While our favorite legal television shows highlight the roles of lawyers, judges, and even trial consultants in winning a case, precious little air time is given to an equally critical party: the expert witness. Expert witness testimony, classified by the Federal Rules of Evidence as testimony given by witnesses whose scientific, technical, or specialized knowledge helps either the judge or jury understand evidence, is frequently the deciding factor in a verdict or settlement.
Not all expert testimony, however, is admissible at trial. To protect juries against “junk science” and testimony that could create unjust results, courts often act as “gatekeepers” by excluding unreliable expert testimony in pretrial hearings.
Both expert testimony and judicial gatekeeping continue to play pivotal roles in determining the outcome of mortgage industry lawsuits arising from the financial crisis, as explained later in this article. Both have also been elevated in importance with the recent decision in a landmark product liability case, described below.
Landmark Product Liability Case
In Dewayne Johnson v. Monsanto Co.,1 a jury in August awarded $289 million in damages to a former school groundskeeper (the plaintiff) who alleged that his exposure to glyphosate in a weed killer manufactured by Monsanto (the defendant) caused him to contract non-Hodgkin lymphoma (NHL). The lawsuit was the first of an estimated 5,000 similar cases to go to trial.
At trial, both parties presented conflicting expert testimony about whether glyphosate was carcinogenic. The plaintiff’s experts primarily relied on epidemiology, toxicology, and genotoxicity peer review studies that they believed demonstrated that glyphosate could cause NHL. By contrast, the defendant’s experts cited tests such as the Agricultural Health Study that they opined established that glyphosate could not cause cancer, and they emphasized that the Environmental Protection Agency did not classify glyphosate as being carcinogenic.
After weighing the reliability of both parties’ expert testimony, along with other evidence presented at trial, the jury ruled in favor of the plaintiff. The defendant has asked the court to consider vacating the decision—specifically on the merits of the expert testimony and whether it should have been allowed by the judge.
Importance of Judicial Gatekeeping to the Case
Although the size of the verdict has been grabbing the headlines, the lawsuit would not have proceeded to trial if not for the court’s pretrial decision to allow the plaintiff’s experts to testify. Because the lawsuit was filed in a California state court, the California Evidence Code governed the admissibility of expert testimony. In Sargon Enterprises, Inc. v. University of Southern California, the California Supreme Court held that “under California Evidence Code sections 801(b) and 802, the trial court acts as a gatekeeper to exclude expert testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative.”2
Based on the Sargon precedent, Monsanto filed pretrial motions to exclude seven of the plaintiff’s experts from testifying that glyphosate can cause NHL.3 While the defendant made multiple arguments for excluding the plaintiff’s expert testimony, its primary basis for exclusion was the alleged inadequacy of the peer review studies that the plaintiff’s experts relied upon to reach their opinions.4 Using its role as a gatekeeper, the court rejected most of the defendant’s arguments.
The court’s pretrial rulings provide insights into similar proceedings in any industry. The judge indicated that “at least in California courts, expert opinion actually founded on peer review studies, most especially when the credentials of the expert are unassailable, may be very difficult to exclude.”5 The court further stated that the admissibility of the plaintiff’s epidemiological opinions should depend “on whether the epidemiological opinions offered by Johnson’s experts have support in the scientific literature and adhere to standards applicable to epidemiological experts.”6 Here, the court noted that the plaintiff’s experts relied on at least one study that showed a statistically significant association between glyphosate and NHL, and rejected the defendant’s argument that the plaintiff’s experts ignored the results of the Agricultural Health Study that reached an opposite conclusion. As such, the court did not exclude the plaintiff’s epidemiological experts.
The court also rejected most of the defendant’s arguments that the plaintiff’s toxicology experts’ testimony should be excluded because they could not extrapolate animal toxicology to humans and manipulated their methodology to reach a specific result. The court held that the plaintiff’s experts did not directly apply animal toxicology to humans, but rather concluded that glyphosate causing cancer in mammals renders it biologically plausible that it could also cause NHL in humans. The court also stated that the plaintiff’s toxicology experts did not manipulate tests to reach a desired result, but instead selected a methodology, and defended it against criticism from others.
Additionally, the court rejected the defendant’s arguments that the plaintiff’s experts improperly applied the Bradford Hill criteria (nine factors used to evaluate whether there is a causal relationship between an exposure to an agent and development of a disease), reiterating that there is scientific evidence that shows an association between glyphosate exposure and NHL, and disagreeing with the defendant that the nine criteria were misapplied by the plaintiff’s experts. By admitting the plaintiff’s expert testimony, the court allowed the lawsuit to proceed to trial, ultimately resulting in the jury’s verdict against the defendant.
Expert Testimony in Financial Services Litigation
The significance of expert testimony is not limited to product liability lawsuits. Expert testimony is also a focal point in complex financial services litigation, including in two of the most high-profile lawsuits resulting from the financial crisis to proceed to trial where Treliant provided expert witness services.
In those cases, re-underwriting experts testified at trial about the quality of the loans under dispute. In most lawsuits where re-underwriting of loans is required, re-underwriting experts reach sharply different conclusions about whether an identical group of loans under examination satisfies the governing underwriting guidelines. As a result, for the few financial crisis-related lawsuits that have gone to trial, the judge or jury has had to decide which experts’ re-underwriting methodologies and opinions were more reliable.
Before such a determination could be made, judges frequently had to evaluate whether the re-underwriting experts’ opinions were reliable enough to be admitted as testimony in the first place. This determination was primarily based on the re-underwriting methodologies of the expert witnesses, with a major emphasis being placed on the re-underwriting experts’ sampling methodologies.
While courts during the early stages of residential mortgage-backed security litigation (RMBS) generally allowed re-underwriting experts to use statistical sampling to prove breaches of representation and warranties in contractual documentation, recent court decisions have held that experts cannot use such sampling methods, resulting in experts having to prove breaches on a loan-by-loan basis. Whether courts allow expert witnesses to use statistical sampling to prove breaches is a key issue in the few remaining lawsuits pending from the financial crisis—particularly the RMBS trustee litigation cases.
Often overlooked, persuasive expert testimony frequently determines the outcome of a case. However, before experts can even testify, courts play a gatekeeper role by determining whether testimony should be admissible at trial. As illustrated by the jury’s verdict in the landmark product liability case referenced earlier in this article, the court’s gatekeeper role is pivotal in product liability lawsuits. The roles of both expert testimony and judicial gatekeeping can be just as pivotal—and increasingly challenging—in financial services litigation.
1 Dewayne Johnson v. Monsanto Co., Super Ct. S.F. City and County 2018, Case No. 16-550128.
2 Federal courts are also required to play a “gatekeeping” role in deciding whether to admit expert testimony. In Daubert v. Merrell Dow Pharmaceuticals, Inc., 1993, 509 U.S. 579, the Court interpreted Rule 702 of the Federal Rules of Evidence as requiring courts to only admit proffered expert testimony if it is both reliable and relevant to the questions the trier of fact would answer.
3 The plaintiff also filed Sargon motions to exclude the defendant’s expert testimony, but only the court’s
ruling on the defendant’s motion will be discussed for purposes of this article.
4 Monsanto Sargon Order, 05/17/18.
5 Id. at 7.
6 Id. at 10.
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Treliant, LLC, Compliance, Risk Management, and Strategic Advisors to the Financial Services Industry and Consumer-Oriented Businesses, brings to you New Coordinates, a quarterly newsletter offering insights and information regarding pertinent issues affecting the financial services industry. This article appeared in its entirety in the Fall 2018 issue. To subscribe to our quarterly newsletter, please Contact Us.