Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-03100/USCOURTS-caDC-07-03100-0/pdf.json

Parties Involved:
Terry Davis
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 4, 2009 Decided February 26, 2010

No. 07-3100

UNITED STATES OF AMERICA,

APPELLEE

v.

TERRY DAVIS,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 06cr00193-1)

Tony Axam Jr., Assistant Federal Public Defender, argued

the cause for appellant. With him on the briefs was A. J.

Kramer, Federal Public Defender.

Katherine M. Kelly, Assistant U.S. Attorney, argued the

cause for appellee. With her on the brief were Roy W. McLeese

III, Elizabeth Trosman, and Michael K. Atkinson, Assistant U.S.

Attorneys.

Before: GINSBURG and TATEL, Circuit Judges, and

RANDOLPH, Senior Circuit Judge.

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Opinion for the Court filed by Senior Circuit Judge

RANDOLPH.

RANDOLPH, Senior Circuit Judge: Terry Davis served as

national treasurer of the Phi Beta Sigma fraternity. Accused of

stealing from the fraternity, he was indicted on ten counts of

bank fraud, one count of first-degree theft, and one count of

first-degree fraud. See 18 U.S.C. § 1344; D.C. CODE § 22-

3211(b)(2); id. § 22-3221(a). The jury acquitted him of two of

the bank fraud counts and convicted him of the remaining

charges. The district court sentenced Davis to 51 months’

imprisonment on each of the bank fraud charges and 24 months’

imprisonment on the theft and fraud charges, all sentences to run

concurrently, and ordered him to pay $217,746.79 in restitution

to the fraternity. There are two evidentiary issues, the first

concerning the court’s refusal to admit testimony from Davis’s

wife, the second dealing with the court’s admission of evidence

regarding settlement talks despite Federal Rule of Evidence 408.

Because the court’s application of Rule 408 warrants reversal,

we do not reach Davis’s constructive amendment argument.

Founded at Howard University in 1914, Phi Beta Sigma has

university and alumni chapters with more than 120,000

members. The fraternity obtains its funds from the annual dues

of its members. When the dues arrive at the fraternity’s

Washington, D.C., headquarters, they are deposited into Phi

Beta Sigma’s general fund bank account and used to pay the

fraternity’s operating expenses.

The Phi Beta Sigma national treasurer is the elected, unpaid

custodian of all fraternity funds. Two main financial controls

cabin the treasurer’s discretion in dealing with the funds. First,

before any expense is paid, the fraternity’s executive director,

national president, and treasurer must each sign a “voucher”

documenting and authorizing the payment. Second, the

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president and the treasurer must co-sign each fraternity check.

The executive director is a full-time employee with an office at

the fraternity’s headquarters; neither the president nor the

treasurer have offices. As a result, each check and voucher must

be mailed from one officer to the next until all signatures are

gathered. 

Davis disregarded these policies during his tenure as

national treasurer from 1999 to 2003. Some checks he wrote

without obtaining an approved voucher. Many checks contained

only Davis’s signature. On others Davis also signed or stamped

the president’s name. In the spring of 2003, the fraternity

investigated financial irregularities and learned that Davis had

written checks to cash, a violation of another fraternity policy.

That June, the fraternity suspended Davis as treasurer. 

The new treasurer, Jimmy Hammock, testified that he asked

Davis to produce the financial records Davis maintained on the

fraternity’s behalf. Davis provided some unused checks and

financial reports but no cancelled checks or bank statements.

Hammock also asked Davis why he had written fraternity

checks payable to cash. Davis explained that he transferred the

funds to the fraternity’s payroll account. 

Hammock testified about a second conversation with Davis

regarding these checks. Hammock told Davis the fraternity had

found $29,000 in checks made out to cash, none of which was

deposited in the fraternity’s bank account as Davis had claimed.

