Alternative-Choice Section 998 Offers: Validity Requires Clear Structure and at Least One Valuable, Certain Alternative

1. Introduction

In Gorobets v. Jaguar Land Rover North America, LLC (Cal. Aug. 6, 2026) S287946, the California Supreme Court addressed whether a single statutory settlement offer under Code of Civil Procedure section 998 may lawfully present the offeree with two independent, alternative sets of settlement terms—and allow acceptance by choosing between them—without becoming too uncertain to trigger section 998’s cost-shifting consequences.

The dispute arose from a Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq.) action brought by plaintiff Vadim Gorobets against manufacturer Jaguar Land Rover North America, LLC. After plaintiff rejected Jaguar’s section 998 offer, a jury awarded plaintiff less than the offer’s lump-sum alternative. The trial court imposed section 998’s cost-shifting penalty. The Court of Appeal affirmed the award, but on the rationale that “simultaneous” multi-term offers are categorically impermissible, then salvaged cost shifting by treating the lump-sum alternative as independently valid.

The Supreme Court affirmed the cost outcome but rejected the Court of Appeal’s categorical rule, establishing a statewide framework for evaluating alternative-choice 998 offers.

2. Summary of the Opinion

The Court held that section 998 does not categorically prohibit an offer that presents two alternative sets of terms and permits acceptance by selecting one. Such an offer can be valid if:

  • (1) Structural clarity: the offer clearly presents the alternatives and requires acceptance by choosing between mutually exclusive sets of terms; and
  • (2) Certainty/valuability: at least one of the alternative sets of terms is sufficiently certain to permit accurate valuation when made.

If validity is established, the cost-shifting comparison is made against the highest-value valid alternative: section 998 cost shifting is triggered only if the offeree fails to obtain a result more favorable than that highest-value valid alternative.

The Court further adopted the lower courts’ “well-established test” requiring section 998 terms to be sufficiently certain/specific to allow both the offeree and the court to assess value at the time of the offer, citing Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692 and Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720.

3. Analysis

3.1. Precedents Cited

Cost statutes and the section 998 “carrot and stick”

  • Madrigal v. Hyundai Motor America (2025) 17 Cal.5th 592: The Court relied on Madrigal for the proposition that costs are statutory and section 998 is a statutory modification of section 1032’s prevailing-party scheme. Madrigal also supplied interpretive discipline: the Court reads section 998 according to its text and purpose, even where that limits settlement “flexibility.” Gorobets distinguished Madrigal’s context (postrejection pretrial settlement and costs) from the present question (form and certainty of a 998 offer).
  • Bank of San Pedro v. Superior Court (1992) 3 Cal.4th 797: Cited for the policy premise that section 998 encourages settlement through strong incentives and penalties, reinforcing that valuation certainty is essential for the incentive structure to operate.

Certainty/specificity test for 998 offers

  • Valentino v. Elliott Sav-On Gas, Inc. (1988) 201 Cal.App.3d 692 and Fassberg Construction Co. v. Housing Authority of City of Los Angeles (2007) 152 Cal.App.4th 720: The Court adopted the lower-court test that an offer must be certain enough to allow valuation as of the time made and without hindsight, both by the offeree deciding whether to accept and by the court later comparing outcomes. This adoption elevates the Valentino/Fassberg approach to controlling Supreme Court doctrine.
  • Berg v. Darden (2004) 120 Cal.App.4th 721: Used to articulate the offeree-side function of certainty: enabling a reasoned decision in light of the risk of paying the opponent’s postoffer costs. The Court also cited Berg for the broader principle that section 998 permits flexibility to craft settlements suited to a case.
  • Khosravan v. Chevron Corp. (2021) 66 Cal.App.5th 288: Cited for the limitation that courts should not undertake “extraordinary efforts” to value an offer whose terms make valuation exceedingly difficult or impossible. Gorobets used this principle as a backstop against overly complex multi-term offers.

