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Hearsay—in small steps

June 6, 2012

We are starting this evidence course by covering hearsay—a little unconventional perhaps—but not without purpose.  The purpose is to start where evidence starts, with thinking.  Hearsay is representative of the thinking we need to engage in to solve all evidence problems, so that’s our starting point.

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), and in particular subpart (2) of that definition.  Understanding this definition is one of the hardest tasks for a trial lawyer.  In order to do it, we must stay focused on the words of 801(c)(2), which are:

“Hearsay” means a statement that:

* * *

(2) a party offers in evidence to prove the truth of the matter asserted in the statement.

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.  We are also leaving out 801(c)(1), which requires that the statement be one that “the declarant does not make while testifying at the current trial or hearing.”  We’ll cover all of that, but our first task is to understand the 801(c)(2) subpart of the definition of hearsay.  For now, 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 problems faced by real people.  So, in order to properly understand any evidence problem (particularly hearsay), we must understand the legal and 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 we are dealing with a statement “the declarant does not make while testifying at the current trial or hearing”).

We’ll consider the steps of the hearsay analysis in the practical context of the trial of 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 a dealer 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 Emich Motors and U.S. Acceptance Corporation 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” with consistently dissatisfied customers, 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 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 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.

Let’s go through the analysis, step by step.  I’ll warn you, however, that I am going to renumber the steps at the end of this blog post, so don’t get too attached to these numbers.  The steps:

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:

Yesterday I had us play a little “Jeopardy,” giving you the answer and asking you to come up with the question.  When we are trying to determine if a statement is hearsay, the answer is “yes” when the statement meets the definition of hearsay in 801(c).  More specifically, it’s hearsay when “a party offers [the statement] in evidence to prove the truth of the matter asserted in the statement.”  That’s from 801(c)(2).  So, now let’s play “Jeopardy.”  If a statement is hearsay when “a party offers [the statement] in evidence to prove the truth of the matter asserted in the statement,” what is the question we need to ask to determine if it’s hearsay?  As you all quickly figured out, the answer—or in “Jeopardy” terms, the question—is “why”?

Why?

To determine whether a statement is hearsay, we must ask “why did the party offer the statement?”  If the answer is “to prove the truth of the matter asserted in the statement,” then it’s hearsay.  If the statement was offered for some other purpose, then it’s not hearsay.  Don’t forget that!

Step Three:

So, we have the key question—Why?  To find the answer to this question, we have to break it down a little bit more.  Look at Emich—why did GM offer the customer complaints into evidence?  Or, let’s ask “why” this way—did GM offer the customer complaints in evidence “to prove the truth of the matter asserted in the statement?”

You are not in a position to argue the answer to that question yet, because you don’t have enough information.  How can you argue that a customer complaint was “offer[ed] in evidence to prove the truth of the matter asserted in the statement” until you know “what is the matter asserted in the statement?”  Let’s break it down a little farther—how can you argue what “the matter asserted in the statement” is until you know what the statement is?  You can’t!

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:

  1. “Emich made me wait for three days before they called me back to tell me what was wrong with my Chevrolet;”
  2. “I have never been treated so rudely as when I asked Emich’s service personnel to explain the repairs they did;” and
  3. “Chevrolet will lose business because of the way Emich treated me.”

This is step three—determine what the statement is!

Step Four:

Now that we have determined what the statement is, tracking as much as possible the words of the statement, we must determine what is asserted in the statement, or “the matter asserted.”  Here, it is important to frame the question precisely: we want to know what is “the matter asserted in the statement!”  Don’t focus on what Emich or GM asserted in the lawsuit.  Don’t focus on what a witness might assert from the witness stand.  Don’t focus on what a lawyer might assert to the trial judge when arguing the admissibility of the customer complaints.

Focus on what the declarant asserted “in the statement” that Emich has objected to as hearsay!

In (a) above, one way to characterize what is asserted is that Emich is slow in performing its service obligations, or at least on that particular occasion it was.  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 Five:

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, not only in regard to hearsay—”Why is the evidence being offered?”  Emich argued the answer to this “Why” question was that GM wanted to prove Emich deserved to have its franchise cancelled because it was a bad dealer so it offered the complaints to prove that the statements made in the complaints were true, or “to prove the truth of the matter asserted in the statement.”  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:

“Your honor, 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 not been treated rudely by others.  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 dealer whose customers are consistently dissatisfied.  To the manufacturer, it doesn’t matter why the customers are dissatisfied.  That is the reason GM cancelled Emich’s franchise—because Emich’s customers were consistently dissatisfied.  Your honor, we are not offering the complaints to prove the truth of the statements in the complaints.  We are offering the complaints for the purpose of proving that GM knew, and how GM knew, that Emich’s customers were consistently 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 in the statement), 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 factual scenario as a classic hearsay problem to include the opinion as the only one 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.”

Let’s reformulate the steps we take in solving a hearsay problem, based on the analysis above.

Step One:

Determine what is the statement, focusing as much as possible on the words of the statement.

Step Two:

Determine what is the matter asserted in the statement.

Step Three:

In the practical and legal context of the lawsuit being tried in the courtroom in which you are arguing that the hearsay problem should be solved in favor of your client, formulate an argument that the other “party offers [the statement] in evidence to prove the truth of the matter asserted in the statement.”  Or, if you are the party offering the statement, formulate an argument that you are not offering it to prove “the truth of the matter asserted in the statement.”

  1. What is the statement?
  2. What is the matter asserted in the statement?
  3. Formulate an argument …
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