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This is the second of two articles analyzing the 2000 amendments to the Federal Rules of Evidence. This column focuses on the changes to the expert and opinion testimony rules — 701, 702 and 703. RULE 701: A DEMARCATION OF OPINIONSRule 701. Lay opinion testimony.The amendment to Rule 701 is intended to more clearly demarcate the line between opinions that may be rendered by laymen and those that may be rendered only by experts. By doing so, the amendment is designed to prevent circumvention of the pretrial disclosure rules relating to expert witnesses. In civil actions, the pretrial disclosure requirements relating to expert witnesses are set forth in Federal Rule of Civil Procedure 26(a)(2). Subdivision A of that rule requires disclosure of “the identity of any person who may be used at trial to present evidence under Rules 702, 703, or 705 of the Federal Rules of Evidence.” Subdivision B mandates a detailed written report from every “witness who is retained or specially employed to provide expert testimony in the case or whose duties as an employee of the party regularly involve giving expert testimony.” One way or the other, everyone who will offer expert testimony is, therefore, subject to disclosure. In this context, the amendment to Rule 701 has an interesting lineage. Over the years, the line between rules 701 and 702 became rather blurry, and a significant amount of expert testimony began seeping in through Rule 701, in the guise of “lay expert” opinion. The theory was that, if a lay witness had a particular expertise, he or she could testify to what was essentially expert testimony under Rule 701. In these circumstances, no Rule 26(a)(2) disclosures were made, opening the door to a bit of trial-by-surprise. Consider the common case of the chief financial officer of a company who is a certified public accountant. The CFO is qualified to provide expert opinion on accounting matters. The CFO’s duties, however, do not “regularly involve giving expert testimony” within the meaning of Rule 26(a)(2)(B). Therefore, no expert report is required from the CFO. Consequently, if the CFO is permitted to testify as a “lay expert” — an oxymoron — then even the fact that he or she would provide expert opinion would not be disclosed under Rule 26(a)(2)(A), which is limited to 702, 703 or 705 testimony. In that circumstance, whether the CFO’s expert opinions are even inquired into during discovery could be a matter of happenstance. Equally important, the opinion testimony of witnesses like this — offered under Rule 701 — would often not be scrutinized as carefully as Rule 702 expert testimony, since it was coming from a “lay” witness. This led to the incongruous result that less-qualified witnesses were sometimes permitted to offer opinions that those more qualified were precluded from contesting. The amendment to Rule 701 is designed to end this by making it clear that if any witness is offering expert testimony, the admissibility of that testimony is to be gauged under Rule 702. The amended version of Rule 701 reads as follows (excised language is in brackets; new language is italicized): “If the witness is not testifying as an expert, the witness’ testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness, [and] (b) helpful to a clear understanding of the witness’ testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” Under this amendment, the test is the subject matter of the testimony. If it conveys “scientific, technical or other specialized knowledge” — the same language that appears in Rule 702 — then the testimony is judged under Rule 702, not 701. This has two repercussions. First, as 702 testimony, Rule 26(a)(2) disclosure obligations must be met. Second, the reliability requirements of Rule 702 apply. (As discussed below, Rule 702 has been amended to codify Daubert v. Merrell Dow Pharmaceuticals Inc., 509 U.S. 579 (1993), and Kumho Tire Co. v. Carmichael, 119 S. Ct. 1167 (1999).) The accompanying committee note emphasizes that the Rule 701 amendment is not intended to change the law concerning the traditional types of testimony properly offered as lay opinion — e.g., the owner of a business testifying as to its value or projected profitability. The note cites approvingly Chief Judge Edward R. Becker’s opinion in Asplundh Manufacturing Division v. Benton Harbor Engineering, 57 F.3d 1190, 1196 (3d Cir. 1995), which identifies many “prototypical example[s] of the type of evidence contemplated by the adoption of Rule 701″ and which flagged the major problems that ultimately led to adoption of the amendment. A POTENTIALLY PROBLEMATIC PHRASE IN RULE 701 The potentially problematic phrase in the amendment to Rule 701 is one that already appears in Rule 702 — “other specialized knowledge.” In some sense, all knowledge is “specialized,” but this is clearly not what is meant, and it is not the way Rule 702 has ever been construed. The committee note addresses this issue by incorporating the helpful approach of State v. Brown, 836 S.W.2d 530 (Tenn. 1992). Browndistinguishes between 701 lay testimony, which “results from a process of reasoning familiar in everyday life,” and 702 expert testimony, which “results from a process of reasoning which can be mastered only by specialists in the field.” Id. at 539. � Rule 702. Expert testimony.Commentators debate whether the Supreme Court’s opinions in Daubertand Kumho Tiresignificantly changed the law as to the admissibility of expert testimony. Whether they have or not, these opinions have clearly revolutionized expert-witness practice. The 2000 amendment to Rule 702 codifies Daubertand Kumho Tireby adding the following three-pronged conclusion to the existing text of the rule: “If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.” For practical purposes, these three