Bankers

Bank of China v. NBM LLC, 359 F.3d 171 (2d Cir. 2004), cert. dism'd, 126 S. Ct. 675 (2005). In civil RICO trial, plaintiffs offers testimony from employee re various aspects of banking practice and custom. Over defendants' objection, district court admits testimony as lay opinion, citing witness's lengthy industry experience and testimony's grounding in "common sense." Jury awards damages. Admissibility reversed. Insofar as it was based on witness's industry experience rather than facts within his personal knowledge, witness's testimony was properly characterized as expert opinion, not lay opinion. Witness's testimony was therefore admitted in error, because he was never designated or qualified as expert, nor was reliability of his testimony established. Question whether error was harmless need not be reached, because remand is required in any event due to faulty jury instruction.

United States v. Meyers, No. 01-1727 (3d Cir. Mar. 26, 2002) (unpublished). In criminal trial for investment fraud, district judge permits prosecution witness Herbert Biern to testify as expert re bank debenture programs, but not on whether defendant's conduct was fraudulent. Admissibility affirmed. Defendant says expert implicitly violated testimonial restriction by encouraging inference that defendant was guilty. But defendant did not so object at trial, and so review is for plain error. Expert's testimony focused on banking terminology, accuracy of certain representations re Federal Reserve Board, and documents. It did not seriously affect fairness of trial, and district court was within discretion in admitting testimony.

First Tenn. Bank, N.A. v. Barreto, 268 F.3d 319 (6th Cir. 2001). Bank sues Small Business Administration (SBA) to enforce loan guaranty agreement. SBA offers expert who testifies that Bank did not follow prudent banking standards. Admissibility affirmed. Bank contends expert did not satisfy Daubert criteria re testability, peer-review, publication, error rate, or general acceptance, but those benchmarks may be inappropriate to evaluation of nonscientific expert testimony (citing Kumho Tire). This expert testified on subjects that do not lend themselves to scholarly review or traditional scientific evaluation, relying instead on over forty years of banking experience. District court did not abuse discretion in admitting testimony.

Aetna Cas. & Sur. Co. v. Leahey Constr. Co., 219 F.3d 519 (6th Cir. 2000). To obtain surety bonds from Aetna, principal of construction company agrees to subordinated debt arrangement, whereby principal will lend his company $275,000, with principal's family trust as source of funds. However, principal actually obtains funds via 30-day personal loan from bank. After lending those funds to his company, he executes contract with Aetna subordinating his interests in funds to Aetna's. But unbeknownst to Aetna, company has actually repaid bank loan six days earlier, and so contract's subordination provisions are without effect. When Aetna's fraud claims against construction company are thwarted by bankruptcy, Aetna sues lending bank for aiding and abetting fraud, and offers testimony from banking expert Dr. Douglas Austin, who opines that bank acted recklessly in connection with loan. Bank files motion in limine, arguing that because witness is not expert in bond underwriting, he should not be permitted to opine on what bond underwriters would rely on when evaluating bonding risks. Aetna responds that expert does have knowledge of underwriting principles that will help to explain his testimony re bank's recklessness in issuing loan, but will not opine on activities of Aetna's underwriters. Based on Aetna's assurance, district court tentatively denies motion in limine, subject to later ruling at trial. When trial convenes, expert testifies, over bank's renewed objections, that loan's thirty-day term should have raised red flag, because bonding companies normally want long-term capital. District court overrules objections, and jury renders verdict for Aetna. Admissibility affirmed. Expert may have drifted into areas outside his expertise, but that was incidental to overall thrust of his testimony, which focused on proper banking practices in detecting fraudulent activities. No abuse of discretion.

Bankers