2003 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-14-2003

USA v. Polishan

Precedential or Non-Precedential: Precedential

Docket No. 02-1325

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2003

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2003 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"USA v. Polishan" (2003). 2003 Decisions. Paper 323.

http://digitalcommons.law.villanova.edu/thirdcircuit_2003/323
PRECEDENTIAL

Filed July 14, 2003

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 02-1325

UNITED STATES OF AMERICA

v.

PAUL F. POLISHAN,

Appellant

Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Criminal Action No. 96-cr-00274)

District Judge: Honorable Thomas I. Vanaskie

Argued March 10, 2003

Before: RENDELL, AMBRO and MAGILL,*

Circuit Judges

(Opinion filed: July 14, 2003)

Peter Goldberger, Esquire (Argued)

Law Office of Peter Goldberger

50 Rittenhouse Place

Ardmore, PA 19003-2276

Attorney for Appellant

* Honorable Frank J. Magill, Circuit Judge of the United States Court of

Appeals for the Eighth Circuit, sitting by designation. 
Thomas A. Marino

United States Attorney

Bruce Brandler (Argued)

Assistant United States Attorney

Office of the United States Attorney

228 Walnut Street

P.O. Box 11754

Harrisburg, PA 17108

Lorna N. Graham

Assistant United States Attorney

Office of the United States Attorney

235 North Washington Avenue

P.O. Box 309, Suite 311

Scranton, PA 18501

Attorneys for Appellee

OPINION OF THE COURT

AMBRO, Circuit Judge: 

Paul F. Polishan appeals his conviction on charges of

conspiracy, securities fraud and other related offenses. He

argues that the District Court erred in rulings relating to

pre-trial discovery procedures and to the admission of

evidence at trial. We hold that Polishan waived his right to

appeal the rulings on pre-trial discovery procedures by

failing to comply with the procedural requirements of a

local rule and we find no error in the admission of evidence

to which Polishan objects. Thus we affirm.

I. Factual Background

In 1987, Polishan became the Senior Vice President of

Finance, Chief Financial Officer and Chief Accounting

Officer of Leslie Fay Companies (LFC). Polishan ran Leslie

Fay’s Hanover, Pennsylvania facility, supervising its

financial operations and the employees involved in those

operations. In January 1993, accounting irregularities at

LFC came to light, for which LFC’s Corporate Controller

and Polishan’s direct subordinate, Donald F. Kenia, initially

claimed full responsibility. The LFC Board of Directors’

2
Audit Committee began an investigation. Two weeks later,

during interviews conducted by attorneys and accountants

retained by the Audit Committee, Kenia stated that

Polishan had directed the illegal conduct. Kenia similarly

implicated Polishan in subsequent interviews with federal

law enforcement authorities. 

In September 1993, the Audit Committee issued a 369-

page report concluding that, because of unsupported

entries in its ledgers, LFC had overstated by more than $75

million its pre-tax net income for the years 1990-1992. As

part of the investigation resulting in the issuance of that

report, LFC President Babcock asked Roger Vallecorse,

former Vice-President of Human Resources, to interview

Polishan, Kenia, and the divisional controllers who worked

under Polishan and Kenia. The Audit Committee Report did

not conclude formally that Polishan participated in the

fraud, but did detail the evidence that supported such a

conclusion (including Kenia’s statements). In October 1994,

Kenia pleaded guilty to charges relating to the making of

false statements in financial statements submitted to the

Securities and Exchange Commission (“SEC”). 

II. Procedural History

In October 1996, a grand jury returned an indictment

charging Polishan with, inter alia, conspiracy to falsify the

books and records of LFC, the making of false statements

in documents submitted to the SEC, securities fraud, bank

fraud and wire fraud. Polishan was arraigned shortly

thereafter. 

A. Discovery

On November 26, 1996, the District Court appointed a

Magistrate Judge to supervise discovery. The Government

adopted an “open file” policy, whereby it made available to

defense counsel all material in the Government’s

possession, with the exception of privileged items and

attorney work-product. Defense counsel had access to the

room in the federal building where the file was located and

permission to bring in a photocopier. Discovery was

completed on December 15, 1998. 

