Daubert and the "Two-Foot Rule"

The City of La Habra, California, passed an ordinance requiring "adult cabaret dancers" to remain two feet from patrons during offstage performances. A number of dancers felt that the ordinance affronted their right to freedom of expression under the First Amendment, and so they joined with the owner of a nightclub establishment in bringing a constitutional challenge. Was the ordinance truly motivated by a desire to prevent crime and stop the spread of sexually transmitted disease? In passing the ordinance, the City relied on numerous studies and reports linking such secondary effects to adult businesses. The dancers dismissed the studies as methodologically flawed.

But you don't need Daubert-quality evidence to ban lap dancing -- or so the Ninth Circuit has held. "While we do not permit legislative bodies to rely on shoddy data, we also will not specify the methodological standards to which their evidence must conform."

See Gammoh v. City of La Habra, No. 04-56072 (9th Cir. Jan. 26, 2005) (Tashima, Fisher, & Tallman, JJ.).

8th Circuit Nixes Expert Testimony on Trade Secret Damages in Storage Technology's Suit Against Cisco Systems

The Eighth Circuit has published an opinion upholding the trial court's exclusion of testimony from the damages expert for Storage Technology Corporation in its trade secrets case against Cisco Systems.

Prior to its acquisition by Cisco at a price of $450 million, an entity known as NuSpeed Internet Systems, Inc., had hired away key Storage Tech employees to build an internet data storage product. The Eighth Circuit held that inducing a rival's employees to breach their noncompetition and nondisclosure agreements could constitute an actionable harm for which a restitutionary remedy is available under Minnesota law, but affirmed the trial court's exclusion of Storage Tech's expert evidence on unjust enrichment damages. The panel particularly faulted the expert for imputing the entire $450 million acquisition value of NuSpeed to trade secrets misappropriated from Storage Tech even though NuSpeed concededly had other assets. The panel emphasized evidence that Cisco acquired NuSpeed to exploit NuSpeed's expertise in storage networking software incorporating the then-emergent iSCSI ("internet, Small Computer Systems Interface") standard -- an idea that nobody contended was appropriated from Storage Tech.

See Storage Tech. Corp. v. Cisco Sys., Inc., No. 03-3673 (8th Cir. Jan. 26, 2005) (Loken, Gibson, & Bye, JJ.).

Compromise Brewing on Medmal Reform in Virginia

Our Virginia correspondent, Steve Minor, reports in his excellent Southwest Virginia Law Blog that compromise between lawyers and doctors threatens to break out on medical malpractice reform legislation. The elements of the proposed bill would include pre-filing claim screening, safe harbor for physician apologies, and review by the Board of Medicine for physicians with more than three malpractice claim payments within ten years. Steve also has a post on proposed legislation that would bring a more Daubert-like standard to Virginia.

Wyoming Nixes "Tort Reform" Measure on Medmal Testimony

According to the Casper Star-Tribune, the Republican-dominated Wyoming House has voted by a 32-23 margin to reject a proposed "tort reform" measure imposing new requirements for expert testimony in medical malpractice cases. The bill would have subjected out-of-state medical experts to the disciplinary authority of the Wyoming Board of Medicine. It also would have barred contingent expert fees and required that physician witnesses belong to the same specialty as the doctor being sued. "We do not have a problem with expert witnesses in medical malpractice cases," said one Republican House member.

7th Circuit Upholds Exclusion of Testimony on Lost Profits

The Seventh Circuit has published a decision upholding the district court's exclusion of lost-profit testimony in a commercial dispute. A Puerto Rico digital television broadcaster contracted to purchase set-top boxes from Zenith, but the boxes Zenith supplied did not meet the digital video broadcast (DVB) standards prevalent at the time of sale. The broadcaster claimed it lost subscriptions as a result, but it came to grief in estimating lost profits. Its expert insisted that the Puerto Rico market was unique, and so he did not consult data from other markets or perform any regression analysis. "A witness who invokes 'my expertise' rather than analytic strategies widely used by specialists is not an expert as Rule 702 defines that term," said the Court of Appeals. If the expert "could or would not explain how his conclusions met the Rule's requirements, he was not entitled to give expert testimony. As we so often reiterate: 'An expert who supplies nothing but a bottom line supplies nothing of value to the judicial process.'"

See Zenith Elecs. Corp. v. WH-TV Broad. Corp., No. 04-1635 (7th Cir. Jan. 20, 2005) (Easterbrook, Kanne, & Evans, JJ.).

Site to Add California Decisions

We're happy to report that two California attorneys have volunteered to team up in monitoring California state court decisions for Daubert on the Web. We'll supply their identities and disclose further details as plans evolve.

