BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Martha M. Escutia, Chair
2001-2002 Regular Session
AB 732 A
Assembly Member Wayne B
As Introduced
Hearing Date: July 3, 2001 7
Code of Civil Procedure 3
CJW 2
SUBJECT
Settlement Offers
DESCRIPTION
This bill would exempt prosecutors in civil enforcement
actions from the laws requiring parties to civil suits who
decline pretrial settlement offers, and then fail to obtain
a more favorable judgment at trial, to pay the post-offer
costs of the party who offered the settlement.
BACKGROUND
Section 998 of the Code of Civil Procedure allows for the
imposition of monetary sanctions against parties to civil
actions who decline pre-trial settlement offers and
subsequently fail to obtain a more favorable outcome at
trial. Historically, this provision has been applied only
to private parties; recently, however, some litigants have
claimed (and at least one trial court has held) that public
prosecutors should be subject to these sanctions, even
though civil law enforcement cases differ substantially
from private cases.
The public prosecutor organizations co-sponsoring this bill
state that Section 998 does not rationally apply to civil
enforcement actions, and that to attempt to apply it in
such cases would be bad public policy. This bill would
confirm that civil enforcement actions brought by public
prosecutors are exempt from the sanctions imposed by
Section 998.
(more)
AB 732 (Wayne)
Page 2
CHANGES TO EXISTING LAW
Existing law provides that, not less than 10 days before
trial or arbitration of a civil action, any party may serve
an offer in writing upon any other party to the action to
allow judgment to be taken or an award to be entered in
accordance with the terms of the offer. [CCP Sec. 998(b).]
Existing law further provides that if such an offer made by
a defendant is not accepted, and the plaintiff fails to
obtain a more favorable judgment or award, the plaintiff
shall not recover his or her post-offer costs and shall pay
the defendant's costs from the time of the offer. In
addition, in any case other than an eminent domain
proceeding, the court in its discretion may require the
plaintiff to pay the reasonable costs of the defendant's
expert witnesses incurred before and during trial. [CCP
Sec. 998(c)(1).]
Existing law further provides that costs awarded under
subsection (c)(1) shall be deducted from any damages
awarded to the plaintiff. [CCP Sec. 998(e).]
Existing law further provides that if such an offer made by
a plaintiff is not accepted, and the defendant fails to
obtain a more favorable judgment or award, the court in its
discretion may require the defendant to pay the plaintiff's
costs, including the reasonable costs of the plaintiff's
expert witnesses. [CCP Sec. 998(d).]
Existing law exempts from the provisions of this statute an
offer made by a plaintiff in an eminent domain action.
[CCP Sec. 998(g).]
This bill would further exempt from the provisions of this
statute "any enforcement action brought in the name of the
people of the State of California by the Attorney General,
a district attorney, or a city attorney, acting as a public
prosecutor."
COMMENT
1. Stated need for legislation
AB 732 (Wayne)
Page 3
According to the Los Angeles District Attorney's Office,
co-sponsor of this bill, Section 998 was enacted in 1971
to address the problem of unreasonable private litigants
burdening the courts with trials in tort and contract
lawsuits, where reasonable parties could have agreed on
money damages and avoided trial. Over the years, Section
998's sanctions have been applied many times in private
lawsuits, but never to the civil enforcement actions
brought by prosecutors under state laws banning unfair
competition, deceptive business practices, fraud, public
health threats, and environmental degradation.
The co-sponsors say that the accepted view has been that
civil enforcement actions are exempt because, among other
reasons, Section 998 speaks of offsetting costs against
the plaintiff's award of "damages." In civil enforcement
actions, prosecutors are empowered to seek only
injunctions, restitution and civil penalties - not
damages.
Recently, however, a Los Angeles trial judge ordered the
Attorney General's office to pay $513,302 in Section 998
sanctions after a civil enforcement action under unfair
competition statutes against a "living trust"
organization that took advantage of elderly citizens.
