Commercial Litigation and Arbitration

Puffery in Settlement Negotiations — Statements Regarding Damages Made in the Context of Settlement May Not Reliably Be Treated as Accurate Factual Representations (Good Quotes)

Richmond v. Gen. Nutrition Centers, Inc., No. 08 Civ. 3577 (PAE)(HBP), 2012 WL 762307 (S.D.N.Y. Mar. 9, 2012):

[T]he context of a settlement discussion, by its nature, is not one in which counsel's oral statement or demand may reliably be treated as an accurate factual representation. A settlement discussion is a negotiation, and a party's assertion as to injury or damages may, or may not, be anchored in fact. “Courts should be alert to the fact that settlement offers can often be wildly unrealistic and constitute mere puffery or posturing rather than a fair or realistic appraisal of a party's damages.” Allen v. Ruby Tuesday, Inc., No. 06–cv–149, 2006 U.S. Dist. LEXIS 73507, at *9, 2006 WL 2790431 (D.Conn. Sept. 26, 2006) (quoting Vermande v. Hyundai Moto Am., Inc., 352 F.Supp.2d 195, 202–03, (D.Conn. 2004)). That is because, “[i]n trying to settle a claim, counsel naturally will try to inflate its value. Such ‘puffing’ cannot be taken as evidence of the amount in controversy.” Gwyn v. Wal–Mart Stores, Inc., 955 F.Supp. 44, 46 (M.D.N.C. 1997). Thus, figures bandied in a settlement context “cannot be considered a reliable indicator of the damages plaintiff is seeking.” Standridge v. Wal–Mart Stores, Inc., 945 F.Supp. 252, 256–57 (N.D.Ga. 1996).

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