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.