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Associated Terminals of St. Bernard, LLC v. Potential Shipping HK Co. Ltd.

United States District Court, E.D. Louisiana

February 16, 2018

ASSOCIATED TERMINALS OF ST. BERNARD, LLC
v.
POTENTIAL SHIPPING HK CO., LTD., ET AL.

         SECTION I

          ORDER AND REASONS

          LANCE M. AFRICK, UNITED STATES DISTRICT JUDGE

         Potential Shipping HK Co., Ltd., in personam and as owner of the M/V UNISON POWER, in rem (“Potential Shipping”), objects[1] to numerous proposed exhibits of Jamaal Ford (“Ford”). Ford filed a response[2] addressing most of the objections.

         In his response, Ford indicates that he is withdrawing two of his proposed exhibits, namely, Exhibit 4 and Exhibit 28.[3] As such, Potential Shipping's objections to these proposed exhibits are dismissed as moot.

         With respect to Potential Shipping's remaining objections, the Court sustains its objections.

         I.

         Most of Potential Shipping's evidentiary objections focus on the issue of hearsay. Under the Federal Rules of Evidence, “hearsay” is “a statement that: (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement.” Fed.R.Evid. 801(c). (Some statements that meet these criteria are carved out of the definition of hearsay. See Fed. R. Evid. 801(d).)

         Hearsay is generally inadmissible as competent evidence at trial. Fed.R.Evid. 802. However, the Federal Rule of Evidence recognizes exceptions to this general rule. See Fed. R. Evid. 803 (exceptions that are available regardless of a declarant's availability to testify at trial); Fed.R.Evid. 804 (exceptions that are available only when a declarant is unavailable to testify at trial); Fed.R.Evid. 807 (residual exception).

         Further, a party may offer out-of-court statements at trial for reasons other than to prove the truth of the matter asserted-e.g., “to show the effect on the listener.” White v. Fox, 470 Fed. App'x 214, 222 (5th Cir. 2012). Simply put, such statements are not hearsay at all. See Fed. R. Evid. 801(c) (defining “hearsay” in part based on the purpose for which a party offers an out-of-court statement).

         Lastly, the Federal Rule of Evidence clarify that hearsay imbedded within hearsay “is not excluded by the rule against hearsay if each part of the combined statements conforms with an exception to the rule.” Fed.R.Evid. 805. Thus, where a party offers hearsay that itself contains hearsay, the Court will not admit the evidence in evidence unless and until the party demonstrates that each layer of hearsay is independently admissible.

         II.

         A.

         Ford's proposed Exhibit 21 includes an email from Don Zemo of Associated Terminals of St. Bernard, LLC (“Associated Terminals”) to Steve Martin of Wilhelmsen Ships Service, Inc. (The date and time on the email are written in Chinese.) Potential Shipping objects to one sentence in the email, beginning with “Our Vessel surveyor” and ending with “are bad, too.”[4] It argues that this sentence constitutes “hearsay within hearsay” and “does not meet any hearsay exceptions to cure both levels of hearsay.”[5]

         In his response, Ford states that he “anticipates that Mr. Zemo will testify live at trial, ” in which case he suggests that he will not offer the email.[6] However, Ford goes on to argue that, “[t]o the extent [Zemo] cannot [testify at trial], the email is admissible to explain the bases for [his] liability expert Greg Perkin's opinions.”[7]

         “[I]t is axiomatic that expert opinions may be based on facts or data of a type reasonably relied upon by experts in a particular field, even if the sources are not admissible evidence.” United States v. Gresham, 118 F.3d 258, 266 (5th Cir. 1997) (citing Fed.R.Evid. 703)). Thus, experts may rely on inadmissible hearsay evidence in developing their expert opinions. First Nat. Bank of Louisville v. Lustig, 96 F.3d 1554, 1576 (5th Cir. 1996) (citing Moss v. Ole South Real Estate, Inc., 933 F.2d 1300, 1309 (5th Cir. 1991)).

         However, an expert's reliance on hearsay to form his expert opinion does not render the hearsay itself admissible as competent evidence. Indeed, Federal Rule of Evidence 703 “was amended in 2000 ‘to emphasize that when an expert reasonably relies on inadmissible information to form an opinion or inference, the underlying information is not admissible simply because the opinion or inference is admitted.'” Szymanski v. Murphy, 437 Fed. App'x 649, 654-55 (10th Cir. 2011) (quoting Fed.R.Evid. 703 advisory committee notes); cf. Jones v. Am. Council on Exercise, No. 15-3270, 2016 WL 6084636, at *10 (S.D. Tex. Oct. 18, 2016) (Miller, J.) (“This is perhaps the type of evidence an expert may rely upon, but it is hearsay and not admissible on its own.”).

         Rather, “if the facts or data” on which an expert relies “would otherwise be inadmissible”-because, for example, the facts or data would constitute hearsay- then the expert “may disclose them to the [factfinder] only if their probative value in helping the [factfinder] evaluate the opinion substantially outweighs their prejudicial effect.” Fed.R.Evid. 703 (emphasis added). In this case, Ford has not demonstrated, or even argued, that the probative value of the objected-to statement in the email in assisting the Court[8] evaluate his liability expert's opinion substantially outweighs its prejudicial effect.

