1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Fernando Castillo Robles, No. CV-19-05863-PHX-DJH
10 Plaintiff, ORDER
11 v.
12 American Zurich Insurance Company, et al.,
13 Defendants.
14 Defendants have filed a Daubert Motion to Exclude Testimony From Plaintiff’s 15 Expert Elliott Flood. (Doc. 120). Plaintiff has filed a Response (Doc. 121). The Court 16 now issues its Order. 17 A. Background 18 1. Facts1 19 Plaintiff was an employee of JBS Holdings, a company insured by Defendants 20 American Zurich. Defendant Sedgwick Claims Management Services, Inc. and Shelly 21 Stephens handled Plaintiff’s claim on behalf of American Zurich. On November 7, 2017, 22 Plaintiff alleges to have accrued an on-the-job left shoulder injury. Plaintiff alleges that 23 the Defendants failed to conduct a reasonable investigation of his claim, ignored the 24 medical and other evidence that confirmed coverage and wrongfully denied his claim. 25 Defendants assert that they did not act unreasonably in handling Plaintiff’s claim, they 26 undertook a reasonable investigation of his claims for back, shoulder and neck injuries and 27 found pre existing injuries. Defendants contend that there was confusion over Plaintiff’s 28 1 The facts are as stated in the parties Final Pretrial Order (Doc. 107) and pending Motions. 1 date of injury and the scope of it, thus they undertook additional investigations. Defendants 2 did find that Plaintiff suffered a compensable claim for his shoulder, but not for his neck 3 and back complaints. 4 2. Plaintiff’s Expert Mr. Flood 5 Mr. Flood is a former insurance company executive who now serves as an 6 independent consultant and expert witness. (Doc. 99 at 6–17). He was retained to provide 7 his expert opinion on “insurance industry customs, practices and standards based on [an] 8 analysis of the records related to [Plaintiff’s] claims.” (Id.) Plaintiff specifically “asked 9 for [Mr. Flood’s] opinion whether American Zurich followed insurance industry standards 10 in the handling of Mr. Robles’ claim.” (Doc 120-1 at 2). 11 Mr. Flood developed his opinions after a “review of the discovery responses and 12 business records produced by [Defendants].” (Id. at 7). He reasons that “[r]eviewing 13 insurer internal records is the customary method used by a claims manager or auditor to 14 determine if the claim was handled properly or not.” (Id.) Mr. Flood “determined that 15 Arizona claim handling standards are very similar, in most cases, identical, to national 16 industry standards for good faith and fair claim handling.” (Id. at 5). In his report, he lists 17 those claim handling standards. Notably, he references specific Arizona Workers’ 18 Compensation statutes and the Arizona Unfair Claim Settlement Practices Act as 19 “[e]xamples of industry standards applicable to Mr. Robles’ claim.” (Id. at 6) (emphasis 20 added). Mr. Flood opined that “Zurich departed from accepted industry standards for claim 21 handling. Zurich delegated all claims handling to Sedgwick but did not exercise sufficient 22 oversight to ensure that Sedgwick promptly handled [Plaintiff’s] claim in accordance with 23 industry standards.” (Id.) 24 B. Legal Standard 25 Rule 702 of the Federal Rules of Evidence tasks the trial court with ensuring that 26 any expert testimony provided is relevant and reliable. Daubert v. Merrell Dow Pharm., 27 Inc., 509 U.S. 579, 589 (1999). A qualified expert may testify on the basis of “scientific, 28 technical, or other specialized knowledge” if it “will assist the trier of fact to understand 1 the evidence,” provided the testimony rests on “sufficient facts or data” and “reliable 2 principles and methods,” and “the witness has reliably applied the principles and methods 3 to the facts of the case.” Fed. R. Evid. 702(a)-(d). An expert may be qualified to testify 4 based on his or her “knowledge, skill, experience, training, or education.” Id. The trial 5 court must first assess whether the testimony is valid and whether the reasoning or 6 methodology can properly be applied to the facts in issue. Daubert, 509 U.S. at 592–93. 