Evidence that a party furnished or promised to furnish or accepted or offered or promised to accept a valuable consideration for the purpose of compromising or attempting to compromise a disputed claim is not admissible as evidence of liability. Further, conduct or statements made during compromise negotiations are similarly inadmissible.13 Two principles underlie Delaware Rule of Evidence 408: (1) the evidence of compromise is irrelevant since the offer may be motivated by a desire to terminate the litigation rather than from any concession of weakness of position; and (2) public policy favors compromise of disputes via settlement.14 This rule applies at all stages of litigation.15 It proceeds on the recognition that an offer of compromise does not imply a specific belief that the adversary’s claim is well-founded, but rather may be the result of a belief that further prosecution of the claim, well-founded or not, would cause expense and annoyance, with possible risks that the party considers worthwhile to avoid by settlement.16
This rule does not require exclusion of such evidence in all circumstances. Such evidence may be introduced, in the discretion of the court, when it is being offered for a purpose other than to prove liability or invalidity of the claim or its amount. Examples of other purposes, as set forth in Rule 408, are to show bias or prejudice of a witness, to negative a contention of undue delay or to prove an effort to obstruct a criminal investigation or prosecution. 17 If at trial a party contradicts a statement of fact which such party made during settlement negotiations, the adverse party may introduce into evidence statements made by the other party during settlement negotiations for the purpose of impeachment.18
Evidence of a settlement may be used when the settlement is the subject of the litigation, such as an action to enforce a settlement agreement.18.1 The rule also does not exclude introduction of settlement-related evidence if the evidence is being introduced to prove a claim of a wrong committed during settlement negotiations.18.2
Where a plaintiff has executed a release with one co-defendant in exchange for payment, a remaining co-defendant may not introduce the release into evidence to show that the plaintiff has been fully compensated and is not entitled to further damages. An amount paid in settlement may have no relationship to the plaintiff’s actual damages and is not a proper basis for the jury to calculate liability and damages.19 However, it is not improper for a trial judge to tell the jury that a third-party is no longer part of the case and instructing them that they need not speculate about why in order to inform the jury of the alignment of the parties.19.1
Beyond the need to disclose the fact of settlement with one or more parties 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. 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. 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, 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 plaintiffs. To minimize the risk, the parties and the court should 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.19.2
The rule also does not require exclusion of evidence otherwise available through discovery and admissible merely because it is presented in the course of settlement negotiations.20 Thus, one cannot shield evidence merely by presenting it to an adverse party in the course of settlement negotiations. As in the case of other relevant evidence, the court retains the discretion to exclude such evidence if its probative value is outweighed by the danger of unfair prejudice, confusion of the issues or misleading the jury or by considerations of undue delay, waste of time or needless presentation of cumulative evidence.21
Similar to the rule regarding settlement proposals, evidence of a plea of guilty that is later withdrawn with court permission, or a plea of nolo contendere, or of an offer to plead guilty or nolo contendere – to the crime charged or any other crime, or a statement made in connection with and relevant to any such plea or offer, is not admissible in any civil or criminal proceeding against the person who made the plea or offer.22 This rule does not affect the admissibility of a judgment, which is covered as an exception to the hearsay rule.23 However, the rule encompasses statements made in connection with or relevant to the negotiation of a plea and statements made in connection with a motion to withdraw a plea. This includes statements made to a presentence officer that are the results of and directly connected with the guilty plea.23.1 As with the rule regarding settlement negotiations, the rule regarding pleas and offers to plea is designed to foster candid discussion by a defendant so as to encourage resolution of a criminal charge by means of consensual agreement.24 In determining whether a given statement occurred in the course of plea negotiations, the trial court must determine that the defendant had an actual, reasonable subjective expectation to negotiate a plea at the time the statement was made. In making this determination, the trial court should look at the quid pro quo of the negotiating process to insure that each party actually offered something in exchange for the promise of something in return.25
An exception to this rule provides that where a criminal defendant makes a statement of fact under oath, on the record and in the presence of counsel, in connection with and relevant to a plea of guilty, later withdrawn, a plea of nolo contendere to a charge, or an offer to plead guilty or nolo contendere, evidence of such statement is admissible in a criminal proceeding against such defendant for perjury or false statement.26
If there is a legitimate question whether evidence should be excluded under this rule, the better practice is to exclude evidence of compromise negotiations.26.1
13. D.R.E. 408; Atwell v. RHIS, Inc., 974 A.2d 148, 151-62 (Del. 2009); Wright v. Moore, 931 A.2d 405-407 (Del. 2007); In re Hilton Hotels Corp., 210 A.2d 185, 189 (1965), aff’d sub nom. Carl M. Loeb, Rhoades & Co. v. Hilton Hotels Corp., 222 A.2d 789 (Del. 1966); Modlin v. Iselin, C.A. No. 8104, slip op. at 6, Jacobs, V.C. (Del. Ch. June 15, 1986); Ellenberger v. Van Vorst, C.A. No. 88C-DE-122, slip op. at 4, Babiarz, J. (Del. Super. May 30, 1991), aff’d mem., 602 A. 2d 1082 (Del. Sept. 5, 1991). See also S. v. K., 453 A.2d 94, 97 (Del. 1982); Gordy Management, Inc. v. B.K. Restaurants of Jamestown, Inc., C.A. No. 88C-MY-156, slip op. at 8-9, Taylor, J. (Del. Super. Mar. 30, 1989) (ORDER); Rochen v. Huang, C.A. No. 87C-JN-96, slip op. at 4, Gebelein, J. (Del. Super. Jan. 6, 1989).
