Don`t Try This at Home: The Troubling Distortion of Rule 68

Transcription

NOTES
Don’t Try This at Home: The Troubling Distortion
of Rule 68
BRADLEY GIRARD*
Rule 68 of the Federal Rules of Civil Procedure was enacted to promote
consensual settlement. Through a mandatory cost-shifting mechanism, the Rule
incentivizes defendants to make offers to settle and plaintiffs to accept those offers.
Over the last few decades, courts of appeals have begun to interpret the Rule in a
way that goes beyond simply shifting costs. Instead, these courts have held that if a
plaintiff refuses a Rule 68 offer that contains all of the monetary or injunctive relief
that a plaintiff is seeking, her claim becomes moot. The courts will moot a plaintiff’s
claim even if the defendant’s offer disclaims liability. Mooting a claim because of an
unaccepted Rule 68 offer is supported neither by the Rule’s text nor by the Supreme
Court’s interpretation of the Rule. Although settlement is a laudable goal, it does not
justify the labored reading of Rule 68 that deprives plaintiffs of their day in court.
TABLE OF CONTENTS
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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I. HISTORICAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
725
A.
ENACTMENT AND PURPOSE
B.
THE TEXT OF RULE 68
C.
THE SUPREME COURT’S DECISION IN DELTA AND THE PROPOSED
CHANGES TO RULE 68
D.
725
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727
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729
MAREK AS AN EXPANSION OF THE POWER OF RULE 68 FOR
DEFENDANTS
E.
...........................
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FROM MAREK TO GENESIS—THE EVOLUTION OF RULE 68 AND THE
SUPREME COURT’S FAILURE TO CORRECT THE ERRONEOUS
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735
II. DON’T TRY THIS AT HOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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INTERPRETATION BY THE CIRCUITS
A.
THE TEXT OF THE RULE DOES NOT SUPPORT MOOTING A CLAIM
...
739
* Georgetown Law, J.D. 2014. © 2015, Bradley Girard. I owe an enormous debt of gratitude to
Professor David Vladeck, who thoughtfully guided the development, research, and writing of this Note.
I also would like to thank Professor Brian Wolfman, Deepak Gupta, Greg Beck, Grace Lally, and
Jennesa Calvo-Friedman for all of their valuable insights.
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THE GEORGETOWN LAW JOURNAL
B.
THE PURPOSE OF RULE 68 IS TO ENCOURAGE CONSENSUAL
SETTLEMENT
C.
....................................
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THE SUBSTANTIAL SAFEGUARDS PROVIDED BY THE FEDERAL RULES
HIGHLIGHT THE INCORRECT INTERPRETATION OF RULE 68
D.
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.......
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PLAINTIFFS AND THE PUBLIC HAVE A STRONG INTEREST IN
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III. EVEN MORE TROUBLING DEVELOPMENTS: CAN INFORMAL OFFERS
MOOT CLAIMS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
748
ADJUDICATION ON THE MERITS
INTRODUCTION
Federal Rule of Civil Procedure 68—Offer of Judgment—is “a little known
rule of court”1 undergoing a shift in interpretation that is, in Justice Kagan’s
words, “wrong, wrong, and wrong again.”2 The Rule encourages consensual
settlements by providing a cost-shifting mechanism that imposes risk on a
plaintiff for refusing an offer to settle. When a defendant makes an offer to
settle and the plaintiff refuses, “[i]f the judgment that the [plaintiff] finally
obtains is not more favorable than the unaccepted offer, the [plaintiff] must pay
the costs incurred after the offer was made.”3 Thus, by potentially lessening the
defendant’s liability and creating a financial risk for a plaintiff’s continued
litigation, the Rule encourages defendants to make offers of settlement and
plaintiffs to accept those offers.
Although “[a] settlement is by definition a compromise,”4 a disconcerting
body of law has developed that allows defendants to use Rule 68 to force
settlements on unwilling plaintiffs. Courts have held that if a plaintiff refuses an
offer under Rule 68 that contains all of the monetary or injunctive relief the
plaintiff could recover, there is no longer a controversy over which to litigate,
and the plaintiff’s case becomes moot.5 A plaintiff’s case will be mooted even
when the defendant explicitly disclaims liability and the plaintiff has expressed
an interest in litigation to determine liability as well as monetary damages or
injunctive relief.
This Note explains why the interpretation of Rule 68 that compels plaintiffs
to settle on the threat of mootness cannot be reconciled with the plain text or
purpose of the Rule. The interpretation at issue fails to take into account that the
plaintiff, as the “master of his case,” often has cognizable interests beyond
money damages or injunctive relief. Part I describes the historical background
1.
2.
3.
4.
5.
Chesny v. Marek, 720 F.2d 474, 479 (7th Cir. 1983).
Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1533 (2013) (Kagan, J., dissenting).
FED. R. CIV. P. 68(d).
SEC v. Citigroup Global Mkts. Inc., 673 F.3d 158, 166 (2d Cir. 2012).
See infra section I.E.
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of the Rule, including its promulgation, the United States Supreme Court’s
analysis of the Rule, and the interpretive shift of the federal courts of appeals.
Part II explains why allowing Rule 68 offers to moot a claim misconstrues the
language and purpose of the Rule, overlooks the role of the Rule in the federal
rules more generally, and discounts the interests of plaintiffs. Part III addresses
a problem that has developed from the same line of reasoning: allowing
informal offers—offers that do not satisfy Rule 68’s requirements—to moot
claims. The Note concludes that the courts should refuse to interpret Rule 68 in
a way that forces settlement on unwilling plaintiffs.
I. HISTORICAL BACKGROUND
A. ENACTMENT AND PURPOSE
The Rules Enabling Act gives the United States Supreme Court the power to
promulgate the Federal Rules of Civil Procedure.6 Promulgation of the civil
rules involves three main steps.7 First, the Judicial Conference of the United
States8 appoints a standing committee to propose new rules or changes to the
existing rules,9 and to respond to public comments.10 Second, if the Supreme
Court accepts the recommendations from the committee, the Court prescribes
the official text of the new or amended rules.11 Finally, Congress has a statutorily defined seven months to enact legislation to reject, defer, or modify the
Supreme Court’s rules.12 If Congress does nothing within the seven months, the
rules take effect.13
Rule 68 was promulgated in 1937 to little fanfare. The promulgation of the
Federal Rules of Civil Procedure was a sea change in federal litigation, of
which Rule 68 was only a small part. Perhaps because rules similar to Rule 68
were “widely prevalent in the states”14 and “firmly established in equity courts,”15
6. See 28 U.S.C. § 2072 (2012) (giving the power to the Supreme Court to enact rules of procedure,
but with the limit that “[s]uch rules shall not abridge, enlarge or modify any substantive right”).
7. See JOHN D. BATES, ADMIN. OFFICE OF THE U.S. COURTS, OVERVIEW FOR THE BENCH, BAR, AND PUBLIC:
THE FEDERAL RULES OF PRACTICE AND PROCEDURE, available at http://www.uscourts.gov/RulesAndPolicies/
rules/about-rulemaking/how-rulemaking-process-works/overview-bench-bar-public.aspx.
8. See 28 U.S.C. § 331 (2012) (“The Chief Justice of the United States shall summon annually the
chief judge of each judicial circuit, the chief judge of the Court of International Trade, and a district
judge from each judicial circuit to a conference at such time and place in the United States as he may
designate.”).
9. See id. § 2073.
10. See id.
11. See id. § 2074.
12. See id.
13. See id.
14. RULES OF CIVIL PROCEDURE FOR THE DISTRICT COURTS OF THE UNITED STATES WITH NOTES AND
PROCEEDINGS OF THE INSTITUTE ON FEDERAL RULES: CLEVELAND, OHIO JULY 21, 22, 23, 1938, at 337
(William W. Dawson ed., 1938) [hereinafter PROCEEDINGS OF THE INSTITUTE ON FEDERAL RULES: CLEVELAND, OHIO].
15. Margaret M. Lyons, The Application of an Offer of Judgment in a Title VII Suit, 2 PACE L. REV.
331, 335 (1982).
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public hearings surrounding the first adoption of the Federal Rules of Civil
Procedure contain minimal discussion of Rule 68.16 Further, the original Advisory Committee notes contain only a citation to statutes from Montana, New
York, and Minnesota, all containing language similar to that of the original
rule.17
Modern commentators largely agree18 that the original purpose of Rule 68
was to “encourage settlements and avoid protracted litigation.”19 Rule 68 did so
by “afford[ing] a means for stopping the running of costs where the defendant
admits that part of the claim is good but proposes to contest the balance.”20
A different interpretation of the original purpose of the Rule is put forward by
Professor Robert G. Bone. He argues that the purpose of the Rule was not to
encourage settlement generally; rather, it was to stop plaintiffs from engaging in
unnecessary litigation in a narrow set of circumstances.21 Relying on historical
research of corresponding state statutes, Professor Bone concludes that the
original purpose of the Rule was to protect a defendant from accruing court
costs when the defendant was willing to surrender, pay the plaintiff everything
he was owed, and admit to liability.22
Professor Bone’s analysis is narrower than the conventional understanding of
Rule 68, but it is not necessary for this Note to decide which interpretation is
correct. Professor Bone recognizes that, in response to fears of an overburdened
federal judiciary, Rule 68 began to garner significantly more interest in the
1970s and was, at that point, interpreted as a tool for settlement more gener-
16. See FEDERAL RULES OF CIVIL PROCEDURE: PROCEEDINGS OF THE INSTITUTE AT WASHINGTON, D.C.
OCTOBER 6, 7, 8, 1938 AND OF THE SYMPOSIUM AT NEW YORK CITY OCTOBER 17, 18, 19, 1938, at 201, 299
(Edward H. Hammond ed., 1939) (addressing Rule 68 only as to state that it does not “take the place of
tender” and clarifying that once an offer is made, it cannot be withdrawn by the offeror because it is not
a “gratuity”; rather it has “enforcible [sic] legal effect”).
