Oakes v. Progressive Transportation Services, Inc. (2021) 71 Cal.App.5th 486

Following a fender-bender, plaintiff was treated for minor injuries covered by workers’ compensation insurance.  Plaintiff nevertheless sued the other driver’s employer (GMSR’s client) for millions of dollars, and rejected a Code of Civil Procedure section 998 settlement offer.  The jury awarded plaintiff less than the offer, so the court awarded GMSR’s client its expert costs.  The defense cost award exceeded the verdict.  Still, citing a workers’ compensation statute, plaintiff argued that he was entitled to pay his own attorney’s fees and costs out of the judgment first, before the defendants’ costs award completely offset the judgment.

In a partially published decision tackling a first-impression issue, the Court of Appeal held that section 998’s penalty provision allowing a defendant to offset its costs against the jury’s verdict applies before the workers’ compensation statute.  The court agreed with GMSR that only after section 998’s penalty applies can a plaintiff use his resulting net judgment to pay his attorney’s fees and litigation costs—and where a verdict is too small to pay both, the Labor Code gives way.  The court affirmed judgment for GMSR’s client.

Court of Appeal Opinion – View Document