Courts Deal With “Dual-Hat” Experts: Part I

Thomas E. Spahn | McGuireWoods

Fed. R. Civ. P. 26(a)(2)(B)(ii) governs testifying experts’ duty to produce “the facts or data considered by the witness in forming” his or her opinion. Fed. R. Civ. P. 26(b)(4)(D) governs dramatically different non-testifying consulting experts. Not surprisingly, witnesses might switch from one role to the other, and also might possess arguably pertinent facts from direct or tangential participation in the pertinent underlying events. This type of expert is commonly called a “dual-hat” expert, whose involvement can raise subtle issues.

In Johns v. CR Bard (In re Davol, Inc.), Case Nos. 2:18-md-2846 & 2:18-cv-1509, 2021 U.S. Dist. LEXIS 105022 (S.D. Ohio June 4, 2021), plaintiff alleged injuries from hernia mesh complications. Plaintiff hired Dr. Nagy as a non-testifying consulting expert, and later designated him as a testifying expert — but refused to produce documents he created while reviewing defendants’ documents. The court ordered plaintiff to produce those documents. First, “[e]ven crediting Plaintiff’s contention that Dr. Nagy was a consulting witness initially,” the court ruled that “[t]he proponent of a dual-hat expert, i.e.[,] an expert that is both a consulting and testifying expert” may only withhold “‘materials generated or considered uniquely in the expert’s role as [non-testifying] consultant.'” Id. at *11-12 (citation omitted). The court explained that Dr. Nagy “‘cannot be expected to draw a mental line in the sand between information gleaned’ in an earlier, consulting context and information later learned as a testifying expert when the subject matter is so similar.” Id. at *12 (internal citation omitted). The court also noted that the testifying expert rule requires such experts to produce “all materials reviewed or considered by the expert, whether or not the expert report ultimately refers to those materials as a basis for his or her opinions.” Id. at *6 (citation omitted). The court emphasized that “[a]mibiguities are resolved in favor of discovery.” Id.

Litigants often retain an expert first as a non-testifying consulting expert — to be sure that the litigant likes the expert’s conclusions, demeanor, etc. But litigants must carefully consider what such an expert might be required to produce upon morphing into a testifying expert. Next week’s Privilege Point will address a “dual-hat” expert scenario another court addressed about two weeks later.

Courts Deal With “Dual-Hat” Experts: Part II

Thomas E. Spahn | McGuireWoods

Last week’s Privilege Point addressed a court’s careful sorting out of discovery issues implicated when a non-testifying consulting expert created documents arguably related to his later role as a testifying expert. About two weeks later, the Southern District of New York (Judge Caproni) dealt with other issues involving non-testifying experts.

In In re Commodity Exchange, Inc. Gold Futures & Options Trading Litig., Nos. 14-MD-2548 (VEC) & 14-MC-2548 (VEC), 2021 U.S. Dist. LEXIS 113760 (S.D.N.Y. June 17, 2021), plaintiffs alleged that defendants comspired to manipulate the London daily benchmark gold price. Defendants sought to depose plaintiffs’ non-testifying consulting experts, but the court rejected defendants’ motion. First, defendants argued that plaintiffs’ non-testifying experts were “fact witnesses and not experts,” because they were familiar with gold pricing issues from their previous work. Id. at *24. The court acknowledged that Fed. R. Civ. P 26(b)(4)’s Advisory Committee’s Notes state that experts may be deposed about information they acquired as “an actor or viewer with respect to transactions or occurrences that are part of the subject matter of the lawsuit.” Id. at *25. But the court concluded that plaintiffs’ experts had not “traded gold or gold-based instruments or participated in any way in the Fixing process” – and that “[b]y Defendants’ logic, most experts who analyze facts are fact witnesses who fall outside the ambit of Rule 26(b)(4)(D), swallowing any protections afforded by the Rule.” Id. at *26-27. Second, the court found that plaintiffs’ experts had waived certain work product protection – accurately noting that “[c]ourts are split as to whether [non-testifying consulting experts’] protections can be waived.” Id. at *29. After concluding that the non-testifying consulting expert Rule did not protect plaintiffs’ experts from depositions, the court nevertheless denied defendants’ motion to depose them – concluding that “any additional information obtained from deposing [plaintiffs’ non-testifying consulting experts] would be unreasonably cumulative or duplicative of the information Defendants should have already received via fact discovery.” Id. at *37.

Litigants and their lawyers should always consider both non-testifying and testifying experts’ source of information – especially if these experts move from one role to the other.

