### 1999 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

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P r e c e de n t i al or N on-P r e c e de n t i al :

D ock e t 98-1007

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. e du/thir dc ir c uit_1999/71Filed March 22, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-1007

IN RE: UNISYS SAVINGS PLAN LITIGATION

JOHN P. MEINHARDT, on behalf of himself and all oth ers similarly situated

v. UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-03067)

BERNARD MCDEVITT, on behalf of himself and all othe rs similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-03126)

PARKER C. KEAN, on behalf of himself and all others similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-03164)

MICHAEL HECK; JOSEPH MCCARTHY; ANGELO DEPIETRO, on behalf of themselves and all others similarly situated

v.

UNISYS CORPORATION; THE ADMINISTRATIVE COMMITTEE OF THE UNISYS SAVINGS PLAN; THE

INVESTMENT COMMITTEE OF THE UNISYS SAVINGS
PLAN; JACK A. BLAINE; JOHN J. LOUGHLIN; KENNETH MILLER; DAVID A. WHITE; STEFAN RIESENFELD (E.D. PA. Civil No. 91-cv-03276)

GARY VALA, individually and on behalf of all others similarly situated

v.JACK A. BLAINE; MICHAEL R. LOSEY; JOHN J.

LOUGHLIN; KENNETH L. MILLER; STEFAN C. RIESENFELD; CURTIS A. HESSLER; DAVID A WHITE;
UNISYS CORPORATION; THE NORTHERN

TRUST COMPANY (E.D. PA. Civil No. 91-cv-03278)

CAROLYN A. GOHLIKE, on behalf of herself and all ot hers similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-03321)

NADIA F. SOS; FAROUK M. SOS, individually and on behalf of all others similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-03582)

KENNETH GOERS; JOHN J. CIESLICKI, on behalf of themselves and all others similarly situated

v.

UNISYS CORPORATION; THE NORTHERN

TRUST COMPANY (E.D. PA. Civil No. 91-cv-04678)

DENNIS C. STANGA; JAMES M. COLLINS, on behalf of themselves and all others similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-04689)

JOHN H. BURGESS, JR., on behalf of himself and all others similarly situated

v.

UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-04696)

WILLIAM TORKILDSON

v.

2UNISYS CORPORATION (E.D. PA. Civil No. 91-cv-04754)

John M. Meinhardt, Michael Heck, Joseph McCarthy, Angelo DiPietro, Gary Vala, Caroly n Gohlike, Dennis C. Stanga, James M. Collins, John H. Burgess, Jr., Bernard McDevitt, Park er Kean, Nadia F. Sos, Farouk M. Sos, Kenneth Goers, John J. Cieslicki, and William Torkildson, plaintiffs in the above-listed actions, individually and on behalf of the c lass certified by Order of the district court ent ered on January 28, 1992 in Master File Civil Action No. 91-3067,

Appellants

No. 98-1037

IN RE: UNISYS SAVINGS PLAN LITIGATION

JOHN P. MEINHARDT, on behalf of himself and all oth ers similarly situated

v.

UNISYS CORPORATION

(E.D. PA. Civil No. 91-cv-03067)

HENRY ZYLLA; RICHARD SILVER; RONALD GRIPPO; EDWARD LAWLER; RICHARD ANDUJAR; CLARENCE MULLER; CHARLES WAHLER; JAMES MCLAUGHLIN; DONALD RADER; JOSEPH LAU; JAMES GANGALE; ALFRED CONTARINO; JOHN MARCUCCI; JOSEPH A. FIORE; RICHARD MASTRODOMENICO; NICK KLEMENZ; PETER SZCZYBEK, on behalf of themselves and all oth ers similarly situated; ENGINEERS UNION LOCAL 444 OF
THE INTERNATIONAL UNION OF ELECTRONIC, ELECTRICAL, SALARIED, MACHINE AND FURNITURE WORKERS, A.F.L.-C.I.O.; LOCALS 445 OF THE
INTERNATIONAL UNION OF ELECTRONIC, ELECTRICAL, SALARIED, MACHINE AND FURNITURE WORKERS, A.F.L.-C.I.O.; LOCALS 450 OF THE INTERNATIONAL

3UNION OF ELECTRONIC, ELECTRICAL, SALARIED,

MACHINE AND FURNITURE WORKERS, A.F.L.-C.I.O.;
LOCALS 470 OF THE INTERNATIONAL UNION OF
ELECTRONIC, ELECTRICAL, SALARIED, MACHINE AND FURNITURE WORKERS, A.F.L.-C.I.O.; LOCALS 165 OF
THE INTERNATIONAL UNION OF ELECTRONIC, ELECTRICAL, SALARIED, MACHINE AND FURNITURE WORKERS, A.F.L.-C.I.O.; LOCAL 3, INTERNATIONAL
BROTHERHOOD OF ELECTRICAL WORKERS, A.F.L.-C.I.O.

v.

UNISYS CORPORATION; EDWIN P. GILBERT; JOHN J. LOUGHLIN; THOMAS PENHALE, individually and in their capacities as members of the Unisys Employee Benefi ts Executive Committee and administrators of the Unisy s Retirement Investment Plan; RICHARD H. BIERLY, EDWI N P. GILBERT; CURTIS A. HESSLER; LEON J. LEVEL; KENNETH L. MILLER; DAVID A. WHITE; JACK A.
BLAINE; STEFAN C. RIESENFELD; GEORGE T. ROBSON, individually and in their capacities as members of the Investment Committee of the Unisys Retirement

Investment Plan

(E.D. PA. Civil No. 91-cv-03772)

Henry Zylla, Richard Silver, Ronald Grippo, Edward Lawler, Richard Andujar, Clarence Muller, Charles Wahler, James McLaughlin, Donald Rader, Joseph Lau, James Gangale, Alfred Contarino, Richard Colby, John Marcucci, Joseph Fiore, Richard Mastrodomenico, Nick Klemenz and Peter Szczybek, plaintiffs in the above-listed act ions, individually and on behalf of the class cert ified by Order of the district court entered on January 28, 1992 in Master File Civil Action No. 91-3067,

Appellants

4On Appeal from the United States District Court

for the Eastern District of Pennsylvania (D.C. No. 91-cv-03067) District Judge: Honorable Herbert J. Hutton

Argued Friday, September 25, 1998

BEFORE: BECKER, Chief Judge, WEIS and GARTH, Circuit Judges

(Opinion filed March 22, 1999)

James R. Malone, Jr. (Argued)
Michael E. Gottsch Pamela Nicolaysen Chimicles, Jacobsen & Tikellis

361 West Lancaster Avenue

One Haverford Centre Haverford, PA 19041

Joel C. Meredith
Daniel B. Allanoff Meredith Cohen Greenfogel & Skirnick, P.C.

117 S. 17th Street
22nd Floor Philadelphia, PA 19103

Attorneys for Appellants

Laurence Z. Shiekman (Argued)
Brian T. Ortelere Pepper Hamilton LLP 3000 Two Logan Square

18th & Arch Streets Philadelphia, PA 19103

5John Teklits

Unisys Corporation Township Line & Union Meeting

P.O. Box 500 C2NW14 Blue Bell, PA 19424-0001

Attorneys for Appellees

Marvin Krislov Deputy Solicitor for National Operations

Marc I. Machiz
Associate Solicitor

Karen L. Handorf Counsel for Special Litigation

Paul C. Adair Trial Attorney U.S. Department of Labor
Office of the Solicitor Plan Benefits Security Division

P.O. Box 1914 Washington, D.C. 20013

Attorneys for Secretary of Labor as Amicus Curiae in Support of Plaintiffs-Appellants

OPINION OF THE COURT

GARTH, Circuit Judge:

This action, brought by employees who had participa ted in individual account pension plans maintained by t heir employer Unisys Corporation ("Unisys"), charged ess entially that Unisys and the individual defendants1 had bre ached their fiduciary duties prescribed by ERISA2 by inve sting in

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1. Unisys is one of eleven defendants. Other defend ants are the
Administrative Committee and the Investment Committ ee of the Plan and those individuals involved in making decisions for the Plan. The defendants will be referred to collectively as "Uni sys."

2. Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. S 1001 et seq.

6Executive Life Insurance Guaranteed Investment Cont racts

("GICs"). After a bench trial, the District Court g ranted judgment for all defendants, ruling in their favor on all issues related to the breach of fiduciary duty clai ms, thus denying all relief and damages to the plaintiff cla ss of Unisys employees.3

We have reviewed the trial record independently and conclude that in all material respects, the Distric t Court's findings of fact were not clearly erroneous, the Di strict Court did not abuse its discretion in excluding Dr. Gottheimer's testimony, and the District Court did not err in making its conclusions of law. We also conclude that while we do not agree with some of the holdings of the District Court, those disagreements have no effect on the District Court's overall holding of prudence, and t hat therefore, the orders entered by the District Court on November 24, 1997 and January 9, 1998 will be affir med.

I.

This is the second appeal from the District Court's rulings in this case. Initially, summary judgment w as entered in favor of Unisys, but on review, we reman ded for trial. In re Unisys Savings Plan Litig., 74 F.3d 42 0 (3d Cir.), cert. denied, 117 S. Ct. 56 (1996) ("Unisys I"). Al most all of

___________________________________________________ ______________

3. Plaintiffs are a class of Unisys employees who w ill be referred to throughout this Opinion as "Meinhardt." John P. Mei nhardt had originally brought this action as a class action on behalf of himself and all others similarly situated. See In re Unisys Sav ings Plan Litig., 74

F.3d 420 (3d Cir.), cert. denied, 117 S. Ct. 56 (1996) ( "Unisys I").

This is an appeal of two consolidated cases. In the first action, final judgment was entered on November 24, 1997 in eleven related actions after a bench trial. A timely notice of appeal wasf iled on December 18, 1997. We exercise appellate jurisdiction under 28 U .S.C. S 1291, as an appeal from a final judgment.

The second appeal before this court involves the ER ISA claims in a twelfth related action, upon which final judgment h as not been entered.
The District Court certified the ERISA claims in th at action under Fed. R. Civ. P. 54(b) on January 9, 1998; a notice of ap peal was filed on January 16, 1998. We exercise appellate jurisdictio n for the second appeal under Fed. R. Civ. P. 54(b) in tandem with 2 8 U.S.C. S 1291.

7the background facts and details are found in our e arlier

opinion and we refer here only to those matters par ticularly relevant to the arguments made by the parties on ap peal.

Now that the District Court has rendered its findin gs of fact and conclusions of law in favor of the Unisys, 4 Meinhardt complains that the standard used by the D istrict Court was improper, that Meinhardt's expert's testi mony was improperly excluded, and that Meinhardt suffere d damages that were not recognized by the District Co urt. As indicated above, we hold that the District Court's essential factual findings were not clearly erroneous and tha t measured by the appropriate prudence standard of ER ISA, the District Court properly concluded that Unisys d id not breach any fiduciary duty. This threshold holding m akes it unnecessary for us to discuss in detail the subsidi ary issues raised on appeal by Meinhardt.

At the outset we call attention to the fact that th e contours of the factual record have changed signifi cantly since we last addressed the GIC issue presented in this case. At the earlier summary judgment stage, the pr ior panel of this court was obliged to assume that vari ous facts presented by Meinhardt were true and that all infer ences had to be drawn in Meinhardt's favor. Moreover, we assumed the report of Dr. Gottheimer, Meinhardt's proposed expert witness, would be admitted into evi dence. As we discuss infra, the District Court properly ex cluded Dr. Gottheimer from testifying under Fed. R. Evid. 702.

As we have mentioned, at the conclusion of a ten-da y bench trial, the District Court entered judgment fo r Unisys and issued extensive findings of fact and conclusio ns of law. We review the District Court's findings of fac ts for clear error. Application of legal precepts to historical facts receives plenary review. Feder v. Evans-Feder, 63 F .3d 217, 222 n.9 (3d Cir. 1995). The District Court's decisi on to qualify an expert is reviewed for abuse of discreti on.

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4. The District Court's findings of fact and conclu sions of law can be found at In re Unisys Savings Plan Litig., No. 91-3 067, 1997 WL 732473 (E.D. Pa. Nov. 24, 1997). For the sake of convenien ce, we will refer to

the District Court's findings of fact as "FF P __," and to its conclusions of

law as "CL P __."

8General Elec. Co. v. Joiner, 118 S. Ct. 512 (1997); In re Paoli

R.R. Yard Litig., 35 F.3d 717, 741-46 (3d Cir. 1994 ) ("Paoli
II").

II.

