FTC Lawsuit Dismissed for Lack of Credible Expert Testimony

On September 29, 2020, the Federal Trade Commission (FTC) lost a bench trial after the presiding judge threw out the opinions of both its expert witnesses. The FTC had claimed false marketing messaging by home insulation company, Innovative Designs, however, Pennsylvania Federal Judge Nora Barry Fischer found that the agency had failed to prove its case because they “offered no reliable or credible expert testimony.”

Allegations of Misleading Marketing

In the initial November 3, 2016 complaint, the FTC alleged that Innovative Designs made false or unsubstantiated claims in its marketing for the Insultex house wrap product. The key issue concerned Innovative Designs’ claim about the R-value (a measure of insulation’s strength) of Insultex. The FTC brought the action under Section 5(a) of the FTC Act, 15 U.S.C. § 45(c).

The FTC alleged that Innovative Designs had not met the standard for testing requirements under federal rules when it determined Insultex’s R-value. As such, the agency claims that Innovative Designs did not have the basis to substantiate its marketing claims on the R-value nor its statement that the Insultex R-value saves consumers money.

Expert Witnesses Involved in the Case

The FTC and Innovative Designs both had retained experts to opine on or to rebut testimony regarding the R-value testing of Insultex. The agency had three experts lined up, but when none of their testimony or depositions were ultimately allowed on the record, the decision fell in Innovative Designs’ favor.

The FTC’s first error was in retaining a research and development expert to testify during its case-in-chief. The problem was that Innovative Designs had previously contracted with the very same expert to perform testing on Insultex. The court granted Innovative Designs’ motion to exclude or strike the expert’s testimony—eliminating the agency’s only testifying expert.

After this, Judge Fischer judge excluded the findings of a previously deposed FTC chemical engineering expert. The issue with this expert was twofold. Firstly, the chemical engineering expert had been an expert witness for Innovative Designs before appearing on the FTC’s witness list. Secondly, Judge Fisher found that this expert’s opinion had no weight because he did not use the ASTM C518 standard test that the FTC asserted was the standard. The judge was also troubled by the expert’s flipflop on his original position that Insultex had the R-value it claimed. The court found the expert’s opinion was simply not reliable due to his testimony that he had almost no experience running the three tests he employed. He further failed to state whether the tests “were typically used to calculate R-value, what the standards for each test were, whether he complied with same, whether his techniques had been subjected to peer review, and the non-judicial uses to which each method has been put.” Finally, the chemical engineering expert failed to test all components on the Insultex insulation.

Next, the court ruled it could not consider the testimony of the FTC’s mechanical engineering rebuttal expert. Innovative Designs’ own mechanical engineering expert, had not testified and the judge reasoned that there was no expert testimony in the record for the expert to rebut. The court also stated that the FTC had not proffered any basis to reopen its case-in-chief. The exclusion of the opinions of all three FTC experts left the agency with no record to prove its case.

The Importance of Good Expertise

This case makes it abundantly clear that attorneys must fully vet expert witnesses. A basic rule for litigators is to avoid hiring experts that pose conflicts of interest. Similarly, finding experts that take the time to understand what claims and standards you are basing your case on is critical to your case’s success. Experts must also be able to establish their credibility on the tests they use and the actual application of their methods to the products or services at issue.

For this reason, litigators must find industry-leading professionals who can withstand the many hurdles of trial. Expert Institute specializes in the custom-recruitment and full vetting of expert witness candidates who can offer the competitive insights your case needs. With the Expert Search service, attorneys simply set their precise criteria, speak with several candidates to ensure fit, and choose their ideal expert. Go into every case with confidence knowing your experts are the most qualified in their field and are prepared to withstand any testimony scenario.