case 3:18-cv-16381-flw-tjb document 1-1 filed 11/21/18 ... · case 3:18-cv-16381-flw-tjb document...

MAR-L-00221U-18 10/23/2Q18 2.35.01 PM Pg 60 of 119 Trans fD: LCV2Q18184~5~2

Order No. A l S- l 1 l

,STATE 4F NEW JERSEYQEPARTMENT OF BANKING AND INSURANCE

Commissioner of the New Jersey )Department of Banking and Insurance, )

P~titianer )

v. }}

John Savadjian, )

Respondent. }

QAL Dkt. Na,; BKI X6053-14Agency Ref. Na.: 1 ~-46 & 14- I :i0

I~ECISI~N AND ORDERGRANTING PETITIONER'S

REQUEST FtJRINTERL(~CUTQRY RELIEF

This matter corns b~#'ore the Commissioner of the New Jersey Q~p~rtment of B~nkin~ and

InsuranG~ ("Commissioner"} pursuant to the authority of N.J.S.A. 52;14B-1 to -31, N.J.A.C. 1;1-

i to -21, N,J.A.C. 1: I -14,1 D, the New Jersey Insurance Producer Licensing Act of 2001 at N.J.S.A.

17:22A-26 to -48 ("Producer Act") and all powers expressed or implied herein.

Qn September 6, 20I S, Petitioner, the New Jersey Department of Banking and Insurance

("D~partm~nl"), requested interlocutory review of Administrative Law Judge Moscowitz's

("ALJ") August 29, 2018 ruling barring the Department's witness, Prudential employe Charles

Shanley {"Shanley"), from authenticating evidence created and collected during a Prudential

investigation as a husin~ss record, an exception to the hearsay rule, under N.J.R.E. 80~i{c)(6}.

R~Spondent John Savadjian ("Respondent" or "5avadji~n"} opposed this motion on or about

September 11, 2018.

Page 1 of S9

Case 3:18-cv-16381-FLW-TJB Document 1-1 Filed 11/21/18 Page 61 of 128 PageID: 65

MER-L-04221D-18 10i23l2Q18 2:35:01 PM Pg 61 of 119 Trans ID: LCV2~181848562

By loiter dated Scptcmber 17, 201 S, the Commissioner gr~~nttd ~h~ Departmc;nt's rcqu~st

t~oi• interlocutory review of the August 29, 2018 ruling. On Sept~mher 21, 2018, Qrder No. El8-

97 was issued gra~iting an cxic;nsion cif time to issue a decision Eo October ! 6, 2018, pursuant t~

BACK(YROUND AND PROCEDURAL HISTt~RY

T~iis interlocutory review concerns two specific docum~nts~ — an Excei spreadsheet witl~

embedded audio recordings and information about tli~ calls that Savadjian allegedly made to

Prudential's Customer ►Service ~f~ic~ ("CSQ") ("Excel Spreadsheet") and a report created by

Prud~n~ial's Corporate Investig~itions Division ("CID Report") detailing the CID's investigation

into Savadjian.

On April i 0, 20 14, the Department issued Order to .Show Cause No, E i4-~6 ("OTSC"),

which alleged, in eight separate counts, that Savadjian committed multiple violations of the

Producer Act by conducting bulk transfers of orphaned life insurance accounts` via facsimile

Although the August 29, 2018 ruling discusses a compact disc containing audio recordings{"CD"), the Department's request for intertoc;utory review and a review of the transcript of theproceedings of August 29, 201? indicate t~iat the Department is seeking to authenticate and admitinto evidence the audio recordings embedded in an excel spreadsheet; not on a compact disc. TheAugust 29, 20l 8 ruling indicates that "a recording of the calls is embedded in the Spreadsheet, butthe Spreadsh~~t is a computer printout, so the audio recvrdin~:s are not aeeessihle through theSpreadsheet." S~~ August 29, 2g18 Order at 2. The transcript af' the proceedings indicates,however, that the Department sought to play the audio rtco~dings embedded in the excelspreadsh~~t. See Transcript of Recording Proceedings nn August 29, 2Q17 ("T2"}, K4:22~85:11.Moreover, in its Memorandum of Law in Support of its Request far Interlocutory Keview{"Respondent's Moving Brief'), the Department seeks admission of the audio recordingsimbedded in the Excel Spr~~dsh~~t.

'- An account becomes "arp~~ned" when the repres~ntativ~ who wrote that piece at business leavesthe company, there#ore, nn representative is ~ssi nod to it. Transcript of Recorded Proc:e~dingson December 19, 2~ 1 b ("T] "), 19:C-16.

Page 2 of 59


MER-L-002~1Q-18 10/23/2018 2:35.01 PM Pg 62 of 119 Trans ID; LCV2Q181848~~2

transmission sheets without the knowledge: car consent o~ policyholders or his managing; dircc:tor.

Thy OTSC also alleged that Savadji~tn committed forgery on a numher of insur~in~~ documents.

Sav~tdji~n ~eni~d the ~l~egations anci requested a hearing and, as a result, this matter was

transmitted to the 4Ffice ~f Administrative Law ("UAL") for a hearing.

On ar abauE S~pternher 17, 2014, PrudenEial lodged yin additioriaI compiainE wiEl~ the

Dep~rirncnl about Savadji~n, alleging lh~tt, on 52 occasions b~twe~n December 1, 201 !and June

12, 2D 1:3, S~vadjian called Pruden~ial's CSO and itn~ersonated six di~~erent persons to obtain

policy information, conduct business, or l~~lp transfer orphaned accounts to R~spondc~~~t's son, who

is also a licensed insurance producer. In ~t l~asc three phone calls, Savadjian identified himsetf,

As a result, the Department tiled Arnencled Clyder to Show Cause IVo. E 14-1 ~~ ("A~TSC") on

November 7, 2~1~, alleging, in S2 additional counts, that Savadjian made fraudulent telephone

calls to Prudential wherein he impersonated others.

As part oi'th~ complaint against Savadjian, Prudential provided the Department with a CD

containing el~ctranic audio recordings of the alleged tel~pho~e calls and a surr~mary of the

investigation conducted by Prudentia['s Corporate Investigations Division ("CIQ"). The audio

re~ardings contain metadata~ reflecting the date they were downloaded from Prudential's

recording system, Verint Impact ~~0 ("V~rint System"), instead of the datc;s and times that the

calls were purportedly made. Moreover, in November 2Q1S, in response to Savadjian's discovery

subpoena, Prudential produced S6,QU~ documents which al$o included copies of the audio

recordings, and the Excel Spreadsheet created by Prud~ntial's CID in the course of its internal

investigation o#' Savadjian's telephone calls to Prudentiat's CSC containing the embedded audio

"Met data" is defined in the New Jersey Rubs off' Professional Conduct as inFarmation embeddedin electronic documents. N.J.R. Prof. Conduct 1.1 ~(b}.

Pa~~3ofS9


MAR-L-00221 -18 10/23/2 18 2:35.01 PM Pg 63 of 119 Trans ID. LCV2418184$562

recordings, the dates end times ~acll dill was p1~iCt'd, and the phone numher from whicl~ the calls

c~riginal~d.

Further, an or shout January 21, 2UIS, and January 30, 2015, SilViltl~lilIl ISSu~'C~ SUhPOL11~iS

to Prudential demanding, among other things, the audio recordings with their electronically stored

intorm~~tion ("E.SI"). In other words, Savaciji~n sought t~~e audio tiles in their native; format —that

is, with the original mc;t~data intact. Prudential, however, objected to Savadjian's demand 1'or the

telephone calls with ESI and ot'fered to produce the recordings in the same tor~~al in w~uch they

were: produced to tl~e Department.

~n or about June 2, 2016, Savadjian moved iY~ limine betore the ALJ to exclude the Excel

Spre~~ds~eet and all copies of the teierhon~ c~~is, arguing that the Department was responsible for

the spoliation of metadata.4 The Department apposed this motion. The ALJ denied the motion to

exclude the evidence in ~ July 1, 2016 Qrder stating that "Respondent's motion in liming is d~ni~d

for the reasons stated in Petitioner's papers in opposition to that motion. The AL.1 stated that if

Department intends to offer PRU-009042... into evidence, it is on notice that Respondent may

raise questions of ils authenticity. Savadjian then sought interlocutory review of this denial, inter

atia, with Acting Commissioner Peter Hartt {"Acting Commissioner"}. In a letter issued on July

15, 2016, the Acting Commissioner denied this motion concludsng that "ALJ Moscowitz's July 1,

20I6 Order and subsequent Order dated July b, 201b~ adequately address the issues raised by

~ In this Juty 1, 2016 Order, the ALJ also granted the Department's Motions ~o Quash the trio!,subpoenas issued tc~ Deputy Attorney G~nerat Ryan Scha~'ter and t~a~lscriptionist Stefanie Lucas.

~ PRU-C}~9~42 refers to thy; Excel Spreadshe~:t.

'' The Aci~~ Commissioner noted in his July 15, 201E letter denying Savadjian's Marion for

interlocutory review of ALJ's giant of two Motions to Quash and d~niai of a MoEion in limine to

~xcIude the evidence at issue that, "ALJ Moscowtiz, sus sponte, on ,iuly 5, 2Q16, amended his July

1, X016 Order, of which interlocutory review ~s svu~i~t and allaweci the Respondent to submit

Page 4 0~ 59


MER-L-00221 D-18 10/23/2Q18 2;35:01 PM Pg 64 of 119 Trans Ip: LCV2Q181848562

Respondent in his request for interlocutory review ~lnd that the; interests o~ justice do not su~g~st

or compel review ot'tl~e July 1, 201E Ordc;r."

