On March 13, 2015, the U.S. Court of Appeals for the First Circuit affirmed the dismissal of a lawsuit seeking recovery of funds from the president of Environmental Careers Organization (ECO), a defunct Massachusetts non-profit company whose business was to place interns with the Environmental Protection Agency (EPA). ECO received compensation from the EPA for its costs of placing students in agency internships. EPA audited the accounts of ECO and then sought recovery of more than $6 million from it, forcing ECO into bankruptcy.
ECO’s bankruptcy trustee (“Trustee”) filed a lawsuit, alleging that the former ECO president breached his fiduciary duty of care to the organization by improperly retaining some surpluses. At trial, the former ECO president moved for judgment dismissing the lawsuit as a matter of law because the Trustee failed to proffer, in advance of trial, expert witnesses who would testify as to the applicable standard of care. Both the trial court and the Court of Appeals agreed that the issues required the testimony of experts who were qualified under Federal Rule of Evidence 702; the complex underlying issues were “beyond the ken of lay jurors”.
The case is In re: The Environmental Careers Organizations, Inc., Cruickshank, Trustee of the Chapter 7 Estate of the Environmental Careers Organization, Inc., v. Cook. Retired Associate Justice David Souter was a member of the panel.