Tag: evidence

Illinois Evidence and Business Records: Injured Worker’s Insurance Claim Properly Admitted At Trial

 

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The plaintiff filed a wrongful discharge suit against his employer when he was fired after he lodged a workers’ comp claim for a work-related injury.  A jury sided with the plaintiff and awarded him about $4.2M including some $3.6M in punitive damages. The employer appealed on the basis that the court allowed some damaging documents into evidence at trial.

Affirming the jury verdict, the court in Holland v. Schwan’s Home Service, Inc., 2013 IL App (5th) 110560 answered some important questions concerning the reach of the attorney-client privilege, the contours of the work-product doctrine and the application of the business records hearsay exception to an insurance claim file.

The plaintiff’s insurance claim file ( the “Claim File”), a document authored by both the defendant’s insurer and its third-party claims administrator, was a key piece of evidence relied on by the plaintiff at trial.  The employer argued that the file (which contained some damaging admissions by the employer and the administrator) was privileged and should have been excluded at trial.

The Fifth District disagreed and stated the applicable evidence rules that controlled the Claim File’s admission:

– business records are admitted into evidence as an exception to the hearsay rule under Supreme Court Rule 236 and the Illinois Evidence Rule 803(6) (see earlier posts for foundation requirements) ;

– the rationale for allowing out-of-court business documents (e.g. invoices, ledgers, etc.) into evidence is the belief that businesses are motivated to keep accurate records;

– because accurate record-keeping is so crucial, business records are cloaked with a level of trustworthiness that doesn’t apply to non-business records;

– a document made in anticipation of litigation is not admissible as a hearsay exception since it doesn’t contain the built-in level of trustworthiness that ordinary business records do;

– the “in anticipation of litigation” rule doesn’t apply where the challenged document is sought to be introduced against the party that prepared it (as opposed to being used in support of a summary judgment motion, for example)

– an employee’s statement is admissible against his corporate employer where (a) it’s made during the existence of the employment relationship; and (b) concerns a matter within the scope of the employment;

– statements made by a party’s agent about a matter within the scope of his agency are binding on the principal;

– The attorney-client privilege (A/C Privilege) is designed to promote and encourage open dialogue between an attorney and client;

– the A/C Privilege extends to communications between an insured and its insurer where statements made to an insurer are relayed to an attorney for the protection or defense of the insured;

– where a communication is made to an insurer for the dominant purpose of transmitting the information to an attorney for the protection of the insured’s interest, the insurer-insured privilege applies;

– the work-product doctrine offers separate and distinct protection from the A/C Privilege;

– work-product means material prepared by or for a party in preparation for trial and discloses the theories, mental impressions or litigation plans of the attorney;

– relevant information that doesn’t disclose an attorney’s “conceptual data” is freely discoverable.

(¶¶ 186-206); SCR 201(b)(2)

Under these guideposts, the Fifth District found that the Claim File was properly admitted in evidence at trial over the defendant’s A-C privilege, work-product and “in anticipation of litigation” objections.

First, there was no record that the Claim File was prepared for the “dominant purpose” of transmitting it to an attorney in order to protect the insured’s interests.  Instead, it was a general business record that consisted of basic information about the plaintiff’s medical condition.

The court found that the plain text of the Claim File and accompanying notes from the adjuster showed that the File was made in the regular course of the insurer’s business and wasn’t created for the purpose of defending the plaintiff’s retaliatory discharge claim.  As a result, no attorney-client or work-product protection attached to the Claim File. (¶¶ 201-202).

Take-aways: the attorney-client privilege applies to insurer-insured communications.  Especially if the main purpose of those communications is to protect the insured in a potential lawsuit.  In addition, a document prepared in the regular course of business, by definition, will almost always not be protected as a document prepared in anticipation of litigation.  Also, a document that doesn’t contain mental impressions or legal theories and strategy will likely be viewed as a general business record and won’t garner attorney-client or work-product doctrine protection.

