Identity of Owner of AOL or PACER Account — Input by Unknown Individual and Unverified by Service — Is Inadmissible Hearsay when Proffered through AOL / PACER Representative

From United States v. Blechman, 2011 U.S. App. LEXIS 18919 (10th Cir. Sept. 14, 2011):

a. Exhibit 1-BBB -- The AOL Record

Early in the trial, the Government sought to introduce an AOL account record, Exhibit 1-BBB, through Patricia Johnson, an investigator with AOL. The purpose of the exhibit was to "show[] that an individual using the screen name 'Rablechman' who listed a name and address of 'Robert Blechman, 10736 Jefferson Blvd., Culver City, CA 90230' established an account with AOL." (Aple. Br. at 11-12; see also Aplt. Br. at 17 (stating that the purpose of the exhibit was "to link the email address 'rablechman@aol.com' to Blechman").) Exhibit 1-BBB consisted of three pages. The first page showed that someone using the screen name "rablechman" logged on to AOL on December 5, 2008, from a Cox Communications IP address. The second page indicated that the screen name "rablechman" was associated with a free AOL account. This page also featured a description of free AOL accounts, which read, in part, "Registration information is recorded but not verified. Fictitious names and addresses are common." (ROA, vol. XI at 13 (Gov't Ex. 1-BBB -- AOL account information for "rablechman").) The third page contained registration information for the account corresponding to the screen name "rablechman." This page showed that the account was created on May 20, 1998, and that the account was registered to Robert Blechman in Culver City, California.

Johnson testified that Exhibit 1-BBB was an AOL record kept in the regular course of business, made at or near the time of the information recorded, and made by a person with knowledge of AOL's business. She also testified that AOL regularly records the activity reflected in Exhibit 1-BBB and creates reports of that activity. When questioned by defense counsel, however, Johnson admitted that AOL did not verify who originally input the "subscriber information" contained on the third page of the exhibit and that it could have been "anybody in the world who could access a computer." (Id. vol. V at 329.) For this reason, Blechman objected to admission of Exhibit 1-BBB on hearsay grounds. But the district court overruled the objection, concluding that the exhibit fell within the business records exception to the hearsay rule set forth in Federal Rule of Evidence 803(6). ***

i. Exhibit 22

Willmann [the manager of the PACER service center in San Antonio] explained that Exhibit 22 was a "screen capture" from PACER's "account maintenance application." ... According to Willmann, the record identified the name of an individual who maintained an account with PACER. As Edward Walsh, the analyst in the U.S. Trustee's office, later clarified, Exhibit 22 specifically showed that PACER account "RB1071" was registered in the name of "Michael N. Sofris, Apc [A Professional Corporation]"; that "Robert A. Blechman" was the contact person on the account; and that the primary e-mail address for the account was "robert@sofris.com." ... On direct examination, Willmann testified that Exhibit 22 was a PACER record that was created and kept in the regular course of business. Accordingly, the Government moved for conditional admission of the exhibit under the business records exception to the hearsay rule; however, Blechman objected on the grounds that the Government failed to lay an adequate foundation under Rule 803(6). The district court overruled the objection and conditionally admitted the exhibit.

On cross-examination by Blechman's counsel, Willmann admitted that the information contained in Exhibit 22 was entered by someone accessing PACER on the Internet and that PACER could not verify the accuracy of the information: "We do some verification, but I don't know who filled it out is the person that they said they were." (Id. at 228.) The "some verification" mentioned by Willmann consisted of (1) sending a mailing to the address entered at the time of registration to make sure that the mailing was not returned and (2) checking to see if any of the data entered was already associated with another account. Willmann conceded that this procedure did not verify the authenticity of the user-input information. ***

