Judge: David A. Rosen, Case: 20STCV18473, Date: 2023-08-03 Tentative Ruling

Case Number: 20STCV18473    Hearing Date: August 3, 2023    Dept: E

8/2/2023

20STCV18473 Hsu v. Tesla

Tentative ruling on Plaintiff’s Motion to Strike Defendant’s CCP 998 offer.

Plaintiff moves to strike defendant Tesla’s 998 settlement offer in this matter.

The court in Glassman v. Safeco insurance company of America (2023) 90 Cal. App. 5th 1281, 1313-1314, provides a useful explanation of CCP section 998 (“998”) and its application.

Intended by the legislature as a powerful method of promoting litigation settlements, CCP section 998 was promulgated to provide a strong financial disincentive to either party to a case to proceed to trial and risk failing to achieve a better result, generally at trial, than the party would have obtained by accepting their opponent’s 998 settlement offer.  As the Glassman opinion notes, 998 is structured as a classic carrot and stick procedure; the offeree faces the stick of having to pay significantly enhanced litigation costs of its opponent if the offeree does not beat the offer at trial, while the carrot, for both parties, encourages reasonable settlement offers so that the offeror has a chance to obtain or recover more of its costs if the case doesn't settle and the offeror does better at trial than the offer, while, to the offeree, 998 purports to encourage the other party to make a reasonable settlement offer.

Of course, for 998’s cost-shifting provisions to apply, the Court must determine that the 998 was procedurally valid in that it complied with the code section’s requirements, and, if so, the Court must then determine if the offer was reasonable and made in good faith. As the Glassman opinion also recounts, it is the offering party’s burden to establish the validity of its 998 offer. Once the offeror does so, the burden then shifts to the offeree to demonstrate that the offer was unreasonable or not made in good faith.

Plaintiff argues that Tesla’s 998 offer, served on February 13, 2023, was not procedurally valid.  While Tesla’s 998 was properly and timely (more than 10 days before trial) served on Plaintiff, and sufficiently specific in its terms to permit Plaintiff to have meaningfully evaluated the offer and make a reasonable decision as to whether accept it, or reject it and bear the risk achieving a lesser result at trial (than the offer) and thus have to pay a likely substantially increased amount Tesla 's litigation costs and expenses,  Plaintiff contests the procedural validity of Tesla’s 998 on the basis that it “was improperly subject to Tesla ‘being provided with a release of all claims executed by plaintiff….’ [See Exhibit 15 [to Plaintiff’s moving papers], P.2, paragr. 4].”  Page 2: lines 13-15 of Plaintiff’s moving papers.

Tesla’s opposition to this Motion details the procedural propriety of its 998. The Court concludes that Tesla 's 998 offer was procedurally valid. Plaintiff offers no explanation for basing its argument that the offer was not valid on the claim that the 998 was subject to Tesla being provided with a release of all claims executed by plaintiff. The Court is unaware of any claims executed by this plaintiff against Tesla aside from this lawsuit. Thus, the only reasonable interpretation of this 998 was that Tesla was making the offer for a complete release of this lawsuit and the claims within it.

Plaintiff next argues that Tesla 's 998 offer of $10,000.00 and a waiver of costs was not reasonable and was not made in good faith.

That the actual judgment or verdict was clearly more favorable to offeror Tesla than was the 998 offer that Plaintiff rejected is indeed prima facie evidence that Tesla 's 998 offer was reasonable. Adams v. Ford Motor Co. (2d dist.-2011) 199 Cal. App. 4^th 1475, 1484.  Nonetheless, the offeree Plaintiff may still carry its burden of showing that the offer was unreasonable or not made in good faith by showing, by a preponderance of the evidence, that the 998 offer, at the time it was made, did not carry a reasonable prospect of acceptance by the offeree/Plaintiff.  Adams, supra, 199 Cal. App. 4^th at 1483-1484. The inquiry includes inter alia whether the offer was within the range of reasonably possible results at trial, considering all of the information Tesla knew or reasonably should have known at the time the offer was made. Further, did the offeror know that the offeree had sufficient information, based upon what the offeree knew or reasonably should have known, to assess whether the offer was a reasonable one such that the offeree had a fair opportunity to intelligently evaluate the offer?  Whether a 998 offer is reasonable must be determined by considering the circumstances at the time the offer was made. Elrod v. Oregon Cummins Diesel, Inc. (1987) 195 Cal. App. 3rd 692, 699.

