Expert Witness Profiler

Category: Finance Expert Witness

  • Finance Expert Allowed to Opine on Damages and Disgorgement

    Finance Expert Allowed to Opine on Damages and Disgorgement

    Through various entities (hereinafter, the “Tarter Companies”), the Tarter family operates a large animal management and farm gate manufacturing business. Principally at issue in this case are the business transactions between Plaintiff C-Ville Fabricating, Inc. (doing business as Tarter Industries), and Defendant Hong Kong QMC Industry Company, LTD (“QMC”).

    Defendant Josh Tarter is a shareholder of Tarter Industries. Plaintiff contends that at all relevant times, Josh held himself out as a high-ranking executive of the Tarter Companies and oversaw their operation. Plaintiff also alleged that Josh’s right-hand man was fellow Defendant Thomas Lewis Gregory.

    Moreover, Plaintiff sued Josh Tarter, Thomas Gregory, and QMC because of their alleged undisclosed interest in QMC. The scheme allegedly resulted in the Tarter Companies wiring approximately $74,857,122.80 to QMC and its affiliates. Plaintiff asserted that during this period, Josh and Thomas hid their interests in QMC – despite a duty to reveal that information – and that Josh affirmatively lied about such interests on two occasions.

    The Court has noted that the “thrust” of the Plaintiff’s allegations is that Josh and Thomas “used their senior positions with the Tarter Companies to ensure that components and parts were sourced from QMC, while siphoning Tarter funds to themselves through inflated rates for the purchased components” from QMC. Plaintiff alleged that they were damaged because they overpaid QMC for the components.

    On June 5, 2019, the Court ordered the Clerk of Court to enter default against QMC. QMC has never participated in the litigation. Despite Josh and Thomas’ majority ownership interest in QMC, none of its financial records were disclosed during discovery.

    Because Plaintiff was unable to obtain any of QMC’s financial records, they retained Dr. Christopher Clifford.

    Motion to Exclude

    Clifford conducted a financial analysis of QMC’s profits. The expert report (“Clifford Report”) calculates the difference between the amount the Tarter Companies actually paid to QMC and price quotes of the same products from a Chinese business called LongLife.

    Clifford’s calculations were derived from an Excel spreadsheet detailing 7,094 purchases made by Tarter Industries from QMC between 2010 and 2017 and an Excel spreadsheet detailing 5,885 price quotes from LongLife on parts previously purchased by Tarter Industries from QMC. Clifford then estimated the economic damages by calculating QMC’s markup as the difference between the price charged by QMC and that quoted by LongLife. The average markup of the 5,885 price quotes was 27.45%. Clifford then assumed an average markup of 27.45% for the 1,210 purchases that did not have a direct quote from LongLife. Clifford aggregated the markups to determine the markup paid on an annual basis and compounded the result to present value at 7.05%. The Clifford Report concluded that the total damages suffered by the Plaintiff was approximately $24,162,158. The Defendants sought to exclude the Clifford Report on numerous grounds.

    Finance Expert Witness

    Dr. Christopher Clifford holds a Ph.D. in finance from Arizona State University. His research interests focuses on non-banking intermediaries such as financial advisors, mutual funds, and hedge funds. Clifford’s work has been mentioned in the Financial Times, The Economist, and the Wall Street Journal. His representative papers have been published at the Review of Financial Studies, Journal of Financial Economics, and the Journal of Financial and Quantitative Analysis.

    Want to know more about the challenges Christopher Clifford has faced? Get the full details with our Challenge Study report.

    Discussion by the Court

    A. The Clifford Report Relies on a Valid Comparison

    Defendants argued that the Clifford Report should be excluded because it erroneously assumed that the QMC payments and the LongLife Quotes are comparable.

    Because the Plaintiff is unable to view QMC’s financial documents, some way of calculating its profits is necessary. Although Defendants assert that the payments were an apples-to-oranges comparison to the price quotes, the evidence shows otherwise. In fact, the comparisons, minus the obvious shipping costs discrepancy, are very similar. Most parts the Tarter Companies ordered from QMC had an exact comparison with LongLife.

    This is because LongLife is in the same industry as QMC, and, in fact, was QMC’s supplier. Contrary to Defendant’s argument that the comparison is “unhelpful and misleading,” it is a reliable way determine QMC’s profits since its records are unavailable. Allowing this report will not confuse the jury, and any discrepancy in the Clifford Report is properly dealt with by vigorous cross examination.

    Clifford has testified that his analysis is standard in the finance community and can be found in “every finance textbook, in any corporate finance or
    valuation-based textbook at the undergraduate or graduate level.”

    B. The Clifford Report has a Sufficient Basis for Determining the Plaintiff’s Economic Damages

    Next, Defendants take issue with the fact that the Clifford Report failed to allocate damages to Tarter Industries individually.

    Defendants argued that the Clifford Report aggregates damages amongst all four Tarter Companies, which is irrelevant and entirely unhelpful, since the only remaining Plaintiff is Tarter Industries.

    While parts of the Clifford Report reference economic damages suffered by the “Plaintiffs,” this is due to the fact that the report was created at the time when the other three Tarter Companies were still members to the lawsuit. However, the Clifford Report bases its calculations “solely” on the sales between Tarter Industries and QMC.

    The total damages figure is based off 7,094 orders, all of which were purchased by Tarter Industries. This makes sense given that Tarter Industries “is responsible for the manufacture and purchase of component parts . . .” The fact that the Clifford Report’s conclusion says “Plaintiffs” instead of “Plaintiff” is immaterial, because the remaining Plaintiff is the entity whose purchases the calculations were based off.

    C. The Clifford Report Satisfies Rules 26(a)(2)(B) and 37(c)(1)

    Defendants argued that the Clifford Report should be stricken because the Report did not include information about Clifford’s testimonial experience over the last four years and on his compensation.

    Each of those are required to be disclosed during discovery. The drastic sanction of striking the Clifford Report is not warranted because the nondisclosure was harmless. Plaintiff states that the Clifford Report did not mention Clifford’s testimonial experience over the past four years because he has none. Additionally, the Plaintiffs indicated that Clifford’s rate is $400 per hour. Because the error was harmless, the Court will not strike the Clifford Report on these grounds.

    D. Additional Arguments in Defendants’ Supplemental Briefing

    Defendants submitted five new arguments in their supplemental briefing. The Court will address each in turn.

    i. Damages and disgorgement

    Defendants argued that Clifford’s model of “economic damage” is not really a measure of damage to the Plaintiff, but rather a measure of the amount Defendants profited from marking up QMC prices.

    Plaintiff has given no indication that it seeks to recover QMC’s profits twice over, and any attempt to do so would not be permitted. Rather, the Clifford Report is merely a way to quantify the harm allegedly caused by Defendants. If Plaintiff was to prevail on the merits of its claims, it would be entitled to recover profits earned by QMC.

    Plaintiff’s damages are the Defendants’ profits, because the extra price paid to QMC would otherwise be money it saved.

    Even if this distinction mattered, the Plaintiff would still have to prove the amount of revenue the Defendants earned to be entitled to disgorgement. Because they do not have access to QMC’s financial records, the Clifford Report helps fill in the missing pieces.

    Further, for purposes of a motion to exclude, the Court’s gatekeeping function is limited to the considerations in Rule 702. The Court has already determined that Clifford’s report satisfies Rule 702 and that his testimony will help assist the jury. Defendants’ attempt to distinguish the remedies of damages and disgorgement did not alter the Court’s Rule 702 determination.

    ii. The Clifford Report is not an adoption of Plaintiff’s lay opinion, nor is it basic math

    Defendants contended that the Clifford Report is not an expert report at all, but rather Plaintiff’s own position clothed in expert garb. Defendants argued that Clifford “blindly accepted that the LongLife quotes were comparable to the QMC prices” and that he conducted basic math to arrive at his opinion. This, Defendants argued, amounts to a wholesale adoption of Plaintiff’s position.

    To determine QMC’s profits, Clifford necessarily had to reference the Plaintiff’s purchase records. Using such records to calculate QMC’s profits is not a wholesale adoption of Plaintiff’s position.

    Additionally, the Clifford Report is more than basic math. The Clifford Report analyzed 7,094 purchases over a seven-year span. It then aggregated QMC’s markups on an annual basis and compounded the result to present value at a rate of 7.05%.

