Why Every Business Owner Facing Employment Litigation Should Understand Section 998

A Costly Lesson from Simers v. Los Angeles Times

If you're a business owner defending against an employment discrimination claim in California, there's a recent Court of Appeal decision worth knowing about: Simers v. Los Angeles Times Communications LLC (2024) 104 Cal.App.5th 940. It's not a case about whether discrimination occurred — the employer lost on liability years earlier. It's a case about the cost of litigating past the point where a smart settlement offer was on the table. And it shows both the power and the limits of one of the most underused tools in an employer's defense arsenal: the Section 998 offer to compromise.

The Backstory, Briefly

T.J. Simers, a well-known LA Times columnist, was demoted in 2013 and sued the Times for age and disability discrimination and constructive termination. What followed was nine years of litigation and three separate jury trials — including a second trial that produced a staggering $15.4 million verdict, later thrown out because of attorney misconduct during closing argument.

By the time a third trial rolled around, the Times made a formal settlement offer under California Code of Civil Procedure section 998: $1.25 million. Simers turned it down. The third jury came back with a verdict of... $1.25 million. Exactly the offer amount.

The Payoff for the Employer

Because Simers didn't beat the Times' offer, section 998 kicked in and cut off his ability to recover any attorney fees or costs incurred after the offer date. That's the mechanism every employer should understand:

• Section 998 offers create a real financial consequence for rejecting a reasonable settlement.

• If the plaintiff doesn't do better at trial than the offer, they lose their right to shift post-offer legal costs onto the defendant — even if they ultimately win the case.

• The statute is unambiguous on this point: courts must exclude post-offer costs when deciding whether the plaintiff "beat" the offer. Plaintiffs can't retroactively pad their recovery with fees generated after they should have taken the deal.

In Simers, this meant the plaintiff's attorneys — who had asked the jury for $30 to $50 million — ended up bearing significant financial risk for pushing past a settlement number that turned out to be exactly right.

What This Means for Your Business

1. A well-calibrated 998 offer is a genuine cost-control tool. The Times didn't need to win the case to benefit from section 998. It needed to make an offer close to what the case was actually worth. When the jury independently landed on the same figure, the statute did its job — shifting significant litigation risk onto the plaintiff's side for the remainder of the case.

2. Timing and valuation matter enormously. An offer that's too low won't create leverage; an offer that's too high gives away more than necessary. The trial court in Simers later observed that $1.25 million was "a sensible and fair result that reflected the approximate value of the case" — suggesting the Times had accurately sized up its exposure before making the offer.

3. Section 998 doesn't erase fee exposure for prior stages of litigation. It's worth noting what section 998 didn't do here. The Times separately argued that Simers shouldn't recover fees for the second trial (nullified by his own attorney's misconduct) or for an appeal he lost. The Court of Appeal rejected both arguments, reinforcing that FEHA plaintiffs are generally entitled to fees for all reasonably-spent time in litigation they ultimately win — unless that time involved bad faith, incompetence, or entirely unrelated claims. Section 998 is a powerful tool, but it operates on a specific slice of the timeline (post-offer), not the whole case.

4. Employment litigation risk compounds — plan your offers accordingly. Multiple trials, appeals, and years of litigation can generate legal fees far exceeding the underlying damages. A properly timed 998 offer, made when you have a realistic read on case value, can meaningfully limit your downside even in cases you ultimately lose on liability.

The Bottom Line

Simers is a reminder that in California employment litigation, winning the fee fight is often as consequential as winning the merits. Business owners should work closely with defense counsel to identify the right moment — and the right number — for a section 998 offer. Get it right, and even a losing case on liability can come with a meaningfully capped bill.