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In this country, absent a court rule, statute of contract term to the contrary, the law requires each party to a law suit to assume his/her own cost of litigation. Indeed, in New Jersey, there is a strong policy disfavoring the shifting of attorney fees.

Over the years, however, legislators in this state and the federal government have provided litigants with the opportunity to shift the cost of litigation to a party that violates the terms of a statute. Some legislative schemes that authorize attorney fee-shifting relate to claims in the area of consumer fraud, discrimination, civil rights and certain conduct in the workplace. In addition, the New Jersey Supreme Court has implemented what is called the Offer of Judgement Rule, which permits a party to offer an adversary to allow a money judgment to be taken against the offeror for a sum certain or to allow a judgment in an amount certain to be taken against the adversary. The underlying purpose of the rule is to nurture settlement by discouraging out-of-hand rejections of reasonable offers of settlement. Under this rule, if a offer of settlement is rejected by the other party, reasonable litigation expenses, including attorney fees and an escalated pre-judgement interest will be exacted against the rejecting litigant, if the ultimate result of the case is favorable to the offering party by 20% of the original offer. One provision of the rule, however, does not allow fee-shifting, where the allowance for attorney fee would conflict with policies underlying a statute that authorizes fee-shifting.

Recently, the New Jersey Supreme Court addressed the question of whether an employer who allegedly violated two workplace statutes authorizing attorney-fee shifting to recovery under the Offer of Judgement Rule. In that case , an employee sued his employer for a violation of the Prevailing Wage Act and the Consciousness Employee Protection Act. At one point, the employer offered to take a judgment for $25,000. When a jury award the employee a mere $2,600, the employer moved the court to require the employee to assume the cost of litigation from the date of its $25,00 offer of judgement to ultimate adjudication.

On appeal to the New Jersey Supreme Court, it was determined that a defendant could never be awarded fees under the Offer of Judgment Rule in any case where there is a fee-shifting provisions in a statute. The court did rule, however, that a plaintiff who was is unreasonable in rejecting an offer of judgment could have that decision influence the amount of the plaintiffs’ request for attorney fees.

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