§ 7.11 COMPROMISE STATEMENTS

• Jurisdiction: United States

§ 7.11 COMPROMISE STATEMENTS

[1] STATEMENTS DURING CIVIL SETTLEMENT NEGOTIATIONS

The courts have long favored the out-of-court settlement of legal claims. That attitude has become even more pronounced in recent years; in many areas, the trial courts are so badly backlogged that it is imperative that we encourage out-of-court settlements. The attitude expresses itself in a doctrine excluding statements made during civil settlement negotiations. The courts reason that if negotiators know that their statements are privileged, their discussions will be more candid and, hopefully, more successful.

Federal Rule of Evidence 408(a) states the norm:

(a) Prohibited Uses. Evidence of the following is not admissible—on behalf of any party—either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction:

(1) furnishing, promising, or offering—or accepting, promising to accept, or offering to accept—a valuable consideration in compromising or attempting to compromise the claim; and
(2) conduct or a statement made during compromise negotiations about the claim—except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority.

Like the subsequent repair doctrine, this doctrine is not an absolute exclusionary rule; it too is a rule of limited admissibility. In the words of Federal Rule of Evidence 408(a), the proponent may not offer the evidence "to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction." Again, however, the proponent may offer the evidence on other theories of logical relevance. Rule 408(b) adds: "The court may admit this evidence for another purpose, such as proving a witness's bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution."

The party attempting to exclude the evidence should lay this foundation:

1. At the time of the statement, a dispute had already arisen between the parties over the existence or extent of civil liability. If on his or her own motion a person freely and unilaterally admits liability immediately after an incident occurs, the rule is inapplicable.
2. The party made the statement for the purpose of settling the dispute.
3. The subject-matter of the statement is proper. All jurisdictions protect an offer to settle. However, some jurisdictions protect accompanying statements of fact only if the speaker expressly states that the statements of fact are "hypothetical" or "without prejudice."

The party attempting to introduce the evidence must be ready to make an offer of proof. In the offer of proof, the party should state:

4. What the witness will testify to if the judge permits the party to pursue the line of questioning.
5. The evidence is logically relevant to some issue other than the general question of the claim's validity. Prior to 2006, the federal courts were split over the question of whether Rule 408 permits the use of compromise statements as prior inconsistent statements under Rule 613. However, effective December 1, 2006, Rule 408 was amended to read: "Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction."
6. The issue the evidence relates to is a genuinely disputed question in the case.

The first fact situation is a tort action for personal injuries. The plaintiff, Mr. James Stone, sues the defendant, Ms. Rachel Damer. The plaintiff alleges that the defendant caused a collision and that in the collision, the plaintiff suffered injuries in the amount of $100,000. The plaintiff takes the witness stand to testify in his own behalf. On cross-examination, the following occurs. The proponent is the defendant.

P Mr. Stone, ISN'T IT TRUE THAT in your complaint in this case, you claim that you've suffered $100,000 in damages?

W Yes.

P ISN'T IT A FACT THAT on February 17, 2017, you were at my office?

W Right.

P ISN'T IT CORRECT THAT while you were there, you offered to settle your whole claim for only $20,000?

O Your Honor, I...