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Products Liability *'Conduit Hearsay': A Minefield for Lawyers* By Michael Hoenig - New York Law Journal - March 13, 2006	Print article

Often, experienced trial counsel try to use expert testimony as a "conduit" to get inadmissible hearsay evidence to the jury.

The tactic frequently succeeds because, once qualified, experts often are accorded substantial latitude in explaining the bases for their opinions as well as the reasoning process by which such conclusions were reached.

Sometimes Federal Evidence Rule 703 is used (or misused) to justify entry of the hearsay. Then there are those not-infrequent occasions when opposing counsel simply sleep at the switch and let the expert run off about hearsay that seems scientific or technical or that appeared in some journal.

In prior articles we have used the term "trial by literature" to describe proceedings where possibly unreliable hearsay articles abound and no one is available to be cross-examined about the innards, the skeletons in the closet, of such out-of-court literature. We do not speak here of hearsay stipulated by both sides to be admissible for the case. Nor do we focus on strategic gambits where the opponent of the hearsay actually wants it to come in for tactical purposes.

Hearsay, in itself, clearly is not the devil's work. Life in the courts, or outside, would be severely burdened, sometimes paralyzed, if all hearsay were declared taboo. In part, that is why the hearsay exclusionary rule is riddled with so many exceptions. Quite simply, we have to tolerate it — nay, we actually need it — if there are good and valid reasons to trust the specific item of hearsay because, under the circumstances in which it was generated, it probably (and usually) is reliable. Indeed, experts frequently testify on the basis of "hearsay" of one kind or another since it is a practical impossibility for an individual personally to know everything there is to know about a given subject. Thus, physicians routinely testify about conditions, diagnoses and treatments they themselves may not have encountered; engineers often give an opinion about designs they never built or structural qualities they never tested; and chemists testify about toxic effects of chemical compounds they never replicated in a laboratory.

'Qualifications' and 'Helpfulness'

Under Rule 702 of the Federal Rules of Evidence, an expert qualified by "knowledge, skill, experience, training or education" may give testimony that will assist the trier of fact to understand the evidence or to determine a fact in issue. These twin pillars of "qualifications" and "helpfulness" inevitably mean that expert testimony often will be comprised of, or reliant upon, large chunks of "hearsay" information developed or written by others. And if that were not enough, Rule 703 informs us that an expert may rely upon inadmissible facts or data, such as hearsay, provided that the data upon which the opinion rests are of a type "reasonably relied upon by experts in the particular field." Further, a Dec. 1, 2000 amendment to Rule 703 even lets the inadmissible hearsay be disclosed to the jury if the trial judge finds that the probative value of assisting the jury to evaluate the expert's opinion outweighs the risk of prejudice from the jury's potential misuse of the information.¹

'Junky' Hearsay

Ostensibly, Evidence Rule 703's "reasonable reliance by experts in the particular field" criterion is supposed to be a safety screen against experts leaning on "junky" hearsay in order to render their opinions. But, as all trial practitioners and judges know, the invigorated emphasis upon Daubert and Frye "gatekeeping" to exclude unreliable expert testimony, has revealed widespread violation of expert reliability standards. Even qualified experts sometimes offend accepted trustworthiness criteria. At the heart of much of this ubiquitous traffic in unreliable or junky expert opinion is untrustworthy hearsay or out-of-court materials that we cannot be sure are reliable.

Conduit for Admission

The rule in New York state courts about experts using out-of-court hearsay also imposes boundaries.² For example, the hearsay materials must be professionally reliable,³ thereby directly injecting the question of reliability of the hearsay. Further, the hearsay ought not to be the "principal basis" for the expert's opinion but, rather, merely a link in the chain of data on which the expert relied.⁴ Some cases hold that the expert is not to become a mere funnel or conduit for the admission of what otherwise would be excluded.⁵

Increased Daubert and Frye "gatekeeping" of expert testimony has brought the percolating problem of "conduit hearsay" to the fore. Moreover, a decision issued Dec. 20 by the New York Court of Appeals, People v. Goldstein,⁶ mentioned conduit hearsay expressly so it has become a potential front-burner issue in New York. But this is not only New York's problem. Federal courts and courts in other states are grappling with the challenge as well. The topic impacts upon the vital interface between experts and permissible evidence.

