CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari to decide whether attorney's fees incurred by a plaintiff subsequent to an offer of settlement under Federal Rule of Civil Procedure 68 must be paid by the defendant under 42 U. S. C. § 1988, when the plaintiff recovers a judgment less than the offer.
Petitioners, three police officers, in answering a call on a domestic disturbance, shot and killed respondent's adult son. Respondent, in his own behalf and as administrator of his son's estate, filed suit against the officers in the United States District Court under 42 U. S. C. § 1983 and state tort law.
Prior to trial, petitioners made a timely offer of settlement "for a sum, including costs now accrued and attorney's fees,
Respondent filed a request for $171,692.47 in costs, including attorney's fees. This amount included costs incurred after the settlement offer. Petitioners opposed the claim for postoffer costs, relying on Federal Rule of Civil Procedure 68, which shifts to the plaintiff all "costs" incurred subsequent to an offer of judgment not exceeded by the ultimate recovery at trial. Petitioners argued that attorney's fees are part of the "costs" covered by Rule 68. The District Court agreed with petitioners and declined to award respondent "costs, including attorney's fees, incurred after the offer of judgment." 547 F.Supp. 542, 547 (ND Ill. 1982). The parties subsequently agreed that $32,000 fairly represented the allowable costs, including attorney's fees, accrued prior to petitioners' offer of settlement.
The Court of Appeals reversed. 720 F.2d 474 (CA7 1983). The court rejected what it termed the "rather mechanical linking up of Rule 68 and section 1988." Id., at 478. It stated that the District Court's reading of Rule 68 and § 1988, while "in a sense logical," would put civil rights plaintiffs and counsel in a "predicament" that "cuts against the grain of section 1988." Id., at 478, 479. Plaintiffs' attorneys, the court reasoned, would be forced to "think very hard" before rejecting even an inadequate offer, and would be deterred from bringing good-faith actions because of the prospect of losing the right to attorney's fees if a settlement offer more favorable than the ultimate recovery were rejected. Id., at 478-479. The court concluded that "[t]he legislators who enacted section 1988 would not have wanted its effectiveness
We granted certiorari, 466 U.S. 949 (1984). We reverse.
Rule 68 provides that if a timely pretrial offer of settlement is not accepted and "the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer." (Emphasis added.) The plain purpose of Rule 68 is to encourage settlement and avoid litigation. Advisory Committee Note on Rules of Civil Procedure, Report of Proposed Amendments, 5 F. R. D. 433, 483, n. 1 (1946), 28 U. S. C. App., p. 637; Delta Air Lines, Inc. v. August, 450 U.S. 346, 352 (1981). The Rule prompts both parties to a suit to evaluate the risks and costs of litigation, and to balance them against the likelihood of success upon trial on the merits. This case requires us to decide whether the offer in this case was a proper one under Rule 68, and whether the term "costs" as used in Rule 68 includes attorney's fees awardable under 42 U. S. C. § 1988.
The first question we address is whether petitioners' offer was valid under Rule 68. Respondent contends that the offer was invalid because it lumped petitioners' proposal for damages with their proposal for costs. Respondent argues that Rule 68 requires that an offer must separately recite the amount that the defendant is offering in settlement of the substantive claim and the amount he is offering to cover accrued costs. Only if the offer is bifurcated, he contends, so that it is clear how much the defendant is offering for the substantive claim, can a plaintiff possibly assess whether it would be wise to accept the offer. He apparently bases this argument on the language of the Rule providing that the defendant "may serve upon the adverse party an offer to allow judgment to be taken against him for the money or property
The Court of Appeals rejected respondent's claim, holding that "an offer of the money or property or to the specified effect is, by force of the rule itself, `with' — that is, plus `costs then accrued,' whatever the amount of those costs is." 720 F. 2d, at 476. We, too, reject respondent's argument. We do not read Rule 68 to require that a defendant's offer itemize the respective amounts being tendered for settlement of the underlying substantive claim and for costs.
The critical feature of this portion of the Rule is that the offer be one that allows judgment to be taken against the defendant for both the damages caused by the challenged conduct and the costs then accrued. In other words, the drafters' concern was not so much with the particular components of offers, but with the judgments to be allowed against defendants. If an offer recites that costs are included or specifies an amount for costs, and the plaintiff accepts the offer, the judgment will necessarily include costs; if the offer does not state that costs are included and an amount for costs is not specified, the court will be obliged by the terms of the Rule to include in its judgment an additional amount which in its discretion, see Delta Air Lines, Inc. v. August, supra, at 362, 365 (POWELL, J., concurring), it determines to be sufficient to cover the costs. In either case, however, the offer has allowed judgment to be entered against the defendant both for damages caused by the challenged conduct and for costs. Accordingly, it is immaterial whether the offer recites that costs are included, whether it specifies the amount the defendant is allowing for costs, or, for that matter, whether it refers to costs at all. As long as the offer does not implicitly or explicitly provide that the judgment not include costs, a timely offer will be valid.
