(dissenting)
I respectfully dissent. It is my firm conviction that the verdict was influenced, if not controlled, by a serious error of law that pervaded the entire case.
My dissent is focused on Minn. R. Evid. 408, a rule that mandates exclusion of evidence of compromise and offers to compromise. I agree with the majority that rule 408 is an exclusionary rule, as distinguished from the body of evidence received during trial at the discretion of the trial court. Evidence excluded by this rule may not be received at the discretion of the court; plainly stated, it must be excluded. See 11 Peter N. Thompson, Minnesota Practice § 408.01, at 178 n. 4 (1992); Hayes v. Northwood Panelboard Co., 415 N.W.2d 687, 690 (Minn.App.1987) (release that is part of settlement offer must be excluded under rule 408), review denied (Minn. Jan. 28, 1988).
Implicitly, erroneous application or employment of rule 408 creates instant prejudice. This is an issue that should be considered de novo on appeal, and it should not be reviewed under the clearly erroneous or greater weight of the evidence standards. I respectfully request the supreme court to review this case and expound on the meaning and purpose of rule 408, to clarify the proper application of the rule for the bench and bar.
Rule 408 provides:
Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting 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-*529denee of conduct or statements made in compromise negotiations is likewise not admissible. This rule does not require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations. This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
Minn. R. Evid. 408.
I am at a loss to understand why the trial court denied the motion in limine to exclude Exhibit 106E, the June 27, 1988 letter to Reger from Steve Davis, appellants’ attorney. I am at a further loss to understand why the court, after returning to the issue four or five times during trial, continued to stubbornly adhere to its ruling. To suggest, as the trial court held, that a dispute arose only after receipt of the letter and proposed release is to circumvent rule 408 by disregarding the plain language and obvious meaning of those documents.
Case law establishes that if there is any doubt whether rule 408 applies, a court should exclude the evidence. Bradbury v. Phillips Petroleum Co., 815 F.2d 1356, 1364 (10th Cir.1987); General Tire Co. v. Standard Accident Ins. Co., 65 F.2d 237, 240 (8th Cir.1933) (reversing and remanding because of admission of settlement evidence); Paster v. Pennsylvania R.R., 43 F.2d 908, 911 (2nd Cir.1930) (Learned Hand, J.) (“[t]he only way to handle [settlement] evidence is to exclude it”); Esser v. Brophey, 212 Minn. 194, 200, 3 N.W.2d 3, 6 (1942). There is also a line of cases holding that a “dispute ” exists whenever there is an apparent difference of opinion between the parties as to the validity of a claim, lending strength to the argument that the letter was an offer to compromise existing differences. Alpex Computer Corp. v. Nintendo Co., 770 F.Supp. 161, 163 (S.D.N.Y.1991); see also Affiliated Mfrs., Inc. v. Aluminum Co., 56 F.3d 521, 527 (3d Cir.1995) (“actual dispute or a difference of opinion” triggers rule 408).
The trial court apparently took a very narrow view of the terms “compromise of a claim which was disputed” and reasoned that a dispute had not yet arisen between the parties. However, the letter and attachments cannot be viewed in isolation. Rather, they were preceded in time by a number of meetings and communications, including (1) appellants’ cancellation of Reger’s contract in November 1987; (2) Reger’s testimony that the November 6, 1987 letter from Davis was the “start” of discussions with appellants regarding reevaluation of his employment and compensation; (3) when Reger asked John Duffey why he did not receive his usual year-end bonus in 1987, Duffey merely told him that Davis would get in touch with him; (4) on April 13,1988, Reger met with Davis and later acknowledged in a letter that Davis had raised “three areas of concern” at the meeting, including the amount of money Reger claimed was owed under his contract, the level of overall compensation Reger had taken out-of the companies, and Reger’s continuing role in the companies; (5) in May 1988, Reger met with Davis and John Duffey to discuss modification of his contract and Re-ger’s continuing role in the companies; and (6) Reger admitted that the letter represented “a difference between our view” or a “difference of opinion.” Thus, it cannot be argued that Reger’s receipt of the letter and attachments was entirely unexpected. Rather, the evidence establishes that the parties had been embroiled in a dispute for a significant period of time prior to June 27, 1998.
