United States v. Polishan ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
7-14-2003
USA v. Polishan
Precedential or Non-Precedential: Precedential
Docket No. 02-1325
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PRECEDENTIAL
Filed July 14, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-1325
UNITED STATES OF AMERICA
v.
PAUL F. POLISHAN,
Appellant
Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Criminal Action No. 96-cr-00274)
District Judge: Honorable Thomas I. Vanaskie
Argued March 10, 2003
Before: RENDELL, AMBRO and MAGILL,*
Circuit Judges
(Opinion filed: July 14, 2003)
Peter Goldberger, Esquire (Argued)
Law Office of Peter Goldberger
50 Rittenhouse Place
Ardmore, PA 19003-2276
Attorney for Appellant
* Honorable Frank J. Magill, Circuit Judge of the United States Court of
Appeals for the Eighth Circuit, sitting by designation.
2
Thomas A. Marino
United States Attorney
Bruce Brandler (Argued)
Assistant United States Attorney
Office of the United States Attorney
228 Walnut Street
P.O. Box 11754
Harrisburg, PA 17108
Lorna N. Graham
Assistant United States Attorney
Office of the United States Attorney
235 North Washington Avenue
P.O. Box 309, Suite 311
Scranton, PA 18501
Attorneys for Appellee
OPINION OF THE COURT
AMBRO, Circuit Judge:
Paul F. Polishan appeals his conviction on charges of
conspiracy, securities fraud and other related offenses. He
argues that the District Court erred in rulings relating to
pre-trial discovery procedures and to the admission of
evidence at trial. We hold that Polishan waived his right to
appeal the rulings on pre-trial discovery procedures by
failing to comply with the procedural requirements of a
local rule and we find no error in the admission of evidence
to which Polishan objects. Thus we affirm.
I. Factual Background
In 1987, Polishan became the Senior Vice President of
Finance, Chief Financial Officer and Chief Accounting
Officer of Leslie Fay Companies (LFC). Polishan ran Leslie
Fay’s Hanover, Pennsylvania facility, supervising its
financial operations and the employees involved in those
operations. In January 1993, accounting irregularities at
LFC came to light, for which LFC’s Corporate Controller
and Polishan’s direct subordinate, Donald F. Kenia, initially
claimed full responsibility. The LFC Board of Directors’
3
Audit Committee began an investigation. Two weeks later,
during interviews conducted by attorneys and accountants
retained by the Audit Committee, Kenia stated that
Polishan had directed the illegal conduct. Kenia similarly
implicated Polishan in subsequent interviews with federal
law enforcement authorities.
In September 1993, the Audit Committee issued a 369-
page report concluding that, because of unsupported
entries in its ledgers, LFC had overstated by more than $75
million its pre-tax net income for the years 1990-1992. As
part of the investigation resulting in the issuance of that
report, LFC President Babcock asked Roger Vallecorse,
former Vice-President of Human Resources, to interview
Polishan, Kenia, and the divisional controllers who worked
under Polishan and Kenia. The Audit Committee Report did
not conclude formally that Polishan participated in the
fraud, but did detail the evidence that supported such a
conclusion (including Kenia’s statements). In October 1994,
Kenia pleaded guilty to charges relating to the making of
false statements in financial statements submitted to the
Securities and Exchange Commission (“SEC”).
II. Procedural History
In October 1996, a grand jury returned an indictment
charging Polishan with, inter alia, conspiracy to falsify the
books and records of LFC, the making of false statements
in documents submitted to the SEC, securities fraud, bank
fraud and wire fraud. Polishan was arraigned shortly
thereafter.
A. Discovery
On November 26, 1996, the District Court appointed a
Magistrate Judge to supervise discovery. The Government
adopted an “open file” policy, whereby it made available to
defense counsel all material in the Government’s
possession, with the exception of privileged items and
attorney work-product. Defense counsel had access to the
room in the federal building where the file was located and
permission to bring in a photocopier. Discovery was
completed on December 15, 1998.
