The California Supreme Court's decision in Madrigal v. Hyundai Motor America clarifies the application of California Code of Civil Procedure Section 998 concerning cost-shifting. The Court ruled that if a plaintiff rejects a valid Section 998 settlement offer and subsequently settles for an amount less than the offer, they may still incur cost-shifting repercussions mandated by Section 998 even without going to trial. This ruling emphasizes the statute's power as a strategic instrument for defendants, particularly employers, to mitigate exposure to legal costs following a rejected offer.
In its decision on Madrigal v. Hyundai Motor America, the California Supreme Court confirmed that rejecting a Section 998 offer can still result in cost consequences even without a trial verdict.
The ruling strengthens Section 998 as a tool that employers can use strategically to mitigate legal expense risks, reinforcing the importance of early settlement offers in civil cases.
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