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In Settlement, Overstatement Is Better than Understatement

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By Robyn Hagan Cain on March 04, 2013 3:05 PM

Juana Sanchez sued Prudential Pizza for sex discrimination, sexual harassment, and retaliation under Title VII of the Civil Rights Act. The parties avoided a trial when Sanchez accepted Prudential Pizza's offer of judgment under Federal Rule of Civil Procedure (FRCP) 68.

Prudential Pizza's offer said that it included "all of Plaintiff's claims for relief," but it didn't specifically refer to costs or attorney fees. The district court concluded that the offer was unambiguous and included attorney fees. The Seventh Circuit Court of Appeals, however, reversed that decision.

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." If the suit was brought under a statute that provides for an attorney fee award to the prevailing plaintiff, the relevant "costs" include attorney fees.

Here, Sanchez accepted Prudential Pizza's offer within the prescribed time frame, and proceeded to move for attorney fees. She argued that the offer was silent regarding costs and fees, and that she was entitled to attorney fees as a Title VII prevailing party.

The district court rejected Sanchez's contention, but the Seventh Circuit agreed with her, noting:

If Prudential Pizza's offer was meant to include attorney fees and costs, the offer was not specific. It simply did not refer to Sanchez's attorney fees or costs. It referred to Sanchez's "claims" but failed to specify what those claims were, such as whether they included her claim against the other defendant ... If Prudential Pizza intended its offer to include attorney fees, its chosen language was insufficient.

Pursuant to its rulings in Webb v. James and Nordby v. Anchor Hocking Packaging Company, the appellate court resolves an offer of judgment ambiguity against the offeror. Because the Rule 68 offer was silent as to costs and fees, the Seventh Circuit found that costs and fees were not included.

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