The hearing rroc~eded before the ALJ on Octob~~• 17, 2016. The Departme~lt originally

intended to leave Thomas Schrock ("Schrock"), a Frudentiai employee at the time and Director of

Prudentia!'s CAD Unit since 2 14, ~uthenticat~; the evici~nct at issue during tl~e proceedings

scheduled for December l9, 2016. Prior to the hearing, Schrock signed a certire~tion detailing

iris personal knowledge of the ~viclence al issue and how he crated the spre~~sheet. However,

Schack was terminated f'rorn employment with Prudential on D~;cember 9, 2~ 1 G. At the

Department's request, Prudential identitied Shanley as an individual who could testify in place of

Schack. Sl~~nley began leis testimony tl~at day. Al the: hearing, counsc! for Savadjian abjecte~ to

Shanley appearing as a witness to authenticate tl~e items o~ evidence, and the ALJ granted this

nbjectian end harrc;d Shan{ey from testifying in this regard. 7'he ALJ ruI~d that Shanley could not

authenticate the audio recordings, the Excel Spreadsheet, or the CID Report.

On December 19, 2016, the ALJ made an oral ruling precluding the Department tram

authenticating the recordings of telephone calls made by Sav~djian. 4n December 27, 201 b, the

Department sought interlocutory review by the Acting Commissioner of the ALJ's December 19,

201 b ruling. In response to a January 6, 20I 7 request by the Acting Commissioner, the AI..~

memorialized his December 19, 201b ruling in a formal Order dated January l8, 2017.

In the January 1 S, 2017 Order, the ALJ found that Shaniey did not have the persona!

knowledge to authenticate the three pieces of evidence at issue. With respect to the audio

recordings, the ALJ applied the factors set forth in State v. Driver, 38 N..f . 25S { 1 y62), noting that,

opposition to the two moti~n~ to quash the trial subpoena ~f Rytln S. Schaffer and Stefanie Lucas,T~ereat'ter, on July 6, 2016, the ALJ issued a formal order that allowed the Responde~it to fileopposii~on to the atorementioned motions to quash by July 8, 2~l ~."

Page 5 of S9


MER-l~-0~221Q-18 10/23/2018 2:35:01 PM Pg 65 of 119 Trans ID: LCV2~181848562

while the: Department may be able to s~~tisfy the first two factors, that the device w~~s c~p~blc of

taking lh~ conversaEion and that its opc;rator was competent, ~h~ Department could not satisi'y the

third and f'ourtl~ factors, which require the Dep~rtm~nt to establish that the recorc~i~igs ~tre ~uti~entic

and correct and that nn changes, addiEions, ~r deletions wire made. Moreover, the ALJ ~lcd

that tl~e Dc;p~rtment failed to esEablish that the written documents or the auclia recordings are

business records under the; business r~cards exception to hearsay. H~ further ruled that the

prahative value of the report, without the cams, is substantially outweighed by tli~ risk that its

admission would necessitate an undue consumption of time and create a substantial danger of

undue pre,~udice, and thus should be exciud~d under N..i.A.C. l:I-15.1.

As discussed below, on February 27, 2Q i 7, the Acting Commissioner issued Decision ~nci

Order Nn. A 17-1~4 ("Order No. A 17-105"), granting the Department's request for interlocutory

relief. Thy Acting Corrimissioner remanded the matter back to DAL #or continued proceedings as

~o the authenticity and admissibility of the CID Report and the electronic evidence under the

business records exceptions to the hearsay rule, including permitting the Department to continue

its examination of Shanley.

On August 29, 2017, the ALJ heard additional testimony frarn Shanley, The ALJ issued a

second ruling on August 29, 2Q18 ("August 29, 2018 Order"), barring Shanley from authenticating

the CD,~ the excel Spreadsheet, or the CID Report as business records, an exception to the hearsay

rule, under N.J.R.E. 80:~{c)(b). This Qrder is being reviewed herein.

7 State v. Driver, 38 N.J. 255, 2$7 {19G2), also s~;ts forth a fifth reyuirement fc~r proponents of

sound recordin,~s to ~;stab[isll as a prec;anditian to admissibil~Ey, This fifth factor, however, relates

to instances of c~~iminal confessiar~s acid therefore does not apply heR•e.

~ As previously noted, it is unc~eac~ why reference is made to t~~e CQ. See footnote 1. The

Department's request for interlocutory review and a review of the transcript of the proceedings of

Page 6 0~ 59


MER-L-002210-18 10123/2018 2:35:01 PM Pg 66 of 119 Trans ID: LCV2~181848562

Order Na. A17-105

Tlie Acting Commissioner issued Decision ~znd 4rdcr No. A 17-105 un February 27, 2 17,

finding tl~at the ALJ erred in preventing Shanley from providing testimony to auth~ntic~te the CD

containing audio recordings, the Excel Spreadsheet, and the CID Report. Order No. A 17-105 at

21. In addition, the Acting Commissioner noted shat the ALJ h

MER-L-002210-18 10/23/2Q18 2:35:x1 PM Pg 67 of 119 Trans !D: LCV2~181848562

D~p~rtment asserts thc;y ~trc, without alteration. Id. at 2:~-24. As such, thc~ Acting Commissioner

found that Shanl~y's leslimony reg~irding tine Verint Syst~;m in ~onjuncliun with Schr~ck's

certitic~tioii established tllal the V~rint System automatically records i~~caming calls and the,l

siarc~s these recordings, which are thin capah~~ of being downloaded from the Verint System if

need be, satisfying the first prong o!' Driver. Id. ~t 24. As to the secc~ncl prong, nU indication or

challenge from Sr~vadjian was raised ~s to the competency of the operator as so required under

gong two of Driver, Ihid.

Tl~c Acting Commissioner noted that the audio recordings could still be verified and

authenticated, without the related metadata, as the mc~t~data is only one indicia of reliability end is

ncit Fatal to determining wllclhcr the: recordings are authentic end correct or that no changes,

additions or deletions have been made, as required by prongs three: and four of Driver. Yd. at 24-

Z~. The Acting Commissioner noted that the Department had presented a substantial amount of

direct and circumstantial evidence to satisfy these remaining prongs, which should have been fully

considered by the ALJ. Id. at 25. Furthermore, Sh~niey's testimony and Sehreck's certification

indicate that calls are automatically recorded by the VerinL System, lacking "human inVusion,"

which speaks to the authenticity of the Cp. lbid. In conclusion, the AcEing Commissioner held

that them is no indication that the recordings themselves have be~;n altered in any meaningful way.

Ibid.

The Acting Commissioner noted that the written entries on the Excel Sprc~adshe~t contain

information that could he used authenticate and verity the ~-eiiability of the audio recordings. Ibid.

The Acting Commissioner also noted that the Department offend many other pieces of evidence

in an attempt to verify the reliability of the ~videnc~ but was prevented from doing so. 1d, at 26.

Ye e S of 59


MAR-L-002210-18 10/23/2 18 2:35:01 PM Pg 6$ of 119 Trans ID; LCV2~181848562

Lastly, the Acting Commissioner found that Shanley ci~arly can and has established that

the Excel Spreadsheet ~~nd CID Report are created in tht regul~~r course of business and that it was

the regular practice of Prudential to make them. Ibitl,

Thy Acting Commissioner relied on Sllantey's direct testimony, including his current rote

as Director o~ CID ~t Prudentiat, testimony about the general investigatory practices employed at

Prudential, his testimony about the Verint System, his description that the audio recordings can be

downloaded onto a spreadsheet, end his testimony that spreadsheets are often created by the CID

to track an investigation, and his testimony that a report is customary written at tl~e close of an

investigation. Ibid.

In conclusion, the Acting Commissioner remanded the matter to the 4AL to allow the

Department the ~~portunity to present its casein full regarding whether the sources of information

ur the method, purpose or circumstances of preparation indicate that it is not trustworthy, as set

forth in N.J.R.E. 84:~(c)(6}. Id. at 27.

AL,T's August 29. ZU18 Order

The ALJ issued an order on August 29, 20l 8, addressing several of the evidentiary issues

remaining in this m~tcer, following the issuance of Order No. A 17-1 OS. The ALJ provided the full

and complete reproduction of Thomas Schreck's c~rti~ication, a summary of Shanley's initial

testimony on December 19, ~U16 and his most recent testimony on August 29, 2017 to support

several explicit findings. August 29, 201$ (7rder at 3 — 16.

The ALJ noted that Savad~ian raised the question of the authenticity of the CD, the Excel

Spreadsheet, and the CID Report more than six months in advance of tie hearing based primarily

an the fact that the audio recordings did not contain the metadat~t associated with their creation.

Id. at 17. The ALJ continued that rather thin prod~icing Schack, who wotiId hive Iikeiy satisfied

Page 9 of S9


MER-L-04221Q-18 10/23/2018 2;35: 1 PM Pg 69 of 119 Trans ID. LCV2a181$48562

the ALJ's inquiry as to how the audio tiles wGrc created, the Department prad~ced Shnnley "who

had no personal knuwl~dge and nu technic~il knuwlcd~e ahou~ l ow Schrock creti~ed the audio

recordings, or any other aspect of tl~e writings." Ibid.

The AL,i noted that while the authenticity of a writing, which in this case includes the CD,

Excel .Spreadsheet and CID Report, can be estat~lished by either ciir~ci or circumstantial evidence,

the proponent must m~k~ some prima facie showing that lh~ writing is whit the proponent claims

ii to he. Icy. at 18. Furthermore, the ~uth~nticity of a writing can either tie ~s~ablished by direct

proof, such as the testimony of its author, or circumstantial cvidcnc~, which must "include intimate:

knowledge of information which one world expect only the person alleged to have b~~n the writer

or participant to I~ave." Ibid. However, the ALJ pc~inled out that tl~i~ is nol absolute, as, pursuant

to N.J.R.E. 602, aaudge still leas the inherent power to reject the testimony if the judge finds that

no trier ~f fact could reasonably believe that the witness perceived the matter. Ibid. Finally, the

ALJ noted that while it is not n~c~ssary to negate every passibility of substitution or change in

condition between the event and the time of'tr~al, there must still be a reasvnahle probability t,hal

the evidence has not peen changed in important respects. Id. at 19.

