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Expert Testimony:
How to Prepare Your Expert
and/or How to Be an Expert
Howard Seife, Moderator
Chadbourne & Parke LLP; New York
William Q. Derrough
Moelis & Company; New York
Hon. Barbara J. Houser
U.S. Bankruptcy Court (N.D. Tex.); Dallas
Barry W. Ridings
Lazard; New York
Bonnie Steingart
Fried, Frank, Harris, Shriver & Jacobson LLP; New York
207
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© 2012 American Bankruptcy Institute All Rights Reserved.
American Bankruptcy Institute
MakeSureIncredibleExpertIsAlsoCredible
Contributing Editor:
Brian L. Shaw
Shaw Gussis Fishman Glantz Wolfson
& Towbin LLC; Chicago
[email protected]
Also Written by:
Mark L. Radtke
Shaw Gussis Fishman Glantz Wolfson
& Towbin LLC; Chicago
[email protected]
B
ankruptcy litigators often find
themselves embroiled in litigation
in which expert testimony is critical to the case, if not outcome-determinative. The most obvious example—valuation—routinely plays an important role
and requires expert testimony to assist the
judge. For example, value is prevalent
in contested matters or adversary proceedings involving relief from the automatic stay (§ 362), use of cash collateral
(§ 363), secured claims (§ 506), avoidance actions (§§ 544, 547 and 548) and
plan confirmation (§ 1129), among other
matters. Of course, there are many other
issues in bankruptcy cases that similarly
require specialized expertise.
Litigators sometimes
have the luxury of
handpicking their
testifying experts.
Other times an expert
has already been
chosen because of
pre-existing relationships. Regardless
Brian L. Shaw
of the situation, a
litigator rarely goes
into a case with a mindset that his or her
expert is lousy. (And on the rare occasion that one does think so, the case
tends to settle quickly.) Instead, a litigator believes (rightly or wrongly) that the
expert will help to deliver a victory. As
a case progresses, the expert’s Kool-Aid
starts to taste even better, and it is easy to
become increasingly enamored with an
expert and your case. In order to ensure
that your incredible expert is also credible, numerous practical issues should
not be overlooked—both when selecting
and retaining your expert and before any
report is distributed.
Rule 702 and Daubert Issues1
The admissibility of expert testimony
is governed by Rule 702 of the Federal
1 Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993)
(seminalcaseonadmissibilityofscientificexperttestimony).
50 September 2011
About the Authors
Brian Shaw and Mark Radtke are
members of Shaw Gussis Fishman
Glantz Wolfson & Towbin in Chicago.
Mr. Shaw also serves as ABI’s Vice
President-Membership.
Rules of Evidence (FRE), made applicable in bankruptcy proceedings by Rule
9017 of the Federal Rules of Bankruptcy
Procedure. FRE 702 provides for the
admission of expert testimony to assist
the trier of fact where “(1) the testimony
is based upon sufficient facts or data, (2)
the testimony is the product of reliable
principles and methods and (3) the witness has applied the principles and methods reliably to the facts of the case.”2
Unless expert testimony is both reliable and relevant, it is inadmissible.3
The trial court has a “gatekeeper obligation” to ensure that expert testimony
is both relevant and reliable.4 Although
as a practical matter bankruptcy judges
may often ignore the gatekeeper obliga-
cialized education and experience. When
an expert intends to rely on experience,
“the witness must explain how that experience leads to the conclusion reached,
why that experience is a sufficient basis
for the opinion, and how that experience is reliably applied to the facts.”7
“The expert’s testimony should also be
grounded in an accepted body of learning
or experience in the expert’s field.”8
In addition to determining reliability, the court must
determine whether
the proffered testimony is relevant.
“Testimony is relevant if it assists
the trier of fact in
understanding the
Mark L. Radtke
evidence or in determining a fact at issue.” 9 Even reliable
testimony may be barred if it does not
meet the standard for relevance. Just as
important, even otherwise reliable and
relevant testimony may be discredited if
Building Blocks I
tion prior to trial and admit expert testimony where no jury is involved, good
litigators perform their own gatekeeper
analysis to ensure that their expert’s testimony will be reliable and relevant and
to assess the relative strength or weakness of their case.
To determine whether an expert’s
testimony is reliable, the court must
make a preliminary assessment of
whether the reasoning or methodology
underlying the testimony is valid.5 In
order to pass the reliability hurdle of the
Daubert test, an opinion must consist of
more than simply “subjective belief or
unsupported speculation.”6 More often
than not, in bankruptcy litigation an
expert is not relying on some scientific
knowledge, but is testifying on a subject
matter (such as value) that requires spe2Fed.R.Evid.702.
