United States District Court, D. Colorado
U.S. COMMODITY FUTURES TRADING COMMISSION, Plaintiff,
GREGORY L. GRAMALEGUI, Defendant.
ORDER REGARDING THE CFTC'S MOTION TO EXCLUDE THE
EXPERT REPORT AND TESTIMONY OF DAVID R. ARONSON
P. Gallagher, United States Magistrate Judge
matter comes before the Court on the CFTC's motion (ECF
#111) (which was referred to this Magistrate
Judge (ECF #115)),  Defendant's response (ECF #
123), and the CFTC's reply (ECF # 131). The Court has
reviewed each of the aforementioned documents and any
attachments. The Court has also considered the entire case
file, the applicable law, and is sufficiently advised in the
premises. Oral argument was not requested and is not
necessary to resolve this discrete issue. For the following
reasons, I GRANT the motion in part and DENY the motion in
part as set forth below.
wishes to utilize the opinion and testimony of David R.
Aronson, CMT. The CFTC moves to exclude the report he
submitted as well as his potential testimony. Defendant
opposes this request. Mr. Aronson was asked to address three
broad questions which will be set forth below in turn
(see ECF # 111, opinion of David Aronson, p. 6).
702 of the Federal Rules of Evidence, which governs the
admissibility of expert witness testimony, states:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of
an opinion or otherwise if:
(a) the expert's scientific, technical,
or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient
facts or data;
(c) the testimony is the product of reliable
principles and methods; and
(d) the expert has reliably applied the
principles and methods to the facts of the case.
Fed.R.Evid. 702. In determining admission under Rule 702, and
in appropriately performing the “gatekeeping”
role it bears, the Court must also look to: Daubert v.
Merrell Dow Phar., 509 U.S. 579 (1993); Gen. Elec.
Co. v. Joiner, 522 U.S. 136 (1997) and Kuhmo Tire
Co., Ltd. V. Carmichael, 526 U.S. 137 (1999). Keeping in
mind that “rejection of expert testimony is the
exception rather than the rule” U.S. v.
Nacchio, 519 F.3d 1140, 1154 (10th Cir.
2008), I must apply the principles set forth in the trio of
Daubert, General Electric., and Kuhmo.
CFTC's complaint states that Defendant “offered for
sale to clients a trading system and advisory service . . .
“ (ECF #1, para. 1). It goes on to define “[a]
trading system [as] a methodology for determining when to
enter and exit a trade, among other things.”
Id. The first question asked of Mr. Aronson bears on
1. Is there a distinction between a
“trading-system” and a trading plan? Were the
products offered by Defendant through Eminitradingschool.com
a trading system? Was Defendant operating a trading system?
CFTC properly opposes Mr. Aronson's proffered testimony
on this question for a number of reasons. It is “the
court's duty to set forth the law” applicable to
the facts presented at trial. Sprecht v. Jensen, 853
F.2d 805, 808 (10th Cir. 1988) (en banc),
cert. denied, 109 S.Ct. 792 (1989). Mr. Aronson
attempts to define and distinguish the terms trading-system,
trading plan, trading methodology, and trading method. (ECF
#111, Aronson report pp. 8-11). “[O]ur system reserves
to the trial judge the role of adjudicating the law for the
benefit of the jury.” Sprecht, supra. at
808-09. Additionally, the terms trading system and advisory
service are pulled from sections of the prior agency Order
and Offer of Settlement and set forth in the complaint. (ECF
# 1, para. 16). To the extent that there may be ambiguity in
these terms, “[w]hen an agency order is ambiguous, a
court will uphold the agency's interpretation unless it
is arbitrary and capricious.” Colorado Interstate
Gas Co. v. F.E.R.C., 791 F.2d 803, 810 (10th
Cir. 1986) (citation removed). There has been no request nor
any finding here that the agency's interpretation is
arbitrary and capricious.
the provision of definitions, Mr. Aronson goes on to apply
the law to the facts, opining “[i]n summary, in keeping
with my analysis above, the products offered by ETS are not a
trading system, but, rather, are an educational product that
teaches a subjective methodology for evaluating financial
markets.” (Aronson report p. 11). This is an improper
application of the law to the facts and invades the province
of the jury. See U.S. v. Bedford, 536 F.3d 1148,
1158 (10th Cir. 2008) (citation and internal
it attempts to define the law of the case, because it
attempts to override an agency definition not found to be
arbitrary and capricious, and because it ultimately attempts
to invade the province of the jury, Mr. Aronson will not be
permitted to testify to what has been set forth in question
one or the answer thereto.
Was Defendant offering and selling an advisory service?
the reward to risk ratios be defined for trades never
above question has been broken down by the parties into (a)
and (b). I will address the question in that same fashion.
Defendant offering and selling an advisory service?
Aronson's answer to 2(a) breaks down into two parts. The
first of these is an opinion as to why Aronson believes
Defendant was offering training education rather than an
advisory service. The larger part of the answer to question
2(a) goes on to provide research, facts and examples of what
constitute teaching or training education.
Aronson attempts to define “advisory service.” As
set forth above, Mr. Aronson does not get to provide for the
Court the definition of advisory service as this would be
improper. Additionally, Mr. Aronson again, as with question
1, attempts to apply the law to the facts in an improper
manner to answer the question as to whether Defendant was
operating an advisory service. This will not be allowed.
regard to showing what an educator or teacher does, my ...