Federal Evidence Review

In diversity automobile negligence action, the plaintiff’s post-accident supplemental tax returns were admissible under FRE 608(b) as probative of the plaintiff’s character for untruthfulness regarding loss of income and the scope of injuries suffered in the automobile accident, in Gaillard v. Jim’s Water Service, Inc., 535 F.3d 771 (8th Cir. Aug. 1, 2008) (No. 07-3160)

FRE 608(b) limits the introduction of "specific instances" of conduct of a witness in order to attack or support the witness's character for truthfulness when those specific instances are extrinic to the action. Whether tax return evidence can be used as impeachment evidence under FRE 608(b) is a matter upon which the courts split. Compare, United States v. Epstein, 426 F. 3d 431, 439 (1st Cir. 2005) (no plain error in admitting cross-examination of the defendant about his tax return that failed to report income from fraudulent scheme under Rule 608(b) where the tax form was an intrinsic part of the charged fraudulent scheme) with United States v. Jackson-Randolph, 282 F.3d 369, 382-83 (6th Cir. 2002) (noting after witness was asked on cross-examination about the filing of his income tax returns, trial court properly denied defense request to impeach witness with testimony from his accountant). In a recent case, the Eighth Circuit considered whether an income tax return was extrinsic.

In the case, plaintiff Gaillard was injured in making a motorcycle trip with a friend to a motorcycle rally. Shortly after sunset, he pulled over to fix the headlight on his friend’s motorcycle. The plaintiff was struck on the side of the road by defendant Holt who was driving a truck in the employ of defendant Jim’s Water Service, Inc. As a result of his injuries, Gaillard sued the driver and the company.

Before trial, Gaillard moved to exclude his supplemental tax returns which he filed after the accident. The supplemental returns, provided in discovery, “claimed additional income of as much as $120,000 per year for the previous few years derived from an alleged catering business he owned,” resulting in “earning[s of] about $150,000” after “declaring only around $30,000 per year” and a tax shortfall of $11,000. Gaillard v. Jim’s Water Service, Inc., 535 F.3d at 774. The defendants wanted to introduce the supplemental returns to show that the plaintiff was trying to inflate his claim for lost income. The trial court admitted the tax returns, which while prejudicial, were not unfairly so, and were probative of the plaintiff’s character of untruthfulness, under FRE 608(b). The first trial resulted in a mistrial. In the second trial, the jury ruled for the defendants. On appeal, the plaintiff challenged the admission of his supplemental tax returns as unfairly prejudicial.

The Eighth Circuit affirmed the admission of the supplemental tax returns. The returns were probative of past income which was considered on the loss of income claim. The circuit noted the tax returns were admissible under FRE 608(b) because:

"We find Gaillard's tax returns highly relevant to the defense of this case. First, past income as established by tax returns is highly relevant to a loss of income claim. Second, the tax returns were probative of his character for untruthfulness and thus relevant to keeping any damage award to a reasonable and fair level. See Fed R. Evid. 608(b). The returns were offered to attack the credibility of his testimony regarding loss of income and the extent and severity of his injuries. They were also relevant to impeach the credibility of Gaillard's economic expert, who testified he typically relies upon an individual's income tax return as the most reliable source of wage verification, yet ignored Gaillard's untrustworthy returns.

The district court properly found when Gaillard presented evidence to suggest he suffered a loss of income, he opened the door for Defendants to produce evidence to contradict his claims. See Halladay v. Verschoor, 381 F.2d 100, 113 (8th Cir.1967) (income tax returns may be treated as a prior inconsistent statement and may be used to impeach witness as to amount of loss). It matters not that Gaillard's expert did not rely on the returns. The district court properly found the tax returns were admissible as impeachment evidence under Rule 608(b), which allows the 'court in its discretion to allow cross examination of witnesses regarding specific instances of a witness's own conduct if the past experiences are probative of a character of untruthfulness.'”