On May 20, 2020, Plaintiffs filed the complaint initiating this action against Defendants for allegedly conspiring to acquire Plaintiffs’ personal and private records from the California Department of Motor Vehicles for the purpose of sending them letters to solicit business in the form of legal representation for litigation against sellers of vehicles they had purchased.
Defendants filed a motion to exclude the testimony of Plaintiffs’ expert witness, Larry Londre at trial based on untimely disclosure and lack of qualifications.
Marketing Expert Witness
Larry Londre is a marketing executive and analyst with expertise in creating, applying and delivering marketing, advertising, media, business development, sales, brand integrity, collateral programs, and expert witnessing.
Since 2002, he has served as an expert witness and has been designated as an expert witness involving Marketing, Advertising, Trademark, Patent, Promotion, Breach of Contract, Unfair Competition, Custom and Practice, Lanham and Robinson-Patman Act Violations, and others.
According to Plaintiffs, Defendants were first aware in March 2023 that Plaintiffs designated Londre as their expert when they concurrently filed his declaration in support of their opposition to Defendants’ first motion for summary judgment. Defendants were also made aware of Londre following the lifting of the stay of this case when Plaintiffs formally listed Londre as their expert witness in their supplemental disclosures made pursuant to Federal Rule of Civil Procedure 26 on February 26, 2024. Defendants do not dispute this timeline or the fact that they were aware of Plaintiffs’ designation of Londre, but they assert that these dates are not relevant because Londre’s expert report was not provided until March 14, 2024.
Plaintiffs learned for the first time that Defendants intended to move for exclusion of Londre’s testimony at trial because they believe Plaintiffs did not timely disclose Londre as their expert witness. Consequently, on that same day, Plaintiffs filed the pending motion for relief from the expert witness disclosure deadline, if necessary, to permit Londre to testify at trial notwithstanding Defendants’ assertion that he was not timely disclosed.
Plaintiffs asserted that their inadvertent failure to timely disclose Londre was excusable neglect under these circumstances given the confusion caused by the Court’s orders staying this case, lifting the stay, and modifying the schedule as to certain dates while remaining silent as to other dates, including the expert disclosures deadline. Plaintiffs also asserted that even under Defendants’ interpretation of the court’s orders, Plaintiffs’ disclosure on March 14, 2024 was only 66 days past the January 8, 2024 disclosure deadline and thus its late disclosure was harmless to Defendants, particularly because Defendants expressed no interest in deposing Londre or need for more time to prepare for trial in light of the late disclosure.
Analysis
Rule 26
The Court finds under the circumstances of this case that Plaintiffs’ disclosure of Londre two months late was harmless to Defendants. Federal Rule of Civil Procedure 37 provides that “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.”
Notably, in their opposition to Plaintiffs’ motion, Defendants did not identify any prejudice or harm that they contend they would face at trial as a result of receiving Londre’s expert report in March 2024 instead of January 2024. Defendants instead suggested that they were harmed in the context of their summary judgment motion, but that motion was denied in August 2024. Curiously, while that motion was under submission, Defendants did not file any motions for relief due to any such perceived harm, and even after the motion was denied, Defendants did not file any motions for reconsideration either. As noted above, Defendants also did not seek to take the deposition of Londre in the several months that passed after the March 14, 2024 disclosure. The Court is therefore not persuaded by Defendants conclusory assertion that Plaintiffs’ late disclosure of their expert witness was not harmless.
Rule 702
To the extent Defendants’ pending motion to exclude Londre’s testimony at trial is based on untimely disclosure, that motion will be denied by the Court. However, to the extent Defendants’ motion is based on the purported inadmissibility of Londre’s testimony pursuant to Federal Rule of Civil Procedure 702, that motion will also be denied by the Court, albeit without prejudice to Defendants filing an appropriate motion in limine to exclude Londre’s testimony on that basis—indeed, an issue Defendants should be better positioned to address after deposing Londre and probing his qualifications.
Held
The Court will grant Plaintiffs’ motion and will not preclude Londre from testifying at trial on the basis of untimely disclosure. As for next steps, the Court is not persuaded that Defendants have any actual interest in deposing Londre. Nevertheless, out of an abundance of caution, the Court will reopen expert discovery for a period of 60 days (equal to the approximate amount of time that Plaintiffs’ disclosures were made past the disclosure deadline) for the limited purpose of permitting Defendants to depose Londre.
Key Takeaway:
Defendants did not identify any prejudice or harm that they contend they would face at trial as a result of receiving Londre’s expert report in March 2024 instead of January 2024. They instead suggested that they were harmed in the context of their summary judgment motion, but that motion was denied in August 2024. Defendants also did not seek to take the deposition of Londre in the several months that passed after the March 14, 2024 disclosure.
Plaintiffs Iola Favell, Sue Zarnowski, Mariah Cummings, and Ahmad Murtada (“Plaintiffs”) alleged that Defendant University of Southern California (“USC”) engaged in a scheme to artificially inflate the U.S. News & World Report (“US News”) ranking of USC’s Rossier School of Education (“USC Rossier”) by submitting incomplete data to US News — and then marketed that fraudulent ranking to the public.
An internal investigation conducted by USC’s outside counsel, Jones Day, determined that USC had submitted student selectivity data only for USC Rossier’s highly selective, in-person PhD program — but not from its less-competitive EdD program. The less-competitive EdD program was offered online after 2015 in collaboration with 2U, a company that offers technology platforms for online programs and provides advertising and recruiting for those online programs.
Plaintiffs alleged that USC, knowing the importance of the rankings on prospective students’ school choice, heavily marketed USC Rossier’s rapidly rising ranking to the public to boost enrollment in the online programs. USC orchestrated this scheme, Plaintiffs alleged, through its submission of false/incomplete data and then promoted the resulting ranking knowing that it was misleading.
Dr. John Chandler is a professor of marketing at the University of Montana who holds a master’s degree in mathematics and a doctorate in statistics and has worked in analytics and data science for 25 years with a focus on digital marketing.
Sara Neher is a partner at Kennedy & Company Higher Education Strategies, a higher education consulting firm. She has an MBA and has worked in higher education for more than twenty years, including academic leadership positions at two business schools. Neher has experience consulting higher education clients about their US News rankings, including constructing models like the one she submits in this case, and has also been part of the submission of data to US News for multiple schools.
J. Michael Dennis is the Senior Vice President of the National Opinion Research Center, which is a survey research organization affiliated with the University of Chicago. Dennis has worked in survey research for more than 20 years, has authored more than 60 articles, and has been found qualified by numerous courts to provide expert opinions on consumer surveys.
John Chandler submits a 95-page report explaining digital marketing practices in the context of student recruitment for graduate programs, the stages of a prospective student’s journey through the “marketing funnel,” what marketing strategies are typically deployed for student recruitment, and how USC Rossier applied these principles in its marketing strategy.
The first portion of Chandler’s report expresses extensive opinions on marketing practices, the enrollment journey, and the comprehensive marketing strategy that USC and 2U deployed to market USC Rossier. The second part of Chandler’s report discusses the exposure — i.e., the reach — of USC Rossier’s marketing materials containing the allegedly fraudulent ranking information. In the end, Chandler’s bottom line conclusion is: “Given the extensive and varied exposure methods outlined above, I can state with a reasonable degree of scientific certainty that all or nearly all students at USC Rossier in the MAT and OCL programs during the period of ranking manipulations were exposed to the fraudulent rankings. The pervasiveness of these rankings across multiple touchpoints ensured their near-universal reach.”
Reliability
USC did not challenge Chandler’s opinions on general marketing principles or the specifics of the extensive marketing strategy 2U and USC implemented with regard to USC Rossier. Instead, USC challenged the exposure/reach aspects of Chandler’s opinions. The crux of USC’s argument is that Chandler has no quantitative basis to opine that all or nearly all prospective students were exposed to fraudulent rankings through emails and/or other means.
USC further contended that Chandler did not have reliable site traffic data to substantiate an opinion that the vast majority of students visited the USC Rossier website and were exposed to a ranking representation.
The Court first observed that Chandler’s report extensively details the marketing strategy that USC and 2U deployed on behalf of USC Rossier, including specific opinions on how the marketing strategy was designed to move interested students through the marketing funnel from “awareness” to “enrollment.”
To arrive at his exposure conclusions, Chandler relied heavily on testimony from 2U’s 30(b)(6) representative, Dr. Joana Gerber. The Court has reviewed Gerber’s deposition transcript, as well the arguments both USC and Plaintiffs make about her testimony.
The Court agreed with Plaintiffs that the thrust of Gerber’s testimony and Chandler’s report is that 2U orchestrated an extensive marketing strategy designed to move all prospective students through the marketing funnel. It also agreed with Plaintiffs that Chandler’s opinions are the result of extensive review of record evidence, including Gerber’s testimony, and that USC’s placement of rankings on the USC Rossier website and in social media further supports his exposure conclusions.
Sara Neher
Sara Neher submitted a 13-page expert report explaining a model she constructed to project the US News ranking USC Rossier would have received if USC had submitted accurate data. US News publishes its methodology each year, including the relative weights of the various factors that underlay its rankings, with each school receiving an assigned rank based on its overall score on a 100-point scale.
