Intro to the Federal Rules of Evidence - 14

2. Offer to compromise a claim which was disputed as to the validity or amount (FRE 408)

a. Inadmissibility

i) Inadmissible
To show that liability for or invalidity of a claim, or its amount.

ii) Admissible
To prove bias, negate a contention of undue delay, etc.

iii) Scope
Evidence of conducts and statements made during the settlement negotiation. Unlike the exclusion of medical expenses (FRE 409), the severance rule does not apply.

b. Rationale

i) To promote the public policy favoring the compromise and settlement of dispute
ii) Low probative value

c. Requirement of a dispute as to validity or amount
There must be some indication, express or implied, that a party is going to make some kind of claim. Thus, if a party admits liability and the amount of liability but offers to settle (rather than litigate) for a lesser amount, every statement made in connection with that offer is admissible.