Meinhardt participated in a 401(k) savings plan ("P lan")5 administered by Unisys. Two companies, Sperry and Burroughs, had merged in 1986 to create Unisys, and thus their retirement plans also merged. See Unisys I, 7 4 F.3d at 425-26. Meinhardt and the class he represents elect ed to invest their money in two of the funds offered by t he Plan, the Fixed Income Fund ("FIF ") and the Insurance Co ntract Fund ("ICF "). Investments in the FIF/ICF were excl usively restricted to Guaranteed Investment Contracts ("GIC s").6 For ease of reference throughout this Opinion we wi ll refer to the FIF/ICF as the "Fund."

Unisys described the Fund as one of the more conservative funds that was intended to return prin cipal with interest.7 Plan participants could invest as m uch or as little of their money as they desired. In order to prevent interest rate arbitrage by the participants and in order to receive a higher yield from the GICs, Fund assets c ould not be transferred to the money market fund directly; F und assets had to be held for at least a year in one of the four equity stock funds. In 1990, Unisys shortened this "equity wash" to a period of six months after receiving app roval from Executive Life. App. 1702.

In 1987 and 1988, Unisys purchased three Executive Life
GICs as investments for the Fund. The Executive Lif e GICs

___________________________________________________ ______________

5. The Plan is actually three separate plans that m ake joint investments. See Unisys I, 74 F.3d at 426-27 & 427 n.5.

6. A GIC is a contract under which the issuer is ob ligated to repay the principal deposit at a designated future date and t o pay interest at a specified rate over the duration of the contract. U nisys I, 74 F.3d at

426.

7. The Plan offered five other investment funds: th e Diversified Fund, the Indexed Equity Fund, the Active Equity Fund, the Un isys Common Stock Fund, and the Short Term Investment Fund ("money ma rket fund"). The money market fund invested in United States Treasur y Bills, bank obligations, and other short term investments.

9themselves were comprised of assets that potentiall y had

high rates of return, some of which were high yield bonds, or "junk bonds." The junk bonds did not fare well i n the late 1980's markets. In 1991, California regulators seized Executive Life and temporarily froze all payments f rom the Executive Life GICs. By 1996, however, the Fund reimbursed the principal to Meinhardt and had paid some interest, but at a lower rate than had been guarant eed.
FF P 80.

Meinhardt accuses Unisys of breaching its fiduciary duties of prudence, diversification, and disclosure with respect to the Executive Life contracts that had be en purchased for the Fund. ERISA prescribes that fiduc iaries must adhere to a standard of prudence. ERISA requir es that a fiduciary's duty shall be discharged:

with the care, skill, prudence, and diligenc e under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise wi th like character and with like aims; . . . .

29 U.S.C. S 1104(a)(1)(B).

III.

To determine whether Unisys had satisfied the ERISA standard of prudence, the district court found the following
facts from the evidence.

Unisys delegated the responsibility of investing fo r the
Fund to David White and Leon Level. White and Level have educational and practical backgrounds in financial matters. FF PP 17-18; App. 643-45, 1136-37. At the direction of White and Level, Unisys purchased three Executive L ife GICs as investments for the Fund through bidding processes in June 1987, December 1987 (both for the FIF), and January 1988 (for the ICF). Of the many GICs purchased for the Fund, only three were Executive L ife GICs, constituting between 15 and 20 percent of the Fund's assets. FF PP 14-15; App. 4450. Unisys, through Whi te and Level, considered many firms through a process of competitive bidding, and Unisys heard in-person

10presentations from the insurance companies. FF P 20 ; App.

523, 1154.

Unisys presented evidence that for the first bid (J une 1987), White and Level hired an experienced investm ent consultant, Murray Becker, who evaluated many diffe rent insurance firms.8 FF P 20. In evaluating potential insurance companies from which to purchase GICs, Becker obtai ned information and ratings from Standard and Poor's an d A.M. Best, ratings services that evaluate the stability and potential profitability of various types of compani es including insurance companies. Both ratings service s gave Executive Life their highest rating.9 Becker and ot hers testified that the ratings services were quite thor ough because they analyzed raw data and interviewed inve stment managers. App. 535. Becker testified that he and ot her professionals had a high confidence in the thorough ness of the ratings services, which led to their respective ratings. FF P 21; App. 658-62, 702-03, 708-12, 1160-61. As d etailed in the District Court's findings of fact, Becker wa s very familiar with how the ratings services evaluated th e GICs.

Id.

Prior to the first bid, Unisys reviewed Becker's bi d specifications. FF P 20 n.2; App. 1267-68, 3659. Wh ite testified that he carefully considered the use of h igh yield bonds and knew the risks involved. The prevailing v iew in the investment world at that time was that high yie ld guaranteed insurance contracts were good risks. FF P 27; App. 1038-39.

___________________________________________________ ______________

8. Becker had given Sperry advice about GICs throug h his firm, Johnson & Higgins, before the Unisys merger. See Unisys I, 74 F.3d at 427.
Becker handled more than 500 such bids in his caree r. FF P 20; App.

522.

9. Standard and Poor's gave Executive Life an AAA r ating, which was reaffirmed on several occasions to meet questions c oncerning, inter alia, the inclusion of high yield bonds in Executive Life 's portfolio. FF P 23.

An "AAA" rating means that an insurer offers"superior financial security on both an absolute and relative basis." The insurer p ossesses "the highest safety and [has] an overwhelming capacity to meet p olicyholder obligations." FF P 24; App. 4279. A.M. Best also ga ve Executive Life its highest rating, A+. FF P 24.

11In addition to understanding the risks associated w ith

Executive Life GICs, White chose Executive Life GIC s for their other unique features. He selected the three Executive
Life GICs to balance other Fund investments -- the Executive Life GICs had longer maturity dates, App. 656- 57, 692, and their portfolios lacked real estate mo rtgages or derivatives and had a low proportion of commercial real estate investments. App. 1010, 1156-58. Furthermore
, Executive Life used the "barbell" approach in makin g investments for the GICs; that is, the higher risk associated with the high yield bonds was balanced with low ris k, lower yield government bills. FF P 25; App. 1156-58.

For the second two bids and upon completion of the merger between Burroughs and Sperry into Unisys, Un isys decided not to utilize Becker's services. White, Le vel, and three other employees under their direction had suf ficient professional experience to select GIC issuers. More over, Becker had charged the Plan $25,000 per bid. FF P 3 1; App. 1162-65. White and Level expanded the list of poten tial
bidders for the second and third bids and maximized the market information available to them. FF P 32; App. 1054-

55.

In the months between the bids, White and Level "engaged in an ongoing process of reviewing and upd ating the information on the potential bidders." FF P 33; App. 615-22. They testified that they also kept abreast of developments in the GIC industry by reading trade publications and journals. FF P 33 n.6; App. 617, 6 32. They analyzed the portfolio and risk of the insurance ca rriers, using the Standard and Poor's and A.M. Best ratings as a source of information about both the insurance comp anies' asset composition and their creditworthiness. FF P 35; App. 1056. They testified that they would not have been able to replicate the analyses done by the ratings services inhouse. App. 711. They had available to them SEC for ms 10K and 10Q to review prior to making their selecti on. FF P 35; App. 1065-66, 631. They had also consulted with a firm that Unisys had engaged to advise it on its defined benefit pension plan. That firm advised Unisys on i ts selection of issuers for the GIC funds. App. 608, 6 26-27.

12In Unisys I, 74 F.3d at 436, we directed the Distri ct

Court to determine whether the ratings could be use d reliably by Unisys. As mentioned earlier, Level and White both testified that the ratings services were respe cted for their competence and thoroughness throughout the investment and finance community. App. 1160-61, 658 - 623, 702, 708-11. The District Court found that the ratings services provided reliable information. FF P 21. We are satisfied that this finding is not clearly erroneou s. See also Bussian v. RJR Nabisco, ___ F. Supp. 2d ___, No. Ci v. A. H91-1533, 1998 WL 639320, at *7 (S.D. Tx. Sept. 2, 1 998) ("Nabisco's use of the consultant and rating agenci es [in selecting an Executive Life annuity] does not demon strate imprudence.").

The District Court also resolved at trial four othe r issues of fact that we identified in Unisys I. First, evid ence in the summary judgment record may have indicated that Bec ker had recommended the purchase of a three-year GIC, r ather than a five-year GIC. Unisys I, 74 F.3d at 427. At trial, however, Becker testified that he had not recommend ed the shorter maturity (three-year) Executive Life GIC. R ather, his discussion with Unisys officers about maturity date s was very general, leading to the conclusion that the in vestment in five-year GICs was appropriate. FF P 30; App. 55 5-558.

Second, at the summary judgment stage, the evidence suggested that Becker told White that Executive Lif e would lose its AAA rating from Standard & Poor if its inv estments of junk bonds exceeded 35%, and White believed that 40- 50% of Executive Life's investments were junk bonds

. Unisys I, 74 F.3d at 427. At trial, Becker stated t hat it was
not his view that Executive Life would lose their S tandard and Poor's AAA rating if high yield bonds comprised more than 35% of Executive Life's portfolio. Rather, he testified that Executive Life thought its AAA rating might be in jeopardy if their high yield bond holdings exceeded 35%. However, Standard and Poor's had access to the actu al percentage of high yield bonds in Executive Life's portfolio, and it still issued a AAA rating to Executive Life. Thus, White's reliance on the AAA rating was neither unreasonable nor imprudent. As discussed infra, eve n if White had an erroneous view of the percentage of hi gh yield

13bonds in Executive Life's portfolio, a hypothetical prudent

fiduciary would have known that Executive Life's hi gh yield bond percentage was within an acceptable range in Executive Life's and Standard and Poor's analyses. FF P 28; App 501.10

Third, in Unisys I, we stated:

[A] reasonable factfinder could infer from t his evidence that Unisys failed to analyze the bases unde rlying [Becker's] opinion of Executive Life's finan cial condition
and to determine for itself whether credible data supported [Becker's] recommendation that Uni sys consider investing plan assets with the insu rer. A
reasonable factfinder could also conclude th at Unisys passively accepted its consultant's positive appraisal of Executive Life without conducting the indepe ndent investigation that ERISA requires.

Unisys I, 74 F.3d at 435-36 (emphasis added). Howev er, after taking evidence at trial, the District Court did not find that Unisys had failed to make its own evaluation o f Executive Life's financial condition, nor did itfin d that Unisys "passively" had accepted Becker's appraisal. On the contrary, the District Court made numerous findings that White and Level were aware of the composition of as sets of Executive Life GICs and that they understood the ri sks
associated with each of those assets. FF PP 25-27.

Fourth, in Unisys I, we advised the District Court that it should determine the significance, if any, of Execu tive Life's substantially higher interest rates. We suggested t hat dramatically higher interest rates might have promp ted Unisys to conduct extra investigation into Executiv e Life's creditworthiness. As stated earlier, at trial, Whit e testified that he carefully had considered the use of high yi eld bonds and knew the risks involved. Unisys recognized that higher rates could, over time, yield dramatic differences in income, but that the trustees were "constrained by their st andards

___________________________________________________ ______________

10. As counsel for Unisys pointed out at oral argum ent, if Executive Life had 40% of its holdings in high yield bonds, and Ex ecutive Life GICs constituted 15-20% of the Fund, White invested only 8% of the Fund assets in high yield bonds.

14of risk tolerance." FF P 25; App. 1250. The Distric t Court

credited the testimony of the Unisys fiduciaries an d was satisfied and concluded that Unisys had made a reas onable and thorough investigation of Executive Life GICs. CL P 3. We will not disturb that holding here.11

IV.

The District Court's factual findings support its l egal conclusions that Unisys was prudent under the stand ard articulated in ERISA and that a hypothetical pruden t investor would have purchased each of the three GIC s. As we stated in Unisys I, ERISA requires that afiducia ry shall discharge his duties

with the care, skill, prudence, and diligenc e under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise wi th like character and with like aims; . . . .

___________________________________________________ ______________

11. Meinhardt contests three other alleged failures of the District Court
to follow this Court's mandate or to consider evide nce in the record. Each of these objections however, is without merit because Meinhardt did not tender an expert to show how these facts su pported the conclusion that Unisys was imprudent.

First, the evidence revealed that Unisys did not ha ve written
investment or diversification standards for the Fun d, but that it had guidelines for the money market fund. However, Mein hardt did not present evidence that prudence required written fun d guidelines and Unisys testified that the unwritten guideline for i nvestment diversity was
that no one investment should constitute more than 20% of a fund's portfolio.