Neher’s model standardizes the data in each category
Neher begins her reconstructed model with the data published by US News. First, Neher’s model standardizes the data in each category using z-scores, which are multiplied by the relative weights published by US News and added together to create a total for each school. Then, the total is indexed such that the top score always equals 100. The critical component — and the factor USC most vigorously challenges — is what Neher does to account for the information US News does not release. Neher acknowledged that she does not have access to information US News does not make publicly available, including the number of faculty with awards, the number of doctoral students who submitted a GRE score, the overall score for the lowest ranked 25% of schools, and the process for applying a logarithmic transformation to the student-faculty ratio.
Neher replaced the data USC Rossier actually submitted to US News with accurate data USC should have submitted
To account for this unavailable information, Neher calculated what she labels a “hidden-data constant” by comparing how much her model’s raw score (using the publicly available data) deviates from the school’s actual US News ranking. This, Neher reports, “captures the difference between what our model is able to calculate as the indexed score and what US News reports as the final score.” Then Neher replaced the data USC Rossier actually submitted to US News with accurate data USC should have submitted, based on an internal report from USC’s Director of Institutional Research who was instructed to investigate the matter. After generating a new overall score for USC Rossier using this information, Neher applies the hidden-data constant to account for the information she cannot recreate.
The result led to a dramatic decrease in USC Rossier’s ranking. Under Neher’s model, USC Rossier’s rank would have dropped from 15 to 48 in 2018; from 10 to 34 in 2019; from 12 to 61 in 2020; from 11 to 63 in 2021; and from 11 to 64 in 2022.
USC argued that Neher’s opinions regarding USC Rossier’s adjusted US News rankings must be excluded because they are the result of an unreliable methodology. Specifically, USC argued that the “hidden data constant” Neher calculates varies both school-to-school and year-to-year, resulting in a score that is sometimes close to US News’ ranking, but other times is dramatically far off. In other words, USC argued that there is no consistency to the hidden-data constant, so the methodology cannot be reliably used to predict adjusted scores based on different data input.
Qualifications
USC challenged Neher’s qualifications on the grounds that she does not have the training, experience, or specialized knowledge to qualify as an expert in statistical modeling. In addition, USC argued that she has never worked for or been trained by US News and has never before tried to replicate US News’s model; instead, she knows only what US News publicly discloses.
As USC sees it, absent insider knowledge about US News’s rankings, it is not possible to reliably replicate US News’ ranking at all — and any attempt to do so is “a pure guessing game.”
The Court declined USC’s invitation to announce a rule — especially in a discretionary evidentiary ruling — that the only way to reliably prove rankings fraud is to use (or, more likely, to misappropriate) insider knowledge of US News’s proprietary methodology. The Court is not convinced that any attempt to do so is necessarily a “pure guessing game” that categorially forecloses Neher’s proffered reconstructed rankings. This is especially true considering that Plaintiffs have identified other consulting firms and academic research that attempt to reconstruct US News rankings.
The Court held that Neher’s extensive experience working in higher education consulting constitutes a sufficient foundation to qualify her to offer her proffered opinions.
Reliability
The Court would begin by observing that neither Plaintiffs nor Neher purport to represent the proffered adjusted rankings model as a perfectly exact replication of the US News rankings. In addition, though USC did not challenge in its moving papers the result of Neher’s model — i.e., that USC Rossier’s ranking would experience a large decline — it indicated at the hearing that it does challenge Neher’s ultimate conclusion that rankings would have dropped.
For present purposes, the crux of USC’s challenge is how close Neher got in making a rankings prediction.
The Court also disagrees with USC that Neher’s methodology cannot be tested. Neher has described the methodology she deploys in her model in transparent and understandable terms, meaning USC and its experts can verify it, test it against different data, and/or critique the application of the hidden data constant.
USC does, however, point to numerous examples where the hidden data constant does not come close to replicating the school’s actual US News ranking, and that it also varied year-to-year. The question becomes, then, whether the inconsistencies with the outcome of Neher’s model compared to US News’s actual rankings are the result of unreliable methodology or instead go to the weight of the evidence. The Court notes that USC does not challenge Neher’s replication of the published aspects of US News’s methodology, only the methodological step of capturing the “hidden data constant.”
J. Michael Dennis
J. Michael Dennis submitted a 55-page report proposing two yet-to-be-conducted choice-based conjoint surveys that would estimate what USC Rossier’s tuition prices would have been but for USC’s alleged conduct. Dennis defines a choice-based conjoint survey as a “standard marketing research technique for quantifying consumer preferences for products and for the component features that make up a product. Conjoint analysis can be used to break down the value of a conceptual feature ( i.e., claims about the USC Rossier’s credentials) into its component parts (i.e., the claim that USC Rossier is a ‘top ranked’ program, or more specifically, that it was ranked between 10-15 by U.S. News & World Report in the 2017-2022 time period). Conjoint surveys take advantage of the fact that consumers are profoundly familiar with the task of shopping — comparing products, evaluating them, and making choices. Consumers are accustomed to making choices in their real-world shopping experiences.”
To calculate damages, Dennis explains:
“I define the but-for world as a world where the actual U.S. News rankings were in fact between 34 and 64 (corresponding to my fourth level of “30 to 59” for the “Rankings” attribute). In contrast, class members paid program costs when the advertised rankings were between 10 and 15 (i.e., corresponding to my second level of “10 to 19” for the “Rankings” attribute). If Plaintiffs’ allegations have merit, the market-clearing prices in the but-for worlds will be lower than the prices paid by class members.”
Reliability
USC first argued that Dennis’ opinions must be excluded because they rely on Neher’s inadmissible opinions. However, the Court would not exclude Neher’s opinions, thereby rendering this argument moot.
USC next argued that Dennis’ opinions must be excluded under Fed. R. Evid. 702(b) because they are based on insufficient facts or data.
USC argued that higher education does not operate in normal supply-and-demand conditions because of the impact of other economic incentives, including scholarships, fellowships, and grants. In addition, USC argued that universities address scarcity through selective admissions, not tuition price. USC’s argument, then, is that Dennis has no evidence justifying his assumption that the market value of an education from USC Rossier is anything other than what USC Rossier decides to charge.
Relatedly, USC also argued that Dennis has no evidence supporting his assumption that USC Rossier’s tuition responded to US News rankings. USC relies on a report from its expert witness to argue that there is no empirical analysis showing that tuition for EdD programs is affected by changes in school rankings.
This Court agrees that the real-world and market realities evidence upon which USC relies speak to the weight of Dennis’ analysis — which certainly could persuade a jury — but are not supportable reasons for excluding Dennis’ expert report and testimony.
Finally, the fact that Dennis’ survey has not been fully developed or implemented does not warrant exclusion at this juncture. There is no basis to exclude Dennis’ proposed conjoint survey. However, the Court will not preclude USC from bringing a later Daubert challenge to Dennis’ final report and testimony after his conjoint survey has been fully executed.
Held
The Court denied USC’s Daubert motions to exclude the expert report and testimony of Dr. John Chandler, Sara Neher, and Dr J. Michael Dennis.
Key Takeaways:
While Chandler is not able to offer at this juncture a quantifiable number of students exposed to fraudulent rankings — an issue that might make the specific contours of his testimony subject to a later motion in limine — the Court does not find too great of an analytical gap between the record evidence and his exposure opinions. The core of USC’s argument goes to the weight of Chandler’s opinion and the identified shakiness of Gerber’s testimony, but “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.”
The fact remains that Plaintiffs intend to use Neher’s model to show how consumers would react to USC Rossier’s adjusted rankings range, as compared to being a top-ranked school. With this in mind, the argument USC makes about the exact precision of Neher’s estimation cannot carry the weight that USC places upon it. But to be sure, USC has identified several weaknesses of Neher’s model which can be subject to “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof.” The Court cannot and will not consider whether Neher’s model is right or wrong; it is satisfied at this juncture that Neher transparently and thoroughly explained her methodology in a way that can be tested and cross-examined. The Court is therefore not convinced that Neher’s model is the product of such unreliable methodology as to fail Daubert‘s gatekeeping standard.
The Court noted that Dennis extensively details the structure of his survey and has considerable experience executing similar surveys. And as just examined, the Court is satisfied at this juncture that Dennis is qualified and has proposed a reliable methodology. Accordingly, there is no basis to exclude Dennis’ proposed conjoint survey.
Case Details:
Case Caption:
Iola Favell Et Al V. University Of Southern California Et Al
The underlying case concerns the alleged release of toxic chemicals from a manufacturing facility in Canoga Park between 1968 and 1970 by Litton Systems, Inc., an entity now owned by Defendants Northrop Grumman Corporation and Northrop Grumman Systems Corporation (“Northrop Grumman”). Plaintiffs moved for class certification on their claims for negligence, private nuisance, and trespass relating to the contamination.
Defendants submitted an expert report by Dr. Dominique Hanssens purporting to show, among other things, that class members’ homes contained other potential sources of the relevant toxins—sources unrelated to the contamination from Litton’s manufacturing facility—such as common household cleaning products.
To reach this conclusion, Hanssens designed and conducted a survey sent by mail to homes in Plaintiffs’ Proposed Class Area (“PCA”).
