The Michigan Court of Appeals has established a new standard for when an expert witness may be disqualified for an alleged conflict of interest.

In Estate of Teutsch v Van De Ven (Docket No. 349674 and 349703), the defendants appealed the Washtenaw County Circuit Court’s order striking two of their expert witnesses. The trial court’s reasoning for striking the experts was that the plaintiff’s attorney had long-standing personal and professional relationships with the experts and had shared nonconfidential information with them. The defendants appealed, arguing the trial court applied a mistaken rationale.

“We conclude that there is a need to establish a new rule of law regarding when an expert witness may be disqualified on the basis of a conflict of interest,” the Court of Appeals held.

Accordingly, the Court of Appeals signed on to the rule set forth in Paul v Rawlings Sporting Goods Co, 123 FRD 271 (SD Ohio, 1988) - a standard already used by several federal courts and state courts. “We are persuaded that, like many other courts, we should adopt the Paul test, with the addition of a public-policy element.”

Therefore, “rather than either affirming or reversing the trial court’s decision, we will vacate the trial court’s order and remand for reconsideration in light of this opinion,” the Court of Appeals said.

Judges Jane M. Beckering, David H. Sawyer and Douglas B. Shapiro were on the panel that issued the per curiam published opinion.

New Disqualification Standard

On appeal, “[t]wo questions are … before this Court: first, what test should a trial court apply when determining whether an expert witness should be disqualified on the basis of a conflict of interest; and second, applying that test to these cases, did the trial court abuse its discretion when it struck defendants’ experts?” the Court of Appeals explained. “We will address the first question, but … we will leave it to the trial court on remand to address the second.”

The Court of Appeals noted that the plaintiff’s motion to strike and her appellate brief asserted the Paul test for disqualification, which has been used by various federal and state courts. The Paul Court explained the standard as follows: “Under certain circumstances, it might be reasonable for an attorney or his principal to communicate privileged or confidential matters to an expert witness even in the absence of a formal contractual relationship. On the other hand, there may be situations where, despite the existence of a formal contractual relationship, so little of substance occurs during the course of the relationship that neither the integrity of the trial process, nor the interests of the party who retained the expert, would be served by blanket disqualification. Consequently, I believe the proper focus in such situations is to determine, first, whether the attorney or client acted reasonably in assuming that a confidential or fiduciary relationship of some sort existed and, if so, whether the relationship developed into a matter sufficiently substantial to make disqualification or some other judicial remedy appropriate. Stating each proposition negatively, if any disclosures of privileged or confidential material were undertaken without a reasonable expectation that they would be so maintained (so that, in effect, any confidentiality or privilege relating to the matters communicated was waived), or if, despite the existence of a relationship conducive to such disclosures, no disclosures of any significance were made, it would seem inappropriate for the court to dictate to the expert or his new employer that his participation in the case be limited or eliminated.”

In addition, the Court of Appeals cited the standard applied in Koch Refining Co v Jennifer L Boudreaux MV, 85 F3d 1178 (CA 5, 1996). The appeals court, quoting Koch, said that in disqualification cases other than those where the expert clearly switched sides, “lower courts have rejected a ‘bright-line’ rule and have adopted the following test:

• First, was it objectively reasonable for the first party who claims to have retained the expert to conclude that a confidential relationship existed?

• Second, was any confidential or privileged information disclosed by the first party to the expert?”

According to Koch, “Only if the answers to both questions are affirmative should the witness be disqualified,” the Court of Appeals observed. “The Koch Court also noted that ‘[m]any lower courts have considered a third element: the public interest in allowing or not allowing an expert to testify.’ The party seeking disqualification bears the burden of proving these elements.”

Several federal and state courts have used or adopted the test set forth in Paul and Koch, the Court of Appeals explained. “In applying the first prong of the test, courts focus on whether the party seeking disqualification acted reasonably in assuming that a confidential or fiduciary relationship existed. … [C]ourts have examined several factors in evaluating the reasonableness of a party’s assumption: (1) whether the relationship was long standing and involved frequent contacts, (2) whether the expert was to be called as a witness in the underlying case, (3) whether the parties entered into a formal confidentiality agreement, (4) whether the expert was retained to assist in the litigation or paid a fee, (5) whether work product was discussed or the party provided documents to the expert, and (6) whether the expert derived any of his specific ideas from work done under the direction of the retaining party. … As to the second prong, courts ‘consider whether the expert received or had reasonable access to information and whether that information was confidential.’ … Confidential information is information ‘of particular significance’ or information ‘which can be readily identified as either attorney work product or within the scope of the attorney-client privilege.’”

Regarding the public interest considerations, “some courts consider factors such as: ‘preventing conflicts of interest, maintaining the integrity of the judicial process, maintaining accessibility to experts with specialized knowledge, and encouraging experts to pursue their professional calling,’” the Court of Appeals pointed out. “The Koch Court added that ‘[c]ourts have also expressed concern that if experts are too easily subjected to disqualification, unscrupulous attorneys and clients may attempt to create an inexpensive relationship with potentially harmful experts solely to keep them from the opposing party.’”

Because the present case does not present a “side-switching” issue - that is, when an expert switches sides during litigation - “we adopt the standard first articulated in Paul,” the Court of Appeals held. “But we additionally adopt the public interest factors as a third element as a part of the analysis.”

Based on the foregoing, the order of the trial court striking the defense experts “is vacated and the matter is remanded to the trial court for reconsideration in light of this Court’s opinion,” the Court of Appeals concluded.