Tuesday, May 18, 2010

Do you know? Admissibility of settlement offers

Sometimes, employers are blindsided by a lawsuit. The first you might learn that an ex-employee is suing you is when you are served the complaint and summons. Other times, however, the filing of a lawsuit is preceded by a back-and-forth between attorneys hoping to resolve the dispute outside of court. To what extent can you freely communicate with an ex-employee’s attorney without fear that your words and statements will come back to haunt you in a trial if the negotiations break down? Eid v. Saint-Gobain Abrasives (6th Cir. 5/12/10) [pdf] provides some guidance.

After his termination from Saint-Gobain, Kenneth Eid retained counsel for the purpose of asserting an employment discrimination claim. Prior to filing a claim, Eid’s attorney sent a letter to Saint-Gobain announcing Eid’s intention to pursue a claim but inviting a negotiated resolution. Saint-Gobain’s associate general counsel responded in writing with a discussion of Saint-Gobain’s internal investigation into Eid’s allegations and witnesses interviews. The responses concluded that the “termination was handled in our judgment in an appropriate fashion,” and “[t]here is no basis for the organization to consider a settlement with your client.”

Prior to trial, the court excluded the general counsel’s letter under Evidence Rule 408. Following a defense verdict, Eid appealed that decision.

Evidence Rule 408 prohibits a party from introducing into evidence:

  • offers to settle; and
  • conduct or statements made in settlement negotiations regarding the claim.

The 6th Circuit found that the trial court properly excluded the letter, despite the refusal to engage in any further settlement negotiations:

A party will often adopt a hardline position at the beginning of negotiations in order to extract greater concessions from an opponent. It would ignore the realities of negotiation to hold that such a position necessarily means that the parties are not engaged in compromise negotiations. Such a rule would also run contrary to the purposes of Rule 408, as it would invite undue caution in settlement negotiations, and would facilitate the admission of communications that contain puffing, posturing, and various irrelevancies.

The 6th Circuit also found that the discussion of the internal investigation was within the protections of Rule 408.

In other words, you can respond to an employee’s pre-suit settlement overtures with a reasonable degree of confidence that a jury will not some day be reading your lawyers comments about the strengths and weaknesses of your case.

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.