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Bill Barrett Corporation v. YMC Royalty Company, 18-1067 (2019)

Court: Court of Appeals for the Tenth Circuit Number: 18-1067 Visitors: 9
Filed: Mar. 07, 2019
Latest Update: Mar. 03, 2020
Summary: FILED United States Court of Appeals Tenth Circuit PUBLISH March 7, 2019 Elisabeth A. Shumaker UNITED STATES COURT OF APPEALS Clerk of Court TENTH CIRCUIT BILL BARRETT CORPORATION, Plaintiff - Appellee, v. No. 18-1067 YMC ROYALTY COMPANY, LP; YBC MANAGERS, LLC; and BAYSHORE ROYALTY, LP, Defendants - Appellants. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO (D.C. NO. 1:15-CV-02177-DME) Jennifer Lynn Peters (Timothy Ryan Odil with her on the briefs), Otis Bedingfield &
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                                                                      FILED
                                                          United States Court of Appeals
                                                                  Tenth Circuit

                                     PUBLISH                    March 7, 2019
                                                             Elisabeth A. Shumaker
                  UNITED STATES COURT OF APPEALS                 Clerk of Court

                               TENTH CIRCUIT



 BILL BARRETT CORPORATION,

             Plaintiff - Appellee,
 v.                                                    No. 18-1067
 YMC ROYALTY COMPANY, LP;
 YBC MANAGERS, LLC; and
 BAYSHORE ROYALTY, LP,

             Defendants - Appellants.


        APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF COLORADO
                  (D.C. NO. 1:15-CV-02177-DME)


Jennifer Lynn Peters (Timothy Ryan Odil with her on the briefs), Otis Bedingfield
& Peters, LLC, Greeley, Colorado, for Appellants.

Andrew K. Glenn (Karen L. Spaulding with him on the brief), Beatty & Wozniak,
P.C., Denver, Colorado, for Appellee.


Before TYMKOVICH, Chief Judge, MURPHY, and HARTZ, Circuit Judges.


PER CURIAM.


      The Bill Barrett Corporation and YMC Royalty Company are experienced

oil and gas companies with mineral rights in northeastern Colorado. In 2013, they
had the opportunity to jointly develop two oil wells. To facilitate the drilling

operations, YMC executed documents authorizing joint expenditures, accepting

responsibility for costs, and electing to participate and share in the revenues. But

after depositing nearly $150,000 in revenues, YMC asserted it had never entered

into an enforceable joint operating agreement with Barrett and declined to pay its

share of the costs. Barrett sued for breach of contract. A jury ultimately found in

favor of Barrett. The district court denied YMC’s motions for judgment as a

matter of law and for a new trial, and this appeal followed.

        We conclude the parties formed an enforceable contract under Colorado

law and a reasonable jury could conclude the parties should be held to their

bargain. We also hold the district court properly exercised its gatekeeper

functions for the admission of expert testimony and did not abuse its discretion in

excluding YMC’s expert witness. Finally, we hold the district court’s comments

during the exclusion of YMC’s expert witness did not improperly influence the

jury.

                                 I. Background

        To further the development of drilling operations in Colorado’s

Greasewood Flats oil field, Barrett sent a proposal to YMC in January 2013. Ijaz

Rehman, controller of YMC, executed Barrett’s proposal letter and the attached

“Authorization for Expenditure” form (AFE) for the Greasewood 11-21H Well.


                                         -2-
The proposal letter provided that Barrett “is hereby offering [YMC] an

opportunity to participate in the [11-21 Well] . . . by paying your proportionate

share of the costs.” App. 3638. The letter further stated if YMC elected to

participate, it must “indicate [its] approval by signing in the space provided below

and as provided on the AFE.” 
Id. Once participation
was confirmed, Barrett

would then furnish its “proposed form of Joint Operating Agreement for your

review and approval.” 
Id. The space
provided on the proposal letter listed three options. Mr. Rehman

checked the box “I/we elect to participate in the drilling of the Greasewood 11-

21H Well. Enclosed is my/our signed AFE.” 
Id. at 3639.
Mr. Rehman then

signed the signature block, initialed the AFE on the first and last pages, and

notarized the instrument. The AFE listed the total estimated cost of the 11-21

Well and YMC’s proportionate share of those costs based on a proposed 12.5%

working interest.

