COMPOSITE EXHIBIT B

Doe, et al. v. School Board for Santa Rosa County, et al.

Case No.: 3:08-cv-361-MCR-EMT
United States District Court, Northern District of Florida, Pensacola Division
 Page 1

LEXSEE

PHILADELPHIA'S CHURCH OF OUR SAVIOR, Plaintiff, v. CONCORD

TOWNSHIP, et al., Defendants.

CIVIL ACTION NO. 03-1766

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF

PENNSY LVANlA

2004 U.S. Di.s.Fr.LEXIS 15400

July 27,2004, Decided

July 28,2004, Filed

PRIOR HISTORY: Philadelphia's Chztrch of Our Sav-

ior v. Concord Twp., 2004 U.S. Dist. LEXlS 1941 (E.D.
Pa., Feb. 4, 2004)
DISPOSITION: [*I] Plaintiffs motion for leave to
supplement complaint denied.
COUNSEL: For PHILADELPHIA'S CHURCH OF
OUR SAVIOR, Plaintiff: CHARLES J. HARDY,
JOSEPH J. MCALEE, RICHARD A. SPRAGUE,
STEPHEN R. KURENS, LEAD ATTORNEYS,
SPRAGUE AND SPRAGUE, PHILADELPHIA, PA.
For CONCORD TOWNSHIP, Defendant: HUGH A.
DONAGHUE, LEAD ATTORNEY, DONAGHUE
AND BRADLEY, MEDIA, PA.
For CONCORD TOWNSHIP, HUGH A. DONAHUE,
MANOS KAVADIAS, JAMES W. McKINLEY,
DOMINIC J. CAPPELLI, HOWARD J. GALLAGHER,
H. WILLIAM VOLLMER, DOMINIC A. PILEGGI,
Defendants: PAOLA TRIPOD1 KACZYNSKI,
WILLIAM F. HOLSTEN, HOLSTEN & ASSOCIATES,
MEDIA, PA.
JUDGES: CHARLES B. SMITH, UNITED STATES
MAGISTRATE JUDGE.
OPINION BY: CHARLES B. SMITH
OPINION
MEMORANDUM AND ORDER
CHARLES B. SMITH
UNITED STATES MAGISTRATE JUDGE
Currently before the Court is a Motion for Leave to
Supplement the Amended Complaint by plaintiff, Phila-
delphia's Church of Our Savior. Having considered the
arguments of both parties, the Court denies Plaintiffs
motion.
I. PROCEDURAL HlSTORY
On March 26, 2003, plaintiff, Philadelphia's [*2]
Church of Our Savior (the "Church"), filed a complaint
against defendant, Concord Township (the "Township")
alleging three counts of defendant's misconduct in viola-
tion of the Religious Land Use and Institutionalized Per-
sons Act of 2000 ("RLUIP"), 42 U.S.C. $2000cc, et seq.,
five counts of misconduct in violation of 42 U.S.C. $
1983, and five counts of misconduct in violation of the
Pennsylvania Constitution. The complaint specifically
contended that defendants (1) wrongfully rejected the
Church's request for a building permit, after promising to
issue one; (2) improperly demanded a permanent ease-
ment from the Church as a quid pro quo for the building
permit and; (3) improperly refused to accept for filing or
to review the Church's written application for a building
permit, despite the fact that the proposed sanctuary com-
plied with all applicable zoning, building and safety
codes. Plaintiff asserted this Court's federal question ju-
risdiction overall federal claims pursuant to 28 U.S.C. $
1331 and 1342(3)-(4), and supplemental jurisdiction over
state law claims pursuant to 28 U.S.C. f 1367. [*3] On
February 4, 2004, plaintiff was granted leave to amend
its complaint in order to add the five members of the
Township's Board of Supervisors, the Township Solicitor
and the Township Building Inspector in their individual
capacities.
Both parties met with this Court on June 23, 2003
and entered into settlement negotiations. Following dis-
cussions, the parties agreed that plaintiff would complete

2004 U.S. Dist. LEXlS 15400, *
an application for a building permit and plaintiff would
pay the cost for an architectural firm to certify BOCA
compliance. The firm was approved by defendant and,
upon submission of the firm's report, the Township is-
sued a foundational permit on August 28,2003, authoriz-
ing plaintiff to build the foundation to support the mem-
brane structure. Thereafter, it issued a Building Permit
authorizing plaintiff to erect the proposed sanctuary.
On June 4, 2004, plaintiff filed a Motion for Leave
to Supplement its First Amended Complaint to include
paragraphs referring to the settlement conference and
how the concessions made by the Township establish
that defendants had the authority to waive its application
requirements. The undersigned held oral argument on
June 17, 2004 and, subsequently, both [*4] parties filed
post-argument briefs. The Court now considers whether
Plaintiffs request for leave to supplement the Amended
Complaint should be granted.
11. DISCUSSION
Plaintiff seeks leave to supplement its Amended
Complaint with references to the settlement proceedings
held before this Court ' in order to prove that defendants
repeatedly denied, in their responsive pleading and dis-
covery responses, that they had the authority to grant
waivers of various requirements. '
I Specifically, plaintiff seeks to add the follow-
ing paragraphs:
9 I. In or about March 2003, plaintiff filed its
Complaint against the Defendant Township, and
in or about February 2004 plaintiff filed its First
Amended Complaint. In its responsive pleadings
and discovery responses, defendants have repeat-
edly denied that defendant Concord Township, by
and through its Board of Supervisors, had the au-
thority to grant a waiver or waivers of various
permitting requirements such as land develop-
ment or land disturbance permits, and/or a special
exception ....
92. At a conference held before Magistrate
Judge Charles B. Smith on June 23,2003, Defen-
dant Concord Township, by and through its coun-
sel, agreed to afford plaintiff a procedure to ob-
tain a building permit which would permit the
plaintiff to construct the proposed temporary
sanctuary in question, which procedure did not
include any requirements that plaintiff comply
with various local building requirements such as
a the need to obtain a land development permit,
land disturbance permit, and/or special exception.
93. Plaintiff availed itself of the opportunity
afforded by Defendant Township and the Defen-
Page 2
dant Township officials, and the Defendant
Township did, in fact, thereafter issue a founda-
tional permit to Plaintiff on or about August 28,
2003 authorizing the Plaintiff to build the founda-
tion to support the membrane structure ....
94. Thereafter the Defendant Township is-
sued a building permit to the plaintiff authorizing
the plaintiff to erect the proposed sanctuary.
95. Both the foundational permit and the
building permit issued to the plaintiff were issued
under a process which did not require Plaintiff to
comply with various local building requirements
such as the need to obtain a land development
permit, land disturbance permit or a special ex-
ception ....
96. As permitted by the foundational permit
and the building permit, the plaintiff has begun
the construction of its proposed 620-seat sanctu-
ary.
97. In light of the explicit representations and
actions on behalf of defendants before this Court
including the explicit waiver of various permit-
ting requirements, defendant should be and/or ju-
dicially and/or equitably estopped from denying
such authority in this case.
[*51
2 In its Answer to the Complaint, the Township
denied that there was "any alternative procedure
for reviewing and granting requests for building
permits." and that "any procedure resembling
what Plaintiff refers to as 'the expedited permit
approval procedure' exists within Concord Town-
ship." Answer to Complaint. at par. 24.
Federal Rule of Civil Procedure 15(d) states that:
Upon motion of a party the court may,
upon reasonable notice and upon such
terms as are just, permit the party to serve
a supplemental pleading setting forth
transactions or occurrences or events
which have happened since the date of the
pleading sought to be supplemented.
The Supreme Court has held that "leave to amend 'shall
be freely given when justice so requires."' Foman v.
Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d
222 (1962). "In the absence of any apparent or declared
reason - such as undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure defi-
ciencies by amendments previously allowed, [*6] undue
prejudice to the opposing party by virtue of allowance of
the amendment, futility of the amendment, etc.--the leave

