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September 29, 1980


The opinion of the court was delivered by: BECKER



 (Admissibility of Materials Relating to Activities in Japan)

 I. Preliminary Statement

 This is the second in a series of opinions which will address the myriad issues raised during the course of a lengthy pretrial evidentiary hearing in this complex antitrust case. The anatomy and scope of the case has been described in our opinion on subject matter jurisdiction, filed April 14, 1980. The nature and scope of the evidentiary hearing has been described in the first opinion in the current series, filed on August 7, 1980. 1/ This opinion will consider admissibility of three major groups of documents: (1) materials seized by the Japanese Fair Trade Commission (JFTC) in "raids" on the offices of several of the defendants here who were respondents in the so-called "Six Company Case"; 2/ (2) testimony and statedments or "protocols" given by officials of the respondent companies during the course of the JFTC proceedings in the "Six Company Case"; and (3) materials produced in discovery from the files of the Japanese defendants and others relating to activities in Japan of Japanese manufacturers of consumer electronic products or of associations of manufacturers. There were virtually no documents in these categories whose admissibility was agreed upon, and all of the documents were the subject of heated dispute about their admissibility.

 In the course of the pretrial evidentiary hearing, we also considered the admissibility of a host of materials produced in discovery from the files of defendants and of American purchasers of Japanese-made consumer electronic products relating to certain import transactions. We do not rule on the admissibility of any of those documents in this opinion. However, the legal questions involved in determining the admissibility of the import-related documents are essentially the same as those considered herein. 3/ As a result, the legal rulings in Part II, infra, will relate as well to the import transaction documents. To the extent that rulings on the admissibility of particular import-related documents are necessary, we will make them in our forthcoming opinion deciding the defendants' motion for summary judgfment on proof of conspiracy.

 Before we proceed further, some explanation is in order as to our reasons for writing a long opinion about admissibility of the documents relating to activities in Japan, while reserving admissibility rulings relative to import related documents. When we first addressed defendants' summary judgment motions in April 1979, we were compelled to postpone consideration of those motions addressing plaintiffs' conspiracy claims because of the amorphous state of the record. At that time plaintiffs were invoking in support of these claims not only the entire JFTC record of some 6300 pages, but also an unlimited number of documents from among the millions of documents produced for inspection during discovery. It was clear to all concerned that out of this huge record there were a limited, though yet unidentified, number of critical documents whose admissibility it was important to determine and that, at all events, it was impossible for us to decide the summary judgment motions in the absence of a more discrete record. We concluded that what was first required was the filing of plaintiffs' Federal Pretrial Statement (F.P.S.), with preclusive effect. 4/ We later decided that a second step was necessary -- the holding of pretrial evidentiary hearings at which we could focus clearly on plaintiffs' key documents and also rule on admissibility since summary judgment motions are to be determined on the basis of admissible evidence. See Rule 56(e).

 Even before the F.P.S. was filed, the emanations from the JFTC proceedings pervaded the case. During the course of many pretrial conferences, and in the initial summary judgment briefs, we were constantly confronted with plaintiffs' allegations that the documents seized by the JFTC during the course of the Six Company Case were laden with evidence of conspiratorial activities by the defendants, in both the domestic Japanes and the export matters. The most frequently cited sources were the three diaries of Seiichi Yajima, an official of Toshiba Corp. The significance of Yajima's diaries was underscored when the F.P.S. was finally filed, for it contained no less than 600 references to them.

 The F.p.s./ was similarly suffused with references to other documents which had their source in the JFTC proceedings, many of which were likewise represented as demonstrating the existence of a broad based unitary conspiracy to destroy the American consumer electronic products industry by a low price predatory export conspiracy funded or "war-chested" by conspiratorial high prices in Japan. Because of the extremely broad and allegedly damning implications of the JFTC material as portrayed in the F.P.S., it became evident to us that the intensive scrutiny of all of the critical documents was a condition precedent to any full and fair decision on the summary judgment motions.

 On the other hand, the references to import-related documents were, generally, more limited in character. What is reflected in most of the import related documents is a practice on the part of the Japanese manufacturers to give rebates to the American importers. These rebates had the effect of reducing the actual price paid by importers below the "check-price" divulged to American customs authorities and to the Japanese Ministry of International Trade and Industry (MITI). The existence of the rebate practice is not disputed by most of the defendants (although they do dispute plaintiffs' allegations of customs fraud). While the plaintiffs contend (and defendants deny) that a variety of inferences may be drawn from these documents that point to concerted activity by defendants and their co-conspirators in furtherance of a predatory export scheme, the important point here is that the fact of the rebate payments is not generally in issue. As a result, the admissibility vel non of most of these documents is not significant for the Rule 56 motion.

 We will thus consider - and at some length because of its importance - the admissibility of Mr. Yajima's diary. Also to be considered at some length, because they are alleged to be of similarly great import are the diaries of Messrs. Yamamoto and Yamada, both employees of Hitachi; Mr. Okuma, an employee of MELCO, and Mr. Tokizane, an employee of Matsushita. During the course of the Six Company Case proceedings, Mr. Yajima and a number of other officials of Japanese companies were interviewed and gave statements, referred to herein as "protocols." They also gave formal testimony at hearings before the JETC. In plaintiffs' submission, the protocols and testimony contain significant evidence of conspiratorial activity by defendants, and also authenticate the diaries under Federal Rule of Evidence 901 and qualify them as business records within the meaning of Federal Rule of Evidence 803(6). 5/ These matters will also be treated at length, as will certain of the materials produced in discovery relating to the activities in Japan of Japanese manufacturers or manufacturers associations.

 The evidence whose admissibility is treated in this opinion is not only of critical importance to plaintiff's case in chief, but it also forms a major part of the factual basis for the opinions of their expert witnesses, the admissibility of which we will consider in a subsequent opinion. In plaintiffs' submission, the documents coming from Japan demonstrate that the Japanese consumer electronic products manufacturers, including the seven manufacturing defendants, Matsushita (MEI), Toshiba, Hitachi, Sanyo, Melco, Sharp, and Sony, entered into conspiratorial arrangements, effectuated through a series of monthly meetings involving mid-level to top-level management, the purpose of which was to fix prices in Japan at a high level in order to finance the predatory export campaign to destroy the American consumer electronics products industry to which we have referred. The documents themselves, for the most part, are said to set forth accounts in a variety of forms of what transpired at the meetings of the various "conspiratorial groups," principally the so-called "Tenth Day Group," but including higher Echelon groups as well.

 Textually, the protocols, testimony and other writings indicate that there were meetings of Japanese consumer electronics products executives, and that at those meetings they discussed predictions of domestic demand, the establishment of domestic "bottom prices," i.e. minimum suggested retail sales prices, and appropriate domestic wholesale profit, retail profit, and "rebate" margins in the retail distribution chain. There are scattered references in the documents to "export," though, for the most part, the executives attending the meetings had no responsibility for export matters.

 The protocols, which were prepared by JFTC investigators and signed by the witnesses, are straightforward, readily comprehensible, narrative statements. The testimony is similarly clear, and is developed through question and answer in a manner which is generally similar to that employed to develop testimony in the U.S. legal system. 6/ The diaries and memoranda are another matter. The diaries all appeal to have been written solely for the diarist, with the notations written in a kind of shorthand or code which the writer presumably himself can understand, but which no one else could fully understand except for occasional excerpts. As defendants correctly note, they are a "hodge podge" of notes in which the author has not explained with any degree of clarity what he meant, to what he was referring, or even where he was when he wrote it. While plaintiffs have clarified a few of the references in the diaries by cross reference to JFTC testimony or protocols, only an infinitesimal part has been thus explained. One would have to engage in the rankest of speculation to make sense out of the vast bulk of the diaries.

 One cannot tell with any certainty where entries begin and end. There are many time gaps in the notebooks or diaries, and only a portion of the "conspiratorial meetings" otherwise demonstrated to have taken place are recorded in them. There are all kinds of arrows and innumerable symbols and notations and references which are unintelligible to the translators, who report those references as "illegible." Many of them are written in a code which only a cryptographer could solve.

 There is both intrinsic and extrinsic evidence that many of the diary entries reflect occurrences at meetings which the diarists did not attend, but rather about which they were informed by others. The diaries plainly contain numerous instances of second and third level hearsay. Because of the manner in which the diaries are kept, however, it is not possible to sort out which entries are based upon the diarist's personal knowledge and which are based upon hearsay. There is no evidence of regular or continuous habit on the part of any of the diarists in making their notebook entries or checking them systematically. There is no evidence that the diaries were ever communicated (or intended to be communicated) to anyone else. Given this general description, it is obvious that the admissibility of the diaries would be in sharp dispute.

 The evidentiary hearings focused only upon the important documents in the case. Some, including the diaries, were considered in enormous depth, in argument lasting hour after hour. During the course of argument, plaintiffs would advance many reasons why the particular document was authenticated, why it was a business record or an admission or a statement against interest, and so forth, referencing a host of matters in the voluminous record. The defendants would respond, and all would join in extensive colloquy with the court on each point.

 Unlike our procedure in connection with the public records and reports, we did not address at the hearings matters of relevancy and its limits (F.R.E. Article IV). There are serious relevancy issues with respect to many of these documents; however, with one exception, we will defer relevancy considerations, including those under Rule 403, until our opinion on the summary judgment conspiracy motions. 7/ We also defer until then the determination as to whether the plaintiffs have produced evidence aliunde of a conspiracy which would render their evidence admissible against coconspirators under Rule 801(d)(2)(E). 8/

 The admissibility of the referenced JFTC materials has been fought on a number of battlegrounds. First, the defendants have challenged the authenticity of much of the proffered material, asserting that the plaintiffs have failed to meet their burden of establishing authentication under F.R.E. 901 and 902. Defendants urge that the notion of authentication does not implicate merely the genuineness of the subject document, but also involves additional layers of foundation. In order for a diary to be authenticated within the meaning of Rule 901, for example, defendants argue that plaintiffs must not only establish its genuineness, but also, to the extent that it is proffered as a faithful account of what transpired at meetings attended by the diarist, must establish personal knowledge by the diarist of the recorded events.

 The remaining disputed issues relate to Article VIII of the FRE, the hearsay rules. The principal hearsay objection is defendant's contention that none of the diaries or memoranda are records of regularly conducted activity within F.R.E. 803(6), the "business records" exception to the hearsay rule. This contention is advanced in four aspects: (1) that plaintiffs have failed to qualify the materials as business records by the testimony of a "custodian or other qualified witness" as required by 803(6); (2) the documents to not meet the requirement that they were kept in the regular course of business and that it was the regular practice of the business to make the record; and (3) the plaintiffs have failed to establish the "personal knowledge" required under 803(6); and (4) the materials are untrustworthy. Defendants characterize the diaries and memoranda as an unintelligible hodge podge of materials which inherently cannot qualify as business records, especially in the absence of a witness to explain them. Plaintiffs rejoin that a "custodian or other qualified witness" is not necessary and that they have adequately qualified the documents through circumstantial means, including analysis of the documents themselves, cross-validation by way of comparison with other documents, and the fact of production of the documents by defendants under F.R.Civ.P. 33(c) or 34. 9/

 Alternatively, the plaintiffs seek admissibility of some of the diaries and memoranda under F.R.E. 801(d)(2) (B)(C)&(D) as admissions against the company which employed the declarant.In each such instance, defendants object that the requisite foundation has not been laid on the grounds that the requirements of subsections (B)(C)&(D) have not been met. Moreover, admission of the diaries is resisted on the grounds that in each case they were not communicated to anyone within or outside the company hence do not qualify under the rules for authorized or vicarious admissions. Defendants also argue that the diaries do not constitute "assertions" within the meaning of Rule 801(a), hence cannot be admissions, and that they cannot in any event qualify as admissions because they are rambling, conjectural and suppositous statements, rather than specific, clear, and concise ones.

 Plaintiffs also seek admission of the diaries and memoranda under Rule 803(1), as present sense impressions, under Rule 803(5) as recorded recollection, and under 803(24) and 804(b)(5), the residual or "catchall" exceptions, on the grounds of their supposed truthworthiness. They apparently also assert them to be statements against interest under 804(b)(3). The defendants deny the applicability of 803(1) and 804(b)(3) to the diaries for a variety of reasons, substantive and foundational. Defendants also argue that the foundational requirements of the residual exceptions are not met (or have been waived) because of plaintiffs' failure to try to secure equally or more probative evidence by other reasonable means (i.e. depositions of the diarists and memo writers). They further assert that the materials lack the circumstantial guarantees of trustworthiness required by 803(24) and 804(b)(5). Finally, they argue that the residual exceptions are not intended to be available in situations otherwise provided for by the rules, an argument which they dub the "near miss" doctrine. 10/

 The protocols are said by plaintiffs to be admissible as statements against interest under F.R.E. 804(b)(3), under the residual exceptions, and as admissions of a party opponent under 801(d)(2)(C) and (D).Plaintiffs' reliance on F.R.E. 804(b)(3) requires a showing under 804(a) of unavailability of the declarant. While there is no dispute as to Mr. Yajima's unavailability, since he died in 1968, defendants strongly contend that all of the other declarants are available because, under 804(a)(5), their attendance or testimony could easily have been procured. More specifically, defendants represent that virtually all of the diarists and persons who attended the alleged conspiratorial meetings are alive and well and still employed by their respective companies and that they have been available for discovery or trial depositions for years.

 Defendants also contend that the requirements of 804(b)(3) are not met because the statements and testimony given in the JFTC proceeding were not against the pecuniary or proprietary interest of any witness whose statement of testimony is proffered, much less "so far" contrary to his interest, or "so far" subjecting him to civil or criminal liability that a reasonable man in his position would not have made the statement unless he believed it to be true, the requirement of Rule 804(b)(3).They also assert that plaintiffs have advanced no evidence of consciousness of contrariety to interest, another requirement of 804(b)(3). Defendants add that even if the witnesses' statements tended to subject their employers to civil or criminal liability, the posture of the employers does not matter for Rule 804(b)(3) purposes.

 The JFTC transcripts are said to be admissible as former testimony under 804(b)(1), as well as under 804(b)(3) and (5) and 801(d)(2). Defendants object to the introduction of the JFTC testimony mainly on the grounds that they did not have a similar motive to develop the testimony by direct, cross, or redirect examination as is required by Rule 804(b)(1), since the issues in that case were very different from this one. The defendants also object to admission of the testimony under the other hearsay exceptions for the reasons already stated with respect to the protocols and diaries.

 Defendants argue that neither the protocols nor the testimony are admissions because the persons making them were neither authorized to make a statement concerning the subject, nor were the statements made concerning a matter within the scope of their agency or employment. Finally, defendants oppose the notion that the residual hearsay exceptions are available in these circumstances. First they invoke the so-called "near miss" doctrine under which the residual exception cannot be invoked if the proffered hearsay fits within the framework but fails to qualify under a specific hearsay exception. Second, they challenge the trustworthiness of these materials. Third, they assert that more probative evidence could be procured by reasonable efforts.

 In connection with each of our determinations, whether under the authentication rules or the hearsay rules, we must determine whether admissible evidence is required to support the factual findings which are the underpinnings of the ruling on the admissibility of the evidence proffered. Rule 104(a) provides that in making determinations of preliminary questions concerning the admissibility of evidence, the court is not bound by the Rules of Evidence, except with respect to privileges. Under Rule 104(b), entitled "Conditional Relevancy," however, the jury rather than the court makes the ultimate determination of admissibility, hence admissible evidence is required. The parties dispute the need for admissible evidence in the qualification process not just in connection with authentication, but also at the subsequent levels, e.g. qualification as a business record. The plaintiffs argue that admissible evidence is not required in the qualification process, relying principally on 104(a), while the defendants maintain that it is. 11/

 The foregoing is a catalog of the more significant legal questions which have arisen during the course of our hearings over the JFTC and cognate materials. As we have noted, similar questions have arisen in connection with the materials produced in discovery in connection with import transactions.Still other interesting legal questions have arisen which we shall enumerate as we proceed through our discussion. Because virtually all of these questions have been raised with respect to each document, the discussion of each will perforce be many layered, though we hope not labyrinthine.

 We have observed about the diaries the difficulty that anyone other than the diarist would have in understanding them. It is of course obvious that there are indeed persons who could eliminate that difficulty and decipher any codelike references in any diary: either the diarist himself, or, in his absence, someone present at the meeting whose proceedings are supposedly recorded in the diary, or someone contemporaneously familiar with the content of the diary or memo and the diarist's recording practices. However, the plaintiffs, despite their role as proponents of the documents hence bearers of the burden to qualify them, have not proffered the testimony in any form of any such person. Moreover, they have made it clear that they have no intention of doing so, before or at trial. Rather, they prefer to qualify the documents circumstantially and to offer selected (though voluminous) excerpts therefrom in connection with the summary judgment motions and at trial.

 The litigation strategy we have described is not our supposition, but rather the plaintiff's clear statedment. Edwin P. Rome, Esquire, plaintiffs' lead counsel, has confirmed the strategy again and again. For instance, he noted during the course of the evidentiary hearings:

 I assume personally, Your Honor, whatever onus there may be about the fact that we chose quite deliberately, and I state it of record, we chose quite deliberately not to undertake to depose persons in a foreign language when we had documents that in our view documented and explicated a conspiracy to violate American law.

 PTO 268 at 143-44 (June 27, 1980). There are numerous similar statements by Mr. Rome in the voluminous pretrial record in this case. 12/

 This litigation strategy was maintained in the face of repeated warning from the defendants that they intended to challenge the admissibility of the diaries, memoranda, protocols, and testimony. This warning came not only during the course of our numerous pretrial conferences, but even in Melco's motion for summary judgment, filed April 1978, well before the close of discovery. In that motion, Melco spent many pages detailing the kinds of evidentiary foundational deficiencies we deal with herein. Yet the plaintiffs, all the while insisting they were ready for trial, declined to take depositions of those who might shed light upon the documents. For example, at the pretrial conference of June 14, 1978, six months before the close of plaintiffs' discovery period, plaintiffs' counsel stated to the Court:

 MR. McELROY: We said a long time ago, and Ed Rome has repeated throughout, that the plaintiffs in this case are ready to go to trial upon reasonable advance notice. We believe that discovery in the case to date is sufficient for us to get to a jury and to get a verdict. Likewise, we believe that, and it follows, that we believe we have had enough discovery, we have enough evidence to defeat a motion for summary judgment. We don't need further discovery in order to respond to [Melco's counsel] Mr. Reath's motion.

 PTO 107, at 21.

