Plaintiff, Southwestern Manufacturing, LLC alleged that it owned the “MULTI WEDGE” trademark in connection with a stylized wedge tool primarily used in the industrial and automotive industries (the “MULTI WEDGE Product”). Plaintiff alleged that it used the mark in commerce since May 2003 and received federal registration of the mark (the “MULTI WEDGE Mark”) on January 17, 2017.
Defendant Wilmar LLC (“Wilmar”) requested the right to sell a “private label” version of the MULTI WEDGE Product. In response, Plaintiff supplied Wilmar with information about and samples of the MULTI WEDGE Product. Plaintiff filed a trademark infringement suit after it learned that Defendants Wilmar and Advance Auto Parts (“Advance”) used the MULTI WEDGE Mark and MULTI WEDGE Dress by selling their own versions of the MULTI WEDGE Product.
Defendants sought to preclude Plaintiff’s expert witness, Edwin A. Sisson, from testifying or presenting evidence at trial.
Intellectual Property Expert Witness
Edwin A. Sisson is an intellectual property attorney and focuses his practice on trademarks, trade dress, patents, copyrights, and trade secrets. Prior to becoming an attorney, Sisson received an undergraduate degree in Chemical Engineering from the University of Nebraska in Chemical Engineering and worked in various roles for The Goodyear Tire and Rubber Company, Shell Chemical Company, and M&G Chemicals.
Plaintiff offered Sisson as a rebuttal expert on the issue of whether the MULTI WEDGE Dress “is a legally non-functional tool design.”
Defendants argued that Sisson’s opinion and testimony should be excluded because he (1) lacked the requisite qualifications; (2) offered impermissible legal conclusions; and (3) provided testimony that is highly prejudicial.
Here, the Sisson Report impermissibly offered legal conclusions regarding the functionality of the MULTI WEDGE Dress. In concluding that “[t]he Duckbill Design is not legally functional,” Sisson improperly opined on the law. For example, the Sisson Report provided that “a design cannot be registered if it is functional.” Sisson also critiqued Defendants’ expert opinion as being “not consistent with the law.”
The Court held that the materials relied upon by Sisson were also telling. The Sisson Report primarily relied on legal decisions, the Ninth Circuit’s model jury instructions, various textbooks and materials published by the U.S. Patent and Trademark Office, and third-party websites.
In the Court’s view, the bulk of the Sisson Report “instructed the jury on the law, or how to apply the law to the facts of the case.” The Court held that the Sisson Report read like a legal brief. Section E illustrated this point by setting forth the four Disc Golf factors courts used to determine functionality and using each factor as a sub-header.
Held
The Court denied Defendants’ Daubert motion to preclude Plaintiff’s expert witness, Edwin A. Sisson.
Key Takeaways:
Rule 702 requires that expert testimony “help the trier of fact to understand the evidence or to determine a fact in issue.” Consistent with Rule 704(a), 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.
Plaintiff, Wheel Pros, LLC and Defendants, Rhino Tire USA, LLC are engaged in the business of selling wheels and tires for vehicles and each owns trademarks in its respective brand. Wheel Pros owns various trademarks related to its “Black Rhino” brand and Rhino Tire own trademarks for their “Rhino” brand.
Plaintiff brought this action against Defendants for trademark infringement alleging the the public is likely to be confused by the similarities between the marks. In support of its case, Plaintiff proffered the expert report of Dr. Robert A. Peterson. Peterson conducted a forward likelihood of confusion survey designed to determine the likelihood of confusion between Plaintiff’s “Black Rhino” trademarks and Defendant’s “Rhino” trademarks within a target universe of survey respondents.
In rebuttal to Peterson’s report, Defendants proffered the expert report of Dr. Henry D. Ostberg. Ostberg offered opinions as to what he termed “significant problems and fatal defects” with Peterson’s survey.
Henry D. Ostberg has over 40 years of experience in conducting marketing research and has conducted or overseen over 2,000 consumer surveys for various clients over that time. He earned an M.B.A. degree and a Ph.D. degree in marketing from Ohio State University and earned an L.L.B. law degree from New York Law School. Moreover, Ostberg has served as a marketing research expert in connection with trademark and intellectual property litigation in over 200 cases, has been a frequent speaker “on the subject of marketing, the use of surveys and related topics before a variety of professional organizations,” and was on the faculty of both New York University and Ohio State University.
First, Plaintiff argued that Ostberg was not qualified because he testified and stated in his report that he was not familiar with Peterson’s methodology.
At his deposition, Ostberg admitted his lack of familiarity with Peterson’s “modified sequential evaluation” approach. However, Ostberg made these statements based on his experience in the field of conducting surveys in similar circumstances rather than due to any purported lack of experience or qualification.
Upon consideration of Ostberg’s qualifications, the Court held that he is sufficiently qualified to criticize Peterson’s methodology in his rebuttal report and at trial.
Reliability of Opinions
1. Improper Research Design
To begin with, Plaintiff argued that Ostberg’s opinions were unreliable because his conclusions were not based on his status as an expert or any research into that area, he was not familiar with the method employed by Peterson, and he mischaracterized the way in which Peterson’s survey was conducted.
The Court found that Ostberg relied on his experience in conducting surveys under similar circumstances, his review of Defendants’ website in marketing its products, conversations with Defendants’ attorney, and his experience as a consumer to conclude that the methodology employed by Peterson was inappropriate.
In other words, Ostberg’s methodology in criticizing Peterson’s research design was sufficiently reliable to permit his testimony at trial.
2. Wrong Respondents Interviewed
Ostberg next opined that Peterson’s survey was flawed because it failed to base its data on respondents who were likely to be future purchasers of Defendants’ products.
The Court found Ostberg’s methodology in raising such “technical deficiencies” with Peterson’s survey pursuant to the prevailing literature and practice to be sufficiently reliable to survive Plaintiff’s Daubert motion.
