Opinion vs. Legal Conclusion: Has Your Expert Crossed the Line?
Posted by Benjamin Schuver on January 09, 2023
The line between permissible expert opinion and impermissible legal or factual conclusions can sometimes be blurry under the Federal Rules of Evidence (FRE). It’s critical for lawyers and their expert witnesses to understand the distinction between an opinion that embraces an ultimate issue and one that offers a legal conclusion.
FRE Rule 704 states, “An opinion is not objectionable just because it embraces an ultimate issue.” The committee notes to Rule 704 provide a helpful example: In a proceeding to determine the validity of a will, an expert can express an opinion on whether the will maker had “sufficient mental capacity to know the nature and extent of his property and the natural objects of his bounty and to formulate a rational scheme of distribution.” But the expert would impermissibly cross the line by opining whether the will maker had the “capacity to make a will.”
Applying the Rule in the Real World
A recent Delaware Chancery Court decision provides another example of the subtle differences between permissible expert opinions and impermissible legal conclusions. In re Columbia Pipeline Group, Inc. Merger Litigation involved claims against an energy company and its officers for alleged breaches of fiduciary duty related to a merger. (Note that the Delaware Rules of Evidence closely track the FRE.)
The defendants submitted a report by a financial expert on merger and acquisition negotiations. But the court disallowed several aspects of his report because they offered conclusions of law or specific factual findings.
In one example, the expert opined on whether fiduciaries’ actions were “reasonable and consistent with negotiation best practices.” The court explained that the test for measuring a breach of fiduciary duty is whether the officers’ conduct “fell outside the range of reasonableness.” Here, it was permissible for the expert to opine on whether the actions in question were consistent with negotiation best practices. However, by going beyond that to provide an opinion on their reasonableness, the expert was “expressing a backdoor legal opinion.”
The court also suggested that it would be more likely to exclude expert testimony for invading the province of the judge or jury if it isn’t supported by data and rigorous analysis. The court seemed skeptical about testimony that simply offers the expert’s “views based on his thinking and judgment.”
Toeing the Line
FRE Rule 702 permits expert opinion testimony when, among other things, the expert’s “specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.” However, experts aren’t permitted to usurp the court’s role by offering legal conclusions or specific factual findings. These tasks are reserved for the judge and jury.
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As a manager, Ben’s responsibilities include the valuation of businesses, business interests, and intangible assets for purposes of financial reporting, transaction advisory, and tax planning and compliance. Additionally, Ben’s role includes the performance of various forensic accounting procedures, as agreed upon with clients. Ben’s prior experience includes performing assurance services for publicly traded companies within the aerospace and manufacturing industries, as well as large private companies and the gaming industry. He also has experience in testing and evaluating internal controls over financial reporting.