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CONDUS v. HOWARD SAV. BANK

December 4, 1997

AUGUSTUS CONDUS, CHRISTOPHER C. HARDING, JOHN D. CONNOR, ABRAM SCHMIER, HOWARD PHILLIPS and DAVID OLTCHICK, Plaintiffs,
v.
HOWARD SAVINGS BANK and THE FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Howard Savings Bank, Defendants. LEO A. GUTMAN and GEORGIA GUTMAN, as Joint Tenants, Plaintiffs, v. HOWARD SAVINGS BANK and THE FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Howard Savings Bank, Defendants.



The opinion of the court was delivered by: BASSLER

 BASSLER, DISTRICT JUDGE:

 Defendants object to the introduction into evidence of Plaintiffs' Exhibits 57, 67, and 68 on the ground that they constitute inadmissible hearsay. For the reasons set forth below, Defendants' objection is overruled.

 I. BACKGROUND

 In early 1990, the Governance Committee of Howard Savings Bank ("Howard") hired Speer & Associates ("Speer") to make an independent assessment of the quality of Howard's credit administration process and the adequacy of Howard's loan loss reserves. (Tr. 2:232-33.) James Olson was the Speer representative who was responsible for the Howard assessment. (Id. at 232.) After conducting the assessment, Speer issued a number of reports. At least one of these reports was presented to Howard's Board of Directors.

 At trial, since Olson was unavailable to testify, his deposition testimony was read to the jury with respect to these reports. Plaintiffs also sought to introduce three of these reports, labeled Plaintiffs' Exhibits 57, 67, and 68 ("Speer Reports"). Defendants raised a hearsay objection to the introduction of the Speer Reports. Plaintiffs responded that the Speer Reports were admissible on two separate grounds: (1) they were admissions of a party-opponent pursuant to Fed. R. Evid. 801(d)(2)(D); and (2) they were business records pursuant to Fed. R. Evid. 803(6). The Court tentatively sustained Defendants' objections from the bench, but permitted the parties to brief the issues.

 II. DISCUSSION

 A. Admission by a Party Opponent

 Federal Rule of Evidence 801(d)(2)(D) provides: "A statement is not hearsay if . . . the statement is offered against a party and is . . . a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship." Both Plaintiffs and Defendants agree that the principal issue is whether Speer was a servant or an agent of Howard.

 "Because the Federal Rules of Evidence do not define 'agent' or 'servant,' [the Third Circuit has held] that Congress intended Rule 801(d)(2)(D) 'to describe the traditional master-servant relationship as understood by common law agency doctrine.'" Lippay v. Christos, 996 F.2d 1490, 1497 (3d Cir. 1993) (quoting Boren v. Sable, 887 F.2d 1032, 1038 (10th Cir. 1989)). Additionally, because the Federal Rules of Evidence are to have uniform nationwide application, federal common law rules of agency apply rather than the agency law of the forum. Id.

 The Third Circuit, in American Tel. & Tel. Co. v. Winback and Conserve Program, Inc., a Lanham Act case, set forth the relevant principles of agency law:

 42 F.3d 1421, 1434-35 (3d Cir. 1994) (citations omitted).

 There is no serious dispute that Speer was an independent contractor as opposed to a servant. Speer is an outside company that was brought in to perform this one service for Howard. Speer is its own business enterprise and Speer and its employees were clearly not subject to the physical control necessary to support a finding that Speer was the servant of Howard. See id. at 1436-37 (finding that the "the principal's right of physical control, the place where the representatives work, the method of payment, [and] the fact that the representatives had their own ...


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