In support of her theory that she was entitled to significantly more compensation than she had received, the plaintiff introduced the testimony of an expert witness on executive compensation. The expert's opinion was based on "'independent research[,] first-hand experience within the search industry, and information which [he] obtained from industry contracts, [sic] who have provided insights into compensation practices at top tier recruiting firms.'" This information was not publicly available and, other than unnamed industry sources, the plaintiff was the sole individual with whom the expert spoke. He specifically discounted reliance on published information, stating that none was available due to the confidential nature of the executive search industry.
The Defendants' Attempt to Exclude
The defendants sought to exclude the expert's testimony, alleging a lack of sufficient data and an unreliable methodology. The defendants first alleged the existence of published reports regarding executive compensation, and the expert's failure to examine those reports made his testimony insufficient. As to methodology, the defendants "provide[d] a laundry list of alleged flaws in how [the expert] arrived at his estimation . . . including that he relied upon [the plaintiff's] representations . . . and failed to properly assess the revenues that [the former employer] collected from her work." The defendants also identified, as a counter expert, an economist who intended to attack the expert's methodology, but who did not provide an alternate opinion on appropriate compensation.
The U.S. District Court for the Southern District of New York rejected both attacks. The court found a sufficient basis existed for the expert's opinions. Specifically, the defendants did not challenge the expert's experience or his reliance on industry contacts. The court considered the expert's personal experience and data the expert personally observed as sufficient bases for his testimony, regardless of his lack of published data, because Federal Rule of Evidence 702 allows an expert to rely on personal experience and data personally observed. The court also found the issues with the expert's methodology went to the weight, not the admissibility, of the evidence.
Even Without Exclusion, a Motion to Exclude Retains Value
"Two of the hallmarks of a reliable methodology are that the methodology is verifiable and repeatable. These concepts are at the core of peer review," and any expert opinion based on an analysis that is not "repeatable and verifiable" raises concern under Daubert and Kuhmo Tire, offers Matthew F. Prewitt, Chicago, IL, cochair of the Section of Litigation's Expert Witnesses Committee. The Henkel decision acknowledged those precedents and the requirements of the Federal Rules of Evidence, but nonetheless allowed the testimony. In doing so, "the Henkel court was simply observing that in practice those requirements are met more often than not. It certainly did not hold that there is something like a rebuttable presumption in favor of admissibility," observes Blanca F. Young, San Francisco, CA, cochair of the Section's Trial Evidence Committee.
As Henkel acknowledges, rather than a motion to exclude, "[c]ross-examination 'is the appropriate way of attacking weak expert testimony. . . .'" A motion to exclude, however, retains value because "such a motion requires the other side to explain the foundation for their expert's opinion and their expert's methodology, which can expose weaknesses that can then be exploited on cross-examination if the testimony is not excluded," explains Young.
In fact, the Henkel court referred to the testimony as "weak" in light of the defendants' motion. Because even an unsuccessful motion may have value, whether to file a motion to exclude becomes a strategic decision, best made on a case-by-case basis, according to Meaghan G. Boyd, Atlanta, GA, cochair of the Section's Expert Witnesses Committee. Such a motion may be particularly effective in a jury trial, and practitioners may find it useful to "both file the motion and have a counter-expert who is as qualified as the opposing side's and is relying on unpublished data that leads to the contrary conclusion," notes Boyd. In that case, "maybe the court takes a harder look at the methodology in using unnamed sources," potentially resulting in an exclusion that would not otherwise be obtained, Boyd concludes.
Adam E. Lyons is an assocaite editor for Litigation News.