 Indeed, the plaintiffs were challenged on several occasions by the Court as to why, having proceeded with this case for close to a decade, and having inspected literally millions of documents, they had failed to take depositions for the purpose of laying foundation for the admissibility of the challenged JFTC materials *fn13" It was pointed out that such foundational depositions are regular fare in complex cases, i.e. it is the custom for counsel to take them. *fn14" Mr. Rome consistently responded that it was his considered decision not to do so. The plaintiffs did take depositions of some Japanese executives in connection with the motions relative to personal jurisdiction and venue. n15/ That foundational (or substantive) depositions of Japanese executives were feasible is demonstrated by the repeated and uncontroverted representations of defense counsel that, with the exception of Mr. Yajima who died in 1968, all of the diarists and all persons whose names were focused upon during the evidentiary hearings are alive and well in Japan, still employed by their companies, and that they have been available for depositions for many years.

 It is important to note that our observations about plaintiffs' strategy are not merely retrospective, for it is clear that plaintiffs intend to call no witnesses from Japan to lay foundation for admissibility at trial either. Not only have they so conceded, but had they intended to do so they would have been obliged to list those witnesses in their preclusive F.P.S., which they have not done.

 The defendants' explanation for plaintiffs' litigation strategy is not gentle. They state it in their "Memorandum of Certain Defendants in Support of their Position that Materials from the JFTC Proceeding Are Not Admissible in Evidence" (pp. 3-4) as follows:

 Indeed, it seems clear that it was precisely because the Japanese materials do not constitute records of the only two matters that could make them properly probative in this case, that plaintiffs chose not to follow the normal route of taking depositions to lay a proper foundation for their introduction. Plaintiffs knew that such depositions would not be helpful to their case and that, at the end of such discovery, while they might have come up with admissible evidence regarding discussions of "bottom prices" by six companies for two years (1965-1966), they would not come up with any admissible evidence of the creation of a U.S. export invasion fund or of a United States predatory price agreement. They, therefore, seized upon the ploy of attempting to introduce the materials without proper foundations -- and without any opportunity by the other side to cross examine -- and arguing to the jury that all kinds of wild inferences can be drawn from a handful of cryptic and basically incomprehensible "export references" found in materials which were obviously not written to record export activities. Since plaintiffs' direct case will last for some months, the jury will be hopelessly prejudiced by such tactics before the first of the defendants could even be heard.

 In furtherance of this approach, plaintiffs adopted the tactic of piling into the FPS hundreds of thousands of materials and spuriously arguing that they are all evidence of conspiracy, so that they could create the argument that it would be extremely burdensome for them to lay foundations in the normal way, even though their PPTM and summary judgment briefs show that they are, in fact, relying on a relatively small number of such Japanese materials.

 Defendants conclude with a little homily:

 Fortunately, as we will demonstrate below, our Rules and evidentiary precedents, which are rooted in basic fairness and due process, do not allow for such a result. Evidence must be shown -- through the establishment of a foundation in prescribed ways -- to be proper and reliable before it can be thrown before a jury and begin to affect that jury's mind.

 Of course, the legal aspect of their homily is quite correctly stated. And while we do not endorse defendants' rhetoric, we do note that we find a kernel of truth in defendants' evaluation of plaintiffs' litigation strategy.

 The volume of material before us for consideration is staggering. We refer not only to the large number of documents (and the large volume of document pages), but also the extensive briefs and other submissions of the parties. It was represented to us during the hearings that, at that juncture, some 85 or more lawyers and paralegals were working close to full time on the case (75 for the defendants). Scores of memoranda relating to admissibility were filed during the hearings, and it is difficult to digest all of that material so as to write a worthy opinion. We shall do our best.

 Because the plaintiffs have not produced the conventional evidentiary foundation, i.e. testimony of a custodian or other qualified witness, it is necessary that we evaluate the subject documents on the basis of the circumstantial factors called to our attention by plaintiffs' counsel at our evidentiary hearings. Doing so will be a tedious process, requiring us, in the case of each document, to review plaintiffs' foundation and defendants' response and then to apply the applicable legal standards to determine admissibility. We are aided materially in this regard by the post-hearing submissions of the parties which summarize the plaintiffs' foundation and defendants' response on each document, and we draw heavily upon those submissions. After a point there will be some degree of repetition in the factual patterns, enabling us to simply incorporate earlier discussion by reference. However, because of the importance plaintiffs attributed to each of the critical documents taken up in this opinion, we cannot, in fairness, unduly truncate or abbreviate our description of plaintiffs' foundational proffer or defendants' response. All of this makes for a very long opinion for which we apologize but which we cannot avoid. This is because of our obligation to the parties in this very important case to which they have devoted so much time and expense, and also to the Court of Appeals which will ultimately review it and will need a full statement of the reasons for our major rulings.

 For the variety of reasons which follow, we conclude that neither the diaries, memoranda or "minutes of meetings" nor discrete portions thereof are admissible in evidence; that the JFTC testimony is admissible against the defendants in the Six Company Case only, except for any so-called "export" and war-chesting "references," which are, with minor exceptions, inadmissible; and that the protocols are admissible against the employer of the maker of the protocol.

 In terms of opinion structure, we shall follow the same course here as we did in the first opinion in this series. In Part II, we shall set out the legal principles applicable to the evidentiary questions we must decide, resolving the disputes between plaintiffs and defendants on legal issues. We shall take up all of the sections of the F.R.E. claimed by the parties to have bearing upon whether any of the documents were authenticated or admissible under one of the exceptions to the hearsay rules. As will be seen, there is hardly a section or subsection of Article VIII (hearsay) or Article IX (authentication) of the F.R.E. that escaped their advocacy. The number of rules invoked is largely a function of plaintiffs' circumstantial mode of laying foundation, as opposed to doing so by direct testimony. Because of these myriad issues and the fact that some of them are of first impression, this discussion will be extremely detailed. Then, in Part III, we shall describe the documents at issue and then apply the legal principles to the documents, determining their admissibility vel non. Fortunately, the breadth of the Part II discussion will cut "across the board" and will obviate the necessity for further legal discussion in Part III.

 II. Rulings on Contested Legal Issues Concerning Interpretation of the Federal Rules of Evidence

 A. Authentication

 The requirements for authenticating documents are set forth in Article IX of the F.R.E. The general provisions of Rule 901(a) provide:

 The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.

 1. The Standard for a Preliminary Ruling on Authentication Under Rule 104; Will Inadmissible Evidence Suffice?

 Plaintiffs and defendants differ as to whether admissible evidence is necessary to authenticate evidence. Defendants say "yes" and plaintiffs say "no." We begin with the Advisory Committee's Note to Ruel 901, which states expressly that the requirement of showing authentication falls in the category of "relevancy dependent upon fulfillment of a condition of fact," and is thus governed by the procedure set forth in Rule 104(b), and not that set forth in Rule 104(a). Rule 104, titled "Preliminary Questions," provides in pertinent part:

 (a) Questions of admissibility generally. Preliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court, subject to the provisions of subdivision (b). In making its determination it is not bound by the rules of evidence except those with respect to privileges.

 (b) Relevancy conditioned on fact. When the relevancy of evidence depends upon the fulfillment of a condition of fact, the court shall admit it upon, or subject to, the introduction of evidence sufficient to support a finding of the fulfillment of the condition...

 (e) Weight and credibility. This rule does not limit the right of a party to introduce before the jury evidence relevant to weight or credibility.

 The Advisory Committee Note to Rule 104(b) makes plain that preliminary questions of conditional relevancy are not determined solely by the judge, for to do so would greatly restrict the function of the jury as the trier of fact. If, for instance, there were serious questions in this case as to whether Mr. Yajima's diary was a forgery, it is obvious that a question of evidence so critical could not be decided solely by the court.Under the aegis of Rule 104(b), the judge makes a preliminary determination whether the foundation evidence is sufficient to permit a factfinder conclude that the condition in question has been fulfilled.If so, according to the Advisory Committee Note:

 ... the item is admitted. If after all of the evidence on the issue is in, pro and con, the jury could reasonably conclude that fulfillment of the condition is not established the issue is for them. If the evidence is not such as to allow a finding, the judge withdraws the matter from their consideration.

 In United States v. Goichman, 547 F.2d 778, 784 (3d Cir. 1976), the Court of Appeals formulated this principle as follows:

 [The] showing of authenticity is not on a par with more technical evidentiary rules, such as hearsay exceptions, governing admissibility. Rather, there need be only a prima facie showing, to the court, of authenticity, not a full argument on admissibility.

 Thus, once a prima facie showing has been made to the court that a document is what its proponent claims, it should be admitted. At that point the burden of going forward with respect to authentication shifts to the opponent to rebut the prima facie showing by presenting evidence to the trier of fact which would raise questions as to the genuineness of the document. *fn16" The required prima facie showing of authentication need not consist of a preponderance of the evidence. Rather, all that is required is substantial evidence from which the trier of fact might conclude that a document is authentic. As the court in Goichman, supra, stated:

 [It] is the jury who will ultimately determine the authenticity of the evidence, not the court. The only requirement is that there has been substantial evidence from which they could infer that the document was authentic.

 Id. (emphasis added). *fn17"

 The plaintiffs contend that in determining whether an adequate prima facie showing has been made, the court may consider inadmissible evidence. We disagree. Under Rule 104(b), authentication must be established by the "introduction of evidence." By using this language, the Rule plainly contemplates that the jury's determination of authenticity will be made only on the basis of admissible evidence. We find nothing in either Rule 104 or the Advisory Committee notes to suggest that the jury may consider inadmissible evidence in this regard, except to the extent that evidence may be admitted "subject to" the introduction of subsequent (admissible) evidence of its authenticity.

 So then, while the court's power to "consider" inadmissible evidence under Rule 104(a) is clear, the substantive determination which the court is required to make on the issue of authentication is whether admissible evidence exists which is sufficient to support a jury finding of authenticity. For it would be a pointless exercise for a judge to rely upon inadmissible evidence to fulfill the substantial evidence requirement when the trier of fact can only consider admissible evidence that a proffered document is authentic. *fn18" Accordingly, we hold that under Rule 104(a), Rule 104(b), and Goichman, our task in ruling on authenticity is limited to determining whether there is substantial admissible evidence to support a finding of authentication by the trier of fact. *fn19"

 Since only admissible evidence can form the basis for the determination of authentication, the degree to which plaintiffs rely on using some of the documents they have submitted to authenticate other documents creates problems of circularity, and in some cases it is more logical to determine other aspects of admissibility before reaching the 901 determination. This will be considered infra with regard to specific categories of documents.

 2.The Notion of Authentication and the Scope of Rule 901(a); is Authenticity More Than Mere Genuineness?

 Another important issue addressed in argument and briefs is the intended scope of Rule 901(a) and, in particular, the meaning of the last phrase which defines authentication as a finding "that the matter in question is what its proponent claims." In contrast to the position of the plaintiffs, who equate authentication with genuineness, the defendants contend that the scope of authentication is determined by the claims made by the proponent of a document and encompasses all of what the proponent "must claim it is in order to use it as he wishes to" *fn20" (emphasis in original). They argue that the subject documents' "logical status as evidence, and hence their authenticity, could be established only by showing that they are accurate and reliable accounts..." *fn21" (of the allegedly conspiratorial meetings reported), otherwise "they are not probative" *fn22" and thus not what their proponent claims. Since authentication is but a "special aspect of relevancy," Advisory Committee Note to Rule 901(a), this is an appealing argument. After all, the plaintiffs claim that Yajima's diary should be admitted to portray the agreements made at certain meetings. What does it matter then that the diary is not a forgery, if it is not an accurate and reliable account of what transpired at the meetings Yajima purported to record?

 The problem with defendants' argument is that it reads the language of 901 to subsume nearly all of the issues involved in many cases in which the issue may arise. For example, the proponent claims that many of the documents under consideration here are "business records." As the Advisory Committee Notes to 901 make clear, however, this is a completely separate determination which must be addressed outside the scope of the authentication inquiry. *fn23" While the Advisory Committee Notes state specifically that authentication is an aspect of conditional relevancy, they are also quite clear that it is but one kind of conditional relevancy, *fn24" and does not subsume all of the evidentiary foundation which must be established in order to show that a document is relevant evidence:

 Authentication and identification represent a special aspect of relevancy. Thus a telephone conversation may be irrelevant because on an unrelated topic or because the speaker is not identified. The latter aspect is the one here involved. *fn25"

 (emphasis added) (citations omitted).

 The specific illustrations under subsection (b) further support a narrow interpretation of authentication. For example, authentication can be established by expert or non-expert opinion on handwriting, F.R.E. 901(b)(2), a method which would do nothing to establish a document as the "accurate and reliable account" that defendants claim it must be in order to authenticate it.

 While, as defendants urge, different showings are required in accordance with the type of evidence presented, in all of the cases and examples which they have cited authentication involves establishing the origin or authorship of an item, or the connection of an item to a particular individual or party. *fn26" In Rhoads v. Virginia-Florida Corporation, 476 F.2d 82 (5th Cir. 1973), upon which defendants place their strongest reliance, the authenticity of the drawings at issue had been conceded by the opposing party. The court there pointed out that:

 authentication of the documents merely established their authorship, the proof of some human's "personal connection with a corporal object."

 7 Wigmore on Evidence § 2129, at 564 (3d ed. 1940). 476 F.2d at 85 (emphasis added). The court then proceeded to discuss additional requirements for admissibility and suggested that the drawings must either be "verified" by testimony of a witness, citing 3 Wigmore On Evidence § 790, at 218, or must qualify as an exception to the hearsay rule. *fn27" As we have noted supra, a finding of authentication does not establish admissibility, and any other applicable requirements must also be met.

 We conclude that, notwithstanding the apparent sweep of 901, created by its use of a rather expansive locution, i.e., the prescription that authentication is satisfied by evidence sufficient to support a finding that the matter in question is "what its proponent claims," the notion of authentication is a narrow one, akin to the notion of genuineness. The other foundation requirements should not be simply subsumed under the authenticity terminology, but should remain analytically distinct. We find other support for this conclusion. First, the Advisory Committee Note, subdivision (a) provides:

 Also, significant inroads upon the traditional insistence on authentication and identification have been made by accepting as at least prima facie genuine items of the kind treated in Rule 902, infra.

 (emphasis added). Moreover, a review of the annotations under Rule 901 confirms this view, for the cases discussing the Rule, have a similarly limited scope. See S. Saltzburg & K. Redden, Federal Rules of Evidence Manual 651-52 (1977) and 245-47 (1980 supp.) [hereinafter cited as "Saltzburg"]. Thus such foundation issues as personal knowledge of the declarant, which defendants urge us to treat as authentication issues, will be dealt with separately under the appropriate rules.

 3. Methods of Authentication

 Rule 901(b) lists several examples of methods of authentication which would meet the requirements of 901(a). *fn28" The Advisory Committee Notes for this subsection state that these examples are not intended to exhaust all the possibilities, "but are meant to guide and suggest, leaving room for growth and development in this area of the law."

 In their endeavors to authenticate the matters before us, the plaintiffs place primary emphasis on 901(b)(4), Distinctive Characteristics. They also assert, however, that the testimony and protocols from the JFTC proceedings may provide evidence of authenticity under 901(b)(1) (Testimony of a Witness with Knowledge), and that since some of the documents fall just short of the age requirements under 901(b)(8) (Ancient Documents), this subsection in conjunction with other circumstances would be sufficient to fulfill the 901(a) requirements. Once authenticity has been established for one document, 901(b)(3) may be used to authenticate other documents of a similar type.

 Rule 903 (Subscribing Witness' Testimony Unnecessary) and the illustrations given under 901(b) make it clear that testimony is not essential to establish authenticity, and, as McCormick states, "authentication by circumstantial evidence is uniformly recognized as permissible." *fn29"

 Elements which tend to establish authenticity may be found both in rule 901 itself, in the Advisory Committee Notes, and in the cases which we will outline in the following discussion. One such element is the source of a particular document, i.e., the method or place of its discovery.

 A. Source of the Document

 Plaintiffs urge that the defendants' production of certain of the documents in answer to interrogatories under Rule 33(c) is itself sufficient to establish them ipso facto as authentic. We disagree with this reading of the Rule. *fn30" Given the breadth of the discovery rules and the broad requirements for production, we feel it would undermine the liberal intent of the those rules to interpret such production as an admission of authenticity in the absence of a specific assertion by the producing party regarding the nature or authorship of the documents produced.

 The production of the documents by the defendants may, however, provide circumstantial evidence of authenticity. McCormick notes that a prima facie showing of authenticity is made by the emergence of a document from public custody. He concludes that, while the circumstances of private custody are too varied to warrant an expansion of the rule in every case, "proof of private custody, together with other circumstances, is frequently strong circumstantial evidence of authenticity." *fn31"

 In Alexander Dawson, Inc. v. N.L.R.B., 586 F.2d 1300 (9th Cir. 1978), the Ninth Circuit upheld the decision of an Administrative Law Judge admitting ob application forms even though there had been no testimony regarding who had filled out the particular applications, and no witness could testify to a specific chain of custody. The circumstances surrounding their discovery, *fn32" considered along with their contents *fn33" was held adequate to authenticate the forms. In United States v. Natale, 526 F.2d 1160, 1173 (2d Cir. 1975), cert. denied, 425 U.S. 950 (1976), a notebook that had been seized during the defendants' arrest for extortion was admitted at trial. The Court of Appeals enumerated among the facts supporting its authenticity: (1) the presence of the defendants at the office where the notebook was discovered; (2) that defendants had held numerous meetings with a witness in that office; and (3) that one of the defendants admitted that the office was his. This, together with evidence supplied by the notebook's contents, see infra, was sufficient to allow its admission into evidence. *fn34" We will follow the Dawson and Natale courts by treating the circumstances of their production as one element of circumstantial evidence which tends to authenticate the documents produced by the defendants.

 b. Characteristics of the Document Itself

 The characteristics of the document itself are also a basis for establishing authentication, Rule 901(b)(4). The last phrase of the rule indicates, however, that characteristics of a document must be considered "in conjunction with circumstances." Although Weinstein states that a document "can be authenticated by its contents alone," it is clear, from the examples used, that he "means in light of surrounding circumstances." P901(b)(4)[01] at 901-46. All of the characteristics mentioned in 901(b)(4) are also subject to the overriding requirement of "distinctiveness" under that example.

