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District Court, Adams County, Colorado DATE FILED: June 2, 2023 4:20 PM
1100 Judicial Center Drive CASE NUMBER: 2020CV30649
Brighton, CO 80601
___________________________________
Plaintiff: United Power Inc. et al
v.
▲ COURT USE ONLY▲
Defendant: Tri-State Generation and Transmission
Association. ____________________
Case No.: 2020CV30649
Div.: W
Order Regarding Motion to Strike Expert
Testimony of Herrick Lidstone JR., Esq.
On March 17, 2023, Defendant (Tri-State Generation and Transmission
Association) filed a Motion to Strike, Plaintiff’s (United Power) expert witness Herrick
Lidstone Jr. Esq. United Power filed its Response on April 7, 2023, and Tri-State filed its
Reply on April 14, 2023.
I. Background
The Court relies on the initial background section of the previous expert orders and
will not repeat them here except as necessary to resolve this motion. Additional background
may be found in the order on Tri-State’s motion to strike expert testimony of Jason Wiener.
Plaintiff’s operative complaint states claims for declaratory relief and, in the alternative,
breach of contract and implied duty of good faith and fair dealing.
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United Power endorsed Mr. Lidstone as an expert in commercial business practices
to provide expert opinions concerning reasonable, customary, and well accepted
commercial business practices, as well as standards and norms of conduct of lawyers
representing business entities in meeting their requirement for doing business as defined
by the applicable statutes, their articles of incorporation, and their bylaws.
II. Motion at Issue
Tri-State has moved to exclude the testimony of Mr. Lidstone pursuant to CRE 702.
Tri-State identifies a number of statements it believes are improper but asks the Court to
exclude the entirety of Mr. Lidstone’s testimony. Tri-State’s objections generally fall into
three categories: (1) that Mr. Lidstone’s opinions regarding the admission of the Non-
Utility Members (NUMs) are inadmissible legal opinions, contain conclusory application
of the law to facts, are unrelated to his expertise, and improperly invade the province of the
fact finder; (2) that Mr. Lidstone’s opinion that Tri-State’s conduct was inconsistent with
reasonable commercial practices in the corporate industry are conclusory, do not constitute
expert analysis, and impermissibly apply the law to the facts; and (3) that Mr. Lidstone’s
opinions are prejudicial and should be excluded under CRE 403.
III. Law
The Colorado Supreme Court has found that CRE 702 and CRE 403 provide the
best model for determining the admissibility of scientific evidence, “because their
flexibility is consistent with a liberal approach that considers a wide range of issues.”
People v. Shreck, 22 P.3d 68, 77 (Colo. 2001) (citation omitted). “[A] trial court must issue
specific findings as it applies the CRE 702 and 403 analyses.” Id. at 79.
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In determining whether to allow expert testimony, a trial court must consider: (1)
the reliability of scientific principles at issue; (2) the witness’s qualifications to opine on
such principles; (3) the usefulness of the testimony to the jury; and (4) the danger of unfair
prejudice or confusion must not substantially outweigh the probative value of the evidence
in order to satisfy CRE 403. Shreck, 22 P.3d at 78-79.
Under CRE 702, a witness qualified as an expert may testify if their “scientific,
technical, or other specialized knowledge will assist the trier of fact to understand the
evidence or to determine a fact in issue.” Huntoon v. TCI Cablevision of Colo., Inc., 969
P.2d 681, 689 (Colo. 1998).
“[A]n expert’s failure to state the basis for an opinion does not of itself render the
testimony unreliable or otherwise inadmissible under the Colorado Rules of Evidence.”
People v. Ramirez, 155 P.3d, 371 379-80 (Colo. 2007). “The expert may testify in terms of
opinion or inference and give reasons therefor without first testifying to the underlying
facts or data, unless the court requires otherwise. The expert may in any event be required
to disclose the underlying facts or data on cross-examination.” CRE 705.
“The court’s reliability inquiry under CRE 702 should be broad in nature and
consider the totality of the circumstances of each specific case.” Ramirez, at 378 (Colo.
2007). “[S]peculative testimony that would be unreliable and therefore inadmissible under
CRE 702 is opinion testimony that has no analytically sound basis. Admissible expert
testimony must be grounded in the methods and procedures of science rather than
subjective belief or unsupported speculation.” Id. at 378 (internal quotation and citation
omitted).
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Concerns about reliability are “mitigated by vigorous cross-examination,
presentation of contrary evidence, and careful instruction on the burden of proof.” Shreck,
22 P.3d at 78 (internal quotation marks, citation, and brackets omitted).
“[A]n expert witness may be qualified through any of the five enumerated factors:
knowledge, skill, experience, training, or education.” People v. Douglas, 412 P.3d 785,
798 (Colo. App. 2015). “[T]here is no requirement that a witness hold a specific degree,
training certificate, accreditation, or membership in a professional organization, in order to
testify on a particular issue.” Id. at 797. However, an expert witness must still provide “an
understandable explanation of [his or] her qualifications.” Id. A trial court may accept an
attorney as an expert witness when his knowledge, skill, expertise, training, or education
qualifies him. Allen v. Martin, 203 P.3d 546, 570 (Colo. App. 2008). Experienced-based
testimony may invoke different reliability consideration than scientific testimony.
However, a court must still determine whether the witness is qualified to render an expert
opinion. Meier v. McCoy, 119 P.3d 519, 521 (Colo. App. 2004).
“Usefulness” in relation to a jury “means that the proffered testimony will assist the
fact finder to either understand other evidence or to determine a fact in issue.” Ramirez,
155 P.3d at 379 (citation omitted). “The critical inquiry is whether the proffered expert can
provide appreciable help to the jury on the subject matter for which he is offered.” Douglas,
412 P.3d at 796. “In determining whether a proposed area of expert testimony would be
useful to the jury, a court must find that the testimony is logically relevant under CRE 402
and not unduly prejudicial under CRE 403.” Id. There are many factors to consider when
determining whether the testimony will appreciably assist the jury. “Among those
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considerations are the elements of the particular offense, the nature and extent of other
evidence in the case, the expertise of the proposed expert witness, the sufficiency and extent
of the foundational evidence upon which the expert witness’ ultimate opinion is to be
based, and the scope and content of the opinion itself.” Masters v. People, 58 P.3d 979
(Colo. 2002).
