# Zenith Radio Corp. v. Matsushita Electric Industrial Co.

> District Court, E.D. Pennsylvania · September 29, 1980 · 505 F. Supp. 1190

URL: https://www.frixlaw.com/law-library/cases/1949884

## Case

- **Full name:** ZENITH RADIO CORPORATION, Plaintiff, v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., Et Al., Defendants; NATIONAL UNION ELECTRIC CORPORATION, Plaintiff, v. MATSUSHITA ELECTRIC INDUSTRIAL CO., LTD., Et Al., Defendants. in Re JAPANESE ELECTRONIC PRODUCTS ANTITRUST LITIGATION
- **Court:** District Court, E.D. Pennsylvania
- **Decided:** September 29, 1980
- **Citations:** 505 F. Supp. 1190; 6 Fed. R. Serv. 1329; 30 Fed. R. Serv. 2d 797; 1980 U.S. Dist. LEXIS 14059
- **Precedential status:** Published
- **Opinion:** Opinion by Becker
- **Judges:** Edward R. Becker
- **Cited by:** 96 later opinions in the Frix Law Library

## Citator (automated)

- **Red flag:** Reversed in part, on other grounds by Zenith Radio Corp. v. Matsushita Electric Industrial Co., 723 F.2d 238 (1983).
- Negative treatments: 2
- Distinguished by: 0
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/1949884

## How later opinions describe it (automated extraction)

- holding that, under the corresponding federal rules of evidence, interrogatory answers are not admissible against a party that was not the party that furnished the answers
- applying agency principles to relationship between parent and subsidiary corporations to determine whether statement of subsidiary can be admitted against parent

