Fischel was prepared to present a study of Nacchio's trading patterns that showed they were inconsistent with insider trading.

But the majority noted on Wednesday that Nacchio's attorneys first disclosed plans to call Fischel three days before the start of trial, giving the government inadequate time to review Fischel's qualifications and opinions.

"The district court's exclusion of the testimony was not arbitrary, capricious, whimsical, or manifestly unreasonable; nor are we convinced that the district court made a clear error of judgment," the majority justices wrote.

The dissenting judges said:

[D]efense attorneys should not have been penalized for "an understandable and inconsequential mistake." "Not every violation of procedural rules warrants the nuclear option of disallowing the defense to present its case," the dissenters wrote.

The case now goes back to the three judge panel to address Nacchio's arguments about the length of his sentence and amount of restitution.

I would have ruled for Nacchio, for the reasons expressed here. All of my Nacchio coverage is available here. My live-blogging of the trial on the days I attended is available at 5280.com.