978 F. Supp. 2d 250
S.D.N.Y.2013Background
- Sharkey filed a SOX complaint with OSHA; OSHA dismissed preliminary findings; Sharkey filed suit in SDNY asserting SOX claims; court denied motion to dismiss and granted leave to replead; Marchetti served as Plaintiff's expert on SOX compliance; Defendants moved to strike Marchetti's testimony; court granted in part and denied in part the motion to strike.
- Marchetti testified about SOX compliance, red flags, and industry practices; Defendants argued she lacked personal knowledge and offered improper lay testimony.
- Court analyzed admissibility under Rule 702, holding certain opinions improper as lay or conclusory but allowing red-flag testimony within Marchetti’s expertise.
- Court concluded Marchetti may testify about red flags from an accountant’s perspective but cannot opine on Plaintiff’s belief being reasonable or on internal JPMorgan processes lacking personal knowledge.
- The order granted in part and denied in part the motion to strike Marchetti’s testimony, clarifying permissible and impermissible topics.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Marchetti on red flags under Rule 702 | Sharkey argues Marchetti's expert analysis is needed for SOX red flags | Defendants contend Marchetti lacks experience and offers lay narrative | Admissible for red-flag guidance, not for belaboring personal beliefs |
| Can Marchetti testify that Plaintiff’s belief was reasonable | Marchetti can validate belief based on SOX experience | Testimony would amount to improper legal conclusion | Excluded; cannot testify about reasonableness of belief |
| May Marchetti testify about JPMorgan KYC/AML processes | Marchetti’s knowledge supports impact on fraud risk | She lacks personal knowledge of JPMorgan processes | Excluded; contemporaneous internal processes and conclusions not allowed |
| May Marchetti bolster Plaintiff’s testimony about internal matters | Expert could contextualize evidence | Unqualified; would substitute expert for jury | Excluded; no personal knowledge of internal JPMorgan matters; limited to red flags |
| Overall scope of Marchetti’s testimony | Her expertise supports integrity of SOX compliance | Testimony risks improper narrative and lay-issue sidestep | Granted in part (red flags admissible) and denied in part (reasonableness and internal processes excluded) |
Key Cases Cited
- United States v. Mulder, 273 F.3d 91 (2d Cir. 2001) (limits expert testimony that narrates evidence or substitutes jury judgment)
- United States v. Duncan, 42 F.3d 97 (2d Cir. 1994) (expert must not tell jury what result to reach; cannot usurp jury's role)
- Highland Capital Mgmt., L.P. v. Schneider, 379 F. Supp. 2d 461 (S.D.N.Y. 2005) (expert testimony must aid, not replace, jury; cannot simply recount record)