## Opinion text

EDWARD R. BECKER, District Judge.
TABLE OF CONTENTS
- rage
I. Preliminary Statement........................................1209
II. Rulings on Contested Legal Issues Concerning Interpretation of the
Federal Rules of Evidence......................................1^1®
A. Authentication...........................................1218
1. The Standard for a Preliminary Ruling on Authentication Under Rule 104; Will Inadmissible Evidence Suffice?...........1218
2. The Notion of Authentication and the Scope of Rule 901(a); is
Authenticity More than Mere Genuineness?.................1220
3. Methods of Authentication ..............................1222
a. Source of the Document 1223
b. Characteristics of the Document Itself 1224
c. Testimony and Interrogatory Answers 1225
d. Similarity to Other Authenticated Documents 1226
e. Age of the Document 1226
4. Self-Authentication Under Rule 902 ....................... 1226
5. “Best Evidence” Rule ..................................1227
B. Qualification as a Business Record Under Rule 803(6)............ 1228
1. The Impact of Rule 104(a); Will Inadmissible Evidence Suffice? 1229
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 1231
3. The Requirement of Qualification by a Custodian or Other
Qualified Witness .....................................1233
*1208
TABLE OF CONTENTS -Continued
Page
4. The Import of Rule 33(c) Production ......................1236
5. The Personal Knowledge and Trustworthiness Requirements .. . 1237
C. Qualification as Admissions by Party - Opponent under Rules 801
801(d)(2)(B), (C) and (D)....................................1238
1. “Non-Hearsay” - The Treatment of Admissions in the F.R.E. .. 1239
2. An Admission Must be an Assertion.......................1240
3. Adoptive Admissions...................................1243
4. Authorized. Statements .................................1245
5. Vicarious Admissions..................................1246
6. Admissions of a Subsidiary Corporation Offered Against the
Parent Corporation....................................1247
D. 804(b)(1) Former Testimony.................................1248
1. Unavailability.........................................1248
a. Introduction 1248
b. Inability to Procure Attendance Under Rule 804(a)(5) 1249
2. Similarity of Motive.....................................1251
3. The Meaning of “Predecessor in Interest”..................1252
E. Statements Against Interest Under Rule 804(b)(3)...............1255
1. Unavailability.........................................1256
a. Inability to Procure Testimony Under Rule 804(a)(5) 1256
b. Lack of Memory Under Rule 804(a)(3) 1256
2. Statement Against Interest — The Requirements of Rule 804
(b)(3)................................................1256
F. The Residual Hearsay Exceptions: Rules 803(24) and 804(b)(5).....1261
1. Introduction..........................................1261
2. The “Near-Miss” Problem...............................1262
3. The Requirement of Making Reasonable Efforts to Procure
Other Evidence.......................................1264
4. Trustworthiness.......................................1265
G. The Problem of Internal Hearsay............................1265
1. Hearsay Within Hearsay................................1265
2. Hearsay Within Admissions..............................1266
III. The Yajima Diaries - DSS 48-50 ................................. 1267
A. Introduction.............................................1267
B. Plaintiffs’ Foundation for Authentication and Admissibility Under
One of the Exceptions to the Hearsay Rules....................1268
C. Defendants’ Response...................... 1268
D. Authentication (F.R.E. 901).................................1270
E. Business Record Status (F.R.E. 803(6))........................1270
1. The Regular Practice Requirement........................1270
2. Requirement of Firsthand Knowledge and Contemporaneity ... 1273
3. The Trustworthiness Proviso.............................1273
F. Admissions of a Party Opponent.............................1273
G. Statements Against Interest................................1275
H. The Residual Hearsay Exceptions............................1276
I. Internal Hearsay (Rule 805).................................1276
*1209
TABLE OF CONTENTS-Continued Page
*
IV. The Yamada Diary, DSS 51 ....................................1277
V. The Yamamato Diaries, DSS 52-54 .............................. 1280
VI. The Okuma Diary, DSS 55 ..................................... 1283
VII. The Tokizane Diary, DSS 56-57 ................................. 1285
VIII. JFTC Testimony, DSS 58-74....................................1286
A. Introduction.............................................1286
B. Authentication...........................................1287
C. Admissibility as Former Testimony - Rule 804(b)(1)...............1288
1. Unavailability.........................................1288
2. Similarity of Motive to Develop the Testimony..............1288
a. Contentions of the Parties 1288
b. Similarity of Issues and Purpose 1290
c. Other Differences in Circumstances 1290
d. Export References 1291
3. Predecessor in Interest .................................1292
4. Authentication References...............................1292
D. Other Hearsay Exceptions, Admissions, and Internal Hearsay.....1293
IX. JFTC “Protocols,” DSS 75-92 ................................... 1294
X. The “Shimizu Memorandum” - DSS 95 ........................... 1297
XI. Toshiba Internal Memoranda - DSS 96,97 and 98 ................... 1299
XII. “Minutes” of the EIAJ Officers’ Meetings - DSS 1027 and DSS 1028 ... 1301
XIII. The EIAJ Statistics Committee 1966 (or Japan Victor Document) — DSS
1029 ............................ .'..........................1303
XIV. TV Export Council Meetings-DSS 1030-1034 (Production by Matsushita).............................■............................1310
XV. Conclusion...................................................1313
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, 494 F.Supp. 1161 . The nature and scope of the evidentiary hearing has been described in the first opinion in the current series, filed on August 7, 1980, 505 F.Supp. 1125 .
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 statements or
*1210
“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 judgment 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’ Final Pretrial Statement (FPS), with preclusive effect.
4
We later decided that a
*1211
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 FPS 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 Japanese and the export markets. 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 FPS was finally filed, for it contained no less than 600 references to them.
The FPS 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 FPS, 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 JFTC. 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 plaintiffs’ case in chief, but it also forms a major part of the factual basis for the opinions of their expert witnesses,
*1212
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 appear 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 them. 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 diarists’ 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.
*1213
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 defendants’ 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 do 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; (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
*1214
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 and 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 suppositious 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
*1215
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 have been 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 code-like 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.
*1216
The litigation strategy we have described is not our supposition, but rather the plaintiffs’ clear statement. 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.
13
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.
14
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.
15
*1217
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
*1218
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
*1219
authenticate evidence. Defendants say “yes” and plaintiffs say “no.” We begin with the Advisory Committee’s Note to Rule 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 to 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:
[T]he 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.
16
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:
[I]t 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
*1220
which they could infer that the document was authentic.
Id
(emphasis added).
17
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.
18
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.
19
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”
20
(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
*1221
accounts . . .. ”