Second, some evidence suggested that Unisys spent l ess than twenty minutes evaluating each bidder on bid day. Meinhard t presented no evidence that more time should have been spent at b id day, and considering this fact in isolation ignores evidence of Unisys's investigation and consideration of each bidder prio r to bid day.

Third, Unisys admitted at trial that the FIF bids h ad late maturity dates, and thus Executive Life GICs would become la rger percentages of the FIF as time wore on. App. 1081. Again, Meinhard t did not demonstrate that the percentages were ever beyond t he norm. Moreover, the FIF was phasing out in favor of the ICF.

15Unisys I, 74 F.3d at 434 (quoting 29 U.S.C. S 1104( a)(1)(B)).

We also stated that the prudence requirement focuse s on "a fiduciary's conduct in arriving at an investment de cision, not on its results, and asking whether a fiduciary employed the appropriate methods to investigate and determin e the merits of a particular investment." Id.

After taking evidence on the issue of Unisys's prud ence, the District Court held that the actions taken by t he Fund's trustees satisfied the prudence standard: "Based on the evidence at trial I find that the Unisys fiduciarie s undertook adequate and reasonable steps before purchasing the three
Executive Life contracts." CL P 3. The District Cou rt concluded, "Measured by any standard, the Unisys fiduciaries' actions are consistent with the pruden ce requirements of ERISA." CL P 13. We hold that the D istrict Court's findings of fact support its conclusions of law that Unisys was prudent in investing in Executive Life G ICs, and thus Meinhardt failed to prove an essential element of his
ERISA claim.

As an alternate theory for holding that Unisys was not imprudent, the District Court considered the object ive prudence of Unisys investments in Executive Life GI Cs by applying the "hypothetical prudent investor" test. Unisys I, 74 F.3d at 436 (citing Fink v. National Savings & T rust Co., 772 F.2d 951, 962 (D.C. Cir. 1985) (Scalia, J., con curring in part and dissenting in part) and Roth v. Sawyer- Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir. 1994)).

The District Court held that a hypothetical prudent fiduciary would have invested in Executive Life GIC s because (1) Executive Life was qualified under fede ral regulations as an insurance company authorized to p rovide
annuities to facilitate the termination of benefit pension plans because it was state licensed, 46 Fed. Reg. 9 532, 9534 (1981); (2) other judicial decisions endorsed the purchase of Executive Life annuities, e.g., Riley v . Murdock, 890 F. Supp. 444, 458-60 (E.D.N.C. 1995);12 (3) Bec ker, the adviser Unisys retained for the first bid, included Executive

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12. See also Bussian v. RJR Nabisco, ___ F. Supp. 2 d ___, No. Civ. A. H91-1533, 1998 WL 639320 (S.D. Tx. Sept. 2, 1998) (d ecided after the District Court issued its findings of fact and conc lusions of law).

16Life on his approved list of GIC bidders until six months

after Unisys made its third and final purchase of E xecutive Life, App. 559; and (4) other well-known pension pl ans purchased Executive Life GICs. App. 559, 1742. The District Court did not err in concluding that a hyp othetical prudent fiduciary would have made the same investme nts in Executive Life GICs as the investments made by U nisys. FF P 24 n.3; CL PP 8-10.

In sum, we are satisfied that the District Court's holdings that Unisys was prudent, and in the alternative, th at a hypothetical prudent fiduciary would have made the same investments, are supported by the evidence.

V.

In addition to holding that the trustees' actions s atisfied the standard of prudence required by ERISA, the Dis trict Court went on to discuss why the trustees' actions were not arbitrary and capricious. The District Court need n ot have discussed application of an arbitrary and capriciou s standard in this case. In light of the District Cou rt's holding of prudence and our affirmance of that holding, the District Court's discussion of an arbitrary and capricious s tandard cannot affect the judgment in favor of Unisys.

In Unisys I, we stated that fiduciaries of investme nt plans had to satisfy the "prudent" legal standard specifi ed in ERISA, cited supra. We stated that one of ERISA's underlying purposes was "to enforce strict fiduciar y standards." Unisys I, 74 F.3d at 434 (citing 29 U.S .C. S 1001 and H.R. Rep. No. 93-533 (1974), reprinted i n 1974 U.S.C.C.A.N. 4639, 4639-43).

In Struble v. New Jersey Brewery Employees' Welfare Trust Fund, 732 F.2d 325 (3d Cir. 1984), we held specifically that the duties of loyalty and prudenc e demanded by ERISA should not be reviewed through an "arbitrary and capricious" lens. We held that the " standards set forth explicitly in ERISA" should be used to ev aluate the trustees' conduct. Id. at 333-34 (finding support i n cases from the Second, Fifth, and Eleventh Circuits). Str uble governs the question of Unisys's duty of prudence u nder

ERISA.

17The District Court should have applied only the sta ndard

of "prudence under the circumstances" as required b y the statute. Only the standard found in ERISA, 29 U.S.C

. S 1104(a)(1)(B); Unisys I, 74 F.3d at 434, should h ave been applied to determine whether Unisys's investment me thods were prudent.

As authority for an arbitrary and capricious standa rd, the District Court cited Varity Corp. v. Howe, 516 U.S. 489 (1996), Firestone Tire & Rubber Co. v. Bruch, 489 U .S. 101 (1989), and Moench v. Robertson, 62 F.3d 553 (3d Ci r. 1995), cert. denied, 516 U.S. 1115 (1996). These ca ses, however, involved situations not relevant to the pr esent claims asserted against Unisys.

In the context of a case challenging a denial of be nefits under 29 U.S.C. S 1332(a)(1)(B) -- and not challeng ing the prudence of investment decisions -- the Supreme Cou rt held that the "inherently discretionary" nature of fiduciary functions does not necessarily require a deferentia l
standard of review. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112 (1989). Under ERISA, the standard of review over a trustee's decision to deny benefits o r the interpretation of the plan is de novo as a general rule; only when the plan gives the trustee discretion to deny benefits or construe the terms of the plan should a court em ploy the arbitrary and capricious standard. As the instant c ase does
not concern a denial of benefits under 29 U.S.C. S 1332(a)(1)(B) or an interpretation of Unisys's Pl an, Firestone's standard is inapplicable. Nor did Varit y Corp. v. Howe, 516 U.S. 489 (1996), involve a claim that a t rustee's investments were imprudent -- the claim that Meinha rdt

makes here.

In Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995), cert. denied, 516 U.S. 1115 (1996), we did apply a defere nt arbitrary and capricious standard of review to a cl aim by a plan's participants that the fiduciary was impruden t. We were careful to point out in Moench, however, that our holding was limited to the specific type of plan in volved in that case, an Employee Stock Ownership Plan ("ESOP" ). Here, of course, the Unisys Plan was not an Employe e Stock Ownership Plan. Furthermore, Moench specifica lly held its analysis was in "complete harmony with the

18prudent man standard of care obligations imposed by 29

U.S.C. S 1104 on fiduciaries, as our holding implic ates only
the standard of review of the conduct of a fiduciar y and not the standards governing that conduct," Moench, 62 F .3d at 566 n.3 (emphasis added), as is the case here.

In sum, Unisys's methods of making that decision mu st be evaluated using the ERISA standard mandated by Unisys I and in accordance with Struble. The Distri ct Court did not err in concluding that Unisys did not breac h its duty of prudence.

For these reasons, the District Court's discussion of an arbitrary and capricious standard was superfluous a nd
constitutes no more than harmless error. Fed. R. Ci v. P. 61. The District Court's statements that Unisys's actio ns were not arbitrary and capricious do not negate its othe rwise correct holding that Unisys satisfied the ERISA pru dence

standard.

VI.

Meinhardt also argues that the District Court abuse d its discretion when it decided to exclude the testimony of Dr. George M. Gottheimer, one of Meinhardt's two propos ed expert witnesses.13 Meinhardt offered Dr. Gottheime r to testify on the subject of "the customary methods of investigating the financial condition and creditwor thiness of insurance companies."

To qualify as an expert under Fed. R. Evid. 702, a witness must have sufficient qualifications in the form of knowledge, skills, and training. Additionally, the court must find that the testimony of the expert will be relia ble and that the testimony will "fit," that is, assist the trier of fact. In re Paoli R.R. Yard Litig., 35 F.3d 717, 741-43 ( 3d Cir. 1994). While it may be arguable that the "fit" pres cribed in

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13. Meinhardt's expert Tsetsekos was qualified to t estify and did testify on the issue of damages caused by Unisys's alleged breaches of its duties of diversification and disclosure. However, the District Court held that his testimony was insufficient to prove that a ny alleged failure to diversify or disclose information caused Meinhardt and the other class plaintiffs to suffer losses. We agree. See infra Pa rts VII and VIII.

19In re Paoli is a "fit" reflecting on the substance of the

witness' testimony, we think it just as relevant to the "fit" reflecting on the witness' credibility. Indeed, in the recent Supreme Court decision discussing the standard of r eview applicable to the admission and exclusion of expert evidence, the Supreme Court refers to the District Court's "gatekeeper" role of screening such evidence to ens ure that it is not only relevant but reliable. The Court goe s on to write, "A court of appeals applying `abuse of discr etion' review to [expert testimony] rulings may not catego rically distinguish between rulings allowing expert testimo ny and rulings which disallow it." General Elec. Co. v. Jo iner, 118 S. Ct. 512, 517 (1997). Thus in our view, the Court 's emphasis on reliability as well as on relevancy emb races within its standard the credibility of the witness proffering expert opinion. This is particularly true where, as here, it is the district court judge sitting as a finder of fac t who must rule on issues of evidence. See Goodman v. Highland s Ins. Co., 607 F.2d 665, 668 (5th Cir. 1979) ("[A] trial judge sitting without a jury is entitled to even greater latitude concerning the admission or exclusion of evidence." ).

While we could understand issue being taken with th e Goodman precept, it appears to us after Joiner that the Goodman standard has been given increased viability

. Although Joiner was a summary judgment decision, it nevertheless emphasized that Daubert did not alter the general rule announced in Spring Co. v. Edgar, 99 U .S. 645 (1978). In Edgar, the Court stated, " `cases arise where it is very much a matter of discretion with the court whe ther to receive or exclude the evidence; but the appellate court will not reverse in such a case, unless the ruling is ma nifestly erroneous.' " Joiner, 118 S. Ct. at 517 (quoting Ed gar, 99 U.S. at 658). After so stating, the Court rejected any alteration of this rule and in the context of exper t testimony said, "But Daubert [v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)] did not address the standard o f appellate review for evidentiary rulings at all. . .." Id. The Court then repeated that under Daubert " `the trial judge must ensure that any and all scientific testimony o r evidence admitted is not only relevant, but reliabl e.' " Id. (quoting Daubert, 509 U.S. at 589).

20The Court went on to hold in Joiner that the Eleven th

Circuit had erred in reviewing the exclusion of Joi ner's experts' testimony because it failed to give the tr ial court
the deference that is the hallmark of abuse of disc retion review. Id. (citing Koon v. United States, 518 U.S. 81, 97-99 (1996)). The Court further held that the studies up on which Joiner's experts relied were not sufficient whether individually or in combination, to support their co nclusions that Joiner's exposure to PCBs contributed to Joine r's cancer, and that the District Court therefore did n ot abuse its discretion in excluding their testimony.14

In the instant case, the District Court ruled that Dr. Gottheimer's testimony would not be admissible for three reasons. First, the court found that Dr. Gottheimer 's educational credentials were not of the highest cal iber.15 Second, during Dr. Gottheimer's voir dire, the Dist rict Court
found Dr. Gottheimer not to be credible because he had
made statements about his credentials that were inconsistent with his deposition testimony. Finally , the District Court found that Dr. Gottheimer's expertis e was in property casualty insurance, not life insurance, an d that Gottheimer had admitted in his deposition that ther e are "fundamental" differences in evaluating the two typ es of insurance. FF PP 101-05; CL PP 17-19.

These three reasons coincide with the three require ments articulated in Paoli II: qualifications, reliabilit y, and fit. The record discloses that Dr. Gottheimer's qualificatio ns were less than stellar. Because he had testified untruth fully at voir dire, his testimony could well have been held unreliable. Finally, Dr. Gottheimer's alleged exper tise, limited in any event to methods of investing with r espect to property casualty insurance, did not fit with or me et the need of the District Court for expert testimony in life insurance investing. See Surace v. Caterpillar, Inc ., 111 F.3d 1039, 1055-56 (3d Cir. 1997). The District Cou rt
determined that Dr. Gottheimer could not be a credi ble

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14. Ultimately, the Court, on another issue, revers ed the judgment and remanded the proceedings as to whether a material d ispute of fact existed as to Joiner's alleged exposure to other el ements.