3 Kumho Tire Co., Ltd v. Carmichael,526U.S.137,147(1999)(expanded
Dauberttononscientificexperttestimony).
4 Daubert, 509 U.S. at 589. See also Ueland v. United States, 291 F.3d
993, 997 (7th Cir. 2002) (expert testimony may be received only if
expertis“qualifiedasanexpertbyknowledge,skill,experience,trainingoreducation...[and](1)thetestimonyisbaseduponsufficientfacts
ordata,(2)thetestimonyistheproductofreliableprinciplesandmethodsand(3)thewitnesshasappliedtheprinciplesandmethodsreliably
tothefactsofthecase”).
5 Daubert,509U.S.at592-93.
6 Cummins v. Lyle Industries,93F.3d362,368(7thCir.1996).
an expert is not credible. It is accordingly
important to address practical issues that
will protect and even enhance the credibility of a testifying expert.
Practical Issues: Selecting
and Retaining an Expert
Before assessing prospective experts,
a litigator must first do some homework.
You must know if your bankruptcy judge
has written any opinions involving the
subject matter of your expert’s testimony, what the judge is looking for from an
expert and how other experts may have
hurt their credibility before your judge.
If no such opinions exist, you should
identify any other opinions regarding the
subject matter of your expert’s testimony. The information you acquire should
guide your selection of the right expert
for your case.
How do you then determine who
your expert should be? There is not a
one-size-fits-all answer. Sometimes,
7 In re Husting Land & Dev. Inc.,255B.R.772,781(Bankr.D.Utah2000)
(quotingAdvisoryCommitteeNotes,AmendmentstoFed.R.Evid.702
(effectiveDec.1,2000)).
8 Id.
9 Masters v. Hesston Corp.,291F.3d985,991(7thCir.2002).
ABI Journal
209
Mid•Level Professional development Program
you will not practically be able to look
beyond a particular expert or firm. If you
have the autonomy to select any expert
you want, you have to ask yourself several questions. Are you going to be satisfied with a generalist who has some
experience with a particular industry,
or are you going to find the industryspecific expert? Is industry even important in your case? You obviously do not
want a manufacturing expert for a real
estate case or a real estate expert for a
retail case. What exactly will the scope
of the project be? For example, do you
need your valuation expert to prepare a
liquidation analysis and a going-concern
analysis? Does your expert have a predisposed bias for utilizing a certain method? These questions address issues that
may affect your expert’s credibility and
must be evaluated in context.
Experts’ Reputations
Often Precede Them
Especially in the bankruptcy and
restructuring world, an expert can be preceded by his or her reputation (good or
bad). The often-used saying, “It’s a small
world,” applies with even greater force
in bankruptcy circles. It usually does not
take long to find someone who has had
some experience with a particular expert.
Thus, reputations are often formed by the
perceptions of peers. Those perceptions
range from staffing of assignments (do
you want an expert who digs into the
minutia, or who sweeps in at the end to
compile the analyses?) to experience and
beyond. However, those perceptions do
not always mirror reality. It is a good
idea to perform your own examination
of an expert’s credentials even if he or
she comes highly recommended.
Every expert comes with a preexisting package of attributes that affect
that expert’s credibility for any given
case. One set of attributes is generally
found in the expert’s curriculum vitae
and includes such information as the
expert’s employer, education, training,
professional experience, publications
and prior cases. This information will
give you a general understanding of
whether the proposed expert generally
fits the needs of your case, but it does
not tell the whole story. You must dig
deeper. While weeding out a bad expert
is typically not difficult, selecting among
high-quality experts can be.
Even if your expert is a well-known
superstar, he or she may not be the best
fit for your case. Existing law does not
always align with your expert’s view of
ABI Journal
210
the subject. For example, valuation literature permits an analyst to choose from
various approaches to value a business as
a going-concern, but some cases favor certain approaches. Just as you do not want an
expert who performs a superficial analysis
of available data, you do not want an expert
who undertakes a mission to use your case
as an opportunity to change law. In a case
where you know a certain approach is
required, you want to select the expert who
already subscribes to that approach.
