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Hearsay—Business Records—What is the Business Duty Rule?

July 6, 2011

Many times you have heard me say the Rules of Evidence replace the common law as a comprehensive body of evidence law, and that if we want to figure out the foundation for an item of evidence we must track the language of the Rule.  So, where in Rule 803(6) are the words “business duty?” 

Rule 803. Hearsay Exceptions; Availability of Declarant Immaterial

The following are not excluded by the hearsay rule, even though the declarant is available as a witness:

(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, or by certification that complies with Rule 902(11), Rule 902(12), or a statute permitting certification, unless the source of information or the method or circumstances 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.

The words are not there, and yet, courts include the “business duty rule” as part of the foundation for admitting a business record as an exception to the hearsay rule.  To remind ourselves, here are the elements of the foundation as described by the Tenth Circuit:

To satisfy Rule 803(6) the inventory records must (1) have been prepared in the normal course of business; (2) have been made at or near the time of the events recorded; (3) be based on the personal knowledge of the entrant or of a person who had a business duty to transmit the information to the entrant; and (4) indicate the sources, methods and circumstances by which the record was made were trustworthy.  (citation omitted).  The proponent of the document must also lay this foundation for its admission.

United States v. Ary, 518 F.3d 775, 785 (10th Cir. 2008).

Here’s another version of the elements of the foundation of a business record, from Evidentiary Foundations § 10.05[2] (6th ed. 2005) by Professor Edward J. Imwinkelried, currently at the University of California (Davis) School of Law:

(1) The report was prepared by a person with a  business relationship with the company; (2) The informant (the ultimate source of the report) had a business duty to report the information; (3) The informant had personal knowledge of the facts or events reported; (4) The written report was prepared contemporaneously with the facts or events; (5) It was the routine practice of the business to prepare such reports; (6) The report was reduced to written form; (7) The report was made in the regular course of business; (8) The entry is factual in nature (noting Rule 803(6) allows for opinions or diagnoses).

Both of these renditions of the elements include the business duty rule.  In my first blog on the business records exception to the hearsay rule (July 5), I promised we’d get back to United States v. Vigneau, 187 F.3d 70 (1st Cir. 1999), so let’s do it!  We left our discussion with this question:

What is the court’s ruling, and which element of the foundation did the court find the government failed to meet?

Well, the court stated at one point that “[t]he district judge was correct that the “To Send Money” forms literally comply with the business records exception … .”  The court went on, however, to hold the forms should have been excluded because the statement “Patrick Vigneau” violated the business duty rule.

[D]espite its language, the business records exception does not embrace statements contained within a business record that were made by one who is not a part of the business … .

So, what is this “business duty rule?”  Some courts and commentators suggest the requirement of a business duty arises from the portion of Rule 803(6) that says:

… 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 … record …

This view seems to be the one expressed in American Jurisprudence.  29A Am. Jur. 2d Evidence § 1260.  This also seems to be the position taken in the Advisory Committee Notes.  The elements listed in the Ary opinion suggest, however, that the business duty rule relates to the requirement of personal knowledge.  McCormick seems to support this view.  McCormick on Evidence § 290 (6th ed. 2006).  Other authorities suggest that the business duty rule is actually a recognition of the principle of hearsay within hearsay.  See Kwestel, The Business Records Exception to the Hearsay Rule: New is Not Necessarily Better, 64 Mo. L. Rev. 595 (1999).

I say … it makes little or no difference to a practicing lawyer!

A practicing lawyer who wants to win an evidence struggle by keeping evidence out may use the business duty rule as a tool to convince the trial judge that the foundation has not been met.  On the other hand, a practicing lawyer who wants to win the struggle by getting the record admitted may argue that the rule has been relaxed under the Federal Rules of Evidence, particularly when the business participant verifies the information, or where there are other adequate indications of trustworthiness.  See, e.g., United States v. Cestnik, 36 F.3d 904, 908 (10th Cir. 1994).

Let the academics figure this one out while you win evidence struggles, and cases, for clients!

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