Marketing Expert Witness
Dominique Hanssens is a Distinguished Research Professor of Marketing at the UCLA Anderson Graduate School of Management. He has served as the school’s faculty chair, associate dean, and marketing area chair. From 2005 to 2007 he served as executive director of the Marketing Science Institute in Cambridge, Massachusetts.
Hanssens studied econometrics at the University of Antwerp in his native Belgium. He then obtained an M.S. and Ph.D. in marketing from Purdue University. His research focuses on strategic marketing problems, in particular marketing productivity, to which he applies his expertise in data-analytic methods such as econometrics and time-series analysis.
Plaintiffs argued that Defendants tricked and coerced putative class members into responding to the survey—designed to undermine class certification—by including a two-dollar bill that was visible through the envelope window and giving survey respondents a $20 Walmart gift card. Additionally, according to Plaintiffs, Hanssens should have disclosed to participants that Northrop Grumman was sponsoring the survey and that the respondents could be undermining their legal position by responding.
Since the survey itself appeared to be facially neutral and created in accordance with accepted principles, the survey did not require the Court to take the corrective actions Plaintiff seeks.
Plaintiffs pointed to no statement that is likely to leave respondents with a false impression of the litigation or cause respondents to abandon their legal rights. And the Court found no statement in the survey to be clearly misleading or coercive. For example, the Court is not overly troubled with the statements that the recipient was sent the survey as a “resident of the greater Los Angeles area” or that “the results of this survey will not be used to try to sell you anything” and would be “kept in confidence.”
The Court believes that although Plaintiffs can come up with a misleading interpretation of these statements, they simply do not rise to the level of deception that would convince the Court to restrict the parties’ speech rights. Nor are they the type of statements that would enable the Court to craft a narrowly-tailored restriction on speech.
Held
The Court denied Plaintiffs’ motion to strike the expert report of Dominque Hanssens.
Key Takeaway:
Rule 23(d) gives the Court the power “to impose limitations when party engages in behavior that threatens the fairness of the litigation.” For example, courts have found that limitations are necessary in the wake of ex parte communications “soliciting opt-outs” or “discouraging participation in a case.” In contrast to these cases, Hanssens’ survey here was “facially neutral, did not require the participants to waive any of their rights in this litigation, and was conducted pre-certification when Defendants may generally gather information about the putative class.”
Case Details:
Case Caption:
Jed Behar Et Al V. Northrup Grumman Corporation Et Al
Plaintiff La Canada Ventures, Inc., is a health and beauty retailer offering cosmetic products. Defendant MDalgorithms is a company that offers computer software and app technology for education and advice about the treatment of acne. Both parties create and market skin and haircare products with the root mark “MD.”
Plaintiff brought this action against Defendant, advancing several claims related to trademark infringement and false advertising.
Plaintiff owns seven trademarks. Defendant creates and sells MDacne and MDhair, which are customizable skincare and haircare product kits. Plaintiff does not sell a product called MDacne but does have an acne skincare product that displays the mark “MD” on the packaging. Plaintiff avers that its customers nonetheless confuse the source of MDalgorithm’s products as coming from Plaintiff. Where a customer confuses the source of the junior user’s product as the senior user, that is known as “forward confusion.” Other types of confusion actionable under the Lanham Act include “reverse confusion,” which occurs when consumers approach the senior user, mistakenly believing they are dealing with the junior user, as well as the newly minted “initial interest confusion,” which occurs when customers are drawn to one party’s brand during their search for its competitor’s products, and the former “capitalizes on the goodwill associated with [the latter’s] mark.”
Defendant filed a motion to strike the opinion of Plaintiff’s expert, Richard Kostick. In his report, Kostick opined that (1) Plaintiff consistently followed best practice for effective digital marketing and (2) the sales and revenue generated by Plaintiff do not reflect the expected return from its digital marketing investment. Defendant challenged Kostick’s research methodologies as deficient and self-serving.
Marketing Expert Witness
Richard Kostick is the Founder and CEO of Purity Cosmetics (100% PURE) and has demonstrated expertise in leading and growing a successful cosmetics company with a strong focus on natural and organic beauty products. Under his leadership, Purity Cosmetics became a leader in prestige natural and organic beauty products. The flagship brand, 100% PURE, was committed to producing the purest and healthiest products while promoting environmental sustainability and improving the lives of both people and animals. With almost two decades of experience as the CEO of Purity Cosmetics, he gained extensive knowledge and expertise in the digital marketing strategies and tactics employed within the beauty industry. He employed this knowledge for the strategic decision-making that was instrumental in positioning Purity Cosmetics as a recognized brand in the market.
There are several reasons why an expert’s proposed testimony may be excluded, including the expert’s lack of qualification, the inapplicability of the proposed testimony, and the unreliability of the proposed testimony. Defendant primarily contended that Kostick’s report and any associated testimony should be excluded because it is unreliable.
Kostick’s opinion that Plaintiff engaged in best practices for digital marketing
Plaintiff argued that Kostick’s methodology is adequately stated and that cross-examination, not exclusion, is the appropriate way for Defendant to attack his opinions.
The Court observed that none of the other four analytical steps enumerated in Kostick’s report provide any greater insight into his actual methods, making it impossible to test his results. Kostick described the steps of his analysis in only the most general of terms. For example, he stated in only four lines of text that he conducted a “website audit” using three tools: Google Search Console, Google Optimize, and GTMetrix. He did not state what he actually did with these tools. Further, while Kostick stated that the audit provided “valuable insights” and “potential areas for improvement,” he did not elaborate as to either.
Moreover, Kostick did not record his work. Kostick’s report might be admissible if its vagueness could be cured by complete contemporaneous notes and documentation because Defendant could use that documentation effectively to cross-examine him. The Court noted that no such documentation exists.
Kostick’s report simply states that he used GTMetrix to conduct his website audit. When asked at his deposition if he took any notes during that process, Kostick replied that he could not recall and that he provided Plaintiff with any notes he did write, but Plaintiff has not produced any notes regarding GTMetrix. Similarly, Kostick’s report states that he used Ubbersuggest to conduct keyword research, but he does not recall whether he preserved any results or data from his use of that program and no such documents have been produced by Plaintiff.
The Court held that Kostick’s report ran afoul of Rule 26 which requires that an expert’s report contain “the facts or data considered by the witness in forming” their opinions. “
Kostick’s opinion that Plaintiff did not achieve the expected return from its digital marketing investment
The Defendant moved to strike an additional opinion in Kostick’s report; specifically, that “a solid investment in digital marketing should result in a return of 2-5 times during the short term and more in lifetime value of the customer.” However, the Court held that the report did not provide any additional information about this claim or its basis. When asked during his deposition about the claim, Kostick confirmed that he had not cited a source and could not identify a potential source supporting this claim despite it being supposed common knowledge.
The ten blog posts and articles that Kostick had listed as “authoritative sources” to shed light on the potential returns from the kinds of marketing investments employed by the Plaintiff added nothing to support his report’s reliability. Since he had not provided citations for any of these ten sources, Kostick failed to make clear exactly what articles he was relying on. However, even a cursory search for these ten sources made clear that they were not from reliable peer-reviewed publications. Instead, Kostick had apparently cited industry magazines and blogs run by technology companies who were likely writing with incentives irrelevant here.
Held
The Court granted Defendant’s motion to strike and exclude the report and associated testimony of Richard Kostick.
Key Takeaway:
Whether Kostick’s methodology is sound is unknowable because he does not state his methodology with sufficient specificity to satisfy even the very liberal standard under Daubert.
Defendant challenged Kostick’s failure to document and disclose his methods. Basic documentation of an expert’s analytical process is not, as Plaintiff argues, merely additional information that Defendant would like to see, but rather an essential part of an expert report that cuts to the heart of whether the method “can be or has been tested.”
Case Details:
Case Caption:
LA Canada Ventures, Inc. v. Mdalgorithms, Inc.
Docket Number:
3:22cv7197
Court:
United States District Court for the Northern District of California
Plaintiff Amy Lee Sullivan is suing Defendant Flora, Inc. for copyright infringement of 33 illustrations that she created for Flora as part of two advertising campaigns.
Sullivan offered the testimony of a financial evaluation expert, Dennis Kleinheinz. Sullivan wanted to present Kleinheinz’s calculations on Flora’s profits but the Court reserved the ruling on Sullivan’s motion regarding the testimony of Dennis Kleinheinz when Flora filed its objections.
Plaintiff also retained Danny Mager and Flora filed objections against his opinion that each additional use of each of Sullivan’s registered illustrations have a market value of between $3,000.00 and $6,000.00.
Marketing Expert Witness
Danny Mager is employed by Staples Marketing, LLC, which does business as AFFIRM Agency. The AFFIRM Agency is a Milwaukee County, Wisconsin full-service advertising agency originally established in 1985. Mager is a principal and the marketing director of AFFIRM. He is a 50% owner of that company as well. Mager has 30 years of creative, marketing and advertising industry experience. He is a member of various advertising and marketing industry professional and trade associations including the American Advertising Federation-Madison Chapter, the Agency Management Institute, Second Wind Agency Network and the Business Marketing Association.
Dennis Kleinheinz is a partner with the Middleton, Wisconsin CPA firm of Meicher CPAs, LLP. He received his Bachelor in Business Administration degree from the School of Business at the University of Wisconsin-Madison. Kleinheinz graduated in 1977 “with distinction”.
