This post is a follow-up of sorts to our “Stupid Expert Tricks” post. That post dealt with dodgy games that our opponents’ experts play. This post is about adding injury to insult, that is, when the plaintiffs try to make us pay for the privilege of dealing with those tricks.
Now both our side and the plaintiffs are essentially free to pay their experts whatever the market will bear – subject to the usual cross-examination that “you’ve been paid X million dollars by the other side for your testimony about this product.” But disputes arise when we subpoena the other side’s experts to testify. Often the fees that they attempt to charge are exorbitant, and when the opposition is paying, no incentive at all exists to charge anything but top dollar.
That’s where the courts come in.
Our first preliminary observation is that we are not dealing here with the involuntary taxation of expert fees as “costs” to a prevailing party in litigation. Taxation of costs is governed by statute, not by the Federal Rules of Civil Procedure.
[The general “costs” statute] create[s] a default rule and establish[es] a clear baseline against which Congress may legislate . . . . Rule 54(d) authorizes an award of “costs” but does not expressly refer to expert witness fees. In defining what expenses qualify as “costs,” [the statute] likewise do[es] not include expert witness fees. . . . “When a prevailing party seeks reimbursement for fees paid to its own expert witnesses, a federal court is bound by the limit of [the general costs statute] absent contract or explicit statutory authority to the contrary.”
Rimini Street, Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 877-78 (2019) (quoting Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 442 (1987)). We thus caution that pre-Rimini precedent purporting to tax “costs” under the Federal Rules that exceed those permitted by the general “costs” statute, codified at 28 U.S.C. §§1820-21, should be regarded as suspect. See Stanley v. Cottrell, Inc., 784 F.3d 454, 464-65 (8th Cir. 2015); Halasa v. ITT Educational Services, Inc., 690 F.3d 844, 852 (7th Cir. 2012). In Rimini, the Supreme Court just said “no” to all that.
Our next preliminary observation is that no basis exists under the Federal Rules of Civil Procedure for anyone to demand prepayment of expert fees. An expert is entitled to be paid for his/her time, Fed. R. Civ. P. 26(b)(4)(C), but not in advance, unless the parties agree.
The rule does not state, however, that the expert’s fees must be paid in advance of the deposition absent agreement to do so. To the contrary, unlike ordinary witness fees, no rule requires that an opposing expert’s deposition fees be tendered to the witness in advance. . . . Because there is no rule allowing a party to terminate a deposition for the failure to pay opposing expert witness fees in advance, Plaintiff’s counsel was wrong in doing so in the instant case.
Harris v. Costco Wholesale Corp., 226 F.R.D. 675, 676 (S.D. Cal. 2005) (citations omitted) (emphasis original).
[Plaintiff] does not provide any authority to support its position that an expert witness may condition his or her appearance for deposition upon a payment in advance. In contrast, the weight of authority is to the contrary. Permitting an expert to condition his appearance upon prepayment of fees would undoubtedly hamper an opposing party’s ability to conduct relevant discovery. Moreover, numerous courts have found that Rule 26(b)(4)(E) does not require the payment of expert fees in advance, and have required experts to appear for deposition without being paid in advance.
PC Anything, Inc. v. Lexington Insurance Co., 2019 WL 2515001, at *1 (S.D. Fla. June 18, 2019) (string citation omitted). See also, e.g., PC Anything, Inc. v. Lexington Insurance Co., 2019 WL 2515001, at *1 (S.D. Fla. June 18, 2019); Smith v. Bradley Pizza, Inc., 2018 WL 5920626, at *7 n.7 (Mag. D. Minn. Nov. 13, 2018), objections overruled, 2019 WL 2448575 (D. Minn. June 12, 2019).
