for) evaluative reports" to be "a helpful guide" in determining whether findings going beyond observed facts should be admissible under Rule 803(8)(C). Indeed, its listing of factors that may be of assistance in passing upon the admissibility of evaluative reports demonstrates the Advisory Committee's acceptance of the position that the "factual findings" phase of Rule 803(8)(C) is not limited to observed facts.
Beyond that, the decisions subsequent to the promulgation of the Rule tend towards a more rather than a less expansive definition of "factual findings," and they generally permit the admission into evidence of reports and conclusions that do more than memorialize observed facts. See Chandler v. Roudebush, 425 U.S. 840, 863 n. 39, 96 S. Ct. 1949, 1961, 48 L. Ed. 2d 416 (1976) (prior administrative findings with respect to an employment discrimination admissible under 803(8)(C)); United States v. School District of Ferndale, 577 F.2d 1339 (6th Cir. 1978) (HEW hearing examiner's finding that school had been established and maintained as a black school for purposes of segregation admissible); Miller v. New York Produce Exchange, 550 F.2d 762 (2d Cir. 1977) (Commodity Exchange Authority document containing data and conclusions about a commodity squeeze in the cottonseed oil is admissible); Hackley v. Roudebush, 171 U.S. App. D.C. 376, 520 F.2d 108 (D.C.Cir.1975) (administrative record is admissible at a Title VII trial de novo); Melville v. American Home Assurance Co., 443 F. Supp. 1064 (E.D.Pa.1977), rev'd on other grounds, 584 F.2d 1306 (3d Cir. 1978) (F.A.A. airworthiness directives impugning the mechanical safety of the model of a plane whose crash was at issue admissible); Baker v. Elcona Homes Corp., supra (conclusions of police officer as to color of light that he did not observe personally admissible); contra, Complaint of American Export Lines Inc., 73 F.R.D. 454 (S.D.N.Y.1977) (report of Marine Board of Investigation convened by Coast Guard to examine harbor collision inadmissible).
The rationale for the admissibility of factual findings contained in public records, as explained in the cases cited above, lies in their fundamental trustworthiness.
The guarantee of trustworthiness does not necessarily reside in the contents of the records, be they facts or conclusions, but rather in their source. "(Public) records or reports, by virtue of their being based on legal duty and authority, contain sufficient circumstantial guarantees of trustworthiness to justify their use at trial." Melville v. American Home Assurance Co., supra, 443 F. Supp. at 1112. Since the reliability of the factual findings results essentially from the fact that the public official concerned is pursuing an investigation authorized by law, there is no reason not to admit the findings simply because they tend towards the conclusory rather than the factual end, unless, as Rule 803(8)(C) further provides, the "sources of information or other circumstances indicate lack of trustworthiness."
See Part B infra.
Rule-making proceedings present a more complicated problem in the scheme of Rule 803(8)(C). Defendants contend that the prospective, policy-oriented, rule-making character of the regulatory decisions at issue here renders them incapable of engendering the factual findings contemplated by the Rule. It is certainly true that, to the extent that a proceeding is clearly rule-making-directed in focus to regulation of future conduct, with any fact-finding at most incidental and used primarily for predictive purposes
-it is not addressed to past facts, and it therefore cannot result factual findings under Rule 803(8)(C).
The difficulty is that with respect to the great bulk of the test case materials it is impossible to draw a hard-and-fast distinction between rule-making and fact-oriented adjudication. The materials typically mix both elements; they involve the prescription of future behavior through order or rule, but at the same time they contain findings of fact made by the Commission (or an administrative law judge) upon which the issuance of rulings for the future is based. Hence, the Court is required to look beyond the label and to examine more closely the subject matter of the paragraphs designated within each docket to determine which of these constitute findings of facts or conclusions drawn from such findings, on the one hand, and which are more fully oriented towards future conduct or policy, on the other.
1. Simple Findings of Facts
A small number of the designated paragraphs
contain simple findings, that is, largely non-conclusory statements describing past acts or events. Even the most restrictive view of "factual finding" under Rule 803(8)(C) would embrace these paragraphs. See Complaint of American Export Lines, Inc., 73 F.R.D. 454 (S.D.N.Y.1977); Report of the Committee on the Judiciary, H.R.Rep.No.93-650, 93d Cong., 1st Sess. 14 (1973), U.S.Code Cong. & Admin.News 1974, p. 7088.
