United States District Court, D. Colorado
JOAN OBESLO, JAMES DIMAGGIO, ANNE HALL, CAROL A. REYNON-LONGORIA, CYNTHIA BERNAL, TINA GORRELL-DEYERLE, on behalf of Great West Funds, Inc., Plaintiffs,
GREAT-WEST CAPITAL MANAGEMENT, LLC, Defendant.
DUPLASS, ZWAIN, BOURGEOIS, PFISTER & WEINSTOCK APLC 401 K PLAN, Plaintiff,
GREAT-WEST CAPITAL MANAGEMENT, LLC, Defendant. JOAN OBESLO, JAMES DIMAGGIO, ANNE HALL, CAROL A. REYNON-LONGORIA, CYNTHIA BERNAL, and TINA GORRELL-DEYERLE, on behalf of Great-West Funds, Inc., Plaintiffs,
GREAT-WEST LIVE & ANNUITY INSURANCE CO, and GREAT-WEST CAPITAL MANAGEMENT, LLC, Defendants.
ORDER DENYING DEFENDANTS' MOTIONS TO STRIKE
PLAINTIFFS' EXPERT WITNESSES
CHRISTINE M. ARGUELLO, UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants Great-West Capital
Management, LLC and Great-West Life & Annuity Insurance
Company, LLC's Motion to Strike Plaintiffs' Proffered
Expert Brian Henderson (Doc. # 287) and Motion to Strike
Plaintiffs' Proffered Expert J. Chris Meyer (Doc. # 288).
Both Motions have been fully briefed. (Doc. ## 294, 296, 299,
301.) For the reasons that follow, the Court denies both
Court detailed the factual background of this case at the
September 27, 2018 hearing at which the Court denied
Defendants' Motion for Summary Judgment. (Doc. # 272.)
That order is incorporated by reference, and the facts
explained therein need not be repeated. The Court recounts
only the facts necessary to address Defendants' Motions
Funds, Inc. is an entity composed of over 60 mutual funds.
(Doc. # 248 at 10.) The mutual funds include actively managed
funds, index funds, and asset allocation funds. (Id.
at 10-11.) Defendant Great-West Capital Management, LLC
(GWCM) provides investment advisory services for Great-West
Funds for all series of its shares. (Doc. # 252-1 at 13.)
Great-West Funds compensates GWCM based on a percentage of
the total value of assets under management for each fund.
(Id.) Defendant Great-West Life & Annuity
Insurance Co. (GWLA) provides administrative services for
various Great-West Funds plans. (Id. at 12.)
Great-West Funds compensates GWLA through an administrative
services fee of 0.35% (35 “basis points” or
“bps”) for certain share classes of the
Great-West Funds. (Id.)
are shareholders in the mutual funds managed by Defendants.
(Doc. # 230-1 at 2.) Plaintiffs filed this suit on behalf of
themselves individually as well as all other shareholders of
Great-West Funds, alleging that Defendants violated §
36(b) of the Investment Company Act of 1940 (the
“ICA”). (Id.) Plaintiffs argue
Defendants charged excessive fees, and, therefore, violated
the ICA's “fiduciary duty [on investment advisers]
with respect to the receipt of compensation for
services.” 15 U.S.C. § 80a-35(b).
support of their arguments, Plaintiffs intend to call J.
Chris Meyer and Brian Henderson as expert witnesses. Mr.
Meyer has “24 years of experience working for advisers
to four different mutual fund families[, ] and [he] was
involved in the processes by which those advisers satisfied
their statutory fiduciary duties under . . . the [ICA] in
informing and obtaining approval from mutual fund boards of
their compensation.” (Doc. # 294 at 1.) Mr. Meyer's
proffered opinions relate to “the lack of care and
conscientiousness of Great-West Funds' Board of Directors
. . . in connection with its approval of fees paid by
Great-West Funds to GWCM and GWLA . . . and how
disproportionate those fees were to the services actually
rendered.” (Doc. # 288-1 at 5.)
intend to call Dr. Henderson as a rebuttal witness to opine
on the testimony of Dr. Glenn Hubbard, who is one of
Defendants' expert witnesses. Defendants “retained
Dr. Hubbard to assess, from an economic and comparative
perspective, the fees Defendants charged the Great-West
mutual funds.” (Doc. # 282 at 45.) Defendants expect
that Dr. Hubbard “will offer expert testimony that the
fees of the Great-West mutual funds are consistent with the
fees of their respective peer funds.” (Id.)
