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This '97 9th Circuit Decision En Banc, Discusses an Expert Testifying on his Opinion as to Whether a Defendant Possessed the Mental State Element of a Charged Crime, and the Admissibility of Such Testimony under the Federal Rules of Evidence.

Fed.R. Evid. 704(b) precludes an expert, testifying as to the mental state or condition of a defendant, from stating "an opinion or inference as to whether the defendant did or did not have the mental state or condition constituting an element of the crime charged or of a defense thereto."

If the court based its decision to exclude testimony on Rule 704(b), it misapplied the law and thus abused its discretion. A contrary conclusion would favor a reading of R.704(b) that not only would exclude an expert's opinion as to whether a defendant did or did not have the requisite mental state, but would also exclude an expert's opinion on any matter from which the fact-finder might infer a defendant's mental state. This is not what R.704(b) says.

U.S. 9TH CIRCUIT COURT OF APPEALS
No. 94-10507

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
GLORIA ANN MORALES, Defendant-Appellant.

Appeal from the U.S. Dist. Court, N.D. of Calif.
Sandra Armstrong, Dist. Judge
D.C. No CR-93-00336-SBA

Argued and Submitted Sept. 26, 1996 at S.F., Calif.


Before: Chief Judge Procter Hug, Jr., James Browning, Joseph Sneed, Betty Fletcher, Stephen Reinhardt, Cynthia Holcomb Hall, John Noonan, David Thompson, Ferdinand Fernandez, Pamela Ann Rymer and Michael Daly Hawkins, Circuit Judges.

Counsel: Larry Kupers, Asst Fed. Defender, S.F., Ca., for defendant-appellant.
Stephen Jigger, Asst U.S. Atty, S.F., Ca., for plaintiff-appellee.

OPINION by Judge Thompson, Filed March 5, 1997

Federal Rule of Evidence 704(b) precludes an expert, testifying as to the mental state or condition of a defendant, from stating "an opinion or inference as to whether the defendant did or did not have the mental state or condition constituting an element of the crime charged or of a defense thereto." There is a conflict in our circuit concerning the admissibility of expert testimony under this rule when an expert is asked to give an opinion on a predicate matter from which a jury might infer the defendant's required mens rea. In U.S. v. Brodie, 858 F.2d 492 (9th Cir.'88), we held R.704(b) precluded an expert from testifying to a predicate matter from which the jury might "extrapolate" whether the defendants possessed the necessary mens rea. In cases decided since Brodie, however, we've held 704(b) does not preclude such testimony, so long as the testimony as to the predicate matter does not necessarily imply the mens rea element. See U.S. v. Rahm, 993 F.2d 1405 (9th Cir.'93); U.S. v. Gomez-Norena, 908 F.2d 497 (9th Cir.), cert. denied, 498 U.S. 947 ('90). We overrule Brodie.

In the present case, Gloria Morales was convicted of two misdemeanor counts of willfully making false entries in a union ledger in violation of 29 U.S.C.439(c). She appeals the district court's exclusion of expert testimony that she had a weak grasp of bookkeeping principles that she proffered to establish a predicate from which the jury could infer she lacked the necessary mens rea. The lower court did not specify which rule of evidence it relied upon in excluding the testimony.

We hold that the district court erred whether it relied on R.704(b), 702, 103(a)(2)(b), or R.403. The error in excluding the testimony was not harmless, and we reverse Morales's conviction.

FACTS

Gloria Morales worked as the bookkeeper for Local 304 of the Laborers' Int'l Union of N. America (the Local) from 1988 to 1991 when she was terminated. As part of her duties, she recorded in a bookkeeping ledger all monies received by the Local and all bank deposits made.

Morales accurately recorded receipts in the "Amount" column, but her recording of deposits was flawed. Each time she entered receipts in the "Amount" column, she entered a matching figure in the "Deposits" column and would make the deposit with future receipts when funds became available to equal the undeposited amount.

The Local discovered what Morales was doing in 1991 when she told its secretary-treasurer, Julian Vega, that money was missing, but that she did not know how much or for how long. A special audit by the Local's regular auditor, Sondra Melling, revealed that approx. $36,000 was missing. Morales could not produce deposit slips or money for all the "deposits" she had recorded.

Morales was charged with one felony count of embezzlement from a labor organization in violation of 29 U.S.C. 501(c) and two misdemeanor counts of willfully making false entries in union records required to be kept by federal law under 29 U.S.C. 439(c).