17. See FED. R. CIV. P. 68 advisory committee’s notes to 1937 adoption. The Minnesota statute states:
At least ten days before the term at which any civil action shall stand for the trial the
defendant may serve on the adverse party an offer to allow judgment to be taken against him
for the sum, or property, or to the effect therein specified, with costs then accrued. If within
ten days thereafter such party shall give notice that the offer is accepted, he may file the same,
with proof of such notice, and thereupon the clerk shall enter judgment accordingly. Otherwise the offer shall be deemed withdrawn, and evidence thereof shall not be given; and if a
more favorable judgment be not recovered no costs shall be allowed, but those of the
defendant shall be taxed in his favor.
2 MINN. STAT. § 9323 (1927).
18. See, e.g., Jay Horowitz, Rule 68: The Settlement Promotion Tool that Has Not Promoted
Settlements, 87 DENV. U. L. REV. 485, 489 (2010) (referring to Professor Robert G. Bone as the only
“notable exception” to the general agreement among commentators that the Rule is intended to
encourage settlement).
19. 12 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3001 (2d ed. 1986).
20. PROCEEDINGS OF THE INSTITUTE ON FEDERAL RULES: CLEVELAND, OHIO, supra note 14, at 337.
21. See Robert G. Bone, “To Encourage Settlement”: Rule 68, Offers of Judgment, and the History
of the Federal Rules of Civil Procedure, 102 NW. U. L. REV. 1561, 1590–91 (2008).
22. See id. at 1596–97.
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ally.23 As discussed below, whatever the origins of the Rule, beginning in 1981
the Supreme Court fully endorsed the theory that Rule 68 was aimed at
encouraging consensual settlement.
B. THE TEXT OF RULE 68
The process through which parties can settle under Rule 68 is prescribed by
the text of the Rule. “At least 14 days before the date set for trial, 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.”24 Although not made
explicit in Rule 68, Rule 5(a)(1)(E) requires that an offer of judgment be in
writing.25
After the defendant makes the offer, the plaintiff has fourteen days to
accept.26 “[E]ither party may then file the offer and notice of acceptance” with
the court and “[t]he clerk must then enter judgment.”27 The litigation is over,
and the plaintiff walks away with an enforceable judgment, according to the
terms agreed to by both parties.
If the plaintiff does not accept the offer within the fourteen days, the offer is
deemed rejected by the plaintiff and withdrawn by the defendant.28 A rejected
offer “does not preclude a later offer” and “[e]vidence of an unaccepted offer is
not admissible except in a proceeding to determine costs.”29 Further, Rule 68
does not apply only to pretrial offers—a defendant can stipulate to judgment for
a specified sum after a finding of liability but before a determination of
damages.30
The risk that a plaintiff takes by not accepting an offer derives from subsection
(d), which imposes the costs of an unaccepted offer.31 The Rule provides that
23. See id. at 1605–06.
24. FED. R. CIV. P. 68(a).
25. See FED. R. CIV. P. 5(a)(1)(E). But cf. Doyle v. Midland Credit Mgmt., Inc., 722 F.3d 78, 81 (2d
Cir. 2013) (holding that an oral offer of judgment was not an offer under Rule 68 and was sufficient to
render a plaintiff’s case moot).
26. See FED. R. CIV. P. 68(a).
27. Id.
28. See FED. R. CIV. P. 68(b).
29. Id.
30. FED. R. CIV. P. 68(c) (“When one party’s liability to another has been determined but the extent
of liability remains to be determined by further proceedings, the party held liable may make an offer of
judgment. It must be served within a reasonable time—but at least 14 days—before the date set for a
hearing to determine the extent of liability.”).
31. See FED. R. CIV. P. 68(d). 28 U.S.C. § 1920 governs what costs a court can impose and states:
A judge or clerk of any court of the United States may tax as costs the following:
(1) Fees of the clerk and marshal;
(2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the
case;
(3) Fees and disbursements for printing and witnesses;
(4) Fees for exemplification and the costs of making copies of any materials where the copies
are necessarily obtained for use in the case;
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“[i]f the judgment that the offeree finally obtains is not more favorable than the
unaccepted offer, the offeree must pay the costs incurred after the offer was
made.”32 Even though subsection (d) uses the terms “offeror” and “offeree,” it
was enacted with the intent of giving only the party defending against a claim33
the ability to make the offer.34
Although only the party defending against a claim can make an offer, Rule 68
encourages a consensual process in which both plaintiff and defendant must
decide if the compromise is worthwhile. A plaintiff is encouraged to weigh the
strength of his case and engage in a cost–benefit analysis to decide if further
litigation is worth the risk. The compromise also has to be worth it to a
defendant, who must be willing to have an enforceable judgment entered by the
court. Through entry of an enforceable judgment and the threat of shifting costs,
Rule 68 provides incentives that do not otherwise exist in a private settlement.35
An example may help to clarify the operation of the Rule. A plaintiff brings a
suit for $10,000, but the defendant believes that the plaintiff will not receive his
full recovery. Three weeks before trial, the defendant sends the plaintiff a
written offer of judgment for $3,000. Under Rule 68, the plaintiff now has two
choices.36 First, the plaintiff can accept the $3,000 and the court will enter the
judgment in his favor. An agreement between the parties would end the litigation and give the plaintiff an enforceable judgment. The plaintiff can also reject
the offer of judgment, perhaps believing that he can recover more than $3,000 at
trial. By operation of the Rule, a rejected offer is withdrawn and the case
proceeds to trial. The plaintiff’s choice, however, comes with a substantial risk.
If the plaintiff’s recovery is equal to or less than the $3,000 that was offered,
say, $2,000, he has to pay the costs that the defendant accrued after the point at
which the defendant made the offer. The plaintiff had the option to settle,
decided to gamble on winning at trial, and so must pay the price of his failed
wager.
(5) Docket fees under section 1923 of this title;
(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees,
expenses, and costs of special interpretation services under section 1828 of this title.
28 U.S.C. § 1920 (2012).
Other federal statutes, including 42 U.S.C. § 1988, allow courts to impose attorney’s fees as a part of
costs. This issue is further addressed in section I.D.
32. FED. R. CIV. P. 68(d).
33. Id. Because “a party defending against a claim,” FED. R. CIV. P. 68(a), may make an offer under
Rule 68, the plaintiff can also make an offer of judgment to settle a counterclaim that he is defending.
For the sake of clarity, this Note will use the term “defendant” in place of “a party defending against a
claim.”
34. See PROCEEDINGS OF THE INSTITUTE ON FEDERAL RULES: CLEVELAND, OHIO, supra note 14, at 338.
35. See infra section II.C (discussing private settlement under Rule 41).
36. The plaintiff may make an informal counteroffer to privately settle the claim, but the plaintiff’s
offer does not come with the same cost-shifting potential or judicial enforcement as an offer made by
the defendant under Rule 68. See infra section II.C (discussing private settlements under Rule 41).
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Because Rule 68 is designed to encourage compromise by both the plaintiff
and defendant, the Rule appears to be most useful in cases in which both the
plaintiff and defendant believe the case to have some merit but disagree as to
how much. In such cases, a Rule 68 offer can put added pressure on a plaintiff
to settle, but only if the defendant makes it worth the plaintiff’s while. Another
logical use of the Rule is when a defendant believes the claim is meritless, but
because it survived a motion to dismiss, it may simply be more cost-effective
for the defendant to settle if the terms are low enough. A defendant can also use
a particularly low Rule 68 offer, such as $10, as a signaling device—letting
the plaintiff know that he thinks the case to be wholly without merit, shifting the
risk of not prevailing onto the plaintiff.
Regardless of whether the defendant believes the case to have merit, the point
of the process is the same—Rule 68 is a tool to encourage consensual settlement. The defendant offers to settle for however much he thinks the case is
worth, even if it is a miniscule amount, and have judgment entered against him.
The plaintiff must weigh the offer, consider the risks of litigation, and decide if
a settlement with an enforceable judgment is a better option than proceeding to
trial.
C. THE SUPREME COURT’S DECISION IN DELTA AND THE PROPOSED
CHANGES TO RULE 68
Until 1981, it was unclear if (1) the Rule applied to any offer made by a
defendant—reasonable or not—and (2) if the cost-shifting provision only applied to victorious plaintiffs. In 1981, the Supreme Court interpreted Rule 68 for
the first time in Delta Air Lines, Inc. v. August.37 In Delta, the plaintiff was a
flight attendant who claimed that she had been fired on the basis of racial
discrimination in violation of Title VII.38 She sought reinstatement, $20,000 in
back pay, and attorney’s fees and costs.39 At the beginning of the litigation Delta
offered her $450 as a settlement—unsurprisingly, she did not accept.40 She lost
at trial, however, and the trial court ordered that each party bear its own costs.41
The defendant objected and claimed that because Ms. August had turned
down the $450 Rule 68 offer, she was liable for all of Delta’s costs after the
offer.42 The district court rejected Delta’s argument, finding that Delta’s offer
did not satisfy Rule 68 because it was not made in a good-faith attempt to settle
and end the litigation.43 The court of appeals affirmed on the same reasoning.44
37.
38.
39.
40.
41.
42.
43.
44.
450 U.S. 346 (1981).
See id. at 348.
Id.
See id. 348–49.
See id.
See id. at 349.