On January 5, 1999, Polishan filed pre-trial motions
arguing, inter alia, that the “open file” policy of the
4
Government had proved impractical. He requested relief in
the form of continuing access to the discovery file and, to
facilitate access, requested that the Court establish a
supervised document depository where documents would
be stored until trial. The Magistrate Judge rejected this
request, concluding that Polishan was given adequate
opportunities to conduct discovery.
Polishan also requested identification by the prosecution
of material under Brady v. Maryland, 373 U.S. 83 (1963).
The Magistrate Judge concluded that “the Government has
complied with its Brady obligations by providing a complete
open file to the defendant for more than two years.”
B. Trial
While Polishan’s bench trial was initially scheduled for
January 27, 1997, it began over three years later — on
March 1, 2000. It continued for 35 days over four months.
On July 5, 2000, the District Court found Polishan guilty of
18 of the 20 substantive counts. He filed post-verdict
motions in August and September 2000. In those motions,
he contended, for the first time, that the Magistrate Judge
had erred in his rulings on Polishan’s pre-trial motions. On
July 27, 2001, the District Court denied those motions.
Thereafter Polishan was sentenced to nine years
imprisonment, to be followed by three years of supervised
release. This appeal followed.1
III. Discussion
A. Discovery Procedures
Polishan argues that, by holding the Government
satisfied its obligation to produce documents, the District
Court violated his rights under Brady and Federal Rule of
Criminal Procedure 26.2. The District Court held that
Polishan had waived his right to object to discovery
procedures by failing to seek reconsideration of the
discovery rulings of the Magistrate Judge prior to trial.2 We
agree.
1. The District Court had subject matter jurisdiction pursuant to 18
U.S.C. § 3231. We have jurisdiction over this appeal from a judgment of
conviction and sentence pursuant to 28 U.S.C. § 1291.
2. The District Court also concluded that the Magistrate Judge’s holdings
were not clearly erroneous. Because we conclude that Polishan waived
his right to object, we need not assess the merits of that conclusion.
5
28 U.S.C. § 636 authorizes a district court to appoint a
magistrate judge to hear and decide both dispositive and
non-dispositive matters. For the former, the statute
mandates a specific time within which objections are to be
filed. 28 U.S.C. § 636(b)(1)(C) (authorizing “any party” to
“serve and file written objections” within ten days of service
of the findings and recommendations on dispositive
motions). In contrast, § 636(b)(1)(A), which authorizes a
magistrate judge to hear and decide pretrial non-dispositive
matters, provides only that the district court judge “may
reconsider any pretrial matter . . . where it has been shown
that the magistrate judge’s order is clearly erroneous or
contrary to law,” without specifying particular procedures
for that reconsideration.
In all federal civil cases, Federal Rule of Civil Procedure
72(a) requires a party to serve and file objections to a
magistrate judge’s ruling on a “pretrial matter not
dispositive of a claim or defense” of any party “[w]ithin 10
days after being served with a copy of the magistrate
judge’s order,” and that “a party may not thereafter assign
as error a defect in the magistrate judge’s order to which
objection was not timely made.” There is no analogue to
this rule in the Federal Rules of Criminal Procedure, but we
have noted “the legislative history indicates that procedures
are to be established by local rules.” United Steelworkers of
Am. v. New Jersey Zinc Co., Inc., 828 F.2d 1001, 1006-07
(3d Cir. 1987) (citing H.R. Rep. No. 94-1609 at 10 (1976),
reprinted in 1976 U.S.C.C.A.N. 6162, 6170). In the Middle
District of Pennsylvania, Local Rule 72.2 provides that in a
civil or criminal case any party aggrieved by the order of a
magistrate judge may seek review by appealing to the
district court within ten days. Thus, in keeping with our
conclusion in United Steelworkers, we follow the procedure
prescribed by this Local Rule.
