The opinion of the court was delivered by: DAVIS
In this diversity action, the question before the court is whether defendant, Federal Pacific Electric Company (Federal) may introduce evidence of plaintiff Young's settlement with former co-defendant Verson Allsteel Press (Verson) at trial. Here, unlike the typical case, plaintiff is not offering evidence of defendant's settlement with a third party to establish defendant's liability. See e.g. Sun Oil v. Govostes, 474 F.2d 1048, 1049 (2d Cir. 1973). Instead, defendant (Federal) seeks to introduce evidence of plaintiff's settlement with Verson to minimize its potential exposure in damages.
Implicit in Federal's position must be the belief that a jury will be less likely to render a large damage award if they are aware that plaintiff has already been compensated by a former co-defendant, viz. Verson.
The resolution of this question, is governed by the application of Rule 408 of the Federal Rules of Evidence.
This rule provides that:
(1) furnishing or offering or promising to furnish,
Fed.R.Evid. 408. (brackets added).
Defendant argues that because it is forced to attend trial without the presence of former co-defendant Verson Allsteel Press (Verson)
it should be permitted to introduce evidence of Verson's settlement with plaintiff Young. Defendant contends that evidence of Verson's settlement with Young would alleviate an "unnecessary and substantial" prejudice which would result if, "the jury were kept in the dark about the settlement and misled into thinking that Federal was the only possible source of funds to compensate plaintiff for his injuries." Supplemental brief of defendant at 3 and 4. In support of its position defendant relies on that portion of Rule 408 which authorizes the admission of settlement information when offered for a purpose other than "to prove liability for or invalidity of the claim or its amount."
Presumably the "other purpose", here averred, is to prevent unnecessary and substantial prejudice from accruing to defendant.
Taking Federal at its word; i.e., that it wishes to prevent the jury from believing that Federal would be the only source of a plaintiff's recovery, it is still not possible to see how this is not precisely the forbidden fruit excluded by operation of Rule 408. It is difficult to understand how Federal is not, by its own admission, seeking to introduce such evidence to mitigate the amount of any possible jury award by informing the jurors that plaintiff has already received a measure of compensation for his injuries. Thus, upon more circumspect analysis it is clear that Federal's argument is merely an attempt to circumvent the express prohibition of Rule 408.
Whether or not Federal would dispute this characterization is irrelevant; for there are additional considerations which support the denial of Federal's motion.
Federal has argued that because its express purpose for introducing evidence of settlement is not to prove the validity or invalidity of the claim or its amount, such evidence of settlement should be deemed admissible.
This claim, even if true, would not signal an end to our inquiry because as Judge Weinstein has trenchantly observed:
Despite such a sweeping statement, care should be taken that an indiscriminate and mechanistic application of this "exception" to Rule 408, does not result in undermining the rule's public policy objective ... The trial judge should weigh the need for such evidence against the potentiality of discouraging future settlement negotiations.
2 J. Weinstein & M. Berger, Weinstein's Evidence, § 408(05) (1978).
Even if Rule 408 did not explicitly address the issue, my concern about the prejudice to plaintiff and the "unsettling" effect upon future compromise agreements between parties leads me to conclude, Federal's motion should be denied.
It is well established that statements made for purposes of settlement negotiations are inadmissible. And Rule 408 of the Federal Rules of Evidence extends the exclusion to completed ...