    Additionally, Clifford based his calculations off specific data that is best understood by a specialist in the finance industry.

    iii. The Clifford Report based its calculation on gross profits

    Defendants argued that Plaintiff’s reliance on gross profits is improper; that the correct measure of damages should be net profits. Even if Defendants are correct, the Court can resolve this issue with specific jury instructions, avoiding the need to take the harsher path of excluding an expert. Additionally, Clifford’s figures will be subject to scrutiny on cross examination and defense counsel is free to question all aspects of his financial calculations. The Court will not exclude the Clifford Report on that basis alone.

    iv. Federal Rule of Evidence 403

    Defendants’ final argument is that the Clifford Report should be excluded because it will mislead the jury. To support this claim, Defendants repeat its argument about economic damages and disgorgement. The Court has already resolved that argument and will not address it further. Because the probative value of the Clifford Report is not substantially outweighed by its likelihood of misleading the jury, it will not be excluded.

    Held

    The Court denied the Defendants’ motion to exclude the testimony of Christopher Clifford.

    Key Takeaway

    The Clifford Report will help assist the jury in understanding the financial impact of the transactions between Plaintiff and QMC. Plaintiff has established that Clifford has specialized knowledge in the financial industry; based his Report on thousands of actual purchases over a seven year period; used principles taught in “every finance textbook, in any corporate finance or valuation-based textbook at the undergraduate or graduate level;” and applied present value calculations to all 7,094 purchases. Because Plaintiff has proven by a preponderance of evidence that the requirements of Fed. R. Evid. 702 have been met, the Clifford Report will not be excluded.

    Case Details:

    Case Caption:C-Ville Fabricating V. Tarter
    Docket Number:5:18cv379
    Court Name:United States District Court, Kentucky Eastern
    Order Date:July 20, 2026
  • Finance Expert’s Testimony on Corporate Ethics Excluded

    Finance Expert’s Testimony on Corporate Ethics Excluded

    This case arises from Fluor’s performance under LOGCAP IV, Task Order 0005 (“TO5”), under which Fluor provided logistics and support services to U.S. military operations in Afghanistan. As a cost-reimbursable contract, TO5 was subject to oversight by multiple Government entities, including the Defense Contract Management Agency (“DCMA”) and the Defense Contract Audit Agency (“DCAA”).

    As part of that oversight, DCMA conducted periodic Property Management System Analyses, or Property Management System Analysis (“PMSAs”), to assess whether Fluor’s property management system complied with applicable contractual and regulatory requirements. PMSAs evaluate the design and operation of a contractor’s system and may result in findings, corrective action requests, or system approval determinations. PMSAs do not evaluate individual claims for payment and are not designed to function as fraud-detection mechanisms.

    In addition to Government oversight, Fluor conducted internal audits and assessments related to its property and materials management practices and communicated with Government officials regarding performance issues during TO5.

    Relators alleged that Fluor failed to disclose material deficiencies in its property and materials management practices, misrepresented the adequacy of its systems, and improperly billed the Government under TO5.

    Relators retained Dr. Dov S. Zakheim to offer expert testimony regarding Department of Defense financial oversight, acquisition practices, and the operation and limitations of Government review mechanisms in contingency environments.

    Finance Expert Witness

    Dr. Dov S. Zakheim has extensive experience with defense acquisition, financial management, and wartime contracting oversight.

    Zakheim served as Under Secretary of Defense (Comptroller) and Chief Financial Officer from 2001 to 2004 and later served as the Department of Defense’s Civilian Coordinator for Afghanistan and as a commissioner on the Congressionally mandated Commission on Wartime Contracting in Iraq and Afghanistan. 

    Get the full story on challenges to Dov Zakheim’s expert opinions and testimony with an in-depth Challenge Study.

    Discussion by the Court

    A. Qualifications

    The parties’ dispute concerns not Zakheim’s senior government service, but the extent to which that experience supplies specialized expertise for the particular subjects addressed in his proffered opinions.

    Fluor argued that Zakheim lacked specialized knowledge and experience in the day-to-day administration of Government property requirements, including the conduct of PMSAs and DCMA property administration.

    For purposes of Rule 702(a), the Court found that Zakheim’s education and experience at senior levels of the Department of Defense qualify him to provide experience-based testimony regarding (1) the structure and objectives of DoD oversight mechanisms in contingency environments, (2) the general roles of oversight entities within DoD, and (3) the practical constraints such entities may face in wartime settings. Zakheim also stated that he reviewed a substantial body of case materials, including DCMA PMSA reports, internal audits, corrective action plans, and contemporaneous correspondence.

    Accordingly, the Court concluded that Zakheim satisfied Rule 702’s threshold “qualification” requirement for the limited purpose of offering experience-based testimony within the foregoing bounds.

    B. Scope, Reliability, and Fit

    1. Permissible Experience-Based Testimony

    Fluor argued that Zakheim’s report is largely an advocacy narrative that does not employ a reliable methodology and did not assist the jury because jurors are capable of reading the documents for themselves.

    The Court agreed that certain general, experience-based testimony is both reliable and helpful. Zakheim may testify, in general terms, regarding the purpose and practical limitations of Government oversight mechanisms in contingency environments—including that PMSAs are system-level reviews, may rely on sampling, are affected by resource and operational constraints, and are not designed as fraud-detection tools—and why the existence of PMSAs finding a system “adequate” does not, standing alone, foreclose factual disputes about what was occurring internally or what information was (or was not) disclosed.

    At the same time, the Court emphasized the limits of this ruling. To the extent Zakheim’s testimony becomes a document-by-document narrative offered to argue what happened or to urge the jury to adopt Relators’ factual inferences, it is not considered admissible expert testimony.

    2. Impermissible opinions regarding intent, credibility, and concealment

    Fluor argued that Zakheim’s report and testimony go beyond permissible expert context and instead offer conclusions that, in substance, attribute dishonest intent, concealment, or deception to Fluor based on his interpretation of internal documents.

    The Court agreed with Fluor and held that Zakheim may not testify that Fluor acted dishonestly or deceptively, engaged in a cover-up, concealed information, lacked integrity, or intentionally misled Government officials. Nor may he offer expert opinions framed as conclusions about Fluor’s motive, intent, credibility, or corporate ethics.

    However, this limitation does not preclude Zakheim from identifying categories of information reflected in the record that, if credited by the jury, would have placed a contractor on notice of operational or compliance issues, or from explaining why such information would be significant to senior Department of Defense officials. The line is crossed, however, where the testimony moves from describing the existence or significance of information to directing the jury to draw conclusions about Fluor’s honesty, intent, or credibility.

    3. Counterfactual Predictions of Government Action and Legal Conclusions

    Fluor also challenged Zakheim’s opinions regarding what DCMA, DCAA, an Award Fee Evaluation Board, an Inspector General, or suspension and debarment officials would have done had they possessed additional information, including assertions that the Government would have disapproved Fluor’s business systems, imposed financial penalties, denied or clawed back award fees, or pursued suspension or debarment.

    The Court found that Zakheim may, at a general level, describe the existence and purpose of Government oversight and response mechanisms, including that contractors are subject to system reviews and that corrective-action and enforcement processes exist. He may also explain why integrity, candor, and accurate reporting can matter to senior Government officials.

    However, Zakheim may not opine that particular Government actors would have reached different outcomes in this case, exercised their discretion in a specific manner, or imposed particular contractual, regulatory, or financial consequences had they known additional information. Such testimony consists of speculative counterfactual predictions that depend on discretionary, multi-factor decision-making and is not supported by an articulated, reliable method for forecasting how the Government would have acted on this record.

    For the same reasons, Zakheim may not offer legal conclusions regarding what the contract or regulations require or instruct the jury on what legal or contractual consequences should follow from a given set of facts. He may describe processes in general terms, but he may not apply those processes to declare the proper outcome in this case. This limitation applies regardless of whether such opinions are framed as what the Government “would have done,” “likely would have done,” or “typically does.” Testimony describing the existence of oversight mechanisms or the factors such mechanisms may consider is permissible; testimony that applies those processes to declare the proper or expected outcome in this case is not.

    C. Rule 403

    Fluor separately sought to exclude, under Rule 403, narrative testimony concerning violent incidents in Afghanistan, including references to a suicide bombing and related loss of life. Fluor argued that such testimony had minimal probative value to the claims and defenses being tried, would invite a collateral mini-trial over a tragic event, and created a substantial risk of unfair prejudice and jury distraction.

    The Court agreed that detailed testimony about violent events—particularly where the proffer would invite the jury to attribute casualties to Fluor or to litigate the causes and responsibility for the attack—poses a substantial risk of inflaming the jury and diverting attention from the elements the jury must decide in this False Claims Act case. 