 The first characteristic mentioned in 901(b)(4) is "appearance." Weinstein gives as examples of the types of appearance the courts may wish to consider: a postmark, a return address, a letterhead, a signature even where affixed by a rubber stamp, typing or form which corresponds to usual practice. *fn35" The aspect of the document's appearance which is most relevant with respect to the JFTC documents is the fact that many of them are marked with a particular person's name in the form of a "chop," a Japanese seal which contains a stylized rendition of a person's name and is sometimes used in lieu of a signature. During the discussion of authenticity of the so-called MITI statement, *fn36" proffered by defendants, they urged that the "chop" affixed to the document made it the legal equivalent of a signed document. Though this contention was resisted at that time by plaintiffs, we conclude that a "chop" should be given weight equivalent to a signature. We recognize that a "chop," like a signature, may not always be genuine. Furthermore, many people with the same surname may have a common "chop", hence the "chop" does not in every case indicate authorship. The particular use of a "chop" will be considered with respect to the individual document upon which it appears. Many of the import transaction documents also have distinguishing characteristics, particularly letterheads.

 A second characteristic mentioned in 901(b)(4), again subject to the distinctiveness requirement, is the contents, or substance, of the document. Contents have been used to establish authentication in a variety of ways. In United States v. Smith, 609 F.2d 1294 (9th Cir. 1979), hotel records of defendant's registration and charges incurred were introduced. Included in the evidence linking the defendant to the records were independent corroboration of his presence at meetings in the hotel, the use of names used by defendant in signing records, and the use of the address which appeared on defendant's business card. *fn37" In Natale, supra, the court similarly relied upon the corroboration of the contents of the notebook involved by independent evidence. One of the entries referred to a loan made to a witness in the case, and served to authenticate the document.

 In Goichman, supra, 547 F.2d at 783, an unsigned document entitled "History of Children's Assets," which listed the defendants' expenditures, had been produced as part of the docket record in a prior (domestic relations) proceeding. The contents of the document were corroborated by defendant's complaint in that proceeding, and the words "I" and "my" were used in conjunction with the first names of the defendant's three children. The Third Circuit held that this evidence of contents was sufficient to establish a prima facie showing of authentication.

  If the subject matter of a document refers to knowledge which only one individual would have had, it is sufficient to authenticate the document. 7 Wigmore on Evidence § 2148 (3d ed. 1940). Weinstein disagrees with the insistence on knowledge by only a single person, however, as he states, "the force of the inference decreases as the number of people who know the details... increases." Weinstein, § 901(b)(4)[01] at 901-46 and 47. In United States v. Wilson, 532 F.2d 641 (8th Cir.) cert denied, 429 U.S. 846 (1976), the prosecution sought to introduce a notebook which contained records of drug transactions. Though it was admitted that the author was unknown, the Court of Appeals upheld the authentication of the notebook on the grounds that only those persons acquainted with the particular transactions involved could have written the entries. *fn38"

  Some of the documents involved are said to contain information allegedly known only to a limited number of individuals who attended various meetings. The plaintiffs' own showing demonstrates that the number was not all that limited. However, to the extent that information contained in documents is corroborated by other admissible evidence, and is known to a limited number of individuals, these factors may be considered in determining whether sufficient evidence exists to authenticate it.

  c. Testimony and Interrogatory Answers

  Testimony before the JFTC, to the extent that it is found admissible, may also be used to authenticate other documents. Rule 901(b)(1) specifically holds testimony sufficient to establish authenticity.Where the testimony does not deal directly with any particular document offered, it may still be helpful in proving authenticity circumstantially. Weinstein P901(b)(1)[01] at 901-22. *fn39" We will have occasion below to consider JFTC testimony both as circumstantial and as direct evidence of authenticity.

  The answers to interrogatories may also be considered as "testimony" where they directly identify a document's source or author, corroborate the contents of particular documents, indicate the presence of a purported author at a meeting or a meeting's limited attendance, or otherwise establish the document's authenticity. While Weinstein notes that Interrogatories, Requests for Admissions and Stipulations "should be relied upon to dispose of most authentication problems before trial," § 901(b)(2)[01] at 901-23, the questions and answers in most of the interrogatories here are not specific enough to constitute a concession of authenticity.

  Since we have ruled that documents must be authenticated by admissible evidence, the admissibility of former testimony and the interrogatory answers themselves is an additional issue to be determined. Since the interrogatories may not be admissible against all defendants unless the plaintiff's conspiracy theory is accepted, this presents a particularly difficult situation. *fn40" Where authentication depends on the admissibility of an interrogatory, which itself depends on the plaintiffs' establishment of a conspiracy, the documents may be admitted "subject to" such a showing.

  d. Similarity to Other Authenticated Documents

  The example in 901(b)(3) allows the trier of fact to compare a document to another authenticated document in order to establish its authentication. In Dawson, supra, the employment applications involved were "on the same form" as applications whose authenticity was conceded. This, in conjunction with the circumstances of production, was considered sufficient to establish their authenticity, 586 F.2d at 1303. Many of the documents involved here are members of "groups" of documents, sharing similar characteristics.The authentication of one such document may serve as the basis for authenticating the others in a group on the basis of comparison, initially by the court, and ultimately by the trier of fact.

  e. Age of the Document

  A final element to be considered in our determination of authenticity is the age of the document. Rule 901(b)(8)(C) sets twenty years as the age requirement for "Ancient Documents." None of the documents now before us is twenty years old, although some may reach that age by the time of trial. *fn41" While Weinstein urges that this figure should not be regarded as an absolute necessity, *fn42" it is itself ten years shorter than the period under common law. *fn43" This is explained in the Advisory Committee Notes as being due to a shift in the underlying rationale for the rule from an emphasis on the unavailability of witnesses to an emphasis on the unlikeliness of a fraud over such an extended time period. While the Notes state that any time period is bound to be arbitrary, we feel that in the present case some additional indicia of authenticity are needed where all of the documents fall short of the twenty year limit.

  4. Self-Authentication Under Rule 902

  Rule 902 provides that certain documents are "self-authenticating" to the extent that no extrinsic evidence of authenticity is needed. Although 902(3) lists Foreign Public Documents as being of this type, the Advisory Committee Notes to 902(4) make it clear that 902(3) applies to the originals of documents and that 902(4) is the section applicable to copies. Under this section the copy must be certified as correct by either the custodian or other authorized person, and this certification must itself conform to Rule 902(3) in order to be received. *fn44"

  None of the documents involved here were obtained by plaintiffs from official custody or were accompanied by this type of official certification, and thus none are "self-authenticating" under Rule 902. Since the method of authentication provided in Rule 902 is not exclusive, however, plaintiffs' failure to procure certified copies does not bar authentication of the documents under Rule 901.

  5. "Best Evidence" Rule

  An issue closely related to authentication is set forth in Article X, often referred to as the "Best Evidence Rule." Rule 1002 states that the original of any writing is required, "except as otherwise provided in these rules..."

  One such exception is stated in Rule 1003, which admits "duplicates" *fn45" to the same extent as the originals, provided there are no genuine questions as to authenticity and it would not be "unfair" to admit them in the circumstances. The documents involved are all duplicates and would satisfy these conditions. However, the protocols and testimony which plaintiffs offer may be viewed as public records, and there is authority which suggests that Rule 1005 supersedes Rule 1003 with respect to public documents. *fn46"

  Rule 1005 deals specifically with Public Records, and provides two alternative methods of satisfying the "best evidence" requirements for copies of documents falling within its scope. The first is by providing a copy certified as correct in accordance with Rule 902, which as we noted supra has not been done with respect to any of the documents under consideration here. The second method is by presenting testimony of a witness who has compared the copy with the original. Only if neither of the foregoing can be obtained by "reasonable diligence" may other evidence of the contents be given. The plaintiffs have offered no testimony on the correctness of the copies offered, and have repeatedly asserted their intention to rest on their documentary evidence. Since "reasonable diligence" has not been exercised, the final clause of the rule is also inapplicable.

  This section is one which, it turns out, was not invoked by the parties. Rather, we called it to the parties' attention as we were surveying the law after the conclusion of the evidentiary hearing, concerned that, in the welter of argument, it had in fact been invoked directly or indirectly. By letter, we inquired of the parties about its applicability. Plaintiffs replied in their letter to the Court of August 5, 1980, that:

  defendants have not objected to the admissibility of the protocols or transcripts of testimony, or any other public records (or any other document for that matter) on the grounds that they are not true and correct copies of original records lodged elsewhere.

  A review of the record reveals that this contention is correct. Melco has argued that many of the documents were "copies that merely happened to be in the possession of the party" and in their July 12, 1980 brief, they listed among their objections to the testimony and protocols several points relating to the absence of certification or authenticating testimony, which are listed in our discussion of the testimony in Part VIII-B, infra. At no time have any defendants invoked Rule 1005, however, and none of the other defendants have made even passing reference to the issues involved under Article X. We therefore conclude that, despite the fact that defendants might have prevailed on the point, any potential issues under Rule 1005 have been waived. See Rule 103(a)(1). We will consider Melco's objection under the standards of Rule 901 which we have explained supra.

  Melco has also urged that the testimony is inadmissible under Fed.R.Civ.P. 80(c), which provides:

  (c) Stenographic Report or Transcript as Evidence. Whenever the testimony of a witness at a trial or hearing which was stenographically reported is admissible in evidence at a later trial, it may be proved by the transcript thereof duly certified by the person who reported the testimony.

  Plaintiffs have provided no certification for the JFTC testimony they have proffered. There is little case law or commentary on this rule. Rules 80(a) and (b), which dealt with the appointment of stenographers to take evidence in U.S. federal courts, were abrogated by 1946 amendments to the Rules because of the Official Court Reporter Act of 1944, 28 U.S.C. § 753. See 7 Moore's Federal Practice Part 2 P80.01 at 80-2. Because of its original context, we believe that Rule 80(c) should be read to apply only to evidence which was stenographically reported in the United States federal courts. See id P80.02 at 80-7 (rule should now be read in conjunction with Official Court Reporter Act of 1944). Accordingly, the rule has no application to the testimony before us, which was recorded in Japan.

  Having concluded our discussion of authentication and related matters, we turn to what are probably the most hotly contested evidentiary points, those relating to foundation requirements under 803(6), the business records exception to the hearsay rule. B. Qualification as a Business Record Under Rule 803(6)

  It is conceded that the numerous diaries, memoranda and letters considered during the pretrial evidentiary hearings are hearsay *fn47" and that to be admitted they must qualify under one of the exceptions to the hearsay rule. *fn48" The principal exception upon which the plaintiffs, as proponents of the evidence, rely is F.R.E. 803(6), the business records rule. *fn49" The Rule creates an exception from the hearsay rule for evidence which meets the following requirements:

  (6) Records of regularly conducted activity. A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstance of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

  It is clear that business records need not be in a particular form to be admissible under Rule 803(6), which refers broadly to "a memorandum, report, record, or data compilation, in any form." There are cases which hold, for example, that personal diaries or appointment books which are kept regularly for a business purpose may be admissible under Rule 803(6). E.g., United States v. McPartlin, 595 F.2d 1321 (7th Cir.), cert. denied, 444 U.S. 833 (1979). We thus reject defendants' position that a personal diary, though kept for business purposes, is per se inadmissible. Other cognate documents which have been found admissible are notes made in the course of negotiations for a business opportunity, Magnus Petroleum Co., Inc. v. Skelly Oil Co., 446 F. Supp. 874, 882-83 (E.D. Wisc. 1978), and a customer book kept by a member of a heroin importation conspiracy. United States v. Baxter, 492 F.2d 150, 164 (9th Cir. 1973), petition for cert. dismissed, 414 U.S. 801 (1973), cert. denied, 416 U.S. 940 (1974). Of course, a diary may fail to qualify as a business record. In Hospital Television Inc. v. Wells Television, Inc., 462 F.2d 417 (8th Cir.), cert. denied, 409 U.S. 1024 (1972), Mr. Justice Clark, sitting specially, upheld the District Court's refusal to admit a diary of longhand notes into evidence under 28 U.S.C. § 1732(a) on the grounds that it was not a business record.

  1. The Impact of Rule 104(a); Will Inadmissible Evidence Suffice?

  In determining whether the diaries and memoranda qualify under 803(6), we must, at the threshold, confront the question whether such a determination depends upon admissible evidence. Defendants submit that it does; plaintiffs submit that it does not. Neither the Advisory Committee Notes nor any of the commentators have specifically addressed the question whether determination of 803(6) status comes under 104(a), in which case it could be made on the basis of inadmissible evidence, or whether it is subject to the provisions of 104(b), which on our reading requires admissible evidence. See p. 26-27, supra (quoting Rule 104). Rule 104(b) applies by its terms only "[when] the relevancy of evidence depends on the fulfillment of a condition of fact" (emphasis added). The question is a close one, but with the qualification hereinafter stated, we conclude that hearsay exceptions do not raise questions of relevancy conditioned on fact.

  The term "relevancy" as used in the Federal Rules of Evidence does not encompass all objections to the admissibility of evidence.Evidence may be quite relevant to the issues in a lawsuit, but still be barred as hearsay, or for other reasons. Conversely, evidence may be otherwise admissible, but barred as irrelevant. See Seidelson, Conditional Relevancy and Federal Rule of Evidence 104(b), 47 Geo. Wash. L.Rev. 1048, 1059-1062 (1979). The Advisory Committee Note to Rule 104(a) gives several examples of evidentiary issues which are not matters of conditional relevancy -- unavailability of a hearsay declarant and the against-interest nature of a hearsay declaration. Thus it is clear that Rule 104(b) does not generally apply to determinations of the applicability of the hearsay exceptions.

  The determination of business record status, in particular, is one which, before the Rules, was always for the court to make; indeed, we know of no instance where that matter has been submitted to the jury. We conclude that this determination is still for the Court to make in accordance with Rule 104(a), and that we are not bound by the Rules of Evidence in making the 803(6) determination.Therefore, we may rely upon evidence which is wholly inadmissible, or is admissible only against certain parties, in determining whether or not the proffered documents meet the requirements of Rule 803(6).

  Since the determination of business record status will not be submitted to the jury at any point, there is no reason for us to treat our ruling on admissibility under 803(6) as a "prima facie" test. Cf. discussion at pp. 26-27, supra. Consequently, there is no reason to apply a lowered standard of proof to the determination. Cf. id. As a result, we will decide the questions relating to business record status on the basis of the preponderance of the evidence. *fn50"

  As a corollary of this ruling, we hold that if the proffered documents qualify as business records, they will be admissible against all parties. The defendants have argued that a document which is qualified as a business record by evidence which is admissible only against one defendant wuld itself be admissible only against that defendant. Our ruling that 104(b) does not apply to 803(6) undercuts defendants' position, since the qualification of a document under 104(a) may be based on evidence which is not admissible against the party against whom the document is offered.

  The defendants make forceful arguments against this position. They note, correctly, that they are entitled to attack the weight of any documents offered as business records before the jury by showing the lack of regularity of their preparation or other indicia of untrustworthiness. If admissibility as a business record is predicated upon inadmissible evidence, they submit that they should then be permitted to counter it with other inadmissible evidence. Coming full circle, they doubt the viability of the latter proposition, hence they question the validity of the former. Acknowledging the force of this position, we conclude that a strong argument can be made that the "custodian or other authorized witness" provision of 803(6) is tantamount to a requirement of qualification of a business record by admissible evidence.

  While the question is not free from doubt, we nonetheless conclude that 104(a) applies in this area and that qualification as a business record may be based upon inadmissible evidence.

  2. The Requirement That The Records Be Kept In the Course of A Regularly Conducted Business Activity And That It Was The Regular Practice of That Business Activity to Make the Record.

  Rule 803(6) requires not only that a document must be "kept in the course of a regularly conducted business activity," but also that it must be "the regular practice of that business activity to make the memorandum, report, record, or data compilation" (we refer to this hereinafter as the "regular practice" requirement). It is the regular practice requirement which is mainly at issue. We address it at length because of the significant dispute between plaintiffs and defendants as to its meaning.

  Defendants' approach to the language is literal, and rigorous. In defendants' submission, the rule says just what it means and means just what it says because of its underlying rationale. On their view "business records" can come in without the necessity of calling all the persons with personal knowledge of their construction precisely because their reliability is demonstrated by evidence of their making pursuant to established and routine company procedures for the systematic conduct of its business. Plaintiffs, on the other hand, despite lip service to the text of the rule, downplay the "regular practice" terminology, virtually excising notions of "routineness" from the rule, and instead appear to substitute therefor a requirement of reliability. Plaintiffs' theory is that no more need be shown to require admission of a business-related document under 803(6) than that it is business-related and that its sources of information or other circumstances indicate reliability and trustworthiness. As will be seen, we conclude that the defendants' view of the Rule is the correct one.

  The regular practice requirement originated in the Business Records Act, 28 U.S.C. § 1732(a), which governed the admissibility into evidence of business records in federal courts until the Federal Rules of Evidence took effect in 1975. Rule 803(6) as submitted to Congress did not include this requirement in its text, although a comparable requirement might well have been inferred from the Advisory Committee Note, which commented that "[the] element of unusual reliability of business records is said variously to be supplied by systematic checking, by regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by a duty to make an accruate record as part of a continuing job or occupation." The House Judiciary Committee restored the explicit regular practice requirement, and commented that "the additional requirement of Section 1732 that it must have been the regular practice of a business to make the record is a necessary further assurance of its trustworthiness." *fn51" (emphasis added). Thus it is plain that the regular practice requirement was taken by the House Judiciary Committee directly from existing law. Accordingly, we may appropriately consult pre-F.R.E. decisions interpreting the Business Records Act, as well as post-F.R.E. decisions, to determine the content of the requirement.

  Plaintiffs argue that "Congress, in enacting Rule 803(6), intended to liberalize the business records exception rather than to restrict prior practice." *fn52" Although the rule did liberalize the definition of what constitutes a "business," to the extent that they argue that there is a liberalization of foundational requirements over prior pratice, we note our disagreement. We find nothing in the Advisory Committee Notes or congressional debates suggesting otherwise. The House Judiciary Committee's action and the requirements of 803(6) relating to personal knowledge, see Part II. B.5, infra, support our view.

  In Gordon v. Robinson, 210 F.2d 192, 196 (3d Cir. 1954), the Court of Appeals commented:

  The legislative history of the Business Records Act clearly shows that it was not the intent of the draftsmen to make admissible all evidence, no matter how incopetent or irrelevant, merely by virtue of the fact that it appeared in a record made in the regular course of business. Rather it was Congress' purpose to admit into evidence entries of a purely clerical or routine nature not defendant upon speculation, conjecture or opinion, where "accuracy is substantially guaranteed by the fact that the record is an automatic reflection of observations" without the necessity of calling the various entrants to identify the entries as their own, as was required under the common law shop book rule.

