satisfied
such fees are to be included as costs for purposes of Rule 68.” Marek, 473 U.S. at 9.
229 Marek, 473 U.S. at 9.
230 Id.
231 Id.
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the only construction that gave effect to every word in both rules,232 is
apposite here. Thus, a construction allowing post-offer attorney’s fees
to shift when section 505 is the underlying substantive statute would be
consistent with Marek and Rule 68. In other words, the Eleventh
Circuit’s holding in Jordan satisfies the requirements of both Rule 68
and Marek.
Jordan also provided the classic example of why Rule 68 is so
necessary. Had Jordan been prudent and truly evaluated the merits of
his case, and the generosity of Time’s offer, the case could have been
settled much earlier, freeing both the district court and the Eleventh
Circuit’s resources for more pressing matters. Significantly, Jordan
would have ended up better off as well.233 Therefore, not only is the
Jordan holding consistent with the language of both Marek and Rule
68, but it also furthers the purposes of the rule and aids in clearing the
dockets.
In Tri-Star Management, like Jordan, the Fourth Circuit, in an
unpublished opinion, allowed fees to shift,234 provided that the
underlying substantive statute defined attorney’s fees as part of
awardable costs.235 There, the relevant underlying substantive statute
was 18 U.S.C. § 1964(c),236 which allows attorney’s fees as awardable
costs.237 Therefore, in accordance with the language of Marek and Rule
68, the Fourth Circuit held such fees to be subject to Rule 68’s costshifting provisions.238
In Lucas, a subsequent district court decision from the Fourth
Circuit, the court in reaching its conclusion noted that Jordan did not
provide much explanation for its holding.239 Lucas, like Jordan,
however, felt that resolving the tension between Rule 68 and the
prevailing party language of section 505 by allowing fees to shift was in
232
233
Id.
Time’s offer of judgment was in the amount of $20,000. Jordan v. Time, Inc., 111 F.3d
102, 104 (11th Cir. 1997). Jordan ultimately recovered $5,500 after trial. Id. at 3. Thus, Jordan
would have been better off if he had accepted Time’s offer of judgment. Further, Jordan could
have avoided the expenses incurred post-offer, as well as the time delays and other stresses
associated with litigation.
234 A successful offer of judgment is one which exceeds the ultimate judgment at trial, and
thus triggers Rule 68’s cost-shifting mechanisms. In other words, if the judgment finally obtained
by the offeree is not more favorable than the offer, the rule’s cost-shifting provisions will be
activated, thus making the offer successful.
235 Tri-Star Mgmt. Group, Ltd. v. Samson, No 92-1247, 1993 U.S. App. LEXIS 27401, at *1
(4th Cir. Oct. 20, 1993) (unpublished opinion).
236 Id. at *8-9.
237 See 18 U.S.C. § 1964(c) (2000).
238 Tri-Star Mgmt., 1993 U.S. App. LEXIS 27401 at *9 (applying the holding of Marek and
awarding attorney’s fees to defendant).
239 Lucas v. Wild Dunes Real Estate, Inc., 197 F.R.D. 172, 176 (D.S.C. 2000).
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harmony with the purposes of the rule.240 In reaching that conclusion,
Lucas cited Delta Airlines, Inc. v. August,241 which explained:
The purpose of Rule 68 is to encourage the settlement of litigation.
In all litigation, the adverse consequences of potential defeat provide
both parties with an incentive to settle in advance of trial. Rule 68
provides an additional inducement to settle in those cases in which
there is a strong probability that the plaintiff will obtain a judgment
but the amount of recovery is uncertain.242
In other words, the district court felt that the holding in Jordan and
its own holding in Lucas would encourage settlement.
Lucas was correct in its assessment that allowing post-offer
attorney’s fees to shift under Rule 68 would encourage settlement. As
noted above, attorney’s fees account for, on average, eighty percent of
the cost of litigation.243 The threat of a potential fee shift will,
accordingly, provide a much stronger incentive for a plaintiff to settle
when faced with a generous Rule 68 offer. Also, the potential to
recover post-offer fees provides an incentive for defendants to make
Rule 68 offers. After all, if attorney’s fees are not subject to the rule’s
cost-shifting provisions, the potential recovery of costs may not be
enough of an incentive for a defendant to make an offer of judgment.244
Thus, the holdings of this court and the Jordan court will better
effectuate the purposes of Rule 68 than the holdings in Crossman,
Harbor, and other like cases.