This construction of the Rule best furthers the objective of the Rule, which is to encourage settlements. If defendants are not allowed to make lump-sum offers that would, if accepted, represent their total liability, they would understandably
Contrary to respondent's suggestion, reading the Rule in this way does not frustrate plaintiffs' efforts to determine whether defendants' offers are adequate. At the time an offer is made, the plaintiff knows the amount in damages caused by the challenged conduct. The plaintiff also knows, or can ascertain, the costs then accrued. A reasonable determination whether to accept the offer can be made by simply adding these two figures and comparing the sum to the amount offered. Respondent is troubled that a plaintiff will not know whether the offer on the substantive claim would be exceeded at trial, but this is so whenever an offer of settlement is made. In any event, requiring itemization of damages separate from costs would not in any way help plaintiffs know in advance whether the judgment at trial will exceed a defendant's offer.
Curiously, respondent also maintains that petitioners' settlement offer did not exceed the judgment obtained by respondent. In this regard, respondent notes that the $100,000 offer is not as great as the sum of the $60,000 in damages, $32,000 in preoffer costs, and $139,692.47 in claimed postoffer costs. This argument assumes, however, that postoffer costs should be included in the comparison. The Court of Appeals correctly recognized that postoffer costs merely offset part of the expense of continuing the litigation to trial, and should not be included in the calculus. Id., at 476.
The second question we address is whether the term "costs" in Rule 68 includes attorney's fees awardable under 42 U. S. C. § 1988. By the time the Federal Rules of Civil
Section 407 of the Communications Act of 1934, for example, provided in relevant part that, "[i]f the petitioner shall finally prevail, he shall be allowed a reasonable attorney's fee, to be taxed and collected as a part of the costs of the suit." 47 U. S. C. § 407. There was identical language in § 3(p) of the Railway Labor Act, 45 U. S. C. § 153(p) (1934 ed.). Section 40 of the Copyright Act of 1909, 17 U. S. C. § 40 (1934 ed.), allowed a court to "award to the prevailing party a reasonable attorney's fee as part of the costs." And other statutes contained similar provisions that included attorney's fees as part of awardable "costs." See, e. g., the Clayton Act, 15 U. S. C. § 15 (1934 ed.); the Securities Act of 1933, 15 U. S. C. § 77k(e) (1934 ed.); the Securities Exchange Act of 1934, 15 U. S. C. §§ 78i(e), 78r(a) (1934 ed.).
The authors of Federal Rule of Civil Procedure 68 were fully aware of these exceptions to the American Rule. The Advisory Committee's Note to Rule 54(d), 28 U. S. C. App., p. 621, contains an extensive list of the federal statutes which allowed for costs in particular cases; of the 35 "statutes as to costs" set forth in the final paragraph of the Note, no fewer than 11 allowed for attorney's fees as part of costs. Against this background of varying definitions of "costs," the drafters
In this setting, given the importance of "costs" to the Rule, it is very unlikely that this omission was mere oversight; on the contrary, the most reasonable inference is that the term "costs" in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority. In other words, all costs properly awardable in an action are to be considered within the scope of Rule 68 "costs." Thus, absent congressional expressions to the contrary, where the underlying statute defines "costs" to include attorney's fees, we are satisfied such fees are to be included as costs for purposes of Rule 68. See, e. g., Fulps v. Springfield, Tenn., 715 F.2d 1088, 1091-1095 (CA6 1983); Waters v. Heublein, Inc., 485 F.Supp. 110, 113-117 (ND Cal. 1979); Scheriff v. Beck, 452 F.Supp. 1254, 1259-1260 (Colo. 1978). See also Delta Air Lines, Inc. v. August, 450 U. S., at 362-363 (POWELL, J., concurring).
Here, respondent sued under 42 U. S. C. § 1983. Pursuant to the Civil Rights Attorney's Fees Awards Act of 1976, 90 Stat. 2641, as amended, 42 U. S. C. § 1988, a prevailing party in a § 1983 action may be awarded attorney's fees "as part of the costs." Since Congress expressly included attorney's fees as "costs" available to a plaintiff in a § 1983 suit, such fees are subject to the cost-shifting provision of Rule 68. This "plain meaning" interpretation of the interplay between Rule 68 and § 1988 is the only construction that gives meaning to each word in both Rule 68 and § 1988.