3. Research Design Changed Midway
Ostberg criticized Peterson’s use of a pilot study that resulted in a change to the survey. In particular, Ostberg stated that Peterson’s report failed to include a “credible explanation” for modifying his survey after the pilot study. The Court found Ostberg’s methodology in reaching this opinion sufficiently reliable. In other words, Plaintiff’s arguments challenging this opinion largely go towards whether Ostberg reached the right conclusion in applying his method and are therefore inappropriate to justify excluding Ostberg at this stage.
4. Inappropriate Statistical Calculations
Ostberg also opined regarding the statistical calculations in Peterson’s survey. Specifically, Ostberg noted that Peterson’s survey “did not have a probability sample,” yet the statistical calculations used are “applicable only to surveys based on true probability samples of respondents, according to many statistical texts.”
The Court noted Ostberg’s experience conducting consumer surveys in trademark litigation and, once again, found Ostberg’s method sufficiently reliable to permit his testimony.
5. Internal Data Casts Doubt on the Validity of the Findings
Now, Ostberg opined that the data collected in Peterson’s control group survey casts doubt on the validity of the survey itself because a 51.7% likelihood of confusion between Plaintiff’s trademark and the non-infringing control mark was abnormally high. Ostberg’s conclusion in this opinion did not cite to specific authority, but rather impliedly relied on his own education and experience with conducting similar surveys for over four decades. As with Ostberg’s other opinions, the Court found this opinion sufficiently reliable to preclude exclusion of the opinion at this stage.
Helpfulness to Trier of Fact
Finally, Plaintiff argued that Ostberg’s opinions will not be helpful to the jury.
The Court held that since Ostberg is being proffered to criticize Peterson’s forward likelihood of confusion survey, a technical matter in which Ostberg has sufficient experience and that is beyond the understanding of the average lay person, Ostberg’s opinions will be of assistance to the jury at trial.
Held
To conclude, the Court denied Plaintiff’s Daubert motion to strike testimony and opinions of Henry D. Ostberg, Ph.D.
Key Takeaways:
Ostberg relied on his experience in conducting surveys under similar circumstances, his review of Defendants’ website for marketing their products, conversations with Defendants’ attorney, and his experience as a consumer to reach his conclusions.
Moreover, Ostberg’s analysis is grounded in his experience conducting consumer surveys in trademark litigation, as well as scholarly literature regarding the type of statistical analysis necessary in the survey conducted by Peterson.
Because Peterson’s forward likelihood of confusion survey is a technical matter that is beyond the understanding of the average lay person, Ostberg’s opinions were considered helpful to the trier of fact.
Plaintiff, James Rowedder alleged a Field & Stream Stealth Climber Tree stand HEH01293 (“tree stand”) manufactured by Defendant Primal Vantage Company, Inc. (“Primal”) and sold by Defendant Dick’s Sporting Goods, Inc. d/b/a Field & Stream failed while Rowedder was using it and that he sustained injuries as a result. Plaintiff brought claims for (1) Negligence—Product Defect; (2) Breach of Warranty; and (3) Strict Liability.
Plaintiff’s proffered expert Rick Brenner was retained to testify about the standard of care and best practices for consumer products manufacturers, and, specifically, how Primal failed to meet these standards.
Defendants filed a motion to exclude opinions offered by Plaintiff’s proffered expert Rick Brenner.
Product Safety Expert Witness
Robert (Rick) Brenner is a recognized expert in consumer product safety, regulatory compliance, and quality management programs. He is president of Product Safety Advisors, a consulting firm that advises clients in the development and implementation of product safety and regulatory compliance programs including best practices in product design, risk assessment and failure mode analysis, performance and compliance testing protocols, supply chain risk, production oversight, quality management strategies, and related employee training programs.
His experience includes being president and CEO of Prime Resources Corporation for 12 years, an “importer, manufacturer, and distributor of consumer products sourced from multiple overseas factories” where Brenner had “direct oversight responsibility for Prime’s overseas sourcing business including the development of our standard operating procedures for product safety, risk assessment, compliance management, selection and vetting of vendors, factory oversight, correction actions, factory auditing . . . and product safety testing.”
Defendants argued Brenner was not qualified to offer such opinions because, despite his extensive experience with product safety and quality management practices, Brenner was not an engineer, not familiar with tree stands, and, inter alia, had not physically examined the evidence in this case.
The Court denied Defendants’ motion on this point and found Brenner qualified to offer opinions on the standard of care and best practices for consumer products manufacturers or importers considering his extensive experience as a “manufacturer, importer, and product safety professional” in his report.
Brenner’s Opinions are Based on his Relevant Knowledge and Experience
Last, Defendants argued Brenner’s opinions must be excluded because they are speculative, unreliable, and legal in nature. Namely, Defendants argued that Brenner’s testimony that Primal “did not conduct specific risk assessments under CPSC [Consumer Product Safety Commission] and ISO [International Organization for Standardization 10377:2013 Consumer Product Safety Guidelines for Suppliers] standards” should be excluded because he admitted “that those are not mandatory standards for manufacturers of consumer products.”
The Court found that Brenner based his opinions regarding Primal’s alleged disregard for the safety of consumers on evidence—namely deposition testimony—adduced in this case.
Brenner did not purport to be a design or engineering expert and could not opine on whether the products or component parts of those products at issue here were defective. Nor could Brenner opine that any alleged failure on Primal’s part to meet the standards of care Brenner articulates rendered the products at issue defective. However, the Court held that Brenner will be able to testify, generally, as to what he believes constitute best practices for a manufacturer or importer of products such as Primal and how Primal did not live up to those standards considering the evidence adduced in this case and cited in his report.
Held
The Court denied Defendants’ motion to exclude the testimony of Rick Brenner.
Key Takeaway:
The Court, citing Brenner’s extensive experience with product safety and quality management practices, decided he is more than qualified to testify about the standard of care and best practices for consumer products manufacturers, and, specifically, how Primal failed to meet these standards.
