Commercial Litigation and Arbitration

Evidence of Earlier Preliminary Injunction Ruling and Other Litigations Excluded from Jury Trial Under 403 — Prior Arbitration Award Excluded as Hearsay — Brief of Party in Other Litigation Excluded as Hearsay

From Park West Radiology v. CareCore Nat’l LLC, 2009 U.S. Dist. LEXIS 110282 (S.D.N.Y. Nov. 19, 2009):

[Preliminary Injunction Ruling.]

Plaintiffs move to exclude any references to the Court's Preliminary Injunction Ruling as irrelevant and prejudicial pursuant to FRE 402 and 403. Defendants seek to introduce evidence related to the Preliminary Injunction Ruling, but not the ruling itself, to support a standing defense. Defendants argue that because Plaintiffs requested injunctive relief that would preclude CareCore from denying Plaintiffs access to reimbursement from commercial payors that contract with CareCore, they essentially "were seeking to join CareCore, the very organization that [Plaintiffs] allege is an illegal cartel." *** The Court agrees with Plaintiffs and finds that even if Defendants show that the Preliminary Injunction Ruling is relevant, any references to the Court's Preliminary Injunction Ruling are likely to unduly influence the jury. Considering the risk of undue influence on the jury pursuant to FRE 403, references to the making of the motion, as opposed to the Preliminary Injunction Ruling itself, will also not be permitted without prior ruling by the Court sought at sidebar or in the jury's absence. Accordingly, Plaintiffs' motion is GRANTED. ***

[Arbitration Decision]

The Court agrees with Defendants that the Arbitration Decision should be excluded as hearsay. Hearsay is a "statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Fed. R. Evid. 801(c). The arbitrator will not be testifying at trial and Plaintiffs do not seek to use the Arbitration Decision for any purpose other than to prove the substance and outcome of the arbitration, in other words, for the truth of the matter asserted. Nor is the Arbitration Decision subject to admission as nonhearsay through an exception. Further, as this Court held in Cary Oil Co., Inc. v. MG Refining & Marketing, Inc., the Arbitration Decision should be excluded because of its prejudicial effect, pursuant to FRE 403. See 257 F. Supp. 2d 768, 773-74 (S.D.N.Y. 2003). The Arbitration Decision, if introduced, "could encourage the jury to make a decision on how much blame to assign to Defendants based on the arbitration panel's findings, not on the jury's own deliberations." Id. ***


Defendants move to exclude any evidence concerning the following litigations brought against CareCore: *** (collectively, the "Other Litigations"). Defendants argue that the pleadings from the Other Litigations constitute inadmissible hearsay under FRE 802 and that any probative value of the evidence of the Other Litigations is substantially outweighed by the risk of unfair prejudice to CareCore under FRE 403. Plaintiffs, having themselves moved in limine to exclude certain evidence relating to other litigations, do not object to the exclusion of the evidence of the Other Litigations. The Court is persuaded that the pleadings in the Other Litigations constitute inadmissible hearsay under FRE 803 and that any probative value of references to the Other Litigations is substantially outweighed by the risk of unfair prejudice, confusion of the issues, misleading the jury, and waste of time under FRE 403. Accordingly, Defendants' motion to exclude evidence of the Other Litigations is GRANTED. ***


Defendants move to exclude the Bankruptcy Filing, which includes statements that Manhattan Imaging's "core value is derived in large measure from its interest and participation in CareCore"; "the lion's share of [Manhattan Imaging's] patient referral base is directly tied to its participation in CareCore"; and "[t]he termination of the CareCore relationship would altogether undermine [Manhattan Imaging's] referral base, business model and value." ... Defendants argue that the statements contained in the Bankruptcy Filing are irrelevant and unfairly prejudicial pursuant to FRE 402 and 403. Defendants also assert that the Bankruptcy Filing, prepared by attorney Robert R. Leinwand ("Leinwand") and based on out of court statements made by his clients, constitutes inadmissible double hearsay pursuant to FRE 801 and 802.

Plaintiffs argue that the Bankruptcy Filing contains highly probative evidence that is not unfairly prejudicial to Defendants. Plaintiffs also claim that the Bankruptcy Filing is admissible hearsay pursuant to the business record exception and the residual exception, FRE 807.

The business records exception does not apply here. To be admitted under the business record exception, the record must be made "in the course of regularly conducted business activity." Fed. R. Evid. 803(6). The Court finds that the Bankruptcy Filing was not made or kept in the course of Manhattan Imaging's regularly conducted business activity, but rather was made by bankruptcy attorneys recollecting prior events.

Plaintiffs have also failed to establish that the Bankruptcy Filing meets the requirements of admissibility under FRE 807. The residual exception permits a court to admit hearsay where it has circumstantial guarantees of trustworthiness and:

the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (c) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence.

Fed R. Evid. 807. "Congress intended that the residual hearsay exceptions will be used very rarely, and only in exceptional circumstances." Parsons v. Honeywell, Inc., 929 F.2d 901, 907-08 (2d Cir. 1991) (citations and internal quotation marks omitted). Even though the Bankruptcy Filing was prepared and certified by an officer of the Court, the attorney responsible was acting as an advocate for his client. As such, the Court finds that the Bankruptcy Filing does not possess any guarantees of trustworthiness and cannot be admitted under the residual exception.

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