A district judge in Louisiana admitted a law enforcement expert’s testimony summarizing police procedures.
Cortez alleged that on November 21, 2019, his wife had called 911 and requested that police be dispatched so she could leave their residence without incident because Cortez was in an agitated mood. Cortez averred that an altercation had ensued after Deputies Reese and Custard arrived on the scene.
Plaintiff brought this lawsuit to pursue claims of excessive force in violation of the Fourteenth Amendment; a cover up by Jefferson Parish Sheriff’s Office employees; and ongoing physical and psychological injuries.
Defendants Deputy Custard, Deputy Reese, and Sheriff Lopinto asserted that the claims alleged were frivolous, groundless, and unreasonable.
Defendants offered the testimony of Kerry Najolia to summarize police procedures and to analyze whether the Deputies met those standards. Plaintiff filed a motion to exclude eight of Najolia’s opinions contending they were inadmissible as per Daubert and Rule 702.
Law Enforcement Expert Witness
Kerry Najolia has been qualified as, and has testified as, an expert on police practice, procedure, training, police officer survival/defensive tactics, police use of force, and police canines in numerous Louisiana state and federal courts. He has worked in various divisions in law enforcement, which includes patrol, investigations, Training and SWAT.
The eight opinions in question found that the deputies’ actions were “authorized,” “consistent with their training” and “consistent with departmental policy, procedures, and protocols” at various stages of their interaction with Plaintiff. In support of his motion, Plaintiff argued that: (1) Najolia would need to repeat inadmissible hearsay at trial to explain these opinions (2) Najolia’s testimony is irrelevant, and (3) Najolia’s methodology is unreliable.
Najolia Will Not Need to Repeat Inadmissible Hearsay at Trial
Plaintiff argued that Najolia’s opinions about the Deputies’ use of force must be excluded because Najolia will necessarily need to repeat hearsay testimony at trial to express these opinions. He added that Najolia largely relies on an Offense Report written by Deputy Reese, who has not been deposed, for his understanding of the foundational facts of the case.
Plaintiff did not dispute that Najolia may express opinions in his expert report that are based, in part, on facts contained in an inadmissible report such as the Offense Report. Rather, he contended that Najolia will need to describe Deputy Reese’s hearsay statements at trial. Since, Defendants’ witness list noted that Deputy Reese will testify at trial, the Court held that Najolia may properly refer to her testimony after Deputy Reese testifies.
Najolia’s Opinions Do Not Constitute Improper Legal Conclusions
Plaintiff contended that Najoila will improperly invade the duty of the factfinder by offering conclusions on legal issues.
The eight opinions Plaintiff sought to exclude were tied to the police policies and procedures at issue. The opinions described various actions of the deputies as “consistent with their training” “appropriate” and “in accordance with the deputies training.” This language showed that Najolia intended to opine on whether the Deputies “comported with applicable policies and procedures.” The Court held that such testimony was permissible but Najolia will not be allowed to opine on the ultimate issues of whether the officer’s actions were generally “reasonable” under the applicable legal standard.
Plaintiff’s Concerns About Najolia’s Assumption of Facts were Properly Addressed on Cross-Examination, Not By Exclusion of His Testimony
Plaintiff argued that Najolia’s opinions should be excluded because his methodology was unreliable. Najolia, Plaintiff contended, improperly relied on the Defendants’ version of the facts while ignoring other record evidence. The Court held that this this argument was unavailing since Plaintiff’s concerns that Najolia’s opinions were based on incorrect and one-sided facts could be addressed at trial on cross-examination. These questions relate to the “bases” of Najolia’s opinions, and thus go to the “weight to be assigned that opinion rather than its admissibility.”
Held
The Court denied Plaintiff’s motion to exclude and held that Najolia may testify as to whether the Defendant Deputies acted in accordance with applicable policing standards, protocols, and trainings.
Key Takeaway:
Under Federal Rule of Evidence 704, an expert’s “opinion is not objectionable just because it embraces an ultimate issue.” Louisiana District Court has previously permitted Najolia to opine on whether police officers’ conduct was in accordance with specific policing standards. The eight opinions Plaintiff sought to exclude were tied to the police policies and procedures at issue and hence were permissible. Despite Plaintiff’s concerns that Najolia’s opinions are based on incorrect and one-sided facts, the Court held that Najolia’s testimony will be properly offered to summarize police procedures and to analyze whether the Deputies met those standards.
A district judge in Texas refused to admit the insurance expert witness’ bad faith report because it failed to explain how exactly the Defendant violated the generally accepted adjusting standards.
On February 17, 2021, a Texas winter storm damaged a commercial building owned by Barron. Century insured that building under a surplus lines renewal policy. Barron filed a claim with Century for damages to the metal roof of the insured building. Immediately after the storm, Barron began emergency repairs to the metal roof of the building. Barron also repaired damage to the interior of the building and the domestic plumbing.
On March 5, 2021, a field adjuster inspected the building on Century’s behalf. On June 16, 2021, Century sent a letter to Barron that adopted its field adjuster’s net replacement cost of less than $4,000 and claimed that damage to the metal roof, domestic plumbing lines, and the interior of the building was excluded from coverage. Century identified “freeze damages to the domestic plumbing lines” as the cause of damage to the building’s interior. Further, Century stated that the indentations in the roof resulted from activities excluded from coverage under the policy exclusions.
Motions to exclude
Barron designated Phil Spotts as an expert to testify regarding damages and bad faith. Spotts inspected the damaged building on October 6, 2021. Spotts prepared his final estimate on December 6, 2021, relying on both his inspection and “additional information that was provided by the insured.” His estimate of the replacement cost value of the roof totaled $370,020.81. Spotts also rendered an opinion on whether Century’s claim investigation and adjustment were conducted in bad faith. Additionally, Barron designated Joshua Reeves as an expert to testify regarding causation. Reeves conducted two on-site inspections of the damaged building on November 10, 2022 and November 23, 2022. Reeves opined that the damages to the metal panels that comprised the roof of Barron’s building were damages by environmental forces from the February 2021 winter storm. Century sought to exclude Spotts and Reeves’ expert reports.
Insurance Expert Witness
Philip N. Spotts is the founding member of The Mission Risk Consulting Group, LLC, having opened Mission Adjusting and Risk Management, LLC in 1993. He has over 40 years’ experience in handling or managing a wide variety of property and casualty claims, including commercial and residential property, national catastrophe, auto liability, general liability, and governmental liability.
He has several industry designations granted by the Insurance Institute of America, including Chartered Property and Casualty Underwriter, Associate in Risk Management, and Associate in Claims.
Joshua G. Reeves is a licensed Professional Engineer employed by Neches Engineers, an engineering firm located in Beaumont, Texas. He is a Licensed Professional Engineer in Texas and a Certified Texas Department of Insurance Windstorm Inspector. He has designed thirteen metal roofs for private commercial and industrial clients.
Regarding bad faith, Spotts concluded that the Century claim investigation and adjustment “fell below generally accepted adjusting standards and involved an unreasonable and sub-standard investigation” based on his experience. Spotts also concluded that the Century estimate used as a basis for the claim payment was “underpriced” and “under scoped.”
Century challenged (1) Spotts’ qualifications as both a damage and bad faith expert and (2) the reliability of his report.
