Presenting a live 90-minute webinar with interactive Q&A Daubert Motions in Construction Litigation: Making and Defending Challenges Navigating Daubert Standards for Expert Witnesses in Design and Construction Defect Claims TUESDAY, APRIL 29, 2014 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Thomas R. Buchanan, President, McDowell Rice Smith & Buchanan, Kansas City, Mo. José Ramón González-Magaz, Partner, Steptoe & Johnson, Washington, D.C. Brendan J. Peters, Partner, Perkins Coie, Seattle The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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Daubert Challenges in Construction Litigation By: Thomas R. Buchanan, Esq. tbuchanan@mcdowellrice.com Jose Gonzalez, Esq. jrgonzalez@steptoe.com Brendan Peters, Esq. BPeters@perkinscoie.com
Overview Daubert trilogy and more recent Supreme Court cases Daubert s application in construction Reliability and relevance issues. Scheduling, construction defect and damages. Daubert s future impact on construction claims. Lessons learned. 6
Frye v. United States 293 F. 1013 (D. D.C. 1923) In Frye, the court held that the methodology underlying the lie-detector test was not generally accepted and excluded evidence of a successful test by the defendant. (1923 lie detector) 7
Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993) Overruled Frye, charged courts to act as gatekeepers to exclude irrelevant and/or unreliable expert testimony and set forth a flexible test and some factors to consider: Testability of the method Peer review and publication of the method The error rate for the method General acceptance of the method 8
General Electric Co. v. Joiner 522 U.S. 136 (1997) At the time Joiner was decided, there was a split among the circuits concerning the appropriate standard of review of Daubert rulings. Supreme Court reversed 11 th Circuit s overly stringent standard of review of District Court s Daubert ruling, holding that appellate review is an abuse of discretion standard. 9
General Electric Co. v. Joiner 522 U.S. 136 (1997) The Supreme Court further held: "[C]onclusions and methodology are not entirely distinct from one another. Trained experts commonly extrapolate from existing data. But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered." 522 U.S. at 146. 10
Kumho Tire Co., Ltd. v. Carmichael 526 U.S. 137 (1999) District Court excluded testimony of tire failure expert in tire blowout/rollover case using Daubert analysis. (actual photo of tire in Kumho) 11
Kumho Tire Co., Ltd. v. Carmichael 526 U.S. 137 (1999) Eleventh Circuit reversed, holding that Daubert only applied to the application of scientific principles rather than skill or experience-based observation. The Supreme Court disagreed, holding that Daubert applied to expert testimony based upon technical and other specialized knowledge. [A]n expert, whether basing testimony upon professional studies or personal experience, [must] employ in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. 526 U.S. at 151. 12
Weisgram v. Marley Co., 528 U.S. 440 (2000) District Court admitted expert testimony concerning the origin of a fatal fire, and the plaintiff prevailed at trial. Eighth Circuit reversed, holding the expert testimony was scientifically unreliable, and the remaining evidence was insufficient to support the jury verdict and directed the district court to enter judgment for the defendant. 13
Weisgram v. Marley Co., 528 U.S. 440 (2000) The Supreme Court upheld the Eighth Circuit s ruling, holding under F.R.C.P. 50 that the authority of courts of appeals to direct the entry of judgment as a matter of law extends to cases in which, on excision of testimony erroneously admitted, there remains insufficient evidence to support a jury s verdict. 528 U.S. at 547. 14
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. ---,131 S.Ct. 2541 (2011) In Dukes, an employment class action, the Supreme Court did not rule directly on the issue, but did indicate that a full Daubert analysis may be warranted: The District Court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so[.] Dukes, 131 S.Ct. at 2553-54. 15