Over an objection based on Rule 408 of the Federal Rules of

Evidence, Hammock related the rest of the conversation: “Terry

asked – he said ‘Can we just split this $29,000.00 and make this

situation just go away?’ . . . . I told him that [the] amount was

in excess of a hundred thousand dollars. Terry’s statement to

me at that point was, ‘I can’t afford to pay that amount,’ and

then I told him – I said, ‘Terry, if you want to do some –

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negotiate some kind of settlement, you need to talk to our legal

counsel or our international president.”

At trial Davis called his wife, Rhonda Davis, to support his

account of the disputed checks – namely, that “although he had

written checks made payable to cash and deposited those checks

into his personal banking account, he had used funds derived

from those checks to pay fraternity bills and to reimburse

himself for fraternity debts he had paid using personal funds.”

Appellant’s Br. 26. Rhonda testified that she saw her husband

working at home on fraternity business “on a very regular basis

every day, most of [the] time, in some way, shape or form.”

Asked about the “types of things” she saw him doing, she

replied that “I would see him working on his computer with

spreadsheets. I would – I would even help him mail things. I

would see the money orders that had to be processed. I would

wait for the Fed. Ex. man.” Defense counsel later asked Rhonda

to elaborate further: “You talked about seeing Mr. Davis make

payments for fraternity expenses. Can you tell me a specific

instance when you saw him make a payment for a fraternity

expense?” After she responded “Yes, I can,” the prosecutor

objected. 

The government’s objection was that Rhonda’s only

personal knowledge of Davis’s fraternity payments was derived

from inadmissible hearsay, and that her only nonhearsay

testimony was that she saw her husband receive bills, write

checks, and purchase money orders. Such limited testimony,

the government argued, should be excluded under Federal Rule

of Evidence 403 as speculative and prejudicial.

The district court thoroughly considered the objection in a

hearing the next day. Both sides then filed written memoranda

and the court and counsel questioned Rhonda out of the jury’s

presence. Rhonda’s responses focused on three types of

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documents she saw in her home: checks, money orders, and

fraternity bills. 

Rhonda stated that she saw Davis write checks to pay

fraternity bills and expenses. But she could only recall one

check that Davis wrote from his personal checking account to

pay a fraternity bill. Asked how she knew this check was for a

fraternity expense, she said her husband told her the check was

“for fraternity stuff.” The court also asked Rhonda how she

knew Davis was using money orders to pay fraternity bills. She

recalled asking Davis about the money orders “the very first

time” she saw them at their home. He told her he used money

orders to pay fraternity bills because some vendors would not

accept the fraternity’s checks. Rhonda also testified on voir dire

that she and her husband did not use money orders to pay

household expenses, and that she saw bills from The Hartford

and the utility company PEPCO, neither of which served her

household. She did not claim to have seen Davis using money

orders for any particular vendor other than The Hartford.

The district court sustained the government’s objection and

Rhonda briefly concluded her testimony. Davis then took the

stand. Contradicting the testimony of the two national

presidents under whom he served, Davis testified that they had

authorized him to bypass the fraternity’s financial controls. He

admitted that he wrote fraternity checks to cash and deposited

many of the checks in his personal account. Davis testified that

he only used this money to pay the fraternity’s vendors, fund its

payroll account, and reimburse legitimate fraternity expenses –

never to line his own pockets. 

To explain the commingling of fraternity and personal

funds, Davis described a circuitous system of financial transfers

that he devised to pay fraternity obligations. He claimed that his

personal account was merely a way station that allowed funds to

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1

 Davis said he sometimes wrote “payroll transfer” or “payroll tax

transfer” on the memo line of the fraternity checks made out to cash.

He said that on other occasions he wrote checks to cash and

purchased money orders with the proceeds, without ever depositing

the money in his personal account. 

remit more quickly to vendors and banks wary of dealing

directly with Phi Beta Sigma. Due in part to the fraternity’s

poor financial history, some vendors allegedly would not accept

a fraternity check. And, according to Davis, the fraternity’s

bank denied access to newly deposited funds while a check

cleared, which delayed payment of the fraternity’s overdue bills.

