A valid 998 offer is the starting point. Per Code of Civil Procedure section 998(b), offers must be in writing, and must include a provision allowing the offeree to indicate acceptance “by signing a statement that the offer is accepted.” Puerta v. Torres (2011) 195 Cal.App.4th 1267(award of expert witness fees reversed because the 998 offer lacked statutorily required provision for indicating acceptance). The offer, however, need not have any magic words. Berg v. Darden (2004) 120 Cal.App.4th 721(otherwise valid 998 offers need not precisely track the language of the statute).
Subject to narrow exceptions such as community property or other unity-of-interest cases, in a multi-party case, separate offers should be made to each defendant or plaintiff. Taing v. Johnson Scaffolding Co. (1992) 9 Cal.App.4th 579 (plaintiff’s joint 998 offer to three defendants insufficiently specific for each defendant to determine amount sought); Menees v. Andrews (2004) 122 Cal.App.4th 1450 (defendant’s 998 offer invalid because individual plaintiffs had no opportunity to settle unless all settled).
Avoid the temptation to alter the statutory scheme. Marina Glencoe L.P. v. Neue Sentimental Film AG (2008)168 Cal.App.4th 874 (inclusion of a shorter deadline for acceptance than the statutory scheme provides invalidated the offer by technically revoking it on the expiration date). And be careful of including conditions in the offer that are not easily capable of valuation. Barella v. Exchange Bank (2000)84 Cal.App.4th 793 (confidentiality provision rendered valuation of offer uncertain for cost shifting purposes).
Although the circumstances validating early-bird 998 offers should be rare, offers can be served with a summons and complaint. Barba v. Perez (2008)166 Cal.App.4th 444 (upholding cost shifting under 998 offer served with summons and complaint). As for later in the case, under subdivision (b), offers must be made “not less than 10 days prior to the commencement of trial or arbitration.” The “commencement of trial” is statutorily defined as the “opening statement of the plaintiff or counsel.” And in the absence of opening statements, the “administering of the oath ... to any witness, or the introduction of any evidence” constitutes commencement of trial. See section 998 (b)(3). So depending on courtroom availability etc., there may be time to make a 998 offer as late as trial call and beyond.
As for the offer’s amount, there is a good faith requirement that offers be “realistically reasonable” under the circumstances that existed during the acceptance period. Fortman v. Hemco, Inc. (1989) 211 Cal.App.3d 241. But the offeree has the burden to prove unreasonableness and the standard of review is abuse of discretion. Santantonio v. Westinghouse Broadcasting Co., Inc. (1994) 25 Cal.App.4th 102 (1994). And low offers, including offers to waive costs, are frequently upheld. Bates v. Presbyterian Intercommunity Hospital, Inc. (2012) 204 Cal.App.4th 210 (offer to waive costs); Adams v. Ford Motor Co. (2011) 199 Cal.App.4th 1475 (offer of $10,000 plus costs in mesothelioma case upheld as reasonable and shifted six figures in expert witness fees).
Multiple 998 offers can be made during the course of litigation. But if a subsequent offer is made while a prior offer is still pending, service of the second offer renders the prior offer invalid for cost shifting. Palmer v. Schindler Elevator Corp. (2003)108 Cal.App.4th 154. What if two or more valid offers are made during the course of litigation, none are accepted and all are greater in amount than the offeree’s judgment—which one shifts costs? The state Supreme Court will decide which offer shifts costs when it resolves the split between Martinez v. Brownco Construction Co. Inc. (2012) 203 Cal.App.4th 507 (review granted, depublished) which held that the earliest valid offer shifts costs and Wilson v. Wal-Mart Stores Inc. (1999) 72 Cal.App.4th 382, which held that the last valid offer shifts costs. In some cases, the spread can be huge, so keep an eye out for the Court’s decision.
Is there more? Oh yeah, there is much, much more at play with 998 offers.