As it relates to the authenticity of the CD, which contains the audjo recordings, the ALJ

focused his analysis on prongs three (the recording is authentic and correct) and four (no changes,

additions, or deletions have been made) of State v. Driver, 3~ N.J. 255 (1962), As it relates to the

third prong of Driver, the AL.J noted that as Drivec is typically applied in the context of criminal

cases, where the witnesses testifying about the authenticity of a recording are the same policy

ot'ficers wino made the recording or who knew how the criminal canfi+~ssions were recorded,

enabling them to testify ~s to whether ~n audio recording is authentic end correct. Id. at 20. The

ALJ noted that tie Department m~ini~ins that the ALJ should listen to the audio recordings to

Page 1 D of S9


MER-L-~~221 ~-18 10123/2018 2;35:07 PM Pg 70 of 119 Trans ID: LCV20181848562

determine their prahative v~~lue and to determine i1'the recordings authtnlic and carrcct. Ihid. The

ALJ found that as the rec:ordin~;s have; not, in his view, heen autl~entic~itcd, it would be illu~ical

For the ALJ to listen to tl~e recordings si»ce ,Sllanley did not record tl~e conversations at issue, did

not extract the recordings from the recording system used or know haw the record system works.

Id. at 21.

As it relates to the tourEh prong of Driver, shat no changes, additions or d~Ietions have been

made, t~~e ALJ found that the ahsence of the met~~data associated with t11e audio recordings

indicates that the audio recordings have, in tact, been changed, and the qu~;stion that remains is

whether they have been changed ~n any important aspects. Ibid. The AL3 applied Carmona v.

Resorts Int'1 Hotel, Inc., 1 R9 N.J. ;iS4, 384 (2007), wherein the Court helc! that an investigative

report could not be submitEcd pursuant to tl~e husiness records exception of the hearsay rule, as it

was maintained in a computer system that was capahlc; of manipulation, and therefore, was nut

trustworthy. Ibid. As in the instant matter, the ALJ pointed out that the metadata related to the

audio recordings is missing, thus, the ALJ found that if~ere is su#'f~cient reason to question the

reliability/trustworthiness of the Verint System. Id. at 2:~. The ALJ concluded that Shaniey was

noti sufficiently familiar with the Verint System to allow for meaningful cross-examination

surrounding the CT'~atfOn of the audio recordings to demonstrate that the Verint System is

reliable/trustworthy. Ibid. Furthermore, he held that that Shanley cannot speak to this point

because he has presented no "intimate knowledge of information one would expect only the person

alleged io have been the writer or the participant to have" in their creation. Ibid.

The ALJ addressed the Department's assertion that authentication is a low far to entry,

relying on State v. I-iann~th, 448 N.J..Super. 78 {App. Div. ZO 1 b). "I'h~ Court in Hannah held that

the c~Errent standards for ~uthentic~tion pursuant N.J.R.E. 9D 1, which generally toilows Fed. R.

Pale 1 1 of S9


IOiI~R-L-Qt~2210-1 S 10123/ 018 2:35:01 PM Pg 71 of 11 ~ Tans ID. LCV2c~1$1 ~Q~856~Case 3:18-cv-16381-FLW-TJB Document 1-1 Filed 11/21/18 Page 72 of 128 PageID: 76

MER-L-OQ221Q-18 10/23/~~18 2:35.01 PM Pg 72 of 119 Trans ID: ~.CV2Q18~848562

Evid. 901, were adequate to auth~nticat~: a social media post on TwitEer. NJ.~.E. 901 includes the

"the reply leEter doctrine [and] content known only to the particip~nls"`'was su~fici~nt to est~~blish

authentication of the Tweet in question. Id. at 2;~ {siting Hannah, 448 N.J, Super. at 88-89}. In

Hannah, tt~e Appellate Division reasoned that the victim's testimony was adequate for

authentication becouse the victim had a history of "tweeting" with the defendant to tine defenciant',5

Twitter handle, and the subject matter of the tw~el cantain~d information that only those with

personal knowledge o~ the assault would know. Ibid. (citing Haiynah, 44S I~i.J. Super. at R8-89).

In sum, tl» defendant's Twitter dandle, the defendant's profile photo, the content of the tw~~t, its

naEure as a reply, and the testimony presented al trial wire su~~icient to ~stabiish a primp facie cage

that the tweet w~►s authentic. Ibid. {citing Hannah, 448 N.J. Super. at 94-9 I ).

The ALJ found that the application of Hannah in the instant matter was insufficient to

establish a prima facie case sufficient to support a finding that the audio recordings are authentic

because Shantey did not participate in the calls, extract the cabs from the Verint System, perform

the investigation of Savadjian ar supervise anyone who did. Id. at 24. As such, Shanley cannot

meet "the reply letter doctrine and or content known only to the participants" standard applied in

Hannah. Ibid.

The ~1.LJ pointed out that when a writing is a multidimensional document, such as the audio

recordings at issue here, and the witness does not have persan~l ar firsthand knowledge under

either the reply letter doctrine or the content known only to the participants standard, "the witness

must have the technical knowledge to authenticate it." Id. at 25. Tie ALJ provided the example

y The August 29, 2018 Order dogs not explain what "the reply letter doctrine and content knownonly to the participants" rile means. Pursuant tv Hannah, the reply letter docE~-ine and contentknown only to the participants rule states that a writing may be authenticated by circumstantial~videnc~ ~stablisi~ing that it was sent in reply to a previous communication. Hannah, 448 N,J.Super, at 9I .

Pa ;e ~ 2 of S9


MER-L-042210-18 1(J/23/,~~18 2.35.01 PM Pg 73 of 119 Trans ID: LCV~~18~8485G2

of twa em~ils, which may b~ facially id~ntic~~l, however the trrtnsmission o~ the email can only be

confirmed by a witness with personal knowledge ar a witness with technict~l knowl~dg~ of its

met7drtta. [bid. (ciE~iion omitted}. Tl~~ ALJ acknowledged tl~at the distincEion between metadzta

end the content of the electronic file is welt established. Ibid. (citing Estate of Kennedy v.

Rosenblatt, ~7 N.J. Super. 444, 454 (App. Djv. 20l 6), wh~r~ the App~llat~ Qivision distinguished

between the revsew by an ~uorney of m~taclata in an ei~ctronic ale end the r~v~~w o~ content of

the electronic file). In this case, the ALJ poinl~d oul that Shanley also does not have the technical

knowledge to authenticate the documents either. 1d. at 26.

Tll~ ALJ noted that Slianley's testimo~ly of his recreation of Schreck's investigation may

estab(~sh Shat he has personal knowledge that the audio recordings are the same ones that exist in

the VerinE Syscern nvw — but nvt in 2Q 13 when the Department proffers they were crated. Ibid.

However, this is problematic because the metadata indicates that modif cations, dei~tions, or

alterations have been made to the f ies. Ibid,

As it relates to the authentication of tote Excel Spreadsheet and CID Report, the ALJ found

that as the Excel Spreadsheet's metadata has also been compromised, Shanley cannot authenticate

the written words contained in the document as he does oat have the personal ar technical

knowledge to do so. Similarly, the A1J found khat Sh~niey has neither the personal oar the

technical knowledge to authenticate the GID Report. The AI..J noted that the CID Report eonlains

Schreck's impressions, findings, and conclusions, but that Schreck was not called to authenticate

the CID Report. The AI.,J concluded that without the author o~- a witness with personal o~- technical

knowledge, the CID Report is hearsay.

The ALJ noted that while all relevant evidence ~s admissible in an admir~jstrativ~

proceeding however, evidentiary rulings sh~lI be made to promote fundamental principles of

Page 13 of 59


MER-l~-002210-18 10123/2018 2:35:01 PM Pg 74 afi 119 Trans ID: LCV24181848562

fairness and justice and to aid in the ascertainment ~f truth. ibid. (citing N.J.A.C, l :1-1 S,) {b)),

However, judges, at their disc:r~tion, may det~rmin~ if the probative value of the evidence is

subsl~ntially outweighed by the risk tI~at its admission will either necessitate undue consumption

of time; or create substantial danger of undue prejudice or confusion. Id. at 28 (citing N.J.A.C.

1;1-1,5,1 {c)). The ALJ stated that even if the evidence at issue could b~ authenticated by Shanley,

these writings must meet ~n exception to the hearsay rule to be admissible. In this case, the AL.1

Holed he has already ruled the probative value of the evidence is substantially outweighed by tl~e

risk of crating substantial danger ~f undue prejudice or confusion and witl n~c~ssit~te an undue

consumption of time, without a residuum o~ legal and competent evidence to prove that Savadjian

made the calls and that he made the calls when the Department alleges he did. Furthermore,

although hearsay is admissible, some legally competent ~videnc~ must exist to support each

ultimate finding of fact Eo an extent Sufficient to provide assurances of reliability and to avoid thc;

factor appearance of arbitrariness. Ibid. (Citing N.J.A.C. 1:1-15.5(a) and N,J.A.C. l:1-15.5(h)).

The ALJ noted that while hearsay may be employed to corroborate competent proof ar

competent proof may be given added probative farce by hearsay testimony, there must be a

residuum of legal and competent evidence in the record to support it. Thus, the ALJ concluded,

hearsay may be admitted io corroborate or offer added probative force to eampetent evidence at

the (3AL, but hearsay cannot provide the residuum far an ultimate finding of fact at the OAL. Id.

at 29 {citing Weston v. State, 6~ N.J.:~6, S 1 (1972)}.

The ALJ noted that the Department has the burden of proving the authenticity of tie CD,

the Excel Spreadsh~~t, and the CID Report under N,J.A.C. 1: l - 15.1(t) but his Hat produced a

witness who is competent Eo do so. The ALJ stated ~h~t to overcome this deficit, the Department

seeks to gain their admission through the business record exception to the hearsay rile. Ibid. The

Page 14 of S9


MER-L.-002210-1 S 10123/2Q18 2:35:01 PM Pg 75 of 119 Trans ED: LCV2418~ 848562

ALJ stated that he is requiring a rc;siduum of legal and competent evidence now to support them.

