In United States v. Holmes, No. 22-10312 (9th Cir. Feb. 24, 2025), the Theranos/Elizabeth Holmes fraud prosecution, the Ninth Circuit affirms the convictions and sentences. It acknowledges the defense argument that a former Theranos scientist should not have been allowed to offer Fed. R. Evid. 702 expert testimony as an occurrence witness, without being qualified, though the error is held to be harmless.
Defendants “Elizabeth Holmes and Ramesh ‘Sunny’ Balwani . . . set out in the mid-2000s to revolutionize medical laboratory testing through a biotechnology company called Theranos. In the early 2010s, Theranos claimed that it could run fast, accurate, and affordable tests with just a drop of blood drawn from the prick of a finger, in contrast to traditional testing methods that require large needles to draw blood from a vein.” Theranos attracted prominent investors and board members, but by 2015, news reporters exposed the “grandiose achievements touted by Holmes and Balwani [as] half-truths and outright lies.” Separate juries convicted the co-defendants of wire fraud and conspiracy, and they were sentenced to 135 months (Holmes) and 155 months (Balwani) imprisonment.
The Ninth Circuit affirms. It finds merit in one of Holmes’s evidence objections, but finds it harmless (not reversible) error.
Holmes argued that her case was tainted by the admission of testimony by “Dr. Kingshuk Das, who worked as a laboratory director at Theranos . . . . Das testified that . . . he was involved in Theranos’s performance of Patient Impact Assessments (PIAs) . . . . According to Das, the PIAs were ‘descriptions of [Theranos’s] assessment on [its] evaluation of whether these tests led to potential for patient harm.’ To perform these assessments, Das reviewed three categories of Theranos documents: validation reports for tests performed, quality control results and reports, and patient test result distributions and calculations.”
The government examined Das about the PIA. “Das confirmed that, based on the data analyzed in the PIA, he found the Edison [a device deployed in Theranos’s clinical lab to test patient samples] ‘unsuitable for clinical use’ . . . . Das further testified that he conveyed these results and conclusions to Holmes.”
Holmes argued that Das’s scientific testimony should have been subjected to gatekeeping under the standards of Rule 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 US 579 (1993). “The PIA and Das’s opinions about Theranos’s quality control data, according to Holmes, ‘rested on sophisticated data analysis based on extensive scientific training.’ In response, the government argues that Das properly testified as a percipient witness because he merely described the job he was hired to do, and the PIA is not expert testimony but rather an admission by Theranos— and, by extension, Holmes—that there were serious reliability issues with the Edison device.”
The panel sides in substance with Holmes. “The government’s argument is misplaced. As we explained, there is no ‘on-the-job’ exception to Rule 702. That Das described personal observations made while performing his job would not take his testimony outside the scope of Rule 702 if Das offered opinions that relied on specialized knowledge, training, or skill . . . . And there is little doubt that the PIA and Das’s opinions concerning the suitability of the Theranos device for clinical use were based on specialized knowledge . . . . To the extent that the government used Das’s testimony to prove that there were significant problems with the accuracy and reliability of the Edison device, Rule 702 required that Das’s opinions be subject to Daubert scrutiny.”
Notwithstanding, the panel holds that the admission of Das’s testimony was harmless error, on the ground that Das would have passed muster under the court’s Rule 702 gatekeeping function and, in any event, “[i]t is not likely . . . that the admission of Das’s opinion testimony affected the jury’s verdict, given the weight of other evidence against Holmes.”
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