UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
October 15, 2012
RICHARD SNYDER, PLAINTIFF,
WELLS FARGO BANK, N.A. AS SUCCESSOR TO WACHOVIA BANK, N.A., DEFENDANT.
The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
OPINION AND ORDER
Richard Snyer, a retired businessman, brings this action against Wells Fargo Bank, N.A. ("Wells Fargo"), as successor to Wachova Bank, N.A. ("Wachovia"), for Wachovia's alleged mismanagement of Snyder's personal and retirementd investment accounts, resulting in losses to Snyder in excess of $2.5 million. There are currently two motions in limine before the Court, both brought by Wells Fargo. First, Wells Fargo seeks to preclude Snyder from: (1) materially changing his deposition testimony using the errata sheet; (2) referencing in the Rebuttal Report of Sean P. Kelly, or in his testimony, documents not reviewed by Kelly in rendering his opinion;*fn2 and (3) introducing into evidence a letter to Snyder dated August 4, 2008 from Edwin Wachenheim, III of Greenhaven Associates, Inc. (the "Wachenheim Letter") referencing Snyder's "philosophy of preserving [his] capital."*fn3 Second, Wells Fargo seeks to preclude, in whole or in part, the Expert Report of John J. Duval, Sr. insofar as it "adds up to an impermissible narrative."*fn4
For the following reasons Wells Fargo's motions are granted in part and denied in part.
II. LEGAL STANDARD
The purpose of a motion in limine is to allow a court to rule on the
admissibility of potential evidence in advance of trial.*fn5
A court will exclude evidence on a motion in limine only if
the evidence is "clearly inadmissible on all potential
grounds."*fn6 A court "considering a motion in limine
may reserve judgment until trial, so that the motion is placed in the
appropriate factual context."*fn7
III. CHANGES TO DEPOSITION TESTIMONY
A. Applicable Law
Federal Rule of Civil Procedure 30(e) provides that "[o]n request by the deponent or a party before the deposition is completed, the deponent must be allowed 30 days . . . to review the transcript . . . and if there are changes in form or substance, to sign a statement listing the changes and the reasons for them." This Court's Local Rules permit deposition transcripts to be changed "when the transcript is an incorrect reporting of what was said or when, although the transcript is correct, the witness's current recollection is different from what it was during the deposition."*fn8 "The original transcript remains part of the record of the litigation."*fn9
Plaintiff's counsel asserts that he requested the right to review Snyder's deposition transcript at the deposition, and timely reviewed and submitted the errata sheet.*fn10 The contested alteration on Snyder's errata sheet changes the line "They could not buy or sell" to "There was a termination of their discretion to buy and sell and transact transactions in my account at Wachovia upon the transfer of my account."*fn11 The reason is listed as "clarification."*fn12 This is consistent with Rule 30(e)'s allowances for changes in substance*fn13 and this Court's rules permitting changes when "the witness's current recollection is different from what it was during the deposition."*fn14 Defendant is, of course, free to reference the original deposition testimony during trial as it remains part of the record.*fn15
III. ADMISSIBILITY OF WACHENHEIM LETTER
A. Applicable Law
Rule 401 of the Federal Rules of Evidence defines "relevant evidence" as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Rule 402 states that "[i]rrelevant evidence is not admissible." Rule 403 states that relevant evidence "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury."
Wells Fargo objects to plaintiff's use of the Wachenheim Letter "as proof of [Snyder's] contention that he informed Wachovia representatives that he wanted to pursue a capital preservation investment objective at Wachovia."*fn16
Snyder explains that Duval relied upon the Wachenheim Letter "in which
Mr. Wachenheim confirmed that Plaintiff's assets would be transferred
to Wachovia" and set forth plaintiff's investment objective at the
time -- a "philosophy of preserving (his) capital."*fn17
Snyder argues further that "[t]he subject of Plaintiff's
investment objective is a central issue in this case, as it portends
the timing and kind of an investment strategy that Wachovia should
have implemented for Snyder, and forms the basis for Mr. Duval's
expert opinion about whether Wachovia timely implemented a prudent
investment strategy for Snyder."*fn18
Wells Fargo is correct that, in the absence of any indication that Wachovia saw this letter, "the Wachenheim Letter is not probative as to whether Snyder ever communicated such alleged objective to Wachovia [as] there is no claim that the letter was ever provided to Wachovia."*fn19 The letter is therefore inadmissible for the purpose of establishing "whether Wachovia timely implemented a prudent investment strategy for Snyder."*fn20
IV. EXPERT REPORTS
A. Applicable Law
Federal Rule of Evidence 702 permits an expert witness*fn21
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.