_~ ~

"Che ALJ noted that pursuant to N.J.R.E. 802, il~~rs~y :s not admissible, except as provided

by the rules or by other law. Id. at ~0. However, records o~ regularly conducted activity, otherwise

known as "business records," are excepted from tf~e hearsay rule. Ibic~. {citing N.J.R.E. 50:~(c)(6}}.

As business records often include hearszy statements, those statements—ofEen referred to as

"hearsay within hearsay"—must also meet this exception, pursuant to N.J.R.E. 805. Ibid.

However, the ALJ noted that if evidence is not offered far t1~e truth of the matter asserted,

the evidence is not hearsay and no exception to the he~say rule is necessary to inEroduce that

evidence at trial. Id. at ~ 1. {citing State v. Long, 17~ N.J. l :i8, 152 (2002} and Russell v. Rutgers

Cmty. Health Plan, Inc., 280 N.J. Super. 445, 4Sb (App. Div. 1995)}. The ALJ found that in the

instant c:~se, while the writings at issue are hearsay documents, the audio recordings contained in

them ti-e not hearsAy statements because they are not being offered for the truth of the matter they

assert. Ibid. To the contrary, they are being offered for their t'alsity. Therefore, the AIJ found

that the audio recordings are not excludable as hearsay. Ibid. Furthermore, it is well estahlished

in New Jersey that computer generated information is admissible as long as a proper foundation is

laid. Ibid. (citing Sears, Roebuck & Co. v. Merla, I42 N.J. Super. 205, 207 (App. Div. 1976)).

Therefore, the computer generated information contained on the CD, populaEed in the Excel

Spreadsheet, and attached to the CID Report will be admissible as fang as a proper foundation is

laid, that is, as long as these outer layers can he authenticated or meet the business record exception

to the hearsay rule. Ibid.

The AI..i stated that a statement is a business record if it is contained in a writing or other

record of acts, events, conditions made at or near the time of observation by ~ person with actual

Page 1 S of 59


MFR-L-002210-18 10/23/2~1~ 2:35.01 PM Pg 76 ofi ~ 19 Trans ID. LCV~~181848562

knowledge or from information supplied by such a person, if made in the reg~ilarcourse ofbusiness

and if it was the regular pr~~c;tice of that business to m~k~ ii, unless the sources of information or

the method, purpose or circumstances of preparation indicate that it is not trustworthy. Id. at 32

(citing N.J. R.E. 803(c)(6}}.

The AL.1 held that tl1~ CD and Excel .Spreadsheet are electronic writings, due to the

computer gener~t~d audso recordings on the CD and emh~dded in the Excel Spreadsheet. Id. at

32. For a compul~r generated record to b~ admissible under the business record exception to tie

hearsay rule, tl~e proper Foundation must be laid. Ibid. (citing Hahnemann Univ. Hosp. v. Rudnick,

292 N.J. Super. l I (App. Div. 199b)}. A founciatifln~l witness is usually not required to have

personal knowledge of the facts contained a computer generated business record. Furthermore,

the AL.1 nand that expert testimony is unnecessary i~ the foundational witness can demonstrate

that the computer record is what the proponent claims, is suffciently familiar with the record

system used, and, can establish that ie was the regular practice of that business Eo make the record.

td. at ~~. (citing Hahnemann, 292 N.J. Super. 17 — l8), The AIJ noted that pursuant to N.J.R. .

80:x, the record is admissible "unless the sources o~ information or the method, purpose or

circumstances o~ preparation indicate that it is nat trustworEhy." Ibid.

The ALJ noted that Savadjian came forward with evidence, namely the certi~catian at' a

digital forensics expert, Tino Kyprianou, to question the reliability of the audio recordings at issue

and Shanley could not satisfy any of the prongs set forth in Hahnemann. 1d. at 33. Shanley could

not establish that the audio recordings on the CD embedded in the Excel Spreadsheet are what the

propone~~t claims, that l7e is unt'amiliar with the Verint System, does not hold the correct title to

establisl~ familiarity, and that he could not establish that the GD ar Excel Spreadsheet were made

in the regular practice of business, only that "it was the regular practice o~ Prudential to record

Page 16 of 59


MER-I..-Ua2214-18 10/23/2x18 2.35:U1 PM Pg 77 of 119 Trans ID: LCV2018~ 848562

calls to the CSO and that Prudential often made CDs ar spreadsh~~ts during investigations -not

that it was its regular practice to do so." lbid. Therefore, the ALJ ruled Shanl~y was without

suff cien~ familiarity of the record system used to iay the foundation and authenticate either tl~e

CD ar the Excel Spreadsheet as a business record under 1'~I.J.R.E. 803(c)(6}. Ihid.

The ALJ described the CIQ Report as a closing memor~n~um that summarizes the

investigation by the CIIa and contains the opinions and impressions of its investigators. Id. at 3S.

The AL3 found that Shanley's testimony as to whether the CIQ Report constitutes a business record

is deficient. Ibid. Sl~anley could not establisiz that the CID Report was made near or at Use tune

of observation from actual knowledge or from information supplied to l~im by a person wiEl~ such

knowledge. Ibid, The ALJ Hated that although Shanley coulcJ establish that tt~e CID did conduct

investigations and that it did write repots, h~ could not estahlish that the method, purpose, or

circumstances of the CID Report's preparation indicate that ii is trustworthy. Ibid. Therefore, the

AL.t ruled that Shanley could not prove that the CID Report is a business record under N.J.R.E.

803(c)(b). Ibid.

In conclusion, the ALJ asserted that the Acting Commissioner's remand infringes on the

role and responsibility of the ALJ to determine what should he admitted into evidence at his or her

discretion and disregards the power and authority of the SAL to be an independent arbiter of

agency determinations. Id. at 36. As such, the AL.1 ruled that Sh~nley cannot authenticate the CD,

the ~xce1 Spreadsheet, or the CID Report as a business record exception to the hearsay rule under

N.J.R.E. 803~c)(6}. Ibid. Furthermore, the ALJ stated that until the Department provides a witness

who can authenticate these dacum~nts and provide a residuum of evid~nc~ to prove that Savadjian

made Ehe ca11s, end that he made those calls when the Department alleges that he did, these

documents will remain inadmissible and will not be admitted into evidence. Id. at 37.

Page 17 of 5}


MER-L-002210-18 10/23/2018 2:35:01 PM Pg 78 of 119 Trans ID: LCV2~18~848562

Department's Arguments

On September G, 2~i 8, the Department submitted a bri~;t in support of its motion for

interlocutory review of the ALJ's August 29, 2018 Urder.

The Qepartm~nt argues that interlocutory review by the Commissioner is necessary to

prevent injustice in khis matter. Department's Moving Brief at 13. The Department argues that

the Commissionc;r is vested with the so~~ regulatory authority over John Sav~dji~n as an insurance

producer, who has been ordered to show cause as to serious allegations of fraudulent conduct and

di~hon~sty invatving his recorded statements to Prudential. Ibid. (citing N.J.S.A. 17:22A-2b

through -48; In re Appeal, 90 N.J. at 99). Tlie August 29, Z~ ~ ~ ~!'d~l' ~1a5 a!1 ~CIOi'TClOUS ifTlp~Ct OIl

the scope of issues and presentation of evidence, and cssentialiy barred the Department from

introducing into the record evidence critical to the majority of the counts alleged in the Order to

Show Cause. Ibid. (citing In re Apaeal, 90 N.J. al 99). To exclude this ~vid~n~e will predetermine

the Commissioner's decision because it results in S2 Counts of the Order to Show Cause being

dismissed. id. at :~~. The OAL's unauthorized determination of the case based on misapplication

of !aw and facts frustrates the strong public policy of this State for regulation of insurance

producers who commit fraud. Ibid. {citing In re Kallen, 92 N.J, at 30-~ 1 }. Thus, interlocutory

review is necessary at this lime.

As it relates to the authentication of the audio recordings, the Department asserted that the

standard for authentication at the (SAL is a low bar. The Department indicated that the only

requirement under the Uniform Administrative Procedure Rules ("APA"} for the excjusion of

evidence in an SAL proc~~ding is if the AL1 determines that the probative value of the evid~:nc~

"is substantillly outweighed" by the risk that the admission will "create [aJ substantial dagger of

undue prejudice ar contusion." Id. at 14. (citing N.J.A.C. 1:1-15.1(c}}. Thus, the burden of

Page 1$ of 59


MER-L-00221 -18 10/231~~18 2:35:01 PM Pg 79 of 119 Trans ID; l~CV20181$48562

authentication is not "designed to be onerous" and only requires prima facie showing of

authenticity. Id. al 1 S (citing Hannah, 44~ N.J, Super. at 89).

To authenticate a recording, the party offering the evidence must show: "(1) the device was

capable of taking the conversation or statement, {2} its operator was competent, (:~) the recording

is authentic and corr~~t, (4) no cl~anges, additions or deletions have been made." Ibid. (citing State

v. Nan-Tambu, 221 N.J. 390, 40:i {2015) (quoEing ,State v. Driver, :~8 N.J. 255 { 1962)}, "[Ejven a

i7awed audio recording is ̀ not inadmissible per se, so long as its capacity to record accurately, and

the other conditions precedent [area establisi~ed."' Ibid. (citing Nan-Tarnbu, 221 N.3. at 4~3}.