      About two months later, Mr. Rehman executed a second proposal letter and

AFE pertaining to the Greasewood 10-20 Well. This time, Barrett’s proposal

offered an 18.75% working interest in the Well. The documents contained

substantially the same terms as previously, but additionally emphasized that,

“[w]hile this is an estimate and actual costs may be higher or lower, execution of

the AFE constitutes agreement to pay the actual costs. We understand that you


                                         -3-
will tender your share of the costs outlined in the AFE at the time the well is

commenced.” 
Id. at 3654.
Once again, Mr. Rehman signed the signature block,

initialed the AFEs, and notarized the instrument.

      In August 2013, YMC executed two division orders that listed YMC as

owning 12.5% of the working interest in the 11-21 Well and 18.75% in the 10-20

Well. Internal YMC communications introduced at trial also indicated that YMC

believed it owned a working interest in both wells. Most tellingly, Barrett sent

monthly revenue checks and statements to YMC from September 2013 to July

2014 for YMC’s ownership interests in the wells. YMC ultimately deposited

$148,165.26 in revenue. In July 2014, however, the relationship deteriorated.

Barrett ceased paying YMC when it learned YMC refused to pay its share of the

costs and denied the existence of a contract. Barrett sued YMC for breach of

contract.

      The jury found YMC breached its contracts and awarded Barrett damages.

Following the trial, YMC renewed its motion for judgment as a matter of law and

moved for a new trial, arguing there was insufficient evidence indicating

contractual formation, AFEs are unenforceable as a matter of law, and no

reasonable jury could find mutual assent to contract. YMC also argued the court

committed reversible error in excluding its expert witness on industry custom and

practice (while allowing Barrett’s expert witness) and in making unfair comments


                                         -4-
about the expert’s qualifications before he was excluded. The district court

denied the motions and YMC appealed.

                                   II. Analysis

      We first consider whether the parties formed an enforceable contract under

Colorado law and whether sufficient evidence supported the jury verdict for

Barrett. We then consider whether the district court erred in excluding YMC’s

expert witness testimony from trial.

      A. Contract Formation

      As a federal court sitting in diversity, we apply Colorado contract law to

this dispute. See Specialty Beverages, L.L.C. v. Pabst Brewing Co., 
537 F.3d 1165
, 1175 (10th Cir. 2008). We “look to the rulings of the highest state court”

to guide our interpretation of state law. Stickley v. State Farm Mut. Auto. Ins.

Co., 
505 F.3d 1070
, 1077 (10th Cir. 2007). When the highest state court has not

addressed the question, we predict how it would rule after giving “proper regard

to relevant rulings of other courts of the State.” 
Id. (internal quotation
marks

omitted).

      First, YMC argues that AFEs cannot be enforceable contracts as a matter of

law and that the instrument contained language too indefinite to constitute a

contract under Colorado law. Second, YMC says the evidence introduced at trial

was insufficient to indicate mutual assent. We disagree on both points.


                                         -5-
             1. Motion for Judgment as a Matter of Law

      “We review a district court’s denial of a Rule 50 motion de novo, applying

the same standards as the district court.” Home Loan Inv. Co. v. St. Paul Mercury

Ins. Co., 
827 F.3d 1256
, 1261 (10th Cir. 2016). “A party is entitled to [judgment

as a matter of law] only if the court concludes that all of the evidence in the

record reveals no legally sufficient evidentiary basis for a claim under the

controlling law.” Wagner v. Live Nation Motor Sports, Inc., 
586 F.3d 1237
, 1244

(10th Cir. 2009) (cleaned up). The court draws “all reasonable inferences in

favor of the nonmoving party” and does not “weigh evidence, judge witness

credibility, or challenge the factual conclusions of the jury.” 
Id. (internal quotation
marks omitted). Judgment as a matter of law is “cautiously and

sparingly granted and then only when the court is certain the evidence

conclusively favors one party such that reasonable men could not arrive at a

contrary verdict.” Weese v. Schukman, 
98 F.3d 542
, 547 (10th Cir. 1996)

(internal quotation marks omitted).

