The opinion of the court was delivered by: BECKER
OPINION (Pretrial Order No. 283)
(Admissibility of Public Records and Reports)
This is the first of several opinions that will address the myriad issues raised during the course of a lengthy pretrial evidentiary hearing in this antitrust case, the anatomy and scope of which have been described elsewhere.
The hearing, which commenced on June 16, 1980, and terminated on July 18, 1980, has had a two-fold purpose. First, it has enabled us to rule upon the admissibility of a number of documents that play a critical role in plaintiffs' case so that we will know whether to consider them in ruling upon defendants' motions for summary judgment, particularly their motions addressed to plaintiffs' conspiracy claims.
Second, the hearings were in limine, and have provided the forum for a pretrial ruling on the question whether plaintiffs have come forward with a fair preponderance of independent evidence ("evidence aliunde") of the existence of a conspiracy among the various defendants to enable them to proceed with their conspiracy claims. See United States v. Bey, 437 F.2d 188 (3d Cir. 1971) and its progeny, cited in United States v. Continental Group, Inc., 603 F.2d 444 (3d Cir. 1979), cert. denied, 100 S. Ct. 703 (1980).
As we commenced these hearings, we realized that both of these undertakings, which for the most part overlap, were formidable. As appears from plaintiffs' 17,000 page final pretrial statement (FPS),
plaintiffs' case is erected primarily upon documents. Both the EPS and the list of evidence aliunde which plaintiffs have filed pursuant to Pretrial Order No. 154, as refined by Pretrial Order Nos. 222, 227, and 232, list approximately 250,000 documents, the originals of many of which are in Japanese.
Obviously, no one could read 250,000 documents within a reasonable time, even if all the Japanese language documents had been translated into English, which they have not.
Even prior to the commencement of the hearings, however, and with the concurrence of counsel for the plaintiffs and defendants, we concluded that a reading of only a small portion of these documents was necessary.A substantial number are transactional or other documents which are of the same or similar form or genre; hence, a sample is sufficient for consideration and omnibus ruling. Many of the documents are in the nature of general bankground material. Many of the documents relate to the issue of damages, which is not now before us. And many of the documents are, for other reasons, unrelated or of peripheral relevance to either the summary judgment motions or the in limine conspiracy determination. As we imperfectly, though correctly, perceived prior to the hearings, and as is now eminently clear in the wake thereof, notwithstanding the avalanche of paper under which this case has become burdied over the course of a decade, there are a not insubstantial but discrete number of critically important documents that are central to the case and upon which, in not inconsiderable measure, it must stand or fall. These are the documents upon which we have focused during these hearings.
The important documents fall into a number of broad categroies as follows:
1. Documents, including certain findings, promulgated by the U.S. Treasury Department and U.S. Tartiff Commission in connection with proceedings under the 1921 Antidumping Act.
2. Documents, including certain findings, promulgated by the U.S. Tariff Commission and its successor, the U.S. International Trade Commission (I.T.C.) as well as the Secretary of Labor under §§ 301(b)(1) and (c)(1) and (2) of the Trade Expansion Act of 1962 and §§ 201(b) and 221 of the Trade Act of 1974.
3. Certain purported findings and related documents of the Japanese Fair Trade Commission (JFTC) arising out of proceedings in two cases before the JETC, one, in 1957, brought against the Home Electric Appliance Market Stabilization Council, some of whose members are defendants in this action,
alleging industry-wide price fixing, and the second, brought in 1967, alleging retail price maintenance against defendant Matsushita Electric Industries Co., Ltd.
4. The findings of Judge A. Leon Higginbotham, Jr., our predecessor in this case, regarding personal jurisdiction and venue, found at 402 F.Supp. 262 (1975).
5. Statistical data from the statistical office of the United Nations and a report of the Organization for Economic Cooperation and Development.
6. Diaries of officials of several of the Japanese defendants, alleged to contain evidence of the conspiracy referenced in plaintiffs' complaint, which were seized in 1966 and utilized in the course of JETC Case No. 17 of 1966 (the so-called "Six Company Case"). That case was an investigation and proceedings against six of the defendants, Sanyo Electric Corp., Tokyo Shibaura Electric Corp. (Toshiba), Hayakawa Electrical Industry Corp. (now Sharp Corporation), Hitachi, Ltd. (Hitachi), Matsushita Electric Industrial Co. Ltd. (MEI), and Mitsubishi Electric Corp. (MELCO). The six companies were charged with a conspiracy to fix prices and to engage in a variety of activities in violation of the Japanese Anti-Monopoly Law. The eight diaries in dispute have been attributed to a Mr. Yajima, an employee of Toshiba (3 diaries); Messrs. Yamamoto (2 diaries) and Yamada, both employees of Hitachi; a Mr. Okuma, an employee of MELCO; and Mr. Tokizane, an employee of MEI. Also included in this category are a number of internal company memoranda also seized by the JFTC.
7. Transcripts of testimony and of protocols by witnesses in the Six-Company case. A protocol is a written statement outlining the substance of oral discussions between a JFTC staff member and a witness, which the witness signs to indicate that the contents comport with his statement.
8. Various agreements and rules of certain Japanese manufacturers' associations relating to export practices.
9. Various documents alleged to be minutes or memoranda of meetings of committees of certain manufacturers' associations.
10. A purported internal memorandum of the Japan Victor Company, 51% of which is owned by MEI, allegedly reflecting the decision made by the Electronic Industries Association of Japan (EIAJ) to conceal from the Japanese Ministry of International Trade and Industry (MITI) the discrepancy between domestic and export prices and suggesting changes in accounting methods by which such concealment could be accomplished.
