After a rigorous three-year investigation conducted by the Office of the Attorney General, involving in-depth interviews with over 65 witnesses and the examination of extensive documentation provided by the Defendants and other involved parties, it was established Defendants Donald J. Trump (“Trump”), Trump Organization LLC and the Trump Organization, Inc. (collectively with the other named entities, the “Trump Organization”), Allen Weisselberg, and the other individuals and entities affiliated with Trump and his companies named as Defendants, were engaged in a pattern of fraudulent activities and misrepresentations spanning the years 2011 through 2021. These deceptive practices primarily revolved around the preparation of Trump’s annual financial statements, known as the Statements of Financial Condition.
The investigation revealed a consistent and deliberate pattern of fraudulent conduct orchestrated by upper management within the Trump Organization. This conduct was deemed a collective effort to manipulate the content and presentation of the Statements of Financial Condition. Moreover, crucial information was deliberately withheld or concealed from Mazars, the entity responsible for compiling these financial statements. It’s important to note that Mazars, in its role of compiling assertions of Trump and the Trustees’ into financial-statement format rather than conducting comprehensive audits, remained unaware of many of the fraudulent strategies and misrepresentations embedded within the financial statements.
These fraudulent actions were not isolated incidents but were instead part of a systematic effort that received approval at the highest levels of the Trump Organization, including Donald J. Trump himself. The intent behind these actions was to present a misleading and inaccurate financial portrayal through the annual statements.
New York University Stern School of Business research professor, Eli Bartov testified that upon his review, he did not identify any indications of fraud within Trump’s family real estate company’s financial statements. This assessment contrasts with the allegations made by the New York state’s attorney general, who pointed to overstated property values meant to secure advantageous loan and insurance terms.
Jason Flemmons, a forensic accountant who’s a senior managing director at Ankura, an international consultancy firm and a a former deputy chief accountant at the U.S. Securities and Exchange Commission acknowledged that Trump’s annual net-worth statements spanning a decade exhibited “glaring” issues. However, he attributed the content of these statements to Trump’s accountants, asserting that they held the ultimate responsibility for the statement’s contents.
Accounting Expert Witnesses
Eli Bartov, renowned for his expertise in accounting and academia, serves as a Professor of Accounting at New York University’s Leonard N. Stern School of Business. With a Ph.D. from UC Berkeley in 1989, he’s recognized globally for his award-winning research and teaching prowess. His extensive research spans a diverse array of topics including financial reporting, executive compensation, social media’s impact on capital markets, forensic accounting, stock price dynamics, M&A analysis, and diverse facets of equity valuation and trading strategies.
Jason Flemmons, currently serving as a Senior Managing Director at Ankura in Washington, DC, boasts an extensive career spanning more than 25 years. His expertise lies in forensic accounting, corporate investigations, and technical accounting and auditing. Notably, Flemmons previously held the position of Deputy Chief Accountant within the Securities and Exchange Commission’s Division of Enforcement. In this pivotal role, he oversaw and actively conducted a multitude of investigations focused on financial and accounting fraud, involving SEC registrants and other involved parties.
Discussion by the Court
The Court held that the “overarching point” of Bartov’s testimony was that Trump’s subject statements of financial condition were “accurate in every respect” yet the Statements of Financial Condition were found to consist of numerous inadvertent errors with even a previous ruling to that effect. Bartov contended that no expert countered or disputed his testimony, nor did any expert testify that they had uncovered evidence of fraud.
During his testimony, Bartov disclosed that he dedicated approximately 650 hours to the case, charging at a rate of $1,350 per hour, resulting in compensation totaling around $877,500. He clarified that payments for his services came from both the Trump Organization and Save America, a political action committee that backed Trump’s prospective 2024 election campaign. Bartov held this rate to represent his standard billing fees.
Justice Arthur Engoron wrote that the testimony merely demonstrated that, for a considerable sum of money, certain experts could be swayed to align their statements with the desires of those footing the bill.
During his testimony, Flemmons admitted to lacking expertise in property valuation, yet attempted to offer opinions on property values. He testified that a wide variety of “methodologies” could legally be used in estimating property and asset values. These methodologies could produce net-worth values that differ from each other by “orders of magnitude.”