An expert’s approach may already be
known to you because he or she has testified credibly in several written opinions,
but it is sometimes difficult to track an
expert’s prior positions on a particular
subject matter. You must start by performing an exhaustive search of written
opinions involving testimony by your
prospective expert. Just because a particular expert has an adverse opinion on
his or her record does not mean that you
should eliminate that expert from contention. You must consider how that black
mark may affect credibility in your case
and how badly you need the expert’s
specialized knowledge. If your expert is
a generalist, it is easier to simply move
on to the next candidate. If your expert
has unique industry experience, you may
have to retain that expert.
In addition to exploring your expert’s
prior opinions and approach, including
his or her success or failure before another court, you must determine the extent
to which your potential expert may have
had prior experience with the judge.
The easiest way to understand whether
your expert already has some credibility before a particular judge is to ask the
expert. Be careful to not fall into the trap
of overvaluing an expert’s pre-existing
credibility before the court. Reputations
may set experts apart but are not guarantees of success.
Compensation May
Unintentionally Affect Credibility
Compensation issues may also
affect your expert’s credibility. If you
are not yet in the midst of litigation but
anticipate that an expert’s opinion may
someday be needed to prove a disputed
issue, contingent-fee or incentive-based
compensation should be avoided. The
TOUSA bankruptcy case provided a
prime example of how a contingentfee compensation arrangement can cast
doubt on an expert’s credibility and
invalidate opinions. 10 In connection
10 In re TOUSA Inc.,422B.R.783,839-40(Bankr.S.D.Fla.2009),rev’d
on other grounds,444B.R613(S.D.Fla.2011).
with a pre-petition financing transaction, TOUSA agreed to pay its expert $2
million if the expert ultimately opined
that TOUSA was solvent, but only the
expert’s hourly fees and reimbursement
of expenses if the expert could not render
an opinion that TOUSA was solvent. 11
Given that, among other things, the
expert’s hourly fees and actual expenses amounted to less than half of the $2
million contingent fee the expert was
ultimately paid for a solvency opinion,
the bankruptcy court concluded that the
expert’s opinion was “unpersuasive.”12
In short, contingent fees and incentive-based compensation are big red
flags that should be avoided. These
types of compensation arrangements
may have validity under certain circumstances and for certain fields of expertise based on industry customs, but it
is generally advisable to avoid them in
bankruptcy litigation.
Contingent-fee and incentive-based
arrangements are not the only type of
expert-retention pitfalls that should concern a litigator. The magnitude of an
expert’s fees and the circumstances of
an expert’s retention may also inadvertently provide fodder for your opponent
to attack your expert’s credibility.
Practical Issues
Testing Opinions
Recent amendments to the Federal
Rules of Civil Procedure have thankfully eliminated the silly gymnastics
that lawyers and experts would have to
engage in to avoid the creation of discoverable work product. Under the old
rules, courts would generally allow discovery of all drafts of an expert’s report,
along with all communications between
the expert and lawyer. Those drafts and
communications are now generally protected.13 Litigators should take advantage of the improved rules to ensure that
they take every possible step to protect
and enhance their experts’ credibility,
especially before submission of the
expert report.
Before distribution of an expert’s
final report, there are a number of things
that a litigator should do to test the opinions and enhance credibility. Nothing is
worse than a litigator who assumes that
his or her expert knows everything and
is afraid to ask questions or challenge
the expert (unless you are that litigator’s
11 Id.at839.
12 Id.
13Fed.R.Civ.P.26(b)(4).
continued on page 79
September 2011 51
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Building Blocks I: Make Sure Your Incredible Expert Is Also Credible
from page 51
opposing counsel). It is assumed that a
qualified expert has specialized knowledge that may assist the court. The question is how well the expert knows his or
her craft, especially as compared to a
competing expert.
The key is to explain, explain,
explain! An expert’s credibility will
often be enhanced if he or she can
clearly explain reasoning in layman’s
terms in his or her report (and testimony) without forcing the judge to independently attempt to learn the complex
underpinnings. A litigator must instruct
his or her expert to avoid analytical
leaps. If you do not understand what
the expert is attempting to explain
when you read the report or discuss
the topic, chances are the concept will
also be lost on the judge. Frustration
over the inability to understand what
an expert is attempting to convey
will likely erode credibility and open
the door for your opponent to further
attack your expert’s credibility. It is
important to explore with your expert
different ways of presenting the same
concept. The presentation is typically
improved if your expert breaks down
dense concepts into separate and simplified explanations. Keep in mind that
your expert likely knows the concepts
better than you (and hopefully anyone
else), but you know the best way to
present those issues in the report and
when testifying before the court.
