Scrutiny Is Tough For Nonscientific Experts. By Richard A. Cirillo And Lisa B. D Alessio

Transcription

1 Scrutiny Is Tough For Nonscientific Experts By Richard A. Cirillo And Lisa B. D Alessio The recent decisions in Total Containment, Inc. v. Dayco Products, Inc. 1 and Trouble v. The Wet Seal, Inc. 2 oblige us to reflect on the following question: Have 20 years of intense jurisprudence had any real effect on the standards for admissibility of nonscientific expert testimony in litigation? A snapshot comparison of the Eastern District of Pennsylvania s 1981 decision in Zenith Radio Corp. v. Matsushita Elec. Indust. Co. 3 with these recent decisions concerning the admissibility of nonscientific expert testimony reveals that the landscape virtually remains the same. This may come as a surprising revelation to many practitioners who have watched the Supreme Court and the Legislature continually alter and refine the standards for admissibility of such experts work, but the result may not be as radical as some may have imagined. We examine, in the context of subsequent developments, two landmark Supreme Court decisions and an amendment to Federal Rule of Evidence 702 in December 2000, to see how the admissibility standard for nonscientific expert testimony has been altered. What is nonscientific expert testimony? Nonscientific disciplines include, among othe rs: economics, engineering, accounting, appraisal, securities, banking, patents and trademarks and insurance. These disciplines have become increasingly important, and in many instances crucial to litigations involving securities violations, antitrust, products liability, and trademark or copyright infringement. Indeed, in the antitrust context, certain courts have held that an expert opinion is necessary to define the relevant market and prove monopoly power in that upon lay opinion testimony. 4 Accordingly, the judiciary has been forced to fashion rules concerning admission of nonscientific expert opinions where they had not existed before. An explanation of the development of these rules is appropriate here WL (E.D. Pa. Sept. 6, 2001) WL (S.D.N.Y. Dec. 14, 2001) F. Supp (E.D. Pa. 1981), rev d on other grounds. 723 F.2d 238 (3d Cir. 1983), rev d, 475 U.S. 574 (1986). 4 E.g. Colsa Corp. v. Martin Marietta Services, Inc., 133 F.3d 853 (11 th Cir. 1998); Monsanto Co. v. Trantham, 156 F. Supp.2d 855 (W.D. Tenn. 2001); Bailey v. Allgas, Inc., 148 F. Supp.2d 1222 (N.D. Ala. 2000). Atlanta /21/2002

2 High Court, Federal Rules The controversy over the admission of expert testimony began in 1923 with the decision in Frye v. United States. 5 Frye outlined the following test for the admission of scientific expert testimony: in order to be admissible, the expert s methodology had to be sufficiently established to have gained general acceptance in the field in which it belongs. This general acceptance test required a two part analysis: (1) identifying the field in which the expert opinion fell and (2) determining whether the proffered evidence was generally accepted in that field. In 1975, the Supreme Court and Congress promulgated Federal Rule of Evidence 702, dealing with the admissibility of expert testimony. Rule 702 required expert testimony, among other things, to be reliable, but it failed to incorporate Frye s general acceptance test as part of the standard. This left the courts without clear guidance as to whether Rule 702 overruled the Frye test, or intended to incorporate it. The Daubert Case After almost 20 years of uncertainty, in 1993, the Supreme Court articulated a formal standard for admitting expert evidence in Daubert v. Merrel Dow Pharmaceuticals, Inc. 6 At issue was scientific expert testimony offered by plaintiffs to establish a causal link between the ingestion of the prescription drug Benedictin during pregnancy and the delivery of children with birth defects. The Supreme Court held that the adoption of Federal Rule of Evidence 702 superseded the general acceptance test set out in Frye. In finding that FRE 702 superseded the Frye decision, the Supreme Court said that FRE 702 requires the district court, as gatekeeper for the admission of scientific evidence, to determine whether the expert evidence is reliable (i.e., constitutes valid scientific knowledge ) and relevant (i.e., it will assist the trier of fact to understand the evidence or to determine the fact in issue ). The court outlined certain factors for the admissibility of expert evidence: (1) whether a theory or technique has been tested; (2) whether a theory or technique has been subjected to peer review and publication; (3) the known of potential rate of error of a particular technique; (4) the existence and maintenance of standards controlling the technique operation; and (5) the extent to which the theory or technique has attained general acceptance in the re evant field. Daubert stated purpose was to retreat from the rigidity of the Frye test which was at odds with the libera thrust of the Federal Rules. Accordingly, the Court emphasized that a trial court s opinion should not be bound by the five considerations outlined in Daubert, since many factors would bear on the inquiry F (1923). 509 U.S. 579 (1993). -2-

