by Wilton H. Strickland

As I’ve discussed on prior occasions, relevance is merely the first of several hurdles to introducing evidence at trial. Even if the evidence is relevant, it might still be excluded for other reasons. One of those reasons is when the evidence reflects settlement negotiations, which are shielded from the jury because of public policy that encourages people to resolve their disputes out of court if possible. If settlement negotiations could be used in court, everyone would be far less likely to engage in them.

But the devil is in the details. As with the hearsay rule, attorneys often make a reflexive objection while ignoring that there are several circumstances where evidence of negotiations might still be admissible. A good place to start is Federal Rule of Evidence 408, which parallels what many of the state evidence codes say:

(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.

(b) Exceptions. 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.

Right off the bat, we see that evidence of negotiations is admissible if offered for any purpose other than the few that are prohibited. This is made clear by the limited scope of Paragraph (a) and the list of exceptions in Paragraph (b). So, if the negotiations are not being referenced to show the validity of a claim, the amount of a claim, or the prior inconsistent statement of a witness, an objection should fail.  

Second, even if the negotiations are being referenced for a prohibited purpose, they remain admissible if they concern something other than a compromise of the claim. I once successfully opposed a pretrial motion to exclude a letter reflecting the parties’ negotiations, specifically because the letter contained a non-waiver provision that nothing in the lawsuit was being bargained away or surrendered. This made the letter an admissible “business communication” rather than an inadmissible “compromise negotiation,” and it made no difference that the lawsuit was ongoing when the letter was sent. See, e.g., In re E. Airport Dev., LLC, 443 B.R. 823, 829 (B.A.P. 9th Cir. 2011) (“[N]o evidence exists in the record that the documents were exchanged as part of, or under the motivating influence of, compromise negotiations. Rather, the record reveals that these documents were ordinary business communications between the parties.”) (citation omitted); Bright Harvest Sweet Potato Co. v. H.J. Heinz Co., L.P., No. 1:13-CV-296-BLW, 2015 U.S. Dist. LEXIS 31421, at *5 (D. Idaho Mar. 12, 2015) (allowing document into evidence because it embodied “business communications” rather than a “statement made during compromise negotiations about the claim.”); Kottayil v. Insys Therapeutics, Inc., No. 1 CA-CV 15-0765, 2017 Ariz. App. Unpub. LEXIS 1179, at *46-*48 (Aug. 29, 2017) (admitting communications as part of ordinary business rather than settlement negotiations, and emphasizing that “[t]he mere fact that the discussions occur after litigation began is not conclusive evidence of settlement negotiations.”) (citations omitted). 

Third, there is always the possibility that an opposing party already referenced certain of the compromise negotiations and thereby waived the objection to this sort of evidence (i.e., “opening the door”). This makes it worthwhile always to pay close attention to the written and verbal arguments by an opposing party, which could contain a waiver of this evidentiary rule or many others.

On the flipside, if you do have a valid objection under Rule 408, you should assert it at the first opportunity to avoid waiving it. This could be as early as the pleading stage, since it is possible to file a motion to strike allegations that reference compromise negotiations. See Jones v. Metro. Life Ins. Co., No. C-08-03971-JW (DMR), 2010 U.S. Dist. LEXIS 113219, at *45, *46 (N.D. Cal. Oct. 15, 2010); United States ex rel Alsaker v. Centracare Health Sys., No. 99-106 (JRT/RLE), 2002 U.S. Dist. LEXIS 10180, at *7, *8 (D. Minn. June 5, 2002); Philadelphia’s Church of Our Savior v. Concord Twp., No. 03-1766, 2004 U.S. Dist. LEXIS 15400, at *7, *8 (E.D. Pa. July 27, 2004).