III. DISCUSSION

On appeal, Blechman argues that the district court erred in admitting Exhibit 1-BBB (the AOL record) and Exhibits 22, 23, and 24 (the PACER records) under Federal Rule of Evidence 803(6), the business records exception to the hearsay rule. He contends that because the critical, user-identifying information in all of these records was input by a third party over the Internet and was not verified by AOL or PACER, the exhibits contained inadmissible double hearsay and should have been excluded. Further, he argues that he was harmed by admission of the exhibits because they constituted the primary evidence linking him to Yass's scheme. Although we agree with Blechman that the district court erroneously admitted the challenged exhibits under Rule 803(6), we conclude that the error was harmless to Blechman.***

B. Layered Hearsay and the Business Records Exception

***

In this case, it is undisputed that the AOL record and PACER records were offered to prove the truth of the matters asserted in these documents—namely, that Blechman was the registered owner of the "rablechman@aol.com" e-mail address and that Blechman was associated with PACER account "RB1071," which someone used to access fraudulent bankruptcy cases in Tennessee. Accordingly, the records constitute hearsay.

Nevertheless, the district court admitted the records under the business records exception to the hearsay rule, which provides that certain records of regularly conducted business activity are admissible for their truth even though they contain hearsay. Fed. R. Evid. 803(6). To satisfy the business records exception, a record

must (1) have been prepared in the normal course of business; (2) have been made at or near the time of the events recorded; (3) be based on the personal knowledge of the entrant or of a person who had a business duty to transmit the information to the entrant; and (4) indicate the sources, methods and circumstances by which the record was made were trustworthy.

United States v. Ary, 518 F.3d 775, 786 (10th Cir. 2008). Blechman argues that Exhibit 1-BBB and Exhibits 22, 23, and 24 do not meet these requirements because the records feature "double" or "layered" hearsay in the form of unverified user-input information.

"Double hearsay in the context of a business record exists when the record is prepared by an employee with information supplied by another person." United States v. Gwathney, 465 F.3d 1133, 1141 (10th Cir. 2006) (internal quotation marks omitted). If the person who provides the information is an outsider to the business who is not under a business duty to provide accurate information, then the reliability rationale that underlies the business records exception ordinarily does not apply. See Ary, 518 F.3d at 787 ("The essential component of the business records exception is that each actor in the chain of information is under a business duty or compulsion to provide accurate information. If any person in the process is not acting in the regular course of business, then an essential link in the trustworthiness chain fails." (ellipsis, citation, and internal quotation marks omitted)); see also United States v. Snyder, 787 F.2d 1429, 1433-34 (10th Cir. 1986) ("The business records exception is based on a presumption of accuracy, accorded because the information is part of a regularly conducted activity, kept by those trained in the habits of precision, and customarily checked for correctness, and because of the accuracy demanded in the conduct of the nation's business. The reason underlying the business records exception fails, however, if any of the participants is outside the pattern of regularity of activity." (citation and internal quotation marks omitted)). Accordingly, the general rule is that "[a]ny information provided by . . . an outsider to the business preparing the record[] must itself fall within a hearsay exception to be admissible." Gwathney, 465 F.3d at 1141; see also Fed. R. Evid. 805 ("Hearsay included within hearsay is not excluded under the hearsay rule if each part of the combined statements conforms with an exception to the hearsay rule provided in these rules.").

This Court, however, has recognized one exception to the general rule: information provided by an outsider that is included in a business record may come in under the business records exception "[i]f the business entity has adequate verification or other assurance of accuracy of the information provided by the outside person." United States v. McIntyre, 997 F.2d 687, 700 (10th Cir. 1993); see also United States v. Cestnik, 36 F.3d 904, 908 (10th Cir. 1994). In the context of identity information provided by an outsider, we have identified "two ways to demonstrate this 'guarantee[] of trustworthiness': (1) proof that the business has a policy of verifying [the accuracy of information provided by someone outside the business]; or (2) proof that the business possesses 'a sufficient self-interest in the accuracy of the [record]' to justify an inference of trustworthiness." Cestnik, 36 F.3d at 908 (some alterations in original) (quoting McIntyre, 997 F.2d at 700).

