Troudt v. Oracle Corp.

369 F.Supp.3d 1134

Deborah TROUDT, et al., individually and as representatives of a class of plan participants, on behalf of the Oracle Corporation 401(k) Savings and Investment Plan, Plaintiffs,

v.ORACLE CORPORATION, et al., Defendants.

Civil Action No. 16-cv-00175-REB-SKC

United States District Court, D. Colorado.

Signed January 31, 2019

Ethan Dail Hatch, Heather Lea, James Redd, Kurt Charles Struckhoff, Michael Armin Wolff, Stephen M. Hoeplinger, Troy Andrew Doles, Jerome Joseph Schlichter, Schlichter Bogard and Denton, LLP, St. Louis, MO, for Plaintiffs.

Brian T. Ortelere, Jeremy P. Blumenfeld, Morgan Lewis & Bockius, LLP, Philadelphia, PA, Christopher Joseph Boran, Morgan Lewis & Bockius, LLP, Chicago, IL, Richard B. Benenson, Brownstein Hyatt Farber Schreck, LLP, Denver, CO, for Defendants.

ORDER RE: MOTION TO EXCLUDE PROPOSED EXPERT TESTIMONY OF MICHAEL GEIST

Robert E. Blackburn, United States District Judge

The matter before me is defendants' Motion To Exclude Proposed Expert Testimony of Michael Geist [# 127],¹ filed March 23, 2018. I grant the motion in part and deny it in part.

I. JURISDICTION

I have jurisdiction over this case under 28 U.S.C. § 1331 (federal question) and 29 U.S.C. § 1132(e)(1) (action to enforce rights under ERISA).

II. STANDARD OF REVIEW

The instant motion implicates Rule 702 of the Federal Rules of Evidence, which governs the admissibility of expert witness testimony. The rule provides, relevantly, that

[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

FED. R. EVID. 702. As interpreted by the Supreme Court, Rule 702 requires an expert's testimony be both reliable, in that the witness is qualified to testify regarding the subject, and relevant, in that the testimony will assist the trier in determining a fact in issue. Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579, 589-92, 113 S.Ct. 2786, 2795-96, 125 L.Ed.2d 469 (1993) ; Truck Insurance Exchange v. MagneTek, Inc. , 360 F.3d 1206, 1210 (10th Cir. 2004). The Supreme Court has described the court's role in weighing expert opinions against these standards as that of a "gatekeeper." See Kumho Tire Company, Ltd. v. Carmichael , 526 U.S. 137, 147, 119 S.Ct. 1167, 1174, 143 L.Ed.2d 238 (1999).

An expert may be qualified by "knowledge, skill, experience, training, or education" to offer an opinion on an issue relevant to the case. FED. R. EVID. 702(a). See also 103 Investors I, L.P. v. Square D Co. , 470 F.3d 985, 990 (10th Cir. 2006). An expert opinion is reliable when it is based on sufficient facts or data, employs a methodology generally deemed reliable in the expert's field, and properly applies such methods to the facts of the case. See FED. R. EVID. 702(b), (c), & (d) ; United States v. Crabbe , 556 F.Supp.2d 1217, 1222-23 (D. Colo. 2008).

Guided by these principles, the trial court has broad discretion in determining whether expert testimony is sufficiently reliable and relevant to be admissible. Truck Insurance Exchange , 360 F.3d at 1210 ; Smith v. Ingersoll-Rand Co. , 214 F.3d 1235, 1243 (10th Cir. 2000). The overarching purpose of the court's inquiry is "to make certain that the expert ... employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Goebel v. Denver and Rio Grand e Western Railroad Co. , 346 F.3d 987, 992 (10th Cir. 2003) (quoting Kumho Tire , 119 S.Ct. at 1176 ). Generally, "rejection of expert testimony is the exception rather than the rule." United States v. Nacchio , 519 F.3d 1140, 1154 (10th Cir. 2008), vacated in part on rehearing en banc , 555 F.3d 1234 (10th Cir. 2009). See also FED. R. EVID. 702 (2000 Advisory Comm. Notes). "Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." Daubert , 113 S.Ct. at 2798.

