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At a civil trial for slander, the plaintiff showed that the defendant had called the plaintiff a thief. In defense, the defendant called a witness to testify, «I have been the plaintiff's neighbor for many years, and people in our community generally have said that he is a thief.»
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When a person's character is the ultimate issue in the case, character evidence must be admitted. While these cases are rare, the FRE allows three types of evidence of character when a party's character is at issue: (i) specific acts to demonstrate character; (ii) a witness's opinion of that character; and (iii) evidence as to the subject's reputation for the character trait at issue.
B is correct. In slander cases, where the defendant makes a statement that the plaintiff has an unsavory character, the plaintiff's character is considered «at issue» (i.e., an essential element of the claim or defense under the substantive law) in two respects.
First, remember that truth is a defense to slander. Thus, the plaintiff's actual character will determine whether the defendant is liable for slander. Second, in an action for slander, the plaintiff must allege that he is damaged by the statement. These «damages» are evidence his true character has been besmirched. If, however, the plaintiff actually has a bad reputation, then damages are limited. In slander cases like the one in this question, character evidence is relevant both to whether the plaintiff has a certain character trait and to the extent of damages. Under FRE 405, when character is «at issue,» it can be proved by evidence of reputation, opinion, or specific acts.
A is incorrect. When a person's character is an essential element of the case, proof may be offered in one of three forms, including specific instances of conduct, as well as testimony based on opinion and reputation evidence regarding that trait.
C is incorrect. Evidence of the plaintiff's character is not only relevant and admissible as substantive evidence regarding slander, but also as to damages. Whether the plaintiff is a thief (i.e., whether the defendant was correct) will have a direct impact on the extent of damage done to the plaintiff's reputation.
D is incorrect. Evidence of the plaintiff's character is not only relevant and admissible to reduce or refute the level of damages claimed, but also to prove that the plaintiff is a thief, which is an essential element of the case.