Moreover, Rule 68's policy of encouraging settlements is neutral, favoring neither plaintiffs nor defendants; it expresses a clear policy of favoring settlement of all lawsuits. Civil rights plaintiffs — along with other plaintiffs — who reject an offer more favorable than what is thereafter recovered at trial will not recover attorney's fees for services performed after the offer is rejected. But, since the Rule is neutral, many civil rights plaintiffs will benefit from the offers of settlement encouraged by Rule 68. Some plaintiffs will receive compensation in settlement where, on trial, they might not have recovered, or would have recovered less than what was offered. And, even for those who would prevail at trial, settlement will provide them with compensation at an earlier date without the burdens, stress, and time of litigation. In short, settlements rather than litigation will serve the interests of plaintiffs as well as defendants.
Rather than "cutting against the grain" of § 1988, as the Court of Appeals held, we are convinced that applying Rule 68 in the context of a § 1983 action is consistent with the policies and objectives of § 1988. Section 1988 encourages plaintiffs to bring meritorious civil rights suits; Rule 68 simply encourages settlements. There is nothing incompatible in these two objectives.
Congress, of course, was well aware of Rule 68 when it enacted § 1988, and included attorney's fees as part of recoverable costs. The plain language of Rule 68 and § 1988 subjects such fees to the cost-shifting provision of Rule 68. Nothing revealed in our review of the policies underlying § 1988 constitutes "the necessary clear expression of congressional
The judgment of the Court of Appeals is
JUSTICE POWELL, concurring.
In Delta Airlines, Inc. v. August, 450 U.S. 346 (1981), the offer under Rule 68 stated that it was "in the amount of $450, which shall include attorney's fees, together with costs accrued to date." Id., at 365. In a brief concurring opinion, I expressed the view that this offer did not comport with the Rule's requirements. It seemed to me that an offer of judgment should consist of two identified components: (i) the substantive relief proposed, and (ii) costs, including a reasonable attorney's fee. The amount of the fee ultimately should be within the discretion of the court if the offer is accepted. In questioning the form of the offer in Delta, I was influenced in part by the fact that it was a Title VII case. I concluded that the " `costs' component of a Rule 68 offer of judgment in a Title VII case must include reasonable attorney's fees accrued to the date of the offer." Id., at 363. My view, however, as to the specificity of the "substantive relief" component of the offer did not depend solely on the fact that Delta was a Title VII case.
No other Justice joined my Delta concurrence. The Court's decision was upon a different ground. Although I think it the better practice for the offer of judgment expressly to identify the components, it is important to have a Court for a clear interpretation of Rule 68. I noted in Delta that "parties to litigation and the public as a whole have an interest — often an overriding one — in settlement rather than exhaustion of protracted court proceedings." Ibid. The purpose of Rule 68 is to "facilitat[e] the early resolution of marginal suits in which the defendant perceives the claim to
Accordingly, I join the opinion of the Court.
JUSTICE REHNQUIST, concurring.
In Delta Airlines, Inc. v. August, 450 U.S. 346 (1981), I expressed in dissent the view that the term "costs" in Rule 68 did not include attorney's fees. Further examination of the question has convinced me that this view was wrong, and I therefore join the opinion of THE CHIEF JUSTICE. Cf. McGrath v. Kristensen, 340 U.S. 162, 176 (1950) (Jackson, J. concurring).
The question presented by this case is whether the term "costs" as it is used in Rule 68 of the Federal Rules of Civil Procedure
I dissent. The Court's reasoning is wholly inconsistent with the history and structure of the Federal Rules, and its application to the over 100 attorney's fees statutes enacted by Congress will produce absurd variations in Rule 68's operation
The Court's "plain language" analysis, ante, at 11, goes as follows: Section 1988 provides that a "prevailing party" may recover "a reasonable attorney's fee as part of the costs." Rule 68 in turn provides that, where an offeree obtains a judgment for less than the amount of a previous settlement offer, "the offeree must pay the costs incurred after the making of the offer." Because "attorney's fees" are "costs," the Court concludes, the "plain meaning" of Rule 68 per se prohibits a prevailing civil rights plaintiff from recovering fees
The Court's "plain language" approach is, as Judge Posner's opinion for the court below noted, "in a sense logical." 720 F.2d 474, 478 (CA7 1983). However, while the starting point in interpreting statutes and rules is always the plain words themselves, "[t]he particular inquiry is not what is the abstract force of the words or what they may comprehend, but in what sense were they intended to be understood or what understanding they convey when used in the particular act."
