Expert Disclosures: Navigating the Distinction Between Retained and Non-Retained Experts

In 2010, Fed. R. Civ. P. 26 was amended to require full expert reports and other disclosures for retained expert witnesses, but only summaries of anticipated opinion testimony of non-retained experts. During the ensuing nine years, courts have weighed in on the distinctions between retained experts and non-retained experts. Even still, the distinctions are murky.

Under Fed. R. Civ. P. 26(a)(2)(B), a full expert report is required “if the witness is one retained or specially employed to provide expert testimony in the case.” If the expert witness is non-retained then, under Rule 26(a)(2)(C), the party must disclose only “a summary of the facts and opinions to which the witness is expected to testify.” According to the Advisory Committee, “[f]requent examples [of non-retained expert witnesses] include physicians or other health care professionals and employees of a party who do not regularly provide expert testimony.”[i]

Indeed, treating physicians are perhaps the most common non-retained experts. Many courts have found that a treating physician is not considered a retained expert witness if the physician testifies about their medical treatment and other observations based on personal knowledge. However, when the “treating physician’s testimony is based on a hypothesis, not the experience of treating the patient, it crosses the line from lay to expert testimony.”[ii]

Other examples of non-retained experts are scientists or engineers involved in the development of a drug or medical device. The key to determining whether a witness should be considered a retained expert is whether their opinions were developed based on the witness’s personal involvement in the facts giving rise to the lawsuit or whether the witness developed their opinions for purposes of the lawsuit.

Differing Court Standards

A leading case on this issue is the United States Court of Appeals for the First Circuit’s decision in Downey v. Bob’s Discount Furniture Holdings, Inc.[iii] There, the plaintiffs alleged damages from a bedbug infestation, and the court considered whether the plaintiffs were required to produce an expert report for an exterminator, Edward Gordinier, who had inspected their home. The court found that Gordinier was not “retained or specially employed” by the plaintiffs because he did not “h[o]ld himself out for hire as a purveyor of expert testimony” and was not “charging a fee for his testimony.”[iv] The court further stated:

In order to give the phrase “retained or specially employed” any real meaning, a court must acknowledge the difference between a percipient witness who happens to be an expert and an expert who without prior knowledge of the facts giving rise to litigation is recruited to provide expert opinion testimony. It is this difference, we think, that best informs the language of the rule.
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Gordinier was “an actor with regard to the occurrences from which the tapestry of the lawsuit was woven.” Put another way, his opinion testimony arises not from his enlistment as an expert but, rather, from his ground-level involvement in the events giving rise to the litigation. Thus, he falls outside the compass of Rule 26(a)(2)(B).

In an effort to blunt the force of this reasoning, the defendant contends that Gordinier should be considered “retained” because his inspection reports do not indicate that he deduced the cause of the infestation in the process of inspecting and treating the plaintiffs’ premises. This contention misperceives both the law and the facts.

Interpreting the words “retained or specially employed” in a common-sense manner, consistent with their plain meaning, we conclude that as long as an expert was not retained or specially employed in connection with the litigation, and his opinion about causation is premised on personal knowledge and observations made in the course of treatment, no report is required under the terms of Rule 26(a)(2)(B).

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If, however, the expert comes to the case as a stranger and draws the opinion from facts supplied by others, in preparation for trial, he reasonably can be viewed as retained or specially employed for that purpose, within the purview of Rule 26(a)(2)(B).[v]

“Several district courts have followed the lead of Downey and held that the distinction between a Rule 26(a)(2)(B) expert and a 26(a)(2)(C) expert is that 26(a)(2)(C) experts’ conclusions and opinions arise from firsthand knowledge of activities they were personally involved in before the commencement of the lawsuit, and not conclusions they formed because they were recruited to testify as an expert after-the-fact.”[vi]

Compensation of the witness may have only marginal relevance. For instance, in Caruso v. Bon Secours Charity Health Sys., Inc.,[vii] the Second Circuit found that “[t]he reporting requirement in Rule 26(a)(2)(B) does not turn solely on an expert’s compensation or lack thereof. Rather, the more relevant distinction is between an expert who happened to have personal involvement with the events giving rise to litigation and an expert whose only involvement consists of aiding the already-initiated litigation.” And in Spears v. U.S.,[viii] a federal district court found that “[it] is irrelevant for purposes of Rule 26 whether an expert has been compensated for his or her testimony or simply volunteers that testimony.”[ix]

In Tolan v. Cotton,[x] a Texas federal district court discussed at length what is meant by “retained or specially employed.” According to the court:

The term “specially employed” is a non-specific, catch-all phrase that encompasses experts whose relationship to the party employing them defies ordinary classifications or more specific labels. Thus the Court holds that a witness is “retained” if she is to provide expert opinion and testimony in exchange for a fee; a witness is “specially employed” if she has no personal involvement in the facts giving rise to a case and is instead engaged specifically by a party to provide opinions and testimony bearing on the particulars of a case, without monetary payment for those services.[xi]

The court concluded there are “three categories of witnesses who are required to produce written reports during discovery: ‘retained’ witnesses, ‘specially employed’ witnesses, and party employees whose duties ‘regularly involve giving expert testimony.’”[xii] A retained expert was defined as one who is hired by payment of a retainer. By contrast, a specially employed witness does not require monetary payment.