14. Atwell v. RHIS, Inc., 974 A.2d 148, 151-62 (Del. 2009); Sammons v. Doctors of Emergency Services, P.A., 913 A.2d 519, 533 (Del. 2006); Capital Management Co. v. Brown, 813 A.2d 1094, 1100 (Del.2002); Newton v. Devin, C.A. No. 88C-OC-136, slip op. at 2, Gebelein, J. (Del. Super. Nov. 26, 1991), reh’g denied, C.A. No. 88C-OC-136, Gebelein, J. (Del. Super. Nov. 26, 1991) (ORDER); Ellenberger v. Van Vorst, C.A. No. 88C-DE-l22, slip op. at 14, Babiarz, J. (Del. Super. May 30, 1991), aff’d mem., 602 A.2d 1052 (Del. Sept. 5, 1991).
15. Young v. Frase, 702 A.2d 1234, 1237-38 (Del. 1997) (on motion for additur or new trial, judge’s review is limited to evidence admitted at trial); Carney v. Preston, 683 A.2d 47, 49 (Del. Super. 1996) (reference to settlement offers or offers of judgment in connection with motion for additur or new trial deemed “highly improper”); Clough v. Wal-Mart Stores, Inc., C.A. No. 94C-05-030-HDR, slop op. at 2, Ridgely, J. (Del. Super. July 30, 1997), aff’d mem., 712 A.2d 476 (Del. 1998) (on motion for remittitur); Ellenberger v. Van Vorst, C.A. No. 88C-DE-122, slip op. at 14, Babiarz, J. (Del. Super. May 30, 1991), aff’d mem., 602 A.2d 1052 (Del. 1991) (on motion for remittitur).
16. In re Hilton Hotels Corp., 210 A.2d 185, 189 (Del. Ch. 1965), aff’d sub nom. Carl M. Loeb, Rhoades & Co. v. Hilton Hotels Corp., 222 A.2d 789 (Del. 1966).
17. D.R.E. 408; Newton v. Devin, C.A. No. 88C-OC-136, slip op. at 2, Gebelein, J. (Del. Super. Nov. 26, 1991) reh’g denied, C.A. No. 88C-OC-136, Gebelein, J., (Del. Super. Nov. 26, 1991) (ORDER) (bias); Gordy Management, Inc. v. B.K. Restaurants of Jamestown, Inc., C.A. No. 88C-MY-l56, slip op. at 9, Taylor, J. (Del. Super. Mar. 30, 1989) (ORDER) (proving tender of payment in conformity with contract); Rochen v. Huang, C.A. No. 87C-JN-96, slip op. at 5, Gebelein, J. (Del. Super. Jan. 6, 1989).
18. In re Hilton Hotels Corp., 210 A.2d 185, 189 (Del. Ch. 1965), aff’d sub nom. Carl M. Loeb, Rhoades & Co. v. Hilton Hotels Corp., 222 A.2d 789 (Del. 1966); Rochen v. Huang, C.A. No. 87C-JN-96, slip op. at 6, Gebelein, J. (Del. Super. Jan. 6, 1989).
18.1. Loppert v. WindsorTech, Inc., 865 A.2d 1282, 1286 (Del. Ch. 2004), aff’d mem., 867 A.2d 903 (Del. 2005).
18.2. Page Capital Management, LLC v. Lerber Master Fund, LLC, 22 A.3d 710, 726 (Del. Ch. 2011).
19. Comegys v. Dorsey, C.A. No. 77C-SE-23, slip op. at 3, O’Hara, J. (Del. Super. Oct. 15, 1981).
19.1. Alexander v. Cahill, 829 A.2d 117, 124 (Del. 2003); Capital Management Co. v. Brown, 813 A.2d 1094, 1101 (Del. 2002).
19.2. Atwell v. RHIS, Inc., 974 A.2d 148, 151-56 (Del. 2009); Wright v. Moore, 931 A.2d 405, 407-098 (Del.2007); Alexander v. Cahill, 829 A.2d 117, 125-27 (Del. 2003).
20. D.R.E. 408.
21. D.R.E. 403.
22. D.R.E. 410.
23. See § 16:4.
23.1. State v. Patterson, K93-09-006, 0070I, slip op. at 3-4, Terry, J. (Del. Super. Oct. 3, 1997).
24. Williams v. State, 491 A.2d 1129, 1132 (Del.), cert. denied, 474 U.S. 824 (1985); State v. Barrow, Cr. A. Nos. IN97-02-1238, et seq. & IN97-02-1353 et seq., slip op. at 4, Toliver, J. (Del. Super. Mar. 31, 1997).
25. Williams v. State, 491 A.2d 1129, 1132 (Del.), cert. denied, 474 U.S. 824 (1985); State v. Barrow, Cr. A. Nos. IN97-02-1238, et seq. & IN97-02-1353 et seq., slip op. at 4, Toliver, J. (Del. Super. Mar. 31, 1997).
26. D.R.E. 410. See also Williams v. State, 491 A.2d 1129, 1133 (Del.), cert. denied, 474 U.S. 824 (1985).
26.1. Candlewood Timber Group LLC v. Pan American Energy LLC, C.A. No. 04C-12-139 RRC, slip op. at 23, Cooch, J. (Del. Super. May 16, 2006).
© 2010 David L. Finger