Award of costs and attorney’s fees in Federal civil diversity litigation after an offer of settlement

Section 1332 of title 28, United States Code, is amended by adding at the end the following:

(e) (1)In any action over which the court has jurisdiction under this section, any party may, at any time not less than 10 days before trial, serve upon any adverse party a written offer to settle a claim or claims for money or property or to the effect specified in the offer, including a motion to dismiss all claims, and to enter into a stipulation dismissing the claim or claims or allowing judgment to be entered according to the terms of the offer. Any such offer, together with proof of service thereof, shall be filed with the clerk of the court. (2)If the party receiving an offer under paragraph (1) serves written notice on the offeror that the offer is accepted, either party may then file with the clerk of the court the notice of acceptance, together with proof of service thereof. (3)The fact that an offer under paragraph (1) is made but not accepted does not preclude a subsequent offer under paragraph (1). Evidence of an offer is not admissible for any purpose except in proceedings to enforce a settlement, or to determine costs and expenses under this subsection. (4)At any time before judgment is entered, the court, upon its own motion or upon the motion of any party, may exempt from this subsection any claim that the court finds presents a question of law or fact that is novel and important and that substantially affects nonparties. If a claim is exempted from this subsection, all offers made by any party under paragraph (1) with respect to that claim shall be void and have no effect. (5)If all offers made by a party under paragraph (1) with respect to a claim or claims, including any motion to dismiss all claims, are not accepted and the judgment or order finally issued (exclusive of costs, expenses, and attorneys’ fees incurred after judgment or trial) in the action under this section is not more favorable to the offeree with respect to the claim or claims than the last such offer, the offeror may file with the court, within 10 days after the final judgment or order is issued, a petition for payment of costs and expenses, including attorneys’ fees, incurred with respect to the claim or claims from the date the last such offer was made or, if the offeree made an offer under this subsection, from the date the last such offer by the offeree was made. (6)If the court finds, under a petition filed under paragraph (5) with respect to a claim or claims, that the judgment or order finally obtained is not more favorable to the offeree with respect to the claim or claims than the last offer, the court shall order the offeree to pay the offeror’s costs and expenses, including attorneys’ fees, incurred with respect to the claim or claims from the date the last offer was made or, if the offeree made an offer under this subsection, from the date the last such offer by the offeree was made, unless the court finds that requiring the payment of such costs and expenses would be manifestly unjust. (7)Attorney’s fees under paragraph (6) shall be a reasonable attorney’s fee attributable to the claim or claims involved, calculated on the basis of an hourly rate which may not exceed that which the court considers acceptable in the community in which the attorney practices law, taking into account the attorney’s qualifications and experience and the complexity of the case, except that the attorney’s fees under paragraph (6) may not exceed— (A)the actual cost incurred by the offeree for an attorney’s fee payable to an attorney for services in connection with the claim or claims; or (B)if no such cost was incurred by the offeree due to a contingency fee agreement, a reasonable cost that would have been incurred by the offeree for an attorney’s noncontingent fee payable to an attorney for services in connection with the claim or claims. (8)This subsection does not apply to any claim seeking an equitable remedy.