Tenth Circuit Examines “Abuse Of Discretion” Standard In Reviewing Exclusion Of Expert Witness Testimony

In insurance contract trial, excluding expert testimony comparing “the insurance company’s actions to the industry standard” which was not helpful to the jury; trial court had discretion to exclude the testimony as precedent for the expert testimony did not “lend measurable support to the contrary position,” in North American Specialty Ins. Co. v. Britt Paulk Ins. Agency, Inc., 579 F.3d 1106 (10th Cir. Aug. 25, 2009) (Nos. 07-7115, 08-7000)

It is not often that an appellate court explicitly notes that “there will not necessarily be a single right answer” to whether a trial court erred in an evidentiary determination. Rather, the task of the appellate court is to review the “range of possible outcomes the facts and law at issue can fairly” support. Big Sky Network Canada, Ltd. v. Sichuan Provincial Gov’t, 533 F.3d 1183, 1186 (10th Cir. 2008) (In applying abuse of discretion standard of review, “we will reverse a district court’s determination only if the court exceeded the bounds of the rationally available choices given the facts and the applicable law in the case at hand.”) In a recent decision, the Tenth Circuit discounted the applicability of a prior decision law that admitted expert evidence on the standard of professional care in the insurance industry professional liability case. The case presents an example where the trial court has discretion to admit or exclude the expert testimony.

In the case, plaintiff North American Specialty Insurance sued its general agent (Paulk) and its limited agent contending that their negligence and breach of contract caused North American to settle a bad faith suit brought by two insureds (the McDonalds) over damage to their farm. In a convoluted factual situation, the plaintiff alleged that it had settled with the McDonalds after learning of defendant Paulk’s representation to the McDonalds that their insurance policy did not cover the damage. The defense offered an expert comparing “the insurance company’s actions to the industry standard.”

The trial judge found that the proposed expert evidence violated Daubert’s requirement that the expert evidence be helpful to the jury. The judge excluded the proposed expert testimony because “the jury was perfectly capable of resolving the issues [of professional obligations owed] in this case without expert testimony.” North American Specialty Ins. Co., 579 F.3d at 1112 (citing Thompson v. State Farm Fire & Cas. Co., 34 F.3d 932, 941 (10th Cir. 1994) (whether the proffered expert evidence will be helpful to the jury is “the touchstone of admissibility” under FRE 702)). After a jury trial, a verdict was returned for North American.

On appeal, the defendant claimed the trial court abused its discretion in excluding the defense expert’s testimony about the applicable standard of care in the insurance industry. The circuit rejected the contention that the trial court abused its discretion by excluding the expert evidence. The circuit noted that the defendant cited precedent to support admission of the expert evidence:

“Britt Paulk contends that the jury should have been permitted to hear [expert] testimony regarding standard insurance industry practice. Such evidence, it claims, would help Britt Paulk establish that North American mishandled the McDonalds’ claim, causing it to settle the bad faith lawsuit. Britt Paulk relies on Ford v. Allied Mutual Insurance Co., 72 F.3d 836 (10th Cir. 1996), for the proposition that insurance experts may testify regarding industry standards. In Ford, the district court permitted expert testimony on the issue of bad faith, overruling an objection that the expert’s testimony was either legally or factually erroneous. Id. at 841. Britt Paulk’s reliance is misplaced.”
North American Specialty Ins. Co., 579 F.3d at 1112.


After distinguishing the cited case as not analogous, the circuit also explained that the case did not necessarily support a finding that the court abused its discretion in striking the defendant’s expert testimony. The circuit explained:

“[T]he district court in Ford did not abuse its discretion by allowing expert testimony by an insurance industry expert does not lend measurable support to the contrary position that the district court in this case [by North American Specialty Ins. Co.] abused its discretion by refusing to permit similar testimony.”
North American Specialty Ins. Co., 579 F.3d at 1112 (citing Shook v. Bd. of County Comm’rs of County of El Paso, 543 F.3d 597, 603 (10th Cir. 2008) (not abuse of discretion to deny class certification due to unmanageability of the case)).


In noting that there was no unique answer to whether expert testimony about insurance professional practice was admissible, the circuit reflected aspects of the reasoning it employed in a case decided over a year ago involving the appropriate range of discretion held by a trial court. In that case the circuit explained:

“When applying an abuse of discretion standard of review, we necessarily recognize that there may be no single right answer to the question at hand, but a range of possible outcomes sustainable on the law and facts, and we will ‘defer to the district court’s judgment so long as it falls within the realm of these rationally available choices.’“
Shook v. Board of County Commissioners of County of El Paso, 543 F.3d 597, 603-04 (10th Cir. 2008).


In setting out this application, the circuit relied on the following authorities:

  • United States v. McComb, 519 F.3d 1049, 1053 (10th Cir. 2007) (“Perhaps not unlike any other formulaic standard of review, the term ‘abuse of discretion’[is not altogether free from interpretation. Still, it is a standard we have long familiarity with applying, and one which we have traditionally understood to mean that we will reverse a determination only if the court ‘exceeded the bounds of permissible choice,’ given the facts and the applicable law in the case at hand. That is to say, we recognize that in many cases there will be a range of possible outcomes the facts and law at issue can fairly support; rather than pick and choose among them ourselves, we will defer to the district court’s judgment so long as it falls within the realm of these rationally available choices.”) (citations omitted)
  • Big Sky Network Canada, Ltd. v. Sichuan Provincial Gov’t, 533 F.3d 1183, 1186 (10th Cir. 2008) (The abuse of discretion standard “may appear opaque, but it is one we have long understood to mean that we will reverse a district court’s determination only if the court exceeded the bounds of the rationally available choices given the facts and the applicable law in the case at hand.”)
  • In re Bueno, 248 B.R. 581, 582 (D.Colo. 2000) (Kane, J.) (an abuse of discretion standard implies a degree of “[d]iscretion invested in judges [to render] a decision based upon what is fair in the circumstances and guided by the rules and principles of law”)

Under the abuse of discretion standard in assessing a trial court’s evidentiary ruling, the reviewing court leaves the trial court’s evidentiary ruling intact. However when it appears the court’s evidentiary ruling is “arbitrary, capricious, whimsical or manifestly unreasonable” the circuit will reverse. The same is true when it appears that the trial court has “made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances.” Dodge v. Cotter Corp., 328 F.3d 1212, 1223 (10th Cir. 2003) (reviewing evidentiary rulings admitting expert testimony). The case illuminates how under the abuse of discretion standard a reviewing court will not disturb a decision within a range of choice that is reasonable.

Federal Rules of Evidence
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