LAW REVIEW 1082
USERRA and Federal Rule of Civil Procedure 68, Offer of Judgment: Awards of Plaintiff's Attorney Fees and Prohibition of Charging Costs Under USERRA Are Not Affected by Rule 68.
By Thomas G. Jarrard,
1.8--USERRA—Relationship Between USERRA and other Laws/Policies
Q: I represent the
plaintiff in a USERRA case. After filing
the complaint in federal district court, defendant’s counsel and I broached the
issue of settlement; we had few fruitless discussions. So, seeing no serious
effort on defendant’s behalf, and not to be stalled by that, I continued in
earnest to keep the case moving ahead. A
few weeks later, however, I received the defendant’s Federal Rule of Civil
Procedure, 68, Offer of Judgment. How
does a Rule 68 offer work in a USERRA case?
Can I still obtain attorney fees for my client if we reject the offer
and move ahead and do not beat the offer?
Does Rule 68 shift defendant’s post offer costs to my client?
A: The short answer to your questions is Fed. R.
Civ. P. 68, Offer of Judgment, does not operate as a bar to the recovery of
attorney fees and litigation expenses incurred by a USERRA plaintiff after an
offer is rejected, and no defendant’s costs may be “charged” or shifted to a
For the sake of other
The Federal Civil Rules of Procedure are the ground rules for how a case moves
along in federal court. An offer of
judgment under Rule 68 is simply an offer to settle a matter for a certain
amount. The purpose of the rule is to
encourage settlement, and thereby clearing up matters without consuming too
much of the federal court’s time. Some
of the ideas behind the rule are: (1) if a matter can be settled it is better
for both parties to settle early, saving money; (2) rather than waiting, and
taking up time in the court, settle early; and for the similar reasons (3) the
court’s time could be put to better use in matters that really need its
involvement to reach resolution. As a
consequence, the rule was designed to create real incentives for both
defendants and plaintiffs to settle; trading risk of loss for cost savings down
How does Rule 68 normally work?
A: In the ordinary course of civil litigation, a plaintiff who rejects a
Rule 68 offer and prevails at trial for an amount not exceeding the offer
forfeits not only costs moving forward from the offer, but also all post-offer
attorneys’ fees that a prevailing plaintiff would otherwise receive by virtue
of a federal statute. Marek v. Chesny, 473 U.S. 1, 9, 87 L.
Ed. 2d 1, 105 S. Ct. 3012 (1985). Federal
Rule of Civil Procedure, 68(d) provides: “[i]f the judgment that the offeree
finally obtains is not more favorable than the unaccepted offer, the offeree
must pay the costs incurred after the offer was made." Ibid.
In Marek v. Chesny, the Supreme
Court applied Rule 68 to a 42 U.S.C. § 1983 case. The Court held that where the plaintiff
recovered less than the defendant's Rule 68 offer, the plaintiff could not
recover attorney fees after that offer if "the underlying statute defines
'costs' to include attorney's fees."
Marek v. Chesny, 473 U.S.
at 9. Since Rule 68 does not define
"costs," "it incorporates the definition of costs that otherwise
applies to the case," e.g. the
underlying statute. Id. at 9
n.2. Thus, absent congressional intent
to the contrary, where the underlying statute defines costs to include
attorney's fees, such fees are to be included as costs for purposes of Rule 68. Id.
So, Rule 68 can be used to create a real incentive for settlement.
Q: How does Rule 68 not work in a
Rule 68’s post offer consequences do not apply in all civil actions;
and particularly not in USERRA cases. For example, it is well settled that an
award of attorney fees under the Fair Labor Standards Act (FLSA) is not
affected by operation of Rule 68. See Fegley v. Higgins, 19 F.3d 1126,
1135 (6th Cir.), cert. denied, 130 L. Ed. 2d 134, 115 S. Ct. 203 (1994); Cox v. Brookshire Grocery Co., 919 F.2d
354, 358 (5th Cir. 1990); Dalal v. Alliant Techsystems, Inc., 182
F.3d 757, 760 (10th Cir. Colo. 1999); Haworth
v. Nevada, 56 F.3d 1048, 1052 (9th Cir. Nev. 1995)(concluding that Rule 68
did not bar the plaintiffs from recovering reasonable attorney fees for
services rendered in their FLSA action after the Rule 68 settlement offer was
made.) Unlike § 1983 claims, the FLSA
defines attorney fees separately from costs; "attorney's fee"
and "the costs of the action" are expressly separate items under 29
U.S.C. § 216(b). Thus, a Rule 68 offer
does not affect the trial court's award of attorney fees under § 216(b). See
Marek, 473 U.S.
at 13, 43-44 (Brennan, J., dissenting) (noting that for "statutes that do
not refer to attorney's fees as part of the costs [such as § 216(b) of the
FLSA, 473 U.S.
at 50]. . . . where an action otherwise is governed by Rule 68, attorney's fees
that are potentially awardable under these statutes are not subject to Rule 68
and instead are to be evaluated solely under the reasonableness standard. . .