The Court held that Sullivan may not rely on Mager to establish that any of the individual illustrations have independent economic value. Mager’s testimony may be relevant to whether or not any individual illustration constitutes a “work,” but it does not conclusively show that any illustration is not nonetheless part of a “compilation.”
Even if Sullivan establishes with other evidence that all of the illustrations have independent economic value, Mager’s opinion would not help to establish the economic value for a particular illustration because Mager did not base his opinion on any independent evaluation of the specific illustrations at issue. So if Sullivan wanted to rely on Mager to place a value on each illustration, Mager would have needed to amend his report to conduct an evaluation of each illustration. Without such an evaluation, the Court held that Mager’s opinion that each use of an illustration has a market value of $3,000 to $6,000 has no foundation and is therefore inadmissible.
Moreover, Flora also filed a motion to exclude expert testimony on statutory damages. The only expert testimony that Sullivan wishes to present on statutory damages is Mager’s opinion that the market value of each illustration is $3,000 to $6,000. The Court explained in its ruling on Sullivan’s motion regarding Danny Mager why that opinion is not admissible. The Court, therefore, granted this motion.
Held
The Court held that Sullivan may not rely on Mager’s opinion that each use of each illustration has a market value of $3,000 to $6,000.
Key Takeaway:
Finding that an illustration is entitled to a separate statutory damages award requires first finding that the illustration has independent economic value. Thus, Mager’s testimony, which assumed that Sullivan’s illustrations were each entitled to a separate statutory damages award (i.e., assumed the illustrations had independent economic value), cannot now (without more) be used to establish that those same illustrations have independent economic value in the first place. Mager’s testimony may be relevant to whether or not any individual illustration constitutes a “work,” but it does not conclusively show that any illustration is not nonetheless part of a “compilation.”
Mager’s testimony assumed that each of the 33 illustrations were entitled to a separate statutory damages award but he did not base his opinion on any independent evaluation of the specific illustrations at issue. Indeed, Mager did not even know how many illustrations there were, stating “I think it was 44 illustrations.”
Case Details:
Case Caption:
Sullivan, Amy V. Flora, Inc.
Docket Number:
3:15cv298
Court:
United States District Court for the Western District of Wisconsin
Plaintiff, Hawaii Foodservice Alliance alleged that Defendant Meadow Gold Dairies Hawaii, LLC (“MGDH”) used phrasing and imagery suggesting that the Meadow Gold brand products are sourced in Hawai`i, and these activities are misleading and deceptive because the Meadow Gold products contain milk and other products that are imported from the continental United States. Defendants Hollandia Dairy, Inc. (“Hollandia”), Heritage Distributing Company dba Ninth Avenue Foods (“Heritage”), and Saputo Cheese USA Inc. fka Saputo Dairy Foods USA, LLC (“Saputo”) (collectively “Supplier Defendants”) supply products to MGDH.
Plaintiff’s designated expert, Thomas J. Maronick submitted surveys which focused on products and intellectual properties (the “Hawai‘i-Themed Images and Phrases”) for which this Court has already ruled in Defendants’ favor. Defendants filed a motion seeking to exclude Maronick’s conclusions regarding consumer perceptions of those products and Hawai‘i-Themed IP.
Marketing Expert Witness
Thomas Joseph Maronick holds a Juris Doctor degree from the University of Baltimore School of Law, with an emphasis on corporate, business and consumer law. He is a member of the Maryland Bar. He also earned a Doctor of Business Administration degree from the University of Kentucky, as well as a Master of Science in Business Administration from the University of Denver, having majored in marketing.
Maronick is an Emeritus Professor of Marketing at Towson University College of Business and Economics, where he taught marketing, strategy, and research courses from 1987 to 2017. He previously held faculty positions teaching marketing at the University of Baltimore School of Business and Virginia Commonwealth University. Additionally, Maronick worked as the Director of the Office of Impact Evaluation at the Federal Trade Commission from 1980 to 1997. Since 1997, Maronick has worked as a marketing consultant and expert witness. He has provided expert services in over 150 cases involving consumer litigation, advertising, trademarks, and survey research.
Maronick concluded “the main message communicated to a significant percentage of consumers . . . is that the milk and dairy products . . . come from Hawaii.”
Defendants sought to exclude Maronick’s testimony because it was irrelevant since his surveys focused on Plaintiff’s claims for which summary judgment had been granted in their favor. Plaintiff contended that the surveys did not heavily focus on the Hawai`i-Themed Images and Phrases, which were no longer part of Plaintiff’s claims.
Maronick’s survey required that the respondents review an image of the story of the Dairymen’s Association that appeared on a side panel and asking them if they noticed the at-issue phrase “Hawaii’s Dairy.” The Court did not find Maronick’s testimony relevant to the remaining claims to the extent that the surveys involved the groups reviewing products containing the Hawai`i-Themed Images and Phrases.
To the extent that Defendants contended that Maronick failed to apply generally-accepted principles and methodologies, the Court held that cross-examination can address these concerns.
Held
The Court granted in part and denied in part the Defendants’ motion to exclude the expert reports and testimony of Thomas J. Maronick.
Key Takeaway:
Federal Rule of Evidence 702 controls the admissibility of Maronick’s opinions. The rule requires that the evidence must assist the fact finder to understand the evidence or to determine a fact in issue; and the witness must be sufficiently qualified to give the opinion.
Case Details:
Case Caption:
Hawaii Foodservice Alliance, Llc V. Meadow Gold Dairies Hawaii, Llc Et Al
Plaintiffs are 31 professional models, actresses, and social media influencers who each earn a living promoting and licensing their image, likeness, and/or identity (collectively, “Image”) to select clients, commercial brands, and media and entertainment outlets, which rely on Plaintiffs to promote, endorse, and sponsor agreed-to goods and services. Plaintiff filed a lawsuit against Orange Lantern, Inc. and Mark Pessolano, alleging violations of the Lanham Act.
Orange Lantern previously operated the Magic Lantern night club and Pessolano was one Orange Lantern’s owners. Plaintiffs have alleged that Defendants posted images of Plaintiffs to Magic Lantern’s Facebook page between July 16, 2012, and November 21, 2018, without their consent or knowledge, making Defendants liable.
Plaintiffs retained Stephen Chamberlin as the Image Consulting and Valuation Expert Witness and Thomas Maronick as the Marketing Expert Witness in this case. Defendant filed a motion to exclude the expert opinions of both Chamberlin and Maronick which the Court subsequently denied.
Both parties also filed motions for summary judgment, each side arguing that there were no disputes of material fact and asserting entitlement to judgment as a matter of law.
Image Consulting and Valuation Expert Witness
Stephen Chamberlin has over thirty years of experience as an agent for professional models and has negotiated numerous contracts for models to appear in advertising. He served in leadership roles at prominent talent agencies including LA Models Management, Warning Management Inc., and Michele Pommier Models. Chamberlin has also represented high-profile celebrity models and talent including Tyra Banks, Claudia Schiffer, and Paris Hilton.
Marketing Expert Witness
Thomas Maronick is an Emeritus Professor of Marketing at Towson University College of Business and Economics where he taught marketing, strategy, and research courses from 1987 to 2017. He also held faculty positions at the University of Baltimore School of Business and Virginia Commonwealth University. Maronick served as the Director of the Office of Impact Evaluation at the Federal Trade Commission from 1980 to 1997. Since 1997, he has worked as a marketing consultant and expert witness, providing services in over 150 cases involving consumer litigation, advertising, trademarks, and survey research.
Discussion by the Court
Chamberlin testified about the rates the Plaintiff would have charged to appear on the Facebook postings. Maronick analyzed the consumer confusion created by the social media postings.
Plaintiffs contended that the opinions offered by Chamberlin and Maronick met the admissibility requirements of Rule 702, and Defendants’ arguments, while framed as objections to methodology, actually concerned questions of weight and credibility that could not be resolved at summary judgment.
Motion to Strike Chamberlin
When the Defendant argued that Chamberlin lacked professional experience negotiating contracts with strip clubs, the Court noted that Chamberlin’s professional background qualified him to opine considering he has negotiated numerous contracts for models to appear in advertising. Moreover, Plaintiffs did not agree to license their images to any strip clubs during the relevant period.
Chamberlin admitted that he did not apply an objective formula to arrive at his opinions but asserted that the methods he used were still reliable. Defendants did not dispute that modeling contracts were negotiated based on an individualized balancing of multiple criteria. Chamberlin listed the criteria he used and explained various assumptions he made when negotiating rates for individual models to appear in specific advertising. It was clear that Chamberlin had reviewed the posted images, spoke with each of the Plaintiffs, and reviewed the Plaintiff’s work history before reaching his opinions.
Court’s Ruling on the Motion to Strike Chamberlin
The Court held that objections to the accuracy of Chamberlin’s statements about the criteria he considered when negotiating modeling rates or the sufficiency of the facts reviewed before rendering his opinion may be presented to the trier of fact, but they did not warrant his disqualification at this stage of the litigation.
Motion to Strike Maronick
The Court deemed Marketing Expert Witness Maronick more than qualified to design and conduct consumer surveys and interpret the results.
He designed an online survey that could administer to “a sample of consumers in the target market for gentlemen’s clubs in Massachusetts” and used it to determine the perceptions of consumers regarding women shown in social media postings by the Magic Lantern.
