Expert Witness Profiler

Category: Corporate Law Expert Witness

  • Corporate Law Expert Witness’ Testimony About the Role of Some CEOs is Entirely Irrelevant

    Corporate Law Expert Witness’ Testimony About the Role of Some CEOs is Entirely Irrelevant

    Plaintiffs, ECB USA, Inc. and Atlantic Ventures Corp. accused Savencia and Zausner, together with other persons and entities, of commiting a series of tortious acts, including, but not limited to, looting the assets of Schratter Foods Incorporated (“Schratter”), then fraudulently inducing Plaintiffs into executing an agreement to purchase all of Schratter’s shares (the “Stock Purchase Agreement”).

    Knowing that the ECB representatives had no experience with cheese and dairy products and were not eligible to work in the United States, Savencia and Zausner, along with other co-conspirators, induced the ECB Representatives to enter a fiduciary relationship with Alain Voss, and then induced Plaintiffs to partner with Voss in the purchase of Schratter. The ECB Representatives, and ultimately Plaintiffs, put their trust and confidence in Voss, who, in turn, colluded with Zausner, Savencia and other co-conspirators in the commission of frauds and other tortious acts.

    A key issue in the case is whether, prior to Schratter’s sale, Defendants secretly “stripped” Schratter’s Chief Executive Officer Voss of certain of his powers and duties as CEO and then “lied” to Plaintiffs’ by holding “Voss out as Schratter’s trusted, knowledgeable, and effective chief, for the purpose of persuading [Plaintiffs’] representatives to accept Voss as a fiduciary and to partner with him to purchase Schratter.

    Plaintiffs hired Jonathan Macey to provide “opinions on corporate governance and ordinary and customary corporate behavior.” Defendants filed a Daubert motion to exclude Macey’s opinions and testimony because his opinions were unreliable and did not “fit” the facts of the case.

    On March 22, 2024, Magistrate Judge Christopher Burke issued a memorandum order granting Defendants’ Daubert motion (“the Order”).

    Objections to the Order

    The order determined that Macey’s opinions did not fit the facts of the case because they were neither relevant nor would assist the trier of fact. Plaintiffs filed objections to the order on April 5, 2024. On April 19, 2024, Defendants filed a response to Plaintiffs’ objections. Pursuant to Federal Rule of Civil Procedure 72(a), the Court now considers the objections and responses and may “modify or set aside any part of the order that is clearly erroneous or is contrary to law.”

    Corporate Law Expert Witness

    Jonathan R. Macey is Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale University and Professor in the Yale School of Management. Professor Macey earned his B.A. cum laude from Harvard in 1977, and his J.D. from Yale Law School in 1982, where he was Article and Book Review editor of The Yale Law Journal.  In 1996, Professor Macey received a Ph.D. honoris causa from the Stockholm School of Economics. 

    Professor Macey has taught at major universities throughout the world, including Bocconi University (Milan), the University of Tokyo; the University of Toronto; the University of Turin, the University of Amsterdam Department of Finance, and the Stockholm School of Economics, Department of Law. He also has been Professor of Law at the University of Chicago (1990) and Visiting Professor of Law at Harvard Law School (1999). In 1998, he received the D.P. Jacobs prize for the most significant paper in volume 6 of the Journal of Financial Intermediation for his paper (co-authored with Maureen O’Hara), “The Law & Economics of Best Execution.”

    Get insight into every aspect of Jonathan R. Macey’s challenged expert witness experience – from direct testimony exclusions to affidavits supporting key motions – all covered in our Challenge Study. 

    Discussion by the Court

    Macey provided two principal opinions in his report:

    1. Based on commonly understood conceptions on the role of the CEO in business organizations such as [Schratter], Alain Voss was not actually the CEO of Schratter during the period beginning June 30, 2014 and continuing through December 31, 2014, as the term ‘CEO’ is universally understood in business. During the foregoing period Voss was the CEO of Schratter in name only, without the usual responsibilities, authority, and duties associated with that position.”
    2.  Analysis of the quality of management of the company being acquired (the target company) is a critical consideration in making a corporate acquisition where the acquisition is being done with management in place. An inevitable implication of this analysis is that the identity of a company’s CEO should be fully and accurately disclosed, including, but not limited to, in the governing documents of the target company. To the extent that a selling entity makes disclosures about the quality of management, such disclosures should be accurate.”

    Analysis

    Although Plaintiffs argued that Macey’s opinion is “necessary for the jury to fully understand the role of a CEO as that term is used ‘in business,’ Macey’s opinion about the role of some CEOs did not relate to a “pertinent inquiry in the case.” 