He emphasized that according to ASC 274, as long as a method permitted by the standards was selected by the Defendant, figures could be inserted into such methods without regard for their accuracy or relation to reality.
Additionally, Flemmons conceded the necessity of discounting future income to present value in financial statements but paradoxically stated there were no departures from Generally Accepted Accounting Principles (GAAP) when Defendants failed to apply a discount rate to future income.
He expressed the opinion that Mazars should have pursued items in the Statements of Financial Condition (SFCs), but firmly stated that it would have been “highly unusual” for Mazars to inquire about any appraisals in the possession of the client. “There would be no obligation or expectation on the part of Mazars or any accountant performing compilation services” to request appraisals that weren’t the basis for values on the statements, said Flemmons.
Held
The Court held that the testimony of Defendant’s expert Eli Bartov and Jason Flemmons lacked credibility. Closing arguments in the trial are set for January 11, 2024.
Key Takeaways:
The Court noted discrepancies in Eli Bartov’s assertion of accuracy with regard to Statements of Financial Condition, considering previous findings of errors. Justice Arthur Engoron flagged concerns about substantial compensation potentially influencing expert alignment with the paying party’s interests. Jason Flemmons emphasized the wide legal scope of methodologies for estimating property values, often without accuracy or relation to reality, as allowed by accounting standards. Flemmons’ stance on GAAP compliance presented a contradiction regarding discounting future income. Additionally, while suggesting Mazars should have pursued items in the Statements of Financial Condition, Flemmons deemed it “highly unusual” for them to inquire about unrelated appraisals, absolving Mazars from obligation in such cases.
Archer Western – de Moya Joint Venture (the “JV”) filed a claim against Ace American Insurance Company (“ACE”), their insurer under a completed value builder’s risk policy, concerning the I-395/S.R. 836 Reconstruction/Rehabilitation Project in Miami, Florida. The claim pertained to bridge components constructed using low strength concrete that failed to meet project specifications. The JV sought coverage for rectifying and improving these elements. However, the policy in question excluded coverage for costs related to rectifying defective workmanship or materials. As a result, ACE denied the JV’s claim entirely.
The JV claimed that multiple batches of concrete from Batch Plant No. 1, termed the “Dry Batch Plant,” had an excess of fly ash. This led to reduced compressive strength and longer hardening times. They alleged a failure of the pressure relief valve on the plant’s fly ash silo between August 2020 and November 2020, although they only provided hearsay mentioning the valve being “clogged.” According to the JV, batches of concrete produced during this period were compromised due to excessive fly ash caused by an unspecified and undocumented overpressure condition in the silo. ACE disputed this theory put forth by the JV.
Plaintiff’ expert Mat Radlinski proffered thirteen opinions to substantiate its claims out of which eleven claims were deemed scientifically invalid, irrelevant to ACE’s liability determination, and were considered unhelpful for the fact-finding process by the Defendant.
Defendant’s Daubert motion seeks to exclude Radlinski from opining on:
That petrographic examinations indicated that the low compressive strengths and/or delayed hardening was due to high amounts of fly ash and low amounts of portland cement in the binder;
That the low compressive strengths and/or delayed hardening in the subject elements was not the result of non-compliant raw materials, weighing or batching errors, noncompliant fresh concrete/grout properties or concrete/grout placement, or consolidation or curing techniques utilized during construction of the subject elements;
That the incorporation of excessive amounts of fly ash occurred during batching at the dry batch plant;
That the combination of (1) the batch tickets for the subject elements indicating quantities of fly ash and cement consistent with the mix design and (2) significantly higher fly ash contents and significantly lower cement contents than the mix design as determined in the samples subjected to petrographic examinations suggests that a nominal quantity of cement batched at the dry batch plant consisted of partially cement and partially fly ash. Combined with the nominal amounts of fly ash per the mix designs, the subject concrete/grout contained significantly more fly ash and significantly less cement than per the mix design;
That the variability in compressive strengths and fly ash contents reported in the petrographic reports suggests that the degree of cement contamination by fly ash varied between and within the elements;
That the raw portland cement incorporated into the subject elements was damaged due to the apparent contamination by fly ash, which impaired the value and usefulness of the cement by compromising its strength gaining capabilities associated with hydraulic cementitious properties, making it no longer fit for its intended use in concrete/grout;
That the incorporation of the damaged cement in concrete/grout batches placed in the subject elements had detrimental effect on their physical properties, including compressive strength and rate of hardening, due to altered composition and microstructure of the binder;
That the compromised concrete and grout batches containing portland cement contaminated with excessive amounts of fly ash were not fit for their intended use, and made recovery of embedded steel reinforcement and adjacent concrete/grout batches in those elements infeasible;
That incorporation of concrete/grout batches exhibiting low strength and delayed hardening due to integration of damaged cement into the subject elements had detrimental effects on their structural capacity and rendered them not fit for their intended use and as a result, those elements were rejected and replaced;
That the concrete seal slab at center pier did not act as a groundwater barrier, as intended, which was reportedly due to low concrete strength, and required dewatering the pier over a period of several months and subsequent repairs;
That since the concrete placed in Pier 4-12 footing (which was cast in the same timeframe as the subject elements) that it may have contained excessive amount of fly ash and insufficient amount of cement, the resulting delayed concrete hardening may have contributed to formwork failure during concrete placement due to increased lateral formwork pressure associated with the hydrostatic head of fluid concrete.
