June 01, 2016

Uses and Implications of Government Reports

Whether and how to use government reports in civil litigation.

Benjamin Margulis

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With the proliferation of government investigations in recent years, we have all likely noticed a recurring pattern: The media announces a government investigation of an individual, company, or industry, followed shortly by news of a private lawsuit against the target of the investigation. There is a feeling of inevitability to this cycle—like the tide or taxes. After all, if the government investigation signals the possibility of wrongdoing, those investigations will lead to lawsuits. The investigation may also generate a report, giving rise to questions about whether and how to use the report in civil litigation.

This article considers ways to use government reports in preparing a civil suit and explores some of the major evidentiary questions that need to be answered before using the reports at summary judgment or in a trial. By and large, the following discussion treats all government reports the same way, regardless of whether they are written by a congressional subcommittee, an agency, or a legislative commission (e.g., the 9/11 Commission). Of course, this discussion cannot be comprehensive. Lawyerly ingenuity ensures that there is no adequate way to catalogue every potential use of a government report. Instead, consider what follows as a whistle-stop tour, designed primarily to highlight the potential uses for government reports in litigation.

Report Uses

Initially, government reports can serve as helpful guides for business development, pointing the way to potential cases, clients, or at the least, areas to explore for potential business opportunities. It is no coincidence that lawsuits follow the release of a new government report. Enterprising lawyers use information gleaned from the reports to develop new cases. That’s just how the system works.

The most direct use for a government report is as the foundation for a case against the subjects of the investigation. If the report is particularly damning, it will typically contain information describing a claim that will, at least, survive a Rule 12(b)(6) motion. Moreover, because government investigations may sometimes release the underlying evidence (emails, memos, chat transcripts, and so on) as part of an appendix to the report, litigators should review such materials for information that could further bolster the case. This primary source material may implicate entities beyond those that the government specifically scrutinized. And even where the report does not focus on a particular entity, it may be useful in adding “color” to a complaint.

A few words of caution here, particularly for newly minted practitioners: First, few government reports can support a claim on their own, unless you happen to file suit against the specific entity targeted by the investigation and for the specific problem that drew the government’s attention. Second, recognize that government investigations are not subject to the same constraints as private litigations. Finally, understand that just because a report says that some practice is problematic, it is not necessarily illegal or tortious.

Government reports can also be invaluable tools for directing discovery efforts. Federal Rule of Civil Procedure 26(b) allows discovery of “any nonprivileged matter that is relevant to any party’s claim or defense.” Thus, the attorney should see whether the government report contains names, dates, or other specific information that could form the basis for a discovery request. This possibility applies with equal force if the investigation focuses on general market practices rather than on a specific company’s malfeasance. For example, such market practices can offer insight into how a party organized its records or even what terms to use in document requests or interrogatories.

The report remains useful after a party begins producing documents. Names, dates, market practices, and other pieces of information in these reports are relevant in evaluating the discovered materials for possible use at deposition, trial, or both. Consider that government reports sometimes discuss what role a particular individual played within the company or even in the larger industry. This information may inform the understanding of that person’s emails and documents. Likewise, if a government report explains common industry jargon, it may help speed the review process and avoid misunderstandings that ultimately waste the client’s time and money. In dealing with large productions, government reports can be helpful in setting search terms or other filters that allow litigation teams to triage sprawling document dumps.

Appendix materials released with the report can be just as useful—sometimes even more so. For example, these materials often contain internal communications and documents, which can provide names and dates for document requests. Publicly released documents also can serve as a check on potential misconduct in the discovery process. If an email found in an appendix is not part of a later document production specifically keyed to that email (e.g., by custodian), there may be grounds to serve follow-up requests or file a motion to compel production.

Ultimately, every litigator must decide whether to offer the government report as substantive evidence at summary judgment or trial. The temptation to do so is understandable—a government report often states what a party wants the jury to conclude. Moreover, the report comes imbued with the government’s authority, thereby commanding the jury’s attention and consideration. Government reports are powerfully persuasive materials. Consequently, courts sometimes exclude them for fear of unduly influencing the jury’s view of a case. There are two broad arguments against the admissibility of government reports: hearsay and prejudice.

Arguments Against Admissibility

A government report is hearsay under Federal Rule of Evidence 801. It is an out-of-court statement offered to prove the truth of the matter asserted; that is, the findings of government agents. However, the rules recognize that if the government discharges its investigative duties honestly and in good faith, the dangers inherent in hearsay, such as misperception and misinterpretation, are likely absent in the resulting report. Thus, an exception to the general ban on hearsay exists for “public records,” such as government reports, that are not demonstrably untrustworthy. Specifically, Federal Rule of Evidence 803(8) allows for the admission of any “record or statement of a public office” if it sets out “in a civil case or against the government in a criminal case, factual findings from a legally authorized investigation; and the opponent does not show that the source of information or other circumstances indicate a lack of trustworthiness.”

