Eleventh Circuit Finds District Court Properly Excluded Lay Opinion Testimony That Was Based on Hearsay in Taxinet Case

Federal Rule of Evidence 701 states that

If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:

(a) rationally based on the witness’s perception;

(b) helpful to clearly understanding the witness’s testimony or to determining a fact in issue; and

(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

On the other hand, Federal Rule of Evidence 703 states that

An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed. If experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need not be admissible for the opinion to be admitted. But if the facts or data would otherwise be inadmissible, the proponent of the opinion may disclose them to the jury only if their probative value in helping the jury evaluate the opinion substantially outweighs their prejudicial effect.

In other words, lay witnesses can only base their opinions on things rationally based on their perceptions, i.e., things they have experienced themselves. On the other hand, expert witnesses can be made aware of facts or data. Indeed, even if those underlying facts or data are inadmissible, experts can offer opinions based on them as long as experts in their field reasonably rely on such facts or data. For example, a doctor could base his opinion on a victim’s cause of death in part based upon hearsay statements by family members.

A good example of the limitation on lay opinion testimony can be found in the recent opinion of the Eleventh Circuit in Taxinet Corp. v. Leon, 2024 WL 3863497 (11th Cir. 2024).

In Leon,, Taxinet Corporation sued Santiago Leon, asserting a number of claims arising from what began as a joint effort to gain a government concession for a taxi-hailing app in Mexico City. In its opinion, the Eleventh Circuit concluded that

the district court did not abuse its discretion in concluding that it had mistakenly allowed Mr. Leon to testify at trial about the $2.4 billion Goldman Sachs valuation and in excluding that testimony from the sufficiency analysis. What Mr. Leon did, in response to questions by Taxinet’s counsel, was repeat the valuation provided by Goldman Sachs in a report that the district court had excluded on hearsay grounds.

This allowed the court to find that such testimony would have violated Rule 701 because

Under Rule 701(a) of the Federal Rules of Evidence, lay opinion testimony is “limited” to opinions that (as relevant here) are “rationally based” on the witness’ “perception.” Though “a lay witness may base opinion testimony on what [he] heard, this does not mean that lay opinion may be based on hearsay. This is because a witness who bases an opinion on hearsay may have perceived the out-of-court statement with the sense of hearing, but the ‘matter asserted’ by that statement usually relates to facts perceived by the hearsay declarant, not the witness.” 29 Victor J. Gold, Fed. Prac. & Proc.—Federal Rules of Evidence: Rule 701 § 6254 (2d ed. & Sept. 2023 supp.). “So if a witness bases lay opinion on the statement of someone else, the application of Rule 701 depends on whether the opinion relies on the mere fact that the statement was made or on the truth of the facts asserted within that statement.”…If it is the latter, the lay opinion is not admissible. 

-CM