At the hearing, the parties agreed that expert reports on damages were unnecessary in light of the appointed umpire’s forthcoming appraisal of the damage to Barron’s property, which was binding on both parties pursuant to the appraisal provisions of the policy. Accordingly, Century’s instant Motion to Exclude was denied as moot with respect to Spotts’ expert report on damages. Additionally, to the extent Barron sought to offer Spotts as an expert on causation, Century’s instant Motion to Exclude was granted because Barron had not formally designated Spotts as an expert on causation. The Court considered Spotts’ qualifications, the relevance of his report, and the reliability of his methodology regarding only his bad faith report.
Spotts is Qualified to Serve as an Expert
Spotts stated that he had been licensed “on an All-Lines basis to supervise and adjust claims” involving “tens of thousands of residential and commercial structures due to a diverse number of causes” and that he “possessed over 40,000 hours of claims-related experience.”
The Court found that Spotts had demonstrated sufficient qualifications to serve as a bad faith expert.
Spotts’ Expert Report is Relevant to the Issues Presented in this Case
Century contended in conclusory fashion that Spotts’ damage report was not relevant but failed to specifically explain how the report lacked relevance to the issues presented in this case.
The Court found that Spotts’ opinions on bad faith were relevant to Barron’s breach of contract, statutory bad faith, and Prompt Payment of Claims Act claims. The parties’ dispute over whether Century properly adjusted Barron’s claim in good faith was central to the resolution of all three claims.
Spotts’ Expert Report Failed to Demonstrate Reliance on Reliable Methodology
Century contended that Spotts’ report on bad faith was not reliable because it “was not supported by any evidence” and failed to cite to “any Texas law, statute, policy provision, or any other standard that would apply to this claim.”
When Spotts claimed that the Century claim investigation and adjustment fell below generally accepted adjusting standards and involved an unreasonable and sub-standard investigation, he identified two sources for the standards on which he relied in his report. First, he cited “long standing claims standards” identified in a book entitled “The Claims Environment” by James J. Markham but the Court found that Spotts’ conclusory statement on Century’s claim investigation and adjustment amounted to him stating “it is so.” In other words, Spotts did not explain how Century’s behavior failed to meet the vague standards of insurance adjusting he cited.
The second source on which Spotts based his conclusions was the “National Association of Insurance Commissioners Unfair Claims Settlement Practices Act” (“NAIC Act”), attached to his report as an addendum. The Court held that while the NAIC Act provided standards for proper adjustment and investigation of claims, Spotts failed to explain which specific sections of the NAIC Act he relied on in reaching his conclusions. Moreover, Spotts did not reference any specific sections of the NAIC Act at all in his expert report. Spotts’ general reference to the entire NAIC Act without reference to any specific provisions was insufficient to demonstrate a reliable methodology because he did not describe what specific standards were violated.
Joshua G. Reeves
In developing his report, Reeves relied on the inspections he conducted as well as various documents such as the International Building Code and International Existing Building Code.
It should be noted that Century challenged only the reliability of Reeves’ report. The Court held that Reeves was qualified to serve as an expert in this case and that Reeves’ expert report was relevant to Barron’s claims since Barron must show that the February 2021 winter storm caused the alleged damage to the metal roof of the building.
Reeves’ Expert Report is Based on Reliable Engineering Methodology
In his report, Reeves identified four potential causes for the damage to the metal roof of Barron’s building: “foundation settlement, faulty construction materials, poor methods of construction, excessive live loads such as wind, show, ice, or seismic.” Reeves determined that the first three causes were not applicable based on the Neches Engineering analysis of (1) the presence of foundation settlement, (2) the structural integrity of the original roof panels, and (3) whether the building’s construction complied with the 1988 Uniform Building Code, which was the governing design criteria when Barron’s building was constructed. After describing his analysis and conclusions on the first three potential causes of the damage, Reeves concluded that the damages “are directly linked to excessive loads: either mechanical or environmental loads.”
Reeves’ conclusion was based on a flawed process of elimination
Century contended that Reeves’ conclusion “was based on a flawed process of elimination.” It added that Reeves’ opinions on these potential causes amounted to “it is so” opinions, which made them unreliable. The Court disagreed because Reeves relied on both his own inspection of Barron’s building, relevant building codes, weather data, reports from other adjusters that examined the property, and documents containing information regarding the specific roof panels used. Reeves then analyzed each potential cause and reached a specific conclusion on each one, excluding three and concluding that the fourth was the cause of damage to Barron’s property.
The Court disagreed with Century that Reeves’ opinions regarding whether mechanical loads caused the damage to Barron’s property were based on insufficient information because Reeves inspected the damaged roof panels during his two on-site inspections of the damaged property and analyzed whether the damage was consistent with footsteps.
Century’s arguments attacking the information on which Reeves relied pertained to the weight of the evidence
The Court held that Century’s arguments attacking the information on which Reeves relied pertained to the weight of the evidence, not its admissibility such as when Century made no attempt to explain why the meteorological data or environmental load calculations Reeves used in his report were incorrect.
Held
The Court granted Defendant Century Surety Company’s motion to exclude Plaintiff’s witnesses Spotts and Reeves with respect to Phil Spotts’ expert report on bad faith; denied it as moot with respect to Spotts’ expert report on damages; and denied it with respect to Joshua Reeves’ expert report on causation.
To the extent Plaintiff Larry Barron sought to offer Spotts as an expert on causation, the Court granted Century’s instant motion to exclude Plaintiff’s Witnesses Spotts and Reeves.
Key Takeaways:
Phil Spotts identified two sources for the standards on which he relies in his report. He cited “long standing claims standards” identified in a book entitled “The Claims Environment” by James J. Markham and the National Association of Insurance Commissioners Unfair Claims Settlement Practices Act. The Court held that there is “too great an analytical gap between the data and the opinion proffered” to render these standards a sufficiently reliable methodology for determining whether Century’s claim investigation and adjustment were conducted in bad faith.
Determining whether an expert report is reliable is the product of a three-part analysis: (1) whether “the testimony is based on sufficient facts or data”; (2) whether “the testimony is the product of reliable principles and methods”; and (3) whether “the expert has reliably applied the principles and methods to the facts of the case.” Joshua Reeves’ testimony was the product of engineering analysis based on Reeves’ personal observations and inspections.
A district judge in Kentucky found the analysis presented by the financial expert witness limited.
This class action arises under the Employee Retirement Income Security Act of 1974 (“ERISA”). On behalf of the Humana Retirement Savings Plan (the “Plan”) and its participants, Plaintiffs brought claims for (1) “Breach of Fiduciary Duty of Prudence” and (2) “Failure to Adequately Monitor Other Fiduciaries.” Defendants were fiduciaries of the Plan which existed to help its participants save for retirement. They hired Charles Schwab as the recordkeeper for the Plan during the class period.
Defendants conducted two requests for proposals (“RFP”)—via Institutional Investment Consulting (“IIC”), which it hired to conduct the processes—in 2014 and 2019, and an additional RFP outside the class period after 2019. After considering more than 125 vendors, Schwab was selected out of 15 candidates in the 2014 RFP, and again out of more than 10 candidates in the 2019 RFP. Although it was not the only factor considered in Schwab’s selection, Schwab offered the lowest recordkeeping cost among finalists in both the 2014 and 2019 RFP. Plaintiffs alleged that Defendants used an “imprudent process” to administer the Plan which led to excessive recordkeeping fees, despite engaging in RFPs for the Plan and performing annual benchmarking using reports from third-party consultants.