III. HOW MEDIATION AND DECLARATORY JUDGMENTS CAN FACILITATE
AND ENCOURAGE THE USE OF RULE 68
A.
Declaratory Judgments and Rule 68
One of the greatest criticisms of Rule 68 is that its operation is
vague and ambiguous.245 A defendant has little incentive to make a
Rule 68 offer if he is not aware of what benefit he may achieve by
making such an offer. Similarly, a plaintiff cannot adequately gauge
whether to accept a Rule 68 offer if he is unaware of how severely he
could be penalized if he does not accept. If, however, Rule 68 offerors
sought declaratory judgments as to which of their costs would shift if
240
241
242
243
244
Id.
450 U.S. 346 (1981).
Id. at 352.
See Shapard, supra note 46.
In the study conducted by the Federal Judicial Center, it was found that costs, other than
attorney’s fees, accounted, on average, for less than twenty percent of the total cost of litigation.
See id.
245 For a discussion of this criticism, see generally Carmichael, supra note 80.
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their Rule 68 offer was successful, then this obstacle could be
overcome. Upon receiving the declaratory judgment, the plaintiff
would be armed with the necessary information to decide whether to
accept the offer, and the defendant would be in a position to know
whether making such an offer would be worthwhile.
Federal Rule of Civil Procedure 57246 governs how declaratory
judgments should be sought and rendered in the federal courts. For the
most part, the granting of relief under the Declaratory Judgment Act,247
28 U.S.C. §§ 2201, 2202, is discretionary.248 Further, under Rule 57,
the federal courts have relatively broad discretion in fashioning
declaratory relief, when such relief is appropriate.249
Declaratory judgment would be appropriate in a Rule 68 scenario
provided certain factors are present. In order for declaratory judgment
to be deemed appropriate there must be some controversy.250 The
likelihood of terminating that controversy is also a threshold question.251
246
FED. R. CIV. P. 57.
The procedure for obtaining a declaratory judgment pursuant to Title 28, U.S.C. §
2201, shall be in accordance with these rules, and the right to trial by jury may be
demanded under the circumstances and in the manner provided in Rules 38 and 39.
The existence of another adequate remedy does not preclude a judgment for
declaratory relief in cases where it is appropriate. The court may order a speedy
hearing of an action for a declaratory judgment and may advance it on the calendar.
Id.
247
28 U.S.C. §§ 2201 & 2202 (2000). Those sections provide:
Creation of remedy
(a) In a case of actual controversy within its jurisdiction, except with respect to Federal
taxes other than actions brought under section 7428 of the Internal Revenue Code of
1986 [26 U.S.C.S. § 7428], a proceeding under section 505 or 1146 of title 11, or in
any civil action involving an antidumping or countervailing duty proceeding regarding
a class or kind of merchandise of a free trade area country (as defined in section
516A(f)(10) of the Tariff Act of 1930 [19 U.S.C.S. § 1516a(f)(10)]), as determined by
the administering authority, any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal relations of any interested
party seeking such declaration, whether or not further relief is or could be sought. Any
such declaration shall have the force and effect of a final judgment or decree and shall
be reviewable as such.
(b) For limitations on actions brought with respect to drug patents see section 505 or
512 of the Federal Food, Drug, and Cosmetic Act [21 U.S.C.S. §§ 355 or 360(b)].
Id. § 2201.
Further Relief
Further necessary or proper relief based on a declaratory judgment or decree may be
granted, after reasonable notice and hearing, against any adverse party whose rights
have been determined by such judgment.
Id. § 2202.
248 See Delno v. Market St. Ry. Co., 124 F.2d 965 (9th Cir. 1942); Penn Elec. Switch Co. v.
U.S. Gauge Co., 129 F.2d 166 (7th Cir. 1942).
249 See Marchwinski v. Oliver Tyrone Corp., 461 F. Supp. 160 (W.D. Pa. 1978).
250 See, e.g., Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 261 F. Supp. 2d 293
(S.D.N.Y. 2003).
