Many fraud examiners would like to be expert witnesses. But before you provide testimony, review the cases and rule changes that affect all testifying experts in federal cases.
A tragic accident occurred on June 25, 1996.1 Theresa Brooks rented a boat from Harry's Bait Shop in Waterport, N.Y. for her 14-year-old son, Matthew, and his 15-year-old friend. Brooks sent the two boys off to fish unsupervised. Matthew's fishing line became entangled with the outboard motor propeller and he reached into the water to attempt to untangle it. Perhaps due to Matthew's shirt catching on the gearshift, the motor engaged in reverse and Matthew's hand was pulled into the spinning propeller and amputated.
Matthew's father, the plaintiff, filed a lawsuit against the outboard manufacturer for damages. The plaintiff hired an expert witness, Robert A. Warren, who submitted a curriculum vitae and a one-page report. Warren produced a videotape demonstrating how a kill switch works and also submitted to two depositions. The defense filed a motion for a ruling that Warren not be allowed to testify and also for a summary judgment in favor of the defense. The defense argued that Warren's education or experience wasn't sufficient for him to testify about the kind of boat and engine in question. They countered that Warren's conclusion that the kill switch would have activated and prevented or lessened the severity of the accident was untested and unsupported by (1) any examination of the actual boat or motor, (2) by interviews of any witnesses, (3) and by Warren's admissions about the kill switch in his deposition.
The magistrate agreed that Warren's opinion regarding the kill switch was "unreliable and speculative and would not assist the jury in its determination of the facts at issue in this case." The magistrate recommended that Warren not testify. The district court adopted both this recommendation as well as the magistrate's recommendation granting summary judgment in favor of the defense. The plaintiff appealed but the judgment of the district court was affirmed.
In the last decade, and particularly in the last few years, expert witnesses of all stripes have found the courts raising the standards of their livelihood. Two U.S. Supreme Court cases and a change in Rule 702 of the Federal Rules of Evidence have permanently changed the landscape in federal court cases of all testifying experts - both the reliable, relevant testimony and the speculative testimony of the "hired gun." Fraud examiners need to know the developments.
The first case was the 1993 decision of Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579. For more than nine years since that decision, there's been considerable conflict in the lower courts on whether the "factors" used in Daubert were applicable to all expert testimony.