Understanding “Without Prejudice” in terms of confidentiality

    The dispute between Edge Games/Tim Langdell and Mobigames has devolved into a bit of a media disaster, but it has brought about several issues worth discussing. In light of Edge Games recent publication of settlement communications, perhaps the most glaring issue at the moment is confidentiality. In several of those communications, Edge Games (ironically) points out that because the communications were submitted under the heading “Without Prejudice”, they should not be disclosed to third parties.

    “We reserve all or rights in this matter, and note this communication is sent under banner of ‘without prejudice’ which means it cannot be used in any legal proceeding and should     not be revealed to any third party, the press, or etc”—July 28, 2009 communication from Edge Corp. to David Papazian

    In one communication Langdell suggests that sharing the communication with the media is in violation of U.S. Law.

    “You quoted on a public forum from a communication that was sent to you under a “without prejudice” header which is not in accord with US law (and it was on a US website). Please     be aware you are not permitted to quote from such correspondence that is written as part of settlement resolution, as all this correspondence between us has been.”—June 3, 2009 communication from Tim Langdell to David Papazian.

    The irony in all this being that Dr. Langdell and his company subsequently disclosed ALL communication under the heading “Without Prejudice” to third parties through its “Edge Studio” website. However, this raises the question of whether the phrase “Without Prejudice” offers any kind of protection, what kind of protection it provides, and whether other statements or contractual provisions would better serve the problem of confidentiality in settlement disputes.

    The heading-phrase “Without Prejudice” in a communication between two opposing parties has a relatively specific application, which has its roots in English Common Law. This application is, under current federal and state evidence law, somewhat redundant. “Without Prejudice” implies that anything contained in the communication is intended for settlement purposes only and cannot be used against either party as evidence or precedence in the event of litigation. The purpose of this statement is to facilitate candor between the parties because it is in the interest of public policy to facilitate the settlement of disputes without court action. The words are intended to free parties from the concern that the admissions and statements made by them in the course of settlement will later be used against them in court. See Am. Eagle Outfitters, Inc. v. Lyle & Scott Ltd., 2008 U.S. Dist. LEXIS 96375 (W.D. Pa. Nov. 26, 2008)

    In today’s usage the phrase does little more than suggest that the communication is, in fact, intended for settlement. As a legal term of art it provides minimal protection under the predominant weight of US law due to Federal Rules of Evidence 408 and its mirror rule in almost every state’s evidence laws. These rules automatically render compromise and settlement communications inadmissible. Under Rule 408, “conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority,” are not admissible evidence.

    Furthermore, using the phrase “Without Prejudice” when it is clear that the communications have gone beyond the point of possible settlement makes the use of the phrase ineffective. If a court could imply that the use is an empty one and the communication does not reflect conduct intended for settlement or compromise purposes, the court will ignore it and any admissions or statements contained therein may be used against either party.

    However, use of “Without Prejudice” in a communication doesn’t render the communication confidential or imply it as such. Generally speaking, settlement communications are only confidential by law if they relate to a court-ordered settlement conference or mediation conference and local rules render communications during and relating to those conferences confidential. In those cases, using “Without Prejudice for purposes of Settlement” may be useful to show that the communication is made in connection with a mediation conference or a court-ordered settlement conference. However, communications made prior to an official proceeding may not be subject to the same protections.

    In communications such as those between Mobigames and Langdell made prior to mediation or court-settlement, confidentiality hinges on an agreement between the parties to keep that information confidential. This may be accomplished via a confidentiality/non-disclosure statement at the end of each communication prohibiting the distribution, disclosure, and copying of communications relating to possible settlement. Better yet, leave such communications to your attorneys. An attorney isn’t allowed to disclose communications arising from representation, nor may they make disclosures to the media or public that may prejudice a case. Furthermore, it would probably reduce the chances of those communications getting as personal and antagonistic as the ones between Mobigames and Langdell.