Monday, October 12, 2015

To Settle Or Not To Settle, That Is The Question

Although people speak about "having their day in court," very few civil cases actually go to trial.  The vast majority of civil cases either are dismissed or settle.  According to various online sources, only approximately 10% of civil cases go to trial.  Moreover, research shows that many of the cases that go to trial would have been better off settled.  In this blog post, I want to discuss some of the considerations that go into deciding whether or not to settle a lawsuit.

As I explain to potential clients, in most cases, it is not easy to win a lawsuit.

First, the plaintiff's allegations have to be strong enough to avoid being dismissed for "failure to state a claim for relief."  This is a relatively low hurdle to jump over (but higher in federal court than in state court).  Assuming the plaintiff has a legitimate grievance against the defendant, and assuming that the plaintiff's allegations do not raise novel legal issues, this hurdle is one that a competent lawyer should be able to get over -- or the lawyer should not take the case.

The second, much higher hurdle is called "summary judgment," which is where the defendants ask the judge to throw out the lawsuit because, based on the evidence developed during discovery, there is no basis for the jury to rule in the plaintiff's favor.  Some kinds of cases, e.g., employment discrimination, are especially prone to being dismissed on summary judgment.  Other kinds of cases, e.g., false arrest, are less likely to be dismissed on summary judgment.  Unfortunately, at the start of a lawsuit, it is difficult to predict the chances that any given case will be dismissed on summary judgment.  Nevertheless, the ability to exercise this judgment accurately is a hallmark of an experienced, effective civil litigator.

The last hurdle that a plaintiff must get over to win a lawsuit is the trial.  Even when the plaintiff has a strong case, the jury can side with the defendant.  There are no guarantees once the jury starts deliberating.  The jury's sense of "justice" does not have to coincide with the plaintiff's.  Moreover, depending on the type of case, it can be more or less challenging to persuade the jury to find in favor of the plaintiff.  For example, juries are notoriously reluctant to rule against police officers in civil rights cases.

In short, winning a civil lawsuit isn't easy, but litigation is an all-or-nothing affair in which the only outcomes are win or lose. 

Given the nature of the legal system, it almost always make sense for the plaintiff to settle for a reasonable amount of money instead of running the risk of losing and obtaining no compensation for the harms the plaintiff has suffered.  (In addition, plaintiffs who lose cases can be required to reimburse the defendants for their costs and attorney's fees -- so the plaintiff ends up even worse off financially.)

OK, but what is a "reasonable amount of money"?  How is this determined?

Unfortunately, there is no formula that can answer this question.  It involves making an educated assessment of the "value" of the case (based on the damages that the applicable law allows a plaintiff to recover) and the "likelihood" of winning or losing at each stage in the litigation process (primarily based on case law).  These variables then must be viewed in light of the plaintiff's financial circumstances and willingness to risk losing the case.  For example, a plaintiff who does not "need" the money from a settlement is going to evaluate a case differently than someone who needs the money to pay bills.  Very few plaintiffs are this fortunate, however.  Most need the money, and sooner than later -- which can be a compelling reason to settle a lawsuit.

But again, it all depends on whether the defendant makes a "reasonable" settlement offer.  Some offers are just too low to accept, even for cases that are worth little and have low chances for success.

In my experience, however, most defendants in most cases will make settlement offers that are "reasonable" based on the facts and law of the case, even if the offers are lower than the plaintiffs would like (as they almost always are, of course).

This brings me to a critical issue:  unrealistic expectations.  In my experience, most plaintiffs believe their cases are "worth" more than they really are (from a legal perspective).  This is understandable, because the plaintiffs have experienced injustice and want compensation.  Unfortunately, the law usually does not provide for the amount of compensation they think is fair.  Usually, the law provides for much less.  In those situations, all I can do is explain to my clients how the legal system values their case and help them make an appropriate settlement decision based on the strengths and weaknesses of their case as well as their personal circumstances.

At The Warshawsky Law Firm, our goal is to obtain as much compensation as possible for our clients.  We screen potential cases carefully.  We research and draft complaints thoroughly.  We conduct aggressive discovery to obtain the evidence needed to defeat a motion for summary judgment.  Above all, we prepare cases with an eye for trial.  We are not afraid to take cases to trial.  Indeed, we had three jury trials this year alone.  But this does not mean that going to trial always is in our clients' best interest.  Often it isn't.  It almost always makes more sense to accept a reasonable settlement than to "roll the dice" at trial.

The decision whether or not to settle ultimately depends on the facts of each case and each plaintiff's personal circumstances.  Sometimes, however, plaintiffs refuse to settle and then obtain a worse outcome later (either a lower settlement, a summary judgment dismissal, or a loss at trial).  This happens much more often than the cases in which the plaintiff "hits a home run" at trial.