12. A pot pourri of other documents, produced for the most part from defendants' files during discovery.
13. Voluminous reports setting forth the opinions (with supporting data) of plaintiffs' experts.
This opinion will consider the admissibility of the matters set forth in the first five categories enumerated above. We took these matters up together in the hearings and decide them together because all involve, or are alleged to involve, the admissibility of public records and reports under Rule 803(8) of the Federal Rules of Evidence (F.R.E.). Consistent, however, with the modus procedendi of the evidentiary hearings, we shall consider all provisions of the F.R.E. bearing upon admissibility of a given piece of evidence, including those dealing with relevancy. The rulings which we announce herein relate to plaintiffs' claims against the defendants. We do not discuss and do not purport to decide whether all or any of these documents may be used by plaintiffs or by defendants in connection with defendants' counterclaims, since it is conceivable that some of these documents may be offered for a nonhearsay purpose to establish facts relevant to these counterclaims and the defense thereof.
Before proceeding further, it is important to say a word or two about the appropriateness of the course of pretrial evidentiary determination we are following.
The Manual for Complex Litigation, in § 1.80, counsels the early resolution of preliminary legal questions. As outlined at p. 2, supra, we view these hearings against the background of two primary, overriding, and overlapping preliminary determinations. First, we must assess whether plaintiffs have met their burden of coming forth with sufficient evidence aliunde of the existence of a conspiracy among the various defendants to enable them to go forward with their conspiracy claims. See United States v. Continental Group, Inc., 604 F.2d 444 (3d Cir. 1979), cert. denied, 100 S. Ct. 703 (1980). Additionally, we must rule on defendants' outstanding motions for summary judgment, and it is indisputable that a Rule 56 determination must be made upon admissible evidence. See Rule 56(e).
In determining admissibility under Rule 56, the same standards apply as at trial. See Munoz v. International Alliance of Theatrical Stage Employees, 563 F.2d 205, 207 n. 1 (5th Cir. 1977); 608 Hamilton Street Corp. v. Columbia Pictures Corp., 244 F.Supp. 193, 195 (E.D. Pa. 1965). Thus, in ruling upon summary judgment motions, courts refuse to consider hearsay ( Daily Press, Inc. v. UPI, 412 F.2d 126, 133 (6th Cir.), cert. denied, 396 U.S. 990 (1969); Trist v. First Federal Savings and Loan Association, 466 F.Supp. 578, 588-89 n. 15 (E.D. Pa. 1979) (Lord, Ch.J.); unauthenticated documents ( California Pacific Bank v. Small Business Admin., 557 F.2d 218, 222 (9th Cir. 1977); United States v. Dibble, 429 F.2d 598 (9th Cir. 1970)); inadmissible expert testimony ( Merit Motors, Inc. v. Chrysler Corp., 569 F.2d 666, 671-74 (D.C. Cir. 1977); Herbert v. Lando, Civ. No. 74-434 (CSH) (S.D.N.Y. March 19, 1980); documents without a proper foundation ( Hamilton v. Keystone Tankship Corp., 539 F.2d 684, 686 (9th Cir. 1976)); parol evidence ( Starling v. Valmac Industries Inc., 589 F.2d 382 (8th Cir. 1979); and even evidence barred by the dead man's rule ( Super Valu Stores Inc. v. First National Bank, 463 F.Supp. 1183, 1192-93 (M.D. Ga. 1979).
As will be seen as we proceed through the materials before us, the evidentiary issues in this case are complex. Detailed briefing and argument have been essential, as can be seen from the fact that even after argument, We found it necessary to request supplemental briefing on over twenty issues that arose during colloquy. To devote the kind of attention to these matters that they require during, rather than before, trial, would create delays that would be terribly unfair to the jury. Furthermore, because many of the categories of items offered for rulings during these pretrial hearings comprise major chunks of plaintiffs' case, a pretrial ruling will permit counsel for both sides to make efficient use of their trial preparation time by narrowing the issues, and, to the extent that they may to some degree be outcome determinative, permit interlocutory review which might save many months of trial otherwise conducted in error.
Of the inhibiting factors, none apply to this case. Our record is not inadequate, for we consider the summary judgment motions based upon an extensive record as set forth in plaintiffs' preclusive final pretrial statement, see n. 3, supra. Because the documents under consideration are the critically imortant ones, they would certainly be offered for our consideration at trial. As to the burdensomeness of these proceedings, we need only note that the issues must be faced sometime, and now, before a jury is empanelled, strikes us as better than later.
In the course of describing this litigation, we have had occasion to observe that it spans the law of antitrust. See Zenith Radio Corp. v. Matsushita Electric Industrial Co., 478 F.Supp. 889, 893 (1979), vacated and remanded, No. 79-2540 (3d Cir., July 7, 1980). It is appropriate at this juncture to observe that the issues raised in the evidentiary hearings span the law of evidence, or at least the Federal Rules of Evidence (F.R.E.) and pose a number of questions which are apparently of first impression under those rules. Of critical importance, and often of not inconsiderable difficulty, are problems arising under the following Rules: 104 (Preliminary Questions of Admissibility); 401 (Relevant Evidence); 403 (Exclusion of Relevant Evidence on Grounds of Prejudice, Confusion or Waste of Time); 410 (Inadmissibility of Pleas, Offers of Pleas and Related Statements); 602 (Lack of Personal Knowledge); 605 (Competency of Judge as Witness); 702 (Testimony by Experts); 703 (Bases of Opinion Testimony By Experts); 704 (Opinion on Ultimate Issue); 705 (Disclosure of Facts or Data Underlying Expert Opinion); 801(d)(2) (Admission by Party-Opponent); 803(5) (Recorded Recollection); 803(6) (Records of Regularly Conducted Activity); 803(8) (Public Records and Reports); 803(2)(24) and 805(b)(5) (The Residual Hearsay Exceptions); 804(b)(1) (Former Testimony); 804(b)(3) (Statement Against Interest); 805 (Hearsay Within Hearsay); 806 (Attaching and Supporting Credibility of the Claimant); 901 (Authentication); 902 (Self Authentication); 1003 (Admissibility of Duplicates); and 1005 (Public Records). Also implicated are the general constructional rule (Rule 102) and the relationship of many of the Rules inter se; e.g., Rules 104 and 901; Rules 104 and 803(6); Rules 703 and 803(8).
