They Said What? Georgia Supreme Court Clarifies the Admissibility of Statements Made During Settlement Discussions
By: Rachel Mathews
The Georgia Supreme Court recently clarified that statements made during settlement discussions cannot be offered to prove liability for a claim for punitive damages and clarified the scope of O.C.G.A. § 24-4-408, providing litigants with further protections for the conduct and statements made during negotiations.
Public Policy Favoring Confidentiality of Settlement Discussions
Georgia courts have long recognized the importance of protecting the confidentiality of settlement discussions and negotiations in order to promote the public policy favoring compromise and settlement of claims. In furtherance of this goal, O.C.G.A. § 24-4-408 provides general protections against the admissibility of evidence of conduct or statements made during the course of compromise negotiations or mediation.1 This rule is in place to encourage parties to have full and frank discussions, promote settlement and avoid protracted litigation, which is generally favorable to all parties. Specifically, Rule 408 states that evidence related to the compromising of a claim that is disputed is not admissible to prove liability for or invalidity of any claim.2
Exceptions Allowing the Admissibility of Statements Made during Negotiations
Like most legal rules, Rule 408 carves out certain exceptions for the introduction of evidence offered for another purpose other than proving liability for or the invalidity of a claim, including, but not limited to, proving bias or prejudice of a witness, negating a contention of undue delay or abuse of process or proving an effort to obstruct a criminal investigation or prosecution.3 The Georgia Court of Appeals has interpreted this statutory language to mean evidence of settlement offers or statements made during the course of negotiations may be admissible where they are used for the purpose of establishing whether actions constituted bad faith, abuse of process or stubborn litigiousness.4
The applicability of Rule 408 to Claims for Punitive Damages
Recently, the Georgia Court of Appeals extended this reasoning to conclude that statements made during settlement negotiations could be introduced to support a party’s claim for punitive damages.5 During the course of settlement discussions regarding the plaintiff’s claims in Whitaker Farms, LLC v. Fitzgerald Fruit Farms, LLC, the defendant made statements regarding how he “thrived off this type of litigation” and “he was going to make an example out of [the plaintiff]”.6 These statements were allowed into evidence for the limited purpose of supporting the plaintiff’s claims for punitive damages. The court of appeals upheld the introduction of these statements, concluding under Rule 408(c) that the statements were admissible “for the limited purpose of proving [his] intent and state of mind” and were not “used against him to prove his liability; rather, his demeanor was used as evidence of his state of mind toward Lennon, which was relevant to the jury's consideration of whether to award punitive damages.”
However, in a recent unanimous decision, the Georgia Supreme Court disagreed with the court of appeals and determined statements made during the course of settlement discussions that were then used to establish a party’s state of mind to support a punitive damages claim were inadmissible under Rule 408.7 Critically, the Supreme Court determined a punitive damages claim is a “claim” within the meaning of Rule 408, and, therefore, evidence arising from settlement discussions to support that claim is inadmissible. Because the evidence in this case was offered to prove the defendant’s state of mind, which is a critical element of a punitive damages claim, the Supreme Court held the statements made by the defendant during the settlement discussions were inadmissible.
This case provides further protections to parties that their statements made during settlement will be safeguarded and not used to support any punitive damages claim against them. Notably, the Supreme Court declined to address whether settlement evidence is categorically excluded under Rule 408(b), which will be left for another day. As always, parties are free to agree that all statements made during the course of mediation are confidential and are not to be used as evidence at trial, which is likely still best practice even as the court further strengthens the protections of Rule 408.
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1 O.C.G.A. § 24-4-408(b).
2 O.C.G.A. § 24-4-408(a).
3 O.C.G.A. § 24-4-408(c).
4 Christie v. Rainmaster Irr., Inc., 299 Ga. App. 383, 682 S.E.2d 687 (2009)(holding statements made during the course of negotiations were admissible to support claim for attorney’s fees); Reid v. Reid, 348 Ga. App. 550, 823 S.E.2d 860 (2019) (settlement offers were admissible for the purpose of determining whether husband's actions constituted delay or abuse of process).
5 Whitaker Farms, LLC v. Fitzgerald Fruit Farms, LLC, 368 Ga. App. 563, 567, 890 S.E.2d 454, 459 (2023), cert. granted (Feb. 20, 2024), vacated and remanded, No. S23G1162, 2024 WL 4633502 (Ga. Oct. 31, 2024).
6 Id.
7 Whitaker Farms, LLC v. Fitzgerald Fruit Farms, LLC, No. S23G1162, 2024 WL 4633502 (Ga. Oct. 31, 2024)
Attorney Contact Info
Rachel Mathews
rachel.mathews@swiftcurrie.com
404.888.6201