On Appeal from the United States District Court for the District of New Jersey (D.C. No. 08-cv-00426) District Judge: Honorable Faith S. Hochberg
The opinion of the court was delivered by: Hardiman, Circuit Judge.
Before: SLOVITER, HARDIMAN and ALDISERT, Circuit Judges.
Rule 68 of the Federal Rules of Civil Procedure is intended to promote the amicable resolution of cases. Although it usually serves its intended purpose, Rule 68 presents a trap for the unwary. This trap manifests itself most frequently when a defendant erroneously believes that an accepted Rule 68 offer of judgment finally resolves a civil action, only to be assessed substantial attorney‟s fees and costs thereafter by the court.
In this appeal, Plaintiff Roberto Lima argues that the Rule 68 offer of judgment he accepted did not include attorney‟s fees and costs. As in many cases, the question is significant because counsel for Lima seek fees well in excess of the value of his settled claims.
The historical facts of this case are incidental to the issue presented on appeal, so we summarize them only briefly. In September 2007, a photographer working for Lima‟s Portuguese-language newspaper, Brazilian Voice, discovered and photographed a decomposed body covered by debris in the Ironbound section of Newark, New Jersey. Lima reported the incident to police and showed them the crime scene. At the crime scene, two police officers allegedly intimidated Lima and the photographer, seized the camera, and ordered Lima not to publish any photographs of the scene. At the precinct office, Lima gave police a statement but refused to turn over the original photographs (though he offered to make copies for them). Lima further alleged that he was handcuffed and released from custody only after he agreed to turn over all copies of the photographs. The police then followed him to his office where they seized CDs containing digital copies of the pictures.
In January 2008, Lima filed suit in New Jersey District Court against the Newark Police Department and certain police officers. He amended his complaint once to add an additional officer, and then again, in January 2009, adding Police Director Garry McCarthy, another officer, and a Monell claim against the City of Newark (collectively, Newark).
Lima‟s second amended complaint stated seven causes of action arising under both federal and state law and concluded with a "PRAYER FOR RELIEF" stating:
WHEREFORE, Plaintiff respectfully requests judgment against the Defendants as follows:
(a) Compensatory and consequential damages in an amount to be determined at trial;
(b) Punitive damages on all claims allowed by law, in an amount to be determined at trial;
(c) Attorney‟s fees and costs associated with this action;
(d) Any further relief as this Court deems just and proper and any other relief as allowed by law.
Before discovery commenced, and before filing his second amended complaint, Lima offered to settle the case for "$85,000, and [an] admission of the event; an apology; and consent to training." After some discovery, the filing of the second amended complaint, further settlement negotiations, and a failed attempt at mediation--during which Lima‟s demand went as high as $150,000 and Newark‟s offer went as high as $50,000--Newark made a Rule 68 offer of judgment (Offer). The Offer was attached to a November 8, 2009 email stating: "Attached is an Offer of Judgment from the City of Newark and Garry McCarthy. The offer is, however, as to all defendants and all claims. The City makes this offer with the intention and expectation that, if accepted, this litigation will be resolved in its entirety." The Offer itself stated:
Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendants City of Newark (and improperly pled "Newark Police
Department"), and Garry McCarthy, hereby offers [sic] to allow Judgment to be entered against these defendants in this action in the amount of $55,000.00, including all of Plaintiff‟s claims for relief against all defendants, including those not represented by this counsel. This offer of judgment is made for the purposes specified in Federal Rule of Civil Procedure 68, and is not to be construed as either an admission that any of the defendants are liable in this action, or that the Plaintiff has suffered any damage. This Offer of Judgment shall not be filed ...