Because Rule 403 assumed a prominent role in many facets of our hearings and because of its potential scope, we think it useful to comment at the outset on the appropriateness of making Rule 403 determinations at a pretrial hearing.
Rule 403 provides that "[although] relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Although there appear to be no cases discussing the applicability of Rule 403 to motions for summary judgment, there are many cases in which pretrial rulings have been made under Rule 403. See Thomas v. C.G. Tate Construction Co., 465 F. Supp. 566 (D.S.C. 1979) (motion in limine by defendant to prohibit personal injury plaintiff from offering films of himself into evidence); Depew v. Hanover Insurance Co., 438 F.Supp. 358, 360 (E.D. Tenn. 1977) (motion in limine to prohibit defendants from offering testimony regarding deceased's statements implicating plaintiff in alleged arson); Grimes v. Employers Mutual Liability Insurance Co. of Wisconsin, 73 F.R.D. 607, 610 (D. Alaska 1977) (motion in limine in personal injury action to determine admissibility of films of plaintiff); United States v. Jackson, 405 F.Supp. 938, 943-45 (E.D.N.Y. 1975) (motion in limine by defendant to exclude evidence of presence in another jurisdiction and use of a false name); Apicella v. McNeil Laboratories, 66 F.R.D. 78, 86 (E.D.N.Y. 1975) (motion in limine to preclude parties from using medical newsletter at trial in action against drug manufacturer). See also, United States v. Bocra, No. 79-2271, slip op. at 6 (3d Cir. May 29, 1980) (affirming grant of motion in limine to preclude defendant from mentioning other bribe cases involving I.R.S. agent); United States v. Nu-Phonics, Inc., 433 F.Supp. 1006, 1014 (E.D. Mich. 1977) (establishing rule that economic evidence would be excluded in antitrust conspiracy prosecution if it were too distant in time from duration of alleged conspiracy).
Because pretrial rulings expedite the trial and eliminate surprise, in limine rulings on objections under Rule 403 are favored by the commentators. See Manual for Complex Litigation, § 4.22; 22 Wright & Graham, Federal Practice and Procedure: Evidence, § 5224 at p. 320-21 (1978) (Wright and Graham); Saltzburg & Redden, Federal Rules of Evidence Manual (2d ed. 1977) at 116. In their discussion of Rule 403, Wright and Graham state that:
Courts and commentators generally agree that any inquiry into preliminary facts in an invocation of discretionary exclusion should be heard out of the earshot of the jury. This suggests the desirability of a pretrial hearing where the issue is important and complex. The use of the motion in limine for this purpose should be encouraged.
Accordingly, when objections have been made to otherwise admissible evidence based upon factors enumerated in Rule 403, we have considered them and include our 403 determinations in these evidentiary opinions.
By way of preliminary "across the board" discussion, we also address two principles that plaintiffs ask us to apply generally to all of the evidentiary questions before us. First, they read in F.R.E. 102 ("These rules shall be construed to secure fairness in administration, elimination of unjustifiable expense and delay, and promotion of growth and development of the law of evidence to the end that truth may be ascertained and proceedings justly determined") a charter of liberality in the admission of evidence and a presumption that would require us, where the question is close, to err on the side of admissibility.We do not so read Rule 102. While we agree that the Rules are designed to be flexible, we do not see that flexibility as favoring admission where specific requirements set forth in particular rules are not met. To read Rule 102 as giving the court unbridled discretion would essentially render the individual rules meaningless. In this regard we endorse the comments of Saltzburg and Redden in Federal Rules of Evidence Manual (2d ed. 1977) at 14:
When Rule 102 states that the Federal Rule shall be construed to the end that the truth may be ascertained and proceedings justly determined, does this signify that whenever the Judge is doubtful as to whether evidence should be admitted or excluded, he should err on the side of admission in order to aid the search for truth?
The answer must be NO for several reasons. First, the Fourth Article of the new Federal Rules makes it clear that certain evidence must be excluded even though it is relevant, because it is too prejudicial or possibly too confusing. In such instances, the search for truth would not be aided by admitting this evidence. When the Trial Judge has doubts about the admissibility of evidence, he must always remember to balance the possible prejudicial effect of evidence against its probative value. Only then can he be sure that the search for truth is aided by his ruling. Second, the Rules also recognize that there are other policies served by rules of evidence aside from reaching accurate decisions as to what happened in a particular case. In dealing with offers to compromise, evidence of insurance, subsequent remedial measures, and privileges, for example, the Trial Judge must consider factors other than accurate reconstruction of historical facts. Finally, Rule 102 itself notes that the Rules must be construed to eliminate unjustifiable expense and delay. In short, there are other factors to be weighed against the probative value of evidence.
