Minnesota has two settlement-forcing mechanisms that read the same document. A written settlement offer can shift costs under Minn. R. Civ. P. 68 and it can reallocate preverdict interest under Minn. Stat. § 549.09, subd. 1(b). Most lawyers know both exist. Fewer have noticed that the two devices disagree about almost every operational detail — what makes an offer count, how long the other side has to answer, how late it can be served, which of several offers is measured, and what it gets measured against.
Start with the difference that costs the most and takes the least effort to avoid. Rule 68.01(b): “An offer does not have the consequences provided in Rules 68.02 and 68.03 unless it expressly refers to Rule 68.” Section 549.09, subd. 1(b), asks only whether “either party serves a written offer of settlement” — no label required. The identical letter — same number, same date, same service — is fully operative for interest purposes and completely inert for cost purposes if the drafter did not name the rule. Rule 68 is opt-in. The interest statute is not.
Section 549.09’s own machinery is covered in depth in Minnesota’s prejudgment interest statute is a machine that prices your settlement offer. This article is about what happens when Rule 68 is running alongside it.
What does Rule 68 actually shift?
Costs and disbursements — and expressly not attorney fees.
Rule 68.03(b)(1), when the offeror is a defendant:
If the offeror is a defendant, and the defendant-offeror prevails or the relief awarded to the plaintiff-offeree is less favorable than the offer, the plaintiff-offeree must pay the defendant-offeror’s costs and disbursements incurred in the defense of the action after service of the offer, and the plaintiff-offeree shall not recover its costs and disbursements incurred after service of the offer, provided that applicable attorney fees available to the plaintiff-offeree shall not be affected by this provision.
Two consequences in one clause: the plaintiff pays the defendant’s post-offer costs, and loses its own. Fees are untouched.
Rule 68.03(b)(2) runs the other way and is the part defendants underrate:
If the offeror is a plaintiff, and the relief awarded is less favorable to the defendant-offeree than the offer, the defendant-offeree must pay, in addition to the costs and disbursements to which the plaintiff-offeror is entitled under Rule 54.04, an amount equal to the plaintiff-offeror’s costs and disbursements incurred after service of the offer. Applicable attorney fees available to the plaintiff-offeror shall not be affected by this provision.
Read the arithmetic carefully. The plaintiff already recovers its allowable costs under Rule 54.04, which provides that “[c]osts and disbursements shall be allowed as provided by law.” Rule 68.03(b)(2) adds an amount equal to the post-offer portion — so post-offer costs are counted twice and pre-offer costs once. Not everything doubles.
Rule 68 creates no fee entitlement at all. Rule 68.04(a) defines “applicable attorney fees” as “any attorney fees to which a party is entitled by statute, common law, or contract for one or more of the claims resolved by an offer made under the rule,” and adds that “[n]othing in this rule shall be construed to create a right to attorney fees not provided for under the applicable substantive law.” Whether fees are on the table in your case is decided elsewhere — see Minnesota’s attorney fee-shifting map.
There is also a safety valve with no counterpart in the interest statute. Rule 68.03(b)(3): if the court determines the obligations “would impose undue hardship or otherwise be inequitable, the court may reduce the amount of the obligations to eliminate the undue hardship or inequity.” Section 549.09, subd. 1(b), contains no such discretion. A Rule 68 consequence can be argued down. An interest consequence, as the subdivision is written, cannot.
How long does the other side have — 14 days or 30?
Both, simultaneously, off the same letter. This is the sharpest practical trap in the overlap.
Rule 68.02(a): “Acceptance of the offer shall be made by service of written notice of acceptance within 14 days after service of the offer. During the 14-day period the offer is irrevocable.” Rule 68.02(d): “If the offer is not accepted within the 14-day period, it shall be deemed withdrawn.”
Section 549.09, subd. 1(b): “If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days.”
A recipient who takes the statute’s window at face value and responds on day 25 has served a perfectly good § 549.09 counteroffer — and has been unable to accept the Rule 68 offer for eleven days, because it was deemed withdrawn at day 14. Nothing in either provision harmonizes the two periods, and nothing warns the reader of one about the other.
How late in the case can an offer be served?
Rule 68 has a cutoff. The interest statute, on its face, does not.
Rule 68.01(a): “At any time more than 14 days before the trial begins, any party may serve upon an adverse party a written damages-only or total-obligation offer to allow judgment to be entered to the effect specified in the offer, or to settle the case on the terms specified in the offer.” Serve it thirteen days out and it is not a Rule 68 offer.