Civil Engineering Expert Witness
Mat Radlinski, Ph.D., P.E. works as a Principal Engineer with Exponent, an engineering and scientific consulting firm he has worked for since 2009. He specializes in concrete and cement-based materials. Radlinski’s area of expertise includes analysis and optimization of concrete-mix design, characterization of chemical composition and physical properties of concrete, and evaluation of durability-related concrete failures including cracking, chemical attack, corrosion, and freeze-thaw damage. He is licensed in California as a Professional Civil Engineer, and has published more than twenty studies.
Discussion by the Court
Radlinski was hired by the Plaintiff to assess specific concrete/grout elements that showed signs of low strength or hardening decay. They sought his opinion on whether the materials used in [the selected concrete/grout] elements were damaged, and if yes, what resulting effects it had on those elements.
The Defendant raised multiple arguments against Radlinski’s testimony. Firstly, they argued that his opinions lacked adequate factual basis or supporting data. Secondly, the Defendant contended that Radlinski failed to utilize reliable scientific principles or methods in forming his opinions. Thirdly, they objected to Radlinski testifying about fly ash due to his admitted lack of expertise in concrete batch operations. Lastly, the Defendant asserted that Radlinski’s opinions should be deemed inadmissible under Federal Rule of Evidence 403. It’s important to note that while the Defendant contested Radlinski’s qualifications to testify about batch plants, they explicitly stated that their challenge did not extend to Radlinski’s expertise as a concrete specialist.
The Plaintiff asserted that the Defendant’s argument urged the Court to evaluate the evidence, which they deemed improper. They contended that the Defendant’s position heavily relied on deeming the supporting facts and data insufficient, thus rendering the methodology unreliable. However, the Defendant disagreed, stating that their motion did not seek to have the Court weigh the evidence but rather emphasized that Radlinski’s opinions lacked adequate factual basis or reliable methodology, as mandated by Federal Rule of Evidence 702. They concurred, to some extent, with the Plaintiff’s claim, asserting that there was no substance for the Court to assess since the opinions were founded on insufficient evidence. Additionally, they argued that the methodology was unreliable due to the inadequacy of supporting facts and data.
The Defendant contended that Radlinski’s opinions lacked sufficient factual basis for three main reasons: he relied on limited and selectively chosen data, failed to adequately address conflicting or alternative opinions, and disregarded facts concerning low strength concrete. According to the Defendant, Radlinski’s opinions were solely derived from a review of compressive strength, limited petrographic testing conducted by the plaintiff before the litigation, and a few photographs, which the defendant argued was an oversimplified representation of Radlinski’s sources. However, Radlinski’s declaration contradicted this portrayal, stating that he analyzed an extensive array of documents, including concrete batch tickets; field reports; mill certificates, data sheets and tests results for raw material; compressive strength tests reports; and petrographic examination of representative concrete samples. His declaration aligned with the content of his report.
