How much is that doggie in the window?

The law of evidence has a concinnity about it: Its various doctrines elegantly fit together into a cogent, logical whole. But what makes the law of evidence even more valuable is its practicality: It is the filter thousands of trial judges use every day to sift “the admissible” from “the inadmissible.”

This filter works best when the rules provide judges with black-or-white answers or, at a minimum, define a gray area entrusting admissibility to their discretion. This filter works poorly when it is too nebulous.

People v. Portillo, 91 Cal.App.5th 577 (2023) involves an instance in which the filter is nebulous and, consequently, unclear. Indeed, Portillo is itself a split decision.

Portillo involves a common enough scenario. A thief steals an item, and is charged with theft. In Portillo, the item was fifteen boxes of dumbbells, but it can be any item – from cordless saws to the titular doggies in the window. Whether the theft is a felony typically turns on the value of the item(s) taken. May a prosecutor prove that value by introducing the item’s “price tag” – either its actual, physical price tag or its electronic equivalent (in Portillo, the sale price advertised on three websites selling the item)?

An item’s price tag is certainly relevant to prove the item’s value, but is it admissible under the hearsay rule? And, as a threshold matter, is a price tag admitted to prove the item’s value even “hearsay”?

This threshold question has turned out to be complicated, which is not surprising given that the definition of hearsay – like the rule against perpetuities – is easy to state but sometimes incredibly difficult to apply.

“Hearsay” is defined as an out-of-court statement admitted to prove the truth of the matter asserted in that statement. Fed. R. Evid. 801(c); Cal. Evid. Code section 1200(a). Put differently, an out-of-court statement is “hearsay” if it has to be true in order to be relevant; conversely, it is not “hearsay” if it remains relevant whether or not it is true.

An item’s price tag is clearly an out-of-court statement. But must it be true in order to be relevant proof of the item’s value?

Thus far, the courts have come up with no fewer than four different answers.

One faction of courts has held that a price tag is hearsay because the sales price of an item must be true for that price to be a relevant data point when assessing the item’s value. See State v. Coleman, 576 P.2d 925 (Wash. Ct. App. 1978); State v. Milano, 228 A.2d 347 (N.J. Super. Ct. App. Div. 1967); Stephans v. State, 262 P.3d 727 (Nev. 2011); State v. McPhie, 662 P.2d 233 (Idaho 1983); People v. Codding, 551 P.2d 192 (Colo. 1976), superseded by statute, Colo. Rev. Stat. § 18-4-414 (2023). Price tags are nevertheless admissible hearsay if they are introduced under the business records exception. McPhie at 236.

A second faction of courts has held that a price tag is not hearsay. This faction reasons that the retailer’s advertised price for the item (namely, its price tag) is being admitted as “circumstantial evidence of the fair market value” of the item. Portillo at 599 n.22. Under this reasoning, Walmart’s price tag for the item is not being admitted to show the truth of what Walmart would charge, but rather as circumstantial evidence of how the item is valued in the market generally; the price tag sheds light on the value of the item generally, so reason these courts, whether or not Walmart truly would require a buyer to pay the amount on the price tag. This is the reasoning adopted by the Portillo majority, and mirrors the reasoning used elsewhere. See Norris v. State, 475 S.W.2d 553 (Tenn. Crim. App. 1971); City of Albuquerque v. Martinez, 604 P.2d 842 (N.M. Ct. App. 1979); DeBruce v. State, 461 So. 2d 889 (Ala. Crim. App. 1984); State v. Harris, 641 S.W.2d 515 (Tenn. Crim. App. 1980). The Portillo majority distinguished cases, such as Garfinkle v. Montgomery, 113 Cal.App.2d 149 (1952), which hold that price estimates to undertake labor for unique projects (such as repairs to a specific house) are hearsay; Portillo found those cases inapplicable to the value of a fungible item in the marketplace generally. Portillo at 595 n.17.

This faction’s reasoning has been questioned. By its use of the term “circumstantial,” this faction’s reasoning seems to align itself to a more traditional type of “non-hearsay” – namely, when a statement is offered as “circumstantial evidence of state of mind.” If, for instance, Rudy declares, “I am Napoleon!”, that statement is not admitted for its truth (that is, to prove Rudy is Napoleon), but instead as circumstantial evidence that Rudy is not of sound mind. But does the analogy to this type of non-hearsay apply here? Or, as the Portillo concurrence noted, is Walmart’s price tag only relevant as circumstantial evidence of the value in the general market if Walmart is truly willing to sell the item for the price on the tag? Portillo at 605.

A third faction of courts has also held that a price tag is not hearsay, but for a different reason. This faction reasons that a price tag is an offer, and offers are “verbal acts,” which are a different traditional type of non-hearsay. This is the reasoning adopted by the Portillo concurrence. To be sure, when a plaintiff sues a defendant for breach of contract, the out-of-court statements allegedly constituting the offer and acceptance at issue are not hearsay because they have the effect of creating a binding contract, regardless of whether they are true. But does the analogy to this type of non-hearsay apply here, where the issue in the case is the market price generally – and not whether a contract is formed with the individual retailers whose price tags are being introduced as offers? The Portillo majority thought not. And in other states where price tags have been treated as verbal acts, value is assessed by reference to the asking price – not, as in California, based on the fair market value of the item generally. Compare People v. Giordano, 856 N.Y.S.2d 568 (N.Y. App. Div. 2008) (asking price), State v. Pulver, 95 P.3d 250 (Or. Ct. App. 2004), and F.T. v. State, 146 So. 3d 1270 (Fla. Dist. Ct. App. 2014), with People v. Romanowski, 2 Cal.5th 903 (2017) (fair market value), and People v. Pena, 68 Cal.App.3d 100 (1977) (price in general market).

The fourth faction has recognized that a price tag is hearsay but has fashioned a special hearsay exception, reasoning that price tags are a reliable indicator of value because retailers are unlikely to “lie to themselves” about an item’s value. Robinson v. Commonwealth, 516 S.E.2d 475 (Va. 1999); Lacy v. State, 432 So. 2d 1205 (Miss. 1983); State v. White, 437 A.2d 145 (Conn. Super. Ct. 1981); see generally Fed. R. Evid. 807.

There may yet be a fifth potential basis for admitting price tags, although no court has yet expressly adopted it. Price tags may be “implied hearsay.” Implied hearsay is the unstated premise of an express assertion: If someone calls into a suspected gambling house and places a bet, that person is impliedly asserting, “I am calling a gambling house.” This implied assertion is more likely to be true because people do not delude themselves (well, most of the time, anyway). A price tag is expressly a retailer’s offer to sell for that price, but is the retailer also impliedly stating, “I think this is the fair market value for this item” (as retailers are not usually in the business of making take-it-or-leave-it offers at below market price)? If so, then this is implied hearsay. Implied hearsay is not subject to the hearsay rule in federal court, see Fed. R. Evid. 801, Adv. Comm. Note, while California courts are split on whether it is hearsay. Compare People v. Morgan, 125 Cal.App.4th 935 (2005) (hearsay), and People v. Allen, 65 Cal.App.3d 426 (1976) (hearsay under certain conditions), with People v. Nealy, 228 Cal.App.3d 447 (1991) (not hearsay).

The different analyses overlap somewhat. The implied hearsay analysis is similar to the Portillo majority (that also looked to a retailer’s implied assertions), and to the faction recognizing a reliability-grounded hearsay exception.

Given the similarity in outcome, however, this may be a case of the waggly tail waving the dog.