On January 5, 1999, Polishan filed pre-trial motions

arguing, inter alia, that the “open file” policy of the

3
Government had proved impractical. He requested relief in

the form of continuing access to the discovery file and, to

facilitate access, requested that the Court establish a

supervised document depository where documents would

be stored until trial. The Magistrate Judge rejected this

request, concluding that Polishan was given adequate

opportunities to conduct discovery. 

Polishan also requested identification by the prosecution

of material under Brady v. Maryland, 373 U.S. 83 (1963).

The Magistrate Judge concluded that “the Government has

complied with its Brady obligations by providing a complete

open file to the defendant for more than two years.” 

B. Trial

While Polishan’s bench trial was initially scheduled for

January 27, 1997, it began over three years later — on

March 1, 2000. It continued for 35 days over four months.

On July 5, 2000, the District Court found Polishan guilty of

18 of the 20 substantive counts. He filed post-verdict

motions in August and September 2000. In those motions,

he contended, for the first time, that the Magistrate Judge

had erred in his rulings on Polishan’s pre-trial motions. On

July 27, 2001, the District Court denied those motions.

Thereafter Polishan was sentenced to nine years

imprisonment, to be followed by three years of supervised

release. This appeal followed.1

III. Discussion

A. Discovery Procedures

Polishan argues that, by holding the Government

satisfied its obligation to produce documents, the District

Court violated his rights under Brady and Federal Rule of

Criminal Procedure 26.2. The District Court held that

Polishan had waived his right to object to discovery

procedures by failing to seek reconsideration of the

discovery rulings of the Magistrate Judge prior to trial.2 We

agree.

1. The District Court had subject matter jurisdiction pursuant to 18

U.S.C. § 3231. We have jurisdiction over this appeal from a judgment of

conviction and sentence pursuant to 28 U.S.C. § 1291. 

2. The District Court also concluded that the Magistrate Judge’s holdings

were not clearly erroneous. Because we conclude that Polishan waived

his right to object, we need not assess the merits of that conclusion. 

4
28 U.S.C. § 636 authorizes a district court to appoint a

magistrate judge to hear and decide both dispositive and

non-dispositive matters. For the former, the statute

mandates a specific time within which objections are to be

filed. 28 U.S.C. § 636(b)(1)(C) (authorizing “any party” to

“serve and file written objections” within ten days of service

of the findings and recommendations on dispositive

motions). In contrast, § 636(b)(1)(A), which authorizes a

magistrate judge to hear and decide pretrial non-dispositive

matters, provides only that the district court judge “may

reconsider any pretrial matter . . . where it has been shown

that the magistrate judge’s order is clearly erroneous or

contrary to law,” without specifying particular procedures

for that reconsideration. 

In all federal civil cases, Federal Rule of Civil Procedure

72(a) requires a party to serve and file objections to a

magistrate judge’s ruling on a “pretrial matter not

dispositive of a claim or defense” of any party “[w]ithin 10

days after being served with a copy of the magistrate

judge’s order,” and that “a party may not thereafter assign

as error a defect in the magistrate judge’s order to which

objection was not timely made.” There is no analogue to

this rule in the Federal Rules of Criminal Procedure, but we

have noted “the legislative history indicates that procedures

are to be established by local rules.” United Steelworkers of

Am. v. New Jersey Zinc Co., Inc., 828 F.2d 1001, 1006-07

(3d Cir. 1987) (citing H.R. Rep. No. 94-1609 at 10 (1976),

reprinted in 1976 U.S.C.C.A.N. 6162, 6170). In the Middle

District of Pennsylvania, Local Rule 72.2 provides that in a

civil or criminal case any party aggrieved by the order of a

magistrate judge may seek review by appealing to the

district court within ten days. Thus, in keeping with our

conclusion in United Steelworkers, we follow the procedure

prescribed by this Local Rule. 

