Court Opinion

ID: 4405233
Source: CourtListenerOpinion
Date Created: 2019-06-10 20:00:41.571767+00
Date Added: 2024-06-11T14:52:35.318282
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        JUN 10 2019
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                       No.    17-50373

                Plaintiff-Appellant,            D.C. No.
                                                2:15-cr-00465-TJH-1
 v.

SHAHRIYAR BOLANDIAN; KEVAN                      MEMORANDUM *
SADIGH,

                Defendants-Appellees.

                   Appeal from the United States District Court
                      for the Central District of California
                    Terry J. Hatter, District Judge, Presiding

                       Argued and Submitted May 17, 2019
                              Pasadena, California

Before: NGUYEN and OWENS, Circuit Judges, and BAYLSON,** District Judge.

      The United States retained Michael G. Mayer (“Mayer”) as a securities

expert to analyze the trading patterns of Defendants Shahriyar Bolandian and

Kevan Sadigh in this insider trading action. The government appeals the district

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Michael M. Baylson, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.
court’s order granting Defendants’ motion in limine and excluding two opinions in

Mayer’s expert report on the ground that Mayer was not qualified under Federal

Rule of Evidence 702. We reverse and remand.

      The parties agree that Mayer is qualified to testify to the factual background

in his report, which explains options trading and call options and provides a factual

summary of Defendants’ transactions based on his review of trade blotters and

other records of Defendants’ accounts. At issue are two opinions in the report:

Opinion 5.3 (“Opinion 3”) and Opinion 5.5 (“Opinion 5”).

      Opinion 3 is titled: “There are various ways in which a trader can profit by

trading with acquisition-related MNPI [(material non-public information)].” At

oral argument, the government contended that provisions of Opinion 3 that address

the “probability” or “likelihood” that MNPI would influence a trader’s securities

choices are properly excludable. 1 However, Opinion 3 includes descriptions of

other topics that reflect objective facts about options trading and call options and

do not contain Mayer’s opinion on subjective topics, such as rationale or intent.

      Opinion 5 concludes that Defendants’ trades “appear consistent with what a

trader would do if they were trying to take advantage of MNPI” and includes 14

sub-opinions. The government is explicitly not appealing the district court’s

1
 This language falls within sections 5.3.1.1 (“Option Leverage and Expected Profit
Associated with the Securities Choices”) and 5.3.1.2 (“Factors that Influence the
Level of Profit”) of Opinion 3.

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exclusion of the overall conclusion in Opinion 5. Nor is the government appealing

the exclusion of all sub-opinions in Opinion 5. Rather, the government only

appeals the exclusion of sub-opinions 1–4, 6–8, and 10–13, and the government

notes that it only plans to use sub-opinions 6, 7, 10, and 11 to rebut defense claims

if raised.

       The district court excluded Opinions 3 and 5 in their entirety in a one-

sentence order granting Defendants’ motion in limine. The district court’s order

stated, “Although the opinions are relevant, the Court finds, pursuant to Fed. R.

Evid. 702, that Michael Mayer is not qualified to render the opinions that are the

subject of this motion.”

       We have jurisdiction over the government’s interlocutory appeal pursuant to

18 U.S.C. § 3731 because the government submitted a timely certification signed

by the Acting United States Attorney, who had authority to properly certify the

appeal. Cf. United States v. Weyhrauch, 548 F.3d 1237, 1241–42 (9th Cir. 2008),

(holding that the Attorney General can properly certify an appeal in the absence of

a United States Attorney or acting United States Attorney overseeing a

prosecution), vacated and remanded on other grounds, 561 U.S. 476 (2010) (per

curiam).

       We review the district court’s exclusion of Opinions 3 and 5 under Rule 702

for abuse of discretion. See United States v. Wells, 879 F.3d 900, 914 (9th Cir.

                                          3                                       17-50373
2018). We conclude that the district court abused its discretion by granting

Defendants’ motion in limine. The district court did not give any reasons for how

it applied Rule 702 to conclude that Opinions 3 and 5 were relevant, but that

Mayer was not qualified. This conclusion is not supported by the record, and

Defendants did not dispute Mayer’s qualifications as an expert to testify about

factual information, such as options trading, call options, and Defendants’ trading

records. See City of Pomona v. SQM N. Am. Corp., 866 F.3d 1060, 1069 (9th Cir.

2017) (holding that “[the district court’s] failure to make any findings regarding

the efficacy of [the] expert opinions constituted an abdication of the district court’s

gatekeeping role, and necessarily an abuse of discretion”).

      To the extent that the provisions of Opinion 3 at issue and sub-opinions 1–4,

6–8, and 10–13 of Opinion 5 consist of such factual testimony, they are admissible.

We assume that on remand, the district court will conduct a Rule 403 balancing

analysis and exercise reasoned discretion to determine the scope of admissible

testimony under Rule 702. See In re Hanford Nuclear Reservation Litig., 534 F.3d
986, 1016 (9th Cir. 2018) (“The district court has discretion [under Rule 403] to

exclude evidence when its probative value is substantially outweighed by the

danger of misleading the jury or confusing the issues. This is especially true with

respect to expert witnesses.”) (citation omitted); see also Murray v. S. Route Mar.

SA, 870 F.3d 915, 923 (9th Cir. 2017) (“Because of the fluid and contextual nature

                                           4                                    17-50373
of the [reliability] inquiry, district courts are vested with ‘broad latitude’ to

‘decid[e] how to test an expert’s reliability’ and ‘whether or not [an] expert’s

[relevant] testimony is reliable.’” (alterations and emphases in original) (quoting

Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152–53 (1999))). As we have noted

above, the district court has already stated that the Opinions are relevant. If the

district court excludes any evidence, it should articulate its reasons. 2

REVERSED AND REMANDED.

2
 In a supplemental letter, the government contends that the record is sufficient for
us to hold that the challenged sections of Opinion 3 and sub-opinions 1–4, 6–8, and
10–13 of Opinion 5 are admissible. The government relies on United States v.
Ruvalcaba-Garcia, --- F.3d ----, 2019 WL 2063373 (9th Cir. May 10, 2019) (per
curiam). In that case, this court held that the district court abused its discretion
when admitting an expert’s testimony at trial, but this court affirmed the
defendant’s conviction because the record demonstrated that the testimony was
admissible, and therefore, the district court committed harmless error. Id. at *5–6.
That case does not stand for the proposition, as the government suggests, that we
may take the place of the district court and independently determine which of the
provisions at issue in Opinions 3 and 5 are admissible.

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