Professors Saltzburg and Redden's observation about delay is especially pertinent in the context of this case, which we have estimated will take at least a year to try.
Second, plaintiffs place great reliance on certain statements of Judge Forman in United States v. General Electric Co., 82 F.Supp. 753, 903 (D.N.J. 1949); "Broad discretion and great latitude are permitted in the reception of evidence in conspiracy cases.... Exaggerated and over-refined niceties in the rules of evidence must give way to the broad terms of Rule 43(a), Federal Rules of Civil Procedure, if full effect of the antitrust laws is to be given." Accord, United States v. E. I. DuPond de Nemours and Co. 10 F.R.D. 618, 621 (D. Del. 1950) (Leahy. J.). Plaintiffs thus advance the principle that more liberal evidentiary rules apply in antitrust cases. In response, we note only that these opinions preceded the Federal Rules of Evidence by many years and that we have found nothing in the Rules themselves to indicate that they are to be applied less (or more) stringently in antitrust cases than in any other kind of lawsuit.
Our pretrial evidentiary hearings have consisted mostly of legal argument and colloquy, although on some points testimony has been taken. Numerous and lengthy supporting briefs and affidavits have been filed. Each piece of evidence to be considered has been accompanied by what we have termed a Document Submission Sheet (DSS). The DSS was prepared in three stages: the proponent of the evidence prepared Part I, identifying the document, referencing it to the FPS and enclosing it within a folder (both Japanese original and English translation, in cases of Japanese language documents). The party opposing admission completed Part II, setting forth the grounds of objection, and the proponent then completed Part III, stating its rejoinder. A copy of the DSS is attached as an exhibit to this opinion.
The hearings were grueling. They consumed almost five weeks, with most sessions running into the early evening (and one running well past midnight). Notwithstanding the length of the hearings, we were unable to cover all of plaintiffs' critical documents but will consider them on the basis of detailed post hearing submissions and supplemental memoranda.
We turn first to a discussion of the basic principles of Rule 803(8), with particular emphasis on 803(8)(C), to be followed by an application of these principles (and those of Article IV of the F.R.E. - Relevancy and Its Limits) to the specific documents at issue here.
II. Rule 803(8) - Its Scope and its Requisites
A. Matters Admissible Under 803(8)(C)
Rule 803(8) creates an exception to the hearsay rule for:
Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth (A) the activities of the office or agency, or (B) matters observed pursuant to duty imposed by law as to which matters there was a duty to report, excluding, however, in criminal cases matters observed by police officers and other law enforcement personnel, or (C) in civil actions and proceedings and against the Government in criminal cases, factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness.
The first two elements of the Rule, sections (A) and (B), are relatively simple and, at least as applied to civil actions, are essentially self-explanatory. They represent a codification of generally accepted evidentiary principles, and we shall not dwell upon them herein.
Section (C), on the other hand, is quite complex, and represents a major change from common law principles.
For, quite contrary to what was generally permitted at common law, under the aegis of 803(8)(C), materials representing the distillation of a process that may have involved years of investigation and the taking of thousands of pages of testimony may be presented to the trier of fact in one fell swoop.
A graphic example may be found in In Re Plywood Antitrust Litigation, 1979-1 Trade Cases P62,459 (E.D. La. 1978) in which three manufacturers of softwood plywood were alleged by a class of purchasers to have conspired in violation of the Sherman Act to fix and maintain a system of delivered prices. The private antitrust case followed on the heels of a lengthy Federal Trade Commission (FTC) proceeding under § 5a of the FTC Act, which had involved the same facts. Judge Pointer, relying on 803(8)(C), admitted into evidence in the antitrust trial findings of an FTC Administrative Law Judge and lengthy excerpts from the FTC's opinion.
The language of 803(8)(C) literally provides for the admission of entire agency reports so long as those reports include, inter alia, factual findings ("reports... setting forth... factual findings..."). It is clear, however, that the intent of the drafters was to permit admission of a somewhat narrower class of materials, i.e., factual findings set forth in reports.... The question thus becomes what constitutes a factual finding, a question that is not free from difficulty given the general willingness of the courts to admit as 803(8)(C) material the so-called evaluative report, which often contains, in addition to findings, a large amount of material that is not independently admissible.
See discussion infra.
Black defines a finding variously as "the result of deliberations of a jury or the court; a decision upon a question of fact reached as the result of a judicial examination or investigation; a determination from the evidence of a case; a conclusion by way of reasonable inference from the evidence." These definitions comport with the common sense meaning of "finding" and support the view that a finding does not include legal conclusions that may have been reached by an investigator
and is necessarily something more than a mere recitation of evidence, although we think the term is broad enough to encompass any statement of fact that represents a conclusion on the part of an investigator and that such factual statements need not be formally termed "findings" in order to come in under 803(8)(C).
This conclusion accords with the case law, which has applied 803(8)(C) to a variety of materials. See, e.g., Melville v. American Home Assurance Co., 443 F.Supp. 1064 (E.D. Pa. 1977), rev'd on other grounds, 584 F.2d 1036 (3d Cir. 1978) (admitting Federal Aviation Administration Airworthiness Directives); Lloyd v. American Export Lines, Inc., 580 F.2d 1179 (3d Cir.), cert. denied, 439 U.S. 969 (1978) (factual findings of hearing examiner in Coast Guard proceeding admissible); Baker v. Elcona Homes Corp., 588 F.2d 551 (6th Cir. 1978) cert. denied, 441 U.S. 933 (1979), (police report containing findings about color of traffic light at the time of accident admissible); Sage v. Rockwell Int'l Corp., 477 F.Supp. 1205 (D. N.H. 1979) (reports discussing general circumstances of an airplane crash and conclusions about the cause of the crash admissible); Fraley v. Rockwell Int'l Corp., 470 F.Supp. 1264 (S.D. Ohio 1979) (related case to Sage, supra, admitting report containing conclusions about the cause of the crash, but excluding report discussing general circumstances on the ground that it was prepared by an inexperienced investigator and was therefore not trustworthy); United States v. School Dist. of Ferndale, 577 F.2d 1339 (6th Cir. 1978) (findings of HEW hearing examiner admissible).
