The Commercial Litigation Daubert Newsletter
Investigating and Articulating the State of the Art
in Daubert Legal Strategy
Commercial Litigation Damages Testimony:
Daubert, Benjamin Franklin, and a Tale of Two Cases
I recently read Walter Isaacson’s new biography of Benjamin Franklin (one and a half thumbs up), and the story put me in mind of Daubert and Kumho Tire several times. It might seem odd that this long-dead inventor and founding father would evoke thoughts of 21st century scientific expert testimony, but some of his writings speak directly to one of the most fundamental issues arising in commercial litigation Daubert practice. This is the threshold issue of the scientific or nonscientific status of proffered expert testimony and this installment of the Newsletter examines how this threshold issue impacts the admissibility of damages testimony in commercial litigation.
The topic of this installment of the
Newsletter is suggested by
Damages expert excluded, damages expert admitted
In the Northern District of Illinois case one of the damages experts offered up a skilled but decidedly nonscientific damages analysis. The opponent of the testimony virtually ignored Daubert’s non-testing criteria while repeatedly disparaging the expert’s “scientific testing” and climaxed with an exhortation to the judge to exclude the damages testimony because it had not “survived the rigors of scientific testing.” Well, of course it had not survived the rigors of scientific testing: As Daubert teaches, it cannot. Its very nature as nonscientific testimony makes it unable to survive the rigors of scientific testing, and this implies no deficiency in Rule 702 testimony. But in this case the opponent of the testimony convinced the judge that the testimony had not been tested and to exclude the testimony. Excluding such testimony on such a basis is error and unfortunately it is common error, especially where damages testimony is concerned. And while this error is common, it is not inevitable. Since such an exclusion effectively grants financial summary judgment, the balance of this newsletter turns to a discussion of the foundations of such an exclusion and legal strategies for keeping the resulting error from occurring.
The science/nonscience dichotomy revisited.
The March 2003 issue of this Newsletter discussed the crucial role that the Daubert/Kumho Tire, science/nonscience dichotomy can play in the admissibility of commercial litigation expert testimony and the somewhat capricious nature of the common law governing that issue. The threshold question of whether testimony is evaluated under the Daubert scientific criteria or the Kumho standard for admissibility of nonscientific testimony presents itself in a large number of commercial litigation matters and is often both dispositive of the matter and decided with error.
At the root of this common error is a misapprehension that manifests itself in a seeming conflict between Daubert and Kumho Tire. The key element of this apparent tension concerns the distinction between science and other learned disciplines and it exists because the Supreme Court seems to come down on both sides of the question.
First, as noted in the March
Newsletter, Daubert drew a clear line between scientific and
nonscientific testimony, saying, “Scientific methodology today is based on
generating hypotheses and testing them to see if they can be falsified;
indeed, this methodology is what distinguishes science from other forms of
human inquiry.” The Court cites the
seminal treatise in scientific method for the proposition that “the criterion of the scientific status of
a theory is its . . . testability.” Such a criterion cannot exist without
dichotomizing science from nonscience.
So before the Daubert court
even mentioned the four factors that are so widely discussed, they said that
scientific testimony must follow the scientific method. And, more importantly for today’s
discussion, they said that the scientific method distinguishes scientific
inquiry from nonscientific inquiry.
The bottom line here is that the
But language in Kumho Tire is cited as support for precisely the opposite proposition: Referring to scientific, technical and other specialized knowledge, Justice Breyer wrote in Kumho that, “There is no clear line that divides the one [science] from the other [nonscience].” It is true that this teaching occurs toward the end of an extended discussion that concludes that the Rules do not distinguish between these different kinds of expert testimony. But it is also true that Justice Breyer does transmogrify his discussion about the Rule into the above-cited statement. This is not just a subtlety for the professors to argue in the law reviews. It means that litigators will have to deal with this pronouncement in briefs addressing whether a particular expert’s testimony is evaluated by the Daubert standard for admissibility of scientific expert testimony or the analogous Kumho standard for the admission of nonscientific expert testimony. This is true for several reasons, but the easiest of them is that the opponent of the testimony will surely try to hold the testimony to a strict scientific standard.
To recap, first, the
It is instructive to compare the outcome of the Northern District of Illinois case to what I will call the “Southern District” case, where the preceding arguments about the science/nonscience distinction were made and the testimony of the damages expert was admitted.
In the “Southern District” case the opponent of the testimony argued that the expert’s business valuation testimony was not scientific and failed Daubert’s scientific testing and error rate criteria. Proponent explained Daubert’s clearly articulated distinction between scientific and nonscientific (in the words of Rule 702, Technical and Other) testimony and that the expert’s testimony, while being a product of a learned process, was not scientific in Daubert’s sense of hypothesis testing and error rate analysis. The court admitted the testimony with very light restrictions.
