Calhoun v. Bailar

Decision Date27 August 1980
Docket NumberNo. 78-1705,78-1705
Citation626 F.2d 145
PartiesJames L. CALHOUN, Plaintiff-Appellant, v. Benjamin F. BAILAR, Postmaster General of the United States, Defendant- Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Howard Moore, Jr., Moore & Bell, Oakland, Cal., for plaintiff-appellant.

George Christopher Stoll, Asst. U. S. Atty., San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE and FARRIS, Circuit Judges, and KARLTON, * District Judge.

KARLTON, District Judge.

Plaintiff challenges his discharge for falsifying mail volume records on the ground that the administrative findings were not supported by substantial evidence. He appeals from the district court's entry of summary judgment. The issue he posits on appeal is whether or not hearsay statements, subsequently disavowed on direct examination, constitute "substantial" evidence sufficient to support the administrative determination.

This Court's review function in administrative discharge cases is limited "to a determination that the applicable procedures have been complied with and that the dismissal was supported by substantial evidence and was not arbitrary and capricious." Alsbury v. U. S. Postal Service (9th Cir. 1976) 530 F.2d 852, 854, cert. denied 429 U.S. 828, 97 S.Ct. 85, 50 L.Ed.2d 91. See also 5 U.S.C. 706. We do not try the case de novo, and are limited to the record before us. Because the affidavits questioned here were admitted into evidence without objection, were not the subject of a motion to strike, and had "rational probative force" (See Richardson v. Perales (1971) 402 U.S. 389, 407-408, 91 S.Ct. 1420, 1430-1431, 28 L.Ed.2d 842), we now affirm.

I FACTS

For our purposes, the facts may be briefly summarized. Plaintiff was Acting Tour II Superintendent at the Rincon Annex of the United States Post Office in San Francisco. His duties included the supervision of several postal clerks engaged in compiling and reporting information on the volume of mail handled by various distribution operations at Rincon Annex. He was charged with the falsification of mail volume records, or with directing his subordinates to falsify the records and, after an administrative hearing and appeal, discharged.

The Notice of Removal served upon Appellant (See 5 U.S.C. 7513(b)(1)) relied upon the affidavits of four of his subordinates. Three of the affiants aver that they had either falsified records at Appellant's direction or had observed him directing others to falsify the records. 1

At the administrative hearing the officer who took the affidavits laid a proper foundation for their admission, testifying that each affiant was warned both orally and in writing of his or her constitutional rights and was given an opportunity to review and revise the statement before swearing to it. The affidavits were received into evidence without objection. No later motion to strike the affidavits was made.

On direct examination each of the affiants attempted to disavow his or her affidavit. Affiant Scroggins completely disavowed the affidavit on direct examination but refused to answer any questions on cross examination, presumably on self-incrimination grounds. Evidence was later admitted that clearly contradicted his statement on direct examination that he had never reweighed mail. Additionally, another witness, Inspector Johns, testified that Scroggins had admitted to him that he had reweighed mail at Appellant's behest.

Affiant Gaffey denied on direct his averment that he had been promised additional overtime or a step increase in salary in return for falsifying the records, but otherwise apparently affirmed his averment that Appellant directed him to falsify records. 2

Affiant Whitley totally disavowed her affidavit and testified that she was coerced into signing it.

Inspector Johns was the only other major witness. He testified that he had observed widespread falsification during Appellant's tenure as supervisor, and introduced statistical evidence that tended to show falsification in Appellant's unit. Other evidence corroborated Johns' testimony that falsification was occurring, although this testimony, like Johns', did not directly tie the falsification to Appellant.

As noted, Appellant did not challenge the admissibility of the affidavits at any time during the administrative process. At most, he argued the weight that should be given to the affidavits. The hearing examiner found that the affidavits were more credible evidence than the statements made on direct examination, in part because of the witnesses' refusal to answer questions put in cross examination and because portions of the affidavit were corroborated by other evidence. This conclusion was sustained by the Appeals Review Board.