If I could offer just one piece of advice to plaintiffs, it would be to lower their expectations and accept settlement offers that they and their attorneys think are "reasonable"; then they should take the money, consider that a victory, and move on with their lives. 

Monday, September 21, 2015

A Tale Of Two Cases: Why Some Employment Discrimination Plaintiffs Win And Others Lose

At The Warshawsky Law Firm, we handle a wide variety of employment discrimination cases.  When first meeting a prospective client, perhaps our most important task is evaluating the strengths and weaknesses of a potential lawsuit.  Indeed, we usually are asked by the client whether he/she "has a case" and "what are the chances of winning."  This is a complicated question that can be difficult to answer based on the limited information and documentation that the client usually has in his/her possession.  Often times the full picture of an employment situation does not emerge until after the lawsuit has been filed and the parties engage in discovery.

The central question in every discrimination case is whether the plaintiff can prove that the employer was motivated by unlawful discriminatory bias, hostility, or animosity.  For example, in a wrongful termination case, was the plaintiff fired because of his/her race or age or religion, etc.?  While the plaintiff may "believe" that he/she was discriminated against by the employer, this is not good enough in court.  To be able to win a lawsuit in court, the plaintiff must have objective evidence that shows that the employer acted from a discriminatory motive.

What kind of evidence?  While each case is different and various factual circumstances can raise an inference of unlawful discrimination, the most common types of evidence that courts look for are discriminatory comments and differential treatment of similarly situated employees.

Discriminatory comments are just that -- spoken or written comments that demonstrate discriminatory animus.  For example, derogatory comments about a person's race or sex or disability, etc.  Comment evidence is the most important type of evidence in an employment discrimination case.   

Differential treatment of similarly situated employees means, for example, that the employer treats black and white employees differently in the same context (for example, when being disciplined for alleged infractions of workplace rules).  This is the second most important type of evidence -- showing that employees are treated differently for no reason other than their race, sex, disability, etc.

Two recent decisions by U.S. District Judge John Gleeson of the Eastern District of New York (a highly respected jurist) illustrate these basic principles. 

The first case is Charles Krugler v. MTA New York City Transit Authority, et al., Case No. 12-CV-2900.  The second case is Russell Herling v. New York City Department of Education, et al., Case No. 13-CV-5287. 

In the Krugler case, the plaintiff was a 57-year old transit employee who alleged that his employer had discriminated against him on the basis of age by rejecting him for 18 promotions that he had applied for between 2001 and 2011.

In a decision issued on September 10, 2015, Judge Gleeson granted the defendants' motion for summary judgment and dismissed the lawsuit.  Why?  Because the plaintiff did not have any evidence, other than his own opinion, that he had been discriminated against based on his age.  There were no discriminatory comments, and the evidence showed that older employees had been interviewed for and in some cases selected for the positions in question -- as Judge Gleeson explained, "[t]his is persuasive evidence that the defendants did not discriminate against Krugler based on his age."  Moreover, "Krugler was eventually promoted to the position of AGS, one of the positions he claims he was passed over for because of his age."  Based on these facts, Judge Gleeson concluded "as a matter of law" that "age discrimination played no role in the failure to promote Krugler."

In the Herling case, the plaintiff was a white Jewish physical education teacher at a public high school in Brooklyn who alleged that his employer had discriminated against him on the basis of race and religion by disciplining him for workplace infractions, giving him an unsatisfactory rating, and denying him opportunities for additional pay.

In a decision also issued on September 10, 2015, Judge Gleeson denied the defendants' motion for summary judgment and allowed the plaintiff's case to proceed to trial.  Why?  Unlike the plaintiff in the Krugler case, the plaintiff in the Herling case offered objective evidence of his supervisor's discriminatory animus.  This evidence included several discriminatory comments and specific examples of non-white and non-Jewish teachers receiving preferential treatment.  For example, the plaintiff showed that black employees who committed the same alleged rules infractions (e.g., being late to work, not submitting student grades properly) were not disciplined for the same or worse conduct for which he was disciplined.  Judge Gleeson agreed with the plaintiff that this evidence was sufficient to raise an inference of discrimination.  Although the defendants offered various non-discriminatory reasons for the plaintiff's workplace treatment, Judge Gleeson ruled that the plaintiff's evidence was strong enough to require a jury to decide whether or not he had been discriminated against.

The outcomes in these two cases highlight the crucial importance in an employment discrimination case for the plaintiff to present objective evidence -- usually in the form of discriminatory comments and/or differential treatment of similarly situated employees -- that the employer was motivated by discriminatory animus.  Without such evidence, it is very difficult for a plaintiff to persuade a court to allow the case to go to trial.


