A 'Skeletal' Expert Report Complies with Federal Disclosure Rules
Business Valuation Advisor, Winter 2008
Audubon Veterinary Hosp., Inc. v. U.S. Fidelity & Guarantee Co., 2007 U.S. Dist. LEXIS 46301 (June 25, 2007)
In the wake of hurricane Katrina, a Louisiana veterinary hospital sued its insurance company for failing to fully compensate its business interruption losses. Discovery deadlines were set in the case, including disclosure of expert reports pursuant to Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure (FRCP). The Rule clearly requires a "complete statement of all opinions to be expressed and the basis and reasons therefore," in addition to the underlying data and any exhibits that the expert will use.
The insurance company submitted a report that was not signed by the expert—it was not even clear that he’d written it. The report contained columns of figures without any conclusions or defined sources; it was also missing exhibits and a list of the expert’s qualifications. The plaintiff moved to strike the expert’s report for failing to comply with FRCP 26.
A strong argument for striking the report
The plaintiff presented "a strong argument for striking [the expert’s] report," according to the federal district court. The "skeletal" report merely provided notice that the insurance company intended to rely on its expert but otherwise failed to comply substantially with the federal rules.
However, "the Court must consider and weigh" many factors, including the insurance company’s explanation, the prejudice to the plaintiffs for allowing the expert to testify, and the possibility that a continuance would "cure" the prejudice. But the expert’s testimony was also "pivotal" to the insurance company’s defense. The suit was "purely about the value of the plaintiff’s business interruption insurance claim," for which the expert’s report was "crucial."
After weighing these factors—and even though the insurance company provided no explanation—the Court declined to preclude the expert from providing evidence in the case. It gave the insurance company ten days to comply with FRCP 26 and ordered it to pay the costs of any deposition of the expert by the plaintiffs.
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