Volume and Issue: Vol. 97, Postscript

California Code of Civil Procedure Section 998: An Offer to Compromise Between the American and English Rules for Fee-Shifting?

Imagine you bring a personal injury claim seeking damages of $950,000. At the end of trial, the jury finds the defendant negligent and awards you $375,000. Although you prevailed at trial, the court orders you to pay a portion of the defendant’s litigation costs. Accordingly, you lose your entire award and are required to provide an additional payment of $18,000 to the defendant. If you are confused by this hypothetical situation, you are not alone. This seemingly backwards scenario is made possible by California Code of Civil Procedure section 998 (“section 998”),1See Cal. Civ. Proc. Code § 998(e) (West 2024). Under section 998, if a plaintiff rejects a defendant’s 998 offer and subsequently fails to obtain a more favorable judgment or award, costs from the time of the offer are to be deducted from plaintiff’s award. If the costs exceed damages awarded to the plaintiff, “the net amount shall be awarded to the defendant and judgment or award shall be entered accordingly.” Id. This hypothetical operates under two major assumptions. First, that the defendant, at some point, made a valid 998 offer to the plaintiff that was greater than $375,000, which the plaintiff subsequently rejected. And second, that the defendant’s recoverable costs pursuant to section 998(c)(1) were $393,000. a cost-shifting statute that has perplexed California litigators for decades.

When it comes to the determination of which party is responsible for paying legal fees in a litigation, there are two prominent models: the “English rule” and the “American rule.”2Albert Yoon & Tom Baker, Offer-of-Judgment Rules and Civil Litigation: An Empirical Study of Automobile Insurance Litigation in the East, 59 Vand. L. Rev. 155, 160–61 (2006). The majority of the Western world implements the English rule,3Christopher Hodges, Stefan Vogenauer & Magdalena Tulibacka, Costs and Funding of Civil Litigation: A Comparative Study 19 (Univ. of Oxford Legal Rsch. Paper Series, Working Paper No. 55, 2009). which embodies a loser-pays system in which litigation costs, including attorney’s fees, are shifted to the losing party.4Id. Conversely, in America, absent bad faith or a statutory or contractual provision to the contrary, the general rule is no fee-shifting.5Id. at 23. In other words, unless a lawsuit involves bad faith, a contractual dispute and the contract at issue contains a fee-shifting provision, or a statute that provides for recovery of costs, each party bears their own litigation costs, irrespective of the outcome.6Id.

Each model has its pros and cons. On the one hand, a loser-pays system—the English rule—discourages nuisance litigation and promotes settlement, but may subsequently reduce access to litigation,7Thomas D. Rowe, Jr., The Legal Theory of Attorney Fee Shifting: A Critical Overview, 1982 Duke L.J. 651, 653 (1982); Jaime Leigh Loos, The Effect of a Loser-Pays Rule on the Decisions of an American Litigant, 7 Major Themes Econs., 31, 43–      44 (2005). even for those with meritorious claims.8Yoon & Baker, supra note 2, at 161. Conversely, a system that does not generally allow for fee-shifting—the American rule—enables individuals to have their fair day in court, avoiding the English rule’s “potential chilling effect on meritorious litigation.”9Id. The American rule, however, may subsequently decrease the likelihood of settlement and open the door for increased nuisance litigation, which may overwhelm court systems.10John F. Vargo, The American Rule on Attorney Fee Allocation: The Injured Person’s Access to Justice, 42 Am. U. L. Rev. 1567, 1634–35 (1993).

Because the American rule may lack distinct incentives for parties to settle or to refrain from bringing frivolous claims that create a backlog in courts, the American justice system has devices to encourage parties to settle their claims and resolve disputes as quickly and efficiently as possible. One such device includes offer-of-judgment rules: a type of fee-shifting statute that provides an exception to the general rule against fee-shifting. Offer-of-judgment rules are offer-based fee-shifting rules that allocate costs according to pretrial settlement offers.11Kathryn E. Spier, Pretrial Bargaining and the Design of Fee-Shifting Rules, 25 RAND J. Econ. 197, 197 (1994). Thus, under an offer-of-judgment rule, if a litigant rejects a pretrial settlement offer and subsequently receives a less favorable judgement at trial, they must compensate the offeror for certain post-offer costs.