  In Standard Oil Company of California v. Moore, 251 F.2d 188 (9th Cir. 1957), cert. denied, 356 U.S. 975 (1958), the Court of Appeals considered the admissibility of a number of memoranda, letters, and reports dealing with the pricing and marketing policies of oil companies other than the ones in whose files the writing was found. The Court of Appeals excluded the documents because of its finding that the plaintiff had failed to meet the burden of proving that the memoranda were made pursuant to any systematic or routine procedure. In so holding the Court discussed the regular practice requirement of § 1732:

  A memorandum or record cannot be considered as having been made in the "regular course" of business, within the meaning of § 1732, unless it was made pursuant to established company procedures for the systematic or routine and timely making and preserving of company records....

  Concerning almost all of the items comprising the grist of interoffice memoranda and letters which were introduced, the nonexistence of any such company procedure seems almost self-evident. They were patently intended as communications between employees, and not as records of company activity. Many of them were casual and informal in nature, seeking or providing information of a kind which could be, and no doubt often was, communicated by telephone or in conference. Most of them were apparently written as a result of the exercise of individual judgment and discretion.

  If there was any systematic or routine procedure being followed in the preparation and filing of such writings, the burden was upon appellee to prove it.He failed to do so, at least with regard to most such exhibits. Where this foundation was lacking, the exhibit was not admissible under § 1732.

  Id. at 215 (footnotes omitted). *fn53"

  The more recent decisions interpreting the regular practice requirement in Rule 803(6) have adhered to the standards articulated in Gordon and Standard Oil. E.g., United States v. Kim, 595 F.2d 755, 761 (D.C. Cir. 1979); United States v. McPartlin, supra, 595 F.2d at 1347-50; Coughlin v. Capitol Cement Company, 571 F.2d 290, 307 (5th Cir. 1978). We endorse these standards too. Plaintiffs rely heavily upon McPartlin, an action involving conspiracy to violate the wire and travel statutes arising from Ingram Corporation's bribery of city officials in connection with a sludge-hauling contract. The Court of Appeals for the Seventh Circuit upheld the trial court's determination that desk-calendar appointment diaries of William Benton, an unindicted co-conspirator, and a witness for the government, who was also a vice-president of Ingram Corporation, were admissible business records pursuant to Fed. R. Evid. 803(6). However, the McPartlin decision did not depart from the rule that the proponent of a business record must show that it was a regular practice to make the entries in question. As a foundation for admission, Benton testified at trial that he kept the diaries and made entries in them as a regular part of his business activity as a vice president of Ingram. Moreover, he testified that he relied upon them, thereby establishing the important element of reliability. Also worthy of note is the fact that the diaries were used at trial not independently, but for corroboration of details.

  Plaintiffs, in their Post-Hearing Supplemental Memorandum, argue that the courts have permitted documents to qualify as business records without regard to whether the particular type of record was routinely made. In support of this proposition they cite several cases, mostly pre-F.R.E., none of which support their position. In United States v. Hyde, 448 F.2d 815, 846 (5th Cir. 1971), cert. denied, 404 U.S. 1058 (1972), the Court admitted handwritten notes on the details of a certain settlement made at a meeting at which the notewriter, Branum, was present. However Branum testified at trial that he regularly kept informal notes of transactions on note cards in such situations which he turned over to another officer of his company for safekeeping. In United States v. Moran, 151 F.2d 661 (2d Cir. 1945), the Court admitted a memorandum of a telephone conversation made by a bank employee. However, the court found that the memorandum was a "routine record made for the bank's business as such," id. at 662, thereby satisfying the regular practice requirement. Magnus Petroleum Co. Inc. v. Shell Iol Co., supra, involved notes made in the course of negotiations for a business opportunity. However, based on the testimony of the scrivener, who was subject to cross-examination, the Court found them to be a part of a regularly conducted business activity.

  Thus, we hold that for the diaries and memoranda to be admissible under 803(6), the plaintiffs must show *fn54" that their entries were made pursuant to a systematic and routine procedure for the conduct of business, one characterized by careful checking and habits of precision and regularity such as will justify confidence in the reliability of the record keeping. At the least there must be a detailed showing of the nature of the business practice creating the document, the method of record-keeping, the source of the information, and the author's reliance on it. We will review the evidence of regular practice as we proceed through the documents one-by-one in our subsequent discussion. We turn now to a cognate question, the method of establishing that regularity of practice.

  3. The Requirement of Qualification by a Custodian or Other Qualified Witness

  F.R.E. 803(6) provides that its requisites be shown "by the testimony of the custodian or other qualified witness." This provision not only places the burden of laying a proper foundation upon the proponent of the document, but appears to require that the foundation be laid in a specific way. The plaintiffs have not sought to establish that the diaries are business records by such testimony. Rather the plaintiffs have relied upon a variety of other means and contentions: (1) evidence from the protocols and to a lesser extent from the JFTC testimony; (2) the fact that the diaries, memoranda, and other materials were produced by defendants pursuant to certain answers to interrogatories in which they invoked F.R.Civ.P. 33(c); (3) alleged estoppel to deny business records status because of the text and terms of certain answers to interrogatories; (4) cross references to other diaries, documents and answers to interrogatories in the case; and (5) evidence from the diaries and other documents themselves, i.e., the fact that they refer to important business matters; relate information supposedly relied upon by the employers of the diarists; and are said to look like business records (we have dubbed this the "res ipsa loquitur" theory of business records).

  Because of plaintiffs' failure to comply with the literal terms of F.R.E. 803(6) the defendants maintain that the diaries and memoranda do not qualify as business records. As evidence of the rigor of the requirement, the defendants point to the fact that the Business Record Act, 28 U.S.C. § 1732, which, as we have noted, governed the admission of business records into evidence in federal courts from 1936 until the F.R.E. became operative in 1975, contained no such requirement. They contend that this change in the law was carefully considered, and reflects a desire to be more rigorous in connection with the qualification of documents as business records, by requiring testimony of some qualified witness. Cf. p. 62, supra. The defendants cite a number of cases which, on their reading, hold that such testimony is required. E.g., Coughlin v. Capitol Cement Company, 571 F.2d 290 (5th Cir. 1978); United States v. Jones, 554 F.2d 251 (5th Cir.), cert. denied, 434 U.S. 866 (1977); States v. Carranco, 551 F.2d 1197 (10th Cir. 1977). Defendants also cite a number of pre-F.R.E. cases to similar effect. See, e.g., United States v. Rosenstein, 474 F.2d 705 (2nd Cir. 1973); Hagans v. Ellerman and Bucknall Steamship Company, 318 F.2d 563, 574-77 (3d Cir. 1963).

  Coughlin, for instance, appears to be quite specific on the point:

  There can be no doubt but that the party who seeks to introduce written evidence must in some way authenticate it. We agree that under the exception, "[the] testimony of the custodian or other qualified witness who can explain the record-keeping of the organization is essential. If the witness cannot vouch that the requirements of Rule 803(6) have been met, the entry must be excluded."

  571 F.2d at 307 (citation omitted). There are similar statements in Hagans v. Ellerman ("no foundation was offered to qualify the document as a record kept in the ordinary course of business... or that such surveys were systematically ordered for it"). See also Lewis v. Baker, 526 F.2d 470, 474 (2d Cir. 1975), ("All that is required is that someone who is sufficiently familiar with business practices be able to testify that the record was made regularly as part of those business practices and that the record is a truly authentic one"); United States v. Blake, 488 F.2d 101, 105 (5th Cir. 1973) (testimony must be given by a custodian"); National Research Development Co. v. Great Lakes Carbon Corp., 410 F. Supp. 1108, 1113 n. 20 (D. Del. 1975) (M. Schwartz, J) ("basic elements of the Federal Rules of Evidence 803(6) exception... are lacking in that there has been no showing by a 'custodian or other qualified witness' that the notes were either made or kept in the regular practice of investors' professional activity").Plaintiffs, on the other hand, counter with the argument that the literal approach to 803(6) as been discarded by courts under appropriate circumstances. Plaintiffs cite a number of cases where records were qualified by courts under 803(6) in the absence of a custodian. E.g., United States v. Hines, 564 F.2d 925 (10th Cir. 1977), cert. denied, 434 U.S. 1022 (1978); (vehicle bill of sale) United States v. Holladay, 566 F.2d 1018 (5th Cir.), cert. denied, 439 U.S. 831 (1978) (seized gas station notebooks demonstrating themselves to be part of single entry bookkeeping system continually maintained since 1967 for purpose of accounting for receipts and disbursements held admissible under 803(6)). Accord, 4 Weinstein P803(6)[02] at 803-152. Plaintiffs also cite pre-F.R.E. decisions in support of their position. United States v. Leal, 509 F.2d 122 (9th Cir. 1975) (hotel registration forms required by Hong Kong law supported by affidavit of assistant manager); United States v. Ragano, 520 F.2d 1191 (5th Cir. 1975) (corporate reports required by state law admitted without testimony). Plaintiffs submit that this result is supported by the modern and flexible approach of the Federal Rules which favor the submission rather than the exclusion of probative evidence, citing F.R.E. 102.

  Close examination of the cases cited by both parties reveals that none of them have come squarely to grips with the question with which we are faced: may the proponent of materials sought to be qualified under F.R.E. 803(6) meet his burden without introducing testimony of the "custodian or other qualified witness." In the cited cases upholding exclusion there was plainly an inadequate basis to meet 803(6), whether or not live testimony was supplied. *fn55" In the cases admitting the documents, the court had no difficulty in finding the test met, but did not expressly resolve the question whether the evidence which qualified the document must be disregarded because of the absence of the witness. See also E. C. Ernst, Inc. v. Koppers Co., Nos. 79-2184, 79-2290 & 79-2320, slip op. at 11 (3d Cir. July 25, 1980) (rule satisfied by testimony of the custodian). Indeed, defendants correctly distinguish the cases relied upon by plaintiffs in this area (some but not all of which are cited in the text) on one of three grounds: (1) there was some form of testimony -- or stipulation -- establishing foundation; (2) unlike diaries or memoranda of meetings, the records involved in those cases were on their face routine and regular clerical or financial documents such as hotel receipts, purchase orders, financial statements, stock transfer records, or filings with government agencies; and (3) the courts did not discuss the precise issue before us.

  In order to resolve this question of law, we look first to the Advisory Committee Note to Rule 803(6). After listing a number of business records statutes drafted or enacted in the 1920's and 1930's, including the federal Business Records Act, 28 U.S.C. § 1732, which was based on the so-called Commonwealth Fund Act, the committee continued:

  These reform efforts... concentrated considerable attention upon relaxing the requirement of producing as witnesses, or accounting for the nonproduction of, all participants in the process of gathering, transmitting, and recording information which the common law had evolved as a burdensome and crippling aspect of using records of this type. In their areas of primary emphasis on witnesses to be called and the general admissibility of ordinary business and commercial records, the Commonwealth Fund Act and the Uniform Act appear to have worked well. The exception seeks to preserve their advantages.

  On the subject of what witnesses must be called, the Commonwealth Fund Act eliminated the common law requirement of calling or accounting for all participants by failing to mention it. [citations omitted]. Model Code Rule 514 and Uniform Rule 63(13) did likewise. The Uniform Act, however, abolished the Common law requirement in express terms, providing that the requisite foundation testimony might be furnished by "the custodian or other qualified witness." Uniform Business Records as Evidence Act, § 2; 9A U.L.A. 506. The exception follows the Uniform Act in this respect.

  [Emphasis added]. there is no indication in the Advisory Committee Note that the Committee intended, by following the language of the Uniform Business Records as Evidence Act, to change federal law by requiring live testimony where none had been required before. To the contrary, the committee strongly endorsed the liberalization of common-law requirements as to the production of witnesses to qualify documents as business records. Moreover, the committee's adoption of the language of the Uniform Act appears to reflect a determination that the "burdensome and crippling" common-law rules should be abolished "in express terms," instead of implicitly as in the Business Records Act.

  Because we believe that the Federal Rules of Evidence favor a flexible approach, see Rule 102, and in the absence of a clear indication to the contrary in the Advisory Committee Note, we opt for the view that the testimny of the custodian or other qualified witness is not a sine qua non of of admissibility in the occasional case where the requirements for qualification as a business record can be met by documentary evidence, affidavits, or admissions of the parties, i.e., by circumstantial evidence, or by a combination of direct and ircumstantial evidence.

  It is clear from the express language of F.R.E. 803(6) that before a document can be admitted into evidence a proper foundation for its admission must be laid and that the burden of laying such a foundation is on the party seeking to introduce the document. Accord, United States v. McPartlin, supra; Standard Oil Co. of California v. Moore, supra; Hagens v. Ellerman & Bucknall Steamship Company, supra; Coughlin v. Capitol Cement Co., supra. We hold that to meet this burden in the absence of a "custodian or other qualified witness," plaintiffs must show regularity of practice in some precise and explicit manner, either by external evidence or from the documents themselves plus surrounding circumstances. To require less would strip the regularity of practice requirement of vitality, at least in a case such as this where what are proffered are not routine clerical or financial documents such as hotel registration forms or vehicle bills of sale or bank statements, but rather diaries and memoranda heavily laden with cryptic and half-expressed statements which cannot, we find, be interpreted without the testimony of the author explaining what he meant by each entry. We will consider plaintiffs' proffer, notwithstanding the lack of "custodian or other qualified witness," but against this rigorous standard.

  4. The Import of Rule 33(c) Production.

  Plaintiffs contend that by producing the diaries and memoranda pursuant to F.R.Civ.P. 33(c) the defendants have conceded that they are business records. They rely in this respect upon the language of Rule 33(c), of the Civil Rules which is entitled "Option to Produce Business Records." *fn56" They also rely upon the wording of their interrogatories 8 and 42-44 to each of the producing defendants and their responses thereto.

  The first problem with this argument is that the answers to the interrogatories make clear that the defendants are not conceding that the materials produced are business records within the meaning of 803(6). Secondly, we think that the bar and the courts would be startled if they were retrospectively to find that a production under Rule 33(c) constituted an admission that everything that was produced qualified as a record of regularly conducted activity within the meaning of F.R.E. 803(6). There is nothing in the language of Rule 33(c) which suggests that the very specific requirements of 803(6) are waived by its invocation. That invocation is considered a convenience to the bar and a means to facilitate the discovery process. The problems of federal discovery are great enough without rendering Rule 33(c) into a trap for the unwary. *fn57"

  5. The Personal Knowledge and Trustworthiness Requirements

  Rule 803(6) requires as a condition of admissibility that business records be "made at or near the time by, or from information transmitted by, a person with knowledge." This provision represents a change from the Business Records Act, which provided that "lack of personal knowledge by the entrant or maker" could be shown to affect weight but not admissibility. 28 U.S.C. § 1732(a) (repealed 1975).

  This provision of the rule was intended to deal with the problem of business records which merely record information transmitted by an informant. The Advisory Committee Note comments:

  An illustration is the police report incorporating information obtained from a bystander; the officer qualifies as acting in the regular course but the informant does not. The leading case, Johnson v. Lutz, 253 N.Y. 124, 170 N.E. 517 (1930), held that a report thus prepared was inadmissible. Most of the authorities have agreed with the decision... The rule... [requires] an informant with knowledge acting in the course of the regularly conducted activity.

  The Senate Judiciary Committee stated its view that the personal knowledge requirement not be interpreted to require the identification of the particular person upon whose knowledge the record was based, so long as the proponent of the evidence could show that it was the regular practice of the activity to base its records upon information transmitted by a person with knowledge:

  It is the understanding of the committee that the use of the phrase "person with knowledge" is not intended to imply that the party seeking to introduce the memorandum, report, record, or data compilation must be able to produce, or even identify, the specific individual upon whose first-hand knowledge the memorandum, report, record or data compilation was based. A sufficient foundation for the introduction of such evidence will be laid if the party seeking to introduce the evidence is able to show that it was the regular practice of the activity to base such memorandums, reports, records, or data compilations upon a transmission from a person with knowledge, e.g., in the case of the content of a shipment of goods, upon a report from the company's receiving agent or in the case of a computer printout, upon a report from the company's computer programmer or one who has knowledge of the particular record system.

  Senate Report. Thus, in order to meet the personal knowledge requirement of the rule, plaintiffs must show either (1) that the author of the document had personal knowledge of the matters reported, or (2) that the information he reported was transmitted by another person who had personal knowledge, acting in the course of a regularly conducted activity, or (3) that it was the author's regular practice to record information transmitted by persons who had personal knowledge. In the absence of a showing of personal knowledge, made in one or more of these three ways, a document cannot qualify as a business record.

  A related provision of Rule 803(6) denied admissibility even to evidence which meets every other requirement of the rule, if "the source of the information or the method or circumstances of preparation indicate lack of trustworthiness." The burden of showing the untrustworthy nature of evidence which is otherwise admissible under 803(6) is on the opponent of the evidence. In assessing the trustworthiness of the documents before us, we would look, inter alia, to factors analogous to those enumerated in our Public Records Opinion at 26-27.Thus, we might find that a document which is obviously riddled with hearsay statements which were not transmitted by a person with knowledge is so untrustworthy as to fail to qualify under the 803(6) exception. See part II-G, infra (discussion of Rule 805).

  We also think that a document which is unintelligible is for that reason untrustworthy if offered to prove the truth of one interpretation out of many possible interpretations which could be put on the document. The requirement of trustworthiness is intended to prevent the trier of fact from deciding cases on the basis of mere speculation rather than probative evidence. When a document which is unintelligible on its face is presented to the trier of fact, it is not probative evidence, but merely an invitation to engage in unfounded speculation. In such a situation, the document itself reveals its own "method or circumstances of preparation" sufficiently to make it untrustworthy under the 803(6) proviso.

  Having completed our analysis of Rule 803(6), we turn to the issues presented by plaintiff's proffer of the documents as admissions under Rule 801(d)(2)(B), (C) § (D).

  C. Qualification as Admissions by Party-Opponent under Rules 801(d)(2)(B), (C) and (D).

  In addition to asserting admissibility under 803(6), supra, upon which plaintiffs place primary reliance, they offer many of the documents being considered here as Admissions by Party-Opponent under Rules 801(d)(2)(B), (C) and (D):

  (d) Statements which are not hearsay. A statement is not hearsay if...

  (2) Admission by party-opponent. The statement is offered against a party and is...(B) a statement of which he has manifested his adoption or belief in its truth, or (C) a statement by a person authorized by him to make a statement concerning the subject, or (D) a statement by his agent or servant concerning a matter within the scope of his agency or employment, made during the existence of the relationship...

