Hearsay and expert witnesses: relying or relating?

In People v. Sanchez, 63 Cal. 4th 665 (2016), the California Supreme Court held that if case-specific facts are hearsay, then absent a hearsay exception, expert witnesses cannot relate those facts to the jury. Sanchez ended the practice of allowing such hearsay and instructing the jury not to treat those facts as true when considering the expert’s opinion. To any non-lawyer, that would sound bizarre. Yet for decades, that was the law. But as Sanchez recognized, when it comes to case-specific facts a jury “must consider expert basis testimony for its truth in order to evaluate the expert’s opinion.”

Undoubtedly, Sanchez “applies in civil cases.” People ex rel. Reisig v. Acuna, 9 Cal. App. 5th 1, 34 (2017). Thus, after Sanchez, “admissibility — at least where ‘case specific hearsay’ is concerned — is now more cut-and-dried: If it is a case-specific fact and the witness has no personal knowledge of it, if no hearsay exception applies, and if the expert treats the fact as true, the expert simply may not testify about it.” People v. Stamps, 3 Cal. App. 5th 988, 995-96 (2016).

Post-Sanchez, can the expert rely on hearsay case-specific facts for purposes of reaching an opinion as long as the expert does not relate those facts to the jury? It would be an odd proposition to conclude that Sanchez narrowed Evidence Code Section 801(b), which expressly authorizes expert reliance on hearsay and contains no express limitation on case-specific facts. Section 801(b) permits expert opinion to be “based on matter … whether or not admissible, that is of a type that reasonably may be relied upon by an expert in forming an opinion.” As Sanchez clearly put it, “expert[s] may still rely on hearsay in forming an opinion, and may tell the jury in general terms” of such reliance. But is the distinction between an expert witness “relying” and “relating” always clear?

In Universal-Products International, LLC, v. Omega Products International, Inc., 2017 WL 1506742 (2017) (unpublished), “in spite of multiple objections from Omega … [Universal’s expert] testified that he reviewed … Universal’s financial records and consulted with Universal.” As the expert worked his way through his opinion, the trial court “overruled Omega’s repeated hearsay objections.” As a result, the expert testified that “Universal’s damages for lost profits were between $407,751 and $620,122.” On appeal, Omega argued Sanchez error.

But the Court of Appeal was “not persuaded that the expert testimony involved inadmissible hearsay … [The expert] employed the usual forensic methods … he reviewed the company’s business records and consulted directly with the company’s owners and employees about how the business had been affected … He used that information to formulate his opinion. He did not relate ‘to the jury case-specific out-of-court statements’ admitted for their truth … Instead, the information he obtained about Universal was part of the general background information acquired to develop his expertise … To apply Sanchez as Omega proposes would have the practical effect of eliminating most expert testimony about economic damages.”

Under Sanchez, isn’t the first question whether the evidence at issue involves case-specific facts? Obviously, Universal’s business records and other information obtained from Universal’s employees “about how the business had been affected” is case-specific. So the next Sanchez question is whether the evidence at issue was hearsay for which no exception had been established, not whether “the usual forensic methods of experts in [the] field” were employed. The latter goes to gatekeeping — whether the expert should testify at all. The former, by contrast, is Sanchez’s limitation on what the expert can tell the jury.

So was the conclusion that “[Universal’s expert] did not relate ‘to the jury case-specific out-of-court statements’ admitted for their truth … Instead, the information he obtained about Universal was part of the general background information acquired to develop his expertise,” error? It’s difficult to tell, reading the opinion, what the hearsay was that the expert told the jury. But it’s also difficult to imagine that all he told the jury was that “I looked at some stuff, company business records and such, and I can tell they lost profits, here’s how much they lost.” Given all of Omega’s objections, it’s difficult to believe that he only relied on, but did not relate, case-specific hearsay.

If some of those facts were hearsay, isn’t the first lesson of Sanchez that juries must consider case-specific facts for their truth when considering the expert’s opinion? Therefore, with respect to the evidence ostensibly establishing the loss, the “Sanchez question” should have been “is any of this hearsay for which no exception has been established?’ If the answer was “yes,” then some of the “multiple objections from Omega” likely had merit.

In addition, exclusion of inadmissible hearsay shouldn’t turn on the “practical effect” of the Sanchez rule. Surely much of the evidence which Universal’s expert reviewed was admissible, meaning Sanchez did not stand in the way and the expert could relate it to the jury. Thus, there was probably no need for the Court of Appeal to cast Omega’s arguments as having “the practical effect of eliminating most expert testimony about economic damages.”

As for any of the data for which no means for admission could be found, the expert could still rely on it, just not relate it. Sanchez left the rules regarding experts, inadmissible hearsay, and reliance, unchanged. But, Sanchez is also “a ‘paradigm shift’ regarding how out-of-court statements used as expert testimony basis are treated under California hearsay law.” People v. Ochoa, 7 Cal. App. 5th 575, 588 (2017). So if Universal’s expert was indeed relating inadmissible case-specific hearsay to the jury, wasn’t the practical effect of the Court of Appeal’s decision just to fold the Sanchez prohibition back into the now repudiated not-for-truth fiction?