Published monthly since 1976, the NEWS provides subscribers and readers with digests and commentary on the most important judicial opinions interpreting the Federal and Uniform Rules of Evidence. Issues of the NEWS often arrive several weeks before the opinions discussed appear in the standard printed reporters.

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HIGHLIGHTS

The March issue of the NEWS is especially rich in cases dealing with the admissibilityof evidence in civil litigation. In an unlawful discharge case against Wal-Mart, the Ninth Circuit decides whether the trial court abused its discretion in excluding, on unfair prejudice grounds, evidence that another store had fired plaintiff for stealing cigarettes eight years before. See RULE 403. The Eleventh Circuit rules, in litigation to pierce the corporate veil, on whether the exclusion of relevant evidence that individual defendants had altered bills of lading to conceal their breaches of contract with plaintiff was supportable under RULE 403. After a lower court had dismissed the state's request to terminate an alcoholic mother's parental rights and had sent most of her children back into her custody in Colorado, the Arkansas Supreme Court determines the propriety of keeping an adverse home study report by Colorado officials out of evidence based on RULE 403, without regard to its admissibility under some exception to the hearsay rule. In malpractice litigation against a hospital, the Supreme Court of Mississippi, in 5 to 4 split, decides whether an experienced registered nurse's opinions were admissible (1) as to the pain and suffering probably caused by the neglect of patient's needs by hospital nurses and (2) as to the role of this negligent care in causing patient's death.In litigation over defendant's allegedly false claim of entitlement to federal crop insurance for loss of 194 acres of cotton in 1993, the Eighth Circuit determines the propriety of admitting expert testimony based on computer analysis of satellite imaging that plaintiff had not planted any cotton on that acreage that year. See RULE 702.These two appellate opinions are instructive for prosecutors and defense counsel. The Sixth Circuit rules on whether, in a bank embezzlement case, allowing the government to put into evidence 107 coin bags, most of them filled with Styrofoam, as demonstrative evidence of what that much cash would look like, was an abuse of discretion. See RULE 403. The same Court determines whether a memo written by a bank official who claimed to recall the events set forth in the memo was admissible as recorded recollection under RULE 803(5). In the prosecution of defendant for setting up a bogus corporation using the names of a real Hong Kong company and its officials in order to defraud lenders and others, the Ninth Circuit decides whether the admission of the innocent general counsel's reports to law enforcement as to how he had uncovered the fraud violated the individual defendants' attorney-client privilege.

ARTICLE V.Accompanying this issue, our subscribers and readers will find the first of our four cumulative quarterly tables of cases covering opinions discussed in our January, February and March issues. As the year progresses, please consult it from time to time to find out the permanent citations of these cases as well as their significant later history. On the last page of this issue, the editor commends two recent articles on the RULES to your attention.

ARTICLE IV: RELEVANCY AND ITS LIMITS

RULE 403: Exclusion of Relevant Evidence based on Risk of Unfair Prejudice

In September 1990, Jeffrey M. Janes filled out a job application as a meat cutter at PACE Membership Warehouse. The form stated that the position was one in which the company could fire Janes at will, with or without cause. Janes rapidly worked his way up from meat cutter to being an assistant meat manager. In January 1994, Wal-Mart bought PACE and started running the store as a 'Sam's Club.' Wal-Mart immediately gave Janes the title of'team leader.' Ten months later it raised his salary and promoted him from team leader to assistant warehouse manager in charge of the meat department. For reasons the record does not reveal, Wal-Mart required Janes at this point to fill out a job application. The form disclaimed that it was an employment contract but reiterated that the company could fire him 'at any time with or without cause.'Four or five times during the summer of 1995, Janes removed expired meat from Wal-Mart's 'bone barrel,' which a salvage company periodically emptied out. Janes and several other employees then cooked the meat into carne asada on a Wal-Mart grill and ate it for lunch at the store. When the company found this out, it fired Janes for 'violating company policy.' Wal-Mart has no specific ban on taking expired meat but its written policy strictly bans forbids taking 'anything, large or small.' For example, the store warns that eating store candy from a broken bag is a 'dishonest' act. The parties disagree on whether the expired meat had value to Wal-Mart.Janes sued Wal-Mart for unlawful discrimination based on a medical condition, wrongful discharge, and breach of the covenant of implied good faith and fair dealing. The only claims that went to trial were claims relating to breach of contract and the covenant breach.On Janes' motion, the trial judge entered a pretrial order keeping out evidence that, eight years before, Ralph's grocery store had fired seventeen-year-old Janes for stealing cigarettes. Janes had contended, and the trial judge had agreed, that, under RULE 403, the risk of unfair prejudice substantially outweighed any probative value the incident may have. In the trial judge's view, '[the evidence] creates a great risk that you've got the jury deciding the case based on character evidence.' The case went to the jury and it came in with a general verdict for Janes, awarding him $167,000 in damages. Wal-Mart timely appealed. In an opinion by Judge D. W. Nelson, the U. S. Court of Appeals for the Ninth Circuit affirms. Janes v. Wal-Mart Stores, Inc., 279 F.3d 883 (9th Cir. 2002).In Judge Nelson's view, the trial judge's reasoning about admissibility was sound. Moreover, the judge could reasonably have concluded (as he did) that a limiting instruction would not have adequately protected Janes.'First, the proffered evidence was of limited value. Wal-Mart offered the evidence to prove that Janes knew he could be fired for stealing. This fact, however, was not in dispute. Janes testified during trial that he knew that Wal-Mart considered theft to be gross misconduct and that Wal-Mart terminated employees for gross misconduct. This testimony amounted to an admission that Wal-Mart could fire employees for theft.' 'Second, the evidence posed a risk of undue prejudice. Hearing of Janes's former misconduct, a jury may have concluded [that] Janes [was] a person of bad character and viewed his actions and testimony in this case with unwarranted suspicion. The court's exclusion was not an abuse of discretion.' [886]

