A heated encounter between two New York City police officers and a woman walking her dog led to a ruling by the United States Court of Appeals for the Second Circuit that both clarifies and strengthens existing law about the seldom-used procedure for Offers of Judgment. Stanczyk v. City of New York, Docket No. 13-1582-cv (2d Cir. June 3, 2014). When police officers approached Anna Stanczyk and demanded that she clean up after her dog, she claimed that what was there to be cleaned up was not from her dog. Words were exchanged and she was arrested. A claim of excessive force against the police officers was lodged and a civil action for damages was commenced against both the officers and their employer, the City of New York.
During the litigation, the City served an Offer of Judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. The terms were simple"”Stanczyk could take a Judgment against the City for $150,001 plus reasonable attorneys fees, expenses and costs to the date of the Offer of Judgment or, if she recovered less at trial, she would be responsible for the City's costs and trial expenses. If she accepted, it would resolve all claims against the City and the officers. The Offer was rejected and Stancyzk proceeded to trial where she prevailed on her claim for the use of excessive force.
Unfortunately for Stanczyk, the jury returned a general verdict in her favor for $50,000 plus punitive damages of $2,000 against each of the two police officer defendants. Although there was testimony offered to support a claim for extended treatment for post-traumatic stress disorder and pain and suffering, Stanczyk's counsel did not offer any evidence concerning past or future medical costs. The performance of counsel was severely criticized"”it is never a good thing for a lawyer to have your conduct termed "folly" or found to have poorly represented your client negatively impacting the result at trial"”and this caused the trial court to reduce the lawyer's hourly rate in the subsequent attorneys fee award.
The decision is important from a procedural point of view because of the Second Circuit's holding that a party in a civil case may craft an Offer of Judgment in whatever manner and on whatever terms that are desired. The Court further held that the provisions of Fed. R. Civ. P. 68 trump the provisions of Fed. R. Civ. P. 54(d) which by its terms entitles a prevailing party to recover its costs after trial. Here, the failure to accept the Offer of Judgment (at three times the amount of the jury verdict) led to a highly unusual result. Stanczyk recovers her attorneys fees and costs up to the date of the Offer of Judgment and the City recovers its costs from the date of the Offer of Judgment through the verdict.
The Court rejected Stanczyk's argument that she was entitled to recover all of her costs through the date of the verdict under Rule 54(d) or Section 1988 of the Civil Rights Act, holding that the plain language of Rule 68, its purpose and historical roots controlled. Stanczyk's further argument that the Offer of Judgment was ineffective because it did not apportion the damages against the City and the individual police officers was similarly rejected. In so ruling, the Second Circuit joined the First, Fourth, Seventh and Ninth Circuits in finding that Rule 68 means what it says"”a party with a claim against it can fashion an Offer of Judgment on its terms and the failure of the opposing party to choose correctly can have significant consequences.
Rule 68 is a seldom-used procedural tool that can have significant consequences for a stubborn or unreasonable party who fails to give serious consideration to a reasonable settlement offer. How can litigants put this decision and Rule 68 to good use? Evaluate your cases early and often and, where appropriate, extend an Offer of Judgment on terms designed to make the opposing party think twice about taking a questionable case to trial. Waiting until close to trial to properly evaluate exposure at trial will negate the effectiveness of the Offer of Judgment.
If you require further information regarding the content presented in this Legal Alert and its impact on your organization, please contact Thomas B. Cronmiller, Chair of the Torts & Products Liability Defense Practice Area, at (585) 295-4424 or tcronmiller@hblaw.com, or Jon P. Devendorf at (315) 425-2724 or jdevendorf@hblaw.com, or Brian E. Whiteley at (617) 274-2903 or bwhiteley@hblaw.com, Co-Chairs of our Commercial Litigation Practice Area.