Plaintiffs Orellana and Hernandez brought this suit against Defendants on behalf of a class of all persons who, from July 18, 2014 through November 15, 2018, were detained by the Suffolk County Sheriff’s Office (“SCSO”) pursuant to an ICE immigration detainer request after the SCSO’s detention authority had expired, alleging violations of their rights under the Fourth and Fourteenth Amendments of the United States Constitution and under the First Article of the New York State Constitution.
Plaintiffs retained Sean M. Kruskol to calculate the duration in hours that each class member was held in custody by the Suffolk County Sheriff’s Office (“SCSO”) under a detainer and administrative warrant issued by Immigration and Customs Enforcement (“ICE”).
He purported to do so by analyzing the file of inmate records—known as an “inmate jacket”—maintained for each class member by SCSO, and determining “a) the time when the SCSO’s records indicate an individual would have been released but for the existence of an ICE detainer; and b) the time when the SCSO’s records indicate an individual was transferred into ICE custody.”
However, Defendants filed a motion to preclude “[Class] Plaintiffs’ expert Kruskol from offering testimony or opinions in this matter” under Rule 702 and the Daubertstandard.
Data Analytics Expert Witness
Sean M. Kruskol is a Certified Public Accountant (‘CPA’), Chartered Global Management Accountant (‘CGMA’) and a Certified Fraud Examiner (‘CFE’) with more than a decade of experience leading complex, large-scale data analytics in litigation and investigations across industries.
Defendants sought to exclude Kruskol’s expert testimony as (1) outside his area of expertise, (2) based on flawed methodology, and (3) unhelpful to the jury.
After conducting the appropriate review under Rule 702 and under Daubert and its progeny, the Court determined that Defendants’ objections go to the weight, rather than admissibility, of Kruskol’s expert testimony. Kruskol is a qualified expert in data analytics with ample experience analyzing large datasets and deriving conclusions therefrom.
Moreover, his expert testimony relied on sound methodology and data. Kruskol tested the reasonableness of his results by comparing the computed extended detentions intervals to how SCSO’s documents described their internal operational expectations (including the 48-hour detainer language) and performed adjustments and sensitivity checks for administrative processing time.
To the extent Defendants disagree with Kruskol’s conclusions, Defendants will, for instance, have the opportunity to cross-examine Kruskol.
Finally, Kruskol’s testimony is sufficiently likely to assist the jury by presenting a coherent summary of “thousands of pages of technical inmate records” and purporting to “accurately identify and reconcile timestamps across multiple record types and fields.”
Held
The Court denied the motion to exclude Sean Kruskol’s expert testimony.
Key Takeaway:
The test to admit expert testimony under Rule 702 and under Daubert requires an analysis of the following considerations: (1) whether the witness is qualified to be an expert; (2) whether the opinion is based upon reliable data and methodology; and (3) whether the expert’s testimony on a particular issue will assist the trier of fact.
Kruskol is a qualified expert in data analytics with ample experience analyzing large datasets and deriving conclusions therefrom. His expert testimony relied on sound methodology and data. Moreover, Kruskol’s testimony is sufficiently likely to assist the jury.
Case Details:
Case Caption:
Castaneda V. County of Suffolk
Docket Number:
2:17cv4267
Court Name:
United States District Court for the Eastern District of New York
This matter is a False Claims Act case wherein the Relators alleged that Defendant pharmacies submitted false or fraudulent claims to obtain federal funds from Government Healthcare Programs to which Defendants were not entitled. The Relators alleged this occurred through the electronic submission of inflated usual and customary charges to Government Healthcare Programs because Defendants failed to report their cash price matches as their usual and customary prices.
On May 21, 2018, SuperValu (“Defendants”) filed its first motion to exclude Ian Dew and memorandum in support. On March 20, 2019, U.S. District Court Judge Richard Mills entered an order denying Defendants’ motion and concluding that Dew’s expert testimony should not be excluded based on methodology, reliability, or relevance.
On February 26, 2024, Defendants filed a second motion to exclude the testimony of Dew. Defendants argued that this Court should not follow the prior ruling of Judge Mills from 2019 because the ruling was incorrect considering the changes to Federal Rule 702 and based on a supplemental report of Dew.
Data Analytics Expert Witness
Ian Dew has a bachelor’s degree in mathematics and psychology, a Master of Engineering from the University of Virginia, and a Master of Environmental Science from Johns Hopkins. He has worked on complex, computer-assisted data analysis for more than 25 years, focusing on complex healthcare litigation since 2004.
Defendants asked this Court to reconsider its prior ruling on Dew’s methodology and his application of this method in a more recent report. Specifically, Defendants took issue with a new report issued by Dew in December 2023. According to Defendants, this report, which the Relators describe as using the same methodology but filtered in a different way, is unreliable.
Relators pointed to the testimony of Dew regarding the filtering of results in the updated report. This filtering involved whittling down numbers, by “applying filters to identify a subset within the full set from my rebuttal report.” Further, Relators noted that the Actual Usual and Customary Prices that were filed in the supplemental report are the same prices and data as the first report just presented in a different manner.