“Even though the proffered testimony may be admissible under the liberal standards
of CRE 702, the court must also apply its discretionary authority under CRE 403 to ensure
that the probative value of the evidence is not substantially outweighed by the danger of
unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of
undue delay, waste of time, or needless presentation of cumulative evidence.” Ramirez,
155 P.3d at 379 (Colo. 2007) (internal quotation and citation omitted).
When evaluating the admission or limitation for expert testimony the court
considers whether the expert’s opinions invade the court’s function in determining the law,
People v. Pahl, 169 P.3d, 169, 182 (Colo. App. 2006), or the jury’s function in determining
the facts. People v. Lesslie, 939 P.2d 443, 450 (Colo. App. 1996). Testimony in the form
of an opinion or inference is not objectionable merely because it embraces an ultimate issue
to be decided by the fact finder, CRE 704, but an expert witness cannot tell the jury what
result to reach or form conclusions for the jurors that they are competent to reach on their
own. Lesslie, 989 P.3d at 450. This includes impermissible testimony that may include
applying the law to the facts to reach a conclusion. People v. Baker, 487 P.3d 1194, 1199
(Colo. App. 2019). The court should consider, among others, the following factors to
determine whether opinion testimony is admissible under CRE 704: (1) whether the
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testimony can be clarified on cross-examination; (2) whether the expert’s testimony
expresses an opinion of the applicable law or legal standards and thereby usurps the
function of the court; (3) whether the jury can be properly instructed on the law and that it
may accept or reject the expert’s opinion; and (4) whether the expert opines that the
opposing party is liable or guilty, or that there is a particular likelihood that the opposing
party is liable or guilty. People v. Baker, 485 P.3d 1100, 1107 (Colo. 2021).
IV. Analysis
Tri-State’s motion raises multiple objections to a number of opinions presented by
Mr. Lidstone. In order to respond to each issue fully, the Court addresses Tri-State’s
arguments by each challenged statement.
A. Impermissible Legal and Conclusory Opinions
The first category of opinions Tri-State challenges are what Tri-State contends are
impermissible legal opinions. First, Tri-State argues that Mr. Lidstone’s conclusion as to
whether the admission of the NUMs was legally permissible is a legal question related to
United Power’s claim for declaratory relief which is not a proper question for the jury.
United Power contends that Tri-State’s argument ignores the fact that, in addition
to a request for declaratory relief, United Power has also brought a claim for breach of
implied covenant of good faith and fair dealing. According to United Power, this claim will
be proven by Mr. Lidstone’s testimony regarding whether Tri-State acted outside of
accepted general commercial practices through his evaluation of Tri-State’s compliance
with the statutes that regulate its existence and operation.
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The Court agrees with Tri-State that, to the extent Mr. Lidstone’s report seeks to
address the legal questions at issue in this case, his testimony is inadmissible. However,
this does not mean that all of his testimony is inadmissible. Mr. Lidstone’s opinion that the
admission of the NUMs was unlawful is not admissible because it is an opinion regarding
the violation of a legal standard. As such, any statements that Tri-State’s actions were
unlawful, improper, or void are stricken. Mr. Lidstone may still testify as to the commercial
standards and practices in the industry and compare those standards to the facts of the case.
He may provide testimony related to the standards of admission including those standards
identified in the applicable statutes and the standards for Tri-State’s utility members and
NUMs. However, he may not draw the ultimate conclusion that Tri-State’s admission of
the NUMs violated those standards.
Tri-State next argues that Mr. Lidstone should not be permitted to offer testimony
that CRS § 7-55-101 et seq. requires Tri-State to admit members on uniform terms and
conditions because it is a legal question on which expert testimony is inappropriate. Tri-
State specifically objects to Mr. Lidstone’s opinions that Tri-State was formed as a
corporation under Chapter 41, Article 16 of the Colorado Statutes Annotated, 1935, that
the statute was then repealed and replaced in 1953, 1963, 1973 and exists today as Article
55 of Title 7 of the Colorado Revised Statutes, and that the previous article was repealed.
Tri-State labels these statements as statutory analysis which is not only inadmissible but
also unhelpful to the jury. United argues that Mr. Lidstone’s testimony regarding the
requirements of CRS § 7-55-101 et seq. are admissible as they contain Mr. Lidstone’s
assessment regarding whether Tri-State has acted outside the scope of accepted general
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commercial practices through an evaluation of Tri-State’s compliance with the statutes that
regulate its existence and operation.
While Mr. Lidstone’s analysis does include a history of the applicable statutes, the
Court does not read each statement in a vacuum. Mr. Lidstone’s opinion related to the
statutory history of CRS § 7-55-101 and Chapter 41, Article 16 of the 1935 Colorado
Revised Statutes (the cooperative statute Tri-State was originally organized under in 1952)
is not so much a recitation of his statutory analysis of what the law is, but his explanation
for the basis of his expert opinion that CRS § 7-55-101 et seq. and its requirements and
standards apply to Tri-State. This is reinforced by his opinion that Tri-State’s actions
related to its corporate filings were outside reasonable commercial practices if Tri-State
did not consider itself organized under CRS § 7-55-101 and his explanation of alternative
avenues for Tri-State to remove the uniformity requirements of CRS § 7-55-101 et seq. by
converting its organizational structure from CRS § 7-55-101 to CRS § 7-56-101 or CRS §
7-58-101.
The Court finds that the statutory structure and history analysis incorporated by Mr.
Lidstone is not him telling the Court the law but is more consistent with an explanation of
the basis of his opinion that CRS § 7-55-101 et seq. applied based on commercial business
practice norms. This is permissible expert testimony.
Nonetheless, the Court also finds that, at times, Mr. Lidstone’s statements go
beyond permissible expert testimony. As this Court has previously stated, expert testimony
regarding what the standard was and what Tri-State’s actions were is permissible, but
testimony that Tri-State acted improperly, unlawfully, and without effect is a conclusion
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for the fact finder. The Court finds that Mr. Lidstone’s statements and opinions that the
admission of the NUMs was improper, unlawful, and without effect under Tri-State’s
Articles and Bylaws are inadmissible.
