To satisfy the Daubert test, some judges require expert witnesses to explain their reasoning in exhaustive detail. When experts fail to support their conclusions with a high level of detail, parties risk the exclusion of expert testimony.
The Federal Trade Commission (FTC) sued Innovative Designs, Inc. for violating a federal law that prohibits using “unfair or deceptive acts or practices” in commerce. The FTC supported its claim with the expert testimony of David Yarbrough. At the conclusion of a bench trial, the court decided that Yarbrough’s testimony failed to satisfy Daubert because Yarborough did not explain potential deficiencies in his reasoning. The court struck the testimony and later dismissed the case.
Facts of the Case
Innovative Design sells a product called Insultex. The product is marketed as a house wrap that is installed just behind the exterior walls of homes. House wraps are intended to prevent rain from penetrating a home and to allow water vapor to escape so moisture does not accumulate inside the walls.
Innovative Design advertised Insultex as an energy saving product. Its advertising claimed that Insultex products have specific R-values. An R-value is a measurement of a product’s ability to restrict the loss of heat. The FTC argued that Innovative Design overstated the product’s R-value and thus misrepresented the energy-saving properties of its product.
The heart of the dispute at trial concerned the measurement of R-value. The FTC maintained that a particular ASTM standard is the “consensus standard” to measure R-value. ASTM standards are developed by an international organization that creates voluntary technical standards that various materials and products should meet. The court agreed that the ASTM standard for R-value measurement is the prevailing industry standard.
Innovative Design advertises the submitted products as having an R-rating of R-3 and R-6. Innovative Design submitted Insultex for testing to two laboratories in 2009. Using standard testing, the laboratories rated the products as R-0.2 and R-0.3, far less than their claimed R-values.
Innovative Design then paid a different laboratory to build a modified testing device. The new device incorporated air gaps that aren’t present in the standard testing device. A third-party accreditation company inspected the device and accredited it to determine an R-value.
Using the modified device, the testing lab certified that Insultex Products had an R-3 or R-6 value. The certificates of analysis stated that the testing complied with ASTM testing guidelines. Whether a testing device that departs from the ASTM standard by incorporating air gaps is reliable was a disputed question at trial.
Pretrial Rulings Regarding Experts
Innovative Design argued Yarborough’s testimony should be excluded because Yarborough had an employment relationship with a company that Innovative Design once hired to test Insultex. Since Insultex did not provide Yarborough with any confidential information, the court disagreed that he was disqualified from acting as an expert witness.
The FTC also disclosed Anastassios Mavrokefalos as an expert witness and Jonathan Malen as a rebuttal expert. Mavrokefalos had been disclosed as an expert witness for Innovative Design. When the FTC took his deposition, however, he changed his opinions. Innovative Design then withdrew Mavrokefalos as an expert witness. The FTC disclosed that it might use Mavrokefalos’ deposition as evidence in support of its case. The judge denied Innovative Design’s motion to exclude that evidence.
Innovative Design designated Donald Garlotta as an expert witness. The court denied the FTC’s Daubert motion to exclude his testimony after finding that the motion should be treated as a challenge to Garlotta’s credibility. The court said it would determine Garlotta’s credibility at trial. However, Innovative Design did not call Garlotta, or any other witness, to provide expert testimony.
Yarborough testified that an experienced lab technician tested Insultex under his supervision. Applying the relevant ASTM standard, Yarborough concluded that, regardless of the thickness of the specific product, Insultex’s R-value was “negligible at best.” Yarborough also testified that, given the structure of Insultex, the claimed R-values are not theoretically possible.
On cross-examination, Yarborough testified that the lab technician’s testing device was calibrated with a fiberglass board, not with a material that is similar to Insultex as the ASTM standards require. Yarborough explained that testing modifications were necessary because Insultex is an unusual material. If no material with a known R-value is similar to Insultex, it is obviously impossible to calibrate the machine using a similar material.
Examining these and other difficulties with Yarborough’s methodology, the court decided that Yarborough’s explanation of his departure from standardized testing methods was conclusory. While the court recognized that nonstandard testing techniques may be necessary when nonstandard materials are tested, the court concluded that departures “need to be well explained.” The court was not satisfied that Yarborough’s explanation of his decision to calibrate the machine with a fiberglass board established the reliability of his methodology.
The FTC argued that Yarborough employed methods used by other testing labs. The court was not persuaded by that argument because the FTC did not establish that the methods used by other labs are generally regarded as acceptable by the relevant scientific community. The court therefore concluded that Yarborough’s testimony did not satisfy Daubert and declined to rely upon it.
Mavrokefalos’ Expert Testimony
At trial, the FTC contended that Innovative Design engaged in deceptive advertising by promoting values of R-3 or R-6 when standard testing never found a value above R-0.3. The FTC hoped to persuade the court that Innovative Design was trying to game the system by creating a modified testing device that would return the results it wanted without revealing the modification in its advertising.
After Yarborough’s testimony was excluded, the only expert evidence that the FTC introduced in its case-and-chief consisted of Mavrokefalos’ deposition testimony. The FTC wanted to use the deposition because it was more favorable to the FTC’s position than the report Mavrokefalos wrote on behalf of Innovative Design.
After reviewing Yarborough’s report, Mavrokefalos investigated the modified testing device and concluded that it did not always return reliable results. Mavrokefalos believed that the modified device used to test the R-value of Insultex distorted the results by “incorporating the value of the air gaps into every reading.”
Based on his own testing, Mavrokefalos expressed the belief that the Insultex’s R-value was less than R-1. He essentially changed his mind about the reasonableness of Innovative Design’s R-value claims after conducting his own testing.
Since Innovative Design moved for pretrial judgment before putting on any evidence, the court did not consider Malen’s expert opinions when it addressed the motion after the trial concluded. Since Malen had been designated as a rebuttal expert, his opinions could not be used to bolster the FTC’s case-in-chief.
While the FTC claimed that Innovative Design misrepresented the R-value of its product, the court concluded that the claim could only be proved by expert testimony. Since Yarborough’s opinions did not satisfy Daubert and Malen’s could not be considered, the FTC was left with only the expert opinion of Mavrokefalos.
The court declined to credit Mavrokefalos’ testimony because he relied on non-standard testing and failed to give a satisfactory explanation of his departure from the standard testing. Moreover, Mavrokefalos had no experience with the tests that he employed. He did not explain whether those tests are relied upon by the scientific community to determine an R-value. He did not explain whether the tests had a known error rate and did not testify that his methods had been peer-reviewed.
The court faulted some of the tests because they were performed on components of Insultex rather than the product as a whole. Finally, the court found that Mavrokefalos’ credibility was impaired by writing a report that favored Innovative Design and then changing his opinions.
A different court might have deemed Mavrokefalos’ credibility to have been enhanced by his willingness to admit that he was wrong, even after he was paid to give an opinion that favored Insultex. While experts are often condemned for being “hired guns,” Mavrokefalos’ opinions were clearly not influenced by money.
Although the laboratories that used standard tests found that Insultex has a minimal R-value, the FTC did not introduce those test results as expert evidence. Since the court did not know whether the testing comported with ASTM standards, the earlier tests could not be relied upon as proof that Innovative Designs made deceptive representations.
The FTC was apparently confident in the opinions formed by Yarborough. However, this case stands as a reminder that even the most competent expert must explain opinions in detail.
When an expert departs in any way from an accepted methodology, the expert must be prepared to justify the departure by explaining why the departure was necessary and why it returned reliable results. The failure to elicit that testimony may result in a trial loss even when the evidence in support of a party’s position seems compelling.