Pueblo of Isleta v. Grisham

• Decision Date: 30 March 2019
• Docket Number: Civ. No. 17-654 KG/KK
• Parties: PUEBLO OF ISLETA et al., Plaintiffs, v. MICHELLE LUJAN GRISHAM et al., Defendants.
• Court: U.S. District Court — District of New Mexico

PUEBLO OF ISLETA et al., Plaintiffs, v. MICHELLE LUJAN GRISHAM¹ et al., Defendants.

Civ. No. 17-654 KG/KK

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

March 30, 2019

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO EXCLUDE TELLE AFFIDAVIT

THIS MATTER is before the Court on Plaintiffs' and Plaintiffs-in-Intervention's Motion to Exclude Affidavit of Craig S. Telle, JD, CFE (Doc. 112) ("Motion to Exclude"), filed October 29, 2018.² In this motion, Plaintiffs the Pueblos of Isleta, Sandia, and Tesuque, and Plaintiffs-in-Intervention the Pueblos of Santa Ana, Santa Clara, and San Felipe (collectively, "the Pueblos") seek to exclude from the record the Affidavit of Craig S. Telle, JD, CFE (Doc. 99-12) attached to Defendants' Consolidated Response to Plaintiffs Pueblo of Isleta's and Pueblo of Sandia's Motion for Summary Judgment and Plaintiffs-in-Intervention Santa Ana, Santa Clara and San Felipe's and Plaintiff Tesuque's Motion for Summary Judgment, (Doc. 99), filed September 24, 2018. The Pueblos offer two arguments in support of their Motion to Exclude, i.e., that: (1) Defendants failed to disclose Mr. Telle as an expert witness in violation of Federal Rule of Civil Procedure 26; and, (2) the expert opinions in Mr. Telle's affidavit are inadmissible under Federal Rule of Evidence 702. Having reviewed the parties' submissions, the record, and the relevant law, and for the reasonsset forth below, the Court finds that the Pueblos' Motion to Exclude should be GRANTED IN PART and DENIED IN PART as follows.

I. Defendants should have disclosed Mr. Telle as an expert under Rule 26, but their failure to do so was substantially justified or is harmless.

Pursuant to Rule 26, "a party must disclose to the other parties the identity of any witness it may use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705." Fed. R. Civ. P. 26(a)(2)(A). At a minimum, a party must also disclose "the subject matter on which the witness is expected to present evidence under Federal Rule of Evidence 702, 703, or 705," and "a summary of the facts and opinions to which the witness is expected to testify." Fed. R. Civ. P. 26(a)(2)(B), (C). "A party must make these disclosures at the times and in the sequence that the court orders." Fed. R. Civ. P. 26(a)(2)(D). If a party fails to make these disclosures, "the party is not allowed to use that . . . witness to supply evidence on a motion . . . unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). Courts may also impose any other appropriate sanctions, including those listed in Rule 37(b)(2)(A)(i) through (vi). Fed. R. Civ. P. 37(c)(1)(C).

The parties agree that Defendants did not disclose Mr. Telle as an expert witness under Rule 26(a), and that the time for them to do so has passed. (See Doc. 54 at 2 (Defendants' Rule 26(a)(2) expert disclosures due by March 15, 2018).) However, the parties disagree regarding whether Defendants have offered Mr. Telle as an expert or lay witness. Fed. R. Civ. P. 26(a)(2)(A). The Pueblos claim that Mr. Telle's affidavit includes opinions that would be admissible, if at all, as expert testimony under Rule 702, while Defendants argue that his affidavit includes only lay opinions admissible under Rule 701.

Rule 701 provides that

[i]f a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is:

(a) rationally based on the witness's perception;

(b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and

(c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Fed. R. Evid. 701. Rule 702, in turn, provides 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.

Fed. R. Evid. 702.

Rule 701 "does not permit a lay witness to express an opinion as to matters which are beyond the realm of common experience and which require the special skill and knowledge of an expert witness." James River Ins. Co. v. Rapid Funding, LLC, 658 F.3d 1207, 1214 (10th Cir. 2011). Helpfully, "[t]wo Tenth Circuit cases illustrate the difference between Rule 701 lay opinion testimony and Rule 702 expert testimony." Id. In Bryant v. Farmers Insurance Exchange, 432 F.3d 1114 (10th Cir. 2005), the Tenth Circuit held that a witness should have been permitted to testify to basic mathematical calculations under Rule 701:

[t]aking a simple average of 103 numbers, though technically a statistical determination, is not so complex a task that litigants need to hire experts in order to deem the evidence trustworthy. A mathematical calculation well within the ability of anyone with a grade-school education is, in our opinion, more aptly characterized as a lay opinion under Fed. R. Evid. 701.

