Is there a federal equivalent to the CCP 998 Offer in Compromise?

Sort of. There is a similar mechanism under Rule 68 of the Federal Rules of Civil Procedure, called a statutory offer of judgment, but unlike California law only defendants can utilize it. If a plaintiff turns down defendant’s Rule 68 offer and obtains judgment for less than the offer, plaintiff must pay “the costs incurred after the offer was made,” which includes any attorneys’ fees recoverable by statute as part of “costs”. (FRCP 68(d).)

Unless Waived, An FRCP Rule 68 Offer Includes An Agreement to Pay the Plaintiff’s Costs!

In contrast to California law, a federal Rule 68 offer is not effective unless the defendant(s) includes a clear agreement to pay all Plaintiff’s costs incurred to the date of the offer. (Cruz v. Pacific American Ins. Co. (9th Cir. 1964) 337 F.2d 746, 750.) However, there is also authority suggesting that even if the Rule 68 offer omits to mention costs, then the Court will award accrued costs as long as the offer does not explicitly or implicitly provide that the judgment does not include costs. (Marek v. Chesny (1985) 473 US 1, 6, 105 S.Ct. at 3015; Le v. University of Pa. (3rd Cir. 2003) 321 F.3d 403, 409.) Importantly, if pre-offer attorneys’ fees are recoverable as “costs,” then a Rule 68 offer to pay all costs incurred to date necessarily includes those attorneys’ fees.

A Rule 68 offer can, however, be conditioned on plaintiff’s waiving statutory attorneys’ fees that would otherwise be recoverable as “costs.” Any waiver of attorneys’ fees must be explicit to be effective. For example, Plaintiff’s acceptance of a lump sum offer in “total settlement of all claims” (with no mention of costs) does not affect the right to recover accrued costs in addition to the “total” amount.

FRCP 68 requires that an offer of judgment be “served” on opposing parties, so that only a written offer satisfies Rule 68. The terms of a Rule 68 offer may also include non-monetary relief, such as injunctions, rescission or reformation of contract. An offer may be made at any time up to fourteen (14) days before the trial date. To be effective, an acceptance must be made in writing within fourteen (14) days of service (presumably extended by 3 days for mail under FRCP 6(d)). Once accepted, the offer and acceptance should be filed with the Court so that judgment may be entered.

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