      The Colorado Supreme Court has held that “[a]lthough generally, the

question of whether a contract exists is a matter of fact to be determined by the

jury, this is only the case where the evidence is conflicting or admits of more than

one inference.” N.Y. Life Ins. Co. v. K N Energy, Inc., 
80 F.3d 405
, 409 (10th

Cir. 1996) (internal quotation marks omitted) (citing I.M.A., Inc. v. Rocky


                                         -6-
Mountain Airways, Inc., 
713 P.2d 882
, 887 (Colo. 1986)). The “parties do not

dispute what happened,” but rather disagree about “what legal significance, if

any, can be attached to the relevant events.” 
Id. at 410.
For us to rule as a matter

of law, YMC must demonstrate that the evidence of contractual formation does

not conflict or admit of more than one inference.

      Colorado law requires parties to agree on all essential terms to form a

contract. See Fed. Lumber Co. v. Wheeler, 
643 P.2d 31
, 36 (Colo. 1981). Such

terms “must be sufficiently definite to enable the court to determine whether the

contract has been performed or not.” Stice v. Peterson, 
355 P.2d 948
, 952 (Colo.

1960). “[W]hen the language in a contract is too uncertain to gather from it what

the parties intended, the courts cannot enforce it.” 
Id. We construe
the proposal

letters and AFEs together “as though they comprise[] a single document.”

Chambliss/Jenkins Assocs. v. Forster, 
650 P.2d 1315
, 1318 (Colo. App. 1982);

see also E. Ridge of Fort Collins, LLC v. Larimer & Weld Irr. Co., 
109 P.3d 969
,

975 (Colo. 2005).

      YMC argues the documents lack essential terms, such as when the

obligation to pay arises, how payment is to be made, and the terms of payment,

relying on Stice v. 
Peterson, 355 P.2d at 952
(identifying these terms as relevant

for determining the existence of an alleged oral contract). But Stice does not

require precise terms related to payment to prove the formation of a valid


                                         -7-
contract. Stice only requires a contract to be sufficiently definite for a court to

determine whether the parties performed. The contract in Stice was too

ambiguous, since even the plaintiff “was completely uncertain as to what was

actually said by the 
defendant.” 355 P.2d at 952
.

      Here, by contrast, sufficient evidence exists to support a finding by a

reasonable jury that the proposal letters and AFEs were sufficiently definite to

constitute binding contracts under Colorado law. First, the proposal letters and

AFEs contain characteristic contractual language of offer and acceptance,

consideration, and terms of performance. The second proposal letter even stated

that “execution of the AFE constitutes agreement to pay the actual costs.”

App. 3654. It also identified when the obligation to pay arises. The documents

are labeled “Authorization for Expenditure” and Mr. Rehman executed them with

formalities such as signature, initialing, and notarization. YMC is a sophisticated

party and is expected to understand the terms contained in the proposal letters and

AFEs. On their own terms, the proposal letters and AFEs were sufficiently

definite for a reasonable jury to infer the existence of a contract and for a court to

determine whether the parties performed their obligations.

      Second, besides the actual language of the documents, the existence of a

contract may also be inferred from “circumstantial evidence” of the parties’

“conduct rather than in any explicit set of words.” Agritrack Inc. v. DeJohn


                                          -8-
Housemoving, Inc., 
25 P.3d 1187
, 1193 (Colo. 2001). From its course of

performance, YMC understood the cost estimate and its proportionate share of the

costs and benefits. It also recorded its working interest and accepted associated

revenues. Mr. Rehman even acknowledged at trial that he knew YMC was on the

hook for its share of the costs. The parties’ course of performance may admit of

more than one inference, which only serves to underscore the conclusion that the

existence of the contract was a fact question appropriate for the jury.

      Third, a “contract will not fail for indefiniteness if missing terms can be

supplied by law, presumption or custom.” Winston Fin. Grp., Inc. v. Fults Mgmt.,

Inc., 
872 P.2d 1356
, 1358 (Colo. App. 1994); see also Shull v. Sexton, 
390 P.2d 313
, 316 (Colo. 1964). Testimony in the district court established it is customary

for a party to pay costs before receiving revenues; obligations may be incurred

without a joint operating agreement; statements and revenues are sent monthly

without a joint operating agreement; and working interest ownership determines

the share of actual costs. The evidence considered by the jury could therefore

supply any missing terms related to payment and performance.

