United States District Court, D. Maine
ORDER ON MOTION TO EXCLUDE WITNESS
A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE
Court denies a petitioner's motion to exclude an expert
witness designated by the respondents because the Court
concludes that the expert is qualified to give the opinions
he has rendered, that his opinions are likely to be helpful
to the jury, and that the petitioner's other objections
do not justify exclusion. Instead, the petitioner is free to
test the expert's qualifications, his knowledge of the
facts in the case, and his opinions at the crucible of
cross-examination, by the introduction of contrary evidence,
and through careful attention to proper jury instructions.
jury selection set for April 7, 2020 and trial scheduled from
April 27 through May 1, 2020, on August 27, 2019, the Federal
Energy Regulatory Commission (FERC) filed a motion to exclude
one of the Respondents' expert witnesses, Thomas L.
Welch. Pet'r's Mot. to Exclude Thomas
L. Welch (ECF No. 174) (Pet'r's Mot.).
On September 17, 2019, Richard Silkman and Competitive Energy
Service, LLC (CES) responded, objecting to the FERC motion.
Defs.' Opp'n to FERC Mot. to Exclude Expert
(ECF No. 179) (Resp'ts'
Opp'n). On October 1, 2019, FERC filed its reply.
Pet'r's Reply in Support of Its Mot. to Exclude
Thomas L. Welch (ECF No. 180) (Pet'r's
Order on Motions for Summary Judgment dated January 4, 2019,
the Court described in detail the complex factual and legal
underpinnings of this case. Summ. J. Order at 2-69.
FERC claims that the Respondents “engag[ed] in a
fraudulent scheme to manipulate the ISO New England, Inc.
(ISO-NE) Day-Ahead Load Response Program from July 2007 to
February 2008.” Pet. for an Order
Affirming the Fed. Energy Regulatory Comm'n's
Aug. 29, 2013 Orders Assessing Civil Penalties Against
Richard Silkman and Competitive Energy Servs. LLC ¶
1 (ECF No. 1). ISO-NE is “an independent, non-profit,
Regional Transmission Organization serving Massachusetts,
Connecticut, Maine, New Hampshire, Rhode Island, and
Vermont.” Id. ¶ 2. It “ensures the
day-to-day reliable operation of New England's bulk
electric energy generation and transmission system by
overseeing and ensuring the fair administration of the
region's wholesale electricity markets.”
Id. ISO-NE “administers load response programs
that encourage large electricity users to reduce their
electricity consumption or ‘load' during periods of
high or peak demand on the bulk electric system.”
Id. ¶ 3. Under a program administered by ISO-NE
known as the Day Ahead Load Response Program (DALRP),
participants were allowed to offer “electricity
reductions for hours in the next day when New England
experienced high electricity prices” and were required
to actually reduce their consumption of electricity.
Id. ¶ 4. When a business reduced its electrical
needs for a peak period, the DALRP “would pay [the
user] for the electricity savings resulting from its”
reduction. Id. ¶ 5.
case, FERC alleges that Dr. Silkman and CES helped a CES
client create a false baseline to foster “the illusion
that the client was reducing consumption of
electricity.” Id. ¶ 10. As a consequence,
FERC maintains, the client was paid “for demand
response that they neither intended to provide nor actually
provided.” Id. FERC concluded that Dr.
Silkman's and CES's “scheme to extract payments
for phantom load reductions was a violation of the FPA's
prohibition of electricity market manipulation, 16 U.S.C.
§ 824v(a) (2012), and the corresponding prohibition in
the Commission's regulations, 18 C.F.R. § 1c.2
(2013).” Id. FERC brought this lawsuit to
enforce its civil penalty of $1, 250, 000 against Dr. Silkman
and of $7, 500, 000 against CES and to disgorge $166, 841.13
in unjust profits. Id. ¶ 12.
Thomas L. Welch: Defense Expert
Silkman and CES deny FERC's allegations and have
vigorously defended themselves against FERC's
allegations. During discovery, on January 26, 2018, Dr.
Silkman and CES listed Thomas L. Welch as an expert and
produced his expert report and resume. Mr. Welch is a former
member and the former Chair of the Maine Public Utilities
Commission. Pet'r's Mot. Attach. 4,
Thomas L. Welch Statement of Ops. and Basis at 17
(Welch Report). He was graduated from Stanford
University in 1972 and from Harvard Law School in 1975.
Id. He has worked as an attorney in two law firms,
as in-house counsel for Bell Atlantic, as the Chief Deputy
Attorney General for Antitrust in Pennsylvania, as the
Director of Market Strategy for PJM Interconnection, a
regional transmission organization, and since 2015 as a
consultant. Id. According to his report, Dr. Silkman
and CES designated Mr. Welch as an expert to testify that the
DALRP in place in New England was flawed in several crucial
respects. Id. at 2-13.
Respondents also designated Mr. Welch to rebut the proposed
testimony of one of FERC's experts, Dr. Samuel A. Newell.
Id. Attach. 2, Statement of Thomas L. Welch in
Resp. to Dr. Newell Report at 1-12 (ECF No. 174)
(Welch Rebuttal). Dr. Newell expressed the view that
Dr. Silkman's interpretation of DALRP did not
“present a baseline-measuring concept that conforms
to industry norms or guidance from ISO-NE or the intent of
the program, or even one that makes logical sense.”
Id. Attach. 7, Expert Report of Samuel A.
Newell at 56 (Dr. Newell Report). Mr. Welch
issued a rebuttal in which he disagreed with Dr. Newell that
there has been a consensus about how to calculate the
baseline for DALRP. Welch Rebuttal at 1-12.
POSITIONS OF THE PARTIES
Federal Rule of Evidence 702 and the series of judicial
decisions commencing with Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993), FERC
contends: (1) Mr. Welch does not have enough expertise in
“wholesale demand response, ” Pet'r's
Mot. at 3-6; (2) Mr. Welch does not reliably apply his
opinions to the facts in this case, id. at 7-10; and
(3) specific opinions are unreliable and irrelevant,
including his view that the DALRP was flawed, that his
rebuttal opinions do not effectively rebut Dr. Newell's
opinions, that Mr. Welch's opinions about simulating
future conditions are self-contradictory, confusing and
unsupported, and that his views regarding the propriety of
conduct are unsupported and invade the province of the court.
Id. at 11-15.