Section 998 is California’s offer-of-judgment rule. Section 998 is a cost-shifting statute designed to encourage settlement of litigation, without the need for a trial, by shifting certain costs to a party that rejected a 998 “offer to compromise” from their opponent and subsequently failed to obtain a better result at trial.12See Cal. Civ. Proc. Code § 998(c)(1), (d), (e) (West 2024). The California legislature and courts have made clear that the fundamental policy behind section 998 is to encourage the settlement of lawsuits prior to trial. However, statutory and case law analyses may indicate that 998’s policy also encompasses promoting settlement without unduly limiting access to courts.

The effectiveness of section 998 remains an ongoing debate among civil litigators. Application of section 998 is exceedingly difficult to understand and there is concern that it may not offer a high enough incentive to settle since the statute allows only a limited amount of recoverable costs. On the other hand, even if section 998 does not result in settlement as frequently as anticipated, it is a beneficial tool that provides a financial incentive for parties to settle that might not otherwise exist. As the debate over section 998’s efficacy continues, the California legislature and courts will likely be increasingly confronted with proposed amendments and judicial disputes over its applicability. Accordingly, in the future, these state actors may wish to consider how section 998 may be a powerful vehicle to relieve overburdened courts without overly deterring claimants from protecting their rights or interests.

This Note considers the extent to which section 998 can genuinely be considered a compromise between the English and American rules for fee-shifting, rather than just a tool to promote settlement. In particular, this Note asks whether section 998 seeks to promote settlement without unduly limiting access to courts, and if so, to what extent.. Although section 998 may be used in trial and arbitration,13See id. § 998(b). this Note focuses on section 998 in the context of litigation and trial. To help inform this Note’s discussion of the underlying policy tradeoffs behind different fee-shifting rules and the significance of promoting settlement prior to trial, Part I provides an overview of the mechanics, principal stages, and costs of civil litigation. Part II discusses section 998 relative to the competing models of the English rule and the American rule, including general policy tradeoffs and impact on litigation strategy. Part III provides an overview of the statutory framework of section 998 and its underlying policy considerations. Part IV examines section 998 legal developments and whether if, and to what extent, judicial determinations are not only promoting section 998’s purpose of encouraging settlements but also doing so without unduly limiting access to courts. A conclusion with final considerations follows.

Nothing Comes from Nothing: Andy Warhol and the Inadequacy of the Fair Use Analysis of Contemporary Art

Andy Warhol looms large—not just within the ivory tower of contemporary visual arts, but in American culture. To many, his colorful silkscreen portraits of such celebrities as Marilyn Monroe or Elizabeth Taylor are paradigmatic of contemporary art. Yet, despite the near-universal reach of his work and his significant celebrity in his own right, the theoretical and conceptual underpinnings of his work remain less accessible to casual viewers.

In 1984, Lynn Goldsmith, a celebrity portrait photographer, licensed a 1981 photograph she took of the musical artist Prince (the “Goldsmith Photograph”) to Vanity Fair Magazine for use as an artist reference in an illustration that appeared twice in the magazine, with attribution back to Goldsmith for the “source photograph.”1Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 143 S. Ct. 1258, 1266 (2023). Vanity Fair hired Andy Warhol to create a silkscreen portrait of Prince based on the Goldsmith Photograph to accompany an article about Prince’s music and newfound celebrity. Unbeknownst to Goldsmith until she discovered “Orange Prince,” an orange silkscreen portrait of the singer, on the cover of Condé Nast’s posthumous tribute to Prince in 2016, Warhol created fifteen additional works based on her photograph (the “Prince Series”) before his death. Goldsmith sued for copyright infringement, and the district court for the Southern District of New York (the “Warhol district court”) initially found the Prince Series was transformative and granted summary judgment to the Andy Warhol Foundation for the Visual Arts (“AWF”) on its fair use defense. The Second Circuit reversed upon concluding that each of the four statutory fair use factors2  See infra Part I              . weighed in favor of Goldsmith. The Supreme Court granted certiorari to examine the first fair use factor, ultimately finding in a 7-2 decision that the first factor favored Goldsmith and counseled against fair use because the purpose of Orange Prince was substantially the same as the Goldsmith Photograph and AWF’s licensing of Orange Prince to Condé Nast’s special issue commemorating Prince was of a commercial nature.3Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 143 S. Ct. at 1278, 1280. Justice Kagan, joined by Chief Justice Roberts, penned a sharply-worded dissent in defense of Warhol’s transformative use of his source material, accusing the majority of leaving the Court’s first factor inquiry “in shambles”4Id. at 1292 (Kagan, J., dissenting). and “our world poorer.”5Id. at 1312 (Kagan, J., dissenting).