In Roadway Express, the petitioner argued that under 28 U. S. C. § 1927 (1976 ed.) (which at that time allowed for the imposition of "excess costs" on an attorney who "unreasonably and vexatiously" delayed court proceedings),
The Court today restricts its discussion of Roadway to a single footnote, urging that that case "is not relevant to our decision" because "§ 1927 came with its own statutory definition of costs" whereas "Rule 68 does not come with a definition of costs." Ante, at 9-10, n. 2. But this purported "distinction" merely begs the question. As in Roadway, the question we face is whether a cost-shifting provision "come[s] with a definition of costs" — that set forth in § 1920 in an effort
For a number of reasons, "costs" as that term is used in the Federal Rules should be interpreted uniformly in accordance with the definition of costs set forth in § 1920:
First. The limited history of the costs provisions in the Federal Rules suggests that the drafters intended "costs" to mean only taxable costs traditionally allowed under the common law or pursuant to the statutory predecessor of § 1920.
Second. The Rules provide that "costs" may automatically be taxed by the clerk of the court on one day's notice, Fed. Rule Civ. Proc. 54(d) — strongly suggesting that "costs" were intended to refer only to those routine, readily determinable charges that could appropriately be left to a clerk, and as to which a single day's notice of settlement would be appropriate. Attorney's fees, which are awardable only by the court
Third. When particular provisions of the Federal Rules are intended to encompass attorney's fees, they do so explicitly. Eleven different provisions of the Rules authorize a court to award attorney's fees as "expenses" in particular circumstances, demonstrating that the drafters knew the difference, and intended a difference, between "costs," "expenses," and "attorney's fees."
Fourth. With the exception of one recent Court of Appeals opinion and two recent District Court opinions, the Court can point to no authority suggesting that courts or attorneys have ever viewed the cost-shifting provisions of Rule 68 as including attorney's fees.
Fifth. We previously have held that words and phrases in the Federal Rules must be given a consistent usage and be read in pari materia, reasoning that to do otherwise would "attribute a schizophrenic intent to the drafters." Id., at 353. Applying the Court's "plain language" approach consistently throughout the Rules, however, would produce absurd results that would turn statutes like § 1988 on their heads and plainly violate the restraints imposed on judicial rulemaking by the Rules Enabling Act. For example, Rule 54(d) provides that "costs shall be allowed as of course to the prevailing party unless the court otherwise directs."
Congress has enacted well over 100 attorney's fees statutes, many of which would appear to be affected by today's decision. As the Appendix to this dissent illustrates, Congress has employed a variety of slightly different wordings in these statutes. It sometimes has referred to the awarding of "attorney's fees as part of the costs," to "costs including attorney's fees," and to "attorney's fees and other litigation costs." Under the "plain language" approach of today's decision, Rule 68 will operate to include the potential loss of otherwise recoverable attorney's fees as an incentive to settlement in litigation under these statutes. But Congress frequently has referred in other statutes to the awarding of "costs and a reasonable attorney's fee," of "costs together with a reasonable attorney's fee," or simply of "attorney's fees" without reference to costs. Under the Court's "plain language" analysis, Rule 68 obviously will not include the potential loss of otherwise recoverable attorney's fees as a settlement incentive in litigation under these statutes because they do not refer to fees "as" costs.
The untenable character of such distinctions is further illustrated by reference to the various civil rights laws. For example, suits involving alleged discrimination in housing are
Moreover, many statutes contain several fees-award provisions governing actions arising under different subsections, and the phraseology of these provisions sometimes differs slightly from section to section. It is simply preposterous to think that Congress or the drafters of the Rules intended to sanction differing applications of Rule 68 depending on which particular subsection of, inter alia, the Privacy Act of 1974,
In sum, there is nothing in the history and structure of the Rules or in the history of any of the underlying attorney's fee statutes to justify such incomprehensible distinctions based simply on fine linguistic variations among the underlying fees-award statutes — particularly where, as in Roadway Express, the cost provision can be read as embodying a uniform definition derived from § 1920. As partners with Congress, we have a responsibility not to carry "plain language" constructions to the point of producing "untenable distinctions and unreasonable results." American Tobacco Co. v. Patterson, 456 U.S. 63, 71 (1982). See also n. 5, supra. As JUSTICE REHNQUIST, joined by THE CHIEF JUSTICE and Justice Stewart, cogently reasoned in Delta Air Lines, Inc. v. August, 450 U. S., at 378 (dissenting opinion), interpreting Rule 68 to allow a "two-tier system of cost-shifting" would attribute "woode[n] and pervers[e]" motives to Congress and to the drafters of the Rules; "[n]o persuasive justification exists for subjecting these plaintiffs to differing penalties for failure to accept a Rule 68 offer and no persuasive justification can be offered as to how such a reading of Rule 68 would in any way further the intent of the Rule which is to encourage settlement" on a uniform basis.