Although it was not entirely clear until the caselaw began to develop, it is now generally accepted (and settled in this circuit) that under the aegis of 803(8)(C) evaluative reports of public agencies (i.e., those rendering normative judgments or opinions, not just reciting facts), are admissible. See Melville v. American Home Assurance Co., supra 443 F.Supp. 1064.
The caselaw has yet to make clear, however, whether the conclusion that evaluative reports come within the definition of 803(8)(C) findings renders admissible all materials within those reports -- even those that do not fall within our definition of "finding," including hearsay materials that are not otherwise admissible. This is a critical question, for as will be seen, the staff workups upon which plaintiffs here rely contain, in many instances, multiple hearsay and broad ranging and highly conclusory statements.
Although the fact is not reflected in the published opinion, the record of the Plywood litigation, supra, shows that Judge Pointer admitted as findings only factual statements and excluded those that contained legal conclusions. Furthermore, he only admitted those findings of the administrative law judge that were approved and adopted in the opinion of the F.T.C.
We agree with the approach taken by Judge Pointer. We conclude that so long as the trustworthiness criteria are met (see discussion infra), where a staff report contains factual averments that are not mere recitations of evidence, but rather reflect conclusions made by the staff on the basis of evidence before it, those averments may be admitted as 803(8)(C) "findings." Where, however, the staff report is submitted to a commission or other public agency charged with making formal findings, only those factual statements from the staff reports that are approved and adopted by the agency will qualify as 803(8)(c) "findings."
Furthermore, we do not believe that the drafters envisioned that 803(8)(C) would result in the admission of all the exhibits and data that might accompany a given staff report. As we see it, the drafters of 803(8)(C) were motivated by a variation on the theme underlying all hearsay exceptions - that circumstantial guarantees of trustworthiness are provided by the presumption that governmental officials will perform their duties faithfully.Accordingly, they were agreeable to the receipt into evidence of governmental agency findings. We do not perceive, however, that the drafters intended to piggyback the whole administrative proceeding on top of the trial. To do so would permit vast amounts of time to be spent addressing the admissibility of exhibits which are but excess baggage with no direct bearing on the issues at trial. Such a result would, indeed, offend the basic constructional rule, F.R.E. 102, one of whose precepts is the "elimination of unjustifiable expense and dalay," as well as the principles underlying Rule 403.See John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 632 (3d Cir. 1977). This point will come clearer as we proceed through our analysis of the evidence.
Conceptually, we believe this result is consistent with the principles of F.R.E. 703, under which an expert's opinion, based in part on inadmissible evidence, is admissible even though the underlying data is not admissible for its truth. We sense a reluctance on the part of the courts to permit the underlying data unless it is independently admissible. See, e.g., Baker v. Elcona Homes, supra, 588 F.2d at 559 (6th Cir., (1978). But see Complaint of American Export Lines, Inc., 73 F.R.D. 454 (S.D.N.Y. 1977) in which Judge Tenney admitted not only the factual findings made pursuant to a prior proceeding of the United States Coast Guard but the exhibits that accompanied the Coast Guard record and report as well. Judge Tenney's decision as to the exhibits consumes but one brief paragraph of his opinion, and we do not feel bound by it. Instead, we adhere to the view that, unless independently admissible, the exhibits do not come along as "excess baggage." We agree, however, with Judge Tenney's decision that transcripts of agency hearings are not admissible under 803(8)(C), but are tested instead under the provisions of Rule 804(b)(1) [Former Testimony].
With these general observations as to the scope of 803(8)(C) findings in mind, we turn to a discussion of the "trustworthiness" proviso of 803(8) under which those findings must be tested.
B. The trustworthiness Proviso
The text of Rule 803(8)(C), supra, and the Advisory Committee note, see infra, make plain that broad leeway is accorded to the trial judge to exclude 803(8) material where the sources of information and other circumstances indicate lack of trustworthiness. Because 803(8)(C) is such a potent litigation tool, the parties are prone to skirmish mightily over the trustworthiness vel non of public records and reports. The Advisory Committee makes clear that opponents of the evidence have the burden of rebutting the presumption that 803(8)(C) materials are trustworthy and admissible. "[The] rule... assumes admissibility in the first instance but with ample provision for escape if sufficient negative factors are present." Advisory Committee Note to Rule 803(8). See, Melville v. American Home Assurance Co., 443 F.Supp. at 1112.
The trustworthiness question is something which, as we see it, must be resolved prior to trial, lest there be lengthy delays in the midst of the trial process (most disconcerting to the jury) while the court adjudicates the matter; accordingly, the in limine or pretrial hearing is the appropriate vehicle for such adjudication, which can take the form of admission or exclusion of evidence or redaction thereof. Although Rule 803(8) requires the court to make a threshold determination on the trustworthiness issue, the Rule also clearly implies that where the court determines that the evidence passes that threshold, the party against whom the evidence is offered may counter it by introducing before the jury evidence of the untrustworthiness of the public record or report.