15. Dr. Gottheimer received his Ph. D. from a corre spondence school.

21witness based on admissions secured through the use of

his prior sworn testimony. See FF PP 102-104. Becau se the District Court, as fact-finder, listened to the tes timony and assessed the credibility of the witness, these find ings are entitled to great deference by this Court. See Ande rson v. City of Bessemer City, N.C., 470 U.S. 564 (1985).

Judge Becker, in his thoughtful and comprehensive dissent, while focusing almost exclusively on the s tandards for admissibility of scientific expert testimony, n evertheless acknowledges that "the factfinder is ordinarily the arbiter of general credibility," Dissent at 40, and that "the power to evaluate the credibility of witnesses and give test imony its proper weight primarily resides with the trier of f act." Dissent at 41. He also properly acknowledges that t he decision to admit or to exclude expert testimony is reviewed
for abuse of discretion.

Judge Becker, however, fails to recognize or credit in his dissent two significant and controlling issues. Fir st, Dr. Gottheimer's testimony does not fall within the sco pe of scientific testimony, and accordingly, it should no t be tested by the particular standards required for testimony based on a particular scientific ethic.16 See Carmichael v. Samyang Tire, Inc., 131 F.3d 1433 (11th Cir. 1997), cert. g ranted sub nom. Kumho Tire Co. v. Carmichael, 118 S. Ct. 2339 (1998).
It is true of course that we have referred to the P aoli requirements of qualifications, reliability and fit -- but we have done so only to emphasize that, measured by an y standard, scientific or non-scientific, the Distric t Court did not abuse its discretion in excluding Dr. Gottheime r's testimony.

Second, and more important, the dissent, while acknowledging that it is the fact finder that deter mines weight and credibility of an expert's testimony, ap parently overlooks the distinguishing circumstance here: the fact finder was the District Court judge himself, and no t a jury. Judge Hutton made the critical credibility determin ation that he could not believe the testimony of Dr. Gott heimer, and that being so, no reason has been put forward a s to

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16. See Daubert v. Merrell Dow Pharm., Inc., 509 U. S. 579 (1993); In re Paoli R.R. Yard Litig., 35 F.3d 717, 741-43 (3d Cir . 1994).

22why we should not credit and defer to the District Court's

finding. Even if we might have made a different determination regarding Dr. Gottheimer's credibilit y, we are not at liberty to impose our opinion on the Distric t Court.17

We would be hard pressed to require a District Cour t judge sitting in a non-jury case who credibly and w ith
reason found that he could not believe a witness to nevertheless hear the witness's direct examination, crossexamination, and rebuttal examination in an extende d trial when he knew that he would only reject it as unbeli evable. All the instances and cases cited by the dissent, s ee, e.g., Dissent at 32 n.1, 46 n.13, are those in which it w as for the jury as fact finder to determine credibility and we ight of the expert testimony. Thus, those cases are wholly inap plicable to the facts of this case. When the role of the gat ekeeper to admit or exclude evidence (the judge) and the role of the factfinder to assess and weigh the evidence that wa s admitted (the jury) are one and the same, the judge who becomes the factfinder as well as the gatekeeper mu st be given great deference by this Court, and, as we not e below, should not be required to waste judicial time. See Fed. R. Evid. 403. Therefore, we cannot say on this record that it
was an abuse of the District Court's discretion to exclude Dr. Gottheimer's testimony.

Even if the District Court had abused its discretio n, and we hold that it did not, the error must be deemed h armless in light of the District Court's finding that Dr. G ottheimer was not credible. The District Court concluded, "If given the chance to testify, I could not find [Dr. Gottheimer ] to be a

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17. As the Supreme Court of Maine stated:

We have previously stated that the determina tion of the qualifications of expert witnesses is reserv ed to the sound
discretion of the trial judge. It follows, therefore, t hat appellate decisions affirming the trial court do not necessarily stand for the proposition that the opposite ruling would constitute er ror.

Hanson v. Baker, 534 A.2d 665, 667 (Me. 1987) (cita tion omitted); see also Seese v. Volkswagenwerk A.G., 648 F.2d 833, 84 4 (3d Cir. 1981) ("[W]e recognize that the admission of expert testi mony rests within the
sound discretion of the district court and that the district court will be reversed only for an abuse of that discretion.").

23credible witness given his evasiveness, if not his propensity

to state falsehoods." CL P 18. Obviously, hearing t estimony from a witness who was given no credence at all by the District Court judge presiding at a bench trial wou ld have resulted in the "waste of time" proscribed by Feder al Rule of Evidence 403, particularly where the false state ments identified by the judge were material to the purpor ted expert's qualifications.

VII.

ERISA requires a fiduciary to "diversify[ ] the inv estments of the plan so as to minimize the risk of large los ses, unless under the circumstances it is clearly not prudent t o do so." 29 U.S.C. S 1104(a)(1)(C). Meinhardt complains that Unisys
invested an excessive amount of Fund investments in Executive Life GICs. As discussed in Unisys I, Cong ress did not try to quantify diversity with percentages, lea ving that
determination to the facts and circumstances as fou nd by the courts. Unisys I, 74 F.3d at 438-40.

The District Court determined that Meinhardt had no t introduced evidence by way of expert testimony as t o what would have constituted a properly diversified fund. At the time Executive Life went into receivership, the Fun d had 20% of its assets in Executive Life investments, an d the court held this level of diversification to be prop er.18

CL PP 32-33.

Nor did Meinhardt prove his case with respect to th e duty to diversity because he did not show that the Fund suffered "large losses" as a result of any failure to divers ify. This was an issue that the Court of Appeals specifically hel d was not known at the summary judgment stage. See Unisys I, 74 F.3d at 440. Meinhardt presented no evidence of investments that would have constituted proper diversification in order to prove that Unisys did n ot properly

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18. The District Court combined the FIF and the ICF for purposes of diversification because the funds "worked together; " that is, the FIF was being phased out in favor of the ICF. Proceeds from matured FIF contracts were invested in the ICF, and no new inve stments were made in the FIF. FF P 79; App. 1510-12, 4450.

24diversify the investments in the Fund or to enable the

District Court to assess losses, if any, to Meinhar dt for the
difference. FF P 90.

The duty to diversify and resulting damages from a breach of that duty could not be determined from th e summary judgment record in Unisys I. Now that the t rial has concluded, it is evident to us, as it was to th e District Court, that Meinhardt's failure of proof did not le ad to any determination that Unisys breached its duty to dive rsify or that damages resulted.

VIII.

Meinhardt claims that Unisys did not fulfill its ob ligation of making necessary disclosures under ERISA.

In Unisys I, we stated that "a fiduciary may not ma terially mislead those to which section 1104(a)'s duties of loyalty and prudence are owed." Unisys I, 74 F.3d at 440-41 . A fiduciary must make disclosures if silence would be
harmful. Bixler v. Central Pa. Teamsters Health & W elfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993). ERISA also requires plaintiffs to prove losses for any breach of fiduciary duty claim:

Any person who is a fiduciary with respect t o a plan who breaches any of the responsibilities, ob ligations, or duties imposed upon fiduciaries by this subc hapter shall be personally liable to make good to s uch plan any losses to the plan resulting from each s uch

breach.

29 U.S.C. S 1109(a) (emphasis added). As Meinhardt and the other class plaintiffs were seeking individual relief under 29 U.S.C. S 1132(a)(3) (in contrast to S 1132 (a)(2), which only allows relief on behalf of the Plan), Me inhardt was required to prove individual losses. Varity Cor p. v. Howe, 516 U.S. 489, 507-15 (1996).

Although the District Court's discussion of Meinhar dt's claims that Unisys breached its duty to disclose information about Executive Life spans 18 pages, we can dispose of this issue on appeal briefly. Essentiall y, Meinhardt complains that Unisys received reports ab out

25Executive Life's financial troubles in early 1990. Meinhardt

claims that Unisys (1) did not warn the Fund partic ipants, (2) drafted misleading letters in order to dispel p articipants' concern, (3) did not disclose the fact that a high- level Unisys executive had purged his own portfolio of Ex ecutive Life securities, and (4) entered into an agreement with Executive Life not to disclose information to parti cipants that would cause participants to change their inves tments.19 The District Court held that Meinhardt did not prov e that the alleged failures to disclose were material. CL PP 22-23.

We need not address the question of whether the all eged nondisclosures were material, however, because it i s clear that Meinhardt did not prove that any alleged failu res to disclose caused the participants to suffer damages.
CL PP 29-30. The District Court found that Meinhard t and the other class plaintiffs (1) already had actual k nowledge of much of the information it is claimed that Unisy s failed to disclose, (2) did not read the Plan documents, a nd (3) testified that they would not have withdrawn or tra nsferred their money from the Fund even if they had known ab out Executive Life's problems. FF PP 70-71; CL P 28; Ap p. 1681- 82, 1688-89.

Moreover, Meinhardt's expert, Tsetsekos, offered testimony on losses suffered as a result of the all eged failures to disclose, but referred only to those lo sses incurred by the Fund and not to any losses incurred by individual participants named as plaintiffs. FF PP 76-77; CL PP 29-31. Meinhardt also failed to prove individ ual damages suffered by each participant as ERISA requi res. 29 U.S.C. S 1132(a)(3).

We hold that these factual findings of the District Court are not clearly erroneous and that they support the conclusion reached by the District Court that Meinh ardt failed to prove his claim that Unisys breached its duty of
disclosure.

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19. The agreement did not prevent Unisys from discl osing information required by law. App. 1702.

26IX.

A final word should be said about Meinhardt's claim for damages. First and foremost, in the absence of proo f of a breach of fiduciary duty, no relief in the way of d amages or losses could accrue to Meinhardt. We have held that Unisys satisfied ERISA's prudence standard and that accord ingly, no breach of fiduciary duty occurred. This being so , no claim for increased interest, i.e., the promised in terest minus the actual amount of interest received, or an y other damages, can be sustained. As we have noted earlier
, Meinhardt had received the return of the entire pri ncipal
invested as well as some interest.20

It is therefore irrelevant as to whether any losses sustained by the Fund from GIC investments could ha ve been offset by any gains derived from other Fund investments. While we acknowledge that a trustee, w hen he is imprudent and breaches his trust, is liable for all gains and may not offset losses against them,21 in the i nstant case, the Unisys fiduciaries were neither imprudent nor did they breach their fiduciary duties.22

Additionally, Meinhardt and the Department of Labor as amicus also argued that the burden of proving causa tion of damages shifts to the defendant after the plaintiff has proved that the defendant breached a fiduciary duty . Here, the District Court assigned the burden of proof to the plaintiff Meinhardt. Because we have held that Unis ys did not breach its fiduciary duties, we have no need to address the issue of which party bears the burden of provin g causation of damages resulting from a breach offidu ciary duty. While we recognize that our sister circuits h ave

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20. Even without offsetting the losses with the gai ns, the three contracts each returned principal with minimal (3-5%) interes t. FF P 80.

21. See Donovan v. Bierwirth, 754 F.2d 1049, 1056 ( 2d Cir. 1985); Restatement (Second) of Trusts S 213.

22. In light of our decision in favor of Unisys, we have no need to address Unisys's affirmative defense under 29 U.S.C . S 1104(c), which relieves a trustee of liability if the loss results from the participant's
exercise of control.

27divided in deciding this question,23 we have yet to express

ourselves on this issue.24

X.

In sum, we have held that:

(1) The District Court's findings of fact issued after hearing evidence on Meinhardt's ERISA claims will be affirmed as not clearly erroneous.

(2) The District Court's conclusions of law that the Unisys fiduciaries were prudent, and in the alterna tive, that a hypothetical prudent fiduciary would have ma de the same investments in Executive Life GICs, als o will be
affirmed.

(3) Although we do not agree with the District C ourt's additional discussion of an arbitrary and ca pricious standard in reviewing the investments made b y the ERISA fiduciaries, this discussion was super fluous, constitutes no more than harmless error, and does not affect our judgment.

(4) The District Court did not abuse its discret ion in excluding the testimony of Meinhardt's propo sed expert witness on the issue of Unisys's prudence, a nd in any event, that action was harmless in light of the District Court's finding that the expert was not cred ible.

