Falling Short Of The Daubert Standard

Even though trial courts have considerable discretion in performing the Daubert gatekeeping role (including how to assess the reliability of an expert, what procedures to utilize, and the ultimate determination of reliability) if a court's determination on the admissibility of an expert opinion under FRE 702 reflects an “off-the-cuff decision” with no “detailed” or “specific” findings on the record, an abuse of discretion is normally a reviewing court's conclusion, in Procter & Gamble Co. v. Haugen, 427 F.3d 727 (10th Cir. Oct. 19, 2005) (No. 03-4234)

It should come as no surprise to the practitioner that a circuit's review of a judge’s Daubert gatekeeping is best described as deference. Often it is hard to find instances of trial courts, as the court involved in Procter & Gamble v. Haugen, that have abused this discretion. As noted by the Third Circuit, the tendency is to adopt a “generally liberal approach" to district court gatekeeping. The Procter & Gamble case serves as an instructive reminder district courts, acting "on the spot" and exercising considerable care in its approach are not often found to have abused its gatekeeping discretion.

In the case, plaintiff Procter & Gamble Company filed suit against the defendants, primarily distributors of Amway products (who were in the same product field of personal care and household use items as the plaintiff) for violating the Lanham Act based on false descriptions of the origin of the Procter & Gamble products. Plaintiff alleged that the defendant disseminated a voice-mail message to “thousands” of Amway distributors “falsely stating that the president” of plaintiff “had recently appeared on television, announced that he (the president of P & G) was associated with the Church of Satan, and stated that a large portion of the profits from forty-three different P & G products were used to support the Church of Satan.” The plaintiff sought recovery of lost customers caused by this false statement. Procter & Gamble, 427 F.3d at 731.

The Tenth Circuit noted that there was little question that the statement was made. Pretrial proceedings focused on how to measure damages caused by the Satanism rumors on the sales and market share of the plaintiff’s 43 products that the rumor claimed were being used to support the Church of Satan. An initial estimate developed by the plaintiff’s employee (a financial analyst and profit forecaster) concluded that the data available to him was inconclusive. Procter & Gamble, 427 F.3d at 731.

The plaintiff then hired two expert witnesses to investigate and testify on the issue of lost sales. The data used by these experts was requested by the defendant in discovery and the primary issue was the “extent to which defendants requested production of the … market share data from P & G and, in turn, the extent to which P & G complied with those requests,” as well as whether sanctions were appropriate. After a set of hearings into these discovery disputes, the trial court found for the defendants that plaintiffs improperly failed to provide discovery and the court sanctioned the plaintiff by dismissing the case. One ground for dismissal was a finding that:

“that damages testimony and studies [of the plaintiff] … would not be admitted in evidence under Rule 702 of the Federal Rules of Evidence and the Daubert line of cases regarding the admissibility of expert testimony. Such testimony clearly would not be based upon sufficient facts or data to be admissible in this Court. Since Plaintiffs’ damages evidence would not be admissible, Plaintiffs’ claims must fail.”
Procter & Gamble, 427 F.3d at 731.

The circuit concluded the trial court’s expert ruling as a basis for dismissal was an abuse of discretion. The circuit agreed with the plaintiff that dismissal of the action was not warranted based on the trial court’s FRE 702 findings (as well as the alleged failure to make discovery) and it reversed the dismissal order and remanded for further proceedings.

Reviewing the record, the circuit found that the district court provided “absolutely no warning prior to the district court's order of dismissal that the district court would be considering, let alone ruling on, the admissibility” of plaintiff’s expert testimony on damages. The circuit’s assessment of the record revealed that the trial court “failed to ‘creat[e] ... “a sufficiently developed record in order to allow a determination of whether [it] properly applied the relevant law.’ Undoubtedly due to the lack of prior notice, neither side in this case provided the district court with detailed briefing regarding the admissibility of [plaintiff’s] expert’s testimony. In turn, there were no ‘detailed’ or ‘specific’ findings by the district court on the record regarding why it concluded the testimony was inadmissible. To the contrary, the circumstances of the district court’ ruling (i.e., its surprise nature and its lack of specificity) strongly suggest that the district court ‘“simply made an off-the-cuff decision to [exclude] the expert testimony.”’” The circuit accordingly found that the trial court abused its discretion in ruling the plaintiff’s expert’s testimony inadmissible and dismissing the case on that basis. Procter & Gamble, 427 F.3d at 742 (quoting Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1163- 64 (10th Cir. 2000)).

The Procter & Gamble case is an old case but one that explains why trial courts have substantial discretion in the exercise of the Daubert gatekeeping role. In assessing the trial court’s determination that the plaintiff’s expert testimony was inadmissible under FRE 702, the circuit noted the broad discretion the trial court has in how it conducts Daubert gatekeeping. As noted by the Tenth Circuit:

This “broad discretion applies both in deciding how to assess an expert's reliability, including what procedures to utilize in making that assessment, as well as in making the ultimate determination of reliability.” Id. We “will not disturb the district court's ruling unless it is ‘arbitrary, capricious, whimsical or manifestly unreasonable’ or when we are convinced that the district court ‘made a clear error of judgment or exceeded the bounds of permissible choice in the circumstances.’ ”
Procter & Gamble, 427 F.3d at 742 (quoting Dodge v. Cotter Corp., 328 F.3d 1212, 1223 (10th Cir. 2003); Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1163- 64 (10th Cir. 2000).

Image: From John Milton, Paradise Lost, illustrator Gustave Doré depiction of Satan


Federal Rules of Evidence