Monday, February 6, 2017

Offers to settle the case cannot go before the jury

In this disability discrimination case, the plaintiff was unable to work because of complications with her pregnancy. Her employer, M&T Bank, wanted her to fly from the west coast to its Buffalo headquarters, but she was unable to do so on doctor's orders. Management denied her request to telecommute, and she was fired. The case went to trial, and the plaintiff lost. She gets a new trial, in part, because the trial court blew it on an evidentiary issue.

The case is Sheng v. M&T Bank Corporation, decided on February 2. (The case was argued in October 2015). After plaintiff told the bank that health reasons prevented her from flying, she retained a lawyer who tried to work things out with management. Counsel wrote the bank a letter that offered it a chance to "avoid a costly legal action that will result in substantial liability and adverse publicity for the Company and its executives." He wanted $200,000 for plaintiff. When the lawyers spoke on the phone, they agreed that Rule 408 of the Federal Rules of Evidence would govern their conversation. That rule says that offers of settlement are inadmissible at trial. The bank's lawyer suggested that plaintiff return to work and work remotely from Los Angeles for the remainder of her pregnancy. The bank's lawyer did not make an explicit statement that the reinstatement offer was conditioned upon the execution of a release of plaintiff's claims for monetary damages. The offer was rejected.

At trial, the bank wanted the bank's reinstatement offer admitted at trial to show that plaintiff had not mitigated her damages. The judge allowed it to go before the jury. This was error. In Pierce v. F.R. Tripler & Co., 955 F.2d 820 (2d Cir. 1992), the Court of Appeals said that "where a party is represented by counsel, threatens litigation and has initiated the first administrative steps in that litigation, any offer made between attorneys will be presumed to be an offer within the scope of Rule 408." That presumption can only be rebutted if "the party seeking admission of the offer ... demonstrates convincingly that the offer was not an attempt to compromise the claim."  Pierce is still good law, the Court of Appeals (Winter, Kearse and Cabranes) holds, which means plaintiff gets a new trial.

To the uninitiated, offers to settle would constitute great evidence that the person making the offer is throwing in the town and admits he's got a bad case. But the courts do not want these offers going before the jury because that would prevent anyone from discussing settlement. The court system would grind to a halt without settlement. There are too many lawsuits. Everyone is suing everybody else. Without settlements, the courthouse would be as high as the Empire State Building.

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