Brenner based his opinions regarding Primal’s alleged disregard for the safety of consumers on evidence—namely deposition testimony—adduced in this case. The Court concluded that Brenner’s opinions are based on his relevant knowledge and experience.
Plaintiff, Paul Sullivan was employed as a GSI Analyst II in the City’s Public Works Department. His employment was terminated as part of a reduction in force (“RIF”).
During a restructuring of the Public Works Department, which led to the RIF, the City eliminated both of its GIS Analyst II positions, one of which was Sullivan’s. It also created a GIS Analyst III position, which was filled by another employee on August 12, 2019, several months before the RIF. On October 2, 2019, Sullivan asked his direct supervisor to consider him for the GIS Analyst III position. He was informed that there was no open GIS Analyst III position at that time. Sullivan sued the City, alleging that he was terminated in retaliation for engaging in alleged protected activity in violation of the Family Medical Leave Act and the Fair Claims Act.
Sullivan designated Andrew Dakers as an expert witness to testify regarding his economic damages and lost earnings.
The City filed a motion to exclude portions of Dakers’ opinions because they were based on the incorrect assumptions that Sullivan asserted a failure-to-promote claim, that Sullivan would have been promoted to the GIS Analyst III position, and that Sullivan would have received the highest listed salary for the GIS Analyst III position.
Finance Expert Witness
Andrew Dakers is a financial professional with more than twenty years of experience in financial analysis, budgeting, forecasting, project and company assessment, and leading cross-functional teams.
Dakers has a Bachelor of Science in Economics from Carnegie Mellon University and a Master of Business Administration from Yale. Although not currently a practicing or licensed accountant, Dakers successfully passed the Certified Public Accountant examination. Having spent his career in the world of finance, Dakers’ has now begun a new practice providing expert testimony related to employment damages.
Dakers was asked to calculate the financial impact of Sullivan’s alleged wrongful termination under three scenarios. First, Dakers was to assume that Sullivan was promoted to the GIS Analyst III position and was paid at the maximum salary of the published salary range for the position, with annual raises based on the anticipated inflation rate. Second, he was to make the same assumption, but without annual raises. And, third, he was to assume that Sullivan would receive the same salary and fringe benefits that he would have received without termination.
Dakers’ calculations based on the wages for a GIS Analyst III are not based on sufficient facts or data
First, the City argued that Dakers’ calculations were not based on sufficient facts or data because Sullivan did not plead a claim for failure to promote. In his deposition, Dakers testified that he assumed that Sullivan asserted a failure-to-promote claim. He further testified that that would make a difference in his calculations because he could not base his calculations on a similarly-situated position if Sullivan did not assert failure to promote.
The Court rejected Dakers’ calculations based on the wages for a GIS Analyst III because Dakers testified that he would not have used the wages for a GIS Analyst III as part of his damages calculations if he had known Sullivan did not allege a failure-to-promote claim.
Dakers’ report provided no basis for asserting that Sullivan was likely to receive a promotion for a position that was not open at the time of his termination
Second, the City argued that Dakers’ calculations were not based on sufficient facts or data because, at the time that Sullivan sought the GIS Analyst III position, there were no openings. Dakers testified that the damages calculation based on the GIS Analyst III position would only be applicable if this was a position that Plaintiff “was most likely to move into.” But the evidentiary record established that, at the time of Sullivan’s termination, there was no open GIS Analyst III position. And Dakers admitted that, without the likelihood of this promotion at the time, there was no basis for the assumption that Plaintiff’s damages would include lost wages for the position.
Dakers’ use of the maximum salary for the GSI Analyst III position is based on evidence in the record
Third, the City argued that Dakers’ calculations were not based on sufficient facts or data because Dakers had no basis to choose the highest salary in the range for the GIS Analyst III position. When he was terminated, Sullivan’s salary was $57,700. The listed salary range for the GIS Analyst III position was between $50,201 and $72,720. Dakers testified that he chose the highest amount in that range for his calculations because Sullivan was later rehired in a different department at a salary exceeding the maximum for the GSI Analyst III position.
The Court held that Dakers’ use of the maximum salary for the GSI Analyst III position was based on evidence in the record and objections to those calculations go to the weight, not the admissibility, of his damages calculations.
Held
The Court granted in part and denied in part Defendant City of Dallas’ motion to exclude portions of Andrew Dakers’ expert report.
Key Takeaway:
Since Sullivan did not plead a claim for failure to promote, the Court rejected Dakers’ calculations based on the wages for a GIS Analyst III because Dakers testified that he would not have used the wages for a GIS Analyst III as part of his damages calculations had he known that Sullivan did not allege a failure-to-promote claim.
Dakers testified that the damages calculation based on the GIS Analyst III position would only be applicable if this was a position that Plaintiff “was most likely to move into” but at the time of Sullivan’s termination, there was no open GIS Analyst III position.
A district judge in Nebraska admitted the testimony of an orthopedic spine surgeon despite lacking the required education, training and experience in physics, engineering, accident reconstruction or biomechanics.
Plaintiffs, Lisa Rentz Johnson and George Johnson, have brought a personal injury lawsuit involving an accident between two tractor-trailers in a parking lot. Lisa alleged she sustained physical injuries and disability because of the collision, including injuries to her head, neck, back, left arm, and left knee. George sought damages for alleged loss of consortium.
The Defendants retained Dr. Chris Cornett, an orthopedic spine surgeon with Nebraska Medicine, as an expert witness to perform an independent medical evaluation (“IME”) of Lisa.
The Plaintiffs filed a motion to exclude certain testimony and opinions found in Cornett’s report.
The Plaintiffs argued Cornett’s opinions related to the severity of the collision must be stricken and excluded from trial because he failed to provide the methodology by which he formed his non-medical opinions.
