Opinion ID: 709221
Heading Depth: 1
Heading Rank: 2

Heading: Hearsay and FED.R.EVID. 801(d)(2)(D)

Text: 9 The defendant argues that the District Court improperly admitted hearsay testimony, thereby prejudicing his case. The government contends that the testimony at issue did not constitute hearsay, or in the alternative, if deemed inadmissible hearsay, that the standard of review be for plain error because the objection made at trial is not the objection now argued. The outcome of such review, according to the government, would be a finding that admission of such testimony was harmless when set against the plethora of evidence, and therefore the conviction should be affirmed. We find that the testimony was in fact inadmissible hearsay, but that the testimony constituted harmless error. 10 The disputed testimony was that of prosecution witness Roger Towne, an employee of Delaware Professional Services (DPS). DPS was an organization hired by the Fund to search out providers of medical care and laboratory services who would save the Fund money on medical expenses. Over defense counsel's repeated hearsay objections, Towne was allowed to testify that his partner, Edward Brown, since deceased, had told Towne not to bother searching out more cost-effective providers of lab services for the Fund because defendant was making sure that Metric got the Fund's business. 11 The District Court admitted Towne's testimony over defense counsel's objection under the 801(d)(2)(D) exclusion from the general definition of hearsay. This subsection provides that a statement is not hearsay if it is offered against a party and is a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship. Robert R. Jones Assoc., Inc. v. Nino Homes, 858 F.2d 274, 276 (6th Cir.1988). 12 It is clear that Towne's testimony is offered against defendant, a party, but we disagree that declarant Brown was defendant's agent or servant. The Federal Rules of Evidence do not define the terms agent or servant. The Supreme Court has concluded that the use of the terms without definition evidences Congress' intent to describe the traditional master/servant relationship as understood by common law agency doctrine. Boren v. Sable, 887 F.2d 1032, 1038 (10th Cir.1989)(citing Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739-40, 109 S.Ct. 2166, 2172, 104 L.Ed.2d 811 (1989)). The crucial question therefore is whether Brown would have been considered an agent or servant of defendant at the time of the alleged statement. 13 Brown worked for DPS which was hired by the Fund. Assuming arguendo that this relationship made Brown an agent of the Fund, there remains the question of whether Brown was defendant's agent. Boren, 887 F.2d at 1039 (An 'agency relationship' is not created solely by the fact that the purported principal is a corporate officer.). Agency can be established in one of two ways. 14 First, Brown can be shown to have been an agent for the Fund and defendant's control over the Fund so extensive as to have the Fund's role as principal imputed to defendant. See, United States v. Paxson, 861 F.2d 730 (D.C.Cir.1988). In Paxson, statements made by the vice-president of a closely held corporation were admissible under the agency exception to the hearsay rule when the defendant was nominally a co-employee, but owned the overwhelming majority of the [corporation's] stock. Defendant Paxson argued that the declarant was a co-employee rather than defendant's agent but the appeals court found that, given the pair's respective relationships to the corporation, an agency relationship was present as between the defendant and the declarant. 15 Finding the requisite agency relationship by this method of analysis fails in this case, however. The nature of the relationship between defendant and the Fund stands in sharp contrast to the relationship between Paxson and Paxson Electronic. Defendant did not control the Fund for whom he worked as Paxson controlled Paxson Electric. See Paxson, 861 F.2d at 734. The Fund is controlled by union and management trustees. Even granting the government's contention that defendant's job title, at the time, of Office Manager concealed a greater role at the Fund than the title may imply, defendant by no means could have been regarded as having the breadth of control required for the purposes of determining the existence of an agency relationship by imputing the corporation's status as principal to the corporate employee. Charles Collins, who was executive director, a position later held by defendant, was defendant's superior. The prosecution failed to establish the defendant's requisite control over the Fund. 16 An agency relationship would also be proven if factors which normally make up an agency relationship are present between Brown and defendant, regardless of the corporate structure. In other words, defendant's role in the Fund is neither conclusive of an agency relationship with Brown nor is his role as corporate employee preclusive of the possibility. [T]he evidence [of agency] should not be excluded simply because the statement is offered against a corporate officer rather than a corporation. United States v. Young, 736 F.2d 565, 568 (10th Cir.1984), rev'd. on other grounds, 470 U.S. 1, 105 S.Ct. 1038, 84 L.Ed.2d 1 (1985). 