Fiberglass Insulators, Inc. v. Dupuy

United States Court of Appeals for the Fourth Circuit · 1988 · Evidence

856 F.2d 652 (4th Cir. 1988)

Updated August 22, 2026

EvidenceFederal Rule of Evidence 408settlement negotiationscompromise evidenceother purposepublic policy favoring settlementabuse of discretionsame transaction

Facts

The parties were former business associates whose relationship ended in 1980, after which they became adversaries in five or six lawsuits arising from the breakup of their business. Plaintiffs in the present antitrust and trade-practices suit sought to introduce testimony from their attorneys about statements allegedly made by defendants' attorney during settlement discussions in two earlier lawsuits. After multiple hearings and review of proffered evidence, the district court found that the statements, if made, occurred within the context of ongoing settlement negotiations spanning the parties' litigation history. Based on Rule 408 and the policy favoring settlement, the court excluded the testimony.

Issue

Whether Rule 408 permits plaintiffs to introduce statements allegedly made by an attorney during settlement negotiations in prior related litigation between the same parties, either because the statements were outside the rule or because they were offered for an asserted 'other purpose.'

Rule

Under Federal Rule of Evidence 408, statements made in compromise negotiations are inadmissible when they were intended to be part of negotiations for compromise. Whether to admit such evidence for another purpose under Rule 408 is committed to the trial court's discretion and will not be reversed absent an abuse of discretion amounting to manifest error. Even if evidence is not offered to prove liability on the compromised claim, that alone does not make it admissible, especially when the negotiations concern claims arising from the same transaction and the same continuing dispute.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Raleigh, Nora Benton and Leo Mercer dissolved a jointly owned roofing distributorship and then spent four years suing each other in several contract and tort actions. In a later unfair-competition suit, Nora seeks to call her former lawyer to testify that during a meeting arranged to discuss resolving two pending cases, Leo's lawyer said Leo was willing to slash prices below cost until Nora's new company failed.

Should the court most likely admit the lawyer's testimony?

Explanation. The majority treated Rule 408 broadly, excluding all statements made in the course of settlement negotiations. The key inquiry is whether the statement was intended to be part of negotiations for compromise. Here, the remark occurred during a meeting arranged to resolve pending disputes, so the court would likely treat it as part of compromise discussions and exclude it. That the statement describes competitive conduct does not remove it from Rule 408.