Federal Judiciary

1st Cir. Discusses Split on Issue of Apportionment of Multi-Defendant Settlement Offers to Trigger Rule 68

The circuit courts have been divided about variations on the central problem. The Seventh Circuit has insisted that to trigger Rule 68 in multi-defendant cases an offer must contain amounts allocated to each defendant, Harbor Motor Co., Inc. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638, 648-49 (7th Cir.2001); but it did so citing a prior case, Gavoni v. Dobbs House, Inc., 164 F.3d 1071 (7th Cir.1999), involving joint plaintiffs, who present quite different problems; and the result in Harbor Motor was more than justified on a different ground, namely, that the verdict in favor of the co-defendant was being reversed, Harbor Motor, 265 F.3d at 644-45, so the plaintiff's total package could in the end well exceed the package offer.

Similarly, the Fifth Circuit also said the failure to allocate was fatal; but it did so on facts where it was otherwise plainly right to refuse to shift costs because the judgment against the defendant exceeded the offer-when combined with a settlement received from the other. Johnston, 803 F.2d at 870. The apportionment notion was invoked to reach a correct result but one properly reached by saying that the joint offer was less than the total amount actually recovered by the plaintiff.

The Third Circuit, by contrast, approved use of Rule 68 cost shifting where an unapportioned offer had been made that exceeded the amount recovered; it said that the suit against multiple defendants involved joint liability and an indemnification contract, although it is not clear how much this mattered to the court nor why it should matter. Le v. Univ. of Pa., 321 F.3d 403, 408 (3d Cir.2003). And district courts have employed Rule 68 without difficulty in multiple defendant cases where the offer was not apportioned and the total recovery was less than the unapportioned offer.^FN4

. . . .

[W]e agree with the outcomes in the Seventh and Fifth Circuit decisions ( Harbor Motor and Johnston ) because comparability was impossible in the first case and favored the plaintiff in the second, but not the putative rationales adopted by those courts, and we align ourselves with the Third Circuit, save that we do not see why it matters whether liability was joint or several or how the defendants were related: a package offer is simply to be taken on its own terms and compared with the total recovery package.

Full post as published by Split Circuits on March 26, 2009 (boomark / email).