LEVAL, Circuit Judge:
Plaintiff Sleepy's, LLC appeals from the judgment of the United States District Court for the Eastern District of New York (Platt, J.) in favor of Defendant Select Comfort
The case proceeded to a bench trial in the spring of 2012. In June 2012, toward the end of Sleepy's presentation of its case, Select Comfort moved for judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c).
We affirm the judgment dismissing one of the contract claims. As for the other claims, we vacate the judgment and remand for further proceedings.
Plaintiff Sleepy's, LLC is a New York-based retailer of mattresses and bedding products. Defendant Select Comfort, based in Minnesota, manufactures and sells a line of bedding called the Sleep Number, which is known as "alternative bedding" because, unlike traditional springfilled mattresses, Select Comfort's Sleep Number beds are filled with inflatable air chambers that can be adjusted to vary the firmness of the mattress. Select Comfort sells its Sleep Number beds through its own retail stores.
In October 2000, Select Comfort launched a Retail Partner Program to sell Sleep Number beds in the stores of other retailers. Sleepy's began negotiations with Select Comfort in early 2005 to join the Retail Partner Program. In June 2005, Sleepy's and Select Comfort executed a written Dealer Agreement (the "Dealer Agreement") making Sleepy's an authorized retailer of Sleep Number beds.
Under the terms of the Dealer Agreement, the only Select Comfort merchandise
The Dealer Agreement between Sleepy's and Select Comfort in Section 4(a) required Select Comfort to provide Sleepy's with "first quality merchandise ... meeting all mutually agreed upon specifications." Joint App'x ("JA") at 1712. In Section 4(c), each side agreed not to "adversely affect the character, reputation and good will (collectively the `Brand Image') of the other party." Id. Section 9 provided, "Subject to earlier termination in accordance with any provision of this Agreement, the term of this Agreement... will expire September 30, 2006." JA 1715.
Sleepy's began selling Sleep Number beds in August 2005. Sales were disappointing. In response to reports it received that Select Comfort salespeople were disparaging Sleepy's and its Personal Preference line, in late 2006 Sleepy's began conducting "secret shops," sending hired personnel into Select Comfort stores posing as customers to assess whether this was true. Sleepy's contends its undercover shopping revealed a regular pattern of disparagement. In particular, Sleepy's presented evidence that Select Comfort's salespeople told Sleepy's secret shoppers that the wooden foundation sold at Sleepy's was inferior to the plastic polymer foundation of the Core line sold at Select Comfort stores; that beds sold at Sleepy's were stored in warehouses where they attracted allergens and dust mites, while beds sold through Select Comfort's stores were made to order; and that Sleepy's offered inferior sales terms and deceitfully refused to honor its warranties.
At a meeting on January 3, 2007, Sleepy's presented Select Comfort with results of some of its secret shops. Sleepy's continued to conduct additional secret shops thereafter. On January 11, 2007, Select Comfort sent Sleepy's a letter stating that it saw "no reason to extend the term of [the parties'] Agreement" and wanted to "wind-up ... the dealer relationship." JA 1590. The letter proposed that Sleepy's "continue to sell its remaining inventory of Select Comfort product through the end of February, following which [Select Comfort would] arrange for the timely retrieval of [its] merchandising materials and fixtures." Id. On April 18, 2007, the parties entered into a Wind-Up Agreement (the "Wind-Up Agreement"), which provided that between April 30 and May 11 Select Comfort would retrieve all Select Comfort materials from Sleepy's stores and warehouses. Under the Wind-Up Agreement, Select Comfort agreed to "fill all Sleepy's orders" until two weeks before the final date of product removal, subject to certain limitations, and Sleepy's agreed to "operate according to the terms and conditions of [the parties'] previous agreement during this period...." JA 1675-76.
On August 24, 2007, Sleepy's began this suit in New York state court. Select Comfort removed the case to federal court on the basis of diversity of citizenship. Sleepy's complaint alleged that Select Comfort breached the Dealer Agreement by failing to provide it with "first quality
We review the district court's findings of fact for clear error and its conclusions of law de novo. MacDraw, Inc. v. CIT Grp. Equip. Fin., Inc., 157 F.3d 956, 960 (2d Cir.1998).
