David B. Wasson

Wasson & Associates Inc.

Phone: (714) 368-0000

Email: dwasson@wassonlawyers.com

Pepperdine Univ SOL; Malibu CA

California Code of Civil Procedure section 998 was designed to encourage settlements through a cost-shifting mechanism that penalizes the unreasonable rejection of settlement offers. If a party rejects a section 998 offer and does not recover a more favorable judgment, the party rejecting the offer will be required to pay costs not normally recoverable. This is referred to as the carrot and the stick approach. The recovery of these costs is the carrot, and the payment of those costs is the stick. In determining whether the judgment is more favorable than the offer, the plaintiff's pre-offer costs are first added to the judgment. Martinez v. Eatlite One, Inc. (2018) 27 Cal.App.5th 1181, 1185. So, a $12,500 judgment becomes more favorable than the defendant's offer of $15,000when the plaintiff's pre-offer costs $2,516.32 are added to the judgment ($15,016.32). But by adding the plaintiff's pre-offer costs to the judgment before comparing it with the offer, courts have given plaintiffs an advantage over the defendants in formulating the offer because at the time this offer is formulated, the defendant does not know the amount of the plaintiff's pre-offer costs. These costs include all recoverable costs referred to and identified in sections 1032, and 1033.5. Although both parties are in the same position to predict the judgment, only the plaintiff knows the amount of these pre-offer costs. Without knowing the pre-offer costs, defendants must guess at this number in forming the offer. Since plaintiffs know this number, they are in a far better position to decide whether to accept it.

Section 998 does not expressly define the term judgment to include the plaintiff's pre-offer costs. In fact, this practice has arisen from the courts' desire to effectuate rather than merely encourage the parties to settle. By shifting to a policy of effectuating rather than merely encouraging settlements, the courts have treated defendants unfairly in ways that constitute a violation of their constitutional rights. 

The pivotal role of section 998 in encouraging settlements and the current debate over its implications

California public policy favors pretrial settlements. However, some cases do not settle because of obstacles unrelated to the merits of the action. Sometimes it is simply a recalcitrant party allowing passion to govern reason, and other times it is the unrealistic expectations of a party. But in virtually all cases that do not settle, the parties do not believe there are any adverse consequences to the unreasonable rejection of the section 998 offer, and so cases that should settle do not.

Section 998 provides that at least 10 days before trial either party "may serve an offer in writing upon any other party to the action to allow judgment to be taken ... in accordance with the terms and conditions stated at that time." (§ 998, subd. (b).) A section 998 offer must include the terms of the proposed judgment and "a provision that allows the accepting party to indicate acceptance of the offer by signing a statement that the offer is accepted." (Ibid.) An attorney is permitted to sign the acceptance of the offer and "[i]f the offer is accepted, the offer with proof of acceptance shall be filed and the clerk ... shall enter judgment accordingly." (§ 998, subd. (b)(1).) If the offer is not accepted within 30 days, it expires and cannot be accepted. (§ 998, subd. (b)(2).) Section 998 applies to virtually all civil cases awarding monetary damages and all other types of cases capable of a judgment reached after a settlement. (See § 998, subd. (g); Linthicum v. Butterfield (2009) 175 Cal.App.4th 259, 271 [the offer included a non-monetary recovery].)                         

In order to trigger this cost-shifting mechanism, the offer must be an amount more favorable than the judgment. (Jones v Dumrichob (1998) 63 Cal.App. 4th 1258, 1262-1263 [the offer must have "some reasonable prospect of acceptance"].)  The plaintiff's offer must be a number lower than the judgment, while the defendant's offer must be higher than the judgment. In formulating an offer, the party must make a reasonable prediction of the amount of the judgment. Since both parties have roughly the same information necessary to predict the verdict, they each stand in the same position in formulating an offer. If a party makes an offer that is more favorable than the judgment, and the other party rejects it, the party making the offer will be entitled to recover its costs, i.e., the carrot, and the other party will be required to pay those costs, i.e., the stick. This cost-shifting mechanism is intended to simply increase the costs of rejecting a section 998 offer thereby encouraging settlements.