The existence of dense concepts is
not the only reason to challenge your
expert to provide better explanations.
You must similarly challenge your
expert to provide an expanded explanation of his or her thought processes when
it is apparent that the expert is assuming too much and risking a loss of credibility due to a superficial analysis of
the key inputs.14 Assumptions must be
supported by detailed analysis of underlying data rather than superficial analysis. If you ever find yourself wondering
“why” (why did the expert assume this,
why does the report not provide a level
of detail that you would expect given
your experience or existing law, etc.),
you must ask the question and ensure
14“[A]n expert’s report that does nothing to substantiate this opinion is
worthless,andthereforeinadmissible.”Minasian v. Standard Chartered
Bank PLC,109F.3d1212,1216(7thCir.1997).“Anexpertwhosuppliesnothingbutabottomlinesuppliesnothingofvaluetothejudicial
process.” Mid-State Fertilizer Co. v. Exchange Nat’l Bank, 877 F.2d
1333,1339(7thCir.1989).
that your expert’s report provides an
understandable answer. Unless the circumstances warrant, you should also
ensure that your expert avoids hedging
words such as “appears,” “seems” and
the like, all of which suggest some level
of speculation or uncertainty. Plus, there
is always the smell test. Your expert’s
assumptions and opinions should pass it.
Trust your instincts and willingly challenge your expert. Why risk a potential
loss of credibility or invalidation of your
expert’s opinions?
Conclusion
The selection of an expert cannot change the facts or law of a case.
However, the right expert can often positively or negatively change the manner in
which a judge (or jury) perceives the facts
and applies them to the applicable law.
How much weight your expert is given by
the trier of fact and the court (usually the
same in bankruptcy land) will be directly
related to his or her credibility and reception by the judge. Accordingly, do not
take the selection process and credibility
assessment lightly, as it is a vital part of
any litigation process. n
Copyright 2011
American Bankruptcy Institute.
Please contact ABI at (703) 739-0800 for reprint permission.
ABI Journal
September 2011 79
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American Bankruptcy Institute
Federal Rules of Civil Procedure
Rule 26(a)(2) Disclosure of Expert Testimony.
(A) In General. In addition to the disclosures required by Rule 26(a)(1), a party
must disclose to the other parties the identity of any witness it may use at trial to
present evidence under Federal Rule of Evidence 702, 703, or 705.
(B) Witnesses Who Must Provide a Written Report. Unless otherwise stipulated or
ordered by the court, this disclosure must be accompanied by a written report—
prepared and signed by the witness—if the witness is one retained or specially
employed to provide expert testimony in the case or one whose duties as the
party's employee regularly involve giving expert testimony. The report must
contain:
(i) a complete statement of all opinions the witness will express and the
basis and reasons for them;
(ii) the datafacts or other informationdata considered by the witness in
forming them;
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness's qualifications, including a list of all publications
authored in the previous 10 years;
(v) a list of all other cases in which, during the previous four years, the
witness testified as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony
in the case.
(C) Witnesses Who Do Not Provide a Written Report. Unless otherwise stipulated
or ordered by the court, if the witness is not required to provide a written report,
this disclosure must state:
(i) the subject matter on which the witness is expected to present evidence
under Federal Rule of Evidence 702, 703, or 705; and
(ii) a summary of the facts and opinions to which the witness is expected
to testify.
(D) Time to Disclose Expert Testimony. A party must make these disclosures at
the times and in the sequence that the court orders. Absent a stipulation or a court
order, the disclosures must be made:
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(i) at least 90 days before the date set for trial or for the case to be ready
for trial; or
(ii) if the evidence is intended solely to contradict or rebut evidence on the
same subject matter identified by another party under Rule 26(a)(2)(B) or
(C), within 30 days after the other party's disclosure.
(D) Supplementing the Disclosure. The parties must supplement these disclosures
when required under Rule 26(e).
****
Rule 26(b)(4) Trial Preparation: Experts.
(A) Deposition of an Expert Who May Testify. A party may depose any person
who has been identified as an expert whose opinions may be presented at trial. If
Rule 26(a)(2)(B) requires a report from the expert, the deposition may be
conducted only after the report is provided.
(B) Trial-Preparation Protection for Draft Reports or Disclosures. Rules
26(b)(3)(A) and (B) protect drafts of any report or disclosure required under Rule
26(a)(2), regardless of the form in which the draft is recorded.
