Opinion ID: 755739
Heading Depth: 3
Heading Rank: 1

Heading: Market Conduct Examination Report

Text: 39 The district court allowed into evidence the 1992 Market Conduct Examination Report (the Report) prepared by the Oklahoma Insurance Department concerning Enterprise's business practices. Enterprise challenges the admission of the evidence on both hearsay and relevance grounds. Enterprise argues that a report prepared for a state agency does not meet the hearsay exception in Fed.R.Evid. 803(8)(C) for factual findings resulting from an investigation made pursuant to authority granted by law unless and until the agency actually adopts the findings in the report. Specifically, Enterprise quotes Brown v. Sierra Nevada Mem'l Miners Hosp. 849 F.2d 1186 (9th Cir.1988): where 'a staff report is submitted to a commission or other public agency charged with making formal findings, only those factual statements from the staff reports that are approved and adopted by the agency will qualify as 803(8)(C) findings.'  Id. at 1189 (quoting Zenith Radio Corp. v. Matsushita Elec. Ind. Co., 505 F.Supp. 1125, 1145 (E.D.Pa.1980)); see also City of New York v. Pullman, Inc., 662 F.2d 910, 914-15 (2d Cir.1981) (interim reports subject to revision and review, tentative results of an incomplete staff inspection, and preliminary recommendations not yet accepted or adopted by the agency do not constitute factual findings under Rule 803(8)(C)). 40 Enterprise concludes that the agency did not adopt the Report in this case because the Oklahoma Insurance Commissioner subsequently issued an Order with respect to Enterprise following the Report. The Order states that the violations described herein at paragraph 7 (Findings of Fact) shall be incorporated into the examination Report as if expressly set forth therein, and shall constitute the only legal violations set forth in the Examination Report. However, the Order also states under a section entitled Conclusions of Law that the Examination Report of Enterprise Life Insurance Company shall be and hereby is adopted as modified in this Order by the Insurance Commissioner, pursuant to 36 O.S. § 309.4(C) (Supp.1992), with actions to be taken by Enterprise Life Insurance Company to cure the violations noted therein. In addition, the Report was attached and incorporated into the Order as Exhibit A of the Order. 41 Just because the Order did not characterize all of Enterprise's business practices documented in the Report as legal violations does not mean that the Order did not incorporate the factual findings contained in the Report. Instead, a more reasonable interpretation is that the Order relies on and adopts all of the factual findings in the Report but only characterizes certain of those findings as constituting a violation of law. Moreover, Enterprise does not dispute and indeed fully supports the position that the Order was admissible, arguing only that the Order and not the Report should have been admitted. Because the Report is attached and incorporated by reference into the Order, the Report would have been properly admitted as part of the Order even if the Report by itself were inadmissible. 42 On the question of relevance, Enterprise claims the Report was not relevant because the evidence it revealed regarding Enterprise's general conduct was not specific to this case. Enterprise also argues that the Report unfairly prejudiced the jury against it. Determinations of relevance and prejudice under Rule 403 lie within the discretion of the district court. See United States v. Wacker, 72 F.3d 1453, 1468-69 (10th Cir.1995), cert. denied, --- U.S. ----, 117 S.Ct. 136, 136 L.Ed.2d 84 (1996). Vining sought to prove that Enterprise engaged in a pervasive, consistent pattern of abusive rescissions. Such evidence is clearly relevant to the question of how Enterprise acted in this case under Federal Rule of Evidence 406 (habit). While the evidence may have worked to prejudice the jury against Enterprise, such prejudice did not substantially outweigh the relevance of the evidence to the inquiry of Enterprise's general business practices. Thus, we find that the district court did not abuse its discretion by admitting the Report into evidence.