1. Jurisdictional Defect v. Waiver
We reject the Government’s contention that Polishan’s
failure to seek reconsideration under the procedures
specified by the Local Rule means that we lack jurisdiction
to review the Magistrate Judge’s holdings. We have always
treated the defect as non-jurisdictional by allowing for
6
review when “exceptional circumstances” exist. Continental
Cas. Co. v. Dominick D’Andrea, Inc., 150 F.3d 245, 251 n.9
(3d Cir. 1998) (citing Tabron v. Grace, 6 F.3d 147, 153-54
n.2 (3d Cir. 1993)). If the defect were jurisdictional, of
course, we would be unable to review the order even in the
most exceptional of circumstances. See United States v.
Brown, 299 F.3d 1252, 1260 (11th Cir. 2002) (“Although
Brown argues for an equitable exception, the rule is
jurisdictional and therefore is not subject to equitable
exceptions.”)(citations omitted). While we hold that we shall
not review the Magistrate Judge’s rulings because of
Polishan’s failure to seek reconsideration under the
procedures specified by the Local Rule, we do so because
he has waived his right to appellate review, not because our
Court lacks jurisdiction to review his claims. Accord United
States v. Brown, 79 F.3d 1499, 1504-05 (7th Cir. 1996)
(holding that waiver is not jurisdictional); 12 Charles Alan
Wright et al., Federal Practice and Procedure § 3070.1 (2d
ed. 1997) (“Even where the [waiver] rule applies, it is not
jurisdictional.”).3
2. Waiver
Because Polishan did not seek reconsideration of the
Magistrate Judge’s discovery ruling under the procedures
specified by the Local Rule, he has waived the right to
appeal that ruling. It is undisputed that, in civil cases, the
right to appeal the ruling of a magistrate judge is waived if
3. We note that an appellate court may lack jurisdiction to review
dispositive decisions made by a magistrate judge under 28 U.S.C.
§ 636(b)(1)(B) because that order is not final. Rather, it is a proposed
finding and recommendation that must be accepted, rejected or modified
by the district court. Cf. United States v. Ritte, 558 F.2d 926 (9th Cir.
1977) (holding that because a magistrate judge’s order issued under
§ 636(d) must be referred to a district court it “is not a final appealable
order of the district court within the meaning of 28 U.S.C. § 1291”). In
contrast, a non-dispositive decision made by a magistrate judge under
28 U.S.C. § 636(b)(1)(A) (as in this case) need not be reviewed by the
district court unless objections to the order are raised. As a result, the
order of the Magistrate Judge is final without further action by the
District Court. Continental Cas. Co., 150 F.3d at 250 (“In a subsection
(A) referral, the magistrate judge’s order has the force of law unless
appealed. It is final in the sense that it may be appealed.”).
7
reconsideration before the district court is not sought in a
timely fashion. United Steelworkers, 828 F.2d at 1008(“[W]e hold that by failing to object in the district court to
the magistrate’s order striking its jury demand,
Steelworkers has waived its ability to challenge that order
on appeal.”). We have not considered whether the right to
appeal is similarly waived in criminal cases.
Polishan urges us to follow the Ninth Circuit, the only
court to hold that the waiver rule does not apply in criminal
cases. United States v. Abonce-Barrera, 257 F.3d 959 (9th
Cir. 2001).4 The Ninth Circuit relied on the fact that there
is no time for objections set out in 28 U.S.C. § 636(b)(1)(A),
and no gap-filler provided in the Federal Rules of Criminal
Procedure. Abonce-Barrera, 257 F.3d at 967. The
supervisory powers of the courts to form procedural rules
are limited and while Federal Rule of Civil Procedure 72(a)
provided a “clear basis in fact and law” justifying a waiver
rule in civil cases, there is no clear basis in the criminal
context. Id. at 967-68. The Court therefore held that
Abonce-Barrera had not waived his right to appeal the
Magistrate Judge’s discovery rulings.
This reasoning is simply not applicable to Polishan.