Warhol’s fame complicates the fair use analysis in the case at hand (“Warhol”) because it raises questions of “celebrity-plagiarist privilege”6Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 11 F.4th 26, 31, 43 (2d Cir. 2021) (“[T]he more established the artist and the more distinct that artist’s style, the greater leeway that artist would have to pilfer the creative labors of others.”). and how the Supreme Court’s ruling may influence less established artists in future copyright suits. The Warhol district court and the Second Circuit, amici for both parties, and Supreme Court Justices have all debated the proper role, or the absence thereof, that Warhol’s fame might play in the Court’s analysis of whether Orange Prince could be protected as fair use of the Goldsmith Photograph. Despite the fact that this case is far from the first time Warhol’s appropriation of photographs for his silkscreen work has embroiled him in copyright disputes with the photographers of the underlying works (most disputes were settled out of court),7Kate Donohue, Andy the Appropriator: The Copyright Battles You Won’t Hear About at the Whitney’s Warhol Exhibit, Colum. J.L. & Arts (Aug. 2, 2019), https://journals.library.columbia.edu/
index.php/lawandarts/announcement/view/112 [https://perma.cc/73LG-4FNT]. this case promised to be of unprecedented significance because of the myriad of ways in which Warhol epitomizes the challenges that appropriation art,8Appropriation art refers to the practice of using preexisting images or objects to create new artwork with minimal physical transformations to the originals; often to challenge traditional notions of authenticity, creativity, and authorship. Appropriation, Tate, https://www.tate.org.uk/art/art-terms/a/appropriation [https://perma.cc/B8UL-VH45]. and the contemporary visual arts more broadly, have historically posed for the fair use doctrine.

The task of formulating a clear standard for evaluating fair use in cases involving appropriation art has only become more challenging in our digital age, in which the use of appropriation in art is no longer limited to the “relatively small segment of creators who practice ‘appropriation art.’ ”9Amy Adler, Fair Use and the Future of Art, 91 N.Y.U. L. Rev. 559, 571 (2016). The practice of copying has become “both the topic of contemporary art and its technique” and “now permeates art in an extraordinarily diverse range of ways.”10Id. at 571–72. Accordingly, Warhol represented a crucial opportunity for the Supreme Court to tailor a more specialized and better-informed standard of fair use in the context of the conceptual visual arts so that the fair use doctrine may continue to evolve alongside advancements in the arts.

This Note proposes that the Supreme Court should have vacated and remanded Warhol to the district court to supplement its evaluation of the first and fourth fair use factors with an evidentiary analysis of the perspective of an art market consumer or magazine editor. Part I of this Note offers an overview of the legislative intent of the fair use defense and the four statutory factors, then traces subsequent articulations of the doctrine in U.S. fair use jurisprudence. Part II discusses the issues of scope and incompatibility that arise from the fraught application of the Second Circuit’s analysis of “transformativeness” under the first factor to conceptual art. Part III explores how adapting the substantial similarity analysis to fair use by allowing courts to consider the perspective of the art market consumer under the first and fourth factors can contribute to a more equitable and informed application of the fair use doctrine.

Social Media Censorship: Is It Protected by the First Amendment?