criteria state the test that will be applied in Daubertmotions on and after Dec. 1. Prong 1 is “quantitative,” according to the committee note, rather than “qualitative.” The issue is one of sufficiency. Thus, even if the expert is properly relying on facts or data that are otherwise inadmissible under Rule 703, the quantum must be sufficient to satisfy prong 1 of Rule 702. PRINCIPLES MUST BE RELIABLE, AND RELIABLY APPLIED Prongs 2 and 3 invoke a qualitative analysis. The principles and methods must be both reliable and reliably applied. The reference to “principles” should not be off-putting. The word is not used in some ontologic sense that would preclude a mechanic from testifying as to problems in a car engine because of an inability to relate everything back to Newton’s Laws. Webster’s defines “principle” to include “the method of a thing’s operation,” and the Oxford English Dictionary includes “the general mode of construction or operation of a machine.” In many instances this notion will apply. In making the qualitative analysis under prongs 2 and 3, it is important to remember that, under General Electric Co. v. Joiner, 522 U.S. 136, 146 (1997), the court may look at the expert’s conclusions in assessing the reliability of the expert’s methodology and the application to the facts. As mentioned in my last column, the committee notes to the 2000 Evidence Rules Amendments (formerly known as Advisory Committee Notes) assembled from the committee members by the reporter, Professor Daniel J. Capra of Fordham Law School, are exceptional. In one important example, the note to Rule 702 stresses that a judicial finding that one expert’s testimony is reliable does not necessarily lead to the conclusion that an opposing expert’s testimony is not. The note also makes it clear that the amendment is not intended to prevent a party from calling an “industry” expert to educate the judge or jury about general principles without specifically applying those principles to the facts of the case. That might seem to be in conflict with prong 3. The note explains that, for an expert of this type, the “fit” requirement of prong 3 is satisfied as long as the testimony is relevant and reliable, and the witness is qualified. Note that the amendment to Rule 702 changes the law in some circuits (e.g., the 2d), in which Daubertwas not read to apply to all types of expert testimony. The amendment reasons that the general requirements of sufficiency and reliability properly apply across the board, even if the illustrative factors mentioned in Daubertdo not. As a matter of both advocacy and admissibility, offering the testimony of experts whose qualifications are based solely on experience will require a good deal of thought. The committee note recognizes that experience alone can be sufficient, but it also remarks that the judge’s gatekeeping function “requires more than simply ‘taking the expert’s word for it.’ ” The proponent must focus on demonstrating the linkage between the expert’s experience and his or her conclusions. CLOSING A BACK DOOR TO THE INTRODUCTION OF HEARSAYRule 703. Closing the back door.For years, lawyers have used Rule 703 to place before the jury otherwise inadmissible data on which an expert’s opinion is predicated. The 2000 amendment is intended to close this back door to the introduction of hearsay and other incompetent information. The amendment (1) clarifies that it is only the expert’s opinion that may rest on the inadmissible data, (2) presumptively precludes disclosure of the inadmissible data to the jury and (3) erects a new balancing test which is weighted against disclosure, when the judge considers the issue. The new rule reads: “The facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing. If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence in order for the opinion or inference to be admitted. Facts or data that are otherwise inadmissible shall not be disclosed to the jury by the proponent of the opinion or inference unless the court determines that their probative value in assisting the jury to evaluate the expert’s opinion substantially outweighs their prejudicial effect.” Nothing in this amendment will prevent cross-examination into the basis of the expert’s opinion. This cross, however, will open the door to the proponent to explore the basis more fully. Whether and to what extent to cross-examine the expert on this issue is a serious strategic issue under this amendment. Also, the amendment does not prevent the proponent from eliciting for the jury the types of things the expert did, or reviewed, but there will be a line that the judge must draw as to how far the proponent can go. For example, there would not appear to be anything improper about experts’ testifying that they relied on newspaper or magazine articles in forming their opinions. Presumably some general discussion of the subject matter would be permissible. Too much detail — effectively disclosing just what the articles said — is not permissible. This will be a fact-driven judgment for the trial judge. The balancing test contained in Rule 703 is just the opposite of the normal balancing test in Rule 403. Instead of allowing the evidence unless its prejudicial effect substantially outweighs its probative value (Rule 403′s balance), Rule 703 bars introduction unless the probative value substantially outweighs prejudicial effect. There are some circumstances under which this balance can be met — e.g., an X-ray relied on by a testifying physician who did not take it. But this test is strict and is not intended to be casually satisfied. Gregory P. Joseph chairs the litigation department at New York’s Fried, Frank, Harris, Shriver & Jacobsonand is a past chair of the Litigation Section of the ABA. He can be reached at [email protected]

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