The opinion of the court was delivered by: Judge Nora Barry Fischer
On this 21st day of November, 2007, upon consideration of Plaintiff's Motion in Limine to Preclude any Testimony, Argument, Reference, Suggestion or Evidence of Any Nature Regarding the Fact of Settlement or as to the Terms, Circumstances or Nature of any Settlement Agreement Between Plaintiff, EMAP and MacLeod [DE 144] ("Plaintiff's Motion") and Memorandum of Law in Support [DE 144-3], the Mercy Defendants' response thereto [DE 170], the Mercy Defendants' Fourth Motion in Limine for Leave to Present Testimony Regarding Fact of Settlement and Memorandum of Law in Support [DE 124] (the "Mercy Defendants' Motion"), Plaintiff's response thereto [DE 162], the Mercy Defendants' Motion to Compel Production of Settlement Agreement [DE 90], Plaintiff's response thereto [DE 95] and the Mercy Defendants' Reply [DE 96] and oral argument before this Court, this Court HEREBY ORDERS as follows:
For the reasons set forth below, the Mercy Defendants' Motion [DE 124], is DENIED. In addition, Plaintiff's Motion in Limine [DE 144] to preclude testimony regarding the settlement agreement is GRANTED. Further, the Mercy Defendants' Motion to Compel [DE 90] is GRANTED to the extent that it seeks setoff.*fn1
I. Evidence of the Fact of Settlement Between Plaintiff, EMAP and MacLeod Is Inadmissible as Evidence at Trial (Plaintiff's Motion)
The Mercy Defendants' Motion seeks leave to refer to the fact of the settlement between Plaintiff and former co-defendants EMAP and Dr. MacLeod*fn2 solely for the purpose of explaining to the jury why the Mercy Defendants are the only defendants appearing at trial in this case. Plaintiff's Motion seeks, in part, to preclude any reference to the fact of settlement before the jury at trial. Federal Rule of Evidence 408 generally prohibits the admission of evidence regarding the compromise of or attempt to compromise a claim. The Mercy Defendants argue, however, that Rule 408 does not operate to exclude evidence unless it is "offered to prove liability for or invalidity of the claim or its amount." Fed. R. Evid. 408.
In the absence of Third Circuit case law in support of their position that evidence of the fact of settlement is appropriate evidence in this case, the Mercy Defendants cite several Fifth Circuit cases. See, e.g., Reichenbach v. Smith, 528 F.2d 1072, 1074 (5th Cir. 1976); Belton v. Fibreboard Corp., 724 F.2d 500 (5th Cir. 1984). Such cases no doubt have merit within the courts of the Fifth Circuit, however, they are not in line with the lower court decisions of the Third Circuit and/or Pennsylvania law, and therefore, are not persuasive to this Court.
As set forth in Plaintiff's Motion in Limine at Document No. 144, a recent case from the Middle District of Pennsylvania, as well as the policy of this jurisdiction to promote settlement, require a different result than the Fifth Circuit cases cited in the Mercy Defendants' Motion. In Sweeten v. Layson's Home Improvement, Inc., 04-cv-2771, 2007 WL 1189359 (M.D.Pa., April 19, 2007), the court granted the plaintiff's motion in limine to preclude the defendant from offering any evidence as to plaintiff's settlements with two former third party defendants who were involved in allegedly causing the plaintiff's injury. The defendant argued that the settling defendants, who were expected to testify, might be inclined to testify more favorably to the plaintiff so that evidence of the settlement would counter potential bias. The court held that the settlement agreements did not demonstrate the bias envisioned by Rule 408(b) and, therefore, were inadmissible. The court cited the Advisory Committee notes to Rule 408 which state that "exclusion may be based on . . . . promotion of the public policy favoring the compromise and settlement of disputes." To hold otherwise, the court held, would "discourage future plaintiffs from settling with less than all defendants." Id. at *2; see also Young v. Verson Allsteel Press Co., 539 F.Supp. 193, 196 (E.D.Pa. 1982) (admission of a settlement agreement into evidence conflicts with the policy underlying Rule 408). Moreover, the policies of Pennsylvania contract law protect a bargained for exchange between parties, such as the confidentiality provision in the Settlement Agreement. Greene v. Oliver Realty, Inc., 526 A.2d 1192, 1194 (Pa. Super. 1987).*fn3
Further, Federal Rule of Evidence 403 generally precludes the admission of settlement agreements, the fact of settlement and the terms of settlement on public policy and relevancy grounds because its "minimal probative value is outweighed by the danger of unfair prejudice and misleading the jury." Sweeten, 2007 WL 1189359 at *3. Moreover, the prejudice created by admission of such evidence cannot be cured through a limiting instruction to the jury. Id.
