In Bank of China v. NBM LLC, No. 02-9267 (2d Cir. Feb. 17, 2004), the 2nd Circuit reversed a jury’s $132 million civil RICO verdict in a bank fraud trial, in part because of a Fed. R. Evid. 701 violation. The plaintiffs offered an employee to testify in the form of lay opinion about various aspects of banking practice and custom and the district court admitted the testimony, citing the witness’ years of experience in international banking and “common sense.” Inasmuch as the testimony was based exclusively on the experience of the witness, the 2nd Circuit held that the testimony was subject to Fed. R. Evid. 702’s disclosure requirements for expert evidence, and not properly admissible as lay opinion. Although the 2nd Circuit observed that the Fed. R. Evid. 701 violations are subject to a harmless error analysis, the Court nevertheless concluded that the evidentiary error was not harmless, given that the witness’ testimony comprised nearly a thousand pages of the trial transcript.
Moral to this decision: Disclose your experts!