Appeal from the United States District Court for the Central District of Illinois, Springfield Division, No. 82 C 3237, James T. Moody, Judge.
Before FLAUM, RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
ESCHBACH, Senior Circuit Judge.
The primary questions presented in this appeal from an award of attorney's fees under 42 U.S.C. § 1988 are (1) whether under Fed. R. Civ. P. 68 the district court must add pre-offer attorney's fees to the award of damages to determine whether the plaintiff obtained a result more favorable than the offer of judgment he rejected and (2) whether an oral offer of settlement made in a pre-trial conference is a valid offer of judgment for the purposes of Rule 68. For the reasons stated below, we will affirm the judgment of the district court.
The plaintiff brought suit against the defendant law enforcement officers pursuant to 42 U.S.C. § 1983, alleging that the defendants had unlawfully entered and searched his home, and unlawfully placed him under arrest. The plaintiff also alleged that the defendants forced him to walk without shoes or a coat from his residence to a patrol car in inclement weather. The defendants made an offer of judgment pursuant to Fed. R. Civ. P. 68 in the amount of $5,000.00 that included costs and attorney's fees accrued up to the date of the offer. The plaintiff rejected the offer. Subsequently, at the final settlement conference, the defendants made an oral offer of $7,500.00, which also included costs and attorney's fees. The plaintiff rejected this offer as well. The action proceeded to trial and the jury awarded the plaintiff $1.00 in actual damages and $7,000.00 in punitive damages.
The plaintiff petitioned the district court for $16,687.98 in attorney's fees and $5,490.63 in costs pursuant to 42 U.S.C. § 1988. In its initial order, the district court, citing Marek v. Chesny, 473 U.S. 1, 105 S. Ct. 3012, 87 L. Ed. 2d 1 (1985), concluded that, because the damage award obtained by the plaintiff was less favorable than the oral settlement offer, Rule 68 barred the plaintiff from recovering costs and fees incurred after the offer was rejected. The court awarded $7,862.09, the amount of pre-offer costs and fees it found reasonable. The plaintiff filed a motion to reconsider, challenging the district court's failure to award post-offer costs and fees on two grounds. First, the plaintiff argued that the district court, under Rule 68, should have added $7,862.09 in pre-offer costs and attorney's fees to the $7,001.00 damage award in arriving at the relevant figure to compare with the final settlement offer of $7,500.00 to determine whether the plaintiff had obtained a result more favorable than the offer he rejected. Second, the plaintiff claimed that the oral offer made at the final settlement conference did not satisfy the formal requirements of Rule 68. Without explaining the basis for its decision, the district court granted the plaintiff's motion to reconsider and awarded him $14,086.22 in fees and costs.*fn1 This appeal followed.
Unless the district court otherwise directs, a prevailing party is allowed costs as a matter of course. Fed. R. Civ. P. 54(d).*fn2 Rule 68 modifies the cost-shifting provision of Rule 54(d) by requiring a prevailing plaintiff, who rejects a formal offer of judgment more favorable than the judgment he finally obtains, to "pay the costs incurred after the making of the offer."*fn3 See Delta Air Lines, Inc. v. August, 450 U.S. 346, 351-56, 67 L. Ed. 2d 287, 101 S. Ct. 1146 (1981). The intent of Rule 68 is, of course, to encourage settlement by removing the incentive for the plaintiff to pursue a claim whose probable final outcome is not more than the defendant's offer. Marek v. Chesny, 473 U.S. 1, 105 S. Ct. 3012, 3015, 87 L. Ed. 2d 1 (1985); Delta Air Lines, Inc., 450 U.S. at 352; Advisory Committee Notes on Rules of Civil Procedure, Report of Proposed Amendments, 5 F.R.D. 433, 438 n.1 (1946). With the Supreme Court's recent holding in Marek, 105 S. Ct. at 3017, that the term "costs" in Rule 68 includes attorney's fees awardable under 42 U.S.C. § 1988, Rule 68 has taken on a greater significance in civil rights litigation. Rule 68 precludes a prevailing plaintiff from recovering post-offer costs and attorney's fees, if the plaintiff rejects an offer of judgment that is more favorable than the relief he ultimately obtains.*fn4 Id., 105 S. Ct. at 3017-18; see Kirchoff v. Flynn, 786 F.2d 320, 322 (7th Cir. 1986).
