01-1953, 01-2396, 01-1936, 01-2494 Kitchen, et al. v. TTX Co.

Listen to this article

“Approximately three months prior to the commencement of the trial, the plaintiffs made several different settlement demands to TTX. First, on Feb. 3, 2000, the plaintiffs demanded a $1.75 million lump-sum settlement payment, as well as other non-monetary provisions (e.g., the bridging of pensions and the extension of COBRA benefits for certain plaintiffs). The plaintiffs did not specify whether the February 3rd offer included the payment of attorneys’ fees. TTX rejected the plaintiffs’ demand and responded with a counteroffer that stipulated, inter alia, that attorneys’ fees paid pursuant to any settlement should be capped at $400,000.

“TTX rejected the plaintiffs’ last offer and instead, on March 2, 2000, presented separate Rule 68 offers of judgment to each of the eleven plaintiffs. The offers of judgment ranged from $20,000 to $160,000 in value, with the lump-sum amount coming to $610,000, including pension bridges and extensions of COBRA benefits. The plaintiffs accepted their respective offers of judgment. While their acceptance of TTX’s offers of judgment terminated the plaintiffs’ claims, the issue of attorneys’ fees and costs remained unresolved.

“In its appeal, TTX does not dispute that the plaintiffs were technically prevailing parties. … Rather, TTX claims that the district court’s award of fees and costs, when viewed in tandem with the settlement received, unjustifiably compensates the plaintiffs’ attorneys for a de minimis or nuisance value victory. We have reviewed the district court’s determinations and cannot conclude that it abused its discretion in determining that the plaintiffs received substantial compensation for their claims and, therefore, were entitled to recoup reasonable attorneys’ fees.

“This court has stated that a ‘compromise for less than the costs of defense is a good working definition of a nuisance-value settlement. …’ Fletcher, 162 F.3d at 976. In light of the district court’s finding that the offers extended by TTX exceeded the anticipated costs of defense (as well as its findings regarding other concessions made by TTX), we find that the district court did not abuse its discretion in determining that the plaintiffs had made a substantial recovery in accepting TTX’s offers of judgment.”

Affirmed in part, vacated in part, and remanded.

Appeals from the United States District Court for the Northern District of Illinois, Andersen, J., Flaum, J.