Our third preliminary observation is that some courts hold that experts are not entitled to be paid for time “spent reviewing or correcting his or her deposition transcript” or for “the time an expert spent preparing for his or her deposition.” Rock River Communications, Inc. v. Universal Music Group, 276 F.R.D. 633, 635 (C.D. Cal. 2011). Accord M.T. McBrian, Inc. v. Liebert Corp., 173 F.R.D. 491, 493 (N.D. Ill. 1997) (Rule 26 “does not require the party deposing an expert witness to bear the expense of that expert’s deposition preparation time.”). Other courts allow subpoenaed experts to charge for preparation time, which encourages experts to run up excessive numbers of “preparation” hours. See Cohen v. Jaffe, Raitt, Heuer, & Weiss, P.C., 322 F.R.D. 298, 301-02 (E.D. Mich. 2017) (multiple experts’ preparation time reduced as excessive, including all time consulting with counsel); Windsor Securities, LLC v. Arent Fox LLP, 2018 WL 4360769, at *2-3 (S.D.N.Y. Aug. 7, 2018) (58 hours of preparation time for 4-hour deposition cut to 20); Conte v. Newsday, Inc., 2012 WL 37545, at *4 (E.D.N.Y. Jan. 9, 2012) (65 hours of preparation time for 7-hour deposition chopped to 10 hours).
As for the amount of the fee itself, under the “manifest injustice” standard of Rule 26(b)(4)(E), “[t]he party seeking reimbursement of their expert witness fees has the burden of demonstrating to the court that the expert’s rate and fee are reasonable.” Se-Kure Controls, Inc. v. Vanguard Products Group, Inc., 873 F. Supp.2d 939, 955 (N.D. Ill. 2012). “The caselaw also ‘reflects widespread judicial criticism of blatant attempts to gouge opposing parties with steep fees, and an activist approach in reducing fees deemed to be exorbitant.’” Fell v. United States, 2017 WL 2819040, at *3 (Mag. N.D. Fla. June 9, 2017) (quoting Brunarski v. Miami University, 2017 WL 713691, at *1 (S.D. Ohio Feb. 23, 2017)), adopted, 2017 WL 2817881 (N.D. Fla. June 29, 2017). “A guiding principle is that the expert’s fee should not be so high as to impair a party’s access to necessary discovery or result in a windfall to the expert.” In re American Medical Systems, Inc. Pelvic Repair Systems Products Liability Litigation, 2017 WL 1090029, at *2 (S.D.W. Va. March 21, 2017) (quoting Maxwell v. Stryker Corp., 2012 WL 2319092, at *2 (D. Colo. June 19, 2012)). A multi-factor test has been used for years. Here’s a typical list of those factors:
(1) the witness’ area of expertise; (2) the education and training required to provide the expert insight that is sought; (3) the prevailing rates of other comparably respected available experts; (4) the nature, quality and complexity of the discovery responses provided; (5) the fee actually being charged to the party who retained the expert; (6) fees traditionally charged by the expert on related matters; and (6) any other factor likely to be of assistance to the court in balancing the interests implicated by Rule 26.
Grady v. Jefferson County Board of Commissioners, 249 F.R.D. 657, 659 (D. Colo. 2008) (citations and quotation marks omitted). This list apparently originated in Jochims v. Isuzu Motors, Ltd., 141 F.R.D. 493, 4995-96 (S.D. Iowa 1992), and has been widely followed in recent cases.
In the AMS case, in our sandbox, a plaintiffs’ expert demanded a $3500 per hour fee. 2017 WL 1090029, at *3. The court knocked this stratospheric demand down to $500 per hour.
While [the expert] claims that other individuals have been willing to pay him $3,500 per hour, that fact, alone, does not establish the reasonableness of his deposition rate. On the other hand, [defendant] has provided evidence that the customary hourly fee being charged in this MDL is $500. Moreover, a review of the relevant case law indicates that $500 per hour is within the range of reasonable payment for a treating physician’s testimony.
