North Carolina Business Litigation Report

Fourth Circuit Triples Settlement Amount Because Of "Drafting Error" In Offer Of Judgment

If you are making an Offer of Judgment per Rule 68 of the Federal Rules of Civil Procedure, be sure to think about whether to include costs and attorneys' fees in the amount offered.  Yesterday, the Fourth Circuit underscored the need for "precise drafting" of such Offers,and required the offering party to pay triple the amount specified in its imprecise Offer to cover the attorneys' fees and other costs not mentioned in the Offer.  The case is Bosley v. Mineral County Commission.

The Plaintiff had made an offer "in the amount of Thirty Thousand Dollars ($30,000.00) as full and complete satisfaction of [Plaintiff's] claim against . . . Defendants."  The Offer was accepted by the Defendants, who then made a motion for an award of attorneys' fees pursuant to a fee shifting statute, 42 U.S.C. §1988(b), as the prevailing party.

When the District Court awarded over $66,000 in attorneys' fees (which are defined as "costs" per 42 U.S.C. §1988(b)) plus other recoverable costs on top of the $30,000 offer, the Plaintiff screamed that its Offer in "full and complete satisfaction" of the claims  had implicitly included all attorneys' fees because attorneys' fees had been requested in the ad damnum clause of the complaint.  Judge Davis, writing for the Court, said this contention was without merit."

Quoting a Supreme Court opinion on Rule 68, Marek v. Chesney, 473 U.S. 1 (1985), Judge Davis wrote:

if the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion. . . it determines to be sufficient to cover the costs.

Judge Davis declined to consider the negotiations between the parties leading to the Rule 68 Offer, which the Plaintiff said would show that the $30,000 Offer had been understood to include fees and other costs.  He said that considering such evidence would be "imprudent, impractical, and . . . wholly foreclosed by the reasoning of [the Supreme Court's Marek decision."

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Mack Sperling
Brooks Pierce, LLP
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