United States v. Davis
596 F.3d 852, 389 U.S. App. D.C. 282, 81 Fed. R. Serv. 651 (2010)
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Rule of Law:
Under Federal Rule of Evidence 408, evidence of an offer to settle a disputed civil claim with a private party is inadmissible in a subsequent criminal prosecution when offered to prove liability, which includes using the offer as evidence of the defendant's consciousness of guilt.
Facts:
- Terry Davis served as the unpaid national treasurer for the Phi Beta Sigma fraternity from 1999 to 2003.
- Fraternity financial policy required vouchers and two signatures (president and treasurer) on all checks, but Davis routinely bypassed these controls.
- Davis wrote numerous fraternity checks to 'cash', a violation of policy, and deposited many into his personal bank account.
- In the spring of 2003, the fraternity investigated financial irregularities and suspended Davis in June.
- The new treasurer, Jimmy Hammock, confronted Davis by phone about approximately $29,000 in checks made out to cash.
- During this conversation, Davis asked Hammock, "Can we just split this $29,000.00 and make this situation just go away?"
- Hammock rejected the offer, stating the missing amount exceeded $100,000, to which Davis replied, "I can’t afford to pay that amount."
Procedural Posture:
- Terry Davis was indicted in federal district court on multiple counts of bank fraud, theft, and fraud.
- Before trial, Davis filed a motion in limine to exclude testimony regarding his settlement offer to the fraternity, arguing it was barred by FRE 408.
- The district court denied the motion and admitted the testimony.
- A jury convicted Davis on eight counts of bank fraud and one count each of theft and fraud.
- The district court sentenced Davis to 51 months' imprisonment and ordered restitution.
- Davis (appellant) appealed his conviction to the U.S. Court of Appeals for the D.C. Circuit, arguing the district court erred in its evidentiary rulings.
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Issue:
Does Federal Rule of Evidence 408 prohibit the admission of a defendant's offer to settle a private civil claim in a subsequent criminal trial to prove the defendant's consciousness of guilt?
Opinions:
Majority - Randolph, Senior Circuit Judge
Yes, Federal Rule of Evidence 408 prohibits the admission of the defendant's settlement offer. Davis's conversation with Hammock was a clear offer to compromise a disputed claim with a private party. Rule 408(a) explicitly bars the admission of such offers when used to prove 'liability.' The government's stated purpose for introducing the evidence—to show Davis's 'consciousness of guilt'—is functionally equivalent to proving liability and is therefore a prohibited use under the rule. The exception in Rule 408(b) for proving an effort to obstruct a criminal investigation does not apply because the government conceded it was not offering the evidence for that purpose, and there was no indication Davis was attempting to 'buy off' a witness rather than settle a financial claim with the fraternity. Because the admission of this evidence was an abuse of discretion and the error was not harmless, the convictions must be vacated.
Analysis:
This decision significantly clarifies the application of Federal Rule of Evidence 408 in criminal cases that stem from private civil disputes. It establishes a strong precedent that using a defendant's settlement offer as evidence of 'consciousness of guilt' is a prohibited purpose under the rule, not a permissible non-liability purpose. This holding reinforces the rule's core policy of encouraging candid settlement negotiations by ensuring that attempts to resolve civil matters with private parties cannot be weaponized as admissions of guilt in a related criminal trial. The case draws a sharp line between settlement negotiations with private parties, which are broadly protected, and those with government agencies, which receive less protection under the 2006 amendment to Rule 408.