Federal Rule of Evidence 702 Testimony by Expert Witnesses A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case 16
How Courts Apply Daubert Qualifications of the expert Expert bias Testability of the expert s theory Error rate General acceptance in the field Fit Expert s method independent or for litigation Extrapolation Accounting for alternative explanations General acceptance of the field itself 17
Practical Considerations Cost Timing Likelihood of success Requisite knowledge or expertise 18
Strategic Considerations Permits cumulative or inadmissible evidence. Impact on case value. Relationship to summary judgment. Impact when experts intertwined. Setting the stage for a challenge. Maximizing the benefits. 19
Examples of Daubert in Construction Hydrologist s groundwater model stricken. Engineer s analysis of concrete failure stricken. Geotechnical engineer s opinions withdrawn. Geotechnical engineer s opinions admissible but against the weight of engineering community. Cases settled before ruling. 20
Construction Expert Qualifications Hewitt v. Liberty Mutual Group Inc., 82 F.R.D. 681, 686-87 (M.D. Fla. 2010)(Non-engineer insurance adjustor may opine as to wind as cause of roof damage.) Johnson v. Inland Steel Co., 140 F.R.D. 367, 372-73 (N.D. Ill. 1992)(Prohibited occup. Health physician from testifying re design & construction of staircase). Taylor Pipeline Const. Inc. v. Directional Road Boring, Inc., 438 F.Supp.2d 696, 705-706 (E.D. Tex. 2006)(Construction expert may not testify re duties.) 21
Expert Qualifications Con t. Nichols v. Allstate Texas Lloyd s, 2005 WL 2405922, *2 (S.D. Tex. Sept. 29, 2005) (in claim involving mold growth caused by a leaking roof, expert was permitted to discuss general causation issues concerning mold growth, but, as the expert was not an engineer or a contractor, the expert was not qualified to testify as to whether any construction defect or engineering issues may have caused or contributed to the mold). Buddy s Plant Plus Corp. v. CentiMark Corp., --- F.Supp.2d --- (W.D. Penn. Oct. 18, 2013) (in construction defect case involving installation of roof coating system, Plaintiff challenged Defendant s engineer expert on the basis that the expert was not qualified to testify as to condensation damage to the roof due to a lack of expertise in condensation issues. The Court found the expert sufficiently qualified, holding: [W]itnesses may be competent to testify as experts even though they may not... be the best qualified. Who is best qualified is [a] matter of weight upon which reasonable jurors may disagree. ) 22
Daubert and Case Management Rule 702: provides trial courts with substantial discretion in crafting methods to evaluate the admissibility of expert evidence. Rule 706: Court-appointed experts Rule 104: Hearing: Federal Rules of Evidence do not apply Preponderance of the evidence standard 23
Daubert by the Numbers Increase from 30% exclusion rate, pre-daubert to as much as 55% post-daubert. (Dixon/Gill 2002) Defendants challenges successful 66% of the time, compared to less than 50% for plaintiffs, a pattern repeated on appeal. (Risinger 2000) The most recent data shows an 87% affirmance rate for Daubert challenges (PWC study). Summary judgment affirmance rate is 77-78%. 24
Daubert by the Numbers Success rate of exclusion, by Daubert factor: Reliability 60% Relevance ( Fit ) 40% Lack of peer review/publication 30% Qualifications 20% General acceptance 10% excluded even where method was generally accepted, 90% where it not generally accepted Error rate 20% (Dixon/Gill 2002) 25
Daubert Motions in Construction Litigation: Making and Defending Challenges Is the construction-related testimony reliable and relevant? Jose Ramon Gonzalez-Magaz jrgonzalez@steptoe.com April 29, 2014 www.steptoe.com
As with expert qualifications, the court has broad discretion to decide (1) the factors to be considered when determining reliability, and (2) the ultimate determination as to reliability. D&D Assoc., Inc. v. Bd. of Educ. of N. Plainfield, No. Civ. A. 03-1026 (MLC), 2006 WL 755984, at *4 (D.N.J. Mar. 20, 2006) (citing Kumho Tire Co. Ltd. v. Carmichael, 526 U.S. 137, 142 (1999)). www.steptoe.com 27