               
On its face, the determination of whether the judgment is more favorable than the offer is a straightforward comparison of the amount of the offer and the judgment. (Mostafavi Law Group, APC v. Larry Rabineau, APC (2021) 61 Cal.App.5th 614, 620-621.)  However, in determining whether this cost-shifting mechanism is triggered, the courts have interpreted the term judgment to mean the final judgment, i.e., the judgment plus the plaintiff's costs. (Shain v. City of Albany (1980) 106 Cal.App.3d 294, 299 (Shain).)  By defining the judgment as the final judgment after costs have been added, the determination of whether section 998 has been triggered becomes a comparison of the offer and the judgment plus the plaintiff's costs. This is not a straightforward computation.

For purposes of section 998, the term judgment does not necessarily have to mean the final judgment after costs have been added. (Mesa Forest Products, Inc. v. St. Paul Mercury Ins. Co. (1999) 73 Cal. App. 4th 324, 331 quoting § 577 ["the final determination of the rights of the parties in an action or proceeding"] (Mesa Forest).) In fact, a plain reading of the term suggests it was intended to be the amount before the final judgment is entered. Section 998 expressly provides that after the offer is accepted or a verdict is reached, "the clerk ... shall enter judgment accordingly." (§ 998, subd.(b)(1); section 629 [clerks duties following a verdict]; Moody v McDonald (1854) 4 Cal. 297, 299; § 664 [entry of judgment]; Marshall v. Taylor (1893) 97 Cal. 422.)  After the judgment is entered by the clerk and notice is sent to the parties, the prevailing party is identified by the court and costs are awarded. (§ 1032, subd. (b).) If costs are awarded, the clerk shall then add those costs to the judgment thus becoming the final judgment. But before the final judgment is entered by the clerk and costs are awarded, pre-offer costs are not part of this judgment. For purposes of determining whether section 998 is triggered, the determination of the prevailing party is unnecessary. (§ 1032, subd. (a)(4).) Since the determination of the prevailing party is a prerequisite to the award of costs, the statute contemplates the term judgment to be the amount before costs have been added. The statute merely states that the offer should be compared with the judgment, not the final judgment. Thus, the determination of whether section 998 is triggered should be made before the final judgment is entered by the clerk, i.e., before costs have been added.

Nevertheless, some courts assert that a section 998 offer inclusive of costs must be compared with the amount of the judgment the plaintiff received after the trial, i.e., the final judgment. However, this analysis is incomplete. This final judgment includes both pre-offer and post-offer costs. In 1997, section 998 was amended to expressly exclude post-offer costs when comparing the offer with the judgment. (§ 998, subd. (c)(2)(A).) As a result, for purposes of triggering section 998, the term judgment is not defined as the final judgment, inclusive of all costs. Since post-offer costs were never intended to be included in the judgment, the term judgment was never intended to be defined as the final judgment. As a result, the term judgment means the amount awarded before the judgment is entered by the clerk, i.e., before costs have been added.

On its face, the statute commands a straightforward comparison between the judgment, before costs are added, and the offer. In fact, the extra steps necessary to decide the prevailing party and the amount of these costs is an unwarranted complication of an otherwise straightforward exercise.

The legislative policies supporting section 998 are not consistent with the judicial implementation of the cost-shifting mechanism

The Bennett formula rests on a weak judicial platform

Early cases did not mention pre-offer costs in the exercise of this cost-shifting mechanism. (Douthitt v. Finch (1890) 84 Cal. 214 (Douthitt); Robinett v. Brown (1914) 167 Cal. 735 (Robinett).) In Douthitt, the issue of whether pre-offer costs should be added to the judgment was never raised. The offer ($500) was higher than the judgment ($426) even with the addition of pre-offer costs and so the issue was never addressed by the high court. (Re Marriage of Cornejo (1996) 13 Cal.4^th 318, 388 [cases are not authority for propositions not considered]; Mercury Ins. Group v. Superior Court (1998) 19 Cal.4^th 332, 348.)

In Robinett, the defendant served a $60 offer and the judgment was $60. The Supreme Court found that the judgment was not more favorable than the offer. The Court did not add the plaintiff's pre-offer costs to the judgment before comparing it with the defendant's offer. Since we presume the plaintiff incurred pre-offer costs, i.e., filing fees, the plaintiff's pre-offer costs played no role in the Court's exercise of the cost-shifting mechanism. (Scott Co. of California v. Blount, Inc. (1999) 20 Cal.4th 1103, 1115. Pg. 736)

The first recorded mention of pre-offer costs as a factor in this procedure came from a gratuitous statement in Bennett v. Brown (1963) 212 Cal.App.2d 685, 687 (Bennett). Bennett arose from a personal injury action. The defendant served an offer for $600. The judgment was $500. The plaintiff's pre-offer costs were $99.45. Consequently, the judgment was not more favorable than the offer even if the pre-offer costs had been added. In fact, the court focused on whether the plaintiff's post-offer costs should be added to the judgment-- an issue which had a material effect on the outcome. The determination of whether pre-offer costs should be added to the judgment was not necessary for the ruling. Consequently, Bennett v. Brown is not persuasive authority for the issue of whether pre-offer costs should be added to the judgment. (In Re Marriage of Cornejo, supra, at p. 388.)