One of the crucial issues at Morales's jury trial with regard to the false entry charges was whether her admitted bookkeeping inaccuracies were intentional or the result of her ignorance of proper procedures. The gov't elicited testimony from three witnesses that said they thought she had a relatively strong grasp of bookkeeping procedures. Sandra Pritchett, who preceded Morales, Sondra Melling, and Morales's supervisor, Julian Vega, who testified she was a "very, very good employee, and she is a very, very intelligent person, very knowledgeable..." He also testified, however, that she was never given any training manual or written instructions regarding her new assignment as bookkeeper, and that when he hired her (originally as a dispatcher), he didn't know if she had any bookkeeping training or experience.

Morales testified that although she now knows the entries were incorrect, she did not know when she made them. She thought that was the way it was supposed to be done. She denied any intention to make false entries and stealing any money, and said she never completed high school, had any training in bookkeeping or accounting, and had received very limited training and supervision by the Local.

Morales proffered expert testimony from Hilary Crosby, a CPA with twenty years of experience, regarding Morales's level of understanding of bookkeeping principles. The district court sustained the gov't's objection to its admission stating it would not allow Crosby "to testify as to what Ms. Morales did or did not understand" because "that is a conclusion . . . [for] the jury." The court explained that:

obviously Ms. Morales can testify to it herself. But I don't know that this witness can testify [that ] just because someone does or does not manifest an understanding does not mean that they necessarily don't understand. But she can testify to what she observed that is inconsistent with good or average or even marginal bookkeeping practices that could then lend itself to an argument that [Morales] didn't understand.

The jury acquitted Morales of the felony but convicted her of the two misdemeanor counts of willfully making false entries. She was sentenced to 3 years probation and 80 hours of community service.

On appeal, Morales contends the court erred by excluding Crosby's testimony about her lack of bookkeeping knowledge.

DISCUSSION

A. Standard of Review

We review for abuse of discretion the district court's decision whether to exclude expert testimony. A district court abuses its discretion when it bases its decision on an erroneous view of the law or a clearly erroneous assessment of the facts.

Presumably, the court excluded the testimony under R.704(b) or 702, the two relevant rules. 702 provides that the witness must qualify as an expert and that there must be a justification for his testimony. Once that test is met, R.704(b) prohibits the expert from testifying as to whether the defendant had the mental state or condition that constitutes an element of the crime charged.

Because we don't know which rule the court relied on, we evaluate the evidence's admissibility under both. If it could have been excluded under either rule, the court did not abuse its discretion.

B. Rule 704(b)

Generally, experts may testify as to their opinions on ultimate issues to be decided by the trier of fact. However, R.704(b) makes a limited exception in criminal cases, providing:

No expert witness testifying with respect to the mental state or condition of a defendant in a criminal case may state an opinion or inference as to whether the defendant did or did not have the mental state or condition constituting an element of the crime charged or of a defense thereto. Such ultimate issues are matters for the trier of fact alone.

The first issue we decide is whether R.704(b) applies to all expert witnesses who are asked to state an opinion or inference as to a defendant's mental state or condition, or whether the rule applies only to psychiatrists or other mental health experts. Morales's proffered expert was an accountant. If R.704(b) does not apply to her, it could not provide the source for exclusion of her testimony.

Several circuits have suggested that R.704(b) may have a limited reach, and apply only to mental health experts. The circuits which support this view have found support in the rule's legislative history... that Congress intended to limit it to psychiatrists and other mental health experts. The 1984 Senate Report introducing R.704(b) explains the rule's purpose as follows:

With respect to limitations on the scope of expert testimony by psychiatrists and other mental health experts, . . . [this] bill amends R.704 of the Federal Rules of Evidence to [add section (b)].
. . . The purpose of this amendment is to eliminate the confusing spectacle of competing expert witnesses testifying to directly contradictory conclusions as to the ultimate legal issue to be found by the trier of fact. Under this proposal, expert psychiatric testimony would be limited to presenting and explaining their diagnoses, such as whether the defendant had a severe mental disease or defect and what the characteristics of such a disease or defect, if any, may have been. S.Rep.No.225, 98th Cong., 2d Sess. 230('84).

Similarly, the report of the House Judiciary Committee states:

While the medical and psychological knowledge of expert witnesses may well provide data that will assist the jury in determining the existence of the [insanity] defense, no person can be said to have expertise regarding the legal and moral decision involved. Thus, with regard to the ultimate issue, the psychiatrist, psychologist or other similar expert is no more qualified than a lay person. H.R. Rep. No. 577, 98th Cong., 1st Sess. 16 ('83).

