This federal action involves a dispute involving certain Merrill Lynch accounts held by John H. Snead, the father of Plaintiffs, who died in August 2017. Plaintiffs allege that Defendant Guadalupe Wright ("Wright"), who had been in a long-term relationship with John H. Snead up through his death and an employee of Merrill Lynch, unlawfully transferred funds from John H. Snead's trust accounts and fraudulently made herself the beneficiary of his annuity. In addition to the claims asserted against Defendant Wright, Plaintiffs also allege that Merrill Lynch facilitated these transactions for the benefit of Wright and to the detriment of the decedent and Plaintiffs. They bring multiple causes of action against Merrill Lynch, including breach of fiduciary duty, negligence, and fraudulent nondisclosure. In furtherance of these claim, Plaintiffs retained Chris McConnell ("McConnell") as an expert in the financial services industry. Merrill Lynch moves to exclude all testimony from McConnell, arguing that his expert report improperly presents opinions on legal issues and that his opinions are unreliable because they are "replete with speculation, mischaracterizations of evidence, factual errors and unsupported assertions.
Federal Rule of Evidence 702: Testimony by Expert WitnessesA witness who is qualified as an expert by knowledge, skill, experience, training, or education may 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.
improper legal opinions about the annuity and trust accounts at issue, including an opinion about how Merrill Lynch breached a fiduciary duty-one of the ultimate legal issues in the case. It also asserts that his opinions, legal or otherwise, are wholly conclusory, without supporting explanation, and based upon speculation and mischaracterizations of the evidence to such an extent that the court should deem any testimony from him an "unreliable nonsense opinion" that should be withheld from the jury.
McConnell's expert report is centered around the applicable duties owed by Merrill Lynch to John H. Snead and the beneficiaries of the applicable trusts, and whether any of Merrill Lynch's actions at issue in this case "violated any duty, appliable [sic] laws, internal policies, or customary practices." He offers an opinion in his report that Merrill Lynch owed John H. Snead and Plaintiffs a fiduciary duty and that it breached that duty. He also concludes Merrill Lynch violated various SEC and FINRA rules and regulations.McConnell's inclusion of these legal issues in his report does not require that he be outright excluded from testifying at trial. Testimony that touches upon or embraces an ultimate issue is not automatically objectionable. Indeed, the Ninth Circuit specifically has held that testimony regarding whether "[d]efendants failed to comport with industry standards" may be properly admitted at trial. testimony only becomes excludable when it includes an opinion on what legal conclusion should be reached by the trier of fact.
[M]cConnell must refrain from offering the opinion included in his report that Merrill Lynch breached its fiduciary duties, because that is a legal conclusion that encroaches on the job of the fact finder. He may, however, offer testimony at trial to the extent his testimony can be narrowed to focus on explaining the applicable industry standards and best practices garnered from his experience in the industry and how Merrill Lynch's actions and decisions failed to comport with these standards and practices. He may offer opinions that touch on various financial regulations, as long as he can articulate his understanding of what each regulation requires based on his experience and why actions taken by Merrill Lynch fall short of these requirements and expectations.
[M]cConnell has a sufficient foundation of knowledge and experience to serve as an expert on standards of care in the financial services industry, and his proposed testimony is not obviously wholly unreliable. To find that it is, the court would have to conclude that his review of the evidence was erroneous or incomplete, but questions about the facts supporting an expert's opinions reflect on credibility, not admissibility. That is, the court cannot decide whether McConnell's opinions are "right or wrong." Rather, its task simply is to determine whether McConnell's testimony has substance such that it would be helpful to a jury." Here, McConnell's qualifications are established and not challenged, and it is clear he reviewed the evidentiary record. Therefore, his opinions about the applicable standards of care and how they apply to the situation, which is included in his report to some extent, will be helpful to the jury.The court cautions, however, that McConnell may not testify solely to construct a factual narrative for the jury. He may not simply present some theory of the case favorable to Plaintiffs, particularly one that rests on speculation of malicious motives and forgery. Any testimony that speculates as to motive, intent, or mental state is not appropriate expert testimony and will be subject to objection and exclusion at trial. Furthermore, for every opinion and conclusion offered about Merrill Lynch's conduct falling short of industry standards, McConnell must be able to identify and explain the applicable industry standard.
may not simply present some theory of the case favorable to Plaintiffs, particularly one that rests on speculation of malicious motives and forgery. Any testimony that speculates as to motive, intent, or mental state is not appropriate expert testimony and will be subject to objection and exclusion at trial. Furthermore, for every opinion and conclusion offered about Merrill Lynch's conduct falling short of industry standards, McConnell must be able to identify and explain the applicable industry standard.