Craigslist Ad = Improper Hearsay Evidence at Bike Theft Trial

bikeIn re Jovan A, 2014 IL App (1st) 103835, poses the question of whether the content of a craiglist.org advertisement (the “craiglist Ad” or “Ad”) is admissible under the hearsay exception for showing what steps police took in the course of investigating a crime.  The First District answered “no”; it’s not admissible.

The State charged the defendant with stealing a bike off the back of a parked car in Chicago’s Bucktown neighborhood.  The bike belonged to the car owner’s friend.  Later that same night, the car owner visited the craigslist.org site and saw a bike for sale that looked just like her friend’s stolen bike.  The Ad also directed the viewer to call a phone number if interested in buying the bike.  The car owner printed the Ad, cross-referenced it to find an address associated with the phone number and gave it to her detective friend, who then started an investigation.

The detective eventually located a person he believed to be defendant (based on car registration data), called the number on the Ad, and the defendant’s cell phone rang.  Defendant was arrested and charged with theft of property over $300. 720 ILCS 5/16-1(a)(1) (criminal theft statute).  At trial, the detective, the car owner (off whose car the bike was stolen) and two other witnesses testified against the defendant.  The detective and car owner both testified as to the contents of the craiglist Ad over defendant’s hearsay objection.  After a bench trial, the defendant was sentenced to 18 months probation for stealing the bike.  Defendant appealed.

Held: Trial court reversed.  The craiglist Ad is inadmissible hearsay.

Reasoning:

The craigslist Ad was the key piece of evidence relied on by the trial court when it found defendant guilty of stealing the triathlon bike.  The First District reversed the trial court because the Ad was hearsay evidence and didn’t satisfy any exceptions.

Hearsay is an out-of-court statement offered in court to prove the truth of the matter asserted. IRE 801-807.  Hearsay is generally disallowed because it is “no better than rumor or gossip” and can’t be tested by cross-examination.  U.S. v. Boyce, No. 13-1087 (7th Cir. 2014). 

Hearsay includes both oral and written statements (and sometimes non-verbal conduct) and encompasses matters directly asserted as well as matters implied by the declarant (the person making the out-of-court statement). 

Hearsay is inadmissible unless it falls within an exception to the rule.  In the criminal context, a hearsay exception exists where a law enforcement member testifies concerning out-of-court information he read, heard, or saw during the course of an investigation to explain why he arrested a defendant or took other action.  

This testimony is not hearsay because it is offered to show the steps the officer took in his criminal investigation; not for the truth of the matter asserted. Id.   Under the course-of-investigation exception to the hearsay rule, an officer’s testimony is limited to what is necessary to explain his actions.  Beyond that, he can’t testify to the content of any statements he received in the course of the investigation.  Jovan, ¶¶ 23-28.

The challenged hearsay statements allowed in at trial were (1) the car owner’s and (2) detective’s description of the craiglist Ad’s written text and (3) their separate recitation of the Ad’s phone number and how that number led to defendant’s apprehension.  The trial court admitted this testimony not for its truth, but to show the course of the bike theft investigation and the steps taken to arrest the defendant.

The First District held that the trial court improperly allowed the testimony concerning the Ad’s content in evidence.   Ruling that the in-the-course-of-investigation exception didn’t apply, the Court pointed out that the car owner was not a member of law enforcement but was instead a lay person.  As a result, her trial testimony about what the Ad said exceeded the limits of the exception.

The Court also found the detective’s testimony exceeded the scope of the course of investigation hearsay rule.  He testified that he relied on the Ad to locate the subject bike and used the Ad’s phone number to connect that number to the defendant.  The detective should have stopped there (since that testimony satisfied the exception).

But he went further: he also testified that his friend (the car owner) told him that the bike was being sold on craiglist, that he called the number on the Ad and that defendant’s cell phone rang when he called.  The detective violated the hearsay rule by relying on the out-of-court statements – namely, the car owner’s description of the Ad and the phone number and picture featured on the Ad.  The Court found that the Ad’s specifics were improper hearsay and should have been excluded by the trial court.

Afterword:

Jovan is interesting for its discussion of an atypical hearsay exception (at least in the civil litigation context).  The  course-of-investigation hearsay exception is broad but not without limits. Curiously, the State didn’t use the actual craiglist Ad at trial.

