A Reminder From the Seventh Circuit on the Importance of Creating a Record

09 February 2015 Wisconsin Appellate Law Blog

When the court makes an evidentiary ruling off the record, it is required to enter on the record an explanation of the reasoning behind its decision. See, e.g., United States v. Nolan, 910 F.2d 1553, 1559 (7th Cir. 1990); 28 U.S.C. § 753(b). But what is a party’s recourse on appeal if the court failed to meet this requirement and the party didn’t object at the time?

None. So explained the Seventh Circuit in United States v. Lawson, No. 14-1233 (7th Cir. Jan. 20, 2015), a case which should serve as an important reminder about preserving off-the-record rulings for appeal in civil and criminal cases alike.

Lawson was indicted for wire fraud, stemming from allegations that he held himself out as a lender to churches and other religious institutions and then collectively scammed them out of $270,000 in fees associated with the loans. Those fees weren’t really for processing the loans, however; Lawson frittered them away on personal expenses. At trial, the government sought to introduce evidence that Lawson had not reported the fees as income on his tax return (which he had not filed at all) in order to rebut Lawson’s defense that his actions were lawful and well-intentioned. This “other-bad-act” evidence is permissible under Evidence Rule 404(b) to show knowledge or intent, as long as its potential for unfair prejudice does not exceed its probative value, under Rule 403. Lawson’s counsel objected to the admission of the evidence, and the court considered the objection in an off-the-record conference.

In a recent important en banc decision, the Seventh Circuit stressed that a district judge must apply both Rule 403 and Rule 404(b) and exclude evidence that either lacks a proper use (Rule 404(b)) or poses excessive risk of prejudice (Rule 403). See United States v. Gomez, 763 F.3d 845 (7th Cir. 2014). But, here, the court could not determine if the district court had properly applied Gomez, because the decision was made, by mutual consent, in an off-the-record conference. After the conference, the judge put on the record what he had ruled (allowing evidence that Lawson failed to report income, but not evidence that he failed to file tax returns), but not why he had reached those conclusions or how the judge thought a jury could make proper use of the tax evidence. Although the Seventh Circuit found the actions of the district court “disappointing,” and conceded that Lawson “might have a solid position on appeal” if he had protested the court’s failure to make a record of its reasoning, by failing to do so, Lawson also failed to preserve the issue for appellate review.

Trial lawyers should keep in mind that they have a right to insist that off-the-record conferences on evidence be recorded, but, at a minimum (if they want to appeal the ruling), that they must ensure that the trial court explains any decision on the record.

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