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

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Monday, December 6, 2010

Under Pressure: Ninth Circuit Finds Negotiation Statements Admissible Despite Rule 408 To Prove Inappropriate Pressure

Federal Rule of Evidence 408 provides:

(a) Prohibited uses.--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.

(b) Permitted uses.--This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include proving a witness's bias or prejudice; negating a contention of undue delay; and proving an effort to obstruct a criminal investigation or prosecution.

As the language of Rule 408(b) makes clear, the three permitted uses listed are not exhaustive but instead only examples of permissible purposes. In its recent opinion in Costanich v. Department of Social and Health Services, 2010 WL 4910222 (9th Cir. 2010), the Ninth Circuit found that evidence of settlement negotiations was admissible for a purpose not enumerated under Rule 408(b). I'm not sure that I agree.

In Costanich, Washington state revoked Kathie Costanich's foster care license and instituted guardianship termination proceedings against her following an investigation by a Department of Social and Health Services ("DSHS") social worker, Sandy Duron, which purportedly revealed "emotional abuse" of the children in Costanich's care. Costanich's thereafter brought a ยง 1983 claim against Duron, DSHS, and other DSHS officials for deprivation of her due process rights to her foster care license and guardianship of her dependents, and the district court granted summary judgment in favor of all DSHS personnel on the basis of absolute and qualified immunity.

Costanich thereafter appealed, and, in part of its opinion, the Ninth Circuit noted that DHS informed Costanich of its finding of emotional abuse

in a meeting in November 2001. According to the testimony of several officials, DSHS also told her that if she would not appeal the finding of emotional abuse and would agree to participate in a corrective management plan, DSHS would not seek termination of her guardianship of [her foster children].

The Ninth Circuit then noted that

Defendants moved to strike this evidence on the ground that the proposal constituted an inadmissible settlement offer. See Federal Rule of Evidence 408(a)(1). The district court ruled that the evidence was not offered as proof of liability "but to show that DSHS inappropriately pressured [Costanich] to accept its abuse finding." DSHS waived its challenge to the district court's ruling by failing to raise it in the opening brief....Again, even if DSHS had properly preserved this challenge, we would conclude that the district court did not abuse its discretion in admitting the evidence.

This seems like a strange ruling to me. It seems like in most settlement negotiations, the strategy of a party making a settlement offer is to claim that the other party is better off taking the offer than going to trial (e.g., "Give me $10,000 today or you might be paying me $100,000 after trial"). It seems to me that what DSHS did was no different. Their offer was Costanich not appealing the finding of emotional abuse in exchange for DSHS not seeking termination of her guardianship. The court(s) construed this as inappropriate pressure, but it seems to me that it was exactly the type of negotiation that occurs in most actions and that should be covered by Federal Rule of Evidence 408.



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