Orthopaedic Surgery Expert Witness
Dr. Chris A. Cornett, an orthopedic spine surgeon with Nebraska Medicine, has more than a decade of experience as a trauma doctor. He attended medical school at University of Nebraska Medical Center and also has a master’s degree in physical therapy from the UNMC Medicine School of Allied Health Professions. He is a member of the American Academy of Orthopaedic Surgeons (AAOS).
The Plaintiffs objected to Cornett’s description of the damage to the two vehicles based on the photographs he reviewed; Cornett’s noting, “The mechanism in this case and the photographs of the vehicles seem mild, and certainly not high energy in my opinion”; and his conclusion that he did “not see any reason, given this mechanism and the prior history, that one could medically state that this injury permanently aggravated or worsened those preexisting conditions.”
The Plaintiffs argued that since Cornett has no education, training and experience in anything other than orthopedics, all of his opinions on speed, impact and energy should be excluded.”
Cornett testified during his deposition that he did not see it was “reasonable medically that [Lisa] suffered a significant spine injury or a permanent worsening of a prior condition that ultimately required surgery.”
When Cornett was asked what qualifications he has “to assess the energy forces related to the impact of the case”, he responded, “I would say no qualifications, again, as a physicist or a biomechanical expert but just qualifications as taking Level 1 trauma call for over a decade.”
Cornett testified that through his experience as a trauma doctor, it is common to have some description of an accident, either through first responders directly or in subsequent reports.
The Court was satisfied that Cornett is sufficiently qualified and reliable to opine on the specific issues relevant to this case.
Held
The Court denied Plaintiffs’ motion to exclude certain testimony and opinions found in Chris Cornett’s report.
Key Takeaway:
Cornett lacked education in physics, engineering, accident reconstruction or biomechanics but testified that through his experience as a trauma doctor, it is common to have some description of an accident, either through first responders directly or in subsequent reports.
A district judge in Texas admitted the insurance expert’s testimony about the cost to repair or replace the damaged areas.
This is a commercial property insurance coverage dispute arising from hail and wind damage to Plaintiff’s property located at Midland, Texas. Landmark insured the Property under a commercial policy. Landmark received notice that the Property had sustained storm damage with the date of loss claimed as June 19, 2020.
On March 28, 2022, Landmark sent Plaintiff a letter explaining that investigation revealed that the roof was exposed to multiple hail events on April 16, 2017; on May 16, 2017; and/or on April 23, 2019, but did not support that a hail event occurred at the Property on or about June 19, 2020. Plaintiff subsequently filed suit against Landmark for alleged property damages with a date of loss of June 19, 2020.
Plaintiff designated Kevin Funsch, “a licensed public adjuster and owner of US Insurance Adjusters, LLC.” On March 22, 2024, Landmark filed a motion requesting that the Court exclude Plaintiff’s expert witness, Funsch’s testimony and strike his expert report.
Insurance Expert Witness
Kevin Funsch is a public adjuster and the owner of an insurance adjusting firm with a solid background in claims handling and estimating. He is experienced in adjusting property losses and performing appraisals.
Landmark sought for Funsch’s report to be struck and his testimony excluded because: (1) Plaintiff’s expert designation and Funsch’s report did not comport with Federal Rule of Civil Procedure 26(a)(2); (2) Funsch’s report and opinions were unreliable; and (3) Funsch’s report and opinions were irrelevant.
Funch’s Compliance with Rule 26 and Rule 702
Defendant asserted that Funsch’s expert report is deficient for multiple reasons: (1) it “did not contain a complete statement of the basis and reasons for Funsch’s opinions as to the damages sustained to the property and the cost of repairs”; (2) Funsch did not “explain in his report how his experience as an insurance adjuster led him to reach his conclusions”; (3) the report “did not include any explanation as to the basis or reliability of the estimate”; (4) it “failed to demonstrate that Funsch’s opinions on the damages and necessary repairs are based on sufficient facts or data”; and (5) “that Funsch reliably applied those principles and methods in forming his estimate as required by Rule 702”.
After thoroughly scrutinizing Funsch’s report, the Court found it satisfied both Rule 26 and Rule 702. It added that Landmark’s reliance on its cited Rule 702’s advisory committee note was inapplicable to Funsch’s expert report in this case, as he stated that he relied on multiple other documents and conversations with Neil Hall in forming his opinions, rather than relying solely on experience as the advisory committee note contemplated.
The Court addressed Landmark’s arguments that Funsch failed to demonstrate his opinions on the damages and necessary repairs are based on sufficient facts or data, the product of reliable principles and methods; and that he reliably applied those principles and methods in forming his estimate as required. The Court noted that Plaintiff designated Funsch as his damages expert. Funsch is offered as an expert to provide opinion testimony only on the cost to repair or replace the damaged areas identified in the Hall Report.
Reliability of Kevin Funsch’s Opinions
Next, Landmark asserted Funsch’s “opinions regarding the costs of repairs are unreliable because he relied on unexplained assumptions about the Property that have no factual basis.” Landmark’s argument is premised on Funsch’s deposition testimony. In his deposition, Funsch stated most of the quantities and measurements in his estimate were copied over from the Berkley estimate. Then, because Hall’s report “only called for replacing some sections of the roof and the Berkeley estimate called for replacing all of them, Hall told Funsch to just use ‘about half’ of some of the Berkeley quantities.” Funsch admitted he “wasn’t able to verify every single one of the quantities.” Funsch concluded ‘these quantities, the number of items seems reasonable’ which Landmark asserted were “assumptions” by Funsch instead of “actual quantities” actually rendered the entirety of Funsch’s opinions unreliable.
The Court, citing Rule 703, found Funsch’s testimony and report reliable.
Relevancy of Kevin Funsch’s Opinions
Landmark argued Funsch’s opinions were irrelevant because: (1) his repair estimate was based on prices as of April 2023, when the Policy required valuation based on the date of loss; (2) his repair estimate was a replacement cost estimate, not an actual cash value estimate; and (3) his opinions were not tied to “covered causes of loss.”