Specifically, the survey aimed to ascertain whether the women had any affiliation with the club, approved the use of their images, were paid for the use of their images by the Magic Lantern Club, and participated in some or any of the events or activities at the Magic Lantern Club.
Maronick listed the following conclusions:
a large majority of consumers considering whether to visit a gentleman’s club consider the women working there to be an important factor in their decision;
consumers are likely to believe that women shown in ads posted by the Magic Lantern have agreed to endorse or sponsor the Magic Lantern, have a connection with the Magic Lantern, have approved the use of their images, have been paid to promote the Magic Lantern, and have participated in activities at the Magic Lantern
such consumers are likely to believe the Magic Lantern posted images of women in order to convey to potential consumers that they would see similar looking women if they visited the Magic Lantern
Court’s Ruling on the Motion to Strike Maronick
The Court held that Marketing Expert Witness Maronick designed the survey and administered it in a way that gathered data consistent with the limited scope of the inquiry. The Court found Maronick’s opinions to be within the scope of the inquiry and well-supported by the survey data.
Defendants were free to take up any objections they had with regard to Maronick’s survey data at trial but the Court found no basis to exclude Maronick’s testimony.
The Court denied Plaintiff’s motion for summary judgment but granted in part and denied in part the Defendant’s motion for summary judgment.
Held
The Court denied the Defendant’s motions to exclude the testimony of Stephen Chamberlin and Thomas Maronick.
The Court stayed the case because it certified a question to the Massachusetts Supreme Judicial Court (“SJC”) regarding how the Massachusetts discovery rule should apply to Plaintiffs’ defamation claims based on Facebook postings made more than three years before they filed their original complaint.
Key Takeaways:
Reliability: The Court considered Chamberlin’s methods, although lacking an objective formula reliable due to his thoroughness in considering various criteria and reviewing relevant facts. The Court also deemed Maronick’s survey methodology and conclusions consistent with the limited scope of the inquiry and well-supported by the survey data.
Qualifications: The Court held that Chamberlin’s background negotiating numerous contracts for models to appear in advertising was relevant.
Maker’s Mark entered into a Licensing Agreement with Spalding Group gransting an exclusive license to use its trademarks to create and sell cigars seasoned with its bourbon (the “Licensed Cigars”). After renewing the agreement a few times, in 2013, Maker’s Mark notified Spalding that it was terminating the license effective December 31, 2015. Spalding Group had until June 28, 2016, to dispose of its remaining inventory of Licensed Cigars.
Following the termination of the license, Spalding Group began selling a cigar also seasoned with Maker’s Mark bourbon (the “Bourbon Cigar”). Maker’s Mark alleged the packaging of the Bourbon Cigar was intentionally designed to “evoke an association by customers between [t]he Bourbon Cigar on the one hand and Maker’s Mark and the prior Licensed Cigars on the other.”
Maker’s Mark further claimed Spalding Group advertised the Bourbon Cigar in a variety of ways to associate it with Maker’s Mark and the Licensed Cigars, despite Maker’s Mark’s demand that Spalding Group cease and desist.
Maker’s Mark brought this action against Defendants, asserting claims of trademark infringement; false designations, descriptions, and representations; and trademark dilution in violation of the Lanham Act.
It also brought breach of contract, trademark infringement, and false designation and unfair competition claims under Kentucky common law.
Defendants filed a counterclaim alleging various state law claims related to the licensing agreement and seeking to cancel some of Maker’s Mark’s trademark registrations.
To support its trademark infringement claims, Maker’s Mark retained Ran Kivetz (“Dr. Kivetz”), a professor at Columbia University Business School with experience in consumer psychology and surveys. Dr. Kivetz conducted a survey to estimate the likelihood that consumers would mistake the Bourbon Cigars for a Maker’s Mark product.
To rebut Maker’s Mark’s trademark dilution claims, Defendants retained Hal Poret (“Poret”), a public opinion researcher with a master’s degree in mathematics and a law degree from Harvard Law School. Poret conducted surveys to evaluate whether the words “Marker’s Mark” and the red wax design are famous. Defendants later asked Poret to review Kivetz’s likelihood-of-confusion survey and conduct his own.
Neither party challenged the qualifications of the other’s expert; they each argued that the opposing party’s expert’s likelihood-of-confusion surveys were unreliable. Because the challenges were similar, the Court addressed both Daubert challenges together.
Maker’s Mark also retained Michael A. Einhorn (“Dr. Einhorn”) to calculate Defendants’ profits that may be recoverable under 15 U.S.C. § 1117(a). Defendants moved to exclude Einhorn’s testimony regarding the deductions and resulting net profits calculation; they did not challenge his gross profits or royalties calculations, contending that Einhorn was unqualified to calculate Defendants’ deductions and that his testimony was unreliable.
Survey Research Expert Witness
Hal Poret (“Poret”) is a public opinion researcher with a master’s degree in mathematics and a law degree from Harvard Law School. Since 2004, Poret has personally designed, supervised, and implemented over 350 consumer surveys concerning consumer perception, opinion, and behavior, including surveys relating to false advertising, claim substantiation, and trademark/trade dress matters. He has personally designed numerous studies that have been admitted as evidence in legal proceedings and has testified as an expert in over 50 proceedings before U.S. District Courts, the Trademark Trial and Appeal Board, and NAD.
Marketing Expert Witness
Ran Kivetz is the Philip H. Geier Professor of Marketing at Columbia University Business School. He earned a Ph.D. in Business from Stanford University, Graduate School of Business; a Master’s degree in Psychology from the Stanford University Psychology Department; and a Bachelor’s degree from Tel Aviv University with majors in Economics and Psychology. His field of expertise encompasses consumer psychology and behavior; survey methods; marketing management; behavioral economics; human judgment, perception, and decision making; consumer and sales incentives; and branding. Professor Kivetz’s research has won many prestigious awards, including multiple “Best Paper” awards, being a recipient of the New York Times annual “Best Idea” award, and being ranked as the third most prolific scholar in his field during 1982–2006.
Economic Damages Expert Witness
Michael A. Einhorn has a Bachelor of Arts in Economics from Dartmouth College (summa cum laude) and a Ph.D. in Economics from Yale University. Since receiving his Ph.D. in 1981, he has worked as a Member of Technical Staff at Bell Telephone Laboratories, an economist at the United States Department of Justice (Antitrust Division), and a staff economist at Broadcast Music Inc., a collection agency that licenses performance rights in music to major broadcasters, including television networks, local stations, cable companies, and radio stations. He has worked as a testifying expert since 2001. He is also a former professor of economics at Rutgers University (Newark), where he taught courses on macroeconomics, microeconomics, industrial organization, and corporate finance. He is the author of Media, Technology and Copyright: Integrating Law and Economics (2004), which applies economic reasoning to a number of issues in American copyright law with regard to media, entertainment, and technology.
Discussion by the Court
With regard to Defendants’ motion to exclude certain testimony and opinions of Ran Kivetz, the Court analysed Kivetz’s likelihood-of-confusion survey in depth.
Kivetz’s survey was divided into a test group and a control group. The test group participants saw three-dimensional, 360-degree viewable graphics of Defendants’ Bourbon Cigars, first the box, then an individual cigar. The control group participants saw three-dimensional, 360-degree viewable graphics of the box, then an individual cigar, all with the words “Seasoned with Maker’s Mark” on the cigar band replaced with “Seasoned with Bourbon” and the red wax-dipped caps replaced with red plastic caps. Participants could manipulate the images until they were ready, then they proceeded to answer question sets about the product’s source, affiliation, and sponsorship. The first question set was on the product’s source and was open-ended, with participants instructed to write what company they think made the product in a text box below the question (the “source question”), followed by other open-ended questions asking participants to explain their answers. At the beginning of the survey, participants read instructions not to guess and that “don’t know” was an acceptable answer that they could select or type. The other questions asked participants to name companies, products, or brands that the participants thought were affiliated with or sponsored the cigars. Each of those questions had an explicit “don’t know” option, except the open-ended questions asking participants to explain their answers if they provided one. Throughout the survey, an image of the single cigar, either the test or control version depending on the group, remained on the page for participants to view. This image was of the front of the cigar, was not rotatable, and displayed only half of the cigar band, with the test group cigar displaying the words “Seasoned” and “Maker’s,” while “with” and “Mark” on the band and the “ted’s” on the red seal were cut off. Poret conducted likelihood-of-confusion surveys intended to rebut Kivetz’s survey, and it replicated it in all but three ways. First, the participants could view the images, which Poret took from Kivetz’s report, from several angles of the side, top, and bottom, but not a 360-degree view. Second, Poret removed the image of the single cigar from the question pages. Third, Poret provided an express “don’t know” option to the otherwise open-ended source question.
Both the parties filed motions to exclude based on how the opposing party’s expert used images in his likelihood-of-confusion survey and whether it accurately simulated marketplace conditions.
Defendants argued that repeatedly showing participants the single cigar turned Kivetz’s survey into a “reading test,” where they would answer based on the words “Seasoned” and “Maker’s” visible in the repeated image instead of the Ted’s Cigars branding they saw on the cigar box or the branding that was not visible on the single cigar because of the angle. Kivetz’s survey was accused of creating demand effects, or suggesting a “correct” answer to the participants, by leaving an image of the single cigar for participants to view as they answered questions.