Nevertheless, the Bennett court stated that "when the cause of action seeking damages only and the verdict of the jury is less than the offer of settlement, plus costs incurred to that time (pre-offer costs), the judgment is not more favorable, and the rule of section 997 must be applied." This statement was not necessary for the decision and the court did not cite any supporting authorities. Therefore, it lacks significant persuasive weight. (In Re Marriage of Cornejo, supra, at p. 388.)  Nevertheless, courts began following this Bennett formula without much discussion. Bank of San Pedro, supra, 3 Cal.4th 797; Shain, supra, at 804; T.M Cobb Co. v. Superior Court (1984) 36 Cal.3d 273, 280; Doran v. North State Grocery, Inc. (2006) 137 Cal.App.4^th 484, 491; Bodell Construction Co. v. Trustees of CSU, (1998) 62 Cal.App.4^th 1508, 1524; Kelly v. Yee (1989) 213 Cal.App.3d 336 [statutory attorney's fee].

In Shain, the court identified the rule in Bennett as a formula (Bennett formula). (Shain, supra, at p. 299.) The court ruled that the plaintiff's pre-offer costs must be added to the judgment before determining whether section 998 was triggered. Before trial, the defendant served an offer for $100,000 inclusive of costs. The judgment was $100,000. The plaintiff incurred $1,204.71 in pre-offer costs. The trial court did not add the pre-offer costs to the judgment and therefore awarded the defendant costs. The First District Court of Appeal disagreed. 

The Court of Appeal relied on the holdings in Bennett, Brown, and Douthitt for support of its ruling to add the plaintiff's pre-offer costs to the judgment in determining whether section 998 was triggered. (Shain, supra, at pp. 278-279.) The court read Bennett's gratuitous statement as a formula for the determination of whether the judgment was more favorable than the offer. (Ibid.)  The court held that "by implication, the Bennett formula establishes that if the verdict plus plaintiff's pre-offer costs exceeded that offer, 'a more favorable offer' would have been obtained, permitting the plaintiff to recover all costs." (Ibid. [emphasis added].) The Shain court did not address the implications of its holding but merely adopted what the court believed to have been the holding in Bennett (the Bennett formula). While the Shain decision is authoritative, it is neither a compelling nor persuasive argument supporting the Bennett formula. 

The Legislature has not adopted or expressly acquiesced to the Bennett formula

Although section 998 has been amended, the Legislature has not expressed a definitive position regarding the treatment of pre-offer costs in this cost-shifting mechanism. (Heritage Engineering Construction, Inc. v. City of Industry (1998) 65 Cal.App.4th 1435, 1439-1443 (Heritage).) Nevertheless, after section 998 was amended in 1994 and 1997, the Heritage court reevaluated this issue in light of these amendments. The case arose from a dispute brought by a contractor (Heritage Engineering Const.) against the City of Riverside to recover additional expenses for work performed. (Heritage, supra, at p. 1437.)  The City served a section 998 offer for $65,000, inclusive of costs. Heritage rejected the offer, in part, because it had incurred over $100,000 in attorney's fees. (Id. at p. 1438.)  The jury awarded Heritage $48,000. The trial court held that the judgment ($48,000) was not more favorable than the City's offer ($65,000) and awarded the City its costs. The Heritage court disagreed.             

