Trial court relies on outside ‘technical advisor’ for Daubert determination

BVWireIssue #178-3
July 26, 2017

A Daubert hearing in a Mississippi case took an interesting turn when the trial court enlisted the help of a peer review service to evaluate the admissibility of the parties’ proposed expert testimony. Experts should note that the use of this and similar services may become more common in the litigation setting and may even improve the quality of expert work.

The former owner of a construction company sued, alleging that the business’s accounting firm committed malpractice. He claimed the defendant was negligent in the way it audited the company’s financial statements and ended up causing the destruction of the company. The auditor should have informed the board of directors of the improper use of company funds. Had the auditor done so, the former owner “would have done something about it.” Because the auditor failed to discover the misappropriation of corporate assets, the company went downhill and the owner ended up selling it for $1,000. He lost everything and was “broke,” the former owner claimed.

Experts reviewing experts: The plaintiff presented expert testimony on three critical issues: the auditing standard of care, causation, and damages. The defendant offered damages testimony. The trial court used JuriLytics, a California-based academic peer review service, as technical advisor to determine whether the individual expert opinions met the requirements of Daubert. For each of the parties’ reports, JuriLytics provided two independent reviews. The trial court ultimately decided the parties’ auditing standards and damages testimony was admissible, but the plaintiff’s causation opinion failed to establish the necessary link between the auditor’s actions or lack of action and the company’s eventual demise. Considering the technical nature of the case, the plaintiff’s inability to produce expert testimony on causation meant its claim foundered, the trial court ruled, and granted the defendant’s summary judgment motion.

The plaintiff appealed to the state Supreme Court, arguing the law did not require expert testimony in all malpractice cases and that it was able to show causation by way of lay testimony—the company owner’s statements. The Mississippi Supreme Court recently revived the case when it agreed with the plaintiff. Whether the auditor’s conduct damaged the company was a question for the jury, the high court decided. The next test of all of the expert testimony will be cross-examination at trial.

The case is T.L. Wallace Const. v. McArthur, 2017 Miss. LEXIS 271 (June 29, 2017).

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