Fourth Circuit Explains A "Typical" Legal Expert Testimony Case

In trial for conspiracy to engage in a “pump and dump” securities fraud scheme, admitting expert testimony of professor of securities law to explain the complex and intricate regulatory landscape and market influences on the securities trading involved in the case; although the testimony arguably stated legal conclusions, it was admissible under FRE 702 because it also helped the jury understand the federal securities registration requirements, registration exemptions, and specific regulatory practices, that they would need to apply in the case, in United States v. Offill, 666 F.3d 168 (4th Cir. Dec. 6, 2011) (No. 10–4490)

Generally, trial courts doubt the value of admitting expert testimony regarding the law, particularly when the testimony is not specifically focused on the facts of the case. Apparently, the fear is that such testimony might come to displace in juror minds the court's instructions of law, competing with one important role that the judge plays in a trial. The Fourth Circuit recently considered a case that it described as the "typical" legal testimony case, which bears some examination because of the features the circuit found operating in the case.

In the case, defendant Offill was tried for participating "in a 'pump and dump' securities scheme." The government charged that the scheme had been "designed to evade securities registration requirements" and "artificially inflate the value of securities," so that the defendant could "realize a gain by selling the [securities] at the inflated value to the public." Offill, 666 F.3d at 171. Expert testimony had been presented by the prosecution during the trial related to the nature and requirements of securities trading. After the defendant's conviction, he filed an appeal, contending that the trial court erred in allowing the expert opinion testimony.

Specifically he objected to testimony by a professor of securities law regarding terminology and criteria in securities registration and trading. The defendant particularly argued "this testimony crossed the line drawn in Adalman v. Baker" regarding the admission of expert testimony. In Adalman, the circuit had found "no error and affirmed the trial court's exclusion of an expert witness in a securities case, reflecting an understanding that when an expert's testimony directly concern[ed] the ultimate issue in the case, the risk that the testimony will hinder the jury's deliberations is especially heightened. The court noted that even though “an expert may testify to an ultimate fact, and to the practices and usages of a trade, we think care must be taken lest, in the field of securities law, he be allowed to usurp the function of the judge.” Offill, 666 F.3d at 174-75 (citing Adalman v. Baker, Watts & Co., 807 F.2d 359 (4th Cir. 1986), abrogated on other grounds by Pinter v. Dahl, 486 U.S. 622 (1988).

The circuit disagreed, finding the defendant's case was not similar to Adalman. Rather, the circuit explained that the expert evidence was admissible in the defendant's case because it would assist the jury under FRE 702. According to the circuit:

The touchstone of the rule is whether the testimony will assist the jury. Focusing on that criterion, we have held that it does not help the jury for an expert to give testimony that “states a legal standard or draws a legal conclusion by applying law to the facts,” because it “supplies the jury with no information other than the witness's view of how the verdict should read.” Determining when legal conclusions would be helpful to the jury must also take into account the role that the judge has in instructing the jury on the law. We have noted, for example, that when a witness gives an opinion about the meaning of a specialized legal term, the witness is giving a legal conclusion that is better handled by the judge and, coming from the witness, will be of little assistance to the jury.
Offill, 666 F.3d at 175 (citing United States v. McIver, 470 F.3d 550, 561 (4th Cir. 2006); other citations omitted).

The circuit concluded its discussion by finding that the defendant's case was in line with what was typical about cases that admitted such testimony:

we have also noted that when the legal regime is complex and the judge determines that the witness' testimony would be helpful in explaining it to the jury, the testimony may be admitted. Indeed, courts and commentators have consistently concluded that expert testimony that ordinarily might be excluded on the ground that it gives legal conclusions may nonetheless be admitted in cases that involve highly technical legal issues.
Offill, 666 F.3d at 175 (citing United States v. Barile, 286 F.3d 749, 760 n.7 (4th Cir. 2002)).

The circuit offered two cases of other circuits as providing an example of the helpfulness to the jury standard under FRE 702:

  • Second Circuit:United States v. Bilzerian, 926 F.2d 1285, 1294 (2d Cir. 1991) (“Particularly in complex cases involving the securities industry, expert testimony may help a jury understand unfamiliar terms and concepts”)
  • First Circuit:Peckham v. Cont'l Cas. Ins. Co., 895 F.2d 830, 837 (1st Cir. 1990) (expert testimony on proximate causation in insurance law was properly admitted because experts “could reasonably be expected to shed some light in a shadowy domain”)


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