Id. at 1124. Conversely, in LifeWise Master Funding v. Telebank, 374 F.3d 917 (10th Cir. 2004), the Tenth Circuit found a CEO's testimony about his company's lost profits inadmissible under Rule 701 because his testimony was based on "sophisticated economic models" such as "moving averages, compounded growth rates, and S-curves." James River Ins. Co., 658 F.3d at 1214; LifeWise Master Funding, 374 F.3d at 929. The LifeWise Master Funding court confirmed that a witness cannot testify about "technical, specialized subjects under Rule 701," and explained that "a person may testify as a lay witness only if his opinions or inferences do not require any specialized knowledge and could be reached by any ordinary person." 374 F.3d at 929 (quotation omitted).

Applying Bryant and LifeWise Master Funding to the facts before it in James River Insurance Co., the Tenth Circuit found that the opinions of the defendant company's principal regarding property valuation were expert rather than lay opinions. 658 F.3d at 1214-16. The Tenth Circuit first noted that "calculating depreciation requires more than applying basic mathematics. Technical judgment is required." Id. at 1214. The court also observed that the witness relied on his "professional experience" to "[a]ccurately account[] for the interaction between depreciation and damages[.]" Id. at 1215. "[K]nowledge derived from previous professional experience falls squarely within the scope of Rule 702 and thus by definition outside of Rule 701." Id. The court further noted that the witness based his testimony not only on his professional experience, but also "on a technical report by an outside expert." Id. Finally, the court cautioned that the Rule 701 advisory committee note "allowing business owners to testify about the value of their businesses does not allow for Rule 702 testimony to be admitted under Rule 701." Id. at 1216.

Quoting the Advisory Committee Notes to Rule 701's 2000 amendments, the Tenth Circuit explained:

Rule 701 has been amended to eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering anexpert in lay witness clothing. Under the amendment, a witness' testimony must be scrutinized under the rules regulating expert opinion to the extent that the witness is providing testimony based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Id.

In Ryan Development Co., L.C. v. Indiana Lumbermens Mutual Insurance Co., 711 F.3d 1165, 1170-71 (10th Cir. 2013), the Tenth Circuit confirmed that the nature of a witness's testimony, and not the witness's job title, determines whether the testimony falls under Rule 701 or Rule 702. The court in that case observed that "accountants often testify as expert witnesses," but found that the opinions of two accountants were properly admitted under Rule 701 where they "used basic arithmetic, personal experience, and no outside expert reports in calculating lost income[.]" Id. at 1170; see also, e.g., First Annapolis Bancorp, Inc. v. United States, 72 Fed. Cl. 204, 207 (2006) ("While lay witness opinion testimony is more restricted than expert testimony, a lay witness accountant may testify on the basis of facts or data perceived in his role as an accountant based on his personal knowledge of the company.").

Applying these decisions to the present matter, the Court finds that Mr. Telle's affidavit includes both testimony based on facts or data Mr. Telle perceived while working for the New Mexico Gaming Control Board ("NMGCB"), and opinions based on his technical and other specialized knowledge within the scope of Rule 702.³ See id. ("A witness may provide both lay and expert testimony."); Fed. R. Evid. 701, Advisory Committee Notes to 2000 Amendments ("Certainly it is possible for the same witness to provide both lay and expert testimony in a single case. The amendment does not distinguish between expert and lay witnesses, but rather between expert and lay testimony." (emphases in original)). However, the bulk of the opinions Mr. Telleexpressed fall under Rule 702 because they are beyond the realm of common experience, require specialized knowledge, and could not be reached by an ordinary person lacking his specialized education, training, and experience in accounting, the law, and the gaming industry.

Mr. Telle has been employed by the NMGCB from 2008 to the present and worked in the area of "Tribal Compact Compliance" from 2010 to 2015.⁴ (Doc. 99-12 at 1-2.) He has a bachelor's degree in accounting and a law degree, and his past work experience includes employment as an accountant, a controller, and an attorney.⁵ (Id.) In his affidavit, Mr. Telle did much more than simply...