    Accordingly, Zakheim may testify in general terms regarding the operational challenges of contingency environments to the extent that such context informs the limitations of oversight mechanisms. But he may not offer detailed or emotionally charged accounts of violent incidents, and he may not opine—directly or by implication—that Fluor’s alleged property-management practices “caused” such incidents or “cost lives.”

    D. Summary of Rulings and Trial Limitations

    The Court summarizes its rulings regarding Zakheim’s testimony as follows:

    1. Permitted Testimony

    Zakheim may offer experience-based testimony, grounded in his senior Department of Defense service, concerning:

    • the structure, purpose, and general limitations of Government oversight mechanisms in contingency environments, including PMSAs;
    • the effect of wartime conditions, resource constraints, and sampling practices on what such oversight mechanisms are likely to detect; and
    • why the existence of PMSAs or other Government reviews finding a system “adequate” does not, standing alone, resolve factual disputes concerning internal deficiencies or disclosures.

    2. Excluded testimony—intent, credibility, and ethics

    Zakheim may not testify that Fluor acted dishonestly, deceptively, or with intent to mislead; that it “hid” or “covered up” information; that it lacked integrity; or that it engaged in fraud. He may not offer expert opinions regarding Fluor’s state of mind, motive, credibility, or corporate ethics, whether explicitly or through loaded characterizations or rhetorical framing.

    3. Excluded testimony—counterfactual Government action and consequences

    Zakheim may not state that DCMA, DCAA, an Award Fee Evaluation Board, an Inspector General, or suspension/debarment officials would have taken specific actions had they known additional information, including that they would have altered PMSA results, disapproved Fluor’s systems, imposed particular financial consequences, denied or clawed back award fees, or suspended or debarred Fluor. Such counterfactual predictions and legal conclusions are speculative and impermissible. These exclusions apply to the substance of the opinions, not merely their phrasing. Testimony that, in effect, predicts or declares Government decision-making outcomes is inadmissible regardless of whether it is presented as a general tendency, hypothetical scenario, or illustrative example.

    4. Limit on narrative fact summaries

    Zakheim may not present a document-by-document factual narrative or select and characterize record evidence in a manner that effectively argues Relators’ version of events under the guise of expert testimony. To the extent the underlying documents are relevant, they may be presented through fact witnesses or admitted into evidence directly. Expert testimony must add specialized context rather than merely repackage facts for advocacy.

    5. Rule 403 Limitations

    Zakheim may testify generally about the challenges of operating in contingency environments, so far as that context bears on oversight limitations. He may not offer detailed, graphic, or emotionally charged testimony regarding violent incidents, including suicide bombings, nor may he state that Fluor’s alleged conduct caused such incidents or resulted in loss of life.

    6. Preservation of Objections and Trial Management

    The Court will not permit excluded opinions to be introduced through incremental questioning or cumulative context. That said, these rulings do not foreclose contemporaneous objections at trial where testimony exceeds the bounds set forth above. The Court will address any close questions outside the presence of the jury as necessary to ensure compliance with Rules 702 and 403.

    Held

    The Court granted in part and denied in part the Defendants Fluor Corporation, Inc., and Fluor Intercontinental, Inc.’s motion to exclude the testimony of Relators’ expert Dov S. Zakheim .

    Key Takeaway

    Rule 702 does not permit expert testimony that directly, or in practical effect, instructs the jury to conclude that a party acted dishonestly, deceptively, or with intent to mislead, or that it concealed information from the Government.

    Such determinations depend on credibility and intent assessments reserved for the jury and are not the product of a reliable expert application of specialized knowledge.

    Please refer to the blog previously published about this case:

    Logistics Expert’s Fraud-Related Opinions Excluded

    Case Details:

    Case Caption: United States ex rel. Charles R. Shepherd & Danny V. Rude
    Docket Number: 6:13cv2428
    Court Name: United States District Court for the District of South Carolina, Greenville Division
    Order Date: January 14, 2026
  • Finance Expert Allowed to Opine on Loss Causation

    Finance Expert Allowed to Opine on Loss Causation

    Stadium Capital (“Stadium”), the Lead Plaintiff in this class action lawsuit, has sued Co-Diagnostics (“CoDx”), its CEO Dwight Egan, and its CFO Brian Brown, for allegedly making false or misleading statements in violation of the Securities Exchange Act of 1934.

    Defendants filed a motion to exclude the testimony of Stadium’s expert witness, Chad W. Coffman under Rule 702 and Daubert standards.

    Finance Expert Witness

    Chad William Coffman is the President of Peregrine Economics, a Chicago based firm that specializes in the application of economics, finance, statistics, and valuation principles to questions that arise in a variety of contexts, including, as here, litigation.

    He holds a Bachelor’s Degree in Economics with Honors from Knox College and a Master’s of Public Policy from the University of Chicago. He is also a CFA charter-holder.

    Discover more cases with Chad Coffman as an expert witness by ordering his comprehensive Expert Witness Profile report.

    Discussion by the Court

    Defendants filed a motion to exclude Coffman’s testimony because he allegedly failed to analyze and account for confounding factors essential to determining loss causation.

    Defendants argued that Coffman’s expert opinion is inadmissible because it fails to account for the “axiomatic” requirement of “adequately accounting for obvious alternative explanations.” They then argued that expert testimony on loss causation requires an accounting of confounding factors that Coffman did not provide.

    They pointed to three confounding issues that Coffman allegedly failed to disaggregate in his testimony on loss causation: (1) the financial results for the second half of the second quarter of 2022, (2) forward-looking statements about uncertain future sales and demand, and (3) the announcement of delays for the initial clinical trial of an at-home, point-of-care PCR test. 

    Analysis

    The Court held that Coffman’s testimony is reliable and thus admissible. First, he used the common and accepted method of an event study, which determined that the corrective disclosure caused a “statistically significant negative price movement in [CoDx’s] Common Stock beyond the 95% confidence level (as well as beyond the 99% confidence level).” That was after “controlling for market and industry factors,” as required. Second, Coffman stated in his report that he “also considered and analyzed the degree to which information arguably unrelated to the corrective information (i.e., confounding information) potentially impacted the stock price over the two-day trading period.” He noted that he “did not identify any confounding information.” Indeed, the most obvious cause of the over-30% price drop was the news about substantially decreased Logix Test sales and what that fact implied about future sales, not information about those low sales remaining stable for the second half of the quarter, another announcement about continued uncertainty surrounding future demand, or another announcement that the at-home PCR test wasn’t quite ready yet.

    Coffman testified at his deposition that the “confounding” information was either already baked into the market (or would have been if defendants had told the truth on their May call), or it was immaterial. So there wouldn’t be any material “confounding” information to consider.

    Held

    The Court denied Defendants’ motion to exclude Chad Coffman’s expert testimony.

    Key Takeaway

    The Defendants can try to rebut Coffman’s testimony or otherwise mitigate potential damages by showing that their “confounding” information contributed materially to the price drop. But the Court determined that Coffman’s testimony “can be helpful to the jury” as it evaluates those arguments. It is not required that an expert categorically exclude each and every possible alternative cause in order to render the proffered testimony admissible.

    Case Details:

    Case Caption: Stadium Capital Llc V. Co-Diagnostics, Inc.
    Docket Number: 1:22cv6978
    Court Name: United States District Court, New York Southern
    Order Date: January 14, 2026
  • Tennessee Law & Expert Witnesses: Blazin Wings Case Highlights Damage Limits

    Tennessee Law & Expert Witnesses: Blazin Wings Case Highlights Damage Limits

    Charles Haney, an ATM business owner, suffered injuries after tripping over a mat at a Blazin Wings restaurant in Jackson, Tennessee. He was visiting the restaurant to perform routine maintenance on an ATM, one of several that Haney owned and operated throughout West Tennessee. 

    Haney initiated this tort action against Blazin Wings, seeking damages, including lost wages, and retained vocational expert Bruce Brawner and economist Bill Malcolm Brister to support his claims.

    Vocational Rehabilitation Expert Witness

    Bruce Brawner is a vocational rehabilitation counselor and also a life care planner. He formed Brawner & Associates in Madison, Mississippi. He has a master’s degree in vocational rehabilitation counseling from Mississippi State University.

    Get the full story on challenges to Bruce Brawner’s expert opinions and testimony with an in-depth Challenge Study. 

    Finance Expert Witness

    Bill Malcolm Brister teaches finance at Millsaps College. He holds a PhD. from the University of Arkansas. He has done a good bit of consulting in the area of litigation support.

