United States District Court, D. Kansas
WILLIAM J. SKEPNEK and STEVEN M. SMOOT, Plaintiffs,
ROPER & TWARDOWSKY, LLC and ANGELA ROPER, Defendants.
MEMORANDUM AND ORDER
DANIEL D. CRABTREE, District Judge.
This matter comes before the Court on the following motions: (1) plaintiffs' Motion to Strike defendants' Expert Designations, Strike the Expert Report of Evan L. Goldman, and Preclude Testimony by Defendants' Witnesses at Trial (Doc. 271); (2) defendants' Motion for Summary Judgment (Doc. 267); and (3) plaintiffs' Motion for Summary Judgment (Doc. 270). For the following reasons, the Court grants plaintiffs' motion to strike, grants in part and denies in part defendants' motion for summary judgment, and grants plaintiffs' motion for summary judgment.
I. Motion to Strike
Plaintiffs filed their Motion to Strike on March 12, 2015. In it, they seek to (1) strike defendants' designations of Angela Roper, Kenneth S. Thyne, and Evan L. Goldman as experts; (2) strike Goldman's expert report; and (3) limit Roper's and Thyne's testimony to those subjects appropriate for fact witnesses. The Court concludes that the proposed testimony of all three experts is inadmissible under Federal Rule of Evidence 702, and therefore it grants plaintiffs' motion.
A. Legal Standard
The Court has a "gatekeeping obligation" to determine the admissibility of expert testimony. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999). In performing this gatekeeping role, the Court has broad discretion when deciding whether to admit expert testimony. Kieffer v. Weston Land, Inc., 90 F.3d 1496, 1499 (10th Cir. 1996). Federal Rule of Evidence 702 permits a witness to testify as an expert only where the Court determines that "specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue." Fed.R.Evid. 702(a). "The proponent of expert testimony bears the burden of showing that the testimony is admissible." Conroy v. Vilsack, 707 F.3d 1163, 1168 (10th Cir. 2013) (citing United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009)).
Plaintiffs' primary argument against admitting Roper's, Thyne's, and Goldman's testimony is that it will not "assist the trier of fact" under Rule 702. "Many factors have a bearing on whether expert testimony will assist the trier of fact." 29 Victor James Gold, Federal Practice and Procedure Evidence § 6264 (1st ed.). One factor is whether expert testimony will undermine the judge's power to decide the law or encroach on the trier-of-fact's powers to judge the meaning of evidence and the credibility of witnesses. Id. "Indeed, it is ordinarily improper to have a witness testify regarding what the applicable law is; it is the trial judge's duty to inform the jury on the matter." United States v. Lake, 472 F.3d 1247, 1263 (10th Cir. 2007). Likewise, "testimony which articulates and applies the relevant law... circumvents the jury's decision-making function by telling it how to decide the case." Specht v. Jensen, 853 F.2d 805, 808 (10th Cir. 1988). Although Federal Rule of Evidence 704 permits experts to testify about ultimate issues of fact, they may not give opinions on ultimate issues of law. Id. at 809.
B. Defendants' Experts
Defendants seek to present expert testimony from three witnesses: Angela M. Roper, Kenneth S. Thyne, and Evan L. Goldman. In their Fed.R.Civ.P. 26 disclosures, defendants stated that both Roper's and Thyne's experience as practicing attorneys in New Jersey qualifies them to testify as experts on topics that include:
New Jersey Practice and procedure, New Jersey Rules of Professional Conduct, civil trial practice, fee-sharing agreements, contingency agreements, retainer agreements, and the damages sustained by [d]efendants as a result of [p]laintiffs' conduct in the underlying matter in addition to the present litigation. Testimony will include the reasons why [p]laintiffs' claims are barred under New Jersey law, including but not limited to the [p]laintiffs' failure to have a contract, failure to have a fee-sharing agreement, failure to have retainer agreements, failure to perform work on the matter, failure to pay costs, failure to have joint responsibility for any clients, failure to comply with the pro hac vice rules, failure to comply with the New Jersey Rules of Professional Conduct, and the harm caused to [d]efendants by [p]laintiffs' numerous failures.
