“Bright Line” for “Side-Switching” Expert Witnesses Not So Bright

Switching sides has been considered a “bright line” rule for expert witnesses — that a clear conflict of interest exists when an expert has been employed by one side and is later retained as an expert witness by the opposing party. But the line isn't always so bright.

In Consumer Financial Protection Bureau v. Navient (3:2017-cv-00101 , MD. Pa. Mar. 19, 2020), the Bureau asked the court to disqualify its former employee, Xiaoling Lim Ang, PhD, as an economics expert witness for Navient, a student loan financier who allegedly steered students into the forbearance program wrongly rather than income-based repayment plans, increasing student costs exorbitantly. (Separately, from a 2009 investigation, an administrative law judge had previously ruled that Navient overcharged the U.S. Department of Education $22 million, a decision which Navient has appealed.)

From July 2011 to November 2015, Dr. Ang had worked for the Bureau's Office of Research, which was during the time the Bureau was investigating Navient. Attorneys in the Bureau's Office of Enforcement called upon Dr. Ang's Office on occasion for advice in connection with requests for information from Navient, and she was consulted by those attorneys about the Navient investigation five times, including conversations about litigation strategy in the case against Navient.

Some 14 months after Dr. Ang left the Bureau, it sued student loan financier Navient. Two months later, Dr. Ang published an article entitled, “Student Loan Repayment Options in Light of CFPB v. Navient,” in which she argued that “income-driven repayment is not necessarily better for a borrower and that is not possible to determine [that] at the time the decision [to enroll in the forbearance program] is made. Navient's counsel became aware of the article, contacted Dr. Ang, and retained her.

Navient argued that the “bright line” rule for “side-switching” did not apply in this case, that Dr. Ang had only provided “limited technical guidance on data collection” related to Navient.

The Bureau supported its “bright line” argument citing United States v. NHC Health Care Corporation, 150 F. Supp. 2d 1013 (W.D. Mo. 2001), in which a former U.S. government employee was disqualified from acting as an expert for NHC, but the Special Master found that case distinguishable. In NHC, the expert had previously been employed by the U.S. government for 22 years, participated in and directed meetings involving the NHC investigation and made the final decision recommending civil penalties against the NHC before being retained by the NHC as an expert witness.

The Special Master cited two standards used in at least some federal districts for disqualifying an expert witness on an asserted conflict of interest:

1. The “bright-line rule,” which applies when an expert has switched sides in the exact matter being litigated, and
2. A two-part test that applies when the moving party
   1. has an objective belief that it had a confidential relationship with the expert, and
   2. disclosed confidential or privileged information concerning the matter being litigated to the expert. ¹

The Special Master found that the exhibits provided by the Bureau showed no evidence that its litigation strategy had been revealed to Dr. Ang, noting that all of the exhibits were prepared long before the case began and that nothing suggested she had any managerial role or directed any meetings regarding the investigation of Navient. Further, although the Bureau was aware of the article Dr. Ang wrote soon after it was published, but never objected to Dr. Ang authoring the article or its content.

Citing past cases, the Special Master found that disqualifying an expert witness for conflict of interest to be a “drastic measure that is imposed reluctantly,” ² and that “The primary concern in side-switching experts is the protection of litigation strategy.”³

While expert witnesses and attorneys may be keenly sensitive to conflict of interest issues, the line for disqualifying an expert witness in federal court is far from “bright.”