      In response, YMC points to two cases. First, it relies on dicta in Cleverock

Energy Corp. v. Trepel, 
609 F.2d 1358
(10th Cir. 1979), where we upheld a

district court’s finding that an AFE in that case was “an estimate of costs without

binding effect in the [oil and gas] industry,” 
id. at 1360.
In a subsequent case


                                         -9-
citing Cleverock, the Fifth Circuit also opined that “the AFEs at bar do not, on

their faces, create a legally binding obligation . . . to pay a share of the drilling,

completion, and sidetrack expenses.” Sonat Expl. Co. v. Mann, 
785 F.2d 1232
,

1235 (5th Cir. 1986). Relying on these cases, YMC says that AFEs cannot be

contracts, as a matter of law, without a joint operating agreement.

      But Cleverock did not question whether an AFE containing cost estimates

binds the executing party to pay the costs once incurred. Rather, it addressed

whether the amount was fraudulently represented on the AFE and the amount the

signatory was obligated to pay. See 
Cleverock, 609 F.2d at 1360
. The Cleverock

court’s statement that AFEs are “without binding effect in the industry” simply

restated the district court’s factual findings about industry practice; we did not

announce a per se legal rule about the non-binding effect of AFEs.

      Nor does Sonat persuasively advance YMC’s argument. There, the Fifth

Circuit concluded that the AFEs under consideration, standing alone, did not

constitute contracts because they lacked a promise to pay costs and because the

court found no jurisprudential support indicating that AFEs, without more, were

binding contracts. See Sonat, 785 F.2d a 1234–35. Here, however, the AFEs do

not stand alone—they are construed alongside the proposal letters. See E. Ridge

of Fort 
Collins, 109 P.3d at 975
; 
Forster, 650 P.2d at 1318
. The proposal letters

contain a promise to pay costs and Mr. Rehman testified he understood that


                                           -10-
obligation. Moreover, trial testimony indicated that these AFEs—alongside the

proposal letters—constituted binding contracts. Because the evidence admits of

more than one inference about the existence of the contracts, it was proper for the

jury to decide the question.

       No doubt execution of the joint operating agreement would have added

additional terms with greater specificity and detail to the contract. And the

proposal letters did state that Barrett would furnish YMC with a joint operating

agreement if it elected to participate. But based on the terms of the documents

and the conduct of the parties, the district court did not err in denying YMC’s

motion for judgment as a matter of law. The execution of a joint operating

agreement in this instance would have simply added additional operating terms to

the existing ownership agreement between the parties, none of which were in

dispute at trial.

              2. Sufficiency of the Evidence

       Next, YMC argues there is no sufficient evidentiary basis for a reasonable

jury to find for Barrett on its breach of contract claim and therefore the district

court erred in denying its motion for a new trial. According to Mr. Rehman’s

testimony at trial, it was YMC’s intention to sign the cost estimates without

entering into a binding agreement. It was YMC’s understanding that a binding




                                         -11-
agreement to pay costs required a signed joint operating agreement, and that the

signed proposal letters and AFEs were only an agreement to negotiate further.

       According to Colorado law, “[w]hether or not the parties have completed

their negotiations . . . is always dependent upon the circumstances of the

particular case.” Am. Min. Co. v. Himrod-Kimball Mines Co., 
235 P.2d 804
, 807

(Colo. 1951); see also DiFrancesco v. Particle Interconnect Corp., 
39 P.3d 1243
,

1248 (Colo. App. 2001) (“[T]here can be no binding contract if it appears that

further negotiations are required to work out important and essential terms.

Agreements to agree in the future are generally unenforceable.” (citations

omitted)).

       We closely scrutinize correspondence between the parties to determine

whether “such letters are intended merely as preliminary negotiation.” N.Y. Life

Ins., 80 F.3d at 409
(quoting Pierce v. Marland Oil Co., 
278 P. 804
, 806 (Colo.

1929)). “The essential question is: ‘Did the parties mean to contract by their

correspondence, or were they only settling the terms of an agreement into which

they formally proposed to enter after all its particulars had been adjusted, and by

which alone they intended to be bound?’” 
Id. (quoting Pierce,
278 P. at 806). “If

possible, the parties’ intent is to be determined from the face of the contract

itself.” 
Id. -12- Interpreting
the parties’ intent from the face of the documents, however, we

find there is language that can be interpreted by a reasonable jury as that of offer

and acceptance. See Mestas v. Martini, 
155 P.2d 161
, 167 (Colo. 1944) (Mutual

assent is “arrived at by a clear and explicit acceptance of a proper and unrevoked

offer.”). The proposal letters offered participation, defined participation as

YMC’s agreement to pay its share of the costs, and prescribed the exact manner

of acceptance. Although the documents referred to the future negotiation and

execution of a joint operating agreement, a reasonable jury could conclude the

language did not condition YMC’s participation on the execution of the joint

operating agreement.

