People v. Flores-Lozano , 410 P.3d 684 ( 2016 )


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  • COLORADO COURT OF APPEALS                                      2016COA149
    Court of Appeals No. 13CA1733
    Arapahoe County District Court No. 12CR1241
    Honorable Elizabeth Beebe Volz, Judge
    The People of the State of Colorado,
    Plaintiff-Appellee,
    v.
    Maria Guadalupe Flores-Lozano,
    Defendant-Appellant.
    JUDGMENT AFFIRMED
    Division V
    Opinion by JUDGE BERGER
    Román, J., concurs
    Bernard, J., specially concurs
    Announced October 20, 2016
    Cynthia H. Coffman, Attorney General, Ellen M. Neel, Assistant Attorney
    General, Denver, Colorado, for Plaintiff-Appellee
    Douglas K. Wilson, Colorado State Public Defender, Lynn Noesner, Deputy
    State Public Defender, Denver, Colorado, for Defendant-Appellant
    ¶1    The principal question presented in this case is whether a
    computer spreadsheet, prepared by an in-house loss prevention
    director of the defendant’s employer, and designed to determine if
    the defendant, Maria Guadalupe Flores-Lozano, committed theft
    and in what amount, qualified for admission into evidence under
    the business records exception to the hearsay rule. We hold that
    the trial court did not abuse its discretion in admitting the
    spreadsheet and affirm Flores-Lozano’s conviction of theft of more
    than $1000 but less than $20,000.
    I.   Background
    ¶2    Flores-Lozano was a shift manager at a fast food restaurant.
    The restaurant had a point-of-sale (POS) system that stored
    information associated with every sale, a business analytics system
    that analyzed trends within the POS system, and a video recording
    system.
    ¶3    One of the restaurant chain’s loss prevention directors, using
    the business analytics and video systems, noticed that Flores-
    Lozano had been giving an atypical number of discounts to
    customers. He thought that some of the discounts were legitimate.
    But he also noticed a suspicious pattern: Flores-Lozano had
    1
    discounted the gross amounts of sales down to a few cents many
    times.
    ¶4    It appeared to the loss prevention director that, for those
    transactions where Flores-Lozano was discounting almost the entire
    amount of the sale, she was pocketing the difference between the
    amount of the cash taken from the customer and the after-discount
    amount of the sale reflected by the POS system.
    ¶5    Mining the data in the POS system, the loss prevention
    director looked at every discount Flores-Lozano had given over a
    seven-and-a-half-month period. He copied the transactions from
    the POS system in which he suspected Flores-Lozano had
    improperly discounted the sale and pasted them into a separate
    spreadsheet that he created. The spreadsheet reflected
    approximately 4400 transactions in which Flores-Lozano had
    discounted almost the entire amount of the sale. The director
    calculated the total aggregate amount of these discounts, and thus
    of the suspected thefts, to be $23,320.01.
    ¶6    The loss prevention director confronted Flores-Lozano, and
    showed her the spreadsheet. She admitted that she had been
    stealing from the company. He then showed her photographs,
    2
    which he had culled from the video system, and the related receipts
    from fifty-four particular instances in which Flores-Lozano had
    discounted sales to a few cents. She admitted that she had stolen
    from the restaurant in each of these incidents. After completion of
    his internal investigation, he reported the results to his superiors,
    and they directed him to refer the matter to the police.
    ¶7     The People charged Flores-Lozano with theft of more than
    $20,000. The sole contested issue at trial was the amount of the
    theft. Flores-Lozano argued to the jury that it should only convict
    her of theft for the specific instances in which she had admitted her
    guilt. These instances of theft amounted to less than $500.
    ¶8     The jury rejected both the People’s and Flores-Lozano’s
    positions regarding the amount of the thefts and instead found
    Flores-Lozano guilty of the lesser included offense of theft of $1000
    or more but less than $20,000.
