April 05, 2019

Federal Rule of Evidence 408 and Criminal Cases

Stephen A. Saltzburg


How does Fed. R. Evid. 408 operate in a criminal case? This is a question that few lawyers have had occasion to ask in their careers and even fewer have had occasion to answer. There are two principal reasons: First, because Rule 408 deals with offers to compromise civil disputes while Fed. R. Evid. 410 is the rule that focuses on plea bargaining and compromising criminal cases; and second, prior to an amendment of Rule 408, a number of federal courts held that it simply had no applicability in criminal prosecutions. Once Rule 408 was amended in 2006, it became clear on the face of the rule that it reached criminal prosecutions, and it also became clear that, even though it may not be invoked frequently in criminal cases, prosecutors, defense counsel, and judges have to understand how it works.

An illustrative case. United States v. Davis, 596 F.3d 852 (D.C. Cir. 2010), illustrates in part the kind of protection that Rule 408 can afford a criminal defendant who seeks to exclude evidence of an offer to settle what appeared to be a civil dispute. Terry Davis had been the national treasurer of the Phi Beta Sigma fraternity. He was charged with ten counts of bank fraud, one count of first-degree theft, and one count of first-degree fraud. A jury acquitted him on two bank fraud counts and convicted him on all the other counts.

Davis was an elected, unpaid officer of the fraternity. He disregarded the fraternity’s policy with respect to authorization of vouchers to pay expenses and signatures on checks. He wrote checks without obtaining approved vouchers, and sometimes he failed to obtain the co-signature required on the checks. When the fraternity discovered what Davis had done, it suspended him and installed a new treasurer, Jimmy Hammock, who found at least $29,000 in checks that had been made out to cash that was not deposited in the fraternity’s bank account. These checks gave rise to the prosecution.

The Rule 408 issue. Hammock testified that he asked Davis to produce the financial records Davis had maintained on the fraternity’s behalf. Davis provided some unused checks and financial reports but no cancelled checks or bank statements. He also asked Davis why he had written fraternity checks payable to cash, and Davis explained that he transferred the funds to the fraternity’s payroll account.

Davis filed a motion in limine seeking to bar Hammock from testifying about his second conversation with Hammock. The trial judge rejected the motion, and Hammock testified about a second conversation with Davis regarding these checks. Hammock said that he 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, and that Davis asked, “Can we just split this $29,000 and make this situation just go away?” According to Hammock, he told Davis “[the] amount was in excess of a hundred thousand dollars,” Davis said, “I can’t afford to pay that amount,” and Hammock finished the conversation by telling Davis, “Terry, if you want to do some—negotiate some kind of settlement, you need to talk to our legal counsel or our international president.”

Were Davis’s statements offers to settle? Davis claimed that his statements amounted to an offer to settle a claim that was disputed as to validity. The trial judge rejected the argument, but the court of appeals agreed with Davis, finding that Davis did not confess to taking the fraternity’s money, that Hammock rejected Davis’s explanation, and that it was “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.’” The court reasoned, “The Rule is meant to promote settlements. . . . 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.’ It makes no sense to force the party who initiates negotiations to do so at his peril.” Because there was no doubt that Davis attempted to settle the claim that Hammock made on behalf of the fraternity, Davis was within the coverage of Rule 408 even if Hammock told him he would have to negotiate with someone else.

Did Davis offer a valuable consideration? The government argued that Davis did not offer “valuable consideration” because Davis’s offer of $14,500 fell short of the $29,000 Hammock said Davis owed. The government’s argument was that the consideration did not qualify under Rule 408. The court of appeals made short shrift of this argument by reasoning, “Under that theory, only a settlement offer exceeding the full amount of the disputed claim is an offer of valuable consideration,” and “[t]he framers of Rule 408 could not have intended any such thing.”

The court of appeals’ reasoning is sound. The government’s argument would essentially render Rule 408 a nullity because anyone who offered less than the other side claimed it was entitled to would not get the protection of Rule 408. This would make settlement discussions risky rather than safe as the drafters intended.

Was the government’s evidence admissible for another purpose? The government also argued that Davis’s statements were admissible not to prove “liability” but for another purpose. The court of appeals explained the argument and rejected it, concluding that the government was trying to prove Davis’s guilt or “liability” through his statements and did not seek to offer the statements for a limited purpose. Therefore, the exclusionary rule of Rule 408 applied. In the court’s words, “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.’” When asked at oral argument whether this was the government’s purpose, counsel for the government candidly admitted it was not.

Lessons. (1) It is now clear that Rule 408 applies in criminal cases as well as in civil cases. The ambiguity that preceded the 2006 amendment to Rule 408 has been removed. (2) Parties who desire to exclude evidence under Rule 408 are required to register timely objections or make motions in limine as Davis did in this case. (3) An offer to settle qualifies under Rule 408 if there is a disputed claim as to validity or amount and a party makes a genuine offer to settle that claim even though the other party does not want to negotiate. (4) An offer to settle a dispute involving money involves valuable consideration even though the offer is less than the other party believes it is entitled to. (5) There is a difference under Rule 408 when a party bargains about a claim with the government and when it bargains with private parties. The rule puts potential criminal defendants on notice that statements made to government agencies may be used against them in criminal cases notwithstanding that the statements were made in the course of attempting to settle civil claims. (6) A party desiring to offer settlement discussions for a purpose other than to prove liability (or guilt) must make clear an intent to offer the evidence for a limited purpose. The government failed to do so in Davis’s case. (7) A party desiring to offer settlement discussions to prove something like an attempt to obstruct a criminal investigation bears the burden of showing that there was such an attempt. In cases like Davis, where there was no criminal investigation pending and no evidence that Davis was contemplating a criminal investigation or prosecution, meeting that burden might be difficult or even impossible.


More Information About the Criminal Justice Section

This article is an abridged and edited version of one that originally appeared on page 41 of Criminal Justice, Spring 2011 (26:1).

For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

Website: www.americanbar.org/crimjust.

Periodicals: Criminal Justice, quarterly magazine; Criminal Justice Newsletter, three times per year; Juvenile Justice Newsletter, three times per year (electronic); White Collar Crime Newsletter, three times per year (electronic).

Books and Other Recent Publications: Trial Tactics; Street Legal; The Citizenship Flowchart; The State of Criminal Justice; Leapholes (fiction); Achieving Justice: Freeing the Innocent, Convicting the Guilty; ABA Standards for Criminal Justice; Annual Survey of Supreme Court Decisions; Asset Forfeiture: Practice and Procedure in State and Federal Courts; The Child Witness in Criminal Cases; The Criminal Lawyer’s Guide to Immigration Law: Questions and Answers; Fourth Amendment Handbook, 2d ed.; Juvenile Justice Standards, Annotated; The Shadow of Justice (fiction); A Portable Guide to Federal Conspiracy Law: Tactics and Strategies for Criminal and Civil Cases; Practice Under the Federal Sentencing Guidelines; Restitution for Crime Victims: A National Strategy; Successive Criminal Prosecutions: The Dual Sovereignty Exception to Double Jeopardy in State and Federal Courts.


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