Ultimately, the issue of whether a 998 offer was reasonable or made in good faith is subject to the sound discretion of the trial court, reviewed under an abuse of discretion standard. Elrod, supra, 195 Cal. App. 3d at 700, citing, Tech-Bilt. Inc. v. Woodward-Clyde Associates (1985) 38 Cal. 3d 488, 502; Covert v. FCA USA, LLC (2d dist.-2022) 73 Cal. App. 5^th 821, 834.

Tesla's 998 was served on Plaintiff when this lawsuit was nearly 3 years old, and within a month or so of commencement of trial. Both parties knew at that point at least 2 important sets of facts, only one of which plaintiff argues in support of its claim that the 998 was not reasonable. Plaintiff argues that the 998 was not reasonable because both parties knew by February 13, 2023, that each party had spent many hundreds of hours in discovery and in preparing the matter for trial, as well as many thousands of dollars in litigation costs.  Plaintiff argues, and the Court finds that Tesla knew when it made the 998 that Plaintiff had already spent many times the $10,000.00 offered by Tesla in its 998.  This fact alone makes the 998, even including the waiver of costs as it did, unreasonable as, based upon these facts, at the time the offer was made, it did not carry any reasonable prospect of acceptance by Plaintiff. Thus, the 998 was not made in furtherance of the purpose of 998 offers as discussed above.  Instead, the offer was made, with nearly certain knowledge that it could not and would not be acceptable to Plaintiff, merely to put Tesla in a position to seek Plaintiff’s reimbursement of Tesla’s six-figure expert costs, inter alia, by operation of 998 if Tesla defensed the case at trial.

It is thoroughly unreasonable to conclude that Tesla thought there was a possibility that Plaintiff would obtain a verdict in her favor, but of less than $10,000.00. This leads to the second reason that the 998 offer was unreasonable and, quite possibly, not made in good faith; the nature and extent of the injuries Plaintiff sustained in the subject accident, which injuries were not at all contested by Tesla at trial, underscore the fact that Tesla made a clearly low-ball offer in betting that it would defense the case. The fact that Tesla did indeed obtain a defense verdict does not make the 998 offer reasonable or in good faith under all these circumstances.

Tesla argues in its opposition to this motion, without evidence, that it was clear to both parties by the time the 998 offer was made that Plaintiff would be defensed at trial based upon her testimony at deposition. This ipse dixit is not sustainable.  Notwithstanding Plaintiff’s deposition testimony as to her understanding of the vehicle’s operation, both parties could reasonably have anticipated that the jury could find, on the evidence anticipated to be presented at trial, that Tesla knowingly and intentionally misled plaintiff about the vehicle’s capabilities with respect to autopilot, or that the vehicle was defectively designed in that it failed to meet reasonable consumer expectations with respect to the deployment of the airbag or the performance of the autopilot system, or both. That the jury clearly did not so find does not make the 998 offer compliant with the purpose underlying 998 offers. Tesla's vigorous defense of the lawsuit at trial; the extensive evidence it presented, the Plaintiff’s evidence to which Tesla strenuously objected, and the arguments its counsel made reflect that Tesla did not view this matter as a proverbial slam dunk.

Once again, the purpose of 998 offers, as is clear from the legion of case law construing the code section, is not simply to penalize a party for going to trial; it is instead to encourage parties to make reasonable settlement offers that the offeror believes will carry a reasonable prospect of acceptance by their opponent at the time the offer is made, so that the offeree is reasonably incentivized to accept the settlement offer and not go to trial. A $10,000.00 plus waiver of costs 998 offer after nearly 3 years of litigation, approximately a month before the start of jury trial of a significant injury products liability lawsuit, between parties represented by professional, experienced counsel, is not reasonable for the reasons discussed above, and was likely not made in good faith.  The Court need find only that the 998 offer was unreasonable or not made in good faith in order to sustain a challenge to the 998 offer. Glassman, supra, 90 Cal. App. 5^th at 1313-1314.