His repair estimate was based on prices as of April 2023, when the Policy required valuation based on the date of loss
Defendant first asserted Funsch’s opinions were irrelevant and/or not helpful to the jury because his report contained prices from April 2023 instead of 2019, and the Policy’s valuation provision mandated the cost of repairs be in 2019 (the alleged date of loss).
The Court found that the date of Funsch’s damage estimate did not render it completely irrelevant and unhelpful; rather the exact weight to be given to Funsch’s testimony and expert report was for the fact finder to determine.
His repair estimate was a replacement cost estimate, not an actual cash value estimate
Landmark argued Funsch’s opinions were irrelevant and/or not helpful to the jury because his report contained only a replacement cost estimate, and “[i]n order to receive Replacement Cost coverage, the Policy stated that Plaintiff must first ‘actually’ repair or replace the property.” However, “it was undisputed that Plaintiff did not make the necessary repairs and the very minor repairs Plaintiff did make were not made until over two and a half years later.”
The Court noted that whether Plaintiff could recover replacement cost value or actual cash value damages was a point of contention currently being litigated. Thus, without an order barring Plaintiff from recovering replacement cost damages, the Court found Funsch’s opinion as to replacement cost damages was relevant.
Funsch’s opinions are irrelevant and/or not helpful because his opinions are not tied to a covered loss
Landmark argued Funsch’s opinions are irrelevant and/or not helpful because his opinions are not tied to a covered loss. The Court emphasized that Plaintiff designated Funsch as his damages expert. Funsch is offered as an expert to provide opinion testimony only on the cost to repair or replace the damaged areas identified in the Hall Report.
Held
The Court denied Landmark’s motion to strike and exclude the testimony of Kevin Funsch.
Key Takeaways:
It is not unusual in insurance coverage cases to have separate causation and damages experts, and to have the damages expert rely on causation opinions from the separate expert.
Simply because Funsch relied on Hall’s opinion and his own analysis of photographs, does not render Funsch’s reliability below Rule 702’s threshold, as this is exactly the kind of facts and data experts in Funsch’s field reasonably rely on in forming their opinions.
Case Details:
Case Caption:
William Douglas C/O The Havens Group, Inc. V. Landmark American Insurance Company
Alan Solomon with the University of Tennessee (“UT”) developed the 11-1F4 antibody, and the “ownership of the Antibody materials and associated materials are held by Plaintiff.” The Antibody is effective in treating amyloidosis.
In 2009, Solomon applied for and received two different orphan drug designations for two indications of the 11-1F4 Antibody. Defendant Caelum Biosciences, Inc. was founded to advance the clinical development research from Solomon. Plaintiff University of Tennessee Research Foundation alleged that Defendant’s “sole focus and mission was to commercialize the Antibody technology, which it has renamed to CAEL-101.”
Plaintiff entered into several different agreements relating to the Antibody. In 2013, Plaintiff entered an Inter-Institutional Agreement (“IIA”) with former party, The Trustees of Columbia University in the City of New York (“Columbia” or “Columbia University”), allowing it to work on clinical trials with respect to the Antibody.
According to Plaintiff, in 2017, Defendant “began publishing press releases containing false statements regarding the ownership of the 11-1F4 technology, [made] false disclosures on its website, and . . . [made] false disclosures with the U.S. Food and Drug Administration claiming that it had licensed the 11-14F4 technology from Columbia University and that [Defendant] was now the owner of the 11-14F4 Orphan Drug Designations.”
Defendant retained Neil J. Beaton, a certified public accountant, as its damages expert. University of Tennessee Research Foundation (“UTRF”) requested that the Court exclude several opinions of Neal J. Beaton pursuant to Federal Rule of Evidence 702.
Business Valuation Expert Witness
Neil Beaton is a Managing Director with Alvarez & Marsal Valuation Services in Seattle. He specializes in the valuation of public and privately held businesses and intangible assets for purposes of litigation support (lost profits claims, marriage dissolutions and others), acquisitions, sales, buy-sell agreements, ESOPs, incentive stock options and estate planning and taxation. He also performs economic analysis for personal injury claims, wrongful termination and wrongful death actions.
Specifically, UTRF requests that the Court preclude Beaton from testifying that: (1) the release between UTRF and Columbia University “shows that UTRF itself did not regard the UTRF Assets … as having any value”; (2) “the evidence shows that UTRF itself placed little or no value on the UTRF Assets”; (3) “the alleged trade secrets UTRF has identified in this case are generally known in the industry and/or are readily ascertainable,” making damages unavailable; and/or (4) opining that UTRF only is entitled to damages of $371,600 if it prevails against Caelum in this lawsuit.
Specifically, Plaintiff pointed to paragraphs 36, 44, and 45 of Beaton’s expert report. These paragraphs provided as follows:
36. This broad release of “all claims and liability” shows that UTRF itself did not regard the UTRF Assets as of June 12, 2017 as having any value.
44. Since UTRF essentially abandoned the UTRF Assets and Solomon transferred the Investigational New Drug (“IND”) for nothing in return, the evidence shows that UTRF itself placed little or no value on the UTRF Assets.
45. As I understand is detailed in other reports being served by Caelum, the alleged trade secrets UTRF has identified in this case are generally known in the industry and/or are readily ascertainable from publications, presentations, ATCC deposits, patents, and/or other proper means such that no real economic value would be obtained from their disclosure. Thus, it is my understanding that UTRF cannot recover damages for its trade secret misappropriation claim.
Beaton’s first two opinions would not assist the trier of fact
The Court found that the first and second opinions were not within Beaton’s specialized knowledge such that they would assist the trier of fact. Beaton acknowledged that his first opinion is based on the Court’s order dismissing Columbia from this case. And his second opinion is based on his interpretation of the facts of the case, including Solomon transferring the IND without compensation.
