Chapter 12 Make Sure Incredible Expert Is Also Credible

• Jurisdiction: United States

12. Make Sure Incredible Expert Is Also Credible

Written by:

Brian L. Shaw

Shaw Gussis Fishman Glantz Wolfson

& Towbin LLC; Chicago

Mark L. Radtke

Shaw Gussis Fishman Glantz Wolfson

& Towbin LLC; Chicago

Bankruptcy litigators often find themselves embroiled in litigation in which expert testimony is critical to the case, if not outcome-determinative. The most obvious example—valuation—routinely plays an important role and requires expert testimony to assist the judge. For example, value is prevalent in contested matters or adversary proceedings involving relief from the automatic stay (§ 362), use of cash collateral (§ 363), secured claims (§ 506), avoidance actions (§§ 544, 547 and 548) and plan confirmation (§ 1129), among other matters. Of course, there are many other issues in bankruptcy cases that similarly require specialized expertise.

Litigators sometimes have the luxury of handpicking their testifying experts. Other times an expert has already been chosen because of pre-existing relationships. Regardless of the situation, a litigator rarely goes into a case with a mindset that his or her expert is lousy. (And on the rare occasion that one does think so, the case tends to settle quickly.) Instead, a litigator believes (rightly or wrongly) that the expert will help to deliver a victory. As a case progresses, the expert's Kool-Aid starts to taste even better, and it is easy to become increasingly enamored with an expert and your case. In order to ensure that your incredible expert is also credible, numerous practical issues should not be overlooked—both when selecting and retaining your expert and before any report is distributed.

A. Rule 702 and Daubert Issues¹

The admissibility of expert testimony is governed by Rule 702 of the Federal Rules of Evidence (FRE), made applicable in bankruptcy proceedings by Rule 9017 of the Federal Rules of Bankruptcy Procedure. FRE 702 provides for the admission of expert testimony to assist the trier of fact where "(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."²

Unless expert testimony is both reliable and relevant, it is inadmissible.³ The trial court has a "gatekeeper obligation" to ensure that expert testimony is both relevant and reliable.⁴ Although as a practical matter bankruptcy judges may often ignore the gatekeeper obligation prior to trial and admit expert testimony where no jury is involved, good litigators perform their own gatekeeper analysis to ensure that their expert's testimony will be reliable and relevant and to assess the relative strength or weakness of their case.

To determine whether an expert's testimony is reliable, the court must make a preliminary assessment of whether the reasoning or methodology underlying the testimony is valid.⁵ In order to pass the reliability hurdle of the Daubert test, an opinion must consist of more than simply "subjective belief or unsupported speculation."⁶ More often than not, in bankruptcy litigation an expert is not relying on some scientific knowledge, but is testifying on a subject matter (such as value) that requires specialized education and experience. When an expert intends to rely on experience, "the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts."⁷ "The expert's testimony should also be grounded in an accepted body of learning or experience in the expert's field."⁸

In addition to determining reliability, the court must determine whether the proffered testimony is relevant. "Testimony is relevant if it assists the trier of fact in understanding the evidence or in determining a fact at issue."⁹ Even reliable testimony may be barred if it does not meet the standard for relevance. Just as important, even otherwise reliable and relevant testimony may be discredited if an expert is not credible. It is accordingly important to address practical issues that will protect and even enhance the credibility of a testifying expert.

B. Practical Issues: Selecting and Retaining an Expert

Before assessing prospective experts, a litigator must first do some...