Cheryl Ann Humphrey (defendant) worked as a bank and vault teller for Hamilton Bank of Johnson City, Tennessee (later known as SunTrust Bank) from 1975 to 1996. Among her responsibilities were (1) keeping count of the vault which contained cash, loose coin and food stamps and (2) various dealings with the Federal Reserve Bank. She also handled the shipping of food stamps to the Reserve for credit in the Bank's accounts. Concerned by an excessive buildup of food stamps in the vault, Robert Odie Major, the Bank president instituted the shipment of food stamps on a weekly basis. On March 7, 1996, defendant set up a shipment of $651,403 worth of food stamps for the Reserve.Although the Bank's dual control policy required approval by two employees, Tommi Turbyfill denied that he had approved the March 7 shipment or that he had signed the ticket.After defendant admitted on September 3, 1996 that she had placed Turbyfill's initials on the ticket, she resigned. Bank employees then counted the cash in the vault and uncovered a loss totaling more than $510,000. In February 1998, a federal grand jury indicted defendant for embezzling Bank funds and for several counts of making false Bank entries. At the trial, the government offered a videotape dated May 21, 1996 showing that area of the Bank vault where it stored loose coins. It also offered 107 coin bags, six filled with coins and the rest with Styrofoam 'peanuts' as demonstrative evidence of what that many bags would look like and to show that the vault did not contain that many coin bags. The government used Styrofoam in most of the bags to avoid the security problems of bringing coins worth $200,000 into court. Defendant objected based on unfair prejudice because the bags filled with Styrofoam were allegedly bigger than those filled with coins. When an expert equated the sizes of the two types of bags, the court admitted the evidence, leaving the weight of the evidence to defense cross-examination. Government witnesses later testified that they had never seen that much loose coin in the Bank's vault. From her conviction on all counts, defendant noted an appeal. In an opinion by Judge Karen Nelson Moore, the U. S. Court of Appeals for the Sixth Circuit affirms. United States v. Humphrey, 279 F.3d 372 (6th Cir. 2002).Judge Moore first points out that the trial judge did not expressly balance their probative value against the risk of unfair prejudice before letting the bags in. 'Reviewing this evidentiary decision, we are not persuaded that the district court abused its discretion. Humphrey observes on appeal that the Government could have introduced 'a photograph of 217 bags of actual coins placed inside the vault' or used 'other means of demonstration.'The question before the district court, however, was whether the probative value of the coin bags was substantially outweighed by the danger of unfair prejudice. Although the amount at issue was in excess of $214,000, which would have filled 214 coin bags, the Government introduced half that number. We therefore conclude that the district court did not abuse its discretion in admitting the coin bags as evidence.' [377]Defendant also complained on appeal (but not at trial) about letting the witnesses testify as to the number of coin bags shown in the Bank's surveillance video of the vault. 'We conclude that this argument lacks merit. Not only did defense counsel fail to object at trial, but also Federal Rule of Evidence 704 provides that 'testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact,' with a limited exception not pertinent here. The witnesses were Bank employees and it appears that they testified about their personal knowledge of the vault's contents. Their testimony was thus clearly admissible.' [Id.]

In prior litigation, Chrysler International Corporation had brought suit in a Michigan federal court against John Chemaly, Michael del Marmol, and Cherokee Export Company (CEC) in a dispute over an automobile distribution contract. Chrysler won a judgment against CEC. In a distinct follow-on action, Chrysler tried to pierce CEC's 'corporate veil' so as to hold Chemaly and del Marmol personally liable for the prior judgment. In the instant litigation, defendants moved in limine to keep out of evidence certain of CEC's dealings with a company known as First Imperial. This proof would show that CEC had altered some bills of lading to hide the fact that it had sold vehicles in territories where its contract with Chrysler banned it from selling. Opposing the motion, Chrysler contended that defendants had diverted some of the money involved in the First Imperial arrangements to pay Chemaly's personal debts. This is probative on whether the individual defendants had organized CEC to defraud creditors, an element of piercing the corporate veil under Florida law. According to Chrysler, the individual defendants had fraudulently channeled corporate money out of CEC and into their own pockets and that this made CEC unable to pay its debts to Chrysler. The trial judge granted the motion, however, viewing the evidence as more prejudicial than probative under RULE 403 criteria.From an adverse judgment, Chrysler appealed. The U. S. Court of Appeals for the Eleventh Circuit affirms in an opinion by Judge J. L. Edmondson Chrysler International Corporation v. Chemaly, 2002 WL 130255 (11th Cir. Feb. 1).

Reviewing for abuse of discretion, Judge Edmondson does not find it in this case.'Chrysler's challenge to the district court's ruling on Defendants' motion to exclude evidence fails to appreciate that the district court did allow Chrysler to put on evidence that defendants had used the First Imperial transactions to divert funds out of CEC. The district court's ruling was a narrow one. The ruling only excluded evidence that bills of lading had been altered to conceal that sales had been made outside of CEC's rightful territory.''But as the district court saw it, nothing connected the alteration of the bills of lading to the main point of this case: CEC's inability to pay its debts on account of defendants channeling money out of CEC for the Defendants' personal use. The fraud involved in altering the bills of lading deals with the source of funds coming into CEC and is significantly different from the fraud underlying the suit: the fraud involved in diverting funds out of CEC and, thus, causing CEC to become insolvent and, therefore, allowing CEC and defendants to evade liability to Chrysler.' 'Moreover, even if the evidence about the bills of lading was admissible otherwise, the district court concluded that the relevance of the alterations of bills of lading would be substantially outweighed by the unfair prejudicial effect of the evidence under Federal Rule of Evidence 403. The district court noted that Chrysler had 'a lot of evidence' (other than the bill-of- lading evidence) to support its case.''In striking the balance between the costs and benefits of the bill-of-lading evidence, other judges might have come down the other way. But the district court was within its discretion to conclude that evidence of the fraudulent alteration of the bills of lading posed too great a danger of improperly swaying the jury on the veil-piercing claim, which centered around the fraudulent diversion of funds out of CEC.' [Slip op. 4-5]

