There seems to be a common misunderstanding about the proper way to use Rule of Evidence 408 relating to evidence of offers of compromise and settlement discussions. Let's take the recent Bill Cosby criminal trial as an example. In March, Cosby moved to dismiss any evidence regarding any aspect of settlement of the civil action between him and Andrea Constand from 2006. He argued in part that evidence of the civil settlement was inadmissible under Pennsylvania Rule of Evidence 408. The court disagreed with that argument, however, reasoning that the settlement documents were relevant to show Cosby's consciousness of guilt and efforts to obstruct the criminal investigation. The court ultimately did not allow the jury to hear any evidence of settlement of the civil suit. While the court neither issued an opinion nor provided any reasoning for its decision to exclude the evidence of civil action settlement, Cosby's defense team had argued both that the exceptions to Rule 408 did not apply and that the evidence was unfairly prejudicial under Rule 403. Nevertheless, the court's rejection of Cosby's argument that evidence of settlement is inadmissible under Rule 408 demonstrates practitioners' need to better understand the rule: Had the evidence of civil action settlement been admitted, the Cosby criminal trial might have had a different outcome. This rule has the potential to change the trajectory of a trial and greatly influence the jury.

Many lawyers, and even judges, commonly believe Rule 408 to be an absolute rule that prohibits any party from using settlement negotiations or the fact of settlement for any purpose. This rule causes lawyers to immediately think that any document related to settlement cannot be used in trial if the document contains “furnishing, promising, or offering—or accepting, promising to accept or offering to accept—a valuable considering in compromising or attempting to compromise the claim and conduct or a statement made during compromise negotiations about the claim.” This is a misperception. The reality of Rule 408 and its application is more nuanced. Although evidence of settlement, or the content of settlement negotiations, is frequently inadmissible, there are circumstances in which such evidence can be admitted at trial, and used effectively.

The Basics of Rule 408

Rule 408 provides, generally, that evidence of a compromise of a claim, and any statement made during negotiations to compromise a claim, cannot be used “either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction.” It was enacted for two reasons. First, it was intended to encourage uninhibited settlement talks from both parties before trial or summary judgment motions so the parties could come to amicable solutions. Secondly, it took into consideration the weight of such evidence at trial—that is, because settlement-related evidence is often the result of motivations that do not relate strictly to the validity or amount of a disputed claim, its relevancy to “prove or disprove the validity or amount of a disputed claim” was questionable.

Used in the correct way, Rule 408 can allow evidence that can change the course of a trial. In the first place, much of the confusion surrounding Rule 408 originates from the words “disputed claim.” Rule 408 can only be applied when a “dispute” existed when the evidence in question was created. That, however, leaves room for what is defined as a dispute, a question on which courts' opinions vary. Some have said that Rule 408 can be applied when there is a difference of opinion such as making the adverse party aware of one's concerns. Other courts have analyzed what is defined as a claim and defined it as generally as “litigation touching on the same underlying facts.”