Foundation Continues its Focus on the Admissibility of Expert Evidence

On April 21, 2014, Atlantic Legal filed an amicus brief in Accenture LLP v. Wellogix, Inc., an important case involving the admissibility of expert evidence, Federal Rule of Evidence 702 and the Daubert Trilogy of cases decided in the 1990s, on behalf of Atlantic Legal Foundation, the Federation of Defense & Corporate Counsel, which has an international membership of 1,400 defense and corporate counsel, and the International Association of Defense Counsel, an association of corporate and insurance attorneys from the United States and around the globe whose practice is concentrated on the defense of civil lawsuits. Because of Atlantic Legal Foundation’s significant role in Daubert and Kumho Tire, we were asked by one of the most prominent Supreme Court practitioners to file an amicus brief in support of a petition for certiorari.

The case involves allegations of theft of trade secrets — computer code — from an oil-industry services start-up by a very large consulting firm, for use by a major international oil company. The key witness for the plaintiff was a computer programming expert who testified that he had forensic evidence that Accenture had copied computer code created by Wellogix and used it for the benefit of British Petroleum in software that would computerize heretofore handwritten purchase and service orders for complex oil and gas drilling projects.

Federal Rule of Evidence 702 provides that a witness who is qualified as an expert may testify only if the testimony is based on sufficient facts or data and the expert has reliably applied the principles and methods to the facts of the case. The question presented in this case is whether Rule 702 requires a court, and not the jury, to decide whether expert testimony is based on sufficient facts or data and reliably applie[s] . . . principles and methods to the facts of the case, and to set aside a jury verdict that rests on expert testimony that fails to meet these fundamental requirements.

The Supreme Court has recognized that Expert evidence can be both powerful and quite misleading because of the difficulty in evaluating it in its landmark Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 595 (1993) decision. Case outcomes often turn on expert evidence. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 143 (1997). Thus, the Federal Rules of Evidence and the Supreme Court’s cases demand that expert testimony be carefully scrutinized by the court before it reaches the jury. Fed. R. Evid. 702; Daubert, 509 U.S. at 592-97.

Frequently, however, courts are abdicating this essential gatekeeping duty by passing questions that the court must resolve at the admissibility stage to the jury to weigh as a part of the merits determination, on the theory that (as in pre-Daubert jurisprudence) vigorous cross-examination will adequately protect the record. This case is a paradigmatic example. Plaintiffs suit for misappropriation of trade secrets hinged entirely on a software expert whose testimony was decisive, but in key aspects inadmissible because his testimony went far beyond an analysis of software, and included legal conclusions as to what information was a trade secret, whether the defendant had misappropriated those trade secrets, and the economic impact of that alleged misappropriation on the plaintiffs business secrets, despite the fact that the expert had no firsthand knowledge of the underlying facts, no expertise in the oil and gas industry, and no background in appraising businesses or assessing damages, and no factual basis for his opinion.

Unfortunately, the district court and court of appeals punted to the jury. According to them, cross-examination is the proper check on wayward experts, and any defects in an expert’s runaway testimony can be sorted out by the jury. The decisions below are part of a growing trend in which many courts are turning a blind eye to Rule 702’s requirements, and faulty expert testimony is reaching jurors under the rationale that its deficiencies go to the weight of the testimony, not its admissibility.

The thrust of our brief was that the Daubert trilogy and amended Rule 702 represent a shift away from judicial deference to experts conclusory opinions toward a pedagogical model for evaluating expert testimony, which requires the trial judge to understand the facts underlying and the reasoning behind the experts conclusions the whole process from evidence, to analytic principles, to application of those principles to the evidence, and finally to the experts conclusion. Likewise, if the experts testimony goes before a jury, the jury needs to be able apply the experts methodology to the facts before them. In this case, the trial judge admitted that he found it very hard. . .to follow the testimony of Wellogixs expert, notwithstanding that the trial judge had already presided over an arbitration involving similar issues arising out of the same transactions, but different parties and had already heard evidence about Wellogixs computer code, and thus it was illogical for the district court to believe that a lay jury would be able to sort out that testimony and reach an informed judgment.

To view Atlantic Legals brief, please click here.