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  • Data Science Expert Witness’ Testimony About MLR Repricing Excluded

    Data Science Expert Witness’ Testimony About MLR Repricing Excluded

    In 1955, Congress created the Indian Health Service (IHS) to govern tribal healthcare. The IHS, now a sub-agency within the U.S. Department of Health and Human Services (HHS), continues to govern tribal healthcare today. Indeed, the IHS is the “principal federal health care provider and health advocate for Indian people, and its goal is to raise their health status to the highest possible level.” First, IHS funds and operates healthcare facilities—such as hospitals and clinics—which provide direct care to American Indians. Second, IHS separately funds Contract Health Service (CHS) Programs, which operate as a referral safety net such that, if an American Indian seeks a healthcare service that is unavailable at their direct-care IHS tribal facility, CHS Programs may refer that American Indian to a non-IHS healthcare facility. 

    Central to this case, in 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act which authorized HHS to demand no more than Medicarelike rates (MLRs) from hospitals that provide services to tribes under a CHS Program, including those CHS Programs which tribes themselves orchestrate. 

     The Tribe retained ClaimInformatics—a healthcare “payment integrity firm” based in Connecticut to identify which of the Tribe’s claims were eligible for MLRs, and to “reprice” those eligible claims to determine if Blue Cross Blue Shield of Michigan (BCBSM) applied MLRs and, if not, how much the Tribe overpaid.

    On September 16, 2023, the Tribe produced the “Preliminary Expert Report of ClaimInformatics/Dawn Cornelis.” The Report noted that ClaimInformatics “repriced a total of 6,6641 claims” out of the 93,104 claims produced by BCBSM at that time. On November 6, 2023, BCBSM filed a Daubert motion seeking to exclude Cornelis’ proffered expert testimony about MLR and ClaimInformatics’ MLR repricing in this case.

    Data Science Expert Witness

    Dawn Cornelis created her own healthcare claim audit and recovery business—Claim Recovery Services. Claim Recovery Services closed nearly twenty years later in 2010, and Cornelis worked the next seven years in various payment integrity roles. In 2017, Cornelis cofounded ClaimInformatics and helped develop a payment integrity software known as “Claim Intelligence” which was used by ClaimInformatics to process and audit the Tribes claims with BCBSM in this case.

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

    Discussion by the Court

    BCBSM argued that (1) Cornelis lacked the training, education, and experience to testify as a MLR and re-pricing expert at trial under Federal Rule of Evidence 702, and (2) even if qualified, Cornelis’ expert testimony would be unreliable because the testimony merely “parrots” or “bootstraps” the calculations and conclusions of Linda Myrick.

    Qualifications

    BCBSM argued that Cornelis has no formal education in healthcare, insurance, tribal welfare, or any other study which would enable her to testify as an expert in MLR or MLR repricing.

    This Court, however, does not discount Cornelis’ substantial knowledge and experience related to healthcare insurance claim processing and auditing, generally. Yet, it held that despite Cornelis’ knowledge, training, and experiencing in processing and auditing healthcare insurance claims, generally, she does not have comparable knowledge, training, and experience in auditing tribal healthcare claims involving MLR, specifically. Also, Cornelis had no experience with MLR repricing in this specific case.

    As further proof of her lack of experience, Cornelis herself expressly denied her MLR repricing expertise on three separate occasions, noting that she only knows enough “to be dangerous.”

    To sum it up, Cornelis lacked the education, training, and experience to offer expert opinions on MLR repricing, both generally and as specifically applied to the Tribe’s claims with BCBSM.

    Reliability

    Even if Cornelis was qualified based on her training, education, and experience, her proffered opinion about BCBSM’s rates and the Tribe’s MLR repricing would be unreliable because this testimony does not concern her opinion. It would instead only concern Linda Myrick’s opinion.

    However thin the line may be between permissible reliance and impermissible “parroting,” Cornelis crossed it here. According to the Court, Cornelis conceded that all MLR re-pricing was conducted solely by Linda Myrick. Although Cornelis testified that she independently assured the accuracy of some CMS pricing tables which Myrick may have relied on when comparing the rates BCBSM charged the Tribe to the applicable MLRs, nothing suggested that Cornelis independently evaluated Myrick’s re-pricing calculations.

    The Court held that this testimony is just as unreliable under Daubert as it is unfairly prejudicial under Rule 403.  If Cornelis was permitted to testify about Myrick’s re-pricing calculations and conclusions, BCBSM would have no meaningful opportunity for cross-examination. The Tribe has indicated it will not call Myrick as an expert witness.

    In response to BCBSM’s meritorious motion to exclude Cornelis’s testimony, the Tribe attempted to bolster Cornelis’s qualifications and reliability by producing her “Declaration,” dated November 15, 2023—notably executed after the Parties’ Daubert deadlines and nearly one month after Cornelis’s deposition. To the extent Cornelis’s declaration contradicts her prior deposition testimony, the Court held that her declaration will be stricken and will not be considered when analyzing the propriety of her expert testimony at trial.

    Held

    The Court granted the Defendant’s motion to exclude Dawn Cornelis’s proffered expert testimony on Medicare-like Rate repricing.

    Key Takeaway:

    The law governing expert testimony distinguishes between permissible reliance and impermissible “parroting.” True, an expert may rely on the opinions and conclusions of other experts when forming their own independent conclusions throughout their own independent investigation. But an expert may not simply “parrot,” “echo,” “regurgitate,” or “bootstrap” the opinion or conclusion of another expert without any independent evaluation or analysis.