Davis stated that in order to transfer funds more quickly, he

would write a fraternity check to cash, deposit the check into his

personal account, and either write a personal check or use the

proceeds to purchase a money order.1 Then he would transmit

the check or money order to a vendor, a separate fraternity bank

account, or a fraternity officer due to be reimbursed. The net

effect of the transfers, according to Davis, was to pay the

fraternity’s creditors and reimburse expenses he incurred on the

fraternity’s behalf.

The first issue presented in Davis’s appeal is whether the

district court properly excluded Rhonda’s proposed testimony as

hearsay. The Federal Rules of Evidence define hearsay as an

out-of-court statement offered for its truth and generally bar its

admission into evidence. FED.R. EVID. 801(c), 802. The Rules

also prohibit a witness from testifying unless he has personal

knowledge of the subject of his testimony. FED. R. EVID. 602.

These provisions intersect if a witness satisfies Rule 602’s

personal knowledge requirement by relying on the truth of an

out-of-court statement. “If the testimony of the witness

purports to repeat an out-of-court statement, hearsay is the

proper objection. If the testimony on its face purports to be

based on direct perception of the facts described but is actually

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2 Because the distinction between the two objections is based only on

the form of the testimony, an objection invoking either rule is

sufficient. 27 C. WRIGHT & V. GOLD, FEDERAL PRACTICE AND

PROCEDURE:EVIDENCE § 6026, at 252-54 (2d ed. 2007); 2 MCCORMICK ON EVIDENCE § 247 (6th ed. 2006); see, e.g., Elizarraras v. Bank

of El Paso, 631 F.2d 366, 374 (5th Cir. 1980).

based on an out-of-court statement about those facts, the

objection should be lack of personal knowledge.” 27 C.

WRIGHT & V. GOLD, FEDERAL PRACTICE AND PROCEDURE:

EVIDENCE § 6022, at 214-15 (2d ed. 2007); see also 2

MCCORMICK ON EVIDENCE § 249, at 137 (6th ed. 2006).2

The district court properly required Rhonda to demonstrate

personal knowledge of the personal checks, money orders, and

fraternity bills about which she proposed to testify, and to do so

without relying on hearsay statements she read or heard. See,

e.g., Pelster v. Ray, 987 F.2d 514, 525 (8th Cir. 1993); United

States v. Brown, 548 F.2d 1194, 1205 (5th Cir. 1977). As to

personal checks, it became clear during voir dire that Rhonda

could recall seeing only one check that Davis wrote on his own

account to pay a bill to the fraternity. It also became clear that

Rhonda only learned that this check was for a fraternity bill

when her husband said it was for “fraternity stuff.” The district

court therefore correctly sustained the government’s hearsay

objection to her proposed testimony about personal checks. 

As to money orders and bills, defense counsel pointed out

that she read the bills and saw the money orders in her home.

The court also heard Rhonda’s voir dire testimony that the

Davises did not use money orders and that The Hartford and

PEPCO did not serve their household. The government insisted

that because the bills and money orders amounted to hearsay,

Rhonda’s testimony about them would also be hearsay. 

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Davis is correct that like checks, money orders are not

hearsay. They are legally operative documents with a meaning

independent of the truth of the words they display. See 30B M.

GRAHAM, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE

§ 7005, at 46 n.2 (2006); see also United States v. Pang, 362

F.3d 1187, 1192 (9th Cir. 2004) (collecting citations). As

“verbal acts,” their significance “lies solely in the fact that [they

were] made, [so] no issue is raised as to the truth of anything

asserted.” FED. R. EVID. 801(c) advisory committee’s note. A

$100 money order made out to The Hartford instructs a financial

institution to disburse $100 to The Hartford. It would make no

sense to ask whether the money order was true. Such an

“instruction is, by its nature, neither true nor false and thus

cannot be offered for its truth.” United States v. Shepherd, 739

F.2d 510, 514 (10th Cir. 1984). Just as a check is not a

“statement” that can falsely influence federally insured lending

institutions, see Williams v. United States, 458 U.S. 279, 284-85

(1982), neither is a money order a “statement” as defined by

Rule 801(a).