The problem with relying on the foregoing legislative history is the problem inherent in all legislative history. We cannot know what the individual senators and house members who voted for the rule intended simply by reading the Senate and House Reports.

This is not, however, the only problem with the legislative history argument. Before looking at any legislative history, we first look at the rule itself. If the meaning of the rule is perfectly plain from its language, that ends the inquiry. The language of R.704(b) is perfectly plain. It does not limit its reach to psychiatrists and other mental health experts. Its reach extends to all expert witnesses.

The introductory clause of the rule provides: "No expert witness testifying with respect to the mental state or condition of a defendant . . . ." The "mental state or condition" refers to that "of a defendant in a criminal case." If that mental state or condition is an element of the crime charged or a defense thereto, "no expert witness " may testify to it, regardless of whether the witness testifying is a psychiatrist or other mental health expert.

Because R.704(b) applies to the accounting expert Morales presented as a witness, the next question is whether this rule precluded the proffered testimony. We hold it did not.

To convict Morales, the gov't had to prove that she willfully made false bookkeeping entries under 29 U.S.C. sec 439(c) which provides: "Any person who willfully makes a false entry in . . . any books, records, reports, or statements required to be kept by any provision of this subchapter shall be fined not more than $10,000 or imprisoned for not more than one year, or both."

Willfulness requires that an act be done knowingly and intentionally, not through ignorance, mistake or accident. 9th Cir. Manual of Model Jury Instructions Criminal, 5.05 (West '95).

To exclude Crosby's testimony under R.704(b), the court would have had to conclude that Crosby would have stated an opinion or drawn an inference which would compel the conclusion that Morales did not make the false entries willfully. However, Crosby was going to state her opinion as to a predicate matter - that Morales had a weak grasp of bookkeeping principles, as Morales's counsel advised the court.

Even if the jury believed Crosby's expert testimony it would still have had to draw its own inference from that predicate testimony to answer the ultimate factual question - whether Morales willfully made false entries. She could have had a weak grasp of bookkeeping principles and still knowingly made false entries as charged. Thus, Crosby was not going to testify to an opinion or draw an inference as to the ultimate issue of Morales's mens rea within the meaning of R.704(b).

A prohibited "opinion or inference" under R.704(b) is testimony from which it necessarily follows, if the testimony is credited, that the defendant did or did not possess the requisite mens rea. Morales hoped the jury would infer her errors were due to ignorant but innocent mistakes. But such a conclusion was by no means compelled.

We conclude that, if the court based its decision on R.704(b), it misapplied the law and thus abused its discretion. A contrary conclusion would favor a reading that not only would exclude an expert's opinion as to whether a defendant did or did not have the requisite mental state, but would also exclude an expert's opinion on any matter from which the factfinder might infer a defendant's mental state. This is not what R.704(b) says. Nor is it the interpretation we have given the rule in decisions since Brodie. See, e.g., Rahm at 1411; Gomez-Norena at 501.

In Brodie, a husband and wife were convicted of willfully failing to file tax returns. They wanted to call an accountant to testify that he had examined their records and determined that they owed very little money in taxes during the years in question and support their contention that their failure to file the tax returns was not willful. We held, relying on R.704(b), that the testimony, if admitted, would have impermissibly stated an opinion as to willfulness, a mental state which is an element of the crime charged. We now reject Brodie's analysis. To say that an accountant's testimony that the defendants owed very little money in taxes states an opinion or inference that they did not willfully fail to file tax returns ignores the jury's task of making that ultimate inference.

In more recent cases we have adopted an interpretation of R.704(b) that allows testimony supporting an inference or conclusion that the defendant did or did not have the requisite mens rea, so long as the expert does not draw the ultimate inference or conclusion for the jury and the ultimate inference or conclusion does not necessarily follow from the testimony.

Other circuits have also interpreted R.704(b) to exclude only testimony as to a defendant's actual mental state during the charged offense or testimony which necessarily would imply that ultimate conclusion. See, e.g., Richard, 969 F.2d at 854; U.S. v. Foster, 939 F.2d 445 (7th Cir.'91); cf. U.S. v. Dunn, 846 F.2d 761 (D.C.Cir.'88) ("It is only as to ...a conclusion as to the defendant's actual mental state - that R.704(b) commands the expert to be silent.").

We conclude that the proffered expert testimony was not excludable under R.704(b). We overrule Brodie's R.704(b) analysis which is inconsistent with this holding.

C. Rule 702

We also conclude the proffered testimony was not excludable under R.702 which provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.

