Expert Witness: Written Report Under Rule 26

Last year, an important decision was rendered on an appeal involving six expert witnesses. In the case of Walter International Products, Inc. et al v. Walter Mercado Salinas et al, one of the issues on appeal was the district court not allowing Bart Group (one of the plaintiffs) to present testimony from six expert witnesses.

The experts were presented in the following areas:

  • intellectual property transactions under Puerto Rican law
  • forensic accounting and valuation
  • the United States marketing industry
  • international telecom, television, and SMS industry
  • Mexican marketing and artist representation
  • a “responsive” expert

The district court did not allow testimony from any of the experts because the Bart Group did not comply with the disclosures required under Rule 26 of the Federal Rules of Civil Procedure. Specifically, the rules requires that expert witnesses provide a written report which must contain:

  • a complete statement of all opinions the witness will express and the basis and reasons for them
  • the facts or data considered by the witness in forming the opinions
  • any exhibits that will be used to summarize or support the opinions
  • the witness’s qualifications, including a list of all publications authored in the previous 10 years
  • a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition
  • a statement of the compensation to be paid for the study and testimony in the case

The court can order (or the parties can stipulate) that an expert witness is not required to provide a written report, but a disclosure must be provided as to the subject matter on which the witness will testify and a summary of the facts and opinions on which the witness is going to testify.

In this case, there was no order or stipulation that the experts would not be required to provide written reports.  Thus, the district court ruled that there was no justification for not providing written reports, and ruled that the expert witnesses could not testify.

Of particular importance was the Bart Group’s accounting expert, Leonard Cusano. The plaintiffs asserted on appeal that Cusano provided a report, and should have been allowed to testify. The appeals court said that the “report” was barely a report at all, and that the other five experts didn’t even come close to providing reports.

Expert discovery was to be completed by November 14, 2007, and several extensions were granted. The final deadline for the disclosure of expert reports was to be November 20, 2008. Cusano’s “report” was not provided to the defendants until after the close of business on November 20, 2008.

Further, the “report” was not much of a report. Rather, it was a faxed letter stating that Cusano would be providing a net present value calculation of future damages claimed by plaintiffs (with formulas attached), a calculation of pre-judgment interest on the claimed past damages, and rebuttal to any opinions of the defendants’ damage expert. A chart called “Damages Summary” showed total damages of $14.7 million. The letter did not contain:

  • an actual report
  • a curriculum vitae
  • any opinions
  • an explanation of the opinions

The appeals court noted that not only did this not fulfill the requirement to make a complete statement of all opinions and the basis on which those opinions were made,  the letter was produced after multiple extensions had been granted and the district court warned that if either side did not produce expert reports by the deadline of November 20, 2008 the experts would be barred from testifying at trial.

The Bart Group claimed that non-compliance with Rule 26 was “cured” when Cusano was deposed on December 5, 2008. The district court said this wasn’t sufficient. Expert reports with disclosure of opinions (not just one number) were required to be produced prior to the deposition so that opposing counsel could properly examine the witness.

The defendants argued that even at the deposition, Cusano still did not have an expert report. Cusano brought to the deposition a “draft” of something he was working on and said he intended to use it, but that it was still a rough draft and he was still making calculations.

On December 10, 2008, the district court issued an order granting Mercado’s motion to strike the experts of Bart Group, including Cusano. Undeterred, on December 12, 2008, the plaintiffs faxed to Mercado a document titled “Expert Rebuttal Report” authored by Cusano. The Bart Group again asked the court to allow Cusano to testify, and the district court again said that Cusano could not testify as an expert, stating:

The parties had plenty of time and plenty of Court granted leeway to work out a practical schedule to exchange expert witness reports. The parties failed to do so and now [the Bart Group] seek[s] another waiver of the
Court’s deadlines.”

The Bart Group, therefore, did not have the opportunity to present evidence about damages (except by the Bart Group’s president, who did testify about damages). Cusano was allowed to be in the courtroom, however,  when Mercado presented its damages experts, so that he could advise the plaintiffs on the issues and the cross-examination.

The Bart Group lost the arguments related to the expert witnesses, as well as the appeal for a new trial.

What can expert witnesses learn from this?

It is extremely important to follow Rule 26. Written reports are necessary in the absence of a court order or stipulation that written reports aren’t required. Shortcuts cannot be taken on the written reports, either. They must outline all opinions and the basis for those opinions, as well as the other information enumerated in Rule 26.

Don’t expect that you can just throw out a damages figure and explain it later. It must be explained in your written report, and you must support your figure with explanations (and maybe even documentation).

Besides, writing the expert report is good for the expert too. It makes you think through all your opinions, organize them in a logical fashion, and ensure that you have included all relevant facts. Writing the report is an opportunity to make sure you’re explaining things in lay terms, and will serve as a guide when you later testify.

Occasionally, writing a report is more difficult than it may seem. Attorneys sometimes wait until the last minute to find experts. Sometimes it is difficult to receive the documentation and information necessary to form an opinion. Sometimes experts are waiting for additional documents to be produced in discovery, and those documents may be critical to the opinions.

There are a variety of reason why it may be difficult (maybe even impossible?) to produce an expert report with all opinions, explanations of those opinions, and supporting documentation. It is therefore important that an expert witness evaluate a case before accepting it.

What happens if the documentation is not made available? What if there is not enough time? What if an extension may not be possible? The expert should consider not taking the case. At the very least, the engagement letter should set forth what happens if the expert is not given access to people and documents as requested or in a timely fashion.

Would you want your name tied to an appeals court opinion like this? Would you want the entire world to see how you were not permitted to testify at trial? Would you want everyone (potential clients included) to see a judge’s decision on how inadequate your expert report was?

This whole situation may not have been Cusano’s fault. He may not have been provided with enough information or enough time. If that is the case, he may be a victim of bad lawyering. Yet his name is still associated with this case and a judge’s decision that he could not testify.

Evaluating potential clients and cases may be as important as the work you will do in a case. Don’t be afraid to walk away from a potential engagement if there is a chance you won’t be able to fulfill the requirements of Rule 26 or state or local rules governing expert witnesses.

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