Daubert Motions in Construction Litigation: Making and Defending...

Daubert Motions in Construction Litigation: Making and Defending Challenges Navigating Daubert Standards for Expert Witnesses in Design and Construction Defect Claims

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TUESDAY, APRIL 29, 2014

Presenting a live 90-minute webinar with interactive Q&A

Thomas R. Buchanan, President, McDowell Rice Smith & Buchanan, Kansas City, Mo.

José Ramón González-Magaz, Partner, Steptoe & Johnson, Washington, D.C.

Brendan J. Peters, Partner, Perkins Coie, Seattle

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Daubert Challenges in Construction Litigation

By: Thomas R. Buchanan, Esq. [email protected]

Jose Gonzalez, Esq. [email protected]

Brendan Peters, Esq. [email protected]

Overview • Daubert trilogy and more recent Supreme

Court cases • Daubert’s application in construction • Reliability and relevance issues. • Scheduling, construction defect and

damages. • Daubert’s future impact on construction

claims. • Lessons learned.

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Frye v. United States 293 F. 1013 (D. D.C. 1923)

In Frye, the court held that the methodology underlying the lie-detector test was not “generally accepted” and excluded evidence of a successful test by the defendant.

(1923 lie detector)

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Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993)

• Overruled Frye, charged courts to act as “gatekeepers” to exclude irrelevant and/or unreliable expert testimony and set forth a flexible test and some factors to consider:

• Testability of the method • Peer review and publication of the method • The error rate for the method • General acceptance of the method

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General Electric Co. v. Joiner 522 U.S. 136 (1997)

• At the time Joiner was decided, there was a split among the circuits concerning the appropriate standard of review of Daubert rulings.

• Supreme Court reversed 11th Circuit’s overly “stringent” standard of review of District Court’s Daubert ruling, holding that appellate review is an abuse of discretion standard.

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General Electric Co. v. Joiner 522 U.S. 136 (1997)

The Supreme Court further held:

"[C]onclusions and methodology are not entirely distinct from one another. Trained experts commonly extrapolate from existing data. But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered." 522 U.S. at 146.

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Kumho Tire Co., Ltd. v. Carmichael 526 U.S. 137 (1999)

• District Court excluded testimony of tire failure expert in tire blowout/rollover case using Daubert analysis.

(actual photo of tire in Kumho)

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Kumho Tire Co., Ltd. v. Carmichael 526 U.S. 137 (1999)

• Eleventh Circuit reversed, holding that Daubert only applied to the “application of scientific principles” rather than “skill or experience-based observation.”

• The Supreme Court disagreed, holding that Daubert applied to expert testimony based upon “technical” and “other specialized knowledge.”

• “[A]n expert, whether basing testimony upon professional studies or personal experience, [must] employ in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” 526 U.S. at 151.

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Weisgram v. Marley Co., 528 U.S. 440 (2000)

• District Court admitted expert testimony concerning the origin of a fatal fire, and the plaintiff prevailed at trial.

• Eighth Circuit reversed, holding the expert testimony was scientifically unreliable, and the remaining evidence was insufficient to support the jury verdict and directed the district court to enter judgment for the defendant.

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Weisgram v. Marley Co., 528 U.S. 440 (2000)

The Supreme Court upheld the Eighth Circuit’s ruling, holding under F.R.C.P. 50 “that the authority of courts of appeals to direct the entry of judgment as a matter of law extends to cases in which, on excision of testimony erroneously admitted, there remains insufficient evidence to support a jury’s verdict.” 528 U.S. at 547.

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Wal-Mart Stores, Inc. v. Dukes, 564 U.S. --- ,131 S.Ct. 2541 (2011)

In Dukes, an employment class action, the Supreme Court did not rule directly on the issue, but did indicate that a full Daubert analysis may be warranted: • “The District Court concluded that Daubert did not apply to

expert testimony at the certification stage of class-action proceedings. We doubt that is so[.]” Dukes, 131 S.Ct. at 2553-54.