Throughout the class period, the Plan grew from roughly $3.5 billion with 49,150 participants in 2015 to roughly $6.5 billion with 58,735 participants in 2022.
Defendant retained Pete Swisher to evaluate the process followed by Humana to oversee and monitor the recordkeeping services and fees associated with the Plan. Swisher opined on the reasonableness of the recordkeeping fees incurred by the Plan during the Class Period.
Plaintiff retained Veronica Bray to analyse the decisions and actions Defendants took during the class period.
Financial Expert Witnesses
Pete Swisher is currently the founder and president of Waypoint Fiduciary, LLC and co-founder and managing partner of Group Plan Systems, LLC. He has published papers, articles, and a textbook and is involved in the leadership of professional trade organizations in the field. He holds a B.A. in Linguistics from the University of Virginia and is a certified financial planner.
Veronica Bray has over two decades of experience in the retirement plan industry. She currently serves as the founder and Chief Executive Officer of Retirement Plan Advisor Search, which assists retirement plan fiduciaries and plan sponsors with finding service providers for their retirement plans. She holds a B.S. in Business Administration from the University of North Carolina in Greensboro, as well as Financial Industry Regulatory Authority Series 6 and 63 licenses and a North Carolina Life Insurance license, among other “industry related designations.”
Plaintiffs advanced two broad grounds to exclude Swisher’s expert opinion as unsupported ipse dixit. First, they argued Swisher provided no basis for concluding that Defendants’ use of RFPs and benchmarking through Roland Criss amounted to a prudent process, and his conclusion deviated from case law.
Second, they argued Swisher had no basis for concluding the Plan’s recordkeeping fees were reasonable. Plaintiffs contended that Swisher applied circular reasoning since Swisher is essentially saying, “The fiduciary process was prudent because fees were reasonable, and the fees were reasonable because the fiduciaries followed a prudent process.”
I. Swisher’s Opinion on the Committee’s Process
Plaintiffs pointed out that Swisher admitted in deposition testimony that he was not aware of whether the Committee attempted to reduce its fees between 2015 and 2019. However, the Plaintiffs themselves acknowledged that Swisher was explicit that this information was irrelevant to his conclusions, explaining that “typical industry practice is that fees are not negotiated until the term of the contract nears expiration.”
Plaintiffs also argued that the Roland Criss benchmarking reports were unreliable because they included “smaller plans with smaller participant sizes,” and Swisher admitted in his deposition testimony that “he had no way of knowing how many plans in the Benchmarking report were smaller or larger.” The Court held that Swisher explained his basis for crediting the Roland Criss reports as reliable benchmarks in his report when he had drawn from his experience to gather that benchmarking peer groups typically included plans that were both smaller and larger, in terms of assets and participants, than the plan being benchmarked. Even if Swisher did not know exactly how many comparators were larger than the Plan in the reports, he provided sufficient basis for crediting them based on his industry knowledge, and Courts have allowed experience-based testimony about industry practice.
The Court had held that Swisher’s expert report had outlined his extensive professional experience and the industry resources he had drawn upon to form his opinion, but the Plaintiffs had challenged none of it.
II.Swisher’s Opinion on Whether Fees Were Reasonable
Plaintiffs asserted that the fees were not reasonable because NEPC surveys were not a “meaningful benchmark” for comparison. The Court did not find that Swisher’s consideration of NEPC surveys rendered his testimony unreliable, as this was just one piece of the foundation for his opinions.
Finally, the Court disagreed with Plaintiffs’ argument that Swisher’s opinion rests on circular logic. The Court held that it was the nature of the inquiry-a prudent process involving competitive bidding (the RFPs), coupled with the Roland Criss reports and an independent comparison to NEPC surveys which Swisher used to show median recordkeeping fees, could form a basis for concluding that the fees were reasonable. The 2014 and 2019 RFPs not only could constitute part of a prudent process, but they also provided data that Swisher could consider to determine whether Schwab’s recordkeeping fees were reasonable. The same is true for the annual Roland Criss reports, which provided data to support Swisher’s opinion that the recordkeeping fees paid by the Plan were reasonable.
The Court held that it was logical for Swisher to rely on this same data to determine that the fee was reasonable, given that he believed the process that produced the RFPs and the Roland Criss reports was a prudent process, and that he also looked to outside data such as NEPC reports.
Veronica Bray
Bray concluded that “Defendants failed to effectively negotiate reasonable recordkeeping fees, understand total compensation being paid to the Plan’s recordkeeper, and employ other strategies to reduce fees being charged to Plan participants,” which resulted in unreasonably high fees that “cost Plan participants millions of dollars from their retirement accounts.”
Defendants argued that Bray’s opinion should be excluded because she (1) provided no basis for “how she arrived at the $12 to $20 PPPY range” that Plaintiffs say the Plan could have paid in recordkeeping fees, (2) offered “no evidence to show the [six plans selected] are actually comparable to the Humana Plan,” and (3) “ignored more than half of the Class Period” by limiting her analysis to between 2020 and 2022.
I. Bray’s opinion on whether Defendants’ actions were consistent with the standard of care practiced by a prudent fiduciary
Bray’s opinion focused largely on the reasonableness of the recordkeeping fees paid by the Plan as compared to six other plans she chose for evaluation in her report. Bray concluded that a reasonable fee would have been in the range of $12 to $20 PPPY—the fee range achieved by these six plans. The Court held that she chose these plans merely “to kind of give an example of the buying power that these smaller plans had,” and could not give an example of a comparable plan that achieved similarly low recordkeeping fees at her deposition.
Bray herself admitted that she compared only the fees from the six plans she selected to the Humana Plan—she did not analyze other aspects of those plans, or the recordkeeping services provided to them at all.
The Court held that while Bray is generally qualified by knowledge and experience in this field, with over two decades of professional involvement within the industry in various roles, her opinion applies no reliable methodology to the pertinent questions in this litigation: whether Defendants’ process was prudent and whether recordkeeping fees were ultimately “excessive relative to the services rendered.”
Held
The Court denied Plaintiffs’ motion to exclude Pete Swisher but granted Defendants’ motion to exclude Veronica Bray under Daubert and Rule 702.
Key Takeaways:
The Court found that Swisher’s opinion, stating that Defendants’ reliance on RFPs and benchmarking reports resulted in a prudent process, was based on his experience and knowledge of industry practices. This is an acceptable basis for Swisher’s expert opinion, particularly because that experience explicitly relates to conclusions outlined in his expert report.
The Court held that Bray’s method—essentially, reasoning by inference that, because the six smaller plans were able to achieve a fee in the $12-$20 range, it followed that Humana should have also been able to negotiate for fees in that range—was not a reliable basis for concluding the fees were unreasonably high.
A district judge in Florida refused to exclude the testimony of a pharmaceutical expert witness despite allegations of fundamental flaws in the assumptions on which her calculations are based.
Defendant Aveva Drug Delivery Systems, Inc. of an Abbreviated New Drug Application (“ANDA”) No. 217221 to the U.S. Food and Drug Administration (“FDA”) sought approval to manufacture and sell a Lidocaine Topical System, 1.8% product (“Defendants’ ANDA Product”), a generic version of Scilex Pharmaceuticals Inc.’s ZTLIDO® (lidocaine topical system) 1.8% (“ZTlido®”), prior to the expiration of U.S. Patent Nos. 9,283,174 (the “’174 patent”), 9,925,264 (the “’264 patent”), and 9,931,403 (the “’403 patent”) (collectively “the Asserted Patents”).
