Too Late to Stipulate: Reconciling Rule 68 with Summary Judgments
Imagine a typical lawsuit between two parties, plaintiff and defendant. The litigants have reached the final days of pretrial litigation, and like any good defense counsel, the defendant’s lawyer hopes to dismiss the case before going to trial. He moves for summary judgment—increasingly common in modern litigation—and raises the possibility of settlement with the plaintiff. Hoping to strong-arm an end to the case, he decides to send the plaintiff a special settlement offer under Federal Rule of Civil Procedure 68 called an “offer of judgment.” If the plaintiff accepts this offer, the court will automatically enter judgment against the defendant according to the offer’s terms. The case will end. But if the plaintiff declines the offer, Rule 68 may make the plaintiff liable for costs that the defendant incurs during subsequent litigation. This risk of increased costs means the plaintiff should think seriously about accepting the offer.
Before the plaintiff makes a decision, however, the judge grants full summary judgment for the defendant. The plaintiff has lost—at least in the eyes of the court. But plaintiff’s counsel sees an opportunity to turn things around. As soon as he learns of the summary judgment ruling, the plaintiff contacts the defendant to accept his offer of judgment. The defendant protests, but the plaintiff points out that the Rule makes no exception for a grant of summary judgment. At the same time, plaintiff sends the court notification of the offer and his acceptance, along with a motion to amend the entry of summary judgment and enter final judgment against the defendant. If the court grants his motion, the plaintiff has succeeded in turning a certain defeat into a victory.
This hypothetical illustrates the dilemma facing courts that grant summary judgment during a pending offer of judgment. Rule 68 is a rigid procedural mechanism. Once made, the litigants cannot revoke a Rule 68 offer. And once accepted, the Rule appears to mandate entry of judgment. The plaintiff has fourteen days to accept an offer before it is considered withdrawn, and if the plaintiff accepts during this period, the court clerk “must” enter judgment according to the defendant’s terms.
This language has caused a split in federal and state courts as to whether a grant of summary judgment during the fourteen-day acceptance period ends the plaintiff’s power to accept an offer or whether a plaintiff can still accept even after summary judgment has been granted. The implications of this issue for litigants and our adversarial system are significant. If a plaintiff can accept an offer of judgment even after the case would otherwise end in summary judgment, then he can essentially win his case despite having lost on the merits.
This Comment begins with the intuition that something about the entry of judgments makes it different from all other events that might occur during an outstanding Rule 68 offer. Unlike, say, the death of a witness or a ruling on the exclusion of evidence, the operation and purposes of Rule 68 suggest that it should afford special significance to an order disposing of the case.
Accordingly, this Comment advances two ideas: First, offer and acceptance in Rule 68 should be viewed as procedural, rather than contractual. And second, entry of final judgment, but not necessarily summary judgment, should abrogate the operation of Rule 68.