Separate award of costs permitted where unambiguous offer is silent
By: Jamison L. Barkley, Litigation News Contributing Editor
Defendants must be wary with Rule 68 offers of judgment. The court in La Pierre v. City of Lawrence, et al. awarded the plaintiff her attorney fees and costs in addition to an accepted and unambiguous Federal Rule of Civil Procedure 68 offer of judgment, though the offer was not what the defendant intended. La Pierre serves as an important reminder why practitioners should be meticulous in drafting Rule 68 offers.
The Rule 68 Offer of Judgment
In La Pierre, the plaintiff, sexually assaulted by a police officer, sued the officer, the police chief, and the city for civil rights violations under 42 U.S.C. § 1983. Section 1983 is a fee-shifting statute that, in conjunction with 42 U.S.C. § 1988, awards attorney fees to the prevailing party by including “attorney fees” in the statutory definition of “costs.”
After moving for summary judgment, but before trial, the city served a Rule 68 offer of judgment on the plaintiff on September 5, 2014. Rule 68 is a risk-shifting tool: where a plaintiff refuses the defendant’s offer, but later fails to obtain a judgment in a greater amount, the plaintiff is responsible for the defendant’s costs from the date of the offer forward. The city stated the offer was made pursuant to Rule 68, and that it was an offer for “judgment against the City of Lawrence and dismissal of all claims against any other Defendant in exchange for $300,000 payable over three (3) years.” The offer did not state whether it included plaintiff’s costs or attorney fees.
The next day, on September 6, 2015, the city withdrew its offer to plaintiff, via email. On September 7, 2014, the city emailed the plaintiff’s counsel stating it needed to clarify the original offer, and attached an “amended offer of judgment.” The “amended offer” contained the identical language as the original offer, but added the sentence: “This $300,000 figure also [sic] inclusive of any costs and fees incurred to date, including attorney fees.”
On September 9, 2014, the plaintiff advised she was accepting the original offer, and would move for an additional award of fees and costs. The plaintiff then filed the original offer, a notice of acceptance, and proof of service with the district court.
The city moved to strike the plaintiff’s notice of acceptance claiming there had not been a meeting of the minds as to whether the first offer included costs and fees. It submitted its purported withdrawal of the original offer and the amended offer as extrinsic evidence that the city intended the original offer to include the plaintiff’s fees and costs.
The district court agreed there had not been a meeting of the minds as to the Rule 68 offer of judgment, and granted summary judgment in the defendants’ favor.
No Extrinsic Evidence Admissible
On appeal, the U.S. Court of Appeals for the First Circuit vacated the defense judgment and remanded the case for entry of judgment in accordance with the defendant’s original Rule 68 offer. The court reasoned extrinsic evidence on the agreement is appropriate only where the offer is incomplete or ambiguous. Relying on the rule’s purpose of encouraging private settlement of disputes, the court determined the offer was neither incomplete nor ambiguous.
The LaPierre court examined the text of Rule 68, which states: “a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.” The court noted Rule 68 explicitly provides for an offeree to recover its costs. However, the drafters separated the “specified terms” clause from the “costs then accrued” clause. Further, Rule 68 did not specify whether the offering party was required to include costs as a term of the offer. Thus, the court concluded, the language of Rule 68 provides if an offer specifies terms of settlement without mentioning costs, no ambiguity exists, and the plaintiff’s costs will be added to the specified terms by operation of the rule.
Several other Circuit Courts of Appeal, including the Third, the Fourth, and the Seventh, have concluded Rule 68 offers silent as to costs will be interpreted as allowing a separate award of costs. The Sixth Circuit, however, has held when accepting an offer of judgment silent as to costs, a plaintiff has no further right to move for fees or costs.
Advice to Counsel
The LaPierre ruling is especially important in cases involving statutory claims where costs may include attorney fees, like Section 1988 and Title VII of the 1964 Civil Rights Act. “In many cases, court costs are negligible . . . but when you have a fee-shifting action where attorney fees are included as costs, defense counsel better be on their guard,” says James A. King, Columbus, OH, cochair of the ABA Section of Litigation’s Trial Evidence Committee. “Be wary when you submit a Rule 68 offer—make sure you fully vet what you submit and know exactly what you are offering,” cautions King.
“The best practice is to be absolutely clear in preparing your offer of judgment. Be specific about whether your offer includes costs and fees,” agrees Douglas L. McCoy, Mobile, AL, cochair of the Section of Litigation’s Trial Practice Committee.
La Pierre v. Lawrence, 819 F.3d 558 (1st Cir. 2016).
Marek v. Chesny, 473 U.S. 1 (1985).
John B. Pinnie and Jeremie W. Imbus, Attorney Fees in the Context of a Rule 68 Offer, Trial Practice (Dec.18, 2013).
Lima v. Newark Police Dep’t, 658 F.3d 324 (3d Cir. 2011).
Henderson v. Sterling, Inc., 139 F.3d 889 (4th Cir. 1998).
Sanchez v. Prudential Pizza, Inc., 709 F.3d 689 (7th Cir. 2013).
McCain v. Detroit II Auto Finance Center, 378 F.3d 561 (6th Cir. 2004).