."). Accordingly, unlike attorney
fees in a §1983 action, attorney fees in an FLSA action are not automatically
shifted by Rule 68. Id.
the remedies listed in USERRA, 38 U.S.C. 4323, are also conspicuously separated
from costs. The USERRA provides:
(h) Fees, court costs.
(1) No fees or court costs may be charged or
taxed against any person claiming rights under this chapter [38 USCS §§ 4301 et
(2) In any action or proceeding to enforce a provision of this chapter [38 USCS
§§ 4301 et seq.] by a person under subsection (a)(2) who obtained private
counsel for such action or proceeding, the court may award any such person who
prevails in such action or proceeding reasonable attorney fees, expert witness
fees, and other litigation expenses.
38 U.S.C. § 4323(h). This means that when a USERRA plaintiff
prevails, they are entitled to an award of reasonable attorney fees, expert
witness fees, and other litigation expenses.
29 U.S.C. § 216(b), the remedy provisions of USERRA also
differ significantly from § 1983 remedies.
First, while § 1983 defines attorney
fees as costs; 38 U.S.C. 4323(h)(2) defines attorney fees as “litigation
expenses.” Second, attorney fees and
other litigation expenses are listed separate and apart from costs and
fees. Compare 38 U.S.C § 4323(h)(2) and
(h)(1). Also worthy of notice is
that 38 U.S.C. 4323(h)(1) prohibits the shifting of any defendant’s fees or
costs to a USERRA plaintiff, “[n]o fees or court costs may be charged or taxed
against any person claiming rights under this chapter.”
In sum, the intent of Congress is clear and
unambiguous; fees and costs in USERRA litigation are separate from attorney fees and other litigation expenses. Thus, rejection of a Rule 68 offer does not
operate to divest a prevailing USERRA plaintiff from recovering attorney fees
and other litigation expenses as contemplated by 38 U.S.C. § 4323(h)(2). Furthermore, because USERRA bans charging any
fees or costs against a USERRA plaintiff, 38 U.S.C. § 4323(h)(1), no defendant
may use Rule 68 as a mechanism to shift any fees or costs to a USERRA
Thomas G. Jarrard is a Marine Corps Reserve officer and a member of ROA. He practices law in Spokane,
Washington and takes on USERRA cases around
the country. He also wrote, along with
Captain Wright (Director of the Service Members Law Center), ROA’s amicus
curiae brief in the Supreme Court, in the case of Staub v. Proctor
Hospital. His e-mail is
 Notably, 38 U.S.C. §
4302 speaks directly to the relation between USERRA and other laws or rules; it
preempts any infringement that would impose a limit or otherwise eliminate any
of the rights provided under USERRA. 38
U.S.C § 4302(b); 20 C.F.R. 1002.7(b).
Therefore, any application of Rule 68 that works to divest a USERRA
plaintiff of any of their remedies under § 4323 directly contradicts the
mandate of the USERRA, both §§4302 and 4323.
 The USERRA is “to be
liberally construed for the benefit of those who left private life to service
their country in its hour of great need.” Alabama Power Co. v. Davis,
431 U.S. 581, 587, 97 S. Ct. 2002, 52 L. Ed. 2d 595 (1977) (quoting Fishgold
v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 285, 66 S. Ct. 1105,
90 L. Ed. 1230 (1946)); See also
Kirdendall v. Dep’t of Army, 479 F.3d 830, 834 (Fed.Ct.,2007) (Veteran’s
benefit statutes are construed in the veteran’s favor) citing, King v. St. Vincent’s Hosp., 502 U.S. 215, 220 n.9, 112
S.Ct. 570, 116 L.Ed.2d 578 (1991)(“even if this were a close case, which it is
not, the canon that veterans’ benefits statutes should be construed in the
veteran’s favor would compel us to find that [the statute] is subject to
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