  Unlike statements admitted under Rule 803(6), which would be admissible against all parties, statements admitted under 801(d)(2)(B), (C) and (D) are admissible only against parties who have adopted the statement, on who bear the specified relationship to the declarant.

  As a preliminary matter we must decide whether we are to determine admissibility under 801(d)(2) according to the provisions of 104(a) alone, i.e., whether inadmissible evidence may be considered, or whether 104(b) also applies, limiting our decision to admissible evidence. See generally pp. 26-30, supra. While Rule 801(d)(2) is not a hearsay exception (see discussion infra), the same types of "competency" issues must be evaluated in establishing "authority," "agency" or "scope of employment" as are considered in ruling on hearsay exceptions. These issues are not ones of conditional relevancy within the meaning of Rule 104(b), for the reasons stated in our discussion of the interface between Rules 104 and 803(6), at pp. 57-59, supra. In accordance with our reasoning stated there, we shall determine preliminary issues of fact under Rule 801(d)(2) on the basis of both admissible and inadmissible evidence, and shall apply a preponderance of the evidence standard of proof. *fn58"

  1. "Non-Hearsay" - the Treatment of Admissions in the F.R.E.

  Subdivision (d) of Rule 801 is a marked departure from the common law in that all of the statements it defines as "not hearsay" were considered hearsay under preexisting law. Saltzburg at 457. The subsection we are dealing with, (d)(2) Admission by Party Opponent, was an "exception" under the traditional hearsay rule. *fn59" The rationale for admitting this type of statement has been the subject of lengthy academic dispute. *fn60"

  The Advisory Committee Notes explain the treatment of admissions in the Federal Rules as follows:

  Admissions by a party-opponent are excluded from the category of hearsay on the theory that their admissibility in evidence is the result of the adversary system rather than satisfaction of the conditions of the hearsay rule. Strahorn, A Reconsideration of the Hearsay Rule and Admissions, 85 U.Pa.L.Rev. 484, 564 (1937); Morgan, Basic Problems of Evidence 265 (1962); 4 Wigmore § 1048. No guarantee of trustworthiness is required in the case of an admission. The freedom which admissions have enjoyed from technical demands of searching for an assurance of trustworthiness in some against-interest circumstances, and from the restrictive influences of the opinion rule and the rule requiring firsthand knowledge, when taken with the apparently prevalent satisfaction with the results, calls for generous treatment of this avenue to admissibility.

  Congress enacted the proposed Rule 801(d)(2) without change. *fn61"

  The most important change from the common law made by Rule 801(d)(2), apart from denominating admissions as non-hearsay rather than a hearsay exception, was the addition of subsection (D), making admissible against a party "a statement by his agent or servant concerning a matter within the scope of his agency or employment, made during the existence of the relationship." Statements in this category, commonly known as "vicarious admissions," were not admissible under the traditional common law rule, which required "speaking authority" as codified in subsection (C). See infra. The Advisory Committee explained this change as follows:

  The tradition has been to test the admissibility of statements by agents, as admissions, by applying the usual test of agency. Was the admission made by the agent acting in the scope of his employment? Since few principals employ agents for the purpose of making damaging statements, the usual result was exclusive of the statement. Dissatisfaction with this loss of valuable and helpful evidence has been increasing. A substantial trend favors admitting statements related to a matter within the scope of the agency or employment. Grayson v. Williams, 256 F.2d 61 (10th Cir. 1958); Koninklijke Luchtvaart Maatschappij N. V. KLM Royal Dutch Airlines v. Tuller, 110 U.S. App. D.C. 282, 292 F.2d 775, 784 (1961); Martin v. Savage Truck Lines, Inc., 121 F.Supp. 417 (D.D.C. 1954).

  The broad rule requiring receipt into evidence of the statements of a party's employee seems to rest on a slightly different foundation from the rule favoring receipt of a party's own statements. As Judge Weinstein has observed, "[vicarious] admissions do not lend themselves readily to any of the analyses proposed" to explain the receipt of admissions generally. He feels that vicarious admissions are received under the Rules because of the "practical need for pertinent evidence" and represent a judgment by the draftsmen that such statements would "on balance, be more helpful than harmful in determining truth." 4 Weinstein P801(d)(2)[01] at 801-137 & 138. This view is supported by the Advisory Committee Note, which explains the inclusion of vicarious admissions as the result of "[dissatisfaction] with [the] loss of valuable and helpful evidence." (emphasis added). *fn62"

  2. An Admission Must be an Assertion

  Under Rule 801(d)(2), an admission is defined as a "statement" which possesses certain attributes. The term "statement" is defined in Rule 801(a) to include oral and written assertions as well as nonverbal conduct, if intended as an assertion. Since all of the hearsay evidence before us is in written form, for our pressent purposes the term "statement" is equivalent to the term "written assertion."

  The fact that admissions are defined as types of "statements" probably would not be of much import in the ordinary case. The term assumes prominence in this case, however, because the diaries of a number of Japanese executives offered by the plaintiffs are compilations of written notations. Some of the diary entries are comprehensible to the reader, but most are not, and are, in any event, recordation not of utterances or "statements" of the diarist, but "statements" or thoughts of a third party. Plaintiffs also offer a number of memoranda which are equally unclear. We are thus presented with two questions: (1) can a document which is, at best, a compilation of "statements" be admissible as a whole under 801(d)(2), without separate analysis of each statement therein; and (2) can a written notation which does not clearly assert the truth of some proposition be admissible under 801(d)(2)? We answer both questions in the negative.

  First, as to whether or not a compilation can be admissible as a whole without separate analysis of each statement within it, we think that rule 801(d)(2) requires that each statement be separately admissible. Unlike rule 803(6), for example, which expressly authorizes the admission of a "data compilation" as a whole, rule 801(d)(2) speaks in terms of individual "statements." Obviously, in some situations a compilation might be admissible because each of the statements within it is separately admissible. E.g., United States v. Evans, 572 F.2d 455, 488 (5th Cir.), cert. denied, 439 U.S. 870 (1978) (defendant's appointment calendar admitted under 801(d)(2)(A)). The diaries before us are not of this character, however. Quite apart from the problem of entries which are incomprehensible, the diaries include at least two types of statements which may fail to qualify as admissions. First, there are entries which have been shown to be outside the scope of the diarist's employment by evidence extrinsic to the diaries themselves. For instance, some of the Japanese executives testified before the JFTC that their responsibilities related solely to the domestic Japanese market, but their diaries include scattered references to matters interpreted by plaintiffs as relating to exports. Secondly, there are a great many internal hearsay statements within the diaries. See infra. Under these circumstances, we cannot determine the admissibility of the diaries without a separate analysis of the individual statements in them.

  Of equal importance is the question whether a written notation which cannot reasonably be characterized as an assertion can be admissible under 801(d)(2). The diary entries and memoranda which the plaintiffs seek to qualify under that rule differ greatly in their form from the usual type of statements which the courts have allowed into evidence as admissions. It is instructive, for example, to examine the three cases cited favorably by the Advisory Committee in its notes explaining the admissibility of vicarious admissions under 801((d)(2)(D). In Grayson v. Williams, 256 F.2d 61 (10th Cir. 1958), the court of appeals upheld the admissibility of hearsay statements made by a truck driver concerning the collision which had given rise to the action:

  The judgment is challenged on the further ground that the court erred in allowing admissions of appellant Grayson [the driver] to be admitted in evidence against Southern Freightways, Inc.Three persons visited Grayson in the hospital several hours after the accident. They asked him if appellee's truck was in its proper lane. Lockhead testified in substance that Grayson replied that it was and stated further that he didn't see the Union Pacific truck until the last minute and couldn't avoid striking it. Minardi testified that he said both trucks were in their proper lane and "I just didn't see the truck in time enough to avoid striking it." Sgt. Schwarting testified that Grayson said he didn't see the other truck until it was right on him; that he cramped his wheels to the left but was too late and they hit.

  Id. at 66. In Martin v. Savage Truck Line, Inc., 121 F. Supp. 417 (D.C.C. 1954), the court admitted "a statement made by the driver of the truck to an investigating police officer at the scene of the collision... to the effect that he was driving at the rate of thirty miles an hour, but that the green light was with him." Id. at 418. In Koninklijke Luchtvaart Maatschappij N.V. KLM Royal Dutch Airlines v. Tuller, 292 F.2d 775 (D.C.Cir.), cert. denied, 368 U.S. 921 (1961), the court of appeals upheld the admissibility of a statement made by an aircraft radio operator to an investigator concerning the operator's own conduct during the airplane crash which was the subject of the lawsuit. In each of these cases, which the Advisory Committee cited as archetypal admissions, it was clear that the declarant was asserting certain facts, and it was equally clear what the facts were which he was asserting.

  The statements which have come into evidence as admissions since the enactment of the Federal Rules of Evidence are for the most part equally clear. To take only one graphic example, in Mahlandt v. Wild Canid Survival & Research Center, Inc., 588 F.2d 626 (8th Cir. 1978), the plaintiffs claimed that their 3-year-old child had been bitten by a wolf named Sophie, who was kept by a naturalist in his back yard. The court of appeals reversed the trial court's exclusion of hearsay statements, including the wolf's custodian's written assertion that "Sophie bit a child that came in our back yard." Id. at 629. A clearer assertion of fact could hardly be imagined.

  There are two reported decisions in which diary entries which may have been similar to those offered here have been allowed into evidence as admissions. United States v. McPartlin, 595 F.2d 1321, 1347-51 (7th Cir.), cert. denied 444 U.S. 833 (1979); United States v. Evans, supra. The opinions in those cases do not provide sufficient information about the contents of the diaries offered there for us to determine whether they were as inscrutable as those offered here. In any event, both cases are plainly distinguished from the situation now before us by one crucial circumstance: in both cases the diarist himself was present at the trial and could clarify the meaning of any unclear diary entries. In McPartlin, the diarist testified at length as "the principal government witness." 595 F.2d at 1345. In Evans, the diarist was one of the defendants and could have challenged the government's interpretation of any entries which were unclear by testifying or by his counsel's objections. We are aware of no decisions holding that written notations which are not clearly assertions can come into evidence in the absence of testimony to explain their meaning.

  The plaintiffs argue that a diary entry which is not an assertion is ipso facto not hearsay, since "hearsay" is defined in rule 801(c) as "a statement... offered in evidence to prove the truth of the matter asserted." Although this argument has a superficial plausibility, it is fatally flawed as it applies to the documents involved here. Apart from a few entries which plaintiffs purport to offer for a non-hearsay purpose, i.e. not to prove the truth of the matter asserted, *fn63" the plaintiffs' theory of the relevance of the diary entries is that the entries are susceptible to a certain interpretation which supports the plaintiffs' case. In other words, whatever the plaintiffs from time to time say, the fact is that plaintiffs offer of the diary entries is for the truth of the matter which they claim to be asserted therein. Thus if the entries are not assertions, they are not probative evidence of any fact which is material to the determination of the action. Therefore any entries which are not assertions will be excluded as irrelevant under Rules 401 and 402, except insofar as they can be demonstrated to have been truly offered for a non-hearsay purpose.

  We think that the plaintiffs, as proponents of the diary entries, bear the burden of establishing that they are assertions and of ascertaining, with reasonable clarity, what the facts are which are asserted therein. The mere claim, in the form of counsel's argument, that entries which are on their face unclear and inscrutable are susceptible of a certain interpretation which supports plaintiffs' case, and that a jury should be permitted to decide what they mean, is not a sufficient foundation. Instead, the plaintiffs should have established the meaning of unclear diary entries through foundational evidence, in the form of testimony or otherwise. In the absence of such a foundation, the entries cannot qualify as admissions under rule 801(d)(2).

  The defendants have argued that an admission must be "clear and concise," citing Pulver v. Union Inv. Co., 179 F. 699, 705 (3d Cir. 1910); Evis Manufacturing Co. v. FTC, 287 F.2d 831, 839-40 (9th Cir.), cert. denied, 368 U.S. 824 (1961). Although we find their authorities inapposite, we are in substantial agreement with their teaching that an unclear notation cannot be an admission, at least in the absence of foundation evidence, for the reasons stated. The defendants also argue that an admission must be communicated to someone. This is apparently an extension of their argument that an agent's statement cannot be an admission unless it was communicated to someone other than the agent's principal. While the latter contention has ample support in pre-F.R.E. law, we have determined that the decisions upon which defendants rely were overruled by the enactment of the Rules. See pp. 95-97, infra. We recognize the force of defendants' argument that a statement or notation which is never communicated by the declarant to anyone is less likely to be trustworthy than a statement which is so communicated. However, we we see no reason to read into rule 801(d)(2) a requirement which would preclude all uncommunicated statements, including, for example, all entries made in a private diary, from ever coming into evidence as admissions. *fn64"

  In accordance with the overall plan of this opinion, we defer our consideration of specific diaries and entries until after our discussion of all the legal issues raised by the parties.

  3. Adoptive Admissions

  Although the particular legal issues which now confront us under 801(d)(2)(B) were never sharply drawn in argument or briefs, a major difference in the positions of the parties surfaced in the outlining of those factual patterns which, in plaintiffs submission satisfied the criteria for adoption but which defendants claimed were insufficient. This disagreement involves the circumstances in which a party's reference to a document, in a protocol, testimony, or interrogatory, constitutes an adoption of all or part of the writing referred to.

  Rule 801(d)(2)(B) provides for the admissibility of a statement of which a party has "manifested his adoption or belief in its truth." We agree with Judge Weinstein that the language of the rule requires evidence that the party's conduct was "intended" as an adoption. Weinstein P801(d)(2)(B)[01] at 801-144. *fn65"

   In United States v. Coppola, 526 F.2d 764 (10th Cir. 1975), for example, the Court of Appeals distinguished the improper admission of evidence in defendant's first trial from the proper admission of the same statements in defendant's second trial:

  It is not enough that Herman recounted Molina's statements in Coppola's presence and Coppola was silent or did not otherwise respond. Testimony that an accused adopted statements of another person may be let in as an adoptive admission only if it appears the accused understood and unamibiguously assented to those statements.

  Id. at 769 n.2 (citation omitted).

  One of the most interesting questions posed in regard to 801(d)(2) admissions is the extent to which production of documents in response to interrogatories, as permitted under F.R.Civ.P. 33(c), constitutes an "admission of" or "adoption of" the contents of the documents so produced.Written answers to interrogatories may be utilized as admissions, *fn66" although they are not conclusive on the issues addressed. *fn67" We agree with the Court in National Research Development Corp. v. Great Lakes Carbon Corp., 410 F. Supp. 1108 (S.D.N.Y. 1975) that "the language of each interrogatory and the wording of the corresponding reply becomes significant" when it is not the written answers themselves, but documents referenced in the answers or produced in lieu of such answers, which the opposing party seeks to use.

  In the National Research case the plaintiff sought to introduce an inventor's notebook to support its contentions concerning the meaning of a technical term used in a patent. Although the information plaintiff wished to use was apparently on a page of the notebook which had been referenced by defendants in their answers to interrogatories, the Court concluded that the broad and alternative wording of the questions created an "ambiguity in the interpretation of the corresponding response" which rendered it impossible to determine whether any "adoptive connotation" existed. As a second ground for exclusion, the court noted that the question asked did not concern the use of the term involved, and stated that the scope of any "admission," if one existed, "would be narrowly limited by the wording" of the question, and would neither constitute a concession of any other points nor "embrace the truth of the designated documents' total contents. *fn68"

  We conclude that for a document produced under F.R.Civ.P. 33(c) to qualify as an admission, the question and answer when taken together must manifest an "adoptive" rather than merely a "referential" connotation. Further, the only issues conceded by such an "admission" are issues specifically addressed in the question, and responded to by the document.

  The plaintiffs contend that certain documents are adoptive admissions because of a party's or a person's failure to disavow the documents. The Advisory Committee notes to 801(d)(2)(B) recognize the posibility of an adoption by silence and state that "the theory is that the person would, under the circumstances, protest the statement made in his presence if untrue." The Notes caution, however, that the inference is a fairly weak one. In United States v. Flecha, 539 F.2d 874 (2d Cir. 1976), the Second Circuit held that the facts that a party has heard a statement and that he has failed to deny it are not in themselves sufficient to establish adoption by silence, but that the circumstances involved must be considered. The court of appeals quoted Lord Justice Bowen in Wiedemann v. Walpole, 2 Q.B. 534, 539 (1891):

  Silence is not evidence of an admission, unless there are circumstances which render it more reasonably probable that a man would answer the charge made against him than that he would not.

  539 F.2d at 877. We agree. *fn69"

  Another disputed point is whether a statement which is written by someone else but signed by a party opponent or his agent constitutes an admission of the party under 801(d)(2)(B). In a criminal case, United States v. Johnson, 529 F.2d 581, 584 (8th Cir.), cert. denied, 426 U.S. 909 (1976), the Court of Appeals upheld the trial judge's admission of a statement made by the defendant, taken down in longhand by a Secret Service Agent, and read and signed by the defendant at the conclusion of his interview with the agent. With respect to the hearsay aspects involved, the court stated:

  The objections must fail. A statement which is reduced to writing by one other than the accused is generally admissible where the accused reads it over and signs it. See United States v. Evans, 320 F.2d 482. 484 (6th Cir. 1963); United States v. Del Porte, 357 F.Supp. 969, 976 (S.D.N.Y.), aff'd 483 F.2d 1399 (2nd Cir. 1973). Moreover, under the Federal Rules of Evidence, which became effective on the date of Johnson's trial, the statement is not hearsay. Fed.R.E. 801(d)(2)(A), (B).

  We find no cases or commentary to the contrary. *fn70"

  4. Authorized Statements

  Subsection (C) of 801(d)(2) is mainly a codification of prior common law, under which an authorized statement by a party's agent was receivable to the same extent as the authorizing party's own statement. Wigmore explains that the basis for this rule is the principle that:

  [he] who sets another person to do an act in his stead as agent is chargeable in substantive law by such acts as are done under that authority; so too, properly enough, admissions made by the agent in the course of exercising that authority have the same testimonial value to discredit the party's present claim as if stated by the party himself.

  IV Wigmore § 1078 at 162 (Chadbourn rev. 1972). The "speaking authority" required by subsection (C) may represent either express or implied authority, and the authority questions involved are to be determined under the law of agency. Baughman v. Cooper-Jarrett, 530 F.2d 529, 532 (3d Cir.), cert. denied, 429 U.S. 825 (1976).