    Plaintiffs asserted that the order misinterpreted Plaintiffs’ allegations about Voss, “erroneously found that Macey’s opinions regarding the importance of senior management, including a CEO, in an acquisition with management in place, are irrelevant,” and “made an unfounded assumption that a lay person would know what a CEO’s role and duties truly are in business.”

    The pertinent inquiry in this case is whether Defendants are liable for fraudulent misrepresentations or omissions made about Voss’s pre-closing role. To answer that inquiry, the jury will need to know what Voss’s role at Schratter was throughout 2014, if that role changed, and “the extent to which facts about Voss’s role were disclosed to Plaintiffs.”

    The Court held that information about what CEOs do, generally, is entirely irrelevant as to whether Defendants made material misrepresentation about Voss’s role.

    Additionally, to succeed on their fraud claims, Plaintiffs must prove that Defendants’ misrepresentations about Voss’s role were material to Plaintiffs’ decision to retain Voss.

    The order concluded that Macey’s opinion could not aid jurors in assessing the materiality element because Macey cannot opine on whether the alleged omissions and misstatements about Voss’s role were important to the specific Plaintiffs in this case. The Court held that Macey was not involved in the decision to retain Voss and thus cannot testify as to the state of mind of those who made the decision. Instead, it is only Plaintiffs, and Plaintiffs’ fact witnesses, who can prove that the alleged misrepresentations and omissions were material to their decision to retain Voss.

    Held

    The Court overruled the Plaintiffs’ objections to Magistrate Judge Christopher Burke’s memorandum order with regard to the testimony of Jonathan Macey.

    Key Takeaway:

    The Court agreed with Christopher Burke’s thorough analysis on the issue. To begin with, Macey’s opinion about the role of some CEOs did not relate to a “pertinent inquiry in the case.” Information about what CEOs do, generally, is entirely irrelevant as to whether Defendants made material misrepresentation about Voss’s role.

    Moreover, Macey was not involved in the decision to retain Voss and thus cannot testify as to the state of mind of those who made the decision. 

    Please refer to the blogs previously published about this case:

    Case Details:

    Case Caption: Ecb Usa, Inc. Et Al V. Savencia, S.A. Et Al
    Docket Number: 1:19cv731
    Court: United States District Court, Delaware
    Order Date: February 10, 2025
  • Corporate Law Expert Witness Improperly Opines on Defendant’s Mental State

    Corporate Law Expert Witness Improperly Opines on Defendant’s Mental State

    Douglas Worman owns and operates Worman Forest Management, LLC (“WFM”), a limited liability company providing forestry services to various public and private entities. Worman’s spouse owned CRW Resources, LLC (“CRW”), another forestry services limited liability company. Worman was a signer on several of CRW’s bank accounts.

    In 2015, Worman entered into a factoring agreement with another business as the lender. From 2015 through at least September 2018, Worman’s customers submitted invoices to him, and he submitted invoices to the lender for factoring.

    From July 2018 through September 2018, Worman wrote checks between WFM’s and CRW’s bank accounts at two financial institutions—Mountain West Bank and Numerica Credit Union. Worman and his wife later obtained a loan on behalf of CRW from another financial institution, Carolina Bank.

    In May 2023, Worman was indicted on seventeen counts of wire fraud, four counts of bank fraud, and one count of false statements to a bank or other federally insured institution.

    In the indictment, the Government asserts, generally, that Worman inflated and/or falsified invoices from subcontractors and vendors to artificially inflate his factoring requests, then received funds from the factoring lender for work he and his business did not actually perform. The Government also alleges that Worman engaged in check kiting by writing checks between WFM and CRW bank accounts and taking advantage of the float time wherein the account balances appeared inflated. Finally, the Government alleges Worman concealed a material fact in his loan application to Carolina Bank, a federally insured financial institution. Worman has pleaded not guilty to the charges and denies any wrongdoing.

    The Government sought exclusion of Professor Daniel Morrissey as an expert witness pursuant to Federal Rules of Evidence 702, 704, 401, and 403.

    Corporate Law Expert Witness

    Daniel J. Morrissey holds both a bachelor’s (Phi Beta Kappa) and a law degree from Georgetown University. After law school he served as a law clerk for U.S. District Judge Richard Austin in Chicago. He then worked as an attorney in the enforcement division of the Securities and Exchange Commission in Washington, D.C. and Los Angeles. After a period of private practice in Los Angeles, he became a law professor at the University of Tulsa, where he earned the rank of tenured, full professor. He has also served as a visiting professor of law at Pepperdine University, the University of Denver, and Seton Hall University, and as an adjunct professor at Loyola of Los Angeles.

    In 1994 he was appointed dean at St. Thomas University School of Law in Miami, and served in that capacity until 1999. In 2001 he was appointed Dean of Gonzaga School of Law and served in that capacity until 2004. He has published a number of articles in the areas of corporate securities law and jurisprudence.

