Opinion ID: 1196216
Heading Depth: 3
Heading Rank: 1

Heading: Application of HRE 408, Generally

Text: Generally, HRE Rule 408 excludes evidence of an offer of valuable consideration in an attempt to compromise or settle a disputed claim if offered to prove liability for or invalidity of the claim. HRE Rule 408 states: Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, or (3) mediation or attempts to mediate a claim which was disputed, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations or mediation proceedings is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations or mediation proceedings. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. (Emphases added.) The federal rule, which mirrors the language of HRE Rule 408, was developed to ... encourage the resolution of problems through negotiation and settlement without the fear of having statements made during the negotiation process haunt a future legal proceeding. Han v. Yang, 84 Hawai`i at 171, 931 P.2d at 604 (App.1997) (citing 10 J. Moore, Moore's Federal Practice § 408.01[7] (2d ed.1996) (citing S.Rep. No. 650, 93 Cong., 1st Sess. (1973)); see also McCormick on Evidence § 266 (J. Strong 4th ed.1992). The public policy of our appellate courts `favors the resolution of controversies through compromise or settlement rather than by litigation.' Han, 84 Hawai`i at 167, 931 P.2d at 613 (citations omitted). To allow admissions or evidence of settlement negotiations into evidence would hamper the negotiation and settlement process of our legal system and is therefore against the public policy of this jurisdiction. Id. at 171, 931 P.2d at 613.
Some courts have held that Rule 408 applies only in civil proceedings because [t]he reference to a claim which was disputed as to either validity or amount does not easily embrace an attempt to bargain over criminal charges. See United States v. Baker, 926 F.2d 179, 180 (2d Cir.1991) (stating that negotiations over immunity from criminal charges or a plea bargain do not ordinarily constitute discussions of a claim over which there is a dispute as to validity or amount); United States v. Prewitt, 34 F.3d 436, 439 (7th Cir.1994) (citations omitted) (holding that a clear reading of the rule suggests that it applies only to civil proceedings, specifically the language concerning validity and amount of a claim). However, in addition to the use of the terms validity and claim, the rule specifically states in its final sentence: This rule also does not require exclusion when the evidence is offered... [to prove] an effort to obstruct a criminal investigation or prosecution.  HRE Rule 408. To construe the rule as applying only in civil proceedings would render the final sentence of the rule unnecessary. See Keliipuleole v. Wilson, 85 Hawai`i 217, 221, 941 P.2d 300, 304 (1997) (citations omitted) ([C]ourts are bound to give effect to all parts of a statute, and ... no clause, sentence, or word shall be construed as superfluous, void, or insignificant if a construction can be legitimately found which will give force to and preserve all words of the statute.). Accordingly, in construing HRE Rule 408, we must give full force and effect to every sentence in the statute, including the final sentence. Courts have also held that the policy underlying Rule 408 does not apply to criminal prosecutions because the stakes are higher. See United States v. Gonzalez, 748 F.2d 74, 78 (2d Cir.1984) (citing United States v. Gilbert, 668 F.2d 94, 97 (2d Cir.1981), cert. denied, 456 U.S. 946, 102 S.Ct. 2014, 72 L.Ed.2d 469 (1982)); see also Manko v. United States, 87 F.3d 50, 54-55 (2d. Cir.1996). However, we believe that the potential impact of evidence regarding a civil settlement agreement is even more profound in criminal proceedings than it is in civil proceedings. It does not tax the imagination to envision the juror who retires to deliberate with the notion that[,] if the Defendants had done nothing wrong, they would not have paid the money back. United States v. Hays, 872 F.2d 582, 589 (5th Cir.1989). The Intermediate Court of Appeals (ICA) in In the Interest of Doe, 79 Hawai`i 265, 900 P.2d 1332 (App.1995), held that HRE Rule 408 applies in criminal proceedings. Id. at 276, 900 P.2d at 1345. In that case, the juvenile-defendant, on trial for assault in the third degree, sought to exclude evidence of a meeting in which the juvenile-complainant and his mother met with the juvenile-defendant and his father to discuss what happened. In the course of the conversation, the juvenile-defendant made certain admissions that the prosecution sought to adduce as evidence of the juvenile-defendant's guilt. The juvenile-defendant argued that, because the meeting constituted evidence of settlement negotiations, such evidence was inadmissible under HRE Rule 408. Id. at 270, 900 P.2d at 1337. The prosecution maintained that the meeting was not a settlement negotiation, but was instead merely an attempt to determine what had happened. Without determining whether the parties were attempting to settle civil liability, the trial court allowed testimony only as to the alleged admissions and excluded all testimony regarding negotiations or offers to pay anything. Although the ICA ultimately affirmed the trial court's decision, stating that, even if the subject testimonies ... were improperly received, their receipt was harmless error, id. at 278, 900 P.2d at 1345, it specifically held that related compromises or attempts to compromise civil liability are not admissible in a criminal trial because of the danger that such evidence may be taken as criminal guilt. Id. at 276, 900 P.2d at 1343 (citing Ecklund v. United States, 159 F.2d 81, 84 (6th Cir.1947); United States v. Meadows, 598 F.2d 984 (5th Cir.1979); United States v. Hays, 872 F.2d 582, 589 (5th Cir.1989)). We agree with the ICA that evidence of compromise of civil liability should be excluded in related criminal prosecutions to avoid the potential inference of criminal guilt because such a policy promotes settlement of disputed civil liability. Furthermore, we believe that the plain language of the rule, which allows evidence of obstruction of criminal investigation or prosecution, implies the applicability of the rule in criminal proceedings. Accordingly, we hold that HRE Rule 408 does apply in criminal proceedings.