Id. (citing Korabik v. Arcelormittal Plate LLC, 310 F.R.D. 205, 208 (E.D.N.Y. 2015) ($400 an hour was reasonable fee for expert orthopedic surgeon; rejecting $2500 per day demand); Roca Labs, Inc. v. Consumer Opinion Corp., 2015 WL 12844308, at *2 (M.D. Fla. July 23, 2015) ($500 an hour was reasonable fee for expert internist; rejecting $3000 per half day demand); Patterson v. Avis Rent A Car Systems, Inc., 48 F. Supp.3d 534, 534-35 (S.D.N.Y. 2014) ($650 an hour was reasonable for treating physician designated as an expert); Clossin v. Norfolk Southern Railway Co., 2014 WL 3339588, at *2 (W.D. Pa. July 8, 2014) ($500 an hour for the first three hours was reasonable for expert orthopod; rejecting $4000 for first hour demand); Duke v. Performance Food Group, Inc., 2014 WL 370442, at *7 (N.D. Miss. Feb. 3, 2014) (treater’s $300.00 an hour fee was reasonable); Burgess v. Fischer, 283 F.R.D. 372, 373 (S.D. Ohio 2012) ($360 an hour was reasonable for physician with unstated specialty; rejecting $2,000 per day demand); Maxwell v. Stryker Corp., 2012 WL 2319092, at *3 (no more than $750 an hour was reasonable for expert orthopod; rejecting $2000 an hour demand); Cartrette v. T & J Transport, Inc., 2011 WL 899523, at *2 (M.D. Fla. March 15, 2011) ($400 an hour was reasonable for treaters; rejecting demands for $1500 an hour).
We looked a little further for additional examples of excessive expert fees. In the Grady case cited above, the court “f[ound] that the deposition hourly rate of $2,000 per hour as set forth in [an expert orthopod’s] fee schedule is grossly excessive and comes near to being extortionate.” 249 F.R.D. at 662. The court set the fee at $600 per hour. Id. In another, more recent, American Medical case, the plaintiff’s expert pelvic surgeon sought the handsome sum of $18,000 per day for his testimony. In re American Medical Systems, Inc. Pelvic Repair Systems Products Liability Litigation, 2019 WL 2520593, at *1 (S.D.W. Va. June 17, 2019). He didn’t get close to that. The Court rejected flat fees altogether:
[A] flat fee does not comply with the intent of Rule 26(b)(4)(E)(i), which requires some reasonable relationship between the services rendered and the remuneration to which an expert is entitled.” By its nature, a flat fee runs counter to this principle.
Id. (citations and quotation marks omitted). Plaintiffs had pointed to other flat fees charged in similar MDLs before the same judge. Id. at *3. Bad move, since all the flat fees cited are presumably now subject to being held invalid. Based on all the factors, the expert received a his “regular hourly review rate” of $900 per hour, which “while on the high side, [was] reasonable.” Id. See also Fint v. Brayman Construction Corp., 2019 WL 124835, at *2 (S.D.W. Va. Jan. 7, 2019) (collecting cases holding “that a flat fee does not comply with the intent of” Rule 26); AP Links, LLC v. Russ, 2015 WL 9050298, at *1 (E.D.N.Y. Dec. 15, 2015) (collecting cases holding “that flat fees for expert appearances are ‘disfavored’ and are generally considered unreasonable”).
We’ve also seen “sauce for the goose” arguments in this area. By that we mean, that what a moving party pays its own experts is cited as justification for requiring that party to pay the same rate to opposing experts that it has subpoenaed to testify. In Dominguez v. Syntex Laboratories, Inc., 149 F.R.D. 166 (S.D. Ind. 1993), the plaintiff’s expert demanded $860 an hour. The court rejected that amount, comparing it to, among other things, the fees paid by the other side to its experts:
To put it bluntly, no doctor with similar expertise charges as much as [plaintiff’s expert]. In fact, no similar doctor comes close. Plaintiff makes only vague reference to unnamed doctors of unnamed specialty who are alleged to regularly earn $500 to $1,000 per hour for deposition testimony. This is not enough to overcome defendant’s evidence that another [its expert] in the same field . . . earns only $300 per hour − or some evidence unnamed doctors may earn $350 per hour. Other experts in fields relevant to this case earn even less: $120 to $250 per hour.
