In Gorobets v. Jaguar Land Rover North America, LLC (August 6, 2026), the California Supreme Court issued an opinion that clarifies a widely-used tool in civil litigation: Code of Civil Procedure section 998 offer to compromise (998 offer). 998 offers shift the liability for costs when the rejecting party fails to obtain a more favorable judgment or award. The case present the issue of whether a single 998 offer that presented two alternative sets of terms is valid such that it provides sufficient certainty under the statute. The Court held that it was, so long as it clearly presented the available options and that at least one of the options was sufficiently certain to allow a valuation at the time the offer was made.

This case arose from a lemon law dispute between a lessee of a car and a car manufacturer. During the litigation, the car manufacturer made a 998 offer to the plaintiff proposing two alternative sets of settlement terms: (1) a lump-sum payment of $85,000, or (2) an agreement to reimburse plaintiff for expenses he incurred in several categories including transportation” charges, manufacturer-installed options, loan interest, rental charges, and any collateral charges such as sales tax, license fees, registration fees, and other official fees. Plaintiff chose neither option and allowed the 998 offer to expire.

Later, a jury awarded plaintiff just over $76,000 in damages. However, as the prevailing party, when plaintiff sought to recover costs and attorneys’ fees, the car manufacturer argued he was not entitled to cost and fee recovery because he rejected a valid 998 offer and failed to achieve a more favorable outcome. The question of the 998 offer’s validity went before the Supreme Court.

The Supreme Court upheld the 998 offer, holding that such complex 998 offers are upheld so long as they meet the statutory provisions and are “sufficiently clear to permit valuation” at the time of the offer. The Court held the lump-sum option was able to be clearly valued at the time of the offer. Thus, even if the alternative term was difficult to value, the offer was upheld as valid. Once a court determines that the “alternative-choice” offer is sufficiently clear in structure, it then considers whether either set of terms is sufficiently certain to permit valuation at the time the offer was made and whether that value of the valid alternative(s) is higher than the judgment or award ultimately achieved. These alternative-choice offers allow the parties to communicate creative settlement options more efficiently, and potentially, as the Court claims, “shortening the path to common ground.”

Gorobets expands the section 998 toolkit for both sides. Counsel may now structure a single 998 offer around multiple, mutually exclusive alternatives with a reduced risk of invalidity. To maximize the chance of validity, each alternative should be clearly delineated, the alternatives must be mutually exclusive, and at least one must be capable of precise valuation at the time of the offer. Offerees, in turn, must evaluate every independently valid alternative, because cost shifting is measured against the highest-valued one — even if a second, lower-valued alternative is ultimately found invalid. That said, the offeror still bears the burden of demonstrating the validity of its offer.

This decision further reinforces section 998’s policy of encouraging early resolution of cases by allowing flexibility for the parties to explore options and fashion settlements on terms best suited to the particular action. Section 998 offers remain a valuable settlement and cost-shifting tool, and even more so with the Supreme Court’s endorsement of flexible alternative-choice options.