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Hearsay—in small steps

June 7, 2011

Hearsay is a very difficult problem; arguably the most difficult in law.  The great Irving Younger teasingly lamented “I wasted the flower of my youth studying hearsay.”  By this he meant that after spending a lifetime trying to conquer hearsay, he finally realized the beast cannot be conquered.  The most we can hope for is to understand the manner in which hearsay deceives us!  So, let’s set out a few small steps we can take to give ourselves the best chance at this giant challenge.

Before we get to the hearsay analysis, let’s make a few preliminary ground rules for this exercise:

Ground Rule One: we are going to focus on the definition of hearsay under Rule 801(c).  Understanding this definition is one of the hardest tasks a trial lawyer takes on.  In order to do it, we must stay focused on the words of 801(c), which are:

“Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”

There is more to the definition of hearsay, such as Rule 801(d), entitled “Statements which are not hearsay.”  For now, however, please forget about Rule 801(d).  We will cover it in great detail later.  I also want you to forget about any hearsay exceptions under Rules 803, 804 or 807.  That, too, will come later.  Our first task is to understand the 801(c) definition of hearsay, so let’s not worry about the other stuff.

Ground Rule Two: we must remember that evidence problems arise in trials, not in textbooks or law school classrooms.  This requires us to keep two thoughts firmly in our grasp:

  1. Evidence problems do not exist in the abstract.  Rather, they arise during the course of the efforts of trial lawyers to resolve the problems faced by real people.  So, in order to properly understand any evidence problem (particularly hearsay), we must understand the practical context in which the problems of those people arose.
  2. We also have to remember that an evidence problem (again, particularly hearsay) presents itself in a courtroom—during a trial.  The supposed hearsay itself, however, necessarily arises out of an event (a Statement) that occurred previously, outside of the courtroom (meaning “other than one made by the declarant while testifying at the trial or hearing”).

We’ll consider the steps of the hearsay analysis in the practical context of the trial of the case we talked about on Thursday, Emich Motors Corporation v. General Motors Corporation, 181 F.2d 79 (7th Cir. 1950).  General Motors had been accused and convicted of violating the Sherman Antitrust Act by requiring dealers such as Emich to use General Motors Acceptance Corporation to finance the cars it sold as a condition of retaining its GM franchise.  Emich Motors was owned by Fred Emich, who also owned U.S. Acceptance Corporation, which supplied credit services to purchasers from Emich Motors.  Emich Motors was one of the dealers whose franchise GM cancelled.  Both companies filed suit against GM and GMAC, claiming they were damaged by GM’s illegal conduct.  Because GM had already been convicted of the antitrust violation in a criminal trial, it could hardly defend the civil damages claim denying the existence of the illegal conspiracy.  So, GM defended on the basis that Emich was a “bad dealer,” and thus that GM was justified in cancelling Emich’s franchise contract to sell Chevrolets. 

In this context, let’s imagine the scenario that unfolded during the trial.  A trial lawyer representing GM stood up in court (probably nervous) and offered into evidence several hundred customer complaints GM had received regarding Emich Motors.  As the Seventh Circuit described it, “[GM] sought to establish the existence of a considerable amount of customer dissatisfaction with Emich service which had been brought to the attention of the Chevrolet organization, and their difficulties in attempting to adjust the various complaints.”  181 F.2d at 82.  A trial lawyer representing Emich (also nervous) objected to the complaints, some sixty of which were in writing and some of which were not, on the basis that the statements contained in the complaints were hearsay. 

Step One:

We always first determine whether the evidence, in this case the out-of-court statement, is relevant!  As it is most of the time, the relevance of these statements is easy.  Now we’re moving on to “what is it?”—or in this case “is it hearsay?”

Step Two:

As I wrote in the “What are the Words?” blog yesterday, it is absolutely essential to determine what the statement is.  The Emich opinion does not tell us the specific words of the statements.  It does tell us that the substance of the complaints was that Emich performed poor service on the automobiles it sold, and that it was in general a “bad dealer.”  We can imagine a few of the statements made in the complaints might have been: (a) “Emich made me wait for three days before they called me back to tell me what was wrong with my Chevrolet;” (b) “I have never been treated so rudely as when I asked Emich’s service personnel to explain the repairs they did;” and (c) “Chevrolet will lose business because of the way Emich treated me.”

Step Three:

Now that we have determined what the statements are, tracking as much as possible the words of the statement, we must determine what is asserted in the statements, or “the matter asserted.”  Here, it is important to frame the question precisely: we want to know what is asserted “in the statement!”  (More on that in a later blog).  In (a) above, one way to characterize what is asserted is that Emich is slow in performing its service obligations.  In (b), the matter asserted is just what is said, that nobody ever treated the complainant so badly.  In (c), we might say the declarant has asserted it will never buy another Chevrolet, or that he predicts others will not buy as many as before; and that the reason for this is Emich’s bad conduct. 

Step Four:

Now, finally, we can take “the matter asserted” in each statement and determine whether the statement is being offered “to prove the truth of the matter asserted.”  This is the question I will stress so much during this summer: Why is the Evidence Being Offered?  Emich argued the answer to this “Why” question was that GM offered the complaints to prove that the statements made in the complaints were true, or “to prove the truth of the matter asserted.”  GM argued, on the other hand, that one of the grounds for cancelling the Emich franchise was that GM had been told so many times that Emich’s customers were dissatisfied, and that it acted on the dissatisfaction shown by the complaints instead of the truth of the statements.  GM’s argument to the trial judge might have gone something like this:

“Judge, it’s not important to this case that the person making complaint (c) thinks GM will lose business; or that the person making complaint (b) has lived a sheltered life.  What matters is that GM has knowledge of hundreds of complaints from dissatisfied Emich customers.  Judge, any manufacturer is justified in getting rid of a bad dealer, and we are offering the complaints to prove how GM knew that Emich’s customers were dissatisfied.” 

As with all hearsay problems, the answer is debatable.  Some of you will believe the statements were offered to show they were true (to prove the truth of the matter asserted), and some will accept the importance of proving that GM knew of the dissatisfaction, and acted on it, regardless of whether the complaints were valid.  The Seventh Circuit sided with GM.  The Federal Rules of Evidence Advisory Committee thought enough of the opinion to include it as the only case in the Notes to Rule 801(c), and the Committee specifically used the case to illustrate this critical point in the study of hearsay:

“If the significance of an offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay.”

See you later today!!

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