    Want to know more about the challenges Bill Malcolm Brister has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Relying on Federal Rules of Evidence 702 and 403, Blazin Wings made three overarching arguments with respect to Brawner: first, Brawner’s testimony was unnecessary because the jury can assess Haney’s loss of earning capacity without that testimony; second, Brawner’s opinions were unreliable and untrustworthy; and third, Brawner’s testimony will confuse the jury. As to Brister, Blazin Wings likewise invoked Rules 702 and 403. It argues that ” Brister’s opinions are based solely on the unreliable and untrustworthy figures used by Brawner,” and should accordingly be excluded as cumulative, duplicative, and unreliable. Finally, Blazin Wings contended that because Haney cannot recover damages for loss of household services under Tennessee law, Brawner’s and Brister’s opinions regarding that loss are irrelevant and otherwise unreliable. 

    Bruce Brawner

    Defendant’s Objections:

    Blazin Wings first argued that Brawner’s expert testimony was not necessary for the jury to calculate Haney’s lost earning capacity. 

    They asserted that Haney could provide sufficient testimony about his injuries and their impact on his earning capacity, making Brawner’s specialized input unnecessary. The Court held that Haney would be able to testify to the obvious nature of his symptoms and its impact on his ability to work. But it does not follow that an expert witness’s testimony is unnecessary to help establish the extent of his losses. This basis is thus insufficient to exclude Brawner’s testimony.

    Blazin Wings criticized Brawner’s reliance on Department of Labor data for “ATM Servicers,” claiming it was an imprecise match for Haney’s unique business. They insisted on the necessity of Haney’s actual financial records. They argued that Brawner failed to account for Haney’s continued income from his ATMs after the incident. Blazin Wings contested Brawner’s work-life expectancy calculation, arguing that it ignored Haney’s health and medical history, including that Haney has diabetes and has had both his bladder and prostate removed.

    Blazin Wings contended that Brawner’s testimony would confuse the jury and waste time, as the jury could independently assess Haney’s damages.

    Analysis:

    The Court found Brawner’s testimony regarding lost wages relevant and reliable under Rule 702. It emphasized that challenges to Brawner’s data and assumptions affected the weight of his testimony, not its admissibility. The Court stated that cross examination was the appropriate place to challenge the experts findings.

    Bill Brister

    Defendant’s Objections:

    Blazin Wings argued that Brister’s opinions were unreliable because they were based on Brawner’s “unreliable” data. They argued that Brister’s testimony was cumulative, simply “parroting” Brawner’s calculations.

    In his report, Brister relied on the lost earnings calculations provided by Brawner and government data to calculate the present value of those losses. In the appendices to his report, Brister outlined his calculations for various scenarios and provides the sources he relied on.

    Blazin Wings has presented no authority that an expert may not rely on the calculations of another expert. Indeed, under Rule 703 of the Federal Rules of Evidence, “experts may rely on data from others, at least to the extent that the data is of the type reasonably relied on by other experts in the field.”

    Moreover, the Court held that Brister’s testimony is probative as to the issue of damages. Furthermore, reliance on another expert’s report does not necessarily render that expert’s testimony cumulative. While Brister’s report may go to the same issue, it nonetheless offers a distinct perspective on the time-value of Haney’s purported losses. 

    Loss of Household Services

    Blazin Wings argued that Tennessee law doesn’t allow recovery for the general “loss of value” of one’s own household services. The Court agreed, stating that only actual expenditures for replacement household services are recoverable.

    Basically, Brawner relied on “expectancy data” provided by the Department of Labor to inform his calculation——not testimony from Haney regarding what he had paid or would pay someone else to perform household services. Similarly, in his expert report, Brister did not identify any actual or predicted expenditures incurred by Haney on which he based his present value of lost household services figure.

    Since Brawner and Brister’s calculations were based on general data, not Haney’s actual expenses, their testimony on household service loss was excluded.

    Held

    The Court granted in part and denied in part the Defendant Blazin Wings’s motions in limine to exclude the testimony of Bruce Brawner and Malcolm Brister.

    Key Takeaways:

    • Projections of lost wages, by nature, involve a degree of speculation; even where an expert’s factual bases for their conclusions are not particularly strong. It is not proper for the Court to exclude expert testimony merely because the factual bases for an expert’s opinion are weak.
    • Also, the Court recognized that while Haney could testify to the impact of his injuries, expert testimony was necessary to quantify his economic losses.

    Case Details:

    Case Caption: Haney V. Buffalo Wild Wings, Inc.
    Docket Number: 2:23cv2686
    Court: United States District Court, Tennessee Western
    Order Date: March 4, 2025
  • Finance Expert Witness’ Testimony on ESG Activism Does Not Require Specific Scientific Support

    Finance Expert Witness’ Testimony on ESG Activism Does Not Require Specific Scientific Support

    Every year millions of workers set aside their hard-earned dollars to save for retirement. To protect the interests of these workers, Congress passed the Employee Retirement Income Security Act of 1974 (“ERISA”), to remedy “the great personal tragedy” caused by mismanagement of retirement plans that left workers with little to no savings.

    This class action lawsuit is about whether American Airlines (“American”) and the American Airlines Employee Benefits Committee (“EBC” and, together with American, “Defendants”) breached certain fiduciary duties under ERISA when investing—or relying on others to invest—their employees’ retirement assets towards environmental, social, and governance (“ESG”) objectives. In response to Defendants’ ESG-focused investment practices, Plaintiff Bryan Spence, on behalf of the class members, asserts two causes of action under ERISA: (1) Defendants breached their duties of loyalty and prudence and (2) Defendants breached their duty to monitor.

    Plaintiff argued that Defendants violated these fiduciary duties by mismanaging the retirement plan when they utilized “investment managers pursuing non-financial and non-pecuniary ESG policy goals through proxy voting and shareholder activism” — specifically, BlackRock Institutional Trust Company, Inc. According to Plaintiff, BlackRock pursues a pervasive ESG agenda that “covertly converts the [retirement] [p]lan’s core index portfolios to ESG funds.”

     As a result, Plaintiff contended that BlackRock’s inclusion as an investment manager harmed the financial interests of retirement plan participants and their beneficiaries due to pursuing socio-political outcomes rather than exclusively financial returns.

    Defendants filed a motion to partially exclude Plaintiff’s expert witness, J.B. Heaton.

    Finance Expert Witness

    James Breckenridge Heaton, III received Ph.D. and MBA degrees from respected programs at the University of Chicago Booth School of Business. He likewise graduated from the University of Chicago School of Law. His professional experience includes publishing extensively in several peer-reviewed journals on finance topics, including key issues in this case: asset management, index investing, shareholder activism, hedge fund activism, event studies and price impact in securities litigation, corporate finance, corporate governance, and ESG investing. Given his expertise in these subject areas, Heaton has also taught law and finance courses at law schools and business schools across the nation. Beyond his academic experience, Heaton practiced law at the litigation boutique Bartlit Beck LLP for nearly two decades and even served as a fiduciary member of Bartlit Beck’s 401(k) plan committee. During his fiduciary tenure, he monitored the 401(k) plan’s investment options and performance.

    Get the full story on challenges to James Heaton’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Defendants’ motion largely challenged Heaton’s methodology for calculating losses to the Plan as well as the economic value of a potential injunction. Defendants also sought exclusion of any testimony from Heaton about whether Defendants met their fiduciary obligations in accordance with then-prevailing standards and practices, as well as how BlackRock would have responded to a hypothetical proxy voting intervention.

    It should be noted that the the standards for admitting expert testimony in a bench trial are lower than a jury trial.

    Qualifications

    Starting with Heaton’s qualifications, the Court held that his research and background fit squarely with Plaintiff’s theory of the case and his expert testimony is precisely what the Federal Rules of Evidence contemplate by requiring an “expert by knowledge, skill, experience, training, or education” who will apply that “specialized knowledge” to “help the trier of fact to understand the evidence or to determine a fact in issue.”

    Due to his extensive education, research, and overall experience, it should be noted that Heaton has developed particular skills and specialized knowledge to help the Court—the trier of fact in this case—understand the evidence and determine facts in issue.

    Relevance

    Plaintiff has shown by a preponderance of the evidence that both the nature of Heaton’s testimony and purpose for which he offers it are relevant to key issues in this case, including whether BlackRock engaged in ESG activism through proxy voting and whether any losses occurred as a result. The Court held that such testimony can properly be applied to the facts at issue and will assist the Court with understanding the evidence. To the extent Heaton’s testimony could be viewed in any way as attempting to opine on whether Defendants qualified as ERISA fiduciaries or whether they breached their fiduciaries duties, those are questions of law for the Court to determine—not Heaton.