In July 1998, Rose Huff asked for aid from the Arkansas Department of Human Services (ADHS). She had seven young children, including one in a hospital as a recent premature birth. Ms. Huff had no job, no home and lacked any means of transportation. She had to walk around all day with six of the children because the Salvation Army shelter did notlet them remain there during the day. ADHS then petitioned for emergency custody of the children as 'dependent-neglected.' A court issued an ex parte order on July 31, 1998, lodged custody of the children with ADHS and named a guardian ad-litem for them. Ms. Huff's oldest daughter had gone to Colorado to live with relatives. On September 21, 1998, the court held that the children were 'dependent-neglected' within the Arkansas Juvenile Code and gave custody of the other children to ADHS. Ms. Huff next moved to Colorado where she got a job and found housing. Through the Interstate Compact on the Placement of Children (ICPC), the ADHS sent the children to live with Ms. Huff's mother and aunt in Colorado. Due to an (unspecified) disruption, however, the children ended up back in Arkansas in foster care less than three months later. The case plan required Ms. Huff to visit the children weekly by telephone and one weekend per month in person at ADHS's expense. The plan also demanded that Ms. Huff keep up a stable income with proper and stable housing, that she go to counseling and that she get treatment for alcohol addiction. Ms. Huff went to only 60% of the counseling sessions and to only 40% of the alcohol screenings and was dropped from both programs for poor attendance. Since reunification efforts had not succeeded, ADHS moved for termination of parental rights in September 1999 which the court denied. At the August 2000 hearing, ADHS offered into evidence the report of a home study which Colorado officials had carried out pursuant to the ICPC. The Colorado officials reported that the home situation was inappropriate and recommended denial of placement under the ICPC. The trial court, however, declined to admit the home study under either RULES 803(6) as a business record or under RULE 803(8) as an official record.The court found that Ms. Huff had substantially complied with the case plan and previous court orders. It ordered ADHS to return the children to her custody in Colorado. ADHS appealed from that order. The Supreme Court of Arkansas affirms in a valuable opinionby Justice Annabelle Clinton Imber. Arkansas Department of Human Services v. Huff, 2002 WL 188386 (Ark. Feb. 7).Justice Imber first quotes the texts of Ark.R.Evid. 803(6) and 803(8) on which ADHS had relied below. She also observes that both provisions allow for exclusion if, despite a prima facie foundation, there are circumstances that might suggest a lack of trustworthiness. Without deciding whether the Colorado home report qualified under either or both provisions, she declares her agreement with the trial court's concerns about deciding a termination case based largely on an out-of-court report without providing Ms. Huff the right to cross-examine its author.'The fact that a piece of evidence falls within an exception to the rule against hearsay does not equate to automatic admissibility. [Cite] To prevent possible prejudice or confusion, a trial court must still have the authority to exclude a record under Ark. R. Evid. 403. ... This court has held that the weighing under Rule 403 is left to the trial court's sound discretion and will not be reversed absent a showing of manifest abuse. [Cite]' [Slip op. 4] 'Here, the trial court identified the problem with [the] admissibility of the home study: 'we don't have that person here to cross-examine and evaluate as to all of their motives and their thinking ... you have to be able to weigh the credibility.' The right of cross-examination is especially important in cases ... where a fundamental liberty is at issue. ...''In the case now before us, the central issue before the trial court was the potential termination of Ms. Huff's parental rights. A fundamental liberty interest was at issue, and the court concluded that introduction of the Colorado home study would be too prejudicial in the absence of someone who could be cross-examined as to its contents. The trial court did not abuse its discretion by refusing to admit the Colorado home study into evidence.'[Slip op. 5]

RULE 404(b): Other Crime, Wrongs or Acts[For the background facts, see RULE 403 above.] On the threshold issue of the relevance of the alleged alteration of bills of lading to the issues in the instant case, Chrysler had argued that the fraudulent alteration of the bills tended to establish a pattern on the part of defendants to take part in the false and fraudulent behavior alleged in this litigation. The district court, however, had disagreed.From an adverse judgment, Chrysler appealed. In an opinion by Judge J. L. Edmondson, the U. S. Court of Appeals for the Eleventh Circuit affirms. Chrysler International Corporation v. Chemaly, 2002 WL 130255 (11th Cir. Feb. 1).Judge Edmondson remains dubious about Chrysler's theory of probative value. 'Even if we suppose that one kind of fraud may have logical relevance to other kinds, the rules of evidence exclude some 'relevant' evidence. [Cite] For example, Federal Rule of Evidence 404(b) states that evidence of one wrong act by a person is not admissible to show he acted in conformity with it on another occasion. Evidence of the other wrong may be admissible to show 'motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake.'''But as the district court saw it, nothing connected the alteration of the bills of lading to the main point of this case: CEC's inability to pay its debts on account of defendants channeling money out of CEC for the Defendants' personal use. The fraud involved in altering the bills of lading deals with the source of funds coming into CEC and is significantly different from the fraud underlying the suit: the fraud involved in diverting funds out of CEC and, thus, causing CEC to become insolvent and, therefore, allowing CEC and defendants to evade liability to Chrysler.' [Slip op. 4]

