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The Settlement Privilege and the Threat of Legal Action

By Stanley S. Arkin and Lisa C. Solbakken

Editor's Note: The Federal Rules of Evidence (FED. R. EVID. 408) and similar state rules prohibit the introduction into evidence of statements or acts made during compromise negotiations if they are offered to prove the validity or value of a claim. This so-called “settlement privilege” is meant to encourage the parties to negotiate and settle, where possible. But, as the authors pointed out in Part One of this article, there may be a fine line between a settlement offer and an attempt at extortion ' “Pay what I ask or I will sue (and commercially disparage your company).” Here, they describe how two courts came to opposite conclusions about the settlement privilege, and discuss the advisability of enacting an exception to that privilege when an offer rises to the level of an extortionate threat.

Sanders v. Madison Square Garden

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