    According to the Court, the closest any expert testimony may permissibly get to these legal questions is by offering an opinion as to whether a particular party’s conduct fell short of prevailing fiduciary practices. Because Heaton’s reports offered no such opinions and his testimony at trial focused on (1) “whether and how BlackRock engaged in ESG-driven proxy voting and shareholder activism, and (2) “whether that ESG-driven proxy voting and shareholder activism injured [P]lan participants,” there is no reason to exclude Heaton’s non-existent testimony regarding prevailing fiduciary standards.

    Reliability

    Plaintiff has proved by a preponderance of the evidence that Heaton’s testimony is reliable. The Court held that many of Heaton’s opinions are based on, among other things, his clear experience in asset management and research on shareholder activism. His opinions regarding BlackRock’s ESG activism do not require specific scientific support because Heaton relies on his personal observations, professional experience, training, and education. Given Heaton’s qualifications, the Court found him sufficiently qualified to opine on this topic. As to his opinions regarding the economic effects of BlackRock’s ESG activism on the Plan, the event studies used by Heaton are widely accepted. Even Defendants’ own expert uses the event study methodology. Courts across the country have also cited Heaton’s article regarding statistical power.

    Although Defendants challenged the statistical significance of Heaton’s results and argued his methodology diverges from standard scientific practices, the Court held that these arguments are more properly applied to the weight of Heaton’s testimony rather than its admissibility.

    While the Court takes note of Defendants’ arguments—particularly those regarding the reliability and relevance of Heaton’s expert testimony—these are not grounds for exclusion.

    Held

    The Court therefore denied Defendants’ motion to partially exclude and admitted J.B Heaton as an expert.

    Key Takeaway:

    The Court concluded that Heaton’s testimony is unquestionably relevant to this case and sufficiently reliable to permit admission. Instead, Defendants’ arguments (and any counter-expert testimony) bear on the weight assigned to Heaton’s testimony, which will matter when the Court addresses in a subsequent ruling the deferred issues of any losses suffered by the Plan and the appropriateness of an injunction.

    Case Details:

    Case Caption: Spence V. American Airlines, Inc., Et Al
    Docket Number: 4:23cv552
    Court: United States District Court, Texas Northern
    Order Date: January 10, 2025
  • Testimony of Finance Expert Witnesses About Monitoring Responsibilities Under ERISA Admitted

    Testimony of Finance Expert Witnesses About Monitoring Responsibilities Under ERISA Admitted

    Class Representatives Peter Trauernicht and Zachary Wright (“Plaintiffs”), on behalf of themselves, the Genworth Financial Inc. Retirement and Savings Plan (the “Plan”), and all other similarly situated individuals, filed suit against Genworth Financial, Inc. (“Genworth” or “Defendant”) alleging that Genworth breached its fiduciary duties under the Employee Retirement Income Security Act.

    Plaintiffs claimed that Genworth violated its fiduciary duties under ERISA by failing to appropriately monitor, and as a result, imprudently retaining the BlackRock LifePath Target Date Funds (“BlackRock TDFs”) in the Plan despite their significant underperformance. According to Plaintiffs, the retention of the BlackRock TDFs caused the Plan to incur substantial losses.

    Genworth produced two expert reports in response to Plaintiffs’ experts. Genworth retained Lorie L. Latham to offer opinions regarding the Plan’s governance structure and monitoring process. Latham opined that the Plan’s governance structure and monitoring processes of the BlackRock TDFs were reasonable and consistent with widely accepted retirement plan fiduciary practices.

    Genworth also retained Dr. Russell R. Wermers who explained that the BlackRock TDFs are economically reasonable investments once you account for their specific risk-balancing strategies and features, including their asset allocations and glide paths.

    Finance Expert Witnesses

    Russell R. Wermers is the Paul J. Cinquegrana ’63 Endowed Chair in Finance at the Smith School of Business, University of Maryland at College Park. Wermers’ research focuses on analyzing investment strategies of professional asset managers, including how to properly measure the risk-adjusted performance of such strategies. He has published in academic and professional journals on investment fund performance evaluation, equity strategies, the drivers of mutual fund and hedge fund investor flows, and the behavior of institutional investors. He has also previously testified as an expert on numerous ERISA cases involving 401(k) and other defined contribution plans. 

    Get the full story on challenges to Russell Wermers’ expert opinions and testimony with an in-depth Challenge Study. 

    Lorie L. Latham is the founder and president of L. Latham Consulting, LLC, an independent consultancy where she provides financial and strategic advice to financial firms and retirement plan fiduciaries, boards, and committees. Before that, Latham served in senior executive and consulting roles advising on strategies and investment selection for defined contribution plans. That work involved guiding plan fiduciaries in establishing reasonable and appropriate governance and monitoring practices for their defined contribution plans. Latham has also co-authored numerous publications, including articles on defined-contribution plan governance decision making.

    Get the full story on challenges to Lorie L. Latham’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Whether Wermers and Latham Have Specialized Knowledge That Will Assist the Trier of Fact under Rule 702(a)

    Wermers’ Qualifications and Opinions

    Plaintiffs argued that Wermers lacked the relevant qualifications to address the issues in this case because he has no experience with retirement plan investing, including the monitoring responsibilities of investment fiduciaries governed by ERISA. He has never served as a fiduciary nor advised a retirement committee.

    The record does not provide, and the Court does not see, any reason why an expert must be trained in fiduciary monitoring or ERISA, as opposed to general investment theory, to testify on the relative performance and comparability of various target date funds to aid the trier of fact in the determination of whether the BlackRock TDFs violated the Plan’s Investment Policy Statement’s (IPS) criteria.

    The fact that Wermers’ offers more generalized opinions on the BlackRock TDFs and their comparators rather than opinions directly tied to fiduciary monitoring goes to the weight rather than admissibility of his testimony.

    Latham’s Qualifications and Opinions

    Plaintiffs also argued that Latham did not have specialized expertise or knowledge that will assist the trier of fact. Plaintiffs said that her experience came from generalized personal observations and work experience while consulting with plan sponsors and discretionary fiduciaries.

    The Court found that, based on that experience, Latham has the requisite qualifications to assist the trier of fact regarding plan governance and fiduciary monitoring standards. The degree of connection between her experience and her opinions goes to the weight of her testimony. At trial, Plaintiffs will have the opportunity to cross-examine Latham on the relevancy of her experience and how that experience has informed her opinions.

    Whether Latham’s and Wermers’ Opinions Are Supported by Reliable Principles and Methods

    Whether Wermers’ Economic Reasonableness Analysis is Based on Reliable Principles and Methods

    Plaintiffs argued that Wermers’ assessment of “economic reasonableness” is not based on any method or discipline recognized within his industry, and instead, is based on his own subjective view of what represents an “attractive combination” between risk and return.

    The Court disagreed. Plaintiffs’ complaint is essentially that Wermers’ concept of “economic reasonableness” is not reducible to a rigid, rules-based methodology. However, a formulaic methodology is not required for a witness to offer an expert opinion. Wermers relied on his specialized knowledge and experience to offer guiding principles on how to evaluate and compare the performance of target date funds, and he applied those principles to the BlackRock TDFs under a standard he calls “economic reasonableness.” 

     Wermers explained that an “economically reasonable” investment is one that “offers ex-ante an attractive combination of risk and return” based on its “qualitative and quantitative characteristics and its investment strategy.” Rather than a term of art, economic reasonableness is just another way of saying an investment is reasonable from an economic perspective.

    Plaintiffs did not challenge the reliability of any of Wermer’s specific analyses or conclusions, only that his overarching concept of “economic reasonableness” lacked clear guiding rules and principles.

    The Court found that Wermers’ opinions are reliable because he thoroughly articulated his specialized knowledge on the evaluation of target date funds with supporting citations to peer-reviewed articles and other industry sources, and then he applied that knowledge in evaluating the “economic reasonableness” of the BlackRock TDFs and in criticizing Marin’s analyses. 

    Whether Latham’s “Accepted Fiduciary Practices” Analysis is Based on Reliable Principles and Methods

    Plaintiffs argued that Latham’s testimony is unreliable because her opinions on “accepted fiduciary practices” are based on her work experience with unspecified clients rather than any specified method or discipline recognized within her industry. Her failure to explain how her opinions derive from those client experiences, without other guiding industry standards, makes her testimony unreliable according to Plaintiffs.

