Monday, March 17, 2008
The Tenth Circuit Court of Appeals reversed and remanded the case against Joseph Nacchio, the former CEO of Qwest Communications International, Inc., who had been convicted of nineteen counts of insider trading. The court stated that "the improper exclusion of his expert witness merits a new trial, but we conclude that the evidence before the district court was sufficient for the government to try him again without violating the Double Jeopardy Clause." In allowing for a new trial, the Tenth Circuit does provide for a new judge, saying that "it would be unreasonably difficult to expect this judge to retry the case with a fresh mind."
Some of the points made in the decision:
- The Tenth Circuit rejects the trial court's statement that "the deficiencies under Daubert and Kumho Tire in these disclosures are so egregious that they hardly warrant the 63 page of ink the Government has spilled in opposing the testimony." It sounds like the government should have written more than 63 pages here.
- "Rule 16 disclosure is not designed to allow the district court to move immediately to a Daubert determination without briefs, a hearing, or other appropriate means of testing the proposed expert's methodology." (the court cites to Margaret Berger's article, Procedural Paradigms for Applying the Daubert Test, in 78 Minn. L. Rev. 1345 (1994)).
- The court notes the difference between civil and criminal cases - "Unlike under the civil rules, an expert in a criminal case is not required to present and disclose an expert report in advance of testimony."
- The court recognizes that sometimes courts will not allow defense counsel to make their argument, and this should not be held against counsel. The court states,
"[T]he defense was never permitted to speak to the issue in court. When Professor Fischel was called, the district judge immediately announced that he was excluding the testimony. A defense lawyer asked to speak. The judge silenced him immediately, saying that once the court had ruled, the trial was '[n]ot... an interactive process where you get to argue later on.' App. 3921. When the court does not allow a lawyer to present arguments, we will not penalize him for failing to present them."
- The court finds prejudice warranting reversal here, noting that "the exclusion of Professor Fischel was not inconsequential under any standard." The court emphasizes the due process right of the accused to present his or her defense.
- And my favorite line from this decision - "Armchair economics is not the way to decide complex securities cases."
The opinion is authored by Circuit Judge McConnell and there is dissent and concurrence in part by Judge Holmes.
The Opinion - here