Although the Court's opinion fails to discuss any of the problems reviewed above, it does devote some space to arguing that its interpretation of Rule 68 "is in no sense inconsistent with the congressional policies underlying § 1983 and § 1988." Ante, at 11. The Court goes so far as to assert that its interpretation fits in smoothly with § 1988 as interpreted by Hensley v. Eckerhart, 461 U.S. 424 (1983). Ante, at 11.
The Court is wrong. Congress has instructed that attorney's fee entitlement under § 1988 be governed by a reasonableness standard.
Rule 68, on the other hand, is not "sensitive" at all to the merits of an action and to antidiscrimination policy. It is a mechanical per se provision automatically shifting "costs" incurred after an offer is rejected, and it deprives a district court of all discretion with respect to the matter by using "the strongest verb of its type known to the English language — `must.' " Delta Air Lines, Inc. v. August, supra, at 369. The potential for conflict between § 1988 and Rule 68 could not be more apparent.
Of course, a civil rights plaintiff who unreasonably fails to accept a settlement offer, and who thereafter recovers less than the proffered amount in settlement, is barred under § 1988 itself from recovering fees for unproductive work performed in the wake of the rejection. This is because "the extent of a plaintiff's success is a crucial factor in determining the proper amount of an award of attorney's fees," 461 U. S., at 440 (emphasis added); hours that are "excessive, redundant, or otherwise unnecessary" must be excluded from that calculus, id., at 434. To this extent, the results might sometimes be the same under either § 1988's reasonableness inquiry or the Court's wooden application of Rule 68. Had the
But the results under § 1988 and Rule 68 will not always be congruent, because § 1988 mandates the careful consideration of a broad range of other factors and accords appropriate leeway to the district court's informed discretion. Contrary to the Court's protestations, it is not at all clear that "[t]his case presents a good example" of the smooth interplay of § 1988 and Rule 68, ante, at 11, because there has never been an evidentiary consideration of the reasonableness or unreasonableness of the respondent's fee request. It is clear, however, that under the Court's interpretation of Rule 68 a plaintiff who ultimately recovers only slightly less than the proffered amount in settlement will per se be barred from recovering trial fees even if he otherwise "has obtained excellent results" in litigation that will have far-reaching benefit to the public interest. Hensley v. Eckerhart, supra, at 435. Today's decision necessarily will require the disallowance of some fees that otherwise would have passed muster under § 1988's reasonableness standard,
This sort of so-called "incentive" is fundamentally incompatible with Congress' goals. Congress intended for "private citizens . . . to be able to assert their civil rights" and for "those who violate the Nation's fundamental laws" not to be
Other difficulties will follow from the Court's decision. For example, if a plaintiff recovers less money than was offered before trial but obtains potentially far-reaching injunctive or declaratory relief, it is altogether unclear how the Court intends judges to go about quantifying the "value" of the plaintiff's success.
Indeed, the judgment of the Court of Appeals below turned on its determination that an interpretation of Rule 68 to include attorney's fees is beyond the pale of the judiciary's rulemaking authority. Ibid. Congress has delegated its authority to this Court "to prescribe by general rules . . . the practice and procedure of the district courts and courts of appeals of the United States in civil actions." 28 U. S. C. § 2072.
As construed by the Court today, Rule 68 surely will operate to "abridge" and to "modify" this statutory right to reasonable attorney's fees. "The test must be whether a rule really regulates procedure, — the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them," or instead operates to abridge a substantive right "in the guise of regulating procedure." Sibbach v. Wilson & Co., 312 U.S. 1, 10, 14 (1941) (emphasis added); see also Hanna v. Plumer, 380 U.S. 460, 464-465 (1965). Unlike those provisions of the Federal Rules that explicitly authorize an award of attorney's fees, Rule 68 is not addressed to bad-faith or unreasonable litigation conduct. The courts always have had inherent authority to assess fees against parties who act "in bad faith, vexatiously, wantonly,
Rule 68, on the other hand, contains no reasonableness component. See supra, at 29. As interpreted by the Court, it will operate to divest a prevailing plaintiff of fees to which he otherwise might be entitled under the reasonableness standard simply because he guessed wrong, or because he did not have all information reasonably necessary to evaluate the offer, or because of unforeseen changes in the law or evidence after the offer. The Court's interpretation of Rule 68 therefore clearly collides with the congressionally prescribed substantive standards of § 1988, and the Rules Enabling Act requires that the Court's interpretation give way.
