The U.S. Supreme Court’s 1999 Kumho Tire decision expanded Daubert’s reach to financial experts. PricewaterhouseCoopers has just released its Daubert Challenges to Financial Experts:An 11-year study of trends and outcomes, which surveys federal cases since Kumho. As always, the PwC study highlights the continuing trend to use Daubert as a pre-trial weapon to attack economic experts and evidence in damages and other cases, often leading to dismissal.
Highlights of this year’s report include:
- This past year (2010) saw the most challenges and the second highest exclusion rate for all expert witnesses during the past 11 years (2000-2010).
- During that time, plaintiffs’ financial experts were challenged more frequently than defense experts, but courts ultimately excluded only 45% of plaintiffs’ experts vs. 48% of defense experts.
- Challenges to economists, accountants, and appraisers accounted for 55% of all challenges to financial experts (perhaps because they are the most frequently engaged group). Although attacked more often, this group was less likely to succumb to a Daubert review (42%, 40%, and 34%, respectively) than other financial experts (53% excluded).
- For the 11th consecutive year, lack of reliability was the top reason that courts excluded financial experts (7 out of 10 cases), most often due to the lack of valid data or the lack of a valid analytical framework for the data.
- For the first time since 2001, the number of challenges to financial experts fell (by 11%); however, the success rate rose to its highest level in six years: in 2010, courts excluded 50% of all financial experts, compared to the 11-year average of 45%.