The Application of the Federal Rules and Daubert and its progeny to Antitrust Litigation: Perspectives from the Bench, Experts, and the Trial Bar. Presentation to the Antitrust Committee of the Chicago Bar Association – March 1, 2011
Expert Testimony Under Fed. R. Civ. P. 26 and FRE 702, 703 and 705 Preparation of Expert Reports Be Careful about those who try to "add" new Expert Opinions Preparation for Expert's Deposition Communications with Experts Expert Testimony Under Fed. R. Civ. P. 26 and FRE 702, 703 and 705 Basis for Expert Testimony under FRE 702 The Judge as Gatekeeper under FRE 702 Antitrust Cases Have Routinely Applied Daubert Rules FRE 703: Basis of Opinion Testimony by Experts
An Expert's Reliance on Hearsay Rule 703 also requires that the opinion must be “base[d]” on those declarations Courts carefully assess whether the expert testimony is in reality being used as a vehicle to evade the hearsay rule -- either intentionally or inadvertently Can the Expert Report (replete with hearsay) be admitted? Exclusion of Expert Testimony Where and When to Challenge? Daubert Motions May Be Case Dispositive Reported Daubert Decisions are on the upswing In Antitrust Cases Antitrust Injury under § 4 of Clayton Act also a Fertile Area for Expert Attack Don't Forget About Role of Daubert Analysis in Class Actions!
Expert Testimony Under Fed. R. Civ. P. 26 and FRE 702, 703 and 705 • Fed. R. Civ P. 26 •
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Rule requires party to disclose identity of any expert witness who may be used at trial under Rules 702, 703 and 705 of the Federal Rules of Evidence Disclosure is of testifying experts, not consulting experts Disclosures Rule 26 (a)(2)(A) Expert Reports Rule 26 (a)(2)(B) • Complete statement of all opinions and the basis and reasons therefore • Data or information considered • Exhibits to be presented at trial • Qualifications of the witness • List of all publications (last 10 years) • Compensation • List of Expert Testimony or trial for the last four years Rule 26 (a)(2)(B)
Expert Testimony Under Fed. R. Civ. P. 26 and FRE 702, 703 and 705 • Timing of Expert Disclosures • Without schedule, at least 90 days before trial (FRCP 26(a)(2)(D) • Most federal courts enter Scheduling Order with expert disclosure deadlines
Be Careful about those who try to "add" new Expert Opinions And what if the expert's testimony at trial goes beyond the expert report? Alternatively under what circumstances can an expert report be "supplemented" under FRCP 26(e)? Can the plaintiffs' expert in a Sherman Act case attempt to add new theories not plead in the complaint? Behrend v. Comcast Corp., 626 F. Supp. 2d 495 (E. D. Pa. 2009) (Padova, J.)
Ongoing Review reports Prior reports/conflicting positions Obtain prior depositions and trial testimony Research opposing expert Review CV – articles, etc. Use expert report as a road map Expert will be asked about all of the expert's opinions and underlying bases and foundations for his/her opinions
Communications with Experts • Assume all are discoverable • Any documents provided to expert, not produced in discovery, will be discoverable • Don't disclose legal theories to expert • Minimize written communications • Experts should not prepare a report without discussing conclusions with counsel first • Separate teams to do consulting v. testimony
Basis for Expert Testimony under FRE 702 • Admissibility of Expert Opinions Governed by FRE 702 • "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 … 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."
Antitrust Cases Have Routinely Applied Daubert Rules Gatekeeper judge in antitrust case must establish that plaintiffs' expert testimony is sufficiently reliable under FRE 702, is scientifically valid, and properly applied to the facts of the case -- further questions about reliability beyond the initial standard of reliability are for the jury to consider. Energy Mktg. Services, Inc. v. Columbia Gas Transmission Corp., 2009 WL 778778 (S.D. W. Va. March 17, 2009) (Chambers, J.).
FRE Rule 703: Basis of Opinion Testimony by Experts (Cont'd.) •
Judge Posner’s opinion in Dura Automotive Systems of Indiana, Inc. v. CTS Corp., 285 F.3d 609 (7th Cir. 2002) is instructive, as it deals with the issue of an expert relying upon the work of others to formulate the expert’s opinion. In Dura Automotive, the plaintiff’s expert admitted that he was not an expert in a certain field and that he had relied upon modeling done by other employees to reach his conclusion. The defendant moved to strike the plaintiff’s expert, and the plaintiff responded with affidavits from the employees who had done the foundational modeling. The Seventh Circuit considered whether it was permissible for the expert to rely upon data from the four employees who were not themselves disclosed as experts. Writing for the court, Judge Posner held that an “expert witness is permitted to use assistants in formulating his expert opinion, and normally they need not themselves testify,” but the analysis “becomes more complicated if the assistants aren’t merely gofers or data gatherers but exercise professional judgment that is beyond the expert’s ken.” Id. at 613. Judge Posner noted that “a “scientist, however well credentialed he may be, is not permitted to be the mouthpiece of a scientist in a different specialty.” Id. at 614. After examining the expert’s report and the affidavits from the four employees, Judge Posner concluded that “[i]t is apparent from these affidavits that [the expert’s] assistants did not merely collect data for him to massage or apply concededly appropriate techniques in a concededly appropriate manner, or otherwise perform routine procedures, and that he himself lacks the necessary expertise to determine whether the techniques were appropriately chosen and applied.” Id. at 615.