Additionally, Mr. Lidstone’s opinions in paragraph 55 is not permissible expert
testimony. Paragraph 55 contains a complex discussion and response to Tri-State’s legal
arguments related to the applicable statutes and statutory construction. Counsel can present
counter arguments to Tri-State’s arguments related to the applicability of the statutes based
on statutory construction. An expert will not be permitted to tell the factfinder how he
thinks the statute should be interpreted in response to Tri-State’s counsel’s legal arguments.
Therefore, Mr. Lidstone will not be permitted to testify as to the opinions expressed in
paragraph 55.
Tri-State next argues that Mr. Lidstone’s opinion that the NUMs were not admitted
on uniform terms and conditions is an impermissible legal conclusion that is supported by
conclusory assertions rather than expert analysis. According to Tri-State, Mr. Lidstone’s
opinion that the admission of the NUMs was inconsistent with Article 55 is an improper
application of the law to the facts because he does not provide any information as to why
the admission of the NUMs violated uniformity requirements. United Power counters that
Mr. Lidstone’s analysis of whether Tri-State met its obligations under Article 55 is
important to his ultimate analysis of whether Tri-State has acted according to accepted
commercial customs and standards.
Tri-State’s argument is that Mr. Lidstone did not provide any analysis as to why the
terms and conditions under which the NUMs were admitted into Tri-State were not uniform
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terms and conditions. However, Mr. Lidstone’s opinion does state that the utility members
were required to purchase electricity from Tri-State while the NUMs were not. Mr.
Lidstone may offer testimony that the members were required to be admitted under uniform
terms and conditions and that the terms and conditions the NUMs and utility members were
admitted under were not uniform. However, he may not state that Tri-State’s admission of
the NUMs violated CRS § 7-55-101 et seq. as that would be an impermissible legal
conclusion.
While Tri-State does not appear to argue that Mr. Lidstone lacks the qualifications
to provide expert opinions on this matter, it does argue that he failed to explain how he
used his skill or knowledge to evaluate whether the NUMs were admitted on uniform terms
and conditions. The Court finds that Mr. Lidstone’s opinion is sufficiently supported by
his expertise and that he adequately connects his experience to his opinions. Additionally,
his report contains references to testimony, deposition transcripts, discovery responses,
statutes and more to provide the basis of the facts to support his opinions. Therefore, the
Court finds that Mr. Lidstone has provided an adequate basis for his opinion regarding
uniform terms and conditions to comply with the reliability requirements of CRE 702. Tri-
State’s objections go to the weight of his testimony rather than the reliability. Tri-State will
be permitted to challenge Mr. Lidstone through vigorous cross-examination at trial.
Tri-State next argues that Mr. Lidstone’s opinion that it is not customary practice
for an entity to consider itself governed by long elapsed statutes such as the cooperative
act found in Colorado Statute Annotated, 1925, Chapter 41, Article 16 is an impermissible
legal analysis that has no source, context, other information about how it was formulated
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or why it is considered industry standard. Additionally, Tri-State argues that such an
opinion would be irrelevant. United Power argues that Mr. Lidstone explained his
qualifications in detail and that his conclusions on industry practice are drawn from those
qualifications.
Tri-State cites WildEarth Guardians v. Pub. Serv. Co. of Colorado, 853 F. Supp.
1086, 1090 (D. Colo. 2012), to support their argument that expert interpretation on the
meaning of a statute were inadmissible. However, Dr. Lidstone’s opinion is not an opinion
as to the meaning of a statute. The opinion Tri-State is challenging here is an opinion that
it is not consistent with customary practices for an entity to consider itself governed by
long-repealed statutes such as the cooperative act found in Colorado Statutes Annotated,
1935, Chapter 41, Article 16. This is not a matter where the expert is telling the factfinder
what the law is but, instead, it is a situation where an expert is opining as to the customary
practice of an entity. This is a permissible expert opinion.
B. Conduct Consistent with Reasonable Commercial Practices in the Cooperative
Industry
Tri-State’s next category of objections relate to Mr. Lidstone’s opinion that Tri-
State’s conduct was inconsistent with reasonable commercial practices in the cooperative
industry. Tri-State argues that: (1) Mr. Lidstone is not qualified to opine on the reasonable
value of a cooperative member exit charge; (2) Mr. Lidstone’s proportionality analysis is
unreliable and untethered to any industry standards; and (3) Mr. Lidstone’s repetition of
the administrative law judge’s findings in the Public Utility Commission (PUC) proceeding
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and the conclusions from the Federal Energy Regulatory Commission (FERC) proceedings
is not expert analysis and does nothing to assist the finder of fact.
The first two challenged statements may be address together. Tri-State argues that
Mr. Lidstone is not qualified to opine on the reasonable value of a cooperative member’s
exit charge or to provide an analysis of the proportionality of the exit charge offered to Tri-
State to those offered to other exiting members.
United Power argues that Mr. Lidstone is not offering an opinion that Tri-State’s
proposed exit charge was unreasonable or that it should have been proportional to the fees
Tri-State charged to other exiting members. Instead, United Power argues that Tri-State’s
proposed exit charge is a predicate fact on which Mr. Lidstone bases his opinion that giving
this figure was contrary to accepted industry practices. According to United Power, Mr.
Lidstone’s discussion of the exit charge offered to United Power and that offered to other
exiting members is not his own analysis of the disproportionate exit charge but a fact on
which he bases his opinion that the exit charge offered was contrary to accepted industry
practices.
The Court agrees with Tri-State that it does not appear that Mr. Lidstone has the
requisite expertise to provide opinions as to the reasonableness of an exit charge for a
cooperative in the electric utility industry or the proportionality of the exit charge offered
to United Power and those offered to other exiting members. Nonetheless, an expert may
rely on other expert opinions not involving areas of their own expertise. Gold Rush Inv. v.
G.E. Johnson Constr. Co., Inc., 807 P.2d 1169, 1173-74 (Colo. App. 1990). It is
permissible for Mr. Lidstone to base his opinion regarding the reasonableness and
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proportionality of the fees on facts rather than his own analysis, so long as the data or facts
are the type reasonably relied upon by experts in his field in forming opinions or inferences.
