2019 UT App 39
Utah Ct. App.2019Background
- inContact provided call-center services to a consortium of colleges; from Feb 2006–Apr 2007 the colleges experienced telephone failures allegedly causing lost student enrollments and lost profits.
- The colleges retained statistician Dr. Ted Tatos to estimate lost enrollments via regression analysis and CPA Richard Hoffman to convert lost enrollments into lost-profit damages (~$19.7M originally).
- Tatos based his regression on a summary spreadsheet prepared by a college owner (Barney) rather than the underlying OPS Reports; that summary included values inconsistent with the OPS Reports and contained inaccuracies.
- inContact retained rebuttal experts: Kilbourne (forensic accountant) who identified data inconsistencies and reliance on Barney’s summary, and Waters (economist) who demonstrated the regression’s sensitivity and omitted variables (e.g., unemployment rate).
- Hoffman later revised his damages using Waters’s lower lost-enrollment figure (588) but did not independently verify the underlying OPS data; both sides conceded the original dataset contained inaccuracies.
- The district court initially excluded opinions based on the original data, then sua sponte reconsidered and admitted Tatos’s and Hoffman’s expert testimony as meeting Rule 702’s minimal threshold; inContact appealed that reconsideration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether experts’ opinions rest on sufficient facts/data under Utah R. Evid. 702(b) | Expert methods are valid and imperfections in business records go to weight, not admissibility | The data underlying the experts’ models are inaccurate, unverified, and render the regression and damages unreliable | Court of Appeals: District court abused discretion; data admitted did not meet Rule 702(b) threshold |
| Whether a regression model based on unverified summary data is admissible | The regression is a valid method; threshold for admissibility is low | A model built on erroneous inputs is unreliable and its results are tainted | Court: Regression based on Barney’s unverified, inaccurate summary was inadmissible |
| Admissibility of Hoffman’s updated damages opinion (which adopted Waters’s input) | Hoffman reasonably relied on what he deemed the most reasonable data; his damages calc is proper | Hoffman adopted Waters’s numbers without verifying their reliability or presenting foundational support | Court: Hoffman’s updated opinion lacked foundational support and should have been excluded |
| Whether district court’s reconsideration of its earlier exclusion was improper | Reconsideration within court’s authority; admission proper as threshold met | Reconsideration did not cure the foundational absence of reliable data | Court: Reconsideration permissible, but admission remained an abuse of discretion due to unreliable data |
Key Cases Cited
- ConocoPhillips Co. v. Utah Dep’t of Transp., 397 P.3d 772 (Utah Ct. App. 2017) (standard of review for admissibility of expert testimony)
- Eskelson ex rel. Eskelson v. Davis Hosp. & Med. Center, 242 P.3d 762 (Utah 2010) (Rule 702 requires only a threshold showing of reliability)
- State v. Lopez, 417 P.3d 116 (Utah 2018) (trial courts act as gatekeepers for expert testimony)
- IHC Health Servs., Inc. v. D & K Mgmt., Inc., 196 P.3d 588 (Utah 2008) (district court may reconsider prior interlocutory rulings before appeal)
- Mid-America Pipeline Co. v. Four-Four, Inc., 216 P.3d 352 (Utah 2009) (a judge may revisit prior decisions during a pending case)
- In re R.B.F.S., 278 P.3d 143 (Utah Ct. App. 2012) (two judges occupying the same judicial office)
- Maddox v. Claytor, 764 F.2d 1539 (11th Cir. 1985) (flawed underlying data doom statistical analyses)