Conduit hearsay is chameleon-like, often camouflaging itself in different disguises. It comes in different flavors. Sometimes, it sneaks up on you. Sometimes, the out-of-court hearsay is outright the only or the major basis for an expert's opinion. Sometimes, the hearsay comes from other, perhaps more renowned or distinguished sources. The testifier, employing name or image recognition, seeks to bolster his own position by suggesting that the famous hearsay creators agree with him. Sometimes, the testifying expert merely parrots or becomes a mouthpiece for what others have said or written. Sometimes, the hearsay constitutes a key ingredient, foundation or stepping stone for the testifier's opinion. These are very real, common scenarios unfolding in the expert evidence universe. Let's see how some courts have grappled with the problem.

Tensions Recognized

In People v. Goldstein, New York's highest court identified the problem well. In this criminal case, the defendant killed the victim by pushing her into the path of a subway train. At trial the sanity of defendant was in issue. The prosecution presented a forensic psychiatrist to show that defendant only had a mild mental disorder. The expert interviewed six people who had experiences with defendant and was allowed to repeat to the jury what the interviewees said. Defendant was convicted. On appeal, defendant raised two principal arguments: (1) the interviewee statements were inadmissible hearsay under state law; and (2) defendant had a constitutional right to confront witnesses against him. The Court of Appeals rejected the hearsay argument but reversed on the constitutional ground.

We focus here on the evidence issue. The court concluded that the expert's testimony — uncontested on the issue by cross-examination or contradictory evidence — established that the third-party interviews were out-of-court material of a kind "accepted in the profession as reliable," and therefore admissible. So much for that holding. Then the court dropped its bombshell. It briefly discussed the question whether the testifying expert is free to repeat to the jury all the hearsay information on which the opinion is based. Both parties seemed to assume that, if the "professionally reliable" threshold were met, the expert could repeat all the hearsay. However, the court said this was a "questionable assumption."

The court then made the following momentous statement: "And it can be argued that there should be at least some limit on the right of a proponent of an expert's opinion to put before the fact-finder all the information, not otherwise admissible, on which the opinion is based. Otherwise a party might effectively nullify the hearsay rule by making that party's expert a "conduit for hearsay." The court cited Hutchinson v. Groskin,⁷ a U.S. Court of Appeals for the Second Circuit decision in a medical malpractice case. There, "Dr. A" testified that, among the materials he reviewed relating to plaintiff's prognosis were three letters by noted cancer specialists, "Drs. B, C and D." These three notable doctors were repeatedly mentioned and Dr. A's consistency with what the outsiders said was emphasized and exploited in argument. The Second Circuit held that this testimony was improper as a conduit for hearsay. The stratagem "simultaneously conveyed hearsay testimony to the jury and improperly bolstered [the expert's] credibility."⁸

In Goldstein, the state's High Court noted that the distinction between the admissibility of an expert's opinion and the information underlying it when offered by the proponent, has received "surprisingly little attention" in New York. The issue has, however, been discussed by courts elsewhere and in law-review articles. The court quoted the December 2000 amendment to Federal Evidence Rule 703 allowing disclosure to the jury of the outside matter under some circumstances but the court expressly refused "to decide here . . . whether the New York rule is the same as, or less or more restrictive than, this federal rule."⁹

This bombshell indeed may have cratered New York's evidentiary landscape. Many believed that, although the expert could use professionally reliable hearsay in forming the opinion, the out-of-court material was inadmissible. Now, however, these statements in Goldstein may invite some uncertainty. Further, does the court's specific pinpointing of the problem of conduit hearsay decry this evidentiary tactic or merely invite state courts to grapple further with the issue? Bench and bar would seem to have their work cut out for them.

