UNITED STATES TAX COURTJUDICIAL CONFERENCE

May 21, 2015

Duke University

Duke Law Center for Judicial Studies

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EXPERT WITNESSESCREATIVE APPROACHES

PROS AND CONS

PANELISTS:

JUDGE MARY ANN COHEN

JUDGE KATHLEEN KERRIGAN

DAVE CURTIN, MORGAN LEWIS

ROBIN GREENHOUSE, MCDERMOTT WILL & EMERY

DANA HUNDRIESER, IRS OFFICE OF CHIEF COUNSEL

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WHAT IS WRONG?

HOW DO WE FIX IT?

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EXPERT WITNESSES-FRE 702

1) ASSIST TRIER OF FACT

2) WITNESS PROPERLY QUALIFIED

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COURT HAS GATEKEEPING FUNCTION

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POINT OF VIEW OF JUDGE

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- HOW RELIABLE IS THE WITNESS

-HOW HELPFUL IS THE INFORMATION

-IS THE WITNESS TOO ADVERSARIAL

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VIEW OF PARTIES

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-PRE-TRIAL RULINGS ON MOTIONS IN LIMINE MAY FACILITATE SETTLEMENTS

-THE COURT’S APPROACH TO VALUATION ISSUES MAY ENCOURAGE AGGRESSIVE POSITIONS BY EXPERTS

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CREATIVE METHODS

- TUTORIAL

- COURT APPOINTED WITNESS

- CONCURRENT WITNESSES

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ARE DIFFERENT METHODS BETTER FOR DIFFERENT TYPES

OF CASES?

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EXPERTTUTORIALS

WHAT ARE THEY?

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Tutorials In the Tax Court:Are Tutorials a Good Idea?

•Tax Court history of use – none? Limited use

in tax refund cases

–Often used in IP litigation

•Who really benefits?

•Petitioner?

•Respondent?

•Trial judge?

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Perceived Benefits

•Educate the trial judge

•Predispose the trial judge

•Early look at adversary’s case

•Settlement incentive

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Perceived Problems

•Unnecessary

•Expensive

•Questionable benefits

•Possible harm

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Evidence & Discovery Considerations

• When? Early or close to trial date?

• Need for a stipulated and signed ORDER

• Typical terms

– On the record

– Who can present? Lawyers? Expert? Video?

– In court or chambers?

– Closed courtroom?

– Time limit and order of presentations

– Exclude trial witnesses? Experts?

– Not “evidence”

– No objections (and no waiver of objections)

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Interaction with Tax Court Rules

• Rule 143(c): “Ex parte affidavits or declarations, statements in briefs, and unadmitted allegations in pleadings do not constitute evidence.”

• Rule 143(g)(1): Expert Witness reports are required “[U]nless otherwise permitted by the Court upon timely request.”

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Evidence & Discovery - cont’d

– Impeachment material exception

– Tutorial video / transcript may be available to judge throughout the case

– Not discoverable – tutorial preparation off-limits

– Discovery cut-out

– Leads for discovery?

• Can privileges be waived in tutorial?

– FRE 502 agreement and order necessary?

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COURT-APPOINTED EXPERTS

WHEN ARE THEY APPROPRIATE?

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Rule 706. Court-Appointed Expert

Witnesses

(a) Appointment Process. On a party’s

motion or on its own, the court may order

the parties to show cause why expert

witnesses should not be appointed and

may ask the parties to submit nominations.

The court may appoint any expert that the

parties agree on and any of its own

choosing. But the court may only appoint

someone who consents to act.

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(b) Expert’s Role. The court must inform

the expert of the expert’s duties. The court

may do so in writing and have a copy filed

with the clerk or may do so orally at a

conference in which the parties have an

opportunity to participate. The expert:

(1) must advise the parties of any findings

the expert makes;

(2) may be deposed by any party;

(3) may be called to testify by the court or

any party; and

(4) may be cross-examined by any party,

including the party that called the expert.

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(c) Compensation. The expert is entitled

to a reasonable compensation, as set by

the court.

* * *

(d) Disclosing the Appointment to the

Jury. The court may authorize disclosure

to the jury that the court appointed the

expert.

(e) Parties’ Choice of Their Own

Experts. This rule does not limit a party in

calling its own experts.

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Perceived Benefits

•Assist judge

•Provide neutral expertise

•Settlement incentive

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Perceived Problems

•Unnecessary

•Difficulty in selecting a truly neutral expert

•Expensive

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Some Questions

•How is the court-appointed expert selected?

•Are ex parte communications permitted?

•Can the court-appointed expert submit rebuttal reports?

•Can parties move to strike the court appointed expert’s report?

•Can the court-appointed expert give an opinion on the ultimate issue?

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EXPERTS IN HOT TUB

WHAT ARE THE RULES?

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Perceived Benefits

•Efficiency

–Reduce court time and costs associated with presenting expert evidence

•Improved quality and accuracy of the experts testing and more impartiality

•Encourage settlement

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Perceived Problems

•Emphasis on personality traits when selecting an expert

•Experts lack of training in civil procedure, concepts of relevance or admissibility of evidence

•Increased cost of preparing experts

•Counsel lose control over the presentment of testimony

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Some Questions on Hot-Tubbing

1. Can one or both parties request hot tub procedure?

2. At what stage should the Court provide notice to the parties that hot tubbing will be used?

3. Can the Judge order hot-tubbing over the parties’ objection?

4. When can hot-tubbing take place? Before trial? During?

5. Should the Court enter an order?

6. What do the rules provide?

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The Rules:Rule 143(g): Expert Report is Direct Testimony

•Expert’s report is direct testimony

•In Court’s discretion to allow “additional direct” testimony

•Are the experts in the tub on direct, cross or both?

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The Rules:Testimony In Court

•Rule 143(a): Trials by same rules as U.S. District Court in DC

–Has the U.S. District Court in D.C. approved tubbing?

•Rule 143(b): Testimony in open court and on record

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The Rules:Federal Rules of Evidence

• Rule 611: Mode and Order of Examining Witnesses and Presenting Evidence

– Court controls

– Protect witness

• How much notice required?

• The need for an Order: Some essentials

– On the record and under oath

– Objections to Judge’s questions permitted (i.e. hearsay, scope)

– One speaker at a time

– Counsel right to question to clarify

• Is the tub-transcript evidence?

• Length of tub session?

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What about the Lawyers?

• “The ‘concurrent evidence’ approach (more colloquially, the ‘hot tub’ method – footnote omitted) rejects the pure lawyer-driven adversarial nature of eliciting expert testimony, and instead embraces methods that unite the conversational element of some alternative dispute resolution procedures with the inquisitorial element of some other legal systems’ litigation models.”

• “In order to have the most productive (and civilized) conversation, it is best to leave the lawyers out of it.”

Taken from “A Dip in the Hot Tub Concurrent Evidence”, Journal of Taxation, October 2012, pp. 1 and 14.

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