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PEARCE v. E.F. HUTTON GROUP

February 12, 1987

John M. PEARCE, Plaintiff,
v.
The E.F. HUTTON GROUP, INC., et al., Defendants



The opinion of the court was delivered by: FLANNERY

 FLANNERY, District Judge.

 This matter came before the court at a status conference held on February 9, 1987, and upon defendant Bell's motion to strike plaintiff's opposition to Bell's motion for partial summary judgment. After hearing oral argument, and after considering Bell's motion, the plaintiff's opposition, the underlying papers, and the entire record in this case, this court concludes that the congressional hearing materials, relied upon by plaintiff in his original opposition to Bell's motion for partial summary judgment, are inadmissible evidence for the reasons set forth below.

 I. INTRODUCTION

 On May 2, 1985, E.F. Hutton & Company, Inc. ("Hutton"), a wholly owned subsidiary of defendant, The E.F. Hutton Group, Inc., pled guilty in the United States District Court for the Middle District of Pennsylvania to 2,000 counts of mail and wire fraud. The Department of Justice decided not to prosecute individual Hutton executives and instead accepted a plea from Hutton to pay a $2 million fine, to pay a $750,000 reimbursement to the government for its costs, and to pay restitution to defrauded banks. In addition, Hutton was enjoined from engaging in certain cash management practices.

 The Hutton Report named a number of individuals as being responsible, at least in part, for the fraudulent practices resulting in Hutton's guilty plea. The report also recommended certain sanctions for these individuals. Among the persons held responsible in The Hutton Report was John M. Pearce, who had been branch manager of the Hutton office in St. Louis. Pearce filed suit on January 3, 1986 against The E. F. Hutton Group and against Griffin Bell. Pearce alleges that Bell was hired to produce a report that would place blame for the fraudulent cash management program with low level employees rather than with Hutton's senior officers. As a result, plaintiff claims the Hutton Report is false, libels him, and places him in a false light.

 On April 16, 1986, this court denied The E. F. Hutton Group's motion to stay these proceedings pending arbitration. On April 28, 1986, that decision was appealed. On June 10, 1986, a stay of this action, pending the appeal, was granted solely with regard to defendant, The E.F. Hutton Group, Inc.

 The case regarding defendant Bell had been scheduled to go to trial on March 2, 1987. On February 9, 1987, however, trial was postponed after several motions were filed that convinced the court this case was simply not ready to proceed. On January 15, 1987, defendant Bell filed a motion for partial summary judgment. Plaintiff opposed that motion on January 27th. A second motion for summary judgment was filed by Bell on January 29th. Before plaintiff opposed the second motion, Bell filed a motion to strike plaintiff's opposition to the first motion for partial summary judgment.

 Bell's motion to strike was based on two arguments. First, plaintiff's opposition had failed to meet the requirements of Fed.R.Civ.P. 56 and Local Rule 108(h) because his statement of genuine issues included arguments and allegations without citation to the record. Second, where plaintiff did provide supporting citations, he relied heavily on inadmissible evidence. At the status conference held on February 9, 1987, this court granted Bell's motion to strike plaintiff's opposition.

 Plaintiff, however, was given another opportunity to file oppositions, conforming to Fed.R.Civ.P. 56 and Local Rule 108(h), to both outstanding motions for summary judgment. That ruling left open the question of whether the congressional hearing materials plaintiff had relied on in the first opposition could again be cited to in plaintiff's new oppositions. Bell's motion to strike alleged that the material was inadmissible hearsay, and prejudicial in any event. At the status conference, plaintiff was allowed to file an opposition to the motion to strike that addressed Bell's position by contending the material came within the "public records and reports" hearsay exception found in Fed.R.Evid. 803(8)(C). Also at the status conference, the court heard oral argument on the issue.

 II. ADMISSIBILITY UNDER FEDERAL RULE OF EVIDENCE 803(8)(C)

 In the original opposition to Bell's motion for partial summary judgment, plaintiff submitted a statement of genuine issues that cited to a draft report of the Subcommittee on Crime of the House Judiciary Committee, excerpts of testimony before that Subcommittee, a staff analysis of defendant Bell's Hutton Report, and a statement of the Chairman of the Subcommittee given to the Senate Judiciary Committee. Defendant Bell contends that all these materials are inadmissible hearsay that do not fit under any of the rule's exceptions. Plaintiff argues that Fed.R.Evid. 803(8)(C) applies and that all these materials constitute admissible evidence.

 A. Report of House Subcommittee

 In his opposition to the motion to strike, plaintiff directly argues for the admission of only one of the disputed materials, the Draft Report of the Subcommittee on Crime of the House Judiciary Committee. Subcomm. on Crime of the House Comm. on the Judiciary, 99th Cong., 2d Sess., Draft Report on the E. F. Hutton Mail and Wire Fraud Case (1986) [hereinafter Draft Report]. Plaintiff contends that since this report is the result of a congressional investigation, it constitutes the type of evidence covered by Fed.R.Evid. 803(8)(C).

 Rule 803(8)(C) states:

 
The following are not excluded by the hearsay rule, even though the declarant is available as a witness: . . . . Records, reports, statements, or data compilations, in any form, of public offices or agencies, setting forth . . . the factual findings resulting from an investigation made pursuant to authority granted by law, unless the sources of information or other circumstances indicate lack of trustworthiness.

 Fed.R.Evid. 803(8)(C). Though the rule does not explicitly exclude reports by congressional committees, the Advisory Committee notes point out that the rule starts with the presumption of admissibility but provides ample provision for escape if sufficient negative factors are present. Fed.R.Evid. 803(8)(C) advisory committee's note. An ...


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