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Rethinking the Rule 68 'Offer of Judgment'
With the ever-increasing costs of litigation, litigants often take steps to try and control these expenditures. Settling cases early, while not always an attractive option, is nonetheless one way to control these costs. Limiting recovery of attorneys' fees is obviously an approach that may lead to a settlement. Along these lines, defendants, particularly in civil rights cases, have turned to the 'offer of judgment' provision set forth in Rule 68 of the Federal Rules of Civil Procedure. This rule allows defendants to make offers any time after a complaint is served to cut off 'costs' associated with the litigation. However, a recent case decided by the Untied States Court of Appeals for the Second Circuit may have limited the usefulness of 'offers of judgment' and may cause defendants and their counsel to think twice about how and when to use them.
Fees and Costs
Under many federal civil rights statutes, such as Title VII of the Civil Rights Act, a prevailing plaintiff is entitled not only to damages (compensatory and punitive) but also to attorneys' fees and costs. In many cases the attorneys' fees can be greater than the damages ultimately obtained. It is certainly not unheard of for a plaintiff to receive a relatively small amount of damages but nevertheless be able to collect large attorneys' fees amounts as a prevailing party. See, eg, Bridges v. Eastman Kodak Co., 102 F.3d 56 (2d Cir. 1996) (upholding $753,000 fee award in Title VII case recovering $117,000 damages), cert. denied, 117 S. Ct. 2453 (1997); Saulpaugh v. Monroe Community Hospital., 4 F.3d 134 (2d Cir. 1993) (affirming $85,000 fee award on damage award of $38,000), cert. denied, 510 U.S. 1164 (1994). 'The fees awarded may exceed the amount recovered by the suit.' Theatre Confections, Inc. v. Sunstar Theatres Coral Springs, LLC, 2003 WL 21730694, *1 (W.D.N.Y., 2003) citing Orchano v. Advanced Recovery, Inc., 107 F.3d 94, 98 (2d Cir. 1997).
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