Unlike Abonce-Barrera, here there is “a clear basis in law
and fact” to apply a waiver rule to this criminal case. The
Local Rules for the Middle District of Pennsylvania provide
a time within which objections must be filed to a magistrate
judge’s rulings and that rule applies in both civil and
criminal cases. Local Rule 72.2 for the Middle District of
Pennsylvania (“Any party may appeal from a magistrate
judge’s order determining a non-dispositive pretrial motion
or matter in any civil or criminal case.”) (emphasis added).
We note also that, by not timely seeking reconsideration
by the District Court of the Magistrate Judge’s discovery
rulings (instead waiting until after the trial), Polishan
deprived the District Court of the opportunity effectively to
4. The First, Fifth, Seventh, and Eleventh Circuits have, without
comment, applied the waiver rule in criminal cases. United States v.
Akinola, 985 F.2d 1105, 1108-09 (1st Cir. 1993); United States v. Renfro,
620 F.2d 497, 500 (5th Cir. 1980); Brown, 79 F.3d at 1504; Brown, 299
F.3d at 1260.
8
review that decision and to correct any errors. Renfro, 620
F.2d at 500. In the civil context, we have concluded that
seeking review of rulings of magistrate judges for the first
time after a trial would impermissibly allow a litigant a
second bite at the apple. United Steelworkers, 828 F.2d at
1008 (“We cannot escape drawing the inference that
Steelworkers, which never once suggested to the district
court that it preferred a jury trial to the bench trial given it,
wished to have two bites to the proverbial apple, and
awaited that court’s decision on the merits before raising
the jury trial issue . . . . We cannot condone such trial
tactics.”). When objections are not raised until after the
trial, even if the district court disagrees with the magistrate
judge’s discovery rulings, there is very little opportunity to
correct those problems. As the District Court here noted,
“[t]o allow Mr. Polishan to now raise a discovery-related
issue as a basis for a new trial would be manifestly unfair
to the government and wasteful of scarce judicial
resources.” United States v. Polishan, 2002 WL 848583, at
* 12 (E.D. Pa. Jul. 27, 2002); see also United Steelworkers,
828 F.2d at 1007 (“[B]y failing to file timely objections to
the magistrate’s discovery order, appellants not only
stripped the district court of its function of effectively
reviewing the magistrate’s order, but also frustrated the
policy behind the Magistrate’s Act, i.e., to relieve courts of
unnecessary work and to improve access to the courts.”)
(quoting Niehaus v. Kansas Bar Ass’n, 793 F.2d 1159,
1165 (10th Cir. 1986)).5
We conclude that Polishan has waived his right to appeal
the rulings of the Magistrate Judge. He failed to comply
with Local Rule 72.2, which provides a specific time within
which to seek reconsideration of the rulings of a magistrate
judge. And we find no “extraordinary circumstances” that
would justify exercising our discretion to ignore his lack of
compliance. United Steelworkers, 828 F.2d at 1008.
5. Because we hold today that Polishan waived his right to appeal the
rulings of the Magistrate Judge by not complying with Local Rule 72.2,
we need not reach the issue whether, in the absence of that Local Rule,
his failure to appeal the Magistrate Judge’s rulings until after the trial
also would have resulted in a waiver of his right to appeal those rulings.
9
B. Admission of Evidence
Polishan argues that the District Court abused its
discretion by admitting certain evidence in violation of the
Federal Rules of Evidence. We reject these contentions
because Polishan failed to raise objections to any
objectionable evidence, and the admission of any potentially
objectionable evidence did not constitute plain error.
1. Admission of Testimony in Violation of Expert
Witness Rule
Polishan contends that Government witnesses presented
inadmissible evidence by testifying about the corporate
culture at LFC and by giving opinions regarding Polishan’s
mental state in violation of Federal Rules of Evidence 704(b)
and 701(b). The Government retorts that the testimony was
admissible under Federal Rule of Evidence 701 as lay
opinion evidence. We review decisions of the District Court
to admit opinion evidence for abuse of discretion. United
States v. Leo, 941 F.2d 181, 192-93 (3d Cir. 1991). When
contemporaneous objections are not made, we review the
admission of evidence for plain error.6 Fed. R. Evid. 103(d).
i. Rule 704
We reject Polishan’s argument that the testimony of the
Government’s witnesses violated Federal Rule of Evidence
704(b). Testimony about “an ultimate issue to be decided by
the trier of fact” is generally admissible. Fed. R. Evid.