      Furthermore, Mr. Rehman’s trial testimony indicates he understood the

obligation incurred by electing to participate in the wells. See App. 1705–07.

His testimony also demonstrates knowledge that multiple working owners may

participate in a well without a joint operating agreement. See 
id. at 1692–93.
YMC’s actions following the execution of the documents also suggests the

existence of mutual assent: YMC executed division orders confirming its working

interest ownership and deposited nearly $150,000 in revenue checks from Barrett

for the wells. Mr. Rehman affirmed at trial he would not have executed the

division orders if they did not accurately reflect YMC’s ownership interest in the




                                         -13-
wells. Finally, evidence admitted at trial of industry custom and practice tended

to show mutual assent between the parties.

      The evidence was therefore sufficient for a reasonable jury to conclude the

parties had entered into a binding contract and that the proposal letters and AFEs

were not simply agreements to agree. The jury’s conclusion was not decidedly or

overwhelmingly against the weight of the evidence. See Elm Ridge Expl. Co.,

LLC v. Engle, 
721 F.3d 1199
, 1216 (10th Cir. 2013) (“In deciding a new trial

motion based on insufficiency of the evidence, a district court must analyze

whether the verdict is clearly, decidedly or overwhelmingly against the weight of

the evidence.” (internal quotation marks omitted)).

      Thus, the district court did not abuse its discretion in denying YMC’s

motion for a new trial. See 
id. (reviewing a
district court’s denial of a Rule 59(a)

motion for abuse of discretion).

      B. Expert Testimony

      YMC also appeals the exclusion of its expert witness on industry custom

and practice, contending that the district court’s ruling prevented it from

obtaining a fair trial. First, YMC argues the court should have allowed the

testimony of its expert under Federal Rule of Evidence 702 and Daubert v.

Merrill Dow Pharmaceuticals, Inc., 
509 U.S. 579
(1993). Second, YMC argues




                                         -14-
that in excluding its expert in open court, the district court prejudiced the jury

against it.

       Prior to trial, YMC proffered a Denver oil and gas attorney, Randall

Feuerstein, as an expert witness on custom and practice in the oil and gas

industry. 1 Barrett moved in limine to exclude Mr. Feuerstein’s testimony,

alleging it contained unhelpful legal conclusions warranting exclusion under

Federal Rule of Evidence 702. The district court granted the motion in part, but

tentatively allowed Mr. Feuerstein to testify at trial on industry custom and

practice.

       At trial, YMC called Mr. Feuerstein to testify. Following a lengthy voir

dire examination of Mr. Feuerstein’s credentials and proposed testimony, the

district court orally ruled in front of the jury that YMC had not satisfied its

burden under Rule 702 to provide relevant and reliable testimony that would be

helpful to the jury. YMC objected that the court should not have made its Rule

702 ruling in front of the jury, and moved for mistrial. The district court denied

the motion but nevertheless issued a curative instruction to clarify that the jury

should not draw any inference regarding the weight of the evidence from its

comments or from Mr. Feuerstein’s exclusion.



       1
        For reasons not relevant here, Judge Jackson presided over the pretrial
proceedings while Judge Ebel presided at trial.

                                         -15-
             1. Admission of Expert Testimony Under Rule 702

      Federal Rule of Evidence 702 requires the district court to “ensur[e] that an

expert’s testimony both rests on a reliable foundation and is relevant to the task at

hand.” 
Daubert, 509 U.S. at 597
. 2 Under Rule 702, the court must first decide

whether the proffered expert is qualified “by knowledge, skill, experience,

training, or education” to render an opinion. See Fed. R. Evid. 702. Then “the

court must determine whether the expert’s opinion is reliable by assessing the

underlying reasoning and methodology, as set forth in Daubert.” United States v.

Nacchio, 
555 F.3d 1234
, 1241 (10th Cir. 2009) (en banc). “Where an expert

testifies based on experience, the tribunal reviews the reliability of the testimony

with reference to ‘the nature of the issue, the expert’s particular expertise, and the

subject of the testimony.’” F & H Coatings, LLC v. Acosta, 
900 F.3d 1214
, 1222




      2
         Rule 702 provides four factors relating to relevance and reliability. It
states that an expert may testify if:

      (a) the expert’s scientific, technical, or other specialized knowledge
          will help the trier of fact to understand the evidence or to
          determine a fact in issue;
      (b) the testimony is based on sufficient facts or data;
      (c) the testimony is the product of reliable principles and methods;
          and
      (d) the expert has reliably applied the principles and methods to the
          facts of the case.