However, where the probative value of the report is outweighed by the danger of unfair prejudice, confusion of issues, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence attendant upon the opponents' efforts to establish untrustworthiness of the report, the court may exclude the report under F.R.E. 403. John McShain. Inc. v. Cessna Aircraft Co., 563 F.2d 632 (3d Cir. 1977).
The Advisory Committee addressed the important question of the criteria to be applied in determining trustworthiness of evaluative reports, listing the following factors for assistance in passing upon admissibility:
"(1) the timeliness of the investigation...; (2) the special skill or experience of the official...; (3) whether a hearing was held and the level at which conducted...; (4) possible motivation problems...."
Advisory Committee note to 803(8) (citations omitted). The Committee also observed: "Others no doubt could be added." As we proceeded through our hearings on public records and reports, it became clear to us that this statement was correct, or perhaps prescient.
Consonant with the Advisory Committee's thought, and in aid of disposition of the evidentiary questions before us, we have fashioned a number of additional criteria for evaluating trustworthiness.
Each of these criteria has emerged from the crucible of our hearings, and is responsive to what we perceive to be a legitimate concern about the trustworthiness of the reports and findings proffered by plaintiffs. The criteria are responsive to a number of questions about the scope of Rule 803(8)(C) which have not been addressed, or at least extensively developed, in the caselaw. These criteria, which we shall apply in our trustworthiness evaluation, in addition to the Advisory Committee's four criteria, are as follows:
(1) The finality of the agency findings, i.e., the stage of the proceedings at which the findings were made (whether they are subject to subsequent proceedings or de novo review), and the likelihood of modification or reversal of the findings.
(2) The extent to which the agency findings are based upon or are the product of proceedings pervaded by receipt of substantial amounts of material which would not be admissible in evidence (e.g. hearsay, confidential communications, ex parte evidence), and the extent to which such material is supplied by persons with an interest in the outcome of the proceeding.
(3) If the findings are products of hearings, the extent to which appropriate safeguards were used (Administrative Procedure Act, Due Process), and the extent to which the investigation complied with all applicable agency regulations and procedures.
(4) The extent to which there is an ascertainable record on which the findings are based.
(5) The extent to which the findings are a function of an executive, administrative, or legislative policy judgment (as opposed to a factual adjudication) or represent an implementation of policy.
(6) The extent to which the findings are based upon findings of another investigative body or tribunal which is itself vulnerable as the result of trustworthiness evaluation.
(7) Where the public report purports to offer expert opinion, the extent to which the facts or data upon which the opinion is based are of a type reasonably relied upon by experts in the particular field.
There was considerable dispute about all of these matters during the course of the hearings.The foregoing formulation represents a conclusion on our part that public records and reports will fail to pass trustworthiness muster under the circumstances suggested in these criteria, which we shall now address briefly. Fuller explication will emerge from an application of these principles to the actual evidence before us.
Addressing our first additional criterion, we believe that where the proffered findings are preliminary, emerging at an early stage of the agency's proceedings
and are not only subject to extensive reconsideration, but are highly susceptible to modification or reversal, they cannot be deemed trustworthy. The drafters of the Rule appear not to have contemplated that it might be used to admit administrative decisions which are subject to appeal, for unlike Rule 609(e)
nothing in the Rule precludes or qualifies its application when the findings that a party seeks to introduce are subject to extensive review. Given the absence of provision for such a situation by the drafters, we believe the appropriate course is to consider the preliminary finding a candidate for admissibility but to also consider the forthcoming review in determining whether or not the findings are trustworthy.
Of course, if administrative findings are reversed, rejected, or overruled on appeal, the rejected findings must be deemed untrustworthy, as we have occasion to discuss in more detail below in connection with the CF29's. See Saltzburg and Redden, Federal Rules of Evidence Manual (2d Ed. Supp. 1980) at 152.
In sum, we think that the effect on admissibility of the fact that a particular finding was made in the "first inning," so to speak, of a protracted process should be considered under the rubric of trustworthiness and not, as the defendants contend, as part of the definition of "findings." The dangers of modification or reversal were demonstrated in the Plywood litigation, supra, when the decision of the FTC (though not the findings actually introduced) was recently reversed. See Boise Cascade Corp., et al, Trade Reg. Rep. P21,393, enforcement denied, Boise Cascade Corp. v. FTC, [1980-2] Trade Cases P63,323. We turn to our second, third, and fourth additional criteria, which we shall address together.
The fact that the findings were based in part on hearsay or on confidential sources which were not divulged to the defendants does not ipso facto render the findings so untrustworthy as to be inadmissible. No court has held that in order to be admissible under 803(8)(C), findings must result from proceedings with all the procedural protection afforded under the APA or in judicial proceedings. Such an interpretation would be at odds with the failure of the drafters of 803(8)(C) to require first hand knowledge by the investigator or a duty to report by those contributing information. It would also conflict with the Advisory Committee's "assumption that a public official will perform his duty properly," i.e., will exercise his judgment and give appropriate weight to the various types of evidence relied upon by the government. Moreover, given the fact that most 803(8)(C) reports are in the nature of expert reports, such a construction would be inconsistent with Rule 703, which provides that the facts and data forming the basis for an expert opinion need not themselves be admissible so long as they are of a type reasonably relied upon by experts in the particular field.