21
(of the allegedly conspiratorial meetings reported), otherwise “they are not probative”
22
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.
23
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,
24
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.
25
(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
26
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”
*1222
by testimony of a witness, citing 3 Wigmore On Evidence § 790, at 218, or must qualify as an exception to the hearsay rule.
27
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).
28
The Advisory Committee Notes for this subsection state that these examples are not intended to exhaust all the possibilities, “but are
*1223
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.”
29
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, /. 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.
30
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.”
31
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 job 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,
32
*1224
considered along with their contents
33
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 , 96 S.Ct. 1724 , 48 L.Ed.2d 193 (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.
34
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.” ¶ 901(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.
35
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,
36
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
*1225
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.
37
In
Nat ale, 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 , 97 S.Ct. 128 , 50 L.Ed.2d 117 (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 áúthentication of the notebook on the grounds that only those persons acquainted with the particular transactions involved could have written the entries.
38
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 ¶ 901(b)(l)[01] at 901-22.
39
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]
*1226
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 plaintiffs’ conspiracy theory is accepted, this presents a particularly difficult situation.
40
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.
41
While Weinstein urges that this figure should not be regarded as an absolute necessity,
42
it is itself ten years shorter than the period under common law.
43
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.
44
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
*1227
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”
45
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.
46
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
*1228
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 ¶ 80.01 at 80-2. Because of its original context, we believe that Rule 80(c) should be read to apply only to evidence which was steno-graphically reported in the United States federal courts.
See id.
¶ 80.02 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 808(6)
It is conceded that the numerous diaries, memoranda and letters considered during the pretrial evidentiary hearings are hearsay
47
and that to be admitted they must qualify under one of the exceptions to the hearsay rule.
48
The prin
*1229
cipal exception upon which the plaintiffs, as proponents of the evidence, rely is F.R.E. 803(6), the business records rule.
49
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 , 100 S.Ct. 65 , 62 L.Ed.2d 43 (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.Wis.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 , 94 S.Ct. 16 , 38 L.Ed.2d 38 (1973),
cert, denied,
416 U.S. 940 , 94 S.Ct. 1945 , 40 L.Ed.2d 292 (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 , 93 S.Ct. 467 , 34 L.Ed.2d 317 (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
*1230
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. 1219,
supra
(quoting Rule 104). Rule 104(b) applies by its terms only “[w]hen 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. 1218-1219,
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.
50
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 would 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.
*1231
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 “[t]he 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 accurate 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.”
51
(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.”
52
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 practice, we note our disagreement. We find nothing in the Advisory Committee Notes or congressional debates suggesting other
*1232
wise. 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 incompetent 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 dependent 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 , 78 S.Ct. 1139 , 2 L.Ed.2d 1148 (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).
53
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
*1233
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 , 92 S.Ct. 736 , 30 L.Ed.2d 745 (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. v. Skelly Oil 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
54
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, /. 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).
*1234
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.-,
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 , 98 S.Ct. 202 , 54 L.Ed.2d 142 (1977);
United 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, “[t]he 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) has 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 , 98 S.Ct. 748 , 54 L.Ed.2d 770 (1978) (vehicle bill of sale);
United States v. Holladay,
566 F.2d 1018 (5th Cir.),
cert, denied,
439 U.S. 831 , 99 S.Ct. 108 , 58 L.Ed.2d 125 (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 ¶ 803(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
*1235
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.
55
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.,
626 F.2d 324 at 330 (3d Cir. 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
*1236
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 testimony of the custodian or other qualified witness is not a sine qua non 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 circumstantial 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 & Bucknail 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.”
56
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.
57
*1237
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, U.S.Code Cong. & Admin. News 1974, p. 7063. 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) denies 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
*1238
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 plaintiffs’ proffer of the documents as admissions under Rule 801(d)(2)(B), (C) and (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, or 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, /. e., whether inadmissible evidence may be considered, or whether 104(b) also applies, limiting our decision to admissible evidence.
See generally
pp. 1219-1220,
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. 1229-1230,
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.
58
*1239
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.
59
The rationale for admitting this type of statement has been the subject of lengthy academic dispute.
60
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 circumstance, 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.
61
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
*1240
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 ¶ 801(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).
62
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 present 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 , 99 S.Ct. 200 , 58 L.Ed.2d 182 (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
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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 included 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.D.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 , 82 S.Ct. 243 , 7 L.Ed.2d 136 (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
*1242
Cir.),
cert, denied,
444 U.S. 833 , 100 S.Ct. 65 , 62 L.Ed.2d 43 (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,
63
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.,
279 F. 699, 705 (8th Cir. 1922);
Evis Manufacturing Co. v. FTC,
287 F.2d 831, 839-40 (9th Cir.),
cert, denied,
368 U.S. 824 , 82 S.Ct. 43 , 7 L.Ed.2d 28 (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. 1246-1247,
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 see no reason to read into Rule 801(d)(2) a requirement which would preclude all uncommunicated
*1243
statements, including, for example, all entries made in a private diary, from ever coming into evidence as admissions.
64
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 ¶ 801(d)(2)(B)[01]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/1949884. Public record. Not legal advice.