• November 15, 2012

Imagine a case where your client is sued under a statute that provides for, say, $1,000 in statutory damages plus “costs,” plus “reasonable legal fees” if the statute is violated. Imagine your client recognizes the it violated the statute.

Imagine your client offers the plaintiff:  $1,000 in statutory damages plus “costs,” plus “reasonable legal fees” then accrued.  Now imagine the plaintiff rejects the offer.  How could this be?  And what is a court to do? And why would this ever happen?

It would happen because of a cynical ploy by the plaintiff’s lawyer, who hopes to litigate the case further, at his adversary’s expense, and to collect still more “reasonable attorneys fees.”  That, in my view, is patently unreasonable and should not be tolerated.

OR it could happen because, in some cases, there might be substantial attorney involvement needed after the Rule 68 Offer of Judgment is accepted but, by the terms of the Offer, that work would go uncompensated (with the provision, “fees and costs, then accrued“).  It would be reasonable, in my view, for plaintiffs and their lawyers to require that a Rule 68 offer of judgment (“OOJ”) provide complete relief, rather than relief with a discount at the end for the post OOJ work.

When a litigant waves the white flag of surrender and offers 100% recovery, it is a poor use of our burdened court system to let the plaintiffs’ counsel continue with the case.  Plaintiff’s cases generally should be kicked out of court as “moot,” there being no further “case or controversy” and, therefore, no subject matter jurisdiction.  Many courts agree with this view.

But things can get quite confusing and complicated, particularly in the context of class actions.

In fact, U.S. District Court Judge Susan Richard Nelson (D. Minn.) faces such situation in Johnson, et al., v Five Star Leasing.  Plaintiffs’ counsel seeks to strike defendant’s Rule  68 offer of judgment (tantamount to stripping one’s opponent of the right to surrender?).  Defendant seeks to surrender.

Two other judges in the District of Minnesota appear to have ruled opposite ways on this issue (see Zortman and Johnson).

The issue, in the end, is not entirely black and white.  Particularly in the context of class actions, a lawyers job is not over when the defendant makes his offer of judgment.  There are often issues of getting the settlement approved by the court, getting notice to class members, etc., etc.  Don’t the lawyers have a right to be paid for that work?  If they are not paid for that work by the admittedly culpable adversary, they could, in theory be owed that from their own clients, in which case the offer of judgment would not cover all attorneys’ fees and would not make the plaintiff(s) whole.

It would seem to me that a simple gloss on the rule could reconcile the problem. In cases where it is reasonably likely that there would be more than de minimis on-going attorney work (it would be de minimis to file the acceptance of the OOJ with the court, for example), it would seem appropriate that a Rule 68 Offer of Judgment would need to provide for plaintiff’s reasonable attorneys’ fees for that additional work.  Otherwise, the Rule 68 offer would fall short.

It would not be difficult, presumably, for defendants to include language to that effect in their Offers of Judgment.  It would remove any decent argument from plaintiff’s lawyers that, somehow, the surrender was incomplete or that it failed to moot the controversy.

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