1. Jurisdictional Defect v. Waiver

We reject the Government’s contention that Polishan’s

failure to seek reconsideration under the procedures

specified by the Local Rule means that we lack jurisdiction

to review the Magistrate Judge’s holdings. We have always

treated the defect as non-jurisdictional by allowing for

5
review when “exceptional circumstances” exist. Continental

Cas. Co. v. Dominick D’Andrea, Inc., 150 F.3d 245, 251 n.9

(3d Cir. 1998) (citing Tabron v. Grace, 6 F.3d 147, 153-54

n.2 (3d Cir. 1993)). If the defect were jurisdictional, of

course, we would be unable to review the order even in the

most exceptional of circumstances. See United States v.

Brown, 299 F.3d 1252, 1260 (11th Cir. 2002) (“Although

Brown argues for an equitable exception, the rule is

jurisdictional and therefore is not subject to equitable

exceptions.”)(citations omitted). While we hold that we shall

not review the Magistrate Judge’s rulings because of

Polishan’s failure to seek reconsideration under the

procedures specified by the Local Rule, we do so because

he has waived his right to appellate review, not because our

Court lacks jurisdiction to review his claims. Accord United

States v. Brown, 79 F.3d 1499, 1504-05 (7th Cir. 1996)

(holding that waiver is not jurisdictional); 12 Charles Alan

Wright et al., Federal Practice and Procedure § 3070.1 (2d

ed. 1997) (“Even where the [waiver] rule applies, it is not

jurisdictional.”).3

2. Waiver

Because Polishan did not seek reconsideration of the

Magistrate Judge’s discovery ruling under the procedures

specified by the Local Rule, he has waived the right to

appeal that ruling. It is undisputed that, in civil cases, the

right to appeal the ruling of a magistrate judge is waived if

3. We note that an appellate court may lack jurisdiction to review

dispositive decisions made by a magistrate judge under 28 U.S.C.

§ 636(b)(1)(B) because that order is not final. Rather, it is a proposed

finding and recommendation that must be accepted, rejected or modified

by the district court. Cf. United States v. Ritte, 558 F.2d 926 (9th Cir.

1977) (holding that because a magistrate judge’s order issued under

§ 636(d) must be referred to a district court it “is not a final appealable

order of the district court within the meaning of 28 U.S.C. § 1291”). In

contrast, a non-dispositive decision made by a magistrate judge under

28 U.S.C. § 636(b)(1)(A) (as in this case) need not be reviewed by the

district court unless objections to the order are raised. As a result, the

order of the Magistrate Judge is final without further action by the

District Court. Continental Cas. Co., 150 F.3d at 250 (“In a subsection

(A) referral, the magistrate judge’s order has the force of law unless

appealed. It is final in the sense that it may be appealed.”). 

6
reconsideration before the district court is not sought in a

timely fashion. United Steelworkers, 828 F.2d at 1008

(“[W]e hold that by failing to object in the district court to

the magistrate’s order striking its jury demand,

Steelworkers has waived its ability to challenge that order

on appeal.”). We have not considered whether the right to

appeal is similarly waived in criminal cases. 

Polishan urges us to follow the Ninth Circuit, the only

court to hold that the waiver rule does not apply in criminal

cases. United States v. Abonce-Barrera, 257 F.3d 959 (9th

Cir. 2001).4 The Ninth Circuit relied on the fact that there

is no time for objections set out in 28 U.S.C. § 636(b)(1)(A),

and no gap-filler provided in the Federal Rules of Criminal

Procedure. Abonce-Barrera, 257 F.3d at 967. The

supervisory powers of the courts to form procedural rules

are limited and while Federal Rule of Civil Procedure 72(a)

provided a “clear basis in fact and law” justifying a waiver

rule in civil cases, there is no clear basis in the criminal

context. Id. at 967-68. The Court therefore held that

Abonce-Barrera had not waived his right to appeal the

Magistrate Judge’s discovery rulings. 

This reasoning is simply not applicable to Polishan.

