Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Expert Testimony on Industry Practice

By Jodi Misher Peikin and Rachel Agress
February 29, 2016

Late last year, the U.S. Court of Appeals for the Second Circuit, in United States v. Litvak, held that expert testimony regarding how a “specialized securities market” operated ' in this case, the Residential Mortgage-Backed Securities (RMBS) market ' was relevant and potentially “highly” probative of the question of whether the defendant's misstatements to investors were material. United States v. Litvak, 808 F.3d 160, 179, 182-84 (2d Cir. Dec. 8, 2015). Because juries are tasked with determining materiality ' i.e., whether there is “a substantial likelihood that a reasonable investor would find the ' misrepresentation important in making an investment decision” ( United States v. Vilar, 729 F.3d 62, 89 (2d Cir. 2013), cert. denied, ”' U.S. ””, 134 S.Ct. 2684, 189 L.Ed.2d 230 (2014)), the notion that experts can opine on overarching industry practice that is not case-specific, including that RMBS investment managers typically do not rely on representations (or misrepresentations) by broker-dealers, appears surprising.

In fact, however, a long line of Second Circuit cases dating back over 20 years have held that expert testimony of the type proffered in Litvak, relating to “ordinary practices in [an] industry,” can be probative of materiality where it “enable[s] the jury to evaluate a defendant's conduct against the standards of accepted practice,” so long as the testimony does not encompass an ultimate legal conclusion. United States v. Bilzerian, 926 F.2d 1285, 1295 (2d Cir. 1991); see also Marx & Co. v. Diners ' Club Inc., 550 F.2d 505, 509 (2d Cir. 1977), cert. denied, 434 U.S. 861, 98 S.Ct. 188, 54 L.Ed.2d 134 (1977) (finding that “[t]estimony concerning the ordinary practices of those engaged in securities business is admissible under the same theory as testimony concerning the ordinary practices of physicians or concerning other trade customs: to enable the jury to evaluate the conduct of the parties against the standards of ordinary practice in the industry.”).

Indeed, courts in virtually every other circuit have reached the same conclusion: Expert testimony regarding industry practice is admissible so long as it does not cross into the realm of legal conclusions. See, e.g., United States v. Offill, 666 F.3d 168, 175 (4th Cir. 2011) (citing Bilzerian , 926 F.2d at 1294 for the proposition that “in complex cases involving the securities industry, expert testimony may help a jury understand unfamiliar terms and concepts”); S.E.C. v. Johnson, 525 F. Supp. 2d 70, 77 (D.D.C. 2007) (“in securities cases, expert testimony commonly is admitted to assist the trier of fact in understanding trading patterns, securities industry practice, securities industry regulations, ' “) (citations omitted); Krys v. Aaron' 112 F. Supp. 3d 181 (D.N.J. 2015) (allowing expert testimony relating to industry practice because it “provides contextual information ' on common customs and practices in the securities industry ' These issues remain plainly relevant and ' may prove infinitely helpful to the jury ' .”) (citations omitted).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Removing Restrictive Covenants In New York Image

In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?

Fresh Filings Image

Notable recent court filings in entertainment law.