An expert witness's "[t]estimony is admissible under R.702 if 1. the subject matter at issue is beyond the common knowledge of the average layman, 2. the witness has sufficient expertise, and 3. the state of the pertinent art or scientific knowledge permits the assertion of a reasonable opinion." U.S. v. Winters, 729 F.2d 602 (9th Cir.'84).

Here, the subject matter at issue - bookkeeping principles and grasp of them - was clearly beyond the common knowledge of the average layperson. Expert testimony from one who understands bookkeeping and has gained familiarity with Morales and her work would aid the jury in assessing her bookkeeping skills. The first element of the Winters test is satisfied.

As to the second element of the Winters test, Hilary Crosby had sufficient expertise to assert an opinion on Morales's knowledge of bookkeeping principles.... Her experience enabled her to offer an informed and helpful opinion on Morales's level of bookkeeping knowledge.

The third element of the Winters test requires that the state of the art permit assertion of a reasonable opinion. An auditor can assert a reasonable opinion about a bookkeeper's competence based on knowledge ascertained by reviewing her work and interviewing her about her bookkeeping methods.

The gov't argues that Morales may have intentionally deceived Crosby, and that her opinion may be incorrect, but the law does not require every expert who testifies to be an expert in detecting deceit.

We conclude that Crosby was qualified under R.702 to offer a "reasonable" opinion, helpful to the jury, on Morales's level of bookkeeping knowledge. R.702 did not preclude the proffered testimony.

D. Federal Rule of Evidence 103(a)(2)

The gov't argues the exclusion was not reversible error because the substance of the testimony was not made known to the court as required by Rule 103(a)(2) that provides in pertinent part:

(a) Effect of erroneous ruling. Error may not be predicated upon a ruling which admits or excludes evidence unless a substantial right of the party is affected, and
   (2) Offer of proof. In case the ruling is one excluding evidence, the substance of the evidence was made known to the court by offer or was apparent from the context within which questions were asked.

Morales's counsel advised the court that Crosby intended to testify as to Morales's "understanding of bookkeeping principles," and her "level of understanding of bookkeeping concepts." Counsel also stated: "I also wanted to elicit... the opinion of Ms. Morales' understanding of bookkeeping principles. We did hear an opinion from Sandra Pritchett that Gloria Morales was a good bookkeeper... that she understood bookkeeping principles." These remarks were sufficient to satisfy R.103(a)(2).

E. Federal Rule of Evidence 403

The gov't next argues that Crosby's testimony was excludable under R.403 and argues that "expert testimony by its very nature can be disproportionately compelling," and therefore Crosby's would have been unfairly prejudicial. We disagree.

Rule 403 provides:

Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Crosby's testimony would not have resulted in undue prejudice... Aside from Vega's testimony that she received no written instructions on how to perform her job, Crosby's testimony was the only corroborating evidence Morales sought to introduce regarding her level of bookkeeping knowledge. This was probative of her contention that she did not know her entries in the books were false.

F. Harmless Error

When expert testimony has been erroneously excluded, we apply the harmless error standard for nonconstitutional error. Rahm at 1414. We must reverse unless there is a "fair assurance" of harmlessness or, stated otherwise, unless it is more probable than not that the error did not materially affect the verdict. After reviewing the trial court record, we conclude that the erroneous exclusion of Crosby's testimony was not harmless and we must reverse. Id.

CONCLUSION

We hold that the district court erred by excluding the proffered expert testimony to offer a reasonable opinion on Morales's bookkeeping expertise, and that opinion would have aided the jury in assessing whether she willfully made false entries in the Local's books.

R.704(b) is not limited to psychiatrists and other mental health experts, but applies to any "expert witness testifying with respect to the mental state or condition of a defendant in a criminal case" who is asked to "state an opinion or inference as to whether the defendant did or did not have the mental state or condition constituting an element of the crime charged or of a defense thereto."

The expert intended to testify to a predicate matter - Morales's understanding of bookkeeping principles - not whether she willfully made the false entries. R.704(b) does not preclude expert testimony from which a jury might infer that a criminal defendant did or did not possess the requisite mens rea. The rule only precludes expert testimony of an opinion or inference that the defendant did or did not have the requisite mens rea and testimony of an opinion or inference which if true would compel the conclusion that the defendant did or did not have the requisite mens rea.

Finally, the proffered testimony was not excludable under R.103(a)(2) or 403. Its exclusion was erroneous, and the error was not harmless. Morales's conviction is REVERSED.

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