Coin grading can be subject of expert testimony under Rule 702

Introduction

In the case of United States v Romanov [2015 U.S. App. LEXIS 12937], the defendants appealed against their conviction for charges related to mail and wire fraud. The defendants were in the business of selling coins: the character, purity and re-sale value of which they grossly misrepresented. In the district court, there were two expert coin graders who provided testimony as to the discrepancies in the grading of the coins. The defendants claimed an abuse of discretion under Rule 702 of the Federal Rules of Evidence in admitting the evidence of coin graders (“expert coin graders” hereinafter). The defendants claimed that grading of coins was a subjective exercise and hence the expert coin graders’ testimony could not be admitted under Rule 702. The Court disagreed, upheld the decision to allow the testimony based on its reading of Rule 702 that mere subjectivity in the analysis does not take the particular expert out of the purview of Rule 702. If the Daubert test is satisfied in spirit, the particular expert evidence can be admitted.

Background

The defendants were in the business of reselling coins to customers in the United States. They represented to their clients that the value of coins sold were higher than they actually were. In many cases, they misrepresented that a particular transaction was a ‘deal’ when in reality the coins had not been correctly graded in the first place. They also assured customers that they would always buy back the coins if needed but this promise was never followed up on. The prosecution relied on expert testimony provided by the coin graders who used two separate benchmarks to show that representations made by the defendants for the most part were irreconcilable with the industry benchmarks. The defendants, in their appeal, argued that the evidence offered by the expert coin graders could not be admitted as coin grading was subjective in nature. The Court examined the testimony of the coin graders using Rule 702.

Discussion

The argument in appeal from the defendant was that the expert coin graders lacked sufficient methodology and unreliable. They also contended that the testimony of the coin graders dealt with a subject which too subjective for any scientific and reliable analysis under Rule 702. The Court disagreed and used the case of United States v Kayne [90 F.3d 7, 11 (1st Cir. 1996)] to reiterate that a subject matter need not be strictly capable of objective analysis. Expertise is about specialized knowledge and Rule 7o2 allows this knowledge to be admitted if it helps the trier of fact, the Court opined using the Daubert Rule. The expert coin graders exhibited sufficient knowledge during their cross examination. One instance was where it was explained that grading systems usually converge on most cases on valuation, a small deviation was normal but a four point difference was extremely rare. Thus it was shown that even though coin grading was subjective, the difference in opinion between two graders was likely to be nominal (also called consensus grading). This effectively proved the case of the prosecution in that the defendants were grossly misrepresenting the value of the coins that they were selling. Both coin graders proved to the district court that there was sufficient methodology in coin grading for it to be admissible under expert testimony under Rule 702. The Court of Appeals found no error in what the district court had held because it was proven that the methodology that was used by the expert coin graders was not only industry standard for a long time but also was methodologically sound. Thus, expertise related to coin grading can be admitted under Rule 702 of the Federal Rules of Evidence.