(New) NY CPLR § 4549 -- Admissibility of an Opposing Party's Statement

I've alerted you about Original Strength CIDA and the impending CIDA Light, but another new civil action-related provision was signed into law in New York on December 31, 2021 that will impact civil litigation in New York state courts. 

 Senate Bill S7093 amends the New York state court rules of evidence by adding CPLR § 4549 to permit the admission of an opposing party's statement if made by an agent or employee made within the scope of that relationship and during the existence of that relationship. 

 CPLR § 4549 reads:

§ 4549. Admissibility of an opposing party's statement. A statement offered against an opposing party shall not be excluded from evidence as hearsay if made by a person whom the opposing party authorized to make a statement on the subject or by the opposing party's agent or employee on a matter within the scope of that relationship and during the existence of that relationship. 

The Senate sponsor's memo explained: 

This is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation if his Advisory Committee on Civil Practice. 

This measure would relax the common law exclusion of the hearsay statement of a party's agent or employee, provided that the statement was on a matter within the scope of that employment or agency relationship, and made during the existence of the relationship. The measure would add a new CPLR 4549, and cause New York's hearsay exception to follow the approach of Federal Rule of Evidence 801(d)(2)(D). 

The measure is intended to change the extent of authority that a proponent must show in order to make the hearsay statement of an opposing party's agent or employee admissible. While under current law it appears clear that a hearsay statement will be admissible if there was actual authority to speak on behalf of the party, such authority often may be shown only by implication in light of the circumstances of the employment or agency relationship. In practice, this tends to limit 'speaking authority' to only the high levels of management. 

Professor Michael J. Hutter has analyzed several Appellate Division cases that take a very strict view of the predicate proof for speaking authority, and these cases indicate that an employee or agent who is not in charge of the business will have no implied authority to speak on behalf of the employer -- even if the statement made relates to an activity the person was charged to undertake. Instead, the proponent of the hearsay statement may need to make the difficult showing of express authority to speak on behalf of the employer. See Boyce v Gumley-Haft, Inc., 82 AD3d 491 (1st Dept 2011); Scherer v Golub Corp., 101 AD3d 1286 (3d Dept 2012); Hutter, "Speaking Agent Hearsay Exception: Time to Clarify, if Not Abandon," New York Law Journal, June 6, 2013, Pg. 3, col. 1, Vol. 249, No. 108. 

We believe a strict requirement to demonstrate such authority to speak may exclude reliable proof of an event, even though the employer as a party might not be treated unfairly by admissibility, either because the statement is true and made by a person with relevant knowledge, or because the employer is able to introduce other proof in opposition to the implications of the hearsay statement. As noted above, the current strict requirement to show speaking authority is contrary to Federal Rule of Evidence. See Barker and Alexander, Evidence in New York State and Federal Courts (2d ed.) 8:26, p. 148. 

We further believe that the rule is unlikely to change without legislative action. (See, Loschiavo v Port Auth. of New York & New Jersey, 58 NY2d 1040, 1041 (1983) ("We decline plaintiff's invitation to change this well-settled, albeit widely criticized rule of evidence but note, in this connection, that a proposal for modification of the hearsay rule in this state in now before the legislature"). 

An example of statements excluded under the current rule include an employee-driver's admissions of negligence, unless the driver was authorized by the employer to speak about the subject accident. In Schner v Simpson, (286 AD 716, 718 [1st Dept 1955]), an employee's statement "I am sorry that I knocked you down, but I think you will be able to get up" was held inadmissible on the ground that "[g]enerally speaking, employment does not carry authority to make either declarations or admissions."(See, also, Jankowski v Borden's Condensed Milk Co., 176 AD 453 [2d Dept 1917] [Driver's statement that it was his fault held not admissible]; and Raczes v Home, 68 AD3d 1521, 1522-1523 [3d Dept 2009] [Maintenance worker's statement: "This is the third time that I fixed this railing and I'm getting sick of it", not competent to establish notice on the part of employer]). 

However, such employee statements generally are admissible in Federal court and would be admissible under this measure. (See Corley v Burger King Corp., 56 F3d 709, 710 [5th Cir 1995]; Martin v Savage Truck Line, 121 F Supp 417, 419 [DDC 1954]). On the other hand, an employee's statement would not be admissible against the employer where it concerned a matter that was not within the employee's scope of employment. (See, e.g., Wilkinson v Carnival Cruise Lines, Inc., 920 F2d 1560 [11th Cir 1991]; Hill v Spiegel, Inc., 708 F2d 233, 237 [6th Cir 1983]). 

We believe that the Federal approach is an improvement over the current state of New York decisional law, and that trial judges will exercise appropriate discretion to exclude such hearsay evidence when there is inadequate foundation or indicia of reliability.