Time on Their Hands in Indonesia

According to the Jakarta Post, a three-judge Indonesian trial court has ruled that a Japanese man offered insufficient proof to link his consumption of a bottle of allegedly pesticide-contaminated Coca Cola to his subsequent queasiness, sore throat, and hair loss. "According to expert witness Djaja Surja Atmadja from the University of Indonesia, forensic laboratory test results, and medical examinations, the cola couldn't have made the plaintiff sick," said the chief judge.

The ruling capped an eight-month trial. Stay tuned to see if this becomes an iconic parable among Indonesian advocates of tort reform.

Costs of the Tort System (Redux)

On 12/28/03, we posted about a study performed by the insurance consulting firm Tillinghast-Towers Perrin, which placed the "costs of the U.S. tort system" at $233 billion for the calendar year 2002. Among other things, we discussed whether it is legitimate to reckon payments to injured claimants by tortfeasors (or their insurers) as part of the "cost" of the "tort system" (as opposed to counting injuries as a "cost" of accidents, and then discussing who should bear those costs).

Well, the good people at TTP are at it again. They have completed a similar study for the year 2003, with similar results. The TTP press release release puts the 2003 "costs" of the "tort system" at $246 billion -- a 5.4% increase that roughly matches the 4.9% growth in GDP. As before, the TTP figures include not only transaction costs, but also payments to victims.

Mind you, TTP specifically disclaims any attempt to gauge whether these "costs" are too low, too high, or just right. That is obviously a question that actuarial science, by itself, cannot answer. But never fear. Advocates of "tort reform" have stepped forward to take up the slack. These include Sebastian Mallaby, in a Washington Post column, and James R. Copland, in two posts at "Point of Law" dated 1/10/05 and 1/19/05.

All manner of points raised by Messrs. Mallaby and Copland deserve attention and comment. We are especially fascinated with Copland's idea that if the transaction costs associated with litigation are consuming an unwelcome share of our resources, maybe it's really our sentimental attachment to the adversary system that is to blame. Unfortunately, we do not have the space to explore such heady issues here. We are consoled with the thought that some conservative think tank is almost certainly at work on that project. Pending a report on its findings, we will confine ourselves to what Mr. Copland calls the "broader point," which he says is encapsulated in this paragraph from Mr. Mallaby's piece:

A tort system is a form of insurance: Consumers accept higher prices for products and services in exchange for the chance to be compensated if the product or service harms them. Outside the tort system, we have plenty of examples of people buying insurance or warranties. People insure their cars, homes, refrigerators; they want protection against financial setbacks. But people don't buy much insurance to protect themselves from pain and suffering; their revealed preference is that they don't want it. So why have a tort system that provides over $50 billion in pain-and-suffering awards annually?

Did you get that? The real problem, it now transpires, is not those pesky transaction costs after all. The broader problem is allotting $50 billion per year -- half of one percent of GDP -- to compensate accident victims for their pain and suffering. Do you think it stingy, to begrudge them such compensation? Think again, say Mallaby and Copland. The victims' own "revealed preference" is to risk uncompensated pain and suffering, rather than insure against it. If they will not shoulder the costs of insuring against the risk, why should anyone else?

We were initially puzzled that this argument should be pressed only in the context of noneconomic damages. Many Americans, after all, also decline to purchase life insurance or disability insurance. That is, their "revealed preference" is to take the risk of a catastrophic loss of income resulting from fatal or disabling injury, rather than insure against it. Of course, it is possible that their "revealed preferences" would be different, if more resources were at their disposal to spend on insurance premiums. But it is also possible that they accept the risk precisely because it may be possible to recover damages in tort, if they are seriously injured by forces over which they have no control, such as the negligence of another.

To put the point another way: Before we could take the insurance-purchasing behavior of consumers (or the lack of it) as an indication that their "revealed preference" is to bear the risk of economic loss, their behavior would have to be observed in a counterfactual world where they were indeed making an actual choice to bear that entire risk. The same is true of noneconomic harms. We do not insure against the risk that we will be libeled, or deprived of our civil rights, or fall victim to discrimination. We do not even insure against the risk that some psychotic malefactor will cripple us for life, simply for the pure joy of it. But that does not mean that our "revealed preference" is to bear that risk alone and let the harm rest where it falls. It may mean only that we rely on a tort system that will hold the injuring parties responsible.

In other words, it may mean only this: We will not sell you our physical ease, or our peace of mind, at any price. But if you proceed to take them anyway, we will hire a lawyer. It is then that our lawyer will "reveal" our "preferences" to you.