Under Rule 702 and Daubert the district court must determine whether the proposed expert testimony "both rests on a reliable foundation and is relevant to the task at hand."*fn22 Trial judges are given "broad discretion" in determining the admissibility of expert testimony*fn23 and "'[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means ofattacking shaky but admissible evidence.'"*fn24
However, the use of expert testimony must be "carefully circumscribed
to assure that the expert does not usurp either the role of the trial
judge in instructing the jury as to the applicable law or the role of
the jury in applying that law to the facts before it."*fn25
Expert testimony is also inadmissible when it addresses "lay
matters which [the trier of fact] is capable of understanding and
deciding without the expert's help."*fn26
Rule 703 states that "[a]n expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed."*fn27
Although an expert is permitted to support his opinions by reference to his experience, he must demonstrate that this "experience is a sufficient basis for" these opinions.*fn28 Rule 704 states that "[a]n opinion is not objectionable just because it embraces an ultimate issue."
B. Discussion: Kelly Report
Kelly's Rebuttal Report on behalf of Snyder opines that "[t]he Bates Group, LLC damage analysis in this instance uses transfer values that are inconsistent with industry standards and previous reports that I have analyzed from the Bates Group, LLC or other securities firms."*fn29 Kelly's Report states that in reaching this conclusion he reviewed: "(A) the Bates Group, LLC expert witness report dated August 3, 2012; (B) various other Bates Group, LLC damage reports; and (C) statements from other established securities industry firms."*fn30 Defendant requests that references to these documents be stricken from the Report (if it is offered into evidence) and that Kelly be precluded from referencing such documents at trial because he testified at his deposition that he had not reviewed these documents directly in connection with preparing his Report.*fn31
Kelly acknowledged in his deposition that his opinion in this case was based on his memory of reviewing Bates Group damages reports in "easily dozens" of other cases to see how their calculations comported with his, and his memory of "do[ing] analysis of documents from a number of different brokerage firms"which gave him "familiarity with how other firms handled the valuation of transferring securities."*fn32 The foundations for Kelly's conclusions are consistent with Rule 703, which permits an expert to support his opinions by reference to his experience as long as he demonstrates that this "experience is a sufficient basis for" these opinions.*fn33 Kelly's testimony that he has done "well over 50 arbitrations and 500 cases" involving damages reports, dozens of which involved the Bates Group, LLC, over the course of eleven years, and has analyzed documents from "Charles Schwab, Fidelity, Merrill Lynch, Banc of America, on and on" provides a sufficiently reliable foundation for his testimony regarding industry standards for use of transfer values.*fn34 Kelly has also "articulated how the specifics of his experience led to his conclusions."*fn35
If Kelly wishes to bolster his opinion with reference to specific Bates Group reports, then he may seek to introduce those reports.*fn36 However, he is not required to do so in order to render his testimony reliable.If defendant wishes to establish that the Kelly Report was based on Kelly's memory of reviewing these documents in the course of business rather than directly in connection with preparation of this report, it may do so during cross-examination.*fn37 The Kelly Report is admissible.
C. Discussion: Duval Report
Plaintiff claims that "the Duval Report (and its exhibits) is a relevant and reliable expert opinion to consider securities industry custom and practices, and Wachovia's neglect to live up to such custom and practices."*fn38 In fact, the Duval Report is replete with inappropriate statements, and almost every one of the nine conclusions Duval ultimately draws, as well as the final conclusion that Wachovia "failed in its fiduciary duties to Snyder" are inadmissible under Rule 702 as either unreliable or irrelevant expert testimony. Rather than testifying as to "step-by-step practices" generally undertaken when an investment firm manages an individual investment account,*fn39 Duval sheds light on industry practices only by reference to the facts of this case. In so doing, he usurps the role of this Court in explaining the law, and usurps the role of the jury in applying the law to the facts of this case and evaluating the credibility and testimony of the witnesses.