The Internet has become an indispensable tool that many rely on for information, marketing, commerce, and connections. The wide-reaching data accessible by a quick Google search retrieves information that would otherwise take days to find in a library. Society has become greatly dependent on this access to information, allowing individuals to “make quicker, more-informed decisions”1Jaana Anderson & Lee Rainie, 3. Fifty-Fifty Anecdotes: How Digital Life Has Been Both Positive and Negative, Pew Rsch. Ctr. (July 3, 2018) (quoting Andie Diemer) https://www.pewresearch
.org/internet/2018/07/03/fifty-fifty-anecdotes-how-digital-life-has-been-both-positive-and-negative/ [https://perma.cc/Q2EC-6JMZ]. and “connect [with] anything or anyone at any given moment.”2Id. However, “[o]ur greatest strength can also be our greatest weakness, and our human relationship with technology is a classic testament to that.”3Id.

Social media platforms have grown immensely over the past decade, with many using social media as their primary source to learn about current events and breaking news.4The Supreme Court has acknowledged that many individuals rely on social media websites as their “principal source[] for knowing current events, checking ads for employment, speaking and listening in the modern public square, and otherwise exploring the vast realms of human thought and knowledge.” Packingham v. North Carolina, 582 U.S. 98, 107 (2017). A study conducted in 2020, at the height of the COVID-19 Pandemic and the U.S. presidential election, revealed that a staggering 53% of adults in the United States use social media as their news source either “often” or “sometimes.”5Elisa Shearer & Amy Mitchell, News Use Across Social Media Platforms in 2020, Pew Rsch. Ctr. (Jan. 12, 2021), https://www.pewresearch.org/journalism/2021/01/12/news-use-across-social-media-platforms-in-2020 [https://perma.cc/8JTF-4EHP]. With Facebook being the most popular, a subset of 36% of Americans regularly use the site to learn about news, out of a total of 68% of Americans who are on Facebook generally.6Id. With X (formerly known as Twitter) closely behind, 15% of Americans regularly refer to the site as their news source, out of a total of 25% of Americans registered on X generally.7Id.

Social media platforms are owned and operated by private entities that currently have full control over the implementation of algorithms and other content-moderation policies.8See NetChoice, LLC v. Att’y Gen., 34 F.4th 1196, 1203 (11th Cir. 2022) (explaining that “with minor exceptions, the government can’t tell a private person or entity what to say or how to say it”). Due to the influential role of social media, especially with younger generations,9Shearer & Mitchell, supra note 5 (stating that those in the age group of 18–29 make up 47% and 39% of the total users that receive news from Instagram and X, respectively). there has been increased tension regarding a state’s ability to regulate the interaction between platforms and their users through content moderation.10Shari Claire Lewis, Circuit Split over States’ Right to Regulate Social Media Platforms, Law.com (Aug. 15, 2022, 10:00 AM), https://www.law.com/newyorklawjournal/2022/08/15/circuits-split-over-states-right-to-regulate-social-media-platforms [https://perma.cc/96XW-B6VE]. Platforms are resisting state intervention by asserting First Amendment claims, stating that platforms have a right to free speech and that content-moderation decisions are equivalent to protected speech.11Id. Currently, there is a circuit split between the U.S. Court of Appeals for the Fifth and Eleventh Circuits addressing this issue, in which Florida and Texas enacted statutes that placed major restrictions on social media platforms’ ability to freely censor or moderate content.12Id. Censorship is defined as the “suppression or prohibition of words, images, or ideas.” Julie Horowitz, The First Amendment, Censorship, and Private Companies: What Does “Free Speech” Really Mean?, Carnegie Libr. of Pittsburgh (Mar. 9, 2021), https://www.carnegielibrary.org/the-first-amendment-and-censorship [https://perma.cc/QD5V-UUM3]. Specifically, both statutes include nondiscrimination provisions, in addition to other disclosure provisions, that would prohibit platforms from censoring based on viewpoint. The key tension arises between the purported First Amendment rights of the private entities that run social media platforms and the ability for users to express and be exposed to diverse viewpoints through “one of the most important communications mediums used in [the] [s]tate[s].”13NetChoice, LLC v. Paxton, 49 F.4th 439, 454 (5th Cir. 2022).