(C) Trial-Preparation Protection for Communications Between a Party's Attorney
and Expert Witnesses. Rules 26(b)(3)(A) and (B) protect communications
between the party's attorney and any witness required to provide a report under
Rule 26(a)(2)(B), regardless of the form of the communications, except to the
extent that the communications:
(i) relate to compensation for the expert's study or testimony;
(ii) identify facts or data that the party's attorney provided and that the
expert considered in forming the opinions to be expressed; or
(iii) identify assumptions that the party's attorney provided and that the
expert relied on in forming the opinions to be expressed.
(D) Expert Employed Only for Trial Preparation. Ordinarily, a party may not, by
interrogatories or deposition, discover facts known or opinions held by an expert
who has been retained or specially employed by another party in anticipation of
litigation or to prepare for trial and who is not expected to be called as a witness
at trial. But a party may do so only:
(i) as provided in Rule 35(b); or
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(ii) on showing exceptional circumstances under which it is impracticable
for the party to obtain facts or opinions on the same subject by other
means.
(CE) Payment. Unless manifest injustice would result, the court must require that
the party seeking discovery:
(i) pay the expert a reasonable fee for time spent in responding to
discovery under Rule 26(b)(4)(A) or (BD); and
(ii) for discovery under (BD), also pay the other party a fair portion of the
fees and expenses it reasonably incurred in obtaining the expert's facts and
opinions.
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American Bankruptcy Institute
The 2010 Amendments to Rule 26 of the
Federal Rules of Civil Procedure Related to Expert Witnesses
By Bonnie Steingart and Nathan Grow
In 2010 the Supreme Court of the United States approved amendments to Rule 26 of the
Federal Rules of Civil Procedure that affected expert testimony disclosure requirements and the
availability of discovery related to expert testimony. Under these amendments, which took
effect on December 1, 2010 (the “2010 Amendments”), certain expert witnesses that previously
had no obligation to produce written materials are now required to provide a summary disclosure
regarding their anticipated expert testimony. Further, the 2010 Amendments place restrictions
on parties’ ability to obtain draft expert reports and certain communications between attorneys
and expert opinions through discovery.
There are two types of proceedings in bankruptcy cases: adversary proceedings and
contested matters. Under Rule 7026 of the Federal Rules of Bankruptcy Procedure, Rule 26 of
the Federal Rules of Civil Procedure is applicable in adversary proceedings. Under Rule 9014(c)
of the Bankruptcy Rules, unless the court orders otherwise, Civil Rule 26(a)(2) (disclosures
regarding expert testimony) is not applicable in contested matters. Under Bankruptcy Rule 9032,
where Civil Rules are incorporated in the Bankruptcy Rules, any amendments to the Civil Rules
are also made applicable.
The following is a description of 2010 Amendments and the basis therefore as indicated
in the Advisory Committee Notes. A blackline of the relevant provisions of Rule 26 showing the
2010 Amendments is annexed hereto as Exhibit A.
Expert Testimony Disclosure Requirements
Expert witnesses may be divided into three categories for purposes of determining their
obligation to prepare materials regarding their expert opinion: reporting experts, non-reporting
experts and non-testifying experts.
Reporting experts are expert witnesses that are “retained or specially employed to provide
expert testimony in the case or one whose duties as the party’s employee regularly involve
giving expert testimony.” Fed. R. Civ. P. 26(a)(2)(B) (2012). Under Rule 26(a)(2)(B) (both
before and after the 2010 amendments), reporting experts are required to file a detailed report
including several enumerated elements. See Fed. R. Civ. P. 26(a)(2)(B)(i)--(vi). In adversary
proceedings in bankruptcy court, investment bankers and others commonly testify as reporting
experts as they are often specially retained to provide expert testimony on specific topics, such as
on valuation and insolvency issues in fraudulent conveyance proceedings, and Rule 26(a)(2)
applies in such proceedings. However, in contested matters in bankruptcy court, such
as contested plan confirmation hearings in chapter 11 cases, though investment
bankers often testify on such issues as valuation, restructuring options, and financial outlook, the
filing of expert reports is not required in such contested matters unless the bankruptcy
court, pursuant to Bankruptcy Rule 9014(c), so orders or directs the application of Rule 26(a)(2).
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Non-reporting experts are any other expert witnesses that the party wishes to have testify
during trial that are not “retained or specially employed to provide expert testimony in the case
or one whose duties as the party’s employee regularly involve giving expert testimony.” Fed. R.
