People v. Flores-Lozano

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


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 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,


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 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).



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¶ 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


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  (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




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  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).




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¶ 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




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  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).

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  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.




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       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



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  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.




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¶ 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


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        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

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  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




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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

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  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

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  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).

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            “[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.


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