704(a). It is only inadmissible if the testimony comes from
an “expert witness testifying with respect to the mental
state or condition of a defendant in a criminal case,” in
which case that witness may not “state an opinion or
inference as to whether the defendant did or did not have
6. We may reverse a district court for a plain error only if we conclude
(1) an error was committed, (2) it was plain (clear and obvious), and (3)
it affected the outcome of the district court proceedings. United States v.
Olano, 507 U.S. 725, 733-34 (1993). If we conclude that the error is both
obvious and prejudicial, we may order its correction, but are not
required to do so. Id. We correct only if the error “seriously affects the
fairness, integrity, or public reputation of judicial proceedings.” Id. at
734 (internal citations omitted).
10
the mental state or condition constituting an element of the
crime charged or of a defense thereto.” Fed. R. Evid. 704(b).
The ultimate issue at trial was whether Polishan knew of
and directed the accounting irregularities at LFC. He claims
that the Government’s witnesses impermissibly gave their
opinion on this issue, thus violating Rule 704(b). Because
none of the witnesses to whom Polishan objects was an
expert, that their testimony may have covered the issue of
knowledge does not make it inadmissible.
ii. Rule 701
We reject Polishan’s contentions of error under Federal
Rule of Evidence 701. Any testimony that is arguably
inadmissible under Rule 701 was not contemporaneously
objected to, and its admission was not plain error.
Under Rule 701, lay opinion is admissible so long as it is
(a) rationally based on the perception of the witness, and (b)
helpful to a clear understanding of the witness’s testimony
or the determination of a fact in issue. A witness testifying
about business operations may testify about “inferences
that he could draw from his perception” of a business’s
records, or “facts or data perceived” by him in his corporate
capacity. Teen-Ed, Inc. v. Kimball Int’l, Inc., 620 F.2d 399,
403, 404 (3d Cir. 1980). Lay opinion testimony may be
based on the witness’s own perceptions and “knowledge
and participation in the day-to-day affairs of [the]
business.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153,
1175 (3d Cir. 1993).
While we have never held that lay opinion evidence
concerning the knowledge of a third party is per se
inadmissible, we have certainly made this kind of evidence
difficult to admit. If the witness fails to describe the
opinion’s basis, in the form of descriptions of specific
incidents, the opinion testimony will be rejected on the
ground that it is not based on the witness’s perceptions.
United States v. Anderskow, 88 F.3d 245, 250 (3d Cir.
1996) (noting that opinion evidence must be “rationally
based” on witness’s perceptions). To the extent the witness
describes the basis of his or her opinion, that testimony will
be rejected on the ground that it is not helpful because the
11
fact finder is able to reach his or her own conclusion,
making the opinion testimony irrelevant.7 Anderskow, 88
F.3d at 251 (“We do not understand how a witness’
subjective belief that a defendant ‘must have known’ is
helpful to a fact finder that has before it the very
circumstantial evidence upon which the subjective opinion
is based.”) (citing United States v. Rea, 958 F.2d 1206,
1216 (2d Cir. 1992)).
There is a fine line between statements that permissibly
offer a witness’s testimony about his or her own
perceptions while supporting inferences about knowledge,
and statements that constitute opinions on a witness’s
knowledge. In Anderskow, 88 F.3d at 249, we found no
error in the admission of testimony where the witness
“never explicitly opined on direct examination that
[defendant] possessed guilty knowledge” but “provided
several reasons to support the unstated conclusion” that he
did. Examples of such testimony included statements that
defendants were “working toward a common goal” and that
someone had told the witness that the defendant “would do
anything they asked.” Id. Statements that “furnished the
basis for an inference, based on circumstantial evidence,
that [defendant] had guilty knowledge which the
government was free to suggest during its closing
argument” did not implicate Federal Rule of Evidence 701.