2. Findings as to AT&T's Methods of Analysis
Related to the simple findings are those paragraphs which describe and examine certain of AT&T's calculations, projections, and analyses of the costs, investments, and expenses associated with different tariffs. To be sure, opinions or conclusions as to the validity of AT&T's analyses are interspersed with the more strictly "factual" recounting of what methods AT&T used, but even as to such conclusions the Commissioners appear to have relied on their own analysis and expertise. See e.g., P 11 of item 177, Docket No. 20288. The Advisory Committee Notes suggest as one factor to be taken into account in determining the admissibility of a conclusory report the "special skill and experience" of the preparer of the report. This is appropriately interpreted as an invitation to take advantage of an investigator's skill in making inferences which will aid the Court in its own fact-finding process.
There is little reason for the Court to reject the benefits of the Commissioners' expertise, as represented by their findings as to the validity of AT&T's projections. The Court therefore finds these paragraphs
to come within the rubric of "factual findings," as conclusions and inferences drawn from a combination of factual materials and the expertise of the preparer of the report. See Baker v. Elcona Homes Corp., supra, 588 F.2d at 558.
3. Background Matters
A number of paragraphs fall into the category of "background information": descriptions of past events or of other materials largely culled from other documents on the public record. For example, in a number of dockets the Commission simply summarizes the content of certain AT&T tariffs and the positions of the parties in the pleadings to the proceedings. See, e.g., Docket No. 19919, item 36, PP 11-15.
Defendants claim that such background summaries are not legitimate "factual findings" and that the government is required to prove these facts through the original documents, citing Rule 1002,
the "best evidence" rule.
There is no reason for concluding that these summary materials do not constitute "factual findings" of the sort required by Rule 803(8)(C). Certainly, they are not in that category merely because the Commission may have labeled them as "background." That label is simply irrelevant to the "factual findings" issue.
The best evidence rule presents somewhat more of a problem, but in the Court's view the materials in question are admissible notwithstanding that rule. The government has represented that these materials "are only involved collaterally to the principal issues in the case";
and Rule 1004(4) excepts from the best evidence requirement documents "not closely related to a controlling issue."
To require proof of these "background" facts through their underlying documents would accomplish nothing substantive; it would merely result in an accumulation in the record of large quantities of papers not central to the main issues in this case.
Since these documents are matters of public record, defendants should easily be able to prove inaccuracies, if any, in the government's summaries. Therefore, unless there is reason to consider these paragraphs
untrustworthy (see infra ), they fall within the hearsay exception of Rule 803(8)(C).
4. Matters Relating to Burden of Proof
Many of the designated paragraphs focus on conclusions by the FCC that AT&T did not, in certain instances, meet the burden of proof necessary to justify a particular rate or practice under the Communications Act. These paragraphs do not contain findings by the FCC of the existence or non-existence of any fact or a series of facts, nor do they contain inferences from such findings. Rather, they reflect conclusions by the Commission that the record in a particular docket yielded no definitive answers, and that because the burden was on AT&T to produce those answers, it could not prevail. The inclusion of such conclusions within the category of "factual findings resulting from an investigation" of Rule 803(8)(C) would stretch that hearsay exception beyond the bounds of its previous applications, especially if the materials were introduced to prove the non-existence of the particular state of affairs which AT&T did not meet its burden of proving. Conclusions of this sort would simply not be helpful to a trier of fact in making his way through the maze of information connected with this case.
The Court concludes that paragraphs
concluding that AT&T failed to satisfy a burden of proof under the Communications Act do not constitute "factual findings" under Rule 803(8)(C).
5. Findings of Unfair Rates and Practices
The government proposes to introduce into evidence a number of paragraphs containing findings of violations of provisions of the Communications Act, or findings of unlawful discrimination, of unreasonable and practices, unjust rates, and the like. Where such conclusions result from other FCC conclusions not constituting factual findings-i. e., FCC findings that AT&T has not met its burden of proof-they are not regarded as "factual findings" under this Rule (since to construe them otherwise would bring the non-findings in through the back door).
However, where the FCC reached its conclusions as a result of facts found in the course of its investigation-just as the Hearing Examiner did in United States v. Ferndale, supra
-they constitute inferences from the facts before the Commission, and thus are "factual findings" under Rule 803(8)(C).
