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  • Slip Resistance Testing Conducted by Biomechanical Engineering Expert Witness Deemed Reliable

    Slip Resistance Testing Conducted by Biomechanical Engineering Expert Witness Deemed Reliable

    The Plaintiffs alleged that on December 24, 2020, Dr. Bruce Bunting slipped and fell outside the automatic exit doors at the CVS Store. Bunting claimed that he slipped on “slick and wet concrete that resulted from a mixture of salt and water.” The Plaintiffs alleged that CVS Pharmacy, LLC created the slick surface by “spreading the salt on a wet and warm day, which caused it to make the ground unsafe and slippery.” According to the Plaintiffs, the CVS Store was “negligently kept, maintained, and operated, creating an unreasonable risk of injury to invitees,” including Bunting. As a result of the fall, Bunting allegedly suffered a “closed fracture dislocation of his right ankle” that required surgery. The Plaintiffs further alleged that CVS’ negligence caused Bunting to suffer “serious bodily and emotional injuries and damages, including physical pain, suffering, emotional distress, inconvenience, loss of the enjoyment of life, and medical expenses.”

    One of CVS’ designated expert witnesses was Alexandra Maddox, a mechanical engineer and biomedical engineer. Maddox’s expert report detailed her investigation, including slip resistance testing she conducted on January 19, 2023, on the incident walkway surface at the CVS Store, and provided her opinions regarding the slip resistance of the walkway surface. According to Maddox, the salt and water solution that Bunting described slipping on “was less lubricating than water on a walking surface, and created greater slip resistance than water alone.” She stated that the incident walking surface was reasonably safe for pedestrian traffic and concluded that there was lack of sufficient evidence to support the claim that the incident walkaway caused Bunting’s fall.

    As part of her slip resistance testing, Maddox used an English XL Variable Incident Tribometer (“VIT”), a device used for slip resistance testing in different environments. A VIT is designed to yield coefficient of friction (“COF”) measurements that correlate to the likelihood of slip incidents occurring on a given surface. Maddox used a VIT that Excel Tribometers, the manufacturer of the English XL VIT, calibrated three days before her field test. Maddox then field calibrated the VIT the day before her field test. According to CVS, Maddox’s VIT was validated and calibrated in accordance with American Society for Testing and Materials (“ASTM”) standard F2508. Maddox also applied American National Standards Institute (“ANSI”) standard A1264.2, which recommends a COF of 0.5 or greater for walking surfaces in the workplace under dry or wet conditions. CVS asserts that Maddox “obtained slip resistance measurements under both wet and dry scenarios” pursuant to ANSI A1264.2. Consistent with the VIT device manual, Maddox used only water for the wet testing. Maddox concluded that the walkway surface had a COF of 0.64 ± .03 when dry and 0.51 ± .03 when wet.

    Plaintiffs’ filed a motion to strike all opinion testimony of Defendant’s Expert Witness Alexandra Maddox.

    Biomechanical Engineering Expert Witness

    Alexandra Maddox holds a Bachelor’s degree in Biomedical Engineering and is in the process of completing her Doctorate in Aerospace Engineering at the University of Cincinnati. During her tenure at Boston Scientific as a Biomedical Engineer, she gained comprehensive experience in medical device production, covering development, design, manufacturing, and production phases. In her undergraduate research, Maddox specialized in tissue biomechanics related to airway collapse during sleep apnea, earning recognition with the University of Cincinnati’s Biomedical Engineering Student Award for exceptional research. Additionally, she provided technical expertise to the U.S. Government as a Post-Doctoral Researcher at the University of Maryland Applied Research Lab for Intelligence and Security, focusing on testing and evaluating voice analytic tools and other biometric devices for personal vetting purposes. She works as a Biomechanical Engineer for CED Technologies, Inc.

    Discussion by the Court

    The Plaintiffs argued that Maddox was not qualified under Rule 702 to provide expert testimony regarding the slip resistance of the walkway surface at the CVS Store citing his lack of qualifications as a licensed professional engineer, a certified safety specialist, a certified Variable Incidence Tribometrist, or even a human factors expert, besides being inexperienced in testing
    or evaluating walking surfaces for slipperiness. Plaintiffs added that neither Maddox’s ongoing work as a PhD. student pertained to walkway surfaces or testing of materials nor did her Occupational Safety and Health Administration (“OSHA”) accreditations in general industry standards reflect an expertise
    in walkway safety because they were minimally focused on walkway safety and fall protection.

    CVS argued that Maddox was qualified under Rule 702 to offer expert opinions on the slip resistance and reasonable safety of the walkway surface because he did qualify as a Certified English XL Tribometrist (“CXLT”) besides possessing a valid CXLT Certificate. CVS added that it was illogical for the Court to deem Maddox unqualified to perform slip resistance testing using a VIT when the company that manufactures the very device that she used has certified that she is qualified to do so.

    It was worth noting that Maddox had a bachelor’s degree in biomedical engineering, had nearly completed her Ph.D., and has completed two accredited courses in OSHA general industry standards, including walkway safety leading the Court to conclude that Maddox was qualified under Rule 702 to offer opinion testimony regarding the slip resistance of the walkway surface at the CVS Store. Maddox obtained her CXLT certification “following
    classroom and field training provided by” the manufacturer of the VIT that Maddox later used to perform a field test of the walkway surface at the CVS Store. The Court held that Maddox’s status as a CXLT rendered her able to help the jury determine the slip resistance of the walkway surface at the CVS Store and, in turn, whether CVS was negligent in its treatment of the walkway surface.

    Plaintiff called Maddox’s VIT testing methodology “unreliable flawed science”. Plaintiff argued that ASTM F2508 failed to establish a safe threshold value for a walkway surface because it was based on VIT measurements from young adults walking in a straight path on a level surface,whereas the incident involved Bunting who was 73 years old at the time of the incident and was stepping over a door onto a slanted surface; its test subjects walked in shoes that were not representative of all shoes; its use fell short of implying proper validation and calibration under all combinations of test materials and walkway surfaces; and it failed to purport to address all safety concerns associated with its use. In addition to citing recent studies and publications, the Plaintiffs also pointed that ASTM withdrew ASTM F1679—a VIT testing standard that ASTM originally published in 2004—because it lacked precision and bias testing back in 2006. Plaintiff added that Maddox did not demonstrate that she complied with ASTM’s calibration requirements to use a VIT. CVS rejected the Plaintiff’s suggestion that ASTM F2508 cannot be used to determine the reasonable safety of a walking surface, considering ASTM F2508 did not purport to establish what did and what did not constitute a safe walking surface.

    CVS also argued that the studies relied upon by the Plaintiffs to assert the unreliability of VIT testing merely recommended accounting for variability in slip resistance measurements, as Maddox’s measurements did. As for the Plaintiffs’ argument about the withdrawal of ASTM F1679, CVS noted that Maddox did not depend on this standard, and a federal court had previously rejected this argument, affirming the reliability of VIT testing. CVS further asserted, contrary to the Plaintiffs’ suggestion, that the manufacturer of Maddox’s VIT had calibrated the device three days before her field test, and Maddox herself had field-calibrated the same device the day before the test. Moreover, CVS argued that Maddox had conducted her testing in accordance with the VIT manual and her training, producing “reliable” and “reproducible” results. CVS concluded that the Plaintiffs’ challenge to Maddox’s conclusions was more appropriately characterized as cross-examination material and not a valid basis for seeking to exclude her opinions under Rule 702 and/or Daubert.

    The Court noted that the Plaintiff could not successfully identify any such instance where the federal court found VIT testing to be an unreliable methodology. The Court found that various arguments made by the Plaintiffs regarding VIT testing went to the weight of the evidence instead of its admissibility. For example, Maddox’s reliance on ASTM F2508 did not render her methodology unreliable considering ASTM F2508 is an international standard that is intended to establish the procedures for validation,
    calibration, and certification of VITs or the studies and publications cited by the Plaintiffs to raise concerns about VIT testing did not establish her testimony to be excludable. These sources discussed the need to
    consider measurement uncertainty when interpreting VIT testing results which Maddox accounted for by testing the surface at different locations and presenting the slip index values as “mean ± standard deviation.”

    Held

    The Court denied the Plaintiff’s motion to strike all opinion testimony of Defendant’s Expert Witness Alexandra Maddox.

    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 closely examined Alexandra Maddox’s qualifications under Rule 702 to provide expert testimony, recognizing her background in biomedical and aerospace engineering, ongoing pursuit of a PhD, and completion of accredited courses in OSHA standards as sufficient qualifications despite lacking specific certifications like a licensed professional engineer or certified safety specialist. Maddox’s certification as a Certified English XL Tribometrist (CXLT) was deemed significant, bolstering her credibility in slip resistance testing, especially given the manufacturer’s training and certification process. While Plaintiffs critiqued Maddox’s methodology, particularly regarding calibration and adherence to standards such as ASTM F2508, CVS defended her approach, highlighting compliance with manufacturer guidelines and industry standards. The Court distinguished between challenges to the admissibility of Maddox’s testimony and arguments regarding the weight of the evidence, considering concerns about reliability and adherence to standards as affecting the latter. Maddox’s reliance on ASTM F2508, despite its limitations, was deemed acceptable as it aimed to establish procedures for validation and calibration of Variable Incidence Tribometers (VITs), which Maddox followed in her testing methodology. Moreover, the Court noted Maddox’s efforts to address measurement uncertainty by testing surfaces at different locations and presenting slip index values with statistical measures like mean and standard deviation, demonstrating awareness of and mitigation against potential sources of error in her testing. Overall, the Court’s ruling underscores the importance of evaluating expert testimony based on qualifications, methodology, adherence to standards, and consideration of measurement uncertainties while recognizing the distinction between challenges to admissibility and weight of evidence.

    Case Details

    Case Caption: Bunting Et Al V. District Of Columbia Cvs Pharmacy, LLC
    Docket Number: 1:22cv766
    Court: United States District Court, District of Columbia
    Citation: 2024 U.S. Dist. LEXIS 21129
    Order Date: February 7, 2024
  • Human Resources Expert Witness Opinion on Retaliation Held to Lack Sound Methodological Basis

    Human Resources Expert Witness Opinion on Retaliation Held to Lack Sound Methodological Basis

    Plaintiff, Rohan Peters, an African-American Pilot sued his former employer, International Paper Company (“International Paper” or “Defendant”), alleging claims of wrongful termination and retaliation arising out of Defendant’s discrimination pursuant to Title VII of the Civil Rights Act of 1964. Defendant filed a Motion for Summary Judgement on May 31, 2023. The Court granted summary judgement in favor of Defendant on Plaintiff’s racial discrimination claims and on Plaintiff’s entitlement to certain categories of damages on December 28, 2023.

    International Paper filed a motion to exclude the testimony of Plaintiff’s proffered opinion witness, sociology professor Dr. Matthew Hughey, pursuant to Daubert and Federal Rule of Evidence Rule 702. International Paper also renewed its motion to preclude Peters from mentioning or introducing evidence related to the expert opinion, testimony, and report of Matthew Hughey at any point during the proceedings.

    Human Resources Expert Witness

    Matthew Hughey specializes in race and ethnicity, bias, discrimination, racism, culture, media, organizations, religion, and science. He hold a B.A. (Bachelor of Arts) in sociology from the University of North Carolina, Greensboro; a certificate of advanced graduate study in “women’s studies” from Ohio University; an M.Ed. (Master of Education) in cultural studies from Ohio University; a graduate certificate in “religions of the world” from Harvard University; an A.L.M. (Artibus Liberalibus Magistri | Master of Liberal Arts) in religion from Harvard University, and a Ph.D. (Doctor of Philosophy) in sociology (with a specialization in race and culture) from the University of Virginia. He has been on the faculty of the University of Connecticut since 2013. He is full Professor of Sociology (2020-present) and was previously Associate Professor of Sociology (2013-2020). Before then he was Assistant Professor of Sociology at Mississippi State University (2009-2013). He also serves as adjunct faculty at the University of Connecticut in (1) the Sustainable Global Cities Initiative program, (2) for the Graduate Certificate and Masters in Race, Ethnicity, & Politics (REP) program, (3) the Institute for Collaboration on Health, Intervention, & Policy (InCHIP), (4) the American Studies Program, and (5) the Africana Studies Institute.

