The $1.6 million question:When is an out-of-court statement not hearsay?

One of the most difficult areas of law to learn and apply is the hearsay rule. Appellate lawyers, and even learned appellate justices, sometimes get it wrong. Recently, the California Supreme Court's correction of just such an error revived a $1.6 million judgment for the plaintiff in an asbestos case. Hart v. Keenan Properties, Inc., 2020 DJDAR 4754 (May 21, 2020).

During the 1970s, Frank Hart cut and installed asbestos-cement sewer pipe for a California company. When Hart eventually developed mesothelioma, he sued numerous entities, including distributor Keenan Pipe and Supply, which he alleged had supplied the pipe he installed.

Hart had no personal knowledge as to the identity of the pipe supplier, and Hart's employer had not retained any relevant documents. However, the employer's bookkeeper knew her company bought supplies from Keenan, and remembered seeing Keenan's distinctive logo on invoices she paid. The logo consisted of a letter K formed from pipe and embedded in a circle. Keenan's corporate representative confirmed that Keenan sent its customers invoices, and confirmed that an invoice from another job, which bore Keenan's logo, was a genuine example of a Keenan invoice.

Hart's foreman on the sewer pipe project was responsible for checking deliveries of pipe to make sure the supplies being delivered matched the corresponding invoices from suppliers. He testified that he remembered seeing the name "Keenan" on invoices for the pipe Hart installed. The name stuck out in his mind because "the way the -- their K and stuff is all -- I don't know."

Keenan persuaded a majority of Division 5 of the 1st District that the foreman's testimony constituted hearsay and should not have been admitted. The majority reasoned that the invoices were out-of-court statements offered to prove the truth of the matter asserted (i.e., that Keenan supplied the pipes), and therefore hearsay. The dissenting justice agreed that the statement was hearsay, but would have held it admissible under the exception for a statement by an opposing party.

The Supreme Court reversed in a unanimous opinion, agreeing with the trial court that the foreman's testimony about seeing the name "Keenan" on invoices was not hearsay; rather, it was "circumstantial evidence of Keenan's identity as the source of the pipes." The presence of Keenan's name and logo on invoices for the pipes merely served as evidence that the invoices originated with Keenan.

The court illustrated its point with a hypothetical. Suppose Keenan's representative testified that Keenan printed the slogan "Best Pipes on The Planet" on its invoices, and Hart's foreman testified that the documents accompanying the pipes bore that slogan. That evidence would tend to prove that Keenan supplied the pipes, whether or not they were in fact the best pipes on the planet. That is, the presence of the slogan on the documents would not have been admitted to prove the truth of the slogan's content, but rather, as circumstantial evidence that the documents -- and the accompanying pipes -- came from Keenan. Similarly, the presence of Keenan's name and logo on the invoices was not admitted to prove the truth of some statement embodied in those symbols. Rather, it was circumstantial evidence that the invoices originated with the proprietor of those symbols.

California case law is rife with other examples of how documents can be admitted as evidence, notwithstanding the hearsay rule, when they are offered for a purpose other than proving the truth of their contents. For example, a threatening note from a criminal defendant's cellmate to a witness against the defendant is admissible to explain why the witness is reluctant to testify. People v. Garcia, 168 Cal. App. 4th 261, 287-88 (2008). Newspaper clippings about a libel plaintiff are admissible to show that the plaintiff has received publicity, though not for the truth of the facts asserted in the articles. Franklin v. Benevolent and Protective Order of Elks, 97 Cal. App. 3d 915, 930 (1979). Evidence of text messages suggesting that the recipient should engage in sexual activity with the sender is admissible to show that the sender sexually harassed the recipient. Meeks v. Autozone, Inc., 24 Cal. App. 5th 855, 865-66 (2018). Evidence that a corporate official made assurances of job security to an employee is admissible to show an implied contract not to terminate the employee without cause, whether or not the official's assurances were true. Faigin v. Signature Group Holdings, Inc., 211 Cal. App. 4th 726, 749 (2012).

The lesson to be drawn from all of this is that when an appellate issue involves a trial court's ruling on a hearsay objection to an out-of-court statement, the first question appellate counsel must consider is whether the evidence was being offered to prove the truth of the statement's contents. If not, the evidence was not hearsay, and there is no need to prove an exception to the hearsay rule in order to argue that it was admissible. 