2004 U.S. Dist. LEXIS 15400, *
sought should, as the rules require, by 'freely given."' Id.
It "is an abuse of discretion for a district court to deny
leave to amend" without one of these reasons. Alvin v.
Suzuki, 227 F.3d 107, I21 (3d Cir. 2000).
Defendants offer two arguments in opposition to
plaintiffs motion. Defendants first claim that the motion
to supplement would only . proffer
. inadmissible evidence
maki& the supplement futile. Second, defendants claim
that the motion to supplement the claim with allegations
regarding the settlement proceedings is being offered in
bad faith. As the Court deems the futility argument to be
the more compelling claim, we deny the motion on these
grounds.
Denying leave to amend on the ground of futility in-
cludes those instances where:
a complaint or an answer, as amended,
would be subject to a motion to dismiss
under Rule 12(b)6, or a motion to strike
under 12(f), [and] it would be an idle
move for the court to allow such an
amendment over the objection of the op-
posing party who could simply make a
formal motion to dismiss [*7] or strike
after leave to amend is granted.
3 Moore's Federal Practice P 15.080[4]; see also Liberty
Fish Co. v. Home Indemnity Co., 1990 U.S. Dist. LEXIS
7334. Civ. A. No. 89-5201, 1990 WL 83341. * I (E.D. Pa.
June 18, 1990) (leave to amend may be denied on
grounds of futility where proposed amendment would be
subject to successful motion to strike under Rule 12m;
Medical Graphics Corp. v. HarlJord Ins. Co., 1 71 F.R.D.
254, 257 (D. Minn. 1997) (leave to amend should be
denied if proposed amendment would invite motion to
strike).
Defendants argue that the proposed supplemental al-
legations are strictly prohibited by Federal Rule of Evi-
dence 408. which states:
Evidence of (I) furnishing or offering or
promising to furnish, or (2) accepting or
offering or promising to accept, a valuable
consideration in compromising or at-
tempting to compromise a claim which
was disputed as to either validity or
amount, is not admissible to prove liabil-
ity for or invalidity of the claim or its
amount. Evidence or statements made in
compromise negotiations is likewise not
admissible.
Page 3
Fed. R. Evid 408. This [*8] Rule is founded on two
major policies: (1) "the evidence is irrelevant since the
offer may be motivated by a desire for peace rather than
from any concession of weakness of position ... (2) [a]
more consistently impressive ground is promotion of the
public policy favoring the compromise and settlement of
-
rputes. Fed -
Evid. -Ad . ...
;Skk; e.g., Agnew v. ~y~
n.,Jr ullurl. ?vaa u.a. urst. LEXIS 991 1, Civ. A. No.
88-3436, 1988 WL 92872, *4 (E.D. Pa. Sept. 6, 1988)
(parts of a complaint may be stricken pursuant to Rule
408 if they are for the purpose of showing liability and
refer to settlement negotiations); United States Transmis-
sion Sys. v. Americus Ctr., Inc. 1986 U.S. Dist. LEXIS
17057, Civ. A. NO. 85-7044. 1986 WL 13838, *2 (E.D.
Pa. Dec. 3, 1986) (striking allegations from a complaint
as they fall within Rule 408 and are thus clearly inadmis-
sible); Scott v. Township of Bristol, I991 U.S. Dist.
LEXIS 3303, Civ. A. No. 90-1412, 1991 WL 40354, *5
(E.D. Pa. Mar. 20, 1991) [*9] (striking allegations ref-
erencing settlement discussions as immaterial and of
questionable probative value); see also United States ex
rel. Alasker v. Centracare Health Sys., 2002 U.S. Dist.
LEXIS 10180, Civ. A. NO. 99-106, 2002 WL 1285089, *2
(D. Minn. June 5 2002) (granting defendant's motion to
strike paragraphs of complaint that improperly refer to
settlement negotiations and fall within the scope of Rule
408); Yankelevitz v. Cornell Univ., 1997 U.S. Dist.
LENS 2823, Civ. A. No. 95-4593, 1997 WL 115651, *4
(S.D.N.Y. Mar. 14, 1997) (if the amendment relates to
settlement discussions, then it may be stricken under
Rule 12@ and would therefore be futile). Therefore, be-
cause claims in a complaint may be stricken under Rule
1267 if they violate Rule 408, they may also be found
futile pursuant to Rule 408.
The Court must now determine whether the pro-
posed supplement to the Amended Complaint falls
within the scope of Rule 408. As noted above, allegations
made in a complaint may not use settlement negotiations
"to prove liability for or invalidity of the claim or its
amount." Fed R. Evid. 408. Plaintiff alleges in Para-
graph One of the complaint, that defendants [*lo] vio-
lated the RLUlP as well as multiple constitutional rights
due, in part, to defendants' "wrongful rejection of the
Church's request in October through December of 2002
for a building permit through defendant Township's Ex-
pedited Permit approval procedure, after Defendant Con-
cord Township promised to issue a permit." Defendants,
in their Sixth Affirmative Defense, expressly deny that
they ever had "an expedited permit approval procedure
for Building Permits or land development." Conse-
quently, to use the settlement discussions and offers of

