McHann v. Firestone Tire & Rubber Company

United States Court of Appeals for the Fifth Circuit · 1983 · Evidence

713 F.2d 161 (5th Cir. 1983)

Updated August 22, 2026

EvidenceFRE 408settlement evidencecovenant not to suejury questionnegligence as a matter of lawsufficiency of the evidencediversity

Facts

McHann bought a Firestone blemish tire and took it to Green Oaks Exxon for mounting, where mechanic Mark Ivy had difficulty seating the beads. While Ivy was inflating the tire off the mounting machine and with McHann assisting, the bead wire on the underside broke and the tire exploded, seriously injuring McHann. McHann's expert testified that manufacturing defects in the bead made the tire too small to seat properly and caused the explosion, while Firestone's evidence attributed the explosion to Ivy's handling, including failure to secure the tire, use a gauge, lubricate properly, and heed a warning. The district court admitted a covenant not to sue under which McHann received $27,500 from Green Oaks Exxon, excluded evidence that Firestone had settled Ivy's claim for $18,000, and instructed the jury that Ivy was negligent as a matter of law.

Issue

Whether the district court erred by instructing the jury that Ivy was negligent as a matter of law when the evidence permitted differing conclusions, and whether Federal Rule of Evidence 408 barred admission of McHann's covenant not to sue with Green Oaks Exxon while also supporting exclusion of Firestone's settlement with Ivy.

Rule

In federal court, the sufficiency of the evidence to create a jury question is governed by federal law: an issue cannot be taken from the jury if the evidence is sufficiently conflicting, or if even uncontradicted evidence permits conflicting reasonable inferences, such that fair-minded persons could reach different conclusions. Under Federal Rule of Evidence 408, evidence of accepting consideration in compromise of a disputed claim is not admissible to prove liability for, or invalidity or amount of, the claim; thus a plaintiff's settlement with a third person cannot be used to prove the invalidity or amount of the plaintiff's claim, and a defendant's settlement with a third person cannot be used to prove the defendant's liability or extent of liability.

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

In a federal diversity products-liability trial in Dallas, Elena Ortiz claims a ladder manufactured by Summit Forge Tools was defectively riveted and collapsed under her. Before trial, Elena accepted $40,000 from the apartment complex's maintenance contractor, Red Mesa Services, in exchange for a covenant not to sue that contractor.

Summit Forge offers the covenant to show Elena has already valued her injury at $40,000 and that her claim against Summit Forge is therefore overstated. How should the court rule?

Explanation. Rule 408 bars evidence of accepting consideration in compromise of a disputed claim when offered to prove liability, invalidity of the claim, or its amount. The majority held that this bar applies to a plaintiff's settlement with a third person when the defendant offers it to show the plaintiff's claim is invalid or worth less. The settlement's tendency to make jurors think the third party must have been at fault also creates prejudice.