    However, the Court is satisfied that Latham has the requisite experience to provide reliable experience-based opinions on the topics she addresses at this stage.

    Second, Plaintiffs claimed that Latham’s opinions are unreliable and unhelpful ipse dixit because she did not rely on any objective, consistent, or rules-based analytical approaches for what she calls “accepted fiduciary practices.”

    The Court held that rules-based standards are not necessary for an expert’s opinion to be the product of reliable principles and methods, particularly when the testimony is not scientific in nature. Latham explained that “there’s not a written checklist” of accepted practices and “[p]lan governance structures vary, depending upon the size and culture of the plan sponsor, the type of plan, and other factors.”

    Consequently, in her report, Latham reviewed the specific practices of the Genworth Committee from the evidentiary record, and explains whether, in her professional experience, those individual practices comport with the typical industry practices she has observed over her decades-long career. Latham is permitted to rely on her experience to testify in that capacity. The Court held that Plaintiffs’ concerns over the objectivity of Latham’s opinions and the specific experiences on which she relies can be addressed on cross-examination and with contrary evidence.

    Whether Latham and Wermers Reliably Applied Their Principles and Methods to the Facts of the Case

    Whether Wermers Reliably Applied His Principles and Methods to the Facts of the Case

    Plaintiffs argued that Wermers failed to fully consider the IPS in his analysis and relied on other data that was cherry-picked and never relied on by the Plan’s fiduciaries. According to Plaintiffs, that made Wermers’ analysis irrelevant to whether the Plan’s fiduciaries acted prudently in retaining the BlackRock TDFs. Plaintiffs also claimed that Wermers ignored discrepancies between his data and the data presented in materials provided to the Genworth Committee.

    The Court held that Wermers was primarily retained to offer an opinion on whether the BlackRock TDFs were an “economically reasonable” investment and to rebut Marin’s conclusions, particularly those based on his ex-post performance comparisons of the BlackRock TDFs to other funds and benchmarks. Therefore, Plaintiffs’ criticisms about “the lack of references to the Plan’s Investment Policy Statement does not undermine the reliability of [Wermers’] methodology” because that methodology was not predicated on evaluating the BlackRock TDFs’ performance against the IPS’s criteria.

    For the same reasons, it was not problematic for Wermers to have relied on external data which was not provided to the Genworth Committee. For instance, Wermers looked at third-party analyst ratings of the BlackRock TDFs as well as the BlackRock TDFs’ prevalence in the broader retirement plan market to demonstrate that Marin’s views on the BlackRock TDFs’ performance were not widely held among the industry. The Court held that using such data was not irrelevant or unreliable “cherry-picking.”

    When Plaintiffs said that Wermers ignored discrepancies between his data and the data presented to Genworth’s Committee, the Court held that it would seem appropriate for Wermers to use that data if Plaintiffs’ own expert also used it.

    Whether Latham Reliably Applied Her Principles and Methods to the Facts of the Case

    Plaintiffs argued that Latham failed to sufficiently consider the Plan’s IPS in forming her opinions. According to Plaintiffs, Latham stated that the Plan’s IPS was merely a non-binding, guiding document even though the Plan’s fiduciary counsel provided advice to the Genworth Committee that the IPS was a binding, Plan document.

    Plaintiffs did not dispute that Latham reviewed and relied on the IPS in forming her opinions. Instead, Plaintiffs disagreement was over Latham’s understanding of the IPS’ effect. 

    Since, the dispute appeared to be over what constituted a violation of the IPS, not whether the IPS is a legally binding plan document or not. The Court held that just because the Plaintiffs disagreed with Latham’s understanding of the IPS’ effect did not mean she failed to reliably apply her methods to the facts of the case.

    Whether The Testimony Is Admissible Under Rule 403

    Plaintiffs argued that Wermers’ and Latham’s testimony should also be excluded under Rule 403 because it threatens to mislead or confuse the issues for the same reasons already discussed.

    Having found Wermers’ and Latham’s testimony to be admissible under Rule 702, the Court also finds that their testimony is generally admissible under Rule 403 for the reasons discussed. Moreover, in a bench trial, the risk that an expert’s testimony will be unduly confusing or misleading is much lower and excluding evidence under Rule 403 for such reasons is generally not appropriate. 

    Held

    The Court denied Plaintiffs’ motion to exclude opinions and testimony of Lorie L. Latham And Russell R. Wermers, Ph.D.

    Key Takeaways:

    Wermers’ opinions are reliable because he thoroughly articulated his specialized knowledge on the evaluation of target date funds with supporting citations to peer-reviewed articles and other industry sources. Also, Plaintiffs’ concerns over the objectivity of Latham’s opinions and the specific experiences on which she relies can be addressed on cross-examination and with contrary evidence.

    Case Details:

    Case Caption: Trauernicht, Et Al. V. Genworth Financial Inc., Et Al.
    Docket Number: 3:22cv532
    Court: United States District Court, Virginia Eastern
    Order Date: August 29, 2024
  • Testimony of Finance Expert Witness Limited Because It Is Based on the Assumption That Economic Damages Are Inclusive of Lost Wages

    Testimony of Finance Expert Witness Limited Because It Is Based on the Assumption That Economic Damages Are Inclusive of Lost Wages

    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.

    Get the full story on challenges to Andrew Dakers’ expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    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.

    Case Details:

    Case Caption: Sullivan V. City Of Dallas, Texas
    Docket Number: 3:21cv915
    Court: United States District Court, Texas Northern
    Order Date: July 15, 2024
  • Accounting Expert Witness’ Analysis of Costs and Markups Admitted

    Accounting Expert Witness’ Analysis of Costs and Markups Admitted

    The Trade Group’s (“TTG”) is a full-service event marketing and creative design firm well known for its award-winning designs and client-centered service mentality. BTC Media, LLC (“BTCM”), a Bitcoin and blockchain media company approached TTG about managing, planning, and producing Bitcoin 2021, the world’s largest bitcoin conference held in Miami, Florida.

    After a successful Bitcoin 2021, BTCM enlisted TTG’s services again in connection with Bitcoin 2022, but on a much larger scale. This case centers around a dispute between TTG and BTC over the financial ramifications of their business interactions, particularly surrounding the Bitcoin 2022 event. At the heart are disagreements over alleged overcharges and lost profits in planning and hosting Bitcoin 2022 in Miami.

    TTG sought to exclude the expert testimonies of BTC CEO David Bailey and CFO Didier Lewis as well as Dr. Kelly Semrad and Gary Durham for various reasons.

    Accounting Expert Witness' Analysis of Costs and Markups Admitted

    Accounting Expert Witness 

    Gary Durham has been assisting clients with economic damages calculations, valuation, forensic accounting, financial forecasting, and financial issues in bankruptcy since 1993. Durham’s considerable experience preparing expert witness testimony includes damage calculations and other valuation-related financial analysis.

    Want to know more about the challenges Gary Durham has faced? Get the full details with our Challenge Study report. 

    Tourism And Travel Industry Expert Witness

    Dr. Kelly Martinez Semrad, currently serves as a faculty member at the University of Central Florida (UCF) in the Rosen College of Hospitality Management. She is the former associate director for the University of Florida’s Eric Friedheim Tourism Institute. She has also helped provide policy for tax reform and economic structural adaptations as well legislation for social and environmental justice in the tourism and hospitality industry.

    Discover more cases with Kelly Semrad as an expert witness by ordering her comprehensive Expert Witness Profile report.

    Cryptocurrency Expert Witness

    David Bailey is an early bitcoin adopter, entrepreneur, and a prominent figure in the Bitcoin community. He is also the CEO of BTC Media, which includes Bitcoin Magazine and the Bitcoin conference, as well as UTXO. 

    Efficiently evaluate if investing further resources into vetting David Bailey is merited based on the findings in our Preliminary Screening Report.

    Finance Expert Witness

    Didier Lewis is the Finance Director of BTC Media, LLC (“BTC”). As Finance Director, he also has oversight of BTC’s finances, including its accounts receivable, accounts payable, and invoices payable to BTC’s vendors.

    Start your due diligence on Didier Lewis quickly and affordably by first reviewing key insights in our Preliminary Screening Report.

    Discussion by the Court

    A. Gary Durham

    TTG sought to exclude Durham’s testimony on the grounds that it was unreliable and irrelevant.