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Federal Rule of Evidence 702 Testimony by Expert Witnesses

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

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How Courts Apply Daubert • Qualifications of the expert

• Expert bias • Testability of the expert’s theory • Error rate • General acceptance in the field • “Fit” • Expert’s method independent or for litigation • Extrapolation • Accounting for alternative explanations • General acceptance of the field itself

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Practical Considerations

• Cost • Timing

• Likelihood of success

• Requisite knowledge or expertise

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Strategic Considerations

• Permits cumulative or inadmissible evidence. • Impact on case value. • Relationship to summary judgment. • Impact when experts intertwined. • Setting the stage for a challenge. • Maximizing the benefits.

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Examples of Daubert in Construction

• Hydrologist’s groundwater model stricken. • Engineer’s analysis of concrete failure

stricken. • Geotechnical engineer’s opinions withdrawn. • Geotechnical engineer’s opinions admissible

but against the weight of engineering community.

• Cases settled before ruling.

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Construction Expert Qualifications • Hewitt v. Liberty Mutual Group Inc., 82 F.R.D. 681, 686-

87 (M.D. Fla. 2010)(Non-engineer insurance adjustor may opine as to wind as cause of roof damage.)

• Johnson v. Inland Steel Co., 140 F.R.D. 367, 372-73 (N.D. Ill. 1992)(Prohibited occup. Health physician from testifying re design & construction of staircase).

• Taylor Pipeline Const. Inc. v. Directional Road Boring, Inc., 438 F.Supp.2d 696, 705-706 (E.D. Tex. 2006)(Construction expert may not testify re duties.)

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Expert Qualifications – Con’t. • Nichols v. Allstate Texas Lloyd’s, 2005 WL 2405922, *2 (S.D. Tex.

Sept. 29, 2005) (in claim involving mold growth caused by a leaking roof, expert was permitted to discuss general causation issues concerning mold growth, but, as the expert was not an engineer or a contractor, the expert was not qualified to testify as to whether any construction defect or engineering issues may have caused or contributed to the mold).

• Buddy’s Plant Plus Corp. v. CentiMark Corp., --- F.Supp.2d --- (W.D. Penn. Oct. 18, 2013) (in construction defect case involving installation of roof coating system, Plaintiff challenged Defendant’s engineer expert on the basis that the expert was not qualified to testify as to condensation damage to the roof due to a lack of expertise in condensation issues. The Court found the expert sufficiently qualified, holding: “[W]itnesses may be competent to testify as experts even though they may not ... be the ‘best’ qualified. Who is ‘best’ qualified is [a] matter of weight upon which reasonable jurors may disagree.”)

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Daubert and Case Management • Rule 702: provides trial courts with

substantial discretion in crafting methods to evaluate the admissibility of expert evidence.

• Rule 706: Court-appointed experts • Rule 104: Hearing: Federal Rules of Evidence

do not apply • Preponderance of the evidence standard

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Daubert by the Numbers • Increase from 30% exclusion rate, pre-Daubert to

as much as 55% post-Daubert. (Dixon/Gill 2002) • Defendants’ challenges successful 66% of the

time, compared to less than 50% for plaintiffs, a pattern repeated on appeal. (Risinger 2000)

• The most recent data shows an 87% affirmance rate for Daubert challenges (PWC study). Summary judgment affirmance rate is 77-78%.

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Daubert by the Numbers Success rate of exclusion, by Daubert factor:

• Reliability – 60% • Relevance (“Fit”) – 40% • Lack of peer review/publication – 30% • Qualifications – 20% • General acceptance – 10% excluded even where

method was generally accepted, 90% where it not generally accepted

• Error rate – 20% • (Dixon/Gill 2002)

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Daubert Motions in Construction Litigation: Making and Defending Challenges Is the construction-related testimony reliable and relevant? Jose Ramon Gonzalez-Magaz [email protected] April 29, 2014 www.steptoe.com

mailto:[email protected]

“As with expert qualifications, the court has broad discretion to decide

(1) the factors to be considered when determining reliability, and

(2) the ultimate determination as to reliability.”