Qualifications
The Court has, in 2019, discussed Dew’s qualifications at length and will not repeat each of those points. The Court finds based on the knowledge, skill and experience of Dew, that Dew is qualified to provide data analysis of large sets of electronic information.
Methodology
Defendants specifically highlighted Dew’s per-state, per-month analysis as unreliable. Defendants argued the record in this case established that the usual-and-customary price was determined based on a particular store’s prices on a particular day. Relators initially instructed Dew to assume that lower price matches that are widely available are the usual and customary prices that Defendants should have charged Government Healthcare Programs for their drugs. Dew analyzed the massive amounts of raw data provided by the Defendants and determined the best way to group information that could be plugged into an algorithm while excluding potential outliers. The Court noted that this methodology, in relying on information provided by others, including counsel, would be appropriate when rendering an opinion.
The specific methodology in calculating usual and customary pricing by using the most frequently occurring discounted cash price offered by month is a more conservative calculation according to Dew. Further, Dew testified that his use of the most frequently occurring price is recognized as a statistically valid method to find the central tendency of a large data set.
Defendants took issue with Dew’s alleged refusal to review government contracts for each of the Defendants. However, Dew’s work had a limited scope. He was asked to calculate the difference between the two types of price points found within Defendants’ data production: (1) discounted cash override prices and (2) reimbursement based upon undiscounted reported usual and customary prices.
To sum it up, Defendants’ arguments regarding Dew’s methodology are largely the same as their arguments in their initial motion, and the Court declines to reverse its earlier order regarding the exclusion of Ian Dew’s testimony.
Reliability
Defendants take issue with Dew’s per-state, per-month analysis, arguing that a per-store, per-day analysis is more appropriate. Further, Defendants argue that Dew’s lack of justification as to why he utilized a per-state, per-month analysis further supports Defendants position. Dew’s failure to review Pharmacy Benefit Manager contracts and failure to utilize geographic and time parameters specified by state Medicaid are two additional factors Defendants believe should have been considered. Lastly, Defendants point to the fact that Dew has indeed calculated hypothetical usual and customary prices using a per-store, per-quarter methodology.
Dew has testified as to his rationale for his analysis and his use of an alternate method in the past does not disqualify his conclusions in the present matter.
The Court found that Dew’s opinions and reports quantifying alleged overcharges regarding usual and customary price reflect a reliable application of his principles and methods.
Relevance
Defendants argued that Dew’s methods are irrelevant as they do not use the “relevant” unit of per-store, per-day usual and customary pricing which reflects the record in this matter.
However, the Court decided that Dew’s testimony and reports provide the type of context and analysis that would clearly assist a trier of facts in determining whether there were overcharges to Government Healthcare Programs. This testimony regarding how often these claims were submitted and the overages claimed above the usual and customary prices may be helpful to jurors as this subject matter is not within a juror’s usual scope of knowledge.
Held
The Court denied the Defendants’ motion to exclude the testimony of Ian Dew.
Key Takeaway:
Although Defendants took issue with the way Dew organized and grouped tens of millions of purchases, that alone is not enough to disqualify his opinion. Dew’s failure to review Pharmacy Benefit Manager contracts and failure to utilize geographic and time parameters specified by state Medicaid are two additional factors Defendants believe should have been considered. However, the Court is unpersuaded that Dew’s methodology has changed in any significant manner, so the Court will not reverse its prior ruling.
Case Details:
Case Caption:
United States Of America Et Al V. Supervalu Inc Et Al
FTX Trading Ltd. was a cryptocurrency exchange founded in 2019 by Sam Bankman-Fried. It quickly grew to become one of the largest crypto exchanges. Bankman-Fried also founded Alameda Research, a cryptocurrency trading firm. Federal prosecutors alleged that starting in 2019, Bankman-Fried orchestrated a scheme to defraud FTX customers by misappropriating their deposits to support Alameda’s trading activity.
Specifically, he was accused of diverting billions in customer funds to Alameda without disclosing this practice. Alameda allegedly used the funds to make speculative crypto trades. Prosecutors said Bankman-Fried made false statements about FTX’s financial condition and operations to attract more customer deposits as well as investments into FTX and loans to Alameda.
In November 2022, concerns about Alameda’s financial condition led to mass withdrawals from FTX. This caused a liquidity crunch at FTX, which did not have sufficient funds to meet withdrawal demands. FTX filed for bankruptcy on November 11, 2022. An estimated 1 million customers and investors suffered billions in losses.
In December 2022, federal prosecutors filed criminal charges against Bankman-Fried, including wire fraud, commodities and securities fraud, and money laundering conspiracy. Bankman-Fried was arrested in the Bahamas and extradited to face charges in the United States. He pleaded not guilty. Jury selection for his trial is scheduled to begin on October 2, 2023, in New York. Bankman-Fried might face up to 115 years in prison if convicted.
To summarize, Bankman-Fried is faced with 12 criminal charges, which will be spread across two trials scheduled to begin on October 2, 2023, and March 11, 2024. He has pleaded not guilty to all counts.
