Plaintiff filed this lawsuit to recover the $425,000 investment it made into the corporate Defendant, No-H20 USA, Inc., which was the product of fraudulent misrepresentations made by Defendant O’Brien both verbally and in writing pertaining to the Company’s performance and ownership of critical intellectual property. O’Brien was at all material times the CEO of the Company. More than two years after O’Brien’s initial verbal misrepresentations, Plaintiff’s managing member came to learn that the did not own the intellectual property and in addition, the Company was in a financial shambles due to O’Brien’s misuse of corporate funds.
This is now a securities fraud case against the individual Defendant Emmet O’Brien, for on September 5, 2023, a Clerk’s Default was entered against the Company.
Plaintiff moved pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Plaintiff’s motion sought to exclude Robert Barton‘s testimony because it is not relevant to the issues to be tried.
Automotive Industry Expert Witness
Robert Barton has over 25 years of operational experience in the vehicle rental, automotive, and travel industries. He is a senior vice president and general manager at The Hertz Corporation, the world’s largest car rental company. He oversees the global operations and performance of the Dollar and Thrifty brands, as well as the franchise footprint, with a $2 billion P&L responsibility.
Discussion by the Court
To begin with, Plaintiff’s remaining claims are federal and state law securities fraud claims. In order to be relevant, Barton’s testimony needs to address one of the elements of Plaintiff’s claims. Plaintiff asserted that Barton’s testimony is not relevant to the issues before the Court and, thus, will not assist the jury in understanding the evidence or facts in issue.
In his report, Barton set out his instructions as follows:
“My analysis was to focus on the legitimacy of the investment and business practices, as well as the nature of the communications and actions taken by the parties involved. My task was to evaluate the impact of the Plaintiff’s actions on No-H2O’s franchise network, scrutinize the Franchise Disclosure Document (FDD), investment deck, franchisor evaluations, growth projections, and specific email communications.”
In short, the Report concluded: “The Plaintiff’s action and claims have adversely impacted the No-H2O franchise network, inconsistent with the investment deck, and industry standard.”
O’Brien responded that Barton is qualified, Barton’s opinions are grounded in standardized and recognized practices within franchise operations analysis, and his opinions provide essential context to Plaintiff’s allegations. However, the Court noted that Plaintiff has not questioned Barton’s qualifications or his methodology. Plaintiff only questions the relevance of Barton’s opinions. The Court fails to see, and O’Brien has failed to show, how Barton’s opinions—that Plaintiff’s action and claims have adversely impacted the No-H2O franchise network and are inconsistent with the investment deck and industry standard—are relevant to whether Defendants made false or misleading statements to Plaintiff upon which Plaintiff relied when deciding whether to invest in the Company.
Held
The Court granted Plaintiff’s motion to exclude the expert testimony of Robert Barton.
Key Takeaway:
Based on Barton’s stated instructions and his conclusion, Plaintiff maintained that nothing in Barton’s Report is relevant to what Plaintiff must prove to prevail at trial and would only serve to mislead or confuse the jury. The Court agreed.
Case Details:
| Case Caption: | Ae Capital Group Llc V. No-H20 Usa, Inc. Et Al |
| Docket Number: | 0:23cv60601 |
| Court: | United States District Court, Florida Southern |
| Order Date: | July 31, 2024 |
Leave a Reply