CRE 703. Objections regarding his methodology go to the weight of Mr. Lidstone’s
testimony and not its admissibility. Tri-State will be permitted the opportunity for vigorous
cross-examination and presentation of counter evidence regarding the reasonableness of
the exit charge and proportionality of the indicative buyout number offer to United Power
to those offered to other exiting members.
Tri-State next argues that Mr. Lidstone’s repetition of the PUC’s findings and
FERC’s conclusions are not expert analysis and do not assist the fact finder. United Power
argues that Mr. Lidstone’s opinion is not pure repetition of the findings of the PUC and
FERC but is evidence that Mr. Lidstone examined to form his conclusion that Tri-State
acted unreasonably and contrary to general commercial business practices in providing an
exit charge to United Power.
As explained above, an expert may rely on other expert opinions not involving areas
of their own expertise. Gold Rush Inv. v. G.E. Johnson Constr., 807 P.2d at 1173-74. The
Court finds that is what Mr. Lidstone did in this case. His opinions based on the expert
opinions in the PUC and FERC proceedings are permissible. Tri-State is also concerned
that Mr. Lidstone’s opinions are parroting the statements of the PUC or FERC and argue
that this would be unhelpful to the jury. The Court further finds that information regarding
the reasonableness of the exit fee charge would be helpful to the fact finder to determine
whether Tri-State breached its duty of good faith and fair dealing. Additionally, Tri-State’s
concern about the parroting of the PUC and FERC statements depends upon the nature and
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context of Mr. Lidstone’s trial testimony and would more properly be raised by appropriate
objection at trial. Further, Tri-State’s concerns regarding the basis of Mr. Lidstone’s
testimony go to the weight of his testimony and are better addressed through vigorous cross
examination.
Tri-State also argues that Mr. Lidstone’s reference to the findings of fact in the PUC
and the FERC proceedings is prejudicial and that Mr. Lidstone has not established that
experts in his field rely on findings from administrative proceedings in forming opinions
about disputed facts in separate litigation. United Power argues that Tri-State’s objections
regarding the basis of Mr. Lidstone’s opinions is an issue for cross examination.
The Court agrees with United Power that Mr. Lidstone may rely on the FERC and
PUC findings in forming his opinions. Tri-State may challenge Mr. Lidstone on his reliance
on evidence from parallel proceedings through cross examination.
C. Undue prejudice under CRE 403
Tri-State’s last object relates to the prejudicial effect of Mr. Lidstone’s opinions
under CRE 403. Tri-State argues that: (1) Mr. Lidstone’s opinions will not offer meaningful
assistance to the trier of fact and are not reliable so allowing him to testify as an expert to
offer improper opinions without adequate basis is prejudicial; (2) his reference to the
findings of fact in the PUC and FERC proceedings is highly prejudicial; and (3) his entire
opinion is cumulative to the expert testimony offered by other experts endorsed by United
Power.
The Court has already addressed Tri-State’s first argument in its findings above
regarding Mr. Lidstone’s improper opinions.
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The prejudicial effect of admitting statements from the PUC and FERC is a more
difficult analysis. CRE Rule 403, “strongly favors the admission of evidence.” People v.
District Court, 869 P.2d 1281. 1286 (Colo. 1994). The Rule provides that “[a]lthough
relevant, evidence may be excluded if its probative value is substantially outweighed by
the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless presentation of cumulative
evidence.” CRE 403 “Relevant evidence is inherently prejudicial; but it is only unfair
prejudice, substantially outweighing probative value, which permits exclusion of relevant
matter under Rule 403.” Masters v. People, 58 P.3d 979, 1001 (Colo. 2002) (internal
quotation omitted). Evidence is “unfairly” prejudicial if it has “an undue tendency to
suggest a decision on an improper basis, commonly but not necessarily an emotional one,
such as sympathy, hatred, contempt, retribution, or horror.” Id.
Whether Tri-State breached its implied duty of good faith and fair dealing is a
question of fact for the jury which may be proven by showing that Tri-State used “the
discretion conferred by the contract to act dishonestly or to act outside the accepted
commercial practices to deprive the other party of the benefit of the contract.” Dream
Finders Homes LLC. v. Weyerhaeuser NR Co., 506 P.3d 108, 123 (Colo. App. 2021).
United Power has the right to present evidence that is admissible, which would establish,
if true, that Tri-State breached its implied duty of good faith and fair dealing by showing
that they failed to act within reasonable commercial standards within the industry. Two
regulatory bodies in the industry have already opined that Tri-State’s initial exit charges
were unreasonable. “Evidence is not unfairly prejudicial because it damages the
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defendant’s case.” People v. District Court, 785 P.2d 141, 147 (Colo. 1990). While Tri-
State’s concern that the admission of statements made in the PUC and FERC proceedings
may be given undue weight to the jury because they will have the imprimatur that has been
stamped upon them by the judicial system is valid, the Court finds that Mr. Lidstone’s
opinion does not meet the standard for exclusion under CRE 403. Instead, the Court will
entertain a properly worded special requested jury instruction as to that evidence.
Tri-State’s last argument is that Mr. Lidstone’s testimony is cumulative of that
offered by United Power’s other experts. “The fact that evidence is cumulative does not,
by itself, render the evidence inadmissible.” People v. Morrison, 985 P.2d 1, 6 (Colo. App.
1999). In determining whether evidence is cumulative, the reviewing court is required to
assume the maximum probative value that a reasonable jury might give the evidence and
the minimum unfair prejudice reasonably expected. Morrison, 985 P.2d at 6.
While there is overlap in the testimony related to the facts and standards providing
the basis of Mr. Lidstone’s opinions with that of United Power’s other experts, the Court
does not find that the overlap requires exclusion under CRE 403. Mr. Lidstone’s analyzed
Tri-State’s conduct from his perspective as an expert in Colorado corporate law to
determine whether its conduct was in compliance with commercial business practices. Mr.
Wiener’s analysis is from the lens of an expert in cooperative law and cooperative business
practice. These two areas are distinct enough to allow for admission of Mr. Lidstone’s
testimony under CRE 403. The Court finds that the probative value of Mr. Lidstone’s
outweighs the risk of undue prejudice.