See id. at 348–49.
See id. at 349.
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The Supreme Court upheld the judgment but rejected the “reasonableness”
analysis of the lower courts.45 The majority opinion, written by Justice Stevens
and joined by four other Justices, based its analysis on the text of the Rule. The
majority reasoned that the text provides that the offeree is liable for costs “[i]f
the judgment that the offeree finally obtains is not more favorable than the
unaccepted offer.”46 The Rule thus focuses on the offeree who has obtained a
final judgment—not an offeree who has lost and thus obtained nothing.47
Concurring in the result, Justice Powell disagreed with the majority’s reasoning. He found it odd that a losing plaintiff would not be liable for costs, but a
marginally successful plaintiff would be.48 A victorious plaintiff with a stronger
case may be forced to bear the costs under Rule 68 if he refuses an offer and
recovers less than the offer. On the other hand, a plaintiff who refused the same
offer, but lost on the merits, would not be liable for the costs. Justice Powell
concurred in the result, however, reasoning that the offer was not proper
because it did not allow for the court to determine reasonable attorney’s fees.49
Justice Rehnquist, joined by two others, dissented, arguing that the majority
misread the language of the Rule.50 In Justice Rehnquist’s view, nothing in the
language “judgment obtained” required that it be a prevailing judgment.51 Thus,
in this case, the judgment obtained (the plaintiff took nothing) was less than the
offer ($450), so the plain text of the Rule required that the plaintiff bear the
costs.52 Justice Rehnquist also contended that “costs” under Rule 68 should not
be construed to include attorney’s fees, even when the attorney’s fees are
included as “costs” in a fee-shifting statute.53
The Court’s interpretation of Rule 68 in Delta relieved much of the risk that
rejecting an offer of judgment could place on plaintiffs. The threat of shifting
costs would provide a greater incentive to accept an offer of settlement if a
plaintiff could be liable for costs even if he lost on the merits. But the Court
interpreted the cost-shifting provision to apply only to victorious plaintiffs, and
so a loss at trial would not impose additional costs. Without the additional threat
of shifting costs, a plaintiff presumably would be more willing to gamble on a
loss at trial. For that reason, following Delta, Rule 68 was “rarely . . . invoked
and [was] considered largely ineffective as a means of achieving its goals.”54
45. Id. at 355–56.
46. FED. R. CIV. P. 68(d).
47. See Delta Air Lines, 450 U.S. at 352.
48. See id. at 362 (Powell, J., concurring).
49. See id. at 364–65.
50. See id. at 369 (Rehnquist, J., dissenting).
51. Id. at 366–70.
52. See id. at 370–71.
53. Id. at 377.
54. Comm. on Rules of Practice and Procedure of the Judicial Conference of the U.S., Preliminary
Draft of Proposed Amendments to the Federal Rules of Appellate Procedure, Federal Rules of Civil
Procedure, Federal Rules of Criminal Procedure, and Rules Governing Section 2254 Cases and Section
2255 Proceedings in the United States District Courts, 102 F.R.D. 407, 433 (1984).
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Because the Rule was viewed as a “dead letter,”55 the Advisory Committee
proposed significant changes in 1983. The proposed amendments would have
overturned Delta by shifting costs to both winning and losing plaintiffs.56 The
proposal also would have drastically changed the operation of Rule 68 by
allowing plaintiffs to make offers, requiring that the offers be made in good
faith, and including attorney’s fees as a part of costs.57 The expanded scope of
the Rule would have been counterbalanced by no longer requiring cost shifting
as a matter of course, but instead at the court’s discretion.58
The proposed amendments generated considerable controversy. The defense
bar supported the changes, believing that the amendments would make Rule
68 a more powerful tool to force settlement.59 The plaintiffs’ bar strongly
objected, however, claiming that shifting costs to a losing plaintiff would pose
too large a monetary risk, and thus deter vigorous prosecution of meritorious
claims.60 There were also serious concerns that the amendments would violate
the Rules Enabling Act61 by altering parties’ substantive rights.62 In light of the
criticism, the amendments were never adopted, let alone sent to the Supreme
Court.63 One year later, the Advisory Committee put forth another set of
proposed amendments to Rule 68. In response to the previous year’s concerns,
the 1984 changes were similar but slightly less drastic. The responses, however,
were equally divergent, and the 1984 amendments were also abandoned.64
D. MAREK AS AN EXPANSION OF THE POWER OF RULE 68 FOR DEFENDANTS
Four years after Delta read Rule 68 to apply only to prevailing plaintiffs, the
Court changed course in Marek v. Chesny.65 Marek was a Civil Rights Act
55. See ADVISORY COMM. ON CIVIL RULES, SUMMARY OF MEETING OF MAY 17–28, 1982, at 1 (1982),
available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Minutes/CV05-1982-min.pdf.
56. See id.
57. See Comm. on Rules of Practice and Procedure of the Judicial Conference of the U.S.,
Preliminary Draft of Proposed Amendments to the Federal Rules of Civil Procedure, Federal Rules of
Criminal Procedure, and Rules Governing Section 2254 Cases in the United States District Courts, and
Rules Governing Section 2255 Proceedings in the United States District Courts, 98 F.R.D. 337, 361–62
(1983).
58. See id. at 365.
59. Roy D. Simon, Jr., The Riddle of Rule 68, 54 GEO. WASH. L. REV. 1, 12 n.55 (1985) (quoting
from extensive letters that the author had on file, sent from the defense bar in support of the proposed
amendments).
60. See id. at 13–14.
61. See 28 U.S.C. § 2072 (2012) (giving the power to the Supreme Court to enact “general rules of
practice and procedure,” but with the limit that “[s]uch rules shall not abridge, enlarge or modify any
substantive right”).
62. See Simon, Jr., supra note 59, at 15 (“[A] civil rights plaintiff cannot be required to pay a
prevailing defendant’s attorneys’ fees unless the plaintiff’s action was originally frivolous, groundless,
or unreasonable, or unless the plaintiff continued to litigate after it clearly became so. However, under
the 1983 proposal, any civil rights plaintiff who turned down a rule 68 offer and lost at trial—even a
plaintiff with a bona fide claim—could be forced to pay the defendant’s post-offer attorneys’ fees.”).
63. See Bone, supra note 21, at 1609.
64. See id. at 1610.
65. Marek v. Chesny, 473 U.S. 1 (1985).
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claim, under § 1983, brought by the father of a man who had been shot and
killed by police during a domestic disturbance call.66 The defendant-police
officers made an offer pursuant to Rule 68 for $100,000, including costs and
attorney’s fees, and the plaintiff refused.67 The case went to trial and the
plaintiff won a judgment, but only in the amount of $60,000.68 The plaintiff
then moved for an award of attorney’s fees under § 1988, the statute that
provides that in a successful case to enforce § 1983 “the court, in its discretion,
may allow the prevailing party, other than the United States, a reasonable
attorney’s fee as part of the costs.”69
Relying on Rule 68, the defendants argued that the plaintiff could not recover
any attorney’s fees that accrued after the refused offer of judgment because
§ 1988 categorized the attorney’s fees as a “part of the ‘costs.’”70 Although the
plaintiff had incurred over $170,000 in fees and costs to litigate the case, the
pre-offer costs and fees totaled only $32,000. The district court agreed and
refused the full amount of the fees, awarding only $32,000.
On appeal, in an opinion by Judge Posner, the Seventh Circuit reversed.71
First, the court concluded that an offer of judgment did not need to delineate
what portion of the offer constituted the plaintiff’s recovery and what constituted costs.72 Next, the court reasoned that “costs” in § 1988 did not refer to the
same “costs” under Rule 68.73 To interpret the § 1988 attorney’s fees as part of
the Rule 68 “costs” would “cut[] against the grain of section 1988” and would
“put[] Rule 68 into conflict with the policy behind section 1988.”74
The court of appeals refused a “mechanical linking up of Rule 68 and section
1988” because it would force plaintiff’s lawyers to “think very hard before
rejecting” an inadequate offer, “knowing that rejection could cost themselves or
their client a lot if it turned out to be a mistake.”75 This would, in turn, deter the
private attorney general actions that § 1988 sought to encourage.76 The court
was convinced that “[t]he legislators who enacted section 1988 would not have
wanted its effectiveness blunted because of a little known rule of court,” and
that the drafters of Rule 68 could not have intended such a drastic penalty on
plaintiffs that refused an offer of settlement.77
66. See id. at 3.
67. Id. at 3–4.
68. Id. at 4.
69. 42 U.S.C. § 1988(b) (2012).
70. Marek, 473 U.S. at 4.
71. See Chesny v. Marek, 720 F.2d 474 (7th Cir. 1983).
72. See id. at 478.
73. Id. at 478–79.
74. Id.
75. Id. (“That would mean in this case that the plaintiff’s lawyers would have either to collect an
additional fee from the plaintiff, thus reducing his net recovery from the jury’s $60,000 damage award,
or to swallow the time they put in on the trial.”).
