In Mountain Valley Pipeline, LLC v. 9.89 Acres of Land, No. 23-2129 (4th Cir. Jan. 27, 2025), the Fourth Circuit addresses an issue of apparent first impression about the division of bench and jury duties under Fed. R. Civ. P. 71.1(h), governing federal eminent domain proceedings. On the admissibility of expert testimony, the panel issues a decision in conflict with the First Circuit.
While there is no Seventh Amendment right to a jury in eminent domain cases, United States v. Reynolds, 397 U.S. 14, 18–19 (1970), the Federal Rules provide for a jury to set the amount of just compensation to a property owner due to a taking. Rule 71.1(h)(1) says that, unless provided otherwise by law, “[i]n an action involving eminent domain under federal law, the court tries all issues, including compensation, except when compensation must be determined . . . . by a jury when a party demands one within the time to answer or within any additional time the court sets, unless the court appoints a commission.”
The challenge under this rule is what record a jury may consider in reaching its decision. There is surprisingly little guidance in the case law on this critical question. The Fourth Circuit in today’s decision provided a road map for judges and lawyers trying these cases.
“Elizabeth Reynolds owns 109 acres of farmland in Roanoke County, Virginia (the ‘Reynolds Parcel’). In October 2017, Mountain Valley Pipeline (‘MVP’) commenced a condemnation action under the Natural Gas Act, 15 U.S.C. § 717 et seq., for a 9.89-acre pipeline easement on the Reynolds Parcel. The district court granted MVP partial summary judgment and a preliminary injunction granting immediate possession for construction. The only remaining question was the amount of just compensation MVP owed Reynolds.”
In support of her claim for compensation, Reynolds submitted two expert reports by (1) developer Sean Horne (the “Horne Report”) regarding “highest and best use” of the parcel, and (2) appraiser Dennis Gruelle (the “Gruelle Report”) “determine[ing] that just compensation for the taking in this case was $327,000.”
“In April 2020, MVP moved to exclude Reynolds’s expert testimony under an apparent combination of Federal Rule of Civil Procedure 71.1(h) and Federal Rule of Evidence 702. MVP first argued that the Horne Report’s opinion on highest and best use did not meet substantive Rule 71.1(h) standards . . . . [It also] argued that the Gruelle Report was unreliable under [Fed. R. Evid.] 702 because the after-taking values of two of the sales Gruelle identified—Sale One and Sale Two— ‘do not provide the value of a property encumbered by a pipeline easement.’”
The district court excluded both of Reynolds’ expert reports, then granted summary judgment to MVP on the ground that “Reynolds presented no admissible evidence to prove diminution of value resulting from the pipeline.” The court awarded compensation based solely on MVP’s expert reports, in the amount of $82,346.
The Fourth Circuit vacates and remands, issuing several pronouncements about proper procedures under Rule 71.1.
First, the district court erred in applying a higher bar for admissibility of expert reports under Fed. R. Evid. 702 in an eminent domain proceeding. “[T]he district court apparently conflated Rule 71.1(h) with Rule 702. Relying solely on the First Circuit’s decision in United States v. 33.92356 Acres of Land, the district court concluded that its gatekeeping role in excluding expert testimony under Rule 702 ‘is particularly pronounced in condemnation proceedings under Rule 71.1’ . . . . With all due respect to the First Circuit, we disagree. Rule 71.1(h) does not alter the Federal Rules of Evidence in eminent domain proceedings. Rather, the court must first apply those Rules to determine the universe of evidence that it will then use to ‘tr[y] all issues’ under Rule 71.1(h)(1).”
Second, the panel addresses the procedure that the district court follows under Rule 71.1(h). “Once the district court makes its initial evidentiary determinations pursuant to the normal Rules of Evidence, it can proceed to the Rule 71.1(h) stage, where it must consider all admissible evidence together . . . . Exactly what that consideration looks like, however, appears to be an issue of first impression in any federal court. We conclude that, when a district court ‘tries [an] issue[]. of contested fact under Rule 71.1(h), the court must make findings of fact and conclusions of law on the record, as it would in a bench trial.”
“Genuine disputes of material fact are typically left for a jury to resolve. But in eminent domain cases under Rule 71.1(h), the drafters of the Federal Rules of Civil Procedure took some contested factual issues from the jury and gave them to the judge. These issues can be complex, such as in this case, where the judge must decide the reasonable likelihood of an entirely hypothetical buyer building an entirely hypothetical subdivision. The Rule 71.1(h) procedure is thus reminiscent of a bench trial, in which a trial judge must also resolve difficult questions of fact.”
“For that reason, when a district court resolves a contested factual issue under Rule 71.1(h), the court must make findings of fact and conclusions of law on the record for a reviewing court to be able to do its job effectively. We afford factual determinations in eminent domain cases significant deference on appeal—just as we do in bench trials— because the trial judge is best positioned to weigh the conflicting evidence.”
Third, “when a party has demanded a jury, . . . district courts may not resolve the ‘precise issue’ of compensation under Rule 71.1(h).” Although a court may grant summary judgment where no genuine dispute of material fact is presented on that issue, “[o]therwise, the court must convene a jury to determine compensation.” During the just compensation phase, “the district court should exclude from the jury trial evidence inconsistent with its Rule 71.1(h)” findings of fact and conclusions of law. “In the interest of fairness, we think that district courts should—when possible—strike only the portions of testimony that are inconsistent with their factual Rule 71.1(h) determinations, rather than excluding the testimony as a whole.”
Applying its standards to this case, the panel holds that the district court erred in excluding the property owners’ expert reports, and remands for further proceedings. “The district court excluded the Gruelle Report under Daubert and Rule 702, but it challenged the accuracy of Gruelle’s facts rather than his methodology or qualifications,” an issue that belongs to the jury. And “if the district court concludes on remand that the Gruelle Report is admissible, it will need to consider that admissible evidence—together with the Horne Report and MVP’s evidence—in conducting the Rule 71.1(h) analysis.”