Civ. P. 26(a)(2)(B). For example, in bankruptcy cases, an officer of the debtor (such as a chief
financial officer or a chief restructuring officer) may provide expert testimony as a non-reporting
expert given that such officers are usually not employed to provide expert testimony and do not
regularly provide expert testimony as part of their job duties. If the officer is also an investment
banker or financial advisor and was retained for the purpose of providing expert testimony, then
the officer may be a reporting expert.
The third category of expert witnesses is non-testifying experts who may be consulted by
parties or their attorneys but do not offer testimony during trial. For example, a debtor’s counsel
may consult with an expert in the debtor’s industry or an individual with expertise in public
offerings in order to understand options for the debtor moving forward. Rule 26 (both the
current version and the version before the 2010 Amendments) contains no requirement for nontestifying experts to prepare reports or disclosures. Work performed by non-testifying experts is
generally not discoverable because it is covered by the attorney work product doctrine. Note,
however, that if a testifying witness relies on the work of a non-testifying expert as the basis for
the testifying witness’s testimony, that may open up the non-testifying expert’s work product and
communications to discovery. As with anything else that is protected by the attorney work
product doctrine, attorneys must exercise caution to protect non-testifying expert’s work from
becoming discoverable.
Discovery Related to Expert Testimony
Prior to the 2010 Amendments, Rule 26(a)(2)(B)(ii) required that expert witness reports
include the “data or other information” considered by the witness in forming the witness’ expert
opinion. Fed. R. Civ. P. 26(a)(2)(B)(ii) (before 2010 Amendments). Courts interpreted “other
information” broadly and allowed parties to request information relied on by expert witnesses
through discovery, including communications between attorneys and expert witnesses.
Limitation to “Facts or Data”
The 2010 Amendments changed Rule 26(a)(2)(B)(ii) to require only “the facts or data”
considered by the witness in forming the witness’s expert opinion. Fed. R. Civ. P.
26(a)(2)(B)(ii) (2012). According to the Advisory Committee Notes, the amendment
is intended to alter the outcome in cases that have relied on [the
pre-amendment] formulation in requiring disclosure of all
attorney-expert communications and draft reports. . . . The refocus
of disclosure on “facts or data” is meant to limit disclosure to
material of a factual nature by excluding theories or mental
impressions of counsel. At the same time, the intention is that
“facts or data” be interpreted broadly to require disclosure of any
2
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material considered by the expert, from whatever source, that
contains factual ingredients.
Fed. R. Civ. P. 26 Advisory Committee’s Note.
Work-Product Protection for Communications
The 2010 Amendments also added Rule 26(b)(4)(C) which limits discovery of
“communications between the party’s attorney and any witness required to provide a report
under Rule 26(a)(2)(B)” (i.e. reporting experts). Fed. R. Civ. P. 26(b)(4)(C). In effect this
means that work-product protection is afforded to certain attorney-expert communications.
Parties are only allowed to request discovery of the following three types of communications
between attorneys and reporting experts:
(i)
communications that “relate to compensation for the expert’s study or testimony”
Fed. R. Civ. P. 26(b)(4)(C)(i);
(ii)
communications that “identify facts or data that the party’s attorney provided and
that the expert considered in forming the opinions to be expressed” Fed. R. Civ. P.
26(b)(4)(C)(ii); and
(iii)
communications that “identify assumptions that the party’s attorney provided and
that the expert relied on in forming the opinions to be expressed.” Fed. R. Civ. P.
26(b)(4)(C)(iii).
According to the Advisory Committee Notes, discovery of communications on subjects
outside the above three categories may be available in limited circumstances and by court order.
“A party seeking such discovery must make the showing specified in Rule 26(b)(3)(A)(ii) — that
the party has a substantial need for the discovery and cannot obtain the substantial equivalent
without undue hardship. It will be rare for a party to be able to make such a showing given the
broad disclosure and discovery otherwise allowed regarding the expert’s testimony.” Fed. R.
Civ. P. 26 Advisory Committee’s Note.
Notably, the new Rule 26(b)(4)(C) applies only to communications with reporting expert
witnesses. There is no restriction on parties requesting discovery of communications between a
party’s attorney and a non-reporting expert witness, however, there may be other privileges that
apply to such communications.