1. The Report Contains an Impermissible Narrative
The first four pages of Duval's expert report consist largely of
rehashing and characterizing testimony regarding the "circumstances
regarding [Snyder's] signing on with Wachovia . . . ."*fn40
Duval summarizes what was said at meetings between Snyder and
Wachovia representatives,*fn41 and, moreover, states
conclusions without any reference to his purported expertise such as
that Wachovia's General Assets Presentation ("GAP") "missed the mark,"
"failed Snyder's request to hedge," and was
"inappropriate,*fn42 and states as fact that Snyder
"rejected" the GAP.*fn43 These first four pages are an
impermissible narrative amounting to little more than a "a summation
from the witness stand,"*fn44 and
address "lay matters which [the trier of fact]is capable of
understanding and deciding without the expert's help."*fn45
2. Duval's Report Impermissibly Addresses Credibility and Motivations of the Witnesses
It is well established that "[e]xpert testimony is not relevant if the
expert is offering a personal evaluation of the testimony and
credibility of others or the motivations of the parties."*fn46
Furthermore, "[w]hen an expert undertakes to tell the jury
what result to reach, this does not aid the jury in making a decision,
but rather attempts to substitute the expert's judgment for the
jury's."*fn47 This goes well beyond the expert's
"limited role of providing the groundwork in the form of an
opinion to enable the jury to make its own informed
Duval contravenes these restrictions throughout his report, most blatantly with his conclusion that "[Anthony Gerard] Rogers' deposition answers are not credible and his testimony, by an large, should be discounted."*fn49 Other examples include: (1) characterizing Rogers' testimony "that an orderly liquidation would be over time to manage the tax burden" as "spurious;"*fn50 (2) concluding that Rogers' "excuses for not taking protective action in Snyder's account on August 8, 2008, are unacceptable both from an industry practice standpoint and are, simply put, disingenuous;"*fn51 and (3) declaring Rogers' testimony that "what we knew was that puts had become cost prohibitive, so that makes a collar strategy cost prohibitive" to be "false."*fn52
3. Duval's Report Opines on "Lay Matters"
In addition to impermissibly evaluating the credibility of witnesses, the portion of Duval's report identifying inaccuracies and omissions in Rogers' deposition testimony about his prior registrations and employment also draws conclusions that a jury is more than capable of understanding on its own. For example, Duval points out that: (1) Rogers' testimony that there was a $3,000 settlement in 1995 regarding a customer complaint was inconsistent with his FINRA registration, which reflects a $6,000 settlement in 2001; (2) there were omissions in Rogers' discussion of his employment history; (3) Rogers' deposition answer of "I don't know" implies confusion about licensing and registration; and
(4) testimony regarding phone calls on a certain date are unlikely as Snyder was still in Europe, en route to the United States.*fn53
4. Duval's Report Draws Numerous Legal Conclusions
"[W]hile an expert'may opine on an issue of fact within the jury's province,' an expert 'may not give testimony stating ultimate legal conclusions based on those facts.'"*fn54 The Second Circuit defined the scope of this limitation explaining that where an expert "did not give his opinion as to whether [defendants'] actions violated the securities laws" but rather provided "general background on federal securities regulation . . . , which he presented by referring to a blank form," the opinion was admissible.*fn55 In contrast, "an expert's repeated statements that defendants' conduct established a manipulative and fraudulent scheme within the meaning of the securities laws exceeded the permissible scope of opinion testimony."*fn56
Duval's Report falls well outside the scope of permissible testimony. It draws numerous legal conclusions with regard to the specific facts of the case at hand.*fn57 For example, the section on Rogers begins with the statement that "Mr. Rogers' deposition is instructional, because it belies Wachovia's defense in this dispute."*fn58 It concludes further that "[i]f Rogers and Wachovia did not have cost data before Snyder opened the accounts with Wachovia, then both Rogers and Wachovia were remiss and negligent."*fn59 In his "Conclusions and Opinions," Duval states that "Wachovia was negligent and imprudent in not obtaining an Options Consent Form on July 31, 2008 when Snyder signed the new account forms and agreements."*fn60 In addition, Duval opines on the ultimate issue in the case -- whether Wachovia "failed to timely implement any kind of prudent investment strategy" for Snyder -- by concluding that "Wachovia should have immediately begun selling some or all of Snyder's stocks, bought tax-free bonds, and collared the stocks not sold" and that "Wachovia did not protect Snyder and Snyder suffered damages as a result."*fn61 Duval concludes with the statement that "Wachovia failed in its fiduciary duties to Snyder in not protecting Snyder's assets and is accountable for the resultant damages."*fn62 This testimony epitomizes the type that Rule 702 prohibits because it usurps the role of the judge, the jury, and the adversary system generally. Because Duval's Report is so ridden with improper statements and opinions, I decline to identify the limited portions that might qualify as expert testimony. The Duval Report is excluded in full.
For the foregoing reasons, Wells Fargo's motions in limine are granted in part and denied in part as follows: (1) Snyder's amendment to his deposition testimony is admissible; (2) kelly's Rebuttal Report is admissible; (3) the Wachenheim Letter is inadmissible for the purposes of establishing Wachovia's knowledge or duties with respect to Snyder's account; and (4) Duval's Expert Report is precluded.