II 

108TH CONGRESS 

1ST SESSION S. 1836

To amend chapter 85 of title 28, United States Code, to provide for greater 

fairness in legal fees payable in civil diversity litigation after an offer 

of settlement. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 6, 2003

Mr. GRAHAM of South Carolina (for himself, Mr. CORNYN, and Mr. GRASSLEY) introduced the following bill; which was read twice and referred to 

the Committee on the Judiciary 

A BILL

To amend chapter 85 of title 28, United States Code, to 

provide for greater fairness in legal fees payable in civil 

diversity litigation after an offer of settlement.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Legal Expense Equity 

5 Act of 2003’’. 
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1 SEC. 2. AWARD OF COSTS AND ATTORNEY’S FEES IN FED2 ERAL CIVIL DIVERSITY LITIGATION AFTER 

3 AN OFFER OF SETTLEMENT. 

4 Section 1332 of title 28, United States Code, is 

5 amended by adding at the end the following: 

6 ‘‘(e)(1) In any action over which the court has juris7 diction under this section, any party may, at any time not 

8 less than 10 days before trial, serve upon any adverse 

9 party a written offer to settle a claim or claims for money 

10 or property or to the effect specified in the offer, including 

11 a motion to dismiss all claims, and to enter into a stipula12 tion dismissing the claim or claims or allowing judgment 

13 to be entered according to the terms of the offer. Any such 

14 offer, together with proof of service thereof, shall be filed 

15 with the clerk of the court. 

16 ‘‘(2) If the party receiving an offer under paragraph 

17 (1) serves written notice on the offeror that the offer is 

18 accepted, either party may then file with the clerk of the 

19 court the notice of acceptance, together with proof of serv20 ice thereof. 

21 ‘‘(3) The fact that an offer under paragraph (1) is 

22 made but not accepted does not preclude a subsequent 

23 offer under paragraph (1). Evidence of an offer is not ad24 missible for any purpose except in proceedings to enforce 

25 a settlement, or to determine costs and expenses under 

26 this subsection. 
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1 ‘‘(4) At any time before judgment is entered, the 

2 court, upon its own motion or upon the motion of any 

3 party, may exempt from this subsection any claim that 

4 the court finds presents a question of law or fact that is 

5 novel and important and that substantially affects non6 parties. If a claim is exempted from this subsection, all 

7 offers made by any party under paragraph (1) with re8 spect to that claim shall be void and have no effect. 

9 ‘‘(5) If all offers made by a party under paragraph 

10 (1) with respect to a claim or claims, including any motion 

11 to dismiss all claims, are not accepted and the judgment 

12 or order finally issued (exclusive of costs, expenses, and 

13 attorneys’ fees incurred after judgment or trial) in the ac14 tion under this section is not more favorable to the offeree 

15 with respect to the claim or claims than the last such offer, 

16 the offeror may file with the court, within 10 days after 

17 the final judgment or order is issued, a petition for pay18 ment of costs and expenses, including attorneys’ fees, in19 curred with respect to the claim or claims from the date 

20 the last such offer was made or, if the offeree made an 

21 offer under this subsection, from the date the last such 

22 offer by the offeree was made. 

23 ‘‘(6) If the court finds, under a petition filed under 

24 paragraph (5) with respect to a claim or claims, that the 

25 judgment or order finally obtained is not more favorable 
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1 to the offeree with respect to the claim or claims than the 

2 last offer, the court shall order the offeree to pay the 

3 offeror’s costs and expenses, including attorneys’ fees, in4 curred with respect to the claim or claims from the date 

5 the last offer was made or, if the offeree made an offer 

6 under this subsection, from the date the last such offer 

7 by the offeree was made, unless the court finds that re8 quiring the payment of such costs and expenses would be 

9 manifestly unjust. 

10 ‘‘(7) Attorney’s fees under paragraph (6) shall be a 

11 reasonable attorney’s fee attributable to the claim or 

12 claims involved, calculated on the basis of an hourly rate 

13 which may not exceed that which the court considers ac14 ceptable in the community in which the attorney practices 

15 law, taking into account the attorney’s qualifications and 

16 experience and the complexity of the case, except that the 

17 attorney’s fees under paragraph (6) may not exceed—

18 ‘‘(A) the actual cost incurred by the offeree for 

19 an attorney’s fee payable to an attorney for services 

20 in connection with the claim or claims; or 

21 ‘‘(B) if no such cost was incurred by the offeree 

22 due to a contingency fee agreement, a reasonable 

23 cost that would have been incurred by the offeree for 

24 an attorney’s noncontingent fee payable to an attor-
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1 ney for services in connection with the claim or 

2 claims. 

3 ‘‘(8) This subsection does not apply to any claim 

4 seeking an equitable remedy.’’. 

5 SEC. 3. EFFECTIVE DATE AND APPLICATION. 

6 (a) EFFECTIVE DATE.—Subject to subsection (b), 

7 the amendment made by this Act shall take effect on the 

8 first day of the first month beginning more than 180 days 

9 after the date of the enactment of this Act. 

10 (b) APPLICATION OF AMENDMENT.—The amendment 

11 made by section 2 shall apply only with respect to civil 

12 actions filed on or after the effective date of this Act.

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