Report in support of bill related to the admissibility of an opposing party statement

A.8040 (M. of A. Dinowitz)
S.7093 (Sen. Hoylman)

AN ACT to amend the civil practice law and rules, in relation to admissibility of an opposing party’s statement (Office of Court Administration (Internal # 63 – 2021))

THIS BILL IS APPROVED

The Committee on State Courts of Superior Jurisdiction and the Committee on Tort Litigation of the New York City Bar Association (the “Committees”) support the enactment of the proposed legislation, which would create a new section 4549 in the Civil Practice Law and Rules to relax the New York common law exclusion of hearsay statements of a party’s agent or employee that, if made by the party, would be admissible as admissions.  In doing so, New York would adopt the approach of Federal Rule of Evidence 801(d)(2)(D) and all other states on this issue.[1]

The Committee on State Courts of Superior Jurisdiction and the Committee on Tort Litigation are both comprised of attorneys representing plaintiffs and defendants who regularly practice in the main trial and appellate courts of New York.

Currently, under New York law, a hearsay statement of an agent or employee is not admissible unless the agent/employee had actual authority to speak on behalf of the principal or employer regarding the event or issue in question.  As noted in the Sponsor’s Memorandum, such “speaking authority” is largely limited to upper levels of management.  Consequently, New York courts often exclude contemporaneous statements of agents/employees with first-hand knowledge of the events or issues in question, simply because those individuals did not have actual authority to speak on those particular subjects.[2]

Conversely, in federal court, parties may introduce a vicarious admission under Federal Rule of Evidence 801(d)(2)(D), provided they can establish: (1) an employment or agency relationship, (2) that the statement was made during the course of the relationship, and (3) that the statement related to a matter within the scope of the employment or agency.[3]

Over thirty years ago, in Loschiavo v. Port Authority of N.Y. & N.J.,[4] the New York Court of Appeals recognized the need to change this antiquated rule that has no bona fide justification for its continued existence.  The majority noted that the rule is “widely criticized.”[5] The Court, however, left it to the legislature to change the rule, noting that “a proposal for modification of the hearsay rule in this State is now before the Legislature,”[6] but the legislature failed to act. Judge Fuchsberg, in dissent, quoted Justice Holmes, noting the disservice of keeping a rule for no better reason then “it was laid down in the time of Henry IV:”

I would reverse, essentially for the reasons stated by Justice Leon D. Lazer in the dissenting opinion he crafted for Justice David T. Gibbons and himself at the Appellate Division. In doing so, I also observe that the majority at the Appellate Division took the pains to note that it was constrained by the prior pronouncements of our court.

At stake is the rule rendering an agent’s out-of-court statement inadmissible against his or her principal unless it is made pursuant to the latter’s authorization to speak. This though the declaration contains the following indices of reliability: (1) the declaration purportedly was made on personal knowledge, (2) the declaration was made during the course of the agency or employment of the declarant and (3) the declaration was with regard to a matter within the scope of the declarant’s employment. Well-nigh every other court of last resort and nearly every standard-setting body which has had occasion to evaluate the matter has now concluded, in my view soundly, that a declaration so reinforced constitutes a valid exception to the rule against hearsay (see, e.g., the authorities cited at 86 AD2d 624, at p 626).

I therefore find it troubling that, ignoring this chorus of condemnation, we defer reform of a Judge-created “widely criticized rule of evidence” to the Legislature, whenever and however that body may choose to act, in the interim dooming an incalculable number of cases to an unjust result. As Judge Fuld, in words which could have been written for this case, stated for a unanimous court some 20 years ago, “The common law of evidence is constantly being refashioned by the courts of this and other jurisdictions to meet the demands of modern litigation. Exceptions to the hearsay rules are being broadened and created where necessary * * * Absent some strong public policy or a clear act of pre-emption by the Legislature, rules of evidence should be fashioned to further, not frustrate, the truth-finding function of the courts in civil cases” (Fleury v  [1043]  Edwards, 14 NY2d 334, 341). A decade later, we again unanimously indorsed this declaration of policy (Matter of Brown v Ristich, 36 NY2d 183, 190). There is no reason to depart from it now.

Finally, I suggest that stare decisis is no obstacle to such self-correction. Apt is Holmes’ classical admonition against a rule which persists for no better reasons than that “it was laid down in the time of Henry IV”.[7]

“To continue the old restriction would be to immunize all principals from statements made by their working agents and employees who transact their business and who get into the accidents.’”[8]

New York’s strict “speaking authority” rule may cause reliable proof of an event to be excluded at trial.  Employers concerned about this change in the law are always permitted to introduce other proof to controvert the alleged statements of their agents/employees.    Accordingly, we endorse the enactment of this bill.

Reissued June 2021