United States District Court, N.D. Ohio, Eastern Division
MEMORANDUM OF OPINION
Y. PEARSON UNITED STATES DISTRICT JUDGE.
reviewed the record, the parties' briefs, and the
applicable law, the Court granted Lead Plaintiff's Motion
for Leave to Name a New Expert on Class Certification Issues
and Submit Additional Expert Evidence on the Issue of Market
Efficiency (ECF No. 355) during the Telephonic
Status Conference held on March 20, 2017. The Court enters
the within Memorandum of Opinion to set forth the reasons for
granting Lead Plaintiff leave to name a new expert on class
certification, and allow that expert to submit additional
expert evidence on the issue of market efficiency due to the
unavailability of Plaintiff's prior expert.
Greg Hallman was originally retained by Lead Plaintiff's
counsel to provide opinions on various economic matters in
the case at bar, including market efficiency. In August 2012,
Dr. Hallman finalized an expert report (ECF No.
199-10) providing his opinion on the efficiency of the
market for Federal Home Loan Mortgage Corporation
(“Freddie Mac”) common stock during the class
period of August 1, 2006 to November 20, 2007. The expert
report was submitted in support of Lead Plaintiff's
Motion for Class Certification (ECF No. 199). The
Motion for Class Certification was subsequently denied
without prejudice to refiling at a later date, if necessary.
Non-document Order dated August 23, 2013.
October 2014, the Court granted Defendants' motions to
dismiss, concluding that Lead Plaintiff failed to show loss
causation. Memorandum of Opinion and Order (ECF No.
330). In July 2016, the Court of Appeals for the Sixth
Circuit reversed the Court's dismissal of the third
amended complaint and remanded the case for further
proceedings. Ohio Pub. Emps. Ret. Sys. v. Fed. Home Loan
Mortg. Corp., 830 F.3d 376 (6th Cir. 2016).
Dr. Hallman was contacted to re-engage regarding future work
following the decision of the Sixth Circuit, he told Lead
Plaintiff's counsel he was unavailable going forward.
Declaration of W.B. Markovits (ECF No. 355-4) at
PageID #: 16033, ¶ 3; Declaration of Dr. Greg Hallman
(ECF No. 355-3) at PageID #: 16029, ¶ 3. Dr.
Hallman's report on market efficiency (ECF No.
199-10) involved certain areas of judgment that, due to
his unavailability, he will not be able to defend at any
Daubert hearing, class certification hearing, or at
trial. Indeed, Dr. Hallman has broken off communication with
Lead Plaintiff's counsel. Declaration of W.B. Markovits
(ECF No. 360-1) at PageID #: 17021, ¶ 4.
According to Lead Plaintiff, a decision from late 2013 also
allowed substitution of another expert for Dr. Hallman for
essentially the same reasons given in the case at bar.
See Gulf Coat Shippers Ltd. Partnership v. DHL Exp.
(USA), Inc., No. 2:09-cv-221, 2013 WL 5739781 (D. Utah Oct.
22, 2013). Dr. Hallman is unable - and no longer willing
- to provide any expert assistance to Lead Plaintiff in the
case at bar. Forcing Lead Plaintiff's counsel to work
with an unwilling expert would be prejudicial to Lead
Plaintiff and the class it seeks to represent.
cutoff dates for expert disclosure have been missed; and no
extension of the discovery schedule was sought by the within
motion. Thus, this situation does not fall under the case law
involving motions for substitution under Fed. R. Civ. P.
16(b). Courts addressing typical substitution of expert
cases when a Rule 16 extension of schedule is
necessary generally apply the “good cause”
standard of Rule 16(b). See Whiteside v. State
Farm Fire & Cas. Co., No. 11-10091, 2011 WL 5084981, at
*1 (E.D. Mich. Oct. 26, 2011) (“Courts have
consistently permitted the substitution of expert witnesses
when unforeseen events render the original expert unavailable
to testify at trial.”). Defendants' main argument
in this context is that Dr. Hallman is available and should
be forced to defend his 2012 expert report. See
Memorandum in Opposition (ECF No. 359) at PageID #:
Green v. City & Cty. of San Francisco, No.
10-cv-02649-RS (MEJ), 2015 WL 1738025 (N.D. Cal. Apr. 8,
2015), the district court declined to apply the late
disclosure rule to “the timely replacement of an expert
due to the unavailability of the original expert.”
Similar to the case at bar, although the parties disclosed
experts in 2011 prior to the district court ruling in
defendants' favor, Defendants' expert could no longer
testify as their expert after the Ninth Circuit's
reversal in 2015.
to Defendants, Comcast Corp. v. Behrend, 133 S.Ct. 1426
(2013) changed the class certification standard and Lead
Plaintiff must submit an expert report addressing these
changes. Defendants' Submission in Support of Their
Positions (ECF No. 350) at PageID #: 15987, 15993.
The Supreme Court in Comcast stated courts must go
beyond the pleadings to determine whether the Fed. R.
Civ. P. 23(b)(3) predominance requirement has been
satisfied, including whether damages can be provided for on a
classwide basis and whether classwide damages theories are
tied to the theory of liability. Id. at 1432-33.
Lead Plaintiff agrees that to the extent Comcast
suggests an expert opinion on the availability of a classwide
damage calculation is appropriate, this piece of evidence -
absent from the prior class certification motion (ECF No.
199) and expert report (ECF No. 199-10) - will
have to be addressed by a new expert. Reply Memorandum
(ECF No. 360) at PageID #: 17011.
the number of reported cases regarding market efficiency in
securities cases since Dr. Hallman finalized his expert
report (ECF No. 199-10) in August 2012, including
Halliburton Co. v Erica P. John Fund, Inc., 134 S.Ct.
2398 (2014) (“Halliburton II”), the
Court granted Lead Plaintiff leave to offer a new expert
opinion, reflecting the most current legal standards and
tests as defended by their new expert, Dr. Steven P.
Feinstein, for their Renewed Motion for Class Certification.
In addition, “[e]ach party's expert(s) on class
certification issues must make themselves available for
deposition on or before twenty-one (21) days from the date
their written report is provided to opposing counsel.”
Order (ECF No. 354) at PageID #: 16012. So,
Defendants will have ample opportunity to conduct discovery
based on a new report.
 As a result, Lead Plaintiff shall
serve and file a Renewed Motion for Class Certification,
along with any supporting expert report, on or before June
19, 2017. See Order (ECF No. ...