The court reviewed the various amendments to section 998 and concluded that, "Prior to 1994, Code of Civil Procedure section 998 provided no guidance as to the meaning of the phrase 'more favorable judgment.'" (Id. at pp. 1439-1440.) The court interpreted the 1994 amendment as a failed legislative experiment to exclude pre-offer costs and attorney's fees from the determination of whether section 998 was triggered. (Id. at pp. 1440-1441 n.5.) The amendment stated that "For purposes of this section, a plaintiff in a cause of action not based on tort shall not be deemed to have obtained a more favorable judgment unless the judgment obtained by the plaintiff, exclusive of attorney's fees and costs, exceeds the offer made by the defendant pursuant to this section." (Ibid.) Having determined that the 1994 amendment was subsequently deleted by the 1997 amendments, the court looked at section 998 subd. (c)(2)(A) which reads, "In determining whether the plaintiff obtains a more favorable judgment, the court or arbitrator shall exclude the postoffer costs." The court interpreted the Legislature's exclusion of the plaintiff's post-offer costs and its failure (silence) to specifically address the plaintiff's pre-offer costs--in light of the chaos created by the exclusion of pre-offer costs in the 1994 amendment-- as an affirmation of the rules adopted by the Courts of Appeal before these amendments were enacted. (Id. at p. 1442.) The court reviewed these prior decisions and concluded that "a defendant's offer which included costs was to be compared with the judgment the plaintiff received supplemented by the plaintiff's preoffer costs." (Id. at p. 1440 citing Rose v. Hertz Corp. (1985) 168 Cal.App.3d Supp. 6, 11; Shain, supra, at p. 299.) 

However, the fact that the Legislature had the opportunity to affirmatively address the role pre-offer costs should have in triggering section 998 and failed to do so should not be interpreted as an expression of the Legislature's intent. "[N]ot every silent is pregnant." (Burns v United States (1991) 501 U.S. 129, 136 quoting State of Illinois Dept. of Public Aid v. Schweiker ([CA7 1983] 707 F.2d. 773,775.). In light of its rather tattered legislative history, we should not read into the statute additional words to support a legislative intent that contradicts the very purpose and goal of the statute. Rather than reading support for a formula not expressly set forth in the statute, it is better that the courts wait for legislative direction if such direction is ultimately needed.

An examination of the Bennett Formula and its judicial rationale 

After Heritage, the Bennett formula was followed without much discussion. California courts interpreted the term judgment to mean the judgment after the plaintiff's pre-offer costs were added. (Heritage, supra, at pp. 1439-1443.) In explaining the rationale for the Bennett formula, the Heritage court asserted that "[a] defendant's offer of a lump sum 'including costs' is to compensate the plaintiff both for the underlying wrong and for the costs incurred to the date of the offer. Thus, this amount is to be compared to the amounts eventually awarded for both the underlying wrong and the preoffer costs." (Id. at p. 1440.) As more fully set forth below, this rationale is unpersuasive.

The rationale for the Bennett formula rests on a concern for the potential position some plaintiffs will face by a straightforward application of the statute. The Heritage court reasoned that since a section 998 offer inclusive of costs was intended to compensate a plaintiff "both for the underlying wrong and for the costs incurred," the offer should be compared with its equivalency, i.e., the judgment plus pre-offer costs. (Heritage, supra, at p. 1440; Martinez v. Eatlite One, Inc. 27 Cal.App.5th at p. 1185.)  For example, if the plaintiff's case was worth $12,500and the defendant served a section 998 offer for $15,000 after the plaintiff had incurred $10,000 in costs, by accepting this offer the plaintiff would only recover a net of $5,000 after the pre-offer costs were deducted from the settlement. It seemed distasteful to force plaintiffs to accept such an unfavorable settlement. As a result, the invocation of the Bennett formula guaranteed either the defendants' section 998 offer would be high enough to fully compensate the plaintiff for both the underlying damages ($12,500) and the costs in pursuing those claims ($10,000), or the cost-shifting mechanism of the statute would not be triggered and the penalties designed to encourage settlements avoided. In this example, the plaintiff's pre-offer costs ($10,000) when added to the judgment ($12,500) would be more favorable than the $15,000 offer. As a result, section 998 would not be triggered. In this way, the Bennett formula allows plaintiffs to reject offers that do not fully compensate them for bringing the action against the defendant. Additionally, it forces defendants to make offers more likely to be accepted by the plaintiffs thereby increasing the likelihood of a settlement between the parties. In this way, the Bennett formula serves to effectuate rather than simply encourage settlements.

But this rationale misses the mark. It does not accurately reflect the dynamics of the settlement negotiations between the parties. A defendant's section 998 offer is not intended to compensate a plaintiff for the underlying wrong. In fact, these offers are made with the understanding that the defendant expressly denies any wrongful conduct. (Goldstein v. Bank of San Pedro (1994) 27 Cal.App.4th 899, 906-907; § 998, subd. (c) ["Any judgment entered pursuant to this section shall be deemed to be a compromise settlement"].) Additionally, the amount of the offer is not intended to compensate a plaintiff for the costs incurred in pursuing the claim. The defendants' offer is intended to be a settlement and compromise of the claim. In fact, in many cases, at the time the defendant serves this offer, they believe they will be the prevailing party after trial, i.e., they will receive a defense verdict. Therefore, the defendants intend the amount of the offer to be a number just high enough to overcome a reasonable judgment and not to fully or adequately compensate the plaintiffs.

