Court Opinion

ID: 2786023
Source: CourtListenerOpinion
Date Created: 2015-03-13 16:00:36.735692+00
Date Added: 2024-06-11T11:04:58.697305
License: Public Domain

Not for publication in West's Federal Reporter
            United States Court of Appeals
                         For the First Circuit

No. 14-1697

         IN RE: THE ENVIRONMENTAL CAREERS ORGANIZATION, INC.

                                  Debtor

 GARY W. CRUICKSHANK, as Trustee of the Chapter 7 Estate of the
               Environmental Careers Organization,

                         Plaintiff, Appellant,

                                    v.

                           JOHN R. COOK, JR.,

                          Defendant, Appellee.

            APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. George A. O'Toole, Jr., U.S. District Judge]

                                  Before

                          Lynch, Chief Judge,
                      Souter,* Associate Justice,
                       and Stahl, Circuit Judge.

     *
       Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
     Andrew M. Jacobs, with whom Charles R. Bennett, Jr., Theodore
J. Folkman, and Murphy & King, P.C. were on brief, for appellant.
     Sara A. Colb, with whom Barry C. Klickstein and Day Pitney LLP
were on brief, for appellee.

                          March 13, 2015

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             PER CURIAM.   This appeal arises out of an adversary

proceeding initiated in bankruptcy court by Plaintiff-Appellant

Gary W. Cruickshank, the trustee of the Chapter 7 estate of

Environmental Careers Organization, Inc. ("ECO"), against ECO's

former president, Defendant-Appellee John R. Cook, Jr.       ECO, a

nonprofit corporation organized under the laws of Massachusetts,

maintained government contracts with various agencies, including

the federal Environmental Protection Agency ("EPA"), whereby it

received compensation for the costs of placing students in agency

internships.     The crux of Cruickshank's complaint is that Cook

breached his fiduciary duty of care to the organization, insofar as

he ignored warnings from his staff that he had been misinterpreting

government contracts by treating certain reimbursement rates as

"fixed" rather than "provisional," and had improperly retained

surpluses.    As a result, the complaint alleges, the EPA eventually

audited ECO and sought recovery of payments of over $6 million from

ECO.   Subsequently, ECO filed for bankruptcy.

             Before the district court — which had withdrawn the

reference to the bankruptcy court — Cook moved for judgment as a

matter of law, arguing that Cruickshank could not make out his case

where he had failed to proffer, in advance of trial, expert

witnesses who would testify to the applicable standard of care.

After a round of briefing on the issue, the district court agreed,

reasoning that a jury would be capable of assessing the veracity of

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Cruickshank's allegations only with the help of an expert in the

area of accounting and/or corporate management practices.      The

court observed that whether Cook had "'failed' to take 'corrective

action' after being warned that ECO was 'misinterpreting government

contracts,' or to 'sufficiently inquire' into company practices, or

to 'ensure' that 'proper policies' were implemented," were matters

that could not reliably be assessed without an expert qualified

under Federal Rule of Evidence 702; without testimony as to such

matters, Cruickshank would be unable to satisfy his burden of proof

as to his only claim, breach of fiduciary duty.     Cruickshank v.

Cook, No. 13-11247-GAO, 2014 WL 2615364, at *1 (D. Mass. June 12,

2014) (quoting Pl.'s Mem. in Opp'n to Def.'s Mot. in Limine and

Mot. for J. as a Matter of Law, at 2).

          Applying de novo review, we affirm.     See Palmquist v.

Shinseki, 689 F.3d 66, 70 (1st Cir. 2012) (reviewing district

court's disposition of judgment as a matter of law under de novo

standard). While expert testimony is generally inappropriate where

a matter is within the realm of common experience, it may be

"required in certain circumstances in which a factfinder cannot

reasonably be expected to make a judgment without the benefit of

technical expertise or an informed understanding of professional

standards." Downey v. Bob's Discount Furniture Holdings, Inc., 633
F.3d 1, 10 (1st Cir. 2011) (citing Atlas Tack Corp. v. Donabed, 47

                               -4-
Mass. App. Ct. 221, 226 (1999); Brown v. Gerstein, 17 Mass. App.

Ct. 558, 566 (1984)).

          Although Massachusetts law does not categorically require

expert testimony to elucidate the professional standard of care

applicable to officers of a nonprofit corporation, the district

court properly concluded that this particular case could not be

resolved without specialized knowledge.     As the district court

determined, the peculiar factual issues underlying the claim,

involving technical areas of government contracting and corporate

financial management, are "substantive matters beyond the ken of

lay jurors."   Cruickshank, 2014 WL 2615364, at *1 (citing LeBlanc

v. Logan Hilton Joint Venture, 463 Mass. 316, 328–29 (2012)).   As

such, Cruickshank could not prove that Cook had deviated from the

relevant standard of care without expert assistance.   See Fed. R.

Evid. 701 (prohibiting lay witnesses from testifying to opinions

"based on scientific, technical, or other specialized knowledge

within the scope of Rule 702"); cf. Hochen v. Bobst Grp., Inc., 290
F.3d 446, 450–51 (1st Cir. 2002) (in product liability case

applying Massachusetts law, affirming grant of summary judgment to

defendant where particular issues raised were "complex and thus

appropriately the subject of expert testimony," which plaintiff

failed to offer).

          Thus, the district court, which has primary familiarity

with the evidentiary nuances of this case, did not err in granting

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Cook's motion for judgment as a matter of law.   We accordingly

AFFIRM the judgment of the district court.

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