If it had addressed this central issue, perhaps the Court would have reasoned that Rule 68 as interpreted to include attorney's fees is merely a procedural device designed to further the important policy of encouraging efficient and prompt resolution of disputes. With all respect, such refashioning of settlement incentives is squarely foreclosed by the Court's decision in Alyeska Pipeline Service Co. v. Wilderness Society, which held that it is "inappropriate for the Judiciary, without legislative guidance, to reallocate the burdens of litigation." 421 U. S., at 247. Beyond a handful of "limited circumstances" that do not encompass today's decision,
For several years now both the Judicial Conference and Congress have been engaged in an extensive reexamination of Rule 68 and have considered numerous proposals to amend the Rule to include attorney's fees. The Advisory Committee on the Federal Rules initially proposed an amendment to Rule 68 in August 1983 that would have applied equally to plaintiffs and defendants and that would have left application of the Rule's fee provisions in the court's informed discretion.
In the meantime, numerous revisions of § 1988 have been proposed in Congress in recent years. A 1981 proposal would have imposed a rule similar to that adopted by the Court today,
This activity is relevant in two respects. First, it rather strongly suggests that neither the Advisory Committee nor Congress has viewed Rule 68 as currently governing attorney's fees, else the proposals to amend Rule 68 to include attorney's fees would largely be unnecessary. Second, the Committee and Congress have given close consideration to a broad range of troubling issues that would be raised by application of Rule 68 to attorney's fees, such as (1) whether to import a reasonableness standard into Rule 68, (2) whether and to what extent district courts should have discretion in applying the Rule, (3) the need to revise Rule 68 so as to ensure that offerees have had sufficient time and discovery to evaluate the strength of their cases and the reasonableness of settlement offers, (4) application of the Rule to suits for nonpecuniary relief, (5) application of the Rule to class-action litigation, (6) conflicts of interest between attorneys and clients that the Rule might create, and (7) the precise nature and scope of the sanction. Many of the proposals discussed above have been carefully crafted to address these problems. See nn. 56, 58, and 63, supra.
Congress and the Judicial Conference are far more institutionally competent than the Court to resolve this matter.
APPENDIX TO OPINION OF BRENNAN, J., DISSENTING
Congress has enacted well over 100 fee-shifting statutes, which typically fall into three broad categories:
(A) Statutes that refer to attorney's fees "as part of the costs." Variations include "attorney's fees to be taxed and collected as part of the costs," "costs including attorney's fees," and "attorney's fees and other litigation costs." Under the Court's "plain language" approach, these various formulations all "defin[e] `costs' to include attorney's fees." Ante, at 9. Thus where an action otherwise is governed by Rule 68, attorney's fees that are potentially awardable under these statutes "are to be included as costs for purposes of Rule 68." Ibid.
(B) Statutes that do not refer to attorney's fees as part of the costs. Many other fee statutes do not describe fees "as" costs, but instead as an item separate from costs. Typical formulations include "costs and a reasonable attorney's fee," "costs together with a reasonable attorney's fee," and "costs, expenses, and a reasonable attorney's fee." Some statutes simply authorize awards of fees without any reference to costs. Under the Court's "plain language" approach, none of these formulations "defin[e] `costs' to include attorney's fees." Ibid. Thus where an action otherwise is governed by Rule 68, attorney's fees that are potentially awardable under these statutes are not subject to Rule 68 and instead
(C) Statutes that may or may not refer to attorney's fees as part of the costs. A number of statutes authorize the award of "costs and expenses, including attorney's fees." It is altogether uncertain how such statutes should be categorized under the Court's "plain language" approach to Rule 68. On the one hand, if the phrase "including attorney's fees" is read as modifying the word "costs" at least in part, attorney's fees that are potentially awardable under these statutes arguably are subject to Rule 68. On the other hand, if "including attorney's fees" is read as modifying only the word "expenses" (which seems to be the more plausible "plain meaning"), fees under these statutes are not subject to Rule 68 and instead are governed solely by the reasonableness standard as summarized in Hensley v. Eckerhart, supra.
The following is a summary of the statutes enacted by Congress authorizing courts to award attorney's fees, broken down into the three categories discussed above.