    Discussion by the Court

    Defendant contended that Hughey’s testimony improperly substituted his own judgment in place of that of the jury, effectively instructing them on the legal conclusions they should draw. They argued that Hughey lacked adequate qualifications in workplace discrimination and retaliation, with minimal relevant experience. Additionally, Defendant claimed that Hughey’s opinions lacked a solid factual basis, relied on unreliable methodologies, and failed to apply his principles effectively to the specifics of the case. Defendant pointed out that Hughey’s CV lacked relevant sources relating to retaliation, and they criticized his analysis for typographical errors revealing copy-and-paste analysis from prior cases, suggesting a lack of meaningful application to the case’s facts. Furthermore, Defendant argued that Hughey’s references to the Ku Klux Klan and incidents of police brutality were unfairly prejudicial.

    Plaintiff refuted the Defendant’s claims and found fault with Defendant’s alleged mischaracterization of Hughey’s report, especially its conclusion that racial prejudice likely influenced the Plaintiff’s treatment by Defendant. They asserted that Hughey’s CV qualified him to offer opinions on race-related issues. Additionally, Plaintiff argued that the case’s complexity necessitated expert opinion witnesses, as laypeople might not grasp all the intricate details.

    The Court noted the underlying emphasis on Hughey’s proffered testimony about racial discrimination which provided historical context, analysis, and conclusions applicable to the racial discrimination claim in this case. Indeed, retaliation was only discussed as a basis for Hughey’s ultimate conclusion that Plaintiff experienced racial discrimination. The Court had previously granted Defendant’s summary judgment motion with respect to Plaintiff’s race discrimination claim. Henceforth, Plaintiff’s claims for racial discrimination were not before the jury, having been dismissed at the summary judgment stage. As a result, the sole remaining claim in this case was Plaintiff’s retaliation claim.

    Hughey’s fifty-nine (59) page report mentioned retaliation a total of four (4) times. Among these, two instances were merely recitations of the plaintiff’s claims, while the other two a section and a phrase, respectively, were used to support the conclusion regarding racial discrimination. The four-page section labeled “Racial Gaslighting and Retaliation” comprised one and a half pages of block quotes, one page summarizing the concept of gaslighting, one and a half pages providing a summary of alleged facts, and concluded with sentences stating:

    “A company wishing to avoid conflict of interest and to engage in fair, equitable, and transparent employment practices would not have a subject of the complaint oversee disciplinary measures over the complainant. The action likely sent a message of intimidation with the implicit meaning to drop past, and/or avoid future, complaints.”

    The Court citing Curtis v. Oklahoma City Public Schools Bd. of Educ., 147 F.3d 1200 (10th Cir. 1998), held that Hughey’s failure to address matters beyond common knowledge or experience of the average layperson was highlighted in his section on retaliation, which offered only a single, limited conclusion without supporting citations or analysis regarding the bases, methods, or principles applied to reach that conclusion.

    Held

    Matthew Hughey’s opinion on retaliation, to the extent it existed, did not involve analysis or application of any methodology which led the Court to exclude it. Defendant’s renewed motion to preclude Peters from mentioning or introducing evidence related to the expert opinion, testimony, and report of Hughey was deemed moot.

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

    Key Takeaways:

    Defendant disputed the qualifications and methodology of Hughey, alleging that his testimony improperly substituted his judgment for that of the jury and lacked a solid factual basis. In response, the Plaintiffs argued that Hughey was indeed qualified to offer opinions on race-related issues, asserting the relevance of his expertise to the case’s complexities. They emphasized the need for expert opinion witnesses to help comprehend intricate details beyond laypeople’s grasp. While Hughey’s testimony primarily focused on racial discrimination, it briefly addressed retaliation, albeit in a limited manner, which became a point of contention. The Court criticized Hughey’s report for lacking detailed analysis and support regarding retaliation, citing legal precedent to underscore the importance of thorough expert testimony, especially in complex matters like retaliation in employment discrimination cases.

    Case Details:

    Case Caption: Peters V. International Paper Company
    Docket Number: 2:22cv2132
    Court: United States District Court, Tennessee Western
    Citation: 2024 U.S. Dist. LEXIS 20731
    Date: February 6, 2024
  • Financial Expert Witness’ Damages Calculation Aggregating Alleged Infringing Sales Admitted

    Financial Expert Witness’ Damages Calculation Aggregating Alleged Infringing Sales Admitted

    Massimo Motor Sports, LLC (“Massimo”) and the Defendants were engaged in the manufacturing and sale of sports vehicles, such as utility terrain vehicles (UTVs) and all-terrain vehicles (ATVs). The moving Defendants included Shandong Odes Industry Co., Ltd. (“Shandong”), Odes Usa Inc. (Cal) (“Odes Cal.”), Odes Usa Inc. (Tex) (“Odes Tex.”), Lil Pick Up, Inc. (“Lil Pick Up”), SMG Distribution & Associates, Inc. (“SMG”), 14078 Meridian, Parkway Inc. (“Meridian”), and Nathan D. Threet (“Threet”).

    Plaintiff Massimo acted as a distributor of specific ATVs and UTVs in the United States for Shandong, a manufacturer while Lil Pick Up, Meridian, SMG, and Odes Cal. worked in various capacities to facilitate the sales and distribution of these products. Threet served as the Chief Operating Officer for Massimo before accepting a consulting position for Odes Cal. Following the dissolution of the relationship between Massimo and Shandong, Massimo initiated legal proceedings alleging trademark infringement, breach of contract, trade secret misappropriation, unfair competition, cybersquatting, tortious interference, false designation of origin, breach of the implied covenant of good faith and fair dealing, breach of the duty of loyalty, and unjust enrichment.

    Massimo’s expert, Bryan M. Van Uden, served reports calculating Massimo’s damages. The Defendants moved to strike and exclude some of Uden’s opinions, including: (1) all damage opinions relating to Massimo’s trademark infringement, false designation of origin, and unfair competition claims, (2) all damage opinions relating to Massimo’s breach-of-contract claim against Threet, (3) any damage opinion relating to Massimo’s claims for trade secret misappropriation and cybersquatting, (4) any damage opinion assessing damages against SMG or Meridian, and (5) any damage opinion relating to trademark infringement, false designation of origin, or unfair competition calculated against Threet.

    Defendants’ expert, Christopher Earle also served reports assessing the damages. On November 15, 2022, the parties had exchanged their experts’ opening reports regarding damages. By January 17, 2023, they had also exchanged their rebuttal expert reports. Then, on April 4, 2023, the Defendants had served Earle’s first amended supplemental report, followed by Massimo’s service of its supplemental report and supplemental rebuttal report on April 17, 2023. Earle’s opening report on November 15, 2022, rebuttal report on January 17, 2023, and first amended supplemental report on April 4, 2023, would be collectively referred to as “Earle’s Initial Reports. The Court’s scheduling orders had mandated completion of discovery by May 26, 2023, and filing of any Daubert motions by July 21, 2023. However, on May 24 and May 26, 2023, the Defendants provided Massimo with nearly 500 new documents containing financial data. Subsequently, Massimo deposed Earle on May 31, 2023. Then, on July 14, 2023, Defendants served Massimo with Earle’s second amended report and a new rebuttal report, referred to as “Earle’s July 2023 Reports”. Massimo had not been given the opportunity to depose Earle regarding these new reports, which Massimo argued were untimely. Nonetheless, the Defendants contended that the Court’s scheduling order had allowed exchanging reports until September 6, 2023.

    On July 21, 2023, Massimo had filed a motion to exclude certain aspects from Earle’s Initial Reports, specifically targeting (1) Earle’s affirmative testimony about Shandong’s breach of contract counterclaim, and (2) Earle’s rebuttal testimony regarding the Defendants’ costs associated with selling vehicles that Massimo claimed infringed its trademarks. Following this, Massimo had also filed a motion to strike Earle’s July 2023 Reports, arguing that they were untimely and consisted of entirely new opinions and documents.

    Financial Expert Witness

    Bryan M. Van Uden serves as the Managing Director at Ocean Tomo, a division of J.S. Held, where he leverages over 20 years of expertise in financial consulting. His specialization lies in valuations, dispute analysis, and strategies aimed at enhancing business operations and profitability. Van Uden has a wide array of experience in patent infringement, trademark infringement, copyright infringement, misappropriation of trade secrets, securities violations, veil piercing, breach of contract, personal injury, wrongful termination, unfair business practices, and business and intellectual property valuation. He pursued his Master of Business Administration from the University of Mississippi and also holds a Bachelor of Applied Science in Strategic Management from Louisiana State University. 

    Business Valuation Expert Witness

    Christopher Earle, the Managing Director of Business Valuation at Reynolds & Earle, LLC, has over 20 years of experience in overseeing and conducting analyses related to various aspects of commercial litigation, intellectual property infringement litigation, insurance claims, business disputes, and valuation disputes. His extensive litigation case background encompasses areas such as lost profits, incremental profits, fixed and variable costs, valuation, diminution in value, and apportionment. Earle earned his Master of Business Administration from the University of Dallas, Graduate School of Management, after graduating with a Bachelor of Arts in Economics from the University of Dallas, Constantine College. 

    Discussion by the Court

    The motion to exclude Van Uden’s opinions had raised three key issues: (1) whether or not Van Uden needed to calculate damages for trademark infringement using separate calculations for each individual trademark, (2) whether the lost profits resulting from Threet’s alleged breach must account for other variables potentially influencing lost sales, and (3) whether Van Uden should be prevented from offering damages opinions for certain causes of action that the Defendants believed he had not already addressed.

    The Defendants argued that Van Uden’s opinions regarding Massimo’s trademark infringement claims were flawed citing his failure to break down his calculations separately by each of Massimo’s alleged trademarks. However, the Court noted that the Defendants did not cite any case law where a Court had excluded a damages expert’s report for this reason. Massimo’s trademark infringement claim involved alleged infringement upon eight of its trademarks, and Van Uden’s damages calculation aggregated the Defendants’ infringing sales for all eight of Massimo’s alleged trademarks. The Defendants argued that this method was unreliable because Massimo needed to establish likelihood of confusion for each trademark independently for liability purposes. However, the Court disagreed, finding no inherent unreliability in an aggregate damages calculation. Therefore, the Court denied the Defendants’ motion to exclude Van Uden’s damages calculation based on aggregating all of the Defendants’ alleged infringing sales.

    The Defendants argued that Van Uden’s opinions on lost profits resulting from Threet’s breach of contract and the Defendants’ tortious interference were unreliable considering they ceased to eliminate alternative causes of the lost profits. However, the Court disagreed, stating that ruling out potential alternative variables was not an admissibility issue, noting that many cases in the district had rejected this argument. Therefore, the Court denied the Defendants’ motion regarding Van Uden’s Threet-related lost profits calculations.

    The Defendants sought the Court’s instruction that Massimo could not apply Van Uden’s damages opinions to certain Defendants against whom Massimo had not put forth specific claims. They specifically requested the exclusion of any Van Uden opinions supporting Massimo’s trade secret misappropriation claims against Lil Pick Up or Meridian, as Massimo’s second amended complaint had excluded them as Defendants as to those claims. However, as there was no such existing Van Uden opinion to exclude, the Court declined to make that kind of instruction at the time. Additionally, the Court refused to prohibit Van Uden from offering any damage testimony or evidence against SMG or Meridian, as the Defendants had not adequately demonstrated that he failed to opinions against these Defendants. Therefore, the Court denied the Defendants’ motion to exclude opinions that Van Uden had not made and potential damage opinions against SMG and Meridian.

    The Court initially addressed the timeliness concern regarding Earle’s July 2023 Reports. Due to a prior amended scheduling order, which set expert disclosures after the deadline for motions to strike (July 21, 2023) and the close of discovery (May 26, 2023), the parties faced a dilemma. In fairness, the Court decided to grant Massimo the opportunity to redepose Earle on Earle’s July 2023 Reports. Massimo could then file any motion to strike or exclude after the deposition, and Massimo’s own expert could serve a rebuttal report to Earle’s second amended report. Consequently, the Court denied the motion to clarify/amend the Court’s scheduling order and strike Christopher Earle’s July 14, 2023 expert reports.