Plaintiffs alleged that the Defendants’ ANDA Product will be marketed as a generic competing product to ZTlido®, a product developed by Plaintiffs for the relief of pain associated with post-herpetic neuralgia (PHN) in adults.
This patent infringement arises from Aveva’s notification to Scilex Pharmaceuticals Inc. by Notice Letter dated May 10, 2022, that it had filed an Abbreviated New Drug Application (“ANDA”) No. 217221.
Defendant Aveva proffered expert witness Dr. Maureen Donovan who stated that that the claims of the Asserted Patents were extremely broad, and therefore that they were not enabled because it would require undue experimentation to practice the claims.
Plaintiffs filed a motion to strike Donovan’s opinions and analysis regarding the breadth of the asserted claims from consideration at the bench trial in this case. Plaintiffs also accused her of improper supplementation and bolstering under Rule 26 in a separate motion.
Pharmaceutical Expert Witness
Maureen Donovan is a Professor of Pharmaceutical Sciences and Experimental Therapeutics at the University of Iowa College of Pharmacy. Donovan holds a Ph.D. in Pharmaceutics from the University of Minnesota College of Pharmacy and has over forty years of experience conducting research and consulting with companies in the field of pharmaceutical sciences.
Plaintiffs argued that Donovan’s exemplary calculations, analysis of the breadth of the claimed concentration ranges, and her opinions relying thereon did not meet the requirements of Rule 702. Plaintiffs added there were fundamental flaws in the assumptions on which her calculations are based.
As to experience and qualifications, Plaintiffs did not contend that Donovan was not sufficiently qualified to offer her proffered opinions in this case.
The Court determined that the proper remedy for any potential weaknesses identified is vigorous cross-examination and confrontation. In other words, Plaintiffs were not precluded from challenging the reliability of Donovan’s opinions at the bench trial. In conclusion, the Court may disregard any expert testimony at trial, if it “turns out not to meet the standard of reliability established by Rule 702.”
Rule 26
In a separate motion, Plaintiffs alleged that Donovan altered her written opinion to better align her opinion with another expert’s findings.
Donovan, having discovered an error in her calculations, was required to correct her findings. Defendants argued that the corrections favored Plaintiffs’ position.
The Court held that the revisions were both substantially justified and harmless. The Defendants filed Donovan’s amended report well before the 30-day deadline contemplated for pretrial disclosures under Rule 26(a)(3). The Court, therefore, denied Plaintiffs’ arguments on the grounds that any violation, should one exist, was substantially justified under the circumstances. Moreover, Defendants have both offered Plaintiffs the opportunity to re-depose Donovan and will not oppose supplemental reports from Plaintiffs’ expert.
The Court added that the decision not to exclude Donovan’s corrected report in no way prevented Plaintiffs from vigorously cross-examining her on her alleged mistakes.
Held
The Court denied both motions to exclude the testimony of Defendants’ expert Maureen Donovan.
Key Takeaway:
The Court determined that the proper remedy for any potential weaknesses identified is vigorous cross-examination and confrontation. In other words, Plaintiffs were not precluded from challenging the reliability of Donovan’s opinions at the bench trial and the decision not to exclude Donovan’s corrected report in no way prevented Plaintiffs from vigorously cross-examining her on her alleged mistakes.
Case Details:
Case Caption:
Scilex Pharmaceuticals, Inc. Et Al V. Aveva Drug Delivery Systems, Inc., Et Al
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.
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.
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.
David Baileyis 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.
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.
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.
In March 2023, Manhattan District Attorney Alvin Bragg, a Democrat, indicted Donald Trump on 34 charges tied to the hush money payments, accusing him of “falsifying New York business records to conceal damaging information and unlawful activity from American voters before and after the 2016 election.”
It all started when the Wall Street Journal reported on certain payments Michael Cohen, former Trump attorney and a key witness in Trump’s hush money trial made to adult film star Stormy Daniels before the 2016 presidential election.
Daniels and Karen McDougal, a Playboy model, came forward with unflattering stories about alleged affairs with Trump during the 2016 election. Cohen admitted that he obtained a line of credit on his home to make a payment of $130,000 to Daniels for a nondisclosure agreement about her encounters with Trump while National Enquirer’s parent company, American Media Inc., paid McDougal $150,000 for the rights to her story. Trump denied both affairs. He initially denied any knowledge of the payments, but he later admitted in a carefully worded tweet that he made them to Cohen. Cohen and AMI have both admitted they broke laws by making these payments.
Defendant introduced Bradley Smith to opine on the interpretation and application of federal campaign finance laws during the proceedings.
Elections Expert Witness
Bradley Alan Smith teaches Election Law at the Capital University Law School in Columbus, Ohio. He previously served as commissioner, vice chairman, and chairman of the Federal Election Commission (FEC) between 2000 and 2005. He has held prior visiting appointments at Princeton University and West Virginia University.
Smith’s writings on campaign finance and other election issues have appeared in the Yale Law Journal, the University of Pennsylvania Law Review, the Georgetown Law Journal, the Harvard Journal of Legislation, the Cornell Journal of Law & Public Policy, and other academic journals.
Prosecutors showed checks and ledgers demonstrating payments from Trump’s company to his former attorney, including a handwritten note outlining a payment plan for Cohen. David Pecker, the former publisher of the National Enquirer, admitted to working with Cohen in order to hide unflattering information. The witness list for this hush money casealso included former White House counsellor Hope Hicks. The government wanted Hicks to testify because she’d had conversations with both Trump and Michael Cohen, Trump’s former attorney, about Karen McDougal and Stormy Daniels.
When Cohen testified about his involvement in the hush money case, the judge explicitly told jurors that Trump could not be convicted based solely on Cohen’s testimony. Trump did not testify. The judge instructed the jury that Trump’s decision must not be used as a factor in their deliberations.
The judge overseeing the case, Juan Merchan, expanded a gag order on Trump after the former president attacked Merchan’s daughter on social media. He fined the Defendant a total of $10,000 for various violations.
Bradley A. Smith
Defendant disclosed Bradley Smith to opine on whether the Stormy Daniels (“Daniels”) payoff violated campaign finance law. Prosecution insisted that his proposed testimony be treated as expert testimony and not lay testimony. The Court agreed considering Smith did not possess personal knowledge regarding the underlying facts of the instant matter.
Defendant sought to elicit from Smith, among other things, that at the time Cohen paid Daniels, there had never been a case in which anyone had been convicted of a federal campaign finance law violation for the making of “hush money payments;” the facts surrounding the trial of former U.S. Senator and presidential candidate, John Edwards, his subsequent acquittal, and that the case was heavily criticized.
The Court permitted Smith to testify generally as to the following: general background as to what the Federal Campaign Commission (“FEC”) is, background as to who makes up the FEC, what the FEC’s function is, what laws, if any, the FEC is responsible for enforcing, and general definitions and terms that relate directly to this case, such as for example “campaign contribution” but barred him from opining on the interpretation and application of federal campaign finance laws and whether the alleged conduct in this case did or did not constitute a violation of the Federal Election Campaign Act (“FECA”).
Held
On March 18, 2024, the Court granted in part and denied in part the motion to exclude the testimony of Bradley Smith.
Two months later, a Manhattan jury found Donald Trump guilty of all 34 charges of falsifying business records, making Trump the first former president in American history to be convicted of a felony.
