Saturday, June 15, 2019
Federal Rule of Evidence 702 states that
A 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.
In turn, various other Federal Rules supply the discovery requirements connected with expert testimony. For example, Federal Rules of Criminal Procedure 16(a)(1)(F) and 16(a)(1)(G) provide the discovery requirements in federal criminal cases. Meanwhile, as the recent opinion of the United States Tax Court in Skolnick v. Commissioner of Internal Revenue makes clear, Tax Rule 143 governs discovery in federal tax cases.
In Skolnick, a central question was whether the petitioners' horse-related activity, undertaken through Bluestone Farms, LLC constituted an “activity not engaged in for profit” within the meaning of Section 183 of the Internal Revenue Code. The petitioners sought to present the expert testimony of David Reid, the owner of the leading bloodstock agency in North America (Bloodstock agents are equine professionals who buy and sell Thoroughbreds on behalf of their clients in exchange for a commission). Reid would have testified that the petitioners' horses were worth between $2,500 and $ 1,900,000. The United States Tax Court, however, found that the petitioners/Reid did not comply with the pertinent discovery requirements:
We conclude that Mr. Reid's report does not satisfy the requirements of the Federal Rules of Evidence or this Court's Rules. His report does not set forth any "facts or data" on which he relied. Fed. R. Evid. 702(b); Rule 143(g)(1)(B). Although he avers that he consulted an in-house database, his report includes no data from that database, and he does not attach a printout of the database as an exhibit to his report. He does not identify the valuation "principles and methods" that he employed in performing his appraisal. See Fed. R. Evid. 702(c). Although his "brief guidelines" list nine factors that he believes affect valuation, he does not explain how he applied or weighted those factors when attaching a dollar figure to each horse. His report thus fails to establish that he "reliably applied the principles and methods to the facts of the case." See Fed. R. Evid. 702(d).
Therefore, the court found Reid's proposed testimony to be inadmissible.