The Defendant argued that Radlinski’s opinions regarding the Project elements amounted to mere supposition since not all elements underwent testing. However, Radlinski clarified that he couldn’t test elements that no longer existed. His report indicated that cast cylinder and core samples from several elements were submitted for petrographic examination between September 17 and November 3, 2020. Due to the unavailability of the dry concrete batch plant when Radlinski was retained, he couldn’t test the remaining elements. Despite this limitation, Radlinski formed conclusions by reviewing a combination of evidence related to these elements, employing an engineering methodology consistent with standard industry practices for similar forensic investigations.
Radlinski highlighted that no standard guideline exists within the concrete construction industry dictating the specific number of representative samples required for petrographic examination. The adequacy of samples depends on various factors like the size of affected concrete elements, economic factors, accessibility, overall variability of conditions or concrete properties in those elements, and variations in findings from petrographic examinations. He noted that when findings from petrographic examinations align consistently, fewer samples are generally needed to form a reliable opinion concerning the underlying cause of investigated concrete conditions, such as failure, low strength, or deterioration.
Radlinski’s inability to test each element does not bar his testimony, especially when he relied on what he deems to be reliable principles and methods.
The Defendant raised concern over Radlinski not directly sampling, testing, or independently evaluating any Project element, implying that his opinion might be weakened due to this lack of personal assessment. However, the Court citing Kilpatrick v. Breg, Inc., 613 F.3d 1329, 1337 (11th Cir. 2010), held that in the determination of causation, if the methodology used to derive conclusions is deemed reliable and sound, the absence of Radlinski’s direct involvement with the project elements does not fatally undermine the validity of his opinions. Therefore, Defendant’s challenge was better suited for a jury.
The Defendant contended that Radlinski’s report overlooked specific data and alternative theories regarding the cause of low-strength concrete. They pointed out that Radlinski allegedly disregarded data indicating ongoing concrete problems post the purported fixing of the pressure relief valve, extending to the “wet” batch plant. However, the Plaintiff disagreed, highlighting that Radlinski compared results between the “wet” and “dry” batch plants in his report and discussed these distinctions during his deposition. The core of the Defendant’s argument was that Radlinski allegedly failed to consider an alternative theory unrelated to the high fly ash content in the dry batch plant’s concrete issues. The Court found the defense argument unpersuasive, citing Radlinski’s explicit statement that there was no evidence of similar issues in concrete produced by the wet batch plant.
Defendant contended that Radlinski failed to sufficiently address other conflicting or alternative opinions as to the cause of low strength concrete.
The Plaintiff highlighted that Radlinski thoroughly considered alternative theories regarding the cause of low-strength concrete by extensively reviewing and analyzing all project records. This evaluation was evident in Radlinski’s report, notably commencing on page 20, where he specifically addressed alternative theories. He stated, “The following project records further indicate that the low strengths and delayed hardening of concrete/grout in the subject elements were not the result of non-compliant raw materials, weighing or batching errors, or non-compliant fresh concrete/grout properties . . .” Radlinski then proceeded to enumerate and explain how various types of evidence supported this finding. Radlinski initiated the preceding paragraph by stating that the presence of low strengths in the cylinder samples obtained from truck mixers and cured in laboratory conditions suggested that the low strengths of concrete/grout were unrelated to the techniques employed for placement, consolidation, or curing during the construction of the subject elements. The Court agreed with the Plaintiff and noted that the Defendant did not respond to Plaintiff’s argument in its reply.
The Defendant contended that Radlinski should be barred from testifying about the alleged infiltration of fly ash into the cement silo because he lacked expertise in concrete batch plant operations. However, Radlinski emphasized his concrete batch plant expertise based on his education, training, and professional experience. During his Ph.D. research at Purdue University, he visited multiple concrete batch plants, observed their operations, and personally conducted concrete testing on trial and production batches for bridge structures. He also highlighted previous investigations and report writing involving concrete-related losses, such as an incident where fly ash was mistakenly delivered into a cement silo, altering concrete composition. Additionally, over his nearly 15-year tenure at Exponent, Inc., Radlinski conducted numerous investigations related to concrete material failures or performance issues.
The Court held that based on Radlinski’s experience and expertise, he was qualified to opine as an expert.