76. See id. at 478.
77. Id. at 479.
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The Supreme Court, over a spirited dissent, rejected the Seventh Circuit’s
holding and analysis. In the majority opinion by Chief Justice Burger, the Court
agreed with the Seventh Circuit that the offer did not need to separate costs
from recovery, but rejected the conclusion that Rule 68 costs were different
from § 1988 costs.78 The majority pointed to a handful of statutes in existence at
the time Rule 68 was adopted—not including § 1988—that allowed the shifting
of attorney’s fees as part of “costs.”79 From these statutes, the majority concluded that the drafters of Rule 68 were aware that “costs” could include
attorney’s fees.80 Because it was unlikely that use of the term “costs” in both the
Rule and the various statutes was a “mere oversight,” the majority held that
“costs” under Rule 68 is properly construed as including all costs provided by
the relevant statutes.81
The Court also rejected the Seventh Circuit’s analysis of the policy concerns,
concluding that construing attorney’s fees as a part of Rule 68 costs was not at
odds with Congress’s intent in passing § 1988.82 The majority claimed that its
decision would not deter civil rights suits and would not inhibit access to courts,
but would merely “serve as a disincentive for the plaintiff’s attorney to continue
litigation after the defendant makes a settlement offer.”83 The Court, taking
Judge Posner’s quote out of context, stated that its holding would “require
plaintiffs to ‘think very hard’” about continuing with litigation, but found that
goal was in keeping with the purpose of Rule 68.84 Importantly, the Court
viewed Rule 68 to be a neutral rule that benefitted neither the plaintiff nor the
defendant—that is, defendants would be free of the costs of continued unreasonable litigation, and plaintiffs could receive settlement offers greater than what
their claims were actually worth.85
Justices Powell and Rehnquist concurred separately. Justice Powell, quoting
from his Delta concurrence, wrote that, although he believed that the proper
78. See Marek v. Chesny, 473 U.S. 1, 5–6 (1985).
79. Id. at 8 (citing Clayton Act, 15 U.S.C. § 15 (1934); Securities Act of 1933, 15 U.S.C. § 77k(e)
(1934); Securities Exchange Act of 1934, 15 U.S.C. §§ 78i(e), 78r(a) (1934); Copyright Act of 1909
§ 40 (1934), 17 U.S.C. § 40 (1934); Railway Labor Act §3(p), 45 U.S.C. § 153(p) (1934); Communications Act of 1934 § 407, 47 U.S.C. § 407 (2012)).
80. Id. at 8–9.
81. Id. at 9.
82. See id. at 10.
83. Id.
84. Id. at 11. Judge Posner was not concerned with requiring plaintiffs to “think very hard” about
continuing litigation, as is implied by the Chief Justice. He was concerned that plaintiffs’ attorneys
would be forced to “think very hard” about accepting a settlement that they knew to be inadequate, for
fear that they might sacrifice their fees or be forced to recoup the fees from a client’s inadequate
settlement. See Chesny v. Marek, 720 F.2d 474, 478–79 (1983).
85. See Marek, 473 U.S. at 10. The reasoning used to highlight neutral operation of the Rule can be
read to hold a disparaging view of plaintiffs. On one hand, the Rule frees a defendant from the burdens
of a plaintiff’s unreasonable demand to continue litigation. On the other hand, because the Rule
encourages defendants to make settlement offers, plaintiffs may benefit from getting money that they
could not recover at trial. Thus, the plaintiff either holds an unreasonable view or recovers more than he
deserves.
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construction of the Rule would require delineation of recovery and costs, the
Court had come to a different conclusion with which he now agreed.86 Justice
Rehnquist, recognizing that he had argued otherwise in Delta, concluded that
“costs” could include attorney’s fees.87
Justice Brennan, writing for three justices, dissented vigorously and argued
that under the majority’s holding, simple “picayune differences” in statutory
language would create “absurd variations in Rule 68’s operation.”88 Because
some statutes included attorney’s fees as part of “costs” and some did not, “a
successful plaintiff will, where the requirements of Rule 68 are otherwise met,
be barred from recovering otherwise reasonable attorney’s fees for a defective
toaster (under the Consumer Product Safety Act) but not for a defective bumper
(under the Motor Vehicle Act).”89
Justice Brennan explained that the majority’s reading would not only create
“schizophrenic” results, but its logic was also contradicted at every turn.90 First,
the drafters of the Federal Rules intended for them to apply uniformly to every
civil action, and there was no way that the drafters of Rule 68 intended for the
word “costs” to have different meanings depending on which statute gave rise
to the plaintiff’s claim.91 Further, Rule 68 provides that it is the clerk, and not a
judge, who enters the judgment—including costs. Thus, Justice Brennan argued,
the drafters and Congress could not have considered “costs” the same under
Rule 68 and § 1988 because court awards of attorney’s fees often involve
protracted hearings, complex legal arguments, and are to be determined by a
judge.92
Finally, Justice Brennan took the majority to task for claiming that its
decision was both neutral and not a deterrent to civil rights litigation.93 Justice
Brennan reasoned that, because only defendants can make offers under Rule 68,
and plaintiffs only had ten days94 to decide whether to accept, the majority’s
ruling encouraged defendants to make “‘low-ball’ offers” before the plaintiff
has had an opportunity to engage in any substantial discovery and truly ascertain the value of the claim.95 Because “civil rights plaintiffs ‘appear before the
court cloaked in a mantle of public interest’; to promote the ‘vigorous enforcement of modern civil rights legislation,’ Congress has directed that such ‘private
attorneys general’ shall not ‘be deterred from bringing good faith actions to
86. See id. at 12–13 (Powell, J., concurring).
87. Id. at 13 (Rehnquist, J., concurring).
88. Id. at 14–15 (Brennan, J., dissenting).
89. Id. at 24.
90. Id. at 12–22.
91. See id. at 18–19.
92. See id. at 19–20.
93. See id. at 31–32.
94. In 2009 the Rule was changed to allow for fourteen days as opposed to the ten previously
allowed. See FED. R. CIV. P. 68 advisory committee’s notes to 2009 amendments.
95. Marek, 473 U.S. at 31 (Brennan, J., dissenting).
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vindicate the fundamental rights here involved.’”96 Fearing that they would lose
all possibility of recovering attorney’s fees, many plaintiffs would accept the
low-ball offer—a result that is both non-neutral and a deterrent to meritorious
civil rights litigation.97
Although the difference in interpretation by the Court in Delta and Marek is
stark, the underlying principle in both cases is that the purpose of Rule 68 is to
encourage settlement. Where Delta was concerned with the possible coercive
effect that offers of settlement could have on plaintiffs, Marek emphasized that
the Rule could only encourage settlement if it gave defendants the needed
leverage to make plaintiffs “think very hard,”98 about continuing to litigate.
Arguably, by allowing attorney’s fees under § 1988 to be considered “costs”
under Rule 68, Marek put more weight on the “little known rule of court”99 than
it could bear.100 But regardless of whether Delta construed Rule 68 too narrowly or Marek construed the Rule too broadly, both cases rest on the same
fundamental understanding of Rule 68—its purpose is to encourage consensual
settlement.
E. FROM MAREK TO GENESIS—THE EVOLUTION OF RULE 68 AND THE SUPREME COURT’S
FAILURE TO CORRECT THE ERRONEOUS INTERPRETATION BY THE CIRCUITS
Even though Marek gave defendants more leverage under Rule 68 than had
previously existed, the Rule is still often derided as an insufficient tool for
promoting settlements.101 The reasons proffered to support this claim include
that the Rule does not provide a sufficient incentive for either party;102 the
mechanics of the Rule are too complex;103 and the Rule is a one-way street
because it does not allow plaintiffs to shift costs to defendants.104 Over the
years, many have proposed changes to the Rule in the hopes that it can more
efficiently encourage settlement and thus help to lighten the judicial
workload.105
96. Id. at 32.
97. See id.
98. Id. at 11 (majority opinion) (internal quotation marks omitted).
99. Id. at 5 (internal quotation mark omitted).
100. See, e.g., Jean R. Sternlight, The Supreme Court’s Denial of Reasonable Attorney’s Fees to
Prevailing Civil Rights Plaintiffs, 17 N.Y.U. REV. L. & SOC. CHANGE 535, 568 (1990) (“Whereas Marek
sharply penalizes a plaintiff for overestimating the value of the case, no parallel penalty is ever assessed
on a defendant.”).
101. See Horowitz, supra note 18, at 486; Harold S. Lewis, Jr. & Thomas A. Eaton, Rule 68 Offers
of Judgment: The Practices and Opinions of Experienced Civil Rights and Employment Discrimination
Attorneys, 241 F.R.D. 332, 332 (2007).
102. See Lewis & Eaton, supra note 101.
103. See Lesley S. Bonney et al., Rule 68: Awakening a Sleeping Giant, 65 GEO. WASH. L. REV. 379,
380 (1997).
104. See Albert Yoon & Tom Baker, Offer-of-Judgment Rules and Civil Litigation: An Empirical
Study of Automobile Insurance Litigation in the East, 59 VAND. L. REV. 155, 162 (2006). As discussed
below, infra section II.C, plaintiffs are free to make informal offers to settle, but an informal offer of
private settlement does not include the same cost-shifting encouragement as an offer under Rule 68.
105. See, e.g., Bone, supra note 21, at 1612; Bonney et al., supra note 103, at 380; Harold S. Lewis,
Jr. & Thomas A. Eaton, The Contours of a New FRCP, Rule 68.1: A Proposed Two-Way Offer of
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But whatever the merits of the proposed changes to Rule 68, none have
gained traction.106 In its November 2008 meeting, the Civil Rules Advisory
Committee recognized that “it will be very difficult and controversial to make
Rule 68 effective,” and “[e]ven small changes will open up controversy.”107
Instead of addressing the thorny policy arguments and difficulty of balancing
the interests of plaintiffs and defendants, “[a] motion to do nothing . . . carried
unanimously.”108 The next time that the Advisory Committee addressed Rule 68
was in its November 2011 meeting. Recognizing the difficulty of striking the
right balance, “[t]he Committee [was] not yet . . . willing to enter the fray once
more.”109 However, while the debate over the best way to encourage settlement
through modification of Rule 68 continues, the careful policy considerations
have been circumvented though a troubling distortion of the Rule taking place
in the courts.