Previously, parties were permitted to request discovery of all communications between
attorneys and expert witnesses. Led by the desire to avoid producing discoverable
communications, parties frequently felt compelled to employ a reporting expert to testify at trial
and a separate non-testifying expert for consultation. Attorneys would then discuss more
sensitive and confidential case analysis with the non-testifying expert while limiting discoverable
communications and the exchange of draft reports with the reporting expert. This dynamic
created increased costs for parties and impeded effective communication. The Advisory
Committee stated that the addition of Rule 26(b)(4)(C) was intended to “protect counsel’s work
3
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product and ensure that lawyers may interact with retained experts without fear of exposing those
communications to searching discovery.” Id.
Work-Product Protection for Draft Reports
In addition to protecting certain communications between attorneys and expert witnesses,
the 2010 Amendments added Rule 26(b)(4)(B), which explicitly prohibits discovery of “drafts of
any report or disclosure required under Rule 26(a)(2), regardless of the form in which the draft is
recorded.” Fed. R. Civ. P. 26(b)(4)(B). This means that work-product protection is also
afforded to draft expert reports prepared by reporting expert witnesses as well as draft
disclosures prepared by non-reporting expert witnesses. Previously, courts generally allowed
parties to request draft reports and thus discern whether an expert witness’s opinion changed or
evolved during the time that the report was prepared and whether an attorney may have drafted
or influenced portions of the report.
Changes to Disclosure Requirements for Non-Reporting Experts
Prior to the 2010 Amendments, there was no requirement for non-reporting expert
witnesses to submit any written materials in connection with their expert testimony. The 2010
Amendments added Rule 26(a)(2)(C), which requires non-reporting experts to prepare a more
limited “disclosure” setting forth “(i) the subject matter on which the witness is expected to
present evidence under Federal Rule of Evidence 702, 703, or 705; and (ii) a summary of the
facts and opinions to which the witness is expected to testify.” Fed. R. Civ. P. 26(a)(2)(C). Prior
to the 2010 Amendments, courts occasionally imposed disclosure requirements on non-reporting
experts in order to prevent the tension caused by the prospect of unexpected testimony during
trial. According to the Advisory Committee Notes, the inclusion of Rule 26(a)(2)(C) was
intended to resolve that tension. Fed. R. Civ. P. 26 Advisory Committee’s Note. Further, the
Advisory Committee stated that a non-reporting expert’s “disclosure is considerably less
extensive than the report required by Rule 26(a)(2)(B). Courts must take care against requiring
undue detail, keeping in mind that these witnesses have not been specially retained and may not
be as responsive to counsel as those who have.” Id.
Application of 2010 Amendments in Selected Recent Cases
In re Asbestos Prods. Liab. Litig., Civ. No. MDL 875, 2011 U.S. Dist. LEXIS 143009 (E.D. Pa.
Dec. 13, 2011)
In this case, the attorneys for plaintiff asbestos claimants sent letters to doctors with
information regarding certain individuals’ exposure and medical history, which the
doctors may have utilized in forming letters or reports to counsel to support a claim. The
defendants requested discovery of these letters. The plaintiffs argued that the letters were
protected under new Rule 26(b)(4)(B) because they were draft reports. However, the
court ruled that the letters fell under the exception to the work product doctrine set forth
in new Rule 26(b)(4)(C)(ii) because they constituted “facts or data that the party’s
attorney provided and that the expert considered in forming the opinions to be
expressed.”
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The court explicitly endorsed the view expressed in a law review article which stated,
One final unanswered question is whether counsel will be able to
use Rule 26(b)(4)(B) to trump Rule 26(b)(4)(C)(ii-iii)—can
counsel protect from discovery facts or data considered by or
assumptions relied upon by a retained expert by providing some in
a draft report. Courts would not seem to be receptive to such an
obvious loophole, and caution dictates against embarking upon
such a course without the support of new case law in support of
such a practice.
George Lieberman, “Experts and the Discovery/ Disclosure of Protected
Communication,” 78 Defense Counsel Journal 220, 227 (Apr. 2011).
Allstate Ins. Co. v. Nassiri, 2:08-cv-00369-JCM-GWF, 2011 U.S. Dist. LEXIS 79866 (D. Nev.
July 20, 2011)
The plaintiff insurance company assigned an employee the task of determining the
amount of damages incurred by the plaintiff in anticipation that the employee would
testify as an expert witness. Testifying as an expert witness was not a part of the
employee’s regular duties. The defendants argued that the employee should be required
to prepare a report under Rule 26(a)(2)(B) rather than a summary disclosure under Rule
26(a)(2)(C). The court found that the expansion of the requirements for non-reporting
experts in the 2010 Amendments militated toward requiring less of expert witnesses that
were not retained specifically to provide expert testimony. Therefore, the court ruled that
the witness was only required to provide a more limited disclosure under Rule
26(b)(2)(C).