Plaintiffs expect that Dr. Henderson-a professor of
Finance-will identify analytical and methodological errors in
Dr. Hubbard's analysis. (Doc. # 296 at 1.) Additionally,
Plaintiffs anticipate that Dr. Henderson will adjust Dr.
Hubbard's methodology “with more prudent
assumptions” which will show that the fees at issue are
comparatively higher than Dr. Hubbard suggests. (Doc. # 287-1
filed the instant Motions to Strike Dr. Henderson's and
Mr. Meyer's testimony on February 11, 2019. (Doc. ##
287-88.) Plaintiffs filed Responses on March 4, 2019 (Doc. ##
294, 296), and Defendants filed Replies on March 18, 2019
(Doc. ## 299, 301).
Daubert, the trial court acts as a
“gatekeeper” by reviewing a proffered expert
opinion for relevance pursuant to Federal Rule of Evidence
401, and reliability pursuant to Federal Rule of Evidence
702. See Daubert v. Merrell Dow Pharm., Inc., 509
U.S. 579, 589-95 (1993); see also Goebel v. Denver &
Rio Grande W. R.R. Co., 215 F.3d 1083, 1087 (10th Cir.
2000). The proponent of the expert must demonstrate by a
preponderance of the evidence that the expert's testimony
and opinion are admissible. United States v.
Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009);
United States v. Crabbe, F.Supp.2d 1217, 1220-21 (D.
Colo. 2008); F.R.E. 702 advisory comm. notes. This Court has
discretion to evaluate whether an expert is helpful,
qualified, and reliable under Rule 702. See Goebel,
214 F.3d at 1087; United States v. Velarde, 214 F.3d
1204, 1208-09 (10th Cir. 2000).
Rule of Evidence 702 governs the admissibility of expert
testimony. Rule 702 provides that a witness who is qualified
as an expert by “knowledge, skill, experience,
training, or education” may testify 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
(d) the expert has reliably applied the principles and
methods to the facts of the case.
deciding whether expert testimony is admissible, the Court
must make multiple determinations. First, it must first
determine whether the expert is qualified “by
knowledge, skill, experience, training, or education”
to render an opinion. Nacchio, 555 F.3d at 1241.
Second, if the expert is sufficiently qualified, the Court
must determine whether the proposed testimony is sufficiently
“relevant to the task at hand, ” such that it
“logically advances a material aspect of the
case.” Norris v. Baxter Healthcare Corp., 397
F.3d 878, 884, 884 n.2 (10th Cir. 2005). “Doubts about
whether an expert's testimony will be useful should
generally be resolved in favor of admissibility unless there
are strong factors such as time or surprise favoring
exclusions.” Robinson v. Mo. Pac. R.R. Co., 16
F.3d 1083, 1090 (10th Cir. 1994) (quotation omitted).
the Court examines whether the expert's opinion
“has ‘a reliable basis in the knowledge and
experience of his [or her] discipline.'”
Norris, 397 F.3d at 884, 884 n.2 (quoting
Daubert, 509 U.S. at 592). In determining
reliability, a district court must decide “whether the
reasoning or methodology underlying the testimony is
scientifically valid.” Id. (quoting
Daubert, 509 U.S. at 592-93). In making this
determination, a court may consider: “(1) whether a
theory has been or can be tested or falsified, (2) whether
the theory or technique has been subject to peer review and
publication, (3) whether there are known or potential rates
of error with regard to specific techniques, and (4) whether
the theory or approach has general acceptance.”
Norris, 397 F.3d at 884 (citing Daubert,
509 U.S. at 593-94).
Supreme Court has made clear that this list is neither
definitive nor exhaustive. Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 150 (1999). In short,
“[p]roposed testimony must be supported by appropriate
validation-i.e., ‘good grounds,' based on what is
known.” Daubert, 509 U.S. at 590.
requirement that testimony must be reliable does
not mean that the party offering such
testimony must prove “that the expert is indisputably
correct.” Bitler v. A.O. Smith Corp., 400 F.3d
1227, 1233 (10th Cir. 2004) (quoting Mitchell v. Gencorp
Inc., 165 F.3d 778, 781 (10th Cir. 1999)). Rather, the
party need only prove that “the method employed by the
expert in reaching the conclusion is scientifically sound and
that the opinion is based on facts which sufficiently satisfy
Rule 702's reliability requirements.” Id.
Guided by these principles, this Court has “broad
discretion” to evaluate whether an expert is helpful,
qualified, and reliable under the “flexible”
standard of F.R.E. 702. Velarde, 214 F.3d at
1208-09; Daubert, 509 U.S. at 594.