The 34 charges against the former president are Class E felonies, the lowest level in New York law. Trump, however, has said he will appeal.
Key Takeaway:
Federal investigators went after Cohen instead of Trump. The Manhattan DA took years to finally present the case to a grand jury. Now it could end up being the only one of the four criminal cases against Trump to go to trial before the November election but the guilty verdict, while a major political moment, does not prevent Trump from continuing his presidential campaign nor from serving should he win the White House.
The Court permitted Smith to provide background on what the Federal Campaign Commission (“FEC”) is but barred him from offering opinion testimony on the interpretation and application of federal campaign finance laws.
Case Details:
Case Caption:
People of the State of New York V. Donald J. Trump
A district judge in Oklahoma noted the expert witness’ extensive background in event safety at live events but barred him from testifying because he never inspected the area where Plaintiff fell and ignored relevant statutes and codes.
Plaintiff Boulac sought damages for injuries she allegedly sustained at the Bank of Oklahoma Center (“BOK Center”) in Tulsa, Oklahoma. Boulac was covering the NCAA Basketball Tournament as a member of the CBS Sports crew. She tripped on a cheerleader mat in a walkway.
On February 26, 2024, Defendant SMG identified Steven A. Adelman as an expert to provide an opinion on whether SMG breached or satisfied its duty of care owed to Boulac under Oklahoma law.
Adelman concluded that SMG met its duty of care by ensuring the mat was wholly outside the marked walkway designated for production workers and Boulac failed to meet her duty to maintain reasonable situational awareness. In other words, Boulac’s breach of her own duty of care was a proximate cause of her unfortunate injuries.
Plaintiff Boulac contended that Adelman should be permitted to testify because he lacked the knowledge, skill, experience, or education to qualify as an expert; Adelman’s opinions did not help the jury to understand the evidence or determine the facts in issue; and Adelman’s testimony was not supported by sufficient facts or data, or the product of reliable methods.
Safety Expert Witness
Steven A. Adelman has practiced as an attorney with Adelman Law Group, PLLC, “focusing on risk and safety at live events throughout North America” since 2010. He is the vice president of an international trade association Event Safety Alliance, since 2012. He is the principal author of “Crowd Management,” “Event Security,” “Event Safety Alliance Reopening Guide,” and editor of the forthcoming “Event Safety Guide,” second edition. Adelman was also an adjunct faculty member at Arizona State University, teaching “Risk management in Venues,” and an online “Sports Facilities Management” course.
Defendant SMG retained Adelman to offer testimony about “event safety standard of care.” Plaintiff Boulac contended Defendant SMG “was attempting to pass a litigation-experienced lawyer as an expert witness in a premises liability case.”
Qualifications
Adelman describes himself as “an authority regarding safety at live events, particularly crowd management and event security.” Adelman focuses on risk and safety at live events throughout North America. Plaintiff Boulac argued that Adelman’s “education and work history demonstrated that he lacked the necessary experience to opine on event safety standards of care or Human Factors Engineering principles and definitions.” Adelman testified to never taking any classes on live event operations or crowd management, either during school or since graduation from law school. He admitted to not having any licenses or certifications in these, or the event safety fields.
The Court, however, concluded that Adelman was qualified in the area of event safety because of his extensive background in event safety at live events, including many publications and his position as the vice-president of an international trade association.
Reliability and Relevance
The Court held that Defendant SMG failed to meaningfully satisfy its burden at each step of the Daubert analysis and instead focused solely on the supposed difference between “back of house” and “front of house” standards of care.
To begin with, Adelman’s three opinions—Defendant SMG met its duty of care, Plaintiff Boulac failed to meet her duty, and Plaintiff Boulac breached her duty of care— were all legal conclusions.
Next, the Court concluded that Adelman’s testimony would not help the jury understand the evidence or to determine a fact in issue. As Adelman acknowledged (and as Plaintiff Boulac pointed out), “there is no standard of care that requires venue operators to store thick mats any particular distance away from brightly marked paths of travel in a back of house production area such as BOK Center during an NCAA tournament.”
The Court also agreed with Plaintiff Boulac that testimony on situational awareness did not require specialized knowledge and would be commonly known and easily understood by the jury.
The Court held that Adelman’s opinions were based upon the various court documents filed in this case (complaint, motion for summary judgment, discovery responses), BOK Center contracts, incident reports and depositions. Adelman never inspected the area where Boulac fell and ignored relevant statutes and codes. In conclusion, Adelman’s testimony was not supported by sufficient facts or data, or reliable principles and methods.
Held
The Court granted the Plaintiff Boulac’s motion to exclude the testimony of Defendant’s purported expert, Steven A. Adelman.
Key Takeaways:
Whether Defendant SMG reasonably knew or should have known of the alleged dangerous condition, and whether it acted reasonably in mitigating and protecting against the danger, are factors in determining whether an owner is liable to an invitee under Oklahoma law. This led to the Court rejecting all of Adelman’s three opinions—Defendant SMG met its duty of care, Plaintiff Boulac failed to meet her duty, and Plaintiff Boulac breached her duty of care.
Adelman contended that Boulac failed to meet her duty to maintain reasonable situational awareness. The Court held that testimony on situational awareness did not require specialized knowledge.
The Court found that Adelman never inspected the area where Boulac fell and ignored relevant statutes and codes. In this regard, Adelman’s testimony was based on subjective belief or unsupported speculation
On March 13, 2020, sixteen Montana youth (collectively Plaintiffs or Youth Plaintiffs), then between two and 18 years old, filed a complaint against the State of Montana challenging the constitutionality of the State’s fossil fuel-based state energy system, which they alleged caused and contributed to climate change in violation of their constitutional rights guaranteed under Article II, Section 3; Article II, Section 4; Article II, Section 15; Article II, Section 17; Article IX, Section 1; Article IX, Section 3 of the Montana Constitution; and the Public Trust Doctrine.
Specifically, the complaint challenged the constitutionality of certain fossil fuel-based provisions which prohibited the State and its agents from considering the impacts of greenhouse gas (GHG) emissions or climate change in their environmental reviews; and the aggregate acts the State took to implement and perpetuate a fossil fuel-based energy system.
Youth Plaintiffs asked the Court to acknowledge the [Montana Environmental Policy Act] Limitation’s contribution to the depletion and degradation of Montana’s environment and natural resources.
Ecology Expert Witnesses
Dr. Steven Running is a University Regents Professor Emeritus of Global Ecology in the College of Forestry and Conservation at the University of Montana. Running currently co-chairs the standing Committee for Earth Science and Application from Space of the National Academy of Science. In 2007, Running shared the honor of the Nobel Peace Prize as a chapter Lead Author for the 4th Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).
Dr. Dan Fagre holds a Ph.D. from the University of California, Davis. He joined the National Park Service as a research scientist in 1989 and, in 1991, he became the Climate Change Research Coordinator at Glacier National Park as part of the nationwide United States Global Change Research Program. His position was transferred to the United States Geological Survey (USGS), where he served until his retirement in 2020, after which he has continued as Scientist Emeritus. He also served as a Research Ecologist at the Northern Rocky Mountain Science Center.
Dr. Jack Stanford received his Ph.D. in Freshwater Ecology at the University of Utah.He is Professor Emeritus at the Flathead Lake Biological Station (FLBS) of the University of Montana. He was the Director and Bierman Professor of Ecology at the University of Montana (1980-2016). His primary area of research is aquatic ecosystem processes, including influences of human activities.
