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Does a Plaintiff put a "glass ceiling" on their case value by sending an Offer Of Judgment to Defendants?

Fountain Hills, AZ |
Filed under: Lawsuits and disputes

When a Plaintiff sends a Defendant an offer of judgement for an amount of which they'd be willing to settle the case for, do you think that automatically puts a glass ceiling on the value of the Plaintiff's case? For example, if Defendants reject the offer, but then wish to discuss settlement sometime after, is it likely Defendants won't value Plaintiff's case any higher than the amount Plaintiff sought through the offer of judgment? Do you think it's wise for a Plaintiff to submit an offer of judgement for significantly more than what their bottom number for settlement really is?

Attorney Answers 2

Posted

While what the other attorney stated is true in federal court, in Arizona state court, both Plaintiffs and Defendants make Offers of Judgment under the rule. The idea is to set the amount at a level you believe you can do better than if the matter goes to trial. They are especially useful in settling medical malpractice cases because of the great expense of expert witnesses. If the defendant refuses to accept the Offer of Judgment and does not do better at trial, s/he is on the hook not only for the judgment but also for double taxable costs AND all of the Plaintiff's expert witness fees. So the amount should be set not based on the Plaintiff's bottom number for settlement but on what you realistically think you could recover at trial.

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Asker

Posted

Thank you! In the instance a Defendant doesn't want to accept an offer of judgment due to their position of not wanting a "judgment entered against them," but still wishes to settle the case "off the record..." do you think the Defendants will think of the number on the offer of judgment (of which was rejected) as the starting point for negotiations? In other words, while I understand that a Plaintiff should set an OOJ at a number that could reasonably be exceeded at trial, if the Plaintiff knows that a Defendant isn't going to accept the OOJ no matter what (but will likely want to settle off the record), do you think itd be better for the Plaintiff to put the OOJ higher than what is reasonably anticipated at trial under the assumuption that the Defendants will use that number as the starting point in settlement negotiations (and likely work down from)?

Anne Brady

Anne Brady

Posted

If everyone involved wants to settle "off the record" then an offer of judgment is a bad idea. It should be avoided all together. Simply settle the matter and then dismiss the complaint.

Posted

An offer of judgment is made under a specific rule of civil procedure intended to encourage settlement. In federal practice, it is Rule 68. A defendant usually sends an offer of judgment to the plaintiff. If the offer is not accepted, and the plaintiff recovers less at trial, then the plaintiff is liable for the costs after the offer was made (see FRCP 68). While a plaintiff is not precluded from making an offer of judgment, it is more common for the defendant to make such an offer under the rules of civil procedure. A plaintiff usually just makes a settlement offer without the formalities of a Rule 68 offer of judgment.

Your question, however, seems more focused on the art of negotiating, rather than on the formal rules of civil procedure. There are many different styles of negotiating (cooperative, confrontational, etc.), and one may adopt a different negotiation strategy for different situations. But, as practical matter, a plaintiff would have difficulty getting a defendant to accept a settlement figure higher than its initial offer unless there is a change in circumstance to justify it, A plaintiff could say that it will settle for a lesser amount today, but a higher amount later if it is forced to litigate the matter. But a defendant may interpret that as bluster and ignore the threat. A lot comes down to how well you communicate and understand the other side.

This answer is for informational purposes only. It is not intended as specific legal advice regarding your question. The answer could be different if all of the facts were known. This answer does not establish an attorney-client relationship.

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Posted

Thank you for the response, this is very helpful and informative. Do you think there are any risks for a Plaintiff to make a formal offer of judgment to a defendant, and do the usual risks (double taxable costs, interest, etc.) apply to defendants whom reject a Plaintiff's offer of judgment? Do you think its likely that most Defendants would interpret a Plaintiff's formal offer of judgement (under rule 68) as the Plaintiff's "bottom number" for settlement, or rather a starting point for negotiation?

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