Both Florida and Texas argue that the statutes prohibiting viewpoint discrimination are constitutional because they do not restrict protected speech, and even further, that platforms should be subjected to common carrier obligations.14See Lewis, supra note 10. Common carriers have heightened obligations, in which certain private entities are required to serve the public. The plaintiffs, representing large social media platforms, instead argue that content-moderation decisions require the use of editorial judgment,15Id. Editorial judgment is a term that describes an entity engaging in First Amendment–protected speech through expressive actions. which has been interpreted as protected speech in past cases.16See, e.g., Miami Herald Publ’g Co. v. Tornillo, 418 U.S. 241, 258 (1974). The importance of providing meaningful restrictions on platforms’ censorship policies has become even more evident with the recent acquisition of X, exemplifying that a change in management in such relied-on commodities could potentially be devastating to the access of information.17A critic mentioned that X’s new content-moderation policy seems “wholly dependent on what side of the bed [new owner Elon] Musk wakes up on.” Musk has chosen certain controversial users to be allowed back on the site, including Andrew Tate and Donald Trump, while disallowing others such as Alex Jones. Caleb Ecarma, We’re Officially in the Elon Musk Era of Content Moderation, Vanity Fair (Nov. 21, 2022), https://www.vanityfair.com/news/2022/11/elon-musk-twitter-content-moderation [https
://perma.cc/89GF-YTJM]. Due to the increased uncertainty regarding the status of the law and the importance of providing direction and uniformity on interpreting the Constitution,18See Biden v. Knight First Amend. Inst. at Columbia Univ., 141 S. Ct. 1220, 1221 (2021) (Thomas, J., concurring); NetChoice, LLC v. Paxton, 142 S. Ct. 1715, 1716 (2022) (Alito, J., dissenting). a petition for a writ of certiorari was filed by Texas and granted by the Supreme Court. Opening briefs were filed on November 30, 2023, and oral argument occurred on February 24, 2024.19NetChoice, LLC v. Paxton, SCOTUSblog, https://www.scotusblog.com/case-files/cases/net
choice-llc-v-paxton/ [https://perma.cc/W6VD-WTKN].

One of the main difficulties in resolving this issue is the continuum of control and expression that platforms exert when moderating content. This Note will argue that the ultimate determination of whether moderation decisions rise to protected speech will be fact dependent. Platforms that lack a clear target audience and only censor objectively obscene content (rather than subjective beliefs) do not convey a message through their content moderation that amounts to protected speech. Most large platforms, such as X, Facebook, Instagram, and TikTok20See generally X, https://twitter.com [https://perma.cc/9XGM-Y4RA]; Facebook, https://
http://www.facebook.com [https://perma.cc/TT82-6VX7]; Instagram, https://www.instagram.com [https:
//perma.cc/XJE6-SL4B]; TikTok, https://www.tiktok.com [https://perma.cc/LF25-FPNQ]. would be included within this category. Conversely, this Note will argue that platforms that clearly moderate content based on political or other personal beliefs, and express these choices with their users, will have First Amendment protections as the moderation expresses a message equivalent to speech. By conveying subjective viewpoints through a platform’s content moderation, potential users can make informed decisions about whether to opt-in to the platform’s services. Groups that fall within this second category include Vegan Forum, ProAmerica Only, and Democratic Hub.21See generally Vegan Forum, https://www.veganforum.org [https://perma.cc/426R-P897]; ProAmerica Only, https://proamericaonly.org [https://perma.cc/Z26P-5GT2]; Democratic Hub, https://www.democratichub.com [https://perma.cc/FWP5-FT9A].

Alternatively, with a view on consistency and the best overall policy outcome, there is an argument that Congress should designate social media platforms as common carriers in order to regulate this area similarly to the telecommunications industry.22See Communications Act of 1934, 47 U.S.C. § 151. This Note primarily provides a doctrinal analysis of common carrier law and editorial judgment and applies the analysis to the conflicting arguments raised in the circuit-split cases. While the current debate is highly politicized, with the perceived motive of the Florida and Texas statutes to stop platforms from censoring conservative views,23Press Release, Off. of the Tex. Governor, Governor Abbott Signs Law Protecting Texans from Wrongful Social Media Censorship (Sept. 9, 2021), https://gov.texas.gov/news/post/governor-abbott-signs-law-protecting-texans-from-wrongful-social-media-censorship %5Bhttps://perma.cc/P3SQ-HFKZ%5D (“[T]here is a dangerous movement by social media companies to silence conservative viewpoints and ideas”); News Release, Fla. Gov’t, Governor Ron DeSantis Signs Bill to Stop the Censorship of Floridians by Big Tech (May 24, 2021), https://www.flgov.com/2021/05/24/governor-ron-desantis-signs-bill-to-stop-the-censorship-of-floridians-by-big-tech/ %5Bhttps://perma.cc/2RKT-CSZ3%5D (stating that “by signing [the Florida statute] into law, Florida is taking back the virtual public square” and preventing “censor[ship] if [one] voice[s] views that run contrary to [the platforms’] radical leftist narrative”). this Note argues that analyzing these issues with a neutral, doctrinal-focused lens will provide a positive long-term solution.