    II.   The Spreadsheet Was Admissible Under The Business Records
    Exception To The Hearsay Rule
    ¶9     The first question is whether the spreadsheet contained
    hearsay. We conclude that it did, but that it was admissible under
    the business records exception to the hearsay rule. CRE 803(6).
    3
    ¶ 10   “‘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.” CRE 801(c). “Hearsay is
    not admissible except as provided by [the rules of evidence] or by
    the civil and criminal procedural rules applicable to the courts of
    Colorado or by any statutes of the State of Colorado.” CRE 802.
    ¶ 11   The spreadsheet was not a simple regurgitation of
    electronically stored information created by the victim’s computer
    systems which, under at least some circumstances, might not
    constitute hearsay. In People v. Buckner, 
    228 P.3d 245
    , 250 (Colo.
    App. 2009), a division of this court observed that information
    automatically generated by a machine is not hearsay because it is
    not a “statement” made by a “declarant” within the meaning of CRE
    801. But here the information was not automatically generated.
    ¶ 12   The record shows that the loss prevention director applied his
    professional judgment to sort, include, and exclude electronically
    stored information for the precise purpose of creating a customized
    spreadsheet to determine if the defendant had stolen from the
    victim and, if so, in what amount. The resulting work product, an
    out-of-court statement offered for the truth of the matter asserted
    4
    (that the defendant stole and in what amount), is hearsay and it
    was inadmissible unless an exception to the hearsay rule applied.
    ¶ 13   The relevant hearsay exception was the business records
    exception codified in CRE 803(6). This rule authorizes a court to
    admit into evidence “records of regularly conducted activity” when
    supported by an adequate foundation showing: (1) the document
    was made at or near the time of the matters recorded in it; (2) the
    document was prepared by, or from information transmitted by, a
    person with knowledge of the matters recorded; (3) the person who
    recorded the document did so as part of a regularly conducted
    business activity; (4) it was the regular practice of that business
    activity to make such documents; and (5) the document was
    retained and kept in the course of a regularly conducted business
    activity. See Schmutz v. Bolles, 
    800 P.2d 1307
    , 1312 (Colo. 1990).
    ¶ 14   Each of these requirements was satisfied.
    ¶ 15   First, the loss prevention director testified that the POS
    records were automatically generated when each sale (and each
    discount) was made. While the spreadsheet was made later, the
    data from which it was compiled was generated when the
    5
    transactions occurred. United States v. Keck, 
    643 F.3d 789
    , 797
    (10th Cir. 2011); see also People v. Ortega, 
    2016 COA 148
    , ¶ 15.
    ¶ 16   Second, the loss prevention director, a person with
    indisputable knowledge of the matters recorded, prepared the
    spreadsheet.
    ¶ 17   The third, fourth, and fifth requirements of the business
    records exception were also met by the loss prevention director’s
    testimony that he regularly conducted investigations of theft within
    the restaurant chain and that he regularly prepared and kept
    spreadsheets in the course of these investigations.
    ¶ 18   Although the loss prevention director also testified during voir
    dire examination by defense counsel that he prepared the
    spreadsheet for purposes of litigation, his other testimony and the
    circumstances demonstrate that was not the case and the trial
    court was not bound to accept any specific part of his testimony.
    As the finder of fact on preliminary issues regarding the
    admissibility of evidence, see CRE 104, the district court was
    entitled to credit or discredit any part of the director’s testimony. In
    re Marriage of Bregar, 
    952 P.2d 783
    , 786 (Colo. App. 1997).
    6
    ¶ 19   The responsibilities of the loss prevention director included the
    ferreting out of theft by employees. Unless and until he detected
    theft, there was nothing to litigate. Moreover, he was not a law
    enforcement officer and had no authority to prosecute any crimes,
    including the crime of theft.