In Adams v. Ford, supra, 199 Cal. App. 4^th 1475, the trial court ruled in exercising its discretion that a Defendant’s 998 offer made on facts apparently similar to those in the case at bar was reasonable and in good faith.  The appellate court affirmed.  However, the holding of that case is that it is in the broad discretion of the trial court to determine, on the facts and circumstances of the case before it, whether a 998 offer was reasonable and made in good faith.  The offer in this case was not, based upon all of the foregoing. Pineda v. Los Angeles Turf Club, Inc. (2d dist.-1980) 112 Cal. App. 3d 53, 63.

Tesla also argues in its opposition that this motion is, at the least, improperly titled or made without procedural support. Tesla is, of course, correct to note that its 998 offer was properly not filed with the court, but it does not follow that the 998 cannot be stricken.  Khosravan v. Chevron Corp. (2d dist.-2021) 66 Cal. App. 5^th 288, 294-296.  The Court in its discretion views this motion as titled, or as a motion for an Order finding the 998 to be unreasonable or not made in good faith.  The Motion was filed and served on June 16, 2023, within two weeks of the Notice of entry of judgment, but six days before Tesla filed and served its Memorandum of Costs.  Thus, this Motion was timely filed and served in that Plaintiff need not have waited to see Defendant’s cost bill to make her claim that the 998 was unreasonable or not made in good faith.  Plaintiff has complied with CA Rules of Court, rule 3.1700(b), requiring her to state why items claimed on the cost bill are objectionable.

Plaintiff’s Motion to Strike Tesla’s 998 offer is thus GRANTED.

Moreover, the Court may consider the specifics of the costs claimed in a Memorandum of Costs sua sponte.  Gorman v. Tassajara Development Corp. (6^th dist.-2009) 178 Cal. App. 4^th 44, 68-78; Oak Grove School Dist. of Santa Clara County v. City Title Ins. Co. (1^st dist.-1963) 217 Cal. App. 2d 678, 699; CCP sec. 1033(a).

The Court does so here, and taxes or strikes the following items from Tesla’s Memorandum of Costs, filed and served on 6/22/2023:

Item 8 (b):  Expert fees                                  $208,935.92 (All, per supra, CCP sec. 1033.5 (b)(1)).

Item 11(l):  Models, Enlargements, etc.          29,448.75 (Trial Tech, per CCP sec. 1033.5 (a)(13)).                                    

This item was for Tesla’s convenience.

Item 12: Court reporter fees, established by statute [CA Gov. Code, sec’s. 68086(d), 69950, 69954, and see, Burd v. Barkley Court Reporters, Inc. (2d dist.-2017) 17 Cal. App. 5^th 1037, 1044-1045, rev. denied 2/28/2018.]

It is not possible for the Court to determine from the Memorandum of Costs if the court reporter fees claimed by Tesla are within the statutory limits, but it appears that they are not.  Tesla is indeed entitled to these costs, but only in the amount established by the statutes.  Tesla is to provide further documentation, supported by calculations to show compliance with the statutes.

The remaining costs claimed by Tesla in Items 1 ($3,405-), 2 ($3,731.88), and 4 ($24,510.48) of its Memorandum of Costs are allowed and shall become a part of the Judgment.

August 2, 2023

20STCV18473 Hsu v. Tesla, etc. Tentative Ruling on Plaintiff’s Motion for New Trial

Governing Law & Procedure

The motion, opposition, and reply were timely and properly filed and served. CCP 656, 657, 659.

At the hearing on these motions, the Court will permit oral argument which is not repetitive of the arguments made in the parties’ respective papers. No testimony will be permitted. CCP section 661; Linhart v. Nelson (1976) 18 Cal. 3^rd 641, 644.

