Ever wonder if you can recover litigation costs in employment cases? On August 15, 2017, in Sviridov v. City of San Diego, the court made it clearer for employers.

Two years ago, in Williams v. Chino Valley Independent Fire Dist., the Supreme Court explained that prevailing employers in employment cases can generally only recover costs if the employee’s action was objectively without foundation – an extraordinarily high standard. However, Williams was not asked to consider and did not answer the question of whether costs may properly be awarded in a FEHA action pursuant to a Section 998 offer. That issue was before the court in Sviridov.

Sviridov holds that a Section 998 offer creates economic incentives for both parties to settle rather than try lawsuits. Litigation costs are awarded to an employer if a plaintiff is not awarded damages more than the Section 998 offer, even if the case objectively had foundation.

What does this mean for you? Majority of employment cases are brought under FEHA. In these cases, it can be beneficial for employers to make reasonable Section 998 offers during litigation. Contact Stokes Wagner if you have any questions.

For more legal updates, check out our update for September 2017!

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