Therefore, at trial there will be no statement, evidence, argument or inference concerning the settlement by defendants, EMAP and Dr. Macleod with plaintiff Joan M. Mavrinac, for the reasons stated above. The Court will instruct the jury at the outset of the case as follows:
Plaintiff Joan M. Mavrinac brought this lawsuit against several defendants. Today, two defendants remain, namely The Mercy Hospital of Pittsburgh and Pittsburgh Mercy Health System. The other defendants have been dismissed from this case. It is not for you to wonder or speculate as to the cause of their dismissal. Rather, you have been sworn to try the issues between plaintiff Joan M. Mavrinac and defendants The Mercy Hospital of Pittsburgh and Pittsburgh Mercy Health System. Your verdict should only relate to plaintiff Joan M. Mavrinac's claims against those defendants. Initially, you will hear evidence and be asked to determine whether the Mercy Defendants were or were not joint employers of Plaintiff Joan M. Mavrinac.
II. Whether The Mercy Defendants Have a Right to Set Off in This Case Depends On Whether Joint Liability Exists (Mercy Defendants' Motion)
The Mercy Defendants also seek a ruling permitting reduction in any jury award by the amount of the settlement received by Plaintiff from EMAP and Dr. MacLeod. (See Document Nos. 90, 95). In support of their argument, the Mercy Defendants cite the Third Circuit's opinion in Miller v. Apartments and Homes of New Jersey, Inc., 646 F.2d 101, 110 (3d Cir. 1981). In Miller, the court addressed a racial discrimination issue under the Fair Housing Act and 42 U.S.C.§ 1982 ("Section 1982") and in doing so, held that "in federal civil rights cases, where one or more defendants have settled with a plaintiff, the damages recoverable by the plaintiff shall be reduced by the amount of the settlement received." Id. at 110. Miller deals with set off, although in dicta, the court opined that, as to set off and contribution, "the two problems are so intertwined that they cannot sensibly be treated in isolation." Id. at n. 5. In addition, in Miller, the court addressed the rules of set off and contribution collectively as the "contribution rules." Id.
In concluding that set off and contribution are available in Section 1982 actions (and potentially civil rights actions in general), the court in Miller relied upon a prior Third Circuit case, Glus v. G.C. Murphy Co., 629 F.2d 248 (3d Cir. 1980). In Glus, a female employee brought a class action under Title VII seeking damages on the basis of sex discrimination. Defendant G.C. Murphy Co. ("Murphy") filed cross claims against certain unions seeking contribution. Prior to trial, Murphy and the plaintiff class settled, but litigation continued on the cross claims. The district court held that both Murphy and the unions had violated Title VII, and that Murphy was entitled to contribution with respect to the Title VII settlement with plaintiffs. The Third Circuit affirmed the district court's decision, holding that Murphy was entitled to contribution as a matter of federal common law. In Miller, the court adopted the court's analysis in Glus, holding that "[n]othing in [the Glus case] suggests that a different analysis or a different result should follow in civil rights cases." Miller, 646 F.2d at 107.
Shortly after the Third Circuit's decision in Miller, the United States Supreme Court decided Northwest Airlines, Inc. v. Transport Workers Union of America, 451 U.S. 77 (1981), which overruled the Third Circuit's decision in Glus. In Northwest, a case involving Title VII and Equal Pay Act claims, a union sought contribution in the amount provided by a settlement agreement between the plaintiff and Northwest. The Supreme Court addressed the issue of whether Title VII and the Equal Pay Act support a right to contribution. The Court held that neither Title VII nor the Equal Pay Act expressly creates a right to contribution in favor of employers. Id. Further, the Court held, Congress did not intend to imply a ...