Section 998 Is Not the Only Settlement Show

Alvarez v. Altamont Health Servs. Corp., No. B305155 (D2d8 Mar. 4, 2020)

For an offer of judgment under Code of Civil Procedure § 998 to be valid, it must include a “provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted.” § 998(b). There are some cases that say because an offer without such a provision is invalid, the consequences that apply for a failure to respond—potential shifting of costs—don’t apply.

This case deals with the reverse. Defendant served a § 998 offer. It did not have an acceptance provision. But Plaintiff took the deal anyway and hand wrote an acceptance on the offer document. The trial court entered judgment on the settlement. But Defendant then got cold feet about the offer and moved to vacate the judgment based on the defect. The trial court agreed, and the Court of Appeal here affirms.

The Court reviews various grounds for finding the offer nonetheless valid—statutory, contractual, and equitable—finding them all lacking.

The § 998 analysis basically seems consistent with the statute and the cases interpreting it, even if its a little counter-intuitive. There are, however, two not well developed points here that give me some pause.

First, as a matter of contract law—not specific to § 998—it seems pretty clear that the defendant made an offer—settle the case on these terms—that the plaintiff accepted. So even if there’s no right just to enter judgment under § 998, isn’t the defendant likely entitled to summary judgment on settlement and accord? Not every settlement needs to be a § 998 settlement. That’s not really contemplated here. 

Second, and similarly, there’s an estoppel issue. Defendant made a representation that Plaintiff relied on in changing its legal position. As the Evidence Code puts it: “Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.” Evid. Code § 623.

Here, Defendant made a statement that led Plaintiff believe it was offering to settle the case on certain terms and Plaintiff acted on that statement. Generally, that should estop Defendant from a later denial. This one did get raised—albeit only on appeal—but the Court of Appeal rejects it because, under one test that can apply for equitable estoppel—what we call the “four-element test”—there was no false statement, so equitable estoppel can’t apply. 

But as I wrote, at some length, almost eight years ago, and addressed again just last year, the four-element test, and its cousin, the five-element test, don’t fully encompass all the varieties of equitable estoppel that exist out in the wilderness of California procedure. And in particular, they do not address the core elements of the type of estoppel at issue here—a detrimental reliance on an offer or promise that is not necessarily false when made. Under the case law that applies in that context—see, e.g., Indus. Indem. Co. v. Indus. Acc. Comm., 115 Cal. App. 2d 684, 690 (1953)—there would seem to be enough to work an estoppel here. Or at least for a more thorough analysis.

So while the statutory quirks of § 998 might preclude entry of automatic judgment under its terms, it seems like either contractual rules or an estoppel should be enough to crate a binding agreement that resolves the case.

Affirmed.

This Settlement Is Really Just a Sale . . .

Luckey v. Superior Court, No. B253892 (July 22, 2014)

Plaintiff brings a class action against a retailer for violating FACTA, which prohibits the printing of certain credit card information on a customer receipt. After an early mediation before a retired judge, a class action settles. The class had not yet been certified. 

The terms of the settlement look—ahem—a little shady. The plaintiff attorneys get $300,000 and the members of the class get $5 off any $25 purchase from the defendant during a particular week. Apparently, every other customer of the defendant who shops during that week also gets the same deal. In exchange, the class releases its FACTA claims, which carry statutory damages of $100-1,000 per count. 

The parties stipulate that a temporary judge can hear the motion to approve the settlement. Coincidentally, the temporary judge they agree to is the same judge that conducted the mediation. Because, surely the retired judge who brokered the settlement is in a perfectly objective position to opine upon whether he got the parties to a fair deal! The trial court, however, refuses to approve the stip, reasoning that the class representative has no authority to consent to a temporary judge on behalf of the absent members of an as-yet-uncertified class. Both parties seek writ relief.
 
Interestingly, because both sides agree that the trial court should be reversed, there is effectively no real party in opposition to the writ. The court of appeal, however, requested a response from the superior court itself. Although the superior court is generally only a nominal party on a writ, in certain limited circumstances—those addressing the court’s procedures or uses of its resources—it can provide a response. This was one of those circumstances.
 
The court goes on to agree with the superior court. The state constitution, the rules of court, and concerns of public policy require all “parties litigant” to consent to the appointment of a temporary judge.  If a class has not been certified, the putative class rep does not have the authority to bind absent members of the class to such an agreement.
 
Writ denied.

An Objector's Choice

Litwin v. iRenew Bio Energy Solutions, LLC, No. B248759 (D2d1, as modified, May 29, 2014)

An objector appeals from an approval of a class action settlement over false advertising claims about the magical healing powers of some hippie bracelet. The notice that went to the class said that if an absent class members wanted to object, she needed to both give written notice and show up at the approval hearing to argue her case. Unfortunately, that’s wrong. Under Rule of Court 3.769(f), as interpreted by the court here, and buttressed by Newberg on Class Actions, a class member can lodge an objection by filing a written objection or by appearing at the hearing to object. She needn’t do both, which would be unfairly burdensome. Thus, because the class notice misstated the right of objectors, the settlement should not have been approved.

Reversed.