En Banc Rehearing for Qwest's Joe Nacchio Next Week

On September 25, the 10th Circuit, en banc, will conduct a rehearing of a three judge panel's reversal of former Qwest CEO Joseph Nacchio's insider trading conviction.

The issue is whether the trial judge improperly excluded testimony from Nacchio's expert witness who would have disagreed with two Government experts on an issue that was central to Nacchio's guilt or innocence.

This is about fundamental fairness and affects defendants in all cases, not just Nacchio or white collar cases. A defendant’s ability to call witnesses on his behalf at trial is an integral part of the Sixth Amendment right to put on a defense. [More...]

The rules are the rules. The Judge imposed a burden on Nacchio at a stage of the proceedings in which he had no such burden, and then imposed the most drastic sanction possible, exclusion of his expert's testimony, when he didn't meet the burden.

In a nutshell, Criminal Procedure Rule 16 requires a defendant to notify the Government of its intent to call an expert witness and provide a summary of the expert's testimony, the reasons and basis for his opinion and his qualifications. That's it. At that stage, the defendant in a criminal case is not required to demonstrate the expert's testimony is reliable or admissible under the rules of evidence.

If the Government challenges the expert's testimony and argues it shouldn't be admitted because it is not reliable, relevant to the issues or helpful to the jury, the defense, under Rule 702 of the rules of evidence, gets to make its case for admissibility in writing or at a hearing.

There is no obligation of the defense to request a reliablilty hearing or demonstrate reliability before a challenge is made by the Government or raised by the Court.

The National Association of Criminal Defense Lawyers (NACDL)has filed an excellent amicus brief (pdf) on Nacchio's behalf. This is about fairness and the integrity of the criminal trial process with ramifications for all defendants.

The District Court made three key errors with regard to Federal Rule of Criminal Procedure 16 that resulted in a violation of the Defendant’s constitutional rights to put on his defense.

First, the District Court held that the Rule 16(b)(1)© summary of the defense expert’s opinion was insufficient because it did not establish that the expert was reliable, when in fact Rule 16(b)(1)© contains no such criterion.

Second, the District Court imposed a sanction without providing Defendant with any opportunity to be heard.

Compounding this error, the District Court proceeded to impose the harshest punishment
available – total exclusion of the expert witness – when the governing authority reserves that sanction for egregious cases in which a party is improperly gaming the system for strategic advantage.

On the distinction between the disclosure obligations in Rule 16 of the criminal rules and the admissibility determination in Rule 702 of the evidentiary rules:

The purpose of the rule is simply to give notice to the government. Should the government then object to an expert’s qualifications, a separate process exists to evaluate the expert and the bases for his opinions. That process, however, proceeds pursuant to the standards set forth in Federal Rule of Evidence 702 and in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).

Rule 16 itself calls for no such inquiry, and it is simply not the practice of lawyers in criminal cases (which, after all, proceed under a very different discovery regime than do civil cases) to provide anything even approaching an expert report at the Rule-16-notice stage.

By grafting a Rule 702-Daubert analysis onto Rule 16’s bareboned requirements, the District Court invented a new obligation from whole cloth, thereby both impermissibly interfering with the Defendant’s ability to present his defense and effectively circumventing Rule 16 by allowing the government to obtain the equivalent of a civil expert report in advance of the defense expert’s testimony.

...If there is to be a new rule requiring that Rule 16 notice be more comprehensive than that provided here, then (a) the rule cannot in fairness be applied retroactively to Mr. Nacchio; and (b) the rule must be applied to the Government as well as to defendants.

What happened as a result was that the Government got to have two experts testify unchallenged:

Egregiously, the District Court excluded the Defendant’s expert even though it had allowed two of the government’s experts to testify on precisely the same issues the defense expert would have testified on.

Any criminal defense attorney would find it virtually impossible to properly defend a defendant under such conditions. The District Court’s ruling essentially guaranteed that the Defendant would have no sophisticated means to rebut the government’s case on topics vital to the case...

....Even beyond the normal caution that district courts should exercise when considering exclusion of defense experts, they should virtually never prevent defense experts from presenting evidence on topics about which the government’s experts will present evidence. Doing so unfairly cripples the defense.

As another court held,

"It is an abuse of discretion to exclude the otherwise admissible opinion of a party’s expert on a critical issue, while allowing the opinion of his adversary’s expert on the same issue."

This affects the integrity of the trial process.

Defendants and the public accept the legitimacy of criminal sanctions because our constitutional rules guarantee that courts will impose them only after fair trials. Therefore, courts must be vigilant in protecting “the interest in the fair and efficient administration of justice, and the potential prejudice to the truth-determining function of the trial process.”

The District Court in this case made precisely such a decision by allowing two government experts to testify on a vitally important issue, while at the same time preventing the Defendant from putting on even one of his own. Integrity, fairness, and truth cannot abide such an uneven playing field in a criminal trial.

Here is the proper sequence in criminal cases:

Upon review of the Rule 16 summary produced by a party, the other party requests, or the court sua sponte orders, a Daubert hearing.