Update 1/23/05: Addressing this same point, Judge Posner says: "[Some have] suggested that pain and suffering, disfigurement, and other nonpecuniary losses imposed by medical errors are not real costs because people rarely try to buy insurance against such losses. However, the reason they do not buy insurance is not that the losses aren't real, but that insurance is designed primarily for replacing income or defraying an expense."

D.C. Circuit Upholds Expert Opinion on Modus Operandi of Drug Dealers

The D.C. Circuit has contributed only sparsely to the Daubert jurisprudence, but a panel has now endorsed the admissibility of expert testimony from law enforcement officers on the modus operandi of drug traffickers. See United States v. Miller, No. 04-3033 (D.C. Cir. Jan. 18, 2005) (Ginsburg, Garland, & Williams, JJ.).

Go Directly to Jail and Collect $20,000

You get some interesting e-mail when you run a web site. The following correspondence should be of interest to anyone looking for a one-month vacation from time sheets, voice-mail messages, and senior partners:

If you are a male prosecutor or former prosecutor between the ages of 30-50 who is interested in participating in a documentary about prison life by living in jail for 30 days, please email a short description of yourself and of your prosecutorial career. Please include what your current occupation is and whether or not you feel you could leave your job for 30 days (with compensation).

We are currently casting for the FX series "30 DAYS", a documentary-style series from award-winning filmmaker Morgan Spurlock. The series adapts for TV the concept of Spurlock's critically-acclaimed "Super Size Me".

Please email Allan Johnson at amjthree@yahoo.com or call 310.202.1272 ext.160.

We have spoken to Mr. Johnson and the project is apparently legit. We must say, a paid sabbatical sure sounds attractive to us, but we didn't ask about the food.

Judge Posner and Tort Reform

What is responsible for the high cost of health care in America? Of medical malpractice insurance? What would be the best way to rein in those costs? Damage caps? More restrictive rules on expert testimony?

There are different kinds of conservativism. In the current climate, Judge Posner's variety sounds refreshingly sane.

Update 1/19/05: Judge Posner argues that moving towards experience rating of medical malpractice premiums would be a more suitable reform than damage caps. Posts at Michigan Medical Malpractice and Point of Law suggest that Judge Posner has missed the boat, because the availability and price of malpractice insurance already vary as a function of physician claim history. We are not experts, by any means, on the premium structure for medical liability insurance, but from what we can see on the internet, we're experiencing cognitive dissonance. Some fair number of current commentators, across the ideological spectrum, appear to believe that medical malpractice insurance generally is not experience rated, although it is acknowledged that some insurers have recently moved in that direction. Is the truth that we're in a mixed or hybrid environment? If so, then it would seem unfair to chastise Judge Posner for arguing that moving to a more consistent and full-blown experience-rating system would be an improvement. There might be room to disagree with his argument, but the argument wouldn't rest on a false premise, as the critical posts have implied. It would be enlightening to see some hard information about the current regime.

Update 1/23/05: Judge Posner has now responded to comments on the experience-rating issue, saying he was "pleased to learn" that some insurers follow the practice and wondering aloud why others "do not."

Second Circuit Reiterates Caveat on "Drug Code" Testimony

In an unpublished disposition, the Second Circuit has again emphasized that law enforcement agents testifying as experts on "drug code" overstep their charter when they offer interpretations of language that manifestly does not involve drug jargon. See United States v. Londono-Tabarez, No. 02-1558 (2d Cir. Jan. 12, 2005) (Kearse, Calabresi, & Rakoff, JJ.).

Trial Court's Dissatisfaction with Daubert Does Not Excuse Failure to Object

A January 14 opinion from the Seventh Circuit imparts two pieces of learning:

(1) A Daubert challenge to one expert does not suffice to preserve a Daubert challenge to another.

(2) The trial court's expression of dissatisfaction with Daubert's requirements does not excuse the failure to raise and preserve a Daubert objection.

See Estate of Moreland v. Dieter, No. 03-3734 (7th Cir. Jan. 14, 2005) (Rovner, Wood, & Sykes, JJ.).

Bad Day for Experts in Virginia

Steve Minor, our Virginia correspondent, reports on three decisions by the Virginia Supreme Court on Friday in which expert testimony was disallowed.

Update 1/18/05: L. Steven Emmert has more.