Fed. R. Evid. 702.

                                         -16-
(10th Cir. 2018) (quoting Kumho Tire Co., Ltd. v. Carmichael, 
526 U.S. 137
,

148–50 (1999)).

      The court, when faced with a party’s objection, must “adequately

demonstrate by specific findings on the record that it has performed its duty as

gatekeeper.” United States v. Avitia-Guillen, 
680 F.3d 1253
, 1256 (10th Cir.

2012). “This gatekeeper function requires the judge to assess the reasoning and

methodology underlying the expert’s opinion, and determine whether it is

scientifically valid and applicable to a particular set of facts.” Goebel v. Denver

& Rio Grande W. R.R. Co., 
215 F.3d 1083
, 1087 (10th Cir. 2000).

      Although the gatekeeper obligation is mandatory, “[i]t is within the

discretion of the trial court to determine how to perform its gatekeeping function

under Daubert.” 
Id. A Daubert
hearing is “not specifically mandated” and a

judge may fulfill his gatekeeper obligation when asked to rule “on an objection

during trial . . . so long as the court has sufficient evidence to perform the task”

of ensuring reliability and relevance. 
Id. (internal quotation
marks omitted).

      Before trial, Barrett moved to exclude Mr. Feuerstein, claiming his

testimony would constitute inadmissible legal opinions and therefore not be

helpful to the jury. YMC countered that his opinions were admissible because

they were based on industry custom and practice and would help the jury interpret

the AFEs and allocation agreements. The district court held a pretrial hearing and


                                          -17-
granted Barrett’s motion in part, drawing a line between impermissible opinion

testimony on legal matters and permissible industry custom and practice

testimony:

      [The expert witness cannot] come in here and tell me and tell the jury
      how to decide the case, what the law is, and how it should be
      applied. As helpful as that might be, . . . that’s not his role. That’s
      my role, and we won’t have a lawyer preaching to the jury about the
      law.

App. 1384. But the court “tentatively” permitted Mr. Feuerstein to “express

opinions on custom and practice in the industry” to the extent such opinions were

relevant. 
Id. The court
then identified specific opinions in Mr. Feuerstein’s

expert report that would be “potentially admissible,” including the industry

custom and importance of joint operating agreements for allocating costs, pooling

processes, and the meaning of terms in the AFEs and division orders. 
Id. Implicitly, the
court determined that any testimony drawing legal

conclusions would not help the jury determine a fact in issue and therefore would

not be relevant. See Fed. R. Evid. 702(a) (requiring that the “specialized

knowledge will help the trier of fact to understand the evidence or to determine a

fact in issue”); see also Pioneer Ctrs. Holding Co. ESOP & Trust v. Alerus Fin.,

N.A., 
858 F.3d 1324
, 1342 (10th Cir. 2017) (testimony that makes “impermissible

legal conclusions” may be excluded because it “does not aid the jury in making a

decision, but rather attempts to substitute the expert’s judgment for the jury’s”


                                         -18-
(cleaned up)). Despite its brevity, the district court’s determination provides an

adequate basis for this court to determine that it applied the correct legal test at

this point in the proceedings. Cf. 
Avitia-Guillen, 680 F.3d at 1256
(upholding a

similarly concise ruling).

      At trial, YMC offered Mr. Feuerstein as an expert witness on “oil and gas

industry custom and practice in Colorado regarding partnering in joint operations

for oil and gas development, industry custom and practice in Colorado regarding

pooling and pooling declarations, and industry custom and practice regarding

forced pooling.” App. 3290–91. At that point, the court allowed Barrett to

conduct voir dire. After its questioning, Barrett argued YMC failed under Rule

702 to establish Mr. Feuerstein’s “expertise in the oil and gas industry custom and

practice as it relates to the use of joint operating agreements.” 
Id. 3301–02. The
district court then permitted YMC to further bolster the basis for Mr. Feuerstein’s

opinions before concluding that YMC failed to “establish[] that [Mr. Feuerstein]

meets the criteria for Rule 702 to provide expert testimony,” 
id. 3313. The
court made findings on both the relevance and reliability inquiries

required by Daubert and identified the reasons for excluding Mr. Feuerstein under

each of the four Rule 702 factors. Specifically, the court doubted “this witness’s

testimony will be helpful to the jury in deciding the ultimate facts” because “the

jury has sufficient facts and evidence to make those decisions for itself”; the court