Yet even if money orders are not hearsay, it does not

necessarily follow that Rhonda actually relied upon the money

orders – rather than other hearsay statements – to conclude

Davis used these financial instruments to pay fraternity

expenses. When asked during voir dire how she knew Davis

used money orders to pay fraternity bills, Rhonda mentioned

three things. She and her husband did not use money orders for

household expenses; on several occasions she saw money orders

her husband wrote to a vendor, The Hartford, that did not serve

the Davis household; and the first time she saw Davis writing

money orders she asked him what they were for, and he told her

he was paying fraternity bills. To the extent Rhonda’s

knowledge derived from what Davis told her, rather than from

the practice of her household or the words written on money

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orders, the district court properly excluded her proposed

testimony regarding the money orders.

Whatever more Rhonda could have added on this subject

could not have amounted to much. Rhonda had already testified

– without objection – that she “saw the money orders that had to

be processed” by her husband in connection with his work for

the fraternity. Her testimony thus informed the jury that Davis

used money orders to pay fraternity bills. The only additional

fact defense counsel sought to elicit over the government’s

objection was that Davis used the money orders to pay the

fraternity insurance bill from The Hartford. Even if the district

court abused its discretion in excluding this testimony, it is hard

to see how this prejudiced the defense. 

With respect to the fraternity bills, Davis argues that the

bills were not hearsay because they did not assert the truth of

anything; they simply instructed the fraternity to pay a debt. Yet

the documents did contain assertions, in the form of sender and

recipient labels. These simple labels in effect stated: “This

document is a message from The Hartford, and its contents

pertain to Phi Beta Sigma.” See 31 C. WRIGHT & V. GOLD,

FEDERAL PRACTICE AND PROCEDURE:EVIDENCE § 7141, at 251-

53 (2000); cf. United States v. Vigneau, 187 F.3d 70, 74 (1st Cir.

1999). And unlike words written on money orders, the labels

asserted facts that can be characterized as true or false. This

appears to be how the district court treated Rhonda’s proposed

testimony about the bills. As the court put it, she was prepared

to make assertions – based on her reading of the documents –

“that these bills were, in fact, bills that were sent to the fraternity

on behalf of these various vendors.”

Davis also contends that the bills, even if they contained

assertions, were not hearsay because Rhonda’s testimony was

not offered to show the truth of those assertions. Rather,

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3

 Both decisions recognized that the documents were hearsay to the

extent they were introduced to prove the matter asserted: that the

defendant resided at the address listed on the document. See David,

96 F.3d at 1480-81; Patrick, 959 F.2d at 1000.

4

 The policy underlying the best evidence rule, embodied in Federal

Rule of Evidence 1002, appeared to animate the district court’s

judgment regarding Rhonda’s proposed testimony. In requiring

litigants to prove the contents of a writing by introducing the writing

itself, the rule guards against inaccuracy, fraud, and incompleteness.

See 31 C. WRIGHT & V. GOLD, FEDERAL PRACTICE AND PROCEDURE:

EVIDENCE § 7162 (2000). Rhonda’s testimony regarding documents

not introduced at trial would have raised these concerns. But the best

Rhonda’s “testimony about the bills was offered to show that

[Davis] was on notice of instructions to pay, not that the

fraternity had taken actions to incur the debt.” Appellant’s Br.

28. Davis is correct that documents “may be admitted for a

material purpose other than the verity of [their] assertions.”

United States v. Watkins, 519 F.2d 294, 297 (D.C. Cir. 1975);

see FED. R. EVID. 801(c) advisory committee’s note; 30B M.

