UGI Sunbury LLC v. Permanent Easement for 1.7575
949 F.3d 825
| 3rd Cir. | 2020Background
- UGI Sunbury obtained FERC authorization and, under the Natural Gas Act, condemned permanent and temporary easements across two Pennsylvania properties after owners refused offers.
- The only disputed issue was just compensation; each side offered valuation experts.
- Landowners’ expert Don Paul Shearer testified that the pipeline would create a long-term "stigma" or "damaged goods" effect, producing large value reductions; his method relied on anecdote, appliance‑store experience, and analogies to events like Three Mile Island and Exxon Valdez, but contained no supporting data or established methodology.
- UGI moved to exclude Shearer under Fed. R. Evid. 702; the District Court admitted his testimony in bench trials, then adopted part of his stigma theory and awarded reduced compensation (Beachel: 15% reduction awarded; Pontius: 30% reduction awarded), below Shearer’s proposed percentages.
- On appeal the Third Circuit held the District Court abused its gatekeeping duty under Rule 702 because Shearer’s opinion lacked reliability and did not "fit" the facts; the court vacated the judgments and remanded for new valuation proceedings.
Issues
| Issue | Plaintiff's Argument (UGI) | Defendant's Argument (Landowners) | Held |
|---|---|---|---|
| Whether Rule 702/Daubert gatekeeping applies in bench trials | Rule 702 applies and the court must exclude unreliable expert testimony even in bench trials | Bench trials allow relaxed application because judge is factfinder; expert should be admitted and weighed | Rule 702 applies to bench trials; district courts retain procedural latitude but cannot abandon gatekeeping |
| Whether Shearer’s testimony was reliable under Rule 702 | Testimony was speculative, anecdotal, unsupported by data or established methods and should have been excluded | Testimony was sufficiently probative and not fatally subjective; district court within discretion to admit | Testimony lacked "good grounds" and methodological reliability; admission was an abuse of discretion |
| Whether Shearer’s valuation theory "fit" the case (helpful to trier of fact) | No: analogies to nuclear/oil accidents and appliance sales do not map to pipeline stigma without comparative data | Yes: stigma damages are recognized and district court could find a decrease in market value | Testimony did not fit; expert offered speculation, no comparative sales or nexus to subject property, so it would not assist the trier of fact |
| Whether the Rule 702 error was harmless and whether Rule 52 findings were adequate | Error was prejudicial because the court relied on Shearer’s stigma theory; Rule 52 required clear subordinate factual findings | Awards are supported by record and trial court’s discretion; errors harmless | Error was not harmless; court relied on the flawed testimony and issued conclusory findings insufficient under Rule 52; vacated and remanded |
Key Cases Cited
- Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) (established federal gatekeeping standard for expert testimony)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (trial judge retains latitude in applying Daubert, but must perform gatekeeping)
- In re TMI Litig., 193 F.3d 613 (3d Cir. 1999) (criticizing speculative expert opinions lacking data)
- In re Paoli R.R. Yard PCB Litig., 35 F.3d 717 (3d Cir. 1994) (Daubert factors and importance of fit and reliability)
- Karlo v. Pittsburgh Glass Works, LLC, 849 F.3d 61 (3d Cir. 2017) (expert testimony must be based on "good grounds", not unsupported speculation)
- United States v. 68.94 Acres of Land, 918 F.2d 389 (3d Cir. 1990) (expert testimony significance in eminent domain valuation)
- Tenn. Gas Pipeline Co. v. Permanent Easement for 7.053 Acres, 931 F.3d 237 (3d Cir. 2019) (state law governs compensation issues in private Natural Gas Act condemnations)