Chapter 4 Daubert Gatekeeper Determinations

JurisdictionUnited States
Chapter 4 Daubert Gatekeeper Determinations

The Daubert challenge is multi-faceted.88 Initially, a court determines whether an expert is qualified to offer an opinion, as discussed above. After a court has determined that the expert is otherwise qualified, the court must determine whether the expert testimony offered is both relevant and reliable, dual indicators of the usefulness of testimony to a trier of fact. The two related-but-distinct inquiries are generally addressed separately. The purpose of qualifying an expert is to ensure that the trier of fact is assisted in its duty by a competent and qualified expert with the relevant knowledge, experience, education, certification or other credentials where scientific, technical or otherwise specialized testimony may be necessary. The further purpose of a Daubert hearing is to determine whether the proffered expert testimony is relevant to the issues as framed by the parties and rests on a reliable foundation.89

A. Burden Under Daubert

The party seeking to call an expert has the burden of establishing the expert's qualifications and the relevance of expert testimony by a preponderance of the evidence.90 Further, the proposing party has the burden of knowing what the appropriate standards are. In In re H & M Oil & Gas LLC,91 the court held a Daubert hearing on the defendant's motion in limine to exclude the report and testimony of the trustee's expert. At that hearing, trustee's counsel did not plan to put on evidence because he believed that the hearing "would simply involve legal argument by counsel."92 After the court asked trustee's counsel three times if he was sure that he would put on no evidence, trustee's counsel submitted four documents.93 Due to some procedural issues with regard to the admissibility of evidence, the court requested post-hearing submissions from the parties with regard to certain des-ignations.94 Rather than make his designations, counsel for the trustee submitted two post-trial supplements and, in the second, "proceeded to use this supplement to re-urge his arguments and, even more troubling, to attempt to supplement the Daubert Hearing evidentiary record with information that was available to him, but not offered into evidence, at the Daubert Hearing."95

Trustee's counsel took an interesting approach in his argument with regard to the Daubert hearing. The court broke down his argument as follows:

First, counsel apologizes "for his apparent misunderstanding that the Court intended to conduct a full evidentiary hearing on the [Daubert] Motions," but then argues that his misunderstanding is understandable given the Court's discretion on how it can handle such hearings and that "it bears noting that there is no clear cut 'rule' that requires an 'evidentiary' hearing on Daubert motions be held." Second, counsel argues that, in a bench-trial setting, Daubert hearings can be held in a "very preliminary, informal manner without the need for witnesses to authenticate the expert report or other documents, primarily due to the relaxed evidentiary requirements set forth in Rule 104(a)." Third, Daubert and its progeny are intended to prevent "bogus" science and "crackpot" scientists from influencing unsophisticated juries; but here, as reflected in his Curriculum Vitae and the Trustee's prior pleadings, [the trustee's expert] is an experienced oil and gas valuation expert whose methodology is supported by "pertinent case law and articles on valuation" and is reliable. Finally, counsel asks that this Court not penalize the Trustee for his counsel's misunderstanding regarding the scope of the Daubert Hearing.96

The court was not impressed with the trustee's argument. First, the court found that there was no case law supporting the notion that holding a Daubert hearing was an abuse of discretion.97 Second, the court stated that the burden of proof is clearly on the proposing party.98 Third, the court explained that because the qualifications of the trustee's expert were in dispute, he had the burden of proof, which he had failed to meet.99 Finally, the court found that counsel's misunderstanding of his burden did not allow for a "do-over" and that the expert's testimony would be excluded.100