    According to TTG, Durham’s opinions were based on incomplete information given Durham’s role was to verify the costs TTG claims it incurred and to assess the reasonableness of those costs. Although Durham had multiple opportunities to review TTG’s documents, TTG argued that he failed to accurately compile the costs, thereby rendering his opinions unreliable.

    The Court found that while Durham’s methodology, like most, could have possessed flaws, it was sufficiently reliable for the purposes of expert testimony. Durham reviewed numerous documents and provided a detailed analysis of the costs and markups. His methodology involved a thorough examination of TTG’s invoices and other financial records, and he explained the basis for his conclusions. Any perceived deficiencies in his methodology went to the weight of his testimony, not its admissibility.

    The Court held that highlighting the potential disconnect between TTG’s Google Sheet entries and the underlying accounting documents was vital because it could suggest TTG’s billing practices may have been designed to obscure true charges. This made Durham’s testimony all the more reliable and relevant.

    B. Kelly Semrad

    TTG sought to exclude the testimony of Semrad on the grounds that it was unreliable and irrelevant. TTG argued that Semrad’s opinions were based on insufficient facts and data, and that she lacked the necessary expertise to opine on the reasonableness of TTG’s markups. Despite Semrad admitting that she did not have access to certain critical information, the Court held that her testimony was particularly relevant because it set a benchmark for evaluating TTG’s markups for Bitcoin 2022. 

    By comparing TTG’s charges with industry standards, Semrad provided a clear framework for the jury to assess whether TTG’s pricing was reasonable. Her testimony offered the jury a critical reference point for determining if TTG’s practices deviated from industry norms. 

    The Court found that her analysis was based on sufficient data and reliable principles, aligning with the requirements of Rule 702. 

    C. David Bailey and Didier Lewis

    TTG sought to exclude the expert testimony of BTC’s CEO, David Bailey, and CFO, Didier Lewis, on the grounds that Bailey and Lewis were untimely disclosed.

    Appealing to Federal Rule of Civil Procedure 37(c)(1), TTG argued that BTC’s failure to timely disclose these expert witnesses was neither substantially justified nor harmless, warranting exclusion of their testimony.

    Further, TTG opined that BTC made multiple representations to the Court that they did not seek to designate experts for their counterclaims, the absence of a request to extend the Initial Designation deadline was prejudicial to TTG given their late disclosure.

    However, BTC has consistently maintained that Bailey and Lewis will offer lay opinions under Federal Rule of Evidence 701, which allows business owners or officers to testify about the value or projected profits of their business based on personal knowledge. Both Bailey and Lewis have extensive firsthand knowledge of BTC’s financial operations and can provide valuable insights into the company’s lost profits.

    TTG did not dispute Bailey and Lewis’ knowledge of the company’s finances but contended that their testimony constituted expert opinion requiring timely disclosure under Rule 26(a)(2). However, BTC supplemented their disclosures to include Bailey and Lewis as expert witnesses under Rule 702, likely anticipating potential objections from TTG.

    The Court held that any prejudice to TTG was minimal, given their extensive personal knowledge and the supplemental disclosures.

    Held

    The Court denied that The Trade Group’s three motions to exclude the testimony of BTC CEO David Bailey and CFO Didier Lewis as well as Dr. Kelly Semrad and Gary Durham.

    Key Takeaways:

    • The Court found Durham’s methodology sufficiently reliable because he reviewed numerous documents and provided a detailed analysis of the costs and markups.
    • Semrad’s testimony offered the jury a critical reference point for determining if TTG’s practices deviated from industry norms. The Court held that her testimony met the requirements of Rule 702.
    • The Court held that both Bailey and Lewis’ extensive firsthand knowledge of BTC’s financial operations will assist the jury in understanding the financial impact of the alleged damages and are therefore admissible.

    Case Details:

    Case Caption: The Trade Group, Inc. V. Btc Media, Llc
    Docket Number: 4:23cv555
    Court Name: United States District Court, Texas Northern
    Date: June 5, 2024

  • Psychology Expert Witness’ Depression Diagnosis Upheld

    Psychology Expert Witness’ Depression Diagnosis Upheld

    Plaintiff Duane Anthony Beyenhof alleged that his former employer Defendant Schwan’s Consumer Brands, Inc. (“Schwan’s”) wrongfully terminated him in retaliation for reporting illegal activity at work and because of his age.

    Schwan’s claimed he was terminated for not wearing a seatbelt in violation of Defendant Schwan’s Consumer Brands, Inc.’s (“Schwan’s” or “Defendant”) zero tolerance Seat Belt Policy.

    Defendant Schwan’s Consumer Brands, Inc. requested the Court to issue an order in limine excluding the testimony of and any reference to the expert reports of Plaintiff Duane Beyenhof’s designated experts, Heather H. Xitco and Anthony E. Reading as they did not meet the admissibility requirement of the Federal Rules of Evidence (“FRE”) 702 and would have presented evidence that was needlessly cumulative and unduly prejudicial to Defendant.

    Psychology Expert Witness

    Anthony E. Reading is a licensed psychologist in the State of California. He is a Clinical Professor in the Department of Psychiatry at the David Geffen School of Medicine at UCLA. He is a member of the American Psychological Association, the California State Psychological Association, the British Psychological Society.

    Click here to purchase Anthony Reading’s Expert Challenge Study and learn about the 86 cases where his testimony has been subjected to a challenge.

    Finance Expert Witness

    Heather H. Xitco is a Principal with Dolan Xitco that provides litigation support, financial analysis, and expert testimony. She holds a Bachelor’s degree in Economics from the University of Southern California and a Master’s in Business Administration, with an emphasis in Finance, from the University of San Diego. She is a practicing Certified Public Accountant in California with a Certification in Financial Forensics (CFF).

    Heather Xitco’s testimony has been challenged in more than 50 cases in the past. You can click here to order an Expert Challenge Study on Ms. Xitco and learn all about the grounds of challenge, outcomes, retaining and opposing attorneys and more.

    Discussion by the Court

    Under Federal Rule of Evidence 703, an expert witness can base opinions upon inadmissible hearsay evidence if that evidence is reasonably relied upon by experts in the same field on the same subject. Here, Defendant was concerned that both Xitco and Reading relied on Plaintiff’s statements to form their opinions. 

    Court Should Exclude the Testimonies Of The Plaintiff’s Experts because They Do Not Offer Any Testimony that is Sufficiently beyond Common Experience or Knowledge That Would Assist the Trier of Fact

    The Plaintiffs retained Xitco to “present evidence related to Plaintiff’s economic damages, including past, present, and future lost wages and benefits, and Defendant’s finances.”

    The Defendant argued that in determining Plaintiff’s lost earnings and benefits, Xitco merely relied on his previous wages, bonus, and benefits, and then factored in an estimated 2% growth based on his past wage increases. Accordingly, the calculations in Xitco’s report were simple mathematical calculations that a non-expert witness can just as easily explain and a juror can calculate.

    The Defendant alleged that Readings’ Rule 26 Report was essentially an overview of his initial—and only—consultation with Plaintiff. He based his conclusion of Plaintiff experiencing a Major Depressive Disorder following his termination on Plaintiff’s self-reported feelings. Reading failed to exhibit the level of care required in his field due to his singular visit with Plaintiff.

    After reviewing the reports, the Court found that the evidence relied upon is of the kind reasonably relied upon by experts in the same fields on the same subjects.

    The Court held that Defendant’s concerns about the reliability of Reading’s methods concerned the weight of the testimony, not the admissibility. It also found that Xitco’s expert testimony assisted the jury under Rule 702 by aiding the understanding of damages.

    The Court should exclude Reading Because Plaintiff Failed to Comply to FRCP Rule 26(a)(2)(A-D)

    Defendant filed a motion to exclude specifically Reading’s expert testimony and report because Plaintiff failed to comply with Federal Rule of Civil Procedure 26(a)(2)(A-D). Concerning failure to comply with Federal Rule of Civil Procedure 26(a)(2)(A-D), federal courts have the discretion to exclude expert witness testimony due to an untimely or inadequate expert disclosure.

    The Court held that exclusion of the entire testimony would be unjustified, considering Plaintiff provided Reading’s Report on April 20, 2023, a year before the set trial date on March 5, 2024. Defendant had ample time to review the supplemental testimony. 

    Held

    The Court denied the motions to exclude Finance Expert Witness Heather Xitco and Psychology Expert Witness Anthony Reading.

    The Court dismissed the case on March 04, 2023.