251 See Delno, 124 F.2d at 968-69 (stating that a trial court may deny the granting of
declaratory relief if it appears that it will not be effective in settling controversy); Gross v. Fox,
496 F.2d 1153, 1155 (3d Cir. 1974) (stating that determining whether declaratory judgment
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Thus, declaratory judgments in a Rule 68 context would only be
appropriate if there was controversy between the parties regarding
which costs would shift in the event the offer was successful. Also, if a
court feels that a more effective relief can be obtained through the use
of another procedure, then that court would be justified in refusing to
render a declaratory judgment.252 Fortunately, in a Rule 68 scenario
there is no other mechanism that could provide the necessary
information—which costs would shift—to the parties. Therefore, a
court would not be justified in refusing declaratory relief on that basis.
Provided that the above factors are met, a declaratory judgment
could prove to be an extremely useful mechanism for eliminating the
ambiguity surrounding the operation of Rule 68. As the Second Circuit
expressed, declaratory judgment is properly granted in order to clarify
legal relationships, or when it will afford relief from uncertainty and
controversy in a proceeding.253 By clarifying the extent to which a
plaintiff may be penalized for rejecting a generous Rule 68 offer, both
parties will be better off254 in that both will have the necessary
information to make prudent decisions. Determining the bounds of
what costs could shift prior to making a Rule 68 offer could also save
significant party and judicial resources by avoiding future disputes over
costs and fees. Further, judicial economy is one of the reasons that the
commentators have determined that the Declaratory Judgment Act
should be construed liberally.255 Thus, making a motion seeking
declaratory judgment as to what costs will shift could aid in
encouraging the use of Rule 68 and, in turn, could further stem the tide
of litigation currently facing the federal courts.256
B.
Mediation in a Rule 68 Setting
Another frequent criticism of Rule 68 is that, due to the
requirement that a plaintiff only has ten days to accept or reject the
offer, a plaintiff is put in the impossible position of having to weigh the
strength of her case, the likelihood that she will succeed to a greater
would terminate controversy is a significant factor in deciding whether such judgment was
appropriate); Root v. York Corp., 56 F. Supp. 288, 294 (D. Del. 1944) (stating that where
declaratory judgment would not end controversy, such judgment is inappropriate).
252 See Chicago Metallic Mfg. Co. v. Edward Katzinger Co., 123 F.2d 518 (7th Cir. 1941).
253 See Md. Cas. Co. v. Rosen, 445 F.2d 1012 (2d Cir. 1971).
254 The plaintiff will be making a better informed decision as to whether to accept or reject the
offer. The defendant will be in a better position to determine the utility of making such an offer.
255 See MOORE ET AL., supra note 26, § 57.03.
256 Such a motion would not be necessary, however, if the parties have independently
contracted with regards to what costs will shift. If they have, that contract will control the
operation of the rule. See 13 id. § 68.02.
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extent than the offer, and all of the other relevant factors in determining
whether to accept the offer, within a time period in which it is not
realistic to make such determinations.257 In order to remedy this
problem, many commentators, advisory committees, and bar
associations have recommended extending the acceptance period.258
Extending the acceptance period, however, would require legislative
activity. Fortunately, there is another method by which a Rule 68
offeree can garner the necessary information to adequately evaluate the
merits of accepting or rejecting the offer within the prescribed time
period—mediation.
One of the most lauded and most successful goals of mediation is
the accumulation of information by the parties and the mediator.259
Mediators spend countless hours training to develop the skills to
facilitate the exchange of information between parties, which may never
have been exchanged outside of a mediation scenario. Mediator
training, however, is not the only reason mediation has been so
successful in encouraging the free flow of information.
The
confidentiality of mediation sessions has also been key in the endeavor
to encourage information exchange.260 Because parties are presented
with an environment in which they can speak freely, without the
contents of their conversation coming back to haunt them in a judicial
257 For a discussion of this criticism, see Jay N. Varon, Promoting Settlement and Limiting
Litigation Costs By Means of the Offer of Judgment: Some Suggestions for Using and Revising
Rule 68, 33 AM. U. L. REV. 813, 846 n.284 (1984).
258 For a discussion of several proposals to amend Rule 68 to extend the acceptance period,
see Edward F. Sherman, A Process Model and Agenda for Civil Justice Reforms in the States, 46
STAN. L. REV. 1553 (1994).
259 For discussions of some of the more effective techniques for accumulating information in a
mediation from both the perspective of the mediator and the parties, see STULBERG, supra note
15, at 69-80; Lela P. Love, Training Mediators to Listen: Deconstructing Dialogue and
Constructing Understanding, Agendas, and Agreements, 38 FAM. & CONCILIATION CTS. REV. 27
(2000). In Love’s article, she demonstrates how mediators can encourage parties who were not
forthright with each other prior to attending mediation to become more open through the
employment of several techniques. Love begins by expressing the notion of the “heart of gold.”
