Earlier this month, employers across this state were able to breathe a sigh of relief due to a long anticipated California Supreme Court ruling. On July 6, 2023, the Court held that employers do not owe a duty of care to prevent the spread of COVID-19 to employees’ household members.
In Kuciemba v. Victory Woodwork, Inc., Robert Kuciemba was a worker who claimed he had contracted COVID-19 while at the workplace. As a result of the alleged exposure, Mr. Kuciemba alleged he subsequently transmitted COVID-19 to his wife, who was later hospitalized and placed on a ventilator. As a result, in late 2020, Mr. and Mrs. Kuciemba filed a lawsuit in state court against the employer. Mr. Kuciemba’s wife asserted claims for negligence, negligence, per se, premises liability, and public nuisance. Mr. Kuciemba asserted a claim for loss of consortium. The case was removed to federal district court where it was dismissed in May of 2021. The 9th U.S. Circuit Court of Appeals took the case on appeal before posing its questions to the California Supreme Court.
After nearly three years since the initial filing of the case, the Court determined that Mr. Kuciemba’s wife could not proceed with her claims. The Court reasoned, “although it is foreseeable that an employer’s negligence in permitting workplace spread of COVID-19 will cause members of employee’s household to contract the disease, recognizing a duty of care to nonemployees in this context would impose an intolerable burden on employers and society in contravention of public policy.” The Court focused its ruling on the potentially negative consequence of imposing such a duty on employers. The Court ultimately reasoned that the negative consequences would outweigh the benefits by creating an enormous burden, on not only employers, but the court system and the community.
Although the COVID-19 state of emergency in California has ended, the Court was also concerned with what its decision could mean in the future stating, “… if a precedent for duty is set in regard to COVID-19, the anticipated costs of prevention, and liability, might cause some essential service providers to shut down if a new pandemic hits.” That is, if employers who provide essential services knew they could be liable for employees’ household COVID-19 claims, they could be reluctant to provide those services in the future.
Employers should be relieved that this long awaited liability question has been put to rest for now. Employers should still adhere to and maintain all safety protocols mandated by state and local law.
The fourth appellate district published an opinion earlier this year in Smalley v. Subaru of America, Inc. (2022) 87 Cal.App.5th 450 that serves as an excellent refresher on requirements of the “998 Offer,” or a statutory offer to compromise pursuant to Code of Civil Procedure (“CCP”) §998.
In Smalley, set in the context of a Lemon Law action, Defendant Subaru made a 998 Offer for $35,001.00, together with attorneys’ fees and costs totaling either $10,000.00 or costs and reasonably incurred attorneys’ fees, in an amount to be determined by the Court. (Smalley, supra, 87 Cal.App.5th at 454.) Plaintiff objected that the offer was not reasonable and the case proceeded to trial. At trial, a jury found in favor of Plaintiff and awarded him a total judgment award of $27,555.74 – far short of the $35,001.00 offer. The trial court found Plaintiff had failed to beat the 998 at trial and that Subaru’s earlier 998 offer was reasonable. Plaintiff appealed the post-judgment order awarding Plaintiff pre-offer costs and Defendant post-offer costs on the grounds that the 998 was not reasonable in that it did not specify whether Plaintiff would be deemed the prevailing party for purposes of a motion for attorneys’ fees. The fourth district affirmed the trial court’s order and engaged in a helpful review of 998 requirements.
A statutory offer to compromise has three basic requirements:
(i) must be in writing
(ii) must contain the terms and conditions of the settlement
(iii) must include a provision allowing a plaintiff to indicate his or her acceptance. (Smalley, supra, 87Cal.App.5th at 455, citing Code of Civ. Proc., §998(b).)
The 998 offer must be unconditional, but may include non-monetary terms as well. (Smalley, supra, 87Cal.App.5th at 456.) The terms of the settlement must be sufficiently specific to allow the recipient to evaluate it and make a reasoned decision as to whether to accept the offer or the risk of not accepting. (Ibid.) In addition, the 998 offer must be sufficiently clear that the recipient of the offer can “clearly evaluate the worth of the extended offer.” (Id. citing McQuiddy v. Mercedes-Benz USA, LLC (2015) 233 Cal.App.4th 1036, 1050.) The Smalley court observed there is no rule that a 998 offer identify who is to be the prevailing party; further, a court may not impose additional requirements or limitations that do not appear on the face of the statute. (Id. citing Rowland v. Pacific Specialty Insurance Company (2013) 220 Cal.App.4th 280, 288.) For this reason, the failure to include costs and expenses in a 998 offer does not necessarily invalidate it. Nor does the law require a response by an offering party when the offeree raises objections about the offer.
Once it is determined the 998 offer was valid, the burden shifts to the offeree to demonstrate the offer to compromise is nonetheless unreasonable or was not made in good faith. In a situation where the actual judgment is more favorable to the offeror than the offer to compromise, it is prima facie evidence of the reasonableness of the offer. In considering reasonableness, the Smalley court looked at two questions:
1. Was it in the realm of reasonably possible results at trial?
2. Did the offeror know the offeree had sufficient information to assess the reasonableness of the offer?
In assessing these two questions, the Smalley court noted later discovery of facts known to the offeror at the time of the offer which shed additional light on the value of the case could potentially affect a court’s evaluation of the reasonableness of the offer. As no such facts were discovered in the case before the court, it was comfortable affirming the order.
The Smalley case is an excellent refresher on the use of these statutory offers and stands to reinforce the underlying takeaways surrounding how to make effective use of this powerful litigation tool. Always make offers to compromise clear and sufficiently detailed such that the offeree can make an adequate assessment of the value of the offer and the risk involved in not accepting it.
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