    Case Details:

    Case Caption: Saginaw Chippewa Indian Tribe Of Michigan Et Al V. Blue Cross Blue Shield Of Michigan
    Docket Number: 1:16cv10317
    Court: United States District Court for the Eastern District of Michigan, Northern Division
    Order Date: August 14, 2024
  • Experts are entitled to a reasonable fee despite objections to the admissibility of their opinions

    Experts are entitled to a reasonable fee despite objections to the admissibility of their opinions

    In February 2016, Plaintiffs-Appellants Scott Miller and Michael Spaulding, two Seattle Police officers, fatally shot Che Andre Taylor, a Black man, as they tried to arrest him. Four days after the shooting, Defendant-Appellee Kshama Sawant, then a member of the Seattle City Council, told a crowd of protestors in front of the Seattle Police Department Headquarters that Taylor’s shooting was a “blatant murder at the hands of the police.” Following an inquest into Taylor’s killing, prosecutors declined to file criminal charges against Miller and Spaulding on the ground that there was insufficient evidence to prove that they killed Taylor with the requisite “malice” to be guilty of criminal homicide, as required by Washington law. Roughly three months after the inquest concluded, Sawant told a crowd of protestors that Taylor was “murdered by the police.”

    Miller and Spaulding filed suit in federal court, alleging state law claims for defamation and outrage (i.e., intentional infliction of emotional distress), as well as “federal defamation,” against Sawant.

    The district court dismissed the “federal defamation” claim when it granted Sawant’s motion for partial judgment on the pleadings, but chose to exercise supplemental jurisdiction over the remaining state law defamation and outrage claims. The district court granted Sawant’s motion for summary judgment as to the state law defamation and outrage claims, and Miller and Spaulding appealed the district court’s grant of that motion.

    The appellate court affirmed the district court’s grant of Sawant’s motion for summary judgment but considered whether the district court erred when it granted Sawant’s motion for recovery of expert witness deposition expenses, which included fees for time spent in preparation for deposition.

    Law Enforcement Expert Witness

    Professor Gregory Gilbertson (Ret.) is an expert witness in police practices. He specializes in police use of force, false arrest, officer misconduct, criminal and self-defense casework. He is also a former SWAT team officer, senior patrolman, stakeout squad officer, juvenile investigator, school resource officer, private investigator, and Guardian ad Litem. 

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

    Law Expert Witness

    Lisa Daugaard is an American criminal justice reform activist. She is the director of the nonprofit organization Public Defender Association and a commissioner of the Community Police Commission in Seattle. She received a 2019 MacArthur Fellowship for her criminal justice reform work.

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

    Discussion by the Court

    Sawant sought payment of the fees her expert witnesses had incurred in responding to Miller and Spaulding’s discovery

    In December 2022, Miller and Spaulding deposed two witnesses who Sawant identified as experts in her initial disclosures. Sawant had retained the identified experts as potential defense witnesses. That same month, Sawant sent Miller and Spaulding the experts’ invoices and requested payment for the fees her expert witnesses had incurred in responding to Miller and Spaulding’s discovery, including time spent preparing for the deposition. Sawant sought payment of the fees pursuant to Federal Rule of Civil Procedure 26(b)(4)(E).

    However, Miller and Spaulding failed to provide payment. Sawant covered the costs after Plaintiffs refused to pay, and filed a motion to compel payment.

    As relevant here, the expert witness deposition fees Sawant sought included compensation for time the witnesses had spent preparing for their depositions.

    Specifically, Sawant sought $1,367.50 for Professor Gregory Gilbertson’s expert witness deposition fees and $1,770.00 for Lisa Daugaard’s expert witness deposition fees.

    In June 2023, the district court granted Sawant’s motion, noting there is no clear guidance from the Ninth Circuit regarding whether the reimbursement of preparation time is permitted under Rule 26, but concluding that Sawant’s request was reasonable, that awarding the fees “falls squarely within the ambit of Rule 26(b)(4)(E),” and that no manifest injustice would result from awarding the fees.

    Miller and Spaulding’s objected to the admissibility of Daugaard’s opinions

    Miller and Spaulding argued that the district court erred when it granted Sawant’s motion for Daugaard’s expert witness deposition expenses without first assessing whether she qualified as an expert under the Federal Rules of Evidence and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).

    To begin with, the plain text of Rule 26 provides that a district court “must require” that a deposing party pay “a reasonable fee for time spent in responding to discovery” by “an expert whose opinions may be presented at trial.” The Court held that Miller and Spaulding’s objection to the admissibility of Daugaard’s opinions did not obviate their obligation to pay Daugaard a reasonable fee under Rule 26.

    Expert witness deposition preparation fees that were awarded to Sawant were reasonable and their award did not result in manifest injustice

    Miller and Spaulding also argued that the district court erred when it granted Sawant’s motion for expert witness deposition fees for Gilbertson’s and Daugaard’s time spent preparing for their depositions. That is, Miller and Spaulding maintained that Rule 26(b)(4)(E) permitted expert fees only for time spent during a deposition, and not for time spent preparing for a deposition.

    The Court held that Miller and Spaulding’s suggestion that such fees are never recoverable cannot be squared with Rule 26’s plain text, which requires the “party seeking discovery” to “pay the expert a reasonable fee for time spent in responding to discovery under Rule 26(b)(4)(A).”

    Moreover, Miller and Spaulding raised several policy concerns based on “costs and incentives” and “the potential for abuse” if deposition preparation fees are recoverable. But the policy concerns they raised are addressed by Rule 26’s existing textual limitations on recoverable fees: namely, that fees must be “reasonable,” and their award must not result in “manifest injustice.” Gilbertson spent only 2.5 hours preparing and Daugaard only 2.2 hours, and Miller and Spaulding did not contest the fairness of Gilbertson’s and Daugaard’s hourly rates.

    Held

    In conclusion, the appellate court concluded that the district court did not err when it granted Sawant’s motion for recovery of her expert witnesses’ deposition fees.

    Key Takeaway:

    Therefore, the plain text of Federal Rule of Civil Procedure 26 allows for the recovery of reasonable expenses for the time an expert witness, whose opinions may be presented at trial, spends preparing for a deposition. Plaintiffs’ objection to the admissibility of the expert’s opinions did not obviate their obligation to pay the expert a reasonable fee under Rule 26.

