CCP 998 Offers in California.

Overview

A CCP 998 offer shifts expert witness costs to the party who should have accepted it. This guide covers how to use this powerful tool and how to defend against it.

Overview of CCP 998

Purpose and Policy

Section 998 was enacted to encourage the settlement of lawsuits before trial. It accomplishes this by penalizing a party who rejects a reasonable pretrial settlement offer and then fails to obtain a more favorable result at trial.

The Basic Mechanism

Statutory Text (Key Provisions)

• CCP 998(b): Any party may serve an offer to compromise at least 10 days before trial
• CCP 998(c)(1): If plaintiff's offer is not accepted and defendant fails to obtain a more favorable judgment, the court shall award plaintiff post-offer costs and may award expert witness fees
• CCP 998(d): If defendant's offer is not accepted and plaintiff fails to obtain a more favorable judgment, the plaintiff shall not recover post-offer costs and shall pay defendant's post-offer costs; the court may require plaintiff to pay defendant's expert witness fees

Drafting a Valid 998 Offer

A 998 offer that does not comply with statutory requirements is invalid and has no cost-shifting effect. Strict compliance is essential.

Formal Requirements

• [ ] Written: Must be in writing (CCP 998(b))
• [ ] Served on the party: Must be served on the opposing party (not just the attorney) per CCP requirements
• [ ] At least 10 days before trial: Must be served no later than 10 days before the date initially set for trial or the date the case is first set for arbitration (CCP 998(b))
• [ ] Clear and unconditional: The offer must state the terms clearly and not be ambiguous or conditional on extraneous events
• [ ] Specific amount or terms: Must state a specific dollar amount or specific non-monetary terms (or both)
• [ ] Include statutory language: Reference CCP 998 explicitly
• [ ] Open for at least 30 days: The offer must remain open for at least 30 days, unless shortened by order of the court (CCP 998(b))
• [ ] Not made in bad faith: An unreasonably low (token) offer may be found invalid (Wear v. Calderon (1981) 121 Cal.App.3d 818)

Sample 998 Offer Language (Plaintiff's Offer)

OFFER TO COMPROMISE PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 998
TO: [Defendant Name] and their attorneys of record, [Defense Firm Name]
Plaintiff [Client Name] hereby offers to compromise this action pursuant to
Code of Civil Procedure section 998 for the total sum of [AMOUNT] ($XXX,XXX.00),
inclusive of all damages, costs, attorney fees, and interest accrued to date.
This offer is made to [Defendant Name] only and does not include any other
defendant in this action.
This offer shall remain open for acceptance for a period of thirty (30) days
from the date of service of this offer, or until commencement of trial,
whichever occurs first.
If this offer is not accepted within the time allowed, it shall be deemed
withdrawn and shall not be admissible in evidence, except as provided in
Code of Civil Procedure section 998.
Dated: [Date]
[Attorney Signature Block]

Common Drafting Pitfalls

Timing Strategy

When to Serve a Plaintiff's 998 Offer

The timing of a plaintiff's 998 offer is a strategic decision that depends on case development and litigation posture.

Early 998 Offer (After Initial Discovery)

Advantages:

• Creates early cost-shifting pressure
• Locks in a reasonable number when damages are lower (if injuries worsen, the offer looks more reasonable)
• Forces the defense to evaluate the case early

Risks:

• May signal willingness to settle for a lower amount than the case is ultimately worth
• If the case develops favorably, the early 998 may be below eventual trial value

Mid-Litigation 998 Offer (After Expert Discovery)

Advantages:

• Based on fuller information about damages and liability
• Expert fees begin to accumulate, increasing the cost-shifting stakes
• Defense has a clearer picture of its exposure

Risks:

• May come after significant costs have already been incurred
• Less time for cost-shifting to accumulate before trial

Pre-Trial 998 Offer (30-60 Days Before Trial)

Advantages:

