An expert opinion need not be proved to be correct for it to be admitted in the court. So long as it is given by a duly qualified expert (not necessarily a very highly qualified person) and by one who applies a reliable methodology to the facts of the case before affirming an opinion, it would in all probability be accepted by the court.
The present case, titled Thomas L. Taylor v. U.S. Bank National Association (2015 U.S. Dist. LEXIS 14194), discussing the admissibility of the opinion of an expert witness, is an ancillary matter to another case in which a securities fraud was committed by a group of bodies called the Evolution entities comprising Evolution Capital Advisors, LLC (“ECA”), Evolution Investment Group I, LLC (“EIGI”), and Damian Omar Valdez. This fraud, labeled by the Securities Exchange Commission SEC as ponzi scheme, was allegedly committed between February, 2008 and August, 2010, in which Evolution entities attracted investors to buy their bond/notes by making misleading and incomplete representations. SEC had acquired an injunctive relief from the court on December 22, 2011 against Evolution entities, which then had formally appointed a receiver to take control of and liquidate the Receivership assets.
Receiver Thomas L. Taylor (plaintiff), while investigating potential claims arising from the said ponzi scheme, also investigated a contract that Evolution entities had drawn up with the US Bank (defendant) before floating the impugned scheme. Valdez (founder and manager of Evolution entities) in 2007 had sought for a corporate indenture trustee which would administer the ECA Notes and also represent the interests of its Noteholders. This trustee is the defendant – US Bank.
It was alleged by the plaintiff that the US Bank’s Trust Department had not carried out proper due diligence checks before entering into a relationship with its new client (the Evolution entities). There were provisions in the Trust Agreement that sought to absolve the US Bank of any (and all) potential action and omission that its client could engage in.
It is at this point where this ancillary case comes into the picture. The plaintiff’s (Receiver) case is that if the US Bank had been cautious enough in doing its job as the Evolution indenture trustee then the ponzi scheme would not have come into being in the first place. He alleged that it were the actions and omissions of the US Bank that allowed the growth of this ponzi scheme.
Based on this alleged conduct the receiver brought several claims against the defendant that the latter resisted vehemently. To prove its case the defendant brought in an expert witness whom the plaintiff sought to exclude – one of the issues that were discussed by the United States District Court for the Southern District of Texas, Houston Division in this case.
Mr. Landau produced by the defendant was an expert in corporate trust industry having more than fifty years of experience in this field. The receiver did not challenge either his qualification or the relevance of his testimony. What he challenged was that the expert’s testimony was not based on sufficient facts of the case and that, his findings about US Bank abiding by prevalent industrial standard was incorrect.
The court said that both the concerns of the receiver could be addressed by his counsel at the time of cross examination. In fact, there were at least two instances when Mr. Landau opined against the US Bank when the relevant conduct of the Bank was brought to his notice by the receiver’s counsel.
The court referred to the Supreme Court decision of Daubert v. Merrell Dow Pharmaceuticals in which the conditions for admitting the an expert opinion was discussed at length before pronouncing its findings on the issue of admissibility of the expert testimony in this case. Federal Rule of Evidence 702 requires an expert opinion to be scientific or technical in nature or one relying on specialized knowledge that could assist the trier of fact to understand the evidence or to determine a fact in issue.
The court stated that the principles laid down in the Daubert case were applicable to both scientific and non-scientific expert opinion and therefore also to this case, as long as the opinion was based on the facts of the case. It was not even essential for the expert in question to be highly qualified since his qualification would only matter when the weight of his opinion would need to be determined. In fact there is no need for the party presenting the expert opinion to exemplify in any way that the expert opinion is correct. As long as the expert in question is reasonably qualified, and applies a reliable methodology to the specific facts of the case, his testimony, the court said, would be admissible.
Applying the above principles to the facts of this case, the Court disagreed with the objections of the receiver and held that concerns regarding the factual basis of Mr. Landau’s opinion only go to the weight of the opinion, and not to its admissibility and that mere disagreement with an opinion is not a sufficient ground to render said opinion inadmissible.
Since the US Bank had sufficiently proved that Mr. Landau fulfilled all the basic qualifications of an expert and since his testimony also met the above requirements for admitting it in the court, the plaintiff’s (receiver’s) motion for excluding the expert testimony was rejected.