B. Objections for Lack of Qualification

The Federal Rules of Evidence envision a flexible, nonformalistic or nondoc-trinaire standard regarding who may qualify as an expert witness and do not contain any specific requirements. To be sure, advanced education, a formal academic appointment, years of specialized experience and formal certification may be important considerations; however, no one source of expertise is necessary so long as the court finds that the expert has specialized knowledge, experience, training or the like to aid the trier of fact. For example, in the bankruptcy context, there are many cases where a witness with a CPA credential has failed to qualify as an expert because of lack of experience relevant to the particular case, while a non-CPA witness with accounting or financial experience specific to the questions at issue or certifications in insolvency matters is easily qualified. Often disqualification turns not on a lack of expertise, but on an expert's utter and glaring failure to (1) perform sufficient due diligence into the relevant financial background to the fact issues in litigation, (2) apply each of the standard methodologies101 or (3) "do the math" correctly.102 In this fundamental respect, the expert has effectively forfeited his right in the particular case to qualify because he has not acted like an expert in preparing his report. In short, he has not performed his duties under the standards governing experts in his field of specialized knowledge. Several of these qualifying factors may also apply in the Daubert setting where, for example, a court finds the proposed expert's analysis so unreliable that it calls into question the expert's qualifications.

A review of several cases illustrates how courts have applied the standards of qualification as influenced by the Daubert inquiry. In Biben v. Card,103 the court addressed the qualifications of an economic-loss expert. Although the expert had substantial academic credentials, such credentials were not in the area of expertise being offered in the case. However, the court found that a self-educated economic-loss expert who was a frequent expert witness on the issues before the court, who devoted much time to the preparation of his report, and who devoted much time to gaining and maintaining knowledge of the relevant standards was qualified under Daubert.

The Biben case makes one practice point perfectly clear: An expert can no longer rely simply on a general recitation of credentials in his resume. The record must reflect what credentials and certifications the expert may have, what the applicable standards are to achieve those credentials or certifications, and why he is entitled to be an expert in the particular case. These credentials and certifications must reasonably fit the inquiry at issue. An expert's report should address that fit in reasonable detail. Thus, qualifications, even stellar qualifications, are simply not enough; rather, the qualifications one possesses must be relevant to the subject upon which the testimony is to be offered.

In In re Valley-Vulcan Mold Co.,104 the official committee of unsecured creditors objected to the debtor's proposed solvency expert on Daubert grounds. The trial court nevertheless admitted the debtor's proposed expert testimony. On appeal, the Sixth Circuit Bankruptcy Appellate Panel reviewed the standards established by Daubert and its progeny, as well as the background of the proposed witness (a partner in a leading financial firm and director of the valuation services group), and determined that the testimony fell well within the standards for admissibility. Thus, the expert was qualified and the admission of the expert's testimony was not an abuse of discretion.105

In Tasch Inc. v. Sabine Offshore Service Inc. (In re Tasch Inc.),106 the court embraced a sensible approach in addressing the preliminary question of when expert testimony is needed. There, the plaintiff filed an adversary proceeding against the defendant for monies allegedly owed under their pre-petition contract.107 The plaintiff retained an expert to review the contract, prepare a report thereon and calculate damages.108 The defendants objected to the expert's testimony, arguing that the trier of fact did not need assistance on the issues in question, the expert's testimony would invade the purview of the trier of fact, and the expert did not have the appropriate background to provide accounting testimony.109 The court quoted the advisory committee note to Federal Rule of Evidence 702,110 which states:

There is no more certain test for determining when experts may be used than the common sense inquiry [as to] whether the untrained layman would be qualified to determine intelligently and to the best possible degree the particular issue without enlightenment from those having a specialized understanding of the subject in dispute.111

The court reasoned that expert testimony on issues a jury can decide without the assistance should be excluded, noting that an expert must bring more to the table than that which a lawyer can explain in argument.112 Using that paradigm, the court determined that expert testimony was not necessary on the contract issues before the court and should be excluded on those issues.113 However, the court determined that assistance would be needed on the question of damages. The defendants asserted that the expert was not qualified to opine on damages because he lacked any formal education or accounting background.114 Again, the court embraced a thoughtful approach in addressing the blended question of qualifications and reliability presented by the defendant's objection. The court determined that the expert's significant experience with...

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