Thus, the public records exception is available to any government report that meets the two requirements in Federal Rule of Evidence 803(8)(A). First, it must contain “factual findings.” Second, it must be based on an investigation “pursuant to legal authority.”

While Rule 803(8) requires a “legally authorized investigation,” the authority need not have mandated the investigation; it is sufficient that the authority merely allows for one. Courts have held that a wide range of documents are the products of legally authorized probes, including reports by congressional subcommittees, administrative agencies, legislative commissions, local police departments, and even nongovernmental sources such as the United Nations. For the most part, the authority element is almost always satisfied when dealing with a congressional or federal agency report.

As for the “factual findings” element, courts read the requirement broadly and recognize that the exception covers opinions, conclusions, evaluations, and analysis based on factual findings. In Beech Aircraft Corp. v. Rainey, 488 U.S. 153, 170 (1988), the Supreme Court held that a Navy report on the cause of a plane crash was admissible, despite containing opinions and conclusions. The Court reasoned that the report still set forth “factual findings” because the opinions and conclusions were based on evidence gathered during the Navy’s investigation.

This is not to say, however, that judges impose no restraints on what qualifies as factual findings. To the contrary, courts observe a handful of major limitations. First among these is the requirement for finality. That is, a government report may be excluded from evidence as inadmissible hearsay where it sets forth only interim or advisory factual findings that are subject to change. In City of New York v. Pullman Inc., 662 F.2d 910 (2d Cir. 1981), the Second Circuit excluded a federal government report about potential flaws in subway cars because the document was only an “‘interim’ staff report in the form of a recommendation to the Administrator.” Id. at 913–15 As a result, the Pullman court concluded that the report did not embody the “findings” of the federal agency and could not qualify for the public records exception. See id.

Another potential limitation on the admissibility of government reports is the requirement that the government entity make the findings rather than simply parrot back what others have said. In “parroting” cases, courts analyze admissibility as a question of hearsay-within-hearsay. Consider, for example, a Department of Defense report containing the investigator’s firsthand observations along with interviewee statements. As the Eleventh Circuit has held, the report may be admissible to the extent it embodies the investigator’s own “knowledge or observations.” United Techs. Corp. v. Mazer, 556 F.3d 1260, 1278 (11th Cir. 2009) (internal quotation marks omitted).

The interviewee statements, however, are inadmissible because “placing otherwise inadmissible hearsay statements by third parties into a government report does not make the statements admissible.” Id. This is particularly important where the report extensively quotes from underlying documents or exhibits; courts regularly hold that the underlying data and exhibits to a government report are inadmissible and typically allow only a redacted version of the report into evidence.

Showing Untrustworthiness

Once the report’s proponent has established that it meets the requirements of Federal Rule of Evidence 803(8)(A), the report is presumed admissible and the burden shifts to the opposing party to try and show that it is untrustworthy. This is often a difficult task, but it is by no means an insurmountable one. The advisory notes to the rule make clear that it contains “ample provision for escape if sufficient negative factors are present.”

The advisory notes set out four factors for courts to consider in determining trustworthiness:

  1. The timeliness of the investigation;
  2. The special skill or expertise of the investigator;
  3. The extent to which the investigation included a hearing; and
  4. The possible motivations or biases of the investigator.

Notably, the list is by no means exhaustive—the notes acknowledge that other factors “could be added.” In addition, courts consider the factors holistically in aid of the larger inquiry: Is the government report untrustworthy?

The first factor—timeliness—focuses on how much time has passed between the incident under investigation and the investigation itself. This factor is a matter of common sense: if too much time has elapsed, memories begin to fade, evidence begins to disappear, and documents are more prone to misinterpretation. This is a relatively flexible standard. In Chavez v. Carranza, 559 F.3d 486, 496 (6th Cir. 2009), the Sixth Circuit held that an investigation conducted by the Commission for Truth for El Salvador less than a year after the incidents in question was timely. In another case, the Southern District of Mississippi held that an investigation in 2000 that focused on an ongoing fraudulent scheme that started as early as 1991 was still timely. See Dale v. Ala Acquisitions I, Inc., 398 F. Supp. 2d 516, 520 (S.D. Miss. 2005). It is relatively rare for a report to be deemed inadmissible due to untimeliness.

The second factor—experience—looks to the overlap between the government official’s expertise and the subject matter at issue. For example, a federal district court ruled that a panel of lawyers (including the former U.S. Attorney for the Eastern District of New York) had sufficient experience and expertise to evaluate claims relating to police and prosecutorial misconduct. See Gentile v. County of Suffolk, 129 F.R.D. 435, 452 (E.D.N.Y. 1990). While courts acknowledge that government officials can develop sufficient experience and expertise by being members of bodies charged with investigating a particular subject, this is no guarantee that every investigation will be deemed trustworthy. Another federal district court decision cast doubt on a congressional subcommittee’s expertise where the investigation relied on witness testimony about matters beyond the members’ knowledge or personal experience. See Anderson v. City of New York, 657 F. Supp. 1571, 1579 (S.D.N.Y. 1987).