III. ANALYSIS

The facts of this case are well known to the parties and need not be repeated at length here. In this class action, plaintiffs claim defendants violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et. seq. , by, inter alia , allegedly paying excessive recordkeeping fees to Fidelity Management Trust Company ("Fidelity"), the designated recordkeeper and trustee for defendant Oracle Corporation's 401(k) plan ("the Plan"). To buttress that contention, plaintiffs proffer the expert opinion of Michael Geist, formerly with T. Rowe Price's Retirement Plan Services division, who presently runs his own consulting business specializing in the retirement plan, recordkeeping, and asset management industries. While employed by T. Rowe Price in a series of senior level roles over ten years, Mr. Geist purports to have gained experience with, inter alia , pricing and bidding proposals for recordkeeping services for large defined contribution plans. (See Def. Motion App. , Exh. B ¶¶ 5-10 at 6-9 & Exh. 2.)

Based on this experience, Mr. Geist opines defendants failed adequately and appropriately to monitor the compensation paid to Fidelity for its recordkeeping and administrative services and thus paid excessive fees during the class period. More specifically, he suggests a reasonable range of fees for such services during various years of the class period between $ 17 and $ 29 an hour. In addition, he concludes defendants' failure to put its recordkeeping services out to bid constitutes a breach of the Plan's fiduciary duties under ERISA. Defendants seek to exclude these opinions. While I agree as to Mr. Geist's opinion as to what constitutes a reasonable fee, I find the second, regarding whether the Plan breached its fiduciary duty, admissible within appropriate boundaries.

There is no question but that Mr. Geist possesses impressive credentials and extensive experience in a relevant field. It may be that he could provide cogent testimony which would inform the court's understanding of whether defendants breached their ERISA duties with regard to the per-participant fees paid to Fidelity. Nevertheless, his opinion in this regard falters because the relevant methodology by which he reached his conclusions remains undisclosed, making it impossible to conclude whether this opinion is reliable.

In its role as gatekeeper, the court must "assess the reasoning and methodology underlying the expert's opinion, and determine whether it is both ... valid and applicable to a particular set of facts." Dodge v. Cotter Corp . , 328 F.3d 1212, 1221 (10th Cir.), cert. denied , 540 U.S. 1003, 124 S.Ct. 533, 157 L.Ed.2d 408 (2003). Expert opinions must have "a traceable, analytical basis in objective fact." Bragdon v. Abbott , 524 U.S. 624, 653, 118 S.Ct. 2196, 2212, 141 L.Ed.2d 540 (1998). "The requirement that an opinion be derived from reliable principles or methods, known colloquially as ‘methodology,’ involves two related inquiries:"

(I) what methodology did the witness use to reach the opinion; and (ii) is that methodology generally deemed "reliable" in the field in which the expert works. Both inquiries are entirely factual in nature, and the proponent of the opinion must establish both inquiries by sufficient, competent evidence.

Crabbe , 556 F.Supp.2d at 1222.

Regarding the first of these inquiries, identifying the methodology the expert employed is not a particularly high bar. "Conceptually, determining the witness' methodology is as simple as asking ... how did the witness reach his or her opinion or conclusion?.... [I]t is simply an explanation of the process the witness used." Id. (internal quotation marks omitted). Yet Mr. Geist's opinion does not clear even this low hurdle because the facts on which it is based are wholly opaque. Thus, his opinion regarding what would have constituted a reasonable fee for such services at any particular point in time must be excluded.

Mr. Geist claims his opinion on this issue is premised on the experience and knowledge of the relevant industry he gained during his employment with T. Rowe Price. Yet "while experience may qualify an expert... credentials alone do not suffice" to establish that the expert's opinion has a reliable basis in fact. Ho v. Michelin North America, Inc. , 520 Fed. Appx. 658, 664 (10th Cir. 2013). "[E]xperience is not a methodology. Methodology is the process by which the expert relates his experience to the facts at hand in order to reach an expert opinion." Dean v. Thermwood Corp. , 2012 WL 90442 at *7 (N.D. Okla. Jan. 11, 2012) (emphasis added). Mr. Geist, however, has failed to disclose that process; indeed, he admits he has proffered no "model ... or a spreadsheet ... or an analysis ... where [a third party] could insert different data points and re-create [his] results." (Def. Motion App. , Exh. C at 470.)² During his deposition, Mr. Geist repeatedly claimed either that he did not recall specific facts or data supporting his opinions in this regard or that confidentiality agreements with T. Rowe Price prevented him from making such disclosures.

Yet his opinion as to what the Plan should have paid for Fidelity's services purportedly is based on this very evidence. This leaves the court at an impasse: while expert opinions must have "a traceable, analytical basis in objective fact," Bragdon , 118 S.Ct. at 2212, the court has no way adequately or accurately to assess whether Mr. Geist considered enough information to make his opinions reliable, as Rule 702(1) demands, see Cook v. Rockwell International Corp. , 580 F.Supp.2d...