Unlike Abonce-Barrera, here there is “a clear basis in law

and fact” to apply a waiver rule to this criminal case. The

Local Rules for the Middle District of Pennsylvania provide

a time within which objections must be filed to a magistrate

judge’s rulings and that rule applies in both civil and

criminal cases. Local Rule 72.2 for the Middle District of

Pennsylvania (“Any party may appeal from a magistrate

judge’s order determining a non-dispositive pretrial motion

or matter in any civil or criminal case.”) (emphasis added).

We note also that, by not timely seeking reconsideration

by the District Court of the Magistrate Judge’s discovery

rulings (instead waiting until after the trial), Polishan

deprived the District Court of the opportunity effectively to

4. The First, Fifth, Seventh, and Eleventh Circuits have, without

comment, applied the waiver rule in criminal cases. United States v.

Akinola, 985 F.2d 1105, 1108-09 (1st Cir. 1993); United States v. Renfro,

620 F.2d 497, 500 (5th Cir. 1980); Brown, 79 F.3d at 1504; Brown, 299

F.3d at 1260. 

7
review that decision and to correct any errors. Renfro, 620

F.2d at 500. In the civil context, we have concluded that

seeking review of rulings of magistrate judges for the first

time after a trial would impermissibly allow a litigant a

second bite at the apple. United Steelworkers, 828 F.2d at

1008 (“We cannot escape drawing the inference that

Steelworkers, which never once suggested to the district

court that it preferred a jury trial to the bench trial given it,

wished to have two bites to the proverbial apple, and

awaited that court’s decision on the merits before raising

the jury trial issue . . . . We cannot condone such trial

tactics.”). When objections are not raised until after the

trial, even if the district court disagrees with the magistrate

judge’s discovery rulings, there is very little opportunity to

correct those problems. As the District Court here noted,

“[t]o allow Mr. Polishan to now raise a discovery-related

issue as a basis for a new trial would be manifestly unfair

to the government and wasteful of scarce judicial

resources.” United States v. Polishan, 2002 WL 848583, at

* 12 (E.D. Pa. Jul. 27, 2002); see also United Steelworkers,

828 F.2d at 1007 (“[B]y failing to file timely objections to

the magistrate’s discovery order, appellants not only

stripped the district court of its function of effectively

reviewing the magistrate’s order, but also frustrated the

policy behind the Magistrate’s Act, i.e., to relieve courts of

unnecessary work and to improve access to the courts.”)

(quoting Niehaus v. Kansas Bar Ass’n, 793 F.2d 1159,

1165 (10th Cir. 1986)).5

We conclude that Polishan has waived his right to appeal

the rulings of the Magistrate Judge. He failed to comply

with Local Rule 72.2, which provides a specific time within

which to seek reconsideration of the rulings of a magistrate

judge. And we find no “extraordinary circumstances” that

would justify exercising our discretion to ignore his lack of

compliance. United Steelworkers, 828 F.2d at 1008. 

5. Because we hold today that Polishan waived his right to appeal the

rulings of the Magistrate Judge by not complying with Local Rule 72.2,

we need not reach the issue whether, in the absence of that Local Rule,

his failure to appeal the Magistrate Judge’s rulings until after the trial

also would have resulted in a waiver of his right to appeal those rulings.

8
B. Admission of Evidence

Polishan argues that the District Court abused its

discretion by admitting certain evidence in violation of the

Federal Rules of Evidence. We reject these contentions

because Polishan failed to raise objections to any

objectionable evidence, and the admission of any potentially

objectionable evidence did not constitute plain error. 

1. Admission of Testimony in Violation of Expert

Witness Rule

Polishan contends that Government witnesses presented

inadmissible evidence by testifying about the corporate

culture at LFC and by giving opinions regarding Polishan’s

mental state in violation of Federal Rules of Evidence 704(b)

and 701(b). The Government retorts that the testimony was

admissible under Federal Rule of Evidence 701 as lay

opinion evidence. We review decisions of the District Court

to admit opinion evidence for abuse of discretion. United

States v. Leo, 941 F.2d 181, 192-93 (3d Cir. 1991). When

contemporaneous objections are not made, we review the

admission of evidence for plain error.6 Fed. R. Evid. 103(d).

i. Rule 704 

We reject Polishan’s argument that the testimony of the

Government’s witnesses violated Federal Rule of Evidence

704(b). Testimony about “an ultimate issue to be decided by

the trier of fact” is generally admissible. Fed. R. Evid.

