Minnesota Supreme Court determines a Rule 68 offer which provides double-costs to a plaintiff is substantive not procedural when determining preemption between federal and state Rules.

Boyd v. BNSF Railway Company
Minnesota Supreme Court
January 27, 2016

A new Minnesota Supreme Court decision addresses the interplay between Minnesota Rule of Civil Procedure 68 and federal law in the FELA context.  Minnesota Rule of Civil Procedure 68 governs offers of settlement and judgment in Minnesota cases and provides a cost-shifting mechanism designed to encourage settlement of claims by imposing fees and costs upon a party who failed to accept a settlement offer or offer of judgment that is more favorable than the trial results.  Minnesota Rule 68 also has a federal counterpart but it is significantly different and provides less motivation for settlement.  Both plaintiffs and defendants utilize Minnesota Rule 68 Offers as both a carrot and a stick to encourage early settlement.

The Federal Employers Liability Act (“FELA”) provides the sole legal remedy for many types of claims involving national services regulated by federal law; it is seen most often in Minnesota in the railroad context.  Although the governing law for FELA claims is federal, a FELA claim may be brought in either state or federal court at the plaintiff’s discretion.  If a FELA claim is brought in state court, the applicable rules of procedure are the rules for the district court.  However, if a rule of procedure is “substantive” and not specifically authorized by federal law, then it is not applicable in a FELA case.

In this FELA case, the Minnesota Supreme Court addressed whether the cost-shifting mechanisms in Rule 68 are procedural or substantive and, therefore, whether they can apply to a Rule 68 offer made in a FELA case.  After analysis, the Court concluded that double-costs are “substantive” and, therefore, inapplicable in a FELA case and found that the plaintiff was not entitled to double-costs.   Minnesota attorneys with a FELA case in district court should therefore be aware that they can utilize Federal Rule 68 offers of judgment to encourage settlement, but are not able to utilize the more favorable and flexible Minnesota Rule 68.  Likewise, this case could be argued to open the door to use of Minnesota Rule 68 offers in a civil case venued in federal court solely through diversity jurisdiction.