8th Circuit Upholds Exclusion of Fire Causation Testimony

The Eighth Circuit has published an opinion upholding the district court's exclusion of evidence from fire causation experts testifying on behalf of various subrogated insurers in their claim against the manufacturer of the copying machine that allegedly caused the fire. The experts purported to follow a methodology prescribed by the National Fire Protection Association in its publication NFPA 921: Guide for Fire and Explosion Investigations, but the panel upheld the district court's conclusion that the experts did not apply the methodology reliably. See Fireman's Fund Ins. Co. v. Canon U.S.A., Inc., No. 03-3836 (8th Cir. Jan. 12, 2005) (Bye, Lay, & Gruender, JJ.).

9th Circuit Upholds Testimony from FBI Accountant

In an unpublished opinion, the Ninth Circuit has upheld the trial court's decision admitting testimony from an FBI accountant about the defendants' securities fraud and money laundering scheme. From the opinion:

Cross alleges that the admission of the testimony of FBI Special Agent Steve Eidson, an accountant specializing in white collar crime, violated the helpfulness requirement of Federal Rule of Evidence 702 and that he did not qualify as a summary witness under Rule 1008. While neither party disputes Eidson's qualifications as an expert, Cross contends Edison's testimony consisted entirely of a summary and inferences that the jury could have reached independently of expert testimony and that the testimony therefore violated the helpfulness requirement. See U.S. v. Benson, 941 F.2d 598, 605 (7th Cir. 1991) (holding IRS agent testimony was in violation of helpfulness requirement where "[the agent] had nothing to offer on this question that would assist the jury's understanding of the issue"). Cross further argues that Eidson's testimony is duplicative and therefore prejudicial under Federal Rule of Evidence 403. Cross's counsel did not make any objections at trial, so we review for plain error. See Fed. R. Crim. P. 52(b).

We must consider Eidson's testimony not only as summary but as that of an expert, as Eidson testified about conclusions he drew from the data. The district court did not plainly err in allowing both Eidson's summary testimony and expert conclusions. The funds used by the defendants flowed through at least twelve separate accounts. In formulating his testimony, Eidson reviewed approximately a hundred banker's boxes containing several thousand pages of records. The tracing of money from the individual investors to their ultimate disposition is anything but simple. The analysis is not, as Cross contends, "something which Edison was no more qualified to do than the jury." Instead, the district court permissibly relied on Eidson's testimony as that of an expert able to make these complex transactions more accessible to the jury through both summary and analysis.

See United States v. Fox, No. 02-50022 (9th Cir. Jan. 6, 2005) (B. Fletcher, Noonan, & Paez, JJ.).

8th Circuit Upholds Exclusion of Engineer's Testimony in Design Defect Suit

The Eighth Circuit has published an opinion upholding the exclusion of plaintiff's engineering testimony in a products liability suit involving a worker whose arm was mangled in a sander. From the opinion:

Our cases do not require that experts manufacture a new device or prototype in order for their opinion to be admitted. The question is whether the expert's opinion is sufficiently grounded to be helpful to the jury. We conclude that Dr. Kvalseth's proffered opinion lacked indicia of reliability for other reasons. Although he proposed using a safety trip cord, a commonly used device, he did not prepare drawings showing how it would be integrated into the Timesavers sander or present photographs showing its use with similar machines. See Dancy v. Hyster, 127 F.3d 649, 651-52 (8th Cir. 1997) (excluding testimony of expert who had not designed proposed safety device or pointed to its use on similar machines). Dr. Kvalseth provided even less information about how the brake would function. An expert proposing safety modifications must demonstrate by some means that they would work to protect the machine operators but would not interfere with the machine's utility. See Jaurequi v. Carter Mfg. Co., 173 F.3d 1076, 1084 (8th Cir. 1999); Peitzmeier, 97 F.3d at 297.

See Unrein v. Foley-Martens Co., No. 04-1042 (8th Cir. Jan. 10, 2005) (Murphy, Lay, & Melloy, JJ.).

Free Porn

We have news to impart. Apparently there is pornography on the internet.

If only you had known, you probably never would have wasted time on this site in the first place.

But you had no idea.

So a spammer has decided to help you, by scattering random links to lascivious material in various comments posted at this weblog.

We've deleted most of them, we think. But in case we've missed a few, maybe they'll bring solace to some hapless soul who has spent years scouring the internet for porn, but who just wasn't able to find any, until now.

P.S. to comment spammer: You have won a valuable prize. To claim it, please e-mail us and supply your identity.

9th Circuit Upholds Preclusive Sanction in Copyright Suit

The Ninth Circuit has issued an unpublished opinion upholding the trial court's exclusion of testimony from the defendants' expert in a copyright infringement case, because the expert failed to provide a complete and timely report. See Steppin' Out, Inc. v. National Sav. Corp., No. 01-17282 (9th Cir. Jan. 6, 2005) (Fletcher, Kozinski, & Trott, JJ.).

