Monday, August 8, 2016

On the Epistemology of an Agreement

In re Automobile Antitrust Cases I and II, No. A134913 (D1d4 Jul. 5, 2016)

The trial court granted SJ in an antitrust case premised on an anti-competitive agreement not to import cheaper but otherwise identical cars from Canada. The appeal presents some interesting evidentiary issues. 

First, Plaintiffs sought to admit the deposition testimony of the general counsel of a defendant that had settled out of the case about events occurring at a trade association meeting that was attended by the remaining defendants. The testimony was to the effect that those present generally concurred on the taking measures to prevent the export of Canadian vehicles. The witness wouldn’t go so far as to call it an agreement, but just a general consensus from those present. The trial court seemed inclined to let it in, based on the idea that the witness was just testifying to his perception of what occurred at the meeting. But when orders on the evidentiary came out, hearsay objections were sustained.

Nobody claims that the testimony was inadmissible just because it was in a depo. The witness wasn’t available, and in any event, depo testimony is generally allowed on SJ. So the question is whether the testimony would nonetheless be barred as hearsay if the witness had testified to it at trial. That question depends on whether the witness’s testimony about the general consensus in the room is just recounting what others saidwhich would make it hearsayor something qualitatively differentwhich might mean its not. The court refers to this argument as “conveyed hearsay.”

This is undoubtedly a tough question that goes to the very rationale of the hearsay rule. The reason we know (or at least think we know) any number of things is often because we heard or read about them from someone else. Not having to derive all knowledge from direct empirical perception and a priori first principles is the whole point of having a civilization. So when we testify about our knowledge, we are often implicitly recounting something we heard or read before, from one or more sources, at varying degrees of abstraction. The hearsay rules don’t take on this ball of wax directly, although the rules about lay and expert opinion do, to some degree, as is discussed below.

In any event, when it comes to the quintessential epistemic question, it’s tough to draw a clear line, especially in the abstract. But it seems like if we are going to exclude “Bill told me X” as proof of X, we also shouldn’t be able to prove X with “it was my impression that X, based on what Bill and others in the room were discussing.” Passing hearsay through an additional level of the witness’s subjective interpretation likely makes it less, not more accurate. The purposes of the hearsay rule are not advanced by permitting an evasion of the rule by excluding the exact statement while admitting the witness’s conclusory interpretations of it.

But the Court of Appeal doesn’t share my take. Citing nothing other than the point that hearsay must be a “statement,” it says the witness was “simply recounting generally his impressions and conclusions” and not testifying about any “statements” of a particular declarant. So the trial court erred in excluding the statement.

The court hedges a little in a footnote, noting that testimony about the statements of co-conspirators in the course of forming and carrying out a conspiracy are admissible under an exception. See Evid. Code § 1223. It also notes that if the testimony is offered to prove an agreement, it is also potentially non-hearsay because it is offered, not for its truth, but for its legal effect. Instead of reaching the merits of either argument, however, it explains that the difficulty of resolving them “underscores the inherent unworkability of [the] ‘conveyed’ hearsay theory.”

That seems totally backwards. The footnote analysis—in particular the fact that the statements are offered to prove the legal effect of an agreement—seems like a much easier conceptual basis to let the evidence in than driving a giant hole thought the hearsay rule so long as the witness just gives his “impressions and conclusions” that summarize what is otherwise hearsay. This is an antitrust case. Plaintiffs need to prove an agreement. So if a witness is in the room and ten dudes say some version of “I agree,” the testimony about what they said is proof of the operative facts that form an oral contract. It doesn’t show any truth at all. It shows manifestation of intent thought the objective theory of contract. If that’s the relevance of the testimony, it serves no purpose to obscure the ten dudes’ “I agrees” as hearsay while letting the witness say “it seemed to me that everyone agreed.”

The coconspirator exception is a little more tricky factually. But courts, especially in the criminal context, have done a good job coming up with rules to address the difficulty suggested by the court: how to resolve a foundational fact question of admissibility under Evidence Code § 1223 (a conspiracy) that overlaps with an essential element of the case (an agreement). Bourjaily anyone? Indeed, the Evidence Code itself sets up procedures directed to that precise purpose. See Evid. Code §§ 402, 1223(c). And even if the question is particularly fraught here, it seems much less so than just letting hearsay into evidence because it is filtered through second-order conclusions drawn from a witness’s unstated perceptions.

Anyway, turning to whether the exclusion was prejudicial, the court frames the issue as asking two questions: Was the evidence otherwise admissible? And is it reasonably probably that admitting the statements would change the outcome of the trial.

The admissibility issue presents a problem of personal knowledge. The witness doesn’t actually know anyone actually agreed because he can’t read minds. But lay opinion can fill the gap on that kind of thing. The Supreme Court has recognized that lay opinion can be particularly appropriate when a witness is making the kinds of ordinary inferences a reasonable person could draw about underlying perceptions that themselves are hard to put into words. Especially given the difficulty of memory when it comes to the precise details of non-verbal behavior. So it is sometimes ok to permit lay opinion that someone was angry, scared, or drunk, even when the witness can’t recount the precise factual basis for that belief, from which a jury could draw a conclusion on its own. Of course, any non-recollection of the basis is certainly grounds for cross, but that goes to weight, not admissibility.

Applied to the facts here, the witness’s testimony was legit lay opinion. He knew the folks involved and had interacted with them on numerous occasions and thus could opine based on their various statements, body language, and other furtive actions that they had seemed to agree to something. That’s all fine.

But the court finds it particularly appropriate to permit the opinion because “there is no indication in the record that [the witness] was able to recall any particular statements or actions by any of the meeting participants.” “Thus, his comments were useful to understanding what transpired at this all-important meeting because the concrete observations on which his opinion was based likely could not otherwise be conveyed.” That goes too far. It’s one thing to say that opinion testimony is useful when dealing with the kind of observations that are hard to convey. But there is no reason why opinion testimony should be more admissible because the witness can’t (or pretends not to) remember the underlying perceptions on which the opinion is based. To hold otherwise is to invite mischief by providing an incentive for a witness not to testify about what he actually saw or heard.

The court goes on to find that, based on the context of the testimony in the overall case, excluding it was prejudicial, and thus merits reversal.

The other excluded evidence was various minutes of the meetings taken by an employee of the trade association, which wasnt a party. But the employee had sent them on to Defendant’s general counsel, who proceeded to make a light markup and said that he more or less agreed that they accurately conveyed what went down.* The Court of Appeal thus finds that the minutes were Defendant’s adoptive admissions, admissible under an exception in Evidence Code § 1221. The court declines to engage in a prejudice analysis, having already found that the settled co-defendant’s GC’s testimony was prejudicial enough on its own to merit reversal.

The court goes on to reverse the SJ on substantive grounds as well, finding that—particularly when the excluded evidence is considered—there was sufficient evidence of an agreement to create a triable issue of fact on an antitrust conspiracy.

Reversed.

* Not sure why no issue of privilege here.

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