We shall first consider the question whether pre-offer attorney's fees must be included in the Rule 68 computation. To decide this issue, one must consider the effect Rule 68 would have on the substantive policies of § 1988, if pre-offer fees were not included in the comparative calculus. In enacting § 1988, Congress recognized that there is a value to society in vindicating civil rights, statutory and constitutional, that is very often greater than the monetary value of the claim to the individual. City of Riverside v. Rivera, 477 U.S. 561, 106 S. Ct. 2686, 2694, 91 L. Ed. 2d 466 (1986) (plurality opinion); see also Hensley v. Eckerhart, 461 U.S. 424, 444 n.4, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983) (Brennan, J., concurring in part and dissenting in part); Carey v. Piphus, 435 U.S. 247, 266, 55 L. Ed. 2d 252, 98 S. Ct. 1042 (1978). Society as a whole profits from the vindication of civil rights even if a claim, no matter how meritorious, is a losing proposition economically for the aggrieved individual. A plaintiff who obtains relief in a civil rights suit "does so not for himself alone but as a 'private attorney general,' vindicating 'a policy that Congress considered of the highest priority.'" H.R. Rep. 1558, 94th Cong., 2d Sess. p.2 (1976) (quoting Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 402, 19 L. Ed. 2d 1263, 88 S. Ct. 964 (1968) (per curiam)). "If the citizen does not have the resources, his day in court is denied him; the congressional policy which he seeks to assert and vindicate goes unvindicated; and the entire Nation, not just the individual citizen, suffers." 122 Cong. Rec. 33,313 (1976) (remarks of Sen. Tunney). The private plaintiff who brings a civil rights action is "the chosen instrument of Congress to vindicate 'a policy that Congress considered of the highest priority.'"*fn5 Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 418, 54 L. Ed. 2d 648, 98 S. Ct. 694 (1978) (quoting Newman, 390 U.S. at 402).
Thus, it is because Congress found that the private market for legal services failed to provide many victims of civil rights violations with effective access to the judicial process that it enacted § 1988. H.R. Rep. 1558 at 1-3; S. Rep. 1011, 94th Cong., 2d Sess. p.2 (1976); Gekas v. Attorney Registration & Disciplinary Commission, 793 F.2d 846, 853 (7th Cir. 1986). The Supreme Court has "reject[ed] the proposition that fee awards under § 1988 should necessarily be proportionate to the amount of damages a civil rights plaintiff actually recovers," Rivera, 106 S. Ct. at 2694, because such a rule "would seriously undermine Congress' purpose in enacting § 1988."*fn6 Id. at 2695. A rule excluding pre-offer costs from the Rule 68 calculus like a rule that limits attorney's fees to a proportion of the damage award, compels a civil rights litigant to rely on private-sector fee arrangements for the economic wherewithal to press his claim. Yet, this compulsion is antithetical to the Congressional policy underlying § 1988.*fn7
In Marek, 105 S. Ct. at 3018, the Supreme Court held that civil rights claimants may not be treated more favorably in the negotiation of settlements than plaintiffs in ordinary civil litigation. See also Evans v. Jeff D., 717, 475 U.S. 717, 106 S. Ct. 1531, 1540, 89 L. Ed. 2d 747 (1986). This parity of treatment is as it should be, for the settlement of litigation, even in the context of a civil rights claim, is no less beneficial to plaintiffs than it is to defendants, and is consistent with the policy and intent of § 1988. Marek, 105 S. Ct. at 3018; Evans, 106 S. Ct. at 1540.*fn8
Nevertheless, just as a civil rights plaintiff should not be treated more favorably than any other plaintiff for the purposes of settlement under Rule 68, he should also not be treated less favorably. To disregard pre-offer costs and fees under Rule 68 forces a civil rights plaintiff to assess the value of his claim according to the probable damage award. This is one aspect of settlement where seemingly equal treatment disfavors the civil rights plaintiff, because the Rule 68 computation would not account for the fact that the typically lower monetary value of a civil rights claim handicaps the plaintiff's ability to attract competent counsel. If the plaintiff accepts a lump sum offer on relief as well as costs and fees, he would be unable to compensate his ...