Opinion ID: 1209937
Heading Depth: 1
Heading Rank: 6

Heading: Even If The Defendant's Reply To The Government's Motion Were Somehow Deficient, It Was An Abuse of Discretion To Impose The Extreme Sanction of Disallowing A Criminal Defendant's Key Witness

Text: Even assuming, for sake of argument, that the defendant was under an obligation to request a hearing to establish admissibility of the expert witness through examination on the stand, we believe it would have been an abuse of discretion for a district court to impose the extreme sanction of disqualifying a criminal defendant's principal witness on account of this omission. See United States v. Harvey, 117 F.3d 1044, 1048 (7th Cir.1997) (reversing conviction because, in the absence of any clearly-established rule or duty violated by the defendant, the drastic sanction of precluding a witness was unwarranted). Criminal defendants have a constitutional right to present admissible evidence, and exclusion of a defendant's evidence on account of trial errors is a drastic sanction, reserved for only the most serious cases. It is an abuse of discretion for the trial court to exclude important defense evidence on account of discovery violations, such as inadequate disclosure under Rule 16, unless those violations seriously affect the trial. Short v. Sirmons, 472 F.3d 1177, 1188 (10th Cir.2006) (Where the discovery violation is not willful, blatant or calculated gamesmanship, alternative sanctions are adequate and appropriate. (citation omitted)); cf. Young v. Workman, 383 F.3d 1233, 1239 (10th Cir.2004) (Where a party has failed to comply with a discovery request, and the failure is `willful and motivated by a desire to obtain a tactical advantage' at trial, then exclusion of the evidence `is entirely consistent with the purposes of the Compulsory Process Clause' of the Sixth Amendment. (quoting Taylor v. Illinois, 484 U.S. 400, 415, 108 S.Ct. 646, 98 L.Ed.2d 798 (1988))). The same is true of less serious trial errors, such as defense counsel's unwise[ ] failure to second the government's motion for a Daubert hearing. Maj. Op. 1247-48 n. 14. As Justice Breyer has commented, it is essential in this context that the courts administer the Federal Rules of Evidence in order to achieve the `end[s]' that the Rules themselves set forth, not only so that proceedings may be `justly determined,' but also so `that the truth may be ascertained.' Gen. Elec. Co. v. Joiner, 522 U.S. 136, 149, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) (Breyer, J., concurring) (citations omitted). Nothing about the circumstances here suggests that exclusion of Mr. Nacchio's key witness was an appropriate or proportionate response to defense counsel's omission. First, it was surely understandable, even if it was not correct, for defense counsel to assume that he would have the opportunity to establish the admissibility of the expert evidence through witness testimony. The majority explicitly notes that this assumption may have been reasonable. Maj. Op. 1245. The government shared this reasonable assumption. App. 420 (stating that if the court did not disqualify the witness under Rule 16, the Court would likely need to hold an evidentiary hearing). No case (at least not one that has been cited, or that we have discovered) has ever held that a criminal defendant's expert may be excluded merely because defense counsel did not move for permission to establish admissibility on the stand. Second, far from being calculated to obtain tactical advantage, defense counsel's slip-up was wholly without consequence. The mistake on which the majority relies was counsel's failure to move for a hearing in response to the government's motion to exclude, or to second the government's motion for a hearing. Yet the record demonstrates that this omission was of no benefit to the defense, did not delay the trial, and did not change the course of the trial in any way. The night before Professor Fischel was scheduled to take the stand, the district judge had not yet looked at the government's motion to exclude. App. 3834. The next morning, in court, Judge Nottingham asked the prosecutor who was going to cross-examine Professor Fischel, App. 3870, which indicates that at this point the judge assumed that Professor Fischel would testify, notwithstanding defense counsel's failure to file a motion to that effect. The government expressly acknowledged that, unless the court agreed with its Rule 16 or other admissibility arguments, Professor Fischel would be called to the stand. App. 420. That is why the government needed to file a motion asking the court to schedule a separate Daubert hearing, away from the jury, in advance of the testimony. No one acted on the assumption that, because defense counsel had not requested a hearing in writing, the witness would be disqualified. Whether the defense asked to proceed by testimony in its reply to the government's motion or would do so orally when Professor Fischel took the stand was of no practical