The Supreme Court has ruled that a defendant may never be awarded fees pursuant to an Offer of Judgment in a case involving a claim based upon a fee-shifting statute such as, for example, the Conscientious Employee Protection Act (“CEPA”) or Prevailing Wage Act (“PWA”). In Best v. C & M Door Controls, Inc., — N.J. – (2009), (A-57-08), the plaintiff sued his employer for retaliation after he complained that he had been underpaid. The plaintiff rejected two offers of judgment in the sums of $15,000 and $25,000. A jury awarded the plaintiff $2,600 on the PWA claim and nothing on the CEPA claim.

While the Supreme Court held that a defendant can never be awarded attorneys’ fees in a case involving a statutory fee shift, it noted that the offer can be considered with respect to the reasonableness of any counsel fees sought by a plaintiff. In Best, the trial judge reduced plaintiff’s attorneys’ fees from $122,000 to $62,000 for work conducted after the unreasonable rejection of the defendant’s offer. The Supreme Court made clear though that any offer should break down the amount offered for the plaintiff’s damages and the attorneys’ fees. It remanded the case to determine whether, in light of the attorneys’ fees and costs of suit, the offer was reasonable and whether it was rejected without cause.

Notwithstanding the fact that such defendants will not be able to recover counsel fees when an offer is unreasonably rejected, the Court suggested that an Offer of Judgment will still be an effective tool for defendants who may have an incentive to file offers early on in litigation before attorneys’ fees mount.

http://www.judiciary.state.nj.us/opinions/supreme/A-57-08BestvCMDoors.pdf

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