Thursday, February 19, 2004

2d Circuit Opinion Analyzes Line Between Expert and Lay Opinion

In reversing a jury's $132 million civil RICO verdict in a bank fraud trial, the Second Circuit has issued an opinion addressing the vexing problem of where lay opinion under Rule 701 leaves off, and where expert opinion under Rule 702 begins. The plaintiffs offered an employee to testify in the form of lay opinion about various aspects of banking practice and custom. The district court admitted the testimony, citing the witness's years of experience in international banking, as well as the testimony's grounding in principles of "common sense." The Second Circuit held that insofar as the testimony rested exclusively on the witness's experience, it was subject to Rule 702's disclosure requirements for expert evidence, and not properly admissible as lay opinion. The court also held that Rule 701 violations are subject to a harmless error analysis, but did not reach the issue of whether this particular error was harmless, because reversal was required in any event by virtue of a faulty jury instruction. See Bank of China v. NBM LLC, No. 02-9267 (2d Cir. Feb. 17, 2004) (McLaughlin, Katzmann, & Scheindlin, JJ.).

Update: An earlier version of this post mistakenly asserted that the Second Circuit panel had held the error was not harmless. Thanks to the alert readers who drew this error to our attention.
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.