significance. Third, as the Supreme Court explained in Koon v. United States, 518 U.S. 81, 100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996), [t]he abuse-of-discretion standard includes review to determine that the discretion was not guided by erroneous legal conclusions. Judge Nottingham's exercise of discretion with respect to defense counsel's failure to file a written motion for a hearing is inseparable from his legal errors regarding Rule 16 and the relevance of economic expertise. In determining whether to disqualify the witness for counsel's misstep, it would surely be significant to the judge that, in his eyes, the defendant had made egregious and gross failures to comply with his disclosure obligations, rather than merely having omitted to make a written motionthe sort of failing Judge Nottingham had seemed to say he would not criticize. App. 3603. Even more so, the judge must have been influenced by his conclusion that, quite apart from methodology, the evidence excluded was irrelevant and would be confusing to the jury. In his explanation of his disqualification ruling, Judge Nottingham articulated a contempt for expert economic evidence that raises serious questions about any exercise of his discretion in this matter. He described Professor Fischel's proposed testimonywithout knowing anything more about it than was described in the cursory written summary required under Rule 16as a waste of time that would mislead the jury by inviting the jurors to abandon their own common sense and common experience and succumb to this expert's credentials. Id. at 3919, 3920. He said, among other things, that the jurors had no need of expert evidence in determining whether Mr. Nacchio had an economic incentive to trade or not trade on inside information here, App. 3917; that analysis of the defendant's trading patterns was essentially irrelevant, id.; that economic analysis is within the common knowledge of the jury, id. at 3918; that an analysis of whether Mr. Nacchio's sales could be explained on the basis of the economics of diversification is a piece of elucidation we really don't need here, id.; and that a comparison of Mr. Nacchio's trades to those of other CEOs or Qwest directors at the same time, who lacked Mr. Nacchio's inside information, is almost preposterous. Id. at 3919. He opined that expert evidence is no more necessary in a complex securities matter than in a simple negligence case. Id. at 3841. These statements are in sharp conflict with the advisory committee note to Federal Rule of Evidence 702, which describes the venerable practice of using expert testimony to educate the factfinder on general principles, specifically mentioning as an example how financial markets respond to corporate reports. On appeal the panel held that the district's court's exclusion of the evidence on the ground that economic analysis is irrelevant and misleading in a securities case of this sort was an abuse of discretion. Nacchio, 519 F.3d at 1156. The government did not petition for rehearing to review the panel's conclusion on this point, and the majority does not breathe a word in support of the district court's dismissive view of economic analysis. That the district court erred in this respect is therefore undisputed. Because the district court's exercise of discretion was guided by [these] erroneous legal conclusions, the defendant is entitled to reversal. Koon, 518 U.S. at 100, 116 S.Ct. 2035. The majority disregards the district court's erroneous view of the relevance of economic evidence on the ground that review of this . . . issue was not sought on en banc rehearing. Maj. Op. 1243 n. 9. That is upside-down. The panel explicitly reversed the district court's relevancy ruling, and the government's decision not to seek rehearing on that issue means that holding is now undisputed. It does not make the holding disappear. Even though the panel's opinion was vacated, as the majority points out, id., the district court's errors were still errors; no one defends them. Unless the errors were harmless, see United States v. Labastida-Segura, 396 F.3d 1140, 1143 (10th Cir.2005), they necessitate reversal of the district court's decision. The majority also seems to suggest that the district court's relevancy ruling is outside the scope of this en banc proceeding. Maj. Op. 1243-44 n. 9. Not so. One of the issues posed in the en banc order was whether the district court abuse[d] its discretion in disallowing the evidence. United States v. Nacchio, 535 F.3d 1165 (10th Cir.2008) (order granting petition for rehearing en banc) (quoted at Maj. Op. 1236 n. 1). This court has held time and time again that a district court abuses its discretion if it applies the wrong legal standard. E.g., Westar Energy, Inc. v. Lake, 552 F.3d 1215, 1224 (10th Cir.2009); RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1208 (10th Cir.2009); United States v. Ramirez, 304 F.3d 1033, 1035 (10th Cir. 2002); Dominion Video Satellite, Inc. v. EchoStar Satellite Corp., 269 F.3d 1149, 