The Court has very broad discretion on a Motion for New Trial. Barrese v. Murray (2011) 198 Cal. App. 4^th 494, 503. The Court is to essentially engage in a de novo review of the evidence and inferences, and to reconsider the evidence, including credibility, as, essentially, “the 13^th juror.” Seffert v. Los Angeles Transit Lines (1961) 56 Cal 2^nd 498, 507; Maroney v. Iacobsohn (2015) 237 Cal. App. 4^th 473, 486; and Ryan v. Crown Castle NG (2016) 6 Cal. App. 5^th 775, 784, 786.

The motion must be based expressly upon one or more grounds listed in CCP 657. Kabran v. Sharp Memorial (2017) 2 Cal. 5^th 330, 336 – 337; Fomco v. Maggio (1961) 55 Cal. 2^nd 162, 166.  In compliance with section 657, Plaintiff moves for new trial on three express grounds: newly discovered evidence (ground 4 in CCP section 657), irregularity in the proceedings (ground 1 in 657) and error in law during trial (ground 7 in 657).

As to the first grounds raised by Plaintiff in support of her Motion for New Trial, newly discovered evidence, in order for Plaintiff to prevail on her Motion on these grounds, Plaintiff has the burden to establish by a preponderance of the evidence each of the following essential elements: the evidence, and not merely its materiality, is newly discovered; this evidence is not cumulative; moving party could not, with reasonable diligence, have discovered the evidence and produced it at trial; and the evidence is material to the moving party’s case in that the evidence would make a different result probable on retrial and is the best evidence of the disputed facts. People v. O’Malley (2016) 62 Cal. 4^th 944, 1017; and Santillan v. Roman Catholic Bishop of Fresno (2012) 202 Cal. App. 4^th 708, 727. Unless each of the foregoing elements is established by the moving party, the Court lacks the discretion to grant a Motion for New Trial based upon CCP section 657 (4).  Doe v. United Airlines, Inc. (2008) 160 Cal. App. 4^th 1500, 1506.

The Court must first determine whether the evidence to which the moving party refers in raising 657(4) is in fact “newly discovered evidence”. The evidence in question is “newly discovered” if the moving party shows that it existed but remained undiscovered at the time of trial. Aron v. WIB Holdings (2018) 21 Cal. App. 5th 1069, 1079.               

As to plaintiff’s/movant’s second stated grounds for a new trial; irregularity in the proceedings at trial, she must present specific evidence of irregularity in the proceedings which was prejudicial. To meet her burden of showing prejudice in this context, Plaintiff must convince the Court that there is a reasonable probability that Plaintiff would have obtained a more favorable verdict than she did absent the alleged irregularity. Cassim v. Allstate Ins. Co. (2004) 33 Cal. 4^th 780, 800; Fernandez v. Jimenez (2019) 40 Cal. App. 5^th 482, 492, rehearing and review denied, 2020.   The sole irregularity in the proceedings claimed by Plaintiff was “the Court[’s] [allegedly] improper fail[ure] to exclude the testimony of Dr. Kristen Lennox, an expert for Tesla.”

The Court may grant a new trial based upon the 3^rd grounds Plaintiff has raised; error in law, only if the moving party objected to the claimed error at trial and the moving party meets her burden to show that the claimed error was prejudicial; that is, the error was likely to have affected the outcome of the trial. Norman v. Life Care Centers of America, Inc. (2003) 107 Cal. App. 4^th 1233, 1252 – 1253; Marich v. MGM/UA Telecommunications Inc. (2003) 113 Cal. App. 4^th 415, 427.

