A Corporation as an Expert Witness?

By Joshua Fruchter, Esq
The Delaware Chancery Court recently addressed a novel question that bordered on the metaphysical (or, perhaps more appropriately, the absurd): May a party designate a corporation to serve as an expert witness? The Court answered in the negative on the ground that, under the rules of evidence, an expert witness must be a biological person, i.e., possess “a body and a brain.” Since a corporation has neither, it may not testify.
 
The issue arose in connection with a breach of fiduciary duty case challenging the valuation at which Dole Food Company (“Dole”) was taken private by its controlling shareholder, David Murdock. See In re Dole Food Co, Inc. Stockholder Litigation, 2015 WL 832501 (Del. Chancery Ct. February 19, 2015). Defendants identified Stifel Nicolaus & Co., Inc. (“Stifel”), a corporation, as their expert witness to testify concerning Dole’s value at the time of the buyout.
 
Defendants’ expert reports curiously identified Stifel as the author and were signed by employees of Stifel, but not in their personal capacity. Instead, the employees signed as authorized representatives of Stifel. The fun started when plaintiffs noticed a deposition of Stifel, one in which defendants presented Seth Ferguson (“Ferguson”) as the biological person most knowledgeable about Stifel’s reports. At one point during the deposition, when Ferguson innocently claimed authorship of the reports, his own counsel objected, stating that “Stifel is the expert,” not Ferguson. Plaintiffs were baffled and sought guidance from the Court.
 
At this point, we should pause and ponder the method to defendants’ madness. Did they have a trick up their sleeve? What were they trying to accomplish? According to plaintiffs, the strategy of designating a corporation as an expert witness was to enable reliance on the collective knowledge and experience of all of the corporation’s employees and agents, in contrast to a human witness who can rely only on his or her own limited knowledge and experience. In other words, defendants were attempting to create a “super” witness (like Mr. Incredible) bursting with unlimited brilliance and wisdom far surpassing that of any single human mind. Presumably, any human expert opposing this corporate witness would be left in the dust.
 
It’s hard to believe defendants thought their strategy would succeed, but fortunately for them, the Court seemed far more amused than annoyed and patiently explained how the rules of evidence precluded reliance on a corporation as an expert. Acknowledging that the law personifies corporations as independent entities in numerous contexts, the Court ruled that providing testimony was not one of them. Among other things, the rules of evidence require witnesses to have a voice to take an oath or make an affirmation, a memory that can be refreshed, and a sense of hearing. A corporation possesses none of those qualities and thus cannot qualify as a witness. Moreover, as the court noted, since a corporation can act only through its agents, it must rely on agents to testify on its behalf. However, witnesses must testify personally since testifying through an agent would constitute hearsay. That is a hurdle a corporation cannot overcome.
 
Luckily for defendants, the Court exhibited mercy, and while soundly rejecting the designation of Stifel as a witness, it permitted defendants to substitute Ferguson in Stifel’s place. This was hardly a hardship on plaintiffs since Ferguson had already signed Stifel’s reports and testified on Stifel’s behalf at the deposition. Now Ferguson would simply be acting in his own capacity rather than on behalf of Stifel.
 
As can be seen from the cases cited by the Court in support of its ruling, this is not the first time the question of a corporation serving as a witness has come up. While the day may yet come, no one advancing the proposition of corporation as witness has yet prevailed in court.
 
We noted above one possible advantage defendants might have gained had their gambit worked – reliance on the collective wisdom of all of the corporation’s employees.
 
Can you identify any other motivations for designating a corporation as a witness?
 
Quite possibly, some attorney at one of the firms representing the defendants felt his or her colleagues were taking their jobs too seriously and decided to inject a bit of theater into the litigation, and everyone then played along, including the judge. For those who think jurists and lawyers don’t have a sense of humor, this decision offers evidence to the contrary.
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Joshua Fruchter, Esq

An NYU School of Law graduate, Joshua has been practicing as a litigator for over twenty five years. Joshua has published regularly on legal marketing topics in numerous law-related periodicals, and presented on legal marketing technologies to various bar and legal marketing associations.   Mr. Fruchter is a recognized voice in litigation commentary, who has discussed issues ranging from Daubert analyses and inventor testimony in patent litigation, to predictive coding in document reviews.

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