Reported / Citable
Background
Vadim Gorobets sued Jaguar Land Rover under California’s Song-Beverly Consumer Warranty Act after repeated problems with a leased Land Rover. During the case, Jaguar served one Code of Civil Procedure section 998 settlement offer containing two choices: an $85,000 lump-sum vehicle repurchase or a reimbursement formula largely tracking statutory remedies, with disputed amounts to be resolved later.
Gorobets rejected both. A jury later awarded about $76,155, less than the lump-sum choice. The trial court treated the offer as valid, sharply reduced Gorobets’s recoverable postoffer attorney fees and costs, and awarded Jaguar its postoffer costs. The Court of Appeal upheld the award but reasoned that section 998 generally did not allow simultaneous alternatives, then salvaged the certain $85,000 component.
The Court’s Holding
The California Supreme Court affirmed the cost award while rejecting the Court of Appeal’s categorical rule. A single section 998 offer may clearly present two independent alternative sets of terms and let the receiving party choose either one. Such an offer is valid if the alternatives are clearly structured and at least one independent set of terms is sufficiently certain to be accurately valued when made.
For cost comparison, the court looks to the highest-value valid alternative. The rejecting party avoids section 998’s cost consequences only by obtaining a judgment or award more favorable than that benchmark. An uncertain alternative does not necessarily contaminate a separate, readily valued option when the two are genuinely independent.
Jaguar’s $85,000 lump-sum option was clear and independently acceptable, and Gorobets’s later recovery did not exceed it. Cost shifting therefore applied even if the reimbursement alternative raised valuation questions.
Key Takeaways
- Section 998 does not categorically prohibit one offer containing two alternative settlement packages.
- The offer must clearly explain the choices and permit acceptance of either independent alternative.
- At least one alternative must be certain enough to value when the offer is made.
- The eventual judgment is compared with the highest-value valid alternative, not automatically the simplest one.
- Careful drafting can preserve cost-shifting consequences even if another independent alternative proves uncertain.
Why It Matters
This is a significant settlement-drafting decision for California civil litigators. Parties can now use alternative-choice offers to accommodate different business or remedial preferences—cash versus structured relief, for example—without automatically losing section 998 protection. But the choices must be distinct, comprehensible, and independently acceptable.
Offerees must value every valid alternative rather than dismissing the entire proposal because one choice appears complicated. In fee-shifting cases such as lemon-law litigation, rejecting a clear alternative can dramatically reduce a prevailing plaintiff’s fees and costs even when the plaintiff wins at trial.