Since Marek, federal courts of appeals have interpreted Rule 68 in a way that
allows defendants to use a refused offer of judgment to end a plaintiff’s case.
Five circuits have held that if a plaintiff refuses a Rule 68 offer that contains all
of the requested monetary or injunctive relief, even if the offer explicitly
disclaims liability, the plaintiff’s claim becomes moot.110 These courts reason
that because the plaintiff has been offered all recovery that he could receive,
there is no longer adversity between the parties.111 With no adversity, there is no
case or controversy for the court to adjudicate, as required by Article III of the
United States Constitution.112 The five circuits that have accepted this basic
analysis have formulated different rules, and each rule has a different effect on
plaintiffs.
The Seventh Circuit has the most draconian Rule 68 precedents. In the
Seventh Circuit, a plaintiff who rejects an offer that contains the full monetary
relief not only has her case mooted but “loses outright.”113 The reasoning is that
once a defendant offers “to satisfy the plaintiff’s entire demand, there is no
dispute over which to litigate,”114 and thus the court is divested of subject
Settlement Provision for Federal Fee-Shifting Cases, 252 F.R.D. 551, 552 (2009); Richard Mincer, Rule
68 Offer of Judgment: Sharpen the Sword for Swift Settlement, 25 U. MEM. L. REV. 1401, 1404 (1995).
106. See CIVIL RULES ADVISORY COMM., MINUTES, NOVEMBER 17–18, 2008, ll. 692–740 (2008),
107. Id. l. 734.
108. Id. l. 739.
109. See CIVIL RULES ADVISORY COMM., MINUTES, NOVEMBER 7–8, 2011, ll. 1775–1776 (2011),
110. See Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 371 (4th Cir. 2012); O’Brien v. Ed
Donnelly Enters., Inc., 575 F.3d 567, 574 (6th Cir. 2009); McCauley v. Trans Union, L.L.C., 402 F.3d
340, 342 (2d Cir. 2005); Weiss v. Regal Collections, 385 F.3d 337, 340 (3d Cir. 2004); Alliance to End
Repression v. City of Chicago, 820 F.2d 873, 878 (7th Cir. 1987).
111. See, e.g., Alliance to End Repression, 820 F.2d at 878.
112. See id. at 877–78.
113. Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991).
114. Id.
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matter jurisdiction.115 Under the Seventh Circuit’s rule, if the plaintiff has been
“offered all the relief he demands” and refuses the offer, but desires to proceed
to trial, “[t]he answer is no,” and the claim is dismissed.116 Thus, under the
Seventh Circuit’s severe rule, a plaintiff that refuses an offer walks away
empty-handed—losing her case and the relief contained in the unaccepted Rule
68 offer.
The Sixth, Third, and Fourth Circuits have also held that an unaccepted offer
that satisfies the plaintiff’s monetary demands will moot a claim.117 Parting with
the reasoning of the Seventh Circuit, however, the Sixth Circuit does not simply
dismiss the plaintiff’s claim. Instead, it has found that “the better approach is to
enter judgment in favor of the plaintiffs in accordance with the defendants’ Rule
68 offer of judgment.”118 Under the Sixth Circuit’s approach, the plaintiff does
not walk away empty-handed, but still does not benefit from the trial he wants.
The Third and Fourth Circuits have reasoned that an unaccepted offer under
Rule 68 can moot a claim, but have not made clear whether they follow the
Seventh Circuit and dismiss the plaintiff’s claim outright, or the Sixth Circuit
and enter judgment for the plaintiff.119
The Second Circuit similarly ends the claim, but instead of entering a
stipulated judgment in favor of the plaintiff, it treats the refused offer under
Rule 68 as a default by the defendant.120 The result for the plaintiff is the same,
but the Second Circuit found default judgment to be a “better resolution” that
would “serve [the defendant’s] desire to end the case, would award [the
plaintiff] his damages and, like the Rule 68 settlement offer, would have no
preclusive effect in other litigation.”121
115. See id.
116. Alliance to End Repression, 820 F.2d at 878. Some district courts have interpreted this rule to
require that the claim be dismissed with prejudice; that is, the plaintiff cannot even refile the mooted
claim in state court because of res judicata. See, e.g., Scott v. Westlake Servs., LLC, 948 F. Supp. 2d
898, 914, 921 (N.D. Ill. 2013), rev’d, 740 F.3d 1124 (7th Cir. 2014). However, there is good reason to
doubt the durability of these holdings. The district court’s decision in Scott was recently reversed, so the
court of appeals did not need to decide if a case dismissed because of an unaccepted Rule 68 offer is
dismissed with prejudice. See Scott, 740 F.3d at 1128. Further, in Holstein v. City of Chicago, the court
of appeals affirmed the district court’s decision without addressing if the dismissal was with prejudice.
See 29 F.3d 1145, 1146 (7th Cir. 1994). Although the Seventh Circuit did not address the issue in
Holstein or Scott, dismissal with prejudice for lack of subject matter jurisdiction is contrary to prior
Seventh Circuit holdings. See Frederiksen v. City of Lockport, 384 F.3d 437, 438 (7th Cir. 2004) (“A
suit dismissed for lack of jurisdiction cannot also be dismissed ‘with prejudice’; that’s a disposition on
the merits, which only a court with jurisdiction may render.”); see also Cox, Cox, Filo, Camel &
Wilson, L.L.C. v. Sasol N. Am., Inc., 544 F. App’x 455, 456–57 (5th Cir. 2013) (“[T]o dismiss with
prejudice under Rule 12(b)(1) is to disclaim jurisdiction and then exercise it. . . . [W]e will not do so
here.”).
117. See Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 371 (4th Cir. 2012); O’Brien v. Ed
Donnelly Enters., 575 F.3d 567, 574 (6th Cir. 2009); Weiss v. Regal Collections, 385 F.3d 337, 340 (3d
Cir. 2004).
118. O’Brien, 575 F.3d at 575.
119. See Warren, 676 F.3d at 371; Weiss, 385 F.3d at 340.
120. See McCauley v. Trans Union, L.L.C., 402 F.3d 340, 342 (2d Cir. 2005).
121. Id.
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In 2013, the disagreement between the courts of appeals appeared finally to
make its way to the Supreme Court. In Genesis Healthcare Corp. v. Symczyk,
the Court addressed whether a Fair Labor Standards Act (FLSA) collective
action is justiciable if the lead plaintiff’s claim was moot because of an
unaccepted Rule 68 offer.122 The majority, in a 5–4 decision authored by Justice
Thomas, assumed without deciding that an unaccepted offer can moot a plaintiff’s claim.123 The Court went on to hold that the FLSA collective action was
not justiciable because the lead plaintiff’s claim was moot.124
Justice Kagan, joined by three justices, wrote a fiery dissent focusing on Rule
68.125 She claimed that the majority “resolve[d] an imaginary question” that
was grounded in the fundamental error that an unaccepted offer pursuant to
Rule 68 could moot a claim.126 Justice Kagan reasoned that a case only
becomes moot when a court cannot “grant any effectual relief whatever to the
prevailing party.”127 “When a plaintiff rejects such an offer—however good the
terms—her interest in the lawsuit remains just what it was before. . . . An
unaccepted settlement offer—like any unaccepted contract offer—is a legal
nullity, with no operative effect.”128 The dissent advised the Third Circuit to
revisit its Rule 68 decisions and sent a warning “note to all other courts of
appeals: Don’t try this at home.”129
Despite the troubling trend in Rule 68 interpretation, only months after the
decision in Genesis, the Ninth Circuit heeded Justice Kagan’s warning and
became the first circuit to reject the prevailing interpretation of Rule 68. In Diaz
v. First American Home Buyers Protection Corp., the court held that an
unaccepted Rule 68 offer did not moot a claim.130 The court recognized that it
was going against the reasoning of most courts to approach the question, but
nevertheless found Justice Kagan’s reasoning persuasive.131 A year later, the
Eleventh Circuit followed suit and held that “dismissing a case based on an
unaccepted offer . . . is flatly inconsistent with [Rule 68].”132 Further, after
Genesis and Diaz, Judge Hamilton of the Seventh Circuit signaled in a footnote
122. 133 S. Ct. 1523, 1526 (2013). Many of the Rule 68 cases have addressed mootness in the
collective action or class action context. This Note does not address these issues largely because these
cases rest upon a fundamental flaw in reasoning—that the lead plaintiff’s claim can be mooted at all
through an unaccepted Rule 68 offer.
123. See id. at 1529. The Court did, however, recognize that there was a circuit split on the issue. See
id. at 1528 (citing McCauley, 402 F.3d at 342; Weiss, 385 F.3d at 340). It is odd, perhaps, that the
majority cited to Weiss because although it seems clear that the Third Circuit finds that an unaccepted
offer moots a claim, Weiss, 385 F.3d at 340, it is unclear whether the Third Circuit would follow the
Seventh Circuit’s approach, or the slightly less harsh approach of the Sixth Circuit.
124. See Genesis, 133 S. Ct. at 1526.
125. See id. at 1532–37 (Kagan, J., dissenting).
126. Id. at 1532.
127. Id. at 1533 (internal quotation mark omitted).
128. Id.
129. Id. at 1534.
130. 732 F.3d 948, 950 (9th Cir. 2013).
131. See id. at 953.
132. Stein v. Buccaneers Ltd. P’ship, 772 F.3d 698, 702 (11th Cir. 2014).
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that “there are reasons to question [the Seventh Circuit’s] approach” to Rule
68.133
II. DON’T TRY THIS AT HOME
Unfortunately, Justice Kagan’s words of warning have come after a number
of circuits have already decided that an unaccepted Rule 68 offer can moot a
plaintiff’s claim. This interpretation of Rule 68 does not simply deter meritorious litigation, as Justice Brennan feared in his Marek dissent, but has the
potential to end meritorious litigation—often to the detriment of plaintiffs.