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Conclusion
Tri-State’s motion to strike expert testimony of Mr. Lidstone is granted in part and
denied in part. Mr. Lidstone may not offer testimony:
• That any of Tri-State’s actions were unlawful, improper, impermissible,
void, or violated Colorado law, CRS 7-55-101 et seq., or any other statute;
or
• Those opinions offered in paragraph 55
In all other regards, Plaintiff’s motion is denied.
Ordered on June 2, 2023.
BY THE COURT:
ROBERTO RAMIREZ
DISTRICT JUDGE
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Preview
District Court, Adams County, Colorado DATE FILED: June 2, 2023 4:20 PM 1100 Judicial Center Drive CASE NUMBER: 2020CV30649 Brighton, CO 80601 ___________________________________ Plaintiff: United Power Inc. et al v. ▲ COURT USE ONLY▲ Defendant: Tri-State Generation and Transmission Association. ____________________ Case No.: 2020CV30649 Div.: W Order Regarding Motion to Strike Expert Testimony of Herrick Lidstone JR., Esq. On March 17, 2023, Defendant (Tri-State Generation and Transmission Association) filed a Motion to Strike, Plaintiff’s (United Power) expert witness Herrick Lidstone Jr. Esq. United Power filed its Response on April 7, 2023, and Tri-State filed its Reply on April 14, 2023. I. Background The Court relies on the initial background section of the previous expert orders and will not repeat them here except as necessary to resolve this motion. Additional background may be found in the order on Tri-State’s motion to strike expert testimony of Jason Wiener. Plaintiff’s operative complaint states claims for declaratory relief and, in the alternative, breach of contract and implied duty of good faith and fair dealing. Page 1 United Power endorsed Mr. Lidstone as an expert in commercial business practices to provide expert opinions concerning reasonable, customary, and well accepted commercial business practices, as well as standards and norms of conduct of lawyers representing business entities in meeting their requirement for doing business as defined by the applicable statutes, their articles of incorporation, and their bylaws. II. Motion at Issue Tri-State has moved to exclude the testimony of Mr. Lidstone pursuant to CRE 702. Tri-State identifies a number of statements it believes are improper but asks the Court to exclude the entirety of Mr. Lidstone’s testimony. Tri-State’s objections generally fall into three categories: (1) that Mr. Lidstone’s opinions regarding the admission of the Non- Utility Members (NUMs) are inadmissible legal opinions, contain conclusory application of the law to facts, are unrelated to his expertise, and improperly invade the province of the fact finder; (2) that Mr. Lidstone’s opinion that Tri-State’s conduct was inconsistent with reasonable commercial practices in the corporate industry are conclusory, do not constitute expert analysis, and impermissibly apply the law to the facts; and (3) that Mr. Lidstone’s opinions are prejudicial and should be excluded under CRE 403. III. Law The Colorado Supreme Court has found that CRE 702 and CRE 403 provide the best model for determining the admissibility of scientific evidence, “because their flexibility is consistent with a liberal approach that considers a wide range of issues.” People v. Shreck, 22 P.3d 68, 77 (Colo. 2001) (citation omitted). “[A] trial court must issue specific findings as it applies the CRE 702 and 403 analyses.” Id. at 79. Page 2 In determining whether to allow expert testimony, a trial court must consider: (1) the reliability of scientific principles at issue; (2) the witness’s qualifications to opine on such principles; (3) the usefulness of the testimony to the jury; and (4) the danger of unfair prejudice or confusion must not substantially outweigh the probative value of the evidence in order to satisfy CRE 403. Shreck, 22 P.3d at 78-79. Under CRE 702, a witness qualified as an expert may testify if their “scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue.” Huntoon v. TCI Cablevision of Colo., Inc., 969 P.2d 681, 689 (Colo. 1998). “[A]n expert’s failure to state the basis for an opinion does not of itself render the testimony unreliable or otherwise inadmissible under the Colorado Rules of Evidence.” People v. Ramirez, 155 P.3d, 371 379-80 (Colo. 2007). “The expert may testify in terms of opinion or inference and give reasons therefor without first testifying to the underlying facts or data, unless the court requires otherwise. The expert may in any event be required to disclose the underlying facts or data on cross-examination.” CRE 705. “The court’s reliability inquiry under CRE 702 should be broad in nature and consider the totality of the circumstances of each specific case.” Ramirez, at 378 (Colo. 2007). “[S]peculative testimony that would be unreliable and therefore inadmissible under CRE 702 is opinion testimony that has no analytically sound basis. Admissible expert testimony must be grounded in the methods and procedures of science rather than subjective belief or unsupported speculation.” Id. at 378 (internal quotation and citation omitted). Page 3 Concerns about reliability are “mitigated by vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof.” Shreck, 22 P.3d at 78 (internal quotation marks, citation, and brackets omitted). “[A]n expert witness may be qualified through any of the five enumerated factors: knowledge, skill, experience, training, or education.” People v. Douglas, 412 P.3d 785, 798 (Colo. App. 2015). “[T]here is no requirement that a witness hold a specific degree, training certificate, accreditation, or membership in a professional organization, in order to testify on a particular issue.” Id. at 797. However, an expert witness must still provide “an understandable explanation of [his or] her qualifications.” Id. A trial court may accept an attorney as an expert witness when his knowledge, skill, expertise, training, or education qualifies him. Allen v. Martin, 203 P.3d 546, 570 (Colo. App. 2008). Experienced-based testimony may invoke different reliability consideration than scientific testimony. However, a court must still determine whether the witness is qualified to render an expert opinion. Meier v. McCoy, 119 P.3d 519, 521 (Colo. App. 2004). “Usefulness” in relation to a jury “means that the proffered testimony will assist the fact finder to either understand other evidence or to determine a fact in issue.” Ramirez, 155 P.3d at 379 (citation omitted). “The critical inquiry is whether the proffered expert can provide appreciable help to the jury on the subject matter for which he is offered.” Douglas, 412 P.3d at 796. “In determining whether a proposed area of expert testimony would be useful to the jury, a court must find that the testimony is logically relevant under CRE 402 and not unduly prejudicial under CRE 403.” Id. There are many factors to consider when determining whether the testimony will appreciably assist the jury. “Among those Page 4 considerations are the elements of the particular offense, the nature and extent of other evidence in the case, the expertise of the proposed expert witness, the