Opinion ID: 2298988
Heading Depth: 2
Heading Rank: 2

Heading: Parties' attempts to elicit testimony regarding the third party settlement

Text: Beyond the need to disclose the fact of settlement to the jury during the course of trial in order to avoid jury confusion, the parties themselves may wish to present evidence of settlement or mention settlement in their opening statements or closing arguments. Federal courts have held that although Rule 408 bars the admission of evidence of settlement to prove liability or the validity of a claim, it expressly allows such evidence offered for other purposes. [25] However, settlement evidence will not be admitted simply because it is relevant for a purpose other than avoiding jury confusion. In deciding whether to admit settlement advice for another purpose, a trial court must carefully exercise its discretion and balance the probative value of the evidence for a permissible purpose against the prejudicial effect and risk the evidence will be used for an improper purpose. [26] When the judge discloses the fact of settlement, it is usually for the purpose of avoiding jury confusion or informing the jury of the alignment of the parties. When a party seeks to admit evidence, disclosing the facts of any settlement (not just the fact of settlement), however, we believe that a trial judge must be more skeptical of the party's purpose. Advocacy lends itself to creative arguments purporting to offer the evidence for the purpose of impeachment or to enhance credibility, but may in reality be an attempt to persuade the jury that a claim has no validity, that another party is liable or that the amount of damages should be discounted to avoid a windfall to the plaintiff[s]. In McInnis, the plaintiff was injured in an accident when her motorcycle collided with Florence Poirier's automobile. [27] The plaintiff filed an insurance claim against Poirier, and eventually settled the claim for $60,000 in exchange for a release from Poirier. Later, the plaintiff sued A.M.F. and Harley-Davidson Motor Co. for negligent design. The defendants offered the Poirier release into evidence and the trial judge admitted it. The defendants argued that Rule 408 did not bar the release because it was offered not for the purpose of invalidating the plaintiff's claim against the defendants, but rather to narrow the issues to allow the jury to determine what injuries were actually caused by the defendants. [28] Defendants also argued that the release was offered to attack the plaintiff's credibility. On appeal, the First Circuit held that from the record it seemed apparent that the trial judge admitted the release on the basis that it related to causation. [29] Whether cast in terms of `causation,' `responsibility,' or the `validity of the claim,' the defendants wanted the jury to infer from the fact of settlement that the defendants could not be held liable for the amputation of the plaintiff's leg. Admitting the release for this purpose is inconsistent with the policy underlying Rule 408. [30] The court considered the defendant's alternative theory that the release was offered for the purpose of attacking credibility. The court stated that [a]lthough this contention may have some superficial appeal, we see it as an attempt to obfuscate the critical issue. The release could logically impeach McInnis' credibility only by tending to show that she brought suit against the defendants knowing all the while it was Poirier, and not the defendants, who caused the injury to her leg. [31] Several other circuits have held evidence of third-party settlements inadmissible because the court found the real purpose for offering the evidence was to prove the invalidity of a claim or to discount damages. [32] The Third Circuit has upheld a trial judge's decision to allow evidence of a pretrial release because it was offered for the purpose of proving bias. [33] The McShain court admitted a pretrial release in exchange for $10.00 and the right to use one of the released defendant sister company's employees as an expert at trial against the remaining defendants. The plaintiff sued Cessna and Wings alleging defective design that caused a plane he bought from Wings to be damaged. Before trial, McShain released Butler, the company that initially repaired the plane. In exchange for the release Butler agreed to pay $10.00 and let McShain use a consultant employed by Butler's sister company, Mooney Aircraft as an expert against Cessna and Wings. McShain argued that Cessna offered the release in an attempt to shift the blame for the damage from Cessna (the manufacturer) to Butler (the repairer) contrary to Rule 408. On appeal, the Third Circuit held that Rule 408 did not bar the release because it was offered for the purpose of proving that the expert was a biased or prejudiced witness. [34] The court stated that the terms of the release cast doubt upon [the expert's] impartiality. [35] Recognizing that the evidence was being admitted for a purpose other than to prove liability or invalidity of a claim, the court engaged in a Rule 403 analysis to determine whether the potential prejudice from the admission of the agreement outweighed the agreement's probative value. [36]
In the case at hand, the plaintiff alleges error because the trial judge allowed the following question to be asked by defendant Cahill's counsel on cross-examination of plaintiff: Q: Mrs. Alexander, you and your husband have reached a settlement on behalf of your son against Defendant Knotts and Bermudez ... and have or will receive moneys for releasing liabilities against them; is that right? A: Yes, sir. [37] D.R.E. 408 bars this testimony because counsel asked the question for the purpose of persuading the jury that the persons to blame for the accident had already admitted liability, raising the question that the plaintiff's claim against Cahill might be invalid or to limit a damage award by suggesting that the Alexanders had already been guaranteed some payment toward damages. Cahill's counsel did not ask the question to clarify the alignment of the parties or to avoid jury confusion. The parties knew that the trial judge would disclose the fact of settlement for that legitimate purpose in his closing instructions. This question posed by Cahill's counsel in no way, even arguably, furthered that understanding. Whatever relevance the question and answer may have had was clearly outweighed by the chance of misleading the jury into limiting any damage award by encouraging them to speculate on the moneys received or to be received by the Alexanders. The problem here is further exacerbated by the fact that the parties agreed at pretrial to handle the issue of the settled third-party defendants in their opening statements and in the judge's final instructions. We applaud the parties and the court for following our dicta in Capital Management by agreeing before trial how to handle possible jury confusion about third-party settling defendants. [38] We suggested in Capital Management that the parties and the court come to an agreement before trial on how to handle explaining third-party settlements to the jury for the purpose of avoiding confusion and telling them the alignment of the parties. The purpose of any pretrial agreement should always be to avoid the inadvertent admission of misleading evidence about any settlement that would prejudice one or more parties. Alexander's testimony on cross did not conform to the pretrial understanding and had no purpose other than to suggest the invalidity of the plaintiff's claim or to discount damages and, therefore, should not have been admitted.