RULE 406: Habit or Routine PracticeThe State of Idaho entered into a prime contract with Newby-Wiggins Construction, Inc. (NWC) to build the regional headquarters building for the Department of Parks and Recreation in Boise. In July 1993, Newby-Wiggins entered into a lump-sum subcontract with Gillingham Construction, Inc. (GCI) wherein GCI was to do certain demolition and excavation work. This involved tearing down and removing what is left of an old brickyard, digging out the building pads and parking areas for the new building and rough grading on the site. At the end of each stage of the ground preparation, another subcontractor would drive survey stakes into the ground in that sector of the construction site. These would show the existing elevation of the ground and the depth of dirt that GCI would either have to cut or to fill to comply with the building plans. When about 85% finished, GCI found an error of mismatching between graded elevations and the land next door. After many delays and extra work that GCI had to do to correct the situation, it finished its subcontract duties in the spring of 1994. Contending that the survey on which the site drawings relied were incorrect, GCI claimed that it had to remove more dirt than the original site drawings indicated. It also sought payment for the idle time of its equipment after it was told to hold up its activities and for costs incurred in demobilizing and remobilizing its equipment. Since the parties could not agree, GCI sued NWC in the Idaho courts, the case being set down for a jury trial in April 2000. In the meantime, GCI settled with the State, agreeing to indemnify the State for any liability it might have as a result of NWC's indemnification claim. A key issue in this case is whether the evidence, including reasonable inferences that can be drawn from it, was of sufficient quantity and probative value that reasonable minds could conclude that GCI relied upon the plans and specifications when preparing its bid.The president of GCI testified at the trial that when preparing a bid its 'estimator' would normally use the 'spot elevations' above sea level to calculate the quantity of dirt to be moved. The estimator would examine the plans and inspect the site in the course of figuring out a bid. NWC maintained on the other hand that GCI had not put in enough evidence to support a finding of reliance upon the plans and specifications. At the close of GCI's case, the trial judge entered a directed verdict against it and GCI lodged an appeal. In an opinion by Justice Daniel T. Eismann, the Idaho Supreme Court affirms in part and reverses in part. Gillingham Construction, Inc. v. Newby-Wiggins Construction, Inc., 2002 WL 252468 (Idaho, Feb. 22).Examining the record below, Justice Eismann concludes that there was enough evidence that GCI had relied in part upon the plans and specifications. 'Evidence of the routinepractice of an organization is relevant to prove that the conduct of the organization on a particular occasion was in conformity with that routine practice. IDAHO R. Evid. 406. [GCI's president] also testified that the only way to estimate the volume of dirt that must be moved is by calculating it based upon the existing elevations and the finish elevations as shown by the plans and specifications.' 'The construction site was relatively flat. The jury could reasonably infer that the estimator could not have calculated the dirt to be moved simply by viewing the site. For example, if the plans required that at a particular spot the finish elevation be 2795 feet above sea level, the estimator could not, simply by viewing the site, determine how much dirt needed to be moved, either by filling or cutting, to arrive at that elevation.' 'Finally, Gillingham's president testified that he reviewed the estimator's bid before submitting it. When doing so, he determined from the plans and specifications that Gillingham would be required to remove approximately two feet of dirt from the entire site and that the site was approximately 424,000 square feet. By multiplying these two numbers, he estimated the quantity of dirt that would have to be moved. Based upon that estimate, he concluded that the bid prepared by the estimator was reasonable. There was sufficient evidence from which the jury could reasonably have concluded that Gillingham relied upon the plans and specifications in calculating its bid.' [Slip op. 5]RULE 408: Admissibility of Compromises, Offers to Compromise and Related Statements and ConductMike Cohn, D.V.M. opened his Boise, Idaho veterinary clinic, the 'Critter Clinic,' in 1993 using the slogan: 'Where Pets are Family.' The following year, Petsmart, Inc., a Delaware corporation with a store in Boise, started using the same slogan to advertise its national chain of pet supplies stores. Petsmart obtained a federal trademark for the catch phrase in 1996 while Cohn registered it under Idaho trademark law in 1997. Petsmart itself does not furnish veterinary services. Starting in 1992, however, Dr. Deborah Barton began doing pet vaccinations at the Boise store on weekends. Two years later, she leased space within the Boise store for a full-service veterinary clinic, leading Petsmart to advertise that animal care services are obtainable at 'our pet hospital.'Dr. Cohn brought suit against Petsmart in Idaho state court for infringement of his Idaho trademark rights. His complaint did not claim a specific amount of damages, but asked for treble compensatory damages, treble the profits derived by Petsmart from the alleged infringement, attorney's fees, and an injunction. Petsmart removed the action to federal court based on diversity of citizenship and an amount in controversy over $75,000. The district court denied Cohn's motion to remand to state court and granted Petsmart's motion for summary judgment, holding that there was no likelihood of confusion. Cohn appealed, inter alia, the denial of his remand motion on the grounds that defendant had not shown that the controversy involved more than $75,000. In a per curiam opinion, the U. S. Court of Appeals for the Ninth Circuit affirms. Cohn v. Petsmart, Inc., 2002 WL 206384 (9th Cir. Feb. 12).The Court first outlines the general principles that govern the jurisdictional amount question. 'In order to support removal based on diversity jurisdiction, Petsmart has the burden of proving, by a preponderance of the evidence, that the amount in controversy exceeds $75,000. [Cites] Petsmart relies on a single piece of evidence: a letter from Cohn to Petsmart offering to settle the dispute.' Key language in the letter is as follows: '[u]pon review of my client's records, and evaluating the value of the good will portion of his business, we believe the mark is worth more that $100,000 to him. Therefore, if your client wishes to continue using the by-line 'Where Pets are Family' in my client's market, my client demands $100,000 to compensate him for the expense of establishing a new mark. Otherwise, my client insists that your client stop using the mark in his area immediately.' [Slip op. 1, note 2]'A settlement letter is relevant evidence of the amount in controversy if it appears to reflect a reasonable estimate of the plaintiff's claim. [Cites] Cohn could have argued that the demand was inflated and not an honest assessment of damages, but he made no attempt to disavow his letter or offer contrary evidence. Rather, he consistently maintained that his mark is worth more than $100,000. ... The undisputed evidence shows that Cohn values his trademark rights -- the object of the litigation -- as worth more than $100,000. As the amount in controversy exceeded $75,000, the case was properly removed to federal court.'[Slip op. 1-2]Defendant presumably argued that the lower court should not have relied on the settlement letter because of the exclusionary effect of RULE 408. The Court of Appeals concludes that the RULE does not apply under these circumstances. 'We reject the argument that Fed.R.Evid. 408 prohibits the use of settlement offers in determining the amount in controversy. Rule 408 disallows use of settlement letters to prove 'liability for or invalidity of the claim or its amount.' We agree with the district court that Rule 408 is inapplicable because this evidence was not offered to establish the amount of Petsmart's liability, but merely to indicate Cohn's assessment of the value of the trademark.' [Slip op. 1, note 3]