Section 549.09, subd. 1(b), imposes no deadline of that kind on a written settlement offer. A number served the Friday before trial can still be the number the interest comparison runs on — and, under the supersession sentence discussed below, it may be the only number that runs.
Rule 68 supplies one narrow late-case route. Rule 68.01(e) allows an offer after liability has been determined but before damages are fixed, available only to the party adjudged liable, who “may make an offer of judgment, which shall have the same effect as an offer made before trial if it is served within a reasonable time not less than 14 days before the commencement of a hearing or trial to determine the amount or extent of liability.” A plaintiff who has just won on liability has nothing under that subpart.
Which offer counts when you have made several?
Both devices supersede earlier offers. They do not supersede the same things, and the difference is textual and clean.
Rule 68.02(e): “The fact that an offer is made but not accepted does not preclude a subsequent offer. Any subsequent offer by the same party under this rule supersedes all prior offers by that party.”
Section 549.09, subd. 1(b): “Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers.”
The rule’s supersession is expressly limited to the offeror’s own offers. The statute’s sentence carries no such limit — it speaks to “offers and counteroffers” generally.
Consider an ordinary exchange. A plaintiff serves a Rule 68 offer of $400,000. Three weeks later the defendant serves a written counteroffer of $50,000, and nothing further is exchanged. Under Rule 68.02(e) the plaintiff’s $400,000 offer is untouched — only a subsequent offer by the plaintiff could displace it, and Rule 68.03(b)(2) remains available. Under the statute’s broader sentence, whether the defendant’s counteroffer displaced the plaintiff’s earlier offer for interest purposes is a question the text raises and does not answer.
This page does not resolve that question, and no one should assume a court would read the statute’s sentence as broadly as it is written. The safer point is narrower: your two positions can end up in different places after the same exchange of letters, and only one of them is protected by an express same-party limitation.
Do the two devices ever disagree about who won?
Yes — and the disagreement is structural, not occasional. Rule 68 asks a one-sided question. Section 549.09 asks a comparative one.
Rule 68.03(b) triggers only when the offeree did worse than the offer it turned down. Section 549.09, subd. 1(b), by contrast, always runs a proximity contest: the prevailing party keeps full interest “only if the amount of its offer is closer to the judgment or award than the amount of the opposing party’s offer,” and if the losing party’s offer was closer, “the prevailing party shall receive interest only on the amount of the settlement offer or the judgment or award, whichever is less,” and only “until the time the settlement offer was made.”
Put those side by side and a gap opens where most cases actually land — when the verdict falls between the last demand and the last offer.
| Where the verdict lands | Rule 68.03(b) | § 549.09, subd. 1(b) |
|---|---|---|
| Below the defendant’s offer | Triggers against the plaintiff | Defendant’s offer is closer |
| Between the two numbers | Neither subpart triggers | Still picks whichever offer is closer |
| Above the plaintiff’s demand | Triggers against the defendant | Plaintiff’s offer is closer |
Work the middle row through the text. Suppose the plaintiff’s last written demand is $1,000,000, the defendant’s last written offer is $100,000, and the jury returns $150,000. Rule 68.03(b)(1) does not apply: the defendant did not prevail, and $150,000 is not “less favorable” to the plaintiff than a $100,000 offer. Neither does Rule 68.03(b)(2): a $150,000 judgment is not “less favorable to the defendant-offeree” than a $1,000,000 demand — paying $150,000 is the better outcome for the defendant. Rule 68 produces nothing for anyone.
Section 549.09 is decisive on the same facts. The defendant’s offer missed by $50,000; the plaintiff’s demand missed by $850,000. The losing party’s offer was closer, so the plaintiff’s preverdict interest is computed on the lesser of the offer or the judgment — $100,000 — and stops on the date the offer was served. Years of accrual at the statutory rate disappear, and what interest survives is then subject to the payment-application rules that govern the judgment afterward.
That is the honest version of the two-devices-in-tension idea. They rarely name opposite winners. What they do is more common: when the verdict lands between the numbers, Rule 68 is silent and § 549.09 is dispositive. A defendant who serves a Rule 68 offer expecting cost protection and gets a verdict above it has bought nothing under the rule — and may have bought a great deal under the statute.