These circuits are, in the words of Justice Kagan, “wrong, wrong, and wrong
again.”134 A court considering or reconsidering the scope of Rule 68 should not
replicate the mistakes of the circuits mentioned above, but should instead
engage in a more rigorous analysis that considers the following factors: (1) the
text of the Rule, (2) the purpose of the Rule, (3) the procedural safeguards
already in place, and (4) the nonmonetary interests of both plaintiffs and the
public-at-large.
A. THE TEXT OF THE RULE DOES NOT SUPPORT MOOTING A CLAIM
The text of Rule 68 contradicts the conclusion that a full, but unaccepted,
offer of judgment moots a plaintiff’s claim. Subsection (b) addresses unaccepted offers and expressly precludes admission of a Rule 68 offer for any use
other than consideration of costs. The subsection’s first clause states that “[a]n
unaccepted offer is considered withdrawn.”135 And, as Justice Kagan stated,
“[a]s every first-year law student learns, the recipient’s rejection of an offer
‘leaves the matter as if no offer had ever been made.’”136 Subsection (b)’s first
clause should settle the question, period. But there is more.
Subsection (b) goes on to explain precisely when evidence of an unaccepted
offer is admissible: “Evidence of an unaccepted offer is not admissible except in
a proceeding to determine costs.”137 This statement does not leave open the
possibility that there are also other instances in which admitting or using
the offer would be proper. Instead, it explains the single exception for when the
rejected offer can be introduced into a judicial proceeding. This list of one is
exhaustive, not illustrative.
The Seventh, Second, and Third Circuits make no effort to reconcile their
interpretations with the plain text of the Rule.138 Perhaps avoiding the inconsistency is the prudent tack—it is unclear how the courts would otherwise be able
133. Scott v. Westlake Servs. LLC, 740 F.3d 1124, 1126 n.1 (7th Cir. 2014).
134. Genesis, 133 S. Ct. at 1533 (Kagan, J., dissenting).
135. FED. R. CIV. P. 68(b).
136. Genesis, 133 S. Ct. at 1533 (Kagan, J., dissenting) (quoting Minneapolis & St. Louis Ry. Co. v.
Columbus Rolling-Mill Co., 119 U.S. 149, 151 (1886)).
137. FED. R. CIV. P. 68(b).
138. See, e.g., McCauley v. Trans Union, L.L.C., 402 F.3d 340 (2d Cir. 2005); Weiss v. Regal
Collections, 385 F.3d 337 (3d Cir. 2004); Rand v. Monsanto Co., 926 F.2d 596 (7th Cir. 1991).
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to make their precedents square with subsection (b). These courts allow defendants to introduce unaccepted Rule 68 offers as evidence that a plaintiff’s claim
has become moot, a result that the Rule’s language does not allow.
The Sixth Circuit, on the other hand, has addressed subsection (b), but it
engages in an interpretation that is not supported by the text. The court has
reasoned that what the Rule really means is only that the rejected offer cannot
be introduced as evidence of the defendant’s culpability. “In other words, an
offer of judgment cannot be used to support or challenge the merits of a claim
and to thereby influence the trier of fact.”139 But there is no way to reconcile the
Sixth Circuit’s interpretation with the clear and concise language of subsection
(b).
Allowing an unaccepted offer to moot a plaintiff’s claim also renders portions
of subsection (a) superfluous by leaving the plaintiff without a real choice after
the defendant makes a Rule 68 offer for complete monetary or injunctive relief.
Subsection (a) gives the plaintiff fourteen days to decide whether or not to
accept an offer.140 Mooting a claim because of an unaccepted Rule 68 offer
deprives the plaintiff of any meaningful choice. In the Seventh Circuit, the
courts effectively command the plaintiff to accept the offer or lose outright. In
the Sixth and Second Circuits, the courts give plaintiffs an illusory choice:
Accept the offer or it will be accepted for you by operation of law. If the
drafters of the rules, however, had ever intended such an operation, there would
be no reason for subsection (a)’s requirements that the offer be served to the
plaintiff, that the plaintiff have time to mull it over, and that the plaintiff
respond by service to the court.141
As described in section I.B above, the cost-shifting mechanism of the Rule
places significant financial risk on a plaintiff who refuses an offer to settle.
Thus, the decision to refuse an offer and proceed to trial is a consequential
decision for the plaintiff. But the decision is the plaintiff’s to make. Allowing an
unaccepted Rule 68 offer to moot a plaintiff’s claim ignores that the Rule
expressly gives the choice to the plaintiff, and contradicts the general rule
articulated by the Supreme Court that “[o]ur adversary system is designed
around the premise that the parties know what is best for them.”142
The drafters of the rules could have drafted Rule 68 to moot a plaintiff’s
claim following an unaccepted offer of full monetary relief. They did not.
Instead, the drafters created a rule that gives plaintiffs a choice, carefully
outlines the procedure by which that choice is made, and imposes risk through a
cost-shifting mechanism. Allowing an unaccepted offer of full monetary relief
139. O’Brien v. Ed Donnelly Enters., 575 F.3d 567, 574 (6th Cir. 2009).
140. See FED. R. CIV. P. 68(a).
141. See id.; see also NORMAN SINGER & SHAMBIE SINGER, 2A SUTHERLAND STATUTORY CONSTRUCTION
§ 46:6 (7th ed. 2014) (“It is an elementary rule of construction that effect must be given, if possible, to
every word, clause and sentence of a statute.” (internal quotation marks omitted)).
142. Greenlaw v. United States, 554 U.S. 237, 244 (2008) (alteration in original) (internal quotation
mark omitted).
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to moot a plaintiff’s claim cannot be squared with the text of the Rule.
B. THE PURPOSE OF RULE 68 IS TO ENCOURAGE CONSENSUAL SETTLEMENT
Not only does the current trend of Rule 68 jurisprudence violate the black
letter of the Rule, it also goes against the purpose. Delta and Marek, the two
Supreme Court cases to analyze the purpose of Rule 68, differed in how broadly
the Rule should be construed.143 But despite their differences, the underlying
premise of both decisions is that the fundamental purpose of the Rule is to
encourage consensual settlement.144 Allowing an unaccepted offer to moot a
plaintiff’s claim cannot find support in either Delta or Marek because it does not
encourage settlement—it coerces settlement.
Ending litigation on the merits because a plaintiff has refused a Rule 68 offer
for full monetary relief takes away any choice a plaintiff has in the matter. Not
even the most creative reading can construe this result as the “encouragement”
for which the Rule was designed. The threat of having one’s case mooted surely
does not encourage plaintiffs to “think very hard”145 about continuing to
litigate—there is not much to think about when there is no real choice.
Shifting costs to the plaintiff under Rule 68 functions as a penalty for the
choice to continue to trial. Mooting a plaintiff’s claim because of an unaccepted
Rule 68 offer does not penalize plaintiffs for their choice whether to risk
trial—it removes that choice. The Rule is not being used to encourage settlements; it is being used to force settlements.
C. THE SUBSTANTIAL SAFEGUARDS PROVIDED BY THE FEDERAL RULES HIGHLIGHT THE
INCORRECT INTERPRETATION OF RULE 68
The recent change in interpretation of Rule 68—against the spirit of encouraging settlement—arguably could be justified if it could be shown that the change
was needed to protect a defendant’s ability to end litigation. However, the
Federal Rules of Civil Procedure already provide substantial safeguards to
defendants that want to end litigation. For example, the rules provide safeguards
from nonmeritorious litigation,146 regardless of whether the claims are brought
in good faith.147 Further, Rule 41 allows for settlement and dismissal, and Rule
143. See supra section I.C–D. The majority in Genesis assumed without deciding that a Rule 68
offer can be used to moot a plaintiff’s claim, but it did not address the purpose of the Rule. See Genesis
Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1526, 1528–29 (2013).
144. See supra section I.C–D.
145. Marek v. Chesny, 473 U.S. 1, 11 (1985).
146. There are a variety of pretrial motions that ensure that a plaintiff’s case has merit, available for
the defendant’s use at every step of the way. First, a plaintiff must meet the Twombly–Iqbal requirements to even make her way into court and survive a motion to dismiss under Rule 12(b)(6). See
Ashcroft v. Iqbal, 556 U.S. 662, 679–80 (2009). Summary judgment, under Rule 56, is available before
and after discovery. FED. R. CIV. P. 56(b) (allowing for summary judgment motion “at any time until 30
days after the close of all discovery”). Both summary judgment and motions to dismiss can be powerful
tools to defend against nonmeritorious suits. This is so even when a claim is brought in good faith, but
does not succeed as a matter of law.
147. There are, of course, nonmeritorious claims that are not brought in good faith but only brought
to harass defendants. The rules provide a safeguard here too. Rule 11 allows for a court to sanction
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55 provides a mechanism for defendants to default.
Under Rule 41, parties are free to come to mutually agreeable private
settlement terms and dismiss the case148 without being subject to the procedural
requirements of Rule 68.149 A private agreement under Rule 41 allows plaintiffs
and defendants to freely trade offers and counteroffers. Unlike an enforceable
judgment under Rule 68, a private settlement under Rule 41(a)(1) must be
enforced in state court as a completely new action under state contract law.150
But if the parties seek an enforceable judgment pursuant to a private settlement,
the Federal Rules provide for that too. Rule 41(a)(2) allows for dismissal at a
plaintiff’s request, with judicial enforcement of “terms that the court considers
proper.”151
The rules also already provide protection from meritorious litigation when a
defendant simply wants to give up. Rule 55 allows for default judgment when
a defendant has failed to answer or otherwise defend a claim,152 and provides
defendants the ability to surrender if they do not desire to litigate. Default
judgment does not result in a finding of liability, but, unlike a Rule 68 judgment,
default does not give defendants the ability to explicitly disclaim liability.