2004 U.S. Dist. LEXIS 15400, *
compromise to prove that the Township did have such an
expedited permit approval procedure would directly un-
dermine a primary affirmative defense and go towards
proving liability under the complaint.
Plaintiff asserts that it does not seek to aver an offer
of settlement to prove liability. Rather, it plans to "attack
defendants' credibility, andlor establish that, contrary to
its pleadings and discovery responses, defendant Con-
cord Township did at the time in question have a proce-
dure for the expedited processing of building permits."
Plaintiffs Post-Argument Brief, at pp. 6-7. Plaintiff con-
tends that "despite defendant's denials, after plaintiff
[*I I ] filed suit the Defendant Township agreed to grant
the Church a building permit without the Church first (a)
filing a building permit application, and (b) obtaining all
permits andlor approvals that would normally be re-
quired." Id. at 4.
Yet, plaintiffs argument, which seeks to attack de-
fendants' credibility, is superfluous. Throughout its
pleadings and discovery requests, plaintiff has alleged
only that an expedited permit approval procedure existed
' and repeatedly, defendants have denied those allega-
tions, indicating only that no such expedited approval
procedure was in place. ' For plaintiff now to argue that
it seeks to use the settlement negotiations to contradict
Defendants' averments and judicially estop them From
taking inconsistent positions before this Court is nothing
more than an attempt at misdirection. Using the settle-
ment negotiations to attack defendants' credibility would
also conveniently disprove defendants' Sixth Affirmative
Defense and establish a primary basis of liability. As
noted, such a purpose is expressly precluded under Rule
408.
3 Paragraphs 34-37 state as follows:
34. "... Defendant Township's Board has
adopted customs, practices andlor procedures un-
der which the Defendant Township may exempt
landowners From the various procedural and sub-
stantive formalities set forth in Paragraphs 30-33
above. Pursuant to these customs, practices
andlor procedures, at all times material hereto the
Defendant Township's Board had implemented
alternative procedures for reviewing and granting
requests for building permits. The procedure has
been and is hereinafter referred to as the Expe-
dited Permit approval procedure.
35. Under the Expedited Permit approval
procedure, the Defendant Township's Board may
initiate and complete an expedited review of a
landowner's request to build a structure without
written application by the landowner.
Page 4
36. Under the Expedited Permit approval
procedure, the Defendant Township's Board may
grant a building permit, and permit construction
to begin, based upon the landowner's submission
to the Supervisors of, inter alia, sealed architec-
tural and/or engineering drawings.
37. Under the Expedited Permit approval
procedure, the Defendant Township's Supervisors
may authorize the Defendant Township's Build-
ing lnspector to issue the landowner a building
permit, and conduct a building code review dur-
ing construction; if any changes in construction
are required by applicable building code provi-
sions, the landowner may be required by the
building Inspector to promptly modify the con-
struction.
First Amended Complaint, at PP 34-37.
[* 121
4 For example, in its Answer to the First
Amended Complaint at paragraph 34. defendants
state "It is specifically denied, and strict proof
demanded, that the Township's Board of Supervi-
sors has implemented any alternative procedure
for reviewing and granting requests for Building
Permits. It is hrther denied that any procedure
resembling what plaintiff refers to as 'the expe-
dited permit approval procedure' exists within
Concord Township." Moreover, in its answer to
plaintiffs Requests for Admissions, the Township
stated "no such expedited approval procedure was
ever in effect in Concord Township."
Plaintiffs alternative claim, that it only seeks to
prove that defendants had the "authority" to grant an ex-
pedited permit in order to attack defendants' credibility,
is likewise fatally flawed. Primarily, plaintiff never al-
leged, at any point in its pleadings, that defendants pos-
sessed this expedited waiver authority. Therefore, defen-
dants never had occasion to deny in their Answer that
they had such authority, ' meaning that the settlement
negotiations would not operate to contradict any [*I31
of defendants' averments. Moreover, as the focus of
plaintiffs cause of action depends not on the Township's
authority to grant an expedited permit, but rather whether
the process actually existed, the Court recognizes this
new addition of the word "authority" as a cloaked at-
tempt to prove liability. As Rule 408 expressly precludes
use of settlement negotiations to establish such liability,
the proposed supplement is futile.
5 Although plaintiff vehemently argues in its
Post-Argument Brief that defendants have denied
their authority to grant waivers of local building
requirements, it cites to nothing to support that
statement.

2004 U.S. Dist. LEXIS 15400, *
To the extent plaintiff contends that its proposed
supplemental allegations pertain only to admissions of
fact made by defendants during settlement negotiations,
which fall outside the scope of Rule 408, the Court finds
that nothing in the proposed supplemental allegations
constitute such an admission. That the Township could
waive its permit requirements in the course of a federal
[* 141 court litigation does not mean that it had the abil-
ity to do otherwise outside of litigation. In several cases
cited by defendants, the Pennsylvania Commonwealth
Court, albeit in dicta, took judicial notice that variance
decisions in the context of the settlement of a judicial
proceeding are distinct from zoning board variances. See
Summit Township Taxpayers Asso. v. Summit Township
Board of Supervisors, 49 Pa. Commw. 459, 411 A.2d
1263. 1266 (Pa. Commw. 1980) ("Because court-
approved settlements of zoning cases are lawful ... we
must recognize such settlements as being distinct from
zoning hearing board variances; even though a judicial
settlement may result in a departure from the ordained
zoning pattern"); Yaracs v. Summit Acadamy, 845 A.2d
203, 209 n. 6 (Pa. Commw. 2004) (citing Summit). Ac-
cordingly the mere fact that the Township could act in
the context of a settlement agreement is not dispositive
of whether it had the authority outside of federal litiga-
tion.
Finally, it appears that discovery would not yield
any information that could lead to admissible evidence.
Nor does plaintiff offer any insight on the admissible
evidence they hope [* 151 to find. The "strong Congres-
sional policy behind Fed. R. Evid. 408 as well as the lib-
eral discovery rules"' support putting the burden "on the
party seeking discovery to make a particularized showing
'that the documents relating to the settlement negotiations
Page 5
are relevant and likely to lead to the discovery of admis-
sible evidence."'Key PharmaceuticaIs v. ESI-Lederle,
1997 U.S. Dist. LEXIS 13328, Civ. A . No. 96-1219, 1997
WL 560131, *2 (E.D. Pa. Aug. 29. 1997) (citing Fidelip
Fed. Sav, & Loan Ass'n v. Felicetti, I48 F. R. D. 532
(E.D. Pa. 1993)). Plaintiff fails to show that the discov-
ery relating to these supplemental complaints will lead to
admissible evidence. Consequently, plaintiff fails to meet
its burden of showing that the discovery of these sup-
plemental complaints will lead to any admissible evi-
dence not shielded by Rule 408.
In sum, plaintiff has neglected to overcome defen-
dants' contention that the proposed supplemental allega-
tions are, in fact, futile for purposes of Federal Rule r,S
Civil Procedure 15. Accordingly, the Court denies the
Motion for Leave to Supplement the First Amended
Complaint.
[* 161 An appropriate order follows.
ORDER
AND NOW this 27th day of July, 2004, upon con-
sideration of Plaintiffs Motion for Leave to Supplement
the First Amended Complaint, the Response of Defen-
dants thereto and the additional briefs and letters submit-
ted by both parties, and upon conducting oral argument
on the Motion, it is hereby ORDERED that the Motion is
DENIED.
BY THE COURT:
CHARLES B. SMITH
UNITED STATES MAGISTRATE JUDGE
 Page l

LEXSEE

UNITED STATES OF AMERICA, ex rel. and JULIE ALSAKER, and LUANNE

CATON, Plaintiffs, v. CENTRACARE HEALTH SYSTEM, INC. and ST. CLOUD
HOSPITAL, INC., Defendant.

