USDC S.D. New York, June 19, 2009

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  • In copyright infringement action, district court holds that where an accepted offer of judgment is silent on the issue of costs, a plaintiff may seek an award of costs separate from the award contained in the offer

Plaintiff alleged that defendants violated her rights under the Copyright Act by republishing and selling copies of her books without authorization. Defendants served plaintiff with a written offer of judgment pursuant to Federal Rule of Civil Procedure 68 for $7,500. Plaintiff served an acceptance of the offer, which further requested an award of costs and attorney's fees separate from the $7,500 provided for in the offer of judgment.

The parties disputed whether there was a binding settlement agreement and whether any such agreement precludes plaintiff from making an additional application for costs. Federal Rule of Civil Procedure 68 states: “More than 10 days before the trial begins, 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 10 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.”

The court held that where an accepted offer of judgment is silent on the issue of costs, a plaintiff may seek an award of costs separate from the award contained in the offer. Accordingly, defendants' offer of judgment, which is silent on the issue of costs, will not be interpreted to preclude plaintiff from seeking an award of costs (including attorney’s fees) separate from the $7,500 provided for in the offer of judgment.

The court additionally held the offer of judgment was not null and void for lack of mutual assent, since where an offer of judgment fails to specify that it is inclusive of costs, a plaintiff is entitled to an additional amount sufficient to cover such costs. Consequently, plaintiff's acceptance cannot be said to have altered the terms of the offer such that there was no "meeting of the minds."

The court further held that the court does not need to assess plaintiff's subjective understanding of the terms of the offer of judgment, since the purpose of Rule 68 is to avoid litigation. Collateral proceedings would undermine that purpose. Moreover, because "a Rule 68 offer has a binding effect when refused as well as when accepted," a plaintiff is entitled to adhere strictly to the language of the offer to eliminate any ambiguity in its terms. As the language in defendants' offer of judgment says nothing about costs, plaintiff's assumption that the $7,500 offer was exclusive of costs was entirely reasonable.