If you or someone you know has been the victim of workplace discrimination, please contact The Warshawsky Law Firm today.

Monday, October 24, 2011

Rule 68 Offer of Judgment: Not An Ordinary Settlement Offer

Very few cases in civil litigation actually go to trial.  See here (discussing declining number of federal court civil trials). Rather, most cases are resolved either by dispositive motion (i.e., a motion to dismiss or a motion for summary judgment) or by settlement.  Indeed, cases that cannot be “thrown out” on motion usually are settled (albeit sometimes on the eve of trial).

Ordinarily, settlements are confidential agreements between the parties whereby the plaintiff agrees to dismiss his/her claims against the defendant in exchange for a monetary payment; the defendant, in agreeing to make such payment, does not admit liability. Settlements can be win-win situations that resolve disputes efficiently, provide the parties with finality, and guarantee that the plaintiff receives at least some compensation for his/her injuries.

The legal system tends to encourage settlements.  Judges often urge, and sometimes even browbeat, the parties to reach a settlement.  The uncertainty of jury verdicts provides an incentive for the parties to settle.  The rules of evidence (e.g., Federal Rule of Evidence 408 and similar state rules) encourage settlement negotiations by excluding what is said during such negotiations from trial.

Another device intended to encourage the settlement of litigation is the “offer of judgment” pursuant to Federal Rule of Civil Procedure 68.  (Many states have a similar procedural rule.)  Rule 68 (amended in 2009) provides as follows:

(a) Making an Offer; Judgment on an Accepted Offer.

At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.  If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

(b) Unaccepted Offer.

An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.

(c) Offer After Liability Is Determined.

When one party's liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an offer of judgment. It must be served within a reasonable time – but at least 14 days – before the date set for a hearing to determine the extent of liability.

(d) Paying Costs After an Unaccepted Offer.

If 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.

What distinguishes a Rule 68 offer of judgment from an ordinary settlement offer? 

First, a Rule 68 offer of judgment is not confidential.  It is filed with the court and becomes part of the public record about a lawsuit.

Second, it operates legally as a finding of liability.  This is what “judgment” means.  It means that the defendant is being held liable to the plaintiff.  Of course, the rule provides that the party making an offer of judgment may do so “on specified terms.”  Consequently, most defendants state that their offer of judgment is “not to be construed as an admission of liability,” just like they do in an ordinary settlement agreement.  Such a disclaimer, however, is meaningless legally (perhaps it has public relations value).  The very nature of the offer of judgment is that it “allow[s] judgment” to be entered against the defendant in the case.

Why would a defendant do this?

This brings us to the third main difference between a Rule 68 offer of judgment and an ordinary settlement offer.

With an ordinary settlement offer, there are no legal consequences to the plaintiff for rejecting such an offer.  With an offer of judgment, however, there can be significant legal consequences to the plaintiff for rejecting such an offer.

Specifically, if the plaintiff rejects an offer of judgment (say, for $25,000) and the judgment he/she finally obtains is less favorable than the offer (say, the jury awards only $10,000), then the plaintiff must pay all of the costs incurred after the offer was made.  This means that the plaintiff not only has to pay his/her own post-offer costs, but also must pay the defendant’s post-offer costs (e.g., for court filings, depositions, trial exhibits, etc.).  Depending on the case, these costs may be substantial.  The offer of judgment, therefore, can serve as a powerful incentive to “settle” claims, and must be considered very carefully by the plaintiff.

Unfortunately, the wording of Rule 68 is vague, incomplete, and difficult to understand.  The two main questions about Rule 68 are (1) Does it apply when the plaintiff loses the case?  and (2) Does it require the plaintiff to pay the defendant’s attorney’s fees in addition to costs?

The answer to the first question clearly is no.  This was the issue decided by the U.S. Supreme Court in Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981).  In that case, the plaintiff sued Delta Air Lines for race discrimination in violation of Title VII of the Civil Rights Act of 1964.  A few months after the complaint was filed, the defendant made an offer of judgment in the amount of $450.  The plaintiff rejected the offer.  Subsequently, the plaintiff lost at trial.  The defendant then moved for an order requiring the plaintiff to pay the costs incurred by the defendant after the offer was made.  The district court denied the motion, and the court of appeals affirmed.  The Supreme Court affirmed, but on different grounds.