Civil No. 99-106 (JRTIRLE)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA

2002 U.S. Dist. LEXIS 10180

June 5,2002, Decided

DISPOSITION: [*I] Defendants' motion to strike
granted in part and denied in part. Defendants' motion to
dismiss granted and counts I, I1 and 111 of government's
first amended complaint dismissed without prejudice.
COUNSEL: For United States: D. Gerald Wilhelm, As-
sistant United States Attorney, OFFICE O F THE
UNITED STATES ATTORNEY, Minneapolis, MN.
For Julie Alsaker, Luanne Caton, plaintiffs: Gary Leo
Manka, KATZ & MANKA, Minneapolis, MN.
For defendants: Kevin J. Hughes, Paul R. Harris, Kath-
leen M. Premo, HUGHES MATHEWS, P.A., St. Cloud,
Minnesota.
For defendants: Douglas A. Kelley, William Michael, Jr.,
Steven E. Wolter, DOUGLAS A. KELLEY, P.A., Min-
neapolis, MN.
JUDGES: JOHN R. TUNHEIM, United States District
Judge.
OPINION BY: JOHN R. TUNHEIM
OPINION
MEMORANDUM OPINION AND ORDER
This is a fraud action brought against defendants
CentraCare Health System Inc., and St. Cloud Hospital
pursuant to the qui lam provisions of the False claims
Act, 31 U.S.C. JJ 3729 et seq. Plaintiffs allege that de-
fendants [*2] prepared and submitted false andlor
fraudulent claims for home health aid visits in violation
of 31 U.S.C. $ 3729. The government intervened in the
action pursuant to 31 U.S.C. J 3730(b)(4)(A). Defen-
dants have moved the Court for an order dismissing all
counts of (he relators' complaint and Counts I, I1 and I l l
of the government's amended complaint for failure lo
comply with Rules 9(b) and 12(b)(6) of the Federal Rules
of Civil Procedure. Defendants also move to m i k e cer-
tain paragraphs of the amended complaint. For the rea-
sons that follow, the motion to strike is granted in part
and denied in part. The Court also grants defendants'
motion to dismiss for failure to plead fraud claims with
suficient particulari@ under Rule 9(b), but will grant
plainliffs leave to file a second amended complaint to
,cure these deficiencies.
BACKGROUND
On January 25, 1999, plaintrfs qui tam relators Julie
Alsaker and Luanne Caton ("relators") filed this action
under seal pursuant to the qui tam provisions of the False
Claims Act ("FCA"). Alsaker was employed at one of
defendants' facilities from 1993 through 1996. Caton is
the daughter [*3] of a resident who lived at one of the
facilities owned and operated by defendants. The com-
plaint alleges that since at least 1992, defendants submit-
ted claims for reimbursement of services provided by
home health aides where the aides were not trained and
certified in accordance with the provisions of 42 C.F.R. $
484.36(a)(l). Relators also allege that defendants sub-
mitted false bills to Medicare for home health aid visits
that were not properly reimbursable either because the
claims included "padded" time records or the services
provided were custodial in nature and were not related to
treatment of the beneficiary's illness or injury. Complaint
at PP 18-23.
The government intervened on March 16,200 1, and
shortly thereafter, the case was unsealed. The govern-
ment served its amended complaint on defendants on
October 17, 2001, after United States Magistrate Judge
Raymond L. Erickson directed the government to do so
or face a recommendation of dismissal for failure to ef-

2002 U.S. Dist. LEXIS 10180, *
fectuate proper service and for failure to prosecute. Oc-
tober I I, 200 1 Order at 3. ' The amended complaint al-
leges six counts, three counts of alleged violations of the
FCA and one count each [*4] of Unjust Enrichment,
Payment By Mistake, and Common Law Recoupment. It
alleges that St. Cloud Hospital, acting through its agents,
from "at least" 1992 to the present, filed or caused to be
filed claims for home health services which were not
eligible for reimbursement under the Medicare and
Medicaid programs for, among other reasons, the follow-
ing:
a. claims were inflated by adding fif-
teen-minute increments of time so as to
increase the amount claimed and reim-
bursed for personal care attendant services
under Medicaid. Relator Julie Alsaker
was directed by agents of Defendant St.
Cloud Hospital, acting within the scope of
their agency, to "pad" the time she spent
providing services;
b. The claims submitted were for cus-
todial services unrelated to any need for
skilled nursing services, which makes the
claims non-reimbursable under Medicare.
Relator Julie Alsaker was directed by
agents of the Defendant St. Cloud Hospi-
tal to provide such services to Medicare
beneficiaries, and knows that those ser-
vices were billed to Medicare and/or
Medicaid.
Am. Complaint P 22. The government undertook an in-
vestigation in June 1999 and caused a small sample of
claims submitted to [*5] Medicare to be selected from
among those filed for residents of one of the residential
facilities owned and operated by defendants during cal-
endar year 1995. Am. Complaint P 26. This sample was
reviewed for compliance with Medicare requirements
and when the analysis was completed in November 1999,
the fiscal intermediary determined that of the total of
approximately $ 100,000 paid by Medicare for these
claims, about $ 82,000 in claims were non-reimbursable
for various reasons outlined in Exhibit A attached to the
complaint. Id. In March 2000, the fiscal intermediary
completed a Comprehensive Medical Review of defen-
dants' home health claims submitted during January and
early February 2000. Upon such review, the fiscal inter-
mediary determined that approximately 42% of the
claims submitted to Medicare were not reimbursable for
a variety of reasons, including lack of medical necessity
and missing documentation.
Page 2
1 The government did not file its amended com-
plaint within the prescribed time period because
the parties had agreed to defer service of the
complaint until January 2002 in order to attempt
to settle the claims. However, the parties failed to
notify the court of this extension and in August
2001, the Magistrate Judge issued an order to
show cause why the complaint had not been filed
120 days after the government intervened in the
action.
[*6] The government thus maintains that the claims
which have so far been audited and were submitted to
Medicare and Medicaid were false when submitted either
because the service provided was not medically neces-
sary; the service was not supported by a plan of care as
required by regulation; the beneficiary receiving the ser-
vice was not eligible to receive the service; the service
was not provided as claimed; and/or the service repre-
sented personal care attendance not reimbursable by
Medicare. Am. Complaint P 33. The government further
maintains that defendants knew the claims were false
when submitted. Id. P 34. Defendants responded to the
government's amended complaint by filing this motion to
dismiss and motion to strike.
DISCUSSION
Defendants move to dismiss all counts of the rela-
tors' complaint and Counts I, 11, and 111 of the amended
complaint for failure to state a claim. ' Defendants also
move to strike certain paragraphs pursuant to Rule 1203.
The Court first addresses the motion to strike.
2 Although defendants also move to dismiss all
counts of the relators' complaint, only the
amended complaint is legally relevant. "It is well-
established that an amended complaint super-
sedes an original complaint and renders the origi-
nal complaint without legal effect." Atlas Van
Lines, Inc. v. Poplar Bluf Transfer Co., 209 F.3d
1064, 1067 (8th Cir. 2000); Kenney v. Mus-
greves, 2000 U.S. App. LEXIS 27901, Nos. 00-
2394, 00-2775, 00-2305, 00-2396, 2000 W L
1665077 at * 1 (8th Cir. Nov. 7, 2000). The gov-
ernment concedes as much in its response brief.
Gov't Response to Motion to Dismiss at 1-2.
[*7] 1. Motion to Strike
Defendants move to strike certain paragraphs from
the amended complaint pursuant to Rule 12fl of the
Federal Rules of Civil Procedure. Rule I2fl authorizes
courts to strike "redundant, immaterial, impertinent or
scandalous matter" from parties' pleadings. Specifically,
defendants object to paragraphs 28-30 and 34(e) of the
amended complaint on the basis that these paragraphs