Doc. 277-1 at 3-4. Roper is one of the defendants in this lawsuit. Thyne is a lawyer with Roper & Twardowsky, LLC, the case's other defendant, and he represents defendants in this case. Neither Roper nor Thyne have submitted an expert report.
Evan L. Goldman, defendants' third designated expert, is an attorney with over 30 years' experience practicing law in New Jersey. Unlike Roper and Thyne, Goldman provided a report summarizing his likely testimony and conclusions. Doc. 277-1 at 7-20. The report lays out Goldman's view of the facts of this case, the controlling law, and whether plaintiffs can recover on each of their three claims. He concludes that: (1) plaintiffs are not entitled to an attorney's fee due to their failure to comply with the New Jersey Rules of Professional Conduct; (2) plaintiffs do not have an enforceable fee-sharing agreement with defendants; and (3) defendants breached no fiduciary duty to plaintiffs. Doc. 277-1 at 7.
Plaintiffs argue that the Court should strike defendants' expert designations because their proposed testimony would usurp the role of the judge and the jury in violation of Fed.R.Evid. 702. In support, plaintiffs cite Specht v. Jensen, 853 F.2d 805 (10th Cir. 1988) (en banc), a "leading case" in this circuit. MCC Mgmt. of Naples, Inc. v. Int'l Bancshares Corp., 468 F.Appx. 816, 821 (10th Cir. 2012).
In Specht, the Tenth Circuit considered "whether [Rule] 702 will permit an attorney, called as an expert witness, to state his views of the law which governs the verdict and opine whether [the] defendants' conduct violated that law." 853 F.2d at 806. There, the plaintiffs had sued various government officials under 42 U.S.C. § 1983, alleging that they conducted illegal searches of the plaintiffs' home and office. Id. At trial, the plaintiffs called an attorney as an expert who "painstakingly developed over an entire day the conclusion that [the] defendants violated [the] plaintiffs' constitutional rights." Id. at 808. The attorney-expert "told the jury that warrantless searches are unlawful, that defendants committed a warrantless search on plaintiffs' property, and that the only applicable exception to the warrant requirement, search by consent, should not vindicate the defendants because no authorized person voluntarily consented to allow a search of the premises." Id. "He also stated that the acts of the private individual could be imputed to the accompanying police officer to constitute sufficient state action' for a § 1983 claim." Id.
On appeal, the Tenth Circuit concluded that this testimony exceeded the scope of Rule 702 and thus was inadmissible. The Court grounded its decisions on two principles. First, the attorney-expert's testimony "encroached upon the trial court's authority to instruct the jury on the applicable law" by testifying that warrantless searches are unlawful and about exceptions to the warrant requirement. Id. at 807-08. Such testimony tends to usurp the duty of the trial judge, "for it is axiomatic that the judge is the sole arbiter of the law and its applicability." Id. at 807. The Court noted that an attorney-expert is particularly problematic because "the jury may believe the attorney-[expert], who is presented to them imbued with all the mystique inherent in the title expert, ' is more knowledgeable than the judge in a given area of the law." Id. at 809. Also, "[i]f one side is allowed the right to call an attorney to define and apply the law, one can reasonably expect the other side to do the same, " so the "potential is great that jurors will be confused by these differing opinions, and that confusion may be compounded by different instructions given by the court." Id.
The second problem with the expert's testimony in Specht was that he testified about ultimate issues of law, concluding that the defendants had violated the plaintiffs' constitutional rights. Id. at 808. "[T]estimony which articulates and applies the relevant law... circumvents the jury's decision-making function by telling it how to decide the case." Id. "[A]n expert's testimony is proper under Rule 702 if the expert does not attempt to define the legal parameters within which the jury must exercise its fact-finding function." Id. at 809-10. "However, when the purpose of testimony is to direct the jury's understanding of the legal standards upon which their verdict must be based, the testimony cannot be allowed." Id. at 810.