Default under Rule 55 serves as a useful foil for understanding the circuit
courts’ errors in interpreting Rule 68. Instead of forcing defendants to use Rule
55 when they desire to surrender, courts have allowed defendants to use Rule 68
to surrender and disclaim liability. For example, in Chathas v. Local 134
International Brotherhood of Electrical Workers, the Seventh Circuit held that a
case was moot when an unaccepted Rule 68 offer contained the full injunctive
and monetary relief sought, but no admission of liability.153 The court rejected
the plaintiff’s argument that the offer was not complete because there is a
cognizable interest in a finding of liability. The court reasoned that a party could
not continue litigation solely to get a finding of liability because one cannot
“force his opponent to confess to having violated the law, as it is always open to
a defendant to default and suffer judgment to be entered against him without his
admitting anything.”154 Thus, the court held that because a default judgment
does not contain an admission of liability, a plaintiff cannot insist on a finding
of liability in a Rule 68 offer.
attorneys that bring claims in bad faith, which they know are being brought for the purpose of
harassment or to impose costs. See FED. R. CIV. P. 11. Rule 11 even provides that in such cases the court
has power to award “part or all of the reasonable attorney’s fees and other expenses directly resulting
from the violation.” Id.
148. See FED. R. CIV. P. 41.
149. See FED. R. CIV. P. 68(a) (requiring, among other things, that the offer be in writing and remain
open for fourteen days).
150. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381–82 (1994).
151. FED. R. CIV. P. 41(a)(2).
152. See FED. R. CIV. P. 55.
153. 233 F.3d 508, 512 (7th Cir. 2000).
154. Id.
2015]
743
The Second Circuit makes a similar mistake and treats an unaccepted Rule 68
offer as a default judgment, finding default to be a “better resolution” that
would “serve [the defendant’s] desire to end the case, would award [the
plaintiff] his damages and, like the Rule 68 settlement offer, would have no
preclusive effect in other litigation.”155 The court treats an unaccepted Rule 68
offer containing all monetary relief and a default as one and the same. But if
there is truly no difference, then there is no justification for such a labored
reading of Rule 68 when Rule 55 is readily available.
There are, however, differences between a default and a Rule 68 offer of
judgment, even though both generally lack preclusive effect. Defendants have
an interest in explicitly disclaiming liability in an offer of judgment, allowed
under Rule 68, which is not an option through a default judgment. A recent
disagreement between Judge Rakoff of the Southern District of New York and
the Second Circuit highlights the value of a finding of liability. In SEC v.
Citigroup Global Markets Inc., the district court refused to approve a settlement
agreed to by the SEC and Citibank over SEC claims that Citibank had fleeced
its customers by betting against an underperforming fund that it had marketed to
these same customers, resulting in more than $700 million in customer losses.156
The court refused to give the settlement the stamp of judicial approval partly
because the terms of the settlement allowed Citibank to disclaim liability, and
thus was more a cost of doing business than it was a mea culpa.157
The Second Circuit stayed the decision of the district court pending appeal,
and took issue with, among other things, Judge Rakoff’s reasoning regarding
disclaimer of liability.158 Importantly, the Second Circuit did not disagree with
Judge Rakoff that there was value in the disclaimer of liability.159 In fact, the
court’s disagreement regarded precisely how valuable a disclaimer of liability
155. McCauley v. Trans Union, L.L.C., 402 F.3d 340, 342 (2d Cir. 2005). It could be argued that
because this result is actually no different than a Rule 55 default judgment, the Second Circuit is not
misinterpreting the Rule. But even though the Second Circuit’s approach does not result in the same
hardship to plaintiffs as the Seventh Circuit’s, it is incorrect because it reads into Rule 68 a use that is
not contemplated by the Rule and is available through a Rule 55 default judgment. Although this error
may seem harmless because the result is the same, it contributes to the move away from the clear
language and purpose of Rule 68. It is also unclear, after the decision in Doyle, whether the Second
Circuit still enters a default judgment as opposed to dismissing a plaintiff’s claims. See Doyle v.
Midland Credit Mgmt., 722 F.3d 78, 81 (2d Cir. 2013) (dismissing a plaintiff’s claim as moot when the
defendant made an offer of judgment that did not comply with the strict requirements of Rule 68); see
also Cabala v. Crowley, 736 F.3d 226, 230 n.4 (2d Cir. 2013) (“Since Doyle [is] not inconsistent with
our holding here, we need not address whether it is inconsistent with McCauley, which was not cited by
the Doyle court.”). Further, a Rule 55 default is more widely available because it is not subject to the
timing provisions of Rule 68. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 130
(2d Cir. 2011) (holding that Rule 55’s failure to “otherwise defend” can be satisfied when a defendant
engages in pretrial motions, and then later ceases to defend a claim).
156. 827 F. Supp. 2d 328, 329 (S.D.N.Y. 2011). Although Citigroup is not a Rule 68 case, the court’s
reasoning about the value of a finding of liability is important to Rule 68 analysis.
157. Id. at 332–33.
158. See SEC v. Citigroup Global Mkts. Inc., 673 F.3d 158, 163 (2d Cir. 2012).
159. See id.
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can be. The court reasoned that the SEC might have settled without an admission of liability because Citibank might have refused any settlement that
contained an admission.160 “A settlement is by definition a compromise,”161 so
the Second Circuit reasoned that the SEC may have taken into account the
inability to prove liability, or the cost in doing so, when it agreed to compromise
and settle on specific terms with Citibank.162 Here, the Second Circuit correctly
recognized that a disclaimer of liability is a valuable commodity, with a price,
and is often traded as part of a compromise.
In light of this recognition that a disclaimer of liability has value for a
defendant, it is unclear why courts, including the Second Circuit, refuse to
recognize the value in the context of Rule 68. A default judgment, excluding the
explicit waiver of liability, sends a different signal than an entry of judgment
under Rule 68 that includes the explicit waiver. One says “I give up,” and the
other says “I am settling, but do not admit that I did anything wrong.”
To treat the two as the same is a mistake. Default allows a court to enter
“judgment for the plaintiff when the defendant unconditionally surrenders and
only the plaintiff’s obstinacy or madness prevents her from accepting total
victory.”163 A default is an unconditional surrender. An offer of judgment is a
conditional settlement, and “settlement is by definition a compromise,”164 not a
surrender. Refusal to recognize a plaintiff’s interest in a finding of liability, and
thus conflating a default judgment and an offer under Rule 68, takes out of play
a term (finding of liability) over which the parties can negotiate and automatically gives it to defendants. This puts a thumb on the scale for defendants and
places them in better bargaining position from the start. When viewed in this
light, there is no reason for a defendant to resort to a default judgment as
opposed to using Rule 68, which allows defendants to end meritorious litigation
and explicitly disclaim liability.165
There is, and historically has been, a recognition that there is a value in the
admission of liability, and nothing in the Rule supports depriving a plaintiff of
this value. Thus, there is no reason to read the federal rules in such a way as to
give defendants two ways to surrender, both with the same effect, but one
giving the defendant the ability to explicitly disclaim liability.
Whether through default or settlement, defendants already have ample ways
to end litigation. Allowing an unaccepted Rule 68 offer to moot a plaintiff’s
160. See id.
161. Id. at 166.
162. See id. at 165.
163. Genesis Healthcare Corp. v. Symcyzk, 133 S. Ct. 1523, 1536 (2013) (Kagan, J., dissenting).
164. Citigroup Global Mkts. Inc., 673 F.3d at 166.
165. Ignoring the value of a finding of liability in a Rule 68 offer also goes against the historical
underpinnings of the Rule. See Bone, supra note 21, at 1596. Whether Rule 68 was originally enacted
to encourage settlement or punish recalcitrant plaintiffs, it was generally recognized that for a plaintiff
to receive everything he could receive at trial, the defendant also had to admit to liability. In his article,
Professor Bone outlines that the operation of the statutes on which Rule 68 was based largely required
not only that the defendant pay all requested damages, but also resulted in a finding of liability. See id.
2015]
745
claim overlooks the procedural safeguards provided by the federal rules.
D. PLAINTIFFS AND THE PUBLIC HAVE A STRONG INTEREST IN ADJUDICATION
ON THE MERITS
Courts justify mooting a plaintiff’s claim because after a defendant has
offered full monetary or injunctive relief, the plaintiff has nothing more to gain
from litigation. As the Seventh Circuit put it, “[y]ou cannot persist in suing after
you’ve won.”166 But by only focusing on the monetary or injunctive demands of
a plaintiff’s claim, courts fail to take into account the plaintiff’s personal
interests and the larger public interest in a finding of whether or not a defendant
is liable.
Courts have ignored that many legal claims involve dignitary harms as well
as financial harms. “Actions that would humiliate, torment, threaten, intimidate,
pressure, demean, frighten, outrage, or injure a reasonable person are actions
that can be said to injure an individual’s dignitary interest.”167 But neither a
statute nor a court can easily quantify in monetary terms the humiliation of
being hounded by creditors, or the intimidation in being treated as a lesser
employee because of your race, gender, sexual orientation, or religion. Because
financial recovery is often only an imperfect attempt to make one whole after an
injury, sometimes plaintiffs want public vindication and useful precedent more
than any financial recovery.168 Courts should recognize the value in public
vindication as a remedy for dignitary harms.
