By Steven G. MehtaSteve Mehta

I recently was reviewing my twitter and facebook posts and saw one from my colleague, Don Philbin, regarding settlement offers.  Don, thank you for pointing my attention to this post.  I have copied it here for review.

In a case of first impression, Lohman v. Duryea Borough [PDF], the Third Circuit Court of Appeals has held that rejected informal settlement offers may be used as an indicator of success in deciding attorney fees.

After winning a jury trial, the successful plaintiff’s attorneys requested $112,883.73 in fees. The jury had awarded the plaintiff only $12,205.00 in lost wages and nominal damages.

Prior to the verdict, but after trial had commenced, the defendant employer had made three settlement offers, including one for $75,000.00. Each offer was rejected by the employee.

The court considered the $75,000 settlement offer as a “measure of success” and calculated the attorney fee award in conjunction with the damages.

Lohman appealed, arguing that Federal Rule of Evidence 408 does not allow the court to consider settlement negotiations in determining the attorney fees claim. The Third Circuit disagreed, and affirmed the district court’s award of $30,000 in fees. It held that FRE 408 only precludes consideration of those negotiations in determining the liability of a claim but does not bar a court from considering settlement negotiations when determining what would be a reasonable fee award.

To read the rest of the post, please click here.

California already has a similar rule in employment matters, but not necessarily with informal settlement offers.  This ruling, however, could influence other areas of the law.  For example, in California elder abuse litigation, the court by statute can consider offers of settlement in determining the amount of attorneys fees.  This case could provide further support for the claim by the defendants that not only can the offer by the plaintiff be considered, but also the offer of the defendant.

This could also affect any other area that has the right to recover attorneys fees, such as civil rights cases.