D&D Assoc., Inc. v. Bd. of Educ. of N. Plainfield, No. Civ. A. 03-1026 (MLC), 2006 WL 755984, at *4 (D.N.J. Mar. 20, 2006) (citing Kumho Tire Co. Ltd. v. Carmichael, 526 U.S. 137, 142 (1999)).

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Daubert in Construction Cases: Reliability Expert testimony must be reliable.

– Test of reliability is “flexible” and “depends upon the particular circumstances of the particular case at issue.” Kumho Tire.

Daubert’s reliability factors do not necessarily apply to every expert in every case. – Has the theory been tested? – Subjected to peer review and publication? – Known or potential error rate? – Standards and controls regarding the technique – Degree of acceptance in the relevant scientific community

Expert must employ the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. Kuhmo Tire, 526 U.S. at 152.

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Daubert Reliability Attacks

FRE 702(b) – reliability of facts or data underlying expert opinion – Reliance on inaccurate data (contradicted by

facts) – Reliance on invalid or inaccurate assumptions

• Inconsistent with facts • Not scientifically sound • Dependent upon other experts?

“Cherry picking” the facts

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Daubert Reliability Attacks

FRE 702(c) – reliability of expert’s principles or methodology

– Not generally accepted – Absence of standards – Cannot be tested/validated – Known error rates

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Daubert Reliability Attacks FRE 702(d) – reliability of application of

method to facts – Failed to follow methodology – Failed to consider alternative

explanations – Errors (e.g., calculations, inadvertent

integration of data) – Bias

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Daubert in Construction Cases: Reliability

Daubert challenge should address the principles and methodology used to form the opinion, not the expert’s conclusions

“Good grounds” must support the opinion.

First-hand knowledge not required – Expert can rely on his own expertise and the observations of others. – FRE 703: “An expert may base an opinion on facts or

data in the case that the expert has been made aware of or personally observed.”

Flaws in factual assumptions go to credibility – “Clearly erroneous” exception

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Corner Pocket, Inc. v. Travelers Ins. (W.D. Pa. 2013) – “Good grounds” supported architect’s expert opinion – Expert “well within his purview” to rely on observations

and conclusions of others to form his own opinion regarding property damage

LaShip, LLC v. Hayward Baker, Inc. (E.D. La. 2013) – Causation opinion unreliable where expert failed to

consider alternative causes for damage to property – 5th Circuit precedent that exclusion of alternatives is

necessary for reliable causation opinion

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HNTB Georgia, Inc. v. Hamilton-King (Ga. 2010) – Engineer expert lacked experience designing, reviewing, or

evaluating a bridge construction project – Opinions regarding bridge construction design deemed

unreliable as based on engineering judgments

Miracle Temple Christian Academy v. Church Mut. Ins. Co. (E.D. Pa. 2013) – Expert examined the property more than two years after damage

occurred and after repairs began – Relied on pictures of the property, taken prior to the repairs – Expert opinion regarding property damage still deemed reliable – Flaws in the expert report could be highlighted at trial

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Daubert in Construction Cases: Causation

Court may (should) consider a causation expert’s failure to account for obvious alternative explanations.

FRE 702 Advisory Committee’s Note to 2000 Amendments – “Courts both before and after Daubert have found other factors relevant in determining whether expert testimony is sufficiently reliable,” including “[w]hether the expert has adequately accounted for obvious alternative explanations.”

5th Circuit Rule: The exclusion of alternatives is necessary for a reliable causation opinion. See Michaels v. Avitech, Inc., 202 F.3d 746 (5th Cir. 2000).

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Focus on the Details Small mistakes lead to large errors

– Check every specification, construction phase schedule, change order, etc. – Get out the calculator

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Daubert in Construction Cases: Relevance

Expert testimony must be relevant –Low relevancy threshold

• Relevant evidence “logically advances a material aspect of the proposing party’s case.” Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1315 (9th Cir. 1995) (“Daubert II”).

