445 F.Supp.3d 831
S.D. Cal.2020Background
- Charles Erhart, formerly an internal auditor at BofI Federal Bank, reported suspected wrongdoing to a regulator and sued the Bank for whistleblower retaliation; BofI counterclaimed alleging mishandling and disclosure of confidential information.
- The cases were consolidated; the court previously denied summary judgment on most claims, leaving triable issues.
- BofI designated two witnesses: Guido van Drunen (retained internal-audit expert) and Andrew Micheletti (CFO, non-retained; disclosed to testify about damages).
- Erhart moved to exclude both experts: he challenges van Drunen’s qualifications and many of his opinions as invading the jury’s province, offering legal conclusions, or speculating; he challenges Micheletti as unqualified and as offering improper expert damage opinions.
- The Court evaluated admissibility under Rules 701–703 and 702/Daubert, distinguishing lay opinion vs. expert testimony and excluding or limiting testimony that merely rehashed evidence, presented legal conclusions, or did not require specialized expertise.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CFO Micheletti may testify as an expert on damages | Micheletti is not qualified and his damage analyses rest on hearsay/assumptions | Micheletti may present evidence under Rules 702/703/705; he has finance/accounting knowledge | Excluded as a Rule 702 expert; may offer lay opinion under Rule 701 on lost profits/internal matters if based on particularized personal knowledge and foundation |
| Whether Micheletti’s summary of internal labor costs requires expert testimony | The internal labor tally is simple arithmetic and not expert work | Such a model requires familiarity with employee compensation and is proper expert work | Internal labor cost summary is not Rule 702 expert testimony; Bank must prove via records/employees or permissible lay testimony (foundation required) |
| Whether Guido van Drunen is qualified to opine on internal audit standards/procedures | Erhart: van Drunen lacks specialized knowledge of BofI and whistleblowing context | BofI: van Drunen has decades of internal audit experience and CISA/CIA credentials and KPMG forensic experience | Van Drunen is qualified to testify about internal audit objectives, standards, and procedures under Rule 702 |
| Admissibility of van Drunen’s opinions about Erhart’s conduct (e.g., allegations unsupported, legal conclusions, deviation from audits, independence, chain-of-command, confidentiality) | Erhart: opinions invade the jury’s province, state legal conclusions, speculate about motive, and rehash evidence | BofI: opinions are probative on whether a reasonable auditor in Erhart’s position would have the same beliefs | Mixed result: excluded — opinions relying on CFE standards for assessing Erhart, opinions that rehash evidence or state whether evidence supports claims, opinions that Erhart should not contact regulators or that he made improper legal conclusions, and certain chain-of-command/closure complaints; admitted — opinions on internal audit objectives/standards, procedures, independence concerns, remediation role, and confidentiality handling (but not contract interpretation) |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (U.S. 1993) (trial court gatekeeping: expert testimony must be relevant and reliable)
- Primiano v. Cook, 598 F.3d 558 (9th Cir. 2010) (Daubert standards flexible; admissibility vs. weight)
- Jinro Am. Inc. v. Secure Investments, Inc., 266 F.3d 993 (9th Cir. 2001) (caution against conferring expert mantle on fact witnesses to present hearsay or factual summaries)
- Sharkey v. J.P. Morgan Chase & Co., 978 F. Supp. 2d 250 (S.D.N.Y. 2013) (exclude expert testimony that usurps jury’s determination of whether plaintiff had reasonable belief or whether evidence supported termination)
- Van Asdale v. Int’l Game Tech., 577 F.3d 989 (9th Cir. 2009) (objective reasonableness in whistleblower claims measured against person with same training/experience)
- Wadler v. Bio-Rad Labs., Inc., 916 F.3d 1176 (9th Cir. 2019) (discusses subjective and objective components of reasonable-belief standard)
- United States v. Lopez, 762 F.3d 852 (9th Cir. 2014) (Rule 701(a) personal-knowledge requirement for lay opinion)
- Nationwide Transp. Fin. v. Cass Info. Sys., Inc., 523 F.3d 1051 (9th Cir. 2008) (expert testimony that tells jury what result to reach is not helpful and may be excluded)