Ours is a complex world giving rise to legal disputes in areas of specialized knowledge that are difficult for a trier of fact, either a jury or a judge, to understand without the help of experts on the matter in dispute.
Judges are responsible for ensuring the integrity of the judicial process and are, therefore, the gatekeepers that ensure that, if expert testimony is allowed in a trial, the testimony is reliable and relevant. However, it is a common tactic for one party to a lawsuit to ask the judge to exclude the opposing side’s expert testimony. Motions to exclude or otherwise limit expert testimony are generally raised during pretrial proceedings via motions. Under federal rules of evidence, an expert’s testimony can be excluded for procedural defects, such as failure to provide in a timely manner the expert’s report or, the qualifications of the expert, or copies of the material the expert relied on in forming the opinion. In addition, the expert’s opinion can be excluded on the substantive grounds (known as a Daubert challenge) that the testimony will not help the trier of facts understanding of the case, that the expert lacks the proper qualifications or the lack of reliability of the methodology used by the expert to reach their conclusions. If the objections to an expert’s testimony are not raised in a pretrial motion, they may still be raised when the expert witness is presented at trial.
To help judges make decisions on the reliability and relevance of expert testimony, the Supreme Court has issued court cases that lay down standards for judges to follow, and rules of evidence have also been issued to codify the opinions of the Supreme Court. The ruling that first articulated the standards to be used in assessing the reliability and relevance of expert testimony is Daubert vs. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) (hence the name “Daubert” challenge). In addition to setting out the analytical process to be used to test expert testimony, the Supreme Court confirmed that it was the job of the judge, not the jury, to ensure the required qualities of the reliability and relevance of the testimony.
After the Supreme Court’s Daubert decision, the holdings of the case were embodied in Rule 702 of the Federal Rules of Evidence (set out below), which quite clearly and succinctly states when an expert witness may testify:
“A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the proponent demonstrates to the Court that it is more likely than not that:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert’s opinion reflects a reliable application of the principles and methods to the facts of the case.”
The Supreme Court in Daubert set out a flexible, multi-factored analysis that proposed expert testimony should be subject to by the trial judge to ensure that the testimony meets the test of being relevant to resolving the dispute at hand and based on a foundation of reliable knowledge. The Daubert case involved issues of science, so the Supreme Court created guidelines for judges to determine if the proposed testimony rested on sound scientific knowledge. Federal courts and the great majority of state courts use the Daubert test. Those few states that do not use the Daubert standard use other tests to ensure the reliability and relevance of expert testimony.
However, not all expertise is scientific, where a hypothesis can be formulated and then subjected to confirmation or refutation through experimentation and thereby achieve general acceptance in the scientific community. The Supreme Court recognized this and developed a modified Daubert standard for cases requiring non-scientific expert testimony. The case that articulated this modified Daubert test was Kumho Tire Co. V Carmichael, 526 U.S. 137 (1999). The Court ruled that, in that case, where technical or other specialized non-scientific testimony was called for, the judge still acted as gatekeeper to determine admissibility. However, rather than use the multi-factor Daubert test for scientific soundness, the judge should examine the methodology used by the expert and its application to the facts of the case at hand. Factors such as generally accepted practices and standards in a specific professional or industrial field should be considered. Also, the judge will evaluate the consistency and logic of applying professional practices and standards to the facts of the case. In assessing an expert’s opinion on a non-scientific matter, courts frequently give great weight to experience as they recognize that there is no substitute for years of actual practice in a specialized field.
One such specialized field is the regulation of banks and other financial institutions. Experts in this field must understand whether the financial institution complies with regulatory standards, including the various pertinent laws and regulations, and whether the institution adheres to prudent loan underwriting standards and investment practices. A bank examiner is a trained and often certified financial professional whose responsibility is to examine a financial institution with the objective of concluding whether that financial institution is operating legally and safely. As part of this process, a bank examiner will assess management practices, the riskiness of loans, and the adequacy and accuracy of financial records.
Prepared by Geoff Minott – September 2024