We believe, however, that findings cannot be deemed trustworthy where they emerge from proceedings that are pervaded by the receipt of ordinarily inadmissible material or that are notably lacking in procedural safeguards, although appropriate weight must be accorded where the agency has complied with its own procedures. Cf. Lloyd v. American Export Lines, supra, 580 F.2d at 1189 (judgment of Japanese court held admissible under 803(22) where foreign proceedings accorded with "civilized jurisprudence" and were "stated in a clear and formal record.")
Thus, when hearsay dominates, the report may be excluded.See Swietlowich v. County of Bucks, 610 F.2d 1157, 1165 (3d Cir. 1979) (district attorney's report proffered in civil rights litigation excluded because based on hearsay); John McShain, Inc. v. Cessna Aircraft Co., supra (National Transportation Safety Board report based upon hearsay statements excluded); and see Melville, supra, where one FAA airworthiness directive which rested on hearsay was excluded. 443 F.Supp. at 1115, n. 75. But see n. 21 infra.
The fifth additional criterion we have set forth - the extent to which the findings are a function of an executive, administrative, or legislative policy judgment or represent an implementation of policy - is essentially a variation on the theme of "motivational problems" identified as one of the Advisory Committee's trustworthiness criteria, although we think it different enough to warrant separate discussion. In our view, where there exists within an agency a preconceived notion of the policy that the agency is attempting to implement, e.g., sheltering United States industry from what are perceived as the deletorious effects of unfettered international competition, see Part IV infra, the "findings" of that agency are to at least some degree a function of that preconceived notion, and though they may be "trustworthy" in light of the particular policy objectives the agency is attempting to further, they may or may not be trustworthy for other purposes. Overriding policy concerns bring into question the objectivity of an agency's findings just as the objectivity of a report prepared in anticipation of litigation, Palmer v. Hoffman, 318 U.S. 109 (1943), may be questionable.
The final criterion upon which we need comment at any length is the last additional criterion we have listed - where the public report purports to offer expert opinion, the extent to which the facts or data upon which the opinion is based are ascertainable and/or are of a type reasonably relied upon by experts in the particular field.
That criterion is a function of the close relationship between 803 (8) (C) and F.R.E. Article VII (the opinion evidence rules), which we discussed in our opinion in Melville, 443 F.Supp. at 114-15, and of which the court of appeals likewise took cognizance. 584 F.2d at 1316. As we have suggested above, 803(8)(C) evaluative findings are frequently offered for their underlying (or overriding) expertise; hence, implicit in the trustworthiness determination is the right to attack: (1) the agency's expertise, see Advisory Committee Note ("the special skill and experience of the official"); (2) the basis of its opinion or finding, and (3) its helpfulness to the jury (F.R.E. 702). Just as an opinion may be held inadmissible if its basis is sufficiently tainted, so may a public record or report which is in effect an opinion.
We have considered plaintiffs' argument that 803(8) and the opinion evidence rules differ in that the latter require a foundation to be laid prior to the introduction of the expert's testimony whereas 803(8) omits the foundation requirements. This argument is answered in Melville, supra, 443 F.Supp. at 1115-in the case of public records and reports, the foundation can be attacked under the trustworthiness rubric. "[Where] the foundation of an opinion would be discredited under Rule 705 cross-examination, the presumptive trustworthiness of the opinion might well be sufficiently impugned to disqualify the report under 803(8)(C), thus requiring the proponent of the report either to produce the declarent for purposes of cross-examination or to forego use of the evidence."
We have also considered, and concur with, plaintiffs' contentions that there is no requirement in the F.R.E. that evidence be dispositive of a particular factual issue to be admissible. Where a public record or report passes the trustworthiness threshold, its weight is for the jury, subject to evidence and argument by the opposing party that the report is not trustworthy (and also subject to the overriding requirement that if the probative value of the report is outweighed by the delay involved in litigating trustworthiness, it may be excluded under F.R.E. 403. John McShain, Inc. v. Cessna Aircraft Co., supra).However, the court's obligation to make the threshold determination, at an in limine hearing, remains. This determination, as we see it, must come from a balancing process wherein all of the relevant factors are evaluated. Where the public report is in the nature of an expert opinion, those factors include a consideration of whether the agency possesses sufficient expertise, see n. 21, supra, whether the factual basis of the report is flawed and whether the facts or data upon which the opinion is based are ascertainable and/or are of a type reasonably relied upon by experts in the field.
Against this background, we turn to consideration of the 1921 Antidumping Act material.
III. The 1921 Antidumping Act Material
The plaintiffs have submitted for consideration seven documents arising out of proceedings instituted by the Treasury Department under the 1921 Antidumping Act, 19 U.S.C. § 160, et seq (repealed 1980). We have sketched the procedure under the 1921 Act in our opinion filed on April 14, 1980, dismissing the greater part of plaintiffs' claims under the Antidumping Act of 1916. The chronology of the proceeding may be gleaned from a description of the documents before us, listed by their DSS numbers:
1. The Antidumping Proceeding Notice, 33 FR 8851 (1968);
2. The Withholding of Appraisement Notice, 35 FR 14100 (1970);
3. The Treasury Department Determination of Sales at Less Than Fair Value, 35 FR 18549 (1970);
4. Determination of Injury, United States Tariff Commission Investigation No. AA1921-66 (undated);
5. Notice of Dumping Duty to Be Imposed, 36 FR 4576 (1971) [consists of DSS #4 with introductory text];
5A. The Treasury Department Finding of Dumping, 36 FR 4597 (1971); and
6.Numerous Customs Form 29's (various dates in 1978) [appraising dumping duties against various defendants and other importers].
