United States District Court, N.D. California
BIOTECHNOLOGY VALUE FUND, L.P., BIOTECHNOLOGY VALUE FUND II, L.P., INVESTMENT 10, L.L.C., BVF INVESTMENTS, L.L.C., BVF INC., and BVF X, LLC, Plaintiffs,
CELERA CORPORATION, CREDIT SUISSE SECURITIES (USA) LLC, KATHY ORDOÑEZ, RICHARD H. AYERS, WILLIAM G. GREEN, PETER BARTON HUTT, GAIL M. NAUGHTON, WAYNE I. ROE, and BENNETT M. SHAPIRO, Defendants.
ORDER RE MOTION TO EXCLUDE PORTIONS OF EXPERT REPORTS
WILLIAM ALSUP, District Judge.
In this action asserting claims under federal securities law and state law, plaintiffs move to exclude portions of defendants' expert reports. That motion is GRANTED IN PART AND DENIED IN PART.
The facts of this case are discussed in detail in the Court's previous orders ( see, e.g., Dkt. No. 130). In brief, certain former shareholders of defendant Celera Corporation contend that its board and officers allowed Celera to be sold too cheaply and that the recommendation to shareholders used false statements to support the sale.
Plaintiffs are former Celera shareholders. The defendants (remaining in the case) are Celera Corporation, Kathy Ordoñez, its former CEO, and several Celera directors. Defense counsel have retained expert witnesses William Hasler and David Stowell to opine on various matters in this action. In his report, Mr. Hasler, a former Dean of the U.C. Berkeley School of Business, discusses the standards and customs relating to the use of financial advisors in sale transactions. Mr. Stowell, a professor at Northwestern University's business school, discusses damages models in securities cases. Trial is scheduled to begin on February 9, 2015. Defendants' motion for summary judgment is pending.
No challenge is made to the witnesses' qualifications. Rather, the challenge is made to findings and opinions that purport to tell the jury what actually occurred in our case. Specifically, plaintiffs move to exclude: (1) the entire Hasler report, other than paragraphs 1-8, 18-20, 22, 35-36, 40, 48, 55-57, 64-66, and 97; (2) certain exhibits attached to the Hasler report; (3) paragraphs 10-16, 21-23, 25-39, 47-89, 91, 109, 120-39, 157, 178, 180, and Heading IX of the Stowell report; and (4) testimony by Hasler and Stowell on the subjects covered in those portions of their reports.
Rule 702 governs the admissibility of expert opinions. It provides:
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.
The general evidence problem at issue requires consideration of two distinctions. The first distinction is between custom-and-practice evidence versus evidence as to what actually happened in the specific case at hand. Subject to Rule 403, it is usually proper for an expert to explain custom-and-practice to a jury. When, however, it comes to what actually occurred in the specific case at hand, an expert should be allowed to state findings as to what happened only as to those specific aspects as to which his specialized knowledge, training, and lab work are critical to the analysis.
For example, a ballistics expert may compare two bullets and tell us the likelihood they were fired through the same barrel. Such testimony is based on the witness' own side-by-side comparison, which in itself requires specialized training. Or, a DNA expert may tell us the probability that a DNA sample came from an accused by personally running the lab-tests and calculating the probability. Or, a physician may tell us a diagnosis based on her actual review of the patient. But where the expert does little more than read depositions and deposition exhibits and other such materials, and then proposes to render findings to the jury as to what happened, we should draw the line and bar such testimony. Here are the reasons:
First, when it comes to testimony and other trial-type evidence, our jury system looks to the jury itself to make the critical evaluations as to what actually occurred and what the key actors were thinking or relying on. Juries do this role well and they do not need retained advocates to testify on their respective slants on the evidence. That should be saved for closing argument by counsel. Converting the trial into a question of whose fact-finding "investigator" is more credible is a dangerous idea. The jury itself should be making the findings.
Second, retained experts of the type in question have no personal knowledge of what actually happened. They did no lab work. They made no side-by-side comparisons of bullets. Insofar as what actually happened in the specific case at hand, they bring little to the ...