The Defendant’s Rule 403 arguments regarding Radlinski’s opinions were deemed unconvincing by the Court. They contended that without a causation theory, Radlinski could only offer opinions on two of the eighteen claimed elements. However, Radlinski’s retention was specifically to assess whether the materials used in the subject elements were damaged and to detail the resulting effects, not necessarily to address causation. The argument lacked support as the Defendant did not present any authoritative basis in their motion to illustrate why Radlinski needed to opine on causation, especially when it was not within the scope of his retention, and how that would impact his current opinions.
The Court declined to address multiple arguments related to Florida law and the Plaintiff’s burden of proving causation which was initially absent from the Defendant’s motion. These arguments were excluded from consideration as they were raised for the first time in the reply and were not initially included in the Defendant’s motion.
The Court held that Defendant’s objections to Radlinski’s opinions were misplaced because they were better suited for cross examination. Defendant’s criticisms as to the data he relied on and the theories he considered went to the weight of his opinion, not its admissibility.
Held
The Court denied Defendant’s Motion to Exclude the testimony of Plaintiff’s expert Mat Radlinski since the challenges to his opinions were best addressed at trial, through vigorous cross-examination and the presentation of conflicting opinion testimony.
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 considering expert testimony, several key aspects emerged from the Court’s assessment. The scope of an expert’s opinion was a central point—aligning their testimony with their field of expertise and the specific purpose for which they were retained. Radlinski’s role, for instance, was to assess whether materials used in the subject elements were damaged and its resultant effects, not primarily to establish causation. The Court also emphasized that as long as an expert’s methodology is deemed reliable and sound, the absence of direct involvement with project elements doesn’t necessarily weaken the validity of their opinions. Challenges raised by the Defendant, such as questioning the data used or alternative theories considered by the expert, were noted to be more suited for cross-examination and pertained to the weight of the expert’s opinion rather than its admissibility. Additionally, the Court highlighted the importance of presenting arguments properly within the initial motion, as new arguments introduced in a reply may not be considered.
This case centered on a disagreement over property insurance coverage between Bliv, Inc., a plastics production and manufacturing company, and their insurer Charter Oak Fire Insurance Company. Specifically, Bliv filed an insurance claim due to purported damage from a wind and hail storm that occurred on or around July 9, 2021(referred to as “the Event”). During the Event, Bliv, Inc (referred to as the “Plaintiff”) held a Commercial Insurance Policy provided by The Charter Oak Fire Insurance Company (referred to as “Charter Oak”). The policy was effective from April, 2021, to February, 2022 (referred to as “the Policy”). The Policy covered a commercial building situated at 1643 Lotsie Blvd. in St. Louis County, Missouri. The roof of the Property consists of a Thermoplastic Polyolefin (TPO) membrane as the primary water-proofing layer, with fiberboard and additional supporting materials directly below it.
Around July 21, 2021, the Plaintiff informed Charter Oak about the Event and asserted losses and damage to the property. Charter Oak initiated an investigation into the claim, enlisting a professional engineer from The Vertex Companies (referred to as “Vertex”) to inspect the property and identify the cause of the alleged loss and damage. Following three property inspections on August 31, 2021, September 21, 2021, and March 14, 2022, Charter Oak determined that the covered loss and damage to the commercial building, attributable to the Event, did not surpass the $2,500 deductible specified in the Policy. Furthermore, Charter Oak concluded that the claimed loss and damage to both the exterior and interior of the building were not a result of the Event or any other covered cause of loss.
During the legal proceedings, the Plaintiff identified professional engineer Brian Johnson (referred to as “Johnson”), as a retained expert witness and provided his “Storm Damage Report.” The Plaintiff relied on Johnson to present expert opinions and testimony regarding the alleged causes of the reported exterior and interior damages. Notably, Johnson conducted a roof inspection of the property on May 30, 2023, almost two years after the Event. He did not inspect the interior of the building during his on-site visit, and he did not engage in conversations with the building owner or any other employee of the Plaintiff. Additionally, Johnson did not review maintenance or repair records related to the property. Importantly, he admitted an inability to state with scientific certainty the cause of the alleged damage. Consequently, the Defendant argues that Johnson’s expert report, opinions, and testimony should be excluded because they lack a sufficient factual basis, he did not consistently apply accepted methodologies, and his opinions are characterized as mere speculation and conjecture.
