IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

JERRY RYAN, On Behalf of Himself And

All Others Similarly Situated,

Plaintiff,

go

FLOWSERVE CORPORATION, C.

SCOTT GREER, RENEE J.

HORNBAKER,

PRICEWATERHOUSECOOPERS LLP,

BANC OF AMERICA SECURITIES LLC,

and CREDIT SUISSE FIRST BOSTON

LLC

Defendants

CIVIL ACTION NO. 3-03CV1769-B

(Consolidated with 3:03-CV- 1827-B;

3:03-CV-1846-B; 3:03-CV-2079-B)

CM/ECF

DEFENDANTS’ OPPOSITION TO PLAINTIFFS’ MOTION INLIMINE

TO EXCLUDE THE TESTIMONY AND OPINIONS OF PROPOSED

EXPERT ALLEN FERRELL

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 1 of 15 PageID 44524
TABLE OF CONTENTS

III.

INTRODUCTION ............................................................................................................... 1

ARGUMENT ....................................................................................................................... 2

No Professor Ferrell is a Pre-Eminent Scholar with Substantial Experience in

the Fields of Securities Law and Financial Economics ............................................. 2

B. Plaintiffs Have Mischaracterized the Scope of Professor Fen’eli’s

Engagement ................................................................................................................ 4

C. Plaintiffs Have Mischaracterized Professor Ferrell’s Testimony .............................. 5

D. Plaintiffs Have Invented a "Custom and Practice" Exception to the

Prohibition on Expert Opinions on the Law .............................................................. 9

CONCLUSION .................................................................................................................. 11

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page i

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Flowserve Corporation, C. Scott Greer, Renee J. Hornbaker, PricewaterhouseCoopers,

LLP, Banc of America Securities LLC, and Credit Suisse First Boston LLC ("Defendants") file

this Opposition to Plaintiffs’ Motion In Limine to Exclude the Testimony and Opinions of

Proposed Expert Allen Ferrell ("Plaintiffs’ Motion"), and show as follows:

I. INTRODUCTION

Plaintiffs designated law professor Marc Steinberg as a proposed expert. See Designation

of Experts by Mass. State Carpenters Pension Fund, Alaska Electrical Pension Fund, filed April

8, 2007, Docket No. 524; see also Defendants’ Motion to Exclude the Reports and Testimony of

Marc I. Steinberg, filed July 13, 2007, Docket No. 651 ("Motion to Exclude Steinberg"). In their

Motion to Exclude Steinberg, Defendants explained why Steinberg’s proposed testimony should

be precluded under the Federal Rules of Evidence. Motion to Exclude Steinberg at 4-16. Given

Plaintiffs’ proffer, however, Defendants designated Professor Ferrell of Harvard Law School in

rebuttal, noting that if the Court (or Plaintiffs) should determine that the Steinberg testimony will

not be introduced, then Professor Ferrell’s designation will be withdrawn. Id. at 1, n.2.

Plaintiffs, having been the first to proffer a law professor as an expert witness, now strain

to find reasons why Defendants’ law professor is somehow less appropriate than their own.

Accordingly, Plaintiffs’ Motion attempts to minimize Professor Ferrell’s pre-eminence in the

area of securities law and regulation and repeatedly mischaracterizes his testimony.

Plaintiffs’ Motion demonstrates why a battle among competing law professors will not be

helpful for the jury. See also Motion to Exclude Steinberg at 4, 14-15. However, if such

testimony is to be allowed at all, there is no sound reason to admit the testimony of Plaintiffs’

proposed law professor expert while excluding the testimony of Professor Ferrell. Accordingly,

Plaintiffs’ Motion should be denied in its entirety, either as moot (if Plaintiffs’ proposed expert

Steinberg is excluded, in which case Professor Ferrell is withdrawn) or for its lack of merit.

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 1

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II. ARGUMENT

A. Professor Ferrell is a Pre-Eminent Scholar with Substantial Experience in the Fields

of Securities Law and Financial Economics.

Plaintiffs have baselessly attacked Professor Ferrell as "woefully lacking in the

experience necessary to opine on the subject matters in his report." Plaintiffs’ Motion at 13. The

following is a partial summary of the relevant background that Plaintiffs must think is "woefully

lacking":

@ Professor Ferrell holds a law degree from Harvard Law School, served as

Editor of the Harvard Law Review, and was a clerk for United States Supreme

Court Justice Anthony Kennedy.