GRAHAM, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE §

7005 (2006). Davis is also correct that decisions of this circuit

have treated names written on bills and receipts as non-hearsay.

But in those cases, the documents were offered to link the

person whose name was written with the location where the

document was found. United States v. David, 96 F.3d 1477,

1481 (D.C. Cir. 1996); United States v. Patrick, 959 F.2d 991,

999 (D.C. Cir. 1992).3

 The documents’ relevance did not

depend on their truth; their mere presence made the connection

more likely. Rhonda’s testimony, on the other hand, relied on

the truth of the sender and recipient labels – not their location –

to identify the documents as fraternity bills. Given defense

counsel’s failure to articulate a justification for Rhonda’s

proposed testimony independent of the labels’ truth, the court

did not abuse its discretion by excluding it.4

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evidence rule also affords litigants an opportunity to demonstrate that

admission of secondary evidence is necessary because the writing

itself is unavailable. FED. R. EVID. 1004. Because the government

never made a best evidence objection, Davis was not called upon to

produce the bills, checks, and money orders, although the court

suggested that he should have done so.

5 (a) Prohibited uses. – Evidence of the following is not admissible on

behalf of any party, when offered to prove liability for, invalidity

of, or amount of a claim that was disputed as to validity or

amount, or to impeach through a prior inconsistent statement or

contradiction:

(1) furnishing or offering or promising to furnish – or

accepting or offering or promising to accept – a valuable

consideration in compromising or attempting to

compromise the claim; and

(2) conduct or statements made in compromise negotiations

regarding the claim, except when offered in a criminal

case and the negotiations related to a claim by a public

office or agency in the exercise of regulatory,

investigative, or enforcement authority.

(b) Permitted uses. – This rule does not require exclusion if the

evidence is offered for purposes not prohibited by

subdivision (a). Examples of permissible purposes include

proving a witness’s bias or prejudice; negating a contention of

undue delay; and proving an effort to obstruct a criminal

investigation or prosecution. 

While the court’s evidentiary ruling barring Rhonda’s

testimony may not be entirely free from doubt, the court’s

application of Rule 408 is another matter entirely. Rule 408,

which is set out in the margin,5

 excludes evidence of settlement

offers and negotiations when the evidence is “offered to prove

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liability for, invalidity of, or amount of a claim.” FED. R. EVID.

408(a).

Invoking Rule 408, Davis made a motion in limine to bar

Jimmy Hammock from testifying about his second conversation

with Davis. The defense motion quoted the following portion of

an FBI report of an interview with Hammock in January 2004:

Sometime between the National Conclave and August

2003, HAMMOCK had a telephone conversation with

DAVIS, during which he confronted DAVIS about the

checks made payable to cash and DAVIS’ explanation

[that] the money was deposited to the payroll account.

DAVIS said the money had been deposited into the

payroll account, but HAMMOCK replied “TERRY,

I’m telling you, I’ve gone through the records and it

didn’t.” DAVIS then unexpectedly said “what will it

take to make this go away?” HAMMOCK responded

that DAVIS needed to repay “whatever you took.”

DAVIS asked “what if I split the $29,000?”

HAMMOCK told DAVIS the amount of missing

money was in excess of $100,000.00, to which DAVIS

responded, “Oh, I can’t pay that much.”

There can be no doubt that Davis offered to compromise a

disputed claim. His offer was to split the $29,000 in checks to

cash he thought the fraternity had discovered. The claim “was

disputed as to validity or amount,” FED.R. EVID. 408(a): Davis

did not confess to taking the fraternity’s money; he said that he

had deposited the cash checks into the fraternity’s payroll

account; and Hammock rejected Davis’s explanation. See

Affiliated Mfrs., Inc. v. Alum. Co. of Am., 56 F.3d 521, 527-28

(3d Cir. 1995). It is also clear that the government intended to

introduce Davis’s settlement offer in order to prove Davis’s

guilt, or in the words of Rule 408(a), his “liability.” Offers to

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settle are excluded even if no settlement negotiations follow.

