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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