Ohio Public Employees Retirement System v. Federal Home Loan Mortgage Corp., 4:08-cv-00160

Plaintiff, Ohio Public Employees Retirement System (OPERS), filed a securities fraud case alleging that Defendant, Federal Home Loan Mortgage Corporation ("Freddie Mac"), failed to disclose its true subprime mortgage exposure.
OPERS moved to exclude the expert testimony of Prof. John Coates, Freddie Mac’s proffered corporate disclosure practices expert, arguing his testimony was irrelevant, unreliable, and methodologically flawed.
Prof. Coates has extensive professional experience in public company disclosures, including SEC advisory and academic roles, and opined that Freddie Mac’s disclosure processes paralleled industry customs during the relevant period.
The motion was decided under the Daubert standard, considering qualifications, relevance, reliability, and probative value versus prejudice (under Fed. R. Evid. 702 and 403).
The district court evaluated whether Prof. Coates's testimony would assist the jury in understanding disclosure practices and assessing allegations of scienter (intent or recklessness in fraud).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Relevance of Prof. Coates’s testimony	Testimony on disclosure practices is irrelevant and unhelpful to jury	Testimony is relevant to whether Freddie Mac's actions were reasonable	Testimony is relevant and helpful
Reliability of methods regarding industry customs	Coates did not specifically analyze other companies’ practices, undermining reliability	Coates's broad industry experience and review suffice	General experience supports reliability
Application to challenged disclosures	Coates did not verify that Freddie Mac followed its stated processes	Methodology does not require review of every instance; criticisms go to weight	Weaknesses go to weight, not admissibility
Whether expert should be excluded under Daubert/Rule 702/403	Testimony fails Daubert due to irrelevance, unreliable methodology, and prejudice	Testimony meets Daubert, is properly limited and useful to the jury	Motion to exclude denied

Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (establishes the trial judge's gatekeeping role on expert testimony)
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (extends Daubert to nonscientific expert testimony)
In re Scrap Metal Antitrust Litig., 527 F.3d 517 (rejection of expert testimony is the exception; weaknesses affect weight, not admissibility)
United States v. Smithers, 212 F.3d 306 (sets out the test for admissibility of expert opinions in the Sixth Circuit)
Berckeley Inv. Group, Ltd. v. Colkitt, 455 F.3d 195 (expert testimony on industry customs provides context to scienter determination)