FED. R. EVID. 408(a)(1); see, e.g., Alpex Comp. Corp. v.

Nintendo Co., Inc., 770 F. Supp. 161, 163-64 (S.D.N.Y. 1991).

The Rule is meant to promote settlements. See FED. R. EVID.

408 advisory committee’s note (1974). If one party attempts to

initiate negotiations with a settlement offer, the offer is

excluded from evidence even if the counterparty responds: “I’m

not negotiating with you.” See FED. R. EVID. 408 advisory

committee’s note (1972 proposed rule). It makes no sense to

force the party who initiates negotiations to do so at his peril.

Rule 408 bars not only evidence of settlement offers, but

also “statements made in compromise negotiations.” FED. R.

EVID. 408(a)(2). Davis’s other statements to Hammock during

their second conversation were of that sort. Davis asked what

it would take to “make this go away”; Hammock said pay back

what you took; Davis countered with his offer to split the

$29,000; Hammock countered that the missing funds totaled

more than $100,000. That Hammock understood this give and

take as a compromise negotiation is confirmed by his trial

testimony – not before the court in limine but cited by the

government on appeal – that he told Davis to talk to the

fraternity’s president or lawyer if he wanted to settle the matter.

Although one-half of $29,000 has value – $14,500 worth to

be exact – the government argues that Davis did not offer

“valuable consideration” as the Rule requires. See FED. R.

EVID.408(a)(1). The government’s argument apparently is that

Davis’s offer of $14,500 was not “valuable” because he owed

a lot more. Under that theory, only a settlement offer exceeding

the full amount of the disputed claim is an offer of valuable

consideration. The framers of Rule 408 could not have intended

any such thing. The policy embodied in the Rule is to foster

compromises. And the very nature of compromise is that the

parties settle their differences by making concessions.

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6

 The circuits had been split on the issue. Compare United States v.

Arias, 431 F.3d 1327, 1338 (11th Cir. 2005), United States v. Bailey,

327 F.3d 1131, 1146 (10th Cir. 2003), and United States v. Hays, 872

F.2d 582, 589 (5th Cir. 1989) (applying Rule 408 in criminal cases),

with United States v. Logan, 250 F.3d 350, 367 (6th Cir. 2001), United

States v. Prewitt, 34 F.3d 436, 439 (7th Cir. 1994), and United States

v. Baker, 926 F.2d 179, 180 (2d Cir. 1991) (declining to apply Rule

408 in criminal cases). 

The government also tells us that Hammock’s testimony

properly came in pursuant to the portion of Rule 408(b) stating

that exclusion is not required “if the evidence is offered for

purposes not prohibited by” Rule 408(a), including, for

example, “proving an effort to obstruct a criminal investigation

or prosecution. The “purposes” set forth in Rule 408(a) are

proving “liability for, invalidity of, or amount of a” disputed

claim. FED.R.EVID. 408(a). If evidence is introduced for some

other purpose, Rule 408 is no bar. See United States v. Technic

Servs., 314 F.3d 1031, 1045 (9th Cir. 2002); Carney v.

American Univ., 151 F.3d 1090, 1095-96 (D.C. Cir. 1998). The

problem for the government is that it wanted to use Hammock’s

testimony as evidence of Davis’s knowledge of his own guilt,

which is to say his “liability.” 

There is, as the government points out, a sentence in the

1972 advisory committee note to Rule 408 stating that an “effort

to ‘buy off’ the prosecution or a prosecuting witness in a

criminal case is not within the policy of the rule of exclusion.”

FED. R. EVID. 408 advisory committee’s note (1972 proposed

rule). But it would be a mistake to read much into that remark,

particularly in cases in which the defendant’s actions give rise

to potential civil and criminal liability. The 2006 amendment

to Rule 408, which made clear that the rule applied to both civil

and criminal proceedings,6 drew a distinction between civil

disputes involving the government and civil disputes involving

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private parties. Under amended Rule 408, a defendant’s

statements in settlement negotiations with government agencies

may be admitted in a criminal case. FED. R. EVID. 408(a)(2).

