Daubert & Kumho Expert Challenges Increase, Moving Away From Their Original Purposes

June 2011

PricewaterhouseCoopers (PwC) recently issued a study of what has occurred with financial (usually damages) experts since the 1999 Supreme Court decision in Kumho Tire Co. vs. Carmichael clarified that the Daubert criteria for challenges to expert witnesses extended to non-scientific experts. PwC compiled the results of cases, providing a plethora of statistics (actually too many statistics) of what happened. Here are the major take-aways, most of which are intuitively correct for someone who follows these issues:

1. Since the Kumho Tire opinion, the number of challenges to expert witnesses has been rapidly increasing. The number of successful challenges also is rapidly increasing, thus providing the impetus to lawyers to continue the trial tactic.

2. The percentage of experts who are excluded is shockingly high, at nearly 50%. The number of successful challenges has remained relatively consistent over the past decade. Of those excluded, roughly 20% were partially excluded, and 30% were completely excluded.

3. Plaintiff experts are challenged two to three times more frequently than defense experts. However, perhaps because plaintiffs are more selective in their challenges, plaintiff-side challenges are more frequently successful.

4. Economists, accountants, and appraisers are the more frequently challenged witnesses (because they are used more frequently in damages and financial matters), but these types of witnesses are more likely to survive the challenge. The corollary of this is that lawyers might be well advised to avoid financial and damage witnesses who do not have these three backgrounds.

5. Consistently, the reliability of underlying data is the most frequently reason why testimony is excluded. This is perhaps the most interesting of the statistics in the report. Daubert and Kumho challenges were initially intended to addresses methodology, testability, known error rates, and general acceptance issues, yet these challenges make up only around half of the challenges. The other half of the challenges most regularly pertain to the validly of the underlying data, which the financial expert is often given and told to accept as part of the assignment. In these cases, the financial expert often has little to do with the underlying data. However, the expert is criticized for starting with data (i) that he would have no basis for knowing would subsequently face challenges, or (ii) which was required as part of the initial project definition.

6. Approximately 20% of the exclusions pertain to the qualifications of the expert. This is surprisingly high given that this subject is more easily understood and subject to screening before the expert is employed. In this regard, point #4 above warns legal counsel that the selection of witness who do not have the most established and accepted credentials is dangerous.

The report includes numerous examples of witnesses being excluded. In most cases, the trial judge excluded the testimony because of a methodology topic with which reasonable minds could disagree. In many cases, it appears that the judges involved expanded their accepted gatekeeper function to include a final assessment of the technical results obtained. This generally would fall outside the expertise of the judges involved.