Expert Witness Profiler

Category: Risk Management Expert Witness

  • Risk Management Expert’s Testimony on the Required Team Composition Excluded

    Risk Management Expert’s Testimony on the Required Team Composition Excluded

    Andre Pauwels, the Plaintiff, filed an unjust enrichment claim against The Bank of New York Mellon Corporation and The Bank of New York Mellon, collectively referred to as “BNYM.”

    In short, Pauwels, who previously served as a consultant for BNYM, alleged that BNYM was unjustly enriched by its continued use of his “proprietary computational model”—the Pauwels Model—which is used to analyze proposed tax-equity investments in wind energy projects and monitor the investment BNYM chose to pursue.

    Pauwels sought to quantify the amount by which BNYM was unjustly enriched through the expert testimony of Slim Bentami. Bentami, in his Report and proposed testimony, opined on the cost BNYM, or a similar large bank, would expend to recreate the Pauwels Model from scratch. BNYM filed a motion to exclude Bentami’s testimony from trial.

    Risk Management Expert Witness

    Slim Bentami has over 30 years of experience in the finance industry. He previously held various leadership roles within the Risk Division at Goldman Sachs, where he was responsible for “ensuring that the models used by the firm were fit for purpose and error free.”

    Discover more cases with Slim Bentami as an expert witness by ordering his comprehensive Expert Witness Profile report.

    Discussion by the Court

    BNYM argued, in short, that Bentami’s report and anticipated testimony (1) support a theory of damages which is not cognizable as a matter of New York law, (2) rely on insufficient facts or data; and (3) use an unreliable methodology.

    BNYM primarily attacked Bentami’s relatively terse explanation of why various staff members would be necessary as a part of his “hybrid equivalent” team replicating the Pauwels Model in-house.

    Bentami justifies the composition of such a team as follows:

    “Based on my experience and analysis, I would expect a team of quantitative modeling professionals of various levels to be dedicated to the development of a Pauwels Model equivalent from scratch. In my opinion, such a team would likely consist of (1) one Managing Director (“MD”) level person experienced with this type of investment; (2) two senior Vice President (“VP”) level persons experienced with this type of investment as well as with enterprise systems and processes; and (3) three Associate level staff who would perform the brunt of the development. Such staff would typically be part of a structuring modeling team and/or quantitative development team. The necessity for three associate-level staff follows from the need for redundancy and for cross-validation of work.”

    I. Bentami’s Report Is Relevant Under Rule 702

    BNYM first argued that Bentami’s report and testimony should be “excluded because they merely attempt to quantify a theory of damages that is not recoverable as a matter of law.”

    Pauwels contended that Bentami’s opinions speak to the “value of the thing that BNYM took from Plaintiff” by quantifying the “development cost” of the Pauwels Model.

    It should be noted that Pauwels performed consulting work for BNYM from 2014 to 2017. Pauwels stopped monitoring BNYM’s investments in September 2017, when BNYM replaced him with Deloitte LLP, Deloitte Tax LLP, and Deloitte USA LLP (together, “Deloitte”). The parties disputed the extent to which Deloitte used the Pauwels Model when it took over this monitoring work. 

    Bentami is offering an opinion on the costs that would be incurred if BNYM or an equivalent bank sought to replicate the Pauwels Model. He did not opine on the costs Pauwels himself incurred to create the Pauwels Model or the third-party costs BNYM avoided through the use of the Pauwels Model. Notably, as BNYM has argued, Bentami’s valuation “does not even correspond to . . . the costs that BNY[M] purportedly avoided paying to Deloitte in performing the ongoing investment monitoring work.”

    BNYM attempted to preclude admission of Bentami’s report and testimony on the basis that it does not, and cannot, accurately reflect BNYM’s avoided costs through a reduction in the work done by Deloitte. Bentami’s report, however, clearly indicated that it attempted to measure BNYM’s own cost to replicate the Pauwels Model, rather than its avoided costs with respect to Deloitte.

    Accordingly, the Court found that Bentami’s opinions could support a legally cognizable theory of damages.

    II. Bentami’s Report Should Be Excluded as Unreliable under Rule 702

    Despite Bentami’s substantial experience developing financial models inside large financial institutions, Bentami did not explain with any specificity how his experience led him to reach certain conclusions.

    Bentami provided a relatively terse explanation of why various staff members would be necessary as a part of his “hybrid equivalent” team replicating the Pauwels Model in-house. 

    For example, Bentami includes no detail as to why a “Managing Director” and two “senior Vice Presidents” would be necessary to recreate a model one man created himself.  And without the benefit of any explanation from Bentami, the Court did not see how it “follows” that three associate level staff would also be necessary to satisfy the need for “redundancy and cross-validation of work.”