Id.Most of the statements to which Polishan objected are
analogous to the admissible statements in Anderskow. For
example:
1. Vallecorse: Kenia was “totally committed” to, and
“would do anything to please,” Polishan. Polishan was
the “puppet master” and Kenia was “subservient.”
Polishan had the “dominant personality” and Kenia
“walked on egg shells” because he was “afraid.”
7. If the opinion testimony is rejected on the ground that it is not helpful
because it is repetitive, it follows that the admission of the opinion
evidence will usually be considered harmless error. See, e.g., Anderskow,
88 F.3d at 251 (admission of opinion evidence harmless error because
other circumstantial evidence of defendant’s knowledge was
overwhelming).
12
2. Falkowitz: “Paul Polishan knew about anything and
everything that went on in our company.”
3. Pomerantz: Polishan was “completely knowledgeable
about what was going on in my divisions” and
“incredibly . . . knowledgeable about the — all financial
aspects of the business and intimately knew the
details.”
These statements are based on the witness’s day-to-day
knowledge of his or her business. Lightning Lube, Inc., 4
F.3d at 1175. And they are statements that left the ultimate
conclusion about whether Polishan knew about the
accounting irregularities to the fact finder. In this context
they are unobjectionable.
The evidence to which an objection could have been
raised was not challenged contemporaneously. Vallecorse
read into evidence a document that contained statements
about the relationship between Polishan and Kenia,
including the statement that “[i]t is difficult to believe . . . ,
given the culture in Hanover, that Don Kenia would have
altered financials, without Paul’s knowledge or direction.”
Polishan did not object to the reading of this document. As
his counsel stated, “I don’t have an objection, evidentiary,
or whatever that word is, but, procedurally, these
documents are in evidence, they speak for themselves. He
doesn’t have to read them to the Court.”8
We reject Polishan’s argument that, because he raised a
general objection at the pretrial conference to testimony on
knowledge and reiterated that objection several times
during trial, he should not be penalized for his “failure to
catch each iteration of the improper testimony, particularly
when the court has already overruled counsel’s objections
several times.” Reply Br. at 18 (citing to American Home
8. The Government also argues that Polishan stipulated to the
admissibility of the document. Polishan responds that he reserved the
right to argue that its contents were inadmissible. Even if we were to
assume that he did reserve the right to argue that the contents were
inadmissible (an assumption, from the face of the stipulation, that may
be overly generous to Polishan), we would still reject his argument
because, as noted above, he failed to object to admission of the
document at trial.
13
Assur. Co. v. Sunshine Supermarket, Inc., 753 F.2d 321,
324 (3d Cir. 1985)). Under the American Home test, “if a
party files an unsuccessful motion in limine seeking the
exclusion of certain evidence, that party need not formally
object at trial when the evidence in question is introduced
if two conditions are satisfied: (1) the party filed a written
pre-trial motion setting forth reasons and case citations in
support of the request that the evidence be excluded; and
(2) the district court made a ‘definitive’ ruling with no
suggestion that it would reconsider the matter at trial.”
Walden v. Georgia-Pacific Corp., 126 F.3d 506, 518 (3d Cir.
1997). Polishan’s written pre-trial motion adequately
explained the request that lay opinion evidence about
Polishan’s knowledge be excluded. But the District Court
did not make a definitive ruling on this issue. The pretrial
order explicitly “reserve[d] ruling on any evidentiary issue
not decided by this order until the appropriate evidence has
been presented within its context at trial.” Polishan was
not, therefore, excused from the requirement that he object
at trial.
