In his article entitled “Revisiting the American Rule: Fee-Shifting Strategies for NY Litigators” (New York Law Journal, February 8, 2019), Robert S. Friedman argues that an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure is a potent means for a defendant to limit its exposure in litigation. That is undoubtedly true, but Rule 68 does not sweep quite as broadly as Mr. Friedman suggests.

He states, “In Marek v. Chesney, 473 U.S. 1 (1985), the U.S. Supreme Court held that, while attorney fees are not recoverable as part of costs, where there is statutory fee-shifting, a Rule 68 offer of judgment can establish the baseline for a successful litigant otherwise entitled to legal fees.” Mr. Friedman goes on to contend that “a civil defendant can stop the clock on statutory attorney fees by making an offer of judgment early in a litigation.”

This assertion omits an important nuance. Rule 68(d) provides that “[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.” In Marek, the Supreme Court held that statutory fees under 42 U.S.C. § 1988 are subject to the cost-shifting provision of Rule 68 because such fees may be awarded “as part of the costs” under the statute. 473 U.S. at 9.

To be sure, many types of civil rights actions are subject to fee-shifting under § 1988, including those brought under 42 U.S.C. § 1983, Title VI of the Civil Rights Act of 1964, and Title IX of the Higher Education Act of 1965, and in such cases a plaintiff's fees would indeed be cut off at the point where a Rule 68 offer is rejected. Under Title VII, as well, fees are characterized as “part of the costs,” 42 U.S.C. § 20000e-5(k), and a rejected offer of judgment can cut off fees in those cases as well.

However, under other remedial statutes, attorneys' fees are distinguished from costs. The Fair Labor Standards Act, for example, provides that when a plaintiff prevails, “[t]he court in such action shall . . . allow a reasonable attorney's fee to be paid by the defendant, and costs of the action.” 29 U.S.C. § 216(b). In cases brought under the FLSA, then, attorneys' fees are not part of the costs, and an unaccepted Rule 68 offer does not disqualify plaintiffs from obtaining fees for work performed after the offer was rejected, even if the ultimate recovery is less than the offer. See, e.g., Gurule v. Land Guardian, Inc., 912 F.3d 252, 260 (5th Cir. 2018); Souryavong v. Lackawanna County, 159 F. Supp. 3d 514, 520 (M.D. Pa. 2016); Mogilevsky v. Bally Total Fitness Corp., 311 F. Supp. 2d 212, 219-20 (D. Mass. 2004).

As the court noted in Gurule, an unaccepted offer may still have an impact on the fee award since it is relevant to the plaintiff's degree of success, but it does not altogether foreclose fees for later work. 912 F.3d at 260-62.

A full evaluation of the impact of Rule 68 on a defendant's exposure in a case involving statutory fee-shifting, therefore, requires analysis of whether the statute at issue characterizes attorneys' fees as a part of the costs. If it does not, the clock will keep running for the plaintiff's attorneys' fees even after a Rule 68 offer is rejected.

James Francis is a distinguished lecturer at CUNY School of Law and a former United States magistrate judge in the Southern District of New York.