    ¶ 20   Thus, contrary to the loss prevention director’s testimony
    during voir dire, the trial court was entitled to conclude that the
    spreadsheet was not a document prepared for litigation. If the
    spreadsheet had been prepared exclusively for litigation, it likely
    would have been inadmissible. Longstanding authority holds that a
    record prepared for the purposes of litigation does not carry with it
    the guarantees of reliability that form the underlying basis for the
    business records exception. See People v. Stribel, 
    199 Colo. 377
    ,
    380, 
    609 P.2d 113
    , 115 (1980).
    ¶ 21   Our conclusion that the spreadsheet satisfied each of the
    requirements of the business records exception necessarily leads us
    7
    to conclude that the trial court did not abuse its discretion in
    admitting it into evidence.1
    ¶ 22   As the special concurrence elegantly explains, the ubiquitous
    storage and computerized manipulation of electronically stored
    information raises a number of interesting and vexing issues
    regarding the very meaning of hearsay and the applicability of the
    business records exception to such information or documents. This
    case, however, does not require us to address or decide any of those
    issues because, applying the traditional (and rule-mandated)
    definition of hearsay and the established reach of the business
    records exception, the spreadsheet was properly admitted into
    evidence.
    ¶ 23   We leave it to another day, another case, and perhaps a more
    suitable forum, such as the Colorado Supreme Court Committee on
    the Rules of Evidence and the Colorado Supreme Court in its
    1 Flores-Lozano also contended that the loss prevention director
    used a “faulty data extrapolation process” to prepare the
    spreadsheet. But she never suggested that the spreadsheet did not
    accurately reflect the data from the sales monitoring system. Thus,
    her contention relates to the weight that the jury should have given
    the spreadsheet and its contents and not the spreadsheet’s
    admissibility. See, e.g., Wallace v. Target Stores, Inc., 
    701 P.2d 1272
    , 1273 (Colo. App. 1985).
    8
    rulemaking capacity, to address the questions raised in the special
    concurrence.
    III.   Conclusion
    ¶ 24   The judgment of conviction is affirmed.
    JUDGE ROMÁN concurs.
    JUDGE BERNARD specially concurs.
    9
    JUDGE BERNARD, specially concurring.
    The fact that a computer system may not
    contain an actual document in the precise
    hard copy form by which that data are
    presented in court does not render the hard
    copy evidence inadmissible hearsay. In an
    increasingly technological world, courts would
    well nigh eviscerate the [business records]
    exception if they adopted a contrary policy.
    Dutch v. United States, 
    997 A.2d 685
    , 690 (D.C. 2010).
    ¶ 25   If a company maintains a database of business data in the
    ordinary course of business, and the company’s representative
    creates a document for litigation that consists entirely of data from
    the database, then is the document a business record that is
    admissible under CRE 803(6)? I would answer that question “yes.”
    ¶ 26   I concur with the majority’s conclusion that the spreadsheet
    was a business record that was admissible at defendant’s trial
    under CRE 803(6). But I respectfully write separately because I
    would rely on a different rationale.
    ¶ 27   It is my view that the spreadsheet that the loss prevention
    director prepared in this case was admissible because all of the
    data in it had been generated in the regular course of business.
    The data was generated and collected by a point-of-sale computer
    10
    system that stored information associated with every sale of food
    that occurred in the company’s 192 restaurants. This sales
    monitoring system collected data from each register when each sale
    was made.
    ¶ 28   The sales monitoring system tracked the entries made by
    individual employees because the employees would log into the
    cash register using their employee identification number. Indeed,
    the system kept the register data for every employee in the
    company. Among other things, the system could be used to
    investigate employee theft. According to the loss prevention
    director, the system “force-rank[ed] each employee by the highest
    number of no sales, voids, coupons, open-dollar discounts and kind
    of gives you a preliminary idea of who you might want to look into.”
    ¶ 29   The company only allowed managers, such as defendant, to
    give customers discounts. And they did so by entering their
    employee identification number and then doing one of two things:
    by swiping a computer card through a slot on the register that
    identified the user as a manager or by manually entering a specified
    code on the register’s keypad.
