In August 2009, the Tenth Circuit decided North American Specialty Insurance Company v. Britt Paulk Insurance Agency, Inc., 579 F.3d 1106 (10th Cir. 2009). After North American Specialty Insurance Company settled an underlying bad faith claim brought by one of its insureds, it sued its general and limited insurance agents for negligence and breach of contract, claiming their poor claims-handling forced it to settle the bad faith suit. Id. One of the issues on appeal was whether the district court properly excluded expert testimony regarding whether the claims handling met insurance industry standards. See id. at 1112.
The United States District Court for the Eastern District of Oklahoma excluded all expert testimony proffered by plaintiff and defendants ruling expert testimony would not assist the jury and that the jury was "perfectly capable of resolving the issues in this case without expert testimony." Id. The Tenth Circuit Court of Appeals reviewed the district court's decision to exclude the expert testimony using an abuse of discretion standard. Id. at 1111 (citing Dodge v. Cotter Corp., 328 F.3d 1212, 1223 (10th Cir. 2003) ("We will not disturb the district court's ruling unless it is arbitrary, capricious, whimsical, or manifestly unreasonable or when we are convinced that the district court made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances.")). The Court of Appeals reviewed the two-part Daubert test for admission of expert testimony under Federal Rule of Evidence 702 to determine whether the proffered expert testimony was reliable, and whether it would be helpful to the jury. See North American Specialty Ins. Co., 579 F.3d at 1112. The Court of Appeals determined that the second prong, whether the proffered expert testimony would be helpful to the jury, was not met and concluded that a jury could determine whether the general and limited agent's conduct was negligent and/or breached any contract without expert testimony. Id.
This case is interesting in that industry standards could certainly be deemed "specialized knowledge." See, e.g., Ford v. Allied Mut. Ins. Co., 72 F.3d 836, 841 (10th Cir. 1996) (insurer's expert could testify on insurance industry practice); but see Thompson v. State Farm Fire & Cas. Co., 34 F.3d 932, 941 (10th Cir. 1994) (the court excluded expert testimony offered on insurance industry standards for whether bad faith is met). Nonetheless, the Tenth Circuit upheld the district court's decision to exclude the opinions with very little analysis. The fact that both experts were excluded on the same basis may have been the reason for the Court of Appeals affirming the district court's decision without rigorous analysis. However, North American Specialty Insurance is instructive for defense counsel. When an expert offers testimony that is elementary or simplistic, a court may strike the so-called expert on the basis that a jury is fully capable of determining the case on the facts alone without expert testimony.
In United States v. Roach, 582 F.3d 1192 (10th Cir. 2009), the defendant was convicted of possessing drugs with the intent to distribute. The district court allowed a Wichita police detective to testify regarding gang-related activity based on his years of experience as an undercover detective in the Gang Intelligence Unit. Roach, 582 F.3d at 1199. The defendant, however, challenged the admissibility of the expert's opinion arguing that the detective did not have the requisite expertise and knowledge to testify as an expert witness. Id. The defendant filed a motion in limine before trial, but the court denied the motion without ruling on the proffered expert's qualifications or the reliability of his expected testimony. Id. At the time of trial, an objection was made during the expert's testimony, and the district court instructed the jury that they could consider the witness as an expert and give his opinions the consideration they deemed appropriate. Id.
On appeal, the Tenth Circuit determined that the district court did not properly make a record indicating the factual findings for the basis of the court's determination that the undercover police officer met the requirements of Federal Rule of Evidence 702. Roach, 582 F.3d at 1207. The Tenth Circuit ruled, "[a] conclusory statement that the court has made such a determination will not suffice." Id. The Tenth Circuit further ruled that, "Without specific findings or discussion on the record, it is impossible on appeal to determine whether the district court carefully and meticulously reviewed the proffered scientific evidence or simply made an off-the-cuff decision to admit the expert testimony." Id. (citing Goebel v. Denver & Rio Grande W. R.R. Co., 215 F.3d 1083, 1088 (10th Cir. 2000)).
The Court of Appeals specifically noted that, despite the erroneous admission of expert evidence, an appeals court will reverse a resulting conviction only if the trial court's error was not harmless. Roach, 582 F.3d at 1207 (citing United States v. Bornfield, 145 F.3d 1123, 1131 (10th Cir. 1998)). The Court of Appeals stressed that, when determining harm, the issue is not whether the district court could have ruled that the detective was qualified as an expert based on the evidence in the record (which appeared to be substantial), but that, under Daubert, the determination is strictly reserved for the district court, not the Court of Appeals. See Roach, 582 F.3d at 1208 n.7. Ultimately, the Court of Appeals concluded that the government met its burden showing that admission of the expert's opinions did not substantially affect the verdict; therefore, the court's admission of the expert opinions without citing specific reasons as to why the testimony was reliable was deemed harmless. Id. at 1208.
The Roach decision is an important reminder to counsel that, even when there is ample evidence in the record to support a trial court's decision that an expert is qualified and his or her testimony is reliable, unless an adequate record is established by the district court as to the basis for the court's rulings, a Court of Appeals will not scour the record and determine the issue in the first instance on appeal.
Darren K. Sharp is a partner in the Kansas City office of Armstrong Teasdale LLP, where he has practiced since 1999. He is the Tenth Circuit editor for the DRI Daubert Online newsletter. Mr. Sharp advocates for corporate clients in commercial disputes and business related tort cases in state and federal courts in Kansas, Missouri and Colorado, and has arbitrated commercial disputes before panels and single arbitrators. Mr. Sharp also represents clients in state and federal courts of appeals. Mr. Sharp can be reached at Armstrong Teasdale LLP, 2345 Grand Blvd., Suite 2000, Kansas City, Missouri 64108, ph. 816-221-3420, or by e-mail at email@example.com.