People v. Flores-Lozano, Court of Appeals No. 13CA1733

• Decision Date: 20 October 2016
• Docket Number: Court of Appeals No. 13CA1733
• Parties: The PEOPLE of the State of Colorado, Plaintiff–Appellee, v. Maria Guadalupe FLORES–LOZANO, Defendant–Appellant.
• Court: Colorado Court of Appeals

410 P.3d 684

The PEOPLE of the State of Colorado, Plaintiff–Appellee,

v.Maria Guadalupe FLORES–LOZANO, Defendant–Appellant.

Court of Appeals No. 13CA1733

Colorado Court of Appeals, Div. V.

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

Opinion by JUDGE BERGER

¶ 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 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, 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).

¶ 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 (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 transactions occurred. United States v. Keck , 643 F.3d 789, 797 (10th Cir. 2011) ; see also People v. Ortega , 2016 COA 148, ¶ 15, 405 P.3d 346, 2016 WL 6122810.

¶ 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).

¶ 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 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 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.

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

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