ARTICLE V: PRIVILEGESCurtis R. Martin, Jr. (defendant) formed a sham corporation in April 1998 called CCM Capital, the name of a subsidiary of Mingly, a large Hong Kong company. The real CCM had neither employees nor offices in the United States. Defendant rented office space in Sacramento and actively promoted his company as if it were the real CCM.Defendant put himself forth as the CFO of CCM while his co-defendant, William Yu, acted as Senior Vice President. Defendant signed documents as 'Michael Nock,' a Senior Vice President of the genuine CCM. Yu used the signature 'Lam Yu,' another officer of the real CCM. Justina Cheung, another co-defendant, posed as 'Kim Wong,' a CPA for Deloitte Touche Tohmatso, the real CCM's controller.Posing as Michael Nock, defendant got a $2 million line of credit on CCM's behalf from IBM Credit Corporation. With it, he leased computer equipment from Inacomp Computer Center, ostensibly for use in Mingly's U. S. operations but defendants actually sold it to various retailers in several U. S. states and in Canada. Defendant also came up with bogus serial numbers for nonexistent computers to get $2 million in cash lines of credit for the company of Vladimir Slov, a fugitive co-defendant. Defendant Martin met attorney Robert Wilson in the Spring of 1998. The latter had a law office on the same floor as defendant's 'CCM' offices. Defendant talked Wilson into becoming general counsel for 'CCM' as of November 1, 1998. Most of Wilson's services consisted of small-scale legal matters such as letter writing, getting the right legal forms and reporting a stolen truck. In March 1999, several companies quit doing business with CCM because they had learned from a background check, or 'Scherzer Report,' that defendant Martin had once served five years in San Quentin for grand theft, receiving stolen property and attempted grand theft. As general counsel, Wilson worried that defendant might be defrauding CCM.Wilson wrote a FedEx letter about the situation to the Mingly home office in Hong Kong but used an address that defendant had set up as a mail drop. Finally, on March 7, 1999, Wilson telephoned Mingly and discovered that defendant and his pals had no affiliation with the real CCM Capital or with Mingly. The next day, Wilson met with government agents and reported what he had found out. He explained to them the structure of CCM and the roles of co-defendants William Yu and Kim Wong. On March 23, defendant Martin confronted Wilson about the FedEx bill for the letter to Hong Kong. Wilson immediately resigned.The next day, government agents arrested Martin, Cheung and U and executed search warrants on the offices of the phoney CCM. A few months later, a federal grand jury indicted defendants Martin, Cheung ,Yu and Slov. Among the charges were conspiracy, mail and wire fraud, money laundering and taking part in transactions involving criminally derived property. Defendant filed a motion to suppress the government's case as derived from Wilson who allegedly was both his personal and his corporate lawyer. The court denied the motion.It decided that, except for the minor personal matters noted above, Wilson had done most of his legal work for the fake CCM. As to the privilege question, the judge made several alternative rulings. He first held that defendant had not established a personal attorney-client relationship with Wilson nor was Wilson the attorney for the Mingly corporation of Hong Kong. If he had a client at all, it was the bogus CCM. Even if Wilson was, in some sense, Martin's lawyer, he did not breach any privilege because he at no time disclosed any of Martin's confidential attorney-client communications. Finally, even if Wilson did reveal any such communications, Martin had made them in aid of committing what he knew to be a crime or fraud.After the district court denied defendant's motion to suppress, he entered into a conditional plea agreement with the government. He pleaded guilty to one count of mail fraud, one count of wire fraud, one count of interstate transportation of fraudulently obtained property, and one count of money transactions in criminally derived property.The conditions were preservation of his right to appeal (1) his sentence and (2) the denial of his motion to suppress. On appeal, defendant Martin relied on a general expectation that an attorney will preserve the privacy of information gained on the client's behalf . In a thoughtful opinion by JudgeSusan P. Graber, the U. S. Court of Appeals affirms the denial of the suppression motion but remands for resentencing. United States v. Martin, 278 F.3d 988 (9th Cir. 2002).In Judge Graber's view, it is the Fourth Amendment and the law of privilege that protect certain legitimate expectations of privacy in nondocumentary information. 'When a private person volunteers information to the government, it generally is not improper for the government to listen and then to investigate on the basis of what it hears. The issue becomes complex only if the person has learned about the crime through some special relationship.' 'If a bank robber boards a bus and confesses his crime to the driver, we would not think it improper if that driver contacted the police. Similarly, if the bank robber tells his barber or his bartender about the crime, we would expect them to come forward. However, if the bank robber enters a confessional and admits his crime to a priest, we would be very surprised if the priest reported him.''Our expectations differ because we value open communication in some relationships more than in others. In order to preserve that openness, the law of privilege ensures that certain communications may not be used against us in court. Safe in that knowledge, we confide in our doctors, unburden ourselves to our spiritual counselors, and speak freely with our lawyers. Our expectation of privacy, in other words, has been embodied in the law of privilege, which protects certain communications.' [999]Judge Graber then analyzes the arguments made as to the scope of attorney-client privilege as applied to the facts found or admitted in this case. He concludes that the privilege is inapplicable on three grounds.'First, to assert the privilege, Defendant must show that he had an attorney-client relationship with Wilson. Defendant did not present sufficient evidence to establish such a relationship. Wilson was hired as general counsel for a corporation. The corporation's privilege does not extend automatically to Defendant in his individual capacity.' 'During negotiations for his CCM employment, Wilson performed a few legal tasks for Martin personally. If Wilson served as Martin's personal lawyer, he did so as to two or three minor, discrete matters that predated his work for the sham CCM. These matters had nothing whatsoever to do with the information that Wilson disclosed. The information that Wilson revealed to the government related, at most, only to the purported attorney-client relationship between Wilson and the bogus CCM. That relationship gave rise to no privilege personal to Martin.'