6. Mixed Findings of Fact, Law and Future Policy
The remaining paragraphs in these dockets contain a mixture of statements of fact, legal conclusions, predictions of future events, and prospective rulings on the course of AT&T's conduct. It would be difficult, if not impossible, to separate out with respect to these materials those elements that would qualify as "factual findings" from those that are primarily conjectures by the FCC as to how the future will or should unfold. On that basis, these paragraphs
will not be deemed "factual findings" within Rule 803(8)(C). See John McShain, Inc. v. Cessna Aircraft Co., 563 F.2d 632, 636 (3d Cir. 1977) (trial judge justified in excluding accident reports by National Transportation Safety Board where "reception of such reports into evidence would have involved a lengthy attempt to sift out admissible hearsay").
7. Multiple Hearsay
Defendants contend that the test case materials which are "factual findings" within 803(8)(C) must nevertheless be excluded in most instances because they constitute "multiple hearsay" under Rule 805,
that is, the matters which the government seeks to prove through these decisions were not within the first-hand knowledge of the Commissioners and staff who issued the decisions.
Although the multiple hearsay problem has been mentioned with regard to Rule 803(8)(C) (see Hackley v. Roudebush, supra, 520 F.2d at 156, n. 195 (D.C.Cir.1975)), it has generally been held that the author of the report or decision is not necessarily required to have first-hand knowledge of the facts upon which his findings are based. United States v. Smith, 172 U.S. App. D.C. 297, 521 F.2d 957 (D.C.Cir.1975); Fraley v. Rockwell International Corp., 470 F. Supp. 1264, 1267 (S.D.Ohio 1979). Where the trial judge finds the investigative findings to be reliable, their admissibility under Rule 803(8)(C) is warranted even if the findings are not the result of the direct personal knowledge of the author of the findings. 4 Weinstein's Evidence, P 803(8)(03), at 803-203-04. Thus, the multiple hearsay issue is reducible to one of the trustworthiness of the factual findings.
Rule 803(8)(C) excepts from the hearsay rule public records containing factual findings "unless the sources of information or other circumstances indicate lack of trustworthiness." The burden is on the party disputing admissibility to prove the factual finding to be untrustworthy. Baker v. Elcona Home Corp., supra, 588 F.2d at 558.
The Advisory Committee Notes list a number of factors which may be of help in determining the trustworthiness or lack thereof of a Rule 803(8)(C) factual finding.
Two of these-the special skill and expertise of the official and the holding of a hearing-were raised in some form by the defendants in the attack on the trustworthiness of the materials proffered by the government, and they must accordingly be considered.
1. Agency Expertise
There is no dispute about the FCC's expertise to find and evaluate facts in light of the standards of the Communications Act. Defendants argue, however, that the expertise of that agency relates to communications rather than to antitrust matters, that the test case decisions follow the standards of the Communications Act rather than those of the antitrust laws, and that for these reasons the factual findings at issue are inherently untrustworthy in an antitrust context. In elaboration, defendants assert that the FCC applied the "broad public interest standard of the Communications Act, while factual issues in this case must be analyzed under the competition standard of the antitrust laws." Defendants' Memorandum on Admissibility of Test Case Materials, p. 33.
For a number of reasons, the Court concludes that the findings in question are not unreliable or untrustworthy merely because they were made in a context different from the one in which they are sought to be introduced.
First, it is not appropriate to distinguish between Communications Act standards and antitrust standards on the basis that the former are in the "broad public interest" area while the latter serve the interests of "competition." Although technically the Communications Act focuses on public necessity and convenience and the Sherman Act on competition, in a very real sense both the FCC, in its enforcement of the Communications Act, and the courts, in their application of the antitrust laws, guard against unfair competition and attempt to protect the public interest.
Second, the FCC did not close its eyes to the parallel requirements of the antitrust laws in making its findings under the Communications Act. For example, in its Final Decision and Order in Docket No. 20288, the Commission stated that
we hope to make the "full and fair competition' obligations of the carriers consistent with similar obligations imposed pursuant to the antitrust laws.
See also, Chastain v. American Telephone and Telegraph Co., 401 F. Supp. 151 (D.D.C.1975) (as to matters "such as the reasonableness of (a particular AT&T policy) within the meaning of the Sherman Act, and the policy's effect on competition, the FCC's findings will be received as evidence where relevant." 401 F. Supp. at 157-158).
