Federal Rule of Civil Procedure 68’s purpose is to encourage settlement and avoid litigation. Marek v. Chesny, 473 U.S. 1, 6–7 (1985). Yet, because of confusion surrounding the rule’s operation and its limited utility in cases that do not involve fee shifting, it is a procedural device that federal practitioners have rarely used. This article outlines how Rule 68 operates in the area of attorney fees and highlights issues federal court litigators should be aware of when drafting or considering a Rule 68 offer.
Rule 68 allows a party defending a claim, at least 14 days before the date set for trial, to make an offer of judgment to the other party. See Fed. R. Civ. P. 68(a). If the other party accepts the offer, the clerk must enter judgment per the offer’s terms. Id. However, if the other party rejects the offer and ultimately obtains a less favorable judgment, it then must pay the costs incurred after the offer was made. See Fed. R. Civ. P. 68(d).