sufficiency and extent of the foundational evidence upon which the expert witness’ ultimate opinion is to be based, and the scope and content of the opinion itself.” Masters v. People, 58 P.3d 979 (Colo. 2002). “Even though the proffered testimony may be admissible under the liberal standards of CRE 702, the court must also apply its discretionary authority under CRE 403 to ensure that the probative value of the evidence is not substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” Ramirez, 155 P.3d at 379 (Colo. 2007) (internal quotation and citation omitted). When evaluating the admission or limitation for expert testimony the court considers whether the expert’s opinions invade the court’s function in determining the law, People v. Pahl, 169 P.3d, 169, 182 (Colo. App. 2006), or the jury’s function in determining the facts. People v. Lesslie, 939 P.2d 443, 450 (Colo. App. 1996). Testimony in the form of an opinion or inference is not objectionable merely because it embraces an ultimate issue to be decided by the fact finder, CRE 704, but an expert witness cannot tell the jury what result to reach or form conclusions for the jurors that they are competent to reach on their own. Lesslie, 989 P.3d at 450. This includes impermissible testimony that may include applying the law to the facts to reach a conclusion. People v. Baker, 487 P.3d 1194, 1199 (Colo. App. 2019). The court should consider, among others, the following factors to determine whether opinion testimony is admissible under CRE 704: (1) whether the Page 5 testimony can be clarified on cross-examination; (2) whether the expert’s testimony expresses an opinion of the applicable law or legal standards and thereby usurps the function of the court; (3) whether the jury can be properly instructed on the law and that it may accept or reject the expert’s opinion; and (4) whether the expert opines that the opposing party is liable or guilty, or that there is a particular likelihood that the opposing party is liable or guilty. People v. Baker, 485 P.3d 1100, 1107 (Colo. 2021). IV. Analysis Tri-State’s motion raises multiple objections to a number of opinions presented by Mr. Lidstone. In order to respond to each issue fully, the Court addresses Tri-State’s arguments by each challenged statement. A. Impermissible Legal and Conclusory Opinions The first category of opinions Tri-State challenges are what Tri-State contends are impermissible legal opinions. First, Tri-State argues that Mr. Lidstone’s conclusion as to whether the admission of the NUMs was legally permissible is a legal question related to United Power’s claim for declaratory relief which is not a proper question for the jury. United Power contends that Tri-State’s argument ignores the fact that, in addition to a request for declaratory relief, United Power has also brought a claim for breach of implied covenant of good faith and fair dealing. According to United Power, this claim will be proven by Mr. Lidstone’s testimony regarding whether Tri-State acted outside of accepted general commercial practices through his evaluation of Tri-State’s compliance with the statutes that regulate its existence and operation. Page 6 The Court agrees with Tri-State that, to the extent Mr. Lidstone’s report seeks to address the legal questions at issue in this case, his testimony is inadmissible. However, this does not mean that all of his testimony is inadmissible. Mr. Lidstone’s opinion that the admission of the NUMs was unlawful is not admissible because it is an opinion regarding the violation of a legal standard. As such, any statements that Tri-State’s actions were unlawful, improper, or void are stricken. Mr. Lidstone may still testify as to the commercial standards and practices in the industry and compare those standards to the facts of the case. He may provide testimony related to the standards of admission including those standards identified in the applicable statutes and the standards for Tri-State’s utility members and NUMs. However, he may not draw the ultimate conclusion that Tri-State’s admission of the NUMs violated those standards. Tri-State next argues that Mr. Lidstone should not be permitted to offer testimony that CRS § 7-55-101 et seq. requires Tri-State to admit members on uniform terms and conditions because it is a legal question on which expert testimony is inappropriate. Tri- State specifically objects to Mr. Lidstone’s opinions that Tri-State was formed as a corporation under Chapter 41, Article 16 of the Colorado Statutes Annotated, 1935, that the statute was then repealed and replaced in 1953, 1963, 1973 and exists today as Article 55 of Title 7 of the Colorado Revised Statutes, and that the previous article was repealed. Tri-State labels these statements as statutory analysis which is not only inadmissible but also unhelpful to the jury. United argues that Mr. Lidstone’s testimony regarding the requirements of CRS § 7-55-101 et seq. are admissible as they contain Mr. Lidstone’s assessment regarding whether Tri-State has acted outside the scope of accepted general Page 7 commercial practices through an evaluation of Tri-State’s compliance with the statutes that regulate its existence and operation. While Mr. Lidstone’s analysis does include a history of the applicable statutes, the Court does not read each statement in a vacuum. Mr. Lidstone’s opinion related to the statutory history of CRS § 7-55-101 and Chapter 41, Article 16 of the 1935 Colorado Revised Statutes (the cooperative statute Tri-State was originally organized under in 1952) is not so much a recitation of his statutory analysis of what the law is, but his explanation for the basis of his expert opinion that CRS § 7-55-101 et seq. and its requirements and standards apply to Tri-State. This is reinforced by his opinion that Tri-State’s actions related to its corporate filings were outside reasonable commercial practices if Tri-State did not consider itself organized under CRS § 7-55-101 and his explanation of alternative avenues for Tri-State to remove the uniformity requirements of CRS § 7-55-101 et seq. by converting its organizational structure from CRS § 7-55-101 to CRS § 7-56-101 or CRS § 7-58-101. The Court finds that the statutory structure and history analysis incorporated by Mr. Lidstone is not him telling the Court the law but is more consistent with an explanation of the basis of his opinion that CRS § 7-55-101 et seq. applied based on commercial business practice norms. This is permissible expert testimony. Nonetheless, the Court also finds that, at times, Mr. Lidstone’s statements go beyond permissible expert testimony. As this Court has previously stated, expert testimony regarding what the standard was and what Tri-State’s actions were is permissible, but testimony that Tri-State acted improperly, unlawfully, and without effect is a conclusion Page 8 for the fact finder. The Court finds that Mr. Lidstone’s statements and opinions that the admission of the NUMs was improper, unlawful, and without effect under Tri-State’s Articles and Bylaws are inadmissible. Additionally, Mr. Lidstone’s opinions in paragraph 55 is