    Key Takeaways:

    1. Admissibility under Federal Rule of Evidence 702: The Court resorts to exclusion only when the expert’s opinions lack fundamental support. The Court held that Defendant’s concerns about the reliability of Reading’s methods concerned the weight of the testimony, not the admissibility. It also found that Xitco’s expert testimony assisted the jury under Rule 702 by aiding the understanding of damages.
    2. Compliance with FRCP Rule 26(a)(2)(A-D):  Federal courts have the discretion to exclude expert witness testimony due to an untimely or inadequate expert disclosure. But excluding Reading’s Report was unjustified considering any errors were clearly harmless since Defendants had ample time to remedy any concerns.

    Case Details:

    Case Caption: Beyenhof V. Schwans Consumer Brands, Inc. Et Al
    Docket Number: 2:22cv192
    Court: United States District Court, California Central
    Citation: 2024 U.S. Dist. LEXIS 48635
    Order Date: February 14, 2024

  • Finance Expert Witness’ Art Market Analysis Admitted

    Finance Expert Witness’ Art Market Analysis Admitted

    Athena, a specialty lender engaged in the business of providing loans secured by high-value fine art, extended a loan to a borrower, using the 1982 painting by Jean-Michel Basquiat titled “Humidity” (the “Basquiat”) as collateral. Subsequently, on March 2, 2020, the New York County Supreme Court entered a judgment for Athena in the amount of $14,306,800.47 after the borrower defaulted on the loan. Based on this judgment and with the loan and security agreement terms in mind, Athena asserts its entitlement to sell the Basquiat without regard to outstanding claims from any third parties asserting ownership interests in the painting.

    On July 31, 2020, Interested Party and Intervenor-Plaintiff Satfinance intervened, filing a complaint against Athena based on its claimed interest in the Basquiat.

    In this in rem action to foreclose a lien and to obtain an order permitting the sale of a painting by Jean-Michel Basquiat, Athena Art Finance Corporation, acting as both Plaintiff and Intervenor-Defendant, submitted a motion to strike the expert opinions of Satfinance’s expert Michael Plummer, set forth in his February 23, 2023 report, pursuant to Federal Rule of Civil Procedure 26 and Federal Rule of Evidence 702.

    Satfinance engaged Plummer to provide insights into:  (1) the general nature and conditions of business and credit in the art market; (2) standards of reasonable business practice and due diligence in the art market relative to the operative loans made by Athena; and (3) specifics of the diligence conducted by Athena on such loans.

    Finance Expert Witness

    Michael Plummer is a leading authority on art finance. Plummer worked as an advisor in the art market for 13 years, providing guidance on a range of
    issues, including the general landscape of the art market, art-based lending, and best business practices. Plummer has advised on, articles in the New York Times, the Wall Street Journal, the Financial Times, and the Art Newspaper on the subjects of art market performance, trends, economic factors, investment practices and structures, and liquidity and valuation in an “opaque” market. Plummer also has lectured on panels for continuing education courses and graduatedegree programs on the same subjects discussed in the articles at the Wharton School, New York University, the Appraisers Association of America, Sotheby’s Institute and Christie’s Education.

    Discussion by the Court

    First, Athena argued that finance expert witness Plummer failed to disclose, under Federal Rule of Civil Procedure 26, a prior expert report that served as the “starting point” for his opinions in this case and also failed to disclose a prior client relationship he had with Athena. And second, Athena contended that Plummer was not qualified to serve as an expert “on secured finance and asset-backed lending” and had not followed an appropriate methodology to form his opinions.

    Plummer is qualified to serve as an expert in this case

    Athena objected to Plummer’s lack of formal training and education in secured lending, asserting that Plummer lacked the relevant licensing or credentials common in the field of secured lending and never received formal training in that field.

    Satfinance retained Plummer to opine on the adequacy of Athena’s due diligence when extending a loan secured by a piece of art, given the conditions, norms, and practices of the art market and the art finance industry. The Court found Plummer unquestionably qualified to testify as an
    expert in this case, with his extensive experience in the field of analyzing art
    market economics, valuations, art purchases and sales, and art lending practices.

    Plummer’s lack of formal education and professional licenses in the field of secured lending did not suffice to render him unqualified in this case.

    Satfinance was not attempting to have Plummer opine on subject matters unrelated to his area of expertise, such as general asset-backed lending. The opinions in the Plummer Report were limited to the art market, the art finance industry, and the best business practices therein.

    The Court deemed Plummer qualified to serve as an expert on art industry standards for underwriting asset-back loans secured by pieces of art.

    Plummer followed an appropriate methodology

    According to the Court, Plummer sufficiently explained how his experience led to the conclusions reached, why that experience was a sufficient basis for his opinion, and how that experience was reliably applied to the facts.

    Plummer described the art market in general and outlined the standards and conditions of the art market to provide context for evaluating the loans made by Athena. Plummer provided background on private art sales, art advising versus art dealing, and pricing in the art market, all based on his experience advising and working in that market.

    He also opined on the standards for Athena’s diligence on artwork collateral and the “macro business issues” impacting Athena’s due diligence. In concluding that Athena’s due diligence was inadequate, Plummer based his conclusion on his former experience working in Sotheby’s treasury department, where he approved dealer credit arrangements and managed Sotheby’s first long-term, asset-backed dealer loan.

    The Court held that Plummer’s testimony on these points provided relevant context of the market in which Athena made the operative transactions—a landscape which lay individuals may have possessed little or no knowledge about. Plummer’s testimony also outlined what he opined to be best practices in that market and what red flags should have been apparent when performing diligence on a transaction like the ones at issue here.

    Plummer failed to disclose a prior expert report

    Plummer served as an expert in another case, Overton v. Art Finance Partners LLC, Case No. 15-CV-3927, and issued a report in that case upon which he relied here.

    The Court noted Plummer’s reliance on the Overton Report to prepare his own report. A comparison of the two reports also revealed substantial similarities in the sections regarding the general nature and conditions of business in the art market, confirming Plummer’s reliance on specific information from the Overton Report in creating his Report here.

    The Court held that Athena, however, did not suffer any prejudice from the failure to disclose the Overton Report, such that exclusion of the Plummer Report was required. First, Athena knew about the Overton Report before Plummer’s deposition. Indeed, it questioned Plummer about that report at the deposition. Athena thus had an opportunity to question Plummer about the Overton report and to have its own expert challenge the conclusions reached by Plummer in that report. Rule 26’s disclosure obligation intends to prevent “surprise” or “trial by ambush,” but this was not the case here.

    Athena also contended that Plummer failed to disclose that he relied upon “personal interactions” he had with Athena personnel that formed the basis of his opinions in his Report. The Court held that though Plummer had to disclose any facts or data that informed the opinions he reached in his Report, Athena knew of these interactions and conversations before Plummer’s deposition and thus had a chance to question Plummer about the interactions, and in fact did so.

    Plummer failed to disclose a prior relationship with Athena

    Lastly, Athena cited Plummer’s prior relationship with Athena, that Athena claims did not end well. Athena asserted that it affected Plummer’s ability to be an impartial expert in this case.

    Plummer testified that he disagreed with Athena’s characterization of how the relationship ended, and he further testified that when the “disagreement” arose between him and Athena, Plummer “immediately turned the art fair matter over to another member of his team.” In short, the deposition testimony Athena relied on was too thin a basis from which to conclude that Plummer felt that his relationship with Athena ended so acrimoniously that it rendered Plummer biased.

    Held

    The Court denied Athena’s motion to strike the opinions of Finance Expert Witness Michael Plummer.

    The Court, subsequently, terminated the motion. It has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaways:

    1. Plummer’s Qualifications: Despite Athena’s objections regarding Plummer’s lack of formal training and education in secured lending, the Court found Plummer unquestionably qualified to testify as an expert in the case due to his extensive experience in analyzing art market economics, valuations, art purchases and sales, and art lending practices.
    2. Scope of Expert Opinion: Plummer’s expertise was limited to the art market and the art finance industry, and he was not expected to opine on subject matters unrelated to his area of expertise.
    3. Methodology: Plummer followed an appropriate methodology in forming his opinions, explaining how his experience led to his conclusions and how this experience was reliably applied to the facts. He provided relevant context and outlined best practices in the art market, based on his extensive experience.

    Case Details:

    Case Caption: Athena Art Finance Corp. V. Humidity
    Docket Number: 1:20cv4669
    Court: United States District Court, New York Southern
    Citation: 2024 U.S. Dist. LEXIS 45342
    Order Date: March 14, 2024