The Department asserts that Shanley's testimony satisfies the authentication test set forth

in State v. Driver, ~8 1~.J. 2SS {1962). First, the Department as5erls that Shanley established the

first two prongs o~ tl~e Driver test during his December 2 16 testimony. As it relates to the third

prong of Driver, that the recording is authentic and correct, the Department asserted that the ALJ

must listen to the audio recordings to determine if the recording's probative value is substantially

outweighed by the risk that the admission will create a substantial danger of undue prejudice or

confusion. Id. at 14 {citing N..I.A.C. l:1-15.1(c}). In support of this assertion, the Department

cites Hannah, which states that in the context of a bench trial, "considering the judge's dual role

with regard to [an item's admission and weight, the better practice ...will often warrant the

admission of the documenE and then n consideration by the judge, as faccf nder." ld. at l6 (citing

Hannah, 448 N,J. Super. at 1 S6-S7). As the Department has been prevented from playing the audio

recordings rep~at~dly, the administrative forum has not evaluated or considered that the nature of

the evid~nc;e is not the metadata or even the file, but the recorded telephony conversation of

Sav~daian himself. The Department also cites Order No. A 17-105, wherein the Acting

Commissioner ruled that Shanley "obtained direct knowledge that the recordings and the data in

Page 19 of 59


MER-L-002210-18 14/23/2x18 2:35:Q1 PM Pg 80 of 119 Trans ID: LCV24181848562

the spreadsheet being presented for admission ire what the Department asserts they arc, without

alteration," s~~tisfying tl~e t-ourth prong of Driver. Id. at l8 (citing Order I~Io. A17-lOS at 24). Tli~

Qep~rtment argues that this is permissible as N.J.A.C. 1:1-15.8(c} allows a witness to testify as to

the authenticity of evidence using hearsay statements. Ibid.

Tile Department also asserted that Sl~anley's,testimony leas established the authenticity of

the CID Report in that he has established that the CID Report and attached exhibits are what the

proponent claims them to be. td. at 17 (c:iting T2, 16:25-17;1; T2, 47:18-20}. Furthermore, the

Department asserts there is no evidence that suggests Use CID Report and attached exhibits are not

what they purport to be. Ibid. Specifically, Shanley testified that he was provided with the original

CIS Report from the legal department at Prudential. Ibid. (citing T2, 48:1 b-22). Shanley Shen

testified that exhibit Pl:i (the CID Report) is a true and accurate copy of that original CID Report

and attached exhibits. Ibid. (citing T2, l b:25-17:1; T2, 47:18-20), The Department states that this

is sufficient, as personal knowledge of the matter is required in DAL, but personal knowledge may

be obtained through hearsay. Ibid. (citing N.J.A.C. 1: l -15.8(c)}, Therefore, the Department

maintained that Shanley has met the low burden of admissibility for the CID Report in the context

of an administrative hearing. Tbid.

Furthermore, the Department asserts that during Shanley's testimony on August 28, 2017,

Shan~ey testified in detail about how he recreated Schreck's investigAtion. The Department

reiterates that Shanley also testified that the voice of the person who identified himself as Savadjian

in a recorded coil is the game as the voice of all other callus. Id. at 19 {citing State v. LaBrutto,

1 14 N.J. 187, 199 { 1989) (a lay witness is permitted to testify that t~l~ voice of a defendant taken

from a voice exemplar matched a voice in a taped telephony conversation); State v. Perez, 1 SD N.J.

Super. 166, i 70 (App. Div. 1977) (a taped conversation and the voice exemplar are both

Page 20 of S9


MER-L-0~221Q-18 10i23/2~18 2:35:x1 PM Pg 81 of 119 Trans ID: LCV20181848562

admissible)). Thy Department also points out that Shanley's testimony where he states that h~

knows of other persons who i~avc personal knowl~dgc; of Savadji~n's voice' and wl~o have

previously identified Savadjian as the caller, referring sp~cificaily to Michael Saccento,

Savadjian's longtime colleague, who testified that h~ has si~nif~c~nt personal knowledge of

Savadjian's voice, reviewed one of the recorded calls and positively identified Savadjian as the

caller. lbid. (citing T2, 105:1-5; T2, l~4: l-9; T2, 1:12:150.136:9). The aepartm~nt maintains that

Saccento's testimony is permissible as evidence of tl~e identity of a telephone caller through

recognition of the caller's voice is a means of auth~nticalion pursuant to State v, Mays, :~21 N.J.

Super. 619, 628-29 {App. Div. 1999). Id. at 20. Tile Qepart~nent concludes that Shanley can

testify that the audio recordings and Excel Spreadsheet created in 201 ~ is the same copy introduced

at the hearing, which Shanley reviewed and properly authenticated. Ibid.

The Department also asserts that the Respondent failed to raise a ~~nuin~ question of

authenticity during their cross-examination of Shanley. Specifically, the DepartmenE stated that it

only offered the Excel Spreadsheet and its embedded audio files into evidence, but, that during the

Respondent's crass-examination, the Respondent focused on outside rails, effectively waiving the

opportunity to challenge the Excel Spreadsheet and embedded audio recordings themselves. T2,

125:23-139:b. Furthermore, the Department argues that as no evidence was of#'ered to suggest that

the audio recordings offered have been changed in any way outside of metadata, the Respondent

has failed to raise any other issue of authenticity relating to the offered evidence, Ibid.

Thy Department also asserts that Schreck's certification is sufficient to authenticate the

Excel Spreadsheet and embedded audio recordings, Id. at 21 (citing N.J.A.C. 1:1-1 ~.b). Thy

Department cites the Acting Commissioner, who determined that the Schrock certification

"provides a direct and reliable basis upon which to determine the authenticity of Prudential's

Page 21 of S9


MER-L-002214-18 10i23/2~18 2:35:01 PM Pg 82 ofi 119 Trans ID; LCV2Q181848562

records, including the CID apart and the Excel Spreadsheet." Ibid. (citing order No. A17-lOS at

23). Furthermore, the rules permit authentication of evidence by affidavit or certification and do

not require that an af~an~ be produced at trial for cross-examination. Ibid. (citing N.J.A.C. 1:1-

t 5.6). The Department notes that the certification at issue in this matter was admitted info the

record. ibid. {citing T2, 55:7-1 ~}. 'T`he Department argues that requiring Schreck to appear for

cross-examinaEion would contradiet Ehe rationale for authentication by certification. Ibid.

Furthermore, the Department states that certification, as proof of authentication, is consistent with

the general standard of relaxed rules in administrative hearings. Id. at 22 (citing In re La~ama, ~4~

N.J, Super. 560, Sb6 {App. Div. 20Q1)). As the Schrock certification satisfies the authentication

requirement under N.J.A. . I;1-1,5.6, the Excel Spreadsheet should have been deemed

authenticated. Ibid. The Department argues that the August 29, 2Q18 Qrder's disregard of the

certification and neglect to comply with the Order No. A17-105 clear remand instructions,

constitutes an abuse of discretion. Ibid. The Department notes that tht Excel Spreadsheet was

produced directly to Respondent via his own subpoena to Prudential. The Department has never

held a dit'ferent copy. ld. at 25.

The Department argues that the ALJ erred by failing to listen to the audio recordings to

determine the probative value of the evidence. Id. at 22. As discussed above, to exclude evidence,

the administrative forum must weigh any undue prejudice against the probative value of the

evidence. Ibid. {citing N.J.A.C. 1:1-15,1(c)). If the probative value of evidence is "substantially"

outweighed by the risk of a "substantial" danger of undue prejudice, the court may exclude

evidence. Ibid, {citing N,J.A.C. 1:1-1 S.1(c)). This requires that the Court explore the probative

value relative to prejudice. Ibid. Pursuant to Nan-Tambu, the Court must consider the evidential

purpose of the recording anti whether one or more theories of the case rest on the recordings. Ibid.

Page 22 of S9


MER-L-002210-18 10/23/2418 2:35:01 PM Pg 83 of 119 Trans ID: LCV20181848562

(citing Nan-Tambu, 221 N.J. ~t 408}. The Department argues that ~s ~h~ audio recordings ~r~ the

sole direct cvid~nc~ against S~vadjian for 52 Counts of the UrdGr to Slow Causc, the evidence is

not anecdotal, remote, or simply a theory of the case, tl~~ audio recordings ire the case. Ibid. The

Department notes that while the forum can determine the probative value based an the AOTSC,

proffers, anc~ what is contained in the Excel ,Spreadsheet, this is not a proper substitute for actually

listening to the calls themselves, which is mace clear in State v. Driver, ~8 N.J. 255, 287-2$S

(1962}, where the Court held that "[i]n alI situations" the court should listen to the recording to

determine t~leir authenticity. Id. al 23. In tale instant matter the forum has declined to listen to the

audio recordings. Ibid. The August 29, 2018 Order held that since the AI,J is both "judge and

jury" that "once I hear the calls I cannot unhear them." Ihid. (citing August 29, 2018 order at 21).

The Department maintains that this frustrates. the entire purpose of N.J.A.C. l :1-1 S.1(c}, lbid. The

Department asserts that atl judges, incIudin~ those in bench trials, must routinely review evidence

for unfair prejudice and, i~ prejudicial, disregard the evidence from their decision and argues that

this case is no different. Ibid.

The Department argues that the significant probative force of the audio recordings is

unquestioned, in that they are the case against the Respondent; the probative force, therefore, is

not substantially outweighed by the risk of undue prejudice, which is minimal because altered

metadata does not impact the content of the audio recordings themselves —that is, the

misrepresentations spoken by Savadjian to the CSO on at (east 52 different occasions. Ib~d. The

Department states that the Respondent's argument that the date and time of each call cannot be

verified due to the missing metadata is irrelevant. Id, at 24. First, this in~ormat~on appears on the

Excel Spreadsheet, which his been verified by Shanley. Ibid. {citing'I'2, 101:25-102:2:1). While

the m~t~dat~ on those calls was "altered" .because they ret~ect the dates the files were downloaded

Page 23 of S9


MER-L-002210-18 10/23/2Q18 2:35.01 PM Pg 84 of 119 Trans fD. LCV2018184856.2

from the Verint System, that information is not criticaf to the central issues o~ this case, which

allcg~s that the Respondent viol~ited the Producer Act by Fabricating his identity —not when he did

so. Ibid. The Department asserts that whether the Respondent committed the conduct today, or

years prior to the AQTSC, is irrelevant. Ibid.

Furthermore, the Department argues that excluding evidence based on metadata ignores

Ehe guidance provided in Nan-Tambu and the Acting Commissioner's remand order on the specific

issue. Ik~id. Pursuant to Nan-Tambu, the administrative forum must determine if the metadata

renders the audio recording unduly prejudicial. Ibid. {citing Nan-Tambu, 221 N.J. at 40b}. Here,

even if metadata were "altered," the audio recordings are not inadmissible if it otherwise has

probative value, which depends on "the extent to which the omission ~~versely affects the

evidentiary purpose or purposes for which the recording has been offered." Ibid. {citing Nan-

Tambu, 221 N.J. at 403, 40b). The Department reasserts that the audio recordings are central t~

this case and that altered metadata dogs not change the fact that Savadjian is heard on the audio

recordings misrepresenting his identity; in fact, just because original metadata is not provided does

not render the audio recordings themselves either altered or inauthentic. id. at 25.