In Avnet, Inc. v. Motio, Inc.,[xiii] the defendant disclosed that its CEO, Lynn Moore, intended to provide expert opinions about patent issues, and the plaintiff moved to exclude his testimony because he did not provide an expert report. The Illinois federal district court described multiple approaches that courts have taken in considering this issue. Some courts have followed Downey in distinguishing percipient witnesses from experts who become knowledgeable after being enlisted as an expert.[xiv] Other courts “have addressed this topic slightly differently by examining the expert’s relationship with the litigation” such that the key factor is whether the expert’s relationship to the issues in the lawsuit “developed prior to the commencement of the lawsuit.”[xv] Finally, other courts, such as Tolan, have focused on the meaning of the terms “retained” and “specially employed.”[xvi]

Appearing to follow the Tolan approach, the Avnet court concluded that Moore was required to provide a report for most of his opinions.[xvii] The court stated that the defendant intended to elicit numerous expert opinions from the CEO “without offering any meaningful explanation to show that these are matters Mr. Moore would know about as a result of his normal role as CEO.”[xviii] Further, the defendant “offered nothing to indicate that Mr. Moore derived his opinions for any purpose other than this lawsuit.”[xix] Finally, the court stated:

We also reject Defendant’s argument that Mr. Moore was not “specially employed” to offer expert testimony. We do not read this phrase to mean “hired,” in the sense of a retained expert who has no ongoing relationship with a party but is paid for his or her services in a particular case. Such an interpretation would render the phrase “specially employed” superfluous to the immediately preceding word “retained,” and we will not interpret statutory language in a way that renders it superfluous. Instead, we agree with the Tolan court that a more natural reading of “specially employed” is that of a person who is not a percipient witness but who is being specially “used” to offer expert testimony.[xx]  

Former Employees

Case law suggests that the analysis does not change merely because a percipient witness is a former employee who is being compensated for their time assisting in the litigation. In Guarantee Trust Life Ins. Co. v. Am. Med. & Life Ins. Co.,[xxi] the defendant retained its former CFO, Scott McGregor, as a consultant (who presumably was compensated) and then disclosed him as a non-retained expert. The court found that “a former employee may be a non-retained expert for the purposes of Rule 26(a)(2) if he is a percipient witness and is testifying based upon his personal knowledge of the facts or data at issue in the litigation.”[xxii] Because McGregor intended to provide opinions based on the scope of his employment and “not for the purpose of reviewing new materials expressly for litigation,” the defendant appropriately disclosed him as a non-retained expert.[xxiii]

In the Cook IVC Filters MDL, a plaintiff took issue with the defendants’ disclosure of a former engineer as a non-retained expert to render opinions about design, development and testing of the devices at issue.[xxiv] Relying on Guarantee Trust, the district court found that the engineer’s testimony must be limited to the scope of his personal knowledge and experience while employed and stated as follows:

“[A] former employee may be a non-retained expert for the purposes of Rule 26(a)(2) if he is a percipient witness and is testifying based upon his personal knowledge of the facts or data at issue in the litigation.” If he testifies beyond the scope of his observation, however, he is treated as a retained expert and must provide a written report pursuant to Rule 26(a)(2)(B).[xxv]

In that same MDL the following year, the defendants took issue with a plaintiff’s designation of another former Cook engineer as a non-retained expert. The district court found that “[o]ver Cook’s objection, the court finds Dr. Carlson was not required to submit an expert report because his testimony is based on his observations and opinions he formed during his metallurgical evaluations of Celect filter fractures.”[xxvi]

Bear in mind that many witnesses are “hybrid” witnesses such that the witness “may be subject to Rule 26(a)(2)(C) as to portions of his or her testimony and may be deemed a retained or specially employed expert who is subject to Rule 26(a)(2)(B) as to other portions.”[xxvii] Courts have held that the party providing the summary disclosure bears the burden of showing that an expert report was not required.[xxviii]

Effect of Improper Failure to Provide Report

All is not necessarily lost if a party neglects to provide a full report for a witness who is deemed a retained expert. Under Fed. R. Civ. P. 37(c)(1), “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing or at a trial, unless the failure was substantially justified or is harmless.”

Many courts employ a multi-factor test in making this determination. For instance, the Fourth Circuit has identified the following factors as pertinent: “(1) the surprise to the [other] party … ; (2) the ability of the party to cure that surprise; (3) the extent to which allowing the testimony would disrupt the trial; (4) the explanation for the party’s failure to” properly disclose the information; and “(5) the importance of the testimony.”[xxix]

Litigants should not assume that expert reports are not required for certain individuals who have personal knowledge of the events giving rise to the litigation and who intend to provide expert opinions. Litigants should, instead, carefully analyze Rule 26(a)(2) and thoughtfully consider whether the witness will be providing opinions for which an expert report is required.