Civil Engineering Expert Witness
Brian Craig Johnson holds a Bachelor of Science in Civil Engineering and a Master of Science in Civil Engineering, both from the University of Minnesota. Since becoming a registered Professional Engineer in Civil Engineering in Minnesota in 2004, he has leveraged his background across a range of project engineering and consulting positions. His areas of specialty encompass steel, precast, masonry, and wood construction applications. He gained this well-rounded expertise through roles as a Senior Construction Engineer for Lockheed Martin, as a government contractor. He is currently the Project Director of SRF Consulting Group.
Discussions by the Court
Federal Rule of Evidence 702 governs the admissibility of expert testimony, requiring the expert to be qualified and the testimony to aid the trier of fact. The proponent must prove its admissibility, and the Court, in its discretion, ensures the testimony is both relevant and reliable. Daubert factors, including testing, error rate, and general acceptance, guide the determination of reliability. The Court serves as a gatekeeper, separating reliable expert opinions from speculation. Disputes about an expert’s factual basis usually pertain to credibility rather than admissibility. Liberalized standards favor the admission of expert testimony, allowing scrutiny through the adversarial process. Exclusion is warranted only if the testimony is fundamentally unsupported and provides no assistance to the jury.
Johnson’s Storm Damage Report was deemed unreliable as it relied on insufficient data, leading to speculative conclusions. His delayed inspection, conducted almost two years post the Event, lacked an assessment of interior damage and interviews with the owner of the business or any of its employees. Additionally, he failed to review maintenance records or ascertain the property’s condition before, during, or shortly after the Event. This undermined the credibility of his opinions, as he couldn’t reasonably relate his findings to the property’s state during the Event, which made his report inadmissible under Rule 702 and Daubert standards.
Therefore, Johnson’s opinions regarding the interior of the property lacked any factual basis, let alone sufficient facts or data. His assertions about the cause of the alleged interior damage did not necessitate scientific, technical, or specialized training. The Defendant argued that Johnson’s opinion was mere speculation and conjecture, as he seemingly inferred interior damages solely from reading the Access Restoration Services (“ARS”)estimate and assuming the inclusion of “interior components” indicated Event-related damage. Furthermore, Johnson’s report and opinions, as per his own admission, were not grounded in reliable facts or data, particularly lacking personal observations and supporting evidence for the claimed damage being a result of the Event. Consequently, the Defendant contended that Johnson’s opinions failed to meet Rule 702’s requirement of “sufficient facts or data” and should be excluded from consideration.
Johnson’s exploration of potential explanations for the claimed damage is criticized for residing in the realm of speculation and conjecture. The lack of personal observations, evidence, or supporting data renders his theories unsupported. Citing Knepfle v. J-Tech Corp., 48 F.4th 1282, 1296 (11th Cir. 2022), the Court emphasized that his purported possibilities or theories lack any iota of support from personal observations, evidence, facts, or data.
Johnson’s factual conclusions about the alleged damage were heavily reliant on his status as an expert, his examination of photographs from ARS and Vertex, and his claim of deducing the events. Contrary to his belief, the facts and data gathered by ARS, Vertex, and Charter Oak starkly show the inaccuracy of Johnson’s assertion that there were no failed seams or flashings.
The assertion is made that Johnson’s testimony and Storm Damage Report would not be beneficial to a jury. Citing the standard set in Cole v. Homier Distrib. Co., 599 F.3d 856, 865 (8th Cir. 2010), an expert’s opinion should be excluded if it is fundamentally unsupported and unable to offer assistance to the jury. It is emphasized that an expert must substantiate their opinion, as presenting only an ultimate conclusion without analysis is deemed meaningless.
Johnson’s report is titled “Storm Damage Report,” implying a predetermined assumption that the building damage resulted from a storm, the very issue under consideration. Moreover, there is a lack of substantive evidence supporting his opinion that the damage was caused by the specific event. Johnson failed to identify any storm-created openings through personal observation, photographs, tests, or observations by any party who personally inspected the building.