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23. Compare Silverman v. Mutual Benefit Life Ins. C o., 138 F.3d 98, 105- 06 (2d Cir. 1998), cert. denied, ___ S. Ct. ___, 19 98 WL 440027 (Oct. 5, 1998) and Kuper v. Iovenko, 66 F.3d 1447, 1459-60 ( 6th Cir. 1995) (burden of proof on plaintiff) with McDonald v. Pro vident Indemnity Life Ins. Co., 60 F.3d 234, 237 (5th Cir. 1995); Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917 (8th Cir. 1994) (burde n of proof on fiduciary defendant).

24. Cf. Kemmerer v. ICI Americas, Inc., 70 F.3d 281 , 290 (3d Cir. 1995) (citing Roth for the proposition that burden of dis proving damages shifts to the trustee, but finding no need to shift the bu rden because the case
before the court did not involve a situation where plaintiff had proved a breach of duty and a definite loss); Nedd v. United Mine Workers of Am., 556 F.2d 190, 211 (3d Cir. 1977) (holding that shif ting the burden of causation to the fiduciary is an appropriate rule i n an LMRA case).

28(5) The District Court did not err in denying re lief to

Meinhardt inasmuch as no losses or damages c ould be sustained. As a consequence, we have found i t unnecessary to address the disputed issue of which party bears the burden of proving causation of damages that result from a breach of fiducia ry duty.

(6) The District Court did not err in holding th at Meinhardt's other ERISA claims, failure to d iversify and failure to disclose information, were no t proved.

Thus, we will affirm the District Court's orders of November 24, 1997, and January 9, 1998, in favor of Unisys a nd against Meinhardt.

Each party shall bear its own costs.

29BECKER, Chief Judge, dissenting

Although I join in Parts I through V and VII throug h IX of the majority's opinion, I believe that the major ity has made a significant error regarding expert testimony , and I dissent on this point. Because I believe that this error is not harmless, I believe we should vacate the judgme nt and
remand this case for a new trial.

In concluding that the District Court properly excl uded the testimony of Dr. Gottheimer, the majority serio usly misconceives the proper approach to the admission o f expert opinion testimony under Federal Rule of Evid ence 702. As an initial point, the majority overstates t he degree
to which we owe deference to the District Court's d ecision in a case, such as this, tried to the court. The Di strict
Court's decision deserves no additional deference s imply because the court sat as both evidentiary gate-keep er and fact-finder. If anything, the practicalities of the matter suggest that the trial court in such a situation sh ould be more reluctant than usual to exclude evidence, alth ough I do not suggest that we should apply a corresponding ly more stringent standard of review.

The District Court and the majority also make three important errors in analyzing the substantive requi rements of Rule 702. First, the majority confuses the relia bility of an expert witness -- a matter for the jury -- with the reliability of his or her methodology -- a matter initially for the trial judge -- and therefore erroneously concludes that questions about an expert witness's general credibi lity are a proper basis for excluding his or her testimony. The question for the judge under Rule 702 is not whethe r the witness is reliable but whether the methodology the expert uses in reaching his conclusions is reliable. As to this latter point, the witness's general credibility is simply irrelevant; the relevant issues in determining the reliability of an expert's principles and methods are of the sort set forth with respect to scientific testimony in Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 593-95 (1993).

Second, the majority misconstrues the nature of the requirement of "fit" between the expert's testimony and the facts at issue. The majority concludes that the Dis trict

30Court correctly found that no fit exists in this ca se because

Dr. Gottheimer's experience, in the area of propert ycasualty insurance, on which his testimony is based , is not in the specific area -- life insurance -- with whic h the facts in this case deal. But the majority's focus on the connection between Dr. Gottheimer's claimed basis for being an expert and the facts at issue, as opposed to the connectio n between the substance of his testimony and the fact s, is irrelevant to the question of fit. Their concern ab out his background should more appropriately be directed at Dr. Gottheimer's qualifications, not the fit between hi s testimony and the facts.

Third, the majority permits the District Court to s et the qualifications bar for expert testimony too high. I t approves the District Court's rejection of the expert's test imony simply because his qualifications are not of the"hi ghest
caliber." This conclusion is inconsistent with our longstanding liberal approach to the matter of expe rt witness qualifications. Also, the connection betwee n Dr. Gottheimer's expertise and the issues in this case- - which the majority discusses in the context of fit -- are not too remote for him to qualify as an expert under Rule 7 02.

Finally, I think that the majority wrongly conclude s that any error in the exclusion of Dr. Gottheimer's test imony was harmless. While improper admission of evidence is usually harmless error in a bench trial, the improp er exclusion of an expert witness who would have offer ed a party's sole expert testimony on an element of its case ordinarily is not harmless. The fact that the Distr ict Court
found some inconsistencies in Dr. Gottheimer's voir dire testimony was not a sufficient basis for changing t he ordinary rule. Such inconsistencies are not enough to convince me that it is highly probable that Dr. Got theimer's testimony, if admitted, would not have changed the outcome. This is especially true in light of the fa ct that the
inconsistencies the District Court discusses were a t worst
minor.

I. Overview of Rule 702

Under Rule 702, "[i]f scientific, technical, or oth er

31specialized knowledge will assist the trier of fact to

understand the evidence or to determine a fact in i ssue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify the reto in the form of an opinion or otherwise." Fed. R. Evid. 702 . The Supreme Court has recognized that Rule 702 , althou gh it limits the scope of permissible evidence, is part o f "the `liberal thrust' of the Federal Rules and their `ge neral approach of relaxing the traditional barriers to "o pinion" testimony.' " Daubert, 509 U.S. at 588 (quoting Bee ch Aircraft Corp. v. Rainey, 488 U.S. 153, 169 (1988)) . We have recognized that this "principle of liberal admissio n of expert testimony is found in Rule 702 itself, in the advis ory committee note to the rule, and in our case law."1

To these ends, Rule 702 embodies three distinct substantive restrictions on the admission of expert testimony: qualifications, reliability and fit. See In re Paoli R.R. Yard PCB Litig. ("Paoli II"), 35 F.3d 717, 741 -43 (3d Cir. 1994). First, an expert witness must be qualif ied by virtue of specialized expertise. See Fed. R. Evid. 702 (permitting expert testimony of a witness "qualifie d as an expert by knowledge, skill, experience, training, o r education"); Paoli II, 35 F.3d at 741. Second, "an expert's testimony is admissible so long as the process or t echnique the expert used in formulating the opinion is relia ble." Paoli II, 35 F.3d at 742 (citing Daubert, 509 U.S. at 589 -90). Third, "[e]xpert testimony which does not relate to any issue in the case is not relevant and, ergo, non-he lpful." Daubert, 509 U.S. at 591 (citations omitted).2

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1. Habecker v. Copperloy Corp., 893 F.2d 49, 51 (3d Cir. 1990); accord Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir. 1998) (citing the "policy of liberal admissibility of expert testimony"); Holbro ok v. Lykes Bros. S.S. Co., 80 F.3d 777, 782 (3d Cir. 1996) (citing"our li beral approach to admitting expert testimony"); United States v. Down ing, 753 F.2d 1224, 1230 (3d Cir. 1985) (citing "the liberal standard o f admissibility mandated by Rule 702"); Knight v. Otis Elevator Co. , 596 F.2d 84, 88 (3d Cir. 1979).

2. It is not a settled question in this Circuit whe ther the Daubert requirements apply to nonscientific testimony such as may be at issue here. See Lauria v. National R.R. Passenger Corp., 145 F.3d 593, 599 n.7 (3d Cir. 1998) (questioning, but not resolving, whe ther Daubert analysis

32II. Standard of Review

As an initial matter, I think the majority errs in its analysis of the applicable standard of review and t he extent
to which we owe deference to the District Court's d ecision. Of course, the decision whether to admit or exclude expert testimony is largely within the hands of the trial judge. We
review such a decision for abuse of discretion. See General Elec. Co. v. Joiner, 118 S. Ct. 512, 517 (1997) ("W e have held that abuse of discretion is the proper standar d of review of a district court's evidentiary rulings." (citations omitted)); In re Paoli R.R. Yard PCB Litig. ("Paoli I"), 916 F.2d 829, 856 & n.33 (3d Cir. 1990). The standard d oes not change when we are reviewing a court's decision to exclude, as opposed to admit, expert testimony, in spite of the liberal

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should apply to testimony of expert in train track maintenance); United States v. Velasquez, 64 F.3d 844, 850 (3d Cir. 1995 ) (questioning the propriety of applying Daubert to handwriting analys is, but applying it in an exercise of caution). This question is currently before the Supreme Court. See Carmichael v. Samyang Tire, Inc., 131 F. 3d 1433 (11th Cir. 1997), cert. granted sub nom. Kumho Tire Co. v. Car michael, 118 S. Ct. 2339 (1998). The current proposed amendment to Rule 702 would apply a distillation of the Daubert analysis to all exper t testimony. See Fed.

R. Evid. 702 (proposed amendment 1998) (further limiti ng admissibility of expert testimony to where "(1) the testimony is suf ficiently based upon reliable facts or data, (2) the testimony is the pr oduct of reliable principles and methods, and (3) the witness has app lied the principles and methods reliably to the facts").

The majority contends that I have erred by focusing on Daubert analysis in a case in which it might not apply. See Slip Op. at 23. But even to the extent the majority turns out to be cor rect that a strict Daubert analysis does not apply, my conclusions wou ld not change. First, I do not believe that the result would be an y different if we were to apply the principles of Rule 702 sans Daubert. I n fact, since Daubert imposes additional requirements for scientific test imony beyond the usual requirements for expert testimony, not applyi ng Daubert would provide even greater reason to believe that Dr. Got theimer's testimony should have been admitted. Thus, the majority's cri ticism supports my contention. Second, even if the Supreme Court in Ku mho decides that strict Daubert analysis should not apply to non-sci entific testimony, I still think that the basic principles of reliabilit y and fit would be

relevant in determining the admissibility of expert testimon y under Rule 702.

33standard for the admission of such testimony. See J oiner,

118 S. Ct. at 517.

Even though we apply an abuse of discretion standar d of review, however, "to the extent the district court' s ruling turns on an interpretation of a Federal Rule of Evi dence our review is plenary."3 Furthermore, although our revi ew is highly deferential, it is not a complete bar to rev ersing a
district court's decision even where the court does not commit purely legal error. See, e.g., Paoli I, 916 F.2d at 855-56 (rejecting as an abuse of discretion the tri al court's insistence on certain credentials as expert qualifi cations); 4 Weinstein's Federal Evidence S 702.02(2) n.9 (2d ed . Nov. 1998) (collecting cases).

The majority concludes that the fact that this case involved a bench trial requires additional deferenc e to the District Court's evidentiary exclusion decision. In reaching this conclusion, the majority relies on Goodman v. Highlands Insurance Co., 607 F.2d 665 (5th Cir. 197 9), which states that "a trial judge sitting without a jury is entitled to even greater latitude concerning the ad mission or exclusion of evidence." Goodman, 607 F.2d at 668 . The majority asserts that, after Joiner -- in which the Supreme
Court held that the same abuse of discretion standa rd of review applies to an evidentiary ruling on expert t estimony regardless of whether the trial court admits or exc ludes the evidence -- the "Goodman" rule "has been given incr eased viability." Slip Op. at 20. For a variety of reason s, I cannot agree with the majority's conclusion that our revie w is affected by the fact that this case was tried to th e court.

As an initial matter, Goodman does not support the meaning the majority draws from it. The statement i n Goodman upon which the majority relies refers not t o the trial court's decision on admissibility but to whet her the trial court's decision, if erroneous, was a harmles s error.

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3. DeLuca v. Merrell Dow Pharms., Inc., 911 F.2d 94 1, 944 (3d Cir. 1990) (citing In re Japanese Elec. Prods. Antitrust Litig ., 723 F.2d 238, 277 & n.43 (3d Cir. 1983), revd. on other grounds sub. no m. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (198 6)); accord Barker v. Deere & Co., 60 F.3d 158, 161 (3d Cir. 1995).

34This reading is made manifest by an examination of the

sentence following that quoted above:

In a non-jury case, the admission of incompe tent
evidence will not warrant reversal unless al l of the competent evidence is insufficient to suppor t the judgment, or unless it affirmatively appears that the incompetent evidence induced the court to ma ke an essential finding which would otherwise not have been

made.