2002 U.S. Dist. LEXlS 10 180, *
improperly describe confidential settlement discussions
in violation of Rule 408 of the Federal Rules of Evi-
dence.
)8, evidence of con
n compromise negotiations is inadmissible to
prove 1156ilitFFed. R. Evid. 408. Although this is a rule
L -
of evidence, courts have routinely granted motions to
strike allegations in pleadings that fall within the scope
ust~nv. Cornell Univ., 891 b: SUL
I J V - J I (IY.u.IV.Y. 1995) (granting defendant's morlurl LU
strike paragraph of complaint that alludes to settlement
negotiations and falls within scope of 408), rev'd on
orher grounds, Walsh v. Cily of Auburn, 942 F. Supp.
788, 797 n.5 (N.D.N. Y. 1996); Kelly v. L. L. Cool J.. 145
F.R. D. 32, 40 (S.D. N. Y. 1992) [*8] (granting defendant's
motion to strike portions of complaint that refer to set-
tlement discussions under Rule 408 as immaterial and
potentially prejudicial); Braman v. WoodJield Gardens
Assocs. Realcorp Investors I, 715 F. Supp. 226, 230
(N. D. Ill. 1989) (same). Upon review of the paragraphs
in question, the Court agrees with defendants that these
paragraphs improperly discuss settlement negotiations
prohibited by Rule 408. Paragraph 28 of the amended
complaint provides, in relevant part, that "defendants
were contacted by the United States by letter, and invited
to engage in discussions relating to settlement of poten-
tial claims." Paragraph 29 states that, "during that meet-
ing, counsel for defendants conceded that significant
issues existed concerning the reimbursability of claims
filed by defendants for home health services." Paragraph
34(e) states that "attorneys for defendants, during the
discussions described herein, admitted that the billing
practices of defendants for home health services were
deficient, and had been so at varying levels for a number
of years." Accordingly, the Court grants the motion to
strike these paragraphs. '
3 Defendants also object to paragraph 3 1 which
recounts a status conference between the Magis-
trate Judge and counsel. While the information
contained in this paragraph does not directly ad-
vance plaintiffs allegations of fraud, it does pro-
vide context to the underlying action. The state-
ment is thus not completely immaterial. The
Court therefore denies this portion of defendant's
motion.
[*9] 11. Motion to Dismiss
Defendants argue that plaintiffs have not stated a
claim for fraud with sufficient particularity. Rule 9(b)
requires that "in all averments of fraud, or mistake, the
circumstances constituting fraud or mistake shall be
stated with particularity." Fed. R. Civ. P. 9(b). The
Eighth Circuit has interpreted the term "circumstances"
Page 3
of fraud to include the "time place and contents of false
representations, as well as the identity of the person mak-
ing the false representation, and what was obtained or
given up thereby."' Commercial Prop. v. Quality Inns, 61
F.3d 639, 644 (8th Cir. 1995). Put another way, the
complaint must read like the opening paragraph of a
newspaper article: it must contain the "who, what, when,
where and how" of the alleged fraud. Bennett v. Berg
685 F.2d 1053, 1062 (8th Cir. 1982), adhered to on re-
h'g, 710 F.2d 1361 (8th Cir.)(en banc). One of the pri-
mary purposes of the rule is to ensure that a defendant
can adequately respond and prepare a defense to charges
of fraud. Greenwood v. Dittmer, 776 F.2d 785. 789 (8th
Cir. 1985). As a result, "conclusory allegations that [*lo]
a defendant's conduct was fraudulent and deceptive are
not sufficient to satisfy the rule." Commercial. 61 F.3d at
644; Parnes v. Gafeway 2000, lnc., 122 F.3d 539, 549
(8th Cir. 1997).
Defendants maintain that the false claim allegations
contained in both complaints fail to specify the times of
occurrence of the alleged fraudulent activity (the
"when"), the specific identity of the fraudulent agents
(the "who") and do not describe any specific circum-
stances constituting fraud in specific cases. Such generic
pleading, defendants argue, is clearly insuff~cient as
cases like United States ex rel. Robinson v. Northrop
Corp., 149 F.R. D. 142 (N.D. 111. 1993), Uniled Slates ex
rel. Minnesota Assoc. of Nurse Anesthetists, 1997 U.S.
Dist. LEXIS 21402, Civ. No. 4-96-734 (ADMIJGL) at
21-23 (D. Minn. Mar. 3. 1997) (" MANA"), UnitedStares
ex ref. Clausen v. Laboratory Corp. of America, Inc., 198
F.R.D. 560 (N.D. Ga. 2000), and United States ex rel.
Cox v. Iowa Health Sys., 29 F. Supp. 2d 1022, 1024-25
(S.D. Iowa 1998), make clear.
The government argues that the particularity re-
quirement should be relaxed because this case involves
[*11] a "complex scheme of fraud over an extended pe-
riod of time." ' MANA, Mar. 3 1997 Order at 22 ("Less
specificity in the complaint can be permitted when the
fraudulent activity involves numerous transactions or the
fraud occurred over a long period of time."); Clausen.
198 F.R.D. at 562 (noting that the specificity require-
ments are applied less stringently where the fraud oc-
curred over an extended period of time and consisted of
numerous acts); United States ex rel. Johnson v. Shell Oil
Co., 183 F.R.D. 204 (E.D. Tex. 1998). Under these cir-
cumstances, the government maintains that its complaint
satisfies the notice pleading standard.
4 The government also suggests that a lesser
pleading standard should apply because the in-
formation is "uniquely within the control of the
defendants." Am. Complaint P 32. The Court dis-
agrees. Julie Alsaker is a former employee and is