Not all evidence of civil settlement is excludable under HRE Rule 408. [B]efore HRE Rule 408 is applied, `there must be an actual dispute, preferably some negotiations, and at least an apparent difference of view between the parties as to the validity or amount of the claim.' In the Interest of Doe, 79 Hawai`i at 277, 900 P.2d at 1344 (quoting 2 McCormick on Evidence § 2661 at 194-95 (J. Strong 4th ed.1992)). Furthermore, evidence of settlements that is offered for a purpose other than to prove liability or the validity of a claim is not excluded. See HRE Rule 408. For example, as noted above, if evidence is offered to prove an obstruction of a criminal investigation or prosecution, exclusion is not required. See Fed.R.Evid. Rule 408, Advisory Committee's Note (stating that the final sentence of the rule serves to point out some limitations upon its applicability). Thus, although we agree with the ICA's holding in In the Interest of Doe that HRE Rule 408 applies in criminal proceedings, the rule does not exclude evidence in every circumstance. Specifically, we do not believe that the policy of protecting compromise offers in civil cases is served by protecting an accused who is attempting to settle or compromise criminal charges by paying off the complainant. [5] Fed.R.Evid. Rule 408, Advisory Committee's Note (examining the limitations within the final sentence of the identically worded federal rule and noting that an effort to `buy off' a ... prosecuting witness in a criminal case is not within the policy of the rule of exclusion) (citing McCormick [on Evidence] § 251, p. 542). Rather, when an accused offers money to a complainant in exchange for dropping the charges, the public policy against compounding crimes prevails. See United States v. Peed, 714 F.2d 7, 9 (4th Cir.1983); see also Wright and Graham, Jr., Federal Practice and Procedure § 5313 (1980) (citing Wigmore, Code of Evidence § 1001 (3d ed.1942)). The following cases are instructive: In Peed, the defendant sought indemnity from the United States Postal Service for lost dolls that she had in fact received. 714 F.2d at 9-10. Confronted with a criminal prosecution for mail fraud and a plea from the sender of the dolls, the defendant promised to return the dolls to the sender if the sender promised to drop the charges. The court, refusing to characterize the defendant's statement as an offer to compromise a civil claim, stated: There was no civil suit pending at the time this conversation took place. [The defendant's] jargon (drop the charges) implies concern over criminal prosecution. These were not negotiations aimed at settling a civil claim, negotiations that the policy behind Rule 408 seeks to encourage. Nor were [the defendant's] statements followed up by any attempt on [the defendant's] part to obtain money or resources for achieving a settlement with [the complainant]. Peed, 714 F.2d at 9-10. Thus, the court determined that the defendant's statements were an attempt to avoid criminal prosecution, and, accordingly, the evidence was held admissible. Id. In New Jersey v. DeAngelis, 281 N.J.Super. 256, 657 A.2d 447 (App.Div.1995), a restaurant manager stole money from the restaurant in which he worked. When the director of operations for the restaurant discovered the theft, he made a deal with the manager that he either pay back the money or be prosecuted. The deal fell through when the manager went to the police and told them he was coerced into admitting theft. As a result, the manager was prosecuted and evidence of the deal was ruled admissible. The New Jersey Superior Court held that the [manager's] promise to repay the missing funds was in reality an attempt to purchase the victim's silence and, as such, was more in the nature of an obstruction of justice. DeAngelis, 657 A.2d at 450. By contrast, in Ecklund v. United States, 159 F.2d 81 (6th Cir.1947), the defendant, an owner of a car dealership, was criminally prosecuted for violations of the Emergency Price Control Act of 1942. The pivotal issue in the case was whether the defendant had guilty knowledge that his salesman was selling an automobile above the lawful ceiling price. Prior to the criminal trial, the defendant settled potential civil liability with the customer to whom his salesman had sold a vehicle. The assistant district attorney sought to admit evidence of the settlement as proof of defendant's guilty knowledge. The United States Court of Appeals for the Sixth Circuit concluded that evidence of the settlement had no real probative value as to whether the defendant had wilfully violated laws and regulations governing sales prices. Furthermore, there was no proof that he had attempted to avoid criminal prosecution by settling the potential civil claim against him. Thus, the court in Ecklund held that the defendant's offer to settle the civil claims was not admissible in his criminal trial. Ecklund, 159 F.2d at 84-85. Based on the foregoing, we hold that, in a criminal trial, evidence of an accused's offer to pay value to a complainant in an attempt to avoid prosecution is not excludable under HRE 408. In determining whether an accused is attempting to avoid prosecution, the court should examine the defendant's statements and the surrounding circumstances to ascertain the defendant's objective. Cf. In the Interest of Doe, 79 Hawai`i at 277, 900 P.2d at 1344 (The court, in determining whether negotiations were involved, should look at the declarant's objective in making the statement.) (citing Myers v. Cohen, 67 Haw. 389, 396, 688 P.2d 1145, 1150-51 (1984)). Factors relevant to the court's determination include, but are not limited to, whether a civil suit was pending at the time statements were made, whether any reference to criminal prosecution was made, and whether the admission of liability in the civil suit has any probative value as to criminal liability. See, e.g., Peed, 714 F.2d at 9-10; DeAngelis, 657 A.2d at 450; Ecklund, 159 F.2d at 84.