Part I of this Note will establish an example of a current content-moderation policy exercised by a large social media platform. Part II will provide a doctrinal analysis concerning First Amendment law, specifically referring to the development and current state of “common carriers” and “editorial judgment.” Part III will identify the state and federal statutes that underly the circuit-split litigation. Part IV will discuss the facts and the conflicting rationales of the current circuit-split cases. This Note will also highlight the most persuasive arguments and their application to the doctrinal analysis of First Amendment law provided in Part II. Then, Part V will speak to the significance of resolving this issue and how it will affect social media platforms, states, and the greater community. A conclusion will follow.

 

Justices on Yachts: A Value-Over-Replacement Theory

The Justices have it made. On top of their government salaries, guaranteed until retirement or death, they are pampered with luxuries supplied by various wealthy benefactors—billionaire friends, big publishing houses, and well-funded nonprofits. These benefactors make (and forgive) large loans, book fancy resorts in exotic locations, and save seats on their yachts—glacial-iced cocktails included. The public is rankled. Something seems amiss, but it is hard to say exactly what. There is scant evidence of any quid pro quo. None of this luxury treatment has likely changed any Justice’s vote in any particular case. Thus, the problem here is not run-of-the-mill corruption.

In this Article, we explore an alternate theory. These donors are not trying to influence individual votes; they are trying to influence Justices’ decisions about whether to keep voting at all. The Justices’ government salaries are generous. But their private-sector earning potential is far higher, providing a strong incentive to retire relatively early and maximize lifetime consumption. Supplying a sitting Justice with a luxury lifestyle reduces the retirement incentive, “locking in” the Justice as a voter in more cases.

We explore this strategy for influencing the Court and model its expected results. We argue that, rationally, the strategy will be deployed differentially. All other things equal, Justices who are older and more ideologically extreme, compared with the expected replacement Justice, will receive more pampering. This will systematically alter both the mix of cases the Court hears and its substantive decisions to favor moneyed and politically hard-line interests.

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Statutory Interpretation in the 2020s: A View of the Cathedral

This Comment looks at eighty-seven statutory interpretation cases in the Supreme Court’s docket over the 2020–2022 Terms to evaluate trends in how the nation’s highest court reads statutes in the modern era. It concludes that the overarching story is neither a purely “textualist” one, nor one in which the liberal bloc is very often at odds with the conservative bloc. Instead, statutory interpretation is much more consensual than it is often credited to be—and contextual and purposive arguments continue to remain valid modalities of interpretation, even as standard textualist tools also remain relevant.

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Cost-Benefit Analysis Without the Benefits or the Analysis: How Not to Draft Merger Guidelines

Previous iterations of the DOJ/FTC Merger Guidelines have articulated a clear, rigorous, and transparent methodology for balancing the procompetitive benefits of mergers against their anticompetitive costs. By describing agency practice, clear guidelines deter anticompetitive mergers while encouraging procompetitive ones, ensure consistent and reasonable enforcement, increase public understanding and confidence, and promote international cooperation.

But the 2023 Draft Merger Guidelines do not. They go to great lengths to articulate the potential anticompetitive costs of mergers but with no way to gauge “substantiality.” Most significantly, they ignore potential benefits of mergers, which eliminates the need for balancing. In other words, the Draft Guidelines provide very little guidance about current practice, which increases enforcement risk and thus deters mergers, which may be the point of the Draft Guidelines. In this Article, we offer specific recommendations that do a better job differentiating pro- from anticompetitive horizontal, vertical, and tech mergers.

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