Daubert in Construction Cases: Reliability Expert testimony must be reliable. Test of reliability is flexible and depends upon the particular circumstances of the particular case at issue. Kumho Tire. Daubert s reliability factors do not necessarily apply to every expert in every case. Has the theory been tested? Subjected to peer review and publication? Known or potential error rate? Standards and controls regarding the technique Degree of acceptance in the relevant scientific community Expert must employ the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. Kuhmo Tire, 526 U.S. at 152. www.steptoe.com 28
Daubert Reliability Attacks FRE 702(b) reliability of facts or data underlying expert opinion Reliance on inaccurate data (contradicted by facts) Reliance on invalid or inaccurate assumptions Inconsistent with facts Not scientifically sound Dependent upon other experts? Cherry picking the facts 29
Daubert Reliability Attacks FRE 702(c) reliability of expert s principles or methodology Not generally accepted Absence of standards Cannot be tested/validated Known error rates 30
Daubert Reliability Attacks FRE 702(d) reliability of application of method to facts Failed to follow methodology Failed to consider alternative explanations Errors (e.g., calculations, inadvertent integration of data) Bias 31
Daubert in Construction Cases: Reliability Daubert challenge should address the principles and methodology used to form the opinion, not the expert s conclusions Good grounds must support the opinion. First-hand knowledge not required Expert can rely on his own expertise and the observations of others. FRE 703: An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed. Flaws in factual assumptions go to credibility Clearly erroneous exception www.steptoe.com 32
Daubert in Construction Cases: Reliability Corner Pocket, Inc. v. Travelers Ins. (W.D. Pa. 2013) Good grounds supported architect s expert opinion Expert well within his purview to rely on observations and conclusions of others to form his own opinion regarding property damage LaShip, LLC v. Hayward Baker, Inc. (E.D. La. 2013) Causation opinion unreliable where expert failed to consider alternative causes for damage to property 5 th Circuit precedent that exclusion of alternatives is necessary for reliable causation opinion www.steptoe.com 33
Daubert in Construction Cases: Reliability HNTB Georgia, Inc. v. Hamilton-King (Ga. 2010) Engineer expert lacked experience designing, reviewing, or evaluating a bridge construction project Opinions regarding bridge construction design deemed unreliable as based on engineering judgments Miracle Temple Christian Academy v. Church Mut. Ins. Co. (E.D. Pa. 2013) Expert examined the property more than two years after damage occurred and after repairs began Relied on pictures of the property, taken prior to the repairs Expert opinion regarding property damage still deemed reliable Flaws in the expert report could be highlighted at trial www.steptoe.com 34
Daubert in Construction Cases: Causation Court may (should) consider a causation expert s failure to account for obvious alternative explanations. FRE 702 Advisory Committee s Note to 2000 Amendments Courts both before and after Daubert have found other factors relevant in determining whether expert testimony is sufficiently reliable, including [w]hether the expert has adequately accounted for obvious alternative explanations. 5 th Circuit Rule: The exclusion of alternatives is necessary for a reliable causation opinion. See Michaels v. Avitech, Inc., 202 F.3d 746 (5th Cir. 2000). www.steptoe.com 35
Focus on the Details Small mistakes lead to large errors Check every specification, construction phase schedule, change order, etc. Get out the calculator 36
Daubert in Construction Cases: Relevance Expert testimony must be relevant Low relevancy threshold Relevant evidence logically advances a material aspect of the proposing party s case. Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1315 (9th Cir. 1995) ( Daubert II ). Testimony must fit the underlying cause of action Must be connected to facts and law at issue Must be helpful to the trier of fact Should not include legal conclusions www.steptoe.com 37