In addition, the Department notes that there has been no challenge to the content of the

audio recordings themselves. Ibid. The Department has alleged that Savadjian violated the

Producer Act by contacting Prudential's CSO, misrepresenting his identity, and using the identity

of others to gain access to information, therefore, the content of these calls are in no way unfairly

prejudicial to the Respondent because they are his own statements. Ibid. There is no evidence

that the conE~nt of these calls is not what Petitioner purports it to h~. ibid. Furthermore, the

allegation that met~dat~ was altered is nat so unfairly prejudicial because the metadata has

minimal, if any, probative value, as there is no link between the metadata and the fact that

Page 24 of 59


MER-L-002210-18 10/2312418 2:35:41 PM Pg 85 of 119 Trans ID: ~CV20181848562

Savadjian is heard on the audio recordings m~srepresenling who he is end using the identity of

others. Ihid.

The Department also argues that tl~e offered evidence is admissible uncic~r the resi~uutn

rule. Id. at 26. Hearsay evidence is admissible in an administrative hearing. Ibid. (citing N.J.A.C.

1: l -1 S.5(a)). Notwit~~standing thc: admissihility of hearsay evidence, some legally competent

evidence must exist to support each ultimate finding of face to ~n extent suf~ci~nt to provide

assurances of reliability and to avoid the f~c~ or appearance of arbitrariness. Ibid. (citing N.J.A.C.

~ :1-15.5 (b)}.

The Department argues that t ie audio recordings provide residuum for all oEher evidence

which flows from them, supports the admission of the CID Report and annexed exhibits, including

the Excel Spreadsheet with embedded audio tips. Ibid. Thy Qepartm~nt asserts th~ti applying the

residuum rule reyuires identiFying Ehe "ultimate finding of facE" that must be supported by a

residuum of competent evidence. Ibid. (citing Matter of Tenure Hearin~~owan, 224 N.J. Super.

7:37, 750 (App. Div. 1988) (quoting N.J.A.C. 1:1-1 S.S(b))). The Department asserts that ~n the

instant matter, the ultimate issue to be determined is if Savadjian violated the Producer Act;

specifically, if Savadjian "contacted an insurance company, lied about his true identity, and

fraudulently used the identity of another [person), to collect private and sensitive policy

information and data on multiple insurance consumers and policy holders... in violation of

N.1,S.A. 17:22A-40a(2), (8}, and { 16) as alleged in Counts 9-60." Td. at 27. Furthermore, the

residuum rule does not require that every fact be teased on a residuum of legally competent

evidence, but is concerned with its weight relative to facts material to the case, Ibid. (citing

Ruroede v. Borough of Hasbrouck Hei,~hts> 214 N.J. 3:i8, 359 {201:0). Applied here, the

Department argues that each fact in the CID Report or each date Ind time of a call on the Excel

Page 25 of S9


MAR-L-002210-18 10/23/2018 2:35:01 PM Pg 86 of 119 Trans ID: LCV2~181848562

Spreadshcc~t need not he supported by non-hearsay, as that would frustrate the purpose of the

residuum rule its~:lf. Ibid. Rather, evidence which supports the finding of the ultimate issue may

be admitted, even it' hearsay, as long as a residuum exists to support the ultimate finding that

Savadjian cabled Prud~ntial's CSU and lied about his identity. Ibid. Tl~e Department asserts that

this residuum is provided by the audio recordings containing the statement of the party-opponent

— John Savadjian, Id. at 28. "A staE~ment offered against a party which is the party's awn

statement, made either in an individual or in a representative capacity" is not excluded by the

ll~arsay rule. Ibid. (citing N.J.R.E. 8~3(b}(l )). Thus, the Department argues, the audio recordings

are admissihle under tl~e hearsay rule and the secondary facts in the CtD Report and the details

contained in the Excel Spreadsheet are supported by these non-hearsay audio r~corciings. Ibid.

Furthermore, the Department states that 5hanley has provided a substantial ~aundation for

the admission of the evidence under the business records exception, Ibid. Thy Department cites

the Acting Commissioner's Qrder, which ruled that "Shanley clearly can and has ~stahtish~d that

[the evidenced are created in the regular course o~ business and that it was the regular practice of

Prudential to make them." Ibid. (citing Order t~1o. A 17- l QS at 26-27}. The Department notes that

the August 29, 2nl 8 order concludes that the evidence cannot be admitted because Shanley does

not have personal knowledge, however, the APA expressly slates that a witness may testify to

evidence based on personal knowledge abt~ined through hearsay. Id. at 29 (citing N.J.A.C. 1:1-

15.8(c)}. T'his rule is similar to N.J.R.E. 8Q3(c)~6), which does not require testimony from the

Qrigina~ author of the document sought to be admitted. Ibid.

The Iaepartment next argues that the only other objection made to the evidence in the

August 29, 2018 drd~r regards metadata. The Department noted that this was already addressed

by the Acting Commissioner's Order, which held that the audio calls may be authenticated absent

Page 26 of S9


MER-L-00221D-18 10/23/218 2:35:01 PM Pg 87 of 119 Trans ID: LCV20181848562

the metadata. Ibid. (citing ~rd~r Na. A 17- l OS at 24-25}, Thy Dcpar~ment notes that there are no

legitimate issues raised, outside o~ rnetadata, which would indict that the "sourc;e of information

or tl~e method, purpose or circumstances of prep~r~tion indicate that it is not tr~stwortliy" pursu~tnl

t~ N.J.R.E. 8(}3(e){6), Ihid.

Tl~e DeparErnent concluded that portions of the CID Report and Excel Spr~adsh~et contain

hearsay within hearsay end may not b~ admissible or should he given limited weight, the entire

CID Report and Excel Spreadsheet should not be disregarded. Ed, at 34.

Respondent's Arguments

Thy Respondent cites several cases that support his contention that evidentiary decisions

made by the AL15hould remain undisturbed by agency heads. See Respondent's C}pposition Brief

at 45-47 (citing Clowes v. Terrninix InE'l, Inc., l~9 N.J, 575, 587-88 {1985}; H.K, v, Dept o~

Human Servs., 184 N.J. 367, 384 (2005); City of Passaic v. New .lersev Div. of State Police, 332

I~1.J. Super. 94, 100 {App. Div. 2000}; Cavalieri v. Ed. of Trs. of PERS, :i68 N.J. Super. 527, 5:~4

(App. Div. 2004}; Coughlin v. Ed. of Trustees, Police &Firemen's Ret. Svs., 2011 WL 850114

(N.J. Super. Ct. App. Div. Mar. 14, 2011); Asdal ~3ui~ders, LLC v, New Jersey Dep 't of Envtt.

Prat., 2012 WL 23b875S (N.J. Super. Ct. App. Qiv. June 2.`~, 2012); M.R, v, Div. of Qevelovmental

Disabilities, 2009 WL I b9742, at * 1 {N.J. Super. Ct. App. Div. Jan. 27, ZOQ9); Dept of Children

& Families, Div. of Youth & FamiIy Servs. v. V.D., 213 WL 11d39$l {N.J. Super. Ct. App. Div.

Mar. 22, 2Ul:i); In re Certificates of Benjamin Norton by the N.J. State ~d. of Exam'rs, ZOI6 WL

b 122859 at *~ (N.J. App. Div., Oct. 20, 2D 1 b)).

The Respondent argues that Shanley cannot authenticate the audio recordings.

Respondent's Opposition Brief ~t 5~. 1f a party opposing evidence to b~ offered may not be

authentic, the offering party must submit adequate prooFin response to said authenticity challenge.

Page 27 of S9


MER-L-002210-18 10/23/2Q18 2;35:01 PM Pg 88 of 119 Trans ID: LCV24181848562

lbid. {citation omitted10). i~ the proof is not adequate, the ruses require that the evidence be

~xc;iuded from c;onsideralion. [d. at 54 (c;itaEion omitted). Relying; on State v. Driver, 38 N.J. 25S

{ 1962} and State v. Hannah, 448 N.J. Super., 78 (App. Div. 2416}, the Respondent argues that the

ALJ properly found that Shanley possess no personal knowledge aid therefore, cannot testify as

to the authenticity of tl~e audio recordings under Hannah which requires "intimate knowledge oi'

information which one would expect only the person alleged to have been the writer or participant

to have." Id. at 5fi (citation omitted). Furthermore, the Respondent asserts that ShanIey could not

demonstrate that the audio recordings provided to Sav~djian in discovery are the same as the

"original" versions of the audio recordings that he purportedly reviewed. Ibid. (citation omitted).

The Respondent argues that the Department failed to show that the documents at issue are accurate

representations ofwhat the Departiment purports they are, and as such, the ALJ properly found that

the audio retarding should be excluded from evidence. Id. at S7.

The Respondent further argues that Shanley's testimony is insufficient to authenticate the

CID Report because Shanley lacks the personal knowledge necessary Co authenticate the CID

Report. Ibid. The Respondent argues that the ALI's finding that Shanley's "personal knowledge"

is not credible because "the Sole basis for authenticity of the documents at issue in this case is the

hearsay statement by Shanley that someone in Prudential's legal department told him that the

documents were authentic." Id. at ,58 (citation omitted). As such, the ~espvndent focuses on the

fact that Shanley was not aware ~f the version of the CID Report he reviewed in 2016 was the same

version of the CID Report generated in 2013. Ibid.

t0 The Respondent's Opposition Brief cites to the bats-stamp number of the page they are

referencing in their exhibits, which ~s comprised of tS Volumes and totals 2,778 pages. Citing to

the bate-stamp would noE he helpful to the reader, and they provide no context as Eo which

document is b in: referred to. As such, these citations have been omitted.

