I 
108TH CONGRESS 
2D SESSION 
H. R. 4430 
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 HOUSE OF REPRESENTATIVES 
MAY 20, 2004 
Mr. CHOCOLA (for himself, Mr. AKIN, Mr. BARRETT of South Carolina, Mr. 
BEAUPREZ, Ms. GINNY BROWN-WAITE of Florida, Mr. BURGESS, Mr. 
CARTER, Mr. COLE, Mrs. CUBIN, Mr. CUNNINGHAM, Mr. DEMINT, Mr. 
FLAKE, Mr. HENSARLING, Mr. HOEKSTRA, Mr. JONES of North Caro-
lina, Mrs. KELLY, Mr. KING of Iowa, Mr. KLINE, Mr. LEWIS of Ken-
tucky, Mrs. MILLER of Michigan, Mrs. MUSGRAVE, Mrs. MYRICK, Mr. 
NEUGEBAUER, Mrs. NORTHUP, Mr. NORWOOD, Mr. PAUL, Mr. PEARCE, 
Mr. PENCE, Mr. PITTS, Mr. ROGERS of Michigan, Mr. SHADEGG, Mr. 
SMITH of Michigan, Mr. SOUDER, Mr. SULLIVAN, Mr. TANCREDO, Mr. 
TOOMEY, and Mr. WELDON of Florida) introduced the following bill; 
which was 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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Legal Expense Equity 
Act of 2004’’.
SEC. 2. AWARD OF COSTS AND ATTORNEY’S FEES IN FED-
ERAL 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 juris-
diction 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 stipula-
tion 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 serv-
ice 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 ad-
missible 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 non-
parties. If a claim is exempted from this subsection, all 
offers made by any party under paragraph (1) with re-
spect 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 ac-
tion 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 pay-
ment of costs and expenses, including attorneys’ fees, in-
curred 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, in-
curred 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 re-
quiring 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 ac-
ceptable 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 attor-
ney for services in connection with the claim or 
claims. 
‘‘(8) This subsection does not apply to any claim 
seeking an equitable remedy.’’. 
SEC. 3. EFFECTIVE DATE AND APPLICATION. 
(a) EFFECTIVE DATE.—Subject to subsection (b), 
the amendment made by this Act shall take effect on the 
first day of the first month beginning more than 180 days 
after the date of the enactment of this Act. 
(b) APPLICATION OF AMENDMENT.—The amendment 
made by section 2 shall apply only with respect to civil 
actions filed on or after the effective date of this Act.
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