THE COURTS

[225 PA. CODE ARTICLE IV]

Proposed Amendment to Rule 408 Compromise and Offers to Compromise

[29 Pa.B. 2263]

Introduction

   The Committee on the Rules of Evidence is planning to recommend that the Supreme Court of Pennsylvania amend Rule 408 (Compromise and Offers to Compromise). This proposal would make it clear that evidence of conduct or statements made in compromise negotiations is not admissible to prove liability for or validity of a claim or its amount. This proposal has not been submitted for review by the Supreme Court of Pennsylvania.

   The following explanatory Report highlights the Committee's considerations in formulating this proposal. Please note that the Committee's Reports should not be confused with the official Committee Comments to the rules. Also note that the Supreme Court does not adopt the Committee's Comments or the contents of the explanatory Reports.

   The text of the proposed rule changes precedes the Report.

   We request that interested persons submit suggestions, comments, or objections concerning this proposal to the Committee through counsel Anne T. Panfil, Chief Staff Counsel, Supreme Court of Pennsylvania, Committee on the Rules of Evidence, 5035 Ritter Road, Mechanicsburg, PA 17055 no later than Wednesday, June 2, 1999.

THOMAS C. RAUP,   
Chair

Annex A

TITLE 225.  RULES OF EVIDENCE

ARTICLE IV.  RELEVANCY AND ITS LIMITS

Rule 408.  Compromise and Offers to Compromise.

   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, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of [an admission of fact] any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, [negating] negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.

Comment

   This rule is [similar] identical to F.R.E. 408. [Contrary to its federal counterpart, however, Pa.R.E. 408 does not bar the use of all statements and conduct occurring during settlement negotiations. In this respect, the rule is consistent with Pennsylvania law that distinct admissions of fact made during settlement discussions are admissible. See Rochester Machine Corp. v. Mulach Steel Corp., 498 Pa. 545, 449 A.2d 1366 (1982)(plurality); Heyman v. Hanauer, 302 Pa. 56, 152 A. 910 (1930); Hammel v. Christian, 416 Pa. Super. 78, 610 A.2d 979 (1992).]

   The 1999 amendments abolish the common law rule that distinct admissions of fact made during settlement discussions are admissible, see Rochester Marine Corp. v. Mulach Steel Corp., 498 Pa. 545, 449 A.2d 1366 (1982)(plurality), bringing Pennsylvania in line with F.R.E. 408 and the majority of states.

   The 1999 amendments are consistent with the Mediation Act of 1996. See 42 Pa.C.S. § 5949 (Confidential mediation communications and documents).

*      *      *      *      *

   Pa.R.E. 408 is consistent with 42 Pa.C.S. [A.] § 6141 which provides, in pertinent part, as follows:

*      *      *      *      *

   See Hatfield v. Continental Imports, Inc., 530 Pa. 551, 610 A.2d 446 (1992)(evidence of ''Mary Carter'' agreement admissible to show bias or prejudice, and not excluded by § 6141(c)).

*      *      *      *      *

   Official Note:   Adopted May 8, 1998, effective October 1, 1998; amended ______ , 1999; effective ______ , 1999.

Committee Explanatory Reports:

   Report explaining the proposed amendments concerning the inadmissibility of evidence of conduct or statements made in compromise negotiations published at 29 Pa.B. 2263 (May 1, 1999).

Report

Proposed Amendments to Pa.R.E. 408

ADMISSIBILITY OF CONDUCT OR STATEMENTS
MADE IN COMPROMISE NEGOTIATIONS

   The Committee is proposing that Rule 408 (Compromise and Offers to Compromise) be amended to abolish the common law rule by making it clear that evidence of conduct or statements made in compromise negotiations is not admissible to prove liability for or the validity of a claim or its amount.

   The Committee undertook a review of this rule after receiving correspondence that contended that Rule 408 is a ''trap for the unwary'' because it inhibits talking freely in order to promote settlement, and promotes malpractice actions against lawyers who make damaging statements because they do not say, ''Hypothetically speaking'' prior to any compromise discussions. The correspondents suggested that Rule 408 be amended to parallel the federal rules, F.R.E. 408 and the other states that have similar rules or statutes.¹

   As the Committee evaluated the points raised in the correspondence, the members noted two other considerations. First, the Mediation Act, which was passed in 1996 after the ad hoc Committee on the Rules of Evidence had completed its work on Rule 408, provides that, ''Mediation communications and mediation documents shall not be admissible as evidence in any action or proceeding. . .'' Although the Mediation Act provisions abrogate the common law rule, the experience of the members of the Committee has been that the provisions are logical and work well. Furthermore, the Committeenoted that most states have a Mediation Act, and several of them have included provisions in their rules or statutes concerning the inadmissibility of evidence of mediation or statements made during mediation.

   Second, the Committee noted that there are many situations in which an attorney will agree with opposing counsel to conduct settlement negotiations under the Federal Rules, thereby circumventing the common law and alleviating the necessity to state ''Hypothetically speaking'' prior to any and all settlement discussions.

   Based on the foregoing considerations, the Committee agreed that Pennsylvania evidence law should be brought in line with F.R.E. 408 by amending Pa.R.E. 408 to change Pennsylvania's adherence to the common law, and make it clear that evidence of conduct or statements made in compromise negotiations is not admissible to prove liability for or invalidity of a claim or its amount. The Committee is also proposing correlative revisions to the Comment.

[Pa.B. Doc. No. 99-691. Filed for public inspection April 30, 1999, 9:00 a.m.]

_______

¹ The Committee examined the rules and statutes in several other jurisdictions and found that Pennsylvania is the only state that continues to follow this common law principle.

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