  The Advisory Committee Notes state that the wording of Rule 801(d)(2)(C) was intended to resolve a division among the circuits as to whether an agent's statements were only admissible if made to a third person, or whether statements to the principal himself or itself could also be authorized admissions. See United States v. Lykes Bros. Steamship Co., 432 F.2d 1076, 1078 (5th Cir. 1970) (citing cases from several circuits on both sides of the dispute). Prior to the adoption of the Rules, the Third Circuit had held that an employee's statement made to his employer rather than to a third party could not constitute an admission by the employer. Nuttall v. Reading Co., 235 F.2d 546, 550 (3d Cir. 1956). The Advisory Committee notes to Rule 801(d)(2)(C) make it clear that under that Rule a statement may be an authorized admission even though it was never communicated to a third party. Thus we view Nuttall as legislatively overruled on this point by the enactment of the Federal Rules of Evidence.

  5.Vicarious Admissions

  As we have mentioned, subsection (D) represents a departure from the common law. As the Advisory Committee Notes state, the traditional test was whether the statement was made by the agent within the scope of his employment. They pointedly note that few agents were employed to make damaging statements, and thus most such remarks were excluded. The Rules, however, follow a trend which allows statements to be admitted so long as they are related to a matter which is within the scope of the agent's employment. Advisory Committee Notes to 801(d)(2)(D). The phrase "during the existence of the relationship" makes it quite clear that the statement must relate to a matter which was within the agent's scope of employment at the time he made the statemenet. Thus, we must exclude statements made after the termination of employment, or about matters with which an employee was not, or was no longer, involved.

  The defendants have argued that two additional criteria must be met to satisfy 801(d)(2)(D): first, the statement must have been communicated to someone outside of the company which employed the declarant, and second, the declarant must be an employee with managerial responsibility. Since neither of these requirements are found in the language of the Rule, or in the Advisory Committee Notes, the defendants base their contention on two pre-Rules cases, Nuttall v. Reading Company, 235 F.2d 546 (3d Cir. 1956), and Gilmour v. Strescon Industries, Inc., 66 F.R.D. 146 (E.D.Pa.), aff'd mem. 521 F.2d 1398 (3d Cir. 1975).

  The Nuttall case was decided on the basis of the "authorized" admission exception, discussed supra. As we stated there, the Advisory Committee Notes to Subsection (C) make it clear that under that Rule there is no requirement that a statement must be communicated outside of the company against which it is offered. In Gilmour, Judge Broderick quoted Nuttall, but recognized that the then proposed Rule 801 might alter the common law rule, and decided the issue on other grounds.

  The defendants acknowledge that the Nuttal rule is no longer valid with respect to authorized admissions under subsection (C), but contend that it retains force with respect to vicarious admissions under subsection (D), since the only discussion of the issue is in the Advisory Committee Notes to subsection (C). We reject that contention.It is plain that the committee viewed subsection (D) as an extension of common-law authorized admissions, which were codified in subsection (C). Thus the discussion in the note to subsection (C) of whether a statement must be communicated to a third party is equally applicable to subsection (D), as the Eighth Circuit expressly held in Mahlandt, supra, 588 F.2d at 630. We conclude that Nuttall retains no vitality with respect to either type of admission.

  The defendants also contend that a vicarious admission can be made only by an employee who has managerial responsibilities. This requirement is found only in decisions concerning who is authorized to make an admission for a corporate employer. See Moran v. Pittsburgh-Des Moines Steel Co., 183 F.2d 467 (3d Cir. 1950); Gilmour, supra, 66 F.R.D. at 150. Thus the requirement of managerial responsibilities, if it remains valid after the enactment of the Rules, is pertinent only to authorized admissions, not to vicarious admissions. In any event, it is clear that every employee whose statements the plaintiffs offer did have managerial responsibilities.

  6. Admissions of a Subsidiary Corporation Offered Against the Parent Corporation

  Since the plaintiffs offer DSS 1029, the so-called Japan Victor document, against MEI on the basis of MEI's ownership of the majority of the stock of Japan Victor Co., a brief word is in order about the attribution to a parent corporation of a statement which would be an admission if offered again it's subsidiary. *fn71" The facts and contentions surrounding the document are adequately stated in Part XIII, infra, and will not be restated here.

  The issue to be considered is whether, assuming that a statement could come into evidence as an admission against the subsidiary, it may likewise be admitted into evidence against the parent corporation. While there is no precedent precisely on point, we think the answer is clear: the proponent of the evidence must show either that the subsidiary had authority to make a statement concerning the subject, under rule 801(d)(2)(C), or that the subsidiary acted as the parent's agent and the statement concerned a matter within the scope of its agency, under rule 801(d)(2)(D). Under either subsection of the rule, the proponent of the evidence must establish the existence of an agency relationship between the parent and the subsidiary under the applicable principles of agency law.

  The principles relevant to deciding whether or not a subsidiary is the agent of a parent corporation have recently been reviewed by Judge Caleb Wright in Japan Petroleum Co. (Nigeria) Ltd. v. Ashland Oil Co., 456 F.Supp. 831, 840-41 (D.Del. 1978):

  Whether an agency relationship exists between a parent corporation and its subsidiary is normally a question of fact. The central factual issue is control, i.e., whether the parent corporation dominates the activities of the subsidiary.

  In order to determine whether or not a sufficient degree of control exists to establish an agency relationship, the Court must look to a wide variety of factors, such as stock ownership, officers and directors, financing, responsibility for day-to-day operations, arrangements for payment of salaries and expenses, and origin of subsidiary's business and assets.

  (citations and footnote omitted). See also Walker v. Newgent, 583 F.2d 163, 167 (5th Cir. 1978), cert. denied, 441 U.S. 906 (1979); Pacific Can Co. v. Hewes, 95 F.2d 42 (9th Cir. 1938); Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., 467 F. Supp. 841 (N.D.Cal. 1979).

  As Judge Wright noted, the existence of an agency relationship is a conceptually distinct question from the notion of "piercing the corporate veil." 456 F. Supp. at 439. However, the mere fact that one corporation owns a controlling interest in another does not render the subsidiary the agent of the parent:

  "A corporation does not become an agent of another corporation merely because a majority of its voting shares is held by the other". Restatement (Second) of Agency, supra § 14M. See also, Pacific Can Co; supra, 95 F.2d at 46; Eastern Industries, supra, 142 F.Supp. at 384; Owl Fumigating Corp. v. California Cyanide Co., 24 F.2d 718, 719 (D.Del. 1928), aff'd., 30 F.2d 812 (3d Cir. 1929); Scott-Douglas Corp. v. Greyhound Corp., 304 A.2d 309, 314 (Del.Super.1973). Nor does the fact that a parent and a subsidiary have common officers and directors necessarily indicate an agency relationship. See, Pacific Can Co., supra; Eastern Industries, supra; Owl Fumigating, supra; Scott-Douglas, supra.

  456 F. Supp. at 841.

  We agree with Judge Wright's analysis, and adopt it. In the absence of any showing of express authority, we think that the plaintiffs, as proponents of the evidence, should be required to make the same kind of showing as would be required to impose vicarious liability upon the parent corporation: that the parent corporation "directly intervenes in the management" of the subsidiary so as to treat it as a "mere department of its own enterprise." Consolidated Rock Products Co. v. DuBois, 312 U.S. 510, 524 (1940). In conformity with the overall organization of this opinion, we defer our discussion of the facts pertaining to the relationship between MEI and the Japan Victor Company until Part XIII, infra.

  804(b)(1) Former Testimony

  Plaintiffs seek to introduce into evidence under Rule 804(b)(1) the prior testimony of approximately 16 witnesses, employees of the Japanese manufacturer defendants, who testified before the JFTC in the 1966 "Six Company Case." Rule 804(b)(1) provides:

  (b) Hearsay exceptions. -- The following are not excluded by the hearsay rule if the declarant is unavailable as a witness:

  (1) Former testimony. -- Testimony given as a witness at another hearing of the same or a different proceeding... if the party against whom the testimony is now offered, or, in a civil action or proceeding, a predecessor in interest, had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination.

  If admitted, the testimony would be offered against the six defendants who were present at the JFTC Six Company Case hearins to prove a conspiracy t fix prices in Japan, the home market aspect of the alleged "unitary conspiracy." It would also be offered against all other defendants on the ground that the "six companies" are their predecessor in interest. Moreover, plaintiffs propose to offer the testimony against all defendants insofar as it authenticates the diaries. Defendants object to the admission of the former testimony on the grounds that plaintiffs have failed to show: (1) that the declarants are "unavailable" as witnesses in the present trial, within the meaning of Rule 804(a); (2) that the six defendants who were respondents in the Six Company Case had a "similar motive to develop the testimony" in the JFTC hearings; and (3) that those six defendants qualify as "predecessors in interest" of the other eighteen defendants who were not represented at the JFTC hearings. We discuss the legal aspects of these issues in the order mentioned.

  1. Unavailability

  a. Introduction

  The first requirement for application of all the Rule 804 hearsay exceptions, including 804(b)(1), is that the declarant be unavailable. *fn72" Unavailability is defined in Rule 804(a) as follows.

  (a) Definition of unavailability.-- "Unavailability as a witness" includes situations in which the declarant --

  (1) is exempted by ruling of the court on the ground of privilege from testifying concerning the subject matter of his statement; or

  (2) persists in refusing to testify concerning the subject matter of his statement despite an order of the court to do so; or

  (3) testifies to a lack of memory of the subject matter of his statement; or

  (4) is unable to be present or to testify at the hearing because of death or then existing physical or mental illness or infirmity; or

  (5) is absent from the hearing and the proponent of his statement has been unable to procure his attendance (or in the case of a hearsay exception under subdivision (b) (2), (3), or (4), his attendance or testimony) by process or other reasonable means.

  A declarant is not unavailable as a witness if his exemption, refusal, claim of lack of memory, inability, or absence is due to the procurement or wrongdoing of the proponent of his statement for the purpose of preventing the witness from attending or testifying.

  Rule 804(a) codifies the historically diverse bases for finding a witness "unavailable" for the purpose of admitting (under subsection (b) of the rule) evidence otherwise excluded by the hearsay rule. The burden of demonstrating unavailability falls, of course, on the the proponent. 11 Moore's Federal Practice § 804.02 at 239.

  Plaintiffs contend that the witnesses whose testimony they seek to introduce are unavailable within the meaning of subsections (3), (4), and (5) of 804(a). Plaintiffs' only claim under 804(a)(4) is that one of the declarants, Mr. Yajima, is unavailable because of his death in 1968, prior to commencement of this litigation. The defendants concede that Yajima is dead, hence unavailable, so that a discussion of 804(a)(4) is unnecessary. We can defer our discussion of 804(a)(3) until we reach the discussion of other hearsay exceptions because we find that the 804(a)(5) requirement is satisfied with respect to former testimony, and that is sufficient to establish unavailability.

  b. Inability to Procure Attendance Under Rule 804(a)(5)

  Rule 804(a)(5) provides that a declarant of former testimony is unavailable if the proponent "has been unable to procure his attendance... by process or other reasonable means." In civil cases, it has long been the rule that inability to procure attendance by "process or other reasonable means" is satisfied by demonstration of inability to serve a subpoena. 4 Weinstein P804(a)[01] at 804-41; Saltzburg at 600; McCormick § 253 at 609; Trade Development Bank v. Continental Insurance Co., 469 F.2d 35, 42 (2d Cir. 1972); McIntyre v. Reynolds Metals Co., 468 F.2d 1092, 1093 n. 2 (5th Cir. 1972); United States v. Squella - Avendano, 478 F.2d 433, 439 (5th Cir. 1973). We have found nothing to indicate that the adoption of the Federal Rules of Evidence altered this longstanding rule.

  The declarants in this case, Japanese citizens living in Japan, are beyond the subpoena power of this court as governed by Fed.R.Civ.P. 45(e). The statute governing federal courts' subpoena power over persons in a foreign country, 28 U.S.C. § 1783, extends that power only to "a national or resident of the United States" in a foreign country, and therefore plainly does not reach Japanese citizens residing in Japan.Nor do we find in Rule 804(a)(5) any requirement that plaintiffs seek the voluntary attendance of witnesses residing abroad whose attendance cannot be compelled by process. It would be anomalous to apply in a civil case a requirement which the Supreme Court has found inapposite under the stricter standards applied in criminal cases. See Mancusi v. Stubbs, 408 U.S. 204, 92 S. Ct. 2308 (1972).

  Rule 804(a)(5) is written in the disjunctive. The rule, as promulgated by the Supreme Court, required only a showing of inability to procure attendance of the declarant with respect to all the 804(b) exceptions. However, the House Judiciary Committee added language to the Rule which provides that "in the case of a hearsay exception under subdivision (b)(2), (b)(3), or (b)(4)," a proponent must also be unable to procure the testimony of the declarant. The House Committee noted:

  the amendment is designed primarily to require that an attempt be made to depose a witness (as well as to seek his attendance) as a precondition to the witness being deemed unavailable. The Committee, however, recognizes the propriety of an exception to this additional requirement when it is the declaranths former testimony that is sought to be admitted under subdivision (b)(1).

  House Report at 15. While the Senate deleted the language added by the House, the Conference Committee adopted the House version. Thus, in the Rule as enacted, there is no additional requirement that a proponent of former testimony attempt to depose the declarant.

  Although the Senate Judiciary Committee rejected the House amendment, the Committee expressed its view that if the proponent of hearsay evidence had in fact taken the declarant's deposition, the proponent's failure to ask certain questions at the deposition might estop him from claiming subsequently that the declarant was unavailable at trial. The Committee stated:

  The committee understands that the rule as to unavailability, as explained by the Advisory Committee "contains no requirement that an attempt be made to take the deposition of a declarant." In reflecting the committee's judgment, the statement is accurate insofar as it goes. Where, however, the proponent of the [hearsay] statement, with knowledge of the existence of the statement, fails to confront the declarant with the statement at the taking of the deposition, then the proponent should not, in fairness, be permitted to treat the declarant as "unavailable" simply because the declarant was not amenable to process compelling his attendance at trial. The committee does not consider it necessary to amend the rule to this effect because such a situation abuses, not conforms to, the rule. Fairness would preclude a person from introducing a hearsay statement on a particular issue is the person taking the deposition was aware of the issue at the time of the deposition but failed to depose the unavailable witness on that issue.

  Senate Report. Although the House amendment imposed an attempt-to-depose requirement upon subsections (b)(2), (b)(3), and (b)(4), it did not alter the proposed rule with respect to former testimony. Defendants contend that the Senate Committee's "estoppel" position therefore remains applicable to the proponent of former testimony under subsection (b)(1).

  The plaintiffs did not in fact depose the declarants of the diaries and memos written in Japan.However, they did depose other officials of the companies which employ or employed the declarants in Japan. Those depositions (in two waves) related first to personal jurisdiction, venue, and service of process, and second, to identification of documents produced in discovery. The defendants contend that application of the Senate "estoppel" guideline bars the plaintiffs from claiming that the declarants are now unavailable. They argue that the plaintiffs had ample opportunity to depose the declarants when they deposed the Japanese defendants. Moreover, they say, in such depositions as were taken plaintiffs did not confront the deponents with issues addressed in the testimony of their employees in the JFTC proceedings and did not attempt to elicit foundation for the admissibility of any of the documents produced. Plaintiffs, in response, do not address the application of Senate guidelines, but maintain that a literal construction of the rule renders a proponent of 804(b)(1) testimony exempt from any requirement of attempting to take depositions.

  We cannot accept the defendants' reading of the Senate Committee's comment. First, it must be noted that the Senate Committee guidelines address fairness questions which would arise under the rule as promulgated by the Advisory Committee. Unlike that proposed rule, the rule as enacted makes a distinction between former testimony and the other 804(b) exceptions. We cannot speculate as to what the Senate Committee would have said in direct response to the rule thus drawn.

  Even if the Senate Committee's view retains some vitality in the construction of the rule as enacted, the extension of the Senate guideline which defendants propose is contrary to the plain language of the rule itself. The defendants in effect contend that the Senate report should be read to impose on plaintiffs a requirement of taking depositions which they might not otherwise take, while the Senate report itself speaks only of a party's willful failure to ask certain questions at a deposition which he has taken voluntarily. To read the Senate report as broadly as the defendants propose would be in effect to impose a requirement that the proponent of former testimony must take the deposition of the declarant, even though the rule as enacted clearly distinguishes in this regard between former testimony and the categories of hearsay treated in subsections (b)(2), (b)(3), and (b)(4). Thus we conclude that the declarants of former testimony are unavailable under rule 804(a)(5) if they are outside the subpoena power of the court, even if the proponent of the former testimony has made no effort to take their depositions or to request their voluntary attendance at trial.

  2. Similarity of Motive

  In addition to meeting the requirement of unavailability, former testimony under 804(b)(1) must have been given under circumstances such that "the party against whom the testimony is now offered, or in a civil action or proceeding, a predecessor in interest, had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination." It is uncontroverted that the respondents in the JFTC proceedings had an opportunity to develop the witnesses' testimony, as they were represented by counsel who engaged in extensive examination of the witnesses. *fn73" In this section, we discuss the requirement of similarity of motive to develop the testimony, and in the following section we turn to a discussion of what renders one party a "predecessor in interest" of another.

  At common law, the hearsay exception for former testimony originally required identity of parties and identity of issues. Both were intended to insure the adequacy of the present opponents' opportunity to cross-examine the witness in the prior proceeding. Gradually the courts reduced these requirements to "predecessor in interest" and "substantial" identity of issues. *fn74"

  Abandoning the old requirement of identity of issues, the supreme Court promulgated, and the Congress adopted, the term "similar motive" in Rule 804(b)(1). The Advisory Committee explained its preference as follows:

  The common law did not limit the admissibility of former testimony to that given in an earlier trial of the same case, although it did require identity of issues as a means of insuring that the former handling of the witness was the equivalent of what would now be done if the opportunity were presented. Modern decisions reduce the requirement to "substantial" identity. McCormick § 233. Since identity of issues is significant only in that it bears on motive and interest in developing fully the testimony of the witness, expressing the matter in the latter terms is preferable.

  Advisory Committee Note to Rule 804. The rule thus embodies McCormick's view that the requirement of identity of issues "should be restated, not as a mechanical one of identity or even of substantial identity of issues, but rather as a requirement that the issues in the first proceeding and hence the purpose for which the testimony was there offered, must have been such that the present opponent (or some person in like interest) had an adequate motive for testing on cross-examination the credibility of the testimony now offered." McCormick § 257 at 622.