    Case Details:

    Case Caption: Scott Miller V. Kshama Sawant
    Docket Number: 2:18cv506
    Court: United States Court of Appeals for the Ninth Circuit
    Order Date: August 22, 2024
  • Obstetrics and Gynecology Expert Witness’ Testimony About Medical Necessity of Certain Procedures Performed Admitted

    Obstetrics and Gynecology Expert Witness’ Testimony About Medical Necessity of Certain Procedures Performed Admitted

    In this defamation lawsuit, Plaintiff Mahendra Amin (“Amin”), a doctor, alleged that Defendant Nbcuniversal Media, LLC aired several broadcast segments on MSNBC which included multiple false and defamatory statements about Amin and his medical treatment of detainees at Irwin County Detention Center (ICDC). To support his case, Amin retained Eldridge Bills to review the medical records of the Plaintiff’s patients and provided opinions on the medical necessity of various procedures Amin had performed.

    The Defendant filed a motion to exclude Eldridge Bills’ testimony as it was claimed to be unreliable and inconsistent with the Daubert Standard and Rule 702.

    Obstetrics and Gynecology Expert Witness

    Elbridge Frederick Bills II, M.D., F.A.C.O.G., is an expert in obstetrics and gynecology based in Georgia. He holds medical licenses in both Florida and Georgia and was certified by the American Board of Obstetrics and Gynecology. He earned his medical degree from Emory University School of Medicine in 1989. Afterwards, he completed his residency at the University of South Florida Morsani College of Medicine in 2001. He also finished a fellowship at Emory University School of Medicine. At present, he practices in Alpharetta, Georgia.

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

    Discussion by the Court

    Bills’ Medical Knowledge and Experience Support His Opinions

    Defendant challenged Bills’ methodology, arguing it lacked reliability. They contended that Bills failed to apply his specific experience to this case or support his opinions with medical records.

    Moreover, they noted that Bills did not reference medical literature or guidelines in his report or deposition. They argued that his opinions were merely assertions without supporting evidence.

    In contrast, Plaintiff asserted that Bills’ methodology was reliable due to his 30 years of experience as an OB/GYN. His previous experience as an expert witness in five trials was also highlighted.

    To establish reliability, Bills needed to demonstrate a clear connection between his experience and his opinions. He did so by explaining how his OB/GYN background informed his analysis. His report listed his qualifications and detailed his review of 69 patient records, focusing on the medical appropriateness of procedures.

    Defendant’s objections to Bills’ methodology did not justify excluding his testimony. They argued that Bills’ opinions lacked data, methodology, or study, characterizing them as mere assertions. However, Bills utilized his OB/GYN experience and medical knowledge to review patient records and link his expertise to his opinions. He referenced relevant medical literature and studies during his deposition. The Court found that Defendant’s issues were about the weight of the testimony, not its admissibility. As such, challenges to expert testimony should be addressed through cross-examination, not exclusion. Bills’ opinions were deemed to be based on a reliable methodology.

    Bills’ Opinions Are Based on Sufficient Facts and Data

    Bills’ expert report claimed that every procedure by Amin was “medically indicated as documented by various modalities including the history and physical, preoperative ultrasound evaluation, intraoperative surgical images documentation, and final pathology.” Defendant argued that Bills did not specify which modalities he considered in his review of each of the 69 patient records. Defendant also pointed to Bills’ deposition testimony, in which he acknowledged some ultrasound images and surgical images were either low resolution or not clear enough for him to conduct an independent evaluation. 

    The Court found Bills’ opinions are based on a reliable methodology, in that they are based on sufficient data and the “modalities” he considered are sufficiently discernible. He provided sufficient detail about how he applied his experience to his medical records review and he discussed individual patient considerations and modalities throughout his deposition testimony.

    Additionally, in Bills’ supplemental chart, he lists each patient chart reviewed, relevant preoperative notes for each patient, and the corresponding treatment and procedure for each patient and notes any missing documentation for each patient chart.

    Bills Provides Sufficient Analysis to Support His Opinions

    Defendant argued Bills provided no analysis supporting his opinion every surgery Amin performed was “medically indicated” and, therefore, his methodology is unreliable. Defendant argued Bills included generalized statements about why a doctor could perform these surgeries in his expert report, but he does not explain how each patient’s medical records led him to conclude the surgery Amin performed was medically indicated. 

    The Court held that Bills reviewed a collection of patient medical records and offered a categorical opinion about all of the procedures on those patients. Bills explained how (i.e., the methodology) he formed that opinion. Defendant has failed to show anything unreliable about that methodology. Defendant, instead, contended Bills was required to explain how he assessed each and every procedure in order for Bills’ overall methodology to be deemed reliable.

    Bills’ Presumptions Do Not Warrant Exclusion

    Defendant argued that Bills’ methodology was unreliable due to several inadequately explained assumptions. Specifically, Defendant noted Bills’ presumptions about Plaintiff’s patients being high-risk and indigent, consenting to surgery, and facing possible deportation without notice. Defendant also contended that Bills presumed cysts were removed because they caused pain, despite some patients’ cysts being undocumented.

    In response, Plaintiff argued that these assumptions were reasonable given Bills’ experience and the medical records reviewed. Plaintiff asserted that reasonable inferences are acceptable in expert testimony and that Defendant could address these issues through cross-examination.

    The Court found that Bills’ assumptions were based on reasonable inferences drawn from available data and personal experience. Although the assumptions might not be entirely correct, they provided a reasonable factual basis for Bills’ opinions. Therefore, the Court concluded that Bills’ methodology was reliable and did not warrant exclusion.

    Held

    The Court denied Defendant’s motion to exclude the opinions of Plaintiff’s obstetrics and gynecology expert witness, Eldridge Bills.

    Key Takeaway:

    The Court denied Defendant’s motion to exclude Eldridge Bills’ testimony, finding it reliable under the Daubert standard. Although Defendant argued Bills’ methodology lacked specificity and relied on inadequate assumptions, the Court determined his expert opinions were supported by his extensive OB/GYN experience and medical records review.

    Bills had categorized patient cases and provided explanations in his reports and deposition, despite some generalizations. The Court viewed the Defendant’s concerns as issues of weight rather than admissibility, suitable for cross-examination rather than exclusion. Bills’ reasonable inferences and thorough analysis were deemed sufficient to support his opinions.

