United States v. Blackwell, 954 F. Supp. 944, 976 (D.N.J. 1997) (admitting financial audit where this type of record was created and maintained in the ordinary course of the preparer's business); see United States v. Sokolow, 91 F.3d 396, 403 (3d Cir. 1996) (compilation and summary of over $ 7 million in unpaid insurance claims prepared by a third-party administrator admitted as a business record where the record was made and kept in the third-party administrator's regular course of business), cert. denied, 136 L. Ed. 2d 846, 117 S. Ct. 960 (1997); United States v. Frazier, 53 F.3d at 1105, 1110 (10th Cir. 1995) (regulatory compliance audit prepared by an independent contractor admissible under Rule 803(6) where this type of audit "was made in the course of [the independent contractor's] regular business activity and . . . it was the regular practice of [the independent contractor] to create such a report"); cf. 5 Joseph M. McLaughlin et al., Weinstein's Federal Evidence § 803.11 [c], at 803-82 (2d ed. 1997) (stating, with respect to the admissibility, as business records, of material prepared for litigation: "Expert opinion on a relevant matter should be excluded only in rare instances, particularly if the expert is independent of any party, and especially if the reports have been made available to the opposing party through discovery so that rebuttal evidence can be prepared.").
Defendants attempt to distinguish Blackwell and Sokolow. Defendants first argue that Blackwell is inapposite because in that case, the audit was found to be the business record of the party against which the audit was offered, rather than the business record of an outside consultant. (Defendants' Reply Memorandum in Opposition to the Admission of the Speer Reports ("Reply. Mem.") at 6.) Rule 803(6), however, does not limit the types of admissible business records to business records of party opponents. Here, the Speer Reports are being offered as business records of Speer. Blackwell supports the conclusion that financial reports and audits like the Speer Reports are admissible as business records provided that the regular foundational requirements for admission have been satisfied. 954 F. Supp. at 973-74.
Next, Defendants contend that Sokolow is distinguishable because in that case there was "a specific grant of agency authority to support the introduction of the records as an exception to the hearsay rule." (Reply Mem. at 6.) Such a distinction, however, is irrelevant. Rule 803(6) does not require such a grant of agency authority.
Finally, Defendants' failure to attempt to distinguish Frazier is particularly noteworthy. In Frazier, an independent, outside consultant conducted a financial audit of a party. 53 F.3d at 1109. The Tenth Circuit found the report summarizing the findings of the audit to be admissible as a business record of the outside consultant. Id. at 1110. The Court finds Frazier persuasive.
In order to admit the Speer Reports, the Court must also find that "the source of information or the method or circumstances of preparation [do not] indicate lack of trustworthiness." Fed. R. Evid. 803(6). The Court holds that the Speer Reports indicate trustworthiness because these reports had business significance apart from their use in this litigation and they are the type of reports upon which independent business decisions are routinely made. The Chairman of the Governance Committee, Donald Peterson, stated that the Governance Committee's purpose in hiring Speer was "for the board's comfort to assure ourselves that we were headed in a direction that was satisfactory." (Tr. 4:110.) Mr. Peterson also stated that they hired Speer "to gain the benefit of the outside consultant of the bank that we were doing the best that we could." (Id.) Therefore, Howard intended to rely on the Speer Reports for business purposes independent of anticipated litigation. This fact creates an inference of trustworthiness supporting the admission of these reports pursuant to Rule 803(6). See Frazier, 53 F.3d at 1110 (finding that a regulatory compliance audit report made by an independent contractor was sufficiently trustworthy to be admitted as a business record despite the possibility that it was prepared for purposes of litigation, in part because the report "had business significance apart from its use in [the litigation]"); In re Applin, 108 Bankr. 253, 260 & n.11 (Bankr. E.D. Cal. 1989); cf. United States v. Licavoli, 604 F.2d 613, 622-23 (9th Cir. 1979) (holding that an independent expert's written appraisal of a valuable painting was admissible as a business record of an insurance company where the insurance company relied upon the appraisal in settling a claim for the loss of that painting and the other foundational requirements for admission were not disputed).
There are also other indicia of trustworthiness supporting the admission of the Speer Reports. Speer was an independent consultant with no reason to issue an inaccurate report. See Frazier, 53 F.3d at 1110. Also, Howard itself considered Speer to be well qualified to make a trustworthy and accurate assessment. Mr. Peterson stated in his deposition that "in looking at [Speer] and in even comparing it with other firms we came to the conclusion that these folks were the most skilled to do what we wanted to do in this area which led to our selection of them." (Deposition of Donald Peterson, dated August 25, 1992, at 166.) Finally, the fact the Speer Reports were critical of Howard's practices despite the fact that Howard hired Speer adds to the trustworthiness of the Reports. Speer certainly had no motive to be overly and unfairly critical of the Howard; if anything, one would expect the opposite.
Accordingly, the Court finds that the requirements of Rule 803(6) have been met and the Speer Reports are admissible.
For the reasons previously stated, the Court overrules Defendants' objection to the admission of the Speer Reports.
Dated: December 4, 1997
WILLIAM G. BASSLER, U.S.D.J.