Maker’s Mark responded that Poret’s first likelihood-of-confusion survey was an unreliable “memory test” where participants were not continually exposed to the product while they evaluated it like they would have been in the marketplace. Maker’s Mark demanded exclusion of Poret’s survey since the memory test was based on blurry images from limited angles that did not show “Maker’s Mark.”
The Court held that such challenges amounted to little more than professional disagreement about methodology, which concerned the weight and not the admissibility of the surveys considering neither Maker’s Mark nor Defendants cited any authority suggesting either method was uniformly unreliable and instead each cited articles supporting its expert’s method, which indicated that the disagreement existed within the field and the choice was within the expert’s discretion.
Further, the parties’ more specific concerns about the images appeared unfounded. Defendants argued that 33% of Kivetz’s respondents wrote that “Seasoned Maker’s” produced the cigar because it was all that was visible on the individual cigar image, which showed that Kivetz’s survey inflated the level of confusion. Kivetz, however, did not include the “Seasoned Maker’s” responses as evidence of confusion in his calculations. Maker’s Mark argued that because Poret’s survey did not use 360-degree viewable images, participants could not see the words “Maker’s Mark,” but participants could rotate the individual cigar and see “Maker’s” in one image then “er’s Mark” in the next. Defendants similarly asserted that Kivetz’s survey was flawed because no Ted’s Cigars branding was visible in the single cigar image which remained on the page during the survey, but Maker’s Mark’s name was not visible on the cigar either, only “Seasoned” and “Maker’s”. Moreover, before entering the question portion, participants examined the cigar box and single cigar from 360 degrees for at least 30 seconds each until indicating that they could clearly see the images. Respondents who could not clearly see the image were removed from the survey. Accordingly, the Court found that none of these concerns warranted exclusion and the parties were allowed to explain to the factfinder how each expert used images and whether, in their views, those images accurately replicated marketplace conditions and produced accurate results.
One of the other reasons the parties moved to exclude the other’s likelihood-of-confusion surveys was whether or not the initial source question included a “don’t know” answer option. Defendants insisted on the unreliability of Kivetz’s survey because it did not include a “don’t know” answer option for the source question like it did for the other questions. Maker’s Mark conversely argued that an explicit “don’t know” option was inappropriate for an open-ended question, so Poret’s survey, which had an explicit “don’t know” option, artificially increased the number of participants who selected it, thus erroneously reducing the net confusion rate.
The Court noted that Diamond’s article appeared to be discussing a “don’t know” option in the context of closed-ended questions, so Poret’s survey may have been less accurate, but his choice did not mean the entire survey was so informally designed and conducted that it failed key tests of professionalism and reliability. Henceforth, the Court refused to exclude not only Kivetz’s likelihood-of-confusion survey but also Poret’s rebuttal survey.
Poret conducted a second likelihood-of-confusion survey that tested whether the red wax seal itself and not the “Seasoned with Maker’s Mark” label on the Bourbon Cigars was likely to cause confusion. The second survey again replicated the Kivetz Survey with some exceptions: the images were viewable from several angles but not 360 degrees, and the control cigars and the test cigars kept the “Seasoned with Maker’s Mark” band instead of a “Seasoned with Bourbon” band. Maker’s Mark contended that the survey should be excluded because controls must not be infringing and because the survey results could not explain whether participants were confused by the band or the wax seal. The purpose of avoiding infringing or allegedly infringing controls was to be able to tell whether any reported confusion was the result of actual confusion or the flawed control and the fact that the parties highly disputed whether the use of “Maker’s Mark” on the cigar band was likely to cause confusion made it all the more crucial. Defendants did not adequately respond to this concern with Poret’s survey, noting that “Maker’s Mark” on the cigar band may have been non-infringing or a fair use, actively ignoring the fact that even an allegedly infringing element was problematic in the process besides waiving the fair use defense. They cited only Poret’s explanation that his purpose was to isolate the red wax element. The Court noted that Defendants did not carry their burden to prove that Poret’s wax confusion survey was reliable.
Coming to Defendants’ motion to exclude certain opinions and testimony of Michael A. Einhorn, it was noted that Einhorn submitted a report and two supplemental reports in which he calculated Defendants’ gross revenue and deducted Defendants’ costs to arrive at their net profits from the sale of the Bourbon Cigar, besides calculating what royalties would have been due under the licensing agreement. Defendants targeted Einhorn’s testimony regarding the deductions and resulting net profits calculation instead of his gross profits or royalties calculations. Defendants stated that Einhorn was no expert in cost accounting and highlighted his lack of relevant experience in accounting.
The Court, citing Mannino v. Int’l Mfg. Co., 650 F.2d 846, 851 (6th Cir. 1981), held that Einhorn met the minimal qualifications requirement based on his Ph.D. in economics from Yale University as well as decades of experience calculating damages in intellectual property cases. Even though much of his experience has been related to copyright, trademark damages estimations were well-represented on his resume.
When Defendant argued that Einhorn was not qualified to perform the specific calculations in this case, which involved determining which of Defendants’ costs should be deducted from the gross profits to reach the net profits, the Court noted that Einhorn has been admitted to testify regarding essentially the same calculation in copyright cases. The Court deemed Einhorn qualified to express opinions regarding Defendants’ net profits.
Defendants objected to Einhorn’s use of the “incremental approach” in his calculations as opposed to their expert’s use of the “full absorption” approach. The incremental approach subtracts only direct production costs from a Defendant’s gross profits, while the full absorption approach also subtracts the proportion of overhead costs attributable to the product.
While some courts have adopted one method or the other, the Sixth Circuit appears to have not. In a patent case, the Sixth Circuit declined to adopt a uniform rule about whether overhead costs should be deducted from profits because it depends on the facts of each case. The Court observed that trademark remedies authority suggested that the incremental approach is an acceptable method. The Court declined Defendant’s request to exclude Einhorn’s testimony on that basis.
Defendants moved to seal their motion to exclude Einhorn and the attached Exhibits 1-5, 8, and Maker’s Mark moved to seal its response to the motion and Exhibit 1, which included Einhorn’s report and supplemental reports. The documents contained Defendants’ profit margins, sales data, and other financial information. The Court denied the motions filed by both parties.
Held
The Court issued the following rulings:
1. Defendants’ motion to exclude certain testimony and opinions of Ran Kivetz was denied.
2. Plaintiff’s motion to exclude certain expert testimony of Hal Poret was granted in part and denied in part.
3. Defendants’ motion to exclude certain opinions and testimony of Michael A. Einhorn was denied.
4. Defendants’ motion for leave to file under seal was denied.
5. Plaintiff’s motion for leave to file under seal was denied.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
The Court emphasized that challenges to expert testimony often revolve around methodological differences rather than the admissibility of the evidence itself. Disagreements within the field are common and do not necessarily render expert testimony unreliable.
Regarding the use of images in likelihood-of-confusion surveys, concerns about methodology and the simulation of marketplace conditions were raised by both parties. However, the Court determined that these concerns did not warrant exclusion of the surveys, allowing the parties to present their arguments about the validity of the methodology to the factfinder.
The absence of a “don’t know” option in certain survey questions was debated, with one party arguing that its inclusion artificially affected the results. The Court noted that the survey in question did not fail key tests of professionalism and reliability and refused to exclude the surveys based solely on this issue.
Expert qualifications were also scrutinized, particularly regarding calculations of net profits. Despite challenges to the expert’s qualifications and methodology, the Court deemed the expert sufficiently qualified based on relevant experience and education.
Differences in calculation methods, such as the incremental approach versus the full absorption approach, were considered by the Court. While some courts may have preferences for certain methods, the Court in this case declined to adopt a uniform rule, emphasizing that the appropriateness of a method depends on the specific circumstances of each case.
Case Details:
Case Caption:
Maker’s Mark Distillery, Pbc V. Spalding Group, Inc. Et Al
Plaintiff, Anthony Bush on behalf of a class of California consumers, brought a class action against the Defendant, Rust-Oleum Corporation for mislabeling of its “Krud Kutter” cleaning products as “non-toxic” and “Earth friendly,” contending that it violated California consumer-protection laws since the products were, in fact, harmful to humans, animals, and the environment.
The operative complaint consisted of five claims: (1) unlawful, unfair, and fraudulent business practices under the Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200-08; (2) deceptive advertising under the False Advertising Law (FAL), Cal. Bus. & Prof. Code § 17500; (3) deceptive practices under the Consumer Legal Remedies Act (CLRA), Cal. Civ. Code §§ 1750-84; (4) breach of express warranties; and (5) unjust enrichment.
The Plaintiff filed a motion to exclude the opinions and survey of the Defendant’s market-research expert Dr. Ran Kivetz while the Defendants moved to exclude the declaration of the Plaintiff’s survey expert, Dr. J. Michael Dennis.
Marketing Expert Witness
Ran Kivetz is a renowned marketing scholar and survey expert holding a Ph.D. in Business from Stanford University Graduate School of Business. He is a tenured, chaired Professor of Marketing at Columbia University Business School, and he has received numerous research awards and nominations from leading marketing and consumer research publications and organizations, including, but not limited to, the Journal of Marketing Research, Journal of Consumer Research and the Association of Consumer Research.