    Case Details:

    Case Caption: Amin V. Nbcuniversal Media, Llc
    Docket Number: 5:21cv56
    Court: United States District Court for the Southern District of Georgia, Waycross Division
    Order Date: July 11, 2024
  • Mortgage Lending Expert Witness’ Testimony Regarding Deviation from HUD Standards Limited

    Mortgage Lending Expert Witness’ Testimony Regarding Deviation from HUD Standards Limited

    On November 22, 2019, Plaintiffs Alfredo and Chelsie Dominguez (“collectively “Plaintiffs” or “Dominguez”) refinanced their manufactured home with Wallick & Volk, working with loan originator and W&V employee, Christina Bingham. In February 2020, W&V sold the loan and transferred servicing to The Money Source, Inc. (“TMS”). Nine months later in November 2020, Plaintiffs’ hazard insurance policy premium became due but was not paid by TMS from the loan servicer’s escrow account, resulting in cancellation of the policy on February 6, 2021, for non-payment of premium. On March 22, 2021, more than a year after W&V transferred the loan to TMS, the home suffered severe fire damage.

    Plaintiffs sought to recover approximately $300,000 for the loss of real and personal property, as well as emotional distress damages and attorney fees, resulting from the fire that destroyed their home on March 22, 2021.

    Defendant The Money Source, Inc. (“TMS”) filed a motion to exclude Plaintiffs Alfredo Dominguez and Chelsie Dominguez’s (“Plaintiffs”) expert Curtis Novy’s expert reports and testimony.

    Mortgage Lending Expert Witness

    Curtis L. Novy is a licensed financial crimes investigator and seasoned mortgage & real estate expert witness with many years of experience. His work focuses on complex investigations, corporate risk management, elder financial abuse, private equity & family office investigations, and providing court certified expert witness testimony. 

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

    Discussion by the Court

    Qualifications

    TMS first argued that Novy is unqualified to offer mortgage servicing opinions because his expertise is in mortgage fraud investigations and underwriting.

    Novy, however, has over 30 years of experience in commercial and residential lending, which includes “loan servicing compliance.” Since 1997, Novy has served in various capacities in the mortgage industry—his expertise includes lending operations, mortgage banking standards and practices, and ensuring loans meet industry standards. Furthermore, since 1997, Novy has been retained as a subject matter expert and consultant, where his areas of testimony included mortgage lending for both commercial and residential mortgages. Novy also testified that he received Housing and Urban Development (“HUD”) training as to loan servicing matters and he has reviewed loan servicing records as part of his role in compliance and auditing. The Court therefore found Novy’s qualifications met the knowledge and experience of an expert to discuss the mortgage servicing industry.

    In their response, Plaintiffs attached a declaration from Novy expounding upon his expertise and expert conclusions. The Court held that this declaration amounts to an untimely supplemental expert report because it was produced after the deadline to disclose supplement expert witness opinions.

    Reliability

    TMS argued that Novy’s opinion lacks reliability, calling it speculative and full of legal conclusions.

    Preliminary Report Opinion No. 4

    TMS argued that opinion number 4 in Novy’s preliminary report improperly opined that “TMS failed to properly audit the loan file from Wallick & Volk and therefore accepted all liability and risks.” Novy relied on HUD regulations to reach this conclusion. TMS also argued that Novy did not identify the correct HUD regulations in his deposition testimony.

    The Court found that this statement is an improper legal conclusion because Novy concluded that TMS violated HUD standards and accepted liability. As an expert, Novy may address the factual question of whether TMS deviated from the customs, practices, and standards of the mortgage industry, but not the ultimate legal issue of whether TMS is liable. 

    TMS also argued that Novy improperly testified that Chelsie Dominguez “had no obligation to provide TMS with the Perkin Insurance Policy” because he “had not reviewed the Deed of Trust” to verify who was required to provide proof of insurance. In fact, Novy’s report explained that he did review the Deed of Trust. He testified at this deposition that he did so but could not “recollect the exact wording in there.” Therefore, the Court found this testimony reliable.

    Supplemental Report Opinion No. 5

    TMS argued that Novy’s opinion number 5, concluding that TMS failed to service the loan to HUD standards, was unreliable. TMS failed to develop this argument. The Court found that Novy’s conclusion was reliable because he had “a sufficient basis to support an opinion.”

    Novy relied on TMS procedures, loan servicing records, deposition testimony, HUD QC Audit Checklist, and his knowledge of industry standards and practices.

    The Court reserved the question of whether Novy’s opinion that TMS did not service the loan to HUD standards as an improper legal conclusion for trial.

    Supplemental Report Opinion No. 6

    TMS argued that Novy’s opinion number 6, which concluded that TMS failed to properly monitor its subcontractor work, was unreliable because he never managed or oversaw an insurance vendor.

    The Court found that Novy’s opinion is reliable. Novy testified that he relied on the deposition testimony of Linda Case, who was responsible for managing Assurant, TMS’s servicing vendor. Novy also relied on HUD regulations and “QC plan standards.” 

    Supplemental Report Opinion No. 7

    TMS argued that Novy’s opinion number 7, which concluded that it was improper of TMS to place Plaintiffs’ loan in default status, was unreliable because Novy testified that he did not know the reason the loan was put in default status.

    The Court found Novy’s opinion reliable because he had “a sufficient basis to support the opinion.” Novy reviewed TMS procedures, loan servicing records, deposition testimony, and HUD QC Audit Checklist, which includes property insurance verification. Using these materials and his expertise, Novy concluded that it was improper to put the loan in default status. 

    Supplemental Report Opinion No. 8

    TMS argued that Novy’s opinion number 8, concluding that TMS did not follow FHA (“Federal Housing Administration”) Guidelines to ensure that hazard insurance is filed and settled “expeditiously,” was unreliable because Novy testified that he had no opinion as to the industry standard timing. 

