Why is there any award at all? I keep hearing that defending a case can bankrupt a person or company that doesn't have deep pockets even if they are successful. Why do these guys get reimbursed?
> Why do these guys [Kleiner Perkins] get reimbursed?
From the Reuters report, it appears that Kleiner made an offer of judgment under section 998 of the California Code of Civil Procedure, [1] which provides in part:
<blockquote>
(c) (1) If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant's costs from the time of the offer.
In addition, in any action or proceeding other than an eminent domain action, the court or arbitrator, in its discretion, may require the plaintiff to pay a reasonable sum to cover costs of the services of expert witnesses, who are not regular employees of any party, actually incurred and reasonably necessary in either, or both, preparation for trial or arbitration, or during trial or arbitration, of the case by the defendant.
</blockquote>
(Emphasis and extra paragraphing added)
"Costs," incidentally, means costs of court such as filing fees, court reporter charges, etc. [2] In this case, by statute (quoted above) the term also include expert witness fees. "Costs" usually does not include attorneys' fees.
I've never heard of a rule like that. Is it common in other states to have a similar 'catch' on making settlement offers?
What's the rational? I could see it as a way to try to prevent SLAPP type suits with quick settlements, but it seems like an awfully sharp double edged sword.
It's not a catch on making settlement offers; it's a catch on refusing to accept a settlement offer, and then failing to match or beat the offer at trial. The rationale is, you could have had a better deal if you'd accepted the other side's settlement offer, but you dragged the other side through a trial, so you have to pay their court costs.
This is also seen in Rule 68 of the Federal Rules of Civil Procedure. Some states have similar rules but also provide for attorneys' fees. See the annotations at http://www.commondraft.org/#SettlementIncentiveClause (self-cite).
The rationale is specifically to encourage parties to try to settle out of court before tying up the justice system with a case. As is illustrated here, it makes the cost of saying "no" to a reasonable settlement both the loss of the settlement and the potential payment of your opponent's costs.
They only get reimbursed for some costs. In this case, chiefly witness fees. They probably paid hundreds of thousands in fees to lawyers which are not reimbursed.
Why does she have to pay the legal fees incurred by the defendants because she tried to extort money? Is that what you're asking? She has to pay because she lost, and they weren't doing anything wrong.
Correction: when you sue someone and lose, that does not necessarily mean you were extorting them. In fact, it almost necessarily precludes extortion, since extortion is the act of threatening to reveal a damaging secret unless you are conpensated. It also doesn't necessarily mean that the defendants did nothing wrong, as in the example of failed lawsuits against the NSA.
