One Star, Inc. v. Staar Surgical Co.

INTRODUCTION

Code of Civil Procedure section 998 (section 998) provides that if a plaintiff does not accept a defendant’s pretrial settlement offer and then fails to obtain a more favorable judgment at trial, the defendant may recover its costs incurred after the settlement offer. Here, defendant/appellant STAAR Surgical Company (STAAR) made two separate pretrial offers to settle plaintiff/respondent One Star, Inc.’s claims against it, but withdrew the second settlement offer before its statutory expiration. One Star did not accept either offer, and ultimately recovered less at trial than either of STAAR’s pretrial offers. The present appeal thus presents the following issue: If a defendant makes two separate pretrial settlement offers but withdraws the second offer, against which offer, if either, is the ultimate judgment measured for purposes of section 998’s cost-shifting provisions?

We conclude, contrary to the trial court, that where a defendant withdraws a second section 998 settlement offer, the plaintiff’s recovery must be measured against the defendant’s first settlement offer for section 998 purposes. Thus, we reverse the judgment with directions to the trial…