Paige Capital Mgmt., LLC, et al. v. Lerner Master Fund, LLC, et al.

Plaintiffs, the manager of a hedge fund, sent a heated letter to defendants, plaintiffs' sole outside investor, in which the manager made statements about what the manager would do if the investor did not surrender to the manager's settlement demands. At issue was whether the hedge fund manager's letter was admissible on the grounds that the letter was subject to an absolute privilege and otherwise barred from admission by Delaware Rule of Evidence 408. The court held that the letter was admissible where the investor sought to introduce the threats made in the settlement letter not to prove claims pre-existing the letter but as evidence of new wrongdoing and of a wrongful state of mind.