    11
    ¶ 30   The system collected the data at the time that the sale
    occurred. The system allowed the loss prevention director to “go in
    and search, query.” He could “query . . . to find out all the cash
    transactions we had . . . and discounts.” He could look “at each
    transaction.” In this case, the director obtained a copy of every
    transaction that occurred in the restaurant where defendant
    worked for the pertinent period. He then looked for transactions in
    which cash purchases had been discounted to a few cents. He
    found 4400 of them.
    ¶ 31   The director then developed the spreadsheet that the trial
    court admitted in this case by cutting and pasting data from the
    sales monitoring system concerning those 4400 discounted sales.
    The director’s trial testimony made clear that the spreadsheet only
    contained data that had been generated by the sales monitoring
    system. He did not add anything to it. Under these circumstances,
    I would conclude, for the following reasons, that the trial court did
    not abuse its discretion when it admitted the spreadsheet because
    the spreadsheet was a business record under CRE 803(6).
    ¶ 32   First, tracking the language of CRE 803(6), the director’s
    testimony established that
    12
     the information from the sales monitoring system in the
    spreadsheet was a “data compilation . . . of acts [or] events,”
    CRE 803(6), because it contained information that the system
    had collected about sales transactions, see Fed. R. Evid.
    803(6) advisory committee note (the term “data compilation”
    “includes, but is by no means limited to, electronic computer
    storage”);
     the sales monitoring system automatically collected the data
    about the acts or events — the sales transactions — “at or
    near the time” that they occurred, CRE 803(6);
     the company kept the data in the sales monitoring system “in
    the course of a regularly conducted business activity,” 
    id., which was
    figuring out its taxes;
     it was the company’s “regular practice of [a] business activity,”
    
    id., to compile
    the data from the sales monitoring system; and
     all this information was provided by the director, who was a
    “custodian or other qualified witness,” 
    id. ¶ 33
        Second, the record shows that the spreadsheet was admissible
    as a business record under Colorado case law, see Palmer v. A.H.
    Robins Co., Inc., 
    684 P.2d 187
    , 201 (Colo. 1984), because (1) the
    13
    data in the spreadsheet was made by the company’s employees in
    the regular course of business; (2) the employees who used the cash
    registers, thereby entering information into the sales monitoring
    system, were acting in their regular business routine; (3) the sales
    monitoring system accurately recorded the data from the sales; (4)
    the data entries were made contemporaneously with the employees’
    use of the cash registers; and (5) the information was entered by
    employees who had knowledge of the sales. See 
    id. ¶ 34
      Third, the holdings of decisions from other jurisdictions and
    the observations of commentators indicate that spreadsheets, such
    as the one in this case, are admissible as business records under
    CRE 803(6). (I note that most of these cases involve Fed. R. Evid.
    803(6), which is similar to CRE 803(6). Although the federal rule
    was rewritten in 2011 to remove any reference to “data compilation”
    and to substitute the term “record,” “there can be no doubt that the
    new simpler language reaches at least as far as the original
    language.” 4 Christopher B. Mueller & Laird C. Kirkpatrick, Federal
    Evidence § 8:79, at 734 (4th ed. 2013). Federal cases interpreting
    similar federal rules therefore provide “helpful and highly
    14
    persuasive guidance” when interpreting CRE 803(6). Leaffer v.
    Zarlengo, 
    44 P.3d 1072
    , 1080 (Colo. 2002).)
     “In the context of electronically-stored data, the business
    record is the datum itself, not the format in which it is
    printed out for trial or other purposes.” United States v.
    Keck, 
    643 F.3d 789
    , 797 (10th Cir. 2011).
     “[E]vidence that has been compiled from a computer
    database is . . . admissible as a business record, provided
    it meets the criteria of Rule 803(6).” U-Haul Int’l, Inc. v.
    Lumbermens Mut. Cas. Co., 
    576 F.3d 1040
    , 1043 (9th
    Cir. 2009).