    The Court found Novy’s opinion reliable because his conclusion was based on his knowledge and experience from the industry. Novy testified that HUD does not set a timeline but that “based on [his] 30-plus years of experience” the timing should be between 30 days to 90 days.

    Held

    The Court granted in part and denied in part the Defendant The Money Source, Inc.’s motion to exclude expert Curtis Novy’s reports and testimony. It also struck Curtis Novy’s declaration.

    Key Takeaway:

    Novy reviewed TMS procedures, loan servicing records, deposition testimony, and HUD QC Audit Checklist and used his extensive knowledge of industry standards and practices to arrive at his conclusions. However, Novy may address the factual question of whether TMS deviated from the customs, practices, and standards of the mortgage industry, but not the ultimate legal issue of whether TMS is liable. 

    Case Details:

    Case Caption: Dominguez Et Al V. Wallick And Volk Incorporated Et Al
    Docket Number: 2:22cv768
    Court: United States District Court for the District of Arizona
    Order Date: August 23, 2024
  • Automotive Mechanics Expert Witness’ Testimony Rejected Because it is Based Solely on her Experience

    Automotive Mechanics Expert Witness’ Testimony Rejected Because it is Based Solely on her Experience

    On December 31, 2021, Plaintiffs and Defendant entered a Stock Purchase Agreement (SPA) whereby Plaintiffs purchased all the issued and outstanding shares of 411 Flash Corporation (“Company”) from Defendant. Plaintiffs alleged Defendant breached Section 4.09 of the SPA because the repairs made to these vehicles went beyond “ordinary, routine maintenance and repairs” and they were “material in nature or cost,” all within the meaning of Section 4.09.

    In support of this claim, Plaintiffs engaged an expert witness, Alyssa Nieto, whom they disclosed as a “mechanics expert.” Nieto opined that the vehicles “were not in good operating condition and in need of substantial, material repair, well beyond that which could be considered ordinary or routine that should have been communicated.”

    In Section 4.09 of the Purchase Agreement, Defendant agreed, represented, and warranted that the “vehicles and other items of tangible personal property of the Company” were “structurally sound,” “in good operating condition and repair,” and “adequate for the uses to which they are being put.” Additionally, Defendant represented that “none of” the vehicles were “in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.” Despite his representations, the Company spent a total of $33,000 in repairs made to 13 vehicles transferred at the closing.

    However, Defendant argued Nieto’s testimony must be excluded under Fed. R. Evid. 702 “because her general experience managing an auto body repair shop does not qualify her to opine on specific issues of automobile mechanics,” and he further argued her opinions would not be helpful to the factfinder.

    Automotive Mechanics Expert Witness

    Alyssa Nieto graduated high school from Colorado Academy in Denver, Colorado, in 2014. She began her career in the automotive industry in December 2016 as a receptionist at Community Auto Repair Shop. In 2017, the owner decided to open a second location. From 2017 to 2020, she mentored under the owner/proprietor and the lead technicians, working her way from receptionist to Service Advisor. She eventually earned her role as Service Manager, where she oversaw the day-to-day operations of both locations.

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

    Discussion by the Court

    In its own review of her report, the Court disagreed over the reliability of any methodology Nieto might have employed. Throughout her report, Nieto failed to “explain how [her] experience led to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.”

    For example, Nieto opined that “[m]ost of the repairs detailed in this Report could have been prevented if the vehicles had been serviced pursuant to their factory maintenance schedule.” Here she did identify the specific factory maintenance schedule for transmission service for three of the vehicles, and then opined, “[i]f the transmissions had been serviced with fresh fluid on their regular maintenance schedule (at 60,000 miles), there would not have been metal in the fluid and could have potentially prevented internal transmission failure.” However, she did not explain her methodology supporting this opinion.

    Held

    In conclusion, the Court granted Defendant’s motion in limine to exclude expert testimony from Alyssa Nieto.

    Key Takeaway:

    Nieto has failed to demonstrate her opinion is based on any methodology that renders her opinions reliable under Rule 702. Federal courts routinely exclude as unreliable expert opinions that are based solely on the expert’s experience and which lack any methodology.

    Case Details:

    Case Caption: Harriman Et Al V. Smart
    Docket Number: 1:22cv1883
    Court: United States District Court, Colorado
    Order Date: August 22, 2024
  • Financial Expert Witness’ Cash Flow Analysis Admitted

    Financial Expert Witness’ Cash Flow Analysis Admitted

    Plaintiff, Yoel Weisshau challenged the constitutionality, under the dormant Commerce Clause, of the Port Authority’s toll and fare increases, in effect since September 18, 2011, on all the Port Authority’s bridges and tunnels within the Interstate Transportation Network (“ITN”).

    Plaintiff filed a motion to strike Elizabeth McCarthy’s affidavit and cash flow analysis, as well as her reply to Plaintiff’s expert report. By his motion, Plaintiff additionally sought an order “precluding the submissions of the expert witness Elizabeth McCarthy, precluding the Port Authority of New York and New Jersey from submitting any documents and printouts, calculations, and data downloaded from its General Ledger, and sanctioning Defendant for withholding discoverable information.”

    Financial Expert Witness

    Elizabeth M. “Libby” McCarthy joined the Port Authority as Chief Financial Officer (CFO) in January 2013.

    As CFO, McCarthy is responsible for overseeing, managing, and directing the Port Authority’s financial and accounting functions. This includes responsibility for over $5 billion of annual revenues, $3 billion of annual operating budget expenses, and the annual Capital Plan investments in support of the agency’s 2017 to 2026 Capital Plan.

    Discussion by the Court

    Plaintiff argued that McCarthy’s “cash flow analysis is pure hearsay and inadmissible for purposes of trial and summary judgment.” For Plaintiff, the information is hearsay because McCarthy “does not have personal knowledge of the figures cited in [the cash flow analysis] to be accurate” since her staff prepared information on her behalf. However, Rule 703 states that an expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.

    The Court held that McCarthy’s staff made her aware of information from the General Ledger, which they reviewed and discussed. Thus, the Court declined to find here that McCarthy’s cash flow analysis is inadmissible hearsay.