In re Application of Republic of Ecuador, 280 F.R.D. 506, 508 (N.D. Cal. 2012)
The court ruled that communications between counsel and an expert’s assistants
concerning the expert’s testimony are protected under the work product doctrine to the
extent provided in Rule 26(b)(4)(C). However, communications between an expert
witness and another expert (whether testifying or non-testifying) are not protected.
Further, the court ruled that materials prepared by the expert’s assistants for use in an
expert report are protected under Rule 26(b)(4)(B). However, materials prepared by nonattorney employees of one of the parties for an expert report are not protected under Rule
26(b)(4)(B) and must be produced.
The court ordered the party that retained the expert to produce (1) “[n]otes, outlines,
memoranda, presentations, reviews and letters . . . including those incorrectly labeled as
‘draft reports’” that were drafted by the expert, his assistants, non-attorney employees
and non-retained experts; (2) “[c]ommunications between [the expert and his assistants]
and non-attorney . . . employees, even where an attorney is copied”; (3)
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“[c]ommunications between [the expert and his assistants] and third party expert
consultants or those among third party consultants and . . . employees”; and (4)
“[c]ommunications between [the expert and his assistants] and other . . . testifying
experts.” Id. at 516
In making this ruling, the court stated as follows:
The work product doctrine is to be narrowly construed as its
application can derogate from the search for the truth. The party
seeking to invoke the work product doctrine bears the burden of
establishing all the requisite elements, and any doubts regarding its
application must be resolved against the party asserting the
protection. . . .
If the rules committee intended to protect from disclosure all
expert information prepared in anticipation of litigation, it would
not have refashioned section 26(b)(4) specifically to address expert
discovery. As the Advisory Committee notes to the 2010
amendments reveal, work product protection is limited to
communications between an “expert witness required to provide an
expert report under Rule 26(a)(2)(B) and the attorney for the party
on whose behalf the witness will be testifying.”
Id. at 514-15 (internal quotations and citations omitted).
Decena v. Am. Int’l Cos., Civ. No. 11-1574, 2012 U.S. Dist. LEXIS 61303 (E.D. La. May 1,
2012)
The defendant insurance company designated a doctor as a reporting expert witness and
later notified the plaintiff that the doctor would be retained solely as a non-testifying,
consulting expert and would not prepare an expert report nor be produced for a
deposition. The plaintiff moved to compel the defendant to produce the doctor for a
deposition.
The court ruled that parties are not required to produce non-testifying experts for
deposition, even where such experts have been previously designated as reporting
experts. In making this ruling, the court noted as follows:
[T]here is no consensus of authority as to whether an expert
initially designated as a testifying expert witness, but later
designated as a non-testifying expert before the disclosure of her
expert report, may nonetheless be deposed as a testifying expert
under FED. R. CIV. P. 26(b)(4)(A). The principal case on which
Plaintiff relies, House v. Combined Insurance Co. of America, 168
F.R.D. 236 (N.D. Iowa 1996), has been described as representing
the “minority approach” with respect to this issue. In contrast, the
majority of courts to have addressed the issue have held that a
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party is only entitled to depose a non-testifying expert -- even
when the expert had previously been designated as a testifying
expert -- upon a showing of “exceptional circumstances,” as
required under Fed. R. Civ. P. 26(b)(4)(B).
The courts adopting the majority rule have almost universally
concluded that the purposes of Rule 26 are better served by
requiring a party to show “exceptional circumstances” to depose a
non-testifying expert. As these courts have noted, the purpose of
Rule 26(b)(4)(A) is to ensure a party’s ability to properly prepare
to effectively cross examine his opponent’s experts at trial. Rule
26(b)(4)(B), in contrast, is intended to prevent one party from
being able to benefit from his opponent’s trial preparation. Where
an expert will not testify at trial, the purposes of Rule 26(b)(4)(A)
are not served by allowing his opponent to depose the expert, as
there is no need to prepare for cross-examination. Furthermore,
permitting the deposition of a non-testifying expert will, in most
cases, frustrate the purposes of Rule 26(b)(4)(B) by essentially
allowing a party to utilize his opponent’s expert’s opinions to
prepare his own case, and at his opponent’s expense.
Id. at 4-7 (internal citations ommitted).
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