251 F. Supp. 3d 329
D. Mass.2017Background
- MassMutual sued Credit Suisse under the Massachusetts Uniform Securities Act arising from marketing and sale of RMBS; these two consolidated actions are part of a larger set of related suits.
- MassMutual moved for partial summary judgment seeking a ruling that Credit Suisse made untrue statements and misleading omissions in RMBS offering documents.
- MassMutual’s motion relied entirely on factual statements in a Department of Justice Settlement Agreement and its attached Statement of Facts (DOJ SOF) to establish the alleged untrue statements/omissions.
- Credit Suisse had entered a DOJ settlement concerning the same RMBS transactions; the DOJ Settlement incorporated the DOJ SOF, which Credit Suisse acknowledged in the settlement.
- The court considered whether Rule 408 bars use of the DOJ Settlement and DOJ SOF as admissible evidence for MassMutual’s summary judgment motion and whether the DOJ SOF is separable from the settlement for admissibility purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DOJ SOF is admissible despite Rule 408 | DOJ SOF is a factual admission detachable from the settlement and thus admissible | Rule 408 bars use of settlement and attached facts; DOJ SOF is inextricably tied to the settlement | DOJ SOF inadmissible under Rule 408 |
| Whether Rule 408 applies though MassMutual was not a party to DOJ settlement | Zucco and state law permit admitting factual statements in settlements; Rule 408 should not bar DOJ SOF | Rule 408 applies to settlements involving third parties; federal rule controls and bars the evidence | Rule 408 applies to third-party settlements; federal rule controls |
| Whether the DOJ SOF would exist separate from the settlement (affecting admissibility) | DOJ SOF is a standalone factual document and thus not barred | DOJ SOF was created as part of settlement and would not exist but-for negotiations; thus barred | DOJ SOF inextricably intertwined with settlement and barred |
| Effect on MassMutual’s summary judgment motion | DOJ SOF is admissible so it can support summary judgment | Because DOJ SOF is inadmissible, MassMutual cannot rely on it at summary judgment | MassMutual’s motions for partial summary judgment denied (may use underlying admissible evidence at trial) |
Key Cases Cited
- Portugues-Santana v. Rekomdiv Int’l, 657 F.3d 56 (1st Cir. 2011) (Rule 408 applies to settlements involving third parties)
- McInnis v. A.M.F., Inc., 765 F.2d 240 (1st Cir. 1985) (Rule 408’s scope and application)
- Zucco v. Kane, 789 N.E.2d 115 (Mass. 2003) (Mass. SJC discussion on admissibility of settlement statements)
- Carota v. Johns Manville Corp., 893 F.2d 448 (1st Cir. 1990) (procedure and choice of federal evidentiary law over state law)
- Ramada Dev. Co. v. Rauch, 644 F.2d 1097 (5th Cir. 1981) (evidence created solely by negotiations is inadmissible under settlement-evidence rule)