He is the Harvey Greenfield Professor of Securities Law at Harvard Law

School, currently in his ninth year, and is a Faculty Associate at Harvard’s

John F. Kennedy School of Government.

Professor Ferrell holds a Ph.D. in economics fi’om The Massachusetts Institute

of Technology (Field: Econometrics and Finance).

He is an Academic Fellow to the National Association of Securities Dealers

("NASD").

He is a Member of the Board of Economic Advisors to the NASD.

o He is a Member of the American Law Institute Project on the Application of

U.S. Financial Regulations to Foreign Firms and Cross-Border Transactions.

He is an Academic Expert on Shareholder Rights for the Committee on

Capital Markets Regulation, advising the United States Department of the

Treasury in securities law reforms.

 ̄ He has numerous publications in the area of securities law and regulation.

See App. to Plaintiffs’ Motion, Ex. A at APP0024-26 (Curriculum Vitae). ~

~ In addition, shortly after his deposition, Professor Ferrell testified before the United States Senate Subcommittee

on Securities, Insurance and Investment (Committee on Banking, Housing and Urban Affairs) on securities law

issues, including the current state of securities regulation and its effect on U.S. competitiveness. See CQ

Congressional Testimony, "Cross-Border Stock Exchange Mergers" - Statement of Allen Ferrell, Professor,

Harvard Law Schoo!, July 1, 2007 (2007 Congressional Quarterly, Inc.).

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In the face of these credentials, Plaintiffs’ "make-weight" attacks on Professor Ferrell’s

qualifications border on the absurd. For example:

Plaintiffs complain that Professor Ferrell has "limited teaching experience"

because he has been a Harvard law professor for "only" nine years. Plaintiffs’

Motion at 13-14.

Plaintiffs complain that Professor Fen’ell has "never taught separate courses

on the issues of loss causation and § 11 tracing." Id. at 14. Plaintiffs fail to

note any law school that offers such "separate courses." Nor do they suggest

that their proffered expert Steinberg has taught "separate courses" on

materiality, scienter, or the Section 11 due diligence defense, upon which he

freely opines in the Steinberg Report. See Motion to Strike Steinberg at 3, 11.

"Professor Ferrell has never testified in any trial." Plaintiffs’ Motion at 13.

Of course, if this was a disqualifying factor then no expert would ever reach

his or her first trial.

"Professor Ferrell has never testified on behalf of a plaintiff in any case." Id.

This is hardly a surprising circumstance given that, as Plaintiffs note,

Professor Ferrell has only been deposed as an expert in one prior litigation.

Id. Professor Ferrell has hardly made a career out of serving as an expert

witness -- for plaintiffs or for defendants. Plaintiffs fail to explain why this

should be considered a disqualifying factor.

Confusingly, Plaintiffs also level certain critiques at Professor Ferrell’s employment experience

that are equally true of their own proposed law professor Steinberg:

"Professor Ferrell has never worked in the banking industry." Plaintiffs’

Motion at 13. As noted in Defendants’ Motion to Strike Steinberg, Plaintiffs’

proposed law professor expert has no employment experience in banking

either. See Motion to Strike Steinberg at 11.

"Professor Ferrell is not a certified public accountant, has no accounting

background and has never prepared any financial statements." Plaintiffs’

Motion at 13. Again, the same may be said of Plaintiffs’ proposed expert

Steinberg. See Motion to Strike Steinberg at 11.

If Plaintiffs genuinely believe that these are disqualifying factors, then they should not have

designated Steinberg as a proposed expert in the first instance. Moreover, they should now

voluntarily withdraw their designation of Steinberg, in which case Professor Ferrell’s rebuttal

testimony need not be proffered by Defendants.

DEFENDANTS’ OPPOSITION TO MOTION INLIMINE TO EXCLUDE

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B. Plaintiffs Have Mischaracterized the Scope of Professor Ferrell’s Engagement.