                                          -19-
disputed whether Mr. Feuerstein “has established unique facts or data pertaining

to this case that are unique sufficient to qualify him as an expert”; the court

“found nothing in [Mr. Feuerstein’s] expert report that was tendered that even

mentions principles or methods, no criteria and principles by which his opinion

could be measured”; and the court determined Mr. Feuerstein had not

“sufficiently and reliably applied those principles and methods to the fact of this

case.” App. 3313–15.

      YMC argues the court abused its discretion in the way it resolved the

challenges to YMC’s expert. First, YMC says the court should have conducted a

more robust pretrial hearing on reliability and relevance of the proposed

testimony. But the court was not required to hold a formal Daubert hearing at

that time. See 
Goebel, 215 F.3d at 1087
(explaining the court’s discretion in its

manner of fulfilling the gatekeeper function).

      Second, YMC contends the district court’s manner of exercising the

gatekeeper function (namely, by holding an impromptu Daubert hearing in front

of the jury) was an abuse of discretion. But a judge does not abuse his discretion

by conducting a Daubert hearing in the presence of the jury through direct

examination and voir dire. See 
Goebel, 215 F.3d at 1087
; see also 29 Charles

Alan Wright et al., Fed. Prac. & Proc. Evid. § 6270 (2d ed., Nov. 2018 update)

(The “trial court could decide to forego a formal Daubert hearing outside the


                                         -20-
presence of the jury. In lieu of such a hearing, the court could conduct a voir dire

examination of the witness or permit the proponent of the expert testimony to

establish the necessary foundation on direct examination, through affidavits, or in

other ways.” (footnotes omitted)). The district court’s decision to hold an

informal Daubert hearing in front of the jury was therefore not an abuse of

discretion.

      Finally, YMC contends the district court’s trial decision to exclude all of

Mr. Feuerstein’s testimony was an abuse of discretion. But YMC does not

explain precisely how the court abused its discretion in excluding Mr. Feuerstein

except by reiterating its claim that Mr. Feuerstein is a qualified expert. No one

disputes Mr. Feuerstein is a well-respected and experienced oil and gas attorney.

But reasonable minds could disagree about whether his proposed testimony would

have been helpful to the jury in deciding the ultimate facts. And other than

reiterating its claim that Mr. Feuerstein had specialized expertise, YMC fails to

rebut the other three Rule 702 bases for the district court’s ruling, even though it

would have to succeed on all four to prevail. Nowhere in its opening brief does

YMC explain with any specificity what evidence its expert would have provided

to the jury, nor does it set forth in any detail the factual basis for the proposed

testimony, the methodology by which it was developed, or its application to the




                                          -21-
facts of the case. Without these arguments, we cannot evaluate, let alone reverse,

the reasoning of the district court.

      Our review “will not disturb the [exclusion of an expert] unless it is

arbitrary, capricious, whimsical or manifestly unreasonable, or we are convinced

that the district court made a clear error of judgment or exceeded the bounds of

permissible choice in the circumstances.” 
Nacchio, 555 F.3d at 1241
(internal

quotation marks omitted). Given the circumstances here, the district court did not

abuse its discretion.

             2. Improper Influence on the Jury

      Finally, YMC contends the district court improperly influenced the jury in

its comments excluding Mr. Feuerstein’s testimony. In particular, it objects to the

court’s comment that “the evidence that has already been before this jury is

sufficient for the jury to be able to address these issues and [they] will not need

an opinion from an outside source on those subjects.” App. 3314. YMC contends

this statement amounted to an endorsement of Barrett’s expert witness testimony,

which the jury had heard the day before and which YMC had not objected to.

YMC argues the court thus usurped the fact-finding role of the jury and the only

proper recourse is a mistrial.

      We review de novo the district judge’s comments on the evidence. See

United States v. Nickl, 
427 F.3d 1286
, 1293 (10th Cir. 2005). “We review denial


                                         -22-
of a mistrial for abuse of discretion.” N. Am. Specialty Ins. Co. v. Britt Paulk Ins.