• Maximum information about case value
• Creates immediate pressure as trial approaches
• Defense must confront the cost-shifting consequences of trial

Risks:

• Limited time for post-offer costs to accumulate
• May be seen as a last-ditch settlement attempt rather than a genuine evaluation

When to Serve a Defendant's 998 Offer

Defense 998 offers typically come:

• Early in litigation (low offer designed to create cost-shifting risk for the plaintiff)
• After depositions (when defense believes it has identified weaknesses)
• Before or after MSJ (depending on outcome)
• Shortly before trial (final settlement pressure)

Cost-Shifting Consequences

Plaintiff's 998 Rejected -- Plaintiff Beats the Offer at Trial

Under CCP 998(d):

Cost Category	Effect
Post-offer court costs	Plaintiff shall recover (mandatory)
Pre-offer court costs	Plaintiff recovers under normal CCP 1032 rules
Expert witness fees	Court may award (discretionary)
Attorney fees	Only if independently authorized by statute or contract

Defense 998 Rejected -- Plaintiff Fails to Beat the Offer at Trial

Under CCP 998(c)(1):

Cost Category	Effect
Plaintiff's post-offer costs	Plaintiff shall not recover (mandatory)
Defendant's post-offer costs	Plaintiff shall pay (mandatory)
Defendant's expert witness fees	Court may require plaintiff to pay (discretionary)
Plaintiff's pre-offer costs	Plaintiff may still recover under CCP 1032

What Counts as "Post-Offer Costs"?

Post-offer costs include costs incurred after the date the 998 offer was served:

• Filing and motion fees
• Deposition costs
• Service of process costs
• Witness fees
• Court reporter fees
• Models, enlargements, and photocopies of exhibits
• Other items recoverable under CCP 1033.5

Expert Witness Fees -- The Big Ticket

Expert fees are often the most significant cost-shifting consequence of a 998 offer. In complex PI cases, expert fees can total $50,000-$200,000+ per side.

Key principles:

• Expert fee shifting under 998 is discretionary, not mandatory
• The court considers the reasonableness of the offer and the circumstances of the case
• Courts are more likely to award expert fees when the gap between the offer and the verdict is large
• Expert fees include fees for testimony, preparation, and deposition

Tactical Use by Plaintiffs

Setting the 998 Amount

The 998 amount should be:

1. Reasonable: The offer must represent a reasonable evaluation of the case; a token or bad-faith offer may be invalidated (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258)
2. Below your expected trial value: Set it below what you realistically expect to recover at trial
3. Above the likely defense offer range: It should exceed what the defense is likely to offer voluntarily
4. Defensible: Be able to explain to a court why the offer was a reasonable evaluation at the time it was made

Plaintiff's 998 as Negotiation Leverage

A pending 998 offer changes the defense's cost-benefit analysis:

• The defense must account for potential expert fee exposure when evaluating settlement
• A 998 offer creates a "floor" below which the defense risks cost-shifting consequences
• Multiple 998 offers over time demonstrate the plaintiff's increasing confidence in the case

Using 998 Offers After Failed Mediation

After a failed mediation, immediately serve a 998 offer at or near your mediation bottom line:

• Creates cost-shifting pressure during the post-mediation settlement window
• Signals seriousness about trial
• Memorializes your position while the mediation arguments are fresh

See Mediation for post-mediation strategy.

Defending Against Defense 998 Offers

Evaluating a Defense 998

When the defense serves a 998 offer, evaluate it carefully:

• [ ] What is the realistic trial value of the case?
• [ ] What is the probability of obtaining a result better than the 998 amount?
• [ ] What are the post-offer costs at stake if the plaintiff fails to beat the offer?
• [ ] What expert fees has the defense incurred (or will incur) post-offer?
• [ ] Does the 998 offer include or exclude costs?
• [ ] Is the offer for the entire case or only specific claims?
• [ ] What is the remaining time before trial (how much post-offer cost exposure exists)?