Beaton’s third opinion is not helpful to the jury
For his third opinion, Beaton stated that his understanding is that Plaintiff cannot recover damages because other experts have opined that Plaintiff’s purported trade secrets are generally known in the industry and/or are readily ascertainable. Plaintiff argued that this testimony is not helpful but additionally, it asserted that the “rules do not permit an expert to rely on opinions developed by another expert for purpose of litigation without independent verification of the underlying expert’s work.” Experts are permitted to rely on another expert’s opinion “[i]f experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject.”
Even so, the Court found Beaton’s testimony on this issue was not helpful to the jury. Beaton is essentially stating that if there are no trade secrets, Plaintiff’s damages are zero. But the jury need not hear from an economist to reach that conclusion. The Court therefore found Plaintiff’s arguments well taken on this ground.
The Reliability of Beaton’s Opinions
Plaintiff challenged Beaton’s alternative opinion that should Plaintiff prevail on its claims, it is entitled to only $371,600. It argued that “Beaton’s conclusion is based on incorrect facts and lumps together [Plaintiff’s] breach of contract and trade secret misappropriation claims,” rendering his opinion unreliable.
Plaintiff stated that in its Amended Complaint, it alleged that Defendant breached the Confidentiality Agreement executed on March 14, 2017, but in assessing damages on the breach of contract claim, Beaton used a date of January 1, 2017—more than two months before the contract existed. Plaintiff stated that his reliance on January 1, 2017, to calculate damages is unreliable.
Defendant responded that Beaton evaluated the UTRF Assets using the date of January 1, 2017, because this is when the 2017 Caelum/Columbia Agreement was executed. Beaton explained that choosing a different date would not affect his damages calculation. Plaintiff argued that although it has separate claims for breach of contract and trade secret misappropriation, “Beaton did not provide separate damages opinions for these claims.”
The Court could not conclude that Beaton’s opinions were unreliable or unhelpful simply because he performed an aggregate damages calculation. Plaintiff cited no authority for the proposition that an aggregated damages calculation is inherently unreliable, and to the extent the jury finds Defendant liable on the trade secret misappropriation claim and the breach of contract claim, Beaton’s opinions are helpful. The Court found cross examination and jury instructions are more appropriate than exclusion on these grounds.
Held
To conclude, the Court granted in part and denied in part the Plaintiff’s Daubert motion to exclude the testimony of Neil J. Beaton.
Key Takeaways:
Experts are permitted to rely on another expert’s opinion “if experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject.”
The Court found that Beaton’s opinions regarding the value or lack thereof of Plaintiff’s trade secrets are not helpful to the jury.
At the same time, the Court found Beaton’s damages calculation reliable and helpful.
Moreover, Beaton essentially stated that if there are no trade secrets, Plaintiff’s damages are zero. The Court held that this type of conjecture claiming ‘if there was no violation, there are no damages’ does not require expert testimony; it is a rhetorical argument to make to the jury.”
Case Details:
Case Caption:
University Of Tennessee Research Foundation V. Caelum Biosciences, Inc.
Docket Number:
3:19cv508
Court:
United States District Court for the Eastern District of Tennessee
This matter arises out of a motor vehicle accident (“MVA”) on May 15, 2017, in Denver, Colorado. Plaintiff, Richard Marion Jr was driving a vehicle registered in the State of Nebraska and insured by American Family under a Nebraska family car policy and Umbrella policy (“Policy”) issued to Plaintiff’s parents, Richard and Angela Marion. Marion filed a claim against the tortfeasor and received American Family’s consent to settle with the tortfeasor’s insurance carrier for policy limits of $100,000.00. Plaintiff also sought underinsured motorist benefits (“UIM”) under his Policy.
American Family evaluated the information received from Plaintiff and initially offered Plaintiff $60,000.00, followed by two additional offers of $70,000.00 and $80,000.00. Plaintiff did not respond to American Family’s offer of $80,000.00 and instead filed this action. He sought UIM benefits under two policies, a Nebraska family car policy with UIM coverage limits of $250,000.00, and an umbrella policy with UIM coverage limits of $1,000,000.00. Plaintiff asserted claims for: (1) breach of contract and/or determination of benefits owed; (2) common law bad faith under Colorado law; and (3) statutory bad faith.
In support of his claims against American Family, Plaintiff disclosed Lorraine Berns as his retained liability expert, along with her affirmative expert report. Defendant American Family Mutual Insurance Company filed a motion to limit the testimony Plaintiff’s expert, Lorraine Berns, pursuant to Rule 702 and Rule 403.
Insurance Expert Witness
Lorraine Berns provides insurance consulting and expert witness testimony in the area of insurance bad faith/good faith claims-handling practices based upon insurance claims industry standards. She has worked in the insurance industry since 1991 and has been a consultant and expert witness in this field since 2006. She also provides consulting services to attorneys in the areas of settlement strategies, pre-litigation strategies, investigations, negotiations, and claims handling industry standards.
Opinions that Defendant Unreasonably Delayed Benefits
Defendant argued that Berns’ opinions that it unreasonably delayed benefits to Plaintiff are legal conclusions and therefore improper expert opinion that should be excluded from trial. Plaintiff responded that he had no intention of asking Berns to usurp the role of the jurors. Instead, Plaintiff explained that he intended to question Berns about her background in automobile insurance claim handling; the facts and data she reviewed; her knowledge of insurance industry standards applicable to the handling of UIM claims; her observations / conclusions as to whether the insurer’s claim handling evidenced compliance with industry standards.
Under Federal Rule of Evidence 704(a), an expert’s opinion is not inadmissible simply because it embraces an ultimate issue to be determined by the trier of fact. The Court concluded that Berns may offer testimony articulating what she believes to be the relevant industry standards, and explaining—factually—how Defendant’s conduct did or did not comport with those standards. However, the Court excluded Berns’ opinions that Defendant’s conduct was unreasonable or insufficient as a matter of law, or was in violation of any statute.
Opinions Concerning Defendant’s Motives or State of Mind
Defendant argued that Berns’ “speculative opinions regarding American Family’s motives or state of mind during the handling of Plaintiff’s claim are impermissible and should be precluded from trial.” Defendant added that such opinions concerning Defendant’s motivation or state of mind regarding policy limits are not based on any personal knowledge or personally observed facts or data.