No Bad Faith When Insurer Relied on Opinion of Independent Consultant

Alycen A. Moss and Elliot Kerzner | Property Insurance Law Observer

The Court of Appeals of Georgia recently held that an insurer’s reliance on the report of an independent consultant creates a presumption that it did not act in bad faith in denying coverage. In Montgomery v. Travelers Home and Marine Ins. Co., 859 S.E.2d 130 (Ga. Ct. App. 2021), the insured made a claim under her homeowners insurance policy for water damage to her basement that she asserted had been caused by a ruptured garden hose. The insurer’s claims adjuster inspected the property two days later and saw damage that appeared to be from ground water rather than the ruptured hose. The adjuster sought input from his supervisor, who suggested that he hire an independent engineer to determine the cause of the water damage.

The insurer retained a structural engineer, who inspected the property and observed conditions on several basement walls that indicated moisture had seeped into the basement from the ground outside over a period of time. Based on his observations, the engineer opined that the water damage resulted from the migration of groundwater through breaches in the concrete masonry unit block foundation walls and slab-on-grade, not from the broken garden hose. The engineer issued a written report to the insurer detailing his findings. Based on the engineer’s report, the insurer denied the claim because ground and surface water was not a covered peril under the policy.

The insured then sent the insurer a letter challenging the denial of her claim. She claimed that the engineer had focused on the cause of pre-existing moisture damage for which she was not making a claim instead of looking at the cause of the water damage to her basement from the ruptured water hose. She also claimed the engineer’s conclusions were inconsistent with the amount of rain that had occurred at that time, and she attached to her letter weather data for the month of the loss.

After reviewing the insured’s letter, the engineer disputed her contentions, reiterating the conclusions of his report and stating that the volume of rain at the time was only one of several factors contributing to ground water intrusion. The engineer concluded that the insured’s rebuttal letter contained no new information to alter the conclusions of his report. When the insurer did not change its decision to deny her claim, the insured brought an action in Georgia state court for breach of contract, statutory penalties under O.C.G.A. § 33-4-6 for bad faith failure to pay her claim, and attorney fees. The trial court granted summary judgment to the insurer on the claims for bad faith penalties and attorney fees, and the insured appealed.

The Court of Appeals of Georgia held that the trial court did not err in granting summary judgment to the insurer on the bad faith claim because the insurer presented evidence that it denied the claim based on the advice of the structural engineer and the insured had not presented evidence from which a jury could find that the structural engineer’s advice was patently wrong or that the insurer had used it as a pretext to deny the claim. The court explained that, under Georgia law, the insurer was entitled to summary judgment on the bad faith claim unless there was evidence that the insurer had no reasonable grounds to contest the insured’s claim under the policy. The court further explained that the advice of an independent consultant provides an insurer with a reasonable ground to contest an insured’s claim unless the advice is patently wrong or is a mere pretext for the insurer’s unwarranted prior decision to deny the claim.

Applying these rules to the facts of the claim, the court noted that the insured had pointed to no evidence that the structural engineer’s advice was patently wrong. The court defined “patently wrong” as “obviously or apparently wrong,” and observed that the insured’s criticisms of the structural engineer’s advice, and the evidence she cited in support of those criticisms, merely raised a factual question concerning whether or not the advice was wrong. While the existence of a factual question was sufficient to preclude summary judgment on the insured’s underlying claim of liability under the policy, it did not preclude summary judgment on her claim for bad faith penalties.

To the contrary, the court reasoned, the existence of a factual question demonstrated that the insurer had reasonable grounds to contest the claim and supported the conclusion that it did not deny the claim in bad faith. Similarly, the insured’s evidence challenging the findings of the structural engineer were relevant to the question of whether the engineer’s conclusions were correct, not whether they served as a pretext for the insurer’s denial of the claim. Accordingly, the court affirmed the grant of summary judgment to the insurer on the bad faith claim.

The Montgomery decision highlights the importance of obtaining an opinion from an independent expert who is qualified and been properly vetted. If the expert report is not obviously wrong, and is not used as a pretext for a prior decision to deny the claim, it will help preclude a claim for bad faith penalties.

Avoid ‘Glass Houses’ Arguments When Comparing Experts

Dr. Ken Broda-Bahm | Holland & Hart

…and they are going to be bringing Dr. Smith up here to tell you that their theories are true. But when they do, remember who is paying Dr. Smith to be their hired gun and to offer that testimony.

And what about the experts hired by the side making that argument? Well, in most cases they’re paid too, but their sponsors will believe that they hired a real expert, paid them for their time and not their opinion, and so on. The jurors, however, likely recognize that as a bit of stone-throwing by someone who lives in a glass house. It may be correct that your experts are more honorable than theirs, but appealing to their paid status makes the expert battle look like a matter of, “Good for me, but not for thee.” That may contribute to the tendency for jurors to set the experts aside altogether. There’s also research (Cooper & Neuhaus, 2000) showing that the “hired gun” effect of reducing credibility based on the expert’s paid status only tends to work against an expert whose communication skills are low.

