Offer of Judgment Federal Rules Attorneys Fees
In Utility Automation 2000, Inc. v. Choctawhatchee Electric Cooperative, Inc., 298 F.3d 1238 (11th Cir. 2002), the plaintiff sought attorneys fees pursuant to the federal offer of judgment rule, the Alabama Trade Secrets Act, and a contract entered into with the defendant.
Although the United States Court of Appeals for the Eleventh Circuit awarded attorneys' fees to the plaintiff pursuant to the terms of a contract, it discussed the federal offer of judgment statute and explicitly stated that the plaintiff would also be a prevailing party because of the offer of judgment statute. Id. at 1247:
Prior to Buckhannon Bd. & Care Home v. W. Va. Dep't of Health & Human Res., 532 U.S. 598 (2001), courts attempted to determine whether a party was a "prevailing party" for the purpose of recovering attorneys' fees primarily by weighing the relief obtained against the relief sought. See, e.g., Fletcher v. City of Fort Wayne, 162 F. 3d 975, 976 (7th Cir.1998). . . . In Buckhannon, however, the Supreme Court defined a prevailing party as "a party in whose favor a judgment is rendered, regardless of the amount of damages awarded." 532 U.S. at 603 (quoting Black's Law Dictionary (7th ed. 1999)).
In holding that a plaintiff was not entitled to an award of attorneys' fees when the lawsuit had been dismissed as moot, even though it appeared that the suit had induced the legislation that rendered the action moot, the Court explained that a "material alteration of the legal relationship of the parties" is necessary to permit the award. Id. at 604 (quoting Texas State Teachers Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792-793, 109 S. Ct. 1486, 103 L. Ed. 2d 866 (1989)).
The Court gave two examples of judicial outcomes that satisfy this requirement: an enforceable judgment on the merits or a settlement agreement enforced through a court-ordered consent decree. Id. An enforceable judgment establishes a plaintiff as a prevailing party because the plaintiff has received at least some relief based upon the merits of a claim. Id.
A consent decree also passes the test because "although it does not always include an admission of liability by the defendant, . . . it nonetheless is a court-ordered 'change in the legal relationship between the plaintiff and the defendant.' " Id. (quoting Texas State Teachers at 792).
Although Buckhannon does not specifically mention Rule 68 offers of judgment, we find its rationale equally applicable in the present context. Admittedly, an offer of judgment falls somewhere between a consent decree and the minimalist "catalyst theory" the Court rejected in Buckhannon.
Unlike a consent decree, the court exercises little substantive review over a Rule 68 offer; upon notification that the plaintiff has accepted the offer, the court mechanically enters judgment. However, the court does ensure that the offer conforms with the Rule (it must include costs). More importantly, an accepted offer has the "necessary judicial imprimatur" of the court, Buckhannon at 605 (emphasis in original), in the crucial sense that it is an enforceable judgment against the defendant.
Thus, unlike a "defendant's voluntary change in conduct" or a purely private settlement resulting in a dismissal, a Rule 68 judgment represents a "judicially sanctioned change in the relationship between the parties." Id.
Indeed, the Court recently held that a district court's approval of a private settlement along with its explicit retention of jurisdiction to enforce the settlement terms, made the settlement the functional equivalent of a consent decree as described in Buckhannon, and thus rendered the plaintiff a prevailing party under the ADA. See American Disability Ass'n, Inc. v. Chmielarz, 289 F.3d 1315 (2002). (Id. at 1248.)