The Court granted in part and denied in part this portion of the motion. The Court granted the Motion to the extent that Plaintiff may not elicit testimony regarding Defendant’s motives or state of mind because such testimony would constitute speculation. However, the Court denied the Motion to the extent Berns is permitted to testify about facts from which the jury could infer intent, as such testimony is proper expert testimony.
Opinions Regarding Nebraska Law
Defendant argued that Berns is not qualified to render opinions regarding Nebraska’s Unfair Claims Settlement Practices Act. Defendant emphasized that Berns has not worked in the insurance industry in Nebraska, has not evaluated a Nebraska claim, and is not familiar with Nebraska law. Additionally, Defendant argued that opinions regarding American Family improperly or incorrectly applying Nebraska law (in other words, saying that Defendant should have applied Colorado law) to Plaintiff’s claims are also impermissible expert opinion that usurp the function of this Court.
The Court granted the motion to the extent that Berns was precluded from offering opinions on Nebraska’s Unfair Claims Settlement Practices Act. However, the motion was denied to the extent that Berns may offer opinions concerning whether Defendant’s offers of compromise complied with the applicable insurance industry standards.
Held
The Court granted in part and denied in part the Defendant American Family Mutual Insurance Company’s motion to limit the testimony Plaintiff’s Expert, Lorraine Berns.
Key Takeaways:
The Court excluded Berns’ opinions that Defendant’s conduct was unreasonable or insufficient as a matter of law, or was in violation of any statute. She was unqualified to offer such opinions as a matter of legal expertise and such ultimate conclusions would not be helpful to the jury and would improperly intrude on its fact-finding function.
Only the Court will determine what law applies to the remaining claims in this case, and Berns may not offer opinions concerning which state’s law Defendant should have applied.
Case Details:
Case Caption:
Marion V. American Family Mutual Insurance Company, S.I.
Plaintiff Guadalupe Garcia Al-Dahwa (“Al-Dahwa”) alleged that she suffered personal injuries as the result of a trip-and-fall accident in the parking lot of a movie theater owned by American Multi-Cinema, Inc. (“AMC”). Al-Dahwa averred that AMC had failed to warn her of the dangerous condition.
Al-Dahwa, who said she suffered from a physical disability, contended she tripped and fell in a ‘designated walkway because the concrete in the walking area was cracked, broken, and not level.
Plaintiff designated Jason English as a testifying expert witness. Jason English opined that the principal causative factor related to [Al-Dahwa’s] fall was the presence of an abrupt vertical rise and broken concrete disrepair in the accessible route providing access to the disabled parking area.
AMC insisted that English’s proffered opinions will not help the jury understand the evidence or determine a fact issue. Second, AMC argued that the probative value of English’s opinions are substantially outweighed by the danger of unfair prejudice, confusing the issues, and misleading the jury.
Safety Engineering Expert Witness
Jason English is a licensed Professional Engineer, holding a B.S. in Industrial Engineering with a specialty in Systems Safety Engineering and an M.S. in Safety Engineering from Texas A&M University. English has also completed post-graduate coursework in the Department of Architecture at Texas A&M, focusing on the evaluation and design of means of egress components. He is a member of the American Society of Safety Professionals, Human Factors and Ergonomics Society, National Safety Council, and International Code Council. Since 1999, English has worked as a professional engineering consultant, primarily consulting in the field of safety engineering, including workplace safety, premises safety, product safety, safety management, and human factors/ergonomics. He also serves on several safety standard development committees for the American Society of Testing and Materials International.
Get the full story on challenges to Jason English’s expert opinions and testimony with an in-depth Challenge Study.
Discussion by the Court
Reliability and Relevance Of English’s Opinions
In AMC’s view, this is a relatively simple and straightforward case: Al-Dahwa “contended that she tripped and fell over a clearly visible area of concrete that was cracked and unlevel.”
In response, Al-Dahwa argued that English’s testimony will assist the jury because his knowledge and experience on the issues relevant to the case are beyond that of the average juror.
The Court found the subjects that English intended to address at trial were directly relevant to the elements of Al-Dahwa’s premises liability claim. For example, English planned on testifying that pedestrians, like Al-Dahwa, frequently fail to see hazards in front of them as they walk. This opinion, which English based on published human factors literature, was relevant to both the second element (whether the uneven surface on the walkway posed an unreasonable risk of harm) and the fourth element (proximate causation).
English also intended to testify that the walkway where Al-Dahwa tripped and fell did not comply with the ADA, the TAS, and other applicable safety codes. This testimony was relevant to the third element of a premises liability claim—whether AMC failed to take reasonable case to reduce or eliminate the risk.
Similarly, English’s proposed testimony that AMC should have “establish[ed] and implement[ed] a proper safety program to identify, evaluate, and correct hazards with the reasonable potential to cause serious injury” also addressed the third element.
English’s Testimony Was Not Unfairly Prejudicial
AMC argued that English’s testimony should be excluded under Rule 403 because it “would unfairly prejudice [AMC], confuse the issues, mislead the jury, and improperly bolster [Al-Dahwa’s] liability position.” The Court held that AMC was simply trying to recast its arguments concerning the reliability and relevance of English’s opinion through the lens of Rule 403. The Court already flatly rejected those arguments.
Held
The Court granted the Defendant’s motion to exclude the testimony of Jason English.
Key Takeaways:
Once the proponent of an expert meets the threshold requirements of expertise, reliability, relevance, and helpfulness, the Court should generally admit the evidence.
English’s knowledge and experience related to the safety and accessibility codes applicable to where the incident occurred, safety engineering, when and how falls occur on premises are beyond that of the average juror.
Case Details:
Case Caption:
Garcia Al-Dahwa V. American Multi-Cinema, Inc Et Al
A district judge in Ohio barred an expert in insurance law from testifying because he lacked sufficient expertise in insurance litigation despite his long and distinguished career.