Lawrence Akka
The Government argued that the testimony of all seven experts should be excluded for various reasons. The Government contended that the testimony of Lawrence Akka, an English barrister, should be excluded because he intended to interpret FTX’s terms of service and opine on the legal obligations created by the contract which, according to the Government, usurped the role of the judge in instructing the jury on the law and the jury’s role in applying the law to the facts. The Government also argued that his testimony was also unreliable because it did not consider the full context for interpreting the agreement, and he had not reliably established that there was a uniform definition of “trust” that he could apply. The Government added that his testimony should also be excluded under Rule 403 because it was likely to mislead and confuse the jury about the relevant legal standards.
Joseph M. Pimbley
The Government also pushed for excluding the testimony of Joseph M. Pimbley concerning problems with FTX’s software infrastructure, specifically its database and computer code because considering the notice did not adequately disclose his opinions, his testimony would not be relevant to the issues at trial, and it would be an improper attempt to imply through an expert that Bankman-Fried lacked knowledge of alleged infrastructure deficiencies at FTX.
Bradley A. Smith
The Government also demanded the exclusion of the proposed testimony of Bradley A. Smith regarding campaign finance laws and practices because not only was it improper for an expert to testify about the legal framework that applied to political contributions at the federal level, it was also irrelevant since the campaign finance charges had been dropped, and his opinions about Defendant’s “good faith” compliance with campaign finance laws constituted inadmissible state of mind testimony under Rule 704(b).
Pietro (Peter) Umberto Vinella
The Government asserted that the proposed expert testimony of Pietro (Peter) Umberto Vinella warranted exclusion because he lacked qualifications to opine about cryptocurrency markets and FTX considering much of his proposed testimony was irrelevant or speculative, and his opinions about financial services industry customs and the reasonableness of FTX’s actions were misleading and unfairly prejudicial.
Andrew Di Wu
The Government challenged the background testimony of Andrew Di Wu on cryptocurrency’s history and markets which also drew comparisons between FTX and other cryptocurrency exchanges deeming it irrelevant, speculative, and dismissive of the Court’s legal instructions.
Moreover, the Government also argued that the testimony of Thomas E. Bishop and Brian Y. Kim should be excluded because the defense failed to provide sufficient disclosure about their anticipated expert opinions and the bases for those opinions, as required by Rule 16. The notices for these two experts only identify general topics but do not state any actual opinions or analysis.
In summary, the Government argued that the seven proposed defense experts had either failed to provide adequate notice of their opinions, intended to provide irrelevant or improper legal opinions and testimony on industry practice, lacked qualifications, or intended to provide speculative and unreliable testimony that was substantially more unfairly prejudicial than probative. For these reasons, Daubert hearings were requested to assess relevance, qualifications, and reliability.
As the start date of the trial of FTX co-founder Sam “SBF” Bankman-Fried approached, new court filings indicated that SBF could pay his expert witnesses more than $1,000 an hour should they testify on his behalf.
Some of the witnesses, such as former Federal Election Commission Chairperson Bradley Smith, charged SBF’s legal team $1,200 an hour to testify about issues such as the United States’ campaign finance laws and straw donors, according to a court filing on August 28. Bradley Smith clarified that he had no financial stake in the case’s outcome. He was receiving compensation solely for his time and services, billed at a rate of $1,200 per hour. He emphasized that his compensation was not based on the opinions he provided in the case or on the final outcome of the legal proceedings.
Additional expert witnesses, such as Akka and Pimbley, might charge £800 (equivalent to $1,000) and $720 per hour, respectively, if they testify, as indicated in the court filings. The hourly rates for other potential expert witnesses for SBF’s case vary, ranging from $400 to $650.
On the other hand, Peter Easton, an accounting professor at the University of Notre Dame, who is a proposed witness for the prosecution, would charge $1,175 per hour as per the court data.
SBF seeks to request a trial postponement. If the request is submitted by September 1 and is approved, SBF’s trial will be rescheduled to March 11, 2024.
Key Takeaways:
Experts cannot testify to legal conclusions, interpret contracts, or opine on whether the Defendants had the requisite mental state to commit the crimes. This improperly usurps the role of the judge and jury.
Experts noticed by the defense failed to provide adequate disclosure of their opinions and analysis as required by the rules of evidence. Vague topics are insufficient.
Proposed testimony on background information, industry practices, actions of third parties, and regulatory uncertainty from several experts is irrelevant to the issues the jury must decide. It is also likely to mislead and confuse the jury.
Testimony opining that the Defendants acted reasonably or in good faith compliance with laws and regulations is impermissible state of mind evidence.
Some experts lack qualifications to testify about cryptocurrency markets and exchanges. Their opinions are unreliable and speculative.
Expert testimony that is cumulative of facts that can be established through percipient witnesses is unnecessary and improper. In summary, the government argues the proposed experts either lack proper qualifications, offer legal opinions and testimony irrelevant to the facts at issue, or provide unreliable and prejudicial opinions. The testimony should therefore be excluded or limited through Daubert hearings.