         Alternatively, Ford argues that the Court should admit the email in full under Rule 807, the residual exception to the hearsay bar. Rule 807 provides a residual exception to the Federal Rule of Evidence's hearsay rules. Under this rule, “a hearsay statement is not excluded by the rule against hearsay even if the statement is not specifically covered by a hearsay exception” if four circumstances are met:

(1) the statement has equivalent circumstantial guarantees of trustworthiness; (2) it is offered as evidence of a material fact; (3) it is more probative on the point for which it is offered than any other evidence that the proponent can obtain through reasonable efforts; and (4) admitting it will best serve the purposes of these rules and the interests of justice.

Fed. R. Evid. 807(a). The Fifth Circuit has counseled that “[t]he [807] exception is to be ‘used only rarely, in truly exceptional cases.'” United States v. Phillips, 219 F.3d 404, 419 n. 23 (5th Cir. 2000) (quoting United States v. Thevis, 665 F.2d 616, 629 (5th Cir. 1982)).

         “[T]he proponent of the statement bears a heavy burden to come forward with indicia of both trustworthiness and probative force.” Id. (alteration in original). “[I]n order to find a statement trustworthy, a court must find that the declarant of the . . . statement was particularly likely to be telling the truth when the statement was made.” Id. (internal quotation marks omitted) (alteration in original). “The determination of trustworthiness is drawn from the totality of the circumstances surrounding the making of the statement, but [it] cannot stem from other corroborating evidence.” United States v. El-Mezain, 664 F.3d 467, 498 (5th Cir. 2011) (internal quotation marks omitted) (alteration in original). The evidence “must be at least as reliable as evidence admitted under a firmly rooted hearsay exception . . . [and] must similarly be so trustworthy that adversarial testing would add little to its reliability.” Id. (internal quotation marks omitted) (alteration in original).

         In support of the application of Rule 807 to the email, Ford argues that “the statement is contained in an email produced by Defendants, which provides ‘circumstantial guarantees of trustworthiness.'”[9] Ford further argues that the statement “demonstrates that multiple wire ropes on the Defendants' Vessel were in poor condition; is more probative of this point than other non-hearsay evidence; and will serve the interests of justice.”[10]

         What Ford does not explain, however, is why the email's production by Potential Shipping during discovery indicates that the objected-to statement in the email is uniquely trustworthy, why this particular statement is more probative than any other non-hearsay evidence-such as Mr. Zemo's live testimony-or why its admission will serve the interests of justice. Moreover, Ford points to no case law to bolster his Rule 807 arguments.

         The Court sustains Potential Shipping's objection to Exhibit 21.

         B.

         Ford's proposed Exhibit 22 is a series of emails involving numerous individuals. Two of these individuals are Ed Stettinius and Linda Mitchell, both of Freight Management Logistics.

         Potential Shipping objects to the May 22, 2017 email from Ed Stettinius, [11] and the two May 19, 2017 emails from Linda Mitchell.[12] It argues that their emails “are inadmissible as hearsay.”[13] Potential Shipping also argues that the declarants lacked personal knowledge of the matter discussed in the emails and that Ford will be unable to authenticate the emails at trial.[14]

         For his part, Ford argues that the emails are “admissible to explain the bases for Intervenor's liability expert Gregg Perkin's opinions.”[15] Ford also argues that the emails fall outside the Federal Rules of Evidence's definition of hearsay, because the statements in the emails “were adopted by Defendants.”[16] Ford does not cite any case law to support his latter argument.[17]

         Moreover, Ford does not rebut Potential Shipping's objections based on lack of personal knowledge or inability to authenticate. As the Court explained to the parties, “[a]ny party that does not respond to an objection or motion will be deemed to have waived the ability to contest that objection.”[18] The Court thus treats these objections by Potential Shipping as uncontested.

         Further, as the Court previously explained, an expert may consider inadmissible hearsay in forming his opinions, but the expert may disclose the hearsay only where the probative value of the hearsay in assisting the factfinder assess the expert's opinion substantially outweighs its prejudicial effect. See Fed. R. Evid. 703. Ford has not shown, or argued, that the probative value of the emails in assisting the Court evaluate his liability expert's opinion substantially outweighs their prejudicial effect.[19]

         The Court sustains Potential Shipping's objections to Exhibit 22.

         C.

         Ford's proposed Exhibit 2 is a series of emails involving numerous individuals. Of these emails, Potential Shipping objects to only one sentence in a May 19, 2017 email from Don Zemo and addressed to Steve Martin.[20]

         The Court notes that this is the same sentence- beginning with “Our Vessel surveyor” and ending with “are bad, too”-to which the Court has already sustained an objection. As it did previously Potential Shipping argues that the sentence is “inadmissible as hearsay.”[21]

         Ford offers the same argument that the Court previously determined to be a failing one: that the emails are “admissible to explain the bases for Intervenor's liability expert Gregg Perkin's opinions.”[22] However, even if an expert may look to inadmissible hearsay in developing his opinions, the expert may disclose the hearsay only where the probative value of the hearsay in assisting the factfinder gauge the expert's opinion substantially outweighs its prejudicial effect. See Fed. R. Evid. 703. Ford still has not demonstrated, or argued, that the probative value of the objected-to statement in the email in assisting the Court gauge his liability expert's opinion substantially outweighs its prejudicial effect.

         The Court sustains Potential Shipping's objection to Exhibit 2.

         D.

         Ford's proposed Exhibit 5 is a report prepared by Associated Terminal's expert surveyor, Captain Ronald Campana.[23] Potential Shipping argues that the report is hearsay and that the expert surveyor “is within the subpoena ...


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