At that hearing, the proponent of the expert testimony is provided an opportunity to respond to any objections to or questions about the proffered testimony by presenting evidence and argument. Indeed, on occasion a court will review such evidence in camera in order to ensure that the other side does not use the Daubert proceeding to obtain advance notice (to which it is not entitled) of its adversary’s case.

Only after the proponent of the witness has had such an opportunity to be heard does the court determine whether his proffered expert testimony is admissible. (My emphasis)

What happened here:

In this case, however, the Defendant was neither notified of nor permitted to participate in the admissibility determination. Under these circumstances, he cannot be subjected to the draconian sanction of complete exclusion on the unprecedented and unfounded presumption that he somehow knew that he was required either to request a Daubert hearing or forgo entirely any opportunity to address the District Court’s concerns regarding his expert’s methodology.

Nacchio's case is important for all defendants.

Criminal defendants in cases large and small encounter Daubert questions. Indeed, while Daubert issues are prevalent in complex financial cases, they regularly arise in more “ordinary” criminal cases as well.

A holding that places the onus of requesting a Daubert hearing on criminal defendants may in fact subject to greatest peril not white-collar defendants like Mr. Nacchio but, rather, the poorest and most unsophisticated defendants. here is no sound reason to change the rules in this way.

Next week's hearing will address:

  • First, whether Nacchio had to ask the court before trial to hold a Daubert hearing and present the methodology of his expert at the hearing -- or demonstrate his expert's methodology some other way before trial, such as in a brief.
  • Next the appeals court will address whether the trial judge failed to give Nacchio the opportunity to do either.
  • Whether it was Nacchio's burden to ask for a Daubert hearing. Their last question concerns the remedy if the judge was wrong to exclude the expert testimony without a hearing: Should the remedy be a new trial for Nacchio or would it be sufficient to send the case back to the trial court to hold the evidentiary hearing?

I never predict what an appeals court will do. But, my answers would be: The defendant has a burden to demonstrate reliability (and appropriate methodology) in a brief or at a hearing only after a proper objection has been made by the Government or the Court. The trial judge was wrong to exclude the expert testimony without affording Nacchio an opportunity to do so. A new trial is required.

All of TalkLeft's coverage of the Nacchio trial is accessible here.

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  • Display: Sort:
    Very nice (none / 0) (#1)
    by Abdul Abulbul Amir on Fri Sep 19, 2008 at 02:41:36 PM EST

    Thats a very nice summaty of the issues.  


    I am sure glad someone here understands the (none / 0) (#2)
    by hairspray on Fri Sep 19, 2008 at 03:04:36 PM EST
    nuts and bolts of this case(Jeralyn).   I always thought the government was out to get him because of his refusal to allow Qwest to snoop for the government.  But of course I do not understand the intricacies of evidence, etc. So lacking the framework of what is fair I was left wondering who appointed that bunch of appeals judges and what tilted the evidence in the government's favor. Now as I understand it, the judges tied Nacchio's right hand behind his back in this trial.

    Well, trial judge (none / 0) (#3)
    by befuddledvoter on Fri Sep 19, 2008 at 03:11:01 PM EST
    certainly got it wrong but appellate panel (three-judge) reveresed the trial judge.  Now onto the full bench which is very rare.  

    I think if the full panel does not affirm the prior panels's reversal, there is a basis for ineffective assistance of counsel.  So, if the full court is result driven, the case is far from over.


    Ooops! My bad. I knew there was (none / 0) (#4)
    by hairspray on Fri Sep 19, 2008 at 03:39:32 PM EST
    a GOP appointee in there somewhere.

    Can Nacchio... (none / 0) (#5)
    by MileHi Hawkeye on Fri Sep 19, 2008 at 03:46:22 PM EST
    ...ever really get a fair trial in Colorado?  

    There are an awful lot of people around that would like to beat their pension losses out of him from what I hear.  

    I live-blogged (none / 0) (#6)
    by Jeralyn on Fri Sep 19, 2008 at 04:02:03 PM EST
    the jury selection here.

    More jury slection live-blogging (none / 0) (#7)
    by Jeralyn on Fri Sep 19, 2008 at 04:06:40 PM EST
    Interesting that no prospective juror (none / 0) (#8)
    by befuddledvoter on Fri Sep 19, 2008 at 04:49:44 PM EST
    admit to resenting corporate officers' high salaries. Note, most of these folks are pretty much working class by professiona and education. Overwhelmingly, these people do not read newspapers.  Very weird group.  Not necessarily bad, but how do you get so many people who don't read the paper??  

    since it's federal court (none / 0) (#9)
    by Jeralyn on Fri Sep 19, 2008 at 04:53:57 PM EST
    and not state court, the panel is called from all over the front rage of Colorado, including many conservative, rural areas. There's very little diversity compared to a Denver jury. As to why they don't read the paper, I have no answer for that. But I'd bet they watch the local news.

    Do you think the defense used a (5.00 / 1) (#10)
    by befuddledvoter on Fri Sep 19, 2008 at 06:24:41 PM EST
    jury consultant?  Seems there were not so many challenges at all.  Was there a jury questionnaire that you know of??