While Plaintiff listed CCP section 657 (7), error in law, in her Notice of Intent to Move for New Trial and in the introductory section of her moving papers (p.4, line 14), Plaintiff neither separately discusses nor presents support for this claim, by its title, in her moving papers.  Nevertheless, the substance of Plaintiff’s argument as to irregularity in the proceedings is that the Court made an error in law in admitting Dr. Lennox’ testimony. Analysis of the case law discussing irregularity in trial proceedings (657(1)) makes clear that a Court’s evidentiary ruling admitting or excluding a witness’ testimony is not generally considered an irregularity in the proceedings.  See, e.g., California Judges Benchbook-Civil Proceedings After Trial, sec’s. 2.6-2.13 (2020).  The Court thus considers Plaintiff to be seeking a new trial based upon CCP 657(7)- error in law, in addition to CCP 657(4)- newly discovered evidence.

The Court must rule upon the Motion for New Trial within 75 days of the first notice from moving party/plaintiff that they are seeking a new trial. CCP section 660 (b), (c). The Court concludes that it must rule on these motions on or before August 21, 2023.

If the Court grants a new trial the Court must expressly specify, in writing, its reasons for granting either or both motions. CCP 657. However, upon the denial of a Motion for New Trial, the Court need not specify specific reasons or grounds for the denial. Neal v. Farmers Ins. (1978) 21 Cal. 3^rd 910, 931.

The Evidence

The Court will discuss the evidence, evidentiary objections, and the reasonable inferences and implications therefrom.

The Court notes that the jury’s verdict was internally consistent and there were no irregularities in the special verdict form, the jury’s responses thereto, nor in the polling of the jury.

On a Motion for New Trial, the Court considers the evidence and reasonable inferences raised thereby and must also consider the credibility of the parties and their witnesses.

There was substantial evidence, some presented by Plaintiffs during their case in chief, and more presented by Defendants during their case in chief, supporting the jury’s finding that Defendants neither misrepresented anything of a material nature to Plaintiff nor designed, manufactured, and sold her a defective product which caused Plaintiff’s injuries and damages.

Overall, in exercising the Court’s independent judgment of the evidence in the context of this Motion for New Trial, the Court need not ignore the jury’s verdict as the Court’s view of the evidence is evidently the same as that of the jury. 

Plaintiff was impeached by her own deposition testimony, and by inconsistencies within her trial testimony, with respect to exactly how her car collided with the curb and how she reacted when it did.  Further, Plaintiff’s husband’s testimony as to his experience with the steering wheel sensor in Plaintiff’s vehicle was not persuasive.  This did not help Plaintiff’s case in the eyes of either the jury or the Court.  The impact of CACI 107 and 5003, as supported by CA Evid. Code, sections 312, 411, and 780 cannot be overstated.  See also, BAJI 2.01, 2.20, 2.21, and 2.22.  Plaintiff’s testimony also showed that her exposure to, and reliance upon Tesla’s arguably misleading marketing statements was extremely limited, at best.

Further, the verdict was neither obviously nor clearly wrong.  The jury’s verdict was supported by substantial evidence and reasonable inferences drawn therefrom. This is true whether one considers Plaintiff’s diminished credibility or not, and whether there was some conflict in the evidence and inferences or not.  In short, neither the law nor the evidence supports the claim that the jury should have reached a different verdict.  These specific facts of this accident, together with the testimony of Plaintiff as to her express knowledge and understanding of Tesla 's instructions to keep her hands on the wheel and her eyes on the road at all times while operating the car in Autopilot created a hill that plaintiff could not successfully climb with respect to the injury causing collision itself. Added to that, the testimony of Tesla's witnesses as to the deployment of the airbag under the specific circumstances of this collision created a bridge too far for the jury. While the jury found that ordinary consumers could develop reasonable expectations about the performance of the Autopilot system and the airbags here, the jury unanimously found that these products met those expectations.  The product was, therefore, not defective. Further, despite the admission of evidence showing that Tesla publicly overstated, in general terms, the capabilities of the Autopilot system, the jury unanimously found that Tesla had not misled plaintiff in any material way with respect to this vehicle’s operation in this accident.

Newly discovered evidence (CCP 657(4))

The Court finds that the discovery evidence Tesla allegedly suppressed or withheld was newly discovered by Plaintiff just before or during the trial, although Plaintiff did not bring this matter to the Court’s attention until this Motion.