Federal Approach

The approach of federal courts is not without its complexities. However, there is strong authority for barring various forms of conduit hearsay. Let's briefly survey a few of these federal decisions. In Matter of James Wilson Associates,¹⁰ the question was the state of disrepair and worth of a building. An architect was the expert who planned to testify about the physical condition of the building as reported to him by the consulting engineer. The architect's evidence was excluded. The U.S. Court of Appeals for the Seventh Circuit, in an opinion by Judge Richard A. Posner, said that "the judge must make sure that the expert isn't being used as a vehicle for circumventing the rules of evidence." The fact that inadmissible evidence is a permissible premise of the expert's opinion under Rule 703 "does not make that evidence admissible for other purposes independent of the opinion. If expert "A" bases his opinion on fact "X" that the lawyer told him, then the lawyer cannot in closing argument tell the jury, "See, we proved X through our expert A." That was the kind of "hand-off" attempted in this Wilson case. The expert who had evaluated the state of the building was the consulting engineer. He was the one who should have testified. "The architect could use what the engineer told him to offer an opinion within the architect's domain of expertise, but he could not testify for the purpose of vouching for the truth of what the engineer told him — of becoming in short the engineer's spokesman." It was improper to use an expert witness as a screen against cross-examination."¹¹

Judge Posner confronted the issue a decade after Wilson in Dura Automotive Systems of Indiana, Inc. v. CTS Corp.,¹² a third-party claim stemming from toxic contamination. Let's call the parties "P" and "D." P's only expert was a hydrogeologist who worked for a consulting firm. He admittedly was not an expert in mathematical models of ground water flow. The modeling was done by other employees of the expert's consulting firm. D moved to bar the expert from testifying. The deadline for naming new experts had expired. The trial court struck the expert's proposed testimony and granted D summary judgment. On appeal, one of the questions was whether the expert could testify when his opinion was based on the mathematical modeling done by others in his consulting firm.

Judge Posner noted that an expert witness is permitted to use assistants in formulating his expert opinion, and normally they need not themselves testify. Indeed, the opposing party can depose the assistants to see if they did their work competently. The expert can then be asked whether he supervised them carefully and whether such reliance on the assistants is standard practice in his field. If the requisite assurances are forthcoming, the assistants' work need not be introduced into evidence. But the situation becomes "more complicated" if the assistants "aren't merely gofers or data gatherers but exercise professional judgment that is beyond the expert's ken." It doesn't matter for purposes of analysis whether the hearsay is created by assistants or by independent experts.¹³

Experts in technical fields commonly base opinions in part on what a different expert believes on the basis of expert knowledge not possessed by the first expert. But when the "soundness of the underlying expert judgment is in issue," the testifying expert cannot just "parrot" the opinion of the other expert. Moreover, the Daubert test must be applied with due regard for the specialization of modern science. "A scientist, however well-credentialed he may be, is not permitted to be the mouthpiece of a scientist of a different specialty. That would not be responsible science."

Thus, for example, a theoretical economist, however able, would not be allowed to testify to the findings of an econometric study conducted by another economist if he lacked expertise in econometrics and the study raised questions that only an econometrician could answer. "If it were apparent that the study was not cut and dried, the author would have to testify; he could not hide behind the theoretician."¹⁴

Was this such a case? "Yes," held the court. The mathematical modeling of the ground water flow involved "professional discretion — expertise." The testifying expert was not a modeling expert. Even the decision of what form of model to use was an expert judgment. Since these were not cut-and-dried procedures, but really expert opinions, it was clear that the testifier's assistants did not "merely collect data for him to massage or apply concededly correct techniques in a concededly appropriate manner, or otherwise perform routine procedures . . . ." The testifier "lacks the necessary expertise to determine whether the techniques were appropriately chosen and applied." Without the assistants' testimony "explaining and justifying the discretionary choices that they made, [the expert's] testimony would have rested on air."¹⁵

Principles Applied

Much the same appears in the U.S. Court of Appeals for the Tenth Circuit's decision in TK-7 Corp. v. Estate of Barbouti,¹⁶ an issue of lost profits. An expert sought to testify as to losses of millions of dollars based on hearsay reports prepared by others. The opinions were properly excluded. The expert "failed to demonstrate any basis for concluding that another individual's opinion or a subjective financial prediction was reliable, other than the fact that it was the opinion of someone he believed to be an expert who had a financial interest in making an accurate prediction." The judge must make sure that the expert is not being used as a vehicle for circumventing the rule against hearsay. Moreover, while the expert considered the hearsay study reliable and adequate, "there was no evidence that other experts in his field would rely on such a study and would adopt it for purposes of forming an opinion of the amount of lost profits of an unestablished business." Rule 703 implicitly requires that the information be viewed as reliable by some independent, objective standard beyond the opinion of the individual witness.¹⁷ Moreover, since the state law required that expert's opinion be made with reasonable certainty, clearly, this standard of proof was not met. This latter point could be useful in jurisdictions where the expert must testify to a reasonable degree of professional certainty.