One scope note. Section 549.09, subd. 1(b), clause (4), withholds preverdict interest from “judgments or awards not in excess of the amount specified in section 491A.01” — the conciliation court jurisdictional figure. Below that line the interest half of this analysis may not be in play at all.
Damages-only or total-obligation — and what that choice does to your interest position
Rule 68 makes you pick, and the choice changes the number that both devices will later compare.
Rule 68.01(c): “An offer made under this rule is a ‘damages-only’ offer unless the offer expressly states that it is a ‘total-obligation’ offer. A damages-only offer does not include then-accrued applicable prejudgment interest, costs and disbursements, or applicable attorney fees, all of which shall be added to the amount states [sic] as provided in Rule 68.02(b)(2) and (c).” Under Rule 68.01(d), a total-obligation offer’s stated amount “includes then-accrued applicable prejudgment interest, costs and disbursements, and applicable attorney fees.” Damages-only is the default; total-obligation takes express words.
The comparison then follows the label. Rule 68.03(c): a damages-only offer “is compared with the amount of damages awarded to the plaintiff,” and a total-obligation offer “is compared with the amount of damages awarded to the plaintiff, plus applicable prejudgment interest, the plaintiff’s taxable costs and disbursements, and applicable attorney fees, all as accrued to the date of the offer.”
Now hold that against the statute. Section 549.09, subd. 1(b), compares “the amount of its offer” to “the judgment or award,” and clause (5) excludes from interest “that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.” A total-obligation offer is, by construction, a larger stated number than the same economic offer written damages-only — because it has interest, costs, and fees folded into it. The statute does not say how a bundled offer is to be treated in its proximity comparison. Rule 68 tells you exactly what to compare a total-obligation offer against; § 549.09 was drafted without that category in view and supplies no allocation rule for it.
That silence is a reason for care, not for guessing. The defensible practice is to make the offer’s composition explicit on its face — what portion is damages, what portion is accrued interest, costs, and fees — so that whichever comparison a court later runs, the offer supplies its own arithmetic.
What happens if the offer is accepted?
Rule 68 has real acceptance machinery. The interest statute has none.
Under Rule 68.02(b), acceptance of an offer of judgment produces an actual judgment — for a total-obligation offer, “judgment shall be for the amount of the offer”; for a damages-only offer, “applicable prejudgment interest, the plaintiff-offeree’s costs and disbursements, and applicable attorney fees, all as accrued to the date of the offer, shall be determined by the court and included in the judgment.” Acceptance of an offer of settlement instead produces dismissal under Rule 68.02(c).
Two housekeeping provisions matter more than they look. Rule 68.01(f): “Notwithstanding the provisions of Rule 5.04, no offer under this rule need be filed with the court unless the offer is accepted.” And Rule 68.03(a): “Evidence of an unaccepted offer is not admissible, except in a proceeding to determine costs and disbursements.” The offer stays out of the file and out of the trial, and surfaces only when costs are taxed.
Did the drafters know about the overlap?
They did, and they said so — in a sentence worth reading closely. Rule 68.04(b) provides that “applicable prejudgment interest” means “any prejudgment interest to which a party is entitled by statute, rule, common law, or contract for one or more of the claims resolved by an offer made under the rule,” and that nothing in the rule creates such a right. The 2008 Advisory Committee Comment then adds:
It is noteworthy that Minnesota Statutes, section 549.09, subdivision 1, paragraph (b), which governs prejudgment interest in most cases, contains a mechanism analogous to this rule that adjusts calculation of prejudgment interest based on the relationship between the parties’ offers of settlement and the ultimate judgment or award in the case.
“Analogous” is carrying a great deal of weight. The two mechanisms are analogous in purpose and different in nearly every particular that decides a case. The same comment also cautions that the revised rule “is not as closely modeled on its federal counterpart, Fed. R. Civ. P. 68, as is the existing rule, so that rule and decisions construing it may not be persuasive guidance in construing this rule” — a warning against importing federal Rule 68 practice into a Minnesota state-court file.
What to do
- Put “Rule 68” in the letter, in terms, or accept that you are only playing the interest game. Rule 68.01(b) is a formality with a very large price.
- Serve while both windows are open — more than 14 days before trial, and early enough that the offer works under § 549.09 for a meaningful stretch of the case.
- Answer within 14 days, not 30. The rule’s expiration is automatic under Rule 68.02(d).
- Choose damages-only or total-obligation deliberately, and show the components. Damages-only is the default, and the two labels are measured against different baselines under Rule 68.03(c).
