Your company is embroiled in a contentious commercial fraud case. A former customer claims that the company intentionally misrepresented its global expertise in order to secure a contract it knew it did not have the capability to perform. Unfortunately, comments in a few internal emails unearthed during electronic discovery seem to support the plaintiff’s claim.
One email sent by a project manager states, “If sales had been 100% honest with our capabilities, we would not have landed the deal in the first place.” A second email, sent by a salesperson, comments, “We simply have little expertise on how to deliver international solutions. Perhaps I oversold the client on our ability.”
Opposing counsel claims the emails are indisputable proof of fraud and plans to make them a prominent feature of the plaintiff’s presentation at trial.
Email is probably the most common form of communication used in business today. Unfortunately, it also is unsupervised, casual and seemingly private, an environment that may encourage some employees to engage in email “chatter,” criticizing or speculating about the company or its management. Negative comments that would have been forgotten or dismissed if made in casual conversation are instead memorialized and may resurface unexpectedly during subsequent litigation.
The question is whether the company can prevent these damaging internal emails from being admitted into evidence at trial. In the hypothetical case discussed above, as in most cases, the emails implicate the rule against hearsay.
Hearsay is a statement that “(1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c).
A proponent seeking to admit an email will often argue that it falls within the business records exception to the hearsay rule or that it constitutes a non-hearsay admission of the employer. This article explores the potential admissibility of internal emails under both theories.
Under Fed. R. Evid. 803(6), a record of an act, event, condition, opinion or diagnosis is admissible in evidence under the business record exception to the hearsay rule if (1) “the record was made at or near the time by … someone with knowledge”; (2) “the record was kept in the course of a regularly conducted activity of a business”; (3) “these conditions are shown by the testimony of the custodian or another qualified witness”; and (4) “neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.” See Brown v. Bank of America, 2015 WL 5163045, *3 (D. Mass., Sept. 3, 2015).
The fact that an email is created by an employee during the course of his or her work is generally not sufficient to qualify it as a business record of the organization. See United States v. Cone, 714 F.3d 197, 220 (4th Cir. 2013). Rather, the email must satisfy each of the criteria set forth above.
In many instances, it is the second requirement, that the record was created and kept in the course of a regularly conducted activity of the business, that presents a stumbling block to admissibility. Employees routinely send emails to one another during the course of their work, but unless the emails are created and sent pursuant to a duty imposed by the employer, they cannot qualify as business records. See In Re: Deepwater Horizon, 2012 WL 85447 at *5 (E.D. La., Jan. 11, 2012).
The distinction is illustrated in United States v. Ferber, 966 F. Supp. 90, 98 (D. Mass., 1997), when the government sought to offer as a business record an email sent by an employee to his superior recounting a telephone conversation with a third party. Although there was evidence that the employee regularly sent such emails, the court held that was insufficient to qualify the email as a business record without evidence that the employee was acting pursuant to a duty imposed by the organization.
“Were it otherwise,” the court noted, “virtually any document found in the files of a business which pertained in any way to the functioning of that business would be admitted willy-nilly as a business record.” Id. at 99; see also New York v. Microsoft Corp., 2002 WL 649951, at *2 (D.D.C., April 12, 2002) (refusing to admit employee email describing a business meeting where the proponent failed to demonstrate that it was employer’s “regular practice” to create and maintain such emails).
In the few decisions that have admitted internal emails as business records, the proponent was able to produce evidence that the email was sent pursuant to a regular practice of the organization.
One court, for example, admitted an email sent by one member of a firm to the other members describing a telephone conversation based on the member’s affidavit attesting that the email was made in the ordinary course of regularly conducted business activities and that it was the organization’s regular practice to make and keep those types of records. See Canatxx Gas Storage Ltd. v. Silverhawk Capital Partners, LLC, 2008 WL 1999234, at *12 (S.D. Tex., May 8, 2008); see also Orix Public Finance, LLC v. Lake County, MN, 2013 WL 6328865, *10 (D. Minn., Dec. 5, 2013) (admitting email sent by a county’s administrator as business record).
Ultimately, a determination as to whether a particular email qualifies as a business record is a fact-sensitive inquiry.
In the hypothetical case presented at the beginning of this article, admissibility of the emails depends on the circumstances under which they were created and sent. If the emails constitute casual commentary between company employees (as appears to be the case), it is unlikely that they would qualify as business records.
