The Weakest Link: Selecting Expert Testimony without Daubert in Mind
An authority on expert testimony in franchise disputes has released a study that concludes that one of the weakest links in franchisee court cases is often their own expert's testimony.
In Challenges to the Admissibility of Expert Financial Testimony, attorney Bruce Schaeffer followed all federal and state cases involving the admissibility of expert financial testimony from 2005 through 2008. He discovered that challenges involving expert witnesses were successful some 57% of the time, meaning that only 43% of of proposed experts were allowed to testify. And, when expert testimony is successfully challenged, it almost always means the franchisee's case will fail.
Schaeffer asks, "What's the point of ever getting involved in a franchise dispute if it isn't for the money?" If the plaintiff's attorney doesn't ask that question, the court certainly will ask why the court's time is being wasted and throw the case out for want of damages. Just asking the court to recognize that the franchise owner has been wronged is not enough.
According to Schaeffer, the key point in a franchise dispute is to prove damages. For that, a franchisee needs an expert. But their proposed witness will never make it to the stand if he cannot get by the Daubert test, named after the U.S. Supreme Court case that determined that for expert testimony to be admissible, it must meet a minimum "threshold" level of credibility, namely:
- The theory or technique can be tested
- The expert’s work has been subjected to peer review
- The rate of error is acceptable
- The method utilized enjoys widespread acceptance
If franchisees are going to use an expert, which in most cases is a must, they had better have one that can pass the Daubert test. Chances are the weakest link in a franchisee's case is that they cannot prove damages because their expert's testimony does not pass the Daubert test. So the case will never go to jury and will be thrown out of court.
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Agree and disagree
"If franchisees are going to use an expert, which in most cases is a must, they had better have one that can pass the Daubert test. Chances are the weakest link in a franchisee's case is that they cannot prove damages because their expert's testimony does not pass the Daubert test. So the case will never go to jury and will be thrown out of court."
I agree with much of this, however, one of the better claims a franchisee can make in a state with a strong franchise statute is a claim for rescission. It is not particularly hard to present a pure rescission case without an expert.
The surveyed cases had weak plantiff counsel?
Had to be. Would not a CPA that represents a number of similar (or even the same) type of franchises qualify easily? In many systems it is common that large numbers of franchisees use the same attorneys or CPAs--they rely on word of mouth and the assurance that the servic provider understands their business model, their typical needs, will not have a steep learnig curve, and i a good source of advice on what others have tried that works or doesn't work.
With this sort of aresenal already in your pocket, I find it hard to understand why a plaintiff's lawyer could not get these people qualified as an expert on not only a general field (e.g. how the business vlauationopr cash flow analysis was done--GAAP anyone?), but even on that particular franchise.
Expert Testimony
I think the point is that more plaintiff's counsels cannot qualify than can. And when they aren't qualified, the franchisee loses the case.
Is this an area in which most attorneys are not schooled or skilled in vetting experts?