    Fortify your strategy by reviewing a Challenge Study detailing grounds for excluding Daniel Morrissey’s expert testimony. 

    Discussion by the Court

    Government asserted that Morrissey’s testimony impermissibly instructs the jury on the law and usurps its role by applying the law to the facts of this case; incorrectly comments on a witness’ credibility and Defendant’s mental state.

    Morrisey opined on the law regarding the elements of the crimes Worman is charged with, including the requisite intent.

    The Court held that he applied that law to the facts of this case to draw legal conclusions regarding the legitimacy of the Factoring Agreement and the legal sufficiency of Worman’s federal charges. Morrissey’s report both comments on the law and intrudes upon the jury’s role in applying the law to the facts of this case. The Court found that Morrissey’s opinions are rife with evidentiary defects that demonstrate their inadmissibility. Furthermore, Morrisey improperly opines on Worman’s mental state and concludes that he lacked the intent necessary to result in a conviction in this case.

    Key Takeaway:

    Morrissey’s testimony intrudes upon both the roles of the Court and the jury by opining on the law applicable to this case and by applying the law to the facts. It is well settled that the judge instructs the jury in the law. Furthermore, the Ninth Circuit “has repeatedly affirmed that an expert witness cannot give an opinion as to her legal conclusion, i.e., an opinion on an ultimate issue of law.”

    Held

    The Court granted the Government’s motion and excluded the testimony and report of Daniel Morrisey.

    Case Details:

    Case Caption: United States V. Worman
    Docket Number: 2:23cr136
    Court: United States District Court, Idaho
    Order Date: August 1, 2024
  • Corporate Law Expert Witness’ Opinions on Ordinary Corporate Behavior Excluded

    Corporate Law Expert Witness’ Opinions on Ordinary Corporate Behavior Excluded

    Plaintiffs, ECB USA, Inc. and Atlantic Ventures Corp. accused Savencia and Zausner, together with other persons and entities, of commiting a series of tortious acts, including, but not limited to, looting the assets of Schratter Foods Incorporated (“Schratter”), then fraudulently inducing Plaintiffs into executing an agreement to purchase all of Schratter’s shares (the “Stock Purchase Agreement”).

    Knowing that the ECB representatives had no experience with cheese and dairy products and were not eligible to work in the United States, Savencia and Zausner, along with other co-conspirators, induced the ECB Representatives to enter a fiduciary relationship with Voss, and then induced Plaintiffs to partner with Voss in the purchase of Schratter. The ECB Representatives, and ultimately Plaintiffs, put their trust and confidence in Voss, who, in turn, colluded with Zausner, Savencia and other co-conspirators in the commission of frauds and other tortious acts.

    A key issue in the case is whether, prior to Schratter’s sale, Defendants secretly “stripped” Schratter’s Chief Executive Officer (“CEO”) Alain Voss (“Voss”) of certain of his powers and duties as CEO and then “lied” to Plaintiffs’ by holding “Voss out as Schratter’s trusted, knowledgeable, and effective chief, for the purpose of persuading [Plaintiffs’] representatives to accept Voss as a fiduciary and to partner with him to purchase Schratter.

    Plaintiffs hired Jonathan Macey to provide “opinions on corporate governance and ordinary and customary corporate behavior.” Defendants filed a Daubert motion to exclude Macey’s opinions and testimony because his opinions were unreliable and did not “fit” the facts of the case.

    Corporate Law Expert Witness

    Jonathan R. Macey is Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale University and Professor in the Yale School of Management. Professor Macey earned his B.A. cum laude from Harvard in 1977, and his J.D. from Yale Law School in 1982, where he was Article and Book Review editor of The Yale Law Journal.  In 1996, Professor Macey received a Ph.D. honoris causa from the Stockholm School of Economics. 

    Professor Macey has taught at major universities throughout the world, including Bocconi University (Milan), the University of Tokyo; the University of Toronto; the University of Turin, the University of Amsterdam Department of Finance, and the Stockholm School of Economics, Department of Law. He also has been Professor of Law at the University of Chicago (1990) and Visiting Professor of Law at Harvard Law School (1999). In 1998, he received the D.P. Jacobs prize for the most significant paper in volume 6 of the Journal of Financial Intermediation for his paper (co-authored with Maureen O’Hara), “The Law & Economics of Best Execution.”

    Get insight into every aspect of Jonathan R. Macey’s challenged expert witness experience – from direct testimony exclusions to affidavits supporting key motions – all covered in our Challenge Study. 

