An Offer of Judgment, when used properly, is a vital tool in the litigator’s toolbox. Timing, purpose, and potential benefits and detriments all must be considered prior to deploying your Offer of Judgment. But keep in mind, even with those factors considered, a court could invalidate your Offer of Judgment if it is non-compliant.
Nevada Rules of Civil Procedure (“NRCP”) § 68 provides the framework for an Offer of Judgment. The offer must be in writing and must be made any time more than 10 days before trial. The offer may be made by any party and the receiving party must respond within 10 days of service of the offer. If, within 10 days after service of the offer the offeree serves written notice the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service. If the offer is not accepted within 10 days after service, it shall be considered rejected by the offeree and deemed withdrawn by the offeror. Any offeree who fails to accept the offer may be subject to the penalties of this rule. In 2015, the Nevada Supreme Court held rule 68 also applies to arbitration proceedings. WPH Architecture, Inc. v. Vegas VP, (2015) 360 P.3d 1145.
An Offer of Judgment serves as a sword, either to settle a lawsuit or to impose monetary penalties on the unsuccessful party. An Offer of Judgment also promotes settlement and seeks to reward the offeror for making a reasonable offer to settle a lawsuit. It also compels an offeree to fully analyze its case so as to avoid potential penalties.
Rule 68 (f) provides if an offeree rejects an offer and fails to obtain a more favorable judgment, the offeree cannot recovery any costs or attorney’s fees and shall not recover interest for the period after the service of the offer and before the judgment. In other words, it can serve as an excellent tool to minimize attorney’s fees that may be provided by statute or contract. Additionally, Rule 68 (f) mandates the offeree pay the offeror’s post-offer costs, with applicable interest on the judgment, from the time of the offer to the time of entry of the judgment and reasonable attorney’s fees, if allowed, incurred by the offeror from the time of the offer.
Now, you may be asking yourself, “what do post-offer costs include?” Thankfully, Nevada Revised Statutes §18.005 answers this question. The prevailing party can recover post offer costs that include:
- Clerks’ fees;
- Reporters’ fees for deposition, including the fee for one copy of each deposition;
- Jurors’ fees and expenses;
- Fees for necessary witnesses at trial;
- Reasonable fees of not more than five expert witnesses in an amount of no more than $1,500 for each witness, unless the court allows for a larger fee;
- Reasonable fees for interpreters;
- Service fees;
- Court reporter’ fees;
- Reasonable costs for bonds or undertaking;
- Fees for a court bailiff or deputy marshal who was required to work overtime;
- Reasonable costs of telecopies;
- Reasonable costs of photocopies;
- Reasonable costs for long distance telephone calls;
- Reasonable costs for postage;
- Reasonable costs for travel and lodging incurred taking deposition and conducting discovery;
- Fees charged pursuant to Nevada Revised Statutes §19.0335 and;
- Any other reasonable and necessary expense incurred in connection with the action, including reasonable and necessary expenses for computerized services and legal research.
Despite its cost-shifting nature, there are some detriments that can be avoided with proper foresight and analysis. When issuing an Offer of Judgment, make sure you have a reasonable idea as to the offeree’s damages, including what you estimate a jury (or judge) in your jurisdiction may award. If you issue the offer too early, particularly before initial discovery is completed, it may be too low for the offeror to consider. If you issue an offer too late, particularly after expert discovery has been completed, it may lose its cost shifting effectiveness.
The Offer of Judgment must be in writing, served on the offeror, setting forth specific terms, and must be reasonable in amount. The determination of reasonableness is left to the discretion of the court. Failure to properly draft and serve an Offer of Judgment can render it meaningless.
A compliant and successful Offer of Judgment serves as a very important tool to resolve cases or place the burden of cost shifting penalties on the offeree. Be mindful of the timing of the Offer of Judgment to ensure that you take full advantage of its benefits.