704(a). It is only inadmissible if the testimony comes from

an “expert witness testifying with respect to the mental

state or condition of a defendant in a criminal case,” in

which case that witness may not “state an opinion or

inference as to whether the defendant did or did not have

6. We may reverse a district court for a plain error only if we conclude

(1) an error was committed, (2) it was plain (clear and obvious), and (3)

it affected the outcome of the district court proceedings. United States v.

Olano, 507 U.S. 725, 733-34 (1993). If we conclude that the error is both

obvious and prejudicial, we may order its correction, but are not

required to do so. Id. We correct only if the error “seriously affects the

fairness, integrity, or public reputation of judicial proceedings.” Id. at

734 (internal citations omitted). 

9
the mental state or condition constituting an element of the

crime charged or of a defense thereto.” Fed. R. Evid. 704(b).

The ultimate issue at trial was whether Polishan knew of

and directed the accounting irregularities at LFC. He claims

that the Government’s witnesses impermissibly gave their

opinion on this issue, thus violating Rule 704(b). Because

none of the witnesses to whom Polishan objects was an

expert, that their testimony may have covered the issue of

knowledge does not make it inadmissible. 

ii. Rule 701 

We reject Polishan’s contentions of error under Federal

Rule of Evidence 701. Any testimony that is arguably

inadmissible under Rule 701 was not contemporaneously

objected to, and its admission was not plain error. 

Under Rule 701, lay opinion is admissible so long as it is

(a) rationally based on the perception of the witness, and (b)

helpful to a clear understanding of the witness’s testimony

or the determination of a fact in issue. A witness testifying

about business operations may testify about “inferences

that he could draw from his perception” of a business’s

records, or “facts or data perceived” by him in his corporate

capacity. Teen-Ed, Inc. v. Kimball Int’l, Inc., 620 F.2d 399,

403, 404 (3d Cir. 1980). Lay opinion testimony may be

based on the witness’s own perceptions and “knowledge

and participation in the day-to-day affairs of [the]

business.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153,

1175 (3d Cir. 1993). 

While we have never held that lay opinion evidence

concerning the knowledge of a third party is per se

inadmissible, we have certainly made this kind of evidence

difficult to admit. If the witness fails to describe the

opinion’s basis, in the form of descriptions of specific

incidents, the opinion testimony will be rejected on the

ground that it is not based on the witness’s perceptions.

United States v. Anderskow, 88 F.3d 245, 250 (3d Cir.

1996) (noting that opinion evidence must be “rationally

based” on witness’s perceptions). To the extent the witness

describes the basis of his or her opinion, that testimony will

be rejected on the ground that it is not helpful because the

10
fact finder is able to reach his or her own conclusion,

making the opinion testimony irrelevant.7 Anderskow, 88

F.3d at 251 (“We do not understand how a witness’

subjective belief that a defendant ‘must have known’ is

helpful to a fact finder that has before it the very

circumstantial evidence upon which the subjective opinion

is based.”) (citing United States v. Rea, 958 F.2d 1206,

1216 (2d Cir. 1992)). 

There is a fine line between statements that permissibly

offer a witness’s testimony about his or her own

perceptions while supporting inferences about knowledge,

and statements that constitute opinions on a witness’s

knowledge. In Anderskow, 88 F.3d at 249, we found no

error in the admission of testimony where the witness

“never explicitly opined on direct examination that

[defendant] possessed guilty knowledge” but “provided

several reasons to support the unstated conclusion” that he

did. Examples of such testimony included statements that

defendants were “working toward a common goal” and that

someone had told the witness that the defendant “would do

anything they asked.” Id. Statements that “furnished the

basis for an inference, based on circumstantial evidence,

that [defendant] had guilty knowledge which the

government was free to suggest during its closing

argument” did not implicate Federal Rule of Evidence 701.