    The Court, while addressing the the timeliness issue regarding Earle’s July 2023 Reports in Massimo’s motion to exclude, noted that both parties acknowledged that Earle’s July 2023 Reports significantly altered his Initial Reports. The Defendants contended that the new reports mooted a lot of the issues raised in Massimo’s motion to exclude because Earle’s July 2023 Reports addressed errors raised in Massimo’s motion and were based on new information and documents. Massimo’s motion focused on several aspects: Firstly, it sought to exclude Earle’s affirmative testimony on Shandong’s breach of contract counterclaim, including his relief from royalty opinion deeming it irrelevant and unreliable, as well as his unjust enrichment calculation. Additionally, Massimo aimed to exclude Earle’s rebuttal testimony regarding the Defendants’ costs associated with selling products that allegedly infringed its trademarks.

    Regarding Earle’s relief from royalty calculation, both parties acknowledged that Earle’s July 2023 Reports significantly altered his relief from royalty opinion in the Initial Reports. Consequently, the Court determined that Earle’s relief from royalty opinion in his Initial Reports was superseded, rather than supplemented, by his opinions in the July 2023 Reports. Thus, the Court deemed Massimo’s motion to exclude Earle’s relief from royalty opinion as moot. Massimo was granted the opportunity to redepose Earle on his July 2023 Reports. Massimo could subsequently file a motion to strike or exclude, if desired.

    Earle’s report analyzed the Defendants’ damages for their breach-of-contract counterclaim using an unjust enrichment calculation, which involved estimating Massimo’s profits from sales allegedly resulting from Massimo’s improper use of the Defendants’ confidential information. The central issue revolved around whether Texas law allowed this disgorgement remedy for breach-of-contract claims as restitution damages, especially when an express contract covered the parties’ dispute, as it prohibited unjust enrichment claims in such instances. The Court cited Hoffman v. L & M Arts, 838 F.3d 568, 585 (5th Cir. 2016), where the Fifth Circuit, ruled that the Supreme Court of Texas would reject a disgorgement remedy for breach-of-contract claims. It reasoned that breach-of-contract damages should primarily aim to compensate for the claimant’s actual losses, whereas disgorgement sought to deprive the wrongdoer of any ill-gotten gains instead of compensating the victim. Consequently, disgorgement was not deemed a suitable remedy for the Defendants’ breach-of-contract counterclaim. Thus, the Court partially granted Massimo’s motion to exclude Earle’s expert testimony pertaining to his unjust enrichment methodology for the Defendants’ breach-of-contract counterclaim.

    Regarding Earle’s rebuttal testimony concerning the Defendants’ costs associated with selling products allegedly infringing Massimo’s trademarks, the Defendants argued that Earle’s July 2023 Reports supplemented and corrected the issues raised by Massimo, as they were based on cost data for all 20 accused products, not just the partial data sought to be excluded by Massimo. Massimo also acknowledged that Earle’s July 2023 Reports addressed this issue with new information. The Court deemed Massimo’s motion to exclude Earle’s testimony on this matter moot based on his opinions in the July 2023 Reports, similar to the reasonable royalty opinion. Massimo was allowed the opportunity to redepose Earle on these reports and subsequently file a motion to strike or exclude, if desired.

    Held

    The Court denied the Defendants’ motion to strike and exclude certain expert opinions of Bryan M. Van Uden, as well as Massimo’s motion to clarify or amend the Court’s scheduling order and strike Christopher Earle’s July 14, 2023 expert reports. Additionally, the Court granted in part Massimo’s motion to exclude Earle’s unjust enrichment methodology for the Defendants’ breach-of-contract counterclaim, while otherwise denying the motion. Massimo was allowed to redepose Earle on Earle’s July 2023 Reports and subsequently file a motion to strike or exclude, if required.

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

    Key Takeaways

    Firstly, the Court upheld the reliability of aggregating damages across multiple trademarks in a trademark infringement case, rejecting the argument that damages must be separately calculated for each individual trademark. This decision emphasized that establishing likelihood of confusion for each trademark independently isn’t necessary for liability purposes. Secondly, the Court clarified that ruling out potential alternative variables influencing lost profits or damages is not a prerequisite for the admissibility of expert testimony, noting that many cases have rejected this argument. Additionally, the Court underscored the importance of expert opinions aligning with the specific claims made against each defendant, refusing to exclude opinions where no existing opinions targeted specific Defendants or where inadequacies hadn’t been demonstrated. Regarding the timeliness of expert reports, the Court emphasized adherence to court orders and granted opportunities for redeposition or further motions if significant changes were made to expert opinions. Furthermore, the Court highlighted the necessity for expert opinions to align with applicable legal principles and remedies, particularly concerning disagreements over the appropriateness of certain remedies, such as disgorgement for breach-of-contract claims. Lastly, the Court noted that motions to exclude may be deemed moot if subsequent expert reports address and correct issues raised in those motions, granting parties opportunities for further actions based on updated expert opinions.

    Case Details

    Case Caption Massimo Motor Sports, LLC v. Shandong Odes Indus. Co., Ltd.
    Docket Number 3:21cv2180
    Court United States District Court, Texas Northern
    Citation 2024 U.S. Dist. LEXIS 20343, 2024 U.S. Dist. LEXIS 20345
    Order Date February 6, 2024
  • Intellectual Property Valuation Expert Witness Reasonable Royalty Analysis Deemed Deficient

    Intellectual Property Valuation Expert Witness Reasonable Royalty Analysis Deemed Deficient

    Judge Joshua Wolson of Delaware District Court noted that, “Economists love assumptions. One joke recites that a physicist, a chemist, and an economist find themselves on a desert island with a single can of food. The physicist offers to calculate the force needed to use a coconut to open the can. The chemist offers to make a solution that will eat through the can’s top. The economist tells them they are making it too complicated and just to assume a can opener.”

    Economic assumptions are very crucial when it comes to assessing patent damages, especially the one which assumes that both the infringer and patent holder participated willingly in negotiating a license right before the infringement began. Yet some participants are more willing than others in this hypothetical negotiation.

    The Plaintiff, Wirtgen America, Inc. possessed patents that provided it with a competitive edge over one of its main rivals, the Defendant, Caterpillar, Inc. Wirtgen claimed that Caterpillar had been involved in the manufacture, use, sale, and/or importation of specific road milling machines within the United States. These machines were claimed to incorporate Wirtgen’s patented technology, thus infringing the Asserted Patents.

    Wirtgen had asserted nearly 20 claims across 7 patents, all related to road construction equipment-primarily cold planers- but they covered a range of varied features. The ‘309 Patent disclosed road building machines capable of adjusting the machine’s height relative to the frame or chassis. Similarly, the ‘530 and ‘972 Patents disclosed road construction machines equipped with a drum, adjustable ground supports, and lifting sensors. The ‘641 Patent disclosed a method for working ground surfaces with a milling drum, including raising the drum off the ground. Furthermore, the ‘788 and ‘474 Patents disclosed road construction machines that are height-adjustable for milling depth or slope. Lastly, the ‘268 Patent disclosed aspects of the drive train in a road construction machine.

    Wirtgen presented the expert testimony of Pallavi Seth, who provided an estimation of a reasonable royalty that Caterpillar would have paid to Wirtgen if they had engaged in a hypothetical negotiation before the first alleged infringement. Seth supported his estimate by referencing evidence indicating Wirtgen’s reluctance to license its patents to Caterpillar, even under favorable terms, citing Wirtgen’s history of not licensing its patents to Caterpillar in the past.

    Seth utilized a willing licensor/willing licensee framework to estimate the highest amount that would ensure Caterpillar found the agreement profitable (otherwise known as Caterpillar’s maximum willingness to pay or “MWP”) and the lowest amount that would ensure Wirtgen found the agreement profitable (otherwise known as Wirtgen’s minimum willingness to accept or “MWA”). He defined Caterpillar’s MWP as the expected incremental profits earned from utilizing the Asserted Patents, and Wirtgen’s MWA as the profits it anticipates to lose should Caterpillar practice the Asserted Patents. The difference between Wirtgen’s MWA and Caterpillar’s MWP equaled the “joint surplus value” in Seth’s analysis.

    Wirtgen’s MWA was determined to be its lost profits resulting from infringement. These lost profits consisted of both potential sales of machines as well as sales of spare and replacement parts associated with those machines, which Wirtgen would have had the opportunity to make if Caterpillar had not allegedly infringed the Asserted Patents.

    Seth suggests that the joint surplus value may not entirely relate to the Asserted Patents, so she apportioned it to isolate the incremental value contributions of those patents to the accused products. She apportioned the joint surplus value using an apportionment rate derived from a count of family-level forward patent citations. The Rubinstein bargaining model is a framework used to analyze bargaining situations between two parties over the division of a surplus using which she divided the apportioned joint surplus value between the parties. Finally, she calculated damages by adding Wirtgen’s split of the apportioned joint surplus value to Wirtgen’s MWA. Wirtgen’s MWA accounted for approximately 95% of her total damages figure.

    Seth asserted that the method for calculating Wirtgen’s MWA would remain consistent regardless of which patents the jury found Caterpillar infringed, although the actual amount of the MWA might vary due to different patents being in effect at different times. However, she acknowledged during her deposition that she did not conduct any patent-by-patent apportionment while calculating the MWA.

    The Defendant filed a motion to exclude the testimony of Pallavi Seth deeming her reasonable royalty analysis deficient.

    Intellectual Property Valuation Expert Witness

    Dr. Pallavi Seth is a Principal at The Brattle Group, Inc. and serves as the Co-Chair of Brattle’s Intellectual Property practice. With a Ph.D. in Economics from Boston College and an B.A. in Economics and Mathematics, magna cum laude, from Mount Holyoke College. Her expertise lies in applying economic principles to intricate business litigation matters and public policy, particularly in the realm of intellectual property. Seth’s professional experience at Brattle, an international consulting firm specializing in business consulting and litigation support, underscores her proficiency in this domain.

    Discussion by the Court

    A reasonable royalty, on the other hand, is often “based upon a hypothetical negotiation between the patentee and the infringer when the infringement began.” Nonetheless, “given the great financial incentive parties have to exploit the inherent imprecision in patent valuation, courts must be proactive to ensure that the testimony presented—using whatever methodology—is sufficiently reliable to support a damages award.” Apportionment requires that “a patentee must take care to seek only those damages attributable to the infringing features.” The Federal Circuit requires that “to be admissible, all expert damages opinions must separate the value of the allegedly infringing features from the value of all other features.” 

    The entire market value rule “is a narrow exception” to the rule of apportionment. It states that if it can be shown that the patented feature drives the demand for an entire multi-component product, a patentee may be awarded damages as a percentage of revenues or profits attributable to the entire product.”

    The Court acknowledged that a patent owner, having prevailed on liability, may receive a reasonable royalty or lost profits, but not both for the same infringing units.

    The Court observed that Seth failed to properly apportion her reasonable royalty analysis as required by law. She combined Wirtgen’s MWA with the joint surplus value in order to calculate the royalty payment, but only apportioned the joint surplus value, neglecting to apportion Wirtgen’s MWA/lost profits. Consequently, she set a 95% of her damages figure in a way that included the value of all the other features in the machines. This approach was deemed impermissible for not invoking the entire market value rule.

    In her reasonable royalty calculation, Seth was allowed to consider the profits on sales Wirtgen might lose by granting a license, with lost profits potentially playing a significant role in determining the ultimate reasonable royalty figure. However, Seth’s approach to lost profits posed a problem because it did not isolate the value of the allegedly infringing features from the value of all other features. Therefore, the issue stemmed from Seth’s use of unapportioned lost profits.