Id. at 28. Under this concept, a skilled mediator can elicit key pieces of information from
confrontational dialogue. For instance, if the complainant claims that the respondent is a violent
lunatic, the complainant may be expressing an underlying interest in security. On the other side,
the respondent may have been making idle threats because he was upset about money owed, or
something similar. If the mediator can elicit those underlying interests, show the parties she
understands them, and help them understand each other, conflict may be resolved where it may
not have been otherwise due to a lack of communication between the parties. Another category
of information a mediator can elicit from confrontational dialogue is called “visions.” Visions, in
this context, are conceptions the parties may have of the ideal situation, relationship, or outcome.
In a Rule 68 context, parties may have unrealistic visions of their cases. Thus, a skilled mediator
may be able to aid in deconstructing the unrealistic aspects of each party’s image in order to allow
both parties to gain a better understanding of the true strengths and weaknesses of each other’s
cases. This process will allow both parties to better evaluate their future actions in regards to a
Rule 68 offer.
260 For a discussion of confidentiality in mediation and its effect on the parties, see STULBERG,
supra note 15, at 107-22, 161-63.
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setting, they may feel more willing to disclose information that they
otherwise would not have.261 In a Rule 68 scenario, where a plaintiff
has little time to weigh the factors informing her decision to accept or
reject a defendant’s offer of judgment, the accumulation of the
necessary information to make an informed decision within that brief
period is invaluable.262 Thus, mediation could be the tool that could
overcome the continuous criticism of Rule 68’s acceptance period.
Hence, a Rule 68 offeree should be able to demand mediation after
receiving a Rule 68 offer of judgment, and courts should compel Rule
68 offerors to comply with that demand.
Federal courts, especially after the Civil Justice Reform Act of
1990263 (CJRA) was passed, have considerable leeway to implement
methodologies by which the expense and delay of civil justice can be
reduced. Under 28 U.S.C. § 473(a)(6)(B),264 federal courts have broad
261 Id. For an exposition of some of the confidentiality issues in mediation, both in the states
and federally, see Simrin v. Simrin, 43 Cal. Rptr. 376 (Ct. App. 1965).
262 Several courts have recognized the ability of mediators to facilitate the flow of information
and to aid the parties in assessing the strengths and weaknesses of their cases. For example, the
Eastern District of New York recognizes that mediation can serve the express purpose of allowing
the parties to accumulate information in order to aid in settlement decisions. “The mediator
improves communication across party lines, helps parties articulate their interests and understand
those of the other party, probes the strengths and weaknesses of each party’s legal positions, and
identifies areas of agreement and helps generate options for a mutually agreeable resolution to the
dispute.” U.S. Dist. Ct. E.D.N.Y. Local R. 83.11 (2005).
263 Pub. L. No. 650, § 103, 104 Stat. 5089, 5090-97 (1996) (codified at 28 U.S.C. §§ 471-82).
The CJRA required each district court to file a plan to reduce the expense and delay of civil
justice. See Sherman, supra note 258, at 1553 n.1.
264 28 U.S.C. § 473 (2000). Content of civil justice expense and delay reduction plans
In formulating the provisions of its civil justice expense and delay reduction plan, each
United States district court, in consultation with an advisory group appointed under
section 478 of this title [28 USCS § 478], shall consider and may include the
following principles and guidelines of litigation management and cost and delay
reduction:
...
(6) authorization to refer appropriate cases to alternative dispute resolution programs
that—
...
(B) the court may make available, including mediation, minitrial, and summary jury
trial.
28 U.S.C. § 473(a), (a)(6). Section 473 must also be read in conjunction with Federal Rule of
Civil Procedure 16. Under that rule, a court may compel parties to attend mediation, provided
that mediation presents the possibility of early settlement. See FED. R. CIV. P. 16 (a)(1), (5),
(c)(9):
(a) Pretrial Conferences; Objectives. In any action, the court may in its discretion
direct the attorneys for the parties and any unrepresented parties to appear before it for
a conference or conferences before trial for such purposes as
(1) expediting the disposition of the action;
...
(5) facilitating the settlement of the case.
...
