United States Securities and Exchange Commission v. Collector's Coffee Inc.
- Victor Marrero
- 1:19-cv-04355
- U.S. District Court · Southern District of New York
- 10
In SEC v. Collector’s Coffee Inc., Judge Gorenstein granted the SEC’s motion to exclude Bennett Gershman’s proposed testimony.
The SEC’s motion was granted, and the defense lost the ability to present Bennett L. Gershman’s proposed expert testimony or submit the requested replacement report. The opinion does not state that the underlying claims against the defendants were resolved.
What happened
In United States Securities and Exchange Commission v. Collector’s Coffee Inc., the SEC asked the court to exclude proposed expert Bennett L. Gershman’s testimony in its securities-fraud lawsuit against Collector’s Coffee Inc., Mykalai Kontilai, and others. Gershman’s report criticized the SEC’s investigation and lawyers and questioned the credibility and motives of witness Gail Holt.
The court ruled that the proposed testimony would not help the jury decide the facts. In particular, an expert may not tell the jury whether a witness is credible or replace the jury’s judgment about whether a witness had a reason to lie. The court also rejected the defense request for 14 days to submit a narrower report because the report deadline had passed and the submitted report consisted entirely of inadmissible material.
Judge Gorenstein granted the SEC’s motion to exclude Gershman’s testimony. This ruling concerned the admissibility of proposed expert evidence; the opinion does not state that it resolved the SEC’s underlying securities-fraud claims.
The detailed version
- United States Securities and Exchange Commission v. Collector's Coffee Inc. · No. 1:19-cv-04355
- Victor Marrero
- Aug. 5, 2021
Background
The SEC sued Collector’s Coffee Inc., doing business as Collectors Café, Mykalai Kontilai, and Veronica Kontilai, alleging violations of federal securities laws by defrauding investors. The SEC moved to exclude the testimony of Kontilai’s proposed expert, Bennett L. Gershman.
The court’s scheduling orders required expert disclosures by March 12, 2021. Kontilai’s counsel first submitted Gershman’s report with a motion to compel on March 8, 2021, and disclosed the same report to the SEC on March 12. The report described itself as “a very preliminary Report” and reserved the right to add opinions. During his deposition, Gershman also said that he intended to express additional opinions.
The report criticized the SEC’s investigation and litigation conduct. It asserted that an attorney’s letter triggered the SEC investigation, described an alleged improper relationship between SEC lawyers and the attorney, questioned the truthfulness of SEC witness Gail Holt, criticized the SEC’s use of John Mark Dougan as an informant, and accused SEC lawyers of irregular, overzealous, unethical, and unlawful conduct.
Court’s Analysis
Federal Rule of Evidence 702 permits qualified expert testimony only when the expert’s specialized knowledge will help the fact-finder understand evidence or decide a disputed fact, the testimony is based on sufficient facts and reliable methods, and the expert reliably applies those methods. The court explained that an expert may offer opinions about factual matters but may not give legal conclusions, decide witness credibility, or address matters that a jury can understand without expert assistance.
The court noted that two defenses concerning the SEC’s conduct had been struck shortly after Gershman’s report was submitted. Kontilai nevertheless argued that portions of the report were relevant to Holt’s motivation and credibility, including whether Holt had reason to assist the SEC to avoid criminal liability.
The court rejected that argument. It held that expert opinions evaluating a witness’s credibility are inadmissible because they do not assist the jury; instead, they attempt to tell the jury what result to reach and substitute the expert’s judgment for the jury’s. The court concluded that a jury could decide for itself whether Holt was motivated to lie to gain favor with the government. It also stated that attorneys could challenge witnesses through ordinary questioning about criminal conduct, self-interested motives, and expected benefits.
The court further refused to allow the defense 14 days to submit a narrower expert report. It found that the existing report consisted entirely of inadmissible material, that the expert-report deadline had passed, that no good cause had been shown for failing to submit a proper report on time, and that the defense had engaged in repeated litigation abuses that had prolonged the case.
Disposition
The court granted the SEC’s motion to exclude Bennett Gershman’s testimony. The opinion does not state that the court decided the underlying securities-fraud allegations.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.