Rule 68 Offer of Judgment

Definition

Rule 68 Offer of Judgment is a provision in the Federal Rules of Civil Procedure that allows a party to make a formal offer to settle a case before trial, which, if not accepted, can impact the recovery of costs after the trial concludes. This rule encourages settlements by penalizing the party that refuses a reasonable offer if the final judgment is less favorable than the offer. It creates an incentive for parties to consider settlement seriously and promotes judicial efficiency.

5 Must Know Facts For Your Next Test

1. A Rule 68 offer must be made at least 14 days before trial, allowing the opposing party time to consider it.
2. If the offeree rejects a reasonable offer and fails to obtain a more favorable judgment, they may be responsible for costs incurred after the offer was made.
3. This rule applies only in federal courts and is designed to encourage settlements to reduce case backlog.
4. The offer is not admissible as evidence if the case goes to trial, ensuring that it does not prejudice the jury.
5. Rule 68 is often used strategically; defendants may leverage it to pressure plaintiffs into accepting settlements.

Review Questions

• How does a Rule 68 Offer of Judgment promote settlement between parties in litigation?
  • A Rule 68 Offer of Judgment promotes settlement by allowing one party to make a formal offer that can influence the outcome of litigation. If the offeree declines this reasonable offer and subsequently receives a less favorable judgment, they may be liable for costs incurred after the offer was made. This creates a financial incentive for parties to seriously consider settling their disputes rather than proceeding to trial, as they risk additional costs if their case does not succeed.
• Discuss how Rule 68 impacts the strategic decisions made by defendants in civil litigation.
  • Rule 68 significantly influences how defendants approach civil litigation by providing them with a tactical tool to encourage settlement. By making an early offer, defendants can gauge the plaintiff's willingness to settle while also creating pressure on them to accept if they believe they may not achieve a better outcome at trial. This strategy can lead to reduced legal costs and help resolve disputes more efficiently, benefiting both parties and the court system.
• Evaluate the potential consequences for plaintiffs who reject a Rule 68 Offer of Judgment and subsequently receive an unfavorable verdict.
  • If plaintiffs reject a Rule 68 Offer of Judgment and later receive an unfavorable verdict, they face significant financial consequences. Not only do they miss out on a potentially beneficial settlement, but they may also be required to pay the defendant's legal costs incurred after the offer was made if their final judgment is less favorable. This risk emphasizes the importance of carefully considering such offers and highlights how strategic decision-making plays a crucial role in civil litigation outcomes.

Related terms

Settlement:

An agreement reached between parties in a dispute, resolving the matter without going to trial.

Cost Shifting: The process of transferring the financial burden of legal costs from one party to another based on the outcome of litigation.

Judgment: A formal decision made by a court regarding the rights and liabilities of the parties in a legal action.