Offer to Compromise

Adam Keilen Litigation

How do I send the opposing party an offer to compromise without giving them something to use against me in Court? – Keilen Law, PLC

Federal Rule of Evidence/Michigan Rule of Evidence § 408 (Compromise and Offers to Compromise) refer to the admissibility of offers to compromise; evidence of the following can’t be used by either party to prove the validity of a claim, to impeach a prior statement, or as a 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.

(Note: certain exceptions apply).

In plain English. The Court considers an offer to settle a dispute irrelevant because settlement offers are usually motivated by a desire for peace, a desire to avoid costly litigation, or by other reasons, such as goodwill/etc. In other words, offers to settle are considered irrelevant because they are oftentimes made for reasons that have nothing to do with the merits of the case. McCormick on Evidence § 76.251. More importantly, excluding settlement related evidence promotes amicable resolutions. See Affiliated Mfrs., Inc. v. Aluminum Co. of Am., Inc., 56 F.3d 521, 526 (3d Cir. 1995) (“[T]he policy behind Rule 408 is to encourage freedom of discussion with regard to compromise.”). The Sixth Circuit Court of Appeals explained this rationale in more detail in Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976, 980 (6th Cir. 2003)

The take away. Offers sent subject to FRE/MRE § 408 are not admissible to prove the merits of a case; be sure your lawyer sends any such offer subject to the rule (note: certain exceptions apply). When you make an offer, be sure it is calculated and thoughtful; although the offer may not be admissible, at a practical level, it will likely affect your negotiating position with your opponent.