Commercial Litigation and Arbitration

Party Accepting a Rule 68 Offer of Judgment Is a Prevailing Party for Purposes of Recovering Statutory Attorneys’ Fees

From Walsh v. Boston Univ., 661 F. Supp. 2d 91 (D. Mass. 2009):

The motion raises an issue of first impression in this circuit regarding whether plaintiff, who obtained a Rule 68, Fed. R. Civ. P. ("Rule 68"), judgment in the amount of $15,000 in his favor, is a "prevailing party" within the meaning of the American Disabilities Act, 42 U.S.C. § 12205 ("ADA"). In addition to the ADA, plaintiff seeks a fee award under the Family Medical Leave Act, 29 U.S.C. §§ 2601 et seq. ("FMLA"), and Massachusetts General Laws chapter 151B, section 9 ("chapter 151B"). ***

The issue of plaintiff's prevailing party status involves the intersection of the Rule 68 judgment and the Supreme Court's 2001 decision in Buckhannon Board and Care Home, Inc. v. West Virginia Department of Health and Human Resources, 532 U.S. 598, 121 S. Ct. 1835, 149 L. Ed. 2d 855 (2001). Defendant maintains that plaintiff is not a prevailing party because of the lack of a judge's substantive involvement in the merits. In addition to the lack of judicial imprimatur, defendant points out that plaintiff did not accomplish anything of social value. Given the absence of any "ongoing relationship that will be altered," defendant submits that the acceptance of the Rule 68 offer amounts to no more than a voluntary change in conduct that Buckhannon rejects as a basis for an attorney's fee award. ***

As interpreted in this circuit, Buckhannon "held that for a party to be considered 'prevailing,' there must be a 'material alteration of the legal relationship of the parties,' and there must be 'judicial imprimatur on the change.'" ***

A material alteration of the parties' legal relationship takes place if a party "'"succeed[s] on any significant issue in litigation which achieves some of the benefit [it] sought in bringing suit."'" [Citations omitted.] "Put another way, a plaintiff 'prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff." [Citation omitted.]***

The judgment awards plaintiff $15,000 thereby achieving a change in defendant's behavior toward plaintiff by requiring defendant to pay a not insignificant sum of money. By recovering the $15,000 award, plaintiff succeeded on an important issue, to wit, the payment of $15,000 in monetary damages thereby achieving a portion of the benefits he sought in filing suit. See Rhodes v. Stewart, 488 U.S. 1, 3-4, 109 S. Ct. 202, 102 L. Ed. 2d 1 (1988) (recognizing that a judgment that produces a "payment of damages . . . affects the behavior of the defendant towards the plaintiff"). Although plaintiff did not receive all of the requested relief, the recovery was neither technical nor de minimis. Cf. Smith v. Fitchburg Public Schools, 401 F.3d at 26 (examining relief requested in complaint, finding that settlement included all of the relief and concluding that "there was a material alteration in the legal relationship" between the parties). Furthermore, a nominal damages award "serves to alter the legal relationship between the parties such that the plaintiff must be considered a prevailing party." De Jesus Nazario v. Morris Rodriguez, 554 F.3d 196, 200 (1st Cir. 2009)***.

A close analysis of the implications of a Rule 68 judgment and the meaning of judicial imprimatur as interpreted in two First Circuit cases dealing with private settlements after the Buckhannon decision [Aronov v. Janet Napolitano, 562 F.3d at 89-92; Smith v. Fitchburg Public Schools, 401 F.3d at 21-27] leads to the conclusion that plaintiff is a prevailing party. The Fourth and Eleventh Circuits concur. Grissom v. The Mills Corporation, 549 F.3d at 316-319 (entry of Rule 68 judgment by clerk for $ 130,000 provided material alteration of parties' legal relationship and judicial imprimatur to confer prevailing party status under Buckhannon); Utility Automation 2000, Inc. v. Choctawhatchee Electric Co-op., Inc., 298 F.3d 1238, 1248 (11th Cir. 2002) (Rule 68 judgment for $ 45,000 conferred prevailing party status and achieved judicial imprimatur even though "court exercises little substantive review over a Rule 68 offer").

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