3 Following Daubert, judges were more likely to examine the basis of scientific expert testimony and ultimately exclude at least some of the expert evidence. 7 Because Daubert did not specify its applicability to nonscientific expert testimony, however, courts began holding that Daubert did not apply to nonscientific expert testimony and therefore avoided engaging in a Daubert analysis altogether. 8 Indeed, in United States v. Starzepyzel, 9 the Southern District of New York held that Daubert does not impose any new standard, other than what is found in the text of the Federal Rules of Evidence for the admissibility of nonscientific experts such as harbor pilots or real estate appraisers. 10 Expert witnesses began characterizing themselves as specialists in order to avoid being subject to a Daubert analysis. The Supreme Court responded in 1998 with its decisio n in Kumho Tire Co. v. Carmichael 11 and clarified that FRE 702 and the factors outlined in Daubert applied not only to scientific evidence, but to technical and other specialized knowledge as well. The expert opinion at issue in Kumho was that of an expert in tire failure analysis who intended to testify that the tire on applied the Daubert factors to uphold the trial court s exclusion of the expert opinion. With this decision, the Supreme Court made clear that a nonscientific expert opinion should not be treated more permissively or receive less scrutiny than scientific expert testimony merely because it was outside the realm of traditional science. Indeed, no longer would practitioners have an avenue to avoid scrutiny of their expert by claiming that the expert opinion was not scientific in nature. Federal Rule of Evidence 702 was amended in December 2000 to incorporate the holdings of Daubert and Kumho. The amended FRE 702 provides: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. 12 FRE 702 confirmed its application to both scientific and nonscientific 7 Molly Treadway Johnson, Carol Krafka and Joe S. Cecil, Expert Testimony in Federal Civil Trials: A Preliminary Analysis, p. 4 (Fed. Jud. Ctr. 2000). 8 E.g., United States v. Arevalo-Gamboa, 69 F.3d 545 (9 th Cir. 1995); Thomas v. Newton Int l Enters., 42 F.3d 1266 (9 th Cir. 1994); Iacobelli Constr., Inc. v. County of Monroe, 32 F.3d 19 (2d Cir. 1994) F. Supp (S.D.N.Y. 1995). Id. at U.S. 137 (1999). Fed. R. Evid. 702 (West Group 2001). -3-

4 testimony and purposely did not codify the Daubert factors, instead recognizing the need for flexibility to accommodate all types of expert testimony. 13 Old Versus New It has been several years since Daubert and Kumho clarified that nonscientific expert testimony did indeed need to be carefully scrutinized and set forth a structure within which courts are expected, as gatekeepers, to rule out expert testimony that is nothing more than junk science. Now that the dust has settled, it is time to ask: has the law really changed? A retrospective comparison of one notable Daubert predecessor with recent case law in the area of nonscientific expert testimony suggests that, for better or for worse, the law has remained virtually the same. The most comprehensive pre-daubert discussion of the admissibility of nonscientific expert testimony is the 1981 decision in Zenith Radio Corp. v. Matsushita Elec. Indus. Co., Ltd. Matsushita examined the admissibility of the testimony of three economists whose expertise was offered to support the plaintiff s claim that the defendant Japanese television manufacturers conspired to drive American television manufacturers conspired to drive American television manufacturers out of the United States market for television sets. In a lengthy opinion, Judge Edward Becker detailed the standard for admissibility under Federal Rules of Evidence 702 and 703 and ultimately excluded to a large extent the opinions of all three economists, Judge Becker reasoned that in order to admit the testimony of an expert, the expert must not only be qualified to give an opinion in the relevant field, but the expert s opinion must meet other criteria as well: The opinion must be helpful to the jury. In assessing this issue, Judge Becker queried whether a layman examination at issue without the specialized help of an expert. If so, expert testimony would be excluded. The opinion must be scrutinized carefully to determine whether the expert s underlying assumptions, inferences and ultimate conclusions are logical and sound. While Judge Becker was unclear s to what evidence rule such an inquiry would proceed under, he emphasized the importance of such an inquiry to the admissibility of the expert s testimony. The opinion may not contain conclusions of law. Judge Becker excluded portions of one expert s opinions on this basis, criticizing the expert s opinion that the defendants had engaged in a conspiracy to exclude the plaintiff from the relevant market. Judge Becker explained that the field of conspiracyology does not exist and the expert had done nothing more than sift through the evidence, analyze it and reach certain 13 Fed. R. Evid Advisory Committee Notes, 2000 Amendments (West Group 2001). The advisory committee outlined additional factors that may be relevant to determine whether an expert opinion should be admit- alternative explanations, and whether the field of expertise claimed by the expert is known to reach reliable results for the type of opinion offered by the expert. -4-