More importantly, nothing in the moving papers, including without limitation the Slavick and Arshad Declarations, shows how the discovery Tesla allegedly fraudulently suppressed would likely have, if it had been timely produced, changed the jury’s verdict.  Again, Plaintiff, in moving for a new trial must show that the newly discovered evidence is material. Materiality is defined in this context as evidence which would probably have resulted in a more favorable verdict to movant had it been presented to the jury.   Santillan, supra, 202 Cal. App. 4^th at 727-728.  Plaintiff fails to meet her burden of proving materiality of the allegedly concealed or suppressed evidence. Moreover, it is not completely clear that the evidence which plaintiff has arguably shown Tesla suppressed would have been admissible at trial, much less more likely than not have led to a more favorable verdict for Plaintiff/movant.

New trial motions based upon newly discovered evidence are strictly construed and generally disfavored. Missionary Guadalupanas of Holy Spirit, Inc. v. Rouillard (3d dist.-2019) 38 Cal. App. 5^th 421, 438, rev. denied.

The Court denies the Motion for new trial to the extent it is based upon CCP 657(4).

Error in law (CCP 657(7))

Again, the Court notes that Plaintiff’s claim of irregularity in the proceedings (CCP 657(1)), is, in actuality, rooted in Plaintiff’s claim that the Court made an error in law (CCP 657(7)) in admitting over Plaintiff’s objection the testimony of Defense expert witness, Dr. Kristen Lennox.  The Court finds that no error in law was committed, nor did the admission of Doctor Lennox 's testimony constitute an irregularity in the proceedings.  While plaintiff objected to the admission of this witness’s testimony, the Court overruled the objection on the grounds that the witness’s testimony was relevant on the issue of consumer expectations, which was the sole legal theory upon which plaintiff went to the jury in support of her contention that her Tesla was defectively designed. Specifically, Doctor Lennox 's testimony went to the issue of whether an ordinary consumer could form reasonable safety expectations with respect to the operation of this vehicle; whether the deployment of airbags, the Autopilot system, or both. Plaintiff argues that Doctor Lennox 's testimony was objectionable because it had a tendency to mislead the jury as to whether the product was safe, or defective, or neither. However, this begs the question of the admissibility Dr. Lennox 's testimony with respect to the existence vel non of reasonable consumer expectations. The relevance of Dr. Lenox’s testimony, for whatever weight the jury gave it, clearly outweighed any potential for misleading or confusing the jury.  CA Evid. Code, sec. 352.

Moreover, Doctor Lennox 's testimony was also germane to the issues of fraudulent misrepresentation which went to the jury as well. Despite Plaintiff’s cross of Dr. Lennox, and notwithstanding the testimony of Plaintiff’s witnesses, the jury specifically, and unanimously found that Tesla neither made any false statements to Plaintiff nor intentionally failed to disclose any (material) fact to Plaintiff that she herself did not know nor could reasonably have discovered. Plaintiff argues that Doctor Lennox 's testimony was suspect because it was based solely on information provided to her by Tesla, which data was controlled and presumably edited only by Tesla. However, Plaintiff’s counsel extensively and, in the Court’s view effectively cross-examined Doctor Lennox on these very points. Plaintiff’s counsel also argued these points in closing argument.

Even assuming arguendo that the Court did err in admitting Dr. Lennox 's testimony, the Court finds that Plaintiff again failed to meet her burden to show that the error was likely to have affected the outcome of the trial. In other words, it is Plaintiff’s burden on this motion to show not only that the Court erred, but also that the error was prejudicial; that is, that absent the error Plaintiff would have obtained a more favorable verdict than she did. Plaintiff failed to meet this burden.

The Court thus denies the Motion for new trial to the extent it is based upon CCP 657(1) or (7).

Plaintiff’s Motion for New Trial is Denied. Plaintiff’s request for sanctions against Defendant for alleged discovery violations is not properly before the Court at this time and is thus Denied.