II DISCUSSION

There is no question that the statements in the affidavits would constitute substantial evidence if they were introduced as direct testimony. The affidavits individually and cumulatively support a finding that Appellant was involved in the falsification of records. Indeed, Appellant concedes that the affidavits themselves would be sufficient to support a finding if they were uncontradicted. Appellant argues, however, that hearsay statements disavowed by a declarant can never supply substantial evidence. We decline to adopt such a rigid rule, both because it is unnecessary to the resolution of this case and because the substantial evidence test is quintessentially a case-by-case analysis requiring review of the whole record. See K. Davis, Administrative Law of the Seventies (1976) § 14.11. Nevertheless, the case does raise important and difficult questions concerning the procedure for dealing with administrative hearsay evidence.

We begin with a recognition that strict rules of evidence do not apply in the administrative context. See Marlowe v. Immigration and Naturalization Service (9th Cir. 1972) 457 F.2d 1314, 1315 (per curiam); Navarrette-Navarrette v. Landon (9th Cir. 1955) 223 F.2d 234, 237, cert. denied 351 U.S. 911, 76 S.Ct. 700, 100 L.Ed. 1444. Indeed, the Administrative Procedure Act provides that "Any oral or documentary evidence may be received, but every agency shall as a matter of policy provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence. A sanction may not be imposed or rule or order issued except on consideration of the whole record or those parts thereof cited by a party and supported by and in accordance with the reliable, probative, and substantial evidence." 5 U.S.C. § 556(d). (Emphasis added.) See K. Davis, Administrative Law Treatise § 14.05. Applicable regulations provide that "Rules of evidence are not applied strictly. . . ." 5 CFR § 771.116(f)(3).

Perhaps the classic exception to strict rules of evidence in the administrative context concerns hearsay evidence. Not only is there no administrative rule of automatic exclusion for hearsay evidence, but the only limit to the admissibility of hearsay evidence is that it bear satisfactorily indicia of reliability. We have stated the test of admissibility as requiring that the hearsay be probative and its use fundamentally fair. See Hoonsilapa v. Immigration and Naturalization Service (9th Cir. 1978) 575 F.2d 735, 738, modified 586 F.2d 755; Marlowe v. Immigration and Naturalization Service, supra; Martin-Mendoza v. Immigration and Naturalization Service (9th Cir. 1974) 499 F.2d 918, 921, cert. denied 419 U.S. 1113, 95 S.Ct. 789, 42 L.Ed.2d 810, rehearing den. 420 U.S. 984, 95 S.Ct. 1417, 43 L.Ed.2d 667. See also Richardson v. Perales, supra, 402 U.S. at 407-408, 91 S.Ct. at 1430-1431. 3

Thus, it is not the hearsay nature per se of the proffered evidence that is significant, it is its probative value, reliability and the fairness of its use that are determinative. Richardson v. Perales, supra, illustrates the appropriate analysis. In that case the issue was whether physicians' written reports of the medical examinations they had made of a disability claimant could constitute substantial evidence to support a finding of nondisability "when the claimant objects to the admissibility of those reports and when the only live testimony is presented by his side and is contrary to the reports." Id., 402 U.S. at 390, 91 S.Ct. at 1422. (Emphasis added.) The Court rejected a rigid rule and held that the proffered hearsay evidence could constitute substantial evidence. In doing so, the Court explained that there could be no blanket rejection of administrative reliance on hearsay evidence irrespective of reliability and probative value. Id. at 407-408, 91 S.Ct. at 1430-1431. 4

Although Richardson arose in the context of a Social Security hearing, various courts have followed its reasoning to hold that hearsay, if reliable and credible, could constitute substantial evidence in a variety of administrative settings. See, e. g. McKee v. United States (1974) 500 F.2d 525, 528, 205 Ct.Cl. 303 (Board of Contract Appeals); Reil v. United States (1972) 456 F.2d 777, 780, 197 Ct.Cl. 542 (Civil Service Commission employee discharge); School Board of Broward City v. HEW (5th Cir. 1976) 525 F.2d 900, 905-907 (challenge to order of Department of HEW); but Cf. Bethlehem Steel Corp. v. Clayton (5th Cir. 1978) 578 F.2d 113.

We too reject any per se rule that holds that hearsay can never be substantial evidence. To constitute substantial evidence, hearsay declarations, like any other evidence, must meet minimum criteria for admissibility it must have probative value and bear indicia of reliability. Although no bright line test can be established, cases isolate a number of factors that may be helpful in such an analysis. First, as Richardson teaches, the independence or possible bias of the declarant must be considered as well as the type of hearsay material submitted. In Richardson, the Court laid great stress on the fact that the...

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