1153 (10th Cir.2001). In its explanations for the evidentiary ruling, the district court made at least two glaring legal errors, which no oneneither the government nor the majoritynow defends. First, confusing the civil and criminal discovery rules, the court held that the defendant's Rule 16 disclosures were egregiously deficient because they failed to set forth the expert's econometric methodology. App. 3914, 3917. Second, the court held that expert economic testimony in this case would be irrelevant and a waste of time. Id. at 3917-20. The abuse of discretion issue brings these errors squarely before this en banc court. That the court's decision to exclude the evidence was based in significant part on these errors of law renders the ruling an abuse of discretion. The majority does not defend the district court's holdings on these points; it all but ignores them, and conducts its analysis of abuse of discretion without taking them into consideration. See Maj. Op. 1256-59. The majority offers no explanation why it regards the legal errors that informed the district court's decision as not germane. Id. at 1244 n. 9. It simply declares them so. It is black letter law that a district court's legal errors are relevant to whether it abused its discretion. Koon, 518 U.S. at 100, 116 S.Ct. 2035; Westar Energy, 552 F.3d at 1224; RoDa Drilling, 552 F.3d at 1208; Ramirez, 304 F.3d at 1035; Dominion Video Satellite, 269 F.3d at 1153. Judge Nottingham certainly regarded the supposed disclosure deficiencies and irrelevance of economic analysis as material to his evidentiary ruling. He said so, repeatedly. The judge explained that he was disqualifying Professor Fischel primarily on account of defense counsel's gross defect in failing to reveal the methodology in the disclosures. App. 3921. The other principal reason he gave for the decision was the irrelevan[ce] of economic testimony. Id. at 3919. When he refused to allow Professor Fischel even to testify in rebuttal, the judge repeated these two rationales: that [t]he March 29, 2007, disclosure contained no methodology or reliable application of methodology to the case, id. at 4075, and even if it were reliable, the Court remains of the conclusion that the testimony is of no relevancy. Id. at 4075-76. We are baffled that an appellate court could declare certain reasons not germane when those were the reasons given by the district court for its decision. Even apart from Judge Nottingham's own words, the relevance of his legal errors to the evidentiary ruling is obvious. As we have already noted, in determining whether counsel's procedural derelictions should result in disqualification of the criminal defendant's key witness, it must necessarily have been significant to the judge that they constituted (he thought) egregious and gross violations of the defendant's disclosure obligations. Similarly, Judge Nottingham's notion that economic testimony is misleading and a waste of time must have influenced his ruling. A court must balance any procedural omission regarding the introduction of evidence against the importance of that evidence to the truth-seeking function of the trial. If the court regards the testimony as a waste of time, this must necessarily affect its assessment of the balance. Indeed, if the court did not take into consideration the seriousness of the procedural infraction and the importance of the evidence to the defense, it would likely be an abuse of discretion. Those are among the most important factors the court is supposed to consider. See United States v. Bahamonde, 445 F.3d 1225, 1231 (9th Cir. 2006) (listing factors a district court must consider before excluding a defense witness's testimony); Short v. Sirmons, 472 F.3d 1177, 1188 (10th Cir.2006) (noting the importance of whether the procedural infraction was willful, blatant, or in bad faith); Fendler v. Goldsmith, 728 F.2d 1181, 1188 (9th Cir.1983) (describing the importance of the witness as the most significant consideration). If the considerations that guided the court were based on incorrect understandings of the law, as these were, the court's exercise of discretion was necessarily distorted. Discretion involves a sense of proportion. Not every violation of procedural rules warrants the nuclear option of disallowing the defense to present its case. As the Seventh Circuit observed in Harvey, [t]he stakes in criminal prosecution are always high, and defendants' Sixth Amendment rights must be protected to ensure that the truth is ultimately found. 117 F.3d at 1048. We cannot regard the sanction here as proportionate to the procedural omission, which was both understandable and inconsequential. It strongly appears that the district court's exercise of discretion was affected by its unsupportable views regarding Rule 16 and the value of economic expertise. We have nagging doubts about the district judge's sense of fairness toward this defendant. If the decision here was not an abuse of discretion, we wonder what one would look like.