Opinion
Civil No. 03-2092 (JRT/JSM).
August 31, 2004
Paul Dahlberg, MESHBESHER SPENCE, LTD., Rochester, MN, for plaintiff Patricia Ille, as Trustee for the Next-of-Kin of Rebecca Wallace.
Phillip A. Kohl, CHRISTIAN PETERSON, P.A., Albert Lea, MN, for plaintiff Leo Osbeck, as Trustee for the Next-of-Kin of Kathleen Wallace.
David K. Furness and Ross L. Leuning, WALBRAN, FURNESS LEUNING, Owatonna, MN, for plaintiff Laureen Hohansee, as Trustee for the Next-of-Kin of Robert Wallace.
Patrick J. Sauter and Daniel Q. Poretti, RIDER BENNETT, Minneapolis, MN, for defendant.
ORDER ON DEFENDANT'S APPEAL FROM ORDER OF MAGISTRATE JUDGE
Plaintiffs, trustees for the next-of-kin of individuals killed in an automobile accident, bring this "bad faith" action against defendant American Family Mutual Insurance Company ("American Family"). On June 10, 2004, United States Magistrate Judge Janie S. Mayeron issued an Order ("the Order") striking the designation of defendant's proposed expert, accident reconstructionist Roger Burgmeier. The Magistrate Judge determined that Burgmeier's testimony should be excluded, because he was not qualified to render an opinion in this case and in the alternative the testimony should be excluded because it would not assist the jury. Defendant appeals, arguing that the Order is premised on an erroneous understanding of the standard for bad faith in Minnesota. For the reasons discussed below, the Court grants the appeal, and reverses the Order as to Burgmeier's testimony. Burgmeier will be permitted to testify at trial, in the limited fashion discussed below.
The Order also granted plaintiffs' Motion Precluding Deposition of Skogen and Lofgren. That aspect of the Order is not appealed.
BACKGROUND
The Court has recited the background of this dispute in a previous order, and provides only a brief summary of the underlying facts. On February 22, 1997, six people including Lyle Wallace, Robert Wallace, Kathleen Wallace, and Rebecca Wallace, were killed in an automobile accident. Timothy Donaldson, Lyle Wallace, and Sean Young were drivers of the three cars involved in the fatal accident. Plaintiffs are the trustees for the next-of-kin of those victims in the Wallace vehicle who brought a wrongful death suit in Minnesota state court against Timothy Donaldson. At the time of the accident, Donaldson was insured by defendant American Family, and all three plaintiffs offered to settle claims with American Family for $60,000, the limit of Donaldson's policy. American Family refused, and the wrongful death action proceeded to a jury trial.
In early 2001, the jury found Donaldson thirty-three percent negligent, and $4,632,000 was awarded to the plaintiffs. Donaldson then assigned all his claims against American Family to the plaintiffs, including the claim that American Family's refusal to settle was taken in bad faith. After the Assignment, plaintiffs sued American Family in Minnesota state court, and American Family properly removed to this Court on the basis of diversity of citizenship.
On December 31, 2003, American Family disclosed its expert witness list. Plaintiffs objected to one of American Family's proffered experts — accident reconstructionist Roger Burgmeier. According to the 26(a) report, Burgmeier is expected to testify in support of American Family's position that its conclusion that Donaldson was not clearly liable in the underlying accident was reasonable.
ANALYSIS
I. Standard of Review
"The standard of review applicable to an appeal of a magistrate judge's order on a nondispositive issue is extremely deferential." Reko v. Creative Promotions, Inc., 70 F. Supp. 2d 1005, 1007 (D. Minn. 1999). This Court will reverse such an order only if it is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); D. Minn. LR 72.1(b)(2).
American Family questions whether this is the appropriate standard of review in this instance. Specifically, American Family characterizes plaintiffs' motion to exclude the expert report as a motion in limine, not a discovery motion, and argues that a less deferential standard of review should be applied. Because the Court reverses the Order, the Court will not determine whether a different standard of review is appropriate.
II. Standard for Expert Testimony
The admissibility of expert testimony is governed by Rules 702 and 703 of the Federal Rules of Evidence. Under Rule 702, proposed expert testimony must satisfy the following three prerequisites to be admitted: (1) Evidence based on scientific, technical, or specialized knowledge must be useful to the finder of fact in deciding the ultimate issue of fact; (2) the proposed witness must be qualified; (3) the proposed evidence must be reliable or trustworthy in the evidentiary sense, so that if the finder of fact accepts it as true, it provides the assistance the finder of fact requires. Lauzon v. Senco Prods. Inc., 270 F.3d 681, 686 (8th Cir. 2001) (citations omitted). These requirements reflect the analysis elucidated by the Supreme Court in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), as codified in Rule 702.
The district court has a "gatekeeping" obligation to make certain that all testimony admitted under Rule 702 "is not only relevant, but reliable." Daubert, 509 U.S. at 589, 597-98 (citing Fed.R.Evid. 104(a)). See also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 146 (1999) (extending Daubert to technical and other specialized expert testimony). In its gatekeeper role, the trial court has "substantial latitude to determine whether specific expert testimony is reliable." United States v. Reed Sons P'ship, 280 F.3d 1212, 1215 (8th Cir. 2002); In re Air Crash at Little Rock, Ark., 291 F.3d 503, 514 (8th Cir. 2002). Trial courts should apply the principle that "[e]xpert testimony is admissible if it is reliable and will help the jury understand the evidence or decide a fact in issue." Hartley v. Dillard's, Inc., 310 F.3d 1054, 1060 (8th Cir. 2002).
