Tenth Circuit Grants Rehearing On Expert Evidence Issues

Tenth Circuit orders further briefing on expert evidence questions for en banc rehearing of United States v. Nacchio, 533 F.3d 1165 (10th Cir. July 30, 2008) (No. 07-1311).

On March 17, 2008, a divided Tenth Circuit panel vacated the conviction on nineteen counts of insider trading of Joseph Nacchio, former CEO of Qwest Communications International, Inc. The majority concluded that the trial court erred by excluding the defendant’s expert witness who would have testified about whether economic diversification better explained the pattern of defendant’s stock trades than his insider information. See United States v. Nacchio, 519 F.3d 1140 (10th Cir. 2008).

The government petitioned for rehearing en banc. It argued that the panel majority opinion created a new “procedural step” for expert testimony. The government disputed to panel's holding “that a district judge lacks discretion to exclude expert testimony even where the government’s motion to exclude the evidence challenges the expert’s reliability and the defendant’s written opposition makes no showing of reliability and does not request an evidentiary hearing.” The panel essentially provided the defense “another opportunity to make a showing of reliability …even in the midst of trial, even after the issue has been squarely joined in both sides’ written submissions, and even though the judge is prepared to exclude the expert based on the proponent’s failure to make any showing of reliability.” Petition for Rehearing En Banc, at 1. As a separate basis for rehearing, the government contended that the panel did not consider the trial court’s grounds to exclude the expert testimony under FRE 403 on grounds of prejudice, confusion, delay, and waste of time and required the economic expert “to provide ‘context’ about ‘economic concept[s]’ even if the jurors already understand the concepts.” Petition for Rehearing En Banc, at 2.

The defendant opposed the petition and argued that the disallowed expert testimony would have addressed the issues of materiality and intent. The defense noted that the government did not challenge the majority panel’s decision that the trial court erred in conflating the FED. R. CRIM. P. 16 pretrial discovery standard with the admissibility requirements under Daubert and FRE 702.

On July 30, 2008, the Tenth Circuit vacated the panel decision and decided to rehear the case en banc. The circuit ordered contemporaneous briefing on the following four issues:

  1. Was the defendant sufficiently on notice that he was required either to present evidence in support of the expert’s methodology or request an evidentiary hearing in advance of presenting the expert’s testimony?
  2. Did the defendant have an adequate opportunity to present such evidence or request an evidentiary hearing in advance of presenting the expert’s testimony?
  3. Did the defendant bear the burden of requesting an evidentiary hearing?
  4. Did the district court abuse its discretion in disallowing the evidence, and if so, is the appropriate remedy necessarily a new trial, or is a remand for purposes of conducting an evidentiary hearing adequate?"

Order (July 30, 2008).
Oral argument is set for September 25, 2008 in Denver, Colorado. See Order (July 31, 2008).

The rehearing will present an opportunity to clarify the role of the trial court in ruling on expert testimony, the burden on the proponent of expert testimony, and whether the trial court abused its discretion in excluding the defense expert.

Federal Rules of Evidence