Will Your Expert Testimony Stand Up in Florida Courts? by Richard Pollack and Richard Fechter
Florida’s July 2013 adoption of the federal Daubert standard governing the admissibility of expert testimony ushers in a new era for Florida Courts as well as a parade of challenges for the courts, legal counsel and the experts testifying on behalf of individuals and business clients.
Prior to the legislature’s adoption of Daubert, Florida was among a handful of states that still followed the Frye standard for the admissibility of expert testimony. The Frye standard was significantly less rigorous than Daubert in that it contained a Pure Opinion Exception (POE). The POE provided that if an expert eschews science entirely and relies only on his or her experience and training, the purported expert opinion comes in without any review, Frye or otherwise. This exception was so encompassing that Florida state courts infrequently heard challenges to the admissibility of expert testimony.
The Daubert Standard
The Daubert standard eliminates the POE exception and makes the introduction of expert testimony much more difficult. The Daubert standard contemplates the trial court as a “gatekeeper” that independently assesses the scientific validity and reliability of the reasoning, methodology and principles underlying proffered expert evidence.
Under the Daubert standard, a witness who qualifies as an expert by knowledge, skill, expertise, training or education may provide scientific, technical or specialized testimony or opinion only when:
1. The testimony is based on sufficient facts or data,
2. The testimony is the product of reliable methods and principles, and
3. The expert witness applied those principles and methods reliably to the facts of the case. (See 90.702, Fla. Stat.)
Moreover, under Daubert, judges play a larger role in determining whether purported expert testimony meets these standards. To satisfy this responsibility, judges must assess the reliability and relevance of expert testimony by looking at the general acceptance, testability and error rate of the methodologies on which expert testimony is based.
With this new standard, it is anticipated that Florida Courts (like the Federal Courts that have already implemented Daubert) will see an increase in challenges to the admissibility of expert testimony and corresponding exclusions of said experts, especially as it relates to financial and economic matters, such as lost profits and compensatory damages in commercial disputes.
A 2002 study titled “Changes in the Standards for Admitting Expert Evidence in Federal Civil Cases Since the Daubert Decision,” by RAND Institute for Civil Justice shows an increase in an exclusion of expert witness testimony post Daubert. Additionally, a study released by PricewaterhouseCoopers confirmed that in 2010, approximately 49 percent of expert witness challenges under Daubert were successful – in that they resulted in the striking of expert testimony in whole or in part.
The primary opponents of Florida’s switch from Frye to Daubert are expected to be plaintiffs’ attorneys – those charged with carrying the burden of proof – who are concerned that the new Daubert standard will lead to an up-tick in expert witness challenges and litigation costs. With the heightened thresholds of admissibility, plaintiffs face greater scrutiny in building the facts of their cases while defendants benefit from new opportunities to challenge the basis of those facts.
Florida’s new Daubert standard will equip defendants with a powerful tool to force plaintiffs to go through the time and expense of hiring experts that implement a sound approach and are able to effectively defend their methodology and demonstrate its applicability to the case. It should also be pointed out that plaintiffs’ attorneys may use the new Daubert standard to exclude defense experts who use flawed methodologies to rebut plaintiffs’ experts.
To adapt, both plaintiffs and defendants must follow new evidentiary rules to support their damage cases. Often, the result is a flurry of pre-trial objections and motions to exclude unreliable or irrelevant expert testimony as well as increased fees for the parties involved. As a result, a growing number of plaintiffs are wining trials on liability but losing on damages. In jurisdictions that apply the Daubert standard, plaintiffs are finding it more difficult to recoup damages or include the value of certain assets in their damage awards. In extreme cases, a dismissal of a plaintiff’s expert testimony will result in a dismissal of the entire case. Addressing these challenges requires a through education of the Daubert standard and its application in a variety of legal settings.
Retain a Qualified Economic Expert
Qualified economic experts are independent and objective evaluators of evidence that possess technical competence, adhere to professional standards and rely on proven and tested methods to develop and ultimately defend their calculations. They must not only understand the facts of the case, but they must also be able to communicate their conclusions, and those of opposing experts, knowledgably and convincingly to legal counsel, clients and the courts.
Often, economic damage experts are CPAs, forensics specialists, economists and valuation professionals with experience applying the appropriate calculation method to align lost profits with the facts of a particular case. Ironically, according to the results of a 2010 study, accountants and economists are the most frequently challenged financial experts, with 45 percent of financial expert challenges resulting in successful exclusions from trial. One of the most common reasons for exclusion is lack of relevance, which includes testimony that is beyond the scope of the expert’s role or that deviates from the pre-trial order.
Support Arguments with Proof of Reasonable Certainty
Meeting the Daubert standard is a fact-intensive undertaking. Experts must interview involved parties and apply professionally accepted and tested methods to verify damages calculations, which may conflict with those assumed by counsel and client.
Another area of testimony that risks attack from opposing counsel arises when experts do not use objective evidence or reliable data. This may include overly ambitious projections of future profits and losses, ignorance of fixed and avoided costs, failure to calculate an appropriate discount rate and exclusion of changing market conditions as well as other internal and external factors that may influence damages calculations. These and other unfounded assumptions lead to speculation, which the courts consider unreliable and inadmissible testimony. It is important for experts to conduct their own research and review information such as market studies, historical data and industry projections, in order to confirm that the data they use in their models is reliable and therefore admissible.
By joining the majority of the nation in adopting the Daubert standard, Florida now faces a significant shift in its scrutiny of evidence relating to expert testimony. Plaintiffs, defendants and legal counsel will need to rethink how they rely on expert witnesses to support damages claims and how the courts will test the credibility and testimony of those experts.
The Forensics and Litigation practice with Berkowitz Pollack Brant works with legal counsel to defend and challenge lost profits cases and its team of professionals have authored practice aids and led industry conferences and seminars on these topics.
About the Authors: Richard A. Pollack, CPA, is director in charge and Richard S. Fechter, JD, CAMS, is an associate director in Berkowitz Pollack Brant’s Forensic and Business Valuation Services practice. For more information, call 305-379-7000 or email firstname.lastname@example.org.