  That similar motive is predicated, at least in part, upon the substantial similarity of issues and purpose for which testimony is offered is clear. But motive may also be influenced by other factors. As Saltzburg observes:

  While common law jurisdictions require substantial identity of issues, the Federal Rule does not depart from the common law in its requirement of a similar motive to develop the testimony. The way to determine whether or not motives are similar is to look at the similarity of the issues and the context in which the opportunity for examination previously arose.

  Saltzburg at 602.

  Such circumstances or factors which might influence motive to develop testimony include (1) the type of proceeding in which the testimony is given, *fn75" (2) trial strategy, *fn76" (3) the potential penalties or financial stakes, *fn77" and (4) the number of issues and parties. *fn78"

  Thus in determining whether a party or his predecessor in interest had the opportunity and similar motive to develop the testimony, the court must evaluate, in terms of both the prior and the present proceedings (1) the similarity of issues, (2) the purpose for which the testimony is offered, and (3) the context or circumstances in which the testimony is given.

  3. The Meaning of "Predecessor in Interest"

  Rule 804(b)(1) permits the introduction into evidence of prior testimony against a party which was not represented in the earlier action, so long as there was in the earlier action a "predecessor in interest" of the present party, whose motive to develop the testimony in the earlier action was sufficiently similar to that of the present party to satisfy tht requirement of the rule. The plaintiffs offer the JFTC testimony against all defendants in this action, arguing that the six respondents were "predecessors in interest" of the other defendants.

  The meaning of the phrase "predecessor in interest" in Rule 804(b)(1) is somewhat confused became the relevant legislative history is ambiguous.As we have noted, the original common law rule concerning the admissibility of former testimony required identity of parties in the two proceedings. Prior to the enactment of the Federal Rules of Evidence, however, many courts and commentators had taken the position that the requirement of identity of parties shoudl be relaxed. For example, Wigmore proposed that the inquiry should be only "whether the former testimony was given upon such an issue that the party-opponent in that case had the same interest and motive in his cross-examination that the present opponent has." 5 Wigmore on Evidence § 1388 at 111 (Chadbourn ed. 1974).

  The Supreme Court followed the Wigmore position in its original submission of Rule 804(b)(1), making prior testimony admissible if a person with "motive and interest similar" to the party against whom it is offered had an opportunity to examine the witness. The House Judiciary Committee reinstated the traditional "predecessor in interest" language with the following rationale:

  Rule 804(b)(1) as submitted by the Court allowed prior testimony of an unavailable witness to be admissible if the party against whom it is offered or a person "with motive and interest similar" to his had an opportunity to examine the witness. The Committee considered that it is generally unfair to impose upon the party against whom the hearsay evidence is being offered responsibility for the manner in which the witness was previously handled by another party. The sole exception to this, in the Committee's view, is when a party's predecessor in interest in a civil action or proceeding had an opportunity and similar motive to examine the witness. The Committee amended the Rule to reflect these policy determinations.

  House Report at 15. Thus it appears that the House Committee intended that the phrase "predecessor in interest" be construed narrowly, a position that is consistent with the common law meaning of the term. *fn79"

  The Senate Judiciary Committee accepted the House amendment to the Supreme Court's proposed rule. It put its own gloss on the phrase "predecessor in interest," however, by means of the following comment:

  The House amended the rule to apply only to a party's predecessor in interest. Although the Committee recognizes considerable merit to the rule submitted by the Supreme Court, a position which has been advocated by many scholars and judges, we have concluded that the difference between the two versions is not great and we accept the House amendment.

  Senate Report at 28. Thus it seems that the Senate Committee intended that the statutory phrase "predecessor in interest" be broadly construed as essentially similar to the Supreme Court's proposed rule.In contrast, as we have noted, the House Committee apparently intended that the phrase be construed narrowly in accordance with its common law meaning. While both houses of Congress enacted the same language, they differed in their views of the meaning of that language.

  In Lloyd v. American Export Lines, Inc., 580 F.2d 1179 (3d Cir.), cert. denied, 439 U.S. 969 (1978), a majority of a Third Circuit panel adopted the Senate view of the phrase "predecessor in interest." Referring to the Senate Report quoted above, the court of appeals stated, "we, too, fail to see a compelling difference between the two approaches." Id. at 1185. The Lloyd majority added:

  We do not accept the view that this change in wording signalled a return to the common law approach to former testimony, requiring privity or a common property interest between the parties.

  Id. at n. 5. Lloyd was an action by a crewman (Alvarez) against the shipowner (Export) for injuries sustained in a fight with a fellow crewman (third party defendant Lloyd). Alvarez alleged that Export failed to protect him from Lloyd after Export had knowledge of Lloyd's dangerous propensities. The trial court excluded former testimony given by Lloyd in a Coast Guard hearing which sought to determine culpability in the altercation between Lloyd and Alvarez. The testimony was offered by Export against Alvarez and the question on appeal was whether the Coast Guard examiner was a "predecessor in interest" of Alvarez in terms of 804(b)(1).

  Reasoning that there was the same "nucleus of operative facts" and the same "basic interest advanced" by both the Coast Guard examiner and Alvarez, the court concluded that the examiner was a predecessor in interest, stating:

  While we do not endorse an extravagant interpretation of who or what constitutes a "predecessor in interest," we prefer one that is realisticallyl generous over one that is formalistically grudging. We believe that what has been described as "the practical and expedient view" expresses the congressional intention: "if it appears that in the former suit a party having a like motive to cross-examine about the same matters as the present party would have, was accorded an adequate opportunity for such examination, the testimony may be received against the present party." Under these circumstances, the previous party having like motive to develop the testimony about the same material facts is, in the final analysis, a predecessor in interest to the present party.

  Id. at 1187 (emphasis added) (footnote omitted.) *fn80"

  In our view, it is highly significant that the "previous party" in Lloyd was a government investigator, presumably impartial, who had no role in the subsequent legal action. The Lloyd court itself commented on the community of interest that the government, as representative of the public, and an individual might share:

  [Our] analysis of the concept of interests satisfies us that there was a sufficient community of interest shared by the Coast Guard in its hearing and Alvarez in the subsequent civil trial to satisfy Rule 804(b)(1).... The interest implicated here was a claim or desire or demand which Alvarez as an individual, and the Coast Guard as a representative of a larger group, sought to satisfy...

  Individual interests, like those of Alvarez, are involved immediately in the individual life.... Public interests, like those of the Coast Guard, are involved in the life of a politically organized society, here the United States, and asserted in title of that entity. Thus, Alvarez sought to vindicate his individual interest in recovering for his injuries; the Coast Guard Sought to vindicate the public interest in safe and unimpeded merchant marine service.

  Id. at 1185-86 (footnotes omitted). *fn81"

  Entirely different considerations come into play when prior testimony is offered against one co-defendant on the basis of prior examination of the witness on behalf of a different co-defendant, when the two have potentially conflicting interests and litigation strategies. In Government of the Canal Zone v. Pinto, 590 F.2d 1344 (5th Cir. 1979), for example, testimony from a preliminary hearing was not admitted under 804(b)(1) against a defendant who was not represented at the hearing, even though the lawyer who later represented him at trial attended the prior hearing on behalf of his co-defendant and engaged in cross-examination on behalf of the co-defendant. Judge Wisdom commented that, "the reliability of preliminary hearing testimony is not assured by the mere fact of cross-examination but only by cross-examination designed to illuminate the accuracy of the statement as it concerns the particular defendant." Id. at 1353-54 (emphasis added).

  The facts and circumstances of this case will require us to determine whether a sufficient "community of interest" between alleged co-conspirators exists to satisfy the Lloyd requirements for finding the six respondents in the JFTC proceedings to be predecessors" of the other defendants in the present case. Under Lloyd, our inquiry is whether the six respondents had a "like motive to develop the testimony about the same material facts" as the other defendants would have had if they had been represented at the JFTC hearing. In applying the principles of Lloyd to the vastly different circumstances of this case, we must also bear in mind the House Judiciary Committee's admonition that it is "generally unfair" to impose upon the present party the "responsibility for the manner in which the witness was previously handled by another party." House Report, supra.

  E. Statements Against Interest Under Rule 804(b)(3)

  Plaintiffs seek admission of numerous documents as statements against the interests of both the declarants and their corporate employers. As we have noted, the 804(b) hearsay exceptions require a showing of unavailability of the declarants. Plaintiffs argue that the declarants are unavailable under Rule 804(a)(3) and (5) and, in the case of Mr. Yajima, under (a)(4) because of his death. Defendants reply that, except for Yajima, declarants do not meet any of the tests of unavailability under 804(a). They also contend that the substantive requirements of 804(b)(3) are not met here because: (1) the statements were not contrary to the declarants' pecuniary or proprietary interests, nor did they tend to subject the declarants to civil or criminal liability, within the meaning of the rule; and (2) plaintiffs have failed to show awareness by each declarant of the implications of his statement such that a reasonable man would not have made them unless he believed them to be true. We consider first the issues relating to unavailability for purposes of Rule 804(b)(3).

  1. Unavailability

  a. Inability to Procure Testimony Under Rule 804(a)(5)

  The standard of unavailability which is imposed by Rule 804(a)(5) on the proponent of declarations against interest is more rigorous than that imposed on the proponent of former testimony. As applied to 804(b)(3), the parenthetical clause of 804(a)(5) dictates that a witness is unavailable if he is absent from the hearing and the pronponent of his statement is unable to procure his "attendance or testimony" (emphasis added). While we have ruled that the plaintiff are unable to procure the attendance of Japanese citizens residing in Japan, pp. 104-107, supra, the proponent of declarations against interest is required to meet a higher standard by seeking the witness' testimony before hearsay evidence may be admitted. The legislative history of Rule 804(a)(5) has been reviewed in detail, supra. It is perfectly clear that the House Judiciary Committee, which added to the rule the parenthetical language applicable to subsection (b)(3), intended thereby to require that the proponent of such evidence attempt to depose the absent witness. There is an express statement of that intention in the House Repoort, quoted at p.105, supra. Since the plaintiffs made no effort to depose any of the declarants, none of the declarants (except Yajima) are unavailable under 804(a)(5) for purposes of the hearsay exception for declarations against interest.

  b. Lack of Memory Under Rule 804(a)(3)

  Plaintiffs submit that the witnesses before the JFTC are unavailable under Rule 804(a)(3) because of lack of memory of the subject matter of their testimony and protocols and diaries. Notwithstanding the wording of the rule, which requires that lack of memory be established by the testimony of the declarant, plaintiffs seek to establish lack of memory by certain answers to interrogatories addressed to the declarants' employers. When plaintiffs asked for details of meetings among competitors in nos. 42, 43 and 44 of plaintiff NUE's Second Set of Interrogatories, the defendants are said to have answered to the effect that they had no knowledge or information aside from the documents which they produced. Those documents, produced under F.R.Civ.P. 33(c), included the JFTC testimony and protocols and diaries. Plaintiffs argue that under Federal Rule of Civil Procedure 33(a), corporations are bound to inquire of their employees before making a corporate response, and that a corporation's answers are deemed to represent the findings of those inquiries. They claim that the answers should therefore be treated as representations of the declarants themselves, who are defendants' employees, that they are unable to remember the subject matter of the statements, hence here unavailable with 804(a)(3).

  Defendants contend, correctly, that there is no evidence that the declarants themselves are unable to recall the subject matter of the testimony and protocols. Except for Yajima, all the declarants are alive, well and still in the employ of the respective manufacturing defendants. Yet they have never been asked whether or what they remember, because they have never been deposed. Rule 804(a)(3) provides that a declarant is deemed unavailable when he "testifies to a lack of memory of the subject matter of his statement." Defendants argue that Rule 804(a)(3) means what it says, i.e., that the declarant is unavailable only when he "testifies to a lack of memory." Their position is supported by the Advisory Committee Note, which observes that "the practical effect" of a claimed lack of memory is to put present testimony "beyond reach," and notes that "the lack of memory must be established by the testimony of the witness himself, which clearly contemplates his production and subjection to cross-examination."

  Despite the clear requirement of the rule that lack of memory must ordinarily be proved by testimony of the declarant, we might still find that the defendants were estopped to deny their employees' lack of memory, if their interrogatory answers clearly asserted that the declarants lacked memory, or even if the answers clearly asserted that the defendant corporations as institutions lacked memory of the pertinent subject matter. *fn82" However, we do not think that the relevant interrogatory answers are susceptible of the interpretation which the plaintiffs seek to place upon them.

  The pertinent interrogatories refer to the subject matter of the meetings in question as well as to dates and names of participants. *fn83" Interrogatory No. 42 asks defendant to:

  state the date or dates and identify the persons present at each meeting... during which there was any discussion, comment or reference to the prices, price levels or price formulae, rebates, discounts, allowances, or other terms or conditions of sale for television receivers.

  No. 43 asks for identification of all documents and reports relating to or reporting these meetings. No. 44 asks for identification (if a document) and description (if oral) of each communication between "you and other defendant or defendants, or any other manufacturer, seller, distributor, exporter or importer of television receivers" regarding pricing policies. *fn84"

  The defendants responded to these interrogatories both by making massive document productions, and by written answers. Although the written answers of the defendants are not identical, the general tenor of most of the answers is that, apart from the documents produced to NUE, the defendant corporations were not aware of the matters discussed at meetings among competitors. *fn85"

  Plaintiffs would have us read the written answers to NUE's interrogatories as representations that defendants' employees have no knowledge of the subject matters contained in the former testimony, "protocols," diaries, and memoranda. We find this to be an inappropriate and excessive interpretation of these responses. First, the written answers cannot be considered in isolation from the defendants' production of a large body of documents from which the names, dates and subject matters requested in the interrogatories could be gleaned. The production of documents itself contained much information -- thousands of pages --but nowhere has there been a representation by defendants or their officials that they do not recall the subject matter of those materials.

  Secondly, plaintiffs fail to show the necessity or prudence of accepting this second-hand evidence over depositions or in-court testimony. It would torture logic and the Federal Rules to conclude that, because corporations made limited responses as to knowledge of names, dates and facts, their officials should now be presumed forgetful of the myriad information contained in the several types of documents -- without the plaintiffs ever questioning (deposing) those individuals at all. The unavailability requirement places a large burden on the proponent of the evidence to establish the necessity of foregoing individual testimony, with its circumstantial guarantees of reliability, in favor of inherently suspect and unclarified hearsay evidence. Since all but one of the relevant corporate officials (declarants) are alive and employed by defendants, the necessity of such forebearance is not readily apparent. *fn86" Accordingly, we hold that the plaintiffs may not avail themselves of 804(a)(3).

   2. Statement Against Interest -- The Requirements of Rule 804(b)(3)

  Rule 804(b)(3) embodies the long-recognized hearsay exception for declarations against interest, and is "based on the guaranty of trustworthiness which accompanies a statement against interest." United States v. Lilley, 581 F.2d 182, 188 (8th Cir. 1978). In pertinent part, the Rule creates an exception to the hearsay rule, if the declarant is unavailable, for

  a statement which was at the time of its making so far contrary to the declarant's pecuniary interest, or so far tended to subject him to civil or criminal liability, or to render invalid a claim by him against another, that a reasonable man in his position would not have made the statement unless he believed it to be true.

  The rule proposed by the Supreme Court would have broadened the common-law exception by including in its scope statements which tended to make the declarant "an object of hatred, ridicule, or disagrace." Congress deleted this clause of the proposed rule, retaining "the traditional hearsay exception for statements against pecuniary or proprietary interest." House Report. However, Congress also retained the provision of the proposed rule relating to civil or criminal liability, which it viewed as a clarification rather than an alteration of the common law rule. Id.; Senate Report. On the precise legal issues before us -- whether a statement which is against the interest of the declarant's employer falls within the exception, and whether the declarant must be subjectively aware that the statement is against his interest -- the legislative history indicates no intention to alter pre-existing law.

  Preliminarily, we note that the exception uses the term "statement." Thus it refers back to the definition of "statement" as "assertion," which we discussed at length in Part II-C-2, supra. For the same reasons stated there with respect to admissions, we think that a written notation which is not an assertion cannot be a "statement" against the declarant's interest. Accordingly, any of the diary entries or memoranda which fail to qualify as admissions because they are not assertions will also fail to qualify as statements against interest for the same reason.

  To qualify as an exception to the hearsay rule under 504(b)(3), a declaration must be against the employee's interest, not just the employer's interest. Since the trustworthiness of the declaration is insured only by the accompanying threat of loss or liability, the statement must be to the declarant's "immediate prejudice." Nuttall v. Reading Co., 235 F.2d 546, 550 (3d Cir. 1956). In Gilmour v. Strescon Industries, Inc., supra, Judge Broderick, interpreting Rule 804(b)(3) [then Proposed Rule 804(b)(4)] in light of Nuttall, held that "a declaration against the interest of the declarant's employer... does not fall within this exception to the hearsay rule." 66 F.R.D. at 150. We agree with Judge Broderick's analysis, since the necessary guarantee of trustworthiness is lacking unless the declaration is against the personal interest of the declarant. We note, however, that statements against an employer's interest may be against the employee's own pecuniary or proprietary interests if, for example, they threaten the loss of employment or reduce the chances for future employment. See Gichner v. Antonio Troiano Tile and Marble Co., 410 F.2d 238 (D.C. Cir. 1969).

  Rule 804(b)(3) also requires that the statement be so far contrary to the declarant's interests that a "reasonable man in his position would not have made the statement unless he believed it to be true." Plaintiffs contend that the "reasonable man" language establishes an objective test for awareness of the possibility of loss or liability. While this approach is appealing, it is simplistic for it denies the very rationale of this hearsay exception: that the credibility of self-implication is assured by the declarant's knowledge of the potential consequences. The standard then is objective only to the extent that it is based upon what a "reasonable man" would have said, given a subjective understanding of the danger to his interests. The Third Circuit in Nuttall, supra, held that the fact testified to must be "so palpably against the declarant's interests that he must have realized it to be so when he made the statement." 235 F.2d at 550, quoting 2 Morgan, Basic Problems of Evidence 252 (1954) (emphasis added). Though both Nuttall and Morgan antedate the Federal Rules of Evidence, rule 804(b)(3) does not change the traditional approach requiring consciousness of the implications of the statement against interest. Indeed, a post-F.R.E. case, Workman v. Cleveland-Cliffs Iron Co., 68 F.R.D. 562 (N.D. Ohio 1975), has followed the same analysis. A contrary approach would undercut the very rationale of the rule, for as Judge Weinstein has observed:

  It is not the fact that the declaration is against interest but the awareness of the fact by the declarant which gives the statement significance.