This action arises out of a material breach of insurance policies by Defendant Nancy Caraballo, who entered an unreasonable and collusive $36 million settlement with the Estate of Jordan Rodriguez (“Jordan”), a 5-year-old Cleveland boy who died tragically in late 2017, and whose body was discovered buried in his mother’s backyard. In connection with that tragic death, Caraballo pleaded guilty to four felonies concerning a benefits-fraud scheme she entered into with Jordan’s mother, which she tried to cover up by falsifying records related to her work purporting to provide Jordan’s mother with services as a parent educator.
Prior to Caraballo’s breach, Princeton Excess and Surplus Lines Insurance Company (“PESLIC”), as the insurer of Caraballo’s former employer, Catholic Charities Corporation (“Catholic Charities”), was supporting good faith settlement discussions for a reasonable resolution with the Estate on behalf of both Caraballo and Catholic Charities. PESLIC had also agreed to reimburse Caraballo’s covered defense costs despite several policy defenses asserted under a reservation of rights.
Caraballo was informed repeatedly that any settlement with the Estate in excess of the policies’ $1 million retained limit required the consent of PESLIC. Rather than honor her obligations to PESLIC, Caraballo agreed to a $36 million settlement, an amount that no independent rational actor would agree to pay. Caraballo’s material breach of the obligations imposed by the policies prevented both her and the Estate from obtaining indemnification or any other benefits from PESLIC.
The Estate retained Judge William Taylor to render an opinion regarding whether PESLIC (1) “maintained control of” the underlying State Court litigation; and/or (2) engaged in “bad faith” towards Caraballo.
Plaintiff Princeton Excess and Surplus Lines Insurance Company (“PESLIC”) filed a motion to exclude the report and testimony of Judge William Taylor, submitted by Defendant Michelle Rodriguez, as the Administrator of the Estate of Jordan Rodriguez (“the Estate”).
Insurance Law Expert Witness
Judge William Taylor graduated from Northwestern University School of Law in 1979. He worked as an associate at the law firm of Peterson Ross from 1979 to 1982. While employed at Peterson Ross, Judge Taylor practiced insurance litigation, including representing Lloyd’s of London. Judge Taylor left Peterson Ross in 1982, and moved to Cuyahoga County, Ohio where he helped run a gubernatorial political campaign for Jerry Springer. After that, he moved to California and worked on another political campaign. In 1983, Judge Taylor joined the law firm of Sachnoff Weaver, where he practiced “business litigation.”
Judge Taylor then worked as the Chief of Litigation of Revenue for the Illinois Attorney General’s Office from 1985 to 1987. He testified that, in this position, he was a “tax collector,” supervised 30 people, and appeared in court occasionally. From 1987 until approximately 1989 or 1990, Judge Taylor worked on several political campaigns, including those of Walter Mondale, Michael Dukakis, Harold Washington, and Carole Mosley Braun. In 1990 or 1991, Judge Taylor went into private practice, where he did “litigation, real estate, wills, divorces” and “whatever came in the door.”
The Estate retained Judge William Taylor to render an opinion regarding (1) PESLIC’s supposed control of “the litigation in the underlying case” in state court; and whether PESLIC (2) engaged in “bad faith” towards Caraballo.
Judge Taylor opined that “it was apparent that PESLIC refused to agree to indemnify Caraballo.” PESLIC argued that not only did Judge Taylor lack the requisite qualifications to testify, but also that his opinions were irrelevant and unreliable.
Qualifications
The Court held that Judge Taylor was unqualified to provide expert opinion regarding PESLIC’s control of the state court litigation and for PESLIC acting in bad faith in its control of the litigation regarding Caraballo. While Judge Taylor has a long and distinguished career as a lawyer, jurist, and campaign manager, the Court found that he did not have sufficient expertise in insurance litigation to provide a proper foundation for him to testify about whether PESLIC “maintained control of” the underlying state court litigation or engaged in bad faith under Ohio law.
Reliability
The Court found that neither Judge Taylor’s three years of experience at an insurance defense firm in the 1980’s nor his tenure as a state trial and appellate judge were sufficient to demonstrate that he had specialized knowledge and experience regarding whether an insurance company “maintains control of” litigation and/or engages in bad faith. To sum it up, Judge Taylor’s reliance on his experience and some ill-defined concept of “logic” to form his opinions did not constitute a reliable methodology.
Legal Conclusions
The Court found that several of Judge Taylor’s opinions crossed the line into inappropriate legal conclusions. For example, Judge Taylor opined that: (1) PESLIC’s alleged conduct “constituted legal maneuvering which at a minimum is a constructive refusal to indemnify;” (2) “PESLIC’s refusal to make any offer of settlement within their policy was arbitrary, capricious, and in bad faith;” and (3) “the decision of Caraballo to settle the claim despite the insurer refusing to give written consent was not arbitrary or unreasonable.”
Held
The Court granted PELSIC’s motion to exclude the testimony of Judge William Taylor.
Key Takeaways:
Caraballo and the Estate entered into a $36 million settlement agreement without PESLIC’s consent—an obvious breach of the PESLIC insurance policies’ consent-to-settle provisions. Defendant’s expert, Judge Taylor was highly accomplished but his background and experience simply did not relate sufficiently to the subject matter on which he opined in the instant case. The Court held that several of Judge Taylor’s opinions about PESLIC’s alleged conduct crossed the line into inappropriate legal conclusions.
Expert testimony should not constitute legal conclusions regarding the ultimate legal issues.
Expert witness’ knowledge and experience should be such that his opinions will likely be helpful to or otherwise assist the trier of fact.
Judge Taylor’s reliance on his experience and some ill-defined concept of “logic” to form his opinions did not constitute a reliable methodology.
Case Details:
Case Caption:
Princeton Excess And Surplus Lines Insurance Company V. Caraballo Et Al
