Federal Evidence Review

Third Circuit explains in a contract dispute that testimony could not be offered about contracts used by the parties in the industry (concerning a “buy out” clause) to prove the contents of the disputed contract; the Best Evidence Rule required introduction of the written contracts to establish the contents, in Acumed LLC v. Advanced Surgical Services, Inc., 561 F.3d 199 (3d Cir. March 20, 2009) (Nos. 07-2562, 07-1869)

The Best Evidence Rule set forth in FRE 1002 seems clear enough: a party who wants to prove the “content” of a writing must introduce the writing itself. Under the rule, when is a writing’s content at issue? In a recent case, the Third Circuit took a routine approach to explain why a writing, even if it is not the writing the party seeks to enforce, was still subject to the Best Evidence Rule. In the case, the trial court barred testimony about a particular type of “buy-out” clause used in other contracts by a party with other parties, even though those other contracts were not subject to enforcement in the case. The circuit explained that because the content of these other written contracts was being used to suggest the content of the written contract at issue, only those written contracts, and not testimony about their content, was admissible.

In the case, Accumed LLC (“Acumed”) manufactured surgical implants that were initially distributed by Advanced Surgical Sales (“Advanced”). In 1999, Accumed contracted with Advanced so that Advanced would become Acumed’s exclusive sales representative in southeastern Pennsylvania. Over two years later, dissatisfied with Advanced’s poor sales of its product, Acumed terminated the agreement and hired a new distributor as its exclusive sales agent to take over Advanced’s territory. Part of the subsequent contract dispute between Accumed and Advanced concerned whether the contract required that if Acumed terminated the contract, Acumed would have to pay a “buy-out” fee to Advanced. Advanced claimed that the contract included a buy-out fee, since it was a general term in such contracts so that the sales representative would be compensated for “its expenses in promoting a manufacturer’s product if the manufacturer terminated” Advanced as a sales representative. Acumed, 561 F.3d at 206. At trial, Advanced proffered testimony by its major officer (Morris) regarding the presence of a buy-out clause in its standard distribution contracts with other manufacturers. The trial court excluded the testimony under the Best Evidence Rule. The court found that while these other contracts had not been submitted into evidence, the clauses in those contracts were relevant only to support Advanced’s contention that it used a buy-out clause in all of its contracts, including the contract with Acumed. After the jury rendered a verdict for Acumed, on appeal Advanced contended the trial court erred in excluding the testimony regarding the buy-out clause.

The Third Circuit affirmed and agreed with the trial court that the testimony would have violated the Best Evidence Rule in FRE 1002. According to the circuit, the rule “requires that ‘[t]o prove the content of a writing, recording, or photograph, the original writing, recording, or photograph is required, except as otherwise provided in these rules or by Act of Congress.’” The circuit agreed that Advanced “certainly did not seek to recover on contracts it had with manufacturers other than Acumed,” but even so, “we nevertheless disagree … that the contracts with those manufacturers were not at issue in this litigation.” Whether the contents of a writing was at issue did not turn on whether the “substantive law” made “the contents of a writing, recording, or photograph a primary issue,” because “evidence of those contents may still be relevant. This is true where pertinent events occurred independent of a writing, recording, or photograph but are nonetheless evidenced by the contents of such an item. Rule 1002 applies if evidence of those contents is offered.” Acumed, 561 F.3d at 222 (quoting 31 Charles Alan Wright & Victor James Gold, Federal Practice And Procedure § 7184, at 388 (2008)).

According to the circuit:

“The best evidence rule clearly applied to Morris’s testimony regarding buy-out clauses contained in [Advanced]’s contracts with other manufacturers and suppliers, as the clauses would have been relevant in this litigation only if they tended to support Morris’s testimony that [Advanced] insisted on a buy-out clause in all of its representation contracts and thus did so in its contract with Acumed. Therefore, inasmuch as the best evidence rule applied, the District Court did not abuse its discretion in barring Morris’s testimony regarding the contents of contracts not submitted into evidence or even produced for review at the trial.”

The Acumed case illustrates the general principle that FRE 1002’s Best Evidence Rule requires the production of an original writing even when that original writing is not to be enforced. Because a party’s trial strategy elevated the significance of the content of the other writing to deciding the issues in the case, the Best Evidence Rule applied to that other writing as well.