§ 14.05 "DISPUTE" REQUIREMENT

• Jurisdiction: United States

§ 14.05. "DISPUTE" REQUIREMENT

Rule 408 applies only if the claim or its amount is disputed. If there is no dispute, Rule 408 does not apply because the policy justification for the rule is absent. For example, A owes B $5,000, and A does not dispute this debt. However, A tells B that it will cost her $2,000 in litigation expenses to collect the $5,000 in a lawsuit. Therefore, A offers B $3,000. This offer smacks more of a holdup than a good faith settlement, and the policies underlying Rule 408 "do not come into play when the effort is to induce a creditor to settle an admittedly due amount for a lesser sum."²²

Because statements made prior to the existence of a controversy are not covered by the rule (no dispute), it is critical to identify the time at which a dispute arose.²³ Suppose A drives his automobile into B's car. If A immediately approached B and said, "It was my fault. I will pay for everything," there is no dispute; the statements are admissible. On the other hand, if A yells, "It's your fault! Where did you ever get a license?" and B responds, "I beg to differ." Now there is a dispute, and if they agree to split the costs, that agreement and any related statements are inadmissible. Note that litigation or the threat of litigation is not required, only an actual dispute.²⁴

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Notes:

^[22] Fed. R. Evid. 408 advisory committee's note. See also Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1354 (11th Cir. 2011) ("The district court found that the Lamas . . . did not dispute the debt; they acknowledged its existence and that they were liable for its payment.").

^[23] See Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1373 (10th Cir. 1977) ("The discussions had not crystallized to the point of threatened litigation.").

^[24] See MCI Communications Services, Inc. v. Hagan, 641 F.3d 112, 117 (5th Cir. 2011) ("Litigation does not need to have commenced for Rule 408 to apply, but there must be 'an actual dispute or a difference of opinion.' . . . At the point in time the call was placed, there was not yet an actual dispute or a difference of opinion about who caused the damage to MCI's cable and how much the damage was costing MCI. Coudrain may have...