not permissible expert testimony. Paragraph 55 contains a complex discussion and response to Tri-State’s legal arguments related to the applicable statutes and statutory construction. Counsel can present counter arguments to Tri-State’s arguments related to the applicability of the statutes based on statutory construction. An expert will not be permitted to tell the factfinder how he thinks the statute should be interpreted in response to Tri-State’s counsel’s legal arguments. Therefore, Mr. Lidstone will not be permitted to testify as to the opinions expressed in paragraph 55. Tri-State next argues that Mr. Lidstone’s opinion that the NUMs were not admitted on uniform terms and conditions is an impermissible legal conclusion that is supported by conclusory assertions rather than expert analysis. According to Tri-State, Mr. Lidstone’s opinion that the admission of the NUMs was inconsistent with Article 55 is an improper application of the law to the facts because he does not provide any information as to why the admission of the NUMs violated uniformity requirements. United Power counters that Mr. Lidstone’s analysis of whether Tri-State met its obligations under Article 55 is important to his ultimate analysis of whether Tri-State has acted according to accepted commercial customs and standards. Tri-State’s argument is that Mr. Lidstone did not provide any analysis as to why the terms and conditions under which the NUMs were admitted into Tri-State were not uniform Page 9 terms and conditions. However, Mr. Lidstone’s opinion does state that the utility members were required to purchase electricity from Tri-State while the NUMs were not. Mr. Lidstone may offer testimony that the members were required to be admitted under uniform terms and conditions and that the terms and conditions the NUMs and utility members were admitted under were not uniform. However, he may not state that Tri-State’s admission of the NUMs violated CRS § 7-55-101 et seq. as that would be an impermissible legal conclusion. While Tri-State does not appear to argue that Mr. Lidstone lacks the qualifications to provide expert opinions on this matter, it does argue that he failed to explain how he used his skill or knowledge to evaluate whether the NUMs were admitted on uniform terms and conditions. The Court finds that Mr. Lidstone’s opinion is sufficiently supported by his expertise and that he adequately connects his experience to his opinions. Additionally, his report contains references to testimony, deposition transcripts, discovery responses, statutes and more to provide the basis of the facts to support his opinions. Therefore, the Court finds that Mr. Lidstone has provided an adequate basis for his opinion regarding uniform terms and conditions to comply with the reliability requirements of CRE 702. Tri- State’s objections go to the weight of his testimony rather than the reliability. Tri-State will be permitted to challenge Mr. Lidstone through vigorous cross-examination at trial. Tri-State next argues that Mr. Lidstone’s opinion that it is not customary practice for an entity to consider itself governed by long elapsed statutes such as the cooperative act found in Colorado Statute Annotated, 1925, Chapter 41, Article 16 is an impermissible legal analysis that has no source, context, other information about how it was formulated Page 10 or why it is considered industry standard. Additionally, Tri-State argues that such an opinion would be irrelevant. United Power argues that Mr. Lidstone explained his qualifications in detail and that his conclusions on industry practice are drawn from those qualifications. Tri-State cites WildEarth Guardians v. Pub. Serv. Co. of Colorado, 853 F. Supp. 1086, 1090 (D. Colo. 2012), to support their argument that expert interpretation on the meaning of a statute were inadmissible. However, Dr. Lidstone’s opinion is not an opinion as to the meaning of a statute. The opinion Tri-State is challenging here is an opinion that it is not consistent with customary practices for an entity to consider itself governed by long-repealed statutes such as the cooperative act found in Colorado Statutes Annotated, 1935, Chapter 41, Article 16. This is not a matter where the expert is telling the factfinder what the law is but, instead, it is a situation where an expert is opining as to the customary practice of an entity. This is a permissible expert opinion. B. Conduct Consistent with Reasonable Commercial Practices in the Cooperative Industry Tri-State’s next category of objections relate to Mr. Lidstone’s opinion that Tri- State’s conduct was inconsistent with reasonable commercial practices in the cooperative industry. Tri-State argues that: (1) Mr. Lidstone is not qualified to opine on the reasonable value of a cooperative member exit charge; (2) Mr. Lidstone’s proportionality analysis is unreliable and untethered to any industry standards; and (3) Mr. Lidstone’s repetition of the administrative law judge’s findings in the Public Utility Commission (PUC) proceeding Page 11 and the conclusions from the Federal Energy Regulatory Commission (FERC) proceedings is not expert analysis and does nothing to assist the finder of fact. The first two challenged statements may be address together. Tri-State argues that Mr. Lidstone is not qualified to opine on the reasonable value of a cooperative member’s exit charge or to provide an analysis of the proportionality of the exit charge offered to Tri- State to those offered to other exiting members. United Power argues that Mr. Lidstone is not offering an opinion that Tri-State’s proposed exit charge was unreasonable or that it should have been proportional to the fees Tri-State charged to other exiting members. Instead, United Power argues that Tri-State’s proposed exit charge is a predicate fact on which Mr. Lidstone bases his opinion that giving this figure was contrary to accepted industry practices. According to United Power, Mr. Lidstone’s discussion of the exit charge offered to United Power and that offered to other exiting members is not his own analysis of the disproportionate exit charge but a fact on which he bases his opinion that the exit charge offered was contrary to accepted industry practices. The Court agrees with Tri-State that it does not appear that Mr. Lidstone has the requisite expertise to provide opinions as to the reasonableness of an exit charge for a cooperative in the electric utility industry or the proportionality of the exit charge offered to United Power and those offered to other exiting members. Nonetheless, an expert may rely on other expert opinions not involving areas of their own expertise. Gold Rush Inv. v. G.E. Johnson Constr. Co., Inc., 807 P.2d 1169, 1173-74 (Colo. App. 1990). It is permissible for Mr. Lidstone to base his opinion regarding the reasonableness and Page 12 proportionality of the fees on facts rather than his own analysis, so long as the data or facts are the type reasonably relied upon by experts in his field in forming opinions or inferences. CRE 703. Objections regarding his methodology go to the weight of Mr. Lidstone’s testimony and not