Rule 68 Offer of Judgment: Cost-Shifting and Marek Attorney Fees

A Rule 68 offer of judgment is a formal settlement tool in federal civil litigation: a defendant serves a written offer letting the plaintiff take a judgment for a specified amount plus accrued costs, and if the plaintiff rejects it and then fails to do better at trial, the plaintiff has to pay the defendant’s post-offer costs. The rule is meant to price out unreasonable optimism in settlement talks, and in some categories of cases it can also shift the defendant’s post-offer attorney fees onto the plaintiff.

Who Can Make One

Rule 68 is available only to “a party defending against a claim.”¹ In practice that almost always means the defendant offering judgment to the plaintiff. Plaintiffs cannot use Rule 68 to pressure defendants into paying more. A plaintiff facing a counterclaim is defending against that counterclaim and could use the rule in that posture, but the everyday use case is a defendant serving an offer on the plaintiff.

Timing and Form of a Valid Offer

The offer must be served on the opposing party at least 14 days before the trial date.¹ It has to propose judgment “on specified terms, with the costs then accrued.” That accrued-costs language is not filler. Leaving it out can undermine the cost-shifting mechanism entirely.

If the court has already ruled that a party is liable but has not yet fixed the amount owed, the liable party can still make an offer, but it must be served within a reasonable time and no fewer than 14 days before the damages hearing.¹

Terms have to be definite. Courts have generally expected offers to be clear and unambiguous enough that the plaintiff can evaluate exactly what acceptance would produce, with no room left for further negotiation. A vague or conditional offer risks being treated as something other than a proper Rule 68 offer, which would strip it of cost-shifting force.

The 14-Day Window to Accept

The plaintiff has exactly 14 days to accept by serving written notice.¹ If the plaintiff accepts, either side can file the offer, the acceptance, and proof of service with the clerk, who then enters judgment on the agreed terms. There is no judicial review of whether the amount is fair. The clerk records the judgment as a matter of routine, and at that point the litigation is over on the covered claims.

Acceptance converts a private negotiating move into a public judgment. That matters. A judgment carries the full enforcement machinery of the courts, including wage garnishment and asset levies if the defendant fails to pay, and its terms sit on the public docket.

What Happens If You Ignore the Offer

If the 14-day window closes without a response, the offer is automatically withdrawn.¹ A withdrawn offer cannot be introduced at trial to prove liability or the value of the claim. The jury never learns the defendant was willing to pay a specific amount. The only time an unaccepted offer resurfaces is in post-trial proceedings to allocate costs.

A withdrawn offer does not stop the defendant from making another. Rule 68(b) explicitly says an unaccepted offer “does not preclude a later offer.”¹ Defendants sometimes serve successive offers as the case develops. Where multiple offers have been made, the cost-shifting analysis applies to the last unaccepted one.

The Cost-Shifting Penalty

This is where the rule has teeth. If the plaintiff rejects an offer and then obtains a final judgment that is “not more favorable” than the rejected offer, the plaintiff must pay all costs incurred after the date of the offer.¹ That flips the usual expectation. Under the default federal rules, the winning party recovers costs from the loser. Rule 68 reverses this for post-offer costs, making a plaintiff who technically won pay the defendant’s expenses from the offer date forward.

In practice: suppose a defendant offers $50,000 including accrued costs, the plaintiff rejects it, and the jury later awards $45,000. The plaintiff “won,” but the judgment is less favorable than the offer. The plaintiff keeps the $45,000 but must reimburse the defendant for post-offer costs. Depending on how long the case ran and how much discovery happened after the offer, those costs can cut deeply into the recovery.

The comparison has to be apples to apples. Because the offer includes costs accrued when it was made, the court adds the plaintiff’s pre-offer costs to the trial judgment for the comparison. If the offer was $50,000 with costs then accrued and the plaintiff had $3,000 in accrued costs at the time, the trial judgment plus those pre-offer costs would need to exceed $50,000 to avoid the penalty.

What “Costs” Actually Means

The costs that shift under Rule 68 are generally those listed in 28 U.S.C. § 1920, a fairly narrow set of litigation expenses:²

Clerk and marshal fees, including filing fees and service of process charges.
Deposition and trial transcript fees necessarily obtained for the case.
Witness fees, including the statutory attendance fee plus travel and subsistence expenses.
Copying and exemplification costs for materials necessarily used in the case.
Compensation for court-appointed experts and interpreters.