But if the civil dispute was with a private party, the defendant’s

offer of settlement and statements in negotiation may not be

admitted in a criminal prosecution when “offered to prove

liability for, invalidity of, or amount of a claim.” FED.R. EVID.

408(a). 

This still leaves the example in Rule 408(b) allowing the

use of a defendant’s settlement offer and statements in

negotiation in order to prove the defendant’s attempt to obstruct

a criminal investigation. This example, and the statement in the

1972 advisory notes, are easy enough to understand when

obstruction is one of the criminal charges. 18 U.S.C. §§ 1501

et seq.; see, e.g., Technic Servs., 314 F.3d at 1045. But even in

such cases there may be difficulties. One problem is that

settlement evidence, like other evidence, may be introduced for

multiple purposes, some prohibited under Rule 408(a), some

permitted under Rule 408(b). See Old Chief v. United States,

519 U.S. 172, 187, 190 (1997). Another problem is whether the

“obstruction” illustration applies only to pending criminal

investigations or also to potential investigations. In Davis’s

case, for instance, there was no date identifying the beginning

of a criminal investigation and there was no evidence indicating

that Davis knew of any criminal investigation when he talked to

Hammock. There may be other difficulties in some cases. One

might suppose that if – as in this case – the same acts give rise

to potential civil and criminal liability, any settlement of the

civil dispute could forestall or influence potential criminal

proceedings. Yet to hold that offers of settlement and

negotiations in that context amount to obstruction would be

contrary to the purpose of Rule 408, see 23 C. WRIGHT & K.

GRAHAM, FEDERAL PRACTICE AND PROCEDURE: EVIDENCE

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7

 The notes state that if settlement offers and negotiations between

private parties were admissible, this would be contrary to the policy

of Rule 408 to avoid chilling such negotiations. 

§ 5313, at 278 (1980), and would contradict the notes of the

advisory committee in 2006.7

Davis was not charged with obstructing a criminal

investigation or attempting to do so. We can say with some

assurance that when he offered to split the difference on

$29,000, he was not trying to bribe Hammock. All indications

are that Davis was proposing to pay the money to the fraternity.

It may be that an offer of settlement, excessive in amount, could

be seen as an attempt to “buy off” a complaining party. But

Davis’s offer obviously was not of that sort, which is why

Hammock rejected it out of hand. 

The most important consideration is that the government

did not introduce the Hammock-Davis conversation for the

purpose of “proving an effort to obstruct a criminal

investigation.” FED. R. EVID. 408(b). When asked at oral

argument whether this was the government’s purpose, counsel

for the government candidly admitted it was not. She

explained, as the prosecutor had argued to the jury, that the

conversation revealed Davis’s consciousness of guilt. But that

is one of the prohibited purposes in Rule 408(a). Consciousness

of guilt proves “liability” for a disputed claim under Rule

408(a). 

We therefore hold that the district court abused its

discretion in permitting Hammock to testify regarding Davis’s

offer of settlement and the statements that followed. The

government did not argue that if the court erred, the error was

harmless. Although we have discretion to determine sua sponte

whether an error is harmless, see United States v. Pryce, 938

USCA Case #07-3100 Document #1232312 Filed: 02/26/2010 Page 16 of 17
17

F.2d 1343, 1347-48 (D.C. Cir. 1991), we decline to do so here.

Each side discussed the Hammock-Davis conversation in

closing argument. Whether Hammock’s testimony affected the

outcome is not sufficiently clear to warrant our determining

harmlessness sua sponte. See id. (citing United States v.

Giovannetti, 928 F.2d 225, 227 (7th Cir. 1991)). Accordingly,

we vacate the convictions and remand for further proceedings

consistent with this opinion. 

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