Goodman, 607 F.2d at 668 (citations omitted). This is simply a restatement of the familiar harmless error test for review of decisions admitting evidence in bench tri als.4 It is, however, irrelevant to our determination of whether the district court's decision to exclude expert testimo ny from
evidence is reversible error.5

Furthermore, even assuming the majority correctly s tates the Fifth Circuit's Goodman rule, I think that rule is not a proper one and would not follow it. The Federal Rul es of Evidence apply with full force to bench trials. See Fed. R. Evid. 1101(b); 9 Charles Alan Wright & Arthur R. Mi ller,

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4. As we have stated:

[I]t is well settled that in a nonjury case, an appellate court
will not
reverse on the basis of an erroneous admissi on of evidence unless (1) there is insufficient evidence other tha n the challenged
evidence to support the district court's conclusion, or (2) the district
court is induced by the challenged evidence to make a n essential finding
that it would not have made otherwise.

United States v. Local 560, Intl. Bhd. of Teamsters , 780 F.2d 267, 278 (3d Cir. 1985) (alteration in original) (quoting De Laval Turbine, Inc. v. West India Indus., Inc., 502 F.2d 259, 263-64 (3d C ir. 1974)); accord 12 Rya W. Zobel, Moore's Federal Practice S 61.06(2) ( 3d ed. 1998). This is a sensible rule based on the assumption that judges are more capable of ignoring prejudicial or irrelevant evidence than juries. See 1 Weinstein's, supra, S 103.41(4)(a) ("At one end of the scale is the nonjury trial in which the judge is often assumed, eve n in a criminal case, to have disregarded inadmissible evidence in arrivi ng at a decision.").

5. Recent cases from the same court reveal that the quoted portion of Goodman in fact refers to harmless error analysis. See, e.g., Southern Pac. Transp. Co. v. Chabert, 973 F.2d 441, 448 (5th Cir. 1992) (quoting Goodman and citing it in support of the harmless er ror standard).35Federal Practice & Procedure S 2411, at 587 (2d ed. 1995)

("In theory, the Federal Rules of Evidence apply eq ually in court trials and jury trials."). After all, a trial is a trial. To me, the proposition that we owe more deference to t rial court decisions excluding evidence in bench trials is inconsistent with the Federal Rules and encourages sloppy district court decisionmaking.6

If anything, trial courts should be more chary of excluding evidence in bench trials than in jury tri als. See Builders Steel Co. v. Commissioner, 179 F.2d 377, 3 79 (8th Cir. 1950) ("[A] trial judge who, in the trial of a nonjury case, attempts to make strict rulings on the admiss ibility of evidence, can easily get his decision reversed by e xcluding evidence which is objected to, but which, on review , the appellate court believes should have been admitted. "), quoted in 9 Wright & Miller, supra, S 2411, at 587. The
better course is to admit the evidence and then tak e factors that otherwise might affect its admissibility into consideration in determining its weight, rather tha n waste time debating the propriety of admitting the eviden ce.7 I

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6. The majority suggests that I have failed to reco gnize the critical fact

in this case: that the judge was the fact-finder as we ll as the Rule 702 gatekeeper. The majority is incorrect. Of course I recognize this fact,

but
think that it should make no difference in our anal ysis. The majority essentially contends that, once the trial judge in a bench trial makes up his or her mind during an in limine hearing that a witness is not credible, that decision is cast in concrete and the judge will close his

or her ears to any further (trial) testimony from the witness. Concomitantly, the majority suggests that, with any witness, the c ourt proceeding to a bench trial may exclude a prospective witness's tes timony based not on its admissibility but on the witness's credibility. See Slip Op. at 23
("We would be hard pressed to require a District Court j udge sitting in a nonjury case who credibly and with reason found that h e could not believe
a witness to nevertheless hear the witness's direct examination, crossexamination, and rebuttal examination in an extende d trial when he knew that he would only reject it as unbelievable." ). I, to the contrary, think it would be preferable for the trial judge to listen to the witness and keep his or her mind open to the possibility th at the entirety of the witness's trial testimony could change his or her v iew of the witness's credibility. Listening, after all, is a major part of the judge's job.

7. See Builders Steel, 179 F.2d at 379 (quoting Don nelly Garment Co. v. NLRB, 123 F.2d 215, 224 (8th Cir. 1941)). In Donnel ly Garment, the court noted that it is usually more efficient in a bench trial for the

courtto simply admit questionable evidence, and then tak e such questions

into consideration in determining the weight it sho uld be given. See 123

F.2d at 224.

36believe the majority's approach grants undue defere nce to

trial court's decisions excluding evidence in bench trials.

III. Rule 702 Requirements

I now turn to the substantive requirements of Rule 702. Under Rule 702, expert testimony is admissible only if it meets the requirements of Rule 702: qualifications, reliability and fit. The majority concludes that th e District Court properly found that Dr. Gottheimer's testimon y met none of these requirements. I disagree, and discuss each of these factors, although not in the usual order.

A. Reliability

The majority begins with the indisputable premise t hat reliability is a key factor in determining the admi ssibility of expert testimony. "[U]nder the Rules the trial judg e must ensure that any and all scientific testimony or evi dence admitted is not only relevant, but reliable." Joine r, 118 S. Ct. at 517 (quoting Daubert, 509 U.S. at 589). From this, the majority concludes that, as part of the reliabi lity analysis, a trial court may consider the general cr edibility of a witness in determining whether his or her test imony is appropriately admitted as expert witness testimony. See Slip Op. at 20 ("Thus in our view, the Court's emph asis on reliability as well as on relevancy embraces within its standard the credibility of the witness proffering expert opinion."). Accordingly, the majority holds that, s ince the
District Court found that Dr. Gottheimer was not a credible witness it could properly exclude his expert testim ony under Rule 702. The majority misconceives the fundamental nature of the reliability inquiry under Daubert. The reliability inquiry focuses not on the witness' s reliability in an evidentiary sense, but on the rel iability of the methodology that the expert applies in arriving at an opinion.

[I]n order to qualify as "scientific knowled ge," an inference or assertion must be derived by th e scientific method. Proposed testimony must be supported by appropriate validation -- i.e., "good ground s," based on what is known. In short, the requirement tha t an

37expert's testimony pertain to "scientific kn owledge"

establishes a standard of evidentiary reliab ility.

Daubert, 509 U.S. at 590 (footnote omitted). This i nquiry focuses on the expert's principles and methodology, not his

results.

The inquiry envisioned by Rule 702 is, we e mphasize, a flexible one. Its overarching subject is t he scientific validity -- and thus the evidentiary relevan ce and reliability -- of the principles that underl ie the proposed submission. The focus, of course, m ust be solely on principles and methodology, not on the conclusions that they generate.

Daubert, 509 U.S. at 594-95. Under Rule 702, the tr ial court's preliminary reliability analysis in making an admissibility determination must focus on the witne ss's methods, not his or her testimony as a whole.8 A cu rrent proposed amendment to Rule 702 reemphasizes this fo cus on the reliability of the methodology, as opposed t o the
witness.9

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8. Even the broadest understandings of the Daubert reliability inquiry recognize that such reliability determinations are limited to the
witness's methods and related matters. "The broadest reading of Daubert is that it applies to all reliability issues presented by all expert testimony. Under this interpretation, all reliability issues raised by an expert's application, methodology, reasoning, or underlying theories are admissibility questions to be resolved by the gatekeeper-judge." 29 Charles Alan Wright & Victor James Gold, Federal Practice & Proc edure S 6266, at 290 (1997).

9. The Judicial Conference of the United States's S tanding Committee on Rules of Practice and Procedure is currently consid ering an amendment to Rule 702 proposed by its Advisory Committee on R ules of Evidence that would permit the admission of expert testimony if "(1) the testimony is sufficiently based upon reliable facts or data, (2) the testimony is

the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts." Fed. R. Evid. 702 (proposed amendment 1998). Under the proposed r ule, the trial judge must determine whether the proposed testimony "is properly grounded, well-reasoned and not speculative before it can be admitted." Fed. R. Evid. 702 advisory committee's note (propos ed amendment 1998). "If there is a well-accepted body of learnin g and experience in the expert's field, then the expert's testimony must be grounded in that learning and experience to be reliable, and the exp ert must explain how the conclusion is so grounded." Id.38Credibility plays no appropriate part in the analys is of

the reliability of a proposed expert's methodology. The Court in Daubert recognized a number of factors per tinent to the reliability inquiry, including testability, peer review or publication, potential rate of error, existence of standards and controls, and general acceptance. See 509 U.S. at 593- 94. We, as well as others, have suggested numerous additional factors relevant to reliability as set f orth in the margin.10 The key point is that none of these facto rs requires consideration of the proffered expert's cr edibility in general. "[E]valuating the reliability of scientifi c methodologies and data does not generally involve assessing the truthfulness of the expert witnesses . . . ." Paoli II, 35 F.3d at 749.11 Of course, a particular witness

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10. See, e.g., Downing, 753 F.2d at 1238-39 (listin g additional factors: novelty, specialized literature, and non-judicial u ses of techniques); Joiner, 118 S. Ct. at 519 (whether the expert has u njustifiably extrapolated from an accepted premise to an unfound ed conclusion); Sheehan v. Daily Racing Form, Inc., 104 F.3d 940, 9 42 (7th Cir.) (whether "the expert is being as careful as he woul d be in his regular professional work outside his paid litigation consu lting"), cert. denied, 117 S. Ct. 2480 (1997); Daubert v. Merrell Dow Phar ms., Inc., 43 F.3d 1311, 1317 (9th Cir. 1995) ("whether the experts ar e proposing to testify about matters growing naturally and directly out of research they have conducted independent of the litigation, or whether they have developed their opinions expressly for purposes of testifying "); Claar v. Burlington N.R.R. Co., 29 F.3d 499, 502 (9th Cir. 1994) (wheth er the expert has adequately accounted for obvious alternative explan ations).

11. Courts have held in numerous other cases that c redibility is irrelevant to determining whether a proposed expert witness's testimony is admissible under Rule 702, and particularly whet her it is based on reliable methodology. See, e.g., Breidor v. Sears, Roebuck & Co., 722 F.2d 1134, 1138-39 (3d Cir. 1983) ("Where there is a logical basis for an expert's opinion testimony, the credibility and wei ght of that testimony
is to be determined by the jury, not the trial judge." ); see also Kannankeril v. Terminix Intl., Inc., 128 F.3d 802, 809 (3d Cir. 1997) ("If the expert meets liberal minimum qualifications [under Rule 70 2], then the level of the expert's expertise goes to credibility and weig ht, not admissibility."). For example, expert witnesses cannot be excluded on the basis of bias. See, e.g., Marshall v. Perez Arzuaga, 828 F.2d 845, 851-52 (1st Cir. 1987); Gideon v. Johns-Manville Sales Corp., 761 F. 2d 1129, 1135-36 (5th Cir. 1985). Similarly, factual errors in a wit ness's testimony are

not grounds for excluding the witness from testifying a s an expert. See Paoli II, 35 F.3d at 753-54. Finally, general attacks on credibility based on a lack of personal knowledge are not a proper basis f or excluding expert testimony. See Dixon v. International Harvester Co. , 754 F.2d 573, 580(5th Cir. 1985).

39can lie about whether one of the factors mentioned above is

present. But the witness's general credibility -- i .e., credibility based on matters not directly related t o these factors, such as bias or unrelated prior inconsiste nt statements -- is not relevant to a trial court's pr eliminary determination that these factors are present. These factors are relatively objective matters that the court can generally analyze independent of the witness's testimony abou t them. For example, a court is fully capable of determinin g whether a theory or method is testable.

Furthermore, permitting the trial court to consider the general credibility of an expert witness in its ana lysis of the reliability of proposed expert opinion testimony im properly trenches on the province of the fact-finder. The fa ct-finder is ordinarily the arbiter of general credibility. R ule 702 is intended not to impinge on the authority of the fac t-finder in making credibility determinations, but rather to ensure that the fact-finders' ability to find facts indepe ndently is not overwhelmed by complex and authoritative-seemin g expert testimony. See 29 Wright & Gold , supra, S 6 262, at 179 ("If the trier of fact is unable or disinclined to question the expert's opinion, it surrenders its central fun ction to an expert whose testimony may be unreliable."). In ord er to avoid this eventuality, Rule 702 provides for a pre liminary inquiry into whether proposed expert testimony is t he kind that is appropriately admitted into evidence, i.e., that the method is reliable and based on expertise. See id. at 183- 84. But this inquiry cannot extend into matters tha t are the proper province of the fact-finder, such as general credibility. See id. at 184 ("Importantly, however, Rule 702 on its face creates no general power in the trial j udge to exclude expert testimony on the grounds that it is unreliable.").