2002 U.S. Dist. LEXlS 10180,
alleged to have direct knowledge of the fraudu-
lent activity and to have "witnessed" fraudulent
conduct. Presumably, she would have more spe-
cific information to offer than has been plead so
far. Additionally, the government has subpoena
power to obtain documents, and in fact, previ-
ously exercised this power when it conducted the
first of two studies to assess the merits of relators'
complaint.
[* 121 Having reviewed the amended complaint and
the relevant caselaw, the Court concludes that the
amended complaint fails to provide the sufficient level of
particularity to satisfy Rule 9(b). The amended complaint
suffers from many of the same deficiencies identified in
cases mentioned above. For instance, the amended com-
plaint pleads that "Relator Julie Alsaker was directed by
agents of Defendant St. Cloud Hospital, acting within
the scope of their agency, to 'pad' the time she spent pro-
viding services" and to provide "custodial services unre-
lated to any need for skilled nursing services, which
makes the claims non-reimbursable under Medicare."
Am. Complaint P 22(a), (b) (emphasis added). The com-
plaint's generalized reference to "agents of defendant St.
Cloud Hospital" is as deficient as was plaintiffs' refer-
ence to "a Northrup engineer" in Robinson, or to "defen-
dant anesthesiologists" in MANA. Remarkably, the gov-
ernment suggests that this type of pleading is sufficient
because defendant St. Cloud Hospital was Alsaker's em-
ployer and therefore knows with whom she had daily
contact. However, the burden rests with the government,
not the defendants, to plead their fraud allegations. [* 131
The Court presumes, and counsel for plaintiff acknowl-
edged at oral argument, that Alsaker can identify the
specific "agents" who directed her to "pad" her hours and
to conduct non-reimbursable custodial services. These
specifics are not peculiarly within the control of the de-
fendant and they should be disclosed in the complaint.
The Court recognizes that plaintiffs' allegations in-
volve over 30,000 claims submitted by defendants over
an approximately eight-year period. For this reason, a
lower standard of pleading the fraud allegations is ap-
propriate. Nonetheless, a less stringent standard does not
alleviate the plaintiffs' burden to allege any specifics of
the fraud. As the district court in MANA explained:
The Court recognizes that plaintiffs al-
lege a general practice of fraud that covers
an extensive period of time. Clearly plain-
tiffs are not required to recite specifics for
all 28,000 allegedly fraudulent transac-
tions. Nevertheless, plaintiffs must pro-
vide some representative examples of the
fraud which detail the specifics of who,
where and when. Plaintiffs complaint
Page 4
*
does not once describe a single instance of
the fraudulent conduct that names a spe-
cific anesthesiologist [* 141 on an exact
date at a particular hospital with reference
to either the procedure, patient or bill.
Failure to plead no specifics is insufficient
to satisfy Rule 9(b), even given a lesser
pleading standard for allegations of exten-
sive fraud.
MANA, Mar. 3, 1997 Order at 23 (emphasis in original).
The Court agrees with this statement and finds that the
complaint must at least provide some representative ex-
amples of the alleged fraud. Counts I, I1 and 111 of the
amended complaint do not accomplish this and accord-
ingly must be dismissed for failure to comply with Rule
9(b). The Court will, however, dismiss those counts of
the amended complaint without prejudice and allow the
government an opportunity to file a second amended
complaint which complies with the requirements of Rule
9(b). This practice is consistent with the procedure fol-
lowed by other courts under similar circumstances. Rob-
inson, 149 F.R.D. at 146 (dismissing plaintiffs' com-
plaint without prejudice but granting plaintiffs leave to
amend their complaint to bring it into compliance with
Rule 9(b)); MA NA, Mar. 3, 1997 Order at 24.
Because the Court finds that the complaint is subject
[*I51 to dismissal under 9(b), the Court will not now
address defendants' arguments under Rule 12(b)(6) raised
in the latter part of defendants' reply brief. Defendants
may renew their motion under 12(b)(6) if plaintiffs file a
second amended complaint which satisfies the pleading
requirements of Rule 9(b). However, the Court pauses to
remind defendants of the deferential standard of review
that must be accorded plaintiffs on such a motion. The
Court also notes that most of the cases relied on by de-
fendants in support of this portion of their motion were
before the court on motions for summary judgment, not
motions to dismiss. See United States ex rel. Minnesota
Assoc, of Nurse Anesthetists v. Allina Health Sys. Corp.,
1999 U.S. Dist. LEXlS 23036, Civ. No. 4-96-734, Mar.
17, 1999 (order granting summary judgment); ' United
States ex rel. Lowell Quirk v. Madonna Towers, Inc.. 278
F.3d 765 (Feb. 4, 2002) (appeal of order granting sum-
mary judgment); United States ex rel. Hopper v. Anton.
91 F.3d 1261, 1263 (9th Cir. 1996) (appeal of district
court order granting summary judgment); United States
v. Adler, 623 F.2d 1287 (8th Cir. 1980) (post-trial mo-
tions).
5 In addition, the Eighth Circuit recently over-
turned the district court's grant of summary
judgment for the defendants. United States ex rel.
Minnesota Assoc. of Nurse Anesthetists v. Allina

2002 U.S. Dist. LEXIS 10180, *
Health Sys. Corp, 276 F.3d 1032, 1052-56 (8th
Cir. Jan. 17, 2002), reh'g and reh'g en banc de-
nied 2002 U.S. App. LEXlS 4870, (Mar. 25,
2002).
[*I61
6 At oral argument, the government raised ob-
jection to the submission of exhibits by defen-
dants in their reply brief. Because the Court does
not reach the issues relating to defendants' motion
under Rule 12(b)(6), to which the exhibits in
question pertain, the Court need not resolve that
objection at this time.
ORDER
Based on the foregoing, the submissions of the par-
ties, and all of the files, records, and proceedings herein,
IT IS HEREBY ORDERED that:
I. Defendants' motion to strike [Docket No 221 is
GRANTED in part and DENIED in part. The motion
Page 5
is GRANTED as to paragraphs 28-30 and 34(e) and they
are accordingly STRICKEN from the amended com-
plaint [Docket No. 191. Defendants' motion to strike is
DENIED in all other respects.
2. Defendants' motion to dismiss [Docket No. 221 is
GRANTED and Counts I, I1 and 111 of the government's
first amended complaint [Docket No. 191 are
DISMISSED WITHOUT PREJUDICE. Plaintiffs shall
have thirty (30) calendar days from the date of this Or-
der to file a second amended complaint in this action,
[*I71 Civil File No. 99-106 (JRTIRLE), and defendants
may thereafter respond in a manner authorized by the
Federal Rules of Civil Procedure.
DATED: June 5,2002
at Minneapolis, Minnesota.
JOHN R. TUNHEIM
United States District Judge

