Opinion ID: 4548239
Heading Depth: 2
Heading Rank: 1

Heading: The July 10, 2013 Meeting

Text: Rule 408 provides that: (a) Prohibited Uses. Evidence of the following is not admissible -- on behalf of any party -- either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a 2 The District Court had subject matter jurisdiction under 18 U.S.C. § 3231, and we have appellate jurisdiction pursuant to 28 U.S.C. § 1291. A district court’s evidentiary rulings are reviewed under an abuse of discretion standard. See, e.g., Affiliated Mfrs., Inc. v. Aluminum Co. of Am., 56 F.3d 521, 525 (3d Cir. 1995). Its interpretations of the Federal Rules of Evidence are subject to plenary review while its factual findings are reviewed for clear error. See, e.g., id. 5 contradiction: (1) furnishing, promising, or offering -- or accepting, promising to accept, or offering to accept -- a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim -- except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority. (b) Exceptions. The court may admit this evidence for another purpose, such as proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. According to Cook (and the Prior Counsel), the meeting was conducted in order to settle the dispute with Artisans’ Bank. (See, e.g., Appellant’s Brief at 15 (observing that, according to Prior Counsel, meeting was held to settle dispute concerning bank’s conduct and its nondisclosures as well as Cook’s financial statement problems).) The Prior Counsel also insisted that “he did not admit to any fraud or falsification by his client.” (Appellant’s Brief at 17.) We conclude that the District Court did not abuse its discretion in applying Rule 408. “As a matter of interpretation, the meaning of ‘dispute’ as employed in the rule includes both litigation and less formal stages of a dispute.” Aluminum Mfrs., 56 F.3d at 528. However, “Rule 408 has been interpreted as applicable to an actual dispute, or at least an apparent difference of view between the parties concerning the validity or amount of a claim.” Id. at 526 (citing 2 Jack B. Weinstein & Margaret Berger, Weinstein’s Evidence ¶ 408[01] at 408-12 (1994); Kenneth S. Brown et al, McCormick on Evidence § 266, at 466 (John William Strong ed., 4th ed. 1992)). The rule is not 6 implicated where the debtor is merely attempting to convince a creditor to settle an admittedly due amount for a lesser sum. Fed. R. Evid. 408 advisory committee’s note to 1972 proposed rules. “Hence, the rule requires that the claim be disputed as to either validity or amount.” Id. At the meeting, the Prior Counsel did not dispute that AJJ owed money to Artisans’ Bank. Likewise, he did not contest the amount of money owed to the bank. In turn, the District Court appropriately rejected Cook’s assertion that his attorney’s grand jury testimony flatly rejected the government’s theory that Cook submitted falsified listings of accounts receivable: On the contrary, portions of the testimony would appear to corroborate the allegation in the Superseding Indictment that Defendant knowingly submitted listings of accounts receivable that were not “eligible items” (i.e., were not less than 90 days old). The testimony can also be read as consistent with the government’s proffered testimony of Bank employees that “falsified” listings of accounts receivable and “fraud” were discussed at the meeting, even if it is not clear from the testimony that Defendant’s prior counsel and the Bank employees had the same understandings about why the listings could be fairly described as “falsified” or what was intended by the use of “fraud” at the meeting. Cook, 2018 WL 6499872, at . As the District Court indicated, the government proffered the testimony of the three bank employees who attended the meeting—who would (and subsequently did) testify at trial that the Prior Counsel admitted that Cook had committed fraud and falsified the accounts receivables listed on the BBCs. Furthermore, the District Court properly ruled that the Prior Counsel’s statements were admissible under Rule 801(d)(2). According to Cook, “the facts presented [in this case] were certainly unique to, and easily distinguishable from, any Circuit precedent or the case cited by the District Court in its ruling.” (Appellant’s Brief at 27.) He asserts 7 that (among other things) the alleged statements were substantially and materially denied by the Prior Counsel himself, the Prior Counsel was not called by the government to testify, and the statements were made in the context of settlement negotiations discussing significant issues including potential regulatory misconduct by the bank. Nevertheless, the plain terms of Rule 802(d)(2) exclude from the definition of hearsay a statement that “is offered against an opposing party and . . . (C) was made by a person whom the party authorized to make a statement on the subject, [or] (D) was made by the party’s agent or employee on a matter within the scope of that relationship and while it existed.” As we have recognized, “[c]ourts have applied this rule to admit evidence of statements made by attorneys in a representational capacity.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1198 (3d Cir. 1993) (citing Hanson v. Waller, 888 F.2d 806, 814 (11th Cir. 1989)). It appears undisputed that the Prior Counsel represented Cook as his attorney at the July 10, 2013 meeting. In turn, the Prior Counsel’s statements at this meeting were not made as part of a criminal investigation or proceeding. We further note that the defense called the Prior Counsel as a witness at Cook’s trial and that we have already disposed of Cook’s “settlement negotiations” theory. Cook argues that “the admission of Mr. Cook’s silence as substantive evidence of guilt—despite the silence having been counseled and directed by his attorney—was a violation of the 5th Amendment and Rule of Evidence 403.” (Appellant’s Brief at 30 (emphasis omitted).) We do not agree. Cook admits that “the alleged admissions were clearly not made in the context of a custodial interrogation” (id.) and that “[t]he facts of this case do not fall squarely within any of the precedents that address the use of pre- 8 custodial or post-custodial silence as substantive evidence of guilt” (id. at 32). In fact, Cook acknowledges that his case “does not involve any form of official coercion by government entity” (id. at 35). On the contrary, the only people at the meeting were Cook, his attorney, and the employees of Artisans’ Bank (a non-governmental entity). See, e.g., New York v. Quarles, 467 U.S. 649, 654 (1984) (“The Fifth Amendment itself does not prohibit all incriminating admissions; ‘[a]bsent some officially coerced selfaccusation, the Fifth amendment privilege is not violated by even the most damning admissions.’” (quoting United States v. Washington, 431 U.S. 181, 187 (1977)) (alteration in original)).