N.L.R.B. v. First Termite Control Co., Inc., 80-7142
| Decision Date | 05 August 1981 |
| Docket Number | No. 80-7142,80-7142 |
| Citation | 646 F.2d 424 |
| Parties | 107 L.R.R.M. (BNA) 2749, 108 L.R.R.M. (BNA) 2336, 91 Lab.Cas. P 12,792, 8 Fed. R. Evid. Serv. 1424, 8 Fed. R. Evid. Serv. 585 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. FIRST TERMITE CONTROL CO., INC., Respondent. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard J. Perez, Lempres & Wulfsberg, Oakland, Cal., for respondent.
On Application for Enforcement of an Order of the National Labor Relations Board.
Before PREGERSON, ALARCON, NELSON, Circuit Judges.
The National Labor Relations Board (NLRB) has applied for enforcement of its order requiring First Termite Control Co. (Termite) to cease and desist in unfair labor practices. The NLRB failed to establish the jurisdictional requirement of interstate commerce by admissible evidence. We must deny the enforcement order.
Termite, an Oakland, California, company, provides termite and pest control services to private residences. Five percent of Termite's customers are individual home owners who directly contact the company. The remaining 95 percent of Termite's business comes from real estate agents who contact Termite on behalf of their clients.
The specifics of the unfair labor practices alleged here are irrelevant to our disposition. It is sufficient to note that unfair labor practice proceedings were instituted by the NLRB. In a hearing before an administrative law judge (ALJ), it was found that Termite violated § 8(a)(1) of the National Labor Relations Act (NLRA), 29 U.S.C. § 158(a)(1), by discharging a number of employees for engaging in protected concerted activity. The ALJ issued an order requiring Termite to cease and desist from unfair labor practices. The order also required Termite to offer the discharged employees full and immediate reinstatement in their former jobs, or in substantially equivalent jobs if those jobs no longer existed. The Board affirmed.
Termite contends that the enforcement order should be denied because: (1) the evidence used to establish the jurisdictional requisite of interstate commerce was improperly admitted; (2) the retail business standard was improperly applied to Termite; and (3) the order requiring Termite to offer reinstatement was improper. Our disposition of the first issue makes it unnecessary for us to reach the other two issues.
Under the NLRA, the NLRB has jurisdiction over all cases "affecting commerce." 29 U.S.C. § 160(a). To satisfy this statutory standard, it must be shown that the business in question generates an amount of interstate commerce that rises above the level of "de minimis." NLRB v. Fainblatt, 306 U.S. 601, 607, 59 S.Ct. 668, 672, 83 L.Ed. 1014 (1939).
To establish the necessary amount of interstate commerce, the NLRB introduced the following evidence: From May 1978 through May 1979, Termite bought approximately $20,000 worth of Douglas Fir Lumber from Economy Lumber Co. (Economy) a California company. During that period, Economy purchased over $1 million of Douglas Fir lumber. The NLRB introduced a freight bill to prove that a substantial amount of the lumber purchased by Economy came from outside California. 1 The bill showed that a shipment of lumber delivered to Economy in California originated in the State of Washington.
The freight bill was prepared by Southern Pacific Railroad. The custodian of records for Southern Pacific, however, was not called as a witness. Instead, the NLRB called Economy's bookkeeper as a witness. The bookkeeper testified that she had received the freight bill, and that she had paid it. No other witnesses were called to support the admission of the freight bill.
Termite objected to the introduction of the freight bill on grounds of hearsay. The ALJ overruled the objection, and held that the freight bill was admissible under the business records exception to the hearsay rule. Fed.R.Evid. 803(6). 2
Rule 803(6) provides that: "A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness" are not excluded by the hearsay prohibition.
It cannot be contested that the challenged statement is in fact hearsay. The NLRB sought to introduce a writing that stated lumber came from Washington to California in order to prove the truth of that statement. See Fed.R.Evid. 801(c). The statement would, however, be properly admissible if it fell within the 803(6) exception.
Termite contends that the requirements of Rule 803(6) were not met because the authenticating witness was an employee of Economy, and not of Southern Pacific, the entity that prepared the challenged record. Thus, the witness had no knowledge of the circumstances under which the records were prepared. Termite claims that 803(6) is not satisfied unless the witness has knowledge of both the making and keeping of the records sought to be introduced. Moreover, Termite contends that the witness must be able to testify that the record was made and kept in the ordinary course of the business' activity. In essence, Termite contends that Economy's bookkeeper did not satisfy the "custodian of records or other qualified witness" criterion of 803(6).
The NLRB responds that under 803(6) it is not necessary that the witness have knowledge of the preparation of the record. It is sufficient if the records "have all the indicia of trustworthiness that the federal rules require for the admission of hearsay evidence." (Citing United States v. Ullrich, 580 F.2d 765 (5th Cir. 1978).)
A traditional explanation for the exclusion of hearsay evidence is that it deprives the opposing party of the opportunity for cross-examination. The declarant is not present and thus cannot be cross-examined. On the other hand, the witness who is present and testifying to the hearsay does not have any personal knowledge of the hearsay on which testimony is sought, and therefore cannot be cross-examined in a meaningful manner. See 4 J. Weinstein & M. Berger, Weinstein's Evidence P 800(01) at 10-11. 3
Despite the inability to cross-examine, a business records exception to the hearsay rule has been incorporated into Anglo-American law for a substantial period. 4 The modern theory behind this exception is that business records have a special indicia of reliability. See Fed.R.Evid. 803, Notes of Advisory Committee on Proposed Rules:
The element of unusual reliability of business records is said variously to be supplied by systematic checking, by regularity and continuity which produce habits of precision, by actual experience of business in relying upon them, or by a duty to make an accurate record as part of a continuing job or occupation."
The provision in the rule that requires that the record be supported by "the testimony of the custodian or other qualified witness" insures the presence of some individual at trial who can testify to the methods of keeping the information. If the witness is not knowledgeable as to the manner in which the records are made and kept, he or she cannot be subjected to meaningful cross-examination. Without cross-examination on the keeping of the records, the trier of fact would have no rational basis on which to evaluate the accuracy of the record, and therefore the trustworthiness of the evidence. Thus, "(t)he testimony of the custodian or other qualified witness who can explain the record-keeping of his organization is ordinarily essential." 4 J. Weinstein & M. Berger, Weinstein's Evidence P 803(6)(02) at 151-52. 5
The bookkeeper from Economy had no knowledge of how Southern Pacific's records were made or maintained. She testified that she received a freight bill from Southern Pacific for a shipment of lumber and that she made payment on the bill. At best the freight bill seemed to corroborate her testimony that she paid for a shipment of lumber. The freight bill, however, was offered to prove the lumber was shipped from Washington to California. The record is briefly quoted below:
This particular document says, Washington. You don't check on that to see if that's correct, do you?
Does the amount (of the freight bill) vary in terms of where it comes from?
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