  Weinstein P804(b)(3)[02] at 804-98 (quoting Jefferson, "Declarations Against Interest: An Exception to the Hearsay Rule," 58 Harv.L.Rev. 1, 17 (1944).

  Since the plaintiffs contend that the declarants' statements were against their interest because they tended to subject the declarants to civil and criminal liability under Japanese law, we must at some point review the pertinent Japanese law and practice.It is convenient to do so here.

  Japanese antimonopoly law outlaws price-fixing, furnishes a cause of action against private entrepreneurs for damages, and provides for fines and imprisonment. Section 3 of the Act Concerning Prohibition of Private Monopoly and Maintenance of Fair Trade (Act No. 54 of April 14, 1947), as amended, provides:

  Sec. 3 [Prohibition of Private Monopolization and Unreasonable Restraint of Trade]

  No entrepreneur shall effect private monopolization or any unreasonable restraint of trade.

  Under the Act, an "entrepreneur" is "a person, who carries on a commercial, industrial, financial or any other business." (Section 2(1)). An unreasonable restraint of trade means (Section 2(5)):

  ... such business activities, by which entrepreneurs by contract, agreement, or any other concerted activities mutually restrict or conduct their business activities in such a manner as to fix, maintain, or enhance prices....

  Both civil and criminal remedies are set out by the Act. Section 25 provides for indemnification of the person injured by private monopolization or unreasonable restraint of trade. Criminal liability for employees who violate the Antimonopoly Act is available pursuant to sections 89 and 95. The Act states:

  Sec. 89 [Private monopolization and unreasonable restraint of trade]

  (1) Any personal committing one of the following offenses shall be punished by penal servitude for not more than three years or by a fine of not more than five million yen [at pertinent times, less than $14,000]:

  (i) Any person who, in violation of the provisions of Section 3, effects private monopolization or unreasonable restraint of trade.

  Section 95 provides for "imprisonment or the imposition of a fine for employees who commit violations of the Act."

  While private civil and criminal sanctions exist under the Japanese antimonopoly law, they are rare, and actions against employees are virtually unknown. Plaintiffs' own expert witness, Prof. John O. Haley, testified that there have been only "three or four" civil actions brought in the thirty-year history of the Antimonopoly Act. P.T.O. 264 at 305 (June 24, 1980). According to the defendants' unchallenged representations, none of these have ever been brought against individuals, and all were initiated after the Six-Company Case commenced in 1966. Moreover, according to the defendants' unchallenged representations, only four Antimonopoly Act criminal cases were prosecuted in Japan prior to 1974, all of which involved consumer fraud rather than price-fixing, and the first criminal cases under section 89, the price-fixing section, against individuals were the oil company cases initiated in 1974. Defendants' Supplemental Memorandum Concerning the Inadmissibility of the JFTC Materials Under Fed.R.Evid. 801(d) and 804(b)(3) at 18 (July 14, 1980).

  We leave until later our conclusions as to the effect of this law and practice upon plaintiffs' claim that statements made by various declarants fall within the ambit of Rule 804(b)(3).

  F. The Residual Hearsay Exceptions: Rules 803(24) and 804(b)(5)

  1. Introduction

  In addition to proffering the diaries, protocols and testimony of witnesses before the JFTC under the traditional hearsay exceptions, plaintiffs proffer those documents under the residual exceptions codified in F.R.E. 803(24) and 804(b)(5), which create an exception from the hearsay rule for:

  A statement not specifically covered by any of the foregoing exceptions but having equivalent circumstantial guarantees of trustworthiness, if the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence.

  All 804 exceptions are subject to a general showing of unavailability of the witness as required by subsection (a) of that Rule. Rule 803 has no such condition. The residual exceptions are otherwise identical in language and purpose. *fn87"

  In United States v. Bailey, 581 F.2d 341, 346-47 (3d Cir. 1978), the court of appeals reviewed the legislative history of these exceptions and observed that "[the] history... indicates congressional intention that the rules have a narrow focus." *fn88" Accord, DeMars v. Equitable Life Assurance Society, 610 F.2d 55, 61 (1st Cir. 1979); Huff v. White Motor Corp., 609 F.2d 286, 291 (7th Cir. 1979); United States v. Kim, 595 F.2d 755, 765 (D.C. Cir. 1979); United States v. Mathis, 559 F.2d 294, 299 (5th Cir. 1977).

  The proposed rules as submitted to Congress included broad residual exceptions. The Advisory Committee explained:

  It would... be presumptuous to assume that all possible desirable exceptions to the hearsay rule have been catalogued and to pass the hearsay rule to oncoming generations as a closed system.Exceptions (24) and its companion provision in [Rule 804(b)(5)] are accordingly included. They do not contemplate an unfettered exercise of judicial discretion, but they do provide for treating new and presently unanticipated situations which demonstrate a trustworthiness within the spirit of the specifically stated exceptions. Within this framework, room is left for growth and development of the law of evidence in the hearsay area, consistently with the broad purposes expressed in Rule 102. See Dallas County v. Commercial Union Assur. Co., 286 F.2d 388 (5th Cir. 1961).

  The proposed residual exceptions were eliminated by the House Judiciary Committee. The Senate reinstated the exceptions in a modified form, and the Senate version was accepted by the House-Senate Conference Committee. *fn89" The Senate Judiciary Committee explained its reasons for restoring limited residual exceptions to the Rules:

  [We] feel that, without a separate residual provision, the specifically enumerated exceptions could become tortured beyond any reasonable circumstances which they were intended to include (even if broadly construed). Moreover, these exceptions, while they reflect the most typical and well recognized exceptions to the hearsay rule, may not encompass every situation in which the reliability and appropriateness of a particular piece of hearsay evidence make clear that it should be heard and considered by the trier of fact.

  The committee believes that there are certain exceptional circumstances where evidence which is found by a court to have guarantees of trustworthiness equivalent to or exceeding the guarantees reflected by the presently listed exceptions, and to have a high degree of probativeness and necessity could proprly be admissible....

  The committee, however, also agrees with those supporters of the House version who felt that an overly broad residual hearsay exception could emasculate the hearsay rule and the recognized exceptions or vitiate the rationale behind codification of the rules....

  It is intended that the residual hearsay exceptions will be used very rarely, and only in exceptional circumstances. The committee does not intend to establish a broad license for trial judges to admit hearsay statements that do not fall within one of the other exceptions contained in rules 803 and 804(b). The residual exceptions are not meant to authorize major judicial revisions of the hearsay rule, including its present exceptions. Such major revisions are best accomplished by legislative action. It is intended that in any case in which evidence is sought to be admitted under these subsections, the trial judge will exercise no less care, reflection and caution than the courts did under the common law in establishing the now-recognized exceptions to the hearsay rule.

  (emphasis added).

  There are essentially three legal issues before us with respect to the residual excetions. Initially, we must determine whether the residual exceptions are available to render admissible evidence which appears to fall within a category encompassed in one of the specified hearsay exceptions, e.g., former testimony or business records, but which fails to meet the precise requirements of the specific exception. In our hearings, this issue has been dubbed the "near miss" question. Secondly, we must interpret the provision in the rule requiring the proponent to make reasonable efforts to secure equally probative evidence. Finally, we must analyze the trustworthiness requirement of the rule. We address these issues in the order stated.

  2. The "Near-Miss" Problem

  The defendants contend that the residual hearsay exceptions cannot be invoked as the basis for the admissibility of evidence which is generically of a type covered by another specific hearsay exception, but which fails to meet the precise requirements of that specific exception. *fn90" For instance, they contend that is a document is a "business record" it must qualify for admission under rule 803(6), and not under the residual exceptions. The plaintiffs counter that there is no such rule of law, and cite a number of cases in which courts have considered the admissibility of evidence under the residual exceptions after finding that the evidence failed to meet the terms of one or more of the specific exceptions. E.g., United States v. Hitsman, 604 F.2d 443 (5th Cir. 1979).

  We agree in principle with the defendants. The Advisory Committee explained its proposed residual exception, which was broader than the one enacted by Congress, as designated for "new and presently unanticipated situations." The Senate Judiciary Committee, which drafted the present rule, commented that "an overly broad residual hearsay exception could emasculate the hearsay rule and the recognized exceptions or vitiate the rationale behind codification of the rules." The Senate Committee also stated its intent "that the residual hearsay exceptions will be used very rarely, and only in exceptional circumstances." We find it clear from the history of the rules that neither the Advisory Committee nor the Sentate Judiciary Committee intended that the residual exceptions be used to qualify for admission evidence which is of a type covered by a specific exception, but which narrowly fails to meet the standards of the specific rule. Instead, they intended that the residual exceptions be used in exceptional and unanticipated situations which are not specifically covered by the specific exceptions. *fn91"

  The defendants' position is also supported by a basic principle of statutory construction, which we find equally applicable to the Federal Rules of Evidence: that the specific controls the general. As the Supreme Court stated in Radzanower v. Touche Ross & Co., 426 U.S. 148, 153 (1976):

  It is a basic principle of statutory construction that a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum. "Where there is no clear intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment." Morton v. Mancari, 417 U.S. 535, 550-551 [(1974)].

  In conformity with this rule we conclude that the residual exceptions cannot be invoked when there is a specific exckeption which sets forth conditions governing the admissibility of a clearly defined category of hearsay evidence. *fn92"

  For example, the exception for former testimony, Rule 804(b)(1), applies to a clearly defined category of evidence and specifies conditions which must be met in order for evidence in that category to be admissible. See Part II-D, supra. We will thus not consider a proffer of former testimony under the residual exceptions if the testimony fails to meet the specific requirements of Rule 804(b)(1), such as unavailability of the declarant, and similarity of motive to develop the testimony at the former hearing. Some of the other specific hearsay exceptions similarly apply to a clearly defined category of evidence, and we would follow the "near miss" doctrine with respect to them as well, if the evidence before us were within those categories. E.g., Rule 803(18) (learned treatises); Rule 803(22) (judgment of previous conviction.)

  However, most of the hearsay exceptions which plaintiffs invoke are not of this type. They do not apply to a clearly defined category of evidence, as the former testimony exception does. Instead, they apply to a relatively amorphous category of evidence which is delimited solely by the requirements set forth in the rule itself. For instance, the business records exception applies to any "memorandum, report, record, or data compilation, in any form" which satisfies certain additional requirements. See Part II-B, supra. Rule 804(b)(3) applies to any "statement" which is against the declarant's interest, as specified in that rule. See Part II-E, supra. We view rules 803(1) (present sense impression) and 803(5) (recorded recollection), under which the plaintiffs also offer the diaries and memoranda, as of the same character. See, n. 48, supra. We do not see how the "near miss" doctrine which defendants urge could practically be applied to those rules, without negating the residual exceptions altogether, a result which is plainly contrary to the intent of Congress.

  Accordingly, although as we have stated we agree with the defendant's position in principle, we will not apply it to the evidence before us, except for former testimony, and we will consider plaintiffs' proffer under the residual exceptions. We note, however, that the considerations which we have reviewed in this section of our discussion are additional reasons to apply the express requirements of the residual exceptions most rigorously, so as not to vitiate the hearsay rule and the specific exceptions. We turn next to those express requirements.

  3. The Requirement of Making Reasonable Efforts to Procure Other Evidence.

  Rules 803(24) and 804(b)(5) expressly require that the statement must be "more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts." The rules thus have their own requirement of unavailability of the witness or of similarly reliable evidence. Where a declarant is available for questioning, this provision requires at least that a proponent depose or produce him as a witness, if that can reasonably be done, since live testimony is inherently more probative than hearsay evidence. United States v. Mathis, supra, 559 F.2d at 298-99.

  Several courts have held that in order to satisfy the requirement of the residual hearsay exceptions, the proponent of the hearsay evidence must attempt to procure the testimony, not only of the declarant, but also of other witnesses who have knowledge of the subject matter of the hearsay evidence. In In the Matter of Sterling Navigation Co., 444 F. Supp. 1043 (S.D.N.Y. 1977), the district court affirmed the bankruptcy court's refusal to admit under 804(b)(5) testimony of an unavailable declarant where other witnesses with knowledge of the subject matter were not deposed. Because the president of a bankrupt Bahamian corporation was unavailable, a creditor sought to introduce the president's former testimony at a bankruptcy hearing as evidence of stock ownership and loan-making authority in the corporation. But since others who might possess similar information were not questioned, the proponents did not meet the necessity requirement of the residual exception. The District Court said:

   [No] affirmative steps had been taken to depose the Bahamian shareholders.... It appears that Council [proponent] was content to offer its transcript without making the requisite reasonable efforts to obtain other evidence. In view of this attitude it can hardly be said that the interests of justice would be served by admitting the evidence.

  Id. at 1047. We agree.

  In DeMars v. Equitable Life Assurance Society, supra, the First Circuit reversed the district court's ruling admitting the written report of an unavailable medical expert on the grounds that the proponent could have procured the opinion of another expert witness. 610 F.2d at 61. In United States v. Kim, supra, the D.C. Circuit upheld the district court's ruling that a telex was not admissible under the residual exception because, inter alia, the proponent of the evidence had failed to procure other documentary evidence or testimony of knowledgeable person other than the author of the telex. 595 F.2d at 766. In Workman v. Cleveland Cliffs Iron Co., 68 F.R.D. 562 (N.D. Ohio 1975), the court refused to admit the hearsay statement of an unavailable declarant under 804(b)(5) because the proponent of the evidence had made no effort to secure the testimony of other witnesses to the events dealt with in the hearsay statement. *fn93" In view of the rigor with which the requirements of the residual exceptions should be construed, we agree with these courts that the proponent of hearsay evidence under the residual exception must attempt to procure the testimony by deposition not only of the declarant, but also of any other witness with knowledge of the subject matter of the statement, unless such testimony plainly cannot be procured by reasonable means.

  4. Trustworthiness

  Evidence to be admitted pursuant to the residual exceptions must possess "circumstantial guarantees of trustworthiness" equivalent to the other enumerated exceptions under Rules 803 and 804. The court of appeals has said that the trustworthiness of a statement, for purposes of the residual exceptions, should be analyzed by evaluating:

  the facts corroborating the veracity of the statement, [and] also the circumstances in which the declarant made the statement and the incentive he had to speak truthfully or falsely. Further, consideration should be given to factors bearing on the reliability of the reporting of the hearsay by the witness.

  United States v. Bailey, 581 F.2d 341, 349 (3d Cir. 1978). Additional factors bearing on the trustworthiness of hearsay evidence are discussed in our analysis of the trustworthiness requirement of the business records exception in Part II-B-3, supra. In contrast to the trustworthiness provision of Rule 803(6), however, the trustworthiness requirement of the residual exceptions is part of the plaintiff's affirmative burden of establishing admissibility.

  G.The Problem of Internal Hearsay

  Many of the documents upon which we must rule are laden with internal hearsay. The diaries in particular are full of statements which internal or external evidence shos to be hearsay statements made by another person and merely recorded by the diarist. Even the testimony and protocols contain hearsay statements; according to the representations of counsel, hearsay evidence is not excluded in Japanese legal proceedings. The pervasiveness of internal hearsay necessitates some comments on the legal standards relating to hearsay within hearsay and hearsay within admissions.

  1. Hearsay Within Hearsay

  Rule 805 makes it clear that hearsay within hearsay is not admissible unless each of the hearsay components independently satisfies an exception to the hearsay rule. See, e.g., United States v. Ruffin, 575 F.2d 346, 357 (2d Cir. 1978). Thus a statement in a diary, for example, which recounts the hearsay statement of another person is double hearsay if it is offered for the truth of the matter asserted by the person whose statement is recorded. At the first level, it is hearsay because it is the statement of the diarist offered to show that the other declarant made the statement attributed to him.At the second level, it is hearsay because it is the statement of the other declarant offered for the truth of what he said. Unless the plaintiffs, as proponents of the evidence, can show that the statement recounted can overcome hearsay objections at both levels, it is not admissible evidence.

  The plaintiffs argue that internal hearsay should be admitted across the board under the residual exceptions, rules 803(24) and 804(b)(5). *fn94" They rely heavily on Sherrell Perfumers, Inc. v. Revlon, Inc., 1980-2 Trade Cas. P63,293 (S.D.N.Y. 1980), further consideration, 76 Civ. 4572 (S.D.N.Y. July 15, 1980), in which Judge Sweet found particular double-hearsay statements admissible under 803(24). We have no doubt that the residual exceptions may be applied to internal hearsay as well as first-level hearsay, if the requisites of those exceptions are met. However, as we have explained in Part II-F, supra, the residual exceptions should be narrowly construed. We can perceive no justification for misapplying the exceptions in the manner for which plaintiffs contend so as to negate the rule against internal hearsay. Moreover, the specific requirements of the residual exceptions must be met in order for a statement to be admissible under them. The requirements include a showing by the proponent of the evidence that it is more probative on the point offered than any other evidence which the proponent could procure by reasonable means, including depositions of other witnesses. See pp. 140-42, supra. In Sherrell Perfumers, Judge Sweet found the latter requirement met. 1980-2 Trade Cas. at p. 75,554. Thus, in considering plaintiffs' proffer of hearsay evidence under the residual exceptions, we must consider, inter alia, whether this special requirement of the exceptions is met. We must also consider, of course, whether the internal hearsay meets the specific terms of any other hearsay exception so as to render it admissible.

  2. Hearsay Within Admissions

  Under the Federal Rules of Evidence, admissions under Rule 801(d)(2) are non-hearsay, rather than hearsay admitted under an exception. As a result, hearsay within an admission is not strictly within the terms of Rule 805, governing "hearsay included within hearsay." We think, nevertheless, that internal hearsay in a statement which comes into evidence as an admission must be subjected to an independent analysis to determine whether or not it would survive a hearsay objection in its own right. *fn95" In Cedeck v. Hamiltonian Federal Savings and Loan Association, 551 F.2d 1136 (8th Cir. 1977), the Eighth Circuit held that a statement made by the employee of the defendant could not come into evidence as an admission because it was merely "a reiteration of what someone told him," and was not independently admissible as an admission or under a hearsay exception. We agree that the mere reiteration by a party's agent of the statement of another person does not render the statement an admission against the party, unless the party of his agent adopted the statement within the meaning of Rule 801(d)(2)(B). See Part II-C, supra.

  We have now concluded our survey of the law applicable to the evidence whose admissibility we will consider in this opinion. The survey has been long, but we will now be able to resolve the specific evidentiary questions before us with dispatch, by incorporating referenced portions of the foregoing discussion. We turn first to the admissibility of the Yajima diaries.

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