Briefs of amici curiae urging affirmance were filed for the Alliance for Justice by Laura Macklin; for the American Civil Liberties Union et al. by Roger Pascal, Burt Neuborne, E. Richard Larson, and Harvey Grossman; for the Lawyers' Committee for Civil Rights Under Law by Fred N. Fishman, Robert H. Kapp, Norman Redlich, William L. Robinson, Norman J. Chachkin, Harold R. Tyler, Jr., and Sara E. Lister; for the Committee on the Federal Courts of the Association of the Bar of the City of New York by Sheldon H. Elsen, Michael W. Schwartz, Sidney S. Rosdeitcher, Edmund H. Kerr, and John G. Koeltl; and for the NAACP Legal Defense and Educational Fund, Inc., by Barry L. Goldstein, Julius LeVonne Chambers, and Charles Stephen Ralston.
"At any time more than 10 days before the trial begins, a party defending against a claim may serve upon the adverse party an offer to allow judgment to be taken against him for the money or property or to the effect specified in his offer, with costs then accrued. If within 10 days after the service of the offer the adverse party serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon the clerk shall enter judgment. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible except in a proceeding to determine costs. If the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer. The fact that an offer is made but not accepted does not preclude a subsequent offer. When the liability of one party to another has been determined by verdict or order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, the party adjudged liable may make an offer of judgment, which shall have the same effect as an offer made before trial if it is served within a reasonable time not less than 10 days prior to the commencement of hearings to determine the amount or extent of liability."
"A judge or clerk of any court of the United States may tax as costs the following:
"(1) Fees of the clerk and marshal;
"(2) Fees of the court reporter for all or any part of the stenographic transcript necessarily obtained for use in the case;
"(3) Fees and disbursements for printing and witnesses;
"(4) Fees for exemplification and copies of papers necessarily obtained for use in the case;
"(5) Docket fees under section 1923 of this title;
"(6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.
"A bill of costs shall be filed in the case and, upon allowance, included in the judgment or decree."
The Court's major argument is that, when Rule 68 was drafted in 1938, there already was a disparity in the phraseology of fees-award statutes such that many provisions authorized the award of fees "as" costs, and that it is therefore "very unlikely" that the drafters intended a uniform definition of costs. Ante, at 7-9. As set forth above, however, the limited history strongly indicates that the drafters intended to secure uniform rules on costs and that the uniform definition contained in the statutory predecessor of § 1920 would be "unaffected" by the Rules. See supra, at 18 and this page, and n. 8. Moreover, application of the Court's interpretation to statutes in effect in 1938 would have led to inexplicable variations in settlement incentives, see n. 32, infra — variations for which the Court has no plausible explanation. In the absence of any indication that the drafters or Congress intended a "schizophrenic" application of the Rules, Delta Air Lines, Inc. v. August, supra, at 353, "the most reasonable inference," ante, at 9, contrary to the Court's pronouncement, is that Rule 68 was intended to conform to § 1920 and to the general policy of uniformity in applying the Rules.
"Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs; but costs against the United States, its officers, and agencies shall be imposed only to the extent permitted by law. Costs may be taxed by the clerk on one day's notice. On motion served within 5 days thereafter, the action of the clerk may be reviewed by the court."
Of course, the difficulties in assessing the "value" of nonpecuniary relief are inherent in Rule 68's operation whether or not the Rule applies to attorney's fees. But when the Rule was interpreted simply as affecting at most several hundred or several thousand dollars of traditionally taxable costs, these inherent problems were of little practical significance. Now that Rule 68 applies in some situations to the vital question of attorney's fees, these problems will assume major significance.
Moreover, Rule 23(e) requires the court's approval before a class action is compromised; the Rule protects class members "from unjust or unfair settlements affecting their rights by representatives who lose interest or are able to secure satisfaction of their individual claims by compromise." Moreland v. Rucker Pharmacal Co., 63 F. R. D. 611, 615 (WD La. 1974). Yet Rule 68 does not mesh with such careful supervision. Its "plain language" requires simply that upon the plaintiff's acceptance "the clerk shall enter judgment."
In addition, Rule 68 sets a nondiscretionary 10-day limit on the plaintiff's power of acceptance — a virtually impossible amount of time in many cases to consider the likely merits of complex claims of relief, give notice to class members, and secure the court's approval.
"The Supreme Court shall have the power to prescribe by general rules, the forms of process, writs, pleadings, and motions, and the practice and procedure of the district courts and courts of appeals of the United States in civil actions, including admiralty and maritime cases, and appeals therein, and the practice and procedure in proceedings for the review by the courts of appeals of decisions of the Tax Court of the United States and for the judicial review or enforcement of orders of administrative agencies, boards, commissions, and officers.
"Such rules shall not abridge, enlarge or modify any substantive right and shall preserve the right of trial by jury as at common law and as declared by the Seventh Amendment to the Constitution."