7 “The inquiry envisioned by Rule 702” is “a flexible one.” Id. at 594. The proponent of 8 expert testimony has the ultimate burden of showing that the expert is qualified and the 9 proposed testimony is admissible under Rule 702. See Lust v. Merrell Dow Pharm., Inc., 10 89 F.3d 594, 598 (9th Cir. 1996). 11 That the opinion testimony aids, rather than confuses, the trier of fact goes primarily 12 to relevance. See Temple v. Hartford Ins. Co. of Midwest, 40 F.Supp. 2nd, 1156, 1161 13 (D.Ariz. 2014) citing Primiono v. Cook, 598 F.3d 558, 564 (9th Cir. 2010). “Evidence is 14 relevant if it has any tendency to make a fact more or less probable than it would be without 15 the evidence and the fact is of consequence in determining the action.” Fed. R. Evid. 401. 16 However, an expert witness, “cannot give an opinion as to her legal conclusion, i.e., an 17 opinion on an ultimate issue of law. Similarly, instructing the jury on the applicable law 18 is the exclusive province of the court.” Nationwide Transp. Fin. v. Cass Info, Sys., Inc., 19 523 F.3d 1051, 1058 (9th Cir. 2008). An expert may refer to legal provisions but may not 20 reach legal conclusions. See Hangarter v. Provident Life & Accident Insurance Co., 373 21 F.3d 998, 1016-17 (9th Cir. 2004). 22 C. Analysis 23 Defendants do not challenge Mr. Floods qualifications. Rather, they ask the Court 24 to preclude the entirety of Mr. Flood’s opinion, and specifically to preclude him from 25 “instructing the jury as to the law including ultimate issues of the law” and “from 26 referencing the Arizona Unfair Claims Settlement Practices Act or the Unfair Claims 27 Settlement Practices Regulations.” (Doc. 120 at 3). Defendants’ assert that Mr. Flood’s 28 “opinions rest on faulty principles” and thus his testimony does not satisfy Fed. R. Evid. 1 702((3)-(4)[sic]. They further argue that his application of the standards are “disguised 2 attempts to instruct the jury on the law.” (Doc. 120 at 5). Essentially, the Defendants argue 3 that he intends to express a legal opinion on an ultimate issue of law. So, they say, Mr. 4 Flood may not state his opinion on whether Defendants acted reasonably pursuant to the 5 industry standards or opine on the law governing insurance claim handling. 6 Plaintiff responds that some of Mr. Floods opinions reference the aforementioned 7 laws and regulations, but that his report and opinions are “based on decades of experience 8 implementing and teaching industry standards for appropriate claim handling.” (Doc. 121 9 at 1). Plaintiff adds that Mr. Flood’s references to the Arizona Unfair Claims Settlement 10 Act “are provided to assist the jury in understanding the standards of conduct for insurers.” 11 (Id.) Plaintiff also states that Mr. Flood will not provide testimony on legal conclusions to 12 the jury. (Id. at 2). 13 The Court concludes that Plaintiff’s expert meets the Rule 702 criteria.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Fernando Castillo Robles, No. CV-19-05863-PHX-DJH
10 Plaintiff, ORDER
11 v.
