Most defendants know Rule 68 exists. Far fewer actually use it. That’s a mistake, because a well-timed offer of judgment is one of the few procedural mechanisms that can genuinely shift litigation economics in your favor, and it costs you nothing to serve one.
What the Rule Actually Says
(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 An unaccepted offer is considered withdrawn, but it does not preclude a later offer.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.
The mechanism is straightforward: you offer to let judgment be entered against you on specified terms. If the plaintiff rejects it and then recovers less than or equal to your offer at trial, they pay your post-offer costs. The idea is to put real pressure on plaintiffs to think hard about settlement rather than roll the dice on a bigger verdict.
One threshold limitation worth flagging up front: Rule 68 cost-shifting only triggers when the plaintiff actually obtains a judgment in their favor. If the defendant wins outright at trial, Rule 68 doesn’t kick in. Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981), settled this. The cost-shifting consequence runs only when the plaintiff recovers something, but less than the offer.
The Cost-Shifting Mechanism and Its Limits
“Costs” under Rule 68(d) means what Rule 54(d) means by costs, which is generally the items enumerated in 28 U.S.C. § 1920. That statute lists six categories: clerk and marshal fees, court reporter and transcript fees, printing and witness fees, exemplification and copying fees, docket fees under § 1923, and compensation of court-appointed experts and interpreters. It does not include attorney’s fees unless a fee-shifting statute is in play. This distinction matters enormously for how you calculate the pressure the offer actually creates.
In a garden-variety breach of contract case, post-offer costs are modest. Transcripts, deposition fees, witness fees, maybe some printing costs. The plaintiff who rejected your $150,000 offer and recovers $140,000 at trial is going to be annoyed, but the cost-shifting effect might only amount to $15,000–$25,000 in a typical commercial case. That’s real money, but it’s not the existential threat some practitioners seem to think Rule 68 creates.
Where the rule gets genuinely sharp is when you have a bifurcated damages hearing or a case with substantial post-offer discovery and expert costs. The Rule 68(c) offer after liability is determined is underused for exactly this reason: once a defendant has lost on liability but faces an uncertain damages trial, an offer that forces the plaintiff to crystallize their damages position can shift significant costs if the jury comes in below the offer.
The Fee-Shifting Wrinkle That Changes Everything
Rule 68 gets complicated in civil rights and certain employment cases because of Marek v. Chesny, 473 U.S. 1 (1985). Marek holds that where the underlying fee-shifting statute defines “costs” to include attorney’s fees, those fees become part of the Rule 68 cost-shifting calculus. The classic example is 42 U.S.C. § 1988, which makes prevailing-party attorney’s fees in civil rights actions (including those brought under § 1983) recoverable “as part of the costs.”
The practical effect is one-directional, and this is where practitioners get tripped up. A § 1983 plaintiff who rejects a Rule 68 offer and then recovers less than the offer loses their right to post-offer attorney’s fees under § 1988. That is the cost-shifting consequence, and it’s substantial: in fee-driven civil rights cases, the post-offer fee bill is often larger than the underlying damages.
What Marek does not do is force the plaintiff to pay the defendant’s post-offer attorney’s fees. The reasoning, accepted by the great majority of circuits, is that the underlying statute only awards fees to a “prevailing party,” and a defendant who has triggered Rule 68 cost-shifting is by definition not a prevailing party — the plaintiff still won, just less than offered. See Hescott v. City of Saginaw, 757 F.3d 518, 528 (6th Cir. 2014); Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1029–30 (9th Cir. 2003); Harbor Motor Co. v. Arnell Chevrolet–Geo, Inc., 265 F.3d 638, 647 (7th Cir. 2001); Crossman v. Marcoccio, 806 F.2d 329 (1st Cir. 1986). The 11th Circuit takes the contrary view in the Copyright Act context, Jordan v. Time, Inc., 111 F.3d 102 (11th Cir. 1997), but that view has not gained traction elsewhere.
So in a § 1983 case, Rule 68 is a one-sided sword: it strips the plaintiff of post-offer fees without giving the defendant theirs. That asymmetry is still meaningful pressure when plaintiff’s counsel is working on contingency or counting on a fee application to make the case worthwhile.
