DENVER—Legal analysts are divided over whether the Supreme Court would re-examine expert witness rules if former Qwest Communications chief Joe Nacchio appeals his conviction on $52 million worth of illegal stock sales.
In a 5-4 decision handed down Wednesday, the 10th U.S. Circuit Court of Appeals reinstated Nacchio’s conviction. It ruled the judge was within his authority when he excluded a defense expert witness during Nacchio’s 2007 trial.
“It’s a more narrow rule of evidence issue or admissibility of evidence or expert witness,” said Wayne State University Professor Peter Henning, who specializes in white-collar crime.
“If the court wants to revisit (the guidelines) and take a look at the next step, this could be the case,” Henning said.
Houston-based securities lawyer Tom Ajamie said he doubted the Supreme Court would accept an appeal from Nacchio on this issue, noting that the court takes very few cases.
“They usually take big issues of law where there is a split in the circuits—larger picture issues,” Ajamie said.
Nacchio’s attorney strongly suggested she would appeal. There was no immediate word on when Nacchio would begin serving a six-year prison term.
Nacchio was one of several corporate executives convicted as part of a government push to punish white-collar executives stemming from accounting fraud at companies like Enron and Worldcom.
Nacchio was found guilty April 19, 2007, amid an accounting scandal that nearly sank Qwest Communications International Inc.
Jurors convicted him of 19 counts of insider trading by concluding he sold Qwest stock but didn’t tell investors the Denver-based telecommunications company was at financial risk. Nacchio was acquitted of 23 counts.
During his appeal, Nacchio argued U.S. District Judge Edward Nottingham improperly refused to allow testimony from Daniel Fischel, an author and Northwestern University professor.
Fischel was to give jurors an explanation for the drop in Qwest stock prices at the time of Nacchio’s stock sales and to discuss Nacchio’s trading patterns. Nottingham barred Fischel’s testimony over concerns about his methodology.
A three-judge 10th Circuit panel overturned the conviction last year, agreeing the witness was improperly barred. However, the full court reinstated the conviction by concluding Nottingham acted properly.
At the heart of Nacchio’s appeal is a federal court standard on the admissibility of expert evidence and witness testimony, nicknamed Daubert after the original case.
That lawsuit involved a dispute in which two San Diego families claimed a manufacturer’s anti-nausea drug caused their children’s birth defects. The suit eventually was dismissed.
The families had planned to present an expert witness whose analysis of existing studies contradicted other scientific evidence that found no link between the drug and birth defects. A 1993 Supreme Court decision required judges to decide if the offered expert testimony represented “good science” and was relevant.
Henning said the Daubert ruling was an attempt to establish coherence in the system and to give judges some flexibility.
He said the Supreme Court has looked at Daubert issues since the original decision, but the question of what a judge has to do to make the determination hasn’t been addressed.
“It’s an issue that lawyers are very interested in,” Henning said, adding that the appeals court vote is “certainly an indication that this is a very close issue.”