Second, Defendant cannot point to any privileged communication that Wilson divulged.A party claiming the privilege must identify specific communications and the grounds supporting the privilege as to each piece of evidence over which privilege is asserted. [Cite] Blanket assertions are 'extremely disfavored.' [Cite] Further, the communication must be between the client and lawyer for the purpose of obtaining legal advice. [Cite]''The Scherzer Report that sparked the investigation was not such a communication. Rather, Ernst & Young, a third party, gave the Report to Wilson. The Report did not originate with Ernst & Young. The firm's investigator, Scherzer & Company, had prepared it as part of due diligence that Ernst & Young had ordered. The Report contained information about Defendant's prior convictions -- a matter of public record.''Similarly, any information disclosed regarding the corporate structure of CCM also could have been obtained from publicly available data. For example, Defendant had filed a report with Dun & Bradstreet.''Third, the subject of the disclosure was not privileged. Even if Wilson was Defendant's personal lawyer and somehow divulged a confidential communication to the government, that communication would not be protected by the privilege because it was subject to the crime- fraud exception.' 'The attorney-client privilege does not extend to communications made to a lawyer to further a criminal purpose. When a lawyer's advice is sought to further a crime or fraud, those communications are not privileged. United States v. Zolin, 491 U.S. 554, 563 (1989). The crime-fraud exception to the attorney-client privilege 'assure[s] that the 'seal of secrecy' between lawyer and client does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime.' Id.' 'The government bears the burden of proving that the attorney- client privilege does not apply because of the crime-fraud exception. [Cite] Demonstrating that the communications with the lawyer were 'in furtherance of an intended or present illegality and that there is some relationship between the communications and the illegality' makes a prima facie case. [Cite]' 'It is not enough for the government to have a 'sneaking suspicion the client was engaging in or intending to engage in a crime or fraud when it consulted the attorney.' [Cite] The exception applies only when there is 'reasonable cause to believe that the attorney's services were utilized in furtherance of the ongoing unlawful scheme.'''The district court found that the government had established a prima facie case for application of the crime-fraud exception. We agree.''The sham CCM was created solely to defraud legitimate businesses. Before Defendant hired Wilson, he had already researched the real CCM, filed a false Dun & Bradstreet report that listed actual CCM officers as being affiliated with the bogus CCM, and obtained a $2 million line of credit from IBM claiming to be the real CCM. Wilson was hired as CCM's 'general counsel' to assist Defendant in continuing the CCM fraud.''It does not matter that Wilson was unaware of CCM's criminal purpose or that he took no affirmative step to further that purpose; the client's knowledge and intentions control. Wilson 'need know nothing about the client's ongoing or planned illicit activity for the exception to apply.' Communications from Defendant to Wilson simply were not privileged, because Defendant was using Wilson to perpetuate the CCM fraud.' [1000-1001]

ARTICLE VI: THE COMPETENCY AND IMPEACHMENT OF WITNESSES

RULE 613(b): Prior Inconsistent Statements for ImpeachmentThe agricultural partnership, Larry Reed & Sons (defendants) were engaged in growing cotton in Arkansas. In 1993, defendants asked for federal crop insurance coverage for the alleged loss of 194 acres of cotton. Government investigators later found out that defendants had not planted this particular acreage with cotton during the 1993 season. The government then filed suit against the defendants for violating the False Claims Act (FCA).The Act allowed the award of treble damages and other penalties. At the trial before a jury, Lyman Reynolds, a partner of Larry Reed & Sons, testified that he had no knowledge of whether Reed had put down cotton during 1993. The trial judge then let the government impeach Reynolds pursuant to RULE 613 with his earlier written statement that Reed did not plant cotton that year.

The jury later found for the government and awarded it $93,687 in compensatory damages.After a statutory trebling, the amount came to $281,059. The court also imposed the statutory maximum penalty of $10,000 on the partnership and lesser individual fines on the partners. The partnership noted its appeal, contending that the lower court had abused its discretion in admitting Reynolds' prior written statement for impeachment. In a per curiam opinion, the U. S. Court of Appeals for the Eighth Circuit affirms. United States v. Larry Reed & Sons, Partnership, 2002 WL 87638 (8th Cir. Feb. 12).The Court first outlines general Circuit law on the use of prior inconsistent statements for impeachment. 'To introduce a witness's own earlier statement for impeachment, (1) the statements must be inconsistent, (2) the inconsistency must be relevant, (3) the inconsistent statement must, on request, be disclosed to opposing counsel, the witness allowed to explain the inconsistency, and opposing counsel allowed to question the witness, and (4) the district court should instruct the jury about the limited purpose of the earlier statement.' [Slip op. 2]In the Court's view, most, but not all, of the elements existed at the trial. 'In Reynolds's situation, the first three prongs of the impeachment standard were satisfied, but the fourth prong was not: the district court did not give the jury a limiting instruction. When neither party requests a limiting instruction at trial, however, we review the trial court's failure to issue such an instruction for plain error. [Cit.] Given the context in which Reynolds's statement was introduced and the rest of the evidence against the partnership, we find no plain error here.' [Id.]