[i] Fed. R. Civ. P. 26, Committee Notes (2010).

[ii] Williams v. Mast Biosurgery USA, Inc., 644 F.3d 1312, 1317–18 (11th Cir. 2011).

[iii] 633 F.3d 1 (1st Cir. 2011).

[iv] Id. at 6.

[v] Id. at 6–7 (citations and footnotes omitted).

[vi] Beane v. Utility Trailer Manuf. Co., 2013 WL 1344763, at *3 (W.D. La. Feb. 25, 2013) (citations omitted); see also Indianapolis Airport Auth. v. Travelers Prop. Cas. Co. of Am., 849 F.3d 355, 371 (7th Cir. 2017) (quoting Downey); Goodman v. Staples The Office Superstore, LLC, 644 F.3d 817, 826 (9th Cir. 2011) (discussing how a non-retained expert may morph into a Rule 26(a)(2)(B) expert); United States v. Sierra Pac. Indus., 2011 WL 2119078, at *4 (E.D. Cal. May 26, 2011) (“The distinguishing characteristics between expert opinions that require a report and those that do not is whether the opinion is based on information the expert witness acquired through percipient observations or whether, as in the case of retained experts, the opinion is based on information provided by others or in a manner other than by being a percipient witness to the events in issue”).

[vii] 703 F. App’x 31, 33 (2d Cir. 2017).

[viii] 2014 WL 258766, at *8 (W.D. Tex. Jan. 23, 2014).

[ix] See also Ulbrick v. UPR Prod., Inc., 2011 WL 500034, at *4 (E.D. Mich. Feb. 8, 2011) (“If a witness falls within this requirement is determined primarily by the scope, substance, and source of the intended testimony—not on whether the witness is being compensated”) (citing Fielden v. CSX Transp., Inc., 482 F.3d 866, 871 (6th Cir. 2007)).

[x] 2015 WL 5332171 (S.D. Tex. Sept. 14, 2015).

[xi] Id. at *7.

[xii] Id. at *6 (quoting Huffman v. City of Conroe, No. H–07–1964, at *6–7 (S.D. Tex. July 31, 2008); footnote and citations omitted); see also KW Plastics v. U.S. Can Co., 199 F.R.D. 687, 690 (M.D. Ala. 2000) (citing dictionary and finding that a person is “‘employed’ when she is ‘put to use or service’” and that “[t]he adverb ‘specially’ is ‘used with reference to a particular purpose’ that is ‘surpassing what is common or usual.’”).

[xiii] 2016 WL 927194 (N.D. Ill. Mar. 4, 2016).

[xiv] Id. at *2.

[xv] Id. (quoting Brainstorm Interactive, Inc. v. School Specialty, Inc., 2014 WL 5817327, at *3 (W.D. Wis. Nov. 10, 2014)).

[xvi] Id. at *3.

[xvii] Id. at *4–5.

[xviii] Id. at *4.

[xix] Id. at *5.

[xx] Id. (citation omitted).

[xxi] 291 F.R.D. 234, 236 (N.D. Ill. 2013).

[xxii] Id. at 237.

[xxiii] Id.; see also Speare Tools, Inc. v. Klein Tools, Inc., 2014 WL 3533235, at *1 (E.D. Wis. July 15, 2014) (finding that retired employee who no longer received a salary but continued to perform accounting services (presumably for pay) was a non-retained expert whose opinions arose from her “ground-level involvement in the events giving rise to the litigation”); Addison Express, LLC v. Medway Air Ambulance, Inc., 2005 WL 2738309, at *2 (N.D. Tex. Oct. 24, 2005) (employees and former employee deemed non-retained experts).

[xxiv] See In re: Cook Med., Inc., IVC Filters Mktg., Sales Prac. & Prod. Liab. Litig., 2017 WL 9251216 (S.D. Ind. Oct. 19, 2017).

[xxv] In re: Cook, 2017 WL 9251216, at *1 (citations omitted).

[xxvi] In re: Cook Med., Inc., IVC Filters Mktg., Sales Prac. & Prod. Liab. Litig., 2018 WL 5885539, at *2 (S.D. Ind. Nov. 9, 2018).

[xxvii] Kondragunta v. Ace Doran Hauling & Rigging Co., 2013 WL 1189493, at *10 (N.D. Ga. Mar. 21, 2013) (quoting In re: Denture Cream Prods. Liab. Litig., 2012 WL 5199597, at *4 (S.D. Fla. Oct. 22, 2012)).

[xxviii] Avnet, Inc. v. Motio, Inc., 2016 WL 927194, at *4 (N.D. Ill. Mar. 4, 2016); see also citations therein.

[xxix] Hoyle v. Freightliner, LLC, 650 F.3d 321, 329 (4th Cir. 2011).