In Gorobets v. Jaguar Land Rover North America, the Supreme Court today expands the types of permissible offers a party can make under Code of Civil Procedure section 998, the settlement-encouraging provision that requires the payment of litigation costs by a litigant who “fails to obtain [a judgment or award that is] . . . more favorable” than a pretrial settlement offer they rejected.
Saying “we have never held that an offer must be ‘simple,’ ” the court’s unanimous opinion by Justice Corrigan finds to be valid under section 998 certain kinds of what it calls “alternative-choice offers,” i.e., “a settlement offer that permits an offeree to choose between two distinct sets of settlement terms as a form of acceptance.” But the offer must meet some conditions: “(1) the offer is structured so that it clearly presents the alternatives available to the offeree, and (2) at least one of the two independent sets of terms is sufficiently certain to permit an accurate valuation at the time the offer is made,” and then “the court must determine whether section 998 cost shifting has been triggered by asking whether the party who rejected the 998 offer ‘fail[ed] to obtain a judgment or award more favorable’ than the highest value, valid alternative proposed.”
The court affirmed the judgment of the Second District, Division Two, 2-1 published opinion (see here) because the appellate court upheld the superior court’s award of 998 costs to the defendant. But it rejected the Division Two majority’s “analysis and holding that section 998 categorically prohibits making a single offer with two sets of alternatives.”
