Vail Law: Legal settlement negotiations are confidential because of Rule 408 (column)
January 31, 2018
I can't tell you how many times I've been asked this. Well, really I can; after all, it's not confidential.
The question I've been asked that's launched a thousand protests is: "Can't we use this? Can't we show this to the judge?" The "this" in the last two sentences that untold multitudes of clients have want to "use" or "show" is that we offered settlement to the other side, usually with the implication that the settlement we offered was reasonable, and that the other side — damn them to a life of eternal misery! — was unreasonable.
"Say what? Why in the name of Luis Brandeis not!?"
"It goes like this," I usually say. "If not exactly sacred, settlement negotiations — particularly if reserved under either Colorado Rule of Evidence Rule 408, or the equivalent federal rule, comes about as close to sacred as you get in law."
This is usually met with a blank stare and a "Huh?"
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Permit me to explain.
First, to lay the foundation, there are — as you might suspect from the foregoing — formal rules of evidence. In legal terms, "evidence" covers the burden of proof, admissibility, relevance, weight and sufficiency of what should be admitted into the record of a legal proceeding. In a legal proceeding, you can't just throw stuff against the courtroom wall and see what sticks. Oh my, no.
All about the evidence
Evidence — in both civil and criminal proceedings — may be used to prove or disprove a whole host of things that either support a fact you want to sustain or undermine one you want to disprove. It is the very stuffing in the legal claims that plump the bird of success in the courtroom. Without supporting evidence, you've only got a song that no one wants to hear.
The Federal Rules of Evidence govern the admissibility of evidence in federal trials. Not surprisingly, the Colorado Rules, which are largely modeled after the federal rules, govern trials in the Centennial State.
In shorthand, the Rules are gatekeepers, dictating what gets in at trial and what does not.
So what about the star of this column, Rule 408?
Instructively, the title under which the Rule is found is Article IV, "Relevancy and its Limits." "Relevancy," or the less highfalutin' "relevance," is the tendency of a given item of evidence to prove or disprove one of the legal elements of the case. But legal life is not all skittles and beer; not everything that is potentially relevant is necessarily admissible. And that's where the Rule comes in.
In a nutshell, what Rule 408 is says is: evidence of a settlement offer and conduct or statements made in settlement negotiations are not admissible at trial.
Why in the world would that be? "Doesn't it," more clients than I can count have asked me, "show that we were acting in good faith?" Or, as frequently, "Doesn't it show that the other side was not acting in good faith?"
"Maybe," I say. "But settlement negotiations are sacred."
Why it's sacred
Frank and open settlement negotiations are promoted by the court and may offer a practical solution to a legal dispute. Most times, the parties are better served by crafting their own acceptable resolution as compared to duking it out to court. Not only are court proceedings subject to strict rules, formal processes, and considerable expense (to say nothing about the effect of trial on your blood pressure), sometimes strange and unexpected things happen in a courtroom. If the parties can craft their own solution, they will likely be able to control those variables that may fly away from them at trial.
And there is the matter of certainty as well. If the opposing parties can reach their own resolution, there will be finality; no more guessing, praying and cursing how this whole mess might turn out.
Because the court recognizes the value of potential informal settlement, the Rules promote open, frank — and confidential — settlement discussions. If progress is to be made towards settlement, one can and should not chill the process by holding offers that may have been made against the party who has made them. Who, the law reasonably asks, would venture forward with the olive branch of an offer, if the threat of having one's arm taken off at the shoulder were the consequence of reaching out? And so, in respect of all this, Rule 408. What is offered in settlement cannot be used against you.
"So," my client will often pout, "We can't use this?"
"It's a double-edged sword," I say. "Neither can the other side. It is the holiest of holies."
"Because it promotes settlement?"
"Because it promotes candor and forthrightness," I answer. "If one cannot proceed with frankness, one cannot proceed."
This often gets a pensive "Hmmm."
"Lady justice is blind," I say. "Remember, the blindfold and the scales and all?"
This often gets a resigned "Yup."
"It cuts both ways. What's got your undies in a bunch also protects you."
"I s'pose," is the usual answer.
"Let's give this another try," I say. "Subject, of course, to 408."
Rohn K. Robbins is an attorney licensed before the bars of Colorado and California who practices in the Vail Valley with the law firm of Stevens, Littman, Biddison, Tharp & Weinberg LLC. His practice areas include business and commercial transactions, real estate and development, family law, custody and divorce and civil litigation. Robbins may be reached at 970-926-4461 or at his email address, firstname.lastname@example.org.