ARTICLE VII: THE OPINION RULE AND EXPERT TESTIMONY

RULE 702: Admissibility of Expert Opinion Testimony

Complaining of nausea and vomiting blood, Vivian Wheeless went to Wesley Health Center (WHC) [formerly known as the Methodist Hospital of Hattiesburg, Inc.] on December 5, 1996. The staff originally diagnosed her as having an upper gastrointestinal hemorrhage. The patient's health history was far from good. It included a stroke, delerium tremens secondary to alcohol abuse, elevated heart rate, fast breathing and high blood pressure. While at Wesley, Wheeless had a second stroke and later died on January 8, 1997.Her death certificate recorded that the cause of death was cerebral vascular accident (stroke) secondary to atherosclerotic vascular disease as a consequence of hypertension.In the opinion of her treating physicians, the total blocking of her left carotid artery had brought on the stroke. Decedent's daughter, Linda Richardson, filed suit for personal injury and wrongful death against the hospital in the Mississippi courts. The suit claimed that WHC had caused or contributed to her mother's pain, suffering and death by providing negligent and sub-standard nursing care. In opposition to a defense motion for summary judgment, plaintiff filed the report of Crystal D. Keller, an experienced Registered Nurse and Certified Legal Nurse Consultant.She had looked into the circumstances of decedent's stay at WHC. Among the many instances of substandard nursing care she found were failure to monitor and report to physicians on significant changes in patient status, failure to follow doctors' orders and failure to implement an appropriate plan of care. 'Keller's proffered testimony cites [sic] there were noted instances during Wheeless's hospitalization where she exhibited signs of gastrointestinal bleeding (black tarry stools), decreased laboratory values, changes in mental status and confusion, decreased blood pressure, increased heart and respiratory rates, restlessness, and agitation, all of which either were not reported to the physician or documented appropriately. Keller opined that the deviations from the requisite standard of nursing care led to Wheeless's suffering and subsequent death.' [para. 4]From a grant of summary judgment to WHC, plaintiff filed an appeal. In an interesting opinion by Justice William L. Waller, Jr., the Supreme Court of Mississippi, in a 5 to 4 vote, affirms the judgment for defendant on the wrongful death claim but reverses the judgment for trial on the personal injury count. Richardson v. Methodist Hospital of Hattiesburg, Inc., 2002 WL 307760 (Miss. Feb. 28).As to the pain and suffering claims, plaintiff argued that Nurse Keller's education and sixteen years experience as a registered nurse and six years work as a legal consultant made her expert testimony admissible under Mississippi Rule of Evidence 702. It was also adequate to create a genuine issue of material fact as to the adequacy of nursing care at WHC during her mother's last days. Justice Waller agrees. 'The fact that Keller is not a physician does not bar her right to testify concerning the standard of care for the nursing staff, but more appropriately may affect the weight of her testimony, which is an issue for the trier of fact. Considering all of the evidence in the light most favorable to Richardson, we find there is a genuine issue of fact concerning whether Wheeless suffered more physically and incurred more expense from the failures of the nursing staff documented by Wheeless's expert and that the circuit court improperly granted summary judgment as to pain and suffering.' [para. 11]Dr. Steven Farrell, M. D., Wheeless's treating physician, Justice Waller notes, provided further support as to the nursing deficiencies outlined by Keller. He treated Wheeless while she was hospitalized at Wesley and gave a deposition about his treatment and observations. Dr. Farrell expressed concern over the substandard nursing care that Wheeless was getting. For instance, he believed the nurses were negligent in failing to timely notify him and the other treating physician about melenic (bloody) stools that were observed after Wheeless's admittance to the hospital. In his opinion, the failure to deal with the possible causes of this condition, probably increased decedent's angina pain and other symptoms.As to the wrongful death claim, however, Justice Waller holds that Nurse Keller was not qualified to testify on the essential issue of the causal nexus between the allegedly negligent nursing care and decedent's death. 'While we do not require expert testimony by a medical doctor in order to establish the cause of death, the plaintiff must show that there is causation in fact. [Cite]' 'It is not enough to show that there were deviations from the requisite standard of care for nursing. Here, Richardson has failed to make a required showing that the nurses' negligent failure to abide by the standard of care in fact caused or contributed to Wheeless's death.'[para. 16]'The cause of a stroke or, in Wheeless's case, a second stroke, is a complex medical issue. Wheeless's doctors discussed the cause of death in detail, and none were supportive of Richardson's theory of wrongful death.... .' [para. 17]'We agree with the circuit court that Keller lacks the requisite education and experience as an expert to testify concerning the causal link between Wheeless's death and the alleged deviations in nursing care and further that her proffered testimony does not specify such a link. Therefore, the circuit court did not err in granting summary judgment for Wesley on the charge of causing her wrongful death.' [para. 19]Justice Chuck R. McRae writes an opinion concurred in by three other Justices that would have reversed the entire summary judgment and remanded for trial on all issues presented. In their view, the majority is 'splitting hairs' in drawing a line between Nurse Keller's expertise as to pain and suffering and her ability to relate these symptoms to decedent's passing. They eloquently contend that Ms. Keller not only was qualified to testify as to both matters but her testimony raised genuine issues of fact on both injury and wrongful death claims.