    Bentami’s estimation of the compensation paid to each of these team members was accomplished through a similarly superficial exercise. He simply stated that, “based on his experience and analysis, he estimated the team compensation costs,” for which he lists annual compensation figures.

    Bentami’s unexplained equivalence between one hour of Pauwels’ work and one hour of his “hybrid equivalent” team of seven people was also puzzling. 

    Bentami’s conclusions regarding the length of time an in-house team would spend developing an equivalent to the Pauwels Model appeared to be based exclusively on unsupported, approximately one-to-one equivalence between an hour of Pauwels’ time and an hour of hybrid-equivalent team time. He offered no indication as to why his experience would lead him to opine that this rough equivalence in productivity would be sufficient as even a crude proxy for the work necessary to replicate the Pauwels Model.

    It should be noted that Bentami only reviewed two out of the twelve Pauwels Model spreadsheets created to analyze BNYM’s investments.

    Held

    The Court granted BNYM’s motion to strike Slim Bentami’s report and preclude his testimony.

    Key Takeaway:

    Bentami did not offer even anecdotal evidence as to why such a team composition would be necessary or why this team would work a “hybrid-equivalent” number of hours to Pauwels, through specific reference to his own experience or what is customary in the industry. An expert basing his opinion solely on experience must do more than aver conclusorily that his experience led to his opinion. Bentami provided no detail to support his assumptions beyond a generalized reference to his expertise. And he did not explain “how his experience supports his conclusion” as to the required team composition, compensation, or time spent on the replication project.

    Because critical steps of Bentami’s methodology are supported by nothing more than his “ipse dixit,” the Court found his methodology to be unreliable.

    Case Details:

    Case Caption: Pauwels V. Bank Of New York Mellon Corporation
    Docket Number: 1:19cv2313
    Court Name: United States District Court, New York Southern
    Order Date: October 31, 2025
  • Risk Management Expert’s Conclusions about IBM’s Internal Capabilities Excluded 

    Risk Management Expert’s Conclusions about IBM’s Internal Capabilities Excluded 

    Plaintiff Gerald Hayden brought claims against Defendants International Business Machines Corporation (“IBM”), Pablo Suarez, and Shanker Ramamurthy, under the federal Defend Trade Secrets Act (“DTSA”) and for violating New York’s prohibition on the misappropriation of trade secrets.

    Prior to joining IBM in 2015, Plaintiff developed a “methodology to construct  an architecture for a digital platform,” which he called “Awareness to Execution” (“A2E”). According to Plaintiff, his alleged trade secret “describes an architecture for an IT solution that creates a digital platform which accesses data in near real-time . . . and applies big data prescriptive and predictive analytics.” A2E “can also be used as a methodology to market and sell the various components or elements of the digital platform, individually or in combination with each other.” 

    Plaintiff also brought a number of other claims under New York and federal law: breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, tortious interference, and retaliatory discharge under the Sarbanes-Oxley Act.

    Defendants filed a motion to exclude the proffered testimony of Plaintiff’s expert, David Martin.

    Risk Management Expert Witness 

    David Martin is a risk management consultant with over 40 years of experience as a financial executive. He has held senior positions at PricewaterhouseCoopers, Citibank, and AllianceBernstein, and has “extensive experience with technological solutions in the banking and financial markets industries.”

    Want to know more about the challenges David Martin has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Plaintiff offered Martin as an expert to opine on the nature and value of A2E. Defendants did not dispute Martin’s qualifications regarding the topics for which he has been engaged to testify. Instead, Defendants argued that Martin’s opinions are irrelevant and that his methodologies warranted exclusion of his testimony. Specifically, Defendants argued that Martin’s opinions are not based on sufficient facts and that he does not apply reliable methodologies to reach his conclusions.

    Reliance on Sufficient Facts or Data or Reliable Methodologies

    IBM’s Awareness of A2E

    Regarding IBM’s awareness of A2E and the value it may have held for the company, the Court observed that Martin based his conclusions solely on his personal experience. He asserted that the solutions embodied in A2E were not known to IBM or the broader market as of 2015.

    IBM’s Internal Capabilities

    Martin stated—after reviewing depositions from a former IBM employee and another individual he described as “an expert in software technology”—that “without access to [Plaintiff’s] A2E trade secrets, competitors and IBM would not have been able to execute on these strategies and solutions.”

    However, Martin did not explain how his background or expertise led him to conclusions about IBM’s internal knowledge or capabilities at any specific time. He failed to clarify how he determined that IBM lacked awareness of the “formulas, architectures, and solutions contained in A2E,” especially given that he had never worked for IBM or with the company in any professional capacity.

    The Court found that this omission weakened Martin’s opinion that IBM could not have executed the solutions without access to Plaintiff’s trade secrets. Because his assertion that IBM was unaware of certain strategies lacked a sufficient factual foundation, his related conclusion about IBM’s inability to implement or act on those strategies was similarly flawed.

