Tuesday, May 14, 2013
Federal Rule of Evidence 408 states:
(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.
In United States v. Dish Network, L.L.C., 2013 WL 1876419 (C.D.Ill. 2013), the Central District of Illinois addressed an interesting question under Rule 408: Does the Rule merely deem evidence of settlement negotiations inadmissible at trial, or does it also deem such evidence privileged?According to the complaint in Dish Network,
Dish sells satellite-television programming services that it markets, inter alia, through "authorized dealers" whom it requires by contract to market its services to consumers. The complaint alleges that Dish did not monitor or enforce dealer compliance with the telemarketing laws, and that though it knew that they violated those laws, it continued paying them to market services to consumers. Plaintiffs allege that Dish thereby shares responsibility for its dealers' violations, and seek to hold it accountable for those violations. Dish has moved to dismiss these claims.
During discovery, the plaintiffs sought access to certain documents reflecting settlement negotiations between the Dish Network and the Federal Trade Commission. In response, the Dish Network moved that the documents remain sealed and
support[ed] the Motion with the Declaration of Joseph A. Boyle, one of Defendant's attorneys. According to Boyle, the Settlement Documents contain sensitive and confidential information regarding Defendant's business. Boyle Decl. Boyle also assert[ed] that unsealing these documents would have a chilling effect on others attempting settlements, will compromise ongoing settlement efforts, and discourages out of court dispute resolution.
The plaintiffs then responded that
there is no generally recognized privilege over settlement communications. Plaintiffs further note[d] that Federal Rule of Evidence 408 addresses the introduction of settlement communications into evidence but not the discoverability or privilege.
The Central District of Illinois found that the "[p]laintiffs are correct that no generally recognized settlement-negotiation privilege exists." That said, the court found that the "[d]efendant is also correct that there is a policy interest in facilitating and encouraging settlements, which may be well-served by preserving the confidentiality of communications made during settlement negotiations."
Ultimately, the court sided with the plaintiffs, finding that
a review of the documents does not show that they contain information that should be kept from the public view. Two of the letters (the February 3, 2012 letter and the August 11, 2011 letter) speak only in the broadest terms about the analysis of the call records. These letters do not contain any trade secrets or the type of business information that would warrant sealing them.