Article Is In September 2016 Edition.
In the September 2016 edition of The Orange County Lawyer, Joshua G. Simon has authored an article entitled “Minding the Statutory Offer to Compromise: A Review of Basic Mechanics, Recent Developments, and Common Misconceptions.”
Here is a summary of some highlights we picked up from Mr. Simon’s article:
• If a plaintiff fails to beat a 998 offer by the defense (factoring in plaintiff’s pre-offer costs and fees), the plaintiff is subject to mandatory penalties, including the obligation to pay the defendant’s post-offer costs and inability to recovery post-offer costs even if plaintiff wins at trial, plus the judge has discretion to order plaintiff to pay defendant’s post-offer expert costs.
• If a defendant rejects a plaintiff’s 998 offer (using the same pre-offer calculus above plus plaintiff’s post-offer costs inclusive of authorized fees), the plaintiff is entitled to recovery statutory costs, whether or not the plaintiff is deemed the prevailing party plus a court/arbitrator may order the defense to pay plaintiff’s reasonable post-offer expert fees.
• Besides procedural requirements (including providing a means of acceptance), a section 998 offer must be made in good faith and certain/capable of valuation to determine whether the trial recovery is more favorable than the offer. Typically, the offer should (a) be clear; (b) provide that the offer is in exchange for either a dismissal or entry of judgment; (c) not be token or not nominal amount unless plaintiff has a really weak case; (d) not ask for confidentiality provisions or releases outside the lawsuit incapable of valuation; (e) provide adequate time for assessment during the course of the litigation; (f) be clear about fees and costs being included or not; and (g) not conditioned upon the acceptance of the offer by another party.
• The defense will typically structure a 998 offer in one of two ways: (1) offer a single, set amount to encompass estimated trial damages and pre-offer fees/costs of plaintiff; (2) serve an “open-ended” offer with a set amount to cover plaintiff’s estimated trial damages and a statement to pay “plaintiff’s reasonable attorney’s fees and costs” as of the date of the offer subject to later court determination.
• A 2016 amendment to section 998 leveled the playing field by clarifying that a defendant, like a plaintiff, may recover only post-offer expert witness fees, with lower courts previously also being able to award the defense pre-offer expert fees.
• Litigators should not fear serving multiple 998 offers, because allowable costs run from the earlier 998 offer under Martinez v. Brownco Construction Co., 56 Cal.4th 1014 (2013).
• Parties can agree to settle without a judgment or motion practice by keeping the 998 offer in place but converting to a settlement agreement with “sweetened” deal aspects.