Agency, Inc., 
579 F.3d 1106
, 1112 (10th Cir. 2009).

      “[W]e have explained that a federal district court judge has the

unquestioned right to comment reasonably upon the evidence, and to express his

opinion of it, provided it is made clear to the jury that it is not bound by his views

and that they are the sole judges of the facts.” United States v. Olea-Monarez,

908 F.3d 636
, 640 (10th Cir. 2018). A judge’s statements must not “prevent a fair

and dispassionate consideration of the evidence by the jury.” United States v.

Sowards, 
339 F.2d 401
, 403 (10th Cir. 1964).

      After the court’s ruling excluding Mr. Feuerstein’s expert testimony, the

court briefly recessed. Before the jury returned, YMC objected that the court

should not have allowed the Rule 702 proceeding to be conducted in front of the

jury. The court observed that YMC never asked it to make its Rule 702 findings

outside the presence of the jury. The court therefore denied the motion for a

mistrial. Nevertheless, upon the jury’s return from recess, the court agreed to

issue a curative instruction telling the jury not to draw any inference regarding the

weight of the evidence from its exclusion of Mr. Feuerstein’s testimony. 3


      3
          The curative instruction stated:

      My ruling on the whether Mr. Feuerstein was an expert or not was
      addressed entirely to whether he had the unique experiences that
                                                                    (continued...)

                                         -23-
      We do not think the court’s comments improperly influenced the jury for

two reasons. First, the court’s statement occurred in the context of its evaluation

of Mr. Feuerstein’s qualifications to opine on oil and gas custom and practice.

The court’s statement should be read in that context: Mr. Feuerstein’s

“specialized knowledge” would not “be helpful to the jury in deciding the

ultimate facts” because the court reasonably determined his testimony failed to

meet all of the requirements of Rule 702. In this context, the district court’s

comments on the evidence were reasonable.




      3
       (...continued)
      would qualify him as an expert under the four very precise criteria of
      Rule 702. It has nothing to do with the merits of the case. I didn’t
      address the merits of the case. I truly don’t have an opinion on the
      merits of the case. You have heard the evidence from two very fine
      lawyers, and you are going to have to decide that. My question was
      only whether this expert had some unique expert skills that could be
      brought to bear that would be helpful to you, over and above what
      the evidence showed, that you would need his assistance. And my
      ruling was exclusively and limited to the fact that this particular
      witness I did not think had the—met the four criteria that I must
      apply to determine that he had unique skills to testify in a way that
      would be helpful to you, over and above everything else you have
      heard. So I just wanted to be very clear that I am making no
      comment on this case and truly to assure you that I do not have an
      opinion on the outcome of this case. That’s your prerogative, not
      mine. And for that reason, because I don’t have to have an opinion, I
      truly have not formed an opinion.

App. 3324–25.

                                         -24-
      Second, the court’s curative instruction clarified that it held no view about

the persuasive value or impact of the evidence—its determination was limited to

the qualifications of the proffered expert witness. See 
Olea-Monarez, 908 F.3d at 640
(“The district court made no comment regarding the persuasive value or

impact of any evidence presented in the case. In essence, the district court told

the jury to go back and look at the evidence, which it was well within its

discretion to do.”). “We have held curative instructions—issued promptly . . . and

specifically addressing the precise impropriety complained of—can go far in

erasing prejudice occasioned by an improper remark.” Whittenburg v. Werner

Enters. Inc., 
561 F.3d 1122
, 1131 (10th Cir. 2009). Given the context, including

the court’s prompt and precise curative instruction and YMC’s failure to object to

Barrett’s expert witness, we cannot assume the court’s comments during the

Daubert hearing improperly lent weight to Barrett’s evidence at YMC’s expense.

      We therefore conclude that the court’s comments during the Daubert

hearing held before the jury did not prevent a fair and dispassionate consideration

of the evidence. Furthermore, we find that the court’s curative instruction

clarified and averted any improper inference jurors might have derived from its

remarks. Because it does not “clearly appear that the challenged remarks

influenced the verdict,” denying the motion for mistrial was not an abuse of

discretion. See Britt 
Paulk, 579 F.3d at 1112
.


                                        -25-
                              III. Conclusion

      For the foregoing reasons, we AFFIRM the judgment of the district court

on all issues presented.




                                      -26-

Source:  CourtListener

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