Plaintiffs argue that the proposed testimony of defendants' experts is like that testimony at issue in Specht, and therefore the Court must exclude it. The Court agrees. Roper and Thyne, each seek to testify about "the reasons why [p]laintiffs' claims are barred under New Jersey law, including but not limited to [p]laintiffs' failure to have a contract, failure to have a fee-sharing agreement, failure to have retainer agreements, ... failure to comply with the pro hac vice rules, [and] failure to comply with the New Jersey Rules of Professional Conduct...." Doc. 277-1 at 3-4. Thus, these two witnesses seek to apply the facts to the law as they see it and testify whether plaintiffs can recover on their claims. This is one of the ultimate issues in this lawsuit. Such testimony improperly "circumvents the jury's decision-making function by telling it how to decide the case." Specht, 853 F.2d at 808; cf. United States v. Arutunoff, 1 F.3d 1112, 1118 (10th Cir. 1993) (holding expert testimony admissible because "he did not attempt to apply the law to the facts of the case or otherwise tell the jury how the case should be decided.").
Roper's and Thyne's proposed testimony is particularly troublesome because they are attorneys, a factor the Tenth Circuit considered critical in Specht. 853 F.2d at 808 ("There is a significant difference between an attorney who states his belief of what law should govern the case and any other expert witness."). Because Roper and Thyne are attorneys seeking to tell the jury how to decide this case, the Court concludes that they may not testify why plaintiffs' claims are barred under New Jersey law. And defendants' Rule 26 disclosures identify no other topic on which they seek to testify. At trial, Roper and Thyne may testify only as fact witnesses under Fed.R.Evid. 701.
The putative expert testimony disclose by Goldman's expert report also is inadmissible. In the report, Goldman, an attorney, explains in detail why he believes each of plaintiffs' three claims fails. The report is replete with legal citations and discussions of case law, and it reads more like a brief than an expert opinion. See Romero v. Allstate Ins. Co., 52 F.Supp. 3d 715, 723 (E.D. Pa. 2014) (excluding report from law professor because it was "nothing more than a legal opinion"). Much of Goldman's report is improper because it usurps the Court's authority to instruct the jury about the law governing their deliberations. Specht, 853 F.2d at 807. For instance, Goldman asserts:
"To recover a contingency fee, an attorney must, at a minimum, comply with [New Jersey Rule of Professional Conduct] 1.5." Doc. 277-1 at 16;
"It is well-established that when attorneys fail to comply with New Jersey Rules regarding a fee contract, they cannot sue other attorneys who obtained the fees under a breach of contract theory." Id. at 18 (citing cases); and
"New Jersey law requires that an attorney's fiduciary duty runs from the attorney to the client-there is and can be no conflicting fiduciary duty between co-counsel." Id. at 19.
These excerpts provide just a sampling of Goldman's attempts to define the law, which Specht held is improper. Specht, 853 F.2d at 810 ("In no instance can a witness be permitted to define the law of the case.").
Goldman's proposed expert testimony also is inadmissible because it supplants "the jury's ability to apply [the] law to the evidence." Id. at 808. Goldman comes to a definitive conclusion on each of plaintiffs' three claims, stating that: (1) plaintiffs cannot recover on their breach of contract claim because they did not "comply with the New Jersey Rules of Professional Conduct" and because they "do not have an enforceable fee-sharing agreement with [d]efendants"; (2) "[d]efendants breached no fiduciary duty to [p]laintiffs"; and (3) plaintiffs "are not entitled to any compensation" on their quantum meruit claim. Doc. 277-1 at 7-8. Such testimony tells the jury how to decide the case and therefore contradicts the rule established in Specht. 853 F.2d at 808; accord Askanase v. Fatjo, 130 F.3d 657, 673 (5th Cir. 1997) (holding expert's testimony whether the defendant company's "officers and directors fulfilled their fiduciary duties to the Company, its creditors, and shareholders" was "a legal opinion and [thus] inadmissible").