There is nothing in the term "a more favorable judgment" that expresses a legislative desire to ensure that settlement offers peculiarly benefit the plaintiffs. (Mesa Forest, supra, at pp. 331-332.)  In fact, the purpose of the statute is to merely encourage settlements, not effectuate fair or equitable settlements. It is well-recognized that a settlement and compromise contemplates the acceptance by the plaintiff of an amount less than their expected recovery at trial, i.e., full compensation.   

But the Bennett formula has allowed plaintiffs to avoid the penalties associated with the rejection of a reasonable settlement offer that does not fully compensate them for the alleged wrong committed and the costs to pursue the case. In this way, the formula serves as a disincentive to accepting section 998 offers since at some point during the litigation, the litigation costs in pursuing the action will far exceed the likely judgment. (See, Heritage, supra, at p. 1438 [Heritage incurred $100,000 in fees].)  As a result, cases that should settle, will not.

The cost-shifting mechanism under the Bennett formula is unfair to defendants and constitutes a violation of their constitutional rights

The Bennett formula gives plaintiffs an advantage over the defendants. By design, it is intended to compel the defendant to make an offer in an amount larger than both the plaintiff's pre-offer costs and the anticipated judgment. (Heritage, supra, at p. 1440.) While both parties are in roughly the same position to evaluate the judgment, the defendant does not know the amount of the plaintiff's costs. (Glassman v. Safeco Ins. Co. of America (2023) 90 Cal.App.5th 1281, 1313-1314; Barella v Exchange Bank (2000) 84 Cal.App.4th 793, 795, 800.) At the time the defendant formulates the section 998 offer, the defendant's offer is a prediction of the anticipated judgment. In order to entice the plaintiff to accept the offer, the offer must be higher than this judgment. Both the defendant and plaintiff have equal access to information necessary to make this initial prediction. If both parties accurately predict the amount of the judgment, the offer should be enticing enough to accept. Under a straightforward application of section 998, the cost-shifting mechanism gives the plaintiff added incentive to accept the offer by increasing the risks of rejection. By its very nature, if the offer was higher than the judgment, the offer was reasonable and should have been accepted. 

However, by applying the Bennett formula, the defendant's offer must also include the costs the plaintiff has incurred. But the defendant does not have this information. The defendant must literally guess the amount of these costs. In the first example above, the difference between the judgment plus costs ($15,016.55) and the offer ($15,000) was $16.55. There was no reasonable way the defendant could have guessed the amount of the plaintiff's pre-offer costs to within $20.00. In this way, the plaintiff had the advantage.

Furthermore, the plaintiff has no incentive to disclose this number. If the defendant overestimates these costs and makes an offer much higher than the judgment plus these costs, the plaintiff receives a windfall. If the defendant underestimates the number, the plaintiff escapes the penalties associated with the cost-shifting mechanism of section 998. Since the plaintiff knows the amount of these costs, the plaintiffs are in a better position to evaluate these offers than the defendants are in formulating them.

Hersey v. Volava (2019) 38 Cal.App. 5th 792 (Hersey) is an example of the struggles defendants have in making settlement offers under the Bennett formula. Hersey arose from a landlord-tenant dispute. The defendant served a section 998 offer for $10,000inclusive of costs. Although the defendant accurately predicted that the judgment would be below $10,000 (the verdict was $7,424.00), the defendant did not know the amount of the plaintiff's pre-offer costs ($4,000) and therefore could not have reasonably added these costs to its offer sufficient to exceed the judgment plus costs. Even worse, if the defendant had made the offer exclusive of costs, and the plaintiff accepted the offer, the ultimate pretrial judgment would have been $14,000., more than double the value of the case (judgment), and far more than the defendant's reasonable expectations of its resolution.

To further illustrate the defendant's frustration, after the first section 998 offer was served, the trial date was continued. The defendant served a second section 998 offer for $20,001 in an effort to account for the plaintiff's pre-offer costs. However, by this time, the plaintiff's pre-offer costs had risen to over $12,000. As a result, that same verdict of $7,424was more favorable than the second section 998 offer ($20,001) after the plaintiff's pre-offer costs were added. The application of the Bennett formula allowed the plaintiff to capitalize on its rejection of these section 998 offers.

