Business Records

December 26, 2012 Admission Rule

The last project I gave my law class this semester required them to master the business records rule. Each student had to introduce a telephone toll record into evidence. I impressed on them that no one passed the class without being able to efficiently and crisply use the rule. It is not just a matter of substance but style as well.

803(6) is more than a rule to introduce documents. It also shows how to use the words of the rules to your advantage. All the lawyer has to do is parrot the language of each subsection in a question and the court will reflexively grant the request. The words are important. They have legal meaning. Use them to your advantage.

Here is the rule as redrafted this year by the committee and the Supreme Court for greater ease of use.

803(6) Records of a Regularly Conducted Activity.  A record of an act, event, condition, opinion, or diagnosis if:

(A)    the record was made at or near the time by — or from information transmitted by — someone with knowledge;

(B)    the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit;

(C)    making the record was a regular practice of that activity;

(D) all these conditions are shown by the testimony of the custodian or another qualified witness, or by a certification that complies with Rule 902(11) or (12) or with a statute permitting certification; and

(E)  neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

Business records don’t have the sex appeal of cross-examination or final argument, but what could be more basic to litigation than introducing documents? Any serious trial today has reams of documents. They are the backbone of proof. My theory is that even unsophisticated jurors realize that a lawyer who fumbles over handling documents must be an amateur. Thus they must be handled efficiently and with ease, not only to get them into evidence but to impress the jurors that you know what you are doing. The easiest way of accomplishing that is to use the actual words of the rule. Use each subsection seriatim and almost verbatim in the question. You don’t even have to prep the custodian witness because they will always answer yes to each of the questions.

Before documentary evidence may be introduced, certain evidentiary foundations must be established. A lawyer may have the best “proof” in the world, but if it is not admitted into evidence, it will be of no use. Regardless of the type of evidence, whether records, bills, photographs, letters, diagrams, or charts, a lawyer must lay the proper foundation before the documents may be introduced at trial as evidence.

Let’s examine the rule in more detail:

1. The first requirement is that the document entry must have been made “at or near the time” the reported incident occurred. This is called the prompt entry requirement. This is determined by reading the report. The only issue is whether it was made soon enough to satisfy this time requirement. The answer to that depends on the type of information but the sooner the better. It must be a recital of contemporaneous transactions. This will make it probable that the entries were fairly and honestly kept, and are accurate. If the entries are made a long time afterward, they may be merely self-serving declarations concerning past events, rather than a register of transactions as they occur; and the further from the time of the act the record is made, the more likely it is to be wrong. The law does not set a precise time as to when the entries must be made in order that they may be deemed to have been made “at or near the time” of the transaction to which they relate. There is no arbitrary or artificial time limits. It is a reasonable time. While exact contemporaneity with the transaction to which the entry relates is not required, nor is it indispensable that entries be made “immediately” following the occurrence of the event recorded, or even on the same day, the purpose of the requirement of a timely recording is not fulfilled unless the record is made close enough in time to the event in question so that the memory of the entrant is unimpaired. They must be made while the matter is still fresh enough to be verifiable.

2. The second requirement is that the information in the document must have been transmitted by a person with knowledge of the event. This means that the first person who reported the information must have had first hand knowledge. This person did not have to be the writer or even the one who reported it to the writer. There can be a chain of people who transmit the information after that so long as each is transmitting the information “in the course of a regularly conducted” business. It is the regularity of making the document that is evidence of its accuracy.

Statements by outsiders to the business are not admissible for their truth, in the absence of a showing that the outsider had a duty to report the information, or that it was standard practice for the preparer to verify information from outside sources. The recorder of the entry need not have firsthand knowledge of the event, but there must be an informant with such knowledge who is shown to have begun the chain producing the record. This minimal threshold requirement exists for the obvious reason that no business record can be more accurate than the ultimate source of the information in it. In Petrocelli v. Gallison, the First Circuit ruled that the “complete absence of any indication” as to where information in medical records came from rendered the entry inadmissible under Rule 803(6) because it was impossible to tell whether the record was made by a person with knowledge.

A customer generally has no “business duty” to report only accurate information to a company that wants his business. Thus the justification for the rule breaks down. For that reason, courts generally have held that customer-supplied information is not admissible as a business record, even if that information is found in the records of a business. But the courts also recognize that businesses have an interest in the accuracy of certain customer-supplied information. Therefore, the businesses may take steps to verify that information before including it in the records of the business. Accordingly, when a business has “adequate verification” of the customer-provided information, the information is admissible under the business records exception to the hearsay rule. A good example of this is a hotel clerk requiring a registering guest to show identification.

3. The third requirement is that the document must be kept in the course of a regularly conducted business activity. Was this report kept on file in the business for business purposes? Is it part of the practice of the business to receive and keep this information on file? So an isolated memorandum, or data and exhibits specially prepared for trial, are inadmissible as business records.

The admissibility of business records is based on how they are kept rather than on their form; regularity outweighs the method of expression. A wide variety of books, papers, slips, tags, and the like have been held admissible, including bank deposit slips, bills of lading, delivery tags and slips, invoices, receipts, sales slips and sheets, summary sheets, and time cards, slips, and sheets. But any erasures or suspicious circumstances must be satisfactorily explained before the records will be admissible.

4. The fourth requirement is making the record a regular practice of the business. This requires the persons making the record do so as a regular part of the business. This can involve several people working at the business. The report may contain several layers of hearsay but that is not a problem so long as each comes from a participant in the regular course of business. This requires an examination of all the workers in the chain of information. However if information comes from an outside person, it may not be accorded the same imprimatur as a business worker. The outside person may not have a business duty to report the information, i.e., patients in a medical record, or a witness in a police report. If the outsider has a business relationship it may be admissible. The key is a business reliance on the information, i.e., a letter from one business to another.

If a business record is offered to prove the truth of an incorporated statement made by a person who is not part of the regularly conducted activity and has no business duty to make the report, the record constitutes “double hearsay” and is inadmissible to prove the truth of the incorporated statement unless it independently falls within an hearsay exception.

5. Almost anyone can be a custodian for this rule. I read of a case where an FBI agent was authorized to be a custodian of a business he was investigating because through his investigation he became familiar enough with the keeping of records in that business. A qualified witness is one who can explain the record keeping system of the organization and vouch that the requirements of the business records exception are met.

6. Finally the record can be attacked because either the source of information or the circumstances of preparation demonstrate a lack of trustworthiness. The classic situation in which the courts have found a motivation to misrepresent, and rule a business record inadmissible, is when the record is prepared in anticipation of litigation. However it might still be admissible if the data recorded are important to the business outside the context of the litigation. Or that the reporter and recorder of the data had no motive to misrepresent or amend the record. Other factors tending to defeat objections based on untrustworthiness might include the availability of the persons who prepared the records for cross-examination, and the fact that the record is required by law to be made and filed with a government entity. The trustworthiness clause provides a separate basis for excluding evidence without reference to the other requirements of Rule, but it has not been successful.

This may be a fertile source of cross-examination. So when questioning a witness about a document, also think through how your opponent may try to keep documents out of evidence. I read about a recent document-intensive case where the lawyer questioned many witnesses about certain key documents she wanted to get into evidence. Her refrain with respect to each document was simple: “Did you prepare this document in the ordinary course of your business?” On cross-examination however the witnesses were forced to admit that most of the documents were drafts and, although prepared as part of the witness’s job, were not business records in a true sense—they were not in a form regularly prepared by the witness, nor was retaining them a regular part of the witness’s or company’s practice. The cross-examinations undermined the reliability of the documents and kept them out of evidence.