Defendants argue that Goldman's report simply opines on the "custom and practice" of New Jersey lawyers and therefore does not attempt to define the law or improperly apply the law to the facts of the case. Doc. 281 at 1. This argument is fanciful, relying on a mischaracterization of the proposed testimony. As discussed above, Goldman seeks to testify that plaintiffs cannot recover on their claims. Indeed, defendants concede as much in their memorandum in support of their motion for summary judgment, asserting: "[d]efendants' expert report provides a detailed analysis of [p]laintiffs' claims in this matter and how those claims for breach of contract, fiduciary duty, and quantum meruit would be dismissed under New Jersey law." Doc. 268 at 32. Because Goldman's report both attempts to define the law and dictate to the jury how to decide the case, it is inadmissible under Rule 702. Specht, 853 F.2d at 808 (holding that the trial court erred because it "allowed the expert to supplant both the court's duty to set forth the law and the jury's ability to apply this law to the evidence.").
Finally, defendants argue that if the Court concludes that some part of Goldman's report is inadmissible, "his testimony could be limited to exclude such testimony on the ultimate issue at the time of trial." Doc. 281 at 5. But because his report contains opinions that would usurp the function of both the judge and the jury, the Court need not deconstruct the expert disclosure and try to pick out which parts, if any, are admissible. The Court excludes Goldman, Roper, and Thyne from testifying as experts on any of the subjects disclosed by their expert witness designations and report.
II. Defendants' Motion for Summary Judgment
A. Uncontroverted Facts
The Court next considers and rules on defendants' Motion for Summary Judgment. The following facts are uncontroverted or, where controverted, are stated in the light most favorable to the party opposing summary judgment. Scott v. Harris, 550 U.S. 372, 378 (2007).
Plaintiffs William J. Skepnek and Steven M. Smoot are attorneys licensed in Kansas and Texas, respectively. Defendant Roper & Twardowsky, LLC ("R&T") is a New Jersey limited liability company located in Totowa, New Jersey. Defendant Angela Roper is a licensed attorney practicing and residing in New Jersey. In this lawsuit, plaintiffs seek to recover a share of the attorney's fees defendants earned in another lawsuit.
In late summer or early fall of 2002, several people contacted defendants expressing concerns about an agreement they had entered to settle certain claims against Prudential Life Insurance Company of America. These people believed that their lawyers in that case, a firm named Leeds, Morelli & Brown, had taken a $5 million payment from Prudential which they had concealed from their clients. R&T eventually filed a lawsuit against Prudential and Leeds, Morelli & Brown on behalf of these clients (the "Prudential Clients"). To simplify the discussion of this backdrop, the Court refers to this lawsuit as the "Prudential Litigation" and to Prudential and Leeds, Morelli & Brown as the "Prudential Defendants."
Defendant Roper knew of plaintiff Skepnek and thought he might have expertise germane to some issues in the Prudential Litigation. Roper contacted Skepnek to discuss this case, Skepnek expressed interest in becoming involved in it. Around the fall of 2002, Skepnek and plaintiff Smoot visited the New Jersey offices of R&T to discuss the Prudential Litigation and the possibility of entering into a co-counsel agreement. On December 2, 2002, Daria Twardowsky, an attorney with R&T, sent a letter to plaintiffs that said:
Dear Steve and Bill:
This shall confirm our understanding that the attorney's fees generated in the Prudential matters shall be split on a 50/50 basis between Roper & Twardowsky, LLC and Smoot/Skepnek. It is also agreed that any and all costs (not advanced by the clients) shall be likewise split on a 50/50 basis.
