Expert Testimony Rule Strictly Enforced for Bench Trial

District courts must apply the Federal Rules of Evidence as strictly in bench trials as in jury trials, according to a recent appellate decision. Reversing a trial judge’s admission of “anecdotal experience” to prove property value during a bench trial, the U.S. Court of Appeals for the Third Circuit cast serious doubt on the “relaxed” standard for admission of expert testimony that many courts have adopted when acting as fact finder. The court held that trial courts must continue to act as “gatekeeper” even during bench trials in order to uphold the reliable, objective methodology required by Federal Rule of Evidence 702.

Expert’s “Damaged Goods” Theory Questioned

The plaintiff in UGI Sunbury LLC v. Permanent Easement obtained easements to build and maintain a 34-mile pipeline over two defendants’ property. To prove the amount of compensation they were owed in return, the landowners offered testimony from an expert who testifies frequently in land-value disputes but whose methodology has been widely criticized. The expert based his opinions on a “damaged goods theory,” which he developed “drawing on his experience working in his grandfather’s appliance shop.” The expert concluded that the easement would reduce values of the two properties at issue by 40 percent and 60 percent, respectively.

The trial court admitted the testimony, citing “a strong preference” for admitting expert testimony. The court explained that, during a bench trial, it would be acting as fact finder and would be able to properly assess the expert opinion.

On appeal, the Third Circuit found the trial court had abused its discretion in relying on the expert’s opinion. The court emphasized that the expert’s methodology was based mainly on his subjective impression that properties with pipelines were treated as “damaged goods” by purchasers and would continue to have “long-term stigma on the overall marketability and market value.”

The only case studies referenced in the expert’s report were serious environmental impact cases with no bearing on the facts of the case at bar: the Three Mile Island nuclear incident in 1979, the Exxon Valdez Alaskan oil spill in 1989, and assorted leaking underground storage tanks. Moreover, the court observed, the expert failed to include any data that supported use of his model to value the defendants’ property.

The court also disagreed with sister circuits that have embraced a more “relaxed standard” during bench trials. It cited the plain meaning of the text of Rule 702, which does not distinguish between bench and jury trials. The court cited comments from U.S. Supreme Court Justice Stephen G. Breyer in the introduction to the Reference Manual on Scientific Evidence, observing that “judges lack the scientific training that might facilitate the evaluation of scientific claims or the evaluation of expert witnesses who make such claims.”

Rules of Evidence Still Apply in Bench Trials

ABA Section of Litigation leaders advise that, in practice, judges are more lenient about admitting evidence during bench trials. Nonetheless, it is important to prepare a strong foundation for appeal by closely following the evidence rules. “While in my experience courts are somewhat more laissez-faire during a bench trial, litigators should not cut corners in preparing expert witnesses just because they are preparing for a bench trial,” explains Karen L. Hart, Dallas, TX, cochair of the Section of Litigation’s Real Estate, Condemnation & Trust Litigation Committee.

Expert reports should also be carefully drafted according to Rule 702. “The expert [in UGI] made a significant error in failing to reference prior studies or data to his report to support his opinions,” observes Kenneth M. Klemm, New Orleans, LA, cochair of the Section’s Trial Evidence Committee. “Without that information, the court and the opposing party had no way to evaluate or test the methodology that the expert relied upon.”

Preparation, Preparation, Preparation

The best way to ensure expert testimony will be admitted is to start preparing early, Section leaders advise. “Litigators need to work during deposition testimony to prepare their experts to explain their methodology to the court and the objective basis for their conclusions,” recommends Hart. “Especially in dealing with experts like real estate appraisers who often work with the general public, it is important to work with the expert to make sure they can explain the steps in their methods and provide objective data points,” she says.

Section leaders also highlight the importance of ensuring experts base their decisions on reliable, scientific methods. “When the court hears that an expert is basing his or her opinion not on data but on ‘common sense,’ the court is going to question what the value is of the expert. We all have common sense,” explains Klemm.

Finally, Section leaders recommend ensuring that the expert testimony fits the facts of the case. “Normally, when experts are trying to do a study of the diminution of value or stigma attached to a property, the expert will do some type of comparable value study,” Klemm observes. “There are millions of miles of energy pipelines around the United States, so the expert should have been able to do objective pre- and post-pipeline studies on property values or should have been able to find existing research if support existed for his opinions,” he concludes.