In a pivotal ruling for California civil litigation, the California Supreme Court ruled on August 6, 2026, that Code of Civil Procedure (“CCP”) section 998 settlement offers can present alternative sets of terms within a single offer. Overturning a decision by the Second Appellate District Court of Appeal, the Supreme Court held in Gorobets v. Jaguar Land Rover North America, LLC (S287946) that "alternative-choice" section 998 offers are not categorically prohibited under California law.
For California employers, the decision expands practical tools available to structure settlement proposals, create meaningful litigation risk for opposing parties, and manage post-offer cost exposure.
Under CCP section 998, a party who rejects a valid statutory offer to compromise and fails to obtain a more favorable judgment at trial forfeits post-offer costs and must pay the offering party’s post-offer costs, with some exceptions. Historically, California lower courts required section 998 offers to be sufficiently certain and specific so that the offeree and trial court could accurately evaluate the offer’s monetary value at the time it was made.
In Gorobets, the defendant car manufacturer served a single section 998 offer proposing two distinct, mutually exclusive settlement options:
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