It is contemplated by this agreement that both of you shall be admitted pro hac vice in each of the Prudential matters, in which we are co-counsel. It is anticipated that we shall equally participate in pre-trial discovery as well as in response to all motions. Of course, if you are not admitted pro hac vice, this understanding will need to be modified.
If you wish to enter into a more formal agreement regarding the allocation of fees and responsibilities, or wish to discuss changing this letter of understanding, please contact me. If you think this letter is adequate, please affix your signatures and return to me.
Twardowsky signed the letter, and it included two signature blocks for Skepnek and Smoot to sign.
Defendants assert that the December 2002 letter was never executed and that Skepnek explicitly rejected it. According to defendants, the parties decided to determine the precise fee arrangement in the Prudential Litigation at a later date. Plaintiffs argue that the parties formed a contract to split fees, both orally and in writing, as evidenced by the December 2002 letter. At his deposition, Skepnek testified that, "[t]he original agreement was an oral agreement which was memorialized by Daria Twardowsky. Now, she didn't send me a letter saying I offer this. It was not an offer. It was a memorialization of a prior agreement." Skepnek testified that he had joint responsibility for all of R&T's clients under the parties' initial oral agreement. He also said that he signed the letter and believes he sent it to R&T. Plaintiff Smoot does not recall whether he signed the letter.
According to Skepnek, the terms of the parties' oral contract were that "we were going to jointly prosecute the matter. And when I say matter, I mean the Prudential case, on behalf of the initial group of clients, and thereafter as many others as we could-with good claims that we could obtain on a 50/50 fee sharing basis." When asked whether there were any other terms to the agreement, Skepnek testified, "Oh, I think Daria's letter adequately sets forth what the agreement was." Skepnek denied that the oral agreement called for him to "participate equally in pretrial discovery." He denied that the agreement required him to "participate equally in response to all motions." He also denied that the agreement required him "to be admitted in each of the Prudential matters that were filed pro hac vice " or that the parties even discussed pro hac vice admission when making the oral agreement. Skepnek believed that his role in the Prudential Litigation would be as follows:
I'm not admitted to practice in New Jersey, am not-am 1, 300 miles distance from New Jersey. Mr. Smoot's even farther away. We were there because of our developed expertise in the area of suits concerning aggregate settlements. And it was specifically discussed that I would be the person who would take the lead in taking the core depositions of the Prudential people and the Leeds, Morelli people, and that I would take the lead in the various hearings. That Mr. Smoot and I would develop the theories and draft the important pleadings relating to the prosecution of our claims.
Whether or not the parties ever agreed to a fee arrangement, it is undisputed that they agreed to bring a lawsuit against the Prudential Defendants. In 2002, the parties signed retainer agreements with seven people. Of those seven, six decided to pursue the Prudential Litigation: Thomas O'Donnell, Schubert Jacques, Arthur Talbot, Phillip Shapiro, Lawrence Lederman, and Henry Bell. In relevant part, these fee agreements provided:
We are your attorneys. "We" means our law firm. You have consulted our law firm for legal advice and assistance concerning your potential claims against [the defendants in the Prudential litigation]....
Our firm's name and address are:
Due to the complexity and precedent-setting nature of your claims, we have become associated in this matter with the following attorneys: William J. Skepnek, Esq. and Steven M. Smoot, Esq. whose addresses are respectively.... Insofar as your claims involve a complex field of law in which they are specialists, you have been advised that these attorneys shall make applications for admission to practice in this State for your case ( pro hac vice ).