This limitation on the power of the trial court to admit and exclude expert testimony rests on sound policy considerations. First, it is emblematic of the Rule s' generally liberal approach to the admissibility of evidence, discussed above. See supra Part I. Second, it refle cts the fact that the power to evaluate witness's credibili ty lies traditionally with the fact-finder, not the trial c ourt making evidentiary rulings. See 29 Wright & Gold, supra, S 6262, at

40185 ("[T]he power to evaluate the credibility of wi tnesses

and give testimony its proper weight primarily resi des with the trier of fact.").

Finally, it rests on the general assumption underly ing the
Federal Rules of Evidence as a whole: the fact-find er is best situated to determine the credibility of witnesses. See id. at 185 ("[J]uries generally have the ability to accura tely weight and evaluate witness credibility."). "Accordingly, the most common judicial response to attacks on the reliabil ity of expert testimony is that such matters go to weight, not admissibility." Id. at 185-86. The Court in Daubert recognized the importance of leaving such matters t o the fact-finder, and not determining them on evidentiar y grounds:

Respondent expresses apprehension that aband onment of "general acceptance" as the exclusive req uirement
for admission will result in a "free-for-all " in which befuddled juries are confounded by absurd an d irrational pseudoscientific assertions. In t his regard respondent seems to us to be overly pessimis tic about the capabilities of the jury and of the adve rsary system generally. Vigorous cross-examination, prese ntation of contrary evidence, and careful instruction o n the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.

Daubert, 509 U.S. at 595-96 (citation omitted; emph asis
added).

Accordingly, I conclude that the District Court err ed to the extent that it considered Dr. Gottheimer's gene ral credibility as a factor in determining whether the principles and methodology underlying his proposed expert test imony
were reliable under Rule 702. This result is unaffe cted by the fact that the District Court -- post hoc -- wen t ahead and made credibility findings that arguably would h ave resulted in his rejection of Dr. Gottheimer's testi mony in its role as fact-finder. I deal with this aspect of the matter in my discussion of harmless error. See infra Part IV. Questions about Dr. Gottheimer's credibility should have been left for substantive fact-finding, not evident iary rulings. Since the District Court and Unisys sugges t no

41other concerns about the reliability requirement, I would

conclude that Dr. Gottheimer's proposed testimony s atisfies
it.

B. Fit

The majority also concludes that the District Court properly found that Dr. Gottheimer's testimony did not fit with the question in issue at the trial. In particu lar, the majority concludes that Dr. Gottheimer's experience and knowledge lay in a field not sufficiently connected with the question at issue to meet the requirement of fit."D r. Gottheimer's alleged expertise, limited in any even t to methods of investing with respect to property casua lty insurance, did not fit with or meet the need of the District Court for expert testimony in life insurance invest ing." Slip Op. at 21. The majority misconceives the requiremen t of fit

under Rule 702.

The requirement of fit is essentially a relevance requirement. Under Rule 702, expert testimony is
admissible if it "will assist the trier of fact." F ed. R. Evid. 702. "This condition goes primarily to relevance." Daubert, 509 U.S. at 591. "[A]dmission depends upon the `fit ,' i.e., upon a specific proffer showing that scientific res earch has established" some point relevant to the facts of th e case. United States v. Downing, 753 F.2d 1224, 1226 (3d C ir. 1985). We have further clarified this point:

An additional consideration under Rule 702 -- and another aspect of relevancy -- is whether ex pert testimony proffered in the case is sufficien tly tied to the facts of the case that it will aid the jury in resolving a factual dispute. In this regard, we hold tha t a defendant who seeks the admission of expert testimony must make an on-the-record detailed proffer to the court, including an explanation of precisely how the expert's testimony is relevant to the [factu al issue] under consideration. The offer of proof shou ld establish the presence of factors . . . which have bee n found by researchers to [provide a basis for the prof fered opinion]. Failure to make such a detailed pr offer is sufficient grounds to exclude the expert's t estimony.

42753 F.2d at 1242 (citations omitted); see also Laur ia v.

National R.R. Passenger Corp., 145 F.3d 593, 600 (3 d Cir. 1998); United States v. Velasquez, 64 F.3d 844, 850 (3d Cir. 1995).

The majority errs in concluding that Dr. Gottheimer 's field of expertise has any relevance to the fit inq uiry. As the foregoing discussion of the fit requirement shows, it is satisfied if the proffered expert opinion is releva nt to a factual issue before the fact-finder. The expert'sf ield of expertise is irrelevant to an inquiry into the conn ection between the opinion itself and the issues in the ca se. A simple example shows this. In Lauria, a railroad wo rker slipped and was injured when he stepped on a loose railroad tie that was sitting between some tracks. "The primary issue [was] whether Amtrak was negligent in failing to remove a [railroad] tie from Lauria's workplace. " Lauria, 145 F.3d at 600. An expert opinion "that the tie wa s a dangerous obstruction that should have been discove red and removed and, . . . that Amtrak's negligence mad e the workplace unsafe" clearly satisfies the requirement of fit.

145 F.3d at 600.

But the expertise of the proponent of the opinion i s irrelevant to this inquiry. This is true even if th e witness proposing to testify to the above opinion is a medi cal doctor who has no experience with train tracks. Under the majority's reasoning, however, the doctor's testimo ny would not meet the fit requirement. Clearly, a medical do ctor with no experience working with train tracks has no expe rtise with regard to the placement of loose railroad ties . If Dr. Gottheimer's testimony would not meet the fit requi rement because his expertise lay in a different field of i nsurance than that in issue in the case, clearly the hypothe tical doctor cannot provide testimony that meets the fit requirement. But the doctor's testimony should be e xcluded because of his lack of qualifications, not because of a supposed lack of fit. The proposed expert's experti se is simply irrelevant to determining whether the proffe red expert opinion is relevant to issues in the case.

As this example shows, the majority's and the Distr ict
Court's concerns about the connection between Dr. Gottheimer's expertise and the issues in the case a re

43actually relevant to the step of the Rule 702 inqui ry which

I consider infra: qualifications. Under Rule 702, a witness can offer an expert opinion if he or she is "qualif ied as an expert by knowledge, skill, experience, training, o r education." Fed. R. Evid. 702. The nature of a witn ess's specific field of expertise is part of the expert's background that is considered in determining whether a witness is qualified. See Paoli II, 35 F.3d at 741. 12

I think a proper fit inquiry would show that Dr. Gottheimer's testimony meets the fit requirement. P laintiffs'
counsel said that Dr. Gottheimer would have testifi ed that
certain standard tests exist in the insurance indus try to analyze the financial condition of insurance compan ies, and
that he was familiar with those tests. He would hav e further testified that he performed these tests on Executive Life data, and concluded "that the tests set up cer tain red flags that should have caused a person familiar wit h the tests and performing the tests, to ask further ques tions about the solvency and the credit worthiness of Exe cutive
Life." I think this is the kind of "on-the-record d etailed proffer" that we required in Downing, "including an explanation of precisely how the expert's testimony is relevant to" determining whether Unisys acted prude ntly. Downing, 753 F.2d at 1242. Accordingly, I would con clude that Dr. Gottheimer's proposed testimony meets thef it requirement. The nature of Dr. Gottheimer's experti se, and
its connection with the factual issues in this case , are relevant only to the Rule 702 inquiry into qualific ations, to
which I now turn.

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12. In fact, the case the majority cites in support of its conclusion that Dr. Gottheimer's testimony does not meet the fit re quirement involved an inquiry into the witness's qualifications, not thef it between his proposed testimony and the issues in that case. See Surace v . Caterpillar, Inc.,

111 F.3d 1039 (3d Cir. 1997). In Surace, the plaintiff offered the testimony

of an electromechanical engineer concerning workers' h abituation to auditory warning devices. The district court exclud ed Brink's testimony and we affirmed, noting that the expert's experienc e was limited to mechanical, as opposed to human, factors in design, and he therefore was not qualified to testify about the latter. See 111 F.3d at 1055-56.

44C. Qualifications

The majority also concludes that the District Court properly excluded Dr. Gottheimer's testimony becaus e he was not qualified as an expert with respect to the issues in this case. Specifically, the majority adopts the Di strict Court's conclusion that Dr. Gottheimer was not qual ified because his "qualifications were less than stellar. " Slip Op.
at 21. The District Court noted that "Dr. Gottheime r claims a doctoral degree from a correspondence school, an additional ground for my refusal to qualify him as an expert." In re Unisys Sav. Plan Litig., No. 91-3067 , 1997 WL 732473, at *26 (E.D. Pa. Nov. 24, 1997). In additio n, as discussed above, see supra section III.B, the major ity concludes that the District Court properly rejected Dr. Gottheimer's testimony because his field of experti se was not sufficiently connected to the issues in the cas e. "Dr. Gottheimer's experience in the insurance area was l imited to property casualty insurance and not life insuran ce." Unisys, 1997 WL 732473, at *22. Neither of these ar e appropriate grounds for excluding an expert witness for lack of qualifications.

The requirement that an expert witness be qualified is well established. A witness may only provide expert testimony to the extent that he or she is "qualifie d as an expert by knowledge, skill, experience, training, o r education." Fed. R. Evid. 702. The bases for conclu ding that a witness is qualified are flexible. "[I]nsist ence on a certain kind of degree or background is inconsisten t with our jurisprudence in this area." Paoli I, 916 F.2d at 855; accord Waldorf v. Shuta, 142 F.3d 601, 626 (3d Cir. 1998) ("[I]n considering the qualification of witnesses a s experts, we stress that ordinarily an otherwise qualified wi tness is not disqualified merely because of a lack of academ ic training."); Paoli II, 35 F.3d at 741 ("We have esc hewed imposing overly rigorous requirements of expertise and have been satisfied with more generalized qualifica tions."). A particular educational background is unnecessary; practical experience is sufficient to conclude that a witness is qualified as an expert. See Lauria, 145 F.3d at 599 (citing American Tech. Resources v. United States, 893 F.2d 651, 656 (3d Cir. 1990)). "Following this logic, it is a n abuse of

45discretion to exclude testimony simply because the trial

court does not deem the proposed expert to be the b est qualified or because the proposed expert does not h ave the specialization that the court considers most approp riate."13

Although, as always with evidentiary questions, we apply
a deferential standard of review to a trial court's determination of whether a proposed expert is quali fied, we
have on numerous occasions found that a district co urt abused its discretion in excluding a proffered expe rt because of his or her qualifications. Some of these cases are summarized in the margin.14

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13. Holbrook, 80 F.3d at 782 (citing Paoli I, 916 F .2d at 856); accord Kannankeril, 128 F.3d at 809 ("Whether the appellan ts' expert might have done a better job is not the test."); Paoli II , 35 F.3d at 741 ("[E]xclusion was not the proper remedy `simply bec ause the experts did not have the degree or training which the district court apparently thought would be most appropriate.' " (quoting Paol i I, 916 F.2d at 856)).

14. See Lauria, 145 F.3d at 599 ("Slavin's twenty y ears of experience with track equipment, maintenance, and safety proce dures qualified him as an expert who could testify as to Amtrak's respo nsibility to inspect and maintain the track in a safe condition," even t hough he did not have particularized training other than that which anyon e who had done such work for twenty years would have); Holbrook, 80 F.3 d at 781-82 (reversing exclusion of treating physician's testim ony as to whether plaintiff 's cancer was mesothelioma; district cour t had reasoned that doctor was not qualified because he was not an onco logist; stating that trial court erroneously "restricted Dr. Carpenter's testimony based on a requirement that the witness practice a particular specialty to testify concerning certain matters"); Paoli I, 916 F.2d at 856 (district court excluded witnesses who would have testified about g as chromatography tests and differential diagnoses, because they lack ed degrees in chemistry and medicine respectively: "In light of t he liberal Rule 702 expert qualification standard, we hold that the dis trict court abused its discretion in excluding portions of [the experts'] testimony simply because the experts did not have the degree or trai ning which the district court apparently thought would be most app ropriate." (footnote omitted)); Habecker, 893 F.2d at 52-53 (concluding that district court abused its discretion when it excluded expert testi mony concerning connection between lack of operator restraints and plaintiff's injury, where plaintiff was injured when he was thrown fromthe cab of a forklift; district court's sole reason for finding expe rt was not qualified

was because he lacked an engineering degree); Knight, 5 96 F.2d at 88

46Supported by these cases, I believe that Dr. Gotthe imer

was in fact qualified to offer the expert testimony proffered,
and that the District Court's conclusion to the con trary was
an abuse of discretion. The District Court found th at Dr. Gottheimer was not qualified on two grounds: the na ture of
his educational credentials and the distinction bet ween his experience in property-casualty insurance companies and the issues in the case involving life insurance com panies. In light of the case law discussed in the margin above , both of these findings are inconsistent with the exercise o f sound
discretion.

