What Is a California 998 Offer?

A California 998 offer is a statutory offer to compromise under California Code of Civil Procedure section 998 that, if rejected, can shift litigation costs and expert-witness fees to the party who fails to obtain a more favorable result at trial. Either side may make one, which makes it a powerful, bidirectional settlement tool.

This article explains how a 998 offer works, why it is more potent than the federal offer of judgment, how the “more favorable” comparison is measured, and what makes an offer valid and enforceable. For California litigators, the 998 offer is among the most consequential pretrial instruments available.

What Is a Section 998 Offer and How Does It Work?

A section 998 offer is a written statutory offer to allow judgment on specified terms, which shifts cost consequences if the offeree rejects it and then fails to obtain a more favorable judgment or award. Unlike the federal rule, section 998 is bidirectional — a plaintiff or a defendant may serve one — and its consequences reach beyond ordinary costs to expert-witness fees, which are otherwise not recoverable in California. That expert-fee exposure is what gives the statute real force.

The offer must be served in writing, must contain a term allowing the offeree to accept, and stays open until the earlier of 30 days or the start of trial. If accepted, either party may file it and the clerk enters judgment. If rejected and the offeree does not beat it, the court may deny the offeree its post-offer costs, award the offeror’s post-offer costs and — in its discretion — award the offeror’s reasonable expert-witness fees incurred after the offer.

• Either party may serve a 998 offer, unlike the one-directional federal Rule 68.
• The offer stays open for 30 days or until trial begins, whichever is first.
• Rejecting and failing to beat the offer can trigger expert-fee shifting.
• The offer must be unconditional and capable of valuation to be enforceable.

Why Is a 998 Offer Stronger Than Rule 68?

A 998 offer is stronger than the federal offer of judgment under Rule 68 because it runs in both directions and shifts expert-witness fees, not merely modest taxable costs. In a California personal injury case, where competing experts on liability, causation and damages can cost each side substantial sums, the threat of paying the opponent’s expert fees changes settlement dynamics far more than the taxable costs that Rule 68 ordinarily shifts.

The disparity is why 998 offers are used routinely in California practice while Rule 68 offers are comparatively rare. A plaintiff who makes a reasonable 998 offer the defendant rejects, then wins a larger judgment, may recover post-offer expert fees and, under Civil Code section 3291, prejudgment interest at 10% from the date of the offer in a personal injury action. That interest provision adds a distinctly plaintiff-side incentive that the federal rule has no analog for.

• Section 998 shifts expert-witness fees; Rule 68 ordinarily shifts only taxable costs.
• The statute is bidirectional, giving plaintiffs a genuine offensive tool.
• Civil Code section 3291 adds prejudgment interest when a plaintiff beats its own offer.
• The combined exposure makes a rejected 998 offer a serious financial risk.

How Is a “More Favorable” Judgment Measured?

Whether the offeree obtained a more favorable judgment is measured by comparing the offer against the judgment, and the comparison is not always a simple dollar match. Courts generally weigh the net judgment the offeree actually obtained against the amount of the rejected offer, accounting for how costs and interest are treated. A defendant’s offer is beaten only if the plaintiff’s recovery exceeds it; a plaintiff’s offer is beaten only if the plaintiff recovers more than the plaintiff proposed to accept.

Valuation problems arise when an offer bundles multiple claims or parties, or omits a clear method to compare it to the verdict. California courts require that a 998 offer be sufficiently specific and certain to allow a valid comparison, and they scrutinize offers made so early or so token that they were not reasonable, good-faith efforts to settle. An offer found unreasonable or merely tactical will not support cost shifting.

1. Identify the net judgment the offeree actually obtained after trial.
2. Compare it to the amount and terms of the rejected 998 offer.
3. Confirm the offer was specific, unconditional and reasonably valued.
4. Apply cost and expert-fee shifting only if the offeree failed to do better.

What Makes a 998 Offer Valid and Enforceable?

A 998 offer is valid and enforceable only if it is in writing, unconditional, sufficiently certain to be valued and made in good faith at a point when the offeree could fairly evaluate it. Courts have refused to enforce offers that were vague, that imposed improper conditions such as broad releases untethered to the litigation or that were served so early that the offeree lacked information to assess them. Good faith and reasonableness are the recurring themes.

Practitioners weigh a 998 offer alongside other risk-allocation devices — a high-low agreement that brackets the verdict, or a structured settlement that spreads payment over time. Each serves a different function, and a 998 offer is distinctive in that its purpose is to create post-trial fee exposure rather than to resolve the case by agreement. Careful drafting — a clean sum, a defined release and an acceptance provision — is what preserves the offer’s enforceability.

• Put the offer in writing with a clear acceptance provision.
• Keep the amount definite and the release tailored to the claims at issue.
• Serve it when the offeree has enough information to evaluate it in good faith.
• Avoid token or tactical offers that courts may deem unreasonable.

Conclusion

A California 998 offer is a statutory offer to compromise that shifts costs and, uniquely, expert-witness fees to a party who rejects it and then fails to do better at trial. Its bidirectional design, expert-fee exposure and prejudgment-interest incentive make it far more consequential than the federal offer of judgment, and it is used routinely in California litigation for precisely that reason. Because enforceability turns on good faith, certainty and timing, counsel should draft and serve a 998 offer with care and confirm the current statutory and case-law requirements.

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