    Discussion by the Court

    Macey provided two principal opinions in his report:

    1. Based on commonly understood conceptions on the role of the CEO in business organizations such as [Schratter], Alain Voss was not actually the CEO of Schratter during the period beginning June 30, 2014 and continuing through December 31, 2014, as the term ‘CEO’ is universally understood in business. During the foregoing period Voss was the CEO of Schratter in name only, without the usual responsibilities, authority, and duties associated with that position.”
    2.  Analysis of the quality of management of the company being acquired (the target company) is a critical consideration in making a corporate acquisition where the acquisition is being done with management in place. An inevitable implication of this analysis is that the identity of a company’s CEO should be fully and accurately disclosed, including, but not limited to, in the governing documents of the target company. To the extent that a selling entity makes disclosures about the quality of management, such disclosures should be accurate.”

    Plaintiffs alleged that: (1) prior to mid-2014, Voss was the CEO of Schratter and held certain duties commensurate with that role; (2) but in June 2014, Defendants secretly “stripp[ed]” Voss of those duties, and gave those duties to another executive at Schratter (J.M. Wild, or “Wild”), who became the “de facto” CEO, such that Voss was thereafter the CEO “in name only”; and (3) yet Defendants did not tell Plaintiffs this before the Schratter deal closed, and instead communicated that Voss was a trusted, effective CEO.

    Macey’s opinions as to Voss’ role at Schratter did not meet the fit requirement

    Corporate Law Expert Witness Macey explained his view as to why “based on commonly understood conceptions of the role of the CEO . . . [Voss] was not actually the CEO” as of Schratter’s sale. Here, although Macey acknowledged that “different CEOs focus on different issues and adjust their duties to address the specific needs of particular firms,” he opined that there were “features of the job of CEO that could be generalized across firms.” He discussed only some of those features and opined that at the time of the sale, Voss’ role did not include these particular features. As a result, Macey opined that Voss then “was the CEO of the company in name only” and “did not have the powers of the president and CEO and did not manage the business of Schratter.”

    However, it is not relevant (and thus, the jury will not benefit from hearing testimony about) what CEOs at other companies “generally” do.

    In order to assess these issues, the jury will need to answer related questions such as: (1) What duties did Voss have prior to early-to-mid 2014 in his role as CEO?; (2) Was he “stripped” of some or all of those duties thereafter, with the duties being given to Wild, such that Voss became the “CEO” in “name only”?; (3) What statements or disclosures did Defendants make to Plaintiffs about Voss’ role in the relevant time period, and did Defendants make any misrepresentations or omit important facts on these subjects? 

    These are factual questions regarding events that either did or did not occur in the past regarding Schratter’s sale, and which are not particularly technical or complex. The Court held that assessing whether these events occurred and how that relates to the instant claims did not necessitate reliance on expertise beyond the ken of a typical lay juror.

    Macey will have nothing relevant or admissible to say about how “Voss was portrayed”

    Macey opined that analysis of the quality of management of the company being acquired is a critical consideration in making a corporate acquisition” such that “the identity of a company’s CEO should be accurately reflected in the governing documents of the firm.” He cited published articles for the proposition that “CEO quality” is “often critical to the success of an acquisition.”

    The relevant allegations are not about what “often” happens with regard to acquisitions involving other entities, such as those in the private equity realm. The allegations are that these particular Plaintiffs highly valued the fact that a successful, competent CEO was in place at Schratter (due to their lack of experience in the relevant field) and that this allegedly “created an opportunity for Defendants to fraudulently induce Plaintiffs” to follow through with the acquisition to their detriment.

    The Court held that it was relevant to determine what impact the assertions allegedly made by Defendants had on Plaintiff, all of which relate to the actual transaction at issue in this case. Henceforth, Macey will have nothing relevant or admissible to say about how “Voss was portrayed” or whether it was “highly unlikely” that Plaintiffs would have bought Schratter had they known the “true facts” about Voss’ role.

    Held

    The Court granted Defendant’s motion to exclude the opinions and testimony of Plaintiff’s Corporate Law Expert Witness Jonathan Macey.

    Key Takeaways:

    1. No Specialized Knowledge Needed For The Jury: The jury needed to answer factual questions regarding events that either did or did not occur in the past regarding Schratter’s sale, and which are not particularly technical or complex. Thus, assessing whether these events occurred and how that relates to the instant claims did not necessitate reliance on expertise beyond the ken of a typical lay juror which is why Jonathan Macey’s opinions as to Voss’ role at Schratter did not meet the fit requirement.
    2. Lack of Relevance: Macey could not shed light on the impact the assertions allegedly made by Defendants had on Plaintiff, all of which relate to the actual transaction at issue in this case.

    Case Details:

    Case Caption: Ecb Usa, Inc. Et Al V. Savencia, S.A. Et Al
    Docket Number: 1:19cv731
    Court: United States District Court, Delaware
    Order Date: March 22, 2024