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Editor: Colin Miller
Univ. of South Carolina School of Law

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Friday, April 10, 2009

Potential Vs. Actual: Third Circuit Finds That Rule 408 Doesn't Apply To General Release Signed By Age Discrimination Plaintiff

 Federal Rule of Evidence 408 states in relevant part that

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:

(1) furnishing or offering or promising to furnish--or accepting or offering or promising to accept--a valuable consideration in compromising or attempting to compromise the claim; and

(2) conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.

There are thus two foundational elements that must be satisfied for evidence of alleged settlement negotations to be deemed inadmissible: (1) there must have been a claim, and (2) that claim must have been disputed as to validity or amount. And the problem for the plaintiff in Seasonwein v. First Montauk Securities Corp., 2009 806637 (3rd Cir. 2009). was that the general release he claimed that he executed during settlement negotations was executed before a claim existed.

In Seasonwein, Jerome Seasonwein brought an action against First Montauk Securities, alleging that he was terminated because of his age in violation of the Age Discrimination in Employment Act and the New Jersey Law Against Discrimination. The district judge, however, dismissed the latter claim based upon lack of subject matter jurisdiction and granted First Montauk's motion for summary judgment dismissing the first claim.

Seasonwein subsequently appealed, claiming, inter alia, that the district judge erred by admitting evidence that he signed a general release, under which he agree to waive all of his claims against First Montauk in exhange for his acceptance of a severance package (The district judge actually found that the release did not contain language required by the Older Workers Benefits Protection Act, rendering it ineffective, but she still considered it while deciding First Montauk's motion for summary judgment).    

But Seasonwein's problem, according to the Third Circuit, was that 

[a]t the time Seasonwein signed the release, he had not yet alleged-or even considered alleging-any claims against First Montauk. As a result, the agreement signed by Seasonwein merely affected a general release-it did not settle any specific claims, as there were no claims at issue that could have been settled.  

In other words, because there was no claim, there were no settlement negotiations, and  Federal Rule of Evidence 408 was inapplicable. Or, as some courts have put it, Seasonwein only had a potential claim and not an actual claim, and the latter is required for Federal Rule of Evidence 408 to apply.

-CM

http://lawprofessors.typepad.com/evidenceprof/2009/04/408--seasonwein-v-first-montauk-securities-corpslip-copy-2009-wl-806637ca3-nj2009.html

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