If the statements had instead been made in an email summary of a monthly meeting that was required to be prepared and distributed to all participants, such an email might very well qualify for admission as a business record.
The fact that an email was created by an employee during the course of the organization’s business does not guarantee admissibility.
Another argument frequently advanced by parties seeking to admit internal emails is that they constitute “vicarious admissions” of the company.
Vicarious admissions are considered non-hearsay and, unlike the exception for business records, there is no requirement that the document was created pursuant to a regular business practice. See Fed. R. Evid. 801(d)(2)(D). Nor is there any requirement that the putative admission was made to someone outside the company. See Guidance Endodontics, LLC v. Dentsply Intern., Inc., 663 F. Supp.2d 1138, 1147 (D.N.M. 2009).
The rule regarding vicarious admissions thus has a potentially broader application to internal emails than does the exception for business records.
But the rule is not without limits. Vicarious admissions may be used only when the employing organization is an “opposing party” in the litigation. See Fed. R. Evid. 801(d)(2).
More importantly, the statement at issue must be made by an “agent or employee” of the company “on a matter within the scope of that relationship and while it existed.” See Fed. R. Evid. 801(d)(2)(D).
It is that aspect of the rule that often determines whether a particular statement by an employee may qualify as a vicarious admission of the organization.
“The mere fact that a [party’s] employee sent an e-mail while at work from a work computer to a co-employee does not mean that the e-mail was composed or received concerning a matter within the scope of an employee’s employment.” In Re: Deepwater Horizon, 2012 WL 85447 at *5 (E.D. La., Jan. 11, 2012).
Instead, a party seeking to admit an employee’s email as a vicarious admission must generally demonstrate that the employee was authorized to act concerning the matters about which he or she spoke. See Pappas v. Middle Earth Condo. Ass’n, 963 F.2d 534, 538 (2d Cir. 1992).
Determining admissibility as a vicarious admission thus often involves a comparison of the duties of the authoring employee with the subject matter of his or her statement.
Given the fact-driven nature of that type of analysis, it is not surprising that efforts to offer internal emails as vicarious admissions have met with varying results. In companion opinions examining a host of internal emails, a federal court in Idaho admitted a few of the emails as vicarious admissions of a corporate defendant but declined to admit the others. See Adams v. U.S., 2009 WL 1922250 (D. Idaho, June 30, 2009); Adams v. U.S., 2009 WL 1884387 (D. Idaho, June 28, 2009).
For the emails that were admitted, the court was able to determine that the subject matter of the emails was within the scope of the authoring employee’s duties. With respect to the remaining emails, however, the court denied admission without prejudice because there was insufficient evidence to demonstrate that the author was “speaking about matters within the scope of his employment.” See id.
Other decisions have allowed internal emails into evidence as vicarious admissions when the subject matter of the emails was found to be within the scope of the author’s duties as an employee. See, e.g., Guidance Endodontics, LLC, 663 F. Supp.2d at 1147-48 (admitting emails sent between sales employees of a defendant dental supply company discussing an alleged fraudulent sales scheme as vicarious admissions of the company); Vivian v. Purina Mills, Inc., 2005 WL 5006276 (Pa. Com. Pl., April 19, 2005) (allowing email sent by defendant’s claims manager to sales representative discussing the results of laboratory tests on feed sold to the plaintiffs into evidence as an admission of the corporation).
In the hypothetical case discussed at the beginning of this article, admissibility of the emails as vicarious admissions of the company depends on the position and duties of the authoring employees.
It is unlikely that the first email discussing the veracity of statements made by sales representatives would qualify as a vicarious admission, because the author, a project manager, presumably has no authority over sales functions.
Likewise, the second email, in which a salesperson comments on the company’s lack of operational expertise, probably would not qualify as a vicarious admission, as the salesperson is not authorized to act with respect to the company’s operations.
Internal employee emails likely will continue to be a fertile source of potentially damaging statements that adversaries may seek to use against a company. But the fact that an email was created by an employee during the course of the organization’s business does not guarantee admissibility.
In most cases, a proponent will have to qualify the email for admission either as a business record or as a vicarious admission, both of which are fairly narrow concepts.
With thoughtful analysis and argument, the company may be able to prevent admission of email evidence that could potentially have a dramatic impact on the outcome of the case.
John G. O’Neill is a partner at Sugarman, Rogers, Barshak & Cohen, where he represents businesses and business owners in a wide range of commercial disputes.