Dr. Cathy Whitlock is Regents Professor Emerita of Earth Sciences and a Fellow of the Montana Institute on Ecosystems at Montana State University (MSU). Whitlock was lead author of the 2017 Montana Climate Assessment, and in 2020 co-authored a state-level Montana Climate Solutions Plan and a 2021 special report of the Montana Climate Assessment entitled Climate Change and Human Health in Montana. Whitlock was also co-lead author of the 2021 Greater Yellowstone Climate Assessment.
Dr. Lori Byron obtained a Doctor of Medicine degree in 1984. She has been a board-certified pediatrician since 1988. Byron earned a M.S. in Energy Policy and Climate from Johns Hopkins in 2020. From 1988-2015, Byron worked with the Indian Health Service in Crow Agency, Montana, providing primary care, emergency care, and public health services to Crow Indian children. Byron now works as a pediatric hospitalist at SCL Health in Billings, Montana. Byron has decades of experience caring for children who have suffered Adverse Childhood Events (ACEs). Over the past decade, Lori Byron and her husband, Rob Byron, have made presentations on climate change and health locally, nationally, and internationally.
Dr. Lise Van Susteren is a board certified general and forensics clinical psychiatrist, in practice for thirty years. She is a Clinical Associate Professor of Psychiatry and Behavioral Sciences at George Washington University in Washington, D.C. In 2009, Van Susteren co-convened one of the first conferences on the psychological effects of climate change. In 2013, Van Susteren worked with Dr. James Hansen and other experts on a paper, Assessing “Dangerous Climate Change”: Required Reductions of Carbon Emissions to Protect Young People, Future Generations and Nature. She received the Distinguished Fellow award of the American Psychiatric Association, its highest membership honor in May 2018. Van Susteren has helped develop youth climate anxiety assessment tools, conducted research and reviewed data in assessing the mental health of young people faced with climate change.
Michael Durglo, Jr., is a member of the Confederated Salish and Kootenai Tribes (CSKT). He has a Bachelor of Science degree in Environmental Science from Salish Kootenai College. Durglo has worked in different capacities for the CSKT for over three decades. In his current role as Head of the Tribal Preservation Department and Chairman of the Climate Change Advisory (CCAC), Durglo has worked extensively with tribal elders and youth on climate related issues.
Anne Hedges received a B.S. in environmental policy analysis and planning from the University of California at Davis in 1988 and a Master of Environmental Law, magna cum laude, from Vermont Law School in 1993. She is Co-Director and Director of Policy and Legislative Affairs at the Montana Environmental Information Center (MEIC). She directs MEIC’s program work, including its legislative, regulatory, policy, and legal activities.
Peter Erickson received a bachelor’s degree in Geology in 1998 at Carleton College, Minnesota, as well as coursework in intermediate microeconomics and macroeconomics at the University of Washington. Erickson has worked as an environmental and climate policy and technical analyst in greenhouse gas emission accounting, most recently with the Stockholm Environment Institute, an international research institution providing, in part, technical analysis to government and NGOs on the details of climate policy and emissions accounting.
Terry Anderson has published widely in the popular press and professional journals, including The Wall Street Journal, Christian Science Monitor, Fly Fisherman, Journal of Law and Economics, and Economic Inquiry. During his career at Montana State University, Anderson received several outstanding teaching awards and is now professor emeritus of economics. He received his B.S. from the University of Montana and earned a Ph.D. in economics from the University of Washington.
Mark Jacobson obtained a M.S. in Environmental Engineering, from Stanford University. Dr. Jacobson also obtained both a M.S. and later a Ph.D. in Atmospheric Sciences from UCLA. In 1994, Jacobson became an Assistant Professor in the Department of Civil & Environmental Engineering at Stanford. Since 2007, he has been a full professor in that Department. Jacobson was a co-founder and is Director of Stanford’s Atmosphere/Energy Program, as well as a Senior Fellow at Stanford’s Precourt Institute for Energy, and Stanford’s Woods Institute for the Environment.
Steven Running provided testimony in the general areas of the climate system, including the energy balance and imbalance, the physics of GHG emissions that are driving climate change, the global carbon cycle, the global hydrologic cycle, how they control this energy imbalance, and then how human caused fossil fuel development is harming Montana’s ecosystems and hydrology while Cathy Whitlock explained how human-caused fossil fuel development and the resulting release of CO2 into the atmosphere are harming Montana’s ecosystems, water supplies, communities, and the Plaintiffs themselves. Whitlock’s testimony included projections for Montana’s future based on continuing or increasing the present rate of GHG emissions.
CLIMATE CHANGE HARMS CHILDREN AND SPECIFICALLY THE YOUTH PLAINTIFFS
Lori Byron provided testimony that climate change and the air pollution associated with it are negatively affecting children in Montana, including Youth Plaintiffs, with a strong likelihood that those impacts Will worsen in the absence of aggressive actions to mitigate climate change. Lise Van Susteren provided testimony on the physiological harms caused by climate change to Montana’s youth, including the Youth Plaintiffs, the psychological harms caused by the MEPA Limitation, and the availability of remedies to alleviate Plaintiffs’ psychological injuries. Michael Durglo brought to the table his extensive experience working with tribal elders and youth on climate related issues. The Court found their testimony informative and credible.
CLIMATE CHANGE IS ALREADY ADVERSELY AFFECTING MONTANA’S NATURAL ENVIRONMENT
Dan Fagre helped develop a national climate change research program within the National Park Service, coordinating with other scientists at national parks from Florida to Alaska. He built a research program centered on Glacier Park as a representative mountain ecosystem, engaging faculty and scientists from Montana universities and across the U.S.
Jack Stanford has published over 220 scientific papers and books on aquatic ecosystem processes, including influences of human activities.
Both Stanford and Fagre were of the opinion that anthropogenic climate change was impacting, degrading, and depleting Montana’s environment and natural resources.
The Court observed that of the approximately 146 glaciers present in Glacier National Park in 1850, only twenty-six glaciers larger than twenty-five acres remained in 2015. 82% of Glacier Park’s glaciers were gone and there had been a 70% loss of area of all glaciers. Moreover, Montana’s water resources were critically important to Youth Plaintiffs and all Montana citizens and to many people beyond the State’s borders. Anthropogenic climate change was disrupting the natural range of variation in the flow paths of Montana’s river systems.
DEFENDANTS’ ACTIONS CONTRIBUTE TO CLIMATE CHANGE AND HARM PLAINTIFFS
Anne Hedges shed light on pollution-related policy issues in Montana, emphasizing on impacts to air, water, landscapes, and climate from fossil fuels.
Peter Erickson testified about Montana’s fossil fuel consumption, extraction, and infrastructure, focusing on three categories: (1) extraction of fossil fuels; (2) processing and transportation of fossil fuels; and (3) consumption of fossil fuels by end users. For each of these categories, Erickson quantified the amount of coal, oil, and gas and translated that in units of carbon dioxide (CO2) emissions released from the fuels once they are combusted. Erickson added up all the coal, oil, and gas to determine the emissions associated with the extraction, consumption, and transportation of those fuels. In his opinion, emissions from Montana’s fossil fuel consumption, extraction, and infrastructure were globally significant quantities.