Throughout Plaintiffs’ Motion, Plaintiffs misapprehend the scope of Professor Ferrell’s

engagement. As noted in the Ferrell Report, as well as in Professor Ferrell’s deposition and

Defendants’ Motion to Strike Steinberg, the purpose of the engagement was "to opine on the

assertions in the Report of Marc I. Steinberg." See App. to Plaintiffs’ Motion, Ex. A at

APP0002. Professor Ferrell relied upon the information cited by Steinberg within the Steinberg

Report. Id., Ex. B at APP0051-52 (Ferrell Tr. at 19:24 - 20:8). Accordingly, when Plaintiffs

complain about the "miniscule amount of information" relied upon by Professor Ferrell,

Plaintiffs’ Motion at 9, this only serves to undercut the work of their own proffered expert.

Elsewhere, Plaintiffs complain that "Professor Ferrell’s opinion that there was no

negative stock market reaction upon announcement of the restatement is based solely upon his

review of Lucy Allen Report ...." Plaintiffs’ Motion at 12. But Plaintiffs fail to note the

broader context of Professor Ferrell’s discussion. Professor Ferrell’s fundamental point is that

Steinberg never addresses stock market reaction and loss causation within his proffered

conclusions, rendering Steinberg’s assertion of "strict liability" under Section 11 incomplete.

See App. to Plaintiffs’ Motion, Ex. A at APP0002 (sixth bullet), APP0015, APP0017-19; see

also id., Ex. B at APP0220 (Ferrell Tr. at 188:14-20).2 Professor Ferrell required neither the

Allen Report, or any other expert report, to make this critical observation. While Professor

Ferrell also noted later in his deposition that he concurred in the methodology used by the Allen

Report, given that he is not only a law professor but also a financial economist, it is inaccurate

for Plaintiffs to imply that he simply accepted the Allen Report at face value. See App. to

Plaintiffs’ Motion, Ex. A at APP0015-17; Ex. B at APP0223 (Ferrell Tr. at 191:9-12).

2

Professor Ferrell has also noted that the Steinberg Report reaches a conclusion of"strict liability" under Section

11 without addressing the critical element of"tracing" which is necessaiT for any recovery under that statute. See

App. to Plaintiffs’ Motion, Ex. A at APP0017-19; Ex. B at APP0089 (Ferrell Tr. at 57:1-12).

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

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C. Plaintiffs Have Mischaracterized Professor Ferrell’s Testimony.

In the face of Professor Ferrell’s credentials, Plaintiffs resort to blatant

mischaracterizations of his testimony in an unsuccessful effort to impugn his work product, as

shown in the following examples from Plaintiffs’ Motion:

(1) "Professor Ferrell could not remember documents that supported his

assertion that financial covenant violations are a well-known fact .... "

Plaintiffs’ Motion at 10.

Professor Ferrell did not so testify. Rather, Professor Ferrell was asked: "What’s your

basis for saying that financial covenant violations are, in fact, quite common is a well-known fact

in accounting finance literature?" Professor Ferrell clearly responded: "Well, I cite a study from

the accounting and finance literature for that proposition. And my memory, from reading debt

covenant papers, is that’s an observation that’s often made in those papers." See App. to

Plaintiffs’ Motion, Ex. B at APP0160 (Ferrell Tr. at 128:7-15). Professor Ferrell went on to

specifically reference in his testimony both the "large sample study of the issue" and "the

Accounting Horizons paper," cited by name in his Report. Id., Ex. B at APP0161 (Ferrell Tr.

at 129:1-12).3 The fact that Professor Ferrell stated "I can’t recite the titles off the top of my

head," hardly implies that his written report lacked academic support - as Plaintiffs’ Motion

wrongly implies. !d., Ex. B at APP0160 (Ferrell Tr. at 128:19-20).4 Indeed, it is the opinions of

Plaintiffs’ proposed expert Steinberg regarding hypothetical lender reaction to debt covenant

violations that lack any academic support whatsoever. See Motion to Strike Steinberg at 13.

3 The "large sample study" cited by Professor Ferrell is: I. Dichev and D. Skinner, 2001, Large sample evidence

on the debt covenant hypothesis, University of Michigan working paper, subsequently published in the peerreviewed Journal of Accounting Research, 2002, 40(4). The "Accounting Horizons paper" cited is the peer-review

published paper by V. Gopalakrishnan and M. Parkash, 1995, Borrower and lender perceptions of accounting

information in corporate lending agreements, Accounting Horizons 9:13, 20. See App. to Plaintiffs’ Motion, Ex. A

at APP0008.