Id.

Most of the statements to which Polishan objected are

analogous to the admissible statements in Anderskow. For

example:

1. Vallecorse: Kenia was “totally committed” to, and

“would do anything to please,” Polishan. Polishan was

the “puppet master” and Kenia was “subservient.”

Polishan had the “dominant personality” and Kenia

“walked on egg shells” because he was “afraid.” 

7. If the opinion testimony is rejected on the ground that it is not helpful

because it is repetitive, it follows that the admission of the opinion

evidence will usually be considered harmless error. See, e.g., Anderskow,

88 F.3d at 251 (admission of opinion evidence harmless error because

other circumstantial evidence of defendant’s knowledge was

overwhelming). 

11
2. Falkowitz: “Paul Polishan knew about anything and

everything that went on in our company.” 

3. Pomerantz: Polishan was “completely knowledgeable

about what was going on in my divisions” and

“incredibly . . . knowledgeable about the — all financial

aspects of the business and intimately knew the

details.”

These statements are based on the witness’s day-to-day

knowledge of his or her business. Lightning Lube, Inc., 4

F.3d at 1175. And they are statements that left the ultimate

conclusion about whether Polishan knew about the

accounting irregularities to the fact finder. In this context

they are unobjectionable. 

The evidence to which an objection could have been

raised was not challenged contemporaneously. Vallecorse

read into evidence a document that contained statements

about the relationship between Polishan and Kenia,

including the statement that “[i]t is difficult to believe . . . ,

given the culture in Hanover, that Don Kenia would have

altered financials, without Paul’s knowledge or direction.”

Polishan did not object to the reading of this document. As

his counsel stated, “I don’t have an objection, evidentiary,

or whatever that word is, but, procedurally, these

documents are in evidence, they speak for themselves. He

doesn’t have to read them to the Court.”

8

We reject Polishan’s argument that, because he raised a

general objection at the pretrial conference to testimony on

knowledge and reiterated that objection several times

during trial, he should not be penalized for his “failure to

catch each iteration of the improper testimony, particularly

when the court has already overruled counsel’s objections

several times.” Reply Br. at 18 (citing to American Home

8. The Government also argues that Polishan stipulated to the

admissibility of the document. Polishan responds that he reserved the

right to argue that its contents were inadmissible. Even if we were to

assume that he did reserve the right to argue that the contents were

inadmissible (an assumption, from the face of the stipulation, that may

be overly generous to Polishan), we would still reject his argument

because, as noted above, he failed to object to admission of the

document at trial. 

12
Assur. Co. v. Sunshine Supermarket, Inc., 753 F.2d 321,

324 (3d Cir. 1985)). Under the American Home test, “if a

party files an unsuccessful motion in limine seeking the

exclusion of certain evidence, that party need not formally

object at trial when the evidence in question is introduced

if two conditions are satisfied: (1) the party filed a written

pre-trial motion setting forth reasons and case citations in

support of the request that the evidence be excluded; and

(2) the district court made a ‘definitive’ ruling with no

suggestion that it would reconsider the matter at trial.”

Walden v. Georgia-Pacific Corp., 126 F.3d 506, 518 (3d Cir.

1997). Polishan’s written pre-trial motion adequately

explained the request that lay opinion evidence about

Polishan’s knowledge be excluded. But the District Court

did not make a definitive ruling on this issue. The pretrial

order explicitly “reserve[d] ruling on any evidentiary issue

not decided by this order until the appropriate evidence has

been presented within its context at trial.” Polishan was

not, therefore, excused from the requirement that he object

at trial. 