17 Paxson, which the government offers as precedent in this case, differs not only in the fact that the defendant had complete control over the corporation but also the declarant had worked under the defendant for 25 years and reported directly to him. The record discloses no evidence of such an agency relationship between defendant and Brown whether as a matter of duration or as a matter of authority. See also Young, 736 F.2d at 568 (employer/employee-type relationship between the defendant and declarant clearly established in the record). Therefore, since the factors that normally make up an agency relationship are absent as between defendant and Brown, we find that an agency relationship did not exist and that Towne's testimony therefore constituted inadmissible hearsay. 18 The government argues that Robert R. Jones Assoc., Inc. v. Nino Homes, 858 F.2d 274 (6th Cir.1988) is a case of remarkable similarity to the case at bar and dictates a different result. We disagree. In Nino Homes, we pointed out that both a corporate officer and the corporation itself were defendants. Furthermore, the defendant had hired the declarant. These factors were deemed sufficient to establish the agency relationship. In the case before us, in contrast, the Fund was not a party in the case and there was no showing in the record that defendant was in any position to hire or fire Brown when Brown's statement was made to Towne. Therefore, Nino Homes is distinguished. The government has failed to show the requisite agency relationship to admit Brown's statement under FED.R.EVID. 801(d)(2)(D). 19 Even if the testimony of Towne was inadmissible hearsay, the government argues, the admission of the evidence is reviewable only for plain error. Government brief at 13 (citing United States v. Cox, 957 F.2d 264, 267 (6th Cir.1992); United States v. Evans, 883 F.2d 496, 499 (6th Cir.1989)). Although defendant objected at trial and made a motion to suppress pre-trial, the government argues that defendant did not state the proper basis for the objection. 20 Specifically, the government lays great emphasis on the fact that, in the colloquy following defendant's hearsay objection at trial, defense counsel's explanation for why he felt that Towne's testimony did not come within 801(d)(2)(D) was not the same argument that defense counsel makes on appeal. At trial, defense counsel stated, Mr. Brown is not an agent or servant of this company; Mr. Brown is [Towne's] partner. Thereupon a discussion occurred as to whether one partner is an agent of another partner. Certainly this is not the argument defendant makes on appeal, that Brown was not defendant's agent. 21 However, even if the objection was adequate, we will not reverse if the error was harmless. We look to the entire record to see if the error tended to prejudice the defendant. FED.R.CRIM.P. 52(a). The government emphasizes that the testimony amounted to a minuscule twelve lines. However, the prejudicial effect of hearsay testimony is not measured in line numbers. The words, I confess, occupy little line space but their improper admission could surely prejudice a party. 22 Nonetheless, defendant's thorough and effective cross-examination of the witness went far to neutralize any prejudice that witness' testimony may have had. Counsel effectively showed that the witness had scant knowledge of the facts he alleged. Furthermore, the record provides overwhelming evidence that defendant Wiedyk violated 18 U.S.C. Sec. 1954 in concealing his financial ties with Dr. Nowosielski and Metric from the Fund, in using his position at the Fund to steer business in their direction, and thereby profiting at the Fund's expense. [O]n balance, we believe it can be said 'with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error....'  United States v. Dean, 969 F.2d 187, 197 (6th Cir.1992)(citing Kotteakos v. United States, 328 U.S. 750, 765, 66 S.Ct. 1239, 1248, 90 L.Ed. 1557 (1946)).