     “A business record may include data stored electronically
    on computers and later printed out for presentation in
    court, so long as the original computer data compilation
    was prepared pursuant to a business duty in accordance
    with regular business practice.” Potamkin Cadillac Corp.
    v. B.R.I. Coverage Corp., 
    38 F.3d 627
    , 632 (2d Cir. 1994).
     As long “as the original computer data compilation was
    prepared pursuant to a business duty in accordance with
    regular business practice, the fact that the hard copy
    15
    offered as evidence was printed for purposes of litigation
    does not affect its admissibility.” United States v.
    Hernandez, 
    913 F.2d 1506
    , 1512-13 (10th Cir. 1990).
     “[E]xhibits showing selected data pulled from records
    that a company keeps in the ordinary course of business
    fall under the business records exception, even if the
    physical exhibits themselves were made to comply with a
    request from law enforcement.” United States v. Burgos-
    Montes, 
    786 F.3d 92
    , 119 (1st Cir. 2015).
     A printout of account information was admissible as a
    business record under Fed. R. Evid. 803(6) when the data
    was stored in a database and a manager ran a query to
    create a spreadsheet for trial. United States v. Nixon, 
    694 F.3d 623
    , 633-35 (6th Cir. 2012). The spreadsheet was
    “just a presentation in structured and comprehensible
    form of a mass of individual items.” 
    Id. at 635
    (quoting
    United States v. Russo, 
    480 F.2d 1228
    , 1240 (6th Cir.
    1973)).
     “[C]omputer data compiled and presented in computer
    printouts prepared specifically for trial is admissible
    16
    under Rule 803(6), even though the printouts themselves
    are not kept in the ordinary course of business.” United
    States v. Fujii, 
    301 F.3d 535
    , 539 (7th Cir. 2002).
     A printed Excel spreadsheet containing a “compilation of
    call data produced by human query for use at trial falls
    under the business record exception where the
    underlying data is automatically recorded and stored by
    a reliable computer program in the regular course of
    business.” People v. Zavala, 
    156 Cal. Rptr. 3d 841
    , 846
    (Cal. Ct. App. 2013).
     “[P]rintouts prepared specifically for litigation from
    databases that were compiled in the ordinary course of
    business are admissible as business records to the same
    extent as if the printouts were, themselves, prepared in
    the ordinary course of business. The important issue is
    whether the database, not the printout from the
    database, was compiled in the ordinary course of
    business.” 5 Jack B. Weinstein & Margaret A. Berger,
    Weinstein’s Federal Evidence § 901.08[1A], at 901-84
    (Joseph M. McLaughlin ed., 2d ed. 2015).
    17
     “[W]hen information is recorded in the computer in the
    sequence in which it was received rather than organized
    by customers or transactions, reordering the data by
    computer should not present a barrier to its admission
    greater than a manual collation of related business
    records would.” George E. Dix et al., McCormick on
    Evidence § 294, at 459 (Kenneth S. Broun & Robert P.
    Mosteller eds., 7th ed. 2013).
    ¶ 35     Fourth, based on the previous three reasons, this case is not
    like Palmer v. Hoffman, 
    318 U.S. 109
    , 114 (1943). In that case, a
    railroad’s accident reports were inadmissible because they were
    “not for the systematic conduct of the enterprise as a railroad
    business,” but, instead, they were “calculated for use essentially in
    the court.” Id.; see also Melendez-Diaz v. Massachusetts, 
    557 U.S. 305
    , 321-22 (2009). But, in this case, the spreadsheet contained
    data that was generated and maintained in the regular course of
    business. See, e.g., 
    Burgos-Montes, 786 F.3d at 119
    ; 
    Nixon, 694 F.3d at 633-35
    ; 
    Fujii, 301 F.3d at 539
    ; Potamkin Cadillac 
    Corp., 38 F.3d at 632
    ; 
    Zavala, 156 Cal. Rptr. 3d at 846
    ; 
    Dutch, 997 A.2d at 690
    .
    18