its admissibility. Tri-State will be permitted the opportunity for vigorous cross-examination and presentation of counter evidence regarding the reasonableness of the exit charge and proportionality of the indicative buyout number offer to United Power to those offered to other exiting members. Tri-State next argues that Mr. Lidstone’s repetition of the PUC’s findings and FERC’s conclusions are not expert analysis and do not assist the fact finder. United Power argues that Mr. Lidstone’s opinion is not pure repetition of the findings of the PUC and FERC but is evidence that Mr. Lidstone examined to form his conclusion that Tri-State acted unreasonably and contrary to general commercial business practices in providing an exit charge to United Power. As explained above, an expert may rely on other expert opinions not involving areas of their own expertise. Gold Rush Inv. v. G.E. Johnson Constr., 807 P.2d at 1173-74. The Court finds that is what Mr. Lidstone did in this case. His opinions based on the expert opinions in the PUC and FERC proceedings are permissible. Tri-State is also concerned that Mr. Lidstone’s opinions are parroting the statements of the PUC or FERC and argue that this would be unhelpful to the jury. The Court further finds that information regarding the reasonableness of the exit fee charge would be helpful to the fact finder to determine whether Tri-State breached its duty of good faith and fair dealing. Additionally, Tri-State’s concern about the parroting of the PUC and FERC statements depends upon the nature and Page 13 context of Mr. Lidstone’s trial testimony and would more properly be raised by appropriate objection at trial. Further, Tri-State’s concerns regarding the basis of Mr. Lidstone’s testimony go to the weight of his testimony and are better addressed through vigorous cross examination. Tri-State also argues that Mr. Lidstone’s reference to the findings of fact in the PUC and the FERC proceedings is prejudicial and that Mr. Lidstone has not established that experts in his field rely on findings from administrative proceedings in forming opinions about disputed facts in separate litigation. United Power argues that Tri-State’s objections regarding the basis of Mr. Lidstone’s opinions is an issue for cross examination. The Court agrees with United Power that Mr. Lidstone may rely on the FERC and PUC findings in forming his opinions. Tri-State may challenge Mr. Lidstone on his reliance on evidence from parallel proceedings through cross examination. C. Undue prejudice under CRE 403 Tri-State’s last object relates to the prejudicial effect of Mr. Lidstone’s opinions under CRE 403. Tri-State argues that: (1) Mr. Lidstone’s opinions will not offer meaningful assistance to the trier of fact and are not reliable so allowing him to testify as an expert to offer improper opinions without adequate basis is prejudicial; (2) his reference to the findings of fact in the PUC and FERC proceedings is highly prejudicial; and (3) his entire opinion is cumulative to the expert testimony offered by other experts endorsed by United Power. The Court has already addressed Tri-State’s first argument in its findings above regarding Mr. Lidstone’s improper opinions. Page 14 The prejudicial effect of admitting statements from the PUC and FERC is a more difficult analysis. CRE Rule 403, “strongly favors the admission of evidence.” People v. District Court, 869 P.2d 1281. 1286 (Colo. 1994). The Rule provides that “[a]lthough relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” CRE 403 “Relevant evidence is inherently prejudicial; but it is only unfair prejudice, substantially outweighing probative value, which permits exclusion of relevant matter under Rule 403.” Masters v. People, 58 P.3d 979, 1001 (Colo. 2002) (internal quotation omitted). Evidence is “unfairly” prejudicial if it has “an undue tendency to suggest a decision on an improper basis, commonly but not necessarily an emotional one, such as sympathy, hatred, contempt, retribution, or horror.” Id. Whether Tri-State breached its implied duty of good faith and fair dealing is a question of fact for the jury which may be proven by showing that Tri-State used “the discretion conferred by the contract to act dishonestly or to act outside the accepted commercial practices to deprive the other party of the benefit of the contract.” Dream Finders Homes LLC. v. Weyerhaeuser NR Co., 506 P.3d 108, 123 (Colo. App. 2021). United Power has the right to present evidence that is admissible, which would establish, if true, that Tri-State breached its implied duty of good faith and fair dealing by showing that they failed to act within reasonable commercial standards within the industry. Two regulatory bodies in the industry have already opined that Tri-State’s initial exit charges were unreasonable. “Evidence is not unfairly prejudicial because it damages the Page 15 defendant’s case.” People v. District Court, 785 P.2d 141, 147 (Colo. 1990). While Tri- State’s concern that the admission of statements made in the PUC and FERC proceedings may be given undue weight to the jury because they will have the imprimatur that has been stamped upon them by the judicial system is valid, the Court finds that Mr. Lidstone’s opinion does not meet the standard for exclusion under CRE 403. Instead, the Court will entertain a properly worded special requested jury instruction as to that evidence. Tri-State’s last argument is that Mr. Lidstone’s testimony is cumulative of that offered by United Power’s other experts. “The fact that evidence is cumulative does not, by itself, render the evidence inadmissible.” People v. Morrison, 985 P.2d 1, 6 (Colo. App. 1999). In determining whether evidence is cumulative, the reviewing court is required to assume the maximum probative value that a reasonable jury might give the evidence and the minimum unfair prejudice reasonably expected. Morrison, 985 P.2d at 6. While there is overlap in the testimony related to the facts and standards providing the basis of Mr. Lidstone’s opinions with that of United Power’s other experts, the Court does not find that the overlap requires exclusion under CRE 403. Mr. Lidstone’s analyzed Tri-State’s conduct from his perspective as an expert in Colorado corporate law to determine whether its conduct was in compliance with commercial business practices. Mr. Wiener’s analysis is from the lens of an expert in cooperative law and cooperative business practice. These two areas are distinct enough to allow for admission of Mr. Lidstone’s testimony under CRE 403. The Court finds that the probative value of Mr. Lidstone’s outweighs the risk of undue prejudice. Page 16 Conclusion Tri-State’s motion to strike expert testimony of Mr. Lidstone is granted in part and denied in part. Mr. Lidstone may not offer testimony: • That any of Tri-State’s actions were unlawful, improper, impermissible, void, or violated Colorado law, CRS 7-55-101 et seq., or any other statute; or • Those opinions offered in paragraph 55 In all other regards, Plaintiff’s motion is denied. Ordered on June 2, 2023. BY THE COURT: ROBERTO RAMIREZ DISTRICT JUDGE Page 17