§ 14.07 Third-Party Compromises

• Jurisdiction: United States

§ 14.07 Third-Party Compromises

Settlements between a litigant and a third party are excluded if offered to prove liability for or invalidity of a claim or its amount. For example, assume A's automobile hits B's car, in which C is a passenger. A settles with C but decides to defend against B. B wants to introduce the settlement with C. Not permitted. The policy of promoting settlements (here with C, the passenger) is operative.

Plaintiff, as well as defendant, third-party settlements are covered by the rule,²⁹ as are settlements that favor a party. The Fifth Circuit stated:

While a principal purpose of Rule 408 is to encourage settlements by preventing evidence of a settlement (or its amount) from being used against a litigant who was involved in a settlement, the rule is not limited by its terms to such a situation. Even where the evidence offered favors the settling party and is objected to by a party not involved in the settlement, Rule 408 bars the admission of such evidence unless it is admissible for a purpose other than "to prove liability for or invalidity of the claim or its amount."³⁰

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Notes:

^[29] See McInnis v. A.M.F., Inc., 765 F.2d 240, 247 (1st Cir. 1985) ("In the context of settlements between a litigant and a third party, it is true that Rule 408 is more commonly invoked to bar the admission of agreements between a defendant and a third party to compromise a claim arising out of the same transaction as the one being litigated. . . . If the policies underlying Rule 408...