Litigation
A View from the Civil Trial Bench: “Gatekeepers:” A Dramatic Analogy Between Expert Testimony and the Movie Ghostbusters
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This article represents the thoughts and opinions of the author and should not be considered court policy or the opinion of other trial judges. Comments should be addressed to HersherJ@saccourt.ca.gov
he 1984 movie Ghostbusters is based on the story of three former Columbia University professors (Bill Murray, Dan Aykroyd and Harold Ramis) turned ‘parapsychologists’ who start a ghost catching business. The film’s central theme is built on the premise that Gozer, an unsavory Sumerian god of destruction, is attempting to enter Earth. Trapped in a physical plane atop a New York City building, Gozer can only be released to wreak havoc once the “Gatekeeper,” occupying the body of actress Sigourney Weaver, connects with the “Keymaster,” Rick Moranis. Before being hired to send Gozer back from where he came and close the gate behind him, the Ghostbusters must convince the mayor and others that their science is not only credible, but worthy of acceptance and use. The movie’s construct is not so different from that of an attorney who wants the court to allow an expert to present a theory of damages to a jury. As in the iconic Ghostbusters scene where the scientists discuss whether the method they will use to rid the world of Gozer is too speculative and place their client’s interest in danger1, in the courtroom the question is whether the expert’s opinion is too speculative and therefore too dangerous to present to the jury? And as in Ghostbusters, the courtroom gatekeeper2 or judge plays an important role. Protecting juries from “an array of figures conveying a delusive impression of exactness in an area where a jury’s common sense is less available than usual to protect it.”3 This past Thanksgiving a unanimous California Supreme Court issued Sargon Enterprises v. University of Southern California (2012)55 Cal. 4th 747 (“Sargon”). In its decision the court considered the actions of the judicial “gatekeeper” in keeping speculative expert testimony from a jury in the context of lost profits. The case contains many memorable quotes. The high court clearly decided that it would not “reverse the polarity” or sanction taking any risks on the admission of expert testimony that has no business in a civil damage case involving
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By Judge Judy Holzer Herscher
Sacramento Lawyer May/June 2013
lost profits. In so doing, it established a framework for counsel and the court to evaluate any challenged expert testimony on the basis of speculation, thus extending its importance beyond a lost profits case. The plaintiff, Sargon Enterprises Inc.4, is described as a small dental implant company that had net profits in 1998 of $101,000.00. It patented and obtained government approval for a new dental implant that could be implanted immediately after extraction of a tooth (“immediate load implant”), thereby saving several steps, time and money in the tooth replacement process. In 1996, Sargon entered into a contract with the University of Southern California School of Dentistry to conduct a five-year clinical study of the implant and then publish and distribute the report to dentists. After initial successful clinical trials, the university failed to produce the report. Sargon’s damage expert believed USC’s failure to meet its contractual obligations resulted in, among other things, lost profits of between $200 million and $1 billion for the company. The Sargon decision deals with the trial judge’s decisions in the second trial of the case. In the first trial, the trial judge excluded all evidence of Sargon’s alleged lost profits on the basis that USC could not have foreseen them. Sargon appealed and the appellate court reversed and ordered a new trial, finding that the trial judge had erred in excluding evidence of lost profits on the ground of lack of foreseeability.5 In the second trial, USC again moved to exclude the opinion testimony of plaintiff’s expert, certified public accountant and attorney James Skorheim, on the basis that any evidence of lost profits would be speculative. The specific evidentiary challenge was made under Civil Code § 3301 (“No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and origin.”) In trial number two, the judge conducted an eight-day in limine evidentiary hearing, and issued a 33-page decision denying admission of the testimony. The Court of Appeal reversed, and the matter made its way to the California Supreme Court.
Skorheim testified that he reviewed all litigation materials (including deposition transcripts and reports of USC’s damages experts), financial information from Sargon and its competitors (including annual reports), and market analyses of the global dental implant market prepared by Millennium Research Group. Skorheim based his opinion of lost profits on a “market share” approach of the worldwide dental implant market, which he described as hungry for technological change, growth and innovation aimed at shortening healing time, cost, and treatment. Specifically, Skorheim compared Sargon to six other large, multinational dental implant companies that were the market leaders and reportedly controlled in excess of 80 percent of global sales. His testimony was premised on his belief that there are three market “drivers” in the industry: innovation, clinical studies, and outreach to general practitioners. He testified that in order to be successful a company must engage in all three. He further opined that had USC completed the contract and distributed it to dental practitioners, Sargon would have garnered substantial future profits in the sale of its innovative dental implant system.6 He testified that Sargon would have garnered between 32 and 58 percent of the available dental implant market, which itself was expected to grow at over 18 percent a year. This would have meant profits of upwards of $1.18 billion for the company. The trial judge proceeded to deconstruct the basis of Skorheim’s opinion before discarding it in its entirety. Much of the trial testimony and the court’s decision centered on whether Sargon could properly be classified as “innovative” and whether that innovation would lead, or had a very good chance of leading (i.e., a reasonable certainty), to Sargon becoming the market leader over a 10 year period. The relevant portions of the innovation testimony were critical because it was on that basis that Skorheim further testified that: 1) Sargon would have been able to spend the necessary resources to develop other products over time; 2) Sargon’s prior profit levels were not a necessary component