Survey Research Expert Witness
J. Michael Dennis is a nationally recognized expert on survey research methods, with a focus on online surveys and household panels. He has directed hundreds of statistical studies using probability-based and non-probability panels, as well as using telephone and in-person modes of data collection. Dennis is executive director of AmeriSpeak, NORC’s probability-panel owned and operated by NORC.
Discussion by the Court
With regard to the Plaintiff’s motion to exclude the opinions of Ran Kivetz, the Court observed that Kivetz conducted a experimental design survey which involved a test group and a control group. Kivetz showed the test group the actual label of one of the Krud Kutter products while the control group was shown the same label but without the challenged label claims (“non-toxic” and “Earth friendly”). Kivetz asked two key questions to the respondents. The first question was whether or not they would buy the products shown but for the challenged claims while the second question involved the reasons for the respondent’s purchasing decision which the respondents had to list in open-ended format.
Based on the answers, Kivetz concluded that that the challenged claims were not a but-for cause of purchasing decisions considering the difference between the test and control groups in whether they would purchase the product. Kivetz added that the open-ended responses determined that there were a variety of reasons for consumers’ purchasing decisions.
Plaintiff argued that some of Kivetz’s opinions were irrelevant because under the reasonable-consumer test, the challenged claims could be “material” to purchasing decisions even if the claims were not a but-for cause of the decisions and a variety of factors went into the decisions.
Plaintiff contended that instead of using a proper control stimulus that omitted any references to the “Non-Toxic” and “Earth Friendly” attributes, Kivetz’s control stimulus included several representations that communicated to the control group that the product shown was not only safe or “non-toxic,” but also “earth friendly.” Specifically, he failed to remove the “biodegradability” claim and the Environmental Protection Agency’s “Safer Choice” seal on the front packaging; as well as the word “safely” from the back-packaging claim that the formula “safely and easily” removes various substances. Since the test and control stimuli both showed non-toxic and earth friendly products, Plaintiff concluded that Kivetz’s purported control stimulus was no control at all.
Plaintiff criticized Kivetz’s survey for distorting collected data due to inadequate control over pre-existing consumer attitudes, beliefs, and preferences. The inclusion of branding elements like the Krud Kutter name and packaging were based on the incorrect assumption that respondents could update their preferences despite the removal of Challenged Claims. The survey lacked manipulation checks to determine whether the experimental treatment — removal of the ‘non-toxic’ and ‘Earth friendly’ claims in the control stimulus — was effective.
Plaintiff argued that Kivetz’s open-ended questions were unreliable because such questions tend to measure only what comes first to a respondent’s mind while close-ended questions were better suited for qualitative research. Moreover, Kivetz allegedly failed to properly represent the class or replicate the marketplace.
Kivetz designed a coding frame and employed two blind coders to read and categorize the responses, reconcile any discrepancies between them, to quantify the open-ended responses and determine, in his view, whether a significant number of respondents identified the “non-toxic” and “earth friendly” features as a reason for their purchase decision. Kivetz failed to present the Plaintiff with the data upon which Kivetz relied, including Kivetz’s coding frame, the blind-coders coding, and the reconciliation of discrepancies. Consequently, Plaintiff was deliberately prevented from evaluating how verbatim responses were categorized.
The Court held that the Plaintiff’s attacks concerned the weight that should be accorded to Kivetz’s survey and opinions and determined that the survey methodology employed by Kivetz was within the bounds of accepted principles.
As for the data that Kivetz did not provide, it was seen that while responses were being categorized to the open-ended questions, the coding company excluded certain responses because the respondent spent too little time on it. Some of the data at issue, such as “all starts and metadata reflecting the excluded interviews and basis for their exclusion” were never actually provided to Kivetz.
As for the “pricing data that Kivetz collected to select the $9.47 price point in his survey,” the Defendant contended that it was public. This indicated that any failure to produce was harmless. The Court thus denied the Plaintiff’s motion to exclude the opinions of Kivetz, but this portion of the motion (regarding the alleged failure to produce data) was denied without prejudice to its being refiled as a separately noticed motion if warranted.
The Defendant filed a motion to exclude the declaration of the Plaintiff’s survey expert, J. Michael Dennis, alleging that Dennis repeated methodological errors found in previously excluded surveys from other cases. Dennis aimed to assess the extent to which reasonable consumers perceived the challenged claims regarding product harmlessness. His survey presented a hypothetical label without the Krud Kutter brand name, asking respondents if they believed the claims conveyed the stated meaning.
The Court, once again, noted that the Defendant’s arguments concerned the weight of Dennis’ testimony instead of its admissibility.
Held
The Court denied both the Plaintiff’s as well as the Defendant’s respective motions to exclude the opinions of Ran Kivetz and J. Michael Dennis.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
The case involved expert testimony from both parties, with the Plaintiff seeking to exclude the opinions of Ran Kivetz and the Defendant attempting to exclude the declaration of the Plaintiff’s survey expert, J. Michael Dennis. Kivetz’s experimental design survey with test and control groups, aimed to assess the impact of certain label claims on consumer purchasing decisions. However, the Plaintiff criticized Kivetz’s methodology, arguing that the control stimulus used was flawed as it still contained elements suggesting product safety and environmental friendliness. Additionally, the Plaintiff raised concerns about the incompleteness of expert disclosures. Despite these objections, the Court found that the methodology employed by Kivetz was generally acceptable within the bounds of established principles. As for Dennis’ testimony, the Defendant challenged its admissibility based on methodological errors found in previous surveys. However, the Court reiterated the distinction between challenges to weight versus admissibility of expert testimony, ultimately allowing both Kivetz’s and Dennis’ opinions to be admitted.
The lawsuit was a trademark infringement action filed by Forest River, Inc. against inTech Trailers, Inc. It sought injunctive relief, damages, costs, attorneys’ fees, and any other appropriate remedies. The legal action arose from inTech’s knowing and intentional infringement of Forest River’s DELLA TERRA trademark and its mountain design trademark, (“Forest River Mountain Design”) (Forest River Mountain Design and DELLA TERRA collectively, the “Forest River Marks”). The claims were made under the Lanham Act, the Indiana Trademark Act, and the common law of the State of Indiana, asserting inTech’s infringement of the Forest River Marks.
Forest River, Inc., a prominent player in the manufacturing of recreational vehicles (“RVs”), cargo trailers, utility trailers, pontoon boats, and buses, among other products, had utilized the Forest River Marks to brand, promote, advertise, market, and sell a new line of its RVs known as the “DELLA TERRA RVs.” Forest River extensively promoted, advertised, marketed, and sold a substantial number of DELLA TERRA RVs under the Forest River Marks. Consequently, the Forest River Marks became distinctive and well-recognized at common law within the industry and among consumers in the United States and Canada.
inTech, a competitor of Forest River in the United States and Canadian markets, was knowledgeable about Forest River’s RV product lines and trademarks, with certain members of its leadership having prior connections with Forest River. Commencing in November 2020, inTech initiated a campaign aimed at selling a new line of RVs by creating confusion among consumers, leading them to believe that its new RVs were DELLA TERRA RVs. inTech branded this new line as “Terra,” a name bearing a confusing similarity to DELLA TERRA, and also incorporated a new mountain design similar to that used by Forest River on its RVs. By using “terra” and the mountain design in various combinations, including with a third mark Forest River had used in the past—OASIS—inTech engaged in actions that traded on the goodwill associated with Forest River’s Forest River Marks.
inTech’s use of “Terra” was found to have infringed Forest River’s trademark rights in DELLA TERRA. Additionally, inTech’s use of its new mountain design was determined to infringe Forest River’s trademark rights in the Forest River Mountain Design. The inclusion of an old Forest River mark, OASIS, along with inTech’s knowledge of Forest River’s RV lines, indicated an intentional, willful, and knowing campaign to create initial interest confusion, closely align with the Forest River Marks, and capitalize on Forest River’s goodwill associated with those marks. inTech’s use of “Terra” and its new mountain design in composite marks was found to infringe composite marks comprising the Forest River Marks. All of these infringements were causing confusion in the RV industry and among consumers, thereby violating the Lanham Act, Indiana state law, and common law, entitling Forest River to seek relief.
Forest River, Inc. (“Forest River”) supported its claims by engaging a survey from an Intellectual Property valuation expert, David Franklyn, who conducted a scientific and controlled double-blind survey involving actual consumers of RV travel trailers. The purpose of the survey was to address the crucial question in the case: whether consumers were likely to be confused by inTech Trailers, Inc.’s (“inTech”) infringement on Forest River’s DELLA TERRA and Mountain Design trademarks. According to Forest River’s expert, David Franklyn, the findings indicated that a legally significant percentage of travel trailer consumers were indeed confused by inTech’s infringement.
In response to Forest River’s claims, inTech presented the testimony of a marketing expert, Thomas Maronick. Forest River claimed that despite not conducting his own survey to directly challenge Franklyn’s results, Maronick attempted to provide opinions that, if admitted, would seek to “inform” the jury about RV consumers and their thought processes. Forest River contended that Maronick lacked expertise specifically in RV consumers. Furthermore, Maronick went beyond his role as an expert witness by placing himself in the position of the Court, evaluating evidence using the wrong standard (the United States Court of Appeals for the Ninth Circuit’s Sleekfast factors), and opining on the legal issue of likelihood of confusion. Additionally, Forest River argued that Maronick’s opinions lacked reliance on any verified data or reliable analysis; he merely repeated data from third-party sources and surveys without evaluating the reliability of those sources or applying methodology critiques to his own references.
