Miguel Vidrio and Patricia Salinas (plaintiffs) sued Maria Hernandez (defendant) for negligence arising out of a car accident. Hernandez was insured by Mercury Insurance Company (Mercury) (defendant). The trial court ordered a mandatory settlement conference. Mercury hired an attorney to defend Hernandez, including representing Hernandez at the settlement conference. However, that attorney only repeated a prior settlement offer of $1,000 for each plaintiff and did not provide any counter-offer to the plaintiffs. The trial court determined that the attorney hired by Mercury was not prepared to discuss damages, to discuss the costs of defense, or to have an intelligent conversation about the defense’s $1,000 settlement offer. The trial court then imposed a monetary sanction on Mercury for not participating in good faith in the mandatory settlement conference. Mercury appealed to the California Court of Appeal.