It's not what you don't know that hurts you, but what you think is so that isn't. So, a Jan. 23, 2013, federal court opinion over the protections afforded (or not) to a Rule 408 communication was a glass of cold water tossed in my face.
It's Bourhill v. Sprint Nextel Corporation, et al. Here is the skinny from the opinion. Plaintiff's lawyer writes demand letter to defendant, laying out why its termination of his client was illegal discrimination. Letter ends with settle now or we sue. Typical stuff.
An in-house lawyer at the company responds, including the following words in bold on the subject line: “Confidential/For Settlement Purposes Only." The letter goes on to recite why there was no discrimination and sets out the company's version of the events leading to the termination. Discovery ensues, and cross motions for summary judgment are filed with the in-house lawyer's letter as an exhibit to its motion.
The company, in two thoughtful briefs, argued that the exhibit should be struck because it involved settlement negotiations protected from use as evidence by Rule 408. The plaintiff, in an equally thoughtful brief, disagreed.
The Magistrate Judge said no protection for the section of the letter explaining the reason for the termination, and the district judge agreed. Why? Well, 408 deals with actual settlement negotiations — I offer x, and you give me y — and not with an invitation to engage in settlement discussions. Here, the letter from the in-house counsel regarding the wrongful termination claim dealt only with the facts and why the company was right and the soon to be plaintiff was wrong.
Of course, this logic works the other way, where a plaintiff's lawyer sets out why her client is right and makes only an overture to settle, not a settlement offer. Many lawyers believe that anything said in a letter to opposing counsel discussing the merits of the case is protected from use. Guess not, especially in the more cut-throat litigation climate of the Northeast. Be on guard.