DIJO, Inc. v. Hilton Hotels Corp

In DIJO, Inc. v. Hilton Hotels Corp, 351 F.3d 679, 685-87 (5th Cir.2003), the Fifth Circuit held that the district court abused its discretion in permitting "a financial consultant" to testify as a lay witness regarding the plaintiff company's lost profits. Although the witness was the plaintiff's "primary contact" at a commercial lending facility with which the plaintiff had a business relationship, he had not served as an owner or officer of the plaintiff company. Id. at 685. Additionally, the witness's "opinion ... was based on preliminary income figures and other information that he had received from the plaintiff's founder," and his "appraisal was not based upon his own independent knowledge or observations." Id. at 686. In considering whether the witness was properly permitted to give lay opinion testimony concerning lost profits, the Fifth Circuit reasoned: It is telling that DIJO responds ... not with evidence of the witness's involvement with the plaintiff or the Project, but only emphasizing his substantial business experience... Such generic industry experience does not pass Rule 701 scrutiny. The plaintiff never attempted to qualify the witness as an expert; and a lay witness who was never employed by or directly involved in a business is unlikely to have the type of first-hand knowledge necessary to provide reliable forecasts of future lost profits. The further removed a layman is from a company's day-to-day operations, the less likely it is that his opinion testimony will be admissible under Rule 701. Id. Thus, in light of the witness's lack of "the requisite first-hand, personal knowledge" of the company about which he testified, the Fifth Circuit held that the district court abused its discretion in permitting the witness to give lay opinion testimony under Rule 701. Id. at 686-87.