Securities & Exchange Commission v. Sabhlok et al

Filing 261

ORDER Re 253 Admissibility of Restatement. Signed by Judge Edward M. Chen on 8/26/2010. (emcsec, COURT STAFF) (Filed on 8/26/2010)

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Securities & Exchange Commission v. Sabhlok et al Doc. 261 1 2 3 4 5 6 7 8 9 10 SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. RAJ P. SABHLOK and MICHAEL C. PATTISON, Defendants. ___________________________________/ No. C-08-4238 EMC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA United States District Court 11 For the Northern District of California ORDER RE ADMISSIBILITY OF RESTATEMENT (Docket No. 253) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 On August 16, 2010, Defendant submitted an unsolicited letter further arguing why the Restatement should be excluded from evidence. The Court treats the letter as yet another request for reconsideration of its earlier ruling that the Restatement is admissible subject to certain redactions. As such, the motion fails to comply with Civil Local Rule 7-9 and is therefore DENIED. Even if the Court were to reach the merits of the motion, it is DENIED. The SEC correctly points out that there is language in Paddack v. Dave Christensen, Inc., 745 F.2d 1254 (9th Circ. 1984) that support this Court's conclusion that the Restatement is admissible as a business record. As the Ninth Circuit noted in Paddack, "Although a financial statement audit is based in part on hearsay, it is generally admissible as a business record of the audited entity under Fed. R. Evid. 803(6)." Id. at 1257, n.3. Indeed, the reliability of the audit records in Paddack stand in stark contrast to that of the Restatement in the instant case. The records in Paddack were prepared for purposes of litigation and were aligned with the interests of the sponsoring party raising a risk that they were self-serving. In contrast, as previously noted, the Restatement in the case at bar appears to Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 be more of a statement against the interest of Embarcadero. In any event, Defendant has failed to demonstrate why those portions of the Restatement deemed admissible are unreliable. Furthermore, this Court's ruling is consonant with Judge Ware's ruling in SEC v. Jasper, No. C-07-6122-JW, Slip Op. (July 21, 2010) attached to the SEC's response. Finally, the Court finds that in addition to Fed. R. Evid 803(6), the portions of the Restatement deemed admissible herein would be admissible under the residuary hearsay provisions of Fed. R. Evid. 807. This order disposes of Docket No. 253. IT IS SO ORDERED. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: August 26, 2010 _________________________ EDWARD M. CHEN United States Magistrate Judge 2

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