The defendants' objections to the 1921 Act submissions are manifold and we shall take them up in detail as we discuss each document. Suffice it to say by way of introduction that defendants' overriding arguments fall into the following categories:
1.The documents do not constitute findings within the meaning of § 803(8)(C).
2. The documents are not trustworthy.
3. The documents are not relevant.
4. Any minimal probative value the documents may have is outweighed by the factors listed in Rule 403.
It would take chapters, not pages or paragraphs, to describe the labyrinthine procedures under the 1921 Antidumping Act. Those proceedings, to paraghrase the old movie title, are a many-layered thing. Moreover, although the proceedings with which we are now concerned have been going on for years, they are nowhere close to resolution. On a fair estimate, it might take another decade before they are resolved, that is if the settlement recently entered into between the Treasury Department and the respondents in that proceeding is overturned in court.
We will not describe the entire procedure here; it is amply developed in the record. However, we will sketch the major events in the twelve-year history of the proceeding as a necessary background to our consideration of the defendants' evidentiary objections.
B. The 1921 Act Proceedings
An administrative proceeding under the 1921 Antidumping Act could be initiated by the Customs Service sua sponte or by any person who had information that merchandise was, or was likely to be imported into the United States under circumstances bringing it under the purview of the Act, and who communicates that information in writing to the Commissioner of Customs. The Japanese television proceeding was initiated by the receipt of information from the law firm of Lincoln & Stewart on behalf of the Imports Committee of the Tube Division of the (United States) Electronic Industries Association. In accordance with applicable customs regulations, the Commissioner of Customs then undertook a summary investigation to determine whether or not the information was "patently in error" or whether for other reasons further investigation was not warranted. Following that summary investigation, the Commissioner published in the Federal Register an "Antidumping Proceeding Notice," as was required by the regulations whenever a proceeding was not discontinued after the summary investigation. That notice constitutes DSS #1. The notice stated, in principal part, that information had been received in proper form which tended to indicate that television receivers from Japan were being sold at less than fair value, within the meaning of the Act, and that the Customs Bureau was "instituting an inquiry... to determine the validity of the information." 33 Fed. Reg. 8851 (June 18, 1968).
In the course of that inquiry, Treasury officials investigated the prices during the six-month period from November, 1967 to May, 1968 of five Japanese companies: Matsushita, Hitachi, Toshiba, Sharp and Sony. The "less than fair value" ("LTFV") investigation lasted for two and one-half years, during which time Customs officials sought to determine the "purchase price," the "exporter's sales price," and the "home market price," as defined in the 1921 Act and in regulations promulgated thereunder. The determination whether or not LTFV sales had been made depended upon whether the "purchase price" or "exporter's sales price," representing prices in the United States, were lower than "home market price," representing prices in Japan. The three types of prices on which the determination was based were not actual transactional prices, but were constructs derived by applying to actual transactional prices a variety of adjustments reflecting, for instance, freight charges, selling expenses, or differences in the circumstances of sale. The LTFV proceedings consisted primarily of the verification of transactional price data submitted by the five Japanese manufacturers, and of decisions, made informally by anonymous Treasury officials after ex parte contacts with representatives of United States and Japanese manufacturers, to allow or disallow adjustments claimed by the Japanese manufacturers.
Following the publication of that notice, the Treasury Department held an informal hearing on October 14, 1970, to permit interested persons to make oral presentations of their views. No testimony was taken at that hearing, and no record was made; indeed, the participants were forbidden to make a transcript of the hearing by electronic or other means. The ultimate decisionmaker in the LTFV phase of the proceedings, Assistant Secretary of the Treasury Eugene T. Rossides, did not attend the hearing.
On December 5, 1970, the final result of the LTFV inquiry was published in the Federal Register, 35 Fed. Reg. 18549. This "Determination of Sales at Less Than Fair Value" is now offered as DSS #3. In it, Assistant Secretary Rossides found that television receivers from Japan were being sold at less than fair value, within the meaning of the 1921 Act. The determination, which occupies little more than one column on one page of the Federal Register, was based on a comparison of either the "purchase price" or the "exporter's sales price" with the "home market price." Although the LTFV finding did not state the magnitude of the margin between United States and Japanese prices, subsequent statements of customs officials, which are in the record before us, put the LTFV margin at 2.2%. The determination listed, in a conclusory fashion, the types of adjustments which had been made to arrive at each of the price constructs, but offered no statement of the reasons why particular adjustments were made, the amounts of the adjustments, the models and categories of television receivers with respect to which each adjustment was made, or the manufacturer with respect to whose prices the adjustments were made. The determination made no mention whatever of the adjustments claimed by the manufacturers which Treasury officials had disallowed and, in particular, gave no statement of the reasons for disallowance of such claimed adjustments.
Following the LTFV determination, the 1921 Act proceeding was referred to the United States Tariff Commission in accordance with 19 U.S.C. § 160(a) for an investigation as to whether an industry in the United States was being injured by reason of LTFV sales of television receivers from Japan.An evidentiary hearing was held before the Tariff Commission, which issued its "Determination of Injury" on March 4, 1971. The Commission considered confidential submissions from American manufacturers which were not divulged to counsel for the importers. At the evidentiary hearing, counsel for the importers were not permitted to cross-examine witnesses with respect to confidential data to which those witnesses referred during direct testimony.
The Tariff Commission found that an industry in the United States was beling injured by reason of the importation of television receivers from Japan which were being sold at LTFV prices. It found the injured industry to consist of "the facilities in the United States for the production of television receivers," and noted that there were approximately 20 firms in the industry. The Commission's report did not mention any firm individually, but discussed only injury to the industry as a whole. A typescript of the report is offered ...