12 American Zurich Insurance Company, et al.,
13 Defendants.
14 Defendants have filed a Daubert Motion to Exclude Testimony From Plaintiff’s 15 Expert Elliott Flood. (Doc. 120). Plaintiff has filed a Response (Doc. 121). The Court 16 now issues its Order. 17 A. Background 18 1. Facts1 19 Plaintiff was an employee of JBS Holdings, a company insured by Defendants 20 American Zurich. Defendant Sedgwick Claims Management Services, Inc. and Shelly 21 Stephens handled Plaintiff’s claim on behalf of American Zurich. On November 7, 2017, 22 Plaintiff alleges to have accrued an on-the-job left shoulder injury. Plaintiff alleges that 23 the Defendants failed to conduct a reasonable investigation of his claim, ignored the 24 medical and other evidence that confirmed coverage and wrongfully denied his claim. 25 Defendants assert that they did not act unreasonably in handling Plaintiff’s claim, they 26 undertook a reasonable investigation of his claims for back, shoulder and neck injuries and 27 found pre existing injuries. Defendants contend that there was confusion over Plaintiff’s 28 1 The facts are as stated in the parties Final Pretrial Order (Doc. 107) and pending Motions. 1 date of injury and the scope of it, thus they undertook additional investigations. Defendants 2 did find that Plaintiff suffered a compensable claim for his shoulder, but not for his neck 3 and back complaints. 4 2. Plaintiff’s Expert Mr. Flood 5 Mr. Flood is a former insurance company executive who now serves as an 6 independent consultant and expert witness. (Doc. 99 at 6–17). He was retained to provide 7 his expert opinion on “insurance industry customs, practices and standards based on [an] 8 analysis of the records related to [Plaintiff’s] claims.” (Id.) Plaintiff specifically “asked 9 for [Mr. Flood’s] opinion whether American Zurich followed insurance industry standards 10 in the handling of Mr. Robles’ claim.” (Doc 120-1 at 2). 11 Mr. Flood developed his opinions after a “review of the discovery responses and 12 business records produced by [Defendants].” (Id. at 7). He reasons that “[r]eviewing 13 insurer internal records is the customary method used by a claims manager or auditor to 14 determine if the claim was handled properly or not.” (Id.) Mr. Flood “determined that 15 Arizona claim handling standards are very similar, in most cases, identical, to national 16 industry standards for good faith and fair claim handling.” (Id. at 5). In his report, he lists 17 those claim handling standards. Notably, he references specific Arizona Workers’ 18 Compensation statutes and the Arizona Unfair Claim Settlement Practices Act as 19 “[e]xamples of industry standards applicable to Mr. Robles’ claim.” (Id. at 6) (emphasis 20 added). Mr. Flood opined that “Zurich departed from accepted industry standards for claim 21 handling. Zurich delegated all claims handling to Sedgwick but did not exercise sufficient 22 oversight to ensure that Sedgwick promptly handled [Plaintiff’s] claim in accordance with 23 industry standards.” (Id.) 24 B. Legal Standard 25 Rule 702 of the Federal Rules of Evidence tasks the trial court with ensuring that 26 any expert testimony provided is relevant and reliable. Daubert v. Merrell Dow Pharm., 27 Inc., 509 U.S. 579, 589 (1999). A qualified expert may testify on the basis of “scientific, 28 technical, or other specialized knowledge” if it “will assist the trier of fact to understand 1 the evidence,” provided the testimony rests on “sufficient facts or data” and “reliable 2 principles and methods,” and “the witness has reliably applied the principles and methods 3 to the facts of the case.” Fed. R. Evid. 702(a)-(d). An expert may be qualified to testify 4 based on his or her “knowledge, skill, experience, training, or education.” Id. The trial 5 court must first assess whether the testimony is valid and whether the reasoning or 6 methodology can properly be applied to the facts in issue. Daubert, 509 U.S. at 592–93. 7 “The inquiry envisioned by Rule 702” is “a flexible one.” Id. at 594. The proponent of 8 expert testimony has the ultimate burden of showing that the expert is qualified and the 9 proposed testimony is admissible under Rule 702. See Lust v. Merrell Dow Pharm., Inc., 10 89 F.3d 594, 598 (9th Cir. 1996). 