Third, since the telecommunication laws do differ from the antitrust laws in some significant respects, findings under the former will obviously carry less weight than those made pursuant to the latter, and they certainly carry less weight than facts established by direct evidence.
But these are matters of weight rather than of admissibility, and they do not warrant the exclusion of the FCC findings.
2. Proceedings Not Involving Hearings
Two of the test case dockets-FCC Docket No. 8963 and Colorado P.U.C. Docket No. 881-involved hearings with live testimony and cross examination, and there is therefore no trustworthiness question in their regard.
The other dockets were primarily "paper hearings" without the full battery of evidentiary safeguards characteristic of "trial-type" proceedings.
Defendants contend that a "paper hearing" is inherently incapable of engendering trustworthy factual findings due to the absence of such safeguards. However, the law is that lack of a formal hearing is not necessarily fatal to the reliability of a factual finding under Rule 803(8)(C) where other indicia of trustworthiness are present. Baker v. Elcona Homes Corp., supra, 588 F.2d at 558; see also United States v. Ferndale, supra, 577 F.2d at 1354-55 (lack of subpoena power and discovery at administrative proceedings insufficient to upset the trustworthiness of that proceeding).
With respect to all of the dockets, AT&T was afforded and took advantage of its "full opportunity for hearing" required by section 205(a) of the Communications Act, 47 U.S.C. § 205(a), allowing it to file written comments with the FCC, and replies to comments made by other parties. See American Telephone and Telegraph Co. v. F. C. C., 572 F.2d 17, 22 (2d Cir. 1977). In affidavits before the Special Masters in this case, defendants conceded that the extensive "paper proceedings" in one docket (No. 19919) did "provide the parties the equivalent protections inherent in a trial type hearing with oral cross-examination." Plaintiff's Reply to Defendants' Memorandum on Admissibility of Test Case Materials, p. 29. AT&T and the other parties also apparently had the right to petition for a trial-type hearing with oral cross-examination, but chose not to exercise that right.
The Court concludes that, since AT&T had the opportunity to argue its position and to reply to opposing positions before the Commission at length, albeit on paper, the materials possess sufficient reliability to prevent lack of a formal hearing in and of itself from destroying their trustworthiness.
3. Findings of Unfair Rates and Practices
Inasmuch as they contain elements of legal conclusion in addition to not being the product of oral hearings under antitrust standards, the FCC findings of anticompetitive, unfair, or unreasonable rates and practices present a closer question of reliability than do the types of materials discussed above. Nevertheless, the Court has concluded that they are not untrustworthy and therefore not inadmissible. As already noted, a finding is not outside the scope of the Rule merely because it also includes the conclusions of the finder of facts; it is not inherently unreliable merely because it was made under the matrix of the Communications Act; and it is not untrustworthy merely because the proceeding which produced it was conducted on the basis of documents alone.
Additionally, it is significant that the public agency which made these findings is an independent regulatory commission, apart from the Executive Branch, and operating under stringent procedural guidelines on a public record. See generally, 47 U.S.C. §§ 151 et seq.; American Telephone and Telegraph Co. v. FCC, supra, 572 F.2d at 23.
That circumstance provides an element of trustworthiness which might not be present with respect to a public record generated by a person or body lacking these characteristics.
Nevertheless, especially in view of the existence here of a combination of factors tending toward lack of reliability, it is important to emphasize the limited purpose for which these materials are being received. They are not being admitted as conclusive evidence of the nature of the conduct of the defendants in this case. The Court will make its own findings with respect to that issue, and in doing so it will of course not be bound by the decisions of the Commission, but it will admit other evidence on the issue of whether defendants' rates and practices resulted in the exclusion of competition.
Beyond that, the Court expects that a bare conclusion by the FCC that a particular practice was anticompetitive will not be sufficient, without substantial other evidence, to sustain a finding of a Sherman Act violation with respect to the transactional episode to which that conclusion relates. See Chastain v. American Telephone and Telegraph Co., supra, 401 F. Supp. at 157-58.
With that caveat, the Court holds that the findings of anticompetitive, unfair, or unreasonable rates and practices reached by the FCC as a result of facts found by that agency in the course of its investigations are admissible under Rule 803(8)(C).