Multiple offers, contract principles, and when they apply in section 998

  • Martinez v. Brownco Construction Co. (2013) 56 Cal.4th 1014: Confirmed that section 998 permits subsequent offers after rejection; Gorobets extended the settlement-friendly logic to allow multiple alternatives presented at once, so long as clarity and valuability are preserved.
  • T. M. Cobb Co. v. Superior Court (1984) 36 Cal.3d 273: Provided the governing methodology: section 998 does not address every aspect of offer/acceptance; courts may consult general contract principles where they do not conflict with the statute or defeat its purpose. Gorobets mirrored Cobb’s settlement-enhancing orientation, using contract doctrine to validate alternative-choice structures.
  • Poster v. Southern Cal. Rapid Transit Dist. (1990) 52 Cal.3d 266 and One Star, Inc. v. STAAR Surgical Co. (2009) 179 Cal.App.4th 1082: Cited as examples where courts declined to import contract principles that would inhibit settlement, or crafted section-998-specific rules to encourage offers. Gorobets positioned its approach as consistent with that pro-settlement tradition.
  • Palmer v. Schindler Elevator Corp. (2003) 108 Cal.App.4th 154: Cited as another instance applying general contract rules in the section 998 context.

Alternative-choice offers as a standard contract form

  • H.S. Crocker Co. v. McFaddin (1957) 148 Cal.App.2d 639: The central contract-law anchor: “An offer may contain a choice of terms” and acceptance of one alternate proposition forms a binding contract. Gorobets imported this principle to section 998, rejecting the Court of Appeal’s “two simultaneous offers” characterization.
  • Keller v. Ybarru (1853) 3 Cal. 147 and Hylton Flour Mills v. Bowen (1933) 128 Cal.App. 711: Cited to distinguish a true alternative-choice offer from an indefinite “menu” offer requiring the offeree to supply missing terms—an approach that may be acceptable in general contracting but is problematic for section 998 valuation.

Judgment entry, postjudgment disputes, and interpretation

  • Bias v. Wright (2002) 103 Cal.App.4th 811: Supported the point that the clerk/judge’s entry of judgment after acceptance is ministerial; courts need not adjudicate potential disputes about terms before entering judgment.
  • Roden v. Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620 and Lanyi v. Goldblum (1986) 177 Cal.App.3d 181: Used to explain that once a section 998 offer is accepted and judgment entered, subsequent disputes are handled through ordinary contract interpretation principles.
  • Ignacio v. Caracciolo (2016) 2 Cal.App.5th 81: Cited for the incentive effect of contra proferentem: ambiguous settlement language is ordinarily construed against the drafter, encouraging clarity in 998 drafting.

Song-Beverly context

  • Kirzhner v. Mercedes-Benz USA, LLC (2020) 9 Cal.5th 966: Cited for Song-Beverly’s repurchase/replace obligation and consumer choice structure; Gorobets used this to illustrate why alternative-choice settlement structures can fit statutory remedial schemes, while emphasizing the holding is not limited to Song-Beverly cases.

Good faith/unconditionality and policing gamesmanship (not decided, but relevant guardrails)

  • Barella v. Exchange Bank (2000) 84 Cal.App.4th 793: Referenced for the notion (in lower courts) that a valid 998 offer must be unconditional (the Court did not apply it here because it was not raised).
  • Licudine v. Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918: Cited for the two-part good-faith inquiry (reasonable range; sufficient information for evaluation), identified as an existing safeguard though not at issue in Gorobets.
  • Barba v. Perez (2008) 166 Cal.App.4th 444, Lewis v. Ukran (2019) 36 Cal.App.5th 886, and Whatley-Miller v. Cooper (2013) 212 Cal.App.4th 1103: Cited for the proposition that an offeree may seek extensions or information needed to evaluate an offer; refusal may evidence lack of good faith.

Legislative history/judicial notice discipline

  • Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26 and Myers v. Philip Morris Companies, Inc. (2002) 28 Cal.4th 828: Cited to reject reliance on individual legislators’ postpassage statements and to reinforce careful use of legislative history.

3.2. Legal Reasoning

(a) The statutory text does not bar alternative-choice offers

The Court began with section 998’s text and found no express prohibition on a single offer presenting alternative terms. Plaintiff’s argument that “a statement of the offer” implies only one set of terms failed in light of Code Civ. Proc., § 17, subd. (a) (singular includes plural), and because nothing in section 998 requires an offer to be “simple.”

The Court also rejected the claim that section 998, subd. (b)(1)’s “enter judgment accordingly” language imposes a simplicity requirement. Entry of judgment on an accepted offer is ministerial; interpretive disputes, if any, arise later and are resolved by contract principles.

(b) Alternative-choice offers are a recognized contract form and fit section 998’s purpose

Applying T. M. Cobb Co. v. Superior Court’s framework, the Court imported the contract principle from H.S. Crocker Co. v. McFaddin that an offer may present a choice of terms and acceptance of one creates a contract. Doing so, the Court concluded Jaguar made one offer with two mutually exclusive alternatives, not “two simultaneous offers.” That characterization mattered because the Court of Appeal’s uncertainty logic depended on treating the proposal as two co-equal offers whose “operative” status could not be selected by timing.