Moreover, the documents themselves are couched in terms of settlement of a dispute: the letter questions the validity of Reger’s employment contract and claims there are potential material offsets. Attached to the letter are typical settlement documents, including a release of all claims. That release states:
Except for this Agreement and the Consulting Agreement attached hereto as Exhibit A, Reger and the Duffey Companies mutually release and forever discharge each other of from any and all demands, claims, causes of action, damages, costs, expenses and/or compensation arising from, connected with or in any growing out of the past, present and future relationship *530of the parties, whether known or unknown, direct or indirect which the parties may have or at any time may have had against each other; provided, however, that this paragraph shall in no way affect retirement benefits due or to become due to Reger pursuant to existing plans.
(Emphasis added.) These papers undeniably establish that a “current dispute” or “difference of opinion” existed between the parties.
The majority’s reliance on In re Commodore Hotel Fire and Explosion Cases, 324 N.W.2d 245 (Minn.1982) is misplaced. Although Commodore Hotel requires as a prerequisite to application of rule 408 the existence of a “genuine dispute,” that case involved negotiations between a building owner and insurer regarding the value of restoration loss to the building where the amount of the loss was not disputed. Id. at 247-48. Here, by contrast, the letter indicates that the parties disagreed about the validity of Reger’s contract and the amount he was to be compensated. Thus, Commodore Hotel does not control because “a dispute existed during the parties’ negotiations.”
The majority suggests that receipt of the letter into evidence did not violate rule 408 because the offer was made for a purpose other than settlement. The last sentence of rule 408 provides:
This rule also does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution.
Minn. R. Evid. 408. But Reger has never claimed, nor has he made any offer of proof, that this evidence was offered for any of these reasons.
Nor does the record support the majority’s assertion that the evidence was used for the limited purpose of proving appellants’ “bad faith.” To the contrary, repeated references were made to the letter during trial to bolster Reger’s claim that the letter was an admission of liability by appellants, and had nothing to do with a question of bad faith. The prejudicial error in receiving into evidence the “offer of compromise” continued to influence the ultimate result, even in the final argument of Regers’ attorney, where he pressed the point, stating:
And even so, despite the state of the knowledge that [appellants] had at that time and without knowing all the facts, [appellants] wanted to pay [Reger] almost $2 million.
This is a clear invitation to the jury to use the letter as an admission by appellants of their liability and of the amounts owed Re-ger. This evidence clearly should have been excluded because it “had strong potential to mislead the jury because the motive behind the offer could be misinterpreted by the jury.” See Hayes, 415 N.W.2d at 690.
In addition to bolstering the validity of Reger’s claims against appellants, admission of the letter correspondingly decreased the validity of appellants’ claims. In particular, appellants asserted and presented significant prima facie evidence that Reger had breached his fiduciary duty by (1) receiving, without approval, excessive compensation; (2) signing false company tax returns; (3) taking revolving interest free loans from the companies; and (4) concealing company financial information. The existence and value of these claims is called into question by receipt into evidence of the letter, which offers to settle all claims for $2 million.
Thus, I believe that the trial court erred when it failed to exclude this evidence. Again, because rule 408 is an exclusionary rule, and not a rule of discretion, the fact that there was a three-week trial and that nearly 100 exhibits were received does not answer the question of whether the letter was erroneously received and whether appellants were prejudiced. In my view, the conclusion is inescapable that receipt into evidence of this offer to compromise controlled the result reached in this case, especially because there was no instruction given limiting the purpose and effect of the evidence. See Esser, 212 Minn. at 200, 3 N.W.2d at 6; see also General Tire Co., 65 F.2d at 240 (reversing and remanding for new trial because admission of settlement evidence was “obviously prejudicial”).
*531I would therefore reverse and remand for a new trial, free of the taint of any offer to compromise or settle this dispute. A new trial would also correct any alleged impropriety in the court’s chastisement of appellants’ counsel in the presence of the jury for continuing to object to admission of and reference to the evidence. I would also reverse the award of attorney fees because it is based on the same tainted verdict.
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn.Const. art. VI, § 10.