January 04, 2017 Practice Points

Evidentiary Objections in Bankruptcy Court: Part 2

To 403 or not to 403—that is the question.

By Manish Borde

Many, if not the majority, of bankruptcy court trials are bench trials.  Fed. R. Evid. 403 famously (at least for a trial lawyer) keeps out unfairly prejudicial evidence. This piece is devoted to the question of whether making an objection on Rule 403 grounds is proper in a bankruptcy court bench trial. 

The Rule
Rule 403 of the Federal Rules of Evidence provides: “The court may exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”

While it does not appear that every circuit has addressed this issue, the majority of circuits addressing the issue have held that at the very least, relevant evidence should not be excluded in bench trials under Rule 403 on the basis the evidence is unfairly prejudicial. The Seventh and Ninth Circuits have held that Rule 403 in its entirety is inapplicable to bench trials. United States v. Preston, 706 F.3d 1106, 1117–1118 (9th Cir. 2013); EEOC v. Farmer Bros. Co., 31 F.3d 891, 898 (9th Cir. 1994); United States v. Shukri, 207 F.3d 412, 419 (7th Cir. 2000).  The Fifth Circuit has held that while excluding relevant evidence in a bench trial because it is cumulative or a waste of time is a proper exercise of the trial judge’s power, excluding relevant evidence on the basis of “unfair prejudice” is not proper.  Gulf States Utilities Co. v. Ecodyne Corp., 635 F.2d 517, 519 (5th Cir. 1981). The Fourth Circuit and Tenth Circuit have similarly held that evidence should not be excluded under Rule 403 on the ground it is unfairly prejudicial.  United States v. Musleh, 106 Fed. Appx. 850, 856 (4th Cir. 2004); Schultz v. Butcher, 24 F.3d 626, 632 (4th Cir. 1994); United States v. Kienlen, 349 Fed. Appx. 349, 351 (10th Cir. 2009) (unpublished). The Sixth Circuit in dicta (in an unpublished decision) adopted the notion that the “unfair prejudice” portion of Rule 403 does not apply in bench trials. United States v. Hall, 2000 U.S. App. LEXIS 170, Case No. 98-6421 at *7 (6th Cir. Jan. 4, 2000).

Accordingly, while some Rule 403 objections may be utilized in bankruptcy court bench trials, a prudent practitioner should carefully consider whether “unfairly prejudicial” objections have a place in a bench trial in bankruptcy court.

Manish Borde is a member with Williams Kastner in Seattle, Washington.


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Manish Borde – January 4, 2017