When a defendant enters into a deferred prosecution agreement (DPA) or other agreement with the government, the government often insists on the inclusion of factual admissions. Such factual admissions can include seemingly innocuous language like admitting that the government itself determined certain facts to be true. When the admissions are coupled with other “boilerplate” language in the agreement, however—such as the commonplace provision in which the defendant agrees not to make any future statement “contradicting” the “facts” admitted—the defendant may face challenges in subsequent civil litigation. In particular, the defendant may find itself having to fend off claims that it admitted more than it (or even the government) may have intended.

Southern District Judge Colleen McMahon recently addressed such a situation in BDG Gotham Residential v. Western Waterproofing Company, 2022 WL 4482310 (S.D.N.Y. Sept. 27, 2022). In a prior DPA with the government, the defendant in BDG Gotham, Western Waterproofing Company (Western), admitted that the New York County District Attorney’s Office’s (DANY) “investigation ha[d] determined” various enumerated facts, and Western further agreed that it would not make any statement, in litigation or otherwise, “contradicting” the “facts” in the DPA. The central issue in BDG Gotham was whether Western’s foregoing admission and agreement in the DPA meant that it had adoptively admitted the truth of DANY’s findings. A decision to that effect would have rendered BDG Gotham indefensible.

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