Saturday, January 31, 2004

6th Circuit Upholds Testimony from Two Damages Experts in Fraud Case

In an unpublished opinion, the Sixth Circuit has upheld the testimony of two damages experts offered by plaintiff Regal Cinemas in the trial of its fraud action against some shopping center developers. See Regal Cinemas, Inc. v. W & M Properties, No. 02-3450 (6th Cir. Jan. 27, 2004) (Cole, Clay, & Quist, JJ.). The decision may afford a lesson in how to brief Daubert issues at the appellate level. On appeal, the developers first contended that the experts' evidence was insufficient to support a finding of lost profits to a reasonable certainty, arguing (as they had to the jury) that the experts incorrectly accounted for theater size, failed to reckon with the effects on profitability of stadium-style seating, and (in the case of one expert) lacked experience with movie theaters. The developers also went on to challenge the admissibility of the expert testimony, but raised no independent arguments involving the testimony's reliability, simply referring back, instead, to their earlier discussion of the testimony's asserted insufficiency. The Sixth Circuit panel repaid this economy of exposition by remarking, not without a faint tone of impatience, that the standards for sufficiency and admissibility are different. The panel went on to conclude, rather briskly, that none of the developers' sufficiency arguments established that the district court had abused its discretion in admitting the evidence.

The moral? It may be ineffective, on appeal, to lead with a challenge to the sufficiency of the evidence, following up only later with an alternative Daubert challenge that simply incorporates the previous sufficiency arguments. Homage should be paid to the difference in standards, by way of separate analyses. And it probably makes sense, in general, to lead with the evidentiary objections. Decisions about admissibility are logically and chronologically prior to decisions about sufficiency, and deferring admissibility points to later portions of the brief may telegraph that counsel themselves don't think their evidentiary arguments are especially strong.

In this particular case, it may not have mattered, because it would have been a bold appellate step to hold the testimony on damages offered by these experts to be unreliable as a matter of law.
Fed. R. Evid. 702: If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (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.