Image

California practitioners know Code of Civil Procedure section 998 as one of the most powerful cost-shifting tools in civil litigation. A well-crafted offer to compromise can dramatically shift the financial calculus of a case, and a poorly drafted one can forfeit that advantage entirely. Two recent appellate decisions illustrate just how high the stakes are when it comes to form, structure, and the rules governing multi-party offers.

The Basics: Why 998 Offers Matter

Section 998 is a cost-shifting statute designed to encourage settlement. If a party rejects a valid 998 offer and then fails to obtain a more favorable result at trial, the consequences are significant. A plaintiff who fails to beat a defendant’s offer loses the right to recover post-offer costs and may be ordered to pay the defendant’s post-offer expert witness fees. A defendant in the same position faces the flip side: the plaintiff can recover post-offer expert fees on top of standard costs, and in personal injury actions, 10% interest on the judgment from the date of the offer.

But the statute’s cost-shifting provisions only apply if the offer is valid. Courts have consistently held that the burden of proving validity falls on the offeror, and an invalid offer triggers none of the penalties no matter how favorable the trial result. That makes the drafting process critical.

Getting the Form Right

A valid 998 offer must be in writing, clearly state the terms and conditions of the proposed judgment, and include a provision allowing the offeree to accept by signing a statement of acceptance. Oral offers are unenforceable. An offer that requires execution of a general release — one covering claims beyond those in the lawsuit — is likewise invalid. The offer must be capable of valuation at the time it is made, which means conditional terms, moving targets, and confidentiality requirements can all render an otherwise reasonable offer fatally defective.

Courts construe 998 offers strictly in favor of the party against whom they are enforced, and there is no obligation on the offeree to seek clarification of unclear terms. If the offer is ambiguous, that is the offeror’s problem.

Two Recent Cases Worth Knowing

Joint Offers to Multiple Plaintiffs: Quinn v. Coulton

In Quinn v. Coulton (2026) 121 Cal.App.5th 1124, the First District addressed whether a single defendant could make one unapportioned 998 offer jointly to co-owners of a property. The neighbors had sued for property damage, loss of use, out-of-pocket repair costs, and emotional distress. The defendant made a joint offer to each set of co-owners — one lump sum for each pair — without apportioning the amount between the individual plaintiffs. The trial court found the offers valid and awarded the defendant her post-offer expert fees when the plaintiffs failed to beat the offer at trial.

The Court of Appeal reversed. The rule in California is well established: a joint, unapportioned offer to multiple plaintiffs is invalid as a matter of law when those plaintiffs have separate claims and the offer is conditioned on acceptance by all. The reason is simple: without apportionment, neither the plaintiffs nor the trial court can determine whether any individual plaintiff’s recovery at trial was “more favorable” than the offer.

The defendant argued that the unity-of-interest exception saved the offers. That exception, which permits a joint offer without apportionment, applies when the plaintiffs share a single, indivisible injury. The classic example being spouses asserting a community property claim. The court found it inapplicable here. The neighbors brought individual claims for negligence, nuisance, and emotional distress. Each sought unique personal damages. The fact that they co-owned property together did not transform their separate claims into an indivisible joint injury.

The takeaway is direct: when a defendant faces multiple plaintiffs, each plaintiff must receive a separate, individually apportioned 998 offer. Filing a single joint offer — unless the plaintiffs’ claims are truly indivisible — will cost the offeror the right to post-offer expert fees and negate the benefit of a favorable verdict.

Alternative-Choice Offers: Gorobets v. Jaguar Land Rover North America, LLC

The California Supreme Court addressed a different drafting question in Gorobets v. Jaguar Land Rover North America, LLC, 2026 WL 2267423: is a 998 offer containing two mutually exclusive settlement alternatives categorically invalid?

The plaintiff leased a vehicle that developed pervasive defects and filed suit under the Song-Beverly Act. The car manufacturer responded with a 998 offer presenting two alternative choices: Option A offered a lump-sum payment of $85,000 plus attorney fees (either $7,500 or court-determined fees at the plaintiff’s election), and Option B offered a detailed itemized restitution calculation tracking the statutory categories under the Song-Beverly Act, with the same attorney fee option. The plaintiff accepted neither. The jury returned a verdict of $76,155 — less than the $85,000 lump sum under Option A. The trial court imposed cost-shifting accordingly.

The Court of Appeal affirmed the result but held that alternative-choice offers are categorically invalid. The Supreme Court disagreed.

The Court held that an alternative-choice 998 offer is not categorically invalid. Such an offer is valid for cost-shifting purposes if: (1) the offer clearly presents mutually exclusive sets of terms and specifies how acceptance is to be conveyed, and (2) at least one alternative is sufficiently certain to be fairly valued at the time the offer is made. When those requirements are met, cost-shifting is triggered if the rejecting party fails to exceed the highest-valued valid alternative.

The practical implication for practitioners is significant. An alternative offer gives the offeror flexibility — a complex formula-based option alongside a simpler lump-sum alternative, for example—while still maintaining the cost-shifting leverage of a valid 998 offer. The critical drafting requirement is that the alternatives must be mutually exclusive, clearly labeled, and the acceptance mechanism must be unambiguous. Including a clearly defined lump-sum option alongside any formula-based alternative also provides a reliable benchmark for cost-shifting purposes if the formula alternative is later challenged.

The Bigger Picture

These two decisions reflect a consistent theme in 998 jurisprudence: courts will scrutinize the form and structure of an offer closely, and technical defects have real consequences. A defendant who makes a joint offer to multiple plaintiffs without apportionment, or an offeror whose terms are ambiguous or incapable of valuation, forfeits the statute’s cost-shifting mechanism entirely even after a favorable trial outcome.

The best practice is to keep offers simple and clear, avoid general releases, include explicit acceptance instructions, and understand exactly how the multi-party rules and alternative-offer rules apply to the specific facts of the case. When in doubt, consult with appellate counsel before serving an offer. The cost-shifting benefits of a well-crafted 998 offer can be substantial; the cost of an invalid one can be equally significant.

For More Information, Please Contact:

Arezoo Jamshidi

Partner

San Diego, CA