Defendants offered the testimony of Terry Anderson as an expert economist. Purporting to be based on data from the Energy Information Agency (EIA), Anderson provided extremely limited testimony in response to three questions: (1) the total greenhouse gas emissions for the world; (2) the 2020 greenhouse gas consumption emissions for the state of Montana; and (3) the 2022 greenhouse gas consumption emissions for the state of Montana.
The Court held that Anderson’s testimony was not well-supported and contained errors.
Defendants permitted three types of fossil fuel-related activities: (1) extraction of fossil fuels; (2) processing and transportation of fossil fuels; and (3) consumption of fossil fuels by end users.
Data indicated that in 2019, total annual fossil fuels consumed in Montana led to about 32 million tons of CO2 being released into the Atmosphere.
THE MEPA LIMITATION PREVENTS FULL REVIEW OF THE TECHNOLOGICALLY AND ECONOMICALLY AVAILABLE ALTERNATIVES TO FOSSIL FUEL ENERGY IN MONTANA
In this case, Mark Jacobson summarized his research related to Montana and the feasibility of transitioning Montana swiftly from fossil fuels to clean and renewable energy in all sectors by mid-century, where all energy sectors include electricity, transportation, heating/cooling, and industry.
Data indicated that it was technically and economically feasible for Montana to replace 80% of existing fossil fuel energy by 2030 and 100% by no later than 2050, but as early as 2035.
Held
The Court ruled that the MEPA Limitation deprived Plaintiffs of their constitutionally guaranteed rights. It upheld Plaintiff’s fundamental constitutional right to a clean and healthful environment, which includes climate as part of the environmental life-support system.
Key Takeaways:
Informative and credible testimony presented by experts helped the Court see that Montana has already warmed significantly more than the global average. The science is clear that there are catastrophic harms to the natural environment of Montana and Plaintiffs and future generations of the State due to anthropogenic climate change.
In terms of per capita emissions, Montana’s consumption of fossil fuels is disproportionately large and only five states have greater per capita emissions. Montana is a major emitter of [greenhouse gas] emissions in the world in absolute terms, in per person terms, and historically. The current barriers to implementing renewable energy systems are not technical or economic, but social and political. Such barriers primarily result from government policies that slow down and inhibit the transition to renewables, and laws that allow utilization of fossil fuel development and preclude a faster transition to a clean, renewable energy system.
Case Details:
Case Caption:
Held V. State
Docket Number:
CDV-2020-307
Court:
First Judicial District Court of Montana, Lewis and Clark County
A district judge in Massachusetts admitted the findings of an expert economist meant to advance a theory of disparate impact.
Plaintiffs Marc Savage (“Savage”) and Randolph Blake (“Blake”) (collectively referred to as “Plaintiffs”), a retired and current employee, respectively, of the Fire Department for the Defendant City of Springfield (“City” or “Springfield”), pursued claims of race discrimination against the City.
Plaintiffs, who are Black, cited the Defendant’s failure to enforce the City’s residency ordinance which has denied promotional opportunities to Black and Hispanic firefighters. According to the Plaintiffs, Defendants maintained a racially hostile work environment and retaliated against them for engaging in protected activity.
Plaintiffs indicated that they intended to call Dr. Christopher Erath as an expert during trial in connection with their claim that the City’s failure to enforce the City’s Residency Ordinance had a disparate impact on minority firefighters by depriving them of promotional opportunities within the department. Defendants asserted that Erath’s testimony should be excluded on Daubertgrounds because disparities in promotion were not sufficiently significant to draw an inference of causation necessary to make out a prima facie case of disparate impact.
Economics Expert Witness
Christopher Erath received A.B. degrees in Economics and Mathematics from Bowdoin College and a Master’s and Ph.D. in Economics from the University of Wisconsin. Erath’s primary area of interest is labor economics. He has served as an expert witness in numerous matters involving damages in employment discrimination and wage and hour claims and has also prepared extensive studies of statistical liability in employment proceedings and opined on class certification issues.
Michael Campion is an Industrial and Organizational Psychologist and specializes in human resource management and organizational behavior. Dr. Campion operates a small consulting firm that has conducted over 1200 projects on a wide range of human resource topics for nearly 170 clients in both private and public sector settings. He has been a Professor of Management at Purdue University since 1986. Previously he worked full time for 8 years at IBM and Weyerhaeuser Cos.
Erath indicated that he was asked to address two questions, as follows: (1) Are there racial differences in the rate at which employees satisfied the City of Springfield’s residency requirement?; and (2) Are there racial differences in the composition of the department’s officer ranks?
According to Erath, his understanding was that any firefighter hired or promoted on or after March 17, 1995, was required to live in the City.
In conducting his analysis, Erath utilized the spreadsheet provided by Plaintiffs’ counsel to calculate the percentage of firefighters who satisfied the residency ordinance by race (black, Hispanic, and white), both globally and by rank (firefighter, lieutenant, captain, and above). He then performed Fisher’s Exact tests to determine the likelihood that the different compliance rates by race could have occurred by chance. Finally, he calculated the percentage of firefighters of each race (black, Hispanic, and white) who achieved each rank (firefighter, lieutenant, captain, and above).
Erath concluded that there was a high and statistically significant correlation between residency compliance and race among uniformed employees of the Springfield Fire Department and that if Springfield consistently enforced the 1995 residency requirement, the enforcement action would have disproportionately disqualified whites.
B. Defendants’ Rebuttal Expert
Defendants submitted an affidavit from Michael Campion, Ph. D., in rebuttal to the opinions of Erath. To begin with, Campion found fault with Erath’s analysis because it relied on data going back to 1984, rather than limited to the time periods established by the Court, for Plaintiff’s claims and for including the entire pool of Springfield fire fighters, rather than just those qualified for promotion.
The Springfield Fire Department considered candidates who met the minimum experience requirements, took and passed the civil service exam, and had results coming within the 2n+1 formula for promotions.
Campion then undertook his own analysis using what he maintains is a proper candidate pool for purposes of determining disparate impact in promotion consisting of candidates on the promotional lists from 2015 to the present.
Campion claimed to find no statistical evidence of adverse impact for the jobs in either minority group during the period of the case.
C. Motion to Exclude the Testimony of Christopher Erath
Defendants contended that despite Erath’s use of the Fisher’s Exact test, the underlying data included stale data that goes back over thirty years and did not comport with Massachusetts Civil Service law governing eligibility for promotion because it included the entire pool of firefighters employed by SPD, without considering the Civil Service requirements.
Defendant argued that if it involves the relevant statistical pool, consisting only of minorities and non-minorities qualified to undertake the ranked positions of Lieutenant, Captain, District, Chief, and Deputy Chief within the Springfield Fire Department during the pertinent time-period, the Court cannot draw an inference of causation based on the disparities in promotion.
Plaintiffs argued that Defendants’ failure to disclose Campion as an expert under Rule 26 before the Court’s January 18, 2022 deadline compromised their ability to engage in requisite discovery, including deposing Campion.
The Court held that Defendants were free to try to expose what they viewed as the shortcomings of Erath’s opinions on cross-examination, including by posing questions based on Campion’s analysis. However, the Court did not permit Defendants to call Campion as an expert witness based on their excused and unexcusable failure to comply with the deadline.
Held
The Court denied Defendant’s motion to exclude opinion testimony and declaration evidence of Christopher Erath.