4 Indeed, the Fen’ell Report expressly demonstrates that "financial covenant violations are in fact quite common.

One study found, for instance, that approximately 30% of firms in its large sample (which consisted of tracking

1,300 loans over time) experienced a violation." App. to Plaintiffs’ Motion, Ex. A at APP0008.

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

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(2) "Professor Fen’ell readily admits that in support of this proposition

[regarding "the incidence and consequences of financial covenant

violation"], he relies upon studies that were not published, peerreviewed or tested." Plaintiffs’ Motion at 11.

Professor Fen’ell did not so testify. Indeed, as he clearly stated at his deposition,

Professor Ferrell’s statement that bank waivers of covenant violations occur at a high rate is

drawn from a well-known peer-reviewed, published study. See V. Gopalakrislman and M.

Parkash, 1995, Borrower and lender perceptions of accounting information in corporate lending

agreements, Accounting Horizons 9: 13, 20; see also App. to Plaintiffs’ Motion, Ex. A at

APP0008; Ex. B at APP0157 (Fen’ell Tr. at 125:7-19). Plaintiffs do not take issue with this

study, nor do they assert that reliance on this study was improper. Moreover, a working paper

from 2001 cited by Professor Ferrell, containing findings on the high incidence of bank covenant

violations, was subsequently published in a peer-reviewed journal: "Large-Sample Evidence on

the Debt Covenant Hypothesis," Ilia D. Dichev and Douglas J. Skinner; Journal of Accounting

Research, 2002, 40(4), pp. 1091.5 Plaintiffs have made no challenge to the substance of this

study. Plaintiffs’ claim that "Professor Ferrell’s opinions are based primarily upon data that has

never been subjected to peer review or publication," Plaintiffs’ Motion at 12, is simply false.

(3) "Professor Ferrell was also unaware of APB Opinion 20 ..." Plaintiffs’

Motion at 10.

Professor Ferrell did not so testify. To the contrary, Professor Ferrell was asked "Have

you ever heard of APB 20?" and he responded in the affirmative, but further stated that he could

not recite under oath its precise contents6 without refreshing his recollection. App. to Plaintiffs’

5 Moreover, Professor Ferrell explained at his deposition that these studies cite and discuss other peer-reviewed,

published studies for the proposition that financial covenant violations are common. See App. to Plaintiffs’ Motion,

Ex. B at APP00160 (Ferrell Tr. at 128: 7-22). Plaintiffs do not dispute this testimony.

6 Indeed, Plaintiffs grossly misstate the contents of APB Opinion 20. See Plaintiffs’ Motion at 10. While APB

Opinion 20 discusses restatements resulting from errors, mistakes, or "oversight or misuse of facts that existed at the

time," APB Opinion 20, ¶ 13, Plaintiffs erroneously add the phrase "and were known or should have been known"

in their description, improperly attempting to import an admission of scienter or recklessness into such restatements.

DEFENDANTS’ OPPOSITION TO MOTION INLIMINE TO EXCLUDE

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Motion, Ex. B at APP0193 (Ferrell Tr. at 161:2-6). He further noted that APB Opinion 20 had

not been raised anywhere in the report by Professor Steinberg, the proposed expert to whom

Professor Ferrell was responding. Id., Ex. B at APP0194 (Ferrell Tr. at 162:8). Plaintiffs fail to

explain why Professor Ferrell’s inability to recite from memory an accounting opinion not

referenced by their own proposed expert presents a disqualifying circumstance]

(4) "Professor Ferrell acknowledged that the information he reviewed was so

insufficient that he was unable to make an independent determination of

whether or not CEO Greer or CFO Hornbaker had satisfied their due

diligence defense under § 11 ." Plaintiffs’ Motion at 11.