Daubert in Construction Cases: Relevance Steffy v. Home Depot, Inc. (M.D. Pa. 2008) Appraiser s expert opinion regarding value of property excluded as irrelevant Appraiser relied on pure speculation regarding future zoning Billiott v. Cove Mountain Realty, Inc. (E.D. Tenn. 2008) Architect s expert opinion regarding what building codes applied to the property was a legal conclusion Testimony still relevant to aid the trier of fact as to whether the building codes were followed www.steptoe.com 38
Daubert in Construction Cases: Relevance D&D Assoc., Inc. v. Board of Educ. Of North Plainfield (D.N.J. 2006) Expert report regarding the advice and quality of legal services provided by the defendant s attorney to the defendant did not fit the complaint s allegations that the attorney breached a duty of care owed to the plaintiff. Opinion as to damages was also irrelevant where expert did not review plaintiff s damages, and stated only that the source of damages was self-evident. Hutton Contracting Co., Inc. v. City of Coffeyville (D. Kan. 2004) Expert s opinion regarding industry custom deemed irrelevant because contract language was not ambiguous, did not contain technical language, and expressly negated the expert s conclusion. Opinion also inadmissible as legal conclusion regarding contract s liquidated damage provision www.steptoe.com 39
Daubert Motions in Construction Litigation Brendan Peters Perkins Coie LLP BPeters@perkinscoie.com Strafford CLE Webinar April 29, 2014
Daubert s Application to Construction Scheduling Construction Defects Quantifying Damages Impact Claims 41
Critical Path Method Approaches Daubert & Scheduling Ex. Windows Method Representative Cases Weitz Co., LLC v. MH Washington, LLC, 631 F.3d 510, 526-27 (8th Cir. 2011). MACTEC, Inc. v. Bechtel Jacobs Co., LLC, 2008 WL 250518 (E.D. Tenn. Jan. 28, 2008). RLI Ins. Co. v. Indian River Sch. Dist., 2007 WL 4292109 (D. Del. 2007). Weitz Co., LLC v. MacKenzie House, LLC, 2009 WL 4030756 (W.D. Mo. 2009). 42 Focus on application of the methodology
Daubert & Construction Defects Design Professional Testimony Reference Standards Standard of Care Representative Cases Burbach Aquatics, Inc. v. City of Elgin, 2011 WL 204800 (N.D. Ill. 2011). First Assembly of God Church v. Fondren, 2003 WL 25685226 (E.D. Tex. 2003). Interplan Architects, Inc. v. C.L. Thomas, Inc., 2010 WL 4065465 (S.D. Tex. 2010). Residences at Ocean Grande, Inc. v. Allianz Global Risks U.S. Ins. Co., 2009 WL 7020044 (S.D. Fla. 2009). 43 Focus on application of the methodology
Daubert & Quantifying Damages Total Cost Method Representative Cases AMEC Civil, LLC v. DMJM Harris, Inc., 2009 WL 1883985 (D.N.J. June 30, 2009). Safeco Ins. Co. of Am. v. S & T Bank, 2010 WL 786257 (W.D. Pa. 2010). Focus on application of the methodology 44
Daubert & Impact Claims Productivity: Measured Mile L. Davis, L. Sipanowich & W. Bauer, Does the Measured Mile Measure Up? When It Has, When It Hasn t, and What May Happen Under Dauber/Kuhmo, Construction Briefings, No. 2007-4 (April 2007). J.A. Jones Constr. Co., ENGBCA No. 6386 et al., 00-2 BCA 31,000, 2000 WL 1014011 (2000). United States v. Travelers Cas. & Sur. Co. of Am., No. CV06-0234, Dkt. #123 (W.D. Pa. May 1, 2009). Impact Claims Hensel-Phelps Constr. Co., ASBCA No. 49270, 99-2 BCA 30,531, 1999 WL 669351 (1999). Focus on application of the methodology 45
Future Impact of Daubert PWC: Daubert Challenges to Financial Experts 46
Future Impact of Daubert PWC: Daubert Challenges to Financial Experts 47
Future Impact of Daubert on Construction Claims Building Information Modeling Clash Detection Focus on application of the methodology 48
49 Daubert s Application to Construction
Daubert s Application to Construction Focus on application of the methodology 50
What are the lessons learned? Some important things to keep in mind www.steptoe.com 51
Comments and Questions Thank you www.steptoe.com 52