A comprehensive analysis of the law in this area and the role of Evidence Rule 703 is presented in the July 2005 decision by a U.S. Magistrate Judge in the Northern District of Illinois. The case is Loeffel Steel Products, Inc. v. Delta Brands, Inc.¹⁸ Some of the opinion's highlights regarding our issue are that Rule 703 was "never intended to allow oblique evasions of the hearsay rule"; the testifying expert cannot "hide behind" the other experts and "act as their mouthpiece"; if the underlying assumption cannot be proved by admissible, competent evidence, the very nature of which would appear to require expert testimony, then the testifier's analysis would have no evidentiary support and would be irrelevant; and the testifying expert "cannot simply parrot what he was told by other employees."

In each of the foregoing federal cases, the testifying expert essentially sought to act as a conduit for inadmissible hearsay provided by others. He became a spokesman, a parrot or mouthpiece for what they said, did or concluded. Whether the outsiders be assistants, coemployees or independent experts, when the hearsay creators exercise expertise or professional judgments in their field beyond the expertise of the testifier, the latter cannot, in effect, vouch for the hearsay.

'Trial by Literature'

These same principles may call into question another form of conduit hearsay, i.e., experts' reliance on scientific or technical literature beyond their ken. The notion of "trial by literature" could be threatened.

Added to the foregoing is that Daubert and Frye reliability criteria probably should apply to the underlying hearsay. Successful attack on the underlying hearsay as junky or unreliable, means the expert's opinion or methodology employing it is not better. Given the ubiquity of expert testimony and experts' usual reliance on hearsay, the issues of admissibility and reliability present a veritable minefield for combatants.

Michael Hoenig is a member of Herzfeld & Rubin.

Endnotes:________________________________________________________________________________________________________

1. The Advisory Committee's Note to Amended Rule 703 concedes the topic is controversial. Courts and commentators had expressed differing views on how to treat otherwise inadmissible information when reasonably relied on by an expert in forming an opinion or drawing an inference. For a recent article criticizing the 2000 Amendment, see P. Shectman, "'People v. Goldstein' and Rule 703," New York Law Journal, Jan. 13, 2006, p. 4.

2. See my series of NYLJ columns on Experts and Professionally Reliable Hearsay dated, respectively, April 11, June 18, July 8 and Aug. 12, 2002, each article commencing at p. 3. For a review of how even seemingly authoritative scientific articles fall short in material respects, see Hoenig, "'Gatekeeping' of Experts and Unreliable Literature," NYLJ, Sept. 12, 2005, p. 3; "Experts' Reliance on 'Unreliable' Hearsay," NYLJ, Nov. 12, 2002, p. 3.

3. Hambsch v. N.Y. City Transit Authority, 63 NY2d 723, 726 (1984).

4. Borden v. Brady, 92 AD2d 983 (3d Dept. 1983); Hornbrook v. Peak Resorts, Inc., 194 Misc. 2d 273 (Sup. Ct. Tompkins Co. 2002) (out-of-court material must not be principal basis for expert's opinion on ultimate issue in the case; expert not to be mere conduit by which to funnel out-of-court material into evidence).

5. See Hornbrook, supra n. 4; Hutchinson v. Groskin, 927 F2d 722, 725-726 (2d Cir. 1991).

6. 2005 N.Y. LEXIS 3389 (Ct. App. Dec. 20, 2005).

7. 927 F2d 722, 725 (2d Cir. 1991).

8. Id. at 725.

9. People v. Goldstein, 2005 N.Y. LEXIS 3389, at *11.

10. 965 F2d 160 (7th Cir. 1992).

11. Id. at 173.

12. 285 F3d 609 (7th Cir. 2002) (rehearing en banc denied).

13. Id. at 613.

14. Id. at 614.

15. Id. at 615.

16. 993 F2d 722 (10th Cir. 1993).

17. Id. at 732-733.

18. 387 FSupp2d 794 (N.D. Ill. 2005).