Professor Ferrell did not so testify. Defendants have maintained that the attempt by

Plaintiffs’ proposed expert Steinberg to define the legal test for the due diligence defense, and

then to weigh facts and credibility issues to determine if the defense is met, is an improper

invasion of the provinces reserved to the Court and the jury. See Motion to Strike Steinberg at 4-

9. As Professor Ferrell testified, the fundamental purpose of his engagement was to analyze

Steinberg’s Report, not to reach his own subjective conclusions about whether the due diligence

defense was in fact satisfied. Professor Fen’eli’s conclusion was that there is nothing in

Steinberg’s analysis, or the documents he cited, that undermines the availability of a due

diligence defense.8 Plaintiffs’ argument about Professor Ferrell’s "insufficient" information is

v

In similar fashion, Plaintiffs complain that "Professor Ferrell was unaware of the amicus curia brief of the

[SEC] in h~ re Sunbeam See. Litig." Plaintiffs’ Motion at 10. First, this brief is not raised in the Steinberg Report to

which Professor Ferrell was responding. Second, SEC advocacy in an amicus brief is not equivalent to an SEC rule

or adjudication. Third, while Plaintiffs apparently view this amicus brief as significant, it is not even included by

the SEC on its website list of over forty "friend of court" briefs by the SEC between 1996-2007:

http://www.sec.gov/litigation/amicusbriefs.shtml.

8 Plaintiffs also complain that Professor Ferrell did not review their opposition to dismissal, Plaintiffs’ Motion at

10, but fail to explain why this was necessary. As Professor Ferrell testified, his engagement was to analyze the

Steinberg Report and he reviewed the documents cited in that Report. See App. to Plaintiffs’ Motion, Ex. B at

APP0051-52 (Ferrell Tr. at 19:24-20:8). Long after Professor Ferrell had prepared his Report, Defendants learned

that Steinberg had in fact reviewed and relied upon additional documents other than those cited in his Report. See

Motion to Compel or Strike Steinberg, filed June 18, 2007, Docket No. 571.

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 7

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simply a red herring.9

(5) "Professor Ferrell incorrectly testified that he believes that the Boston

Company... is a plaintiff in this case." Plaintiffs’ Motion at 12.

Professor Ferrell did not so testify. The Boston Company was the investment manager

for both Plaintiffs and had the sole responsibility for Plaintiffs’ Flowserve transactions during the

putative class period.~° When asked "Who are the plaintiffs in this case?" Professor Ferrell

con’ectly identified the "Alaska pension fund" and said that he would otherwise "have to look at

[the Complaint] to see the list of plaintiffs again." App. to Plaintiffs’ Motion, Ex. B at APP0120

(Ferrell Tr. at 88:4-10). Professor Ferrell further correctly identified The Boston Company

witness Mr. Dishop as "a stock analyst at Boston Company." Id., Ex. B at APP0119 (Ferrell Tr.

at 87:20-24). With regard to The Boston Company’s status in this litigation, Professor Ferrell

testified "I don’t know the answer to that, I believe Boston Company might have been -- was a

plaintiff in the case. But I would have to double check the record for that." Id., Ex. B at

APP0119-120 (Ferrell Tr. at 87:25 - 88:3). In any event, Plaintiffs fail to explain how Professor

Ferrell’s thought that The Boston Company previously "might have been" a plaintiff in the case

somehow affects the testimony upon which he relied. Plaintiffs’ Motion certainly does not

suggest that the testimony of their investment manager’s representative was untrue.

9 Plaintiffs also assert that Professor Ferrell did not read the November 2001 prospectus supplement until after he

completed his report. Plaintiffs’ Motion at 10-11. Indeed, Professor Ferrell accepted as true Professor Steinberg’s

assertions about the November 2001 supplement, and even so, found that Steinberg’s analysis was flawed.

Moreover, Plaintiffs fail to note that Professor Ferrell reviewed the April 2002 prospectus supplement in connection

with preparing his report, and further testified that his subsequent review of the November 2001 prospectus

supplement had not changed any of his conclusions in his report. App. to Plaintiffs’ Motion, Ex. B at APP0054-55

(Ferrell Tr. at 22:13-23:1).

~o See App. to Flowserve Opp. to Class Cert., Ex. 13 at A320; Ex. 14 at A338. Plaintiffs argue that "Professor

Fen’ell . . . testified that he does not know when plaintiff’s purchased their shares of Flowserve stock and did not

even review documents reflecting plaintiffs’ purchases of Flowserve stock." Plaintiffs’ Motion at 9-10. However,

Professor Ferrell relied upon the testimony of the representative from Plaintiffs’ sole investment manager, Mr.