I was left wondering why it didn’t try to get the Ad into evidence under IRE 902’s self-authenticating rules for newspapers and periodicals.  I would think craiglist is enough of a ‘Net household name – and similar enough to a generally circulated “newspaper” – that a print-out from the site would be  sufficiently trustworthy to be utilized at trial.  Jovan is also unique in the sense that the First District acknowledges that there was enough circumstantial evidence – aside from  the craiglist Ad – to convict the defendant.

Even so, since the trial court relied so heavily on out-of-court evidence (the Ad), the conviction was reversed.

Single-Page Spreadsheet Doesn’t Satisfy Business Records Rule (Illinois 2nd Dist.)

In In Re Estate of Good, 2013 IL App (2d) 120875-U,  the Second District strictly construed the business records hearsay exception and held that a single-page spreadsheet (the “Spreadsheet”), prepared specifically for litigation by one of the parties from various print and electronic sources, didn’t satisfy the business records admissibility rules.

Facts: The plaintiff real estate auction company sued its deceased founder’s estate alleging the founder misappropriated company funds totalling about $1.5M over a multi-year period.  Good, ¶ 4.  The Plaintiff’s key piece of evidence – the Spreadsheet – was prepared specifically for the  litigation and supposedly summarized various company financial records and itemized the amounts decedent allegedly took from the  company.

The trial court granted the defendant estate’s summary judgment motion on all complaint counts.

Held: Affirmed.

Q: Why?

A: The Spreadsheet was inadmissible hearsay under the prevailing business records rules:

– Evidence which is inadmissible at trial is not admissible in support of or opposition to summary judgment motion;

– Illinois Evidence Rule 803(6) provides that “records of regularly conducted activity” are exceptions to the hearsay rule as long as they consist of a record or data compilation in any form made at or near the time from information transmitted by someone with knowledge if (a) kept in course of regularly conducted business activity and (b) if it was the regular practice of that business activity to make the record or data compilation;

– A business records proponent must also lay a foundation for the records.  To authenticate a document, the party must offer evidence that shows the document is what the party claims it to be;

– A business record’s evidence foundation requires proof that the record (1) was made in regular course of business and (2) made at or near the time of the event or occurrence;

– The foundation for admitting business records can come via affidavit or trial testimony of a records custodian or other person familiar with the business and its mode of operation;

– A summary print-out prepared specifically for trial can satisfy business records rule (and be admissible) IF the underlying data on which the summary is based are (i) kept in regular course of business, (ii) the data was entered contemporaneous to the event, and (iii) there’s nothing to indicate the source of the information is untrustworthy.

Application:

The Spreadsheet didn’t satisfy the  business records exception.  First, it was mathematically inaccurate: the numbers didn’t match up.  Also, plaintiff’s witnesses admitted in depositions that Spreadsheet was cobbled together from different electronic and printed sources – but they couldn’t specifically identify the sources.  ¶¶ 67-70.

Also, the Spreadsheet wasn’t itself a business record: it was a “one-shot” summary document prepared for the summary judgment motion at the direction of a plaintiff  and was “essentially created from scratch.” ¶ 70.

The Court also held that plaintiff failed to lay a proper foundation for the other financial documents (aside from the Spreadsheet) to support its claims.

The Court pointed to the records custodian’s deposition testimony where he couldn’t specifically identify any documents that supported plaintiff’s damage claims and offered only vague testimony about check requests and invoices that he supposedly reviewed. ¶ 74.

Take-aways:

Good illustrates that numerical accuracy is important when seeking summary judgment on damage claims.

A summary of damages document can meet the business records test – but only if the underlying data is regularly recorded and entered by someone with knowledge of the recorded event.

Good also shows that it’s vital for a deponent (or affiant) to sufficiently identify and explain the underlying data that underlies a damages summary.  It’s clear that the conflicting testimony from plaintiff’s agents concerning the underlying Spreadsheet information played an important rule in the Court excluding plaintiff’s evidence.