On August 6, 2026 the California Supreme Court made an important ruling on the use of California Code of Civil Procedure section 998. Code of Civil Procedure section 998 permits a party to serve a formal offer to compromise to another party with consequences for its rejection. Generally, if the receiving party fails to accept the offer within 30 days, and the receiving party fails to get a better result at trial, the receiving party may have to pay the offering party’s post offer costs and expert witness fees.
In Gorobets v. Jaguar Land Rover North America, LLC (2026) _ Cal.5th _ , 2026 WL 2267423the plaintiff received a jury verdict awarding plaintiff $76,155.27 in damages in his action for express and implied breach of warranty, and breach of the duty to return his vehicle from service without defects within 30 days. The trial court concluded that defendant’s 998 offer, which gave plaintiff a choice between an $85,000 one-time payment or a reimbursement/dispute-resolution alternate offer, was valid based on the $85,000 option. Based upon the verdict which did not exceed the 998 offer, plaintiff was imposed the above penalties. The Court of Appeal affirmed the ultimate cost award but held that 998 offers offering alternatives are categorically invalid, but it confusingly found the $85,000 offer itself valid and sufficient to support the award.
The California Supreme Court rejected the Court of Appeals categorical decision invalidating alternative offers, and ruled that a single 998 offer presenting two alternative offers with distinct terms can be valid if it is drafted to clearly present the alternatives, and at least one alternative offer is detailed to permit a clear understanding of the value of the offer. If the offer is clear, then there will be no dispute as to the relative value of the offer and the award at trial, if any.
The Gorobets ruling expressly permits 998 offers drafted in the alternative, if they include mutually exclusive and clear settlement options, and at least one option is sufficiently certain in its value. The offering party must prove a clear explanation of terms (especially for the more certain alternative) and acceptance protocol.
JoLynn M. Klein is a shareholder at Hunt Ortmann Nieves Darling Mah Klein & Lozano, Inc. and leads the Firm’s Labor & Employment and Insurance Practice. She can be reached at klein@huntortmann.com for further information and assistance.