5 conclusions regarding the defendant s culpability, which was ultimately the function of the trier of fact. The conclusion must follow from the facts of the case. Judge Becker concluded that one expert s factual analysis was flawed in that his conclusions did not follow from the evidence. In fact, Judge Becker stated that the expert s assumptions concerning the evidence were demonstrably false. Total Containment Flash forward 20 years. Same court, same issue. n Total Containment, Inc. v. Dayco Products, Inc. the Eastern District of Pennsylvania recently examined the expert testimony of an economist proferring an opinion on lost sales damages in an action for breach of contract and breach of warranty. The court explained the standard of admissibility of nonscientific expert testimony, which is strikingly similar to the standard enunciated in Matsushita: it must come from a qualified expert witness, be based on reliable methods and fit the facts of the case. Compare Matsushita, 505 F. Supp. at 1331, 1333, The court proceeded to analyze the expert s opinions on this basis, and without assessing testability, general acceptance, or other factors suggested by Daubert, ultimately excluded the expert s testimony. The court reasoned that the expert made unjustifiable assumptions and relied upon improper sources to form his conclusions, thus rendering the conclusions unreliable. This is in harmony with Judge Becker s recognition that such illogical assumptions are not helpful to the jury, and therefore should not be admitted. Matsushita, 505 F. Supp. at The Southern District of new York reached similar conclusions in Trouble v. The Wet Seal, Inc. In this case, the plaintiff offered the testimony of a nonscientific expert to prove customer confusion and damages in a trademark infringement action. The court examined each opinion separately to determine its admissibility under FRE 702 and Daubert. As in Matsushita, the court found that the expert s conclusion on consumer fact could have reached without the aid of an expert. The expert was therefore precluded from offering such an opinion at trial. With respect to the expert s opinion on damages, the court criticized the expert s methodology and excluded the opinion as speculative. The court s decision was made not on the Daubert yardsticks: testability, peer review and publication, general acceptance or potential rate of error. Rather, the court made its decisions on the basis of the very factors that Matsushita announced so many years ago: whether the opinion was helpful to the trier of fact and not a conclusion the trier of fact could reach on its own and whether the expert s assumptions, methodology and conclusion were reliable and able to withstand the court s scrutiny. Matsushita, 505 F. Supp. at Similarly, the court in A Supply & Building Co. v. Estee Lauder Int l., Inc., 2001 WL (S.D.N.Y. Dec. 14, 2001), excluded testimony because of concerns of reliability similar to those discussed in Matsushita. In Estee Lauder, the plaintiff hired an economist to testify to plaintiffs damages in a breach of contract action. The court excluded the expert testimony on the basis that -5-

6 Conclusion In a time when experts, especially those in the nonscientific disciplines, are essential to proving claims or defenses in many litigations, one should derive some comfort from the fact that the standards for admissibility of nonscientific expert testimony have not strayed far in the past 20 years. However, there remains uncertainty. The fact is, Daubert challenges are more likely now than ever 15, and in cases where nonscientific opinions are analyzed and the Daubert factors do not fit neatly into the analysis, the courts appear to consider themselves at liberty to fashion a tailored analysis within the broad confines of FRE 702. While some areas of opinion, such as economics, might become more testable and methodologies more generally accepted within the economic community, with a consequently more predictable Daubert analysis, will there be a place for more novel types of expert opinions? And if so, how will they be tested? Will the courts allow experts to testify to underwriting practices in the securities or insurance industries or to give an opinion on directors duties and obligations to a corporation? Such issues remain to be seen as courts and the judiciary continue to fashion the already varied landscape of the admissibility of nonscientific expert testimony. the expert made assumptions that were false; therefore, the resulting conclusions were unreliable. Compare Matsushita, 505 F. Supp. at Molly Treadway Johnson, et al., supra note 7, at p