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The Supreme Court of Georgia Upholds the Offer of Settlement Statute

Posted on: March 15th, 2010

By:  Matthew P. Stone and Todd H. Surden

Today, in Smith v. Salon Baptiste, 2010 WL 889557 (Ga. Mar. 15, 2010), the Supreme Court of Georgia upheld O.C.G.A. § 9-11-68, Georgia’s offer of settlement statute.  The statute, which is part of Georgia’s Tort Reform Act of 2005, allows a defendant to recover reasonable attorney’s fees and expenses of litigation if he makes an offer of settlement that the plaintiff rejects (expressly or by passage of time), and the final judgment is one of no liability or is less than 75% of the offer.  Likewise, a plaintiff can recover reasonable attorney’s fees if he makes an offer of settlement that the defendant rejects (expressly or by passage of time), and then recovers a final judgment that is more than 125% of the offer. 

In Smith, defendants offered to settle plaintiff’s defamation case for $5,000.  Plaintiffs did not respond, and the offer was deemed rejected.  The trial court subsequently granted defendants’ motion for summary judgment, and then defendants filed a motion to recover their attorney’s fees under O.C.G.A. § 9-11-68.  Plaintiffs argued that the motion should be denied because the statute is unconstitutional, and the trial court agreed.

On appeal, the Supreme Court rejected plaintiffs’ first argument, that the statute violates article I, section 1, paragraph 12 of the Georgia Constitution, holding that this provision does not guarantee a “right of access” to the courts.  Rather, this provision “was intended to provide only a right of choice between self-representation and representation by counsel,” and O.C.G.A. § 9-11-68 does not violate that provision.  The Court went on to say that the statute also does not deprive litigants of access to the courts because it “simply sets forth certain circumstances under which attorney’s fees may be recoverable.”

The Court also rejected plaintiffs’ second argument, that the statute violates the uniformity clause of the Georgia Constitution (Ga. Const. art. III, § 6, ¶ 4(a)) because it applies only to tort claims, not to all civil cases.  Although the Court agreed that O.C.G.A. § 9-11-68 does not apply to all civil actions, it held that the statute “applies uniformly throughout the State to all tort cases.” Therefore, the statute is constitutional and serves “a legitimate legislative purpose, consistent with this State’s strong public policy of encouraging negotiations and settlements.”

It is worth noting that Justice David Nahmias, in his concurring opinion, found that O.C.G.A. § 9-11-68 would also withstand challenges based on due process and equal protection, even though plaintiffs did not raise those arguments in this case.  Justice Nahmais stated that:

The fee-shifting provisions of OCGA § 9-11-68 do not flatly deny anyone access to the courts, as statutes of limitations and repose and other restrictions that have survived judicial scrutiny can be said to do.  Litigants remain free to file and defend tort cases.  There is also little question that § 9-11-68 is rationally related to the State’s legitimate objective of “encourage[ing] litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation.”

Nor can a credible argument be made, at least on the record of this case, that the statute substantially impedes, or “chills,” litigants from filing and pursuing their claims, in violation of equal protection.

The majority opinion, together with Justice Nahmias’ concurring opinion, will likely impact tort litigation in Georgia because they remove uncertainty about the viability of the offer of settlement statute.

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