Whereas the lower courts had held that the company’s $450 offer had not been made in a good faith attempt to settle the case, the Supreme Court held that Rule 68 does not apply where judgment is entered against the plaintiff (offeree) and in favor of the defendant (offeror).  As the Court explained, “the plain language of Rule 68 confines its effect to . . . [cases] in which the plaintiff has obtained a judgment for an amount less favorable than the defendant’s settlement offer”; therefore, “it is clear that [Rule 68] applies only to offers made by the defendant and only to judgments obtained by the plaintiff.”  (Note:  Losing plaintiffs, and losing defendants, can be held liable for costs under Federal Rule of Civil Procedure 54 and similar state rules.)

Turning to the second question, regarding attorney's fees, the answer also is no. 

This question has not been addressed by the Supreme Court.  In Marek v. Chesny, 473 U.S. 1 (1985), the Court answered a different but related question:  “whether attorney’s fees incurred by the plaintiff subsequent to an offer of settlement under Federal Rule of Civil Procedure 68 must be paid by the defendant under 42 U.S.C. § 1988, when the plaintiff recovers a judgment less than the offer.”  The Court said no.  In that situation, Rule 68 acts to cut off the defendant’s liability for attorney’s fees to the plaintiff because Section 1988 defines attorney’s fees “as part of the costs” of litigation.  This means that a prevailing plaintiff will not be able to receive an award of attorney’s fees under a statute like Section 1988 if he/she does not obtain a judgment more favorable than the defendant’s offer of judgment.

But does this mean, on the other hand, that the plaintiff will have to pay the defendant’s attorney’s fees?  This question was addressed by Judge Leonard Wexler of the U.S. District Court for the Eastern District of New York in Boisson v. Banian Ltd., 221 F.R.D. 378 (E.D.N.Y. 2004) (link not available).  The key portion of Judge Wexler’s decision reads:

Although Marek precludes a plaintiff from recovering attorneys' fees incurred after the making of the Rule 68 offer, it does not discuss whether the offering defendant is entitled to recover attorneys' fees incurred after the making of the offer. Most courts considering this issue in the context of civil rights actions, have held that there is no such right to recovery. See, e.g., Le v. University of Pennsylvania, 321 F.3d 403 410–11(3d Cir.2003) (denying defendant Rule 68 attorneys' fees in Title VII action); Payne v. Milwaukee County, 288 F.3d 1021, 1027 (7th Cir.2002) (denying defendant Rule 68 attorneys' fees in case brought pursuant to 42 U.S.C. § 1983) E.E.O.C. v. Bailey Ford, Inc., 26 F.3d 570 (5th Cir.1994) (same); O'Brien v. City of Greers Ferry, 873 F.2d 1115 (8th Cir.1989) (same); Crossman v. Marcoccio, 806 F.2d 329 (1st Cir.1986) (same); Jolly v. Coughlin, 1999 WL 20895 *12 (S.D.N.Y.1999) (same).

Courts denying defendants the right to recover post-offer attorneys' fees note that while Marek states, simply, that “costs” include attorneys' fees where authorized by statute, Marek also holds that such costs are recoverable only if they are “properly awardable” under the relevant statute. Marek, 473 U.S. at 9, 105 S.Ct. 3012; see, e.g., Crossman, 806 F.2d at 333–34. Where, as in civil rights cases, costs and fees are properly awardable only to the prevailing party, a defendant who has not prevailed is not entitled to attorneys' fees when seeking to collect costs pursuant to Rule 68. Id.

Cases involving other fee shifting statutes have similarly held that attorneys' fees may be recovered pursuant to Rule 68 only if such fees are “properly awardable” under the relevant statute. If prevailing party status is a prerequisite to such an award, a defendant who has not “prevailed” within the meaning of the statute, may not recover attorneys' fees as part of a Rule 68 award. See, e.g., Champion, 342 F.3d at 1030–31(denying defendant attorneys' fees in case arising under state law defining costs to include fees to a prevailing party); Poteete v. Capital Engineering, Inc., 185 F.3d 804, 807–08 (7th Cir.1999) (denying defendant attorneys' fees in case arising under ERISA statute entitling fees only to prevailing party); cf. United States v. Trident Seafoods Corp., 92 F.3d 855, 860 (9th Cir.1996) (denying defendant attorneys' fees in case brought pursuant to Clean Air Act which awards fees only if the action commenced against the defendant was “unreasonable”).

Thus, as Judge Wexler explained, the key is whether the attorney’s fee statute at issue allows a non-prevailing party to recover attorney’s fees.  Because such statutes, like Section 1988, only award fees to prevailing parties (I am not aware of any exceptions), a defendant that loses the case will not be entitled to attorney’s fees under Rule 68, even if Rule 68 otherwise applies with respect to costs.

For useful commentary on Rule 68, see here and here.

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