Due to his minimal independent analysis and investigation, Johnson’s ultimate conclusion that the damage was caused by the Event is deemed meaningless and unhelpful to the trier of fact. The opinion lacks fundamental support, rendering it insufficient to provide any assistance to the jury.
The Plaintiff contends that weather data suggesting the possible presence of hail on the storm date supports Johnson’s approach in ruling out the possibility of damage from a previous or subsequent storm. However, it is highlighted that Johnson, despite acknowledging the absence of hail punctures or fractures on the roof and finding no evidence of anvil strikes, did not definitively observe such damage. The argument asserts that while Johnson systematically eliminated other potential causes for the damage, his conclusion attributing the damage to the storm remains speculative. This speculation arises from his failure to determine if any damage occurred before or after the storm, prior to his inspection. The Plaintiff argues that Johnson’s opinion regarding hail damage to the roof membrane does not lack a sufficient basis in facts and data to aid the finder of fact. The Plaintiff also contends that the complaints go to the weight of the evidence, not its admissibility.
Although the Plaintiff is correct in asserting that an expert can rely on information collected by others, the Court aligns with the Defendant’s perspective that total reliance is inadequate to demonstrate Johnson’s opinion would assist the jury in its fact-finding responsibilities. This agreement is reached, considering that Johnson’s report includes only a single photograph. Johnson did not conduct independent testing to support his opinion that the absence of physical damage to the roof membrane does not rule out hail damage. Instead, he based this conclusion on roofing literature, specifically marketing materials from a membrane manufacturer, asserting that fiberboard is more prone to hail impact damage. This reliance on unverified marketing literature is identified as a methodological failure in reaching his conclusions.
Similarly, Johnson conducted no independent testing regarding the interior of the building. The absence of concrete reasons for Johnson’s conclusion that there must have been interior damage from the storm, solely because it was included in the estimate, is highlighted. Despite Johnson’s high qualifications, the opinion fails to meet the requirements of Daubert and Rule 702. The deficiency in sufficient facts, data, and methodology is emphasized, and it is noted that even vigorous cross-examination regarding Johnson’s credibility cannot overcome these shortcomings. The report, based on an exterior inspection, photographs taken by others, and data deemed too remote in time or substance, is deemed insufficient for meaningful factual analysis.
Held
The Court reaches the conclusion that Johnson’s opinion fails to assist the trier of fact in understanding the evidence or determining a relevant fact. The opinion lacks a foundation in sufficient facts or data and does not adhere to the necessary reliable principles and methods mandated by Rule 702. Consequently, the Court grants the Defendant’s Daubert Motion to Exclude Expert Reports, Testimony, and Opinions of Brian Johnson. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case demonstrates the vital gatekeeping function Courts must serve under Daubert to scrutinize the reliability of expert witness testimony. The Court excluded Plaintiff Bliv’s expert, Brian Johnson, because his causation opinion lacked sufficient factual support and objective methodology. Most critically, Johnson grounded his conclusion that a hailstorm caused roof and interior damage almost entirely on third-party photographs, estimates, and marketing materials rather than his own inspection and testing. While qualified experts may reference outside sources, Johnson crossed the line into unreliable speculation by basing his view solely on external findings without verification. Moreover, the Court found his failure to review maintenance records or examine the building’s interior especially problematic given his admission that he observed no exterior hail damage. This inability to rule out alternative explanations undermined the reliability of his testimony under Daubert. Finally, Johnson’s reliance on interior damage estimates was misplaced since he never actually inspected inside the premises. By opining on evidence contradicted by his own limited investigation, his methodology proved unsound. Moving forward, this case demonstrates that expert opinions require thorough factual support and objective testing to clear Daubert’s reliability test. Subjective assumptions or theories fail to assist the trier of fact. Attorneys hoping to leverage expert testimony must ensure opinions rest on demonstrable “good grounds” before trial or risk exclusion.
Sheila A. Skaggs filed a lawsuit against Ferrellgas, the supplier of liquid propane and propane dispensing equipment, after sustaining injuries from an explosion at Faurecia Gladstone, a facility owned by Faurecia USA Holdings, Inc. The incident took place when an LP tank exploded while Skaggs was working at Faurecia. The equipment involved, including the LP tank and its connecting hose, was installed, maintained, inspected, and repaired by Ferrellgas. The explosion occurred as a Faurecia employee drove away from the fueling station with the hose still connected, resulting in it tearing apart and causing an LP gas leak. Skaggs alleged that Ferrellgas was negligent in their installation, maintenance, inspection, and repair of the equipment.
