Rewriting Rule 68: Realizing the Benefits of the Federal Settlement Rule by Injecting Certainty into Offers of Judgment

By Danielle M. Shelton. Full text here.

This Article explores a court-sponsored settlement tool—Rule 68 of the Federal Rules of Civil Procedure—which allows defendants to formally offer settlement to plaintiffs. The rule differs from typical settlement devices because the plaintiff’s rejection of a Rule 68 settlement offer carries consequences. Namely, if the plaintiff receives less at trial than the amount of the rejected Rule 68 offer, she cannot recover otherwise awardable costs (and often attorneys’ fees) incurred after rejecting the offer. Thus, defendants use the rule to encourage plaintiffs to accept reasonable settlement offers before costs and attorneys’ fees escalate.

Because of the increasing costs of litigation and the case backlogs in the federal courts, alternative dispute resolution has gained attention over the years. Particular attention has arisen in recent years with regard to Rule 68. This Article focuses on a largely unexplored aspect of Rule 68—the offer itself and the complexities it currently and unnecessarily entails. While significant scholarship focuses on the consequences of rejecting Rule 68 offers, the scholarship does not explore the barriers that discourage parties from making such offers in the first place and from being able to fairly evaluate those offers. This Article proposes an amendment to Rule 68 that reduces barriers and expenses at the offer stage, thus encouraging fair use of the rule without resort to collateral litigation.