Due to Thomas Maronick’s “alleged” lack of reliable methodology and qualifications to opine on the thoughts and behaviors of RV consumers, Forest River, Inc. argued that Maronick’s proffered opinions amounted to nothing more than unsubstantiated and unreliable legal briefing. It was asserted that such ipse dixit opinion testimony was inadmissible under Rule 702 and Daubert. Consequently, Forest River, Inc. sought to exclude the testimony of inTech Trailers, Inc.’s opinion witness, Thomas Maronick.
Marketing Expert Witness
Dr. Thomas Joseph Maronick served as a marketing consultant since 1997, offering guidance on marketing strategy and consumer research issues in litigation. He functioned as an expert witness in more than 150 cases and conducted over 300 survey research projects related to advertising and trademark litigation. Before his consulting role, Maronick served as the director of impact evaluation in the Bureau of Consumer Protection at the Federal Trade Commission from 1980 to 1997. During this time, he acted as the in-house specialist on marketing and survey matters. Maronick has also contributed to publications on the impact of marketing on consumers.
Discussion by the Court
Forest River sought to exclude the anticipated testimony of Maronick. Forest River contended that Maronick’s testimony included inappropriate legal conclusions, particularly in sections 4 and 6 of his report. Forest River argued that Maronick gave conclusions under certain likelihood of confusion factors developed in another circuit and analyzed seven factors known as the “Diamond” factors used to evaluate consumer surveys. In response, InTech clarified that Maronick would not provide an opinion on the likelihood of confusion. The Court interpreted this as a concession, indicating that the set of opinions presented in section 4, even in the context, was no longer in dispute and would not be offered.The Court focused on the opinions in section 6 of Maronick’s report.
InTech had stated that Maronick would only offer his critique of Franklyn’s survey without delving into tracing the seven factors in the reference guide, as courts typically do. He was not required to inform the jury about the judicial evaluation of surveys using these factors. The Court had the responsibility to instruct the jury on weighing evidence, determining witness credibility, and assessing expert opinions.
The reference guide, emphasized as not constituting the law, was deemed inappropriate to present to the jury, as it could be misleading and prejudicial under Rules 702, 704, and 403. It was clarified that the guide was intended for judges and possibly counsel but not for the jury.
Accordingly, the Court held that Maronick had to limit his opinions to the analysis of Franklyn’s survey. However, he was permitted to articulate the factors in evaluating surveys to the extent that they proved to be considerations used by experts in his field for developing or assessing surveys, aligning with his experience. It was noted that many critiques in this section (Section 6) already appeared in Section 7 of his report.
Franklyn conducted a Squirt survey to determine whether consumers of towable travel trailers were likely to be confused by Forest River’s Della Terra and inTech’s Terra marks. The viewed images of travel trailers, were randomly classified as “test” or “control” subjects. Respondents answered two “buffer” questions early on to blind the study’s purpose. Later, they indicated whether the subsequent images were made by, affiliated with, or sponsored by the company that produced the first travel trailer—in this case, Forest River’s Della Terra travel trailer. Franklyn opined that 11 percent of respondents showed confusion, which he considered a significant percentage. He further asserted that a majority of these respondents formed their confusion based on the Terra mark or mountain design.
Forest River argued that Maronick should have conducted a rebuttal survey to address gaps in methodology or data in Franklyn’s survey. However, the Court determined that an opinion witness, in rebuttal, need not necessarily replicate or develop new data. A rebuttal witness may critique another’s opinions without offering alternatives, as long as it aids the jury in deciding a triable issue. Maronick was allowed to base his opinions on Franklyn’s information and add his own insights, provided the information was of a type that experts in his field reasonably rely on. Forest River viewed Maronick’s five critiques of Dr. Franklyn’s survey as unreliable and derivative of his own assertions.
First, Maronick critiqued Franklyn’s survey methodology, asserting that the sample used (the entire U.S. population) was overbroad. Maronick contended that Franklyn should have sampled individuals within the target market for travel trailers, emphasizing that 75 percent of travel trailer purchasers are over age 45 with disposable income above the national average. Franklyn reported that he set quotas in line with census distributions for age, gender, and region. In support of his critique, Maronick referenced a demographic profile study of RV owners conducted by Ipsos in 2020. Ipsos appears to be a near-50-year international company, publicly-traded in the European Union, with nearly 90 markets (including the United States), that collects and compiles data for its clients to make decisions.
The Court found that Maronick’s opinion drew on reputable data and explained the method for conducting a reliable survey, contributing to the jury’s understanding of the importance of starting with a proper sample. While Forest River raised concerns about the weight of his opinion, the Court deemed these concerns relevant to the weight rather than the admissibility of the opinion.
Second, Maronick opined that Franklyn should have used a broader array of images of competing trademarks instead of just a single control image (inTech Sol) and buffer image (Jayco Eagle). According to Maronick, using only these two images increased the likelihood of finding an association between Forest River’s mark and inTech’s mark. Franklyn employed a two-room format in his survey, showing respondents the Forest River Della Terra model in room one and two other images in room two, either the inTech Terra travel trailer (test group) or the Sol RV (control group). Maronick argued that showing these sequential images one at a time, rather than in an array, could skew responses substantially higher. Forest River contended that Maronick’s opinions lacked data or methodology because he didn’t conduct his own survey, characterizing them as merely his say-so. However, the Court disagreed, noting that while Forest River might not agree with the method or data, these were matters for cross-examination and argument at trial, not questions of admissibility under Rule 702. The Court recognized that experts could rely on reliable other sources and even hearsay to offer their opinions, citing United States v. Conn, 297 F.3d 548.
Third, Maronick opined that Franklyn’s use of the inTech Sol RV as the control image was so different from the Terra unit that it signaled to respondents an association between the Della Terra and Terra. Maronick referred to a standard in survey methodology stating that a control should share as many characteristics with the experimental stimulus as possible, except for the characteristic being assessed. He cited survey and industry authorities to support this step in his method, specifying differences in size and configuration that, in his view, skewed the results. Maronick’s experience in developing and conducting surveys, combined with industry sources, provided a reliable basis for his critique. While Forest River may challenge the credibility of his opinion during cross-examination and argument, its concerns were deemed suitable for trial rather than questions of admissibility under Rule 702.
Fourth, Maronick opined that the use of two “irrelevant” questions between respondents’ viewing of the Della Terra image and the images of the Terra, Sol, and Jayco units caused respondents to “guess.” He characterized the intervening questions as a modification to the Squirt survey format. Maronick supported his opinion by referencing industry support, a factual basis within Franklyn’s survey method, facts within the questions and responses, and the logical concern that this method might prompt specific responses. His method included a check-and-balance to frame survey questions clearly and precisely, avoiding bias and using control questions when appropriate. Maronick’s experience and the factual basis he provided spoke not only to his method but also to an issue that the jury might reasonably consider when evaluating the weight to give the survey. Forest River’s concerns were deemed to pertain more to the weight of Maronick’s critique rather than its admissibility.
Fifth, Maronick disagreed with Franklyn regarding whether a 9 percent net difference of survey respondents finding confusion between the Della Terra and Terra represented a significant likelihood of confusion. While Maronick couldn’t recall if his critique drew from the entirety of Franklyn’s analysis or a specific section, the Court considered this a factual gap suitable for cross-examination rather than outright exclusion. Maronick provided a formula for testing statistical significance, although he didn’t include the outcome in his report. Despite not being asked in deposition whether he ran the formula or the results, the Court noted that he offered a basis and method for testing his conclusion, making it testable. Maronick’s opinion, built on a method for adjudging surveys, a formula for statistical significance, data from Franklyn’s survey, and his experience in conducting 300 surveys, aimed to assist the jury in understanding not just the survey but also what it might convey to a factfinder. The Court concluded that his opinion was not inadmissible under Daubert.
Held
The Court granted Forest River’s motion to exclude Maronick’s opinion concerning his conceded opinions and those in section 4 of his report. However, the Court denied the motion as to Maronick’s critique of Franklyn’s survey, particularly his analysis of the five flaws and conclusion derived from the survey.
Key Takeaways:
This opinion addresses the admissibility of expert witness testimony under Daubert and Rule 702. The Court denies most of Forest River’s motion to exclude Intech’s expert, Maronick. The Court finds that Maronick is qualified based on his credentials and experience in marketing research and surveys. His critiques of the opposing expert’s survey methodology are admissible even without conducting his own survey. An expert can rely on outside sources and data reasonably relied upon in the field to critique another expert’s methodology. Any flaws in the data go to weight not admissibility. Maronick tied his critiques to his experience and industry practices for reliable survey methods. The Court excludes only his conceded opinions on likelihood of confusion factors and his discussion of how judges assess survey factors. Experts cannot opine on ultimate legal conclusions. But experts can utilize reliable principles and methods even if their data has gaps, as cross-examination exposes doubts in the testimony for the jury to weigh. The judge ensures the methodology and data are connected to the opinion, not that the opinion is flawless.