Page 28 of ,59


MER-L-00221a-18 10/23/2018 2.35.Q1 PM Pg 89 of 119 Trans ID. LCV20181848562

The Respondent argues that Shanl~y cannot demonstr~ite that the recordings were not

altcr~d or modified as required by State v. Driver. id. at 59. The Respondent notes that he raised

bona fide questions as to the authenticity of the recordings six moiitlis prior to ~ri~tl. Ibid. {citation

omitted). As such, the ALJ required the Department to present sufficient evidence at trial to

overcome this challenge. Ibid. (citatjon amitteci). The Respondent asserts that the ALJ properly

held that Sh~nley could nol testify that the audio recordings had nol peen modified or digitally

altered between 201:1 and 2016 as Shanley failed to "create personal knowledge" as to the content

of tl~e audio recordings, because Shanley could not testify that the recordings existed in 201;1, and

because Shanley has no technical knowledge about the recording system, including whether

additions or deletions could he made. ici. at b0-61 (citation omitted}, The Respondent asserts that

ti~~ audio recordings can in fact be modified, relying on tli~ Verint System Content Producer User

Manual. Id. at 62 {citation omitted). The Respondent concludes that the Department has failed to

meet their burden to demonstrate that the audio recordings are authentic. bid.

The Respondent argues that he raised genuine questions of authenticity as to all versions

of the recordings produced by the Department and Prudential in discovery. Ibid. (citation omitted).

First, Ehe Respondent asserts that the bona fide questions raised as to the authenticity of the audio

recordings pertains to both the audio recordings an the CD and the audio recordings embedded

into the Excel Spreadsheet. Id. at b~i (citation omitted}. The despondent maintains that the

Department has mischaracterized Savadjian's authenticity challenge by claiming it was limited to

only the audio recordings, and nvt the audio recordings embedded in the Excel Spreadsheet. The

Respondent asserts that this is incorrect. Ibid. {citation omitted). The Respondent argues that

Savadjian's digital forensics expert has confirmed, an multiple occasions, that the files embedded

in the Excel Spreadsheet were modified and altered in such a manner that their original properties

Page 29 of 59


MER-L-042210-18 10/23/2018 2.35:01 PM Pg 9Q of 119 Trans ID; LCV2~181$4$562

have been compromised end destroyed, leading to the conclusion that the audio recordings that

were downloaded and c:mbedd~d into the ~xc~l Spreadsheet are not the s~lme ns the version that

existed in the #~irst instance. Ibid. (citation Omitted). The Respondent argues that, ~s this

compromised ESI constitutes a "deletion" within the meaning of the Driver standard, and that as

tl~e proponent o~ said evidence, the Dc;partment has not demonstrated that the recordings are, in

fact, authentic. Ibtd. (citation omitted). As such, th+~ Respondent concludes that the ALJ's findings

were proper, and na abuse of discretion exists. Therefore, the Respondent states that the

Department's application for interlocutory relief should he denied. Id. at bS.

The Respondent further argues that the Schrock certification ~a~ls to authenticate the

contents of the Excel Spreadsheet. chid. The Respondent argues that reliance on Schreck's

certification to establish the authenticity of the Excel Spreadsheet would be misplaced as Schrock

did not establish whether the audio recordings contained in !h~ excel Spreadsh~ec are the same

audio recordings that were provided to Savadjian in discovery, the source of the audio files

embedded in the Excel Spreadsheet and whether the version of the Excel spreadsheet annexed to

Schreck's certif caftans contains audio files at alb. Ibid. (citation omitted). In addition, the

Respondent asserts that Schreck's certification does not contain any information demonstrating

that the proffered evidence is what the Department claims it to be. Id. at bb (citation omitted}.

The Respondent concludes that the A1.J's findings were proper, no abuse of discretion exists

therefore, the Department's application for interlocutory relief should be denied. Ibid.

The Respondent next argues that the ALJ property rules that the pre~udiciat impact of

playing the audio recordings suhstantially outweighs the probative value at playing the audio

recordings. Id. The Respondent argues that the issue is not whether the Department is precluded

From playing the audio recordings, but whether the ALJ would he listening to audio recordings

Page 30 of 59


MER-L-00221Q-18 10/23/218 2:35:01 PM Pg 9~ of 119 Trans ID: LCV20181848562

that, c:onsist~nt with Driver, the Department has not shown to be authentic and not altered. Id. at

67. Tlie Respondent ~irgues that based vn the balancing; of equities, it is c;lc~ar that the ALJ's

decision to not play the audio recordings until the Department his authenticated them, promotes

the interests of justice and avoids substantial prejudice to Savadjian. Ibid. Fur~hermare, tie

Respondent points out that as Sl~~nley testified kl~at he had not pr~vious~y met or spoken with

Savad,~ian, it is mysterious how he would Then he able to authenticate Savadjian's voice, ibid.

(citation omitted).

Finally, the Respondent argues that the probative v~luc of playing the audio recordings is

zero and is reflected in the AL.1's August 29, 2018 Order. Id. at 5S (citation omitted}. The

Respondent reiterates that along the lines of promoting the principles of fundamental fairness and

justice proscribed ~y N.J.A.C. 1:1-1.;i, the ALJ is correct in finding that the Department may be

able to play the audio recordings, but only after the Department has demonstrated that they are

authentic and have not been altered. Ibid. The Respondent concludes thaE the ALJ's findings were

proper and no abuse of discretion exists; kherefore, the Depari.ment's application for interlocutory

reii~f should he denied. Id. at 69.

LEGAL DISCUSSIUIV AND ANALYSIS

Authority of an Agency Head

N.J.A.C. 1:1-1 S.1 {c} affords an AiJ, as trier of fact, broad discretion in determining

whether to admit evidence at a haring. As such, the ALJ is tasked with determining whether the

probative value of the evidence offered is substantially outwei hid by the risk admission would

create ~n undue consumption o time or create substantial danger of undue prejudice or confusion.

Pa,~~ 31 of S9


MAR-L-00221 ~-18 1 ~i23/2~18 2:35.01 PM Pg 92 of 119 Trans ID: L.CV2018~ 84856

However, the Legislature specifically addressed the roic of the ALJ in the review of

cont~st~d m~itters, stating that the aAL shall not "deprive tl~e head of any agency of the authority

to... adopt, reject or modify tl~e findings of fact or conclusions of law of any administrative law

judge." N.J.S.A. 52:14F-7. The legislative intent was reaffirmed by In re Appeal of Certain

Sections of the Ur~if. Admin. Procedure Rules, 9th N.J. 85, 94 { 982), which held that AL.Es "have

no ind~pencient decisional authority." The Legislature preserv~ci agency jurisdiction and

regulatory responsibility, with the agency retaining "the exclusive right ultimately to decide these

cases." New Jersey Election Law Enforcement Comm'n v. DiVincenzo, 4S 1 N.J. Super. SS4 {App.

Div. 20I7). See also N.J.S.A. S2:14B-10(c) {gives the lead o~ an agency the power to "adopt,

rejeck or modify the recommended report and decision" of an ALJ); N.J.S.A, 52: !~F-7(a) (The

APA "shall [not] be construed to deprive the head of any agency of thG authai•ity .. , to determine

wh~th~r a case is contested or to adopt, reject or modify khe findings of fact and conclusions of

law of any" ALJ); and N,J.S.A. 52:14-5(b) (providing that no ALJ shall hear a contested case in

which the agency head has determined "to conduct the hearing directly and individually").

Furthermore, leave may be granted in cases for good cause shown or where justice suggests

the need for inEerlocutory review, In re Appeal, 9t} N.J. at 100. Good cause exists when the

Commissioner deems it likely that an CfAL order "will have an impact upon the status of the

parties, the number and nature of claims or defenses, the identity and scope of issues, the

presentation of evidence, the decisional process, or the outcome of the case." Ibid.

In addition, the New Jersey Supreme Court in In re Kallen, 92 N.J. 14 (1982), examined

whether an agency head approprial~fy remanded a hea~•ing back to the OAL to admit ~urth~r

evidence prior to the entry of a final decision, and held that "because the agency has the statutory

Page 32 of 59


MER-L-002210-18 10/23/2018 2:35:01 PM Pg 93 of 119 Trans ID: ~CV2~18~848562

jurisdiction to set and enforce regulaEory policy, the f nal decision in contested cases is entrusted

solely to the agency head." In re Killen, 92 N.J. at 2Q (citing In re Appal, 90 N.J. at 9b).

The Respondent cites a myriad of cases to support their contention that eviclenti~ry

decisions made by the ALJ should remain undisturbed by agency heads, however, the Respondent

mischaracterizes tEie holdings in these cases. for example, the Respondent cites H.K. v. Dept of

Human Resources, 184 N..~. 367, X84 (2005) to support the position lha! the AL.1 ar~d not the agency

head is best suited to make evidentiary decisions. H.K., however, states that it is not for the agency

head "to disturb a credibility dct~:rmination, made after dui consideration of the witnesses'

testimony and demeanor during the hearing." Respondent's Moving Brief at 47 {citing H.K, 184

N.J. at 384). H,K, does not state what the Respondent contends.

The August 29, 201 S Order states that the Commissioner's remand of the December 27,

2~~b ruling is an in#rin~ement a~the role and responsibility of the AL,i to determine what should

be admitted into evidence at his or her discretion and disregards the power and authority of the

SAL to he an independent arbiter of agency determinations. August 29, 20l S Order at :~6. This

assertion is incorrect. As noted by the above, the Commissioner is vested with the sole regulatory

authority over Jahn Savadjian as an insurance producer. N.J.S.A. 17:22A-26 through -48; See also

~n re Appeal, 90 N.J. at 99. Savadjian has been ordered to show cause as to serious allegations of

fraudulent conduct and dishonesty involving his recorded statements to Pruden~ial. The August

29, 2018 Order has an enormous impact on the scope of issues and presentation of evidence, and

essentially harred the Department from introducing into the record evidence critical to the majority

of the counts alleged in the Order to Show Cause. To exclude this evidence will predetermine the

Commissioner's decision because it results in 52 Counts of the Order to Show Cause being

dismissed. The QAL's unauthorized determination of the case based on misapplication of Iaw and

Page :~~ of S9


MER-L-02210-18 14/23/218 2:35:41 PM Pg 94 of 1'f9 Trans ID: LCV2~1$184$562

facts frustrates the strong public policy of this State for regulation of insurance producers who

commit fraud. In re Kalien, 92 N.J. at 30-31. Thus, interioculory review as granted by order No.