    Held

    The Court denied Plaintiff’s motion to strike Elizabeth McCarthy’s affidavit and cash flow analysis.

    Key Takeaway:

    As per 703, McCarthy’s “cash flow analysis” is not hearsay because McCarthy’s staff made her aware of information from the General Ledger, which they reviewed and discussed.

    Case Details:

    Case Caption: Weisshaus V. The Port Authority Of New York And New Jersey Et Al
    Docket Number: 1:11cv6616
    Court: United States District Court for the Southern District of New York
    Order Date: August 22, 2024
  • Business Valuation Expert Witness’ Financial Projections Admitted

    Business Valuation Expert Witness’ Financial Projections Admitted

    Plaintiff American Northwest Distributors Inc. (“ANW”) was the Washington distributor of Four Roses bourbon, produced by Defendant Four Roses Distillery LLC (“Four Roses”), for about five years from 2015-2020. In 2020, after a pattern of late payments from ANW, Four Roses terminated the distribution agreement and switched to a competitor, Young’s Market Company, LLC (“Young’s Market”). ANW went to arbitration with Young’s Market, as provided for in Washington’s statutes regulating liquor distribution, and the arbitrator awarded ANW what she found to be the fair market value of ANW’s lost distribution rights.

    After the arbitration, ANW sued Four Roses, claiming Four Roses had breached the parties’ contract and interfered with ANW’s other business relationships, causing ANW damages beyond what it received from Young’s Market in arbitration. Four Roses counterclaimed for invoices ANW had never paid.

    ANW has retained Neil Beaton to analyze and determine the damages it has incurred as the result of Four Roses’ wrongful termination of ANW’s distribution agreement.

    Four Roses filed a motion to exclude ANW’s expert witness, Neil J. Beaton. Four Roses first argued that Beaton’s testimony regarding ANW’s lost profits is inadmissible because ANW cannot recover those profits as a matter of law, so that any testimony on this issue is “not helpful to the trier of fact.” The Court held that ANW may seek such recovery under common law contract claims and Four Roses’ argument on this point is unpersuasive. Four Roses also contended that Beaton’s testimony is a “rehash” of the damages he attested to in arbitration. While there may be overlap in Beaton’s financial figures, there are genuine disputes between the parties as to how that impacts the damages analysis in this case.

    Business Valuation Expert Witness

    Neil Beaton is a Managing Director with Alvarez & Marsal Valuation Services in Seattle. He specializes in the valuation of public and privately held businesses and intangible assets for purposes of litigation support (lost profits claims, marriage dissolutions and others), acquisitions, sales, buy-sell agreements, ESOPs, incentive stock options and estate planning and taxation. He also performs economic analysis for personal injury claims, wrongful termination and wrongful death actions.

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

    Discussion by the Court

    Four Roses also questioned the reliability of Beaton’s financial projections, asserting that they are overly optimistic and lack “reasonable certainty.” The Court held that while Beaton’s projections may be “optimistic,” that does not make his testimony unreliable if he lays an acceptable foundation for those calculations.

    Beaton has disclosed his assumptions and methodology for projecting lost profits, and Four Roses has not shown that those methods lack a reliable basis in the knowledge and experience of Beaton’s discipline. Four Roses can challenge Beaton’s approach at trial, but his choice of assumptions does not render his testimony inadmissible—only more or less persuasive when evaluated as a whole.

    The judge at arbitration took a similar approach, recognizing that Beaton held undeniable expertise in business valuation—but the assumptions upon which he applied that expertise did not lead to a persuasive conclusion. 

    As the judge at arbitration recognized, business valuation “is as much an art as a science.” Four Roses did not challenge Beaton’s methods—it questioned the growth assumptions and discretionary factors that were necessary to financial projections and challenged the figures he arrived at.

    Beaton’s convoyed sales estimate relied on the assumption that Four Roses’ conduct interfered with ANW’s sales relationships. Beaton’s testimony regarding “convoyed sales,” however, is no longer relevant, even if it could be considered reliable (an issue the Court need not decide). Beaton opines that ANW’s sales of Four Roses products motivated its customers to buy more products overall—such that Four Roses’ termination negatively impacted these purchases. In light of the Court’s determination, however, that Four Roses did not tortiously interfere with ANW’s other business relationships, Beaton’s “convoyed sales” testimony is no longer relevant and will be excluded. 

    Held

    In conclusion, the Court denied Four Roses’ motion to strike the testimony of Neil J. Beaton as to testimony regarding lost profits and other damages and granted it as to testimony regarding ANW’s loss of “convoyed sales.”

    Key Takeaway:

    The Court has “broad latitude” in determining an expert’s reliability and finds no reason to question the reliability or relevance of Beaton’s testimony on lost profits under Rule 702. Moreover, Beaton has disclosed his assumptions and methodology for projecting lost profits, and Four Roses has not shown that those methods lack a reliable basis in the knowledge and experience of Beaton’s discipline.

    Case Details:

    Case Caption: American Northwest Distributors Inc V. Four Roses Distillery Llc
    Docket Number: 2:22cv1265
    Court: United States District Court for the Western District of Washington
    Order Date: August 20, 2024
  • Psychology Expert Witness’ Testimony Assessing Causal Factors Leading up to a Suicide Admitted

    Psychology Expert Witness’ Testimony Assessing Causal Factors Leading up to a Suicide Admitted

    This case involved various claims arising from the death of SGT, a minor and former student at St. Marys Middle School in the Camden County School District. Plaintiffs alleged SGT died of suicide because of multiple bullying incidents at the school and Defendants’ failures to adequately respond to and address those incidents and asserted claims under the Americans with Disabilities Act (“ADA”) and Georgia law.

    Plaintiffs retained a psychology expert, Dr. Sheila Crowell, to opine on the causal chain of stressors leading to SGT’s suicide and SGT’s symptoms of ADHD. In her report, Crowell opined SGT experienced stress as a result of actions and inactions by staff at St. Marys Middle School and the cumulative nature of these stressors exceeded the typical level of stress most children encounter. 

    Crowell opined there was a clear precipitating event for SGT’s suicide on November 18, 2019. SGT made “origami rockets” for a classmate on November 15, 2019. The classmate threw the origami rockets in the math classroom, and one got stuck in the ceiling. On November 18, 2019, Jackson sent SGT to the “ownership room” for this incident.

    Crowell opined this event appeared to have been on the forefront of SGT’s mind on the day he died by suicide. In Crowell’s deposition, she detailed a process called “chain analysis.” “A chain analysis is where you go through the chain of events that led to a person harming themselves.”

    Defendants argued Crowell formed her opinions based on information that was narrowly focused on stressors SGT experienced at school, and Crowell did not sufficiently consider stressors outside the school. Defendants asked the Court to exclude Crowell’s opinions.

    Psychology Expert Witness

    Sheila Crowell is a tenured Psychology Professor at the University of Utah. She has been a licensed and practicing psychologist since 2013. Crowell has received funding from the American Foundation for Suicide Prevention and the National Institutes of Health to better understand and prevent suicide. Crowell has produced 115 peer-reviewed and invited publications, of which 30 publications deal directly with the topic of suicide or self-injury. 

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

    Discussion by the Court

    Crowell’s Opinions Are Based on Reliable Methodology

    Defendants argued Crowell’s methodology was not reliable for two reasons. First, Defendants contended Crowell’s opinions are based solely on deposition testimony that was narrowly focused on stressors SGT may have encountered at school. Defendants argued SGT could have encountered other stressors, including discipline at home, interactions with peers outside of school, and SGT’s relationship with his parents, but Crowell did not consider these additional stressors in forming her opinions. Second, Defendants argued Crowell’s “chain analysis” was merely her subjective opinion.

    Crowell’s opinions are based solely on deposition testimony that was narrowly focused on stressors SGT may have encountered at school

    Crowell’s report and deposition testimony demonstrated that she reviewed numerous documents to determine which stressors contributed to SGT’s suicide. In addition to depositions from school administrators, Crowell considered SGT’s suicide note, SGT’s suicide video, an interview with SGT’s brother, and Plaintiff Kohn’s deposition.

    Crowell’s report and testimony showed that although she considered information about other stressors from outside of school, like SGT’s home life and parental discipline, she determined those stressors were not “proximal stressors” on the day of SGT’s suicide.

    The Court did not find that Defendants have shown Crowell’s opinions were improperly based on insufficient information.

    Crowell’s “chain analysis” was merely her subjective opinion

    The Court held that the Defendants’ second challenge regarding the reliability of Crowell’s chain analysis methodology is also unconvincing.

    Crowell has sufficiently explained the connection between her training and experience and her opinion that actions and inactions by staff at St. Marys Middle School likely increased SGT’s vulnerability to mental health struggles and led to SGT’s suicide. Defendants have not shown Crowell’s chain analysis is based on an unreliable methodology.

    Crowell relied on her training and experience as a clinical and research psychologist when she performed a chain analysis in this case. Crowell identified several documents she reviewed related to this case, including depositions, a forensic interview, and an academic article focused on youth suicide. After reviewing those materials, Crowell noted there was no evidence of any mental health support for SGT or any efforts to protect him from bullying.

    Crowell’s Opinions Will Assist the Trier of Fact

    Defendants argued causation is the “[t]he legal issue” in this case, and Crowell’s opinions would not assist the trier of fact in resolving that issue. According to the Defendants, Crowell’s opinions focused only on what happened immediately before the suicide, not long-term stressors, and, therefore, her opinions will not help the jury determine whether and to what extent other events could have contributed to SGT’s death.

    Defendants’ contention that Crowell’s opinions will not assist the trier of fact is unconvincing. The Court held that Crowell’s opinions concern the relevant time period for assessing causal factors leading up to a suicide and self-harm generally, and, specifically, concern the proximal stressors that may have contributed to SGT’s suicide. Crowell’s opinions on these topics arise from her specialized training and experience in psychology and assessing risk of self-harm and suicide (with special focus on risks for adolescents). Crowell’s opinions concern a core issue in this case—the cause of SGT’s suicide—and the opinions concern topics likely beyond the understanding of the lay person.

    Held

    The Court denied the Defendants’ motion to exclude the testimony of Sheila Crowell.

    Key Takeaway:

    • Crowell identified the “ownership room” incident as a clear precipitating event for SGT’s suicide, particularly because the “ownership room” probably had negative historical meaning for SGT. Crowell noted the “ownership room” incident occurred in the context of ongoing academic struggles.
    • Crowell’s opinions concern a core issue in this case—the cause of SGT’s suicide—and the opinions concern topics likely beyond the understanding of the lay person. Therefore, Crowell’s opinions would be helpful to the trier of fact.

    Case Details:

    Case Caption: Kohn Et Al V. Camden County School District Et Al
    Docket Number: 2:21cv108
    Court: United States District Court, Georgia Southern
    Order Date: August 21, 2024

  • Law Enforcement Expert Witness’ Testimony About Defendants Deviating from Nationally Accepted Principles Excluded

    Law Enforcement Expert Witness’ Testimony About Defendants Deviating from Nationally Accepted Principles Excluded

    On May 26, 2020, South Bend police officers began clearing a homeless encampment on city property after prior notice and concerns about crime and COVID-19. Tracy Leliaert, a person with a home who protested the clearing, refused to leave even when warned repeatedly. Officer Joshua Morgan and Officer Ryan Williams eventually arrested her and two others for trespassing. She pursued excessive force claims under the Fourth Amendment and a First Amendment right-to-assembly claim, though only one claim remains today. 

    Leliaert retained Chet Epperson to review the evidence and opine on police practices and standards. Chet Epperson opined that the City of South Bend, Indiana, Officers Joshua Morgan, Ryan Williams, and Police Chief Scott Ruszkowski deviated from Nationally Accepted Principles of First Amendment Right to Assembly, Use of Force in Their Interactions with Leliaert, Internal Affairs Investigations and Early Identification Systems in the Complaint of Tracy Leliaert.

    Defendants argued that Epperson did not have the necessary facts or knowledge to reach his conclusions, that some of his opinions did not fit the case, and that he at times supplanted the jury’s role.

    Law Enforcement Expert Witness

    Chet Epperson earned a bachelor’s degree in sociology and anthropology, and then a master’s degree in public administration from Rockford University. He has published and taught seminars on police standards. He has served as a police practices consultant and appointed court monitor for police practices since 2015.

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

    Discussion by the Court

    The Court held that the opinions neither fit nor serve the legitimate purpose of educating the jury, much less without substantial and overweighing confusion.

    Epperson also proposed to opine about the First Amendment claim (first opinion), but this claim too cannot survive summary judgment as a matter of law. Whether the City had a plan in place to remove and then safely house the homeless has no bearing on the First Amendment claim (or Eighth Amendment claim); and that proves truer still when no such claim survives at summary judgment.

    Epperson also acknowledged that whether the land was a public forum would make a difference to a First Amendment claim, but he admitted that he has no information to determine whether it was. He admitted he hasn’t done any investigation and doesn’t have any facts that would make the tent city a public forum.

    When Epperson opined that Officer Morgan deviated from nationally accepted principles of use of force, the Court held that the jury is well positioned to decide whether Officer Morgan acted reasonably.

    Epperson intended to opine that Officer Morgan deviated from a nationally-accepted practice on less lethal encounters in using a knee over Leliaert’s neck. The Court held that the Fourth Amendment standard for excessive force is an objective standard, and his testimony about standards of police practice are immaterial to determining what is objectively reasonable under the Fourth Amendment.

    Held

    The Court granted the motion to exclude the testimony of Chet Epperson.

    Key Takeaway:

    Epperson’s opinion has a glaring factual gap at the start that renders it unreliable—it assumes Leliaert was homeless when she was not. Whether the City had a plan in place to remove and then safely house the homeless has no bearing on a First Amendment claim (or Eighth Amendment claim) for someone who was not homeless.

    Epperson just assumes Leliaert had a right to be there because, simply stated in his words, she was there and it was property owned by the City. His factual gaps thus reveal gaps in his methodology, and reveal his opinion to be barely more than his say-so.

    Case Details:

    Case Caption: Leliaert V. City Of South Bend Et Al
    Docket Number: 3:22cv359
    Court: United States District Court for the Northern District of Indiana, South Bend Division
    Order Date: August 20, 2024
  • Testimony of Economics Expert Witness Excluded Because of his Inability To Produce a Coherent Model

    Testimony of Economics Expert Witness Excluded Because of his Inability To Produce a Coherent Model

    Plaintiffs brought an antitrust lawsuit against Defendants, asserting that Defendants entered a set of agreements with each other and their broadcast partners that suppressed the output of telecasts of out-of-market professional football games, resulting in higher prices for Sunday Ticket.

    Since Judge Philip Gutierrez decided the opinions provided by the Plaintiffs’ expert witnesses regarding financial damages were not reliable, the Sunday Ticket Plaintiffs won’t be getting a mulligan on damages, at least not for now.

    Daniel Rascher, one of the expert witnesses whose testimony was allowed until it wasn’t, crafted a model based on the NFL ditching Sunday Ticket and selling the out-of-market games to various networks that would broadcast the feeds from CBS and Fox.

    Economics Expert Witness

    Daniel Rascher has taught sports economics and finance, business research methods, and master’s project. As President of SportsEconomics, his clients have included organizations involved in the NBA, NFL, MLB, NHL, NCAA, NASCAR, MLS, PGA, WTA, media, sporting goods and apparel, professional boxing, mixed martial arts, minor league baseball, NHRA, AHL, Formula 1. He has authored articles for academic and professional journals, book chapters, and a text book in the sport management and economics fields, has been interviewed hundreds of times by the media for his opinion on various aspects of the business of sports, and has given over fifty presentations at professional and academic conferences.

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

    Discussion by the Court

    Rascher used college football as his model of what would happen in the absence of the competitive restraints at issue in the case (“college football but-for world”). He opined that if the NFL Teams stopped “colluding and selling” their out-of-market games through the NFL, but sold them either independently or in divisions, the result would be like college football as the games would “become available, just like on Saturday, on over-the-air channels and . . . basic sport cable channels” and customers would not “pay anything extra above what they were already paying for their TV package.”

    Judge Gutierrez held that Rascher’s failure to produce a coherent model is particularly problematic as there are significant differences between college football and the outcome in his college football but-for world. Unlike Rascher’s college but-for world, not all college football games are available on over-the-air networks and on the major cable stations as some college football games—including games of top 25 ranked teams—were available only by purchasing premium offerings like the Pac 12, SEC, or ACC network packages or viewable only on local regional networks.

    The judge upheld the finding that Sunday Ticket, as constructed, violated federal antitrust laws. 

    From June 5, 2024 to June 26, 2024, a trial took place, where the jury found that Defendants’ conduct violated § 1 and § 2 of the Sherman Act. The jury awarded the Commercial Class $96,928,272.90 and the Residential Class $4,610,331,671.74 in damages.

    Judge Gutierrez specifically found that there was enough evidence to justify the verdict as to the issue of liability. He threw the verdict out because he determined that the expert witnesses he allowed to testify weren’t reliable.

    Held

    The Court excluded Daniel Rascher’s testimony under FRE 702 because it relied on a college football model that was developed based on speculation and ipse dixit opinion.

    Key Takeaway:

    After review of Rascher’s testimony, the Court finds that his college but-for world was not based on a reliable methodology but rather ipse dixit opinion untethered to an economic analysis of what would have likely occurred in the but-for world and must be excluded. Rascher had to present a but-for world grounded in economic rationality.

    Case Details:

    Case Caption: In re: NFL “Sunday Ticket” Antitrust Litigation
    Docket Number: 2:15ml2668
    Court: United States District Court for the Central District of California
    Order Date: August 01, 2024