by
Jonathan Reich, Womble Carlyle Sandridge & Rice, LLP
Representing clients with dormant or long-tail claims can be a challenge for a number of reasons. Long-tail claims – think asbestos, pollution, sexual molestation, and (increasingly) wrongful convictions – often take decades to develop from the initial tort into the subsequent lawsuit. Sometimes these are products liability lawsuits, where memoranda from the 1960s and 1970s is sought to be admitted at trial. Sometimes these cases are post-exoneration wrongful convictions matters, where the underlying conviction was obtained decades ago. And, sometimes, any of these fact patterns can also initiate bet-the-company insurance coverage litigation. Whether facing a barrage of products liability lawsuits, an alleged civil rights/wrongful conviction from the 1980s, or an insurance coverage matter arising from either, the ability admit into evidence original documents may play a critical part of obtaining summary judgment or a favorable jury verdict. Under both North Carolina Rule of Evidence 803(16) and its federal counterpart, statements in a document which is at least 20 years old and whose authenticity is establish are an exception to the general prohibition against the admissibility of hearsay under Rule 802. This exception is titled “Statements in Ancient Documents” in both the state and federal rule, and has come to be known as the ancient documents exception to the hearsay rule.
Over the last several years, the Judicial Conference Advisory Committee on Evidence Rules has begun the process of removing the ancient documents exception from the Federal Rules of Evidence. This body has proposed amendments to Federal Rule of Civil Procedure 803(16) and has initiated the process of accepting public comments and taking testimony regarding the deletion of the ancient documents rule. This rather innocuous proposal may have major ramifications for tort lawyers generally, including defense lawyers and insurance coverage lawyers.
Although the underlying rationale for this hearsay exception stands on a shaky foundation – a document does not become more reliable when it ages an additional year from being 19 years old to being 20 years old – the rule serves a pragmatic purpose. In many cases with long-tail claims, it is simply impossible for the plaintiff or defendant to locate witnesses which can lay the proper foundation and testify based on personal knowledge about a document which may have been created decades ago.
Under current Federal Rule 803(16), if a document is more than twenty (20) years old, and appears authentic, it is admissible for the truth of its contents. Under the Advisory Committee on Evidence Rules’s pending proposal, Rule 803(16), would be deleted entirely. The Advisory Committee on Evidence Rules reasoning is that the growing presence of ESI – electronically stored information – will lead to an abuse of Rule 803(16) in the future because of the relative ease of retaining documents in excess of 20 years. As a result, the drafters fear an abuse of this hearsay exception in the future.
These future fears have everyday, real-world implications for practicing defense lawyers and insurance coverage lawyers. Clients with long-tail claims, be they asbestos, other products liability, pollution, insurance coverage, or any other, often must rely to some degree on ancient documents. For example, insurance coverage disputes involving insurance policies from the 20th century sometimes rely on fractions of a complete insurance policy. In those cases, specialized insurance expert witnesses (known as “insurance archeologists”) are sometimes used to “reconstruct” the material terms and material exclusions of policies. This process is usually done with a mix of secondary evidence and ancient documents from either the policyholder or the insurer. See, e.g., Dart Industries, Inc. v. Commercial Union Ins. Co., 28 Cal. 4th 1063 (2002).
As clients defending claims well-know, the simple commercial reality is that they will sometimes not be able to produce a records custodian who can testify regarding ancient company documents. Similarly, it is a simple commercial reality that insurance companies and insurance agents (and even law firms!) are usually not required by law to keep every piece of paper generated for an indefinite period of time. With regard to insurance coverage actions for long-tail claims, this is particularly true. In those cases, the defendant in the tort lawsuit often becomes the policyholder-plaintiff in the related coverage action. As plaintiff, it will carry the burden of proof with regards to establishing that a policy of insurance existed.
Under current practice, a witness with personal knowledge can who can testify about company records is often unavailable. It may be because that particular manager of the company has died, cannot be located, is outside the jurisdiction, or has a lack of memory. As a result, Rule 803(16) allows for the admissibility of ancient company documents, if, in conjunction with Rule 901(b)(8), they appear in a condition that creates no suspicion of authenticity and they are simply found in a place they would likely be. If the proposed abrogation of the ancient documents hearsay exception is approved and then incorporated into the Federal Rules of Evidence, any party attempting to prove the contents of an internal memo or ancient insurance policy will be required to produce a witness or additional business records which confirm that the proffered policy is a business record which was made at or near the time indicated on the document in the regular course of that enterprise’s business. Federal Rule of Evidence 803(6).
This proposed amendment to the Federal Rules of Evidence will also raise the stakes in forum battles. Removing the ancient documents hearsay exception from the federal rules will have a major impact in certain types of cases. Cases litigated in North Carolina state courts, where the ancient document rules will continue to apply, will be able to present additional evidence to the trier of fact.
Because long-tail claims will continue to be litigated in our court system, all participants should acknowledge that there remains a role for the ancient documents exception in the Rules of Evidence. Although the period for public written comment has closed, public testimony will be taken. Additionally, a number of lawyers and seven sitting United States Senators have written to oppose the abrogation of the ancient documents exception. Be on the lookout towards the end of the year to see whether the proposed amendment to Federal Rule 803(16) is adopted.
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