Legislature’s Expansion of New York’s “Party Admission” Exception to the Rule Against Hearsay will have Adverse Consequences for Employers

By Nicholas J. Heintzman, Esq.

The New York State Legislature recently amended the rules of evidence to significantly expand the “party admission” exception to the rule against hearsay with the addition of CPLR 4549.  New York's hearsay exception will now follow the approach of Federal Rule of Evidence 801(d)(2)(D). This new rule will undoubtedly have adverse consequences for employers and their insurers as unchecked statements of fault by low-level employees are now more likely to be admissible against their employers.

By way of background, hearsay is a statement made outside of court or a deposition, which is offered into evidence before a court to prove that the content of the statement is true. Hearsay is typically inadmissible because it is considered unreliable, as the parties have not had the opportunity to cross-examine or assess the speaker’s credibility. One exception to the prohibition against hearsay is the “party admission” exception, which renders statements made by an adverse party admissible as against that party. The logic is that a party would not make a statement potentially adverse to its interests unless the statement was true.

The party admission rule had been difficult to apply to companies in New York because not all statements made by employees were admissible against the employer as an exception to the hearsay rule. Prior to this recent amendment, the rule in New York was that an employee statement was only admissible against the employer if that employee had the authority to speak on behalf of the company. Typically, New York courts only found the employee had authority if the employee was at a high level in the organization such that the employee was deemed to speak on the employer’s behalf. See Tyrrell v. Wal-Mart Stores, Inc., 97 N.Y.2d 650 (2001) (employee statement that he directed someone to clean up spill was not admissible as party admission because plaintiff failed to establish that the unidentified employee was authorized to make the alleged statement); Scherer v. Golub Corp., 101 A.D.3d 1286 (3d Dept. 2012) (plaintiff’s testimony that she overheard store manager reprimand the janitor about why he had not yet cleaned up the spill deemed inadmissible); Schner v. Simpson, 286 A.D. 716 (1st Dept. 1955) (employee’s statement to a plaintiff that “I am sorry I knocked you down” was inadmissible against the employer because the employee was not authorized to speak on the employer’s behalf).

This new CPLR provision significantly expands the party admission exception such that a statement of any employee can be admissible against the employer if the statement is: 1) made about a matter within the scope of the employee’s employment; and 2) made during the existence of the employment relationship. Now seemingly any employee acting within the scope of their employment (check-out clerk, janitor, nurse’s aide, etc.) can bind the company to potentially adverse statements, admissible without cross-examination, regardless of whether the employer authorized that person to speak on behalf of the company.

By significantly expanding the scope of employee statements that can be offered against the employer, the legislature has effectively lowered the burden of proof for plaintiffs in presenting their claims.  Employers can minimize the harmful impact of the new rule by providing employees with additional training on accident response and documentation.  To reduce the risk of an employee making a potentially harmful statement, employers should provide employees clear directions on what measures and procedures to take after an accident.  Employers should focus on taking thorough statements of plaintiffs involved in the accident to identify any potential witnesses who may have made adverse statements.  The best time to identify the anonymous store clerk who allegedly admitted fault is at the time of the incident, not three years later.  As lower-level employees may often be temporary or transient, risk managers should be diligent in keeping up-to-date contact information on these former employees so that their alleged statements can be questioned through live testimony and proper examination, not simply admitted without contest.

This is a significant evidentiary change that serves to shift the burden to defendants to explain or contest alleged employee admissions that previously would never have seen the light of day in a New York courtroom.

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