We're Not Spyware Experts, But . . .

Avid as we are to protect our home computer against clandestine inspection by agents of darkness, who are known to stay awake at night thinking up ways to gain illicit access to the rough drafts of our posts, we were naturally pleased when Microsoft offered up its anti-spyware software in beta.

Of course, the term "spyware" means different things to different people, so we took a close look at Microsoft's thoughts on the issue. They were highly illuminating. Among the perils posed by life on the internet, apparently, would be programs that have the ability to change your Web browser's home page or search page.

We certainly hate when that happens, and so we plunged ahead and downloaded Microsoft's product, gleeful at the knowledge that never again would some rogue piece of software hijack our browser's home page.

Just about the first thing Microsoft's program did, before we even got to running a scan, was to reset IE's home page to msn.com. We felt more secure at once.

Update 1/13/05: So did Walter Mossberg (via TVC Alert).

The Yates Imbroglio

It is one of those recurring legal ironies. The biggest disasters to befall expert testimony often have nothing to do with the expert's opinion. They often involve the expert's testimony on matters of brute fact.

That is how matters now stand with Dr. Park E. Dietz, the psychiatrist and former FBI profiler who testified as the sole prosecution expert on Andrea Yates's sanity in her murder trial. As everyone surely knows by now, Yates pleaded post-partum psychosis after drowning her five children in a bathtub. Dr. Dietz, who had incidentally served as a consultant for the television drama "Law and Order," suggested at Yates's trial that she may have drawn inspiration from a contemporaneous episode of the tv show in which a character was acquitted, by reason of insanity, on charges stemming from similar drownings -- a theory on which the Yates prosecutors then placed substantial reliance in closing argument. The Yates jury went on to reject her insanity plea, but a Texas appellate court has now overturned the jury's verdict, because as it turns out, no such episode of "Law and Order" had aired when Yates killed her children.

Dr. Dietz, who has already been cleared of perjury charges, says his testimony was an honest mistake -- the product of a spurious memory he blames on misinformation supplied to him by prosecutors. Prosecutor types are meanwhile blaming Dietz. We didn't follow the trial, and maybe we're speaking with 20-20 hindsight, but we're provisionally inclined to see plenty of blame to go around. If you were prosecuting a case with such eerie parallels to the plot line of a prime time television drama, wouldn't you try, at least, to acquire the videotape, perhaps with an eye toward showing it to the jury? If you were an expert testifying under oath to the possible inspirational link, wouldn't you first want to review the episode carefully yourself? If you were a juror, wouldn't you wonder why nobody had shown you the episode, when it would be such a simple matter to go to the videotape? And if you were the judge, presented with Yates's motion for a mistrial, filed when the testimony's falsity finally came to light after the verdict in the guilt phase, wouldn't you . . . well, the Texas Court of Appeals has now spoken to that last question.

The moral may be this: If you are counsel and your expert's testimony depends on a critical fact, do not stop with the expert's attestation to the truth of that fact. The most honest and scrupulous experts can be just as mistaken as lay witnesses about such factual matters, so go forth and find the best independent evidence you can to support the critical fact -- and if you can't find it, be curious about the reasons.

The Texas appellate opinion is available online. See Yates v. State, No. 01-02-00462-CR (Tex. App. Houston [1st Dist.] Jan. 6, 2005).

Update 1/8/05: Maybe the real moral is actually: "Never testify about things you think you've seen on television."

Daubert Doesn't Affect Removal Rates, Study Says

According to a 1/1/05 story by Elizabeth Amon in the "Bartalk" section of the American Lawyer entitled "The Daubert Debate: Part Umpteen," a new study suggests that the difference between the standards for admissibility of expert evidence under Daubert and Frye is not affecting the overall rate at which defense counsel are removing cases to federal court.

The study reportedly investigated removal rates in sixteen states that have unambiguously adopted either Daubert or Frye, and for which comprehensive data were available going back to 1993, the year Daubert was decided. About half of those states follow Daubert; the others, Frye. The authors -- Prof. Edward Cheng, of Brooklyn Law School, and Prof. Albert Yoon, of Northwestern University School of Law -- conclude that the frequency with defendants remove cases to federal court is not significantly different in Daubert and Frye jurisdictions. The study is slated for April publication in the Virginia Law Review.

Update 1/4/05: Our original post had the study being published in the Brooklyn Law Review. We have corrected the error, and are mortified to have confused Brooklyn with Virginia.