"[A]n expert's testimony need not relate directly to the ultimate issue that is to be resolved by the trier of fact, it only need be relevant to evaluating a factual matter." Smith v. BMW N. Am., Inc., 308 F.3d 913, 919 (8th Cir. 2002) (emphasis added); see also Clark v. Heidrick, 150 F.3d 912, 915 (8th Cir. 1998) (experts offering a global understanding of the possible causes of an injury are useful to a jury). Expert testimony also must be "sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute." Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1055 (8th Cir. 2000). "A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered" for the opinion to be useful to the jury. General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). However, doubts regarding usefulness should generally be resolved in favor of admissibility. Clark, 150 F.3d at 915.
III. Elements of Bad Faith in Minnesota
Minnesota law imposes liability upon an insurer in excess of its undertaking under the terms of the policy if the insurer has control of settlement decisions, but fails to exercise "good faith" in considering offers to settle the claim for an amount within the policy limits. Short v. Dairyland Ins. Co., 334 N.W.2d 384, 387 (Minn. 1983); Boerger v. Am. General Ins. Co., 100 N.W.2d 133, 134 (Minn. 1959). As the Minnesota Supreme Court held in Boerger v. American General Insurance Company:
[An] insurance company could have validly declined the offer of settlement if good faith existed on either of two grounds. First, if it in good faith believed that its insured was not liable. Second, even if liability of its insured was certain, if it believed in good faith that a settlement at the proposed figure which it was required to contribute was greater than the amount the jury would award as damages.100 N.W.2d at 134. "Since 1926, the stated test in Minnesota has required that the insured be clearly liable before the insurer may suffer liability for breach of its duty of good faith." Northfield Ins. Co. v. St. Paul Surplus Lines Ins. Co., 545 N.W.2d 57, 61 (Minn.Ct.App. 1996) (emphasis added).
In other words, an insurer is not liable in a bad faith action if the insurer in good faith believed that its insured was not liable, Boerger, 100 N.W.2d at 134, or, if the insurer "justifiably believed" that the underlying personal injury action was without merit. Northfield Ins. Co., 545 N.W.2d at 60-61.
IV. Synthesis
In this case, American Family proposes that Burgmeier testify with respect to the first element discussed by the Boerger test. Specifically, Burgmeier will address the reasonableness of American Family's determination, prior to the underlying trial, that Timothy Donaldson was not clearly liable. "An expert's opinion is not required to resolve an ultimate issue of fact. [The opinion] need only contribute to the jury's understanding of the issue." Johnson v. Zimmer, 2004 WL 742038 at *5, Civ. No. 02-1328 (JRT/FLN) (D. Minn. March 31, 2004). Nothing in the Federal Rules of Evidence or the cases discussing the relevant Rules requires that one expert be competent to opine on every element of a claim. It is enough, as this Court has previously noted, that the expert's opinion "contribute to the jury's understanding of the issue." Id. American Family must be permitted to argue, and offer evidence, that its refusal to settle was not in bad faith. In this case Burgmeier's opinion will assist the jury in determining whether, as American Family argues, Timothy Donaldson's liability was not clear prior to trial.
American Family acknowledges that Timothy Donaldson's ultimate liability is not at issue, and testimony regarding his ultimate liability will not be permitted. For example, Burgmeier will not be permitted to testify that the jury verdict in the underlying case was wrong. So limited, the testimony does not risk impermissible jury confusion. The jury will be carefully instructed as to the elements of the claim. The Court will also instruct the jury, and plaintiffs are free to emphasize, that Timothy Donaldson's liability is settled. The jury must apprehend the difference between Timothy Donaldson's ultimate liability as found in the underlying trial, and American Family's assessment of that liability prior to trial. Specifically, it cannot be (and indeed, is not) that a liability verdict in an underlying trial necessarily establishes in a subsequent bad faith action that the insured was "clearly liable." See, e.g., Noe v. Am. Fam. Mut'l Ins. Co., 2002 WL 1634251, No. Civ. 01-1217 (ADM/SRN) (D. Minn. July 17, 2002) (granting summary judgment to insurer after finding that insurer did not act in bad faith). It is the jury's duty in the subsequent bad faith action to assess the obviousness of the liability of the insured based on the information that was before the insurer prior to trial. The proposed testimony of the accident reconstructionist is relevant to that obviousness and is therefore a proper subject for expert opinion.
The Court acknowledges that plaintiffs dispute whether they will be required to prove "clear liability." This Opinion and Order is not intended to address the proper elements of a bad faith claim. Such a decision is appropriate in pre-trial motions, or in discussions of the jury instructions.
That said, the Court agrees that Burgmeier is not competent to testify to every aspect of American Family's determination of whether its insured was "clearly liable." For example, Burgmeier could not testify regarding potential for jury sympathies to sway the verdict and result in a large verdict, which would likely be relevant to a decision not to settle. Nonetheless, Burgmeier is qualified to opine on accident causation, and his limited testimony will assist the trier of fact. His testimony will therefore be permitted.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that the Magistrate Judge's Order dated June 10, 2004 [Docket No. 138] is AFFIRMED in part and REVERSED in part. The June 10, 2004, Order is REVERSED to the extent it excluded witness Burgmeier. In all other respects, the June 10, 2004 Order is AFFIRMED.