CaliforniaThe importance of expert witness testimony in personal injury actions cannot be overstated.  Whether the case arises from a simple automobile accident or a highly complex toxic tort action, experts generally testify on various issues related to both liability and damages.  The nature and scope of expert opinions admitted at trial can have a profound effect on a jury verdict.

The judge's central role in any trial is to determine the nature and scope of the evidence, including expert opinions, to be presented to the jury.  Recently, the California Supreme Court re-affirmed the role of the trial judge as gatekeeper to exclude speculative expert testimony.  As creative plaintiffs' counsel assert new liability and damages theories based upon untested or questionable science, the Court's decision in Sargon v. University of Southern California may impact the manner in which trial judges decide which expert opinions will ultimately be presented to juries.

            1.  The Facts Giving Rise to Sargon

The University of Southern California entered into a contract to perform clinical testing of a small dental implant company's new product.  After initial success in clinical trials, USC failed to present reports required by the contract.  The company, which had net profits of $101,000 in 1998, sued USC for breach of contract and sought damages for lost profits beginning in 1998 ranging from $200 million to over $1 billion.  The trial court excluded as speculative the proffered opinion testimony of one of the company's experts who calculated future profits based on large anticipated market share gains.  That opinion was based upon data from larger companies that were not comparable and thus, not relevant to the measure of lost profit damages.  The Court of Appeal reversed.

The Supreme Court settled the dispute by reversing the Court of Appeal.  While recognizing that lost profits need not be proven with mathematical precision, the Supreme Court ruled that expert opinions must not be unduly speculative, and that the trial court acted within its discretion when it excluded speculative expert opinion testimony that the company would have become extraordinarily successful had USC completed the clinical testing.

            2.  The Trial Court as Gatekeeper

Under California law, expert testimony is permitted if it is (a) related to a subject that is sufficiently beyond common experience that the expert's opinion would assist the trier of fact; and (b) based on matter that is of a type that reasonably may be relied upon by an expert in forming an opinion on the subject.  In ruling on the admissibility of an expert's opinion, the trial court may inquire into, not only the type of material on which an expert relies, but also whether that material actually supports the expert's reasoning.  That is because irrelevant or speculative matters are not a proper basis for an expert's opinion.

Disputes as to the admissibility of expert opinions often arise when a new scientific or technical basis is asserted in support of an expert's opinion.  In California, trial courts apply a "general acceptance" test for admissibility of expert testimony based on new scientific techniques.  According to the Sargon opinion, the gatekeeper's role in this context is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.

            3.  Sargon's Speculative Claim for Lost Future Profits

In applying these considerations to the opinions of Sargon's expert as to lost profits, the Supreme Court held that the trial court did not abuse its discretion in precluding the opinions.  While the Court felt that the expert's market share methodology was acceptable in the abstract, the estimates as to lost profits were not based upon a market share which the company had ever actually achieved.  Instead, the expert opined that Sargon's market share would have increased spectacularly over time to levels far above anything it had ever reached.  This made the opinion too speculative to be admissible.

The expert's testimony on lost profits was speculative in other ways as well.  He assumed the company, which had virtually no marketing or research and development departments, would have developed such departments to permit it to compete with the "Big Six" competitors in the dental implant field.  All of these other companies had large marketing and research and development capabilities.  The expert also assumed one of the "Big Six" would fall out of that group, and Sargon would replace it.  Moreover, the expert assumed the "Big Six" would have taken no steps to contend with their new competitor, Sargon. All of these additional speculative factors supported the trial court's exclusion of the opinion testimony as to future lost profits.

            4.  The Future Effect of Sargon

In practice, trial judges approach the admissibility of expert opinions in different ways.  Some judges liberally allow expert opinions to come in and permit the jury to decide the value to be given.  Other judges take a more conservative approach and properly exclude speculative testimony.  In light of the Sargon decision, trial courts will likely be more cognizant of and proactive in their role as the evidence gatekeeper, which will likely have a positive effect on the defense's ability to keep out speculative expert opinions proffered by plaintiffs' experts.

John-Kaniewski-headshot-web-nameFeel free to contact the author with any questions:

Senior Trial Counsel
John A. Kaniewski
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