So how do you address it when their expert, you think, is just saying something for the paycheck? The most basic way is for your expert to be the better teacher. The jury will trust the person who helped them understand, and gave them tools to do their job. When you do need to compare the witness, don’t do it based on the one fact that all experts have in common (compensation). Instead, draw the contrast based on the quality and usefulness of the expert’s work to the jurors. In this post, I’ll share a quick checklist for that comparison.

The best questions to ask when looking for an angle of favorable comparison between your expert and theirs is to focus on the three parts of analysis: Input, process, and output. Your specific checklist is also likely to be particular to the relevant area of expertise and to your case, but here are some general rules of thumb.

Inputs:

  • Who brought more experience to the task?
  • Who brought the right kind of experience to the task?
  • Who reviewed the greater amount of material?
  • Who had the greater leeway to decide what they needed to review?
  • Who reviewed independently, without necessarily knowing the preferred conclusion?

Process:

  • Who conducted their own original research or study (as opposed to just materials review)?
  • Who employs the more objective (rather than subjective) process?
  • Who can better explain the concrete steps they took in reaching their conclusions?
  • Who can explain to jurors how they might understand and follow the same process?
  • Who more completely considered and dismissed rival hypotheses?
  • Who can account for exactly why the other expert got it wrong?

Outcome:

  • Who is more certain about their conclusions?
  • Who is clearer about their conclusions?
  • Who is better able to teach or communicate the conclusions?
  • Who is more definite in the implications of their conclusions, and can tell the jury what to do with this information?
  • Who is more honest in conveying the constraints or limitations of their conclusions?
  • Whose conclusions are more on-point to the case and the questions the jury needs to answer?

The deeper you get into the analysis, the more bases of comparisons you can add, and the more specific they can be. The general message is not to rely on shallow comparisons (like the glass house of expert pay) but to instead dig into the analysis and give your jurors clear and substantive reasons why your expert is better.

Lawyer’s Advocacy in Arbitrations: No. 9 of the Top 10 Horrible, Terrible, No Good Mistakes Lawyers Make: Be Creative with Proof and Issues

David K. Taylor | Buildsmart

There’s a great argument that lawyer advocacy in an arbitration is more essential than at a trial in court. This post is the ninth of the top 10 most horrible, terrible, no good, “bang your head against the door” mistakes that I have seen lawyers make in arbitrations, both when I served as counsel and as an arbitrator. Agreeing to arbitrate a dispute, whether in a contract or by agreement, is a serious decision for any business. There are pros and cons to binding arbitration versus trial in a court that go beyond a series of blog posts, but the fact is that when a dispute is arbitrated, finality is the rule. It is very difficult to appeal an arbitration award. In many instances, representing a party in an arbitration requires more due diligence and work than a trial. Great “arbitration” lawyering is therefore essential but sometimes does not happen.

No. 9: Not Being Creative with Proof and Witnesses 

In a typical trial, the plaintiff goes first with witnesses followed by the defendant’s witnesses. There may be multiple parties and claims, and the trial can stretch out over many days.  Key witnesses or experts could testify on day one, and the witnesses (including experts) who rebut that testimony on those issues may not testify until days later. The judge’s schedule may also dictate trial time and scheduling. Witnesses will not normally be taken “out of turn” regardless of their circumstances. The result may be testimony on claims one, three, and five on the first day of trial, while the rebuttal witnesses may not provide testimony until days later. Whether in front of a judge or jury, this lack of continuity of witnesses can cause confusion, especially when there is no trial transcript for a judge or jury to review. They have to rely on notes (if allowed to a jury) and/or pure memory.

While in arbitration hearings arbitrators face some of these same continuity issues, this is where the more informal nature of arbitration can be a real advantage. It may be harder for the arbitrators to review the testimony than a judge. Keeping this in mind, be intentional about the order of presentation of your witnesses. In arbitration, you are likely to have more flexibility with the order of witnesses and the hours made available for the presentation of evidence. Always remember that the arbitrator is being fed facts and arguments through a fire hose and is relying only on notes taken while a witness is testifying, as well as (typically) volumes of exhibit books chock full of exhibits. Therefore, put on your thinking hat. Arrange the exhibit books (see previous post) and include separate “claims/issues” sections for easy access, not just for the arbitrator but for you and your witnesses’ preparation. Arbitrators appreciate any effort or suggestion to narrow down issues and claims and present all evidence on a specific claim at the same time. Creativity with how issues, witnesses, and claims are presented is the key. Zoom and telephone testimony can be arranged (remember the rules of evidence do not apply). You can suggest what’s called “hot boxing” and propose having key witnesses from both sides testify back to back on key issues. For experts, consider having them present their opinions one at a time, or even at the same time, by going back and forth answering questions from all counsel and the arbitrator. Especially in a dispute where there may be scores of issues and claims, your efforts to make sure the arbitrator’s job is easier will pay off in the final result.

Read numbers 1234567, and 8 on the list.