In re Longtop Financial Technologies Ltd. Securities Litigation
32 F. Supp. 3d 453
S.D.N.Y.2014Background
- Bell report and Palaschuk exchange of expert reports; Bell’s report supports reliance on DTT audits; Siefert report addresses CFO duties and Palaschuk’s responses; motions to exclude Bell and Siefert were filed; the court acted to admit some Bell opinions in part and exclude others; standards require Daubert/Kumho gatekeeping; trial court to assess admissibility not weight.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Bell’s initial report under Rule 702 | Bell unqualified; untimely; lacks CFO/IT expertise. | Bell qualified by CPA/auditing experience; GAAP/controls knowledge relevant. | Bell’s initial report admitted in part; timeliness not prejudicial. |
| Admissibility of Bell’s supplemental affidavit | Supplemental report violates discovery deadline. | No valid justification for late supplementation. | Bell’s supplemental report excluded. |
| Reliability and relevance of Bell’s opinions on audits and DTT documents | Bell’s conclusions are unfounded and rely on Palaschuk’s version. | Bell may discuss auditing process and standard practices. | Bell’s opinions on DTT’s audits limited; some topics excluded; others admitted with care. |
| Admissibility of Siefert’s report | Siefert lacks CFO experience; opinions unreliable; speculative. | Siefert qualified as CPA with audit experience; can discuss internal controls and CFO duties. | Siefert’s report admitted in part for explanations of standards; testimony about state of mind excluded. |
| Gatekeeping role and scope of expert testimony | Experts should not intrude on jury function or assert legal conclusions. | Experts may explain standards and procedures; jury decides ultimate reasonableness. | Court affirms gatekeeping; limits on testimony while allowing core explanations. |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (U.S. 1993) (establishes gatekeeping and reliability standards for expert testimony)
- Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (U.S. 1999) (extends Daubert to all expert testimony, not just science)
- United States v. Williams, 506 F.3d 151 (2d Cir. 2007) (liberal approach to qualification; admissibility focused on basis and usefulness)
- Amorgianos v. National R.R. Passenger Corp., 303 F.3d 256 (2d Cir. 2002) (establishes reliability and helpfulness inquiry for experts; avoid ipse dixit)
- Arista Records LLC v. Usenet.com, Inc., 608 F. Supp. 2d 409 (S.D.N.Y. 2009) (example of expert testimony limits and admissibility decisions)