Applying these principles, we conclude that the district court erred in admitting Exhibit 1-BBB and Exhibits 22, 23, and 24 under Rule 803(6). It is undisputed that the crucial information in the AOL and PACER records—specifically, the information concerning the identity of the user of the "rablechman" AOL account and the user of PACER account "RB1071"—was provided by a third party over the Internet, not by an employee of AOL or PACER. Thus, the Government was required to demonstrate the trustworthiness of the information in one of the two ways mentioned above. See United States v. Samaniego, 187 F.3d 1222, 1224 (10th Cir. 1999) ("The obligation of establishing the applicability of a hearsay exception for these records falls upon the government as the proponent of the evidence.").

But the record makes clear that neither AOL nor PACER made a meaningful attempt to verify the identity of the person who submitted the information. Beginning with AOL, Patricia Johnson, the AOL investigator, admitted that AOL did not verify who input the "subscriber information" contained on the third page of Exhibit 1-BBB and that it could have been "anybody in the world who could access a computer." ... Moreover, Exhibit 1-BBB states in no uncertain terms that AOL made no effort to verify the identity of the individual who registered the "rablechman" account: "Registration information is recorded but not verified. Fictitious names and addresses are common." ... With respect to PACER, Ted Willmann, the PACER manager, acknowledged that PACER did no more than ensure that whoever created account "RB1071" entered a valid mailing address and did not provide identifying information matching that of an existing user. PACER took no steps, however, to verify the authenticity of the identifying information. Furthermore, nothing in the record suggests--and the Government does not argue--that either AOL or PACER "had a sufficiently compelling self-interest in ensuring the accuracy of information filled out by [their] customers to justify an inference of reliability." Cestnik, 36 F.3d at 908. If anything, the record reveals that AOL and PACER were uninterested in the accuracy of the user-input information. For these reasons, the district court improperly admitted Exhibit 1-BBB and Exhibits 22, 23, 24 under the business records exception to the hearsay rule.

Footnote 14. The Government raises one alternative ground for affirming the district court's admission of Exhibit 1-BBB. Specifically, the Government argues that Exhibit 1-BBB was transformed from hearsay into admissible non-hearsay under Rule 801(d)(2)(B) later in the trial when Blechman allegedly manifested his belief in the truth of the information contained in that exhibit. Rule 801(d)(2)(B) provides that "[a] statement is not hearsay if . . . [t]he statement is offered against a party and is . . . a statement of which the party has manifested an adoption or belief in its truth." According to the Government,

[T]he defendant's introduction of six e-mails from rablechman@aol.com to Yass during his cross-examination of Yass, along with his eliciting from Yass that each e-mail came from the defendant, manifested a belief in the truth of the information in Exhibit 1-BBB establishing an evidentiary link between the name "Robert Blechman" and the e-mail address "rablechman@aol.com." Thus, once the defendant introduced his first e-mail from rablechman@aol.com . . . and solicited from Yass that this e-mail came from the defendant, Government's Exhibit 1-BBB ceased to be hearsay, and the basis for the defendant's objection evaporated altogether because an adoptive admission under Rule 801(d)(2)(B) "is not hearsay."

(Aple. Br. at 31-32 (citation omitted).)

This Court may, of course, uphold the district court's admission of evidence "on any ground that finds support in the record, even where the lower court reached its conclusion[] from a different or even erroneous course of reasoning." Ledford, 443 F.3d at 707 (internal quotation marks omitted). In this case, however, we need not decide whether Exhibit 1-BBB "ceased to be hearsay" at some point after the district court's erroneous admission of the exhibit under Rule 803(6), as we can affirm Blechman's convictions on harmless-error grounds. See United States v. McHorse, 179 F.3d 889, 901 (10th Cir. 1999) ("We may affirm if the evidence was admissible on any ground or if the erroneous admission of the evidence was harmless error." (emphasis added)).

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