South Central Petroleum, Inc. v. Long Brothers. Oil Co., 974 F.2d 1015

U.S. Court of Appeals for the Eighth Circuit

1992

Chapter

12

Title

Opinion Testimony - Lay and Expert

Page

555

Topic

703:  Inadmissible hearsay used by both parties.

Quick Notes

Long Brothers Oil Company appeals the district court's grant of summary judgment and order that South Central Petroleum and Jerry Sawyer pay Long Brothers Oil Company $62,627 in exchange for one-half ownership of an oil well.   

Long Brothers argues  - inappropriately relied on hearsay

o         The trial court inappropriately relied on hearsay evidence in making this calculation.

Rule 703. Bases of Opinion Testimony by Experts

o    The facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing.

o    If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need NOT be admissible in evidence in order for the opinion or inference to be admitted.

o    Facts or data that are otherwise inadmissible shall not be disclosed to the jury by the proponent of the opinion or inference unless the court determines that their probative value in assisting the jury to evaluate the expert's opinion substantially outweighs their prejudicial effect.

Court - District Court Expressly limited admission

o         Here, the district court expressly limited the admission to the expert's opinion and did not admit the information on which the expert based his opinion.

Both Long Brothers and South Central Experts relied on the same production figures

o         Moreover, Long Brothers does not dispute that their opponent's expert based his opinion on information reasonably relied upon by experts in the field.

o         In fact, Long Brothers' expert relied on the same type of production figures on which Sawyer's and South Central Petroleum's expert based his opinion.

Court - No Abuse of Discretion

o         We therefore do not believe that the district court abused its discretion in admitting the contested expert testimony.

Book Name

Evidence: A Contemporary Approach.  Sydney Beckman, Susan Crump, Fred Galves.  ISBN:  978-0-314-19105-2.

Issue

o         Whether otherwise inadmissible evidence can be disclosed to the jury if its probative value substantially outweighs their prejudicial effects?  Yes.

Procedure

Trial

o         The district court ordered appellant oil company to transfer one-half of its oil well interest to appellee investment partners, which were ordered to pay appellant one-half of the purchase price and transaction costs minus an offset calculated by subtracting appellant's operating costs from the revenues produced by the oil well interest and then adding six percent in prejudgment interest to one-half of this difference.

Appellant

o         Affirmed.

o         The court found that appellees' expert based his opinion on information reasonably relied on by experts in the field and that appellant's expert relied on the same type of production figures, so the district court did not abuse its discretion in admitting the contested expert testimony.

Facts/Cases

Discussion

Key Phrases

Rules/Laws

Pl - South Cent. Petroleum

Df - Long Bros. Oil Co

Description

o         Long Brothers Oil Company appeals the district court's grant of summary judgment and order that South Central Petroleum and Jerry Sawyer pay Long Brothers Oil Company $ 62,627 in exchange for one-half ownership of an oil well.

o         This case involved a very complicated gas extraction contact.

Long Brothers argues  - inappropriately relied on hearsay

o         The trial court inappropriately relied on hearsay evidence in making this calculation.

Determining the offset

The district court admitted the expert opinions of witnesses for both parties.

o         The district court admitted this evidence under the evidentiary rule permitting an expert to rely upon hearsay in forming an opinion as long as the hearsay evidence itself remains inadmissible. See Fed. R. Evid. 703.

Triple hearsay was involved

o         Indeed, the district court recognized that Sawyer's and South Central Petroleum's expert's testimony involved triple hearsay, because the expert based his opinion on information obtained from a commercial production service, which received its information from the state, which in turn obtained its information from the operator of the well, and none of these sources testified at the trial. 

Spreadsheet calculations were formed by expert opinion

o         Sawyer's and South Central Petroleum's expert presented his revenue conclusion in an exhibit, which also listed the production figures on which he based his opinion.

o         As the expert explained, the spreadsheet-like exhibit listed the underlying data and reflected the calculations that formed his opinion.

o         Thus, when the district court accepted the expert's revenue charts, it also allowed the underlying data to be at the court's disposal.

Long Brothers objects - Improperly relied on hearsay evidence

o         Contends that it demonstrates that the district court improperly relied on hearsay evidence.

Court - district court limited the admission to expert opinion

o         When the district court admitted the exhibit, however, it limited the admission to the expert's opinion, and not to the underlying figures, as required by Federal Rule of Evidence 703.

District court explained

o         I'm going to admit the exhibit.

o         I think that it does qualify under the rule that experts may testify as to conclusions based on evidence that's not itself independently admissible.

Court - District court did not blur the evidentiary distinction

o         This statement convinces us that the district court did not blur the evidentiary distinction which Long Brothers argues was violated

The Federal Rules of Evidence

o         Permit experts to rely on inadmissible information in forming their opinion as long as the underlying information be "of a type reasonably relied upon by experts in the particular field. . . ." Fed. R. Evid. 703.

Exclude Opinion IF expert relied on unsupported hearsay

o         Indeed, "[a] trial court should exclude an expert opinion only if it is so fundamentally unsupported that it cannot help the factfinder. . . .

o         Any weaknesses in the factual underpinnings of (the expert's) opinion go to the weight and credibility of his testimony, not to its admissibility."

Court - District Court Expressly limited admission

o         Here, the district court expressly limited the admission to the expert's opinion and did not admit the information on which the expert based his opinion.

Both Long Brothers and South Central Experts relied on the same production figures

o         Moreover, Long Brothers does not dispute that their opponent's expert based his opinion on information reasonably relied upon by experts  in the field.

o         In fact, Long Brothers' expert relied on the same type of production figures on which Sawyer's and South Central Petroleum's expert based his opinion.

Court - No Abuse of Discretion

o         We therefore do not believe that the district court abused its discretion in admitting the contested expert testimony.

Affirm

Rules

Rule 703. Bases of Opinion Testimony by Experts

o    The facts or data in the particular case upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing.

o    If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need NOT be admissible in evidence in order for the opinion or inference to be admitted.

o    Facts or data that are otherwise inadmissible shall not be disclosed to the jury by the proponent of the opinion or inference unless the court determines that their probative value in assisting the jury to evaluate the expert's opinion substantially outweighs their prejudicial effect.

Class Notes