Id. at 169. See also, e.g., Nelson v. LeBlanc, 2019 WL 1930744, at *4 (E.D. La. April 30, 2019) (expert could only recover from opponent what he charged his client); Fell, 2017 WL 2819040, at *4 (expert’s fee to opponent limited to the rate he charged his client).
In other cases, a professor of some sort sought a $1500 an hour fee in Brunarski, 2017 WL 713691, at *1. The court cut the fee in half. Id. at *2. Similarly, the court in Goins v. Royal Caribbean Cruises, Ltd., 2017 WL 5891475, at *2 (S.D. Fla. Oct. 24, 2017), rejected an expert’s attempt to double his $800 an hour fee for “after hours” testimony. In Cohen, that plaintiffs had agreed to pay their expert’s $715 an hour did not prevent reduction to $295 when the other side was paying, since the court was “not bound to force what may have been one party’s foolish bargain upon its adversary.” 322 F.R.D. at 302. In Massasoit v. Carter, 227 F.R.D. 264 (W.D.N.C. 2005), the court held that a defense expert’s demand of a $2000 flat fee of $2,000 was excessive and allowed only $250 an hour. Id. at 267. In Scheinholtz v. Bridgestone/Firestone, Inc., 187 F.R.D. 221, 221 (E.D. Pa. 1999), two of the plaintiff’s medical experts, demanded flat fees of $2,900 and $5,000. That was “patently unreasonable,” and the court “reluctantly approved a $600 an hour fee – only because the defendants had “agreed to it.” Id. at 222. See Fint, 2019 WL 124835, at *3-4 (expert’s $5000 flat fee held unreasonable, but his $385 hourly rate was OK).
What about Daubert? Expert fees for Daubert hearings are not recoverable under Rule 26(b)(4)(E). “A Daubert hearing is not a discovery proceeding but an evidentiary hearing designed to screen expert testimony.” Knight v. Kirby Inland Marine Inc., 482 F.3d 347, 356 (5th Cir. 2007). There is also precedent that a party need not pay any fees associated with the deposition of an expert where the expert was later excluded from testifying following a Daubert hearing. “To require a party to pay for the costs of a witness who was not even called, and against whom the court had sustained a Daubert challenge is manifestly unjust.” Rogers v. Penland, 232 F.R.D. 581, 583 (E.D. Tex. 2005). Accord GWTP Investments, L.P. v. SES Americom, Inc., 2007 WL 9712172, at *5 (Mag. N.D. Tex. Jan. 30, 2007) (plaintiff “may not recover for . . . fees as a testifying expert because this Court sustained a Daubert challenge against his testimony.”), adopted, 2007 WL 9712173 (N.D. Tex. Feb. 14, 2007) (mathematical errors corrected). Thus, defendants with meritorious Daubert challenges should seek to have expert fee determinations postponed until after the relevant hearings, or at least to be reimbursed for any payments “in the event any Daubert challenge is successful.” Durkin v. Paccar, Inc., 2012 WL 12887769, at *5 (Mag. D.N.J. Dec. 28, 2012), aff’d, 2013 WL 5466930 (D.N.J. Sept. 30, 2013).
Finally, it’s a little old, but back during the DES mass tort, as “key” plaintiff side expert, had his rate cut from $420 an hour to $250. Anthony v. Abbott Laboratories, 106 F.R.D. 461, 464-65 (D.R.I. 1985). Anthony is a reminder of how the advent of the current MDL-dominated mass tort environment has – contrary to Congressional purpose − caused the cost of just about everything involved in such litigation to skyrocket, which includes expert fees.