Because Polishan did not object to the admission of this
testimony, we review its admission for “plain errors
affecting substantial rights.” Fed. R. Evid. 103(d). An error
affects the substantial rights of a party only if it is
prejudicial. United States v. Williams, 299 F.3d 250, 257
(3d Cir. 2002). Any error in the admission of Vallecorse’s
testimony was harmless because of the overwhelming
weight of the other evidence provided by Vallecorse in
support of his conclusions, and by the corroborating
evidence provided by the other Government witnesses about
the corporate culture at the Hanover facility. See
Anderskow, 88 F.3d at 251 (admission of testimony that
gave opinion of knowledge was harmless error because
other circumstantial evidence of defendant’s knowledge was
overwhelming).9
9. Polishan also argues the inadmissibility of Vallecorse’s negative
answer to the question whether he believed Kenia’s denials of Polishan’s
knowledge. No objection was made to this answer. And its admission
was harmless because the District Court sustained the objection that
was made to the Government’s next question. When the Government
asked Vallecorse why he did not believe Kenia, and the defense finally
objected, the District Court sustained the objection on the ground that
“I generally don’t have witnesses testify as to whether somebody is
credible in what they were saying.”
14
2. Admission of Audit Report
Polishan also maintains that the District Court erred in
admitting the Audit Report because it was not a business
record. Once again, the Government argues that Polishan
waived his right to object by stipulating to its admission.
Conceding he waived his right to object on most evidentiary
grounds, Polishan counters that his waiver did not extend
to the issue whether it was a business record. We agree.
The relevant stipulation reads as follows:
The report of the Audit Committee of the Board of
Directors of the Leslie Fay Companies . . . may be
admitted into evidence upon the trial of this matter,
without prejudice to the rights and positions of the
parties as to the truthfulness, accuracy or evidentiary
weight of such document, or as to whether such
document is a business record.
Its plain language gives Polishan a safe haven to object to
the Audit Report as a business Report.
Having not waived his right to object to the Audit
Report’s admission at trial as not a business record, it
nonetheless does not appear that Polishan ever exercised
that right. Indeed, Polishan signed a second stipulation to
the admissibility of the Audit Committee Report, with
defense counsel’s initials next to that exhibit on the exhibit
list, indicating his agreement that the document “may be
admitted into evidence without any further foundation of
proof, or authenticity, and without calling a witness.” He
admitted during a telephone conference with the District
Court that the Audit Committee Report was admissible so
long as defense counsel could submit a responsive report.
Finally, he failed to object when the Audit Committee
Report was first introduced into evidence during the trial.
Thus, once again we review for plain error. At the outset,
the error, if any, was hardly obvious or clear. As the
Government notes, courts are divided on the question
whether this document would be admissible as a business
record. Compare United States v. Frazier, 53 F.3d 1105,
1110 (10th Cir. 1995) (audit report of accountant admitted
as business record); United States v. Blackwell, 954 F.
Supp. 944, 973-74 (D.N.J. 1997) (financial audit of bank
15
admitted as business record); Condus v. Howard Savings
Bank, 986 F. Supp. 914, 918 (D.N.J. 1997) (report prepared
by outside company hired by bank to provide assessment of
loss reserves admissible as business record), with Lamb
Eng’g & Constr. Co. v. Nebraska Pub. Power Dist., 103 F.3d
1422, 1432 n.5 (8th Cir. 1997) (report prepared by certified
public accountant based on audit inadmissible because
prepared for litigation); Paddack v. Dave Christensen, Inc.,
745 F.2d 1254, 1258 (9th Cir. 1984) (compliance audit
inadmissible because company had no regular compliance
audit procedure). Our precedent on this issue is not settled.
See generally United States v. Casoni, 950 F.2d 893, 897
(3d Cir. 1991) (concluding that report prepared by lawyer in
anticipation of litigation was not sufficiently trustworthy to
be admissible, but noting that objective lawyer memoranda
are sometimes business records). Given the divided case
law, we conclude that the admission of the Audit
Committee Report was not plain error.
* * * * *
Polishan waived his right to appeal the rulings of the
Magistrate Judge by not addressing his objections to the
District Court in accord with Local Rule 72.2. As for the
admission at trial of Vallecorse’s testimony and the Audit
Committee Report, they were not contemporaneously
objected to, thereby limiting our review to a search for plain
error. We find none. For these reasons, we affirm the
judgment of the District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit