{title} icon

Articles From Brisbane Consulting Group

Daubert Challenges – Communication with Experts is Key to Avoiding Exclusion

Communication with Experts is Key to Avoiding Exclusion

Litigants in federal cases often challenge the admissibility of expert testimony, arguing that it fails to meet minimum standards of relevance and reliability. Those standards were established by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals. The landmark case anointed federal trial judges as the “gatekeepers” of expert evidence.

Overview of Admissibility Rules

Daubert applies a two-pronged test for expert admissibility. First, the expert’s methods and reasoning must be reliable. Second, the expert’s conclusions must be relevant. In other words, they must be properly applied to the facts at issue.

The Court listed four nonexclusive factors judges should consider in evaluating reliability of an expert’s theory or technique:

  1. Can it be and has it been tested?
  2. Has it been subject to peer review or publication?
  3. What’s the known or potential error rate?
  4. Is it generally accepted in the relevant scientific or technical community?

Before Daubert, most courts applied the less stringent Frye standard, under which admissibility required only that an expert’s methods were generally accepted as reliable in the relevant scientific community. In 1999, the Court clarified in Kumho Tire that the Daubert standard applies to nonscientific testimony, opening the door for challenges against financial experts.

Best Practices

To avoid exclusion of expert witnesses, communication is key, beginning in the early stages of litigation. Before deposition or trial, address these questions with your expert:

What’s the applicable standard? Daubert applies in federal court and most state courts. However, some states continue to apply the Frye standard or other less restrictive standards. It’s critical to determine which standard applies and ensure your experts understand how it affects their work and their testimony.

Recent developments in Florida illustrate the potential uncertainty, in some states, regarding the appropriate evidentiary standard. In October 2018, the Florida Supreme Court in Delisle v. Crane ruled that the Frye standard applied, despite the state legislature’s codification of Daubert in the state’s evidence code five years earlier. The court decided that the evidence code amendments unconstitutionally encroached on the court’s authority to establish procedural rules. But just seven months later, the court reversed course in In re Amendments to Florida Evidence Code, ruling that Daubert was the applicable standard.

Are the methods reliable? To avoid Daubert issues, your experts’ reports and testimony must meet the four reliability factors. Ask experts to gather evidence that their methods are generally accepted, including authoritative treatises, peer-reviewed articles by reputable authors and compliance with applicable professional standards. If you’re concerned that your experts’ methods may not pass the Daubert test, ask them to prepare calculations using alternative methods as a backup.

Also, check whether your experts’ academic credentials, certifications and experience are relevant given the issues in the case. Experts should be ready to explain the standards that govern their work — and they should avoid opining on matters beyond their expertise.

Are the assumptions reasonable? Review your experts’ assumptions with a healthy dose of skepticism. They should be realistic and consider all relevant data — even information that doesn’t support the desired conclusions. If an expert relies on data or work furnished by the client or other third parties, it must be reliable.

Experts’ work also must pass the “real-world” test. In other words, their methods and assumptions should adhere to the same professional standards, and apply the same level of intellectual rigor, as nonlitigation engagements involving the same issue.

Reliability vs. Credibility

In determining whether an expert’s testimony should survive a Daubert challenge, courts often make a distinction between reliability and credibility. Reliability is the province of the judge. But credibility — or accuracy — is the province of the jury.

For example, in Dominion Liquid Technology v. GT Beverage, a federal district court admitted a damages expert’s testimony about a production line’s “going concern potential value.” The plaintiff argued that the expert’s testimony was unreliable because, instead of a “dollars and cents” valuation, he merely provided an opinion based on his own unsupported conclusions.

The court disagreed, noting that the expert’s opinion was based on 30 years of relevant industry experience, as well as an inspection of the production line, a review of the equipment manufacturer’s proposals and a meeting with the company’s president. The pertinent inquiry, the court explained, wasn’t whether the expert offered precise damages calculations but whether his opinions would assist the court in understanding the evidence or determining a factual issue.

The court rejected the plaintiff’s arguments because they “fundamentally confuse the credibility and accuracy of [the expert’s] opinion with its reliability.” The right way to challenge his testimony wasn’t to exclude it, but to vigorously cross-examine it, present contrary evidence and provide careful instruction on the burden of proof.

Avoid Exclusion

There are two main reasons financial experts can be excluded under the Daubert standard. First, an expert who uses insufficient data or methods that aren’t generally accepted may be deemed to lack reliability. Second, an expert whose testimony exceeds the scope of his or her role or isn’t tied to the specific facts may be deemed to lack relevance. Discussing the relative strengths and weaknesses of experts’ testimony can help you develop strategies for increasing the chances of admissibility.

Daubert Challenges – Communication with Experts is Key to Avoiding Exclusion

for more information

Lou is the Managing Director of Brisbane Consulting Group, LLC, specializing in business valuations, forensic accounting, and litigation support services. He has extensive valuation experience and has served as a financial consultant and expert to attorneys in the economic aspects of matrimonial dissolution and other cases involving personal injury and commercial damages. He has been court-appointed throughout New York State and has testified as an expert witness on numerous occasions in State Supreme Court and Federal Court.


How Can We Help?