Key Takeaway:
The factual basis of an expert opinion goes to the credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the factual basis for the opinion in cross-examination. In other words, cross-examination was the appropriate tool for probing the underpinning of Erath’s testimony and not outright preclusion of his expert opinions.
Spokeo owns and operates the website spokeo.com. It collects consumer and public data from various public sources and private vendors, associates that data with particular names, and publishes it online.
Using proprietary algorithms and systems, Spokeo “attempts to collect and aggregate and merge all that data into persons, person objects, which are then designated with a unique [personal identifier or ‘PID’] for that person object.” That aggregated data, associated with a particular PID, can then be searched for by users of the website. It is also used to populate “teaser profiles,” which can be viewed by the public without a subscription to the website. The teaser profiles advertise additional personal information about the subject of the profile, including about their family, court records, sex offender registration status, marital status, and more.
The Plaintiffs, Aviva Kellman, Jason Fry, Nicholas Newell, Susan Gledhill Stephens, and William Williams V, found a teaser profile associated with their personal information.
The Plaintiffs said that they did not consent to Spokeo’s use of their information on its website. They asserted that Spokeo’s publication of their personal information violated their statutory rights of publicity and common law rights regarding misappropriation of name and likeness. They sought class certification against Spokeo for four classes of people in California and Ohio.
Spokeo filed motions to exclude the declaration and testimony of Plaintiffs’ experts, Michael Naaman and Steven Weisbrot. In response, the Plaintiffs also filed a motion to exclude Spokeo’s expert, David Alfaro.
Economics Expert Witness
Michael Naaman, Ph.D., is a senior consultant specializing in antitrust, econometrics, and machine learning. He has provided economic and econometric analysis in issues relating to patent infringement and intellectual property, false advertising, and antitrust disputes.
Naaman has a decade of experience in the economic consulting industry. He received his Ph.D. in economics from Rice University, and he received a M.S. in statistics and B.S. in economics, math, and physics from Tulane University.
Steven Weisbrot, Esq. has been responsible for the design and implementation of hundreds of court-approved notice and administration programs. He is President and Chief Executive Officer of Angeion Group, a leading provider of comprehensive settlement management services. Weisbrot is a licensed attorney in Pennsylvania and New Jersey.
David Alfaro is a Senior Managing Director and co-leads the Data & Analytics West Coast practice and is based in San Francisco. Over his 30-year career, Alfaro has led more than 200 engagements as an expert witness and expert consultant, nearly all of which have been in the investigations and disputes space.
Moreover, he is an expert in the areas of collecting enterprise-wide information with extensive experience in complex, data-intensive analyses in response to government or internal investigations and litigation. In this capacity, Alfaro has provided formal and informal testimony to federal and state courts, the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the Federal Bureau of Investigation (“FBI”), the Securities and Exchange Commission (“SEC”), the Department of Justice (“DOJ”), the U.S. Attorney’s Office, the Financial Industry Regulatory Authority (“FINRA”) and other federal agencies.
Spokeo’s Motion to Exclude Declarations and Testimony of Michael Naaman and Spokeo’s Motion to Strike Naaman’s New Reply Declaration
Spokeo filed a motion to exclude Naaman’s declaration and testimony, arguing that his class size calculations are unreliable and that his method to calculate damages is fundamentally flawed.
Spokeo argued that Naaman failed to exclude Spokeo users, dead people, people who assigned their rights, duplicated profiles, profiles with inaccurate home addresses, and profiles that refer to people who are not real from his class size calculations. The Court considered the argument superfluous as Spokeo did not challenge numerosity. Even if Naaman should have excluded each of these, the classes clearly would still meet the numerosity requirements given the data upon which he relied and the evidence of Spokeo’s business model, which is apparently designed to have a teaser profile for every American adult.
Also, Spokeo sought to exclude Naaman’s declaration and testimony about damages calculations, asserting that Naaman did not provide a method for calculating damages and instead simply multiplied the number of class members by the minimum statutory penalty sought by the Plaintiffs for the Viewed Prior to Purchase classes.
The Court held that, pursuant to Rule 702, it was a logical way to calculate damages in a case where the Plaintiffs seek the statutory minimum for damages, and this would help the trier of fact.
Spokeo’s Motion to Exclude Declarations and Testimony of Steven Weisbrot
Class Notification:
Spokeo also moved to exclude the declaration and testimony from Weisbrot about class notification, asserting that it was irrelevant and that its methodology was unreliable.
Weisbrot’s proposed notification method involved sending emails to potential class members using the email addresses posted on Spokeo’s teaser profiles, by publication in the media, and by website. Though his proposed method provided notice to the nationwide classes, he explained how he would and could use the same method on a narrower target audience if smaller classes were certified, such as statewide classes.
Spokeo contended that Weisbrot’s notice plan will provide notice to all potential class members in the Purchase classes, and that this is overbroad because it is not directed only to members of the Viewed Prior to Purchase classes, for which notice is mandatory under Rule 23(b)(3). But the Federal Rules permitted notice to 23(b)(2) classes like the Purchase classes, and Spokeo offered no reason why notice should not be provided to them.
The Court rejected Spokeo’s argument that Weisbrot not offering a way to target solely Viewed Prior to Purchase members was merely another way to argue that the Plaintiffs were unable to identify their own class members from common evidence. Moreover, the Court found Spokeo’s argument about Plaintiffs self-identifying bizarre because claimants do not have to know pre-filing which class they are in.
Notice Methodology
Finally, Spokeo asserted that Weisbrot should not rely on the email addresses that Spokeo has in its possession and includes for teaser profiles because they might not be real or correspond to a real person. Despite Spokeo’s asserting that its email address data was inherently unreliable, and given the evidence about its use of data gathering and associating via personal identifier labels to connect names with addresses and other information, the Court found it highly likely that many of the email addresses were correct for many of the teaser profiles.
Plaintiffs’ Motion to Exclude Declaration and Testimony of David Alfaro
Plaintiff argued that Alfaro misrepresented evidence about Spokeo data vendors, was unqualified to opine on class size or Naaman’s methodology, was not an expert on class notice and could not opine on Weisbrot’s methodology, and provided improper legal conclusions.
The Court held that it did not rely on Alfaro’s declarations to assess Naaman’s declaration or the validity of Weisbrot’s methodology. In other words, the Court denied Plaintiff’s motion to exclude Alfaro’s testimony as moot because that was the driving basis for which the Plaintiffs challenged Alfaro’s declaration.
Held
The Court granted Plaintiffs’ motion for class certification for the California and Ohio classes, with certain amendments to the class definitions. The motion for the nationwide classes was withdrawn.
To sum it up, the Court denied Spokeo’s motion to exclude the testimony of Michael Naaman and Steven Weisbrot. The Plaintiffs’ motion to exclude David Alfaro’s declaration and testimony was denied as moot.
Key Takeaway:
Naaman simply multiplied the number of class members by the minimum statutory penalty sought by the Plaintiffs for the Viewed Prior to Purchase classes. The Court held it was a logical way to calculate damages in a case where the Plaintiffs seek the statutory minimum for damages.
Despite Spokeo’s assertion that its email address data was inherently unreliable, and given the evidence about its use of data gathering and associating via personal identifier labels to connect names with addresses and other information, the Court held that it was highly likely that many of the email addresses are correct for many of the teaser profiles. Hence, Weisbrot could rely on the email addresses that Spokeo had in its possession and remove junk, fake, or inaccurate emails, to the extent possible.