–Testimony must “fit” the underlying cause of action • Must be connected to facts and law at issue • Must be helpful to the trier of fact • Should not include legal conclusions

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Daubert in Construction Cases: Relevance

Steffy v. Home Depot, Inc. (M.D. Pa. 2008) – Appraiser’s expert opinion regarding value of property

excluded as irrelevant – Appraiser relied on “pure speculation” regarding future

zoning

Billiott v. Cove Mountain Realty, Inc. (E.D. Tenn. 2008) – Architect’s expert opinion regarding what building codes

applied to the property was a legal conclusion – Testimony still relevant to aid the trier of fact as to

whether the building codes were followed

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Daubert in Construction Cases: Relevance D&D Assoc., Inc. v. Board of Educ. Of North Plainfield (D.N.J.

2006) – Expert report regarding the advice and quality of legal services

provided by the defendant’s attorney to the defendant did not “fit” the complaint’s allegations that the attorney breached a duty of care owed to the plaintiff.

– Opinion as to damages was also irrelevant where expert did not review plaintiff’s damages, and stated only that the source of damages was “self-evident.”

Hutton Contracting Co., Inc. v. City of Coffeyville (D. Kan. 2004) – Expert’s opinion regarding industry custom deemed irrelevant

because contract language was not ambiguous, did not contain technical language, and expressly negated the expert’s conclusion.

– Opinion also inadmissible as legal conclusion regarding contract’s liquidated damage provision

39 www.steptoe.com

Daubert Motions in Construction Litigation

Brendan Peters Perkins Coie LLP

[email protected]

Strafford CLE Webinar April 29, 2014

Daubert’s Application to Construction

Scheduling Construction Defects Quantifying Damages “Impact” Claims

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Daubert & Scheduling Critical Path Method Approaches Ex. “Windows” Method Representative Cases

Weitz Co., LLC v. MH Washington, LLC, 631 F.3d 510, 526-27 (8th Cir. 2011).

MACTEC, Inc. v. Bechtel Jacobs Co., LLC, 2008 WL 250518 (E.D. Tenn. Jan. 28, 2008).

RLI Ins. Co. v. Indian River Sch. Dist., 2007 WL 4292109 (D. Del. 2007).

Weitz Co., LLC v. MacKenzie House, LLC, 2009 WL 4030756 (W.D. Mo. 2009).

Focus on application of the methodology

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Daubert & Construction Defects Design Professional Testimony Reference Standards Standard of Care Representative Cases

Burbach Aquatics, Inc. v. City of Elgin, 2011 WL 204800 (N.D. Ill. 2011).

First Assembly of God Church v. Fondren, 2003 WL 25685226 (E.D. Tex. 2003).

Interplan Architects, Inc. v. C.L. Thomas, Inc., 2010 WL 4065465 (S.D. Tex. 2010).

Residences at Ocean Grande, Inc. v. Allianz Global Risks U.S. Ins. Co., 2009 WL 7020044 (S.D. Fla. 2009).

Focus on application of the methodology 43

Daubert & Quantifying Damages Total Cost Method Representative Cases AMEC Civil, LLC v. DMJM Harris, Inc., 2009 WL

1883985 (D.N.J. June 30, 2009). Safeco Ins. Co. of Am. v. S & T Bank, 2010 WL

786257 (W.D. Pa. 2010).


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Daubert & Impact Claims Productivity: Measured Mile

L. Davis, L. Sipanowich & W. Bauer, Does the “Measured Mile” Measure Up? When It Has, When It Hasn’t, and What May Happen Under Dauber/Kuhmo, Construction Briefings, No. 2007-4 (April 2007).

J.A. Jones Constr. Co., ENGBCA No. 6386 et al., 00-2 BCA ¶31,000, 2000 WL 1014011 (2000).

United States v. Travelers Cas. & Sur. Co. of Am., No. CV06-0234, Dkt. #123 (W.D. Pa. May 1, 2009).

Impact Claims Hensel-Phelps Constr. Co., ASBCA No. 49270, 99-2

BCA ¶30,531, 1999 WL 669351 (1999).


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Future Impact of Daubert

PWC: Daubert Challenges to Financial Experts

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Future Impact of Daubert

PWC: Daubert Challenges to Financial Experts

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Future Impact of Daubert on Construction Claims

Building Information Modeling Clash Detection


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Some important things to keep in

mind…

What are the lessons learned?

Comments and Questions

Thank you

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