The Settlement Privilege and the Threat of Legal Action

Some time ago, one of these authors observed that nearly all manner of communication is apt to contain the seedlings of a threat at one time or another. See Stanley S. Arkin, “Blackmail and the Practice of Law,” N.Y.L.J. (Feb. 7, 1995). Whether this be a communication between a parent and child (“Eat your vegetables or else!”) or a TV commercial, the practice in our discourse of imposing a consequence to coerce a concession, achieve an economic or political end, or resolve a dispute is so commonplace that it may proceed without care or notice, much less analysis. Of course, the laws and regulations designed to punish extortion and blackmail are notable exceptions to this. Our society rejects these efforts to exploit others by virtue of fear-invoking threats that are designed to achieve wrongful objectives.

Uniformly excluded from these laws and regulations, however, are threats levied within the context of settlement negotiations. This is accomplished by application of the so-called “settlement privilege,” crafted as it is with the intention of encouraging informal dispute resolution by deeming inadmissible communications made during the course of settlement talks. Statutes ordaining the settlement privilege typically espouse a standard close to (or mirroring) the proscription set for by Rule 408 of the Federal Rules of Evidence ' which by its terms excludes from evidence “conduct or a statement made during compromise negotiations” offered “to prove or disprove the validity or amount of a disputed claim.”