A 17-105 is appropriate end t}le grant of interlocutory review is appropriate at this time.

Evidentiary Standard in Administrative Hearings

N.d.A.C. 1;1-15.1 (c} provides that, "[p]arties in contested cases shall not be bound by

staEutory or common law rules of evidence or any formally adopted in the New 3~csey Rules of

Evidence except as specifically provided in these rules. All relevant evidence is admissible except

as otherwise provided herein." Further, pursuant to N.J.A.G. 1:1-1 S.1 {b), "evidence rulings shall

be made to promote Fundamental principles of fairness and justice and to aid in the ascertainment

of truth."

Th~r~ are twa pieces of evidence at issue in this matter. The Frst piece of evidence is the

Excel Spreadsheet, which was first provided dirertIy to Savadjian by Prudential in r~spvnse to his

November 2015 subpoena daces tecum. Patel Cert. at q~8. This is the only copy of the Excel

Spreadsheet that has been attempted to be introduced in these proceedings, as the Department has

never held another copy, Department's Moving Brief at 2.5. A paper copy of the Excel

Spreadsheet was also attached to Schreck's certification as Exhibit 1. Schreck Cert. at q~.5. The

Excel Spreadsheet is comprised of ten columns, one of which includes audio files downloaded

from the Verint System and embedded into khe document. The other columns include written

statements as to the date and time of the call, the phone number where the call originated from,

whether the voice nn the call was similar to Savadjian, the authenticating information used by the

caller, the policy numbers mentioned by the caller, the clients name, and a summary off' what took

place during the cell. The written statements were made by Schrock and his superv~se~, Anita

Page 34 of 59


MER-L-002210-18 10/23/2U18 2:35:01 PM Pg 95 of 119 Trans ID: LCV24181848562

W~llwork, upon listening to each audio recording embedded in the document. Schreck Cert. at

Jlll~y~' ~ O•

The second piece of evidence at issue is the CID Report. Tl~e CID Report was first

provided to the Department on September 17, 2014, as part o~ the complaint f lid by Thomas

Schrock on hehalf of Prudential against Savadjian. Patel Cent. at y[4. Tl~e CID Report is titled

"Summary of Prud~ntiai's Corporate Invc~sti~;~tio~s Division ("CtD") Investigation Re: Sohn

Savadjian." I~ is a two-page document that describes Schreck's investigation into the 60 phone

calls made by Savadjian to the CSC between D~c~mber 1, 2011 to June 12, 2013 from thr~;e

different phony numbers associated with Savadjian.~ ~

The August 29, 201 S ardor discusses the authentication of the CD marked DC~BI Q768 and

the audio recordings contained therein at great length. However, in this request for interlocutory

review, the Department requests that the Commissioner remand the matter back to t~AL with

instructions that Department has satisfied the requirements for authentication and admissibility of

~o the CID Report and annexed exhibits, which includes the Excel Spreadsheet and its embedded

audio recordings. This request does not relate to the CD marked D0~3I 0768 and as such, the CD

marked DC}BI 0768 is not one of the items at issue in this matter.

Authentication

WiEh respect to authenticity, the standard set forth in N.J.A.C. 1: i-1S.6, provides that,

"[wJ~ere a genuine question of authenticity is raised the judge may require some authentication of

' ~ Upon learning; o~ the a~le~ations that Savadjian had impersonated other persons in telephone

calls to the C50, Schrock conducted a search of the V~rint System for ali calls to the CS4

originating from telephone numbers associated with Savadj~an. Patel Cent. at y[5. For example, as

discussed in the CID Report, (201 } f64 85Q4 is the main number for old Tappan Financial, LLC

for which Jahn Savadjian is Principal, the author of the report was able to search the Verint System

for this number and generated IS calls that were included ~n his invesEigation.

Page :~5 of 59


MER-L-402210-18 1~I23/2Q18 2:35:01 PM Pg 96 of 119 Trans IQ: LCV2a181848562

the questioned document. For these purposes, the judge may accept a submission of proof, in the

form of ~n af'tidavi~, certified document or other similar proof." The New .iersey Rules o~ Evidence

also provide guidance on this issue, seEting a low bar for authentication, stating that

"authentic~tian...as a condition precedent to admissibility is satin#ied by evidence sufficient to

support a finding that the matter is what its proponent claims." N.J.R. .901.

FurEhermore, the burden of authentication is "nal designed to be an~rous." State v. Nannah,

448 N.J. Super. 78, 89 {App. 1~iv. 201f). Authentication "does not require absolute certainty or

conclusive proof -only prima facie showing o~ authenticity is required." Hannah, 448 N.J. Super.

at 89.

1. Authentication of the Audio Recordings Embedded in the Excel Spreadsheet

As described above, the Excel Spreadsheet contains embedded audio recordings and

written statements regarding those audio recordings. Pursuant to State v. Qriver, 38 N.J. 255

(19b2}, to authenticate an audio recording, the proponent must show that the device can record the

~anversation or statement; that its operator was competenE; that the recording is authentic and

correct; and, that no changes, additions, or deletions have been made.

The first prong of Driver requires a showing that the device can record the conversation or

statement. Driver, 38 N.J. at 288. The Acting Commissioner found that Shanley described the

Verint System in sufficient detail to satisfy the f rst prong of Driver, which requires that the device

can record a conversation or statement. Order No. A17-1U5 at 24. Furthermore, the Acting

Commissioner found that between Schreck's certification and Shanley's testimony, the retard is

clear that the Verint System automatically records incoming calls and stores these recordings,

which are then capable of being downloaded if need be. 1bic~. The August 29, 20l 8 Order notes

that the first factor is not ac issue and does not ga into a Further analysis regarding the first prong

Page 36 of S9


MAR-L-002,21Q-18 10123/2 18 2.35.01 PM Pg 97 of 119 Trans ID. LCV2~18184~562

a1' the Driver. August 29, 2018 Order at 20. In addition, ~c;ith~r the Department's Moving Bricf

nor the Respondent's Opposition Brief discuss the ~irsl prong; oC Driver. Consisteill vt~ith (~Cdc~r

Na. A 17-105, 1 end that the first prong of Driver, as it relates Eo ilie audio recording imbedded in

the Excel Spreadsheet, has keen satisfied.

The second prong of Driver requir~:s that the operator o~ the recording system was

eamp~t~nt. Driver, 38 N.J. at 288. ~n C~rd~r No. A 17- l OS, the Acting Commissioner found thaE

there is no indication or challenge from Savadjian as ~o the competency cif the operator under prong

two of Driver. Order Nn. A 17- l05 at 24. The August 29, 241 S Order states tl3at the Driver test

has since been abrogated in part by State v. Nan-Tambu, 221 N.J. 390, 4~5 (2015), wl~er~in the

Supreme Court found that tihc second ~accor no longer requires separate consideration because of

tc~chnologieal advances." August 29, 2018 Order al 20 {citing Nan-Tambu, 22l N.J. at 4Qb). In

addition, both the Departmt;nt's Moving Brief and the Respondent's Opposition Brief da not

discuss this second prong of Driver. No evidence has been submitted to indicate that the operator

a~ the recording system was not competent. As such, I find the second prong of Driver, as it relates

to the audio recordings embedded in the Excel Spreadsheet, has been satisf ed.

The third prong of Driver requires a showing that the recordings at issue are authentic and

correct. Driver, 38 N.J. at 288. The Acing Commissioner found that Shanley had obtained direct

knowledge that the recordings in the Excel Spreadsheet being presented for admission are what

the Department asserts they are, without alteration. Order No. A 17-1 ~S at 24. In addition, the

Acting Commissioner found that the Department had presented a substantial amount of direct and

circumstantial evidence, not fully considered by the ALJ, to support the reliability o~ the audio

recordings. O~-d~r No. A 17-105 at 2S.

Page 37 of 59


MFR-L-002210-18 10/23/2018 2:35:01 PM Pg 98 of 119 Trans ID: LCV2418184$562

In the August 29, 201 S +order, the ALJ points out that in Driver, this factor was never fully

analyzed because the audio recordings alt issue were authenticaE~d by the police officers who were

present and made the .recordings, thus their personal knowledge negated any issues of

authentication. The August 29, 2018 Order focuses on the fact that Shanley was not present when

the audio recordings were made, was not involved in the recording of the telephone calls, and

concfud~s that he dogs not know how the recording system works, rendering him unable is satisfy

this prong oC Iariver. August Z9, 2Q18 Order at 21.

Tlie Department argues that prior to making the determination thaE a recording. is authentic

and correct, pursuant to Driver, in ali situations, the trial court should listen to the recording to

determine if it is "sufficiently audible, intelligible, not obviously fragmented, and, also of

considerable importance, wlleth~r it contains any improper and prejudicial matter which ought to

be deleted." Respondent's Moving Brief at 16 {citing Driver, 38 N.J. ~t 287-288). The Department

asserts that they have routinely been prevented from playing the audio recordings and that the AL.T

has nol evaluated or considered the fact that the nature o~ the evidence is not the m~tadata, or even

the electronic file, but the recorded telephony conversation of S~vadjian himself. Ibid.

The Respondent asserts the audio recordings offered by the Department are not authentic

or correct, based on the absence o~ metadata associated with said audio recordings. First, the

Respondent implies that the Department is purposefully wiEhholding the metadata requested by

Savadjian, who sought the files in "native format." Respondent's Opposition

case 3:18-cv-16381-flw-tjb document 1-1 filed 11/21/18 ... · case 3:18-cv-16381-flw-tjb document...

Documents