Thursday, September 17, 2015

Prevailing as One Is Not Prevailing as Many

Kahn v. The Dewey Grp., No. B259679 (D2d3 Sept. 8, 2015)

Plaintiff, a mobile home tenant, alleges that twenty different defendants caused him to be exposed to harmful industrial chemicals that were disposed of on land that would later become the trailer park. All twenty defendants jointly made a Code of Civil Procedure § 998 offer of judgment for $75,000. Fourteen defendants got out on nonsuit. The other six went to a trail, where the jury deadlocked and a mistrial was declared. Although the retrial was pending, the fourteen nonsuited defendants moved to recover their proportionate share of expert costs, which the trial court granted. Plaintiff appealed.

There’s a threshold issue about timeliness. After the costs were awarded, defendants electronically served a notice of entry of judgment. The moved for costs seventeen days later. Rule 3.1700(a)(1) requires the filing of a costs memo within fifteen days of the service of written notice of entry of judgment. And Code of Civil Procedure § 1010.6(a)(4) provides a two-court-day extension for any time limit measured from service if service is accomplished electronically, unless some statute specifically exempts itself from the extension.

Plaintiff argues that the motion was late because there’s no reason to give defendants two extra days when they were the ones who chose the method of service. No doubt, they are right that even assuming there is any rational reason to give extra time to respond after instantaneous electronic service, no policy supports granting an extension to a party that itself chooses to serve that way. But that’s not what the statute says. Even if § 1010.6’s rationale doesn’t really apply to the serving party, the statute itself is stated in generally applicable terms. So the court sees no fair reason to make an atextual exception, particularly on a matter of routine procedure.

As to the merits, there are two schools of thought on how to decide whether a judgment beats a joint § 998 offer. One approach—called the “absolute prevailing party” approach—holds that a defendant that is party to joint § 998 is entitled to cost shifting when it obtains a judgment that plaintiff takes nothing, regardless of what is recovered from other defendants. See Winston Square Homeowner’s Assn. v. Centex W., Inc., 213 Cal. App. 3d 282 (1989). The other—called the “comparison” approach—looks to whether the judgment rendered for or against the offering parties as a whole beats the number in the § 998 offer. See Persson v. Smart Inventions, Inc., 125 Cal. App. 4th 1141 (2005). 

The court finds that the comparison approach rings more true to the statutory text, the non-offering party’s ability to fairly evaluate the reasonableness of the offer settlement, and the interest of avoiding uncertainty and gamesmanship. Defendants here controlled the terms of their offer. So if they wanted individualized consideration, they could have made twenty separate offers. Going the other way would let groups of defendants make lowball joint offers and then seek to shift costs if any one of them beat the offer. The court thus holds that when a group of defendants make a joint § 998 offer, the relevant comparison is between the offer and whatever aggregate judgment is obtained against that group of defendants.

Reversed.

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