11 That the opinion testimony aids, rather than confuses, the trier of fact goes primarily 12 to relevance. See Temple v. Hartford Ins. Co. of Midwest, 40 F.Supp. 2nd, 1156, 1161 13 (D.Ariz. 2014) citing Primiono v. Cook, 598 F.3d 558, 564 (9th Cir. 2010). “Evidence is 14 relevant if it has any tendency to make a fact more or less probable than it would be without 15 the evidence and the fact is of consequence in determining the action.” Fed. R. Evid. 401. 16 However, an expert witness, “cannot give an opinion as to her legal conclusion, i.e., an 17 opinion on an ultimate issue of law. Similarly, instructing the jury on the applicable law 18 is the exclusive province of the court.” Nationwide Transp. Fin. v. Cass Info, Sys., Inc., 19 523 F.3d 1051, 1058 (9th Cir. 2008). An expert may refer to legal provisions but may not 20 reach legal conclusions. See Hangarter v. Provident Life & Accident Insurance Co., 373 21 F.3d 998, 1016-17 (9th Cir. 2004). 22 C. Analysis 23 Defendants do not challenge Mr. Floods qualifications. Rather, they ask the Court 24 to preclude the entirety of Mr. Flood’s opinion, and specifically to preclude him from 25 “instructing the jury as to the law including ultimate issues of the law” and “from 26 referencing the Arizona Unfair Claims Settlement Practices Act or the Unfair Claims 27 Settlement Practices Regulations.” (Doc. 120 at 3). Defendants’ assert that Mr. Flood’s 28 “opinions rest on faulty principles” and thus his testimony does not satisfy Fed. R. Evid. 1 702((3)-(4)[sic]. They further argue that his application of the standards are “disguised 2 attempts to instruct the jury on the law.” (Doc. 120 at 5). Essentially, the Defendants argue 3 that he intends to express a legal opinion on an ultimate issue of law. So, they say, Mr. 4 Flood may not state his opinion on whether Defendants acted reasonably pursuant to the 5 industry standards or opine on the law governing insurance claim handling. 6 Plaintiff responds that some of Mr. Floods opinions reference the aforementioned 7 laws and regulations, but that his report and opinions are “based on decades of experience 8 implementing and teaching industry standards for appropriate claim handling.” (Doc. 121 9 at 1). Plaintiff adds that Mr. Flood’s references to the Arizona Unfair Claims Settlement 10 Act “are provided to assist the jury in understanding the standards of conduct for insurers.” 11 (Id.) Plaintiff also states that Mr. Flood will not provide testimony on legal conclusions to 12 the jury. (Id. at 2). 13 The Court concludes that Plaintiff’s expert meets the Rule 702 criteria. First, it is 14 reasonable, indeed expected, for an expert to explain the methodology he uses to form his 15 opinion. Mr. Flood appears to have necessarily identified the national, and local standards 16 that apply to the claims handling decision, then he applied those standards to the facts here. 17 In insurance claims handling cases, this methodology is appropriate under Rule 702. See 18 Temple, 40 F.Supp. at 1161 (“Both Arizona law and Ninth Circuit law recognize that 19 experts in the area of insurance claim handling are proper, that they may testify regarding 20 the application of industry standards to claim handling, and that they may refer to legal 21 precedent to the extent necessary to explain the facts of their opinion.”). The Court is 22 satisfied that Mr. Flood meets the criteria as set forth in Rule 702 (a)-(d). 23 The Court recognizes that there is a fine line between testifying about how legal 24 precedent applies to the alleged facts and providing a legal conclusion. For example, in 25 City of Phoenix v. First State Insurance Co., 2016 WL 4591906 (D. Ariz. Sept. 2, 2016), a 26 district court precluded an expert from testifying because his opinion invaded the court’s 27 province by expounding on the law or invaded the jury’s province by resolving facts. Id. 28 at *19. That decision is illustrative of what is unacceptable legal opinion testimony. Plaintiff avows that Mr. Flood will not opine on such legal conclusions. And the Court || will hold Plaintiff to that. Accordingly, 3 IT IS ORDERED denying Defendants’ Motion in Limine (Doc. 120). 4 Dated this 7th day of September, 2022. 5 6 fe □□ 7 norable' Dian¢g4. Hunfetewa g United States District Fudge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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