[For the preliminary facts, see RULE 613(b) above.] The agricultural partnership, Larry Reed & Sons (defendants) were engaged in growing cotton in Arkansas. In 1993, defendants asked for federal crop insurance coverage for the alleged loss of 194 acres of cotton.Government investigators later found out that defendants had not planted this particular acreage with cotton during the 1993 season. The government then filed suit against the defendants for violating the False Claims Act (FCA). The Act allowed the award of treble damages and other penalties. At the trial, the government put Dr. John Brown on the stand to give expert testimony about the soil preparation of the partnership's farmland based on computer analysis of satellite images. On appeal, defendants argued that this evidence fell short of the reliability standards for expert opinions set by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 592-95 (1993), and Kumho Tire Co. v. Carmichael, 526 U.S. 137, 149-50 (1999).The jury later found for the government and awarded it $93,687 in compensatory damages. A statutory trebling raised the amount to $281,059. The court also imposed the statutory maximum penalty of $10,000 on the partnership and lesser individual fines on the partners. The partnership noted its appeal. In a per curiam opinion, the U. S. Court of Appeals for the Eighth Circuit affirms. United States v. Larry Reed & Sons, Partnership, 2002 WL 87638 (8th Cir. Feb. 12).The Court rejects defendants' claims of error as to the admission of expert opinion evidence. 'When Brown testified about his computer analysis of May 8, 1993 satellite images which led him to conclude the partnership's cotton fields were not planted, he also discussed the acceptance of his methodology.' 'Brown referred to 'hundreds and hundreds' of academic articles published about the process of computer analysis of satellite images, the use of this method by NASA and about 10 major universities for the purpose of enhancing agricultural productivity, and the application of this method in assessing crop hail damage.' 'Further, when testifying, Brown clearly explained his method of analysis, presented the satellite data, and illustrated how he applied the method to the facts before him. We conclude the district court did not abuse its discretion under Daubert and Kumho Tire when admitting Brown's expert testimony as reliable evidence.' [Slip op. 2]

ARTICLE VIII: THE HEARSAY RULE WITH ITS EXEMPTIONS AND EXCEPTIONS

RULE 803(5): Recorded Recollection[For the preliminary facts, see RULE 403 above.] During the trial of this bank embezzlement case, the defendant offered into evidence a Bank memo dated August 20, 1996 dealing with a shipment of food stamps from the Bank's Johnson City branch (where defendant worked) to the Nashville branch where Van Ray Peeks, Sr. was head teller. In laying a foundation, defense counsel asked Peeks whether he had 'any independent recollection of the dates when those inquiries occurred.' The witness responded that he did not recall specific dates but did remember 'the events that took place.' Later, on cross, Peeks did admit that he was able to recall the relevant events. Because the evidence failed to comply with the hearsay exception set forth in RULE 803(5), the trial judge kept it out.From her conviction on all counts, defendant noted an appeal. In an instructive opinion by Judge Karen Nelson Moore, the U. S. Court of Appeals for the Sixth Circuit affirms. United States v. Humphrey, 279 F.3d 372 (6th Cir. 2002).Judge Moore first explains the requirements of RULE 803(5). '[It] provides for the admission of documents as recorded recollections if 1) the witness once had knowledge about a matter, 2) the witness now has insufficient memory to testify about that matter, and 3) the document was recorded when the matter was fresh in the witness's mind and the document correctly reflects the witness's knowledge of the matter. In this case, Peeks stated that he remembered the events in question. The district court therefore correctly excluded the memo.' [377] The defense, as Judge Moore notes, had also presented an alternative theory to the trial judge. 'Defense counsel suggested at trial that the memo would assist Peeks in his testimony and refresh his recollection of the events. For this limited purpose, of course, the document would not have been introduced into evidence.' [Id. at note 3] [See RULE 612]

RULE 803(6): Records Kept in the Regular Course of Business[For the preliminary facts and other legal theories, see RULES 403 and 803(5) above.] During the trial of this bank embezzlement case, the defendant offered into evidence a Bank memo dated August 20, 1996 dealing with a shipment of food stamps from the Bank's Johnson City branch (where defendant worked) to the Nashville branch where Van Ray Peeks, Sr. was head teller. The trial judge refused to let the memo in as recorded recollection.From her conviction on all counts, defendant noted an appeal. In an opinion by Judge Karen Nelson Moore, the U. S. Court of Appeals for the Sixth Circuit affirms. United States v. Humphrey, 279 F.3d 372 (6th Cir. 2002).On appeal, defendant also raised for the first time a theory that the Court could sustain admission of the memo as a business record of the Bank pursuant to RULE 803(6). 'Because defense counsel did not raise this specific exception at trial, we review for plain error.' 'The business record exception is available if the document meets four requirements: 1) it was 'made in the course of a regularly conducted business activity,' 2) it was 'kept in the regular course of business,' 3) it was the result of a 'regular practice of the business' to create such documents, and 4) it was 'made by a person with knowledge of the transaction or from information transmitted by a person with knowledge.' [Cite]' 'A witness must lay the requisite foundation for the evidence to be admissible under the business record exception. [Cite] Peeks did not lay such a foundation. Indeed, when the district court asked whether the memo had been 'filed in the Bank records,' Peeks answered, 'I presume it was there. I didn't have a copy of it until this morning.' He did not know where the memo had been kept. Furthermore, the fact that the memo was handwritten casts at least some doubt on whether it was a business document.' [378] Editorial Note. Our subscribers and readers may be interested in the following additions to the evidence literature. Leo H. Whinery, Presumptions and their Effect, 54 Okla. L. Rev. 553 (2001) (contributes greatly to dispelling the murk that surrounds the different types of rebuttable presumptions and their underlying policies); Daniel J. Capra, A Recipe for Confusion: Congress and the Federal Rules of Evidence, 55 U. Miami. L. Rev. 691 (2001) (thoughtfully analyzes the difficulties brought about when Congress, for political reasons, legislates amendments to the Evidence Rules directly rather than having them go through the judicial rule-making process).