Individual amounts are often capped. Witness attendance is set at $40 per day under 28 U.S.C. § 1821.³ A party might pay an expert consultant $500 an hour, but the taxable witness cost is still $40 a day. The Supreme Court has held that §§ 1920 and 1821 define the full extent of a federal court’s power to shift litigation costs unless a separate statute expressly authorizes more. Even at these modest per-item amounts, post-offer costs in a complex case can reach the tens of thousands.

Attorney Fees Under Marek v. Chesny

Attorney fees are the biggest expense in most federal lawsuits, and under the default reading of Rule 68 they are not part of “costs.” A plaintiff who loses the Rule 68 comparison typically owes the defendant’s post-offer taxable costs but not the defendant’s attorney fees, which sharply limits the rule’s bite in most cases.⁴

The major exception comes from the Supreme Court’s 1985 decision in Marek v. Chesny. Police officers sued under 42 U.S.C. § 1983 made a Rule 68 offer that the plaintiff rejected. The plaintiff won at trial but recovered less than the offer. The Court held that because the civil rights fee-shifting statute, 42 U.S.C. § 1988, defines attorney fees as part of “costs,” those fees fall within Rule 68’s cost-shifting provision.⁴ The plaintiff lost the right to recover post-offer attorney fees, which in that case totaled $139,692.

The practical upshot: in any case brought under a statute that treats attorney fees as “costs,” Rule 68 becomes dramatically more powerful. Civil rights claims under §§ 1983 and 1988 are the most common example, but the same logic applies to other fee-shifting statutes that use that specific language. A plaintiff who rejects a Rule 68 offer in a fee-shifting case and fails to beat it at trial can lose post-offer taxable costs and post-offer attorney fees, which often dwarf the underlying judgment. In those cases an offer demands especially careful evaluation.

When the Rule Does Not Apply

Rule 68’s cost-shifting penalty does not apply when the defendant wins outright and the plaintiff recovers nothing. In Delta Air Lines, Inc. v. August, the Supreme Court held that the rule’s language about “the judgment finally obtained by the offeree” only covers situations where the plaintiff actually obtains some judgment in their favor.⁵ When the verdict goes entirely for the defendant, Rule 68 is irrelevant, and the court uses its standard discretion under Rule 54(d) to decide whether to award costs to the prevailing defendant.

The comparison also becomes difficult when the plaintiff sought both money and non-monetary relief like an injunction. If a defendant’s offer was purely monetary but the plaintiff ultimately wins an injunction plus a smaller dollar amount, courts have split on whether the judgment was “more favorable” than the offer. Some have upheld monetary-only offers even when equitable relief was requested; others have said such offers fail to satisfy the rule when both types of relief were at stake. The defendant bears the burden of showing the offer was more favorable than the judgment obtained.

Rule 68 also cannot be used to shut down a class action by picking off the named plaintiff. In Campbell-Ewald Co. v. Gomez, the Supreme Court held that an unaccepted Rule 68 offer does not moot a plaintiff’s case.⁶ Under basic contract principles, a rejected offer has no continuing force, and the parties remain adverse with the same stakes they had at the outset.

Claiming Costs After Trial

When a plaintiff fails to beat a Rule 68 offer, the cost-shifting does not happen automatically. The defendant follows the procedures in Federal Rule of Civil Procedure 54(d) to recover costs. The clerk taxes costs after 14 days’ notice, and either party can challenge the clerk’s decision by motion within 7 days.⁷

If a fee-shifting statute is in play and post-offer attorney fees are on the table under Marek, the party seeking fees must file a motion no later than 14 days after entry of judgment, unless a statute or court order sets a different deadline.⁷ The motion has to identify the judgment, the legal basis for the fee award, and either the exact amount or a fair estimate. Missing these deadlines can forfeit costs that Rule 68 would otherwise shift.

1
Legal Information Institute. Federal Rule of Civil Procedure 68
2
Office of the Law Revision Counsel. 28 USC 1920 – Taxation of Costs
3
Office of the Law Revision Counsel. 28 USC 1821 – Per Diem and Mileage Generally
4
Federal Judicial Center. Likely Consequences of Amendments to Rule 68, Federal Rules of Civil Procedure
5
Legal Information Institute. Delta Air Lines, Inc. v. August
6
Justia. Campbell-Ewald Co. v. Gomez
7
Legal Information Institute. Federal Rule of Civil Procedure 54 – Judgment; Costs