The ADA, ADEA, and FLSA Trap
Several practitioners have been surprised by what Rule 68 does — and doesn’t do — under the ADA, ADEA, and FLSA. The trap is in the statutory language. The ADA’s fee provision, 42 U.S.C. § 12205, allows the prevailing party “a reasonable attorney’s fee, including litigation expenses, and costs.” Note the structure: fees and costs are listed as separate items, not fees “as part of the costs” the way § 1988 does it. The FLSA (29 U.S.C. § 216(b)) and the ADEA (29 U.S.C. § 626(b), which incorporates the FLSA) use the same separate-listing structure.
Under Marek, that statutory choice matters a lot. Because attorney’s fees are not defined as “costs” in those statutes, courts have generally held that Rule 68 cost-shifting does not reach the plaintiff’s post-offer fees in ADA, ADEA, or FLSA cases. The fees keep accruing. See Webb v. James, 147 F.3d 617 (7th Cir. 1998) (ADA); Dalal v. Alliant Techsystems, Inc., 182 F.3d 757, 760–61 (10th Cir. 1999) (ADEA); Haworth v. Nevada, 56 F.3d 1048, 1051 (9th Cir. 1995) (FLSA); Fegley v. Higgins, 19 F.3d 1126, 1135 (6th Cir. 1994) (FLSA).
You can still serve a Rule 68 offer in these cases to shift your taxable § 1920 costs and to create settlement pressure (a real number on the table sometimes moves cases). And the rejected offer can still be a meaningful factor in the lodestar analysis when the court evaluates whether the plaintiff’s claimed fees are “reasonable” — see Gurule v. Land Guardian, Inc., 912 F.3d 252 (5th Cir. 2018), where the trial court reduced an FLSA fee award by 60% partly because the plaintiff had rejected a more favorable Rule 68 offer. But you should not assume an ADA or FLSA Rule 68 offer is going to do the same work an equivalent § 1983 offer would do. It won’t.
Timing Is Everything
The biggest mistake practitioners make with Rule 68 is serving the offer at the wrong moment. Too late is obvious: serving 15 days before trial technically complies with the rule’s “at least 14 days” requirement, but you’ve given the plaintiff a 14-day acceptance window that runs right up to the eve of trial. Practical evaluation in that window — getting the client on the phone, doing the math, getting authority — is hard to do well.
Too early is more subtle. If you serve a Rule 68 offer before discovery is substantially complete, you’re essentially guessing at your exposure. More importantly, the plaintiff is also guessing, and a plaintiff who doesn’t yet know what the documents show is more likely to reject your offer on principle. The offer lands with much more force when the plaintiff’s counsel has seen your key witnesses deposed, knows what the damages evidence actually shows, and has had to brief their own expert on the strengths and weaknesses of the case.
The sweet spot in most commercial cases is somewhere after the close of fact discovery and before expert reports are due. Plaintiff’s counsel has enough information to give a sober assessment to their client, but the parties haven’t yet spent the money on expert work that makes trial feel inevitable.
One more timing wrinkle worth knowing: the 14-day acceptance window is firm, and the offer is automatically deemed withdrawn at the end of it under Rule 68(b). A purported acceptance arriving on day 15 has no force — courts will not bind you to a withdrawn offer. If plaintiff’s counsel needs more time to evaluate and asks for an extension, you can grant one, but do it in writing and be explicit about the new acceptance deadline, because once the original window closes the original offer is gone.
Drafting the Offer
The offer has to be specific. Rule 54 and Rule 68 together require that the offer allow entry of a judgment, which means it needs to specify the amount and the parties. Be explicit about whether the offer includes costs then accrued or requires those to be separately addressed. In fee-shifting cases, specify whether the offer includes or excludes attorney’s fees, because ambiguity on that point will be litigated, and the prevailing rule across the circuits is that any silence or ambiguity gets construed against the offering defendant. Sanchez v. Prudential Pizza, Inc., 709 F.3d 689, 692 (7th Cir. 2013); Webb, 147 F.3d at 622–23.
A careful Rule 68 offer, served at the right moment, doesn’t just create cost-shifting pressure. In a § 1988 case it changes the plaintiff’s attorney’s fee calculation, focuses the plaintiff’s mind on the real risk of coming in below the offer, and sometimes moves cases that have been stuck. The practitioners who use it well treat it as part of their case strategy from early on, not an afterthought in the last weeks before trial.