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Writer's pictureAchille Ekeu, MBA, CVA

Demystifying The Revised FRE 702 for Business Valuation Experts

Updated: Jun 10


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The Federal Rule of Evidence (FRE) 702 has undergone significant revisions over the years, particularly in 2000, 2011, and most recently in December 2023. These amendments aim to clarify the role of trial courts in determining the admissibility of expert testimony and to address inconsistencies in how courts have applied the rule.

 

Historical Context and Daubert Standard

The Daubert standard, established by the U.S. Supreme Court in 1993 in the case of Daubert v. Merrell Dow Pharmaceuticals, Inc., set new criteria for the admissibility of expert testimony, moving away from the older Frye standard, which required general acceptance in the relevant scientific community. The Daubert standard introduced a more flexible approach, allowing courts to consider factors such as testability, peer review, error rates, and general acceptance, but not requiring all these factors to be met.

 

Amendments to FRE 702


2000 and 2011 Amendments

The 2000 amendment to FRE 702 codified the Daubert standard and added specific reliability requirements, emphasizing the trial court's role as a gatekeeper to exclude unreliable expert testimony. The 2011 amendments were primarily stylistic, and aimed at making the rules easier to understand without changing their substantive meaning.

 

2023 Amendments

The most recent amendments to FRE 702, effective December 1, 2023, were introduced to address widespread misapplication of the rule by many courts. These amendments clarify that the proponent of expert testimony must demonstrate by a preponderance of the evidence that the testimony meets the rule's admissibility requirements. Specifically, the amendments emphasize that:

 

1.  Admissibility Standard: The proponent must show that it is more likely than not that the expert's testimony is based on sufficient facts or data, is the product of reliable principles and methods, and that these principles and methods have been reliably applied to the facts of the case.

2.  Gatekeeping Role: The amendments reinforce the trial court's gatekeeping function, ensuring that judges, not juries, determine whether the expert testimony meets the reliability and relevance criteria. This is intended to prevent courts from treating these questions as issues of weight rather than admissibility.

3.  Expert's Opinion: The expert's opinion must reflect a reliable application of the principles and methods to the facts of the case. This change aims to ensure that experts do not overstep the bounds of what can be concluded from their methodology and data.

 

Impact on Legal Practice

 

These revisions are expected to have several implications for legal practice:

 

1.  Stricter Scrutiny: Expert witnesses will likely face more rigorous Daubert hearings, where their qualifications, methodologies, and conclusions will be thoroughly examined. This could lead to more expert testimonies being excluded if they do not meet the stringent requirements.

2.  Preparation of Experts: Litigants must ensure that their experts are well-prepared to defend their methodologies and conclusions under the revised standards. This includes avoiding claims of absolute certainty, especially in fields where the processes are subjective and prone to error.

3.  Judicial Consistency: The amendments aim to reduce the inconsistency in how courts apply FRE 702, promoting a more uniform approach to the admissibility of expert testimony.


Examples


Example 1: Medical Expert in a Malpractice Case

Scenario: A patient sues a doctor for malpractice, claiming that a surgical procedure was performed incorrectly. The patient’s lawyer wants to introduce testimony from a medical expert who will say that the doctor deviated from standard medical practices.


Application of Revised FRE 702:

  • Burden of Proof: The patient’s lawyer must show that it is more likely than not that the medical expert’s testimony is based on reliable data and methods.

  • Reliability and Relevance: The expert must base their opinion on sufficient medical records, use accepted medical standards, and apply these standards correctly to the facts of the case.

  • Judicial Gatekeeping: The judge will review the expert’s qualifications, the data they used, and their methods to ensure the testimony is reliable and relevant before allowing it to be presented to the jury.

 

Example 2: Engineering Expert in a Product Liability Case

Scenario: A consumer sues a car manufacturer, claiming that a defect in the car’s design caused an accident. The manufacturer wants to introduce testimony from an engineering expert who will argue that the car design meets all safety standards.

 

Application of Revised FRE 702:

  • Burden of Proof: The manufacturer must prove that the engineering expert’s testimony is more likely than not reliable and relevant.

  • Reliability and Relevance: The expert must base their opinion on sufficient design data, use reliable engineering principles, and apply these principles correctly to the car’s design.

  • Judicial Gatekeeping: The judge will evaluate the expert’s qualifications, the data they used, and their methods to ensure the testimony is reliable and relevant before it can be presented to the jury.


Conclusion

In simple terms, the revised FRE 702 ensures that expert testimony in federal courts is based on solid data and reliable methods. Judges play a crucial role in filtering out unreliable testimony, making sure that only trustworthy expert opinions are presented to the jury. This helps maintain the integrity of the judicial process and ensures fairer outcomes in legal cases.



The Washington Valuation Group

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