The government has also designated for evidentiary use, to be admissible under the Rule 803(8)(C) exception to the hearsay rule, twenty-nine items relating to a 1939 Report of the Federal Communication Commission on the Investigation of the Telephone Industry in the United States pursuant to P.R. No. 8, 74th Congress (FCC Report). These twenty-nine items include the FCC Report itself, a proposed version of the Report not adopted by the Commission commonly known as the Walker Report, and twenty-seven memoranda prepared by the FCC staff for use in preparing the Walker Report. These reports and memoranda are quite bulky (the FCC Report containing 661 pages, the Walker Report 778 pages, and many of the memoranda reaching similar lengths), and the government has asked that they be admitted in their entirety, without designation of particular paragraphs or sections (as was done for the regulatory agency decisions discussed above). In addition, the government has requested that the Court find admissible a memorandum prepared by the Communications Division of the New York Public Service Commission relating to its Case No. 26894.
The Walker Report, the staff memoranda, and the memorandum prepared for the New York Public Service Commission all have in common that they were never adopted as factual findings by the agencies for which they were prepared. The foreword to the Walker Report states explicitly that the document is a proposed draft, not intended to commit the Commission as to findings of fact. Walker Report, at III. The twenty-seven staff memoranda used in the preparation of the Walker Report are even further removed from final findings of fact by a public agency. The New York Public Service Commission memorandum was attached to an order by the Commission served on all New York telephone companies for the purpose of soliciting comments on the issue of whether the interconnection program of the Rochester Telephone Corporation should be modified or extended to other companies. As such, it merely served as a vehicle by which information could be gathered for eventual factual findings.
Thus, none of these items constitutes findings of fact by the respective agencies as required by Rule 803(8)(C). See United States v. Corr, 543 F.2d 1042, 1050-51 (2d Cir. 1976) (SEC release or announcement notifying public of certain facts was not a determination of facts by the agency obtained after administrative proceedings, and thus was outside of 803(8)(C) hearsay exception).
The FCC Report itself was adopted by the Commission and submitted to the Congress pursuant to P.R. No. 8. Defendants contend that since the Report was the product of a rulemaking proceeding by an administrative agency, employing standards and procedures different from those used in adjudication or in routine investigatory fact finding, it could not be characterized as containing trustworthy factual findings for the purposes of Rule 803(8)(C). As stated above, a finding is not without the scope of Rule 803(8)(C) merely because it resulted from a procedure containing rulemaking elements. However, other features of this Report and the context in which the government proposes to introduce it into evidence combine to compel the conclusion that it may not be admitted.
The FCC Report is over 600 pages long. Although, the Report proposes in some fashion to isolate its descriptive from its recommendatory and conclusory sections, the government has not designated particular paragraphs or sections for evidentiary purposes but requests admission of the entire document. The Report appears to run the gamut from straight factual description to speculative conclusions about the American Telephone and Telegraph Company. Introduction of the Report on that basis would require the Court on its own to sift through hundreds of pages to extract factual findings from conjecture. On that ground alone, the Court would be justified in holding that Report inadmissible. See John McShain, Inc. v. Cessna Aircraft Co., supra, 563 F.2d at 636.
Further, reception of the Report into evidence would no doubt generate an extensive effort on the part of AT&T to litigate extensively on matters that the government itself concedes to be tangential to the issues in this case: the history of the telephone industry prior to 1939.
Rule 403 of the Federal Evidence rules permits the Court to balance the probative value of evidence against considerations of undue delay or waste of time, and to decide in favor of exclusion where the latter outweighs the former. Although the Court does not rule at this time that the early regulatory history of the telephone industry is not relevant to the issues in this case, it does hold that the probative value of the FCC Report is outweighed by the delay and waste of time at trial that would ensue upon its introduction, and that the Report should therefore be excluded.
With this Opinion and the contemporaneous order, the Court has now ruled on the admissibility of all test case materials the admissibility of which is still in dispute between the parties. These rulings provide standards which may be applied to the remainder of the judicial notice materials to determine their admissibility without further intervention by the Court. To facilitate these determinations, the Special Masters will supervise the labeling of the judicial notice materials which the parties wish to introduce into evidence, as either admissible or inadmissible, in accordance with the standards set out above. To the extent that disputes arise as to how the standard should be applied to particular items, they will be resolved by the Special Masters by September 15, 1980. The rulings of the Special Masters may be appealed to the Court, and the Court will also consider in advance of trial
objections to the admission of judicial notice materials on grounds other than hearsay.