BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 732|
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THIRD READING
Bill No: AB 732
Author: Wayne (D)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-1, 7/3/01
AYES: Escutia, Ackerman, Kuehl, O'Connell, Peace, Sher
NOES: Haynes
ASSEMBLY FLOOR : 76-0, 5/10/01 (Consent) - See last page
for vote
SUBJECT : Settlement offers
SOURCE : State Attorney General's Office
California District Attorneys' Association
Los Angeles County District Attorney's Office
DIGEST : This exempts 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.
ANALYSIS : 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).]
CONTINUED
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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 further exempts 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."
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 7/6/01)
State Attorney General's Office (co-source)
California District Attorneys' Association (co-source)
Los Angeles County District Attorney's Office (co-source)
ARGUMENTS IN SUPPORT : 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
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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 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.
ASSEMBLY FLOOR
AYES: Aanestad, Alquist, Ashburn, Bates, Bogh, Briggs,
Calderon, Bill Campbell, John Campbell, Canciamilla,
Cardenas, Cardoza, Cedillo, Chan, Chavez, Cogdill, Cohn,
Corbett, Correa, Cox, Daucher, Diaz, Dickerson, Dutra,
Firebaugh, Florez, Frommer, Goldberg, Harman, Havice,
Hollingsworth, Jackson, Keeley, Kehoe, Kelley, Koretz, La
Suer, Leach, Leonard, Leslie, Longville, Lowenthal,
Maddox, Maldonado, Matthews, Migden, Mountjoy, Nakano,
Nation, Negrete McLeod, Oropeza, Robert Pacheco, Rod
Pacheco, Papan, Pavley, Pescetti, Reyes, Richman, Runner,
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Salinas, Shelley, Simitian, Steinberg, Strickland,
Strom-Martin, Thomson, Vargas, Washington, Wayne, Wesson,
Wiggins, Wright, Wyland, Wyman, Zettel, Hertzberg
RJG:kb 7/6/01 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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