LEXSEE
SPlRO T. AGNEW, et al. v. AYDlN CORPORATION
Civil Action No. 88-3436
UNITED STATES DISTRICT COURT FOR T H E EASTERN DISTRICT OF
PENNSYLVANIA
1988 U.S. DisL LEMS 9911
August 31,1988, Decided; September 6,1988, Filed; September 7,1988, Entered
COUNSEL: [*I] Robert P. Knapp, Jr., Esquire,
ENGEL & MULHOLLAND, New York, NY, Lewis A.
Grafman, Esquire, GRAFMAN & VON DREUSCHE,
Bala Cynwyd, PA, for Plaintiffs
Teresa N. Cavenagh, Esq., DUANE, MORRIS &
HECKSCHER, Phila., Pa., for Defendants
OPINION BY: NEWCOMER
OPINION
MEMORANDUM
CLARENCE C. STATES
DISTRICT JUDGE
Plaintiffs tiled suit alleging a cause of action under
the Rackateer Influenced Corrupt Organization Act
("RICO"), 18 U.S.C. j' 1961 et. seq., and common law
causes of action for fraud, breach of contract, quantum
meruit and return of profits. I now have before me de-
fendant's motion to strike paragraphs 76-77 and 80-84 of
the amended complaint pursuant to rule 12@ of the Fed-
era1 Rules of Civil frocedure. Defendant contends that
of Evidence 408 prohibits plaintiff
using statements defendant's attorney uttered at settle-
ment conferences in the complaint. For the reasons stated
below 1 will grant the motion.
Factual Background
-
On May 27, 1988, plaintiffs filed an amended com-
plaint including several paragraphs, pertaining to the
RICO claim, which referred to statements made by attor-
neys at settlement meetings. The paragraphs in question
state as follows:
76. [*2] In 1985, Agnew discovered that Aydin,
Shaw and Alicanto had fraudulently and maliciously
Page l
deceived him and concealed from him the true, correct
and actual amount of commission paid by Aydin to Ali-
canto and Shaw. Thereafter he and Woolverton made
demands upon Aydin, Shaw and Alicanto for payment of
the fair and just compensation to which each was entitled
pursuant to agreement and stated their intention to bring
suit therefor if necessary. In response, one Ronald F.
Kidd, Esq., the defendant's attorney then and thereupon
revealed and disclosed the corrupt and fraudulent scheme
and intent of Aydin, Shaw and Alicanto when they had
engaged Agnew as aforesaid and had falsely and fraudu-
lently promised and agreed to compensate him for his
services. In or about January 1986, Kidd, acting in con-
cert and conspiracy with, and for and on behalf of Aydin,
Shaw and ~ f i c a n t o traveled
, to New York and then and
there contemptuously and insolently caused Agnew to be
informed that Aydin, Shaw and Alicanto had not thought
of compensating him for his services because "nobody
would believe him" if he sued in view of the unfavorable
publicity connected with prior events related to his hold-
ing public office [*3] and, therefore, he could not afford
to become involved in a lawsuit to enforce his right to a
commission on a contract that Aydin had procured by
bribes and kickbacks.
77. By those statements, Aydin by its attorney, Kidd,
acknowledged admitted by, for and on behalf of it-
self, its co-conspirators, Shaw and Alicanto, that they
had, as Shaw had previously stated for himself and on
their behalf, procured the award of the contract by bribes
and kickbacks.
80. In February 1986, Aydin's said attorney, Kidd,
again traveled from Philadelphia to New York, ostensi-
bly to make an offer of settlement but in truth and actual-
ity for the conupt, unethical and criminal purpose of
threatening Woolverton with prosecution if Agnew
should sue Aydin. Acting in concert and conspiracy with,
and for and on behalf o f ~ ~ d ihe
n ,then and there further
revealed and disclosed Aydin's corrupt and fraudulent