(c) Subjects for Consideration at Pretrial Conferences. At any conference under this
rule consideration may be given, and the court may take appropriate action, with
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discretion to compel parties in litigation to attend mediation in order to
achieve that goal.265 Thus, the federal courts have the power to compel
mediation in a Rule 68 scenario, provided that such an order could
reduce the expense or delay of litigation. Clearly, if the desired effects
of mediation were realized in a Rule 68 context, and the offeree was
able to make an informed Rule 68 decision, the delay and expense of
litigation would be greatly reduced.
Finally, compelling mediation is allowed because ordering a party
to participate in mediation does not affect that party’s right to a jury
trial. Under Federal Rule of Civil Procedure 38, a party’s Seventh
Amendment right to a jury trial is inviolable.266 Because a compelled
mediation would be non-binding in a Rule 68 scenario, such a
mediation would not violate Rule 38.267 Therefore, there would be no
legal impediment to court-ordered mediation in a Rule 68 scenario. In
fact, court-ordered mediation in a Rule 68 scenario should be
encouraged, as it would further the goals of the CJRA by facilitating the
use of the rule.
CONCLUSION
In order to stem the ever-rising tide of litigation in the Federal
Judiciary, the courts need to not only look to new mechanisms to serve
that end, but should also examine ways to strengthen the statutes, rules
and procedures already in existence. In particular, the courts should
examine ways to strengthen Rule 68. Allowing attorney’s fees to be
respect to
...
(9) settlement and the use of special procedures to assist in resolving the dispute
when authorized by statute or local rule.
265 Some mediation experts have commented, however, that compelled mediation is not as
effective as voluntary mediation because parties who have been compelled to mediate may not be
as forthright or may not participate as cooperatively as parties who have chosen the process for
themselves. However, there has been no statistical evidence to show that compelled mediations
are not as successful as those initiated by the parties voluntarily. For examples of local court
rules that have exercised the authority given to the courts to refer cases to mediation, see U.S. Ct.
of Appeals 10th Cir. Local R. 33.1 (stating that counsel must participate in every mediation
conference and related discussion); U.S. Dist. Ct. E.D.N.Y. Local R. 83.11(b)(1) (“Judges and
Magistrate Judges may designate civil cases for inclusion in the mediation program, and when
doing so shall prepare an order to that effect.”).
266 FED. R. CIV. P. 38 (Jury Trial of Right). Rule 38 reads: “(a) Right Preserved. The right of
trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of
the United States shall be preserved to the parties inviolate.” Id.
267 See, e.g., Rhea v. Massey-Ferguson, Inc., 767 F.2d 266 (6th Cir. 1985) (holding that a local
rule which provided that diversity cases only involving monetary damages could be referred to
mediation did not violate Federal Rule of Civil Procedure 38, because the imposition of an extra
step on the path towards a jury trial did not affect the rights of the parties to that trial to have their
case heard by a jury).
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subject to Rule 68’s cost-shifting provisions, when the underlying
substantive statute at issue defines attorney’s fees as costs, is one of the
primary means by which the rule could be strengthened. Allowing such
fees to shift under Rule 68 is consistent with both the language of the
rule itself and the language offered by the Supreme Court in Marek.
Further, adding attorney’s fees to the potential penalties faced by a
miscalculating plaintiff will give the proper incentive to defendants to
make Rule 68 offers of judgment, and to plaintiffs to seriously consider
such offers.
Also, by implementing the procedural mechanisms suggested
above, many of the criticisms of the rule could be overcome. Through
the use of declaratory judgment motions, defendants will be able to
determine whether it is worth their effort to make offers of judgment
and plaintiffs will be able to make better informed decisions as to
whether to accept such offers. By allowing Rule 68 offerees to demand
mediations after receiving offers of judgment, such offerees will be able
to garner the necessary information to make their decisions within the
prescribed time period for them to do so. Thus, this mechanism would
overcome the frequent criticism of the rule, that the acceptance period is
too transient.
Ultimately, by strengthening Rule 68, courts and litigants alike will
be able to avoid much vexatious and protracted litigation. Plaintiffs will
be less likely to continue litigation imprudently. Defendants will be
more likely to make generous offers, if such offers have the ability to
end litigation at an earlier point and thus save additional expenses. The
result of this equation will be a substantial thinning of the dockets, a
liberation of judicial resources, and a betterment of the judiciary on the
whole.