The "Better Result" Comparison

The critical question is whether the plaintiff obtains a "more favorable judgment" than the rejected 998 offer.

What constitutes a "more favorable judgment":

• The judgment amount (including any post-trial additur)
• Pre-judgment interest may be included in the comparison (depends on the case)
• Costs awarded as part of the judgment are generally not included in the comparison

Strategic Responses to Defense 998 Offers

1. Accept if reasonable: If the 998 offer represents fair value, accept it. A 998 acceptance has the same legal effect as a voluntary settlement
2. Counter with a plaintiff's 998: Serve your own 998 offer to create reciprocal cost-shifting pressure
3. Reject but adjust trial strategy: If you reject, ensure your trial presentation maximizes the likelihood of exceeding the 998 amount
4. Document your evaluation: Memorialize your analysis of why rejection was reasonable (protects against potential malpractice claims)

Multiple Defendant Scenarios

Separate 998 Offers to Individual Defendants

When suing multiple defendants, 998 offers should be directed to specific defendants:

• Each 998 offer should clearly identify the offeree defendant
• The offer amount should reflect that defendant's proportionate share of liability
• Cost-shifting applies only to the specific defendant who rejected the offer
• A 998 offer to "all defendants jointly" may be problematic if one accepts and another rejects

Allocation Issues

In multi-defendant cases, the 998 comparison becomes complicated:

• If you settle with some defendants and go to trial against others, the 998 comparison is to the judgment against the remaining defendant(s)
• Credits under CCP 877 (settlement credits) reduce the judgment against non-settling defendants
• The net judgment after credits is compared to the 998 offer

Case Law on 998 Validity

Good Faith Requirement

• Wear v. Calderon (1981) 121 Cal.App.3d 818: A token or nominal 998 offer made without genuine intent to settle is invalid
• Jones v. Dumrichob (1998) 63 Cal.App.4th 1258: A defense 998 offer must bear a reasonable relationship to the case value; a $5,001 offer in a significant injury case may be found invalid
• Elrod v. Oregon Trail Electric Consumers Co-op. (1985) 174 Cal.App.3d 956: The offer must be made in good faith and carry some reasonable prospect of acceptance

Specificity and Clarity

• Valentino v. Elliott Sav-On Gas (1988) 201 Cal.App.3d 692: The 998 offer must be sufficiently specific that its terms can be readily evaluated
• Berg v. Darden (2004) 120 Cal.App.4th 721: An ambiguous offer cannot serve as the basis for cost-shifting
• Barba v. Perez (2008) 166 Cal.App.4th 444: A 998 offer must be unconditional; offers contingent on extraneous conditions may be invalid

Multiple Causes of Action

• Stallman v. Bell (2015) 235 Cal.App.4th 740: A 998 offer that does not clearly indicate whether it covers all or only some causes of action may be ambiguous and invalid
• Fassberg Construction Co. v. Housing Authority (2007) 152 Cal.App.4th 720: In cases with multiple causes of action, the offer should specify which claims are being compromised

Timing Issues

• Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014: The 10-day pre-trial requirement is measured from the initial trial date, not a continued trial date
• The offer must be served, not merely mailed, at least 10 days before trial

Mandatory vs. Discretionary Costs Under 998

Mandatory Costs (CCP 1033.5(a))

These costs are recoverable as a matter of right:

• Filing, motion, and jury fees
• Juror food and lodging
• Taking, video recording, and transcribing depositions
• Service of process
• Witness fees (statutory)
• Court-ordered interpreter fees
• Attorney fees when authorized by contract, statute, or law
• Court reporter fees as established by statute
• Models, enlargements, and photocopies of exhibits used at trial

Discretionary Costs (CCP 1033.5(c))

The court may allow or deny these costs:

• Fees of expert witnesses not ordered by the court
• Investigation expenses
• Surety bond premiums
• Travel expenses
• Electronic discovery costs

Costs Not Recoverable (CCP 1033.5(b))

• Investigation expenses not ordered by the court (though may be discretionary)
• Postage, telephone, and photocopying charges (except as noted above)
• Attorney fees except as authorized

Post-Trial 998 Motions

Filing a Cost Memorandum

After trial, the prevailing party must file a memorandum of costs within 15 days after the date of mailing of notice of entry of judgment (CRC 3.1700(a)(1)).