The District Court concluded that Dr. Gottheimer co uld not be qualified because his doctorate was awarded by a correspondence school. If this were plaintiffs' sol e basis for claiming that Dr. Gottheimer was qualified, I would probably agree with the District Court. It was not, however. Rather, the record discloses numerous grounds on wh ich to conclude that Dr. Gottheimer was qualified as an ex pert. Dr. Gottheimer's resume demonstrates his expertise through three distinct areas: experience, education and teaching. First, he has worked for a dozen years as a consultant in the insurance industry, following thi rty years of employment by various insurance companies. His consulting work has included analyses of both prope rtycasualty and life insurance companies.15 Second, h e has

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(finding error in district court's exclusion of exp ert testimony concerning whether unguarded elevator control buttons were a d esign defect "because it believed that such expertise would requ ire some background in the design and manufacture of elevators," which proposed expert lacked; noting our "reluctance to require highly pa rticularized, subspecialization on the part of experts").

15. The District Court held that Dr. Gottheimer was not qualified because his experience lay largely in the area of p roperty-casualty insurance, not life insurance, noting that Dr. Gott heimer testified that
there were "fundamental differences" between the tw o. See 1997 WL 732473, at *22. This conclusion contradicts our hol dings in Knight and Holbrook, in which we reversed district courts' exc lusions of experts whose expertise the trial courts concluded was not sufficiently specialized. As we emphasized in those cases, we ar e reluctant "to require highly particularized, sub-specialization o n the part of experts." Knight, 596 F.2d at 88; accord Holbrook, 80 F.3d at 782. Any differences between the two areas "should go to the weight, and not the admissibility, of [the expert's] opinion." Knight, 596 F.2d at 88.

47bachelor's and master's degrees in insurance-relate dfields,

as well as the a doctorate from a correspondence sc hool.16 He also possesses several professional affiliations in insurance professionals' organizations. Finally, Dr

. Gottheimer has taught for over twenty-five years at the College of Insurance. The College of Insurance is a n accredited, industry-sponsored school that offers c lasses in all aspects of insurance business. He is now on the fulltime faculty there, and has taught courses in a var iety of fields, including insurance company management.

In light of these extensive qualifications, I have no doubt that Dr. Gottheimer was qualified and should have b een permitted to testify as an expert under Rule 702. T he District Court's decision to the contrary was an ab use of discretion. As the majority points out, the Distric t Court refused to qualify Dr. Gottheimer because his quali fications "were not of the highest caliber." Slip Op. at 21. But in light of our longstanding jurisprudence, this is not an appropriate basis for excluding a proffered expert witness. See Kannankeril v. Terminix Intl., Inc., 128 F.3d 8 02, 809 (3d Cir. 1997); Holbrook, 80 F.3d at 782; Paoli II, 35 F.3d at 741. Accordingly, I must conclude that the Distr ict Court abused its discretion in excluding his testimony on this
basis.

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16. The District Court's focus on the nature of Dr. Gottheimer's doctorate and its consequent implicit dismissal of his other qualifications is also
inconsistent with the exercise of sound discretion. If the district courts abused their discretion in Habecker, Paoli I and La uria by insisting that the expert have a particular type of degree, the Di strict Court in this case erred in insisting that the expert have not ju st a particular degree, but a degree from a particular kind of school. Cf. Lauria, 145 F.3d at 599; Paoli I, 916 F.2d at 856.

Furthermore, the District Court's reliance on Van B largan v. Williams Hospitality Corp., 754 F. Supp. 246 (D.P.R. 1991), in discounting Dr. Gottheimer's degree is misplaced. In that case, the district court excluded an expert because, in addition to discount ing his doctorate from a correspondence school, the court found that he had no other satisfactory qualifications. See Van Blargan, 754 F . Supp. at 248-49. Here, by contrast, Dr. Gottheimer has numerous othe r qualifications in
addition to his doctorate.

48For all these reasons, I think that Dr. Gottheimer should

have been permitted to testify as an expert witness under Rule 702. As discussed above, Dr. Gottheimer fully met all three of the Rule 702 requirements: qualifications, reliability and fit. The only remaining question is whether
that error was reversible or harmless error.

IV. Harmless Error

In the closing paragraph of its discussion of the R ule 702 evidentiary issue, the majority concludes that, eve n if the District Court did commit an error in excluding Dr. Gottheimer's testimony, the error was harmless. In reaching this conclusion, it relies on the District Court's statement that it "could not find [Dr. Gottheimer] to be a credible witness given his evasiveness if not his p ropensity to state falsehoods." 1997 WL 732473, at * 26. The District Court pointed to a few alleged inconsistencies in D r. Gottheimer's deposition and trial testimony in supp ort of this conclusion. The majority concludes that, since the
District Court would not have believed Dr. Gottheim er's testimony, his testimony could not have been given any weight if admitted. Thus its exclusion did not have a substantial effect on the outcome and any error in excluding it was harmless. Once again, I must disag ree.

Under the Federal Rules of Evidence, an evidentiary error to which a party has raised a proper objection is n ot a grounds for reversal "unless a substantial right of the party is affected." Fed. R. Evid. 103(a); see also 28 U.S .C. S 2111; Fed. R. Civ. P. 61. An error is harmless, i.e., it does not affect a substantial right, only if "it is highly p robable that the error did not contribute to the judgment." Murr ay v. United of Omaha Life Ins. Co., 145 F.3d 143, 156 (3 d Cir. 1998) (citing McQueeney v. Wilmington Trust Co., 77 9 F.2d 916, 923-27 (3d Cir. 1985)). Although, as discussed above, the improper admission of evidence is usually harml ess error in a bench trial, see supra Part II, the erro neous exclusion of evidence in a bench trial can be rever sible error just as in a jury trial. See 11 Charles Alan Wright et al., Federal Practice & Procedure S 2885, at 454 (2d ed. 1995) ("In nonjury cases the district court can commit re versible error by excluding evidence but it is almost imposs ible for

49it to do so by admitting evidence." (footnote omitt ed)). Error

is especially likely not to be harmless where the e xcluded expert was the only one a party offered to prove an
essential element of its case.17

In this case, Dr. Gottheimer was the only expert wi tness plaintiffs offered to prove that Unisys acted impru dently. His proffered testimony, set forth in the margin, w as strong.18 By excluding Dr. Gottheimer's testimony, the Distri ct Court deprived plaintiffs of their best evidence that Uni sys breached its duty of prudence, a key element of his case. In light of our conclusion in Lauria and Holbrook, I c annot say that it is highly probable that the exclusion of Dr

. Gottheimer did not affect the outcome of the trial. This is especially true in light of the other evidence admi tted at

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17. See Lauria, 145 F.3d at 600 ("Finally, we note that because Slavin was the only witness originally offered to prove Am trak's negligence with respect to the base tie, his exclusion from the tri al did not constitute harmless error."); Holbrook, 80 F.3d at 787 (findin g that the error in excluding plaintiff 's two doctors who were his onl y evidence regarding the type of cancer from which he suffered was not h armless); see also Habecker, 893 F.2d at 53 (finding that the error in excluding one of plaintiff 's two expert witnesses was not harmless where defendant proffered three experts on the same point).

18. In particular, plaintiffs' attorney stated that , if he had been permitted to testify, Dr. Gottheimer's testimony would have b een as follows:

We have offered [Dr. Gottheimer's] testimon y to establish . . .

that in the insurance industry, there are some st andard tools of tests that are performed in conducting an analysis of thefinancial condition of insurance companies, both life and health, and property and casualty, in terms of ratios that are ge nerated from the annual statement, tests prescribed by the National Association of

Insurance Commissioners, and the Best leverage and liq uidity and profitability
ratios.

The witness has performed these tests in hi s own capacity in the past. He has performed them with respect to Executive Life, based upon information that was available prior to the time of the three bids in question. He is able to interpret th e tests. He is familiar
with the tests. And his testimony would establish that the tests set up certain red flags that should have caused a person familiar with

thetests and performing the tests to ask furthe r questions about the

solvency and the credit worthiness of Execut ive Life.

50trial, set forth in the margin.19 The District Cour t essentially

decided all questions the evidence raised in favor of Unisys and concluded that Unisys acted prudently. Although I agree with the majority that, based on the admitted evidence, this conclusion was not clearly erroneous , this is to me an exceedingly close question. Accordingly, D r. Gottheimer's testimony, if admitted, stood a good c hance of changing this balance and consequently changing the
decision of the District Court.

That the District Court had questions about Dr. Gottheimer's credibility should not affect our harm less error analysis. The District Court's conclusion tha t it would not have found Dr. Gottheimer's testimony credible, based only on his voir dire testimony, is not sufficient grounds for concluding that exclusion of his testimony was harm less. I believe that there is a reasonable chance that, if the District Court had given Dr. Gottheimer the opportunity to p resent his testimony in full, it would have found him to b e a credible witness.

Our decisions in Lauria and Holbrook at least impli citly support this conclusion. In each of those cases, we reversed a district court decision excluding expert testimon y on the grounds that the expert witness lacked the necessar y qualifications. Such evidence goes to the weight, n ot the admissibility, of the expert testimony. See Kannank eril, 128

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19. The evidence on Unisys's prudence admitted at t rial included primarily the testimony of White and Level, two Uni sys executives charged with responsibility for the Funds, and Beck er, an advisor whose services White and Level engaged. The evidence befo re the District Court concerned several questions which, although the cou rt decided them in Unisys's favor, raised serious questions about Unis ys's prudence. (1) Whether Unisys conducted an adequate independent in vestigation into Becker's recommendation? (2) Whether Unisys conduct ed an adequate investigation of its own after it ceased use of Bec ker's services? (3) Whether credit ratings were sufficient to prove tha t Unisys acted prudently? (4) Whether the Unisys trustees adequate ly considered and debated the advantages and disadvantages of the Exe cutive Life GICs? (5) Whether the fact that the Executive Life GICs b ore a higher interest rate was sufficient to suggest that they were not p rudent investments? (6) Whether it was imprudent for Unisys not to main tain written investment guidelines?

51F.3d at 809. In neither Lauria nor Holbrook did the effect of

the expert's particular qualifications on the weigh t properly accorded to his testimony play any part in our harm less error analysis. See Lauria, 145 F.3d at 600 (discus sing harmless error without mentioning the quality of th e improperly excluded expert's qualifications); Holbr ook, 80 F.3d at 787 (same). Similarly, the impact of questi ons about Dr. Gottheimer's credibility on the weight due his testimony should not play a part in our harmless error analys is in
this case.

I find further support for this conclusion in an
examination of what the District Court identified a s "impeachment" of Dr. Gottheimer. The District Court stated that "Dr. Gottheimer was impeached no fewer than fo ur times on the relatively straight forward questions on his qualifications." 1997 WL 732473, at *26; see also 1 997 WL 732473, at *21-*22. But this so-called "impeachment " involved at most minor inconsistencies. First, Dr.
Gottheimer testified at trial that he could not rec all having testified in court in a case involving a life insur ance company, although he stated at his deposition three years earlier that twenty-four out of the twenty-five tim es he had testified in court involved property-casualty insur ance companies. See 1997 WL 732473, at *21. Second, alth ough at his deposition he could not recall having done c onsulting work involving life insurance company solvency, he testified that he had been retained once before his depositio n and several times after his deposition to do such consu lting. See 1997 WL 732473, at *21-*22. Third, while he testifi ed at
trial that there were "some differences and there a re also some similarities in the way" one analyzes life ins urance as opposed to property-casualty insurance company solv ency, in his deposition he agreed with Unisys's attorney that
there were "fundamental differences." See 1997 WL 732473,

at *22.

I cannot see how these answers, under any reasonabl e reading, suggest that Dr. Gottheimer is a completel y incredible witness. At most, they suggest that he c ould remember some things at his deposition that he coul d not at trial, and vice versa. Certainly, Dr. Gottheimer 's statements at trial were not directly inconsistent with those

52in his deposition. A comparison of the statements d oes not

raise an inference that Dr. Gottheimer was being ev asive, let alone lying. Thus, I cannot agree with the majo rity that
the at worst minor inconsistencies in Dr. Gottheime r's testimony make it highly probable that his testimon y would not have affected the District Court's judgment.

Accordingly, I do not think that the District Court 's erroneous exclusion of Dr. Gottheimer's expert witn ess testimony was harmless. Therefore, I would remand t his
case for a new trial in which Dr. Gottheimer's test imony could be presented; hence, I dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

53