Be careful corporate defendants. If one of your employees or agents makes a statement "on a matter within the scope of that relationship and during the existence of that relationship", the statement now may be admissible in New York state court actions under CPLR § 4549. 

For example, if an independent adjuster says or writes something about a claim they are handling for an insurer... 

#nonhearsay #evidence #civillitigation

Trial Court Did Not Abuse Its Discretion in Excluding Reference to Defendant's Expert's Stock Ownership in Defendant's Liability Insurer

EVIDENCE OF DEFENDANT'S LIABILITY INSURANCE – PROBATIVE VS. PREJUDICIAL VALUE
Salm v. Moses
(Ct. Apps., decided 10/22/2009)

Hat tip to Gregory McGoldrick over at McGoldrick's New York State Civil Evidence for spotting and blogging this decision. 

This is not an insurance coverage decision, but one about insurance coverage.  It has long been the rule in New York that evidence that a civil defendant carries liability insurance is generally inadmissible at trial.  In this dental malpractice action, moved in limine to preclude plaintiff from cross-examining defendant's expert regarding the fact that he and defendant were both shareholders of and insured by the same dental malpractice insurance company.  Plaintiff opposed the motion, but did not request a voir dire of the expert to inquire into his connection to the insurer.  After a colloquy with counsel, Supreme Court granted the motion, finding that the probative value of the inquiry would be outweighed by the prejudicial effect of having defendant's insurance coverage revealed to the jury. Upon plaintiff's appeal following a jury verdict in favor of defendant, the Appellate Division affirmed (57 AD3d 370 [1st Dept 2008]). The Court of Appeals granted plaintiff leave to appeal.

In AFFRIMING the Appellate Division's decision, the Court of Appeals held that the trial court did not abuse its discretion in granting the defendant's motion in limine:   

Evidence that a defendant carries liability insurance is generally inadmissible (see Leotta v Plessinger, 8 NY2d 449, 461 [1960], rearg denied 9 NY2d 688 [1961]; Simpson v Foundation Co., 201 NY 479, 490 [1911]). The rationale underlying this rule is twofold. First, "it might make it much easier to find an adverse verdict if the jury understood that an insurance company would be compelled to pay the verdict" (Loughlin v Brassil, 187 NY 128, 135 [1907]). Second, evidence of liability insurance injects a collateral issue into the trial that is not relevant as to whether the insured acted negligently. Although we have acknowledged that liability insurance has increasingly become more prevalent and that, consequently, jurors are now more likely to be aware of the possibility of insurance coverage, we have continued to recognize the potential for prejudice (see Oltarsh v Aetna Ins. Co., 15 NY2d 111, 118-119 [1965]; see also Barker and Alexander, Evidence in New York State and Federal Courts § 4:63, at 260-261 [5 West's NY Prac Series 2001] ["Because the prejudice quotient is obvious, the rule barring such evidence is one of the least controversial in the law of evidence"]).

The rule, however, is not absolute. If the evidence is relevant to a material issue in the trial, it may be admissible notwithstanding the resulting prejudice of divulging the existence of insurance to the jury. For example, we have held that evidence that a defendant insured a premises is relevant to demonstrate ownership or control over it (see Leotta, 8 NY2d at 462). Likewise, it was proper to allow cross-examination of a physician regarding the fact that the defendant's insurance company retained him to examine the plaintiff in order to show bias or interest on the part of the witness (see Di Tommaso v Syracuse Univ., 172 App Div 34, 37 [4th Dept 1916], affd without opn 218 NY 640 [1916]).

Here, we perceive no abuse of discretion in Supreme Court's evidentiary ruling. Such evidence may be excluded if the trial court finds that the risk of confusion or prejudice outweighs the advantage in receiving it (see Kish v Board of Educ. of City of N.Y., 76 NY2d 379, 384-385 [1990]). In this case, plaintiff speculated during the colloquy that a verdict in defendant's favor could result in a $100 benefit — at the time of the expert's death, disability or retirement — based on the expert's shareholder status in OMSNIC. The trial court's finding that any such financial interest was likely "illusory" and that the possibility of bias was attenuated was reasonable on this record. Absent a more substantial connection to the insurance company — or at least something greater than a de minimis monetary interest in the carrier's exposure — the court did not engage in an abuse of discretion in precluding the testimony. We note that a voir dire of an expert outside the presence of the jury can better aid the court in exploring the potential for bias.

Judge Piggott concurred in the majority's conclusion but wrote separately because, in his view, "courts should no longer treat insurance coverage as the third rail of trial practice such that it can neither be mentioned, even incidentally, nor be the basis of appropriate inquiry as to possible bias, as in the ruling here."