6 PerspectivesSeptember 30, 2008
Following my posts about how Rule 68 works in Part I of this series and why it works in Part II, I had spirited discussions with a few of you about when offers of judgment can be most effectively used. This post will highlight 9 situations where Rule 68 offers are more likely than most to be successful. As always, this is a nonexhaustive list based on my own experience; I welcome additional situations you’ve witnessed.
Nine cases and situations where I believe Rule 68 offers are the most likely to be successful include:
(i) Hindsight Avoiders. I have litigated against several trustees, and they know their judgment will someday be second-guessed — with 20/20 hindsight — if they lose at trial. Trustees and other fiduciary representatives are a bit different than individual plaintiffs who can “bet it all” on a bad case; like it or not, trustees may someday have to answer the question: “The Rule 68 offer was unconditional; how could you have left it on the table?” Or: “How could you not have understood how bad our case was when you had an offer of judgment in front of you?” Go ahead and use Rule 68 to make it hard for them to walk away.
(ii) The Bird in the Hand. Cases with natural breaks in damages are ripe for Rule 68 offers. Cases with contractual damage caps and cases where a back pay award is probable but additional damages are more speculative are just 2 examples. In these cases the defendant can offer the amount most likely to be awarded at trial, plus a few extra dollars to cover incidentals. These Rule 68 offers can force the plaintiff into the classic “bird in the hand” quandary — is the plaintiff so confident in her case for damages beyond the natural “break” that she will take on additional Rule 68 exposure to pursue those additional claims?
(iii) Upcoming Expenses. Plaintiffs and their lawyers have to invest in their cases, and they expect a return on that investment. One way for defendants to increase plaintiffs’ ROI is to simply pay them more; but since most of us don’t like that option, another is to settle the case before the plaintiff and her counsel invest any more in it. As a defendant, you should consider a Rule 68 offer 10 days before the plaintiff and her lawyer will have to fly to Berlin to take that deposition, just before they will have to ramp up with their expert, or while they budget for their upcoming e-discovery costs.
(iv) Upcoming Uncertainty. Sometimes plaintiffs would rather accept your offer than take a chance on a summary judgment hearing, an upcoming deposition that may hurt their case, a document production that may reveal harmful facts, or some other major case uncertainty. Take advantage of that discomfort to get your case settled.
(v) On the Heels of Bad News. Bad things happen, and occasionally they even happen to the other side. The plaintiff gives a bad deposition, your case is transferred to the “hanging judge,” or you finally find that document that will embarrass the plaintiff. Before your opponent can rationalize away their troubles, make a Rule 68 offer.
(vi) Nonsettlers’ Remorse. At least a few parties who fail to settle at mediation wish they could have a “do over”; they decide the next morning they didn’t really have the power to walk away, or they need a few days to imagine life with litigation for the next 2 years. Don’t be afraid to take advantage of nonsettlers’ remorse.
(vii) 10 Days Is a Long Time. You’ve seen Deal or No Deal. A contestant must respond to the bank’s cash offer and the clock ticks; spouses, “friends,” and the occasional brother-in-law give conflicting advice. Contestants make irrational decisions. In your case, 10 days is a long time and you have no idea who is pushing for settlement on the other side — particularly when there are multiple plaintiffs, corporate plaintiffs with competing coalitions, or unseen stakeholders. Take advantage of the fact that your offer is irrevocable for 10 days. You never know what might happen.
(viii) The Defendant Is Ready. Sometimes a defendant wants (or needs) to settle but he needs a way to start settlement discussions without appearing weak. Because Rule 68 can be seen as an offensive tool, defendants can use it when they need to open settlement talks.
(ix) When Your Plaintiff’s Lawyer Needs A Little Help. Occasionally your opponent needs to have that “tough discussion” with her client. Whether it’s before that next big expense, after that terrible deposition, or during pretrial preparation, sometimes opposing counsel needs a little help getting discussions started. If you want to settle the case, give the lawyer on the other side the excuse she needs to have that tough discussion.
You’ll be happy you did.
[In case you want links to all the posts in Settlement Perspectives' Rule 68 and Offers of Judgment Series, here they are:
- Rule 68 and Offers of Judgment, Part I: How They Work and Why You Should Care;
- Rule 68 and Offers of Judgment, Part II: Why They Work and How to Use Them;
- Rule 68 and Offers of Judgment, Part III: 9 Situations Where They Just Might Work (this post);
- Claims for Attorneys' Fees: How Rule 68 Can (Sometimes) Help;
- Ambiguities in Rule 68: Why Are They Relevant to You?; and
- Rule 68 Offers: A Few Sample Forms to Get You Started.]