United States District Court, E.D. Pennsylvania
SPEAR, et al.
FENKELL, et al.
RICHARD A. LLORET UNITED STATES MAGISTRATE JUDGE
Fenkell Parties have moved to exclude expert testimony from
Samuel Halpern, Michael Mittleman, and Nick Bubnovich, under
under Fed.R.Evid. 702 and Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993). Doc. No.
635. The Alliance Parties have opposed this motion. Doc. No.
658. For the reasons explained below, I will deny the motion.
Third Circuit requires three things of an expert's
opinion before it can be admitted under Rule 702:
“qualification, reliability and fit."
Schneider v. Fried, 32o F.3d 396 404 (3d Cir. 2003).
The Fenkell Parties focus their attack against all three
experts on reliability. The purpose of the reliability
requirement “is to make certain an expert, whether
basing testimony upon professional studies or personal
experience, employs in the courtroom the same level of
intellectual rigor that characterizes the practice of an
expert in the field.” Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 152 (1999) (emphasis added).
Reliability is not a high standard. In re TMI
Litig., 193 F.3d 613, 665 (3d Cir. 1999) (quoting In
re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 745 (3d Cir.
1994)). To a lesser extent, the Fenkell Parties also attack
the “fit” of the experts' testimony. I will
deny the motion to exclude as to all three expert witnesses.
Mr. Halpern, the Alliance Parties proffer three opinions:
As set forth in his opening report, Halpern will offer three
overall opinions in this case: (A) “Mr. Fenkell's
process for engaging Stonehenge on behalf of the ESOP and
Alliance was not reasonable, in light of applicable standards
and practices for investment due diligence by
fiduciaries”; (B) “The terms of the Stonehenge
Agreements-including but not limited to the structure and
amount of fees the ESOP and Alliance agreed to pay Stonehenge
(reflected in the Fee Agreements)- were not
reasonable”; and (C) “DBF's receipt of fees
from Stonehenge was not reasonable in light of applicable
investment standards and practices for fiduciaries.”
Doc. No. 658, at 18. The Alliance Parties assert that Mr.
Halpern's opinions are grounded in his more than three
decades of experience as an investment professional and
practicing attorney concentrating in ERISA regulated
investments. Id. The Fenkell Parties allege that
Halpern's testimony is unreliable because it is based
“solely on his subjective belief and unsupported
speculation.” Doc. No. 635 at 10. As a result, the
Fenkell parties urge that Mr. Halpern's testimony is not
relevant and is not helpful to the finder of fact.
discussing practical business matters, rather than academic
theories, reliability “depends heavily on the knowledge
and experience of the expert, rather than the methodology or
theory behind it.” States v. Fernwood Hotel &
Resort, 2014 WL 198568, at *3 (M.D. Pa. Jan. 15, 2014)
(quoting United States v. Hankey, 203 F.3d 1160,
1169 (9th Cir. 2000)); see Schneider, 32o F.3d at
406 (explaining that a cardiologist's experience rendered
his testimony reliable). This case is about financial
transactions. There are sufficient indicia of reliability in
Halpern's experience, and in his application of that
experience to the facts of this case, to warrant permitting
his testimony. The Fenkell Parties will be free to exploit
any potential weaknesses through cross-examination at trial.
opined that Mr. Mittleman's testimony need not be
excluded, in denying the Stonehenge Parties' motion to
exclude his testimony (Doc. No. 627). I adopt the same
reasoning in denying the Fenkell Parties' motion to
exclude Mr. Mittleman's testimony. I find that Mr.
Mittleman is qualified and that the testimony is reliable.
His testimony appears to be reasonably based on his years of
experience in structured transactions and asset-backed
securities transactions. His testimony and expertise also
appear to fit at least part of the services supplied by the
Stonehenge Parties. In short, it appears reasonably likely
that Mr. Mittleman's testimony will assist the trier of
fact. Rule 702.
Alliance Parties intend to proffer the testimony of Mr.
Bubnovich for the proposition that (1) Mercer was not
independent insofar as Alliance management, and not the
Compensation Committee, hired Mercer; and (2) the
Compensation Committee should have been informed about the
DBF Consulting payments in approving Fenkell's
compensation. Doc. 658 at 5. The Fenkell Parties argue that
Bubnovich's testimony is not reliable “because it
is based on subjective belief rather than authoritative
materials.” Doc. No. 635 at 12-14.
discussed above, reliability concerning practical business
matters depends primarily on knowledge and experience of the
expert, and not on methodology. Mr. Bubnovich's
experience as a compensation consultant and his application
of that experience to the facts of this case, lend itself to
I note this is a bench trial. I choose to follow Judge
Pollock's reasonable admonition, in Alco Industries,
Inc. v. Wachovia ...