    IBM’s Commercial Objectives

    Martin further opined that, before Plaintiff’s employment, IBM was not focused on the core elements of A2E or on horizontally integrating workflows. He based this view on his review of Plaintiff’s deposition and certain documents produced by IBM describing its commercial offerings.

    Nevertheless, the Court found that IBM’s public-facing commercial materials, even when considered alongside Plaintiff’s testimony, did not constitute “sufficient facts and data.” Moreover, Martin did not demonstrate how his industry experience in banking and finance qualified him to determine, from that limited set of documents, what IBM’s commercial priorities actually were at the time.

    Cloud Pak’s Overall Design

    Martin claimed that IBM incorporated parts of the Plaintiff’s trade secret—A2E—into its Cloud Pak products, and as a result, profited from A2E. He pointed to specific similarities, stating that Cloud Pak included “key combinations of elements” found in A2E, such as integrated data systems, a distinctive marketing framework, and a unique framework for analytics and decision-making.

    Based on these similarities, Martin concluded that IBM’s Cloud Pak was directly based on A2E. He argued that the overlap was too significant to be a coincidence and therefore believed that Cloud Pak’s overall design and architecture were derived from A2E.

    However, the Court rejected this reasoning. It held that Martin’s opinion amounted to a bare assertion—or ipse dixit—which is not valid expert testimony because it lacked a reliable, tested methodology.

    To support his conclusion, Martin had simply compared two slide decks: one showing A2E’s reference architecture and the other showing Cloud Pak’s. The Court found that this kind of side-by-side comparison was not a scientifically valid or reliable method under Rule 702, and therefore could not support his expert opinion.

    Hybrid Cloud Platform Solution

    Regarding Martin’s opinion on how long it would have taken IBM to develop a hybrid cloud platform without knowledge of A2E, the Court found that he failed to offer any methodology to estimate the time IBM allegedly saved by using A2E.

    Although Martin asserted that IBM gained a “head start” by using Plaintiff’s trade secret, the Court pointed out that he did not examine IBM’s internal processes for securing approval or funding for research and development. As a result, his opinion lacked the necessary factual basis and analytical framework.

    Intruding on the Province of the Fact Finder

    Although Martin did not expressly state that A2E qualified as a trade secret—and claimed that he had “no opinion” on that legal issue—he assumed, for the purposes of his report, that a trade secret is any formula that offers a business advantage. Based on that assumption, he concluded that A2E met this definition. However, the Court ruled that this was an inadmissible legal conclusion, which an expert is not permitted to make.

    The Court also noted that Martin made improper credibility judgments by repeatedly adopting the testimony of fact witnesses to support his own conclusions, rather than relying on independent analysis.

    Ultimately, the Court held that Martin’s testimony was inadmissible because his opinions and inferences merely reinforced the Plaintiff’s version of events, rather than offering objective, expert analysis.

    Held

    The Court granted the Defendants’ motion to preclude the testimony of Plaintiff’s expert, David Martin.

    Key Takeaway:

    Although an expert can “draw a conclusion from a set of observations based on extensive and specialized experience,” the expert must base that opinion on sufficient facts or data and “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.” 

    Case Details:

    Case Caption: Hayden V. International Business Machines Corporation Et Al
    Docket Number: 7:21cv2485
    Court Name: United States District Court, New York Southern
    Order Date: June 17, 2025
  • Risk Management Expert Witness’ Testimony on Economic Injury Conditionally Admitted

    Risk Management Expert Witness’ Testimony on Economic Injury Conditionally Admitted

    In June 2008, USA experienced the collapse of the housing market and the worst financial crisis since the Great Depression.

    For homeowners who put down less than 20% for the purchase of their homes, most were required to purchase private mortgage insurance to protect their lenders in the event of default. Many of those private mortgage insurers, in turn, entered into agreements with reinsurers whereby they paid or “ceded” to the reinsurer a portion of the premiums received in exchange for the reinsurer’s assumption of a percentage of the risk of loss.

    Each of the six named Plaintiffs in this case were required to purchase private mortgage insurance in connection with mortgage loans obtained from the lender defendants, PHH Mortgage Corporation and PHH Home Loans, LLC. Atrium Insurance Corporation (“Atrium”), an affiliate of Defendant PHH Corporation, is the reinsurer for Plaintiffs’ loans pursuant to its reinsurance agreements with the private mortgage insurers. According to the Plaintiffs, Atrium receives “millions of dollars” in premiums but assumes “little or no risk of loss” in connection with its obligations under the reinsurance agreements as evidenced by the lack of any paid claims in the years 2000 through 2007.