The third factor—hearings—asks the court to consider whether the investigation included a hearing and how closely that hearing resembled a trial. Courts consider whether the government investigator heard evidence from both sides of an issue and whether evidence was gathered through documents or live testimony. In addition, courts look at whether the hearing allowed for any procedural safeguards, including whether witnesses could bring their attorneys or file supplementary written testimony. A government investigation need not be the exact equivalent of a trial in order to satisfy the third factor, and the adequacy of a hearing is considered in a commonsense manner.

The final factor—bias—is perhaps the most powerful because it works to subvert the underlying assumption of the public records exception: that government investigators will conduct themselves honestly and in good faith. To that end, the fourth factor covers almost anything that could taint the investigation, including politics. This latter concern is particularly true of congressional subcommittee hearings, where courts recognize that politics sometimes plays a disproportionate role. In Anderson, the court questioned the trustworthiness of congressional reports because the hearings “are oft time conducted in a circus atmosphere, with a gracious plenty of posturing by the politicians for TV publicity in large part for benefit of constituents back home.” 657 F. Supp. at 1579 (internal quotation marks omitted). “[T]his ‘circus,’” the court added, “is hardly conducive to the development of facts.”

Still, even if the government report fails to pass muster under the public records exception of Rule 803(8), it may yet be admissible via some other exception. Some courts have recognized that government reports may qualify as business records under Federal Rule of Evidence 803(6). Or when all else fails, government reports may fall into the “residual” exception under Rule 807. Keep in mind, however, that this rule carries with it certain procedural obligations—for example, informing the opposing party of any intent to offer the document into evidence.

Beyond hearsay, the second broad argument against government reports is a concern that they may be too prejudicial. Just because a government report qualifies as admissible hearsay does not automatically mean that the court will admit it into evidence. Careful litigators should consider whether Federal Rule of Evidence 403 will bar the report for being substantially more prejudicial than probative. In the case of government reports, the danger of unduly prejudicing the jury is acute. Government reports lend a certain imprimatur to an argument or suggestion, and courts are careful to screen out reports that may unduly skew the jury’s opinion in some way. This concern is magnified where courts fear that introducing an unreliable government report to the jury will derail the litigation and mire the proceedings in irrelevant side issues.

The analysis of what is “substantially” more prejudicial than probative under Rule 403 is fact-specific and may sometimes overlap with the inquiry into trustworthiness under Rule 803(8). In effect, therefore, litigators have two arguments to persuade the court that a government report should not be presented to the jury—first, that it may misinterpret or misrepresent the truth (and thus is hearsay), and, second, that it may skew the jury’s perception and require an inordinate amount of time to correct via other evidence.

Two examples help illuminate how courts approach this issue. In Pullman, the Second Circuit noted that, even if the interim federal agency report in question did qualify as admissible hearsay, it would be barred under Rule 403 because the report was prepared in an attempt to find a solution to an existing problem with subway cars, not to ascribe blame for the flaw.The interim report was incomplete and relied too heavily on hearsay statements. Admitting the report would require a lengthy and distracting inquest into its accuracy and reliability. See 662 F.2d at 915.

In In re September 11 Litigation, 621 F. Supp. 2d 131, 157–58 (S.D.N.Y. 2009), the court excluded much of the 9/11 Commission’s report under Federal Rule of Evidence 403. Given the sheer breadth of the report, the court reasoned, its admission would “choke the proceedings” with inquiries into the accuracy of every conceivable interview, statement, and piece of evidence. Moreover, the “imprimatur of the 9/11 Commissioners” would be seen as extending to findings that were not adequately tested or rebutted, thereby confusing or outright skewing the jury’s perception of the case. As the court summarized, “[h]owever valuable an account it is to government officials and the public,” the report could not be “permitted to displace the time-tested search for truth by examination and cross-examination.” Id.

Civil litigation follows from government investigation like night follows day. It is the way the system has worked and will continue to work so long as the government keeps finding new matters to investigate and so long as a private bar exists to vindicate the interests of victims. Given these realities, government reports can play a useful role in any litigator’s tool kit. They can identify targets, help kick-start a new case, serve as guides to discovery, and provide crucial evidence at trial. Such reports ensure that the government’s investigations have appreciable consequences, even where the government does not itself prosecute every case. At the same time, it can be dangerous to overly rely on such reports in litigation—they may end up being excluded. Careful litigators should look to government reports as a part of their larger strategy, not as a silver bullet.

Benjamin Margulis

The author is an associate with Boies, Schiller & Flexner LLP, New York City.