Sleepy's alleged that Select Comfort breached § 4(a) of the Dealer Agreement by failure to deliver "first quality merchandise" and § 4(c) by disparaging Sleepy's merchandise and business practices. We agree with the district court that Sleepy's failed to prove a breach of § 4(a), and we therefore affirm the dismissal of the claim based on that provision. As for the claim under § 4(c), however, the district court erred in construing the Dealer Agreement as barring extension of the contract term past the stated expiration date except by written waiver, and dismissing the claim on that basis.
Sleepy's contends its evidence showed that Select Comfort breached the requirement of § 4(a) of the Dealer Agreement that Select Comfort provide Sleepy's with "first quality merchandise." The parties dispute the meaning of "first quality." Relying on evidence from the contract negotiation, Sleepy's maintains that this term required Select Comfort to provide it with beds that were in no way inferior to the beds sold at Select Comfort stores. Select Comfort contends the generally accepted meaning of the term in product manufacturing is "new, unflawed products which are distinguished from defective or damaged goods." Sleepy's LLC v. Select Comfort Wholesale Corp., No. 07-CV-4018, slip op. at 198 (E.D.N.Y. Sept. 26, 2012). The district court found the term ambiguous and, acting as fact-finder, adopted Select Comfort's construction. The court further found that Select Comfort did not breach its obligation to provide Sleepy's with new, unflawed products.
We need not decide whether the district court properly interpreted the term "first quality." Even if Sleepy's is correct that this clause required Select Comfort to deliver to Sleepy's merchandise that was in no way inferior to what Select Comfort sold in its own stores, Sleepy's failed to establish a breach. The district court found that Sleepy's failed to show that the Personal Preference beds it received were of inferior quality to Select Comfort's Core line. We find no flaw in that ruling. Accordingly, we affirm the district court's grant of judgment for Select Comfort on this claim.
In its second breach of contract claim, Sleepy's alleges that Select Comfort breached the non-disparagement clause of § 4(c) of the Dealer Agreement. Section 4(c) provides, in relevant part:
JA 1712. The district court ruled that Sleepy's failed to prove a breach of § 4(c) because it presented no competent evidence of disparagement by Select Comfort that took place while the Agreement was in effect.
The district court's ruling was predicated on its interpretation of two subsections of the Dealer Agreement. Section 9(a) states that "the term of this Agreement... will expire September 30, 2006." JA 1715. Section 9(e) provides that, "after termination" of the Agreement, the terms of the Agreement cannot be extended or continued except "by an express written waiver of termination signed by the terminating party."
The court thus treated "expiration" and "termination" as interchangeable terms referring to the end of the contract term, regardless of how it occurred. Sleepy's argues that the court failed to recognize the contract's carefully drawn distinction between "expiration," which refers to the arrival of the date contractually specified as the end of the contract's term, and "termination," meaning the act of a party, relying on a contractual justification, to bring the contract term to a premature end.
We agree with Sleepy's that the court's construction of the contract was erroneous. The Dealer Agreement does indeed use those terms to refer to different ways of ending the contract term. "Expiration" is used to refer to the end of a pre-determined "Initial Term" on a contractually agreed date. This was provided in Section 9(a), which states, "Subject to earlier termination ..., the term of this Agreement shall commence as of the Effective Date and will expire September 30, 2006 (the "Initial Term")." JA 1715 (emphases added).
Section 9(e) (which is quoted in full in footnote 4), in which the district court found a prohibition of extension of the contract term absent an "express written waiver," applies only "after termination of this Agreement," which had not occurred when the agreement came to its expiration date. In addition, the type of written waiver specified in § 9(e) is a "written waiver of termination." Furthermore, § 9(e) requires that the express written waiver of termination be "signed by the terminating party," a provision that makes no sense if applied to extension of the contract term after expiration, because expiration happens automatically on the arrival of the expiration date, and not at the instigation of any "terminating party."
In sum, § 9(e) did not prevent the Dealer Agreement from being extended by the parties' conduct after the Agreement's Initial Term expired on September 30, 2006. The district court's conclusion that Sleepy's could not prevail on its claim of breach of contract by disparagement because Sleepy's failed to show disparagement prior to the Dealer Agreement's expiration date was based on an invalid interpretation of the agreement. The court did not confront Sleepy's contention that
Sleepy's also challenges the district court's grant of judgment for Select Comfort on Sleepy's claims for unfair competition and breach of the implied covenant of good faith and fair dealing.
As discussed above, the district court erred in ruling that the Agreement could not be extended except by written waiver and therefore necessarily ended on September 30, 2006. Accordingly, we vacate the district court's grant of judgment for Select Comfort on Sleepy's claims for unfair competition and breach of the implied covenant of good faith and fair dealing and remand for further consideration.
Sleepy's asserted claims of slander per se, alleging that Select Comfort salespersons had a practice of defaming Sleepy's merchandise and business practices. Sleepy's undertook to prove defamation through testimony of its "secret shoppers" relating twelve instances of what was said to them by salespersons in Select Comfort stores. The district court dismissed the slander claims, ruling that none of the twelve statements was actionable. As to eleven instances, this was because Sleepy's undercover shopper had been the first to mention the fact that Sleepy's stores also sold Select Comfort merchandise or had asked questions about Sleepy's to find out what Select Comfort would say in response.
Decisions of New York's intermediate appellate courts have established that the consent of the person defamed to the making of a defamatory statement bars that person from suing for the defamation, and that, in some circumstances, a person's intentional eliciting of a statement she expects will be defamatory can constitute her consent to the making of the statement. See Dickson v. Slezak, 73 A.D.3d 1249, 902 N.Y.S.2d 206, 208 (3d Dep't 2010); LeBreton v. Weiss, 256 A.D.2d 47, 680 N.Y.S.2d 532, 532 (1st Dep't 1998); Handlin v. Burkhart, 220 A.D.2d 559, 632 N.Y.S.2d 608, 609 (2d Dep't 1995); Park v. Lewis, 139 A.D.2d 961, 528 N.Y.S.2d 250, 251 (4th Dep't 1988). What is less clear is what circumstances will justify the imputation of consent from the eliciting of the defamatory statement and thus render the statement not actionable. The unclarity of New York law results from the fact that the precedents are few, the formulations of the New York courts to have ruled are not entirely consistent, and New York's highest court has never ruled on this precise question.
The contours and purposes of the rule are somewhat illuminated by the Restatement (Second) of Torts (1977), which in defamation cases has been cited with approval by the highest court of New York. See, e.g., Liberman v. Gelstein, 80 N.Y.2d 429, 434-35, 437-39, 590 N.Y.S.2d 857, 605 N.E.2d 344 (1992); Park Knoll Assocs. v. Schmidt, 59 N.Y.2d 205, 208-09, 464 N.Y.S.2d 424, 451 N.E.2d 182 (1983). Section 583 of the Restatement provides, "Except as stated in § 584, the consent of another to the publication of defamatory matter concerning him is a complete defense to his action for defamation." Comment d to this Section says, "It is not necessary that the other know that the matter to the publication of which he consents is defamatory in character. It is enough that ... he has reason to know that it may be defamatory." As an illustration, the Restatement notes that a summarily discharged school teacher who "demands that the reason for his dismissal be made public ... has consented to the publication [of the reason] though it turns out to be defamatory." Restatement (Second) of Torts § 583 cmt. d (1977).
Section 584, which furnishes an exception to the rule of Section 583, provides, "An honest inquiry or investigation by the person defamed to ascertain the existence, source, content or meaning of a defamatory publication is not a defense to an action for its republication by the defamer." Comment d to this section explains that this exception to the rule of Section 583 "has no application when the inquiry is not an honest inquiry or investigation to ascertain the facts, and the republication is invited only for the purpose of decoying the defendant into a lawsuit." Id. § 584 cmt. d. The First Department of New
Whether a republication of an earlier defamation is itself actionable when elicited by the defamed party appears to turn in part on a combination of the defamed party's motivation for eliciting the republication and the degree of certainty of the defamed party's expectation that the statement elicited will be defamatory. Three precedents of three of New York's four Appellate Divisions have found consent (and hence preclusion of suit based on the statement) in circumstances where the defamed party elicited republication of the statement with a high degree of certainty, based on information derived from prior experience, that the statement would be defamatory. Thus the Third Department in Dickson v. Slezak found consent and consequent preclusion where the plaintiff hired undercover investigators "to garner what he had every reason to anticipate would be defamatory comments from defendants." 902 N.Y.S.2d at 208 (emphasis added). The Second Department in Handlin v. Burkhart found consent and preclusion where "[i]n view of the [previous] meeting ... at which the defendant... met with the plaintiff ... and two representatives from his union and detailed the reasons for [the plaintiff's] requested resignation, [the plaintiff] had every reason to anticipate that the report delivered to the union explaining the reasons for his discharge would be defamatory in nature." 632 N.Y.S.2d at 609 (emphasis added). The Fourth Department in Park v. Lewis likewise found consent where the plaintiff essentially knew the statement elicited would be defamatory. The defendant had made defamatory statements about the plaintiff during an earlier conversation with the plaintiff's agents, and the plaintiff "instructed [his agents] to return to defendant's office to record additional statements concerning plaintiff." Park, 528 N.Y.S.2d at 251.
On the other hand, the choice of words by which the Second and Fourth Departments (but not the Third) have described the standard for determining whether there was consent to the republication has suggested a less burdensome standard for the defendant to demonstrate the plaintiff's consent. The Fourth Department stated in Park that consent is found if the plaintiff has "reason to anticipate that [the] defendant's responses to [the] inquiries might be defamatory." Id. (emphasis added). And the Second Department in Handlin quoted the same standard, citing an earlier Fourth Department case. The Third Department in Dickson, however, as stated above, appeared to base its ruling in favor of the defendant on the fact that the plaintiff elicited the remarks having "every reason to anticipate [they] would be defamatory." Dickson, 902 N.Y.S.2d at 208 (emphasis added).
The provisions of the Restatement cited above place emphasis on the plaintiff's motive in eliciting the statements from the defendant. There is, of course, a close relationship between the degree of assurance the plaintiff possesses that the statements elicited from the defendant will be defamatory and the plaintiff's likely motive in eliciting them. The higher the degree of the plaintiff's certainty that the defendant's statements will be defamatory, the less likely it is that the plaintiff is eliciting them in an "honest inquiry or investigation to ascertain the facts," as expressly condoned by Section 584, and the more likely it is that "the republication is invited only for the purpose of decoying the defendant into a lawsuit," which precludes suit on the elicited republication. Considering the scant and not-altogether-consistent
The district court based its decision on the question whether the alleged defamations of Select Comfort salespersons elicited by Sleepy's secret shoppers were consented to, and thus not actionable, primarily on whether it was Sleepy's agent or Select Comfort's salesperson who first mentioned the fact that Sleepy's stores also sold Select Comfort merchandise. The district court also gave weight in favor of Select Comfort to evidence that Sleepy's instructed its secret shoppers to ask about differences between Sleepy's and Select Comfort products and to "find out whether or not [Select Comfort] would denigrate Sleepy's." Sleepy's LLC, No. 07-CV-4018, slip op. at 202. We do not believe this was the proper analysis under New York's law. Accordingly, we remand for reconsideration of whether these claims were barred by Sleepy's consent. To justify a ruling either way on whether the specific statements of the Select Comfort salespersons were consented to and thus not actionable, the court will need to make findings on the issues outlined above as to whether Sleepy's inquiries were motivated by a good faith attempt to learn whether the Select Comfort sales force was carrying on a consistent pattern of slander, or were merely a ruse to decoy Select Comfort into a lawsuit, along with the closely related question what was the degree of Sleepy's confidence or certainty at the time of each inquiry that such a pattern of slander existed.
We note further, however, that the inquiry into whether Sleepy's should be deemed to have consented to the instances of alleged slander elicited by its secret shoppers may be of limited importance. According to Sleepy's argument, the elicited statements had two purposes. One was as actionable slanders. Their second, and perhaps more important, purpose was as evidence demonstrating that Select Comfort's sales force had adopted a pattern and practice of telling customers who inquired about the relative merits of purchasing
The judgment dismissing the slander claims is vacated and the matter remanded for reconsideration whether Sleepy's should be deemed to have consented to the elicited statements so as to bar claims of slander based on those statements, and for further consideration whether Sleepy's, through those elicited statements, showed a pattern and practice in Select Comfort of slandering Sleepy's.
We conclude in addition that the court's dismissal of the Zaffron claim was also based on an incorrect understanding of New York law. This slander allegation was based on statements made by Select Comfort during a secret shop conducted by Deborah Zaffron on November 5, 2006. Although the court found it could not rule as a matter of law that Sleepy's consented to these statements because the Select Comfort salesperson was the first to mention Sleepy's, the court granted judgment for Select Comfort on the grounds that the statements by the Select Comfort salesperson were not actionable because they were "loose and hyperbolic" sales talk that a reasonable listener would not believe to be conveying facts about Sleepy's. Sleepy's LLC, No. 07-CV-4018, slip op. at 204 (internal quotation marks omitted). This ruling was error.
Under New York law, (with some exceptions) statements that do not purport to convey facts about the plaintiff, but rather express certain kinds of opinions of the speaker, do not constitute defamation. In determining whether a statement is actionable, "[t]he dispositive inquiry ... is whether a reasonable [listener] could have concluded that [the statements were] conveying facts about the plaintiff." Gross v. New York Times Co., 82 N.Y.2d 146, 152, 603 N.Y.S.2d 813, 623 N.E.2d 1163 (1993) (internal quotation marks omitted). The statements are not actionable if a reasonable listener would not understand them as assertions of fact. Id. at 153, 603 N.Y.S.2d 813, 623 N.E.2d 1163. Whether a statement can be reasonably construed to assert a fact (and thus be actionable) is a question of law. Id. The Court of Appeals has instructed that the inquiry calls for examination of "(1) whether the specific language in issue has a precise meaning which is readily understood; (2) whether the statements
The allegedly slanderous statements made during Zaffron's secret shop occurred during a lengthy conversation between Zaffron and the salesman about Select Comfort's beds, pricing, and terms of service, as well as the differences between Sleepy's and Select Comfort's models and pricing policies. Zaffron had told the salesman that she bought a bed at Sleepy's but wanted to replace it because it had become lumpy. The salesman, who had said he used to work at Sleepy's and had left because he was "not wild about the way they did business," JA 1519, at 33:18-35, continued the conversation as follows:
JA 1519, at 34:01-14.
This statement, viewed in the context of the conversation, conveyed defamatory facts about Sleepy's business practices, and not merely non-actionable vague claims of superiority by a competitor. The statement had a precise meaning, capable of being proven true or false — that Sleepy's regularly, as a business practice, refuses to honor its warranty on defective merchandise, justifying the refusal by the false assertion of an inspector that "there's nothing wrong with" the defective merchandise. Especially coming from one who had worked at Sleepy's but left because he did not like the way Sleepy's did business, the statement in context would be understood as communicating a fact known by the speaker to be true. The statement plainly attributed to Sleepy's a regular business practice of intentionally rejecting warranty claims it knew to be justified based on dishonest inspection reports. We accordingly vacate the judgment on this claim and remand for reconsideration.
Sleepy's challenges the district court's exclusion of two kinds of evidence offered by Sleepy's at trial. Trial courts are allowed a measure of discretion in ruling on the admissibility of evidence. United States v. White, 692 F.3d 235, 244 (2d Cir.2012).
Through the testimony of four Sleepy's employees to whom the statements were made, Sleepy's offered statements of four unidentified customers who sought to cancel the purchase of Select Comfort beds. The customers said they wanted to cancel their purchases because of negative things they had been told by Select Comfort employees about Sleepy's. The district court excluded these statements as hearsay. Sleepy's contends this was error. Although acknowledging that the statements would be hearsay if offered to prove what Select Comfort employees said to Sleepy's customers, Sleepy's argues that the statements were nonetheless admissible as evidence of the customers' states of mind. Because slightly different factors bear on each of these offers of evidence, we discuss each separately.
Sleepy's offered the testimony of Scott Cheshul, a Sleepy's employee, about an incident in which a customer said he wanted to cancel a purchase because he was told by Select Comfort that Sleepy's product was inferior. The district court ruled that this was inadmissible hearsay. Sleepy's contends the customer's statement was admissible to show the customer's state of mind 12 — evidencing the customer's belief that the Select Comfort merchandise the customer had purchased from Sleepy's was inferior.
We agree with Sleepy's argument. Although the statement was indeed inadmissible as hearsay if offered to prove what Select Comfort personnel had said to the customer, it was admissible evidence for the limited purpose of the customer's belief that the Select Comfort merchandise sold by Sleepy's was inferior. See Herman Schwabe, Inc. v. United Shoe Mach. Corp., 297 F.2d 906, 914 (2d Cir.1962) (Friendly, J.). Thus, while Sleepy's could not use this evidence to show that Select Comfort was responsible for the customer's beliefs, the evidence was nonetheless competent to show that Sleepy's was harmed by Select Comfort's conduct if it had other evidence to demonstrate that the customer's belief was attributable to Select Comfort.
Sleepy's offered the testimony of its employee, Tyler Paiva, regarding incidents in which two customers said they wanted to cancel their purchases from Sleepy's of Select Comfort beds because they were told by Select Comfort that Sleepy's carried an inferior bed foundation and that the warranty given by Sleepy's was not effective. The district court excluded Paiva's testimony as hearsay because Paiva did not identify the customers.
Sleepy's sought to introduce the testimony of its former employee Deborah Zaffron about a customer who wanted to cancel his purchase of Select Comfort merchandise from Sleepy's because he was told by Select Comfort that "what [Sleepy's] w[as] selling was not a Select Comfort." JA 431.5. When Sleepy's first began this line of testimony, Select Comfort objected on hearsay grounds and sought to exclude the testimony if Zaffron could not identify the customer by name. In response to Select Comfort's hearsay objection, Sleepy's argued that Zaffron's testimony was admissible as evidence of the customer's state of mind.
The district court's ruling on admissibility of the evidence is somewhat unclear. The court stated that if Zaffron could not identify the customer, the court would strike the testimony. When Zaffron testified specifically about what the customer told her regarding his reasons for wanting to cancel his Sleepy's purchase, and Select Comfort again objected on hearsay grounds, the court responded, "No, I'll allow it. I'm not saying the truth of it, the reason why she did what she did." JA 431.5. It is not clear who was the "she" whose reasons the court referred to. If, in so saying, the court was receiving the evidence for the limited purpose of showing the customer's reasons for returning the bed, we believe it was a correct ruling. On the other hand, because the customer was male, it is possible that the court was receiving the testimony solely to show Deborah Zaffron's reasons "why she did what she did." In any event, it makes no difference for our present purposes whether the court's ruling was correct or incorrect as the matter is being returned for reconsideration. Upon remand, the court should consider Zaffron's testimony as to what the customer said about his reasons for wanting to cancel his purchase as competent, nonhearsay evidence of the customer's state of mind, i.e., his beliefs about the merchandise and Sleepy's, while at the same time it is inadmissible hearsay which is not competent to establish what was said to him by Select Comfort.
Zaffron's testimony about this incident continued. She testified that in hopes of saving the sale from cancellation she placed a call to Select Comfort on the speaker phone with the customer listening and asked the Select Comfort employee who responded about differences between Sleepy's and Select Comfort products. According to Zaffron, the Select Comfort employee said a series of negative things about Sleepy's, the quality of Sleepy's products, and its warranties. Zaffron further testified that, after that phone conversation, she was unable to prevent the customer from cancelling his purchase. We see no reason why this evidence was not admissible at least to show disparagement in breach of contract, and perhaps for other purposes as well.
Sleepy's employee James Constantinides testified that he spoke to a customer who wanted to cancel his sale because the customer was told by a Select Comfort employee that Select Comfort's bed foundation was superior to Sleepy's bed foundation. The district court allowed the
During Constantinides's testimony, Sleepy's counsel failed to argue that the testimony was admissible as evidence of the customer's state of mind. While counsel should have apprised the court of its argument in support of the testimony's admissibility, given that the district court will be reconsidering the trial evidence on remand, the court should similarly consider Constantinides's testimony of the customer's reasons for wanting to cancel his Sleepy's purchase.
Sleepy's asserts that the district court erred in refusing to admit into evidence 7 of the 15 secret shop recordings that Sleepy's offered during trial. For several of these recordings, it appears the district court either reserved decision on whether to admit the recording or stated that the court was not admitting the recording until the court resolved the issue of possible evidence spoliation that Select Comfort had raised in several motions before the court. At the time the court entered judgment on partial findings for Select Comfort, the court had not yet issued a definitive ruling on Select Comfort's spoliation motion. We leave it to the district court to consider that issue, and the consequent admissibility of the relevant shop recordings, on remand.
Select Comfort argues that the shop recordings that have not been admitted are inadmissible because Sleepy's witnesses were unable to testify about the chain of custody of the recordings and therefore did not sufficiently establish the recordings' authenticity. This argument has no merit. Sleepy's can authenticate the tapes without providing chain-of-custody evidence. See United States v. Tropeano, 252 F.3d 653, 661 (2d Cir.2001). In this case, for each recording, the Sleepy's witness authenticating the recording testified that (1) the witness recognized his or her own voice and the voice of the Select Comfort employee with whom the witness conversed and (2) the recording accurately reflected the witness's conversation with the Select Comfort employee. A tape recording of a conversation may be authenticated by participants in the conversation. See United States v. Hamilton, 334 F.3d 170, 187 (2d Cir.2003). In order to authenticate the tapes, Sleepy's was not required to provide evidence of chain of custody. To the extent the district court excluded any of the recordings on the grounds that Sleepy's had not established chain of custody, that was error.
For the reasons stated above, the district court's judgment is AFFIRMED in part and VACATED in part. The case is remanded to the district court for further proceedings consistent with this opinion.
Fed.R.Civ.P. 52(c).
JA 1715.
It makes perfect sense for such a contract to require a written waiver signed by the terminating party when the contract is prematurely terminated as the result of the other side's breach or default, and not to require a written, signed waiver for extension beyond simple expiration of the originally conceived duration. Because termination is forcibly inflicted on the other party without its agreement, there is every reason for the terminating party to want assurance that its termination will remain in effect unless it has explicitly agreed to restore the contractual term. In contrast, if the parties continue to function in their relationship after the expiration date as if the contract remained in force, for example, by Sleepy's continuing to sell Select Comfort merchandise, and Select Comfort continuing to deliver new merchandise to Sleepy's, a requirement of written waiver to extend the contract term, as opposed to inferring extension from the conduct of the parties, would result in the disappearance, which might take one or both of the parties by surprise, of all the previously agreed terms governing their relationship. While the parties to such a contract relationship might desire such a definitive cutoff of the contract relationship, they would of course be free to provide for it. In this case, it is clear the Dealer Agreement prohibited consensual extension of the contract term through conduct (absent a signed waiver) following a termination, but not upon the mere expiration of the period contractually specified as the duration of the contract term.
297 F.2d at 914 n. 10. In the present instance, so far as the record reveals, the exclusion was not a discretionary ruling based on such an appraisal of risk of insincerity in the particular circumstances.