    After more than a decade of litigation asserting other theories, Plaintiffs now claim they have standing based on a theory that they suffered economic harm from the reinsurance Atrium provided in the form of higher mortgage insurance premiums.

    Defendants filed a motion to exclude the testimony of Dr. Robert E. Hoyt, whom Plaintiffs offer as an expert on insurance, reinsurance, insurance economics, and risk management to establish their Article III standing. 

    Risk Management Expert Witness

    Robert E. Hoyt is the Moore Chair, Professor of Risk Management and
    Insurance and Department Head of the Department of Insurance, Legal Studies & Real Estate in the Terry College of Business at the University of Georgia.

    He earned his M.A. (1983) and Ph.D. (1987) degrees in risk and insurance from the Wharton School at the University of Pennsylvania. He joined the Terry College of Business faculty in 1988, where he teaches corporate risk management and insurance.

    Get the full story on challenges to Robert Hoyt’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Hoyt opined that “the captive reinsurance agreements utilized by Defendants which do not involve a real risk transfer simply increased transaction costs and in turn the premiums paid by private mortgage insurance buyers (borrowers/class members).”

    For purposes of his report, counsel for Plaintiffs told Hoyt to “assume” the following:

    The jury will find: 1) that there was no real transfer of risk to Atrium under the subject captive reinsurance agreements; and 2) that the amounts paid to Atrium by the primary mortgage insurers were not commensurate with the value of reinsurance services (if any) provided by Atrium.

    Defendants argued that because Hoyt’s reliance on these assumptions was unfounded, his testimony cannot help the trier of fact determine a fact in issue.

    Here the jurisdictional fact in issue is whether Plaintiffs suffered economic injury from Defendants’ assumed Real Estate Settlement Procedures Act of 1974 (“RESPA”) violation.

    Defendants first contended that an expert may not assume liability to establish the harm necessary for standing. They relied on the familiar principle that “[s]tanding is an independent threshold issue that must be established before proceeding to the merits of a claim.”

    Defendants next argued that allowing Hoyt to testify as to harm “will confuse the jury on the issue of liability,” requiring his exclusion.  In substance, their argument invokes Rule 403, though they do not cite it. 

    Analysis

    The topic for Hoyt’s testimony—whether Defendants’ (assumed) RESPA violation injured Plaintiffs—is not the jury’s province, because injury is not an element of the latter’s claim. Instead, the Court decided that question as it would any other factual challenge to standing not intertwined with the merits. 

    Because the Court must decide whether Plaintiffs suffered economic injury, the Defendants’ Rule 403 challenge to Hoyt’s testimony failed.

    Finally, Defendants argued that the assumptions counsel provided to Hoyt are unsubstantiated and refuted by the record. As a general matter, they are correct as to the governing legal principle: An expert witness may not rely on assumptions supplied by counsel that lack factual support in the record because such assumptions, and any testimony based on them, are speculative. However, the flip side of that principle is that an expert may base an opinion on assumptions from counsel provided they are based on evidence that either has been or will be admitted. 

    Defendants’ arguments failed because the Court had previously held—based on evidence proffered by Plaintiffs—that there is a genuine issue of fact as to Hoyt’s two assumptions. That holding is the law of the case, and therefore those assumptions are supported by evidence to be introduced at trial. 

    Besides, there is no dispute here that Hoyt’s training and experience will help the Court—the factfinder for these purposes—”determine a fact in issue,” i.e., whether Plaintiffs suffered any economic injury. 

    The Court conditionally admitted Hoyt’s testimony for purposes of a bench trial as to whether Plaintiffs suffered any economic injury if the jury later finds the two assumptions provided to him by counsel are substantiated. After the hearing, which will also encompass the contested Rule 702 issues, the Court will determine whether to exclude Hoyt’s testimony.

    Held

    The Court denied Defendants’ motion to exclude Robert Hoyt insofar as they seek such relief on grounds other than Federal Rule of Evidence 702(b)-(d) and otherwise reserved judgment pending the conclusion of a bench trial on economic harm where his testimony shall be conditionally admitted.

    Key Takeaway:

    While the governing legal principle states that an expert witness may not rely on assumptions supplied by counsel that lack factual support in the record, the flip side of that principle is that an expert may base an opinion on assumptions from counsel provided they are based on evidence that either has been or will be admitted.

    As a result, when Defendants argued that the assumptions counsel provided to Hoyt are unsubstantiated and refuted by the record, Defendants’ arguments failed because the Court had previously held—based on evidence proffered by Plaintiffs—that there is a genuine issue of fact as to Hoyt’s two assumptions.

    Case Details:

    Case Caption: Munoz, Et Al. V. PHH Mortgage Corporation, Et Al.
    Docket Number: 1:08cv759
    Court: United States District Court, California Eastern
    Order Date: January 31, 2025