The United States District Court, WD Virginia, dealt with a financial dispute in which a former CEO of a company, Stephens, was offered as an expert witness.

The court disqualified Stephens as an expert witness due to his direct financial interest in the outcome of the case.

The court stated:

Defendants’ claim of Steffens’s bias stems primarily from the fact that, although Keystone is now a non-operating entity, its interests in this litigation have been sold to another business entity, Clarendon. Under the terms of the original operating agreement with Clarendon, as Steffens explained it, that entity will receive ten percent of any recovery by Keystone in the lawsuit; Steffens and Ellis will equally split the rest. (Steffens Jan. Dep. 69-70, Dkt. No. 84-2.) If there is a recovery by Keystone in this case, then, Steffens believes he will personally recover 45 percent of those proceeds. (Id. at 70.)
As Steffens candidly admits, he is “obviously” “an interested party” (Steffens Dec. Dep. 43, Dkt. No. 84-4), and he has “a direct financial interest in this case” (Steffens Jan. Dep. 69). Moreover, he is not otherwise being compensated as an expert witness for the time he spent on the report, although he will be given something for incidental expenses. (Id. at 69.)

But the entirety of the circumstances here are different than the typical case. First of all, unlike many of the cases cited by defendants or the principles those cases reference, Steffens has a direct financial stake in the litigation itself, not just an ownership interest in the party for whom he is testifying. He is a party to a separate economic agreement in which he negotiated with others and agreed to split up the proceeds from this litigation. Additionally, as noted above in the court’s discussion of Signal Perfection, he has never before testified as an expert, but is testifying based on experience alone (as opposed to education or qualifications), and his opinions are primarily subjective.

In sum, the particular circumstances of this case—which include Steffens’s clear, substantial, and direct financial stake in this litigation and the fact that his testimony is largely subjective, as opposed to being based on reproducible scientific or other technical methods— lead the court to conclude that Steffens should be excluded as an expert.

Even if the court did not exclude him on that ground, however, the court also finds that he is not qualified as an expert to offer the opinions in his report, and that the opinions themselves are generally unsupported, unreliable, or unhelpful to the jury.

The court did state that Stephens can offer some testimony as a fact witness. For more details, please see this case:

NORTHWEST HARDWOODS, INC., et al., Defendants.
Civil Action No. 5:18-cv-00039.
United States District Court, W.D. Virginia, Harrisonburg Division.
April 19, 2019.