Transbay Auto Service v. Chevron USA

When a party is vaguely aware of the contents of a writing, the party can adopt the writing as the party’s own statement under Federal Rule of Evidence 801(d)(2)(B), and is therefore not hearsay.

Chevron USA Inc. (“Chevron”) planned to sell property it owned in California. Chevron claimed that the gasoline price tag of $2.375 million by Transbay Auto Service, Inc. (“Transbay”) constituted an offer under the Petroleum Marketing Practices Act (“PMPA”). Transbay argued to uphold the jury verdict awarding Transbay nearly half a million dollars as a result of overpaying. On appeal, the Ninth Circuit considered whether the district court erred in excluding a third-party’s appraisal of the property. The panel first held that “when a party acts in conformity with the contents of a document,” they have effectively adopted the writing as a statement, even if a third-party never relies or uses the document. Federal Rule of Evidence 801(d)(2)(B) states that adopting a statement by an opponent is not hearsay. The panel used the “‘possession plus’ test” to determine whether adoption occurred. The panel noted that even if no party personally reviewed the content of the appraisal by the third-party before submitting it, the appraisal was adopted if the party was vaguely aware of the contents of the document. This awareness manifests intent. The panel concluded that the evidence of the appraisal should have been admitted under 801(d)(2)(B) since Transbay used the appraisal while attempting to obtain financing for purchasing Chevron’s property, even though Transbay had not reviewed the appraisal prior to the finance meeting. The panel determined that the district court erred by using a different standard to review the admittance of the appraisal into evidence. REVERSED, VACATED, and REMANDED.