Michael R. Lied

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Inartful drafting required an employer that assumed it had settled a case to pay plaintiff’s attorney fees, too.

Juana Sanchez sued Prudential Pizza for sex discrimination, sexual harassment, and retaliation under Title VII of the Civil Rights Act of 1964.

Prudential Pizza made an offer of judgment which stated:

Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant, PRUDENTIAL PIZZA, INC., hereby offers to allow Judgment to be entered against them [sic] in this action in the amount of $30,000 including all of Plaintiff’s claims for relief. This offer of judgment is made for the purposes specified in Federal Rule of Civil Procedure 68, and is not to be construed as either an admission that Defendants, PRUDENTIAL PIZZA, INC., and JOHN APOSTOLOU are liable in this action, or that the Plaintiff has suffered any damage. This Offer of Judgment shall not be filed with the Court unless (a) accepted or (b) in a proceeding to determine costs.

Sanchez accepted the offer, and the district court entered judgment in Sanchez’s favor.

Sanchez then sought her attorney fees. She contended that Prudential Pizza’s Rule 68 offer was silent with regard to costs and fees, and that she was entitled to attorney fees under Title VII. The district court denied her motion, but Sanchez appealed.

Rule 68 permits a party defending a claim to serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. Where Plaintiff sues under a statute that provides for attorney fees for a prevailing plaintiff, the relevant costs include attorney fees. If the offer is accepted in writing within 14 days, either party may file the offer and acceptance with the court. The clerk must then enter judgment, meaning that the court has no discretion to alter or modify the parties’ agreement.

If the offer is rejected and the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred by defendant after the offer was made.

According to the court of appeals, Rule 68 offers are treated differently than ordinary contract offers. Because the consequences to the plaintiff of a Rule 68 offer are so great, the defendant bears the burden of any ambiguity concerning attorney fees.

Prudential Pizza argued that its offer referred to plaintiff’s “claims for relief,” and that Sanchez requested attorney fees and costs in her amended complaint.

The court of appeals rejected this argument, because this logic would allow a defendant to force a plaintiff to guess at the meaning of the offer.

Prudential Pizza’s offer was silent as to costs and fees, and the court of appeals resolved the ambiguity against Prudential Pizza.  Sanchez was therefore entitled to attorney fees and costs under the Rule 68 offer she accepted.

The lesson? Be sure that the offer of judgment clearly states that it includes costs and plaintiff’s attorney fees.

Sanchez v Prudential Pizza, Inc., 709 F.3d 689 (7th Cir. 2013)

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com