On November 8, 2002, the parties filed a complaint on behalf of Prudential Client Lawrence Lederman against the Prudential Defendants in the Superior Court of New Jersey. Over the next several months, they filed additional lawsuits on behalf of Prudential Clients O'Donnell, Jacques, Talbot, Shapiro, and Bell. Plaintiffs sought pro hac vice admission in New ersey to assist in the Lederman case and the cases of two other Prudential Clients, O'Donnell and Jacques. The New Jersey court granted their motions. But plaintiffs never filed pro hac vice applications in any of the other cases filed by the Prudential Clients. Plaintiffs assert that they did not need to obtain additional pro hac vice admissions because the New Jersey court eventually consolidated the cases filed by other Prudential Clients into Lederman's.
In March 2003, the Prudential Defendants filed a motion to compel arbitration and/or dismiss Lederman's lawsuit. Plaintiffs drafted an 81-page brief that they eventually filed in response to the motion to dismiss. Thyne, an attorney at R&T, asked Skepnek to present oral argument at the hearing on the motion, and, on September 8, 2004, he did so. On October 8, 2004, the New Jersey trial court granted the Prudential Defendants' motion to compel arbitration and dismissed Lederman's case. The trial court later stayed further proceedings in the Lederman case and the five other cases pending against the Prudential Defendants. On November 11, 2004, the parties filed an appeal of the trial court's order dismissing Lederman's case.
Around this time, 11 more Prudential Clients signed fee agreements. In relevant part, these agreements provided:
We are your attorneys. "We" means our law firms. You have consulted our law firms for legal advice and assistance concerning your claims against Prudential Life Insurance Company of America, Inc., (hereinafter Prudential'), Leeds, Morelli & Brown, Lenard Leeds, Steven A. Morelli, Jeffrey K. Brown, and potentially others.
Our firms' names and addresses are:
Two separate law firms are associated due to the complexity and precedent-setting nature of your claims.
While Lederman's appeal was pending before a New Jersey appellate court, the parties worked on drafting class action pleadings on behalf of hundreds of potential plaintiffs to bring claims like those already asserted in the Prudential Litigation. In March 2005, defendant Roper asked Skepnek to argue the appeal of the Lederman case. To that end, Roper filed an application to admit Skepnek pro hac vice in the Superior Court of New Jersey, Appellate Division. In January 2006, Roper sent an e-mail to Skepnek asking about his availability to argue Lederman's appeal in March, April, or May. The New Jersey appellate court eventually set oral argument in that appeal for April 5, 2006.
Sometime in 2005, and without plaintiffs' knowledge, defendants approached another law firm, Snyder, Slutkin & Snyder, to help with the Prudential Litigation. Defendants assert that they were forced to associate with another firm because plaintiffs were doing little to help them litigate the case. Plaintiffs dispute this assertion. On October 11, 2005, Roper sent an e-mail to the original six Prudential Clients informing them that she was finalizing a co-counsel relationship with Steven Snyder of Snyder, Slutkin & Snyder. She did not copy plaintiffs on this e-mail and did not inform plaintiffs that Snyder, Slutkin & Snyder had become involved in the Prudential Litigation until December 12, 2005. When defendants entered into the co-counsel agreement with the Snyder firm, they understood that they would have to compensate plaintiffs in the event they recovered fees in the Prudential Litigation, and the Snyder firm also agreed to negotiate this compensation jointly.
On March 22, 2006, Skepnek's office attempted to contact Roper about his plans to travel to New Jersey to argue the appeal in Lederman's case. Roper responded that Skepnek now did not need to attend the oral argument. On May 5, 2006, the New Jersey appeals court reversed the dismissal of Lederman's case and remanded it to the New Jersey trial court. Roper forwarded the court's order to plaintiffs. From May 2006 through June 2007, Skepnek made repeated attempts to initiate meetings with Prudential Clients and to conduct discovery in the Prudential Litigation, but Roper often rejected his suggestions. On May 9, 2006, Smoot sent Roper an e-mail about the case and offered to meet with her. Roper responded that the Prudential Defendants had filed a motion to stay the case but that she would update Smoot. On that same day, Roper told Skepnek that the Prudential Defendants planned to seek ...