Dishop of The Boston Company, that Plaintiffs’ offering and aftermarket purchases of Flowserve stock were held

indistinguishably in the funds’ accounts. See App. to Plaintiffs’ Motion, Ex. A at APP0019, see also App. to

Flowserve Opp. to Class Cert., Ex. 48 at A762.1, A771, A771.1. Given this testimony, Professor Ferrell testified

that "there was a lack of tracing with respect to the shares that Mr. Dishop testified," App. to Plaintiffs’ Motion, Ex.

B at APP0201 (Ferrell Tr. at 169:5-6), which in fact is the entirety of Plaintiffs’ transactions at issue in this case.

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 8

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(6) "Professor Ferrell testified that he is not even aware of the meaning of the

phrase custom and practice." Plaintiffs’ Motion at 15.

Professor Ferrell did not so testify. Rather, Professor Ferrell responded "I think it can

mean different - a number of different things." App. to Plaintiffs’ Motion, Ex. B at APP0072

(Ferrell Tr. at 40:13-14). Indeed, Professor Ferrell leveled a criticism at the repeated and vague

use of the phrase "custom and practice" by Plaintiffs’ proposed expert Steinberg in the Steinberg

Report: "I think Mr. Steinberg in his deposition said it means New York Stock Exchange listing

requirements perhaps. He also said that it meant to him what a securities lawyer would think, so

I certainly understand those def’mitions of custom and practice, but I don’t see - I did not see

in Mr. Steinberg’s report or in his deposition a clean, simple -- clean, straightforward definition

of that phrase, so I think the phrase does have content, but one can attach different definitions

to it, and so I think it leads to imprecision." Id., Ex. B at APP0072 (Ferrell Tr. at 40:14-25)

(emphasis added). Because Plaintiffs are uncomfortable with this answer, and its implications

for Steinberg’s numerous "opinions," they simply resort to

testimony.

D.

misstating Professor Ferrell’s

Plaintiffs Have Invented a "Custom and Practice" Exception to the Prohibition on

Expert Opinions on the Law.

Finally, again relying on the phrase "custom and practice," Plaintiffs strain to draw a

distinction requiring the Court to exclude the opinions of Professor Ferrell but yet admit the

proffered conclusions of Plaintiffs’ law professor expert Steinberg. Without citation, Plaintiffs

baldly assert that "without grounding his or her opinions upon custom and practice, an expert

cannot opine about the law." Plaintiffs’ Motion at 15 (emphasis added). Plaintiffs do not

explain what they mean by "custom and practice." Moreover, none of the authorities referenced

by Plaintiff contain such a holding, however. See Snap-Drape, Inc. v. Comm ’r, 98 F.3d 194, 198

(5th Cir. 1996); Specht v. Jensen, 853 F.2d 805, 807 (10th Cir. 1988).

DEFENDANTS’ OPPOSITION TO MOTION INLIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL

Indeed, as every Court of

Page 9

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 11 of 15 PageID 44534
Appeals has held, and as Plaintiffs’ counsel have elsewhere noted, the principle that expert

"opinion" concerning the law is inadmissible is "’so well established that it is often deemed a

basic premise or assumption of evidence law - a kind of axiomatic principle.’" In re Initial Pub.

Offering Sec. Litig., 174 F. Supp. 2d 61, 64 (S.D.N.Y. 2001) (quoting Thomas E. Baker, The

Impropriety of E~pert Witness Testimony on the Law, 40 U. KAN. LAW REV. 325, 352 (1992));

see also Motion to Exclude Steinberg at 4-6 (and cases cited therein), and Ex. A thereto (Motion

In Limine to Preclude the Testimony of Ronald J. Gilson, filed by Lerach Coughlin Stoia Geller

Rudman & Robbins, July 7, 2006, In re Cisco Systems, Inc. Sec. Litig., (N.D. Cal.)), at 3-6 (and

cases cited therein). None of these rulings approve of expert "opinions" on the law merely

because they are cloaked with the phrase "custom and practice," as in the Steinberg Report.

