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Univ. of South Carolina School of Law

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Thursday, May 12, 2011

Settlement Discovery: EDNY Finds Rule 408 Doesn't Preclude Discovery Of Settlement Agreement

Federal Rule of Evidence 408 states:

(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.

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.

In other words, Rule 408 deems evidence of settlement agreements inadmissible for certain purposes at trial? But does that mean that such settlement agreements are immune from discovery? According to the recent opinion of the United States District Court for the Eastern District of New York in Levick v. Maimonides Medical Center, 2011 WL 1673782 (E.D.N.Y. 2011), makes clear, the answer is "no."

In Levick

Nadine Levick commenced [an] action against the defendant, Maimonides Medical Center..., seeking damages under Title VII of the Civil Rights Act of 1964,...the Administrative Code of the City of New York ..., and 42 U.S.C. ยง 1983, stemming from alleged discriminatory treatment during her employment at Maimonides. In her Complaint, plaintiff claim[ed] that she was subjected to religious and sexual discrimination while employed by the defendant and was then terminated, without cause, when she complained about her treatment to supervisors....Plaintiff further allege[d] that the defendant has since interfered with her attempts to obtain new employment.

In response, Maimonides filed a motion to compel discovery of a settlement agreement from Levick's prior lawsuit against Harlem Hospital/Columbia University, in which she alleged claims similar to those asserted against Maimonides. In response, Levick argued that settlement agreements are often inadmissible under Federal Rule of Evidence 408 and that even when they are offered for a permissible purpose they are often excluded under Federal Rule of Evidence 403.

The Eastern District of New York found that these conclusions were correct but that these Rules only cover the issue of whether evidence is admissible at trial and not the issue of whether it is discoverable. According to the court,

The Federal Rules of Civil Procedure grant parties in lawsuits broad rights to discovery. Fed.R.Civ.P. 26(b). Parties are entitled to discovery for any "nonprivileged matter that is relevant to any party's claim or defense." Fed.R.Civ.P. 26(b)(1). Discoverable materials "need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. Materials that are inadmissible under the Federal Rules of Evidence may be discoverable if a "minimal showing of relevance" is made.

The court then found that this "minimal showing of relevance" was made because Maimonides

contend[ed] that discovery of the settlement agreement with Harlem Hospital will lead to the discovery of admissible evidence relating to the issue of damages. More specifically, [Maimonides] argue[d] that the terms of the agreement may be used to prove that certain damages the plaintiff asserts against the defendant can be attributed to plaintiff's earlier case.

-CM

http://lawprofessors.typepad.com/evidenceprof/2011/05/408-levick-v-maimonides-medicalcenterslip-copy-2011-wl-1673782edny2011.html

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