Because Polishan did not object to the admission of this

testimony, we review its admission for “plain errors

affecting substantial rights.” Fed. R. Evid. 103(d). An error

affects the substantial rights of a party only if it is

prejudicial. United States v. Williams, 299 F.3d 250, 257

(3d Cir. 2002). Any error in the admission of Vallecorse’s

testimony was harmless because of the overwhelming

weight of the other evidence provided by Vallecorse in

support of his conclusions, and by the corroborating

evidence provided by the other Government witnesses about

the corporate culture at the Hanover facility. See

Anderskow, 88 F.3d at 251 (admission of testimony that

gave opinion of knowledge was harmless error because

other circumstantial evidence of defendant’s knowledge was

overwhelming).9

9. Polishan also argues the inadmissibility of Vallecorse’s negative

answer to the question whether he believed Kenia’s denials of Polishan’s

knowledge. No objection was made to this answer. And its admission

was harmless because the District Court sustained the objection that

was made to the Government’s next question. When the Government

asked Vallecorse why he did not believe Kenia, and the defense finally

objected, the District Court sustained the objection on the ground that

“I generally don’t have witnesses testify as to whether somebody is

credible in what they were saying.” 

13
2. Admission of Audit Report

Polishan also maintains that the District Court erred in

admitting the Audit Report because it was not a business

record. Once again, the Government argues that Polishan

waived his right to object by stipulating to its admission.

Conceding he waived his right to object on most evidentiary

grounds, Polishan counters that his waiver did not extend

to the issue whether it was a business record. We agree.

The relevant stipulation reads as follows: 

The report of the Audit Committee of the Board of

Directors of the Leslie Fay Companies . . . may be

admitted into evidence upon the trial of this matter,

without prejudice to the rights and positions of the

parties as to the truthfulness, accuracy or evidentiary

weight of such document, or as to whether such

document is a business record. 

Its plain language gives Polishan a safe haven to object to

the Audit Report as a business Report. 

Having not waived his right to object to the Audit

Report’s admission at trial as not a business record, it

nonetheless does not appear that Polishan ever exercised

that right. Indeed, Polishan signed a second stipulation to

the admissibility of the Audit Committee Report, with

defense counsel’s initials next to that exhibit on the exhibit

list, indicating his agreement that the document “may be

admitted into evidence without any further foundation of

proof, or authenticity, and without calling a witness.” He

admitted during a telephone conference with the District

Court that the Audit Committee Report was admissible so

long as defense counsel could submit a responsive report.

Finally, he failed to object when the Audit Committee

Report was first introduced into evidence during the trial. 

Thus, once again we review for plain error. At the outset,

the error, if any, was hardly obvious or clear. As the

Government notes, courts are divided on the question

whether this document would be admissible as a business

record. Compare United States v. Frazier, 53 F.3d 1105,

1110 (10th Cir. 1995) (audit report of accountant admitted

as business record); United States v. Blackwell, 954 F.

Supp. 944, 973-74 (D.N.J. 1997) (financial audit of bank

14
admitted as business record); Condus v. Howard Savings

Bank, 986 F. Supp. 914, 918 (D.N.J. 1997) (report prepared

by outside company hired by bank to provide assessment of

loss reserves admissible as business record), with Lamb

Eng’g & Constr. Co. v. Nebraska Pub. Power Dist., 103 F.3d

1422, 1432 n.5 (8th Cir. 1997) (report prepared by certified

public accountant based on audit inadmissible because

prepared for litigation); Paddack v. Dave Christensen, Inc.,

745 F.2d 1254, 1258 (9th Cir. 1984) (compliance audit

inadmissible because company had no regular compliance

audit procedure). Our precedent on this issue is not settled.

See generally United States v. Casoni, 950 F.2d 893, 897

(3d Cir. 1991) (concluding that report prepared by lawyer in

anticipation of litigation was not sufficiently trustworthy to

be admissible, but noting that objective lawyer memoranda

are sometimes business records). Given the divided case

law, we conclude that the admission of the Audit

Committee Report was not plain error. 

* * * * *

Polishan waived his right to appeal the rulings of the

Magistrate Judge by not addressing his objections to the

District Court in accord with Local Rule 72.2. As for the

admission at trial of Vallecorse’s testimony and the Audit

Committee Report, they were not contemporaneously

objected to, thereby limiting our review to a search for plain

error. We find none. For these reasons, we affirm the

judgment of the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

15