A copyright infringement case provides a fitting example. In Lish v. Harper’s
Magazine Foundation, a professor brought suit for, among other claims, libel
and copyright infringement against Harper’s Magazine.169 The magazine had
published a letter that the professor had written to his students, but Harper’s did
not indicate that it had significantly edited the letter.170 All claims, other than
the copyright claim, were dismissed, and Harper’s made an offer pursuant to
Rule 68 for $250. The plaintiff refused the offer and at trial won judgment on
his copyright claim, but received no damages. Harper’s moved to charge costs
to Lish, but the court refused, reasoning that “vindication of Lish’s authorial
right to control the first publication of his [l]etter is a more ‘favorable’ outcome
than the payment of $250 to him.”171 Further, the court recognized that “the
judicial determination of copyright violation confers a benefit on a plaintiff
which he would not have obtained merely by the entry of judgment in his favor:
166. Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir. 1999).
167. Eddie A. Jauregui, Note, The Citizenship Harms of Workplace Discrimination, 40 COLUM. J.L.
& SOC. PROBS. 347, 353 (2007) (quoting Rosa Ehrenreich, Dignity and Discrimination: Toward a
Pluralistic Understanding of Workplace Harassment, 88 GEO. L.J. 1, 22 (1999)).
168. See, e.g., Alliance to End Repression v. City of Chicago, 820 F.2d 873, 874 (refusing claim of
plaintiffs that said, “we are not interested in the money, it’s the principle of the constitutionality of
secret police operations”).
169. 148 F.R.D. 516, 517 (S.D.N.Y. 1993).
170. See id.
171. Id. at 520.
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[Vol. 103:723
that is, to use the precedent established by a court finding in future instances.”172 Lish received two important nonmonetary benefits through
litigation—the public vindication of his position, and the precedential value of
the decision.
Unfortunately, just over a decade later, the Southern District of New York
would disavow the reasoning of Lish in McCauley v. Trans Union, LLC—a case
that went on to create the current rule in the Second Circuit.173 In McCauley,
the plaintiff sued under the Fair Credit Reporting Act and refused the defendantdebt-collector’s Rule 68 offer to settle.174 The defendant, Trans Union, moved
to dismiss the case, but the plaintiff, relying on Lish, argued that he had interests
other than monetary damages that could only be satisfied through a finding of
liability. The court summarily dealt with Lish, first by stating that it had no
precedential value, and then by reasoning that because “Trans Union offered
McCauley all the damages that he was seeking, there was nothing further that
th[e] [c]ourt could do to redress the injury that McCauley claims Trans Union
caused him.”175 The court reasoned that because the defendant offered all of the
damages sought by McCauley, it offered everything that the plaintiff could
receive. But the court made no effort to distinguish Lish in any meaningful way,
and it did not explain why there was no cognizable value in a finding of
liability. The district court dismissed the action.176
On appeal, the Second Circuit overturned the dismissal of the action and held
that the court should treat the refused offer as a default by the defendant.177
Importantly, however, the court affirmed the portion of the decision that stated
that McCauley had been offered everything that he could have received at
trial.178 Like the district court, the Second Circuit did not explain why full
monetary relief was the only relief in which the plaintiff had an interest.
Both the Second Circuit and the district court were wrong. For plaintiffs like
Lish, there is value in a finding of liability—the public vindication of a position.
One need not think hard to recognize other scenarios in which a plaintiff has a
legitimate interest in public vindication. For example, a libel suit by someone
who has wrongly been pilloried in the press, or someone whose creditor
hounded their family and coworkers trying to collect a debt that they never
owed. To plaintiffs in these positions, a lawsuit may be about much more than
money damages—a favorable judgment can have value in itself.
Similarly, as Lish illustrates, there are good reasons why a defendant would
want to avoid trial. In Lish, the defendant was to found to have violated Lish’s
172.
173.
174.
175.
176.
177.
178.
Id.
304 F. Supp. 2d 539, 540 (S.D.N.Y. 2004).
See id.
Id.
Id. at 541.
402 F.3d 340, 342 (2d Cir. 2005).
See id.
2015]
747
copyright.179 It is reasonable to assume that for a literary publication, a public
finding that it had violated an author’s copyright was far more damaging than a $250
settlement. As discussed above, the damage of a finding of liability is only further
evidenced by the fact that defendants regularly insist on disclaimers of liability.180 It is
illogical to recognize that defendants are affected by a finding of liability, but to refuse
to recognize that plaintiffs may benefit from that finding as well.
But it is not only parties to a case that have an interest in liability determinations; there is also a broader societal interest that is served by allowing
adjudication on the merits. A finding of liability, or even a default judgment, can
serve a deterrent effect that a forced Rule 68 offer of judgment does not have. A
court finding that a company discriminated in promotions or that a lender had
abusive collection practices can expose the wrongdoer to public scorn. Public
shaming can be a powerful incentive for bad actors to improve their conduct,181
and courts should not be complicit in using Rule 68 to allow bad actors to force
settlements and disclaim liability.
Federal courts provide a public forum to vindicate public rights, and the
vindication of rights often requires more than money damages. Both plaintiffs
and the public have interests in adjudication on the merits, and courts construing
Rule 68 have overlooked the importance of these interests. Courts examining or
re-examining Rule 68 should be cautious before holding that an offer that
disclaims liability but satisfies the monetary or injunctive relief gives a plaintiff
everything that he could want.
III. EVEN MORE TROUBLING DEVELOPMENTS: CAN INFORMAL
OFFERS MOOT CLAIMS?
As explained above, courts cannot justify mooting a claim pursuant to a Rule
68 offer of judgment. Some lower courts, however, have moved in an even
more troubling direction based on the same reasoning and allowed informal
offers—offers that do not satisfy the procedural requirements of Rule 68, such
as those made verbally—to moot a plaintiff’s claims.182 Informal offers present
significant problems that do not arise in the context of a formal offer. The
Eleventh and Second Circuits addressed the issue squarely and rightfully refused to allow an informal offer to moot a plaintiff’s claim.183 These circuits
reasoned that, unless made pursuant to Rule 68, an informal offer was merely an
offer for private settlement, not for judgment.184
The Eleventh Circuit correctly reasoned that the effect of treating the offer as
a private settlement would be that if the defendant refused to pay, the plaintiff
179. See Lish v. Harper’s Magazine Found., 148 F.R.D. 516, 520 (S.D.N.Y. 1993).
180. See supra section II.C.
181. See generally, e.g., David A. Skeel, Jr., Shaming in Corporate Law, 149 U. PA. L. REV. 1811
(2001).
182. See, e.g., Murphy v. Equifax Check Servs., Inc., 35 F. Supp. 2d 200, 201 (D. Conn. 1999).
183. See Cabala v. Crowley, 736 F.3d 226, 230 (2d Cir. 2013); Zinni v. ER Solutions, Inc., 692 F.3d
1162, 1164 (11th Cir. 2012), cert. denied, 133 S. Ct. 2337 (2013).
184. See Cabala, 736 F.3d at 230; Zinni, 692 F.3d at 1164.
748
[Vol. 103:723
could not return to the federal court and have the court enforce its judgment
because there would be no judgment.185 Instead, the only remedy would be to
file a new claim in state court and have the state court enforce the private
settlement under state contract law.186
A private settlement also strips federal courts of the ability to award attorney’s fees. In Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, the Supreme Court addressed the
requirements for the award of attorney’s fees to “prevailing parties” under
statutory fee-shifting regimes.187 The Court held that federal courts are without
power to award attorney’s fees unless there is a change in the legal relationships
of the parties through the imprimatur of the court.188 Allowing a defendant to
moot a claim through an informal offer of settlement would thus not only take
away the ability to have a federal court enforce the settlement, but it would also
remove the federal court’s ability to award attorney’s fees to a prevailing party.
Cases allowing informal settlement offers to moot claims are rarer and have
yet to receive the approval of any circuit. However, they seem to be an
extension of the distortion of Rule 68 that several circuits have already accepted. If, as explained above, formal offers pursuant to Rule 68 should not moot a
claim, then under the same reasoning, informal offers may not moot a claim either. A
private settlement, unlike a Rule 68 offer of judgment, does not involve the court and
thus, is only a “promise to pay,” not an enforceable judgment.
CONCLUSION
The language and logic of Rule 68 compel the conclusion that an unaccepted
offer to settle does not moot a plaintiff’s claim. Further, the purpose of the Rule
is to encourage settlement, and so any interpretive questions should be resolved
to that end.189 The threat of a mooted claim under Rule 68 does not encourage
settlement. It does not influence plaintiffs to “think very hard,” it simply forces
settlement upon them.
But a desire to facilitate settlement does not justify refusing to recognize
plaintiffs’ legitimate interests and should not result in the wholesale loss of
meritorious claims. Mooting a plaintiff’s claim because of an unaccepted offer
is not supported by the text, the purpose, or the structure of the rules, and does a
great disservice to plaintiffs and the public generally. Hopefully courts will
follow Justice Kagan’s reasoning and reverse the trend of distorted application
of Rule 68.
185. See Zinni, 692 F.3d at 1168.
186. See, e.g., Cabala, 736 F.3d at 230 (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 381–82 (1994)).
187. 532 U.S. 598, 601–02 (2001).
188. See id. at 604.
189. Reasonable analysts differ on how Rule 68 is best interpreted to encourage settlement. See
supra section I.C–E. Because this Note addresses an interpretation that, the author believes, does not
serve to encourage settlement in any meaningful way, an argument as to how Rule 68 should properly
be interpreted is outside of the scope of this Note.

Don`t Try This at Home: The Troubling Distortion of Rule 68

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