Brief Fact Summary. The Supreme Court of the United States granted certiorari to determine resolve a dispute whether a prevailing plaintiff can recover attorney’s fees incurred after the settlement offer.
Synopsis of Rule of Law. A prevailing party may not recover attorney’s fees incurred from the losing party subsequent to an offer of settlement.
Issue. Whether attorney’s fees incurred by a plaintiff subsequent to an offer of settlement must be paid by the defendant when the plaintiff receives a monetary judgment, which is less than the settlement offer?
Held. No. Rule 68 provides that if a timely pretrial offer of settlement is not accepted and the judgment obtained by the offeree is less favorable than the settlement offer, the offeree must pay the costs incurred after the making of the offer. Defendant’s offer of settlement was valid even though it lumped damages and costs together, because if not, a Defendant would be unlikely to make settlement offers. This holding does not frustrate Plaintiff’s efforts to determine whether Defendants’ offers are adequate. Plaintiff is aware of the amount of damages sought. Requiring itemization of damages separate from costs would not in any way require that the plaintiff know in advance whether the judgment at trial will exceed a defendant’s offer. The term costs includes attorney’s fees, and these fees are to be included for cost purposes under Rule 68. Under Section 1983, Congress expressly provided that costs, included attorney’s fees are avoidable to the Plaintiff in such a suit and such fees are subject to the fee shifting provisions of Rule 68. Applying Rule 68 in the context of a Section 1983 action is consistent with the policies in Section 1988, which encourages plaintiffs to bring civil right suits, while Rule 68 encourages settlements.
Dissent. The majority’s reasoning is inconsistent with the history and structure of the Federal Rules of Civil Procedure. The term costs should be interpreted narrowly in accordance with the definition in 28 U.S.C. Section: 1920. It is not suggested in the limited history of the provision that costs include attorney’s fees. The Rules provide that costs may automatically be taxed, which leads one to believe that costs are everyday charges, and that when the Federal Rules of Civil Procedure’s intent costs to encompass attorney’s fee they do so explicitly. Also, the court can point to no authority suggesting that courts have even viewed the cost shifting provisions of Rule 68 as including attorney’s fees. The dissent also argues that the words and phrases of the Federal Rules must be given consistent usage and the drafters of the Federal Rules intended Rule 68 to have a uniform application in all proceedings. The following concerns demonstrate that the term costs should not include attorney’s fees. Furthermore, Section 1988 and Rule 68 do not fit smoothly together as argued by the majority. Congress has instructed that attorney’s fees be governed by a reasonableness standard, but Rule 68 is not sensitive to these issues.
Discussion. This case should be read against the rule that the prevailing party is not entitled to recover attorney’s fees from the losing part