"At any time more than 30 days before the trial begins, any party may serve upon an adverse party an offer, denominated as an offer under this rule, to settle a claim for the money or property or to the effect specified in his offer and to enter into a stipulation dismissing the claim or to allow judgment to be entered accordingly. The offer shall remain open for 30 days unless a court authorizes earlier withdrawal. An offer not accepted in writing within 30 days shall be deemed withdrawn. Evidence of an offer is not admissible except in a proceeding to enforce a settlement or to determine costs and expenses.
"If the judgment finally entered is not more favorable to the offeree than an unaccepted offer that remained open 30 days, the offeree must pay the costs and expenses, including reasonable attorneys' fees, incurred by the offeror after the making of the offer, and interest from the date of the offer on any amount of money that a claimant offered to accept to the extent such interest is not otherwise included in the judgment. The amount of the expenses and interest may be reduced to the extent expressly found by the court, with a statement of reasons, to be excessive or unjustified under all of the circumstances. In determining whether a final judgment is more or less favorable to the offeree than the offer, the costs and expenses of the parties shall be excluded from consideration. Costs, expenses, and interest shall not be awarded to an offeror found by the court to have made an offer in bad faith.
"The fact that an offer is made but not accepted does not preclude a subsequent offer. When the liability of one party to another has been determined by verdict or order or judgment, but the amount or extent of the liability remains to be determined by further proceedings, any party may make an offer of settlement under this rule, which shall be effective for such period of time, not more than 30 days, as is authorized by the court. This rule shall not apply to class or derivative actions under Rules 23, 23.1, and 23.2." Committee on Rules of Practice and Procedure of the Judicial Conference of the United States, Preliminary Draft of Proposed Amendment to the Federal Rules of Civil Procedure (Aug. 1983), reprinted in 98 F. R. D. 337, 361-363 (1983).
"At any time more than 60 days after the service of the summons and complaint on a party but not less than 90 days (or 75 days if it is a counter-offer) before trial, either party may serve upon the other party but shall not file with the court a written offer, denominated as a[n] offer under this rule, to settle a claim for the money, property, or relief specified in the offer and to enter into a stipulation dismissing the claim or to allow judgment to be entered accordingly. The offer shall remain open for 60 days unless sooner withdrawn by a writing served on the offeree prior to acceptance by the offeree. An offer that remains open may be accepted or rejected in writing by the offeree. An offer that is neither withdrawn nor accepted within 60 days shall be deemed rejected. The fact that an offer is made but not accepted does not preclude a subsequent offer. Evidence of an offer is not admissible except in proceedings to enforce a settlement or to determine sanctions under this rule.
"If, upon a motion by the offeror within 10 days after the entry of judgment, the court determines that an offer was rejected unreasonably, resulting in unnecessary delay and needless increase in the cost of the litigation, it may impose an appropriate sanction upon the offeree. In making this determination the court shall consider all of the relevant circumstances at the time of the rejection, including (1) the then apparent merit or lack of merit in the claim that was the subject of the offer, (2) the closeness of the questions of fact and law at issue, (3) whether the offeror had unreasonably refused to furnish information necessary to evaluate the reasonableness of the offer, (4) whether the suit was in the nature of a "test case," presenting questions of far-reaching importance affecting non-parties, (5) the relief that might reasonably have been expected if the claimant should prevail, and (6) the amount of the additional delay, cost, and expense that the offeror reasonably would be expected to incur if the litigation should be prolonged.
"In determining the amount of any sanction to be imposed under this rule the court also shall take into account (1) the extent of the delay, (2) the amount of the parties' costs and expenses, including any reasonable attorney's fees incurred by the offeror as a result of the offeree's rejection, (3) the interest that could have been earned at prevailing rates on the amount that a claimant offered to accept to the extent that the interest is not otherwise included in the judgment, and (4) the burden of the sanction on the offeree.
"This rule shall not apply to class or derivative actions under Rules 23, 23.1, and 23.2." Committee on Rules of Practice and Procedure of the Judicial Conference of the United States, Preliminary Draft of Proposed Amendments to the Federal Rules of Civil Procedure (Sept. 1984), reprinted in 102 F. R. D. 407, 432-433 (1985).
"No award of attorney's fees and related expenses subject to the provisions of this Act may be made —
"(2) for services performed subsequent to the time a written offer of settlement is made to a party, if the offer is not accepted and a court or administrative officer finds that —
"(A) the relief finally obtained by the party is not more favorable to the party than the offer of settlement, and
"(B) the failure of the party to accept the offer of settlement was not reasonable at the time such failure occurred."