When negotiating a private settlement agreement, practitioners typically consider such negotiations to be confidential and privileged, not to be disclosed by the parties outside of the confines of the settlement discussions. In fact, most private mediation and settlement agreements contain specific confidentiality provisions, with each party expressly agreeing that the terms of the settlement are to be kept strictly confidential and not disclosed to any third party unless required by law. But, when settlement negotiations take place with a governmental agency, maintaining confidentiality both during and after settlement can be more problematic, as the content of the negotiations and documents exchanged may be subject to disclosure under the federal Freedom of Information Act (FOIA) and state “sunshine” laws, including Pennsylvania’s Right-to-Know Law and New Jersey’s Open Public Records Act (OPRA).
In general, Federal Rule of Evidence 408 protects settlement communications by making statements and documents exchanged during settlement negotiations inadmissible “either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction.” Rule 408 was intended to facilitate and promote a general public policy favoring settlements and the resolution of claims. Most states, including Pennsylvania and New Jersey, have adopted their own versions of Rule 408 that generally track the rule and prohibit the admission of evidence of parties’ settlement negotiations.