(c) The Court’s operational test: structure first, then certainty, then comparison to the highest-value valid alternative

The Court articulated a practical approach for trial courts ruling on cost-shifting requests grounded in alternative-choice 998 offers:

  1. Structural clarity inquiry: the offer must delineate the terms attributable to each alternative, make them mutually exclusive, and clearly state how acceptance is conveyed (i.e., selecting one alternative).
  2. Certainty/valuation inquiry: the court evaluates whether each alternative is sufficiently certain to permit valuation at the time of the offer (adopting the Valentino/Fassberg test). The offeror bears the burden of proving sufficient certainty.
  3. Trigger inquiry (comparison): if at least one alternative is valid and valuable, section 998’s “more favorable” comparison is made against the highest-value valid alternative. If the offeree fails to beat that benchmark, cost shifting is permitted.

This resolves the Court of Appeal’s “$100,000 vs $200,000” hypothetical by reframing the statutory question: the relevant inquiry is not whether the offeror “did better or worse,” but whether the offeree achieved a result more favorable than the best valid deal it had the chance to accept.

(d) Concerns about gamesmanship and burden are answered by existing doctrines and the Court’s limiting requirements

The Court rejected categorical invalidation as overbroad. It acknowledged the risk of confusing offers but treated it as manageable through: (1) the structural clarity requirement; (2) the certainty/valuability requirement; (3) the offeror’s burden of proof; (4) the existing good-faith doctrine (e.g., Licudine v. Cedars-Sinai Medical Center); and (5) practical tools like requests for extension or information (e.g., Barba v. Perez).

Notably, the Court limited the judicial workload: once the trial court identifies at least one valid alternative and compares the judgment to the highest-value valid alternative, it need not value every other alternative in the offer.

3.3. Impact

Doctrinal impact on section 998 practice

  • Statewide recognition of alternative-choice 998 offers: Trial courts may no longer deem such offers invalid solely because they offer alternative terms.
  • Clarified comparison rule: Cost shifting turns on whether the offeree beat the highest-value valid alternative, not on any court-created “operative offer” timing fiction.
  • Certainty doctrine elevated: By adopting the Valentino/Fassberg certainty framework, the Court strengthened predictability and anchored valuation analysis in Supreme Court authority.

Practical impact on drafting and litigation behavior

  • Offerors are incentivized to include at least one clean, readily valued alternative (often a lump sum) if they want reliable cost-shifting leverage.
  • Offerees must evaluate alternative packages with the understanding that the relevant benchmark is the best valid deal on the table.
  • In Song-Beverly cases, the decision is likely to increase use of offers that mirror the statute’s remedy pathways (restitution-style terms alongside a lump sum), while putting pressure on manufacturers to draft reimbursement frameworks that are objectively valuably certain.

4. Complex Concepts Simplified

  • “Prevailing party” costs (Code Civ. Proc., § 1032): Normally, the party who wins money or obtains dismissal recovers allowable litigation costs.
  • Section 998 offer and “cost shifting”: A statutory settlement offer that can penalize a party who rejects it and later fails to do better at trial—typically by losing postoffer costs and paying the opponent’s postoffer costs.
  • “Sufficiently certain” offer (Valentino/Fassberg): The offer must be clear enough to value when made—so the offeree can decide intelligently, and the court can later compare it to the judgment without guesswork.
  • Alternative-choice offer: One offer that allows acceptance in one of two ways (choose A or choose B), but does not allow mixing terms.
  • Song-Beverly “mileage use offset” (Civ. Code, § 1793.2, subd. (d)(2)(C)): A deduction manufacturers may take for the consumer’s use of the vehicle before repurchase; Jaguar offered to waive it in one alternative.

5. Conclusion

Gorobets v. Jaguar Land Rover North America, LLC establishes that section 998 permits a single alternative-choice offer—so long as the offer is structurally clear and at least one alternative is sufficiently certain to value at the time it is made. If these conditions are met, courts measure section 998’s cost-shifting trigger against the highest-value valid alternative.

The decision rejects categorical invalidation, aligns section 998 practice with settled contract principles (without sacrificing the statute’s demand for clarity), and reinforces section 998’s central function: encouraging early, realistic settlements by attaching predictable cost consequences to rejecting evaluable offers.