This case demonstrates how the Bennett formula defeats the purpose of encouraging settlements. In Hersey, the recalcitrant plaintiff had two opportunities to settle the case in amounts that exceeded the judgment. The statute's cost-shifting mechanism is designed to encourage these types of parties to accept reasonable settlement offers. The application of the Bennett formula allowed the plaintiff to thwart two reasonable settlement offers without any consequences. 

The disadvantages faced by defendants due to the asymmetrical treatment created by the Bennett formula are not easily avoided. There are formidable obstacles preventing the defendants from discovering the amount of the plaintiff's pre-offer costs. The disclosure of pre-offer costs during litigation is marred by issues of attorney-client confidentiality and the potential for manipulation. For purposes of section 998, pre-offer costs consist of ordinary litigation costs, i.e., filing fees, fees for issuing subpoenas, etc. (§ 1033.5, subd. (a) (10)(A)-(C).) These costs also include attorney's fees. (§ 998, subd. (e).) The disclosure of ordinary costs may invade the attorney-client work product privilege by disclosing the litigation strategy of an attorney. For example, the costs of the attorney's failed efforts to serve a subpoena of a peace officer is recoverable. (Fay v. Fay (1913) 165 Cal. 469.)  The plaintiff's failed effort to seek the deposition of a peace officer may reveal the attorney's interest in a witness, the disclosure of which would only have been revealed by the disclosure of the costs of the effort. 

Additionally, while the defendants must wait for the plaintiff's disclosure of the amount of the costs incurred at the time the offer is formulated, plaintiffs are free to formulate their own section 998 offers knowing the precise amount of their pre-offer costs. Unlike the position the plaintiff takes when evaluating the defendant's offer, the defendant must guess the amount of the costs incurred by the plaintiff at the time its offer is served. Unless plaintiffs volunteer the amount of their costs, defendants are at a distinct disadvantage when forced to evaluate the plaintiff's section 998 offer.

It is inherently unfair to require defendants to guess the amount of the plaintiff's pre-offer costs before formulating a section 998 offer because it creates the asymmetrical treatment of all defendants and all plaintiffs. The statute should not be applied to favor the plaintiffs over the defendants.

Section 998 was enacted to encourage settlements by increasing the costs of rejecting a reasonable settlement offer by awarding the offeror costs not otherwise recoverable. Although the cost-shifting mechanism was intended to be a straightforward comparison of the section 998 offer with the judgment, California courts have added the plaintiff's pre-offer costs to the judgment making this comparison far more complicated than necessary. The rationale for straying away from the clear language of the statute rests on a shift in the court's interpretation of the goals of section 998 from encouraging settlements to effectuating them. It was not enough to simply increase the risk of rejecting a reasonable settlement offer, the courts sought to create circumstances that maximize the prospects of settlement in terms favorable to the plaintiffs. As a result, the courts interpreted the term judgment to include the plaintiff's pre-offer costs, effectively increasing the threshold amount of the defendant's offer necessary to become more favorable than the judgment.

But this otherwise altruistic measure to effectuate settlements has actually frustrated the original policy of encouraging settlements. The Bennett formula has added uncertainty to the defendant's effort to formulate an offer. In fact, as the plaintiff's costs increase during litigation, the amount of these costs often climb to levels that far exceed the reasonable settlement of the case thereby rendering section 998 an ineffective tool for encouraging settlements. The formula imposes unreasonable requirements on the enforcement of section 998 offers that disproportionately affect defendants. This asymmetry is unfair to defendants and violates the defendant's due process rights to fair and equal treatment under the law.

This asymmetrical treatment is a judicial not a legislative creation and thus the solution rests firmly in the hands of the courts. The Bennett formula arose from dicta articulated in a decision directed at a different issue. Subsequent courts followed the formula without much discussion until 1998 when the Heritage Court interpreted the Legislature's failure to expressly exclude pre-offer costs as an affirmation of the formula where no express or implicit approval was intended.

At this point, the high court should take action to remedy the current defects in the cost-shifting mechanism of section 998 by overruling Shain v. City of Albany. The Court's disapproval of the Bennett formula will return section 998 to a straightforward computation. Section 998 was intended to encourage not effectuate settlements. The Court should return to section 998's original policy and its ultimate goal.