Notably, the only opinion on "custom and practice," cited in Plaintiffs’ Motion at 15, is a

Louisiana state court opinion on the admissibility of testimony by an oil and gas expert based on

"custom and practice" in that industry that "would assist the jury in obtaining a full

understanding of the factors involved in making a determination whether to lease or abandon a

[drilling] site." See State of La.

1266 (La. App. 3rd Cir. 2004).

Chesapeake Operating, Inc. v. Richardson, 884 So.2d 1263,

Plaintiffs have strayed very far afield in their efforts to justify

the improper opinions of their own proffered law professor expert while seeking to exclude

Professor Ferrell.

In short, Plaintiffs would have the Court ignore the prohibition on expert legal opinions

when it comes to their own law professor Steinberg, but then apply such a prohibition to

Professor Ferrell who was designated in rebuttal to Steinberg. They cannot have it both ways.

Defendants have explained why Steinberg’s proposed testimony should be precluded under the

Federal Rules of Evidence. Motion to Exclude Steinberg at 4-16. If such testimony is to be

admitted, however, there is no basis for excluding the testimony of Professor Ferrell.

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 10

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 12 of 15 PageID 44535
III. CONCLUSION

For all the foregoing reasons, Defendants respectfully request that Plaintiffs’ Motion In

Limine to Exclude the Testimony and Opinions of Proposed Expert Allen Ferrell should be

denied in its entirety, either as moot (if Plaintiffs’ proposed expert Steinberg is excluded, in

which case Professor Ferrell is withdrawn) or for its lack of merit.

Dated: August 3, 2007

Noel M.B. Hensley

State Bar No. 09491400

Carrie L. Huff

State Bar No. 10180610

Nicholas Even

Texas Bar No. 24014446

R. Thaddeus Behrens

State Bar No. 24029440

HAYNES AND BOONE, LLP

901 Main Street, Suite 3100

Dallas, Texas 75202-3789

(214) 651-5000

(214) 651-5940 (Facsimile)

ATTORNEYS FOR DEFENDANT

FLOWSERVE CORPORATION

State Bar No. 22137000

Richard A. Rohan

State Bar No. 17203800

Todd A. Murray

State Bar No. 00794350

CARRINGTON COLEMAN SLOMAN &

BLUMENTHAL L.L.P.

901 Main Street, Suite 5500

Dallas, TX 75202

214.855.3000

214.855.1333 (Facsimile)

ATTORNEYS FOR DEFENDANT

C. SCOTT GREER

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 11

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 13 of 15 PageID 44536
C. W. Flyrm, IV

State Bar No. 07196580

David W. Klaudt

State Bar No. 00796073

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2000

Dallas, Texas 75201-6776

(214) 740-8000

(214) 740-8800 (Facsimile)

ATTORNEYS FOR DEFENDANT RENEE

J. HORNBAKER

State Bar No. 00830700

Ellen Sessions

State Bar No. 00796282

FULBRIGHT & JAWORSKI L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

ATTORNEYS FOR DEFENDANTS BANC

OF AMERICA SECURITIES LLC AND

CREDIT SUISSE FIRST BOSTON LLC

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 12

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 14 of 15 PageID 44537
CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing was served on this 3rd day of

August, 2007 to the following individuals:

Willie C. Briscoe

Provost & Umphrey Law Finn, LLP

3232 McKinney Avenue, Suite 700

Dallas, Texas 75204

Willow Radcliffe

Lerach Coughlin Stoia & Robbins LLP

100 Pine Street, Suite 2600

San Francisco, California 94111

Todd A. Murray

Carrington Coleman Sloman

& Blumenthal L.L.P.

901 Main Street, Suite 5500

Dallas, TX 75202

David W. Klaudt

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2000

Dallas, Texas 75201-6776

Rodney Acker

Fulbright & Jaworski L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

M. Byron Wilder

Gibson, Dunn & Crutcher LLP

2100 McKilmey Avenue

Suite 1100

Dallas, TX 75201

DEFENDANTS’ OPPOSITION TO MOTION IN LIMINE TO EXCLUDE

TESTIMONY AND OPINIONS OF PROPOSED EXPERT ALLEN FERRELL Page 13

Case 3:03-cv-01769-B Document 743 Filed 08/03/07 Page 15 of 15 PageID 44538