Skaggs presented a report authored by Frank Burg, a Certified Safety Professional and Registered Professional Safety Engineer, along with his curriculum vitae. Burg aimed to offer expert opinions asserting that Ferrellgas’s propane dispenser was defective due to lacking a lock-out procedure and a retractable hose. Additionally, Burg suggested that Ferrellgas fell under Occupational Safety and Health Administration (OSHA) regulations based on the multi-employer doctrine. Drawing from his 45 years of experience in safety and health, Burg’s opinions were supported by his review of investigation photographs, emails, and documents. He also provided insights into general OSHA and National Fire Protection Association (NFPA) standards.
Defendant/Third Party Plaintiff Ferrellgas, Inc’s (“Ferrellgas”) filed a motion to exclude Frank Burg’s expert opinion testimony.
Safety Engineering Expert Witness
Frank Burg is an expert in various domains, particularly general industry and construction safety and health, alongside expertise in ergonomics. His investigative experience spans injuries related to cranes, rigging, road construction accidents, falls, railroad incidents, electrical mishaps, machine guarding, gas and oil well incidents, hazardous chemicals, and cases involving human factors engineering and FELA (Federal Employees Liability Act). Beyond investigations, Burg conducts training seminars, OSHA-style audits, and offers expert testimony in his field of expertise.
Discussion by the Court
Skaggs contended that Frank Burg’s expert testimony would aid the fact-finder by establishing Ferrellgas’s breach of duty, citing industry safety standards relevant to Ferrellgas encompassing both OSHA and NFPA standards. Ferrellgas moved to exclude Burg’s specific opinions regarding the necessity of a lock-out procedure and a retractable hose in their dispenser, as well as the assertion that Ferrellgas fell under OSHA regulations due to the multi-employer doctrine. Ferrellgas argued that Burg’s testimony lacked reliability per Rule 702 and Daubert standards, citing the absence of articulated methods for forming opinions and the inapplicability of safety standards to the case’s facts.
During oral arguments, Ferrellgas highlighted that Burg hadn’t taken scene photos, conducted tests, made calculations or diagrams, performed interviews, reviewed articles, visited other plants or propane companies, or examined forklift refueling practices elsewhere. These factors were raised to challenge the credibility and relevance of Burg’s opinions in the case.
Ferrellgas contended that Frank Burg’s attempt to apply OSHA regulations lacked methodological foundation, asserting that as the installer of propane dispensing equipment, they were not subjected to OSHA regulations for Faurecia’s employees. Additionally, Ferrellgas argued that Burg’s reference to the multiemployer doctrine didn’t withstand legal scrutiny and was inappropriate as a subject for opinion testimony. The company further maintained that Burg’s efforts to interpret OSHA regulations were flawed since matters of law, including Burg’s opinion on Ferrellgas falling within the multiemployer doctrine and being under OSHA regulation, were not suitable topics for expert testimony in the case.
Skaggs acknowledged that Frank Burg’s opinion lacked scientific methodology but argued that its non-scientific nature exempted it from requiring a Daubert analysis. Skaggs asserted that Burg, as a Certified Safety Professional, fulfilled the criteria of Federal Rule of Evidence 702 by aiding the fact-finder in determining Ferrellgas’s breach of duty, presenting evidence encompassing both OSHA and NFPA standards.
Skaggs further argued that Burg wasn’t obligated to visit the scene or address other criticisms to provide an opinion. The extensive review of documents and deposition testimony formed a substantial basis for Burg’s opinions according to Skaggs. Skaggs concluded by asserting that Burg’s testimony met admissibility requirements under Fed. R. Evid. 702, deeming it reliable and helpful for the fact-finder in crucial matters of the case. Any concerns about its reliability, Skaggs claimed, should pertain to the evidence’s weight, a determination within the jury’s purview.
The Court acknowledged Frank Burg’s expertise, affirming his qualifications in the field. However, the Court disagreed with Skaggs