FRE Rule 703: Basis of Opinion Testimony by Experts (Cont'd.) • •
Numerous cases from the Northern District of Illinois have analyzed and applied the court’s holding in Dura Automotive to cases dealing with the interplay between Rule 703 and the hearsay rule: In re Sulfuric Acid Antitrust Litig., 446 F. Supp. 2d 910, 915 (N.D. Ill. 2006) (Cole, J.) (“the permissibility of reliance on the data from the third party who will not be testifying is a question answered by the Federal Rules of Evidence, not by Rule 26. Each spoke at length to the principle that while Rule 703 was intended to liberalize the rules relating to expert testimony, it was not intended either to abolish the hearsay rule or to allow oblique evasions of it.”); Sommerfield v. City of Chicago, 254 F.R.D. 317, 321 (N.D. Ill. 2008) (Cole, J.) (holding that “under Rule 703, an expert may rely on hearsay in formulating his opinion if it is of the type reasonably relied on by experts in the field, and that the evidence is not admissible for the truth of the matters asserted” and noting that expert’s opinion depended “on the accuracy of the plaintiff’s lawyer’s several page summary of the thousands of pages of deposition testimony”); Loeffel Steel Prods., Inc. v. Delta Brands, Inc., 387 F. Supp. 2d 794 (N.D. Ill. 2005) (Cole, J.) (barring economic expert’s testimony because he was merely the mouthpiece for the defendant’s employees); Thakore v. Univeral Mach. Co. of Pottstown, Inc., 670 F. Supp. 2d 705, 720 (N.D. Ill. 2009) (Cole, J.) (denying motion to bar expert’s opinion without prejudice to proponent’s showing that the “reports are the type normally relied upon by surgeons in formulating opinions”).
Rule 703 also requires that the opinion must be “base[d]” on those declarations If it is not, Rule 703 precludes their admission for the non-hearsay purpose allowed by the rule. The declarations are then hearsay, and their introduction is prohibited by Rule 802. Terry v. Rice, 2003 WL 1921818, at *2 (S.D. Ind. Apr. 18, 2003) (plaintiff's expert said he relied on a doctor's letter in forming his opinion. In concluding that the letter should not have been admitted, the court said, “Rule 703, however, does not allow an expert witness to cure so easily the hearsay problem for what is otherwise inadmissible evidence.”).
Courts carefully assess whether the expert testimony is in reality being used as a vehicle to evade the hearsay rule -either intentionally or inadvertently (Cont'd.) in forming opinion. “But an expert may not act as a ‘mere conduit’ for the hearsay of another.”); Charles Alan Wright & Victor James Gold, 29 Fed. Prac. and Proc. Evid. § 6273 (1997) (“Rule 703 does not authorize admitting hearsay on the pretense that it is the basis for expert opinion when, in fact, the expert adds nothing to the out-of-court statements other than transmitting them to the jury. In such a case, Rule 703 is simply inapplicable and the usual rules regulating the admissibility of evidence control.”).
Daubert Motions May Be Case Dispositive A motion to bar an expert's testimony under Rules 702 and 703 of the Federal Rules of Evidence and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), if granted, may make it impossible for the proponent of the testimony to prevail. Nonetheless, it is one of those non-dispositive matters that the magistrate judge may properly decide subject to an appeal to the district judge. Jeffrey Cole, Reversing the Magistrate Judge, Litigation Magazine (ABA Winter 2010) Exclusion of expert testimony in an antitrust case alleging that defendants used their monopoly power to charge supracompetitive prices resulted in dismissal of case. In re Fresh Del Monte Pineapples Antitrust Litig., 2009 U.S. Dist. LEXIS 97289 (S. D. N. Y. Sept. 30, 2009 ) (Berman, J.).
Antitrust Injury under § 4 of Clayton Act also a Fertile Area for Expert Attack An expert's damages methodology must show that the alleged monopolistic activity was a substantial cause of the antitrust injury. This does not mean that expert must account for every conceivable causal connection between alleged illegal activity and harm. Remainder of defendants' objections to damages model goes to weight and credibility which can be adequately explored in crossexamination. Discover Fin. Services v. VISA USA, Inc., 582 F. Supp. 2d 501 (S.D.N.Y. Oct. 14, 2008) (Jones, J.).
Antitrust Injury under § 4 of Clayton Act also a Fertile Area for Expert Attack (Cont'd.) Antitrust injury may also be established by economic expert testimony; however, if deemed unreliable and plaintiffs have nothing else to offer in the way of record support for antitrust injury, the case will be dismissed. Mercedes- Benz USA, Inc., v. Coast Automotive Group, Ltd., 362 Fed. Appx. 332, 2010 WL 258785 (3d Cir. Jan. 25, 2010)
Don't Forget About Role of Daubert Analysis in Class Actions! Experts are used to establish common impact under FRCP 23; even in that event, the Daubert standards must be met. "Multiple regression analysis is not a magic formula" -- Judge Grady 'dug into' the econometric analysis of plaintiff's expert to conclude that it had several fundamental flaws and did not meet the requirement of FRE 702 that the expert had applied the principles and methods reliably to the facts of the case. Reed v. Advocate Health Care, 268 F.R.D. 573 (N.D. Ill. 2009).