1988 U.S.Dist. LEXIS 991 1, *
purpose when for a second time, and again with the ut-
most insolence and contempt, he caused Agnew to be
informed that because of his own history and because
Aydin, Shaw and Alicanto had procured the contract by
fraud and bribery, he could not afford to sue for his
commission and lacked the virility to [*4] do so. In so
saying, the defendant's attorney, Kidd, thereby reac-
knowledged and reaffirmed the fact of the defendants'
fraud and bribery.
8 1. In conjunction and concurrently with Kidd's said
trip to New York in February 1986, and as further con-
firmation and corroboration of Aydin's fraud and corrup-
tion, he caused one James Danaher, Esq. of Palo Alto,
California, a member of the California Bar to travel from
California to New York, there to foregather with him and
the plaintiffs and Woolverton's former attorney on that
same occasion, ostensibly for the purpose making an
offer of settlement but as events proved, actually for the
corrupt, unlawful, indecent and unethical purpose of
threatening Woolverton with criminal prosecution if
Agnew and he should institute suit. Danaher stated that
he was attorney for the defendants Schneidau and
Sherman, Aydin officials who had been employed in
Aydin's Systems Division, adjacant to Palo Alto. Kidd,
acting with Danaher in concert and conspiracy with, for
and on behalf of Aydin, Schneidau, Sherman, Shaw and
Alicanto, and by obvious and flagrant pre-arrangement
with Danaher, with whom he had met and conferred pri-
vately immediately prior to their [ * 5 ] meeting with the
plaintiffs and Woolverton's attorney, prompted and cued
Danaher to threaten Woolverton through his said attor-
ney, by announcing that if the plaintiff were to start this
suit, Schneidau and Sherman would in return for grants
of immunity from criminal prosecution and indictment
for their criminal acts of bribery go before a grand jury
and accuse Woolverton of complicity in the defendant's
Shaw's and Alicanto's "illegal payments to the Argentine
general." Thereby Danaher, speaking on cue from Kidd,
once more confirmed, acknowledged and arrested for a
second time for and on behalf of the defendant, Alicanto
and Shaw their bribery and conuption in procuring the
contract, as well as their guilty knowledge of the crimi-
nal and indictable nature and character of their immoral
and unlawful acts in making such corrupt payments.
82. The February 1986 travel by Kidd and Danaher
from Philadelphia and California respectively to New
York City, acting in concert and conspiracy with, for and
on behalf of the defendants, Shaw and Alicanto was for
the purpose of transmitting a communication containing
a threat to accuse Woolverton of a crime, with the intent
thereby to extort and [*6] demand from him his lawful
claims against Shaw and Alicanto, and their making such
travel and threat were criminal acts by Kidd, Danaher,
Shaw, Alicanto and the defendant indictable under 18
Page 2
U.S.C. S;S; 875 and 1952 and constituted "racketeering
activity" under "RICO" 18 U.S.C. S; 1961 et. seq.
83. In still firther confirmation and corroboration of
the defendant's, Shaw's and Alicanto's fraud and corrup-
tion, Aydin's attorney, Kidd, again and for a third time
traveled from Philadelphia to New York in March 1986,
again purportedly for the purpose of making a new offer
of settlement but in truth and actuality once more for the
criminal purpose of again threatening Woolverton with
prosecution if this suit were brought. Danaher too, had
again traveled to New York from California at Kidd's
behest, and had again met and conferred with him pri-
vately in advance of meeting with the plaintiffs attorney.
However, they made no such offer, but, Kidd, acting in
concert and conspiracy with, for and on behalf of the
defendant, Shaw and Alicanto, and speaking in the pres-
ence of and with the acquiescence of Danaher, threatened
the plaintiffs former attorney and Woolverton in the fol-
lowing words, [*7] or in words to the same effect, "If
you bring this suit [meaning the present action] I will
send your father-in-law [meaning Woolverton] to
prison." By reason of the said threat, Kidd and Danaher
again positively and conclusively confirmed, acknowl-
edged and unambiguously asserted for a third time, Ay-
din's Schneidau's, Sherman's, Shaw's and Alicanto's brib-
ery and corruption in procuring the contract and their
guilty knowledge of the criminal and indictable nature
thereof.
84. Kidd's and Danaher's March 1986 travel from
Philadelphia and California to New York was for the
purpose of transmitting a communication containing a
threat to accuse Woolverton of a crime and "send him to
prison." Such travel and threat were made with the intent
to extort from Woolverton his lawful claims against
Shaw and Alicanto and to intimidate him from testifying
and assisting the plaintiff in suit against the defendants,
and were criminal acts by Kidd, Danaher, Shaw and Ali-
canto, and the defendant, indictable under 18 U.S.C. $3
875 and 1952 and constituted "racketeering activity"
under "RICO" 18 U.S.C. $1961 et. seq.
Discussion
The sole issue here is whether the statements re-
ferred to in the [*8] above-enumerated paragraphs of the
complaint should be stricken pursuant to Federal Rule of
Evidence 408. The rule provides:
Evidence of ( I ) furnishing or offering or promising
to furnish, or (2) accepting or offering or promising to
accept, a valuable consideration in compromising or at-
tempting to compromise a claim which was disputed as
to either validity or amount, is not admissible to prove
liability for or invalidity of the claim or its amount. Evi-
dence of conduct or statements made in compromise
 Page 3
1988 U.S. Dist. LEXlS 991 1, *

negotiations is likewise not admissible. This rule does
not require the exclusion of any evidence otherwise dis-
coverable merely because it is presented in the course of
compromise negotiations. his-rule also does not require
exclusion when the evidence is offered for another pur-
pose, such as proving bias or prejudice of a witness,
negativing a contention of undue delay, or proving an
effort to ob ct a criminal investigation or PI cuti
Stuunron v. I arantino, 637 F.Supp. 1051, 1081 (b.L
408 Advisory Committee N a - - .
~erallybelieved zttlemer egotiatic
inhibited if the parties [*9] are aware their
Krilikos v.
TmerJo 8 ;, ,Cir. 1987).
The Notes of the Advisory Committee explain the
broadened scope of Rule 408 over its common law
predecessor:
The practical value of the common law rule has been
greatly diminished by its inapplicability to admissions of
fact, even though made in the course of compromise ne-
gotiations, unless hypothetical, stated to be without
prejudice, or so connected with the offer as to be insepa-
rable from it. . . . An inevitable effect is to inhibit free-
dom of communication with respect to compromise even
among lawyers. Another effect is the generation of con-
troversy over whether a given statement falls within or
without the protected area. These considerations account
for the exuansion of the rule herewith to include evidence
of conducl or statements made in compromise negotia-
tions. (emphasis added).
\is p 1 open discussion by ea
meetings among these opposing attorneys were trans-
formed from settlement discussions into post-discussion
angry exchanges. Such a distinction is nearly impossible
to make. Angry statements may be negotiation ploys or
natural human responses to prolonged or failing negotia-
tions. In Aspen Title & Escrow. Inc. v. Jeld-Wen, Inc.,
the United States District Court for Oregon was faced
with facts similar to the instant case. One party had made
a threat during what the opposing party claimed were
settlement negotiations. Evidence of this "threat" was
ruled inadmissible. The Court stated:
Even if a clear breaking point [demarking the, [ * I I ]
end of negotiations] always existed, the courts may not
be competent to make such a determination. The same
policy considerations which establish the need for Rule
408 to cover all statements, establish the need to have
settlement conferences in their entirety covered.
677 F.Sur- -* '485.
. ,..ornc,, ,..,wing that compromise
untlntln
being pursued. Plaintiffs' response tc 1s motion
-. m s that the meetings in question were scheduled
in tne spirit of negotiation. If the court determines if and
when the character of these meetings changed, a chilling
effect on the openness of discussions at hture compro-
mise meetings might result. In turn, the court's action
would undermine the policy behind Rule 408. The mo-

-4
tion to strike the relevant portions of plaintiffs' complaint
,calls tbr ( t
nPontlatlrrr ..spe,. ....- &Escrow, Inc. v. Jt.,- ,,=.,
will be granted.

Evidence para. 408[03 * 10

-
Inc.. 677 F.Supp. 1477, 1485 (D.Or. 1987); 2 Weinstein's

:lear that the statements referred to in par

ORDER - September 6 , 1988, Filed
AND NOW, this 3 1st day of August, 1988, in con-
sideration of defendant's motion to strike paragraph 76-

-
[grapls 76-77 and 80-84 are evidence used for the p 77 and 80-84 of the amended con and plaintiffs
pose of showing liability of the defendant. Thus, the on'
~determinatioKTineedmake, cons~deringthe broad sco
M e 408, is whether the statemerA-'
. . . 'ement negc ' ionp Ylalntltts contend -m
. ..., ....., ...e statement:, ... question were made by
tha. ,
defendant's attorneys the settlement conference should be
AND IT IS SO ORDERED.
deemed terminated. I disagree. Plaintiffs are, in effect,
requesting that 1 determine the instant in time when the