Ironically, the Attorney General won a major judgment
against several defendants, including extensive victim
restitution and $2.5 million in penalties, but lost a
complex alter ego cause of action against one entity.
Having refused a settlement offer from the combined
defendants, the Attorney General was liable for sanctions
as to the one defendant, despite having won a resounding
victory overall. Although this case is being appealed,
the co-sponsors believe this issue needs to be resolved
legislatively.
2. Section 998 sanctions "do not rationally apply" to
civil enforcement actions
According to the co-sponsors, Section 998 was enacted to
encourage prompt settlement of private actions where harm
is measured in monetary terms and a money compromise
therefore is achievable. Civil enforcement actions, on
the other hand, usually involve complex equitable
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remedies, including injunctive relief, which aren't
easily measured in dollar terms. The co-sponsors add
that no one seriously contends that public prosecutors
were the targets of the legislative efforts in enacting
Section 998, since prosecutors bring "only a tiny
fraction" of all civil lawsuits and have shown no pattern
or refusal to enter into meaningful settlement
negotiations.
3. Section 998 sanctions would be bad public policy
Further, the co-sponsors note that prosecutors have the
duty to "seek justice, not merely to convict" (ABA Code
of Prof. Resp., Canon 7). Accordingly, they should never
be forced or pressured to settle law enforcement actions
on terms not in the best interests of the public out of
concern for Section 998 monetary expenses. Many
prosecutors - particularly those in smaller counties -
might be deterred from enforcing the law at all in these
areas rather than risk unpredictable sanctions.
Finally, the co-sponsors note that an order directing a
public prosecutor to pay a Section 998 sanction may
violate the separation of powers doctrine. The authority
to settle a law enforcement case lies exclusively with
the executive branch of government, and application of
Section 998 sanctions to them may infringe upon their
exercise of that authority.
4. Requested exemption appears consistent with statute's
intent
Section 998 currently exempts from its provisions most
situations involving eminent domain proceedings. [Sec.
998(c), (g).] Although such cases turn almost entirely
upon monetary evaluations, indicating that money
compromises should be achievable, this exemption appears
to recognize the substantial difference between eminent
domain actions and most civil cases, including the fact
that such actions normally are brought by government
bodies in good faith and in the public interest, and are
defended against by property owners who have done no
wrong and are entitled to a fair price for their
property.
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In other words, the nature of these actions and the
history of their prosecution indicates that parties to
eminent domain proceedings do not need or deserve to be
spurred to settlement by Section 998 sanctions.
Including civil enforcement actions in the exemptions
from these sanctions would appear to be consistent with
the intent of the statute.
5. Anti-SLAPP statute exempts prosecutors in similar
circumstances
In 1992, the Legislature enacted a statute aimed at
curtailing certain lawsuits filed to chill free speech
rights, which were known as "Strategic Lawsuits Against
Public Participation (SLAPP) suits." [ See CCP Sec.
425.16.] The "anti-SLAPP" law provides for a special
motion to strike against such a cause of action, and
awards costs and attorney's fees to prevailing
defendants.
At the request of the Attorney General's office, the
statute was drafted to include a specific provision
making clear that the statute "shall not apply to any
enforcement action brought in the name of the people of
the State of California by the Attorney General, district
attorney, or city attorney, acting as a public
prosecutor." Legislative staff involved in the drafting
of the bill report that this provision was not included
to provide a special exemption that otherwise would have
been considered nonexistent, but rather to confirm the
existence of the prosecutorial exemption assumed by the
drafters.
Accordingly, amending Section 998 to confirm the
existence of a prosecutorial exemption would be
consistent with the approach taken in this more recent
legislation.
Support: Consumers for Auto Reliability and Safety (CARS)
Opposition: None Known
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HISTORY
Source: Attorney General's Office, California District
Attorneys' Association (CDAA), and Los Angeles County
District Attorney's Office (co-sponsors)
Related Pending Legislation: None Known
Prior Legislation: None Known
Prior Vote: Assembly Judiciary Committee 10-0; Assembly
Floor 76-0
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