- Before you move your number, price both consequences. Rule 68.02(e) displaces only your own prior offers; § 549.09’s supersession sentence is written more broadly.
- Model the middle zone. If the realistic verdict range straddles your offer and the demand, Rule 68 will likely do nothing and the interest comparison will decide the money.
Madgett Law, LLC litigates civil claims in Minnesota state and federal court and handles the settlement mechanics that determine what a case is worth after the verdict — Rule 68 offers, § 549.09 interest positions, and the cost and fee applications that follow. If you are evaluating an offer or drafting one, send us a message or call 612-470-6529.
Sources: Minn. R. Civ. P. 68 — Rule 68.01(a) (offer at any time more than 14 days before trial begins; damages-only or total-obligation; offer of judgment or offer of settlement); 68.01(b) (no Rule 68.02 or 68.03 consequences unless the offer expressly refers to Rule 68); 68.01(c) (damages-only is the default; excludes then-accrued applicable prejudgment interest, costs and disbursements, and applicable attorney fees); 68.01(d) (total-obligation offer’s stated amount includes those items); 68.01(e) (post-liability offer, by the party adjudged liable, served within a reasonable time not less than 14 days before the damages hearing or trial); 68.01(f) (no filing unless accepted, notwithstanding Rule 5.04); 68.02(a) (acceptance by service of written notice within 14 days; offer irrevocable during the period); 68.02(b)(1)–(2) (entry of judgment on acceptance; total-obligation judgment for the amount of the offer; damages-only judgment with interest, costs, and fees accrued to the date of the offer determined by the court); 68.02(c) (dismissal on acceptance of an offer of settlement); 68.02(d) (offer deemed withdrawn if not accepted within 14 days); 68.02(e) (a subsequent offer by the same party supersedes all prior offers by that party); 68.03(a) (unaccepted offer inadmissible except in a proceeding to determine costs and disbursements); 68.03(b)(1) (defendant-offeror; plaintiff-offeree pays the defendant’s post-offer costs and recovers none of its own; applicable attorney fees unaffected); 68.03(b)(2) (plaintiff-offeror; defendant-offeree pays Rule 54.04 costs plus an amount equal to the plaintiff’s post-offer costs; applicable attorney fees unaffected); 68.03(b)(3) (court may reduce for undue hardship or inequity); 68.03(c)(1)–(2) (damages-only offer compared with damages awarded; total-obligation offer compared with damages plus applicable prejudgment interest, taxable costs and disbursements, and applicable attorney fees accrued to the date of the offer); 68.04(a) (definition of “applicable attorney fees”; the rule creates no fee right); 68.04(b) (definition of “applicable prejudgment interest”; the rule creates no interest right); Advisory Committee Comment — 2008 Amendment (§ 549.09, subd. 1(b), as an analogous mechanism; caution that the revised rule is not as closely modeled on Fed. R. Civ. P. 68 as the former rule). Minn. R. Civ. P. 54.04(a) (“[c]osts and disbursements shall be allowed as provided by law”). Minn. Stat. § 549.09, subd. 1(b) (preverdict interest; 30-day period to serve a written acceptance or written counteroffer; the closer-offer comparison; the cap at the lesser of the offer or the judgment and the cutoff at the date the offer was made where the losing party’s offer was closer; supersession of earlier offers and counteroffers; exclusion (5) for portions of a verdict founded on interest, costs, disbursements, attorney fees, or similar items added by the court or arbitrator). Rule text from the Revisor’s Minnesota Court Rules, Civil Procedure, published under Minn. Stat. § 3C.08, subd. 1; the Revisor’s publication carries “(Added effective July 1, 2008; amended effective January 1, 2020.)” for Rules 68.01 and 68.02 and “(Added effective July 1, 2008.)” for Rules 68.03 and 68.04. Statutory text from the Minnesota Office of the Revisor of Statutes; § 549.09 carried no 2026 currency banner as of August 9, 2026.
The verdict figures used to illustrate the middle zone are hypothetical and are worked entirely from the text of Rule 68.03(b) and § 549.09, subd. 1(b). They are not drawn from any case.
This article is general legal information about Minnesota law. It is not legal advice, it does not create an attorney–client relationship, and no outcome is promised or implied. Whether Rule 68 consequences or preverdict interest apply, and in what amount, depends on the claims, the forum, the offers actually served, and their timing. Do not use this article to evaluate an offer in your own matter.