The Trade Group’s (“TTG”) is a full-service event marketing and creative design firm well known for its award-winning designs and client-centered service mentality. BTC Media, LLC (“BTCM”), a Bitcoin and blockchain media company approached TTG about managing, planning, and producing Bitcoin 2021, the world’s largest bitcoin conference held in Miami, Florida.
After a successful Bitcoin 2021, BTCM enlisted TTG’s services again in connection with Bitcoin 2022, but on a much larger scale. This case centers around a dispute between TTG and BTC over the financial ramifications of their business interactions, particularly surrounding the Bitcoin 2022 event. At the heart are disagreements over alleged overcharges and lost profits in planning and hosting Bitcoin 2022 in Miami.
TTG sought to exclude the expert testimonies of BTC CEO David Bailey and CFO Didier Lewis as well as Dr. Kelly Semrad and Gary Durham for various reasons.
Accounting Expert Witness
Gary Durham has been assisting clients with economic damages calculations, valuation, forensic accounting, financial forecasting, and financial issues in bankruptcy since 1993. Durham’s considerable experience preparing expert witness testimony includes damage calculations and other valuation-related financial analysis.
Tourism And Travel Industry Expert Witness
Dr. Kelly Martinez Semrad, currently serves as a faculty member at the University of Central Florida (UCF) in the Rosen College of Hospitality Management. She is the former associate director for the University of Florida’s Eric Friedheim Tourism Institute. She has also helped provide policy for tax reform and economic structural adaptations as well legislation for social and environmental justice in the tourism and hospitality industry.
Cryptocurrency Expert Witness
David Bailey is an early bitcoin adopter, entrepreneur, and a prominent figure in the Bitcoin community. He is also the CEO of BTC Media, which includes Bitcoin Magazine and the Bitcoin conference, as well as UTXO.
Finance Expert Witness
Didier Lewis is the Finance Director of BTC Media, LLC (“BTC”). As Finance Director, he also has oversight of BTC’s finances, including its accounts receivable, accounts payable, and invoices payable to BTC’s vendors.
Discussion by the Court
A. Gary Durham
TTG sought to exclude Durham’s testimony on the grounds that it was unreliable and irrelevant.
According to TTG, Durham’s opinions were based on incomplete information given Durham’s role was to verify the costs TTG claims it incurred and to assess the reasonableness of those costs. Although Durham had multiple opportunities to review TTG’s documents, TTG argued that he failed to accurately compile the costs, thereby rendering his opinions unreliable.
The Court found that while Durham’s methodology, like most, could have possessed flaws, it was sufficiently reliable for the purposes of expert testimony. Durham reviewed numerous documents and provided a detailed analysis of the costs and markups. His methodology involved a thorough examination of TTG’s invoices and other financial records, and he explained the basis for his conclusions. Any perceived deficiencies in his methodology went to the weight of his testimony, not its admissibility.
The Court held that highlighting the potential disconnect between TTG’s Google Sheet entries and the underlying accounting documents was vital because it could suggest TTG’s billing practices may have been designed to obscure true charges. This made Durham’s testimony all the more reliable and relevant.
B. Kelly Semrad
TTG sought to exclude the testimony of Semrad on the grounds that it was unreliable and irrelevant. TTG argued that Semrad’s opinions were based on insufficient facts and data, and that she lacked the necessary expertise to opine on the reasonableness of TTG’s markups. Despite Semrad admitting that she did not have access to certain critical information, the Court held that her testimony was particularly relevant because it set a benchmark for evaluating TTG’s markups for Bitcoin 2022.
By comparing TTG’s charges with industry standards, Semrad provided a clear framework for the jury to assess whether TTG’s pricing was reasonable. Her testimony offered the jury a critical reference point for determining if TTG’s practices deviated from industry norms.
The Court found that her analysis was based on sufficient data and reliable principles, aligning with the requirements of Rule 702.
C. David Bailey and Didier Lewis
TTG sought to exclude the expert testimony of BTC’s CEO, David Bailey, and CFO, Didier Lewis, on the grounds that Bailey and Lewis were untimely disclosed.
Appealing to Federal Rule of Civil Procedure 37(c)(1), TTG argued that BTC’s failure to timely disclose these expert witnesses was neither substantially justified nor harmless, warranting exclusion of their testimony.
Further, TTG opined that BTC made multiple representations to the Court that they did not seek to designate experts for their counterclaims, the absence of a request to extend the Initial Designation deadline was prejudicial to TTG given their late disclosure.
However, BTC has consistently maintained that Bailey and Lewis will offer lay opinions under Federal Rule of Evidence 701, which allows business owners or officers to testify about the value or projected profits of their business based on personal knowledge. Both Bailey and Lewis have extensive firsthand knowledge of BTC’s financial operations and can provide valuable insights into the company’s lost profits.
TTG did not dispute Bailey and Lewis’ knowledge of the company’s finances but contended that their testimony constituted expert opinion requiring timely disclosure under Rule 26(a)(2). However, BTC supplemented their disclosures to include Bailey and Lewis as expert witnesses under Rule 702, likely anticipating potential objections from TTG.
The Court held that any prejudice to TTG was minimal, given their extensive personal knowledge and the supplemental disclosures.
Held
The Court denied that The Trade Group’s three motions to exclude the testimony of BTC CEO David Bailey and CFO Didier Lewis as well as Dr. Kelly Semrad and Gary Durham.
Key Takeaways:
- The Court found Durham’s methodology sufficiently reliable because he reviewed numerous documents and provided a detailed analysis of the costs and markups.
- Semrad’s testimony offered the jury a critical reference point for determining if TTG’s practices deviated from industry norms. The Court held that her testimony met the requirements of Rule 702.
- The Court held that both Bailey and Lewis’ extensive firsthand knowledge of BTC’s financial operations will assist the jury in understanding the financial impact of the alleged damages and are therefore admissible.
Case Details:
| Case Caption: | The Trade Group, Inc. V. Btc Media, Llc |
| Docket Number: | 4:23cv555 |
| Court Name: | United States District Court, Texas Northern |
| Date: | June 5, 2024 |
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