This issue arises in many of the Daubert issues that I work on and I believe it arises in a very high percentage of commercial litigation matters overall. Allowing nonscientific damages testimony to be evaluated under Daubert’s scientific testing regimen almost guarantees its exclusion, and to be able to argue successfully that your expert’s nonscientific expert testimony should be assessed by the Daubert progeny’s nonscientific criteria, it is necessary to be able to argue successfully that there is a distinction between science and nonscience. So, our issue today is, how do you do that with Kumho Tire itself as seeming authority for the contrary proposition.
Science, nonscience, reliability and unreliability
Some kinds of expert testimony are simply not capable of being tested. An immediate result is that if the opponent of such testimony can convince the court that (1) the Daubert factors for scientific testimony apply and (2) that the testimony has not met the Daubert criteria because it has not been subjected to “the rigors of scientific testing,” the testimony will be excluded regardless of its quality, effectively reading the words “technical and other” out of Rule 702.
So this is where Benjamin Franklin informs the discussion, because his proposition that “when Truth and Error have fair play, the former is always an overmatch for the latter,” frames the issue in a way that clarifies its solution.
Which one is correct and which one is the rule?
The evidence on the compound question that forms the heading of this section is complex, but most of the complexity comes in answering ‘which one is the rule’ because, as intimated above, it is pretty well settled which one is correct. In an ideal world the fact that there is a clearly articulated distinction between science and nonscience would keep lawyers from having to argue against citations to the Supreme Court for the opposite proposition. But such argument is often necessary in briefs on whether or not damages expert testimony must live up to the standards of science. I have seen massive amounts of perfectly good “technical and other” expert testimony excluded for failing to satisfy the criteria of science. In many of those cases the exclusion of the expert testimony has been effectively dispositive of the matter, making this a very serious question.
There are several interesting issues associated with this question, some of which will be taken up in subsequent issues. One that is fairly central to the issue is that judges, in their own self-assessment, are usually not very good scientists. This is no slam on the judiciary: It is rather a quoting of its most able members. No less illustrious a judge than the Chief Justice provided the initial cite to this proposition in his Daubert concurrence and dissent, and countless of the Daubert progeny have echoed the informed judiciary’s sentiment that ‘we are good at law, not so good at science.’ This provides a high-payoff opportunity for good scientifically informed lawyering because it is usually, de facto, left to counsel to educate their judge, either properly or improperly.
I like to draw parallels from known legal issues to unfamiliar Daubert issues2 in discussing the cases. So, just for fun, one more question.3
Does Kumho Tire pass the Daubert test?
As it turns out, the Supreme
Court’s two pronouncements are not only mutually exclusive; they are also
what mathematicians refer to in science-speak as “exhaustive.” This suggests an interesting mental
experiment because, as it turns out, the existence of a set of mutually
exclusive and exhaustive possibilities is a scientific requisite for the
hypothesis testing that the
In every relevant scientific and learned community, this Kumho-inspired null hypothesis is rejected in favor of the alternate. One could even say that there is general acceptance of the rejection, although “general acceptance” is a term with more currency in the legal literature than in the scientific. To put it in the familiar terms of a legal hypothetical, if two opposing experts wanted to testify, one to each of the cited propositions, the proper holding would be to allow the testimony of the expert testifying as to the Daubert proposition that there is a clear distinction between science and non-science, and to exclude the testimony of the expert testifying as to the Kumho based proposition that dismisses such a distinction.
So, by way of conclusion, the side of the Daubert/Kumho dividing line upon which the judge puts an expert’s testimony routinely decides cases. And judges routinely err in this determination. It is difficult to argue against such determinations with Kumho apparently saying that there is no such dividing line. To the extent that Kumho says that there is no distinction between science and nonscience, Kumho is just plain wrong.
And, at least as far as Daubert issues are concerned, whether error is overmatched by truth seems to depend on the lawyering involved.
Preview of the next issue of the Commercial Litigation Daubert Newsletter:
Daubert just had
its 10th anniversary and this has kicked off a flurry of
commentary on Daubert issues. This commentary ranges from the
sublime to the ridiculous, and there are examples all throughout this range
that raise issues of substantial practical application for commercial
litigators. The Wall Street Journal published one such article last month
that laments Daubert’s failure to screen all bad testimony while at
the same time sometimes keeping juries from hearing obviously good
science. The next issue of the Newsletter will consider how the
European model of expert testimony, which federals courts are empowered to
employ, could go a long way toward resolving this all-too-common problem with
the current application of Daubert. This was to be the topic of this
issue but the
Daubertexpert provides sophisticated Daubert analyses that bring Daubert's science-based criteria to the fact-finders comfort level, offering highly cost-effective strategies in commercial litigation that involves expert testimony.
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1 The March issue’s discussion of this topic has been cited and reprinted several times since its original publication and now appears in Bar CLE materials and in peer-reviewed legal and expert witness publications.
2 Sometime I’ll tell you the one about Daubert and hearsay.
3 This is just for fun. Do not try this in your briefs. But if you do, let me know how it comes out.