    Seth’s apportionment approach was considered inconsistent even in comparison to the cases cited by Wirtgen. Typically, when a expert conducts a lost profit analysis as per the factors outlined in  Panduit Corp. v.Stahlin Bros. Fibre Works, 575 F.2d 1152, 1156 (6th Cir. 1978), and then incorporates that analysis into the reasonable royalty rate calculation, it may naturally address apportionment concerns. Alternatively, an examination of licenses to comparable technology could also serve to address this issue.

    The Court further observed that Seth did not utilize the Panduit factors to determine her lost profits figure, nor could she rely on comparable licenses due to Wirtgen’s lack of prior patent licensing. While it was acceptable that she did not use the Panduit factors or comparable licenses, in their absence, she was required to find another suitable method to apportion her damage award considering the specifics of this case.

    Seth attempted to address the requirement for apportionment through her analysis of Georgia-Pacific’s Factor 13, as mentioned in the case Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), but her attempt was deemed inadequate. While she acknowledged the rule of apportionment in her analysis, noting that the Accused Product as a whole incorporated value from other patents, know-how, human capital, and raw materials, in addition to the value contributed by the technology embodied by the Asserted Patents, she only passingly suggested that the sales data she relied on already accounts for apportionment. However, without a more thorough analysis, it remained unclear how machine sales data could account for apportionment. Wirtgen’s counsel was unable to provide a satisfactory explanation during the hearing. Merely mentioning apportionment in discussing the thirteenth Georgia-Pacific factor did not ensure that Seth properly apportioned her damages, nor did it render her analysis admissible.

    Caterpillar conducted an analysis of several of Wirtgen’s patents around the time of the hypothetical negotiation. For some patents, Caterpillar concluded that it had no workaround, causing significant harm to its market position due to its inability to provide the patented technology. However, for the ‘309 Patent, Caterpillar determined it could develop a workaround in a shorter time frame and at a relatively low cost. Seth’s approach, assuming Wirtgen’s MWA to be its lost profits and setting it as a damages floor, failed to consider that patents like the ‘309 Patent were less valuable to Caterpillar. Apportionment could have addressed this issue.

    Wirtgen’s counsel defended Seth’s work by asserting that she conducted a hypothetical negotiation of Wirtgen’s entire patent portfolio. However, this approach was flawed because the portfolio consisted of unrelated patents covering different features of the machines. Furthermore, the hypothetical negotiation should have only included patents that the jury found infringed, rather than the entire portfolio. Seth’s approach thus raised the possibility of awarding damages for features that the jury did not find to be infringing.

    A failure to apportion impacts admissibility, not weight. If Wirtgen prevails on liability, it will be entitled only to a damage award which captures “the value of what was taken” meaning the patented technology. Given that 95% of Seth’s damages figure consists of unapportioned lost profits, admitting this evidence risked skewing the damages horizon for the jury. 

    Wirtgen proposed the possibility of Seth still being able to testify. However, the Court stated that it hadn’t received Seth’s revised expert report nor had it been able to fully analyze the excerpts provided to assess the merits of Wirtgen’s request. Consequently, the Court did not outright reject the possibility of Seth testifying on matters not addressed in the current opinion, but it also did not explicitly approve it.

    The Court concluded that Seth’s assumption that Wirtgen would have been a reluctant licensor, while reasonable, led her to award Wirtgen all of its lost profits without determining if any particular patented technology justified such a recovery. This failure to apportion and ensure that Wirtgen would only receive the benefit of its patented technologies in her damages analysis resulted in her analysis violating governing Federal Circuit precedent and requiring exclusion. Wirtgen was instructed to disclose any parts of Seth’s opinion it believed could withstand this analysis to Caterpillar promptly, with any remaining disputes to be resolved at the final pretrial conference.

    Held

    The Court granted the Defendant Caterpillar, Inc.’s Motion to Exclude Certain Expert Testimony of Pallavi Seth’s damages opinion. Further the Court asserted that Wirtgen must disclose to Caterpillar which parts of Seth’s expert report it intends to offer at trial by February 6, 2023, at 3 p.m. EST. Any disputes may be raised at the final pretrial conference on February 8, 2024, after the parties meet and confer.

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

    Key Takeaways

    Wirtgen’s expert, Pallavi Seth, estimated a reasonable royalty that Caterpillar would have paid to Wirtgen in a hypothetical negotiation, supported by evidence of Wirtgen’s reluctance to license its patents. However, Seth’s failure to adequately apportion the damages, particularly in considering lost profits, raised significant concerns. She attributed a substantial portion of the damages to Wirtgen’s lost profits without ensuring whether or not they were specifically related to the patented technologies. The Court observed that Seth’s approach violated governing Federal Circuit precedent, necessitating the exclusion of her testimony. Seth’s reliance on a hypothetical negotiation involving Wirtgen’s entire patent portfolio, rather than just the patents found to be infringed, further complicated the issue. Without proper apportionment, admitting the damages analysis risked biasing the jury’s assessment.

    Case Details

    Case Caption Wirtgen Am., Inc. v. Caterpillar, Inc.
    Docket Numer 1:17cv770
    Court United States District Court, Delaware
    Citation 2024 U.S. Dist. LEXIS 19468
    Order Date February 05, 2024
  • Accounting Expert Witness Testimony Found to Lack Understanding of the Type of Business at Issue

    Accounting Expert Witness Testimony Found to Lack Understanding of the Type of Business at Issue

    James Swain Rieves, who operated Platinum Vapor, LLC, doing business as Cloud 9 Hemp faced legal trouble when the Town of Smyrna Police Department (hereinafter “SPD”) discovered the sale of Cannabidiol (CBD) products by the business in May 2017. The Smyrna Police Department
    raided Cloud 9’s premises and seized tens of thousands of dollars in
    inventory, along with other items. Despite the clear legality of industrial hemp products, including CBD, under Tennessee law, the SPD continued its investigation yet both Rutherford County and the Town of Smyrna failed to investigate the case during the four months and eighteen days they possessed the materials seized from CLOUD 9. This prolonged scrutiny caused significant harm to Rieves’ business, leading to severe emotional distress, loss of enjoyment of life, and a substantial decline in Cloud 9’s income. The reputation of the business and Rieves himself suffered irreparable damage during this ordeal.

    The Plaintiff, James Swain Rieves, enlisted the services of CPA Tom Price, an expert in damages and business valuation, to assess the financial impact on his business resulting from the events in question. The Defendants, Town of Smyrna, did not dispute the admissibility of Price’s opinions outlined in the Price Report. However, they countered the same with their own expert, CPA Robert Vance, who is a highly skilled forensic economist retained to challenge the foundations of Price’s conclusions and provide an alternative assessment of the Plaintiff’s damages. Rieves did not contest Vance’s qualifications or the relevance of his opinion but questioned the reliability of Vance’s conclusions as presented in the Vance Report.

    The Vance Report comprised two main sections. The first section critiqued the opinions presented in the Price Report, while the second section contained Vance’s own “Damage Calculation.” The Plaintiff raised objections to three opinions expressed by Vance in his critique of the Price Report, seeking their exclusion as unreliable. These included Vance’s assertions that Price’s calculations were unreliable due to the use of “national level statistics” which were applied to the Plaintiff’s “small, local CBD store and his online business”; that the Price Report failed to consider the lack of capital and credit in the damages analysis; and that it overlooked competition from local retail establishments in Smyrna and the potential impact of “big box” stores entering the CBD market when computing damages. Additionally, the Plaintiff contested Vance’s own damages calculation.

    Accounting Expert Witness

    Robert Vance is a highly skilled forensic CPA and forensic economist based in Memphis, Tennessee. His professional focus lies in various areas including business valuation, divorce litigation support, commercial lost profits, personal injury economic damage calculations, forensic investigations, and expert witness testimony. He earned his Bachelor of Science in Business Administration in Accounting from the University of Tennessee in 1985. With a wealth of credentials, Robert holds designations as a Certified Public Accountant (CPA), Accredited in Business Valuation (ABV), Certified in Financial Forensics (CFF), Certified Valuation Analyst (CVA), and Certified Financial Planner (CFP). Robert is the principal of Forensic & Valuation Services, PLC in Memphis, Tennessee.

    Discussion by the Court

    The Plaintiff contested Vance’s opinions on Price’s valuations, asserting that Vance failed to provide any reliable data sources to support his views. Instead, Vance relied on snippets from five online news articles, none of which claimed scholarly status or cited legitimate data sources. Furthermore, the Plaintiff argued that Vance’s opinions were flawed, as he mistakenly believed Rieves’ business was a “brick-and-mortar, local, storefront retailer” of CBD products, whereas it functioned as a manufacturer, wholesaler, and online retailer. Additionally, Vance erroneously assumed the business was primarily sold locally, whereas Rieves testified in his deposition, quoted by Vance himself, that only a small percentage of sales were to Tennessee residents. Based on these discrepancies, the Plaintiff contended that Vance’s opinion, suggesting a comparison to local retail businesses, lacked support from the record or the documents Vance relied upon and was not sufficiently reliable for jury consideration.

    The Court determined that Vance’s fundamental misconception of Rieves’ business as a small brick-and-mortar store with some online presence undermined and rendered his critiques of Price’s analysis unreliable. Vance’s mischaracterization of the business demonstrated a lack of understanding of its nature, customer base, and actual competitors. Specifically, Vance questioned Price’s analysis, citing differences between the “micro-level environment for small retail stores” and the “macro-level sales considerations of manufacturers of CBD products.” However, the Court noted that Rieves’ business was not a small retail store but, in fact, a manufacturer. 

    Furthermore, the Plaintiff highlighted that Vance’s citation of an article to support his claim that such types of establishments operate in different environments was merely an online piece by a “startup consultant.” This article broadly outlined “5 variables every business owner should pay attention to,” including competition, political climate, the economy, trends, and technology. The Plaintiff also noted that Vance criticized Price’s growth projections as “miraculous” without providing a basis for such criticism. Interestingly, one of the articles Vance cited referred to a “recent study out of Boulder, Colorado,” estimating a tenfold increase in the market for CBD products in the next five years. 

    Vance criticized the Price Report for purportedly neglecting to factor in competition in the area in his damages analysis. The Plaintiff testified that his business had minimal dependence on local establishments, with a very small percentage of sales coming from Tennessee. Additionally, Vance listed 52 retail establishments in Smyrna selling CBD products but failed to specify whether these were preexisting competitors or new entrants into the market. 

    The Plaintiff raised objections to Vance’s criticism of Price, claiming a failure to consider Mr. Rieves’ lack of capital and credit in the damages analysis. Vance supported this critique by citing an online article from CNBC.com outlining common reasons for small business failure, including “empty pockets” due to “poor cash flow.” However, the Plaintiff argued that Vance overlooked the alleged cause of Rieves’ cash flow and credit issues, claiming they have stemmed directly from the Defendants’ seizure of assets and shuttering his business twice. Additionally, the Plaintiff noted that the cited article lacked scholarly credibility and did not conduct any specific analysis to support Vance’s assertions. 

    The Court concluded that all of Vance’s critiques of Price’s analysis were deemed unreliable and inadmissible. This decision stemmed from Vance’s mischaracterization or misunderstanding of the business type involved and his reliance on non-scholarly and only tangentially relevant online articles. The Court also deemed these articles inadmissible. Importantly, it was emphasized that Vance’s critiques, largely based on common sense, did not necessitate an expert to cross-examine Price regarding perceived inadequacies and oversights in his opinions. 

    Vance presented his own valuation of the Plaintiff’s damages, relying on an analysis of the business’s actual income and expenses for eight months leading up to the initial seizure in September 2017. However, Vance used income figures from only the three months preceding the seizure to project future earnings and calculate “alleged damages” over a 25-month period, aligning with the Tom Price report spanning from September 2017 through September 2019. His analysis assumed no business growth over time due to factors such as a negative trendline, lack of capital, and increased competition. Vance also explained why he discounted the Plaintiff’s $91,000 claim for damages resulting from the seizure of inventory and materials, deeming it as double-dipping. According to Vance, the total damages arising from the Defendants’ actions amounted to $319,380, a considerable difference from Price’s assessment of total lost income at the “gross profit level,” ranging between $1.27 million and $2.33 million.

