A Settlement Privilege?: Supreme Court of Appeals of West Virginia Finds Rule 408 Doesn’t Create a Settlement Privilege

Similar to its federal counterpart, West Virginia Rule of Evidence 408(a) provides that

Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim, the liability of a party in a disputed claim, or to impeach by a prior inconsistent statement or 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.

So, does Rule 408(a) create a settlement privilege, meaning that a party is not entitled to discovery regarding what happened during settlement negotiations? Let’s take a look at the recent opinion of the Supreme Court of Appeals of West Virginia in State ex rel. City of Weirton v. Sims, 2014 WL 4746206 (West Va. 2014).

In Sims, Terry DiBacco, a former police officer for the City of Weirton, filed suit against Weirton and the Board of Trustees of the Policeman’s Pension or Relief Fund of the City of Weirton claiming disability discrimination under the West Virginia Human Rights Act. To support his claim, DiBacco filed a subpoena to depose a person who was part of alleged settlement negotiations between DiBacco and Weirton after DiBacco was placed on administrative leave due to his mental health status. In response, Weirton filed a motion for a protective order and a motion to quash the subpoena.

The circuit court denied Weirton’s motions, finding that “while compromise and offers of compromise are generally not admissible under Rule 408 of the West Virginia Rules of Evidence, Rule 408 does not address their discoverability or define them as privileged communications.” Upon Weirton’s appeal, the Supreme Court of Appeals of West Virginia agreed, concluding as follows:

The circuit court resolved the issue herein raised, in part, by pointing out that Rule 408 addresses the admissibility of compromise offers, not whether such offers are discoverable. We find this conclusion was unnecessary insofar as Weirton has merely asserted, without supporting evidence, that Mr. Makricostas engaged in settlement negotiations on behalf of Mr. DiBacco. In this case, there simply was no evidence in the record to indicate that Mr. Gurrera and Mr. Makricostas engaged in settlement negotiations. Nevertheless, as the circuit court correctly concluded, the fact that evidence obtained from Mr. Makricostas’ deposition may ultimately be inadmissible does not prohibit its discovery. “[U]nder Rule 26(b)(1) of the West Virginia Rules of Civil Procedure, discovery is not limited only to admissible evidence, but applies to information reasonably calculated to lead to the discovery of admissible evidence.”…The circuit court expressly found that the deposition of Mr. Makricostas was likely to lead to admissible evidence given the factual dispute regarding the type of release requested by Weirton; however, the circuit court deferred any decision regarding admissibility until such time as additional evidence obtained during discovery revealed the nature of the communications at issue. We find no error in the circuit court’s reasoning. 

-CM