The New Jersey Offer of Judgment Rule permits any party to make an “offer to take judgment” either in the party’s favor (if a plaintiff) or against the offeror (if a defendant). The rationale for this rule is to encourage and facilitate a settlement because of the consequences of non-acceptance of the offer. Pursuant to a court rule change, effective September 1, 2022, among other changes, this rule has been revamped to address how offers can be made in a multi-party case.
Under this revised rule, prior to service or filing of a notice of acceptance, an offeror may withdraw an offer by serving the offeree and filing a notice of withdrawal with the court.
The revised rule did not change the consequences of non-acceptance. For an offer made by a defendant, if the judgment is within 80% of the offer or less, then the offeror is entitled to attorney’s fees and litigation expenses incurred after the date of the non-acceptance. But there are no consequences, if the claim is dismissed, a no-cause verdict is returned, only nominal damages are awarded, a fee allowance would conflict with a fee-shifting statute or rule of court and an allowance would impose undue hardship or otherwise result in unfairness to the offeree. Per the revised court rule, the burden is on the offeree to establish the offeree’s claim of undue hardship or lack of fairness.
As for an offer of judgment made by a plaintiff, if the plaintiff obtains an award of 120% of the offer or more, then in addition to costs of suit, the plaintiff is entitled to all reasonable litigation expenses following non-acceptance, reasonable attorney’s fee incurred after the non-acceptance, and prejudgment interest of 8% on the judgment from the offer date or the discovery end date, whichever is later.
The revised rule underwent a major revamp in cases involving multiple plaintiffs or multiple defendants. If one or more plaintiffs seek a claim that is derivative of the claim of another plaintiff (such as a claim of a spouse for a loss of consortium claim), the claimants may make a single unallocated offer. Otherwise, if there are multiple plaintiffs, each may file and serve any offer individually.
The revised rule also changed the rule when there are multiple defendants and what happens when a counteroffer is made to an offer of judgment. Where there are multiple defendants, and a claimant obtains a judgment in an amount of 120% or more of a global offer made, the claimant will be allowed those recoverable expenses and interest, on a joint and several basis (meaning all defendants are responsible for the whole amount that a successful claimant can recover.)
If, however, there is a global counteroffer and plaintiff obtains a “favorable” determination, each defendant would be responsible for the portion of expenses and fees equal to the percentage for which the defendant was individually adjudicated. In the event the defendants obtain a global favorable determination, plaintiff will be responsible for the expenses and fees payable pro rata to each defendant in accordance with that defendant’s proportionate share of the offer.
The revised rule also addresses the consequences if only one defendant or less than all defendants make counteroffers. Essentially, any consequences of a favorable determination would focus on that offer and be limited to that defendant’s adjudicated responsibility and be based upon the individual offer.
However, the rule gets more complicated if all defendants make a counteroffer, then it is treated as a global counteroffer and the consequences to an individual defendant will depend upon if the plaintiff obtains a favorable determination that is more than 120% of their adjudicated responsibility.
The upshot of this rule is that, in multi-defendant cases, defendants should analyze and determine if at least an individual counteroffer should be made if a plaintiff makes a global offer of judgment. Otherwise, any defendant on a joint and several basis, could be responsible to pay the entire consequences awarded in the event of a favorable determination for the plaintiff.
