6. Lay and Expert Witnesses
There were two cost of capital witnesses: one for Great Oaks, the company's president, who was specifically produced in a limited fashion as a lay witness;8 and DRA's project manager, who was offered and qualified as an expert.9 It is important to clearly denote the limitations of a lay witness in contrast to an expert witness for a cost of capital proceeding and we need to note that Great Oaks knowingly made the distinction and thus limited the application of its own witness's testimony in a complex, technical subject area. This distinction must also be viewed in the context of Great Oaks' actions to sever its cost of capital proceeding from the other single-district Class A companies' consolidated proceeding, thus limiting the available record here. Both Great Oaks and DRA relied, at least in part, on evidence in the record of the consolidated proceedings A.09-05-001 et al. for the other single-district Class A water companies.
We rely on the well established definitions for lay and expert witnesses from Black's Law Dictionary:
Lay Witness. Person called to give testimony who does not possess any expertise in the matters about which he [she] testifies. Used in contrast to expert witness who may render an opinion based on his expert knowledge if proper foundation is laid. Generally, such non-expert testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness (i.e. first-hand knowledge or observation) and (b) helpful to a clear understanding of his testimony or the determination of a fact at issue. Fed.Evid.R. 701.
Expert Witness. One who by reason of education or specialized experience possesses superior knowledge respecting a subject about which persons having no particular training are incapable of forming an accurate opinion or deducing correct conclusions. [citation] A witness who has been qualified as an expert and who thereby will be allowed (through his/her answers to questions posed) to assist the jury in understanding complicated and technical subjects not within the understanding of the average lay person. One possessing, with reference to a particular subject, knowledge not acquired by ordinary persons. One skilled in any particular art, trade, or profession, being possessed of peculiar knowledge concerning the same, and one who has given subject in question particular study, practice, or observation. One who by habits of life and business has peculiar skill in forming opinion on subject in dispute. (Black's Law Dictionary, Fifth Edition, at 799 and 519, respectively.)
Where specifically identified and received in the record, we affirm the judge's rulings on admissibility and exclusions of testimony and exhibits from A.09-05-001 et al. On February 1, 2010 Great Oaks filed a motion to strike DRA's testimony. DRA replied on February 5, 2010. The judge ruled in a brief email to parties on February 10, 2010, that the motion was denied, and the DRA testimony was to be treated as expert testimony, and therefore was subject to argument in the opening and reply briefs.10 We note and affirm the judge's ruling that Great Oaks was untimely in objecting to the offered DRA witness and untimely in its request to examine a consultant to DRA. The objection was made at the end of the evidentiary hearing. DRA's prepared testimony clearly indicated that work from A09-05-001 et al was reviewed, revised, and expanded for this proceeding. Great Oaks had notice before the hearing that Charvez was the proposed witness. DRA's witness was properly noticed and qualified as an expert. We affirm the judge's rulings that DRA laid a proper foundation thus demonstrating its witness to be qualified to offer testimony as an expert, and therefore, based upon both direct and cross examination, we will accord DRA's testimony appropriate weight in our determination of the base year cost of capital for Great Oaks. We accord less weight to the Great Oaks lay witness's testimony because we find that cost of capital is a complex technical issue, which, when tempered with our own judgment and discretion, is not a matter of observable fact, but is instead a matter of subjective opinion requiring specific training and experience to support a credible and persuasive recommendation. We do recognize that the Great Oaks witness could testify to facts regarding the operations of the company and his actions as an employee. We otherwise treat him as a lay witness as offered and limited by counsel for Great Oaks.
8 "MR. GUSTER: Your Honor, if I may simply lodge an objection and point out the fact that Mr. Roeder is being offered as a lay witness and not as an expert witness." (Transcript at 95.) And also, "[Objection:] . . . Again, he's not being offered as an expert on how the financial community assesses risks of water utilities. He's here to testify as to his own personal knowledge and belief of the operational and financial risks of Great Oaks Water Company." (Transcript at 106-07.)
9 "MS. BARRERA: He [Mr. Charvez] is our expert, your Honor. (Transcript at 168.)
10 A more detailed ruling was not subsequently issued and was not necessary.