Motion to Tax Costs

The opposing party may file a motion to tax (challenge) costs within 15 days after service of the cost memorandum (CRC 3.1700(b)(1)).

Motion for Expert Fees Under 998

A motion for expert fees under 998 is typically filed as part of or in conjunction with the cost memorandum:

• [ ] Identify the 998 offer, its amount, and the date served
• [ ] Show the trial result was less favorable to the offeree than the 998 offer
• [ ] Itemize all expert witness fees incurred after the 998 offer was served
• [ ] Support with declarations from the experts and invoices
• [ ] Argue the discretionary factors favor fee-shifting (good faith offer, unreasonable rejection, magnitude of the difference)

Ethical Considerations

Communicating 998 Offers to Clients

• Every 998 offer received must be promptly communicated to the client (Cal. Rules of Prof. Conduct, Rule 1.4(a)(3))
• Explain the cost-shifting consequences of accepting or rejecting the offer
• Provide your professional recommendation
• Document the client's decision in writing

998 Offers and Attorney Fees

• A 998 offer that is "inclusive of attorney fees" in a fee-shifting case may be ambiguous -- specify whether fees are included or excluded
• In cases where attorney fees are recoverable by statute (e.g., Civil Code 1942.4, Gov. Code 12965), the 998 analysis must account for the fee component

998 Offer Strategy Checklist

Before Serving a Plaintiff's 998

• [ ] Complete sufficient discovery to support the offer amount
• [ ] Obtain expert opinions on damages (at minimum, a preliminary range)
• [ ] Research comparable verdicts in the jurisdiction
• [ ] Calculate the offer amount based on realistic case evaluation
• [ ] Draft the offer with precise, unambiguous language
• [ ] Specify whether the offer includes or excludes costs
• [ ] Identify the specific defendant(s) to whom the offer is directed
• [ ] Serve the offer at least 10 days before the initial trial date
• [ ] Allow at least 30 days for acceptance
• [ ] File proof of service

After Receiving a Defense 998

• [ ] Communicate the offer to the client immediately
• [ ] Evaluate the realistic probability of beating the offer at trial
• [ ] Calculate the potential cost-shifting exposure (post-offer costs and expert fees)
• [ ] Prepare a risk analysis comparing acceptance vs. rejection
• [ ] Discuss with the client and document their decision
• [ ] If rejecting, consider serving a plaintiff's counter-998
• [ ] Note the 30-day acceptance window on the calendar

Cross-References

• Settlement Negotiation -- Broader negotiation strategy context
• Mediation -- Using 998 offers in conjunction with mediation
• Demands and Offers -- The demand process and how 998 fits into overall offer strategy
• Settlement Agreements -- Documenting a 998 acceptance
• Trial Practice -- Trial preparation when cost-shifting is at stake

Cross-References

• Settlement Negotiation
• Demands & Offers
• Post-Trial Motions
• Mediation
• Settlement Agreements
• Structured Settlements

Common Questions

Sources & Legal Citations

1. California Code of Civil Procedure § 998. Statutory offer to compromise; cost-shifting provisions.
2. California Code of Civil Procedure § 3291. Prejudgment interest after rejected 998 offer.
3. Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276. Requirements for a valid 998 offer.
4. Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014. 998 offer validity and specificity requirements.
5. California Code of Civil Procedure § 1033.5. Allowable costs including expert fees after 998.
6. Goodstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899. 998 cost-shifting when multiple defendants are involved.