    The Plaintiff sought to exclude Vance’s damages calculation, deeming it unreliable. This objection arose from Vance’s use of only eight months of data, despite the Plaintiff’s yearly earnings being available since 2015. This approach led to Vance basing projections on a negative growth trend for the months of July through September 2017, instead of utilizing yearly earnings or even earnings for the entire eight months he purported to have reviewed that could have shown an upward trend. The Plaintiff also criticized the Vance Report for neglecting to consider significant market growth for CBD products, failing to analyze the impact of increased competition, and not providing an explanation for how low capital, combined with these factors, would have hindered the Plaintiff’s business growth over the next 25 months.

    The Court determined that the Plaintiff’s critiques of Vance’s damage calculation were more relevant to their weight rather than their admissibility. Citing In re Scrap Metal Antitrust Litig., 527 F.3d 517, the Court emphasized that the rejection of expert testimony is the exception rather than the rule. The traditional and appropriate means of challenging such evidence involve vigorous cross-examination, presenting contrary evidence, and providing careful instruction on the burden of proof. In Vance’s case, his damage calculation relied on data supplied by the Plaintiff and mathematical equations based on that data. His assumptions projecting no growth for the Plaintiff’s business were based on his own observation of the trendline for the Plaintiff’s business for the last three months for which data were available. 

    The Court concluded that the Plaintiff’s challenges to Vance’s damage calculation were more about their weight than their admissibility. The jury would not be presented with inaccurate facts but rather with a calculation based on assumptions that the jury may or may not agree with. Consequently, the motion to completely exclude Vance’s damage calculation was denied.

    Held

    The Court granted in part and denied in part the Plaintiff’s Motion in Limine to Exclude Expert Testimony of Defendants’ Retained Expert Robert Vance. The motion against Vance was granted to exclude the opinions presented in the first part of the Vance Report critiquing the Price Report and to exclude the five articles cited in support of those opinions. However, the motion was denied in so far as it sought to exclude Vance’s calculation of the Plaintiff’s damages.

    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 granted the motion to exclude opinions presented by expert Robert Vance, critiquing the analysis of another expert, Tom Price. Vance’s mischaracterization of Rieves’ business type and reliance on non-scholarly articles led the Court to deem his critiques unreliable and inadmissible. The Court emphasized that rejecting expert testimony constituted an exception and directed that Vance’s damages calculation, while subject to challenges about its weight, was ultimately considered admissible, rooted in observable facts and data. This case underscores the importance of a thorough and accurate understanding of the type of business at issue when presenting expert opinions and the need for a reasonable factual basis in damages calculations.

    Case Details

    Case Caption Rieves v. Town of Smyrna
    Docket Number 3:18cv965
    Court United States District Court, Tennessee Middle
    Citation 2024 U.S. Dist. LEXIS 18626
    Order Date February 2, 2024
  • Real Estate Appraisal Expert Witness’ Valuation Excluding the Effect of the Pandemic Deemed Inadmissible

    Real Estate Appraisal Expert Witness’ Valuation Excluding the Effect of the Pandemic Deemed Inadmissible

    On August 16, 2021 (“Vesting Date”), the Plaintiff, the National Railroad Passenger Corporation (“Amtrak”), acquired the property at 260-270 Twelfth Avenue, New York, New York (New York County Block 675, Lot 1), through its power of eminent domain, as codified in 49 U.S.C. § 24311(a)(1), from the Defendant, 260 Twelfth Avenue Holdings, LLC. The acquisition was deemed necessary for Amtrak’s Hudson Tunnel Project, a part of the Gateway Project, involving the construction of two new rail tunnels under the Hudson River from New Jersey to New York.

    Amtrak claimed that it had already paid the Defendant $363,000,000 in principal as just compensation for the Property, representing the fair market value of the Property on the Vesting Date. This value was determined based on what a willing buyer would pay a willing seller at the time of the taking, taking into account the impact of the Covid-19 pandemic on the New York City real estate market. Amtrak, having made the just compensation payment, believed that the Defendant was not entitled to any additional compensation.

    On the other hand, the Defendant sought just compensation for Amtrak’s eminent domain taking of the property on August 16, 2021, in accordance with the Fifth Amendment to the United States Constitution, 49 U.S.C. § 24311, and the New York Constitution, N.Y. Const. art. I § 7. Specifically, the Defendant sought $247,000,000, representing the difference between the value of the Property on August 16, 2021, excluding the negative impact of the COVID-19 pandemic ($610,000,000), and the amount Amtrak had paid the Defendant for the Property to date ($363,000,000), excluding interest.

    To sum it up, the parties disputed whether the calculation of just compensation should consider the effect of the COVID-19 pandemic on the New York real estate market as of the Vesting Date. Amtrak urged the Court to restrict its analysis to the market value on the Vesting Date, while Defendants (“260 Twelfth Avenue”) contended that just compensation requires valuing the Property excluding the effect of the pandemic on market value.

    Plaintiff filed a motion to exclude any evidence or argument concerning the value of the condemned property (“Property”) on any date other than the date of taking (“Vesting Date”), and to preclude Defendants’ appraiser, Marc Nakleh from providing his opinion of the market value of the Property on any date other than the Vesting Date.

    Real Estate Appraisal Expert Witness

    Marc Nakleh started his real estate career in 2003 working as a residential sales agent focusing on investors looking to purchase property adjacent to the University of Florida. After two years, Nakleh made the switch from residential real estate to commercial real estate. He received his Master of Science in Real Estate degree at the University of Florida in 2006.

    Nakleh joined Cushman & Wakefield in September 2006. He was promoted to Associate Director in April 2009, Director in July 2010, Senior Director in April 2013, and further promoted to Executive Director in April 2018. Appraisal assignments have included office buildings, ground leases, vacant land, self-storage facilities, shopping centers, apartments, leaseholds, industrial properties and easement valuations. Nakleh’ s practice focuses on arbitration, litigation, and other complex assignments.

    Discussion by the Court

    The Court determined that in accordance with both federal and state law, it was mandated to establish the award of just compensation for the Property’s market value solely based on the Vesting Date. Any evidence regarding the property’s value on any other date was deemed irrelevant, and even if minimally relevant, the Court concluded that such information would be outweighed by the risk of causing unnecessary delays. It is black letter law that just compensation is “what a willing buyer would pay in cash to a willing seller at the time of the taking.” The Fifth Amendment to the United States Constitution precludes the taking of private property “without just compensation.” Accordingly, the Court must determine an amount of compensation that is “‘just’ both to an owner whose property is taken and to the public that must” foot the bill.

    The Court examined the principle that deviation from market value at the time of taking to determine just compensation is permissible only in specific circumstances, such as when market value is challenging to ascertain or would result in manifest injustice to the owner or the public. In the case of 260 Twelfth Avenue, the argument was made that valuing the property at a time when the pandemic had reduced the value of real estate in New York City allowed Amtrak to unfairly benefit at the property owner’s expense.

    The Court emphasized that the risk of “manifest injustice” would justify departing from the market value on the Vesting Date only if the owner demonstrated special conditions and hardships directly applicable to it. Despite the shocks experienced by the New York real estate market due to the pandemic, 260 Twelfth Avenue failed to show that it bore an unfair and disproportionate burden of the pandemic’s effects.

    The Court highlighted that market value, defined as the price at which property would change hands between a willing buyer and a willing seller, considering relevant facts, must be the primary measure of just compensation at the time of taking. The impact of the COVID-19 pandemic was deemed a relevant factor, and the Court acknowledged that market fluctuations, whether overcorrections or undercorrections, are inherent in the functioning of an efficient market.

    Addressing 260 Twelfth Avenue’s reliance on Great Depression-era cases, the Court deemed them irrelevant as the New York real estate market did not collapse entirely during the pandemic, making market value at the time of taking ascertainable. Additionally, the absence of a legislative directive from the New York state legislature to depart from the general rule further distinguished the current situation from the circumstances during the Great Depression. Ultimately, the Court concluded that 260 Twelfth Avenue did not suffer manifest injustice and had no basis to deviate from the established principles regarding just compensation.

    As for Amtrak’s Daubert motion directed toward the portions of Nakleh’s opinion relating to the value of the Property on a date other than the Vesting Date, the Court found that evidence regarding the Property’s value on a date other than the Vesting Date was irrelevant, expert testimony regarding the same was inadmissible pursuant to Federal Rule of Evidence 702.

    Held

    The Court granted Amtrak’s motion in limine to exclude evidence, testimony, or argument concerning the Property’s value on any date other than the Vesting Date, and its Daubert motion directed to Nakleh’s opinion regarding the same.

    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, guided by federal and state law, insisted on determining just compensation for the property solely based on the Vesting Date, deeming evidence of the property’s value on other dates irrelevant. Market value, defined as the price at the time of taking between a willing buyer and seller, was established as the primary measure of just compensation. While acknowledging the impact of the COVID-19 pandemic on market value, the Court emphasized that the property owner failed to show an unfair burden due to the pandemic. Arguments relying on Great Depression-era cases were dismissed as irrelevant, and a legislative directive to deviate from market value was absent. In response to Amtrak’s Daubert motion filed against Marc Nakleh, the Court found evidence regarding the property’s value on dates other than the Vesting Date irrelevant and thus inadmissible, granting the Daubert motion against those portions of Nakleh’s testimony which covered the Property’s value on any date other than the Vesting Date.

    Case Details

    Case Caption National Railroad Passenger Corporation (Amtrak) V. 78,441 Square Feet More Or Less Of Land And Improvements
    Docket Number 1:21cv5810
    Court United States District Court, New York Southern
    Citation 2024 U.S. Dist. LEXIS 17915
    Order Date February 1, 2024

  • Orthopedic Surgery Expert Witness Testimony on Medical Causation Admitted

    Orthopedic Surgery Expert Witness Testimony on Medical Causation Admitted

    James Maples, the Plaintiff, filed a lawsuit against Union Pacific Railroad Company, Inc., the Defendant, under the Federal Employers’ Liability Act (“FELA”), alleging on-the-job injuries stemming from when a wheel broke and detached from the utility vehicle he operated. Union Pacific acknowledged responsibility for the wheel detaching from the utility vehicle but disputed that it caused any harm to Maples. Maples sought partial summary judgment on Union Pacific’s affirmative defenses, encompassing issues such as mitigation, apportionment of fault, failure to join a party, pendency of another related action, accord and satisfaction, arbitration and award, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, and waiver. Additionally, Maples aimed to exclude expert testimony from Union Pacific’s medical expert, Earl Peeples, and biomechanical expert, Jeffrey Broker.

    Orthopedic Surgery Expert Witness

    Dr. Raymond Earl Peeples, MD, graduated from the University of Oklahoma College of Medicine. Following his medical education, he completed a Straight Surgical Internship at Baptist Memorial Hospital. Subsequently, he pursued Orthopaedic Surgery Residency at the University of Oklahoma Health Sciences Center. Further enhancing his expertise, Peeples underwent a Hand Surgery and Microsurgery Fellowship at the University of Colorado Health Sciences Center’s Office of Graduate Medical Education. Currently, Raymond Peeples works at Peeples Medical Legal Consulting. His extensive medical education, residency, and fellowship experiences contribute to his qualifications as a medical expert in the field.

    Biomechanics Expert Witness

    Dr. Jeffrey Palmer Broker, Ph.D., received his Ph.D. in Biomechanics and Motor Control from the University of California, Los Angeles. He holds a B.S. in Mechanical Engineering from California Polytechnic State University. Broker specializes in Biomechanics of Injury, and Accident Causation. His expertise extends to areas like Cycling (control and falls, dynamic simulations, equipment failures) and Sports and Recreation Equipment. Broker has been the owner of Echelon Biomechanics. He also serves as an Associate Professor in Biomechanics at the University of Colorado.

    Discussion by the Court

    Summary judgment was denied concerning the mitigation and apportionment affirmative defenses. However, for the remaining affirmative defenses, summary judgment was granted, as Union Pacific explicitly stated its intention not to present them. Union Pacific retains the option to seek reconsideration if Maples introduces evidence that opens the door for these defenses.

    Summary judgment was denied on the mitigation affirmative defense as it was determined that the question of whether Maples acted reasonably to mitigate his damages should be decided by a jury. This decision was based on the recognition that the failure to mitigate the loss of earnings is a valid affirmative defense in FELA cases. A genuine dispute existed regarding Maples’ capability to perform work beyond what he had undertaken since the accident. It was emphasized that the FELA does not exempt claimants from the obligation to seek suitable employment, and FELA Defendants have the right to a jury instruction on mitigation when the record supports it. In this case, the record indicated that Maples might not have adequately sought other jobs, potentially failing to mitigate damages.

    Summary judgment was denied on the apportionment affirmative defense due to the existence of a genuine factual dispute regarding whether Maples’s back injuries pre-existed from the date of the accident. It was emphasized that FELA Defendants bear liability solely for damages resulting from their negligence. Therefore, the apportionment affirmative defense was deemed appropriate in this context.

    Maples’s motion to exclude Peeples from offering expert testimony on secondary gain or malingering, Maples’s credibility, and Matthew Gornet‘s deposition testimony was denied as moot. It is worth noting that Plaintiff raised arguments against Peeples’ suggestions of Dr. Gornet doing something improper, illegal or unethical in this case.

    This decision arose as Union Pacific affirmed its lack of intention to elicit trial testimony from Peeples on these specific issues. However, Maples retained the option to seek reconsideration if Union Pacific alters its course and expresses an intent to present testimony on these matters.

    The Court acknowledged that Peeples, a medical doctor specializing in orthopedic surgery, was deemed qualified to testify about medical causation. This recognition was supported by the precedent set in Harris v. Ladd, No. 5:09CV00179 JLH (E.D. Ark. Jan. 25, 2012), where it was established that a Defendant’s medical expert has the right to testify that the physical injuries for which the Plaintiff seeks compensation were not caused by the accident.

    The motion to prevent Peeples from expressing opinions on the reasonableness of the work restrictions prescribed by Maples’s doctor was denied based on Peeples’ qualification to provide such testimony. The Court noted that disagreements with a treating physician’s course of treatment could be addressed during cross-examination.

    Peeples was permitted to testify about Gornet’s charges and liens, as the Court recognized that his specialized knowledge could assist a jury in making credibility determinations regarding these issues.

    Maples’s motion to exclude Broker’s expert testimony was denied, as the Court found that Broker’s opinion was not “so fundamentally unsupported that it can offer no assistance to the jury.” This determination stemmed from Broker’s qualifications as a Ph.D. specializing in the biomechanics of injuries and accident causation. The Court deemed Broker’s testimony admissible, particularly his assertion that biomechanically, Maples’s low back injury was inconsistent with the forces exerted during his accident.

    Held

    The Court granted in part and denied in part Maples’ motion for partial summary judgment. The Court also denied Maples’ motions to exclude the testimony of Union Pacific’s experts Earl Peeples and Jeffrey Broker.

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

    Key Takeaways

    In the legal proceedings between Maples and Union Pacific under the Federal Employers’ Liability Act (FELA), expert testimony played a crucial role. The Court allowed testimony from Earl Peeples, a medical doctor specializing in orthopedic surgery, on matters related to medical causation. Additionally, the Court permitted Peeples to testify about Gornet’s charges and liens, acknowledging Peeples’ specialized knowledge as beneficial for the jury in assessing credibility on these issues.

    Similarly, the Court allowed Jeffrey Broker, a Ph.D. specializing in biomechanics, to provide expert testimony. Despite Maples’ attempt to exclude Broker’s testimony, the Court found that Broker’s opinion was not fundamentally unsupported and could offer assistance to the jury. The Court highlighted Broker’s qualifications in biomechanics of injuries and accident causation, particularly noting his assertion that Maples’s low back injury was biomechanically inconsistent with the forces exerted during the accident. In both instances, the Court’s decisions reflected a careful consideration of the experts’ qualifications and the relevance of their testimony to the case.

    Case Details

    Case Caption Maples v. Union Pac. R.R. Co.
    Docket Number 4:22cv965
    Court United States District Court, Arkansas Eastern
    Citation 2024 U.S. Dist. LEXIS 17790
    Order Date February 01, 2024
  • Economics Expert Witness Theory on Investment Performance Admitted 

    Economics Expert Witness Theory on Investment Performance Admitted 

    Plaintiff Joanna P. Mattson filed a legal action, both individually and on behalf of the Milliman, Inc. Profit Sharing and Retirement Plan, along with a class of participants and beneficiaries affected by the alleged misconduct of the Milliman Defendants. The lawsuit is based on a claim of breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA). The named Defendants include Milliman, Inc., the Board of Directors of Milliman, Inc., “the Investment Committee” responsible for selecting investment options for the Plan and its members, as well as “the Administrative Committee” in charge of Plan administration and its members (collectively referred to as “Milliman” or “Milliman Defendants”).

    The Plaintiff asserted that three Wealth Preservation Strategy Funds (the “WPS Funds” or “Funds”) should not have been used in the Milliman, Inc. Profit Sharing and Retirement Plan (the “Plan”). These funds, managed by Unified Trust Company (“Unified”), included the Milliman Managed Risk Strategy (MMRS), an equity risk management approach. Unified, as the investment manager, opted to invest the WPS Funds’ underlying assets in exchange-traded funds (ETFs) representing different segments of equity markets (i.e., small-cap, mid-cap and large-cap, international and emerging market) and various fixed-income products (i.e., bonds and government obligations). Subsequently, Unified engaged Financial Risk Manager (FRM) as a sub-advisor to implement MMRS, which aimed to manage volatility and preserve capital. MMRS comprised two distinct components: a volatility management component using futures contracts to adjust exposure to underlying equity investments and moderate volatility, and a capital protection component utilizing futures contracts to replicate a five-year rolling put option, creating a cash cushion to offset significant market losses.

    To conclude, Plaintiff Joanna Mattson only worked at Milliman, Inc. (“Milliman”) from 2002 to 2004. She enrolled in the Milliman, Inc. Profit Sharing and Retirement Plan (the “Plan”), a 401(k) plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). Despite having
    not worked for Milliman for nearly two decades, she commenced this action claiming that three Wealth Preservation Strategy Funds (“WPS Funds” or “Funds”) should have been removed from the Plan before 2016.

    The Defendants sought to exclude the opinions and testimony provided by the Plaintiff’s experts, Horacio A. Valeiras and Arthur B. Laffer.

    Finance Expert Witness

    Horacio A. Valeiras is the CEO and Co-Founder of Frontier Global Partners LLC, an entity specializing in managing private funds and separate accounts, including multi-asset and retirement accounts. As an SEC-registered investment adviser, he holds a Master of Business Administration degree with a focus on Finance from the University of California, Berkeley, and a Master’s Degree in Chemical Engineering from the Massachusetts Institute of Technology. With a wealth of experience spanning 31 years, Valeiras has been actively engaged in the management of large investment portfolios for institutional money managers. His expertise includes the evaluation and selection of investment products for multi-asset accounts.

    Economics Expert Witness

    Arthur B. Laffer holds the position of Chairman and Chief Economist at Laffer Associates, an economic research and consulting firm he founded. Graduating from Yale University in 1963, he furthered his education by obtaining a Master of Business Administration and a Ph.D. in Economics from Stanford University. Laffer’s expertise in fiduciary responsibility stems from his advisory roles for governments, extensive service on various boards of trustees, boards of directors for both private and publicly traded companies, and his leadership as Chairman and Chief Economist of Laffer Investments. 

    Discussion by the Court

    The Defendants contested the reliability of Horacio Valeiras’ damages opinions and anticipated testimony on two grounds.

    The Defendants argued that Valeiras’ damages calculations and testimony regarding the Plan were not reliable, asserting that his damage models were not tailored to the only component of MMRS that he challenged, the capital protection component. They maintained that damages should be tailored to the accumulation phase of retirement savings. In response, the Plaintiff argued that Valeiras had incorporated both the capital protection and volatility management components into his calculations, as the Defendants had used both components of the overall overlay of MMRS simultaneously. The Plaintiff further contended that Valeiras’ damages calculations could be considered reliable, as he integrated the overlay into his calculations in a manner consistent with how the Defendants might have employed it in practice. Despite Valeiras expressing concerns about the volatility management component, the Plaintiff asserted that his testimony was not necessarily unreliable, as he contended that the overlay as a whole adversely affected the Plan. Valeiras stated that the overlay’s attempts to manage volatility were costly and ineffective. The Plaintiffs argued that Valeiras’ testimony remained reliable, as they contended that his inclusion of the volatility management component of the overlay in his damages calculations did not necessarily undermine its reliability.

    The Defendants contested Valeiras’ inclusion of the Funds’ investors who were in the draw down phase in his damages calculations. In response, the Plaintiffs argued that Valeiras’ opinion was relevant as ERISA damages encompassed all damages incurred by the Plan. The Court determined that the “returns of the Plan as a whole” were a reasonable approximation of losses to the plan, asserting that the Defendants’ challenges to Valeiras’ testimony pertained to weight and not admissibility. The Court concluded that the amount of damages, if any, would be best determined after considering the evidence at trial.

    The Defendants’ motion aimed to exclude the opinions and testimony of Arthur Laffer, focusing on four specific issues.

    The Defendants sought to exclude Laffer’s testimony regarding the removal of the three Wealth Preservation Strategy Funds from the Milliman, Inc. Profit Sharing and Retirement Plan before January 2016, arguing that the performance history was not sufficiently long for him to opine on such a decision. The evaluation of ERISA breach of fiduciary duty claims is fact intensive. Despite other Courts rejecting ERISA claims based on only three years of performance data, the Court stated that this challenge addressed the weight of Laffer’s testimony rather than its admissibility, as the factual nature of the inquiry warranted consideration of the evidence at trial.

    The Defendants sought to exclude Laffer’s testimony on any conduct predating January 2016, including the alleged “seeding” of the Funds with Plan money in 2012, citing ERISA’s statute of repose which barred it. The Plaintiff argued that such testimony should be admissible, contending that the Defendants’ conduct constituted a singular, ongoing breach. According to 29 U.S.C. § 1113(1), any ERISA action brought more than six years after “the date of the last action which constituted a part of the breach or violation” is barred. The Court acknowledged that the duty to exercise prudence in selecting investments at the outset of the Plan exists “separate and apart from” from the duty to prudently monitor Plan investments and remove underperforming investments, as established in Tibble v. Edison Int’l, 575 U.S. 523, 529, 135 S. Ct. 1823, 191 L. Ed. 2d 795 (2015). While recognizing that the selection and retention are not a continuous breach, the Court decided not to exclude Laffer’s testimony about the Defendants’ selection of the Funds. Defendants’ selection of the Funds, regardless of whether such selection was prudent or not, is distinct from the Plan’s retention of the Funds. ERISA fiduciaries were obligated to continually monitor their plan’s investments, with the specific requirements dependent on various factors such as the plan’s nature, investments, and the plan sponsor. In the present case, the process employed by the Plan in selecting the Funds could shed light on whether the subsequent decision to retain the Funds was prudent. Consequently, Laffer’s testimony regarding the initial investment in the Funds was deemed relevant, and the Plaintiff was permitted to present it to support the claim that the Defendants acted imprudently in retaining the Funds.

    The Defendants argued that Laffer’s opinions on the Plan’s investment policy statement (IPS) were legally unsound. Laffer was presented as an expert to assess whether the Defendants demonstrated an appropriate level of prudence and fiduciary responsibility toward managing the Plan and its participants. The Court acknowledged that Laffer’s testimony regarding the Plan’s IPS could be beneficial in assessing whether the Defendants fulfilled their fiduciary duties. Furthermore, since the case would be a bench trial, the Court reasoned that there was no prejudice risk as there was no jury to potentially give undue weight to Laffer’s testimony.

    The Defendants contended that Laffer’s remaining opinions lacked proper support and were characterized as mere ipse dixit. They argued that Daubert and the Federal Rules of Evidence do not mandate a district court to admit opinion evidence solely supported by the expert’s assertion without a connection to existing data.The Court, exercising its discretion in assessing the analytical gap between data and opinions, noted that for non-scientific testimony, reliability rested heavily on the expert’s knowledge and experience rather than a specific methodology or theory. Given Laffer’s substantial expertise in evaluating investments and advising retirement plans and their fiduciaries, as well as other trusts, the Court deemed his knowledge and experience appropriate to provide a sufficiently reliable basis for his expert testimony. The Defendants argued that Laffer’s opinions lacked reliability as he did not cite specific surveys, studies, or documentation supporting his views. The Court deemed this argument as pertaining to the weight of his testimony rather than its admissibility. Similarly, the Defendants’ claim that Laffer’s experience with other types of retirement plans and fiduciary investors was insufficient went to the weight of his testimony. As Laffer based his opinions on extensive experience in the investment industry and as a fiduciary advisor, the Court concluded that these opinions could not be excluded before trial.

    Held 

    The Court denied both of the Defendants’ motions to exclude the opinions and testimony of Plaintiffs’ experts Horacio A. Valeiras and Arthur B. Laffer.

    Key Takeaways

    In the legal proceedings involving Plaintiff Joanna P. Mattson and the Milliman Defendants, the Court addressed key issues related to the expert testimonies of Horacio A. Valeiras and Arthur B. Laffer. The Plaintiff’s claims were centered around the contention that three Wealth Preservation Strategy Funds should have been removed from the Milliman, Inc. Profit Sharing and Retirement Plan before January 2016. The Court considered challenges to the reliability of Valeiras’ damages opinions, with the Defendants arguing that his calculations did not address the capital protection component of MMRS adequately. The Court ruled that these challenges pertained to the weight of the testimony, not its admissibility. Similarly, the Court addressed Laffer’s opinions on the Plan’s investment policy statement (IPS) and other issues, ruling that the objections raised by the Defendants went to the weight of his testimony rather than its admissibility. The Court highlighted Laffer’s extensive experience and knowledge in the investment industry as a basis for deeming his expert testimony sufficiently reliable. Ultimately, the Court denied the Defendants’ motions to exclude the expert testimonies, allowing them to be presented at trial.

    Case Details

    Case Caption Mattson v. Milliman, Inc.
    Docket Number 2:22cv37
    Court United States District Court, Washington Western
    Citation 2024 U.S. Dist. LEXIS 16413
    Order Date January 30, 2024
  • Business Administration and Management Expert Witness Testimony found Inadmissible for not Establishing a Method to Calculate Damages

    Business Administration and Management Expert Witness Testimony found Inadmissible for not Establishing a Method to Calculate Damages

    Plaintiff Kristina Cleaver initiated legal proceedings against her former employer, Transnation Title & Escrow, Inc. dba Fidelity National Title Company (“Fidelity”) based on an accusation of gender discrimination, purportedly in violation of both federal and state laws. Fidelity, identified as a title and escrow company specializing in real estate transactions in collaboration with real estate agents, employed Cleaver as a sales executive from June 2019 to March 2021. 

    Cleaver contended that Fidelity abruptly removed her from a significant account referred to as the “Sweet Account” in December 2019. The alleged reason behind this action was the refusal of the account’s lead real estate agent, Jeffrey Sweet, to continue working with Cleaver due to her gender. Cleaver sought compensatory damages, specifically for lost commissions, and additionally asserted a claim for punitive damages. 

    As part of the legal proceedings, Cleaver designated Kris Miller to provide expert opinions on matters related to discrimination and damages. However, Fidelity responded by filing a motion to “strike” Miller’s report and testimony under Rule 702 of the Federal Rules of Evidence. Fidelity contended that Miller was not qualified to provide opinions on either discrimination or damages, and even if he were deemed qualified, the company argued that his opinions were unreliable. Fidelity argued that Miller was not qualified to opine on either discrimination or damages and that, even if he were qualified, his opinions were unreliable. Alternatively, Fidelity argued that the Court should exclude Miller’s testimony because Cleaver designated Miller, a purported competitor of Fidelity, to improperly provide him with access to Fidelity’s confidential information. 

    On November 19, 2021, Cleaver had disclosed Miller as an expert witness specializing in “title and escrow company management and procedures” to provide opinions on discrimination and damages. In Miller’s initial report, he had articulated seven enumerated opinions, addressing discrimination by Fidelity and quantifying Cleaver’s damages. Regarding Cleaver’s income loss, Miller had indicated in the report that Fidelity had not furnished complete documents reflecting the actual income generated by the Sweet Team. In the absence of Fidelity’s cooperation, he asserted that his numbers were reasonably accurate, emphasizing that Fidelity’s failure to provide key documents, such as complete closed orders, created an unnecessary impediment to determining the loss more accurately. Miller had explicitly stated in his initial report that he would supplement or amend the report upon receiving the missing closed orders. 

    Simultaneously with Miller’s disclosure of his initial report, on the same day, Cleaver had filed a motion to compel Fidelity to produce the “closed orders for the entire year [of] 2021.” Cleaver argued that showing the amount of revenue generated by the Sweet Account for Fidelity was crucial. Despite Fidelity’s opposition, the Court had ruled in favor of Cleaver, deeming the Sweet Account closed orders critical for substantiating a claim for damages. The Court granted Cleaver’s motion and ordered Fidelity to produce the requested documents. 

    On March 11, 2023, a few weeks before Cleaver’s April 18 expert disclosure deadline, Fidelity had produced the Sweet Account closed orders for 2021. However, Miller did not supplement or amend his initial report to address Fidelity’s 2021 closed orders, even though he had received them before the expert disclosure deadline. After that deadline passed, Fidelity had deposed Miller. The deposition transcript provided by Fidelity to the Court indicated that Miller had received the 2021 closed orders, reviewed them, found them “incomplete,” and determined that they did not support his earlier “prediction.” After Miller’s deposition, Miller had produced a rebuttal report specifically addressing Cleaver’s damages. 

    Business Administration and Management Expert Witness 

    Kris Miller is currently Market President for Empire Title & Escrow located in Ada and Canyon Counties, Idaho. With over 15 years of employee management and leadership in a corporate environment, he is familiar with internal policies, practices and procedures for title companies. His expertise involves title company management, including the manner in which title companies hire, retain, develop, evaluate, compensate and promote employees.

    Discussion by the Court 

    In his initial report, Miller had expressed four key opinions: (1) Fidelity’s removal of Cleaver from the Sweet Account violated the company’s own policies related to equal opportunity and harassment; (2) Fidelity’s action contravened industry standards, irrespective of the industry; (3) any circumstance involving the removal of an employee from an account based on gender is inherently discriminatory, making Fidelity’s actions discriminatory; and (4) Fidelity had the option to abstain from removing Cleaver from the account and could have referred the client to another title company. Fidelity had contested these opinions, urging the Court to exclude them on the grounds that they constituted legal conclusions or would not be helpful to the jury. 

    The Court had concurred with Fidelity’s position. It had determined that Miller’s general, blanket opinions, particularly asserting that Fidelity’s removal of Cleaver from the Sweet Account was discriminatory, amounted to legal conclusions. The Court emphasized that Miller failed to provide an adequate explanation or basis for his conclusory opinion alleging discrimination by Fidelity. 

    Moreover, the Court had found that Miller’s opinions asserting Fidelity’s violation of its own company policies by removing Cleaver from the Sweet Account and implying available alternatives to such removal did not necessitate specialized knowledge that would assist the jury in understanding the evidence. The Court concluded that the jury was sufficiently capable of comprehending and drawing inferences from the available evidence without the need for expert opinions on these matters. 

    Additionally, the Court noted that Miller’s general and vague opinion about Fidelity violating industry standards, applicable across various industries, lacked a reliable basis applicable to the specific facts of the case. Miller had not identified any specific industry standard in support of his opinion. Consequently, the Court had granted Fidelity’s motion to exclude Miller’s testimony regarding his discrimination opinions based on these reasons. 

    Furthermore, Fidelity had contested Miller’s opinions concerning Cleaver’s damages, asserting, among other arguments, that those opinions lacked reliability. The Court agreed that Miller’s damage opinions did not fulfill the requirements for admissibility under Rule 702. Miller had made several broad statements regarding Cleaver’s damages, such as the impact of her removal from the Sweet Account on her industry reputation, the loss of past income from title and escrow transactions, the relative value of the 50% stock match, and a distinct loss of income attributed in part to a ‘loss of momentum.’ 

    However, the Court found that Miller had failed to provide a method for calculating these losses, did not conduct an analysis of the losses, and did not express any opinions regarding the specific amounts of these losses. Consequently, the Court concluded that these purported “opinions” did not meet any of the requirements outlined in Rule 702. 

    To reach his remaining damage opinions, Miller relied on a document entitled “Kristina Cleaver Income Loss” (“Income Loss document”) which consisted of calculations for Cleaver’s lost income from 2020 through 2025 based, in part, on  Cleaver’s compensation package, the “growth” of the number of agents on the Sweet team, increases in property values, and an increase in the Sweet team’s sales volume. Based on various assumed numbers, the document calculated an “actual revenue lost” of $311,756.50.  

    Fidelity represented that Cleaver and her counsel prepared the Income Loss document.  Although Cleaver disputed her counsel’s involvement in preparing the document, Miller testified during his deposition that, to his knowledge, Cleaver and her counsel prepared the document. That Miller did not prepare the document, however, was undisputed. Miller’s initial report regarding the Income Loss document stated that despite the lack of an absolute method of determining future income growth from the Sweet Team, the future escrow and title transactions and resultant income to Cleaver could be not be less than her calculations. Miller then adopted Cleaver’s damage number of $311,746.50. Further, he stated that “the actual number is 30% greater at $400,000.00-$450,000.00,” but provided no basis or explanation for reaching these numbers. 

    During Miller’s deposition he testified about his wholesale reliance on the Income Loss document, which Cleaver (perhaps with her counsel’s assistance) prepared.  

    Based on this testimony, the Court observed that it was evident that Miller was simply parroting Cleaver’s method, analysis, and calculations to determine damages. Since, Cleaver previously stated Miller adopted and ratified those calculations, she appeared to assert that Miller’s adoption and ratification of her calculations was enough to satisfy Rule 702. 

    The Court underscored the principle that an expert witness is not allowed to merely echo a party’s stance on an issue but must engage in an independent assessment of the opinions, in accordance with Rule 703 of the Federal Rules of Evidence. In this particular case, Miller had not fulfilled this obligation, and the opinions presented in his initial report did not adhere to the requirements outlined in both Rule 702 and Rule 703. 

    Despite Miller subsequently providing a rebuttal report in support of his opinions, the Court held that this rebuttal report could not rectify the substantial deficiencies found in his initial report. Fidelity’s argument was acknowledged, emphasizing that a party is not permitted to use a rebuttal report to address the inadequacies of its initial report. According to Rule 26(a)(2)(D)(ii) of the Federal Rules of Civil Procedure, rebuttal expert testimony is allowable only when intended to contradict or rebut evidence on the same subject matter identified by another party. It is limited to addressing new, unforeseen facts brought out in the opposing party’s case and cannot introduce new arguments or evidence.Furthermore, the Court highlighted that Cleaver had not addressed Fidelity’s contention that Miller’s rebuttal report did not rectify the defects in his initial report and could not be relied upon to substantiate her case-in-chief. 

    Miller’s initial opinions—by his own admissions in his deposition—were not based in facts or data or the product of reliable principles and methods. Rather, Miller simply adopted and ratified Cleaver’s version of the facts and data and her unproven method for calculating her damages based on that version. Miller exercised no expertise in establishing a method to calculate damages, and his opinions were not based on any independent analysis of any facts or data. Accordingly, the Court concluded that Miller’s damage opinions failed to satisfy Rule 702 and granted Fidelity’s motion to exclude Miller’s testimony about his damage opinions. 

    Because the Court excluded Miller’s expert testimony, it did not address Fidelity’s argument that Miller should be excluded as a sanction under Rule 37 of the Federal Rules of Civil Procedure. Further, the Court denied Fidelity’s other requests, including that Cleaver’s Income Loss document be “stricken”; that Cleaver be precluded from testifying about the information (although the Court will entertain appropriate, pretrial motions in limine regarding the information); and that the Court reconsider the prior order awarding attorney fees related to her motion to compel. 

    Held 

    The Court granted in part and denied in part Fidelity’s Motion to Strike the Expert Report and Testimony of Kris Miller. 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 decision in this case provides several notable insights into expert testimony. Firstly, the Court emphasized the imperative that expert opinions should not amount to legal conclusions or general assertions lacking a sufficient basis. Specifically, opinions offered by the expert, Miller, were considered too broad, constituting legal conclusions, and were excluded due to a lack of clarity and supporting rationale. Additionally, the Court stressed that expert opinions must be grounded in specialized knowledge to aid the jury’s understanding, and Miller’s opinions on policy violations and industry standards were found insufficient in this regard. 

    The Court subjected Miller’s damage calculations to scrutiny, pointing out their unreliability due to a lack of methodological clarity, failure to analyze losses, and absence of specific amounts. Notably, Miller’s reliance on a document prepared by Cleaver and her counsel raised concerns about the independence and expertise of the expert. The Court highlighted the importance of Rule 703, emphasizing that expert witnesses should not merely echo a party’s position but should engage in an independent assessment of opinions. 

    Furthermore, the Court clarified that a rebuttal report cannot remedy significant deficiencies in an initial report, in accordance with Rule 26(a)(2)(D)(ii). Rebuttal expert testimony is restricted to addressing new facts brought out by the opposing party and cannot introduce new arguments or evidence. The Court did not address Fidelity’s argument for sanctions under Rule 37, as the exclusion of Miller’s testimony obviated the need for such measures. 

    Additionally, the Court rejected Fidelity’s requests for preclusion of Cleaver’s testimony, striking Cleaver’s Income Loss document, and reconsideration of prior orders related to attorney fees. These denials were made in light of the Court’s decision to exclude Miller’s testimony. In essence, the case underscores the critical role of experts in presenting reliable and independent opinions, ensuring adherence to procedural rules governing expert testimony.

    Case Caption Cleaver V. Transnation Title & Escrow, Inc.
    Docket Number 1:21cv31
    Court United States District Court, Idaho
    Citation 2024 U.S. Dist. LEXIS 16930
    Order Date January 29, 2024
  • Disability Expert Witness Testimony Admitted Citing Extensive Experience in Special Education Litigation

    Disability Expert Witness Testimony Admitted Citing Extensive Experience in Special Education Litigation

    North East Independent School District (NEISD) appealed the administrative decision by a Special Education Hearing Officer (SEHO) in favor of the minor student I.M., who qualifies for special education services due to autism and an intellectual disability. Following an evidentiary hearing, the SEHO determined that the NEISD had failed to provide I.M. with a free appropriate public education (FAPE) in violation of the Individuals with Disabilities Education Act (IDEA). As a remedy, the SEHO ordered NEISD to provide Extended School Year services to I.M. during the summer of 2023.

    In response to the SEHO decision, NEISD contended that the decision was legally erroneous and lacked support from the evidence presented during the hearing. NEISD sought an order from the Court to reverse and vacate the SEHO decision.

    I.M., represented by his mother as the next friend, counterclaimed against NEISD, seeking attorney’s fees under the IDEA as the prevailing party in the administrative proceedings.

    Both parties submitted cross motions for summary judgment to the District Court. The motions addressed two primary issues: firstly, whether I.M. had indeed received a FAPE from NEISD, and secondly, whether I.M. was entitled to the requested amount of attorney’s fees. The latter consideration involved a discussion on whether the fee request should be reduced based on I.M.’s relative success in the administrative proceedings and the outcomes of settlement negotiations between the parties. These motions are fully briefed and ripe for a ruling by the District Court. 

    NEISD sought the Court’s consideration of additional evidence beyond the administrative record, specifically a three-page investigatory letter from the Department of Justice (DOJ) dated October 24, 2023. This letter was addressed to NEISD and pertained to a complaint filed with the U.S. Attorney’s Office by I.M.’s parents subsequent to the SEHO hearing. The complaint alleged a violation of the Americans with Disabilities Act (ADA).

    In the complaint, I.M.’s parents asserted that the staff at an after-school program had engaged in discriminatory practices against I.M. based on his disability. The alleged discriminatory actions included refusal of enrollment, cancellation of enrollment, and failure to provide accommodations for both I.M. and other children with Autism Spectrum Disorder or similar disabilities. The DOJ investigatory letter served as a piece of evidence in the case, and NEISD sought to introduce it in support of its arguments during the legal proceedings.

    I.M. filed two motions related to NEISD’s expert, Jose L. Martín, who was designated to provide expertise on the attorney’s fees claimed by I.M. in his counterclaim. The first motion sought the exclusion of Martín, asserting that NEISD’s designation of him was untimely in violation of the Court’s Scheduling Order.

    In the second motion, I.M. contested NEISD’s designation of Martín, invoking Federal Rule of Evidence 702 and Daubert standards. The challenge questioned the admissibility and reliability of Martin’s expert testimony on attorney’s fees. I.M. argued that the designation did not meet the criteria set forth in the applicable rules and standards, warranting the exclusion of Martin’s expert testimony from consideration in the legal proceedings.

    Disability Expert Witness

    Jose L. Martín is a founding partner at the law firm of Richards Lindsay & Martín, L.L.P. located in Austin, Texas where his practice focuses on disability issues, litigation affecting school districts, and special education under key federal statutes, including the Individuals with Disabilities Education Act (IDEA), Section 504 of the Rehabilitation Act of 1973, and the Americans with Disabilities Act.

    As an attorney, Martín represents numerous public school districts in the state of Texas. Through his legal work, he has gained extensive experience in addressing the day-to-day challenges faced by schools in their efforts to comply with both state and federal disabilities laws. He is a graduate of the University of Texas in Journalism, and the University of Texas School of Law.

    As a strong advocate for preventive legal measures, Jose L. Martín actively engages in sharing his expertise through various presentations. Martín’s commitment to preventive legal practices is evident through his participation in both national and regional conferences on Individuals with Disabilities Education Act (IDEA) and Section 504 of the Rehabilitation Act.

    Discussion by the Court

    The IDEA provides that, when reviewing an administrative decision under the IDEA, the Court (i) shall receive the records of the administrative proceedings; (ii) shall hear additional evidence at the request of a party; and (iii) basing its decision on the preponderance of the evidence, shall grant such relief as the Court determines is appropriate. 

    I.M. opposed the inclusion of the Department of Justice (DOJ) letter as additional evidence, contending that the letter was not relevant to the issues under consideration by the Court. I.M. argued that there was no ADA claim pending before the Special Education Hearing Officer (SEHO) during the administrative proceedings.

    In contrast, NEISD argued that the DOJ letter was pertinent to I.M.’s counterclaim for attorney’s fees, asserting that the content of the letter and the related settlement negotiations influenced the reasonableness of I.M.’s fee request. NEISD specifically contended that its settlement offer, which involved offering no-cost enrollment in the same afterschool program addressed in the DOJ letter, could have provided I.M. with more favorable relief than what was obtained through the SEHO decision.

    During the Court’s hearing, NEISD confirmed that including the DOJ letter in the evidentiary record for the District Court would not necessitate the supplementation of the parties’ summary judgment motions. NEISD maintained that the inclusion of the DOJ letter was an efficient means of illustrating the existence of an additional related claim that NEISD sought to address through its settlement offer.

    Following the arguments presented by both parties at the hearing, the Court granted NEISD’s motion to consider additional evidence outside of the administrative record. Notably, this decision occurred after I.M. rescinded her opposition to the motion.

    I.M. filed a motion seeking the exclusion of expert Jose L. Martín, arguing that NEISD’s designation of Martín was untimely as per the Court’s Scheduling Order. The Court, however, denied the motion, pointing out that the Scheduling Order had set an expert-designation deadline of November 8, 2023, for parties asserting claims for relief and a deadline of November 22, 2023, for parties resisting claims of relief.

    In this context, NEISD designated only one expert, Martín, on November 21, 2023, specifically to testify on the attorney’s fees claimed by I.M. and the question of whether they are reasonable and necessary. The Court noted that Martin’s expert report clearly demonstrated that he was presenting an opinion solely on I.M.’s counterclaim. Consequently, NEISD, in relation to this expert, fell under the category of a party resisting a claim for relief. As such, the Court deemed NEISD’s expert designation to be timely, in accordance with the deadlines specified in the Scheduling Order.

    As to I.M.’s reliability challenge filed against Martín’s testimony, Daubert set forth four specific factors that the trial court should ordinarily apply when considering the reliability of scientific evidence: (1) whether the technique can or has been tested; (2) whether it has been subjected to peer review or publication; (3) whether there is a known or potential rate of error; and (4) whether the relevant scientific community generally accepts the technique. 

    The Court determined that NEISD successfully met the burden of establishing the reliability of Jose L. Martín’s proposed expert testimony regarding I.M.’s counterclaim for attorney’s fees. Martín, a licensed attorney and founding partner at Richards, Lindsay, and Martín in Austin, specializes in disability issues, litigation affecting school districts, and special education cases under the Individuals with Disabilities Education Act (IDEA) and the Americans with Disabilities Act (ADA). His extensive experience includes litigating on behalf of school districts in Texas, consulting with Departments of Education nationwide, and speaking on topics related to special education and the IDEA.

    In rendering his opinion, the Court noted that Martín had thoroughly reviewed the SEHO decision, I.M.’s administrative-level complaint, various declarations filed on behalf of I.M., the offers of settlement made during the administrative proceedings, and other documents in the administrative record.

    Martín’s expert report asserted that I.M. qualified as a prevailing party under the IDEA, but recommended a significant reduction in the requested attorney’s fees. The reduction was suggested because I.M. did not achieve all the relief sought during the administrative proceedings, and Martín opined that I.M. could have obtained more favorable results by accepting NEISD’s settlement offer.

    After examining Martín’s expert report, along with the parties’ briefs and considering arguments from counsel during the Court’s hearing, the Court concluded that I.M.’s motion did not present a genuine challenge to the reliability of Martín’s testimony. The Court observed that I.M. failed to identify any purported defects in Martín’s methodology or the reliability of his methods in opining on I.M.’s counterclaim for attorney’s fees. Instead, the disagreement between the parties revolved around differing perspectives on what transpired at the administrative level, how to assess the relief granted by the SEHO compared to what I.M. sought, and whether a reduction in fees was justified.

    Held

    The Court granted NEISD’s motion to consider additional evidence outside of the administrative record but denied both I.M.’s motions pertaining to NEISD’s expert, Jose L. Martín. 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 denial of I.M.’s motion to exclude expert Jose L. Martín underscores the importance of adherence to court-issued scheduling orders. In this instance, NEISD’s timely designation of Martín, who focused specifically on I.M.’s counterclaim for attorney’s fees, was deemed compliant with the deadlines set forth in the Scheduling Order.

    The Court’s reliance on the Daubert factors in evaluating the reliability of Martín’s expert testimony establishes a precedent for assessing the soundness of expert opinions in the context of special education litigation. Martín’s extensive experience and thorough review of relevant documents contributed to the Court’s determination that his testimony was reliable.

    The Court’s observation that I.M.’s challenge did not constitute a true reliability challenge underscores the importance of identifying specific defects in an expert’s methodology when challenging the reliability of expert testimony. In this case, the disagreement between the parties centered on differing interpretations of events at the administrative level and the appropriateness of fee reduction, rather than any identified flaws in Martín’s methodology.

    Overall, these key takeaways emphasize the nuanced nature of expert testimony in special education litigation, requiring a careful consideration of procedural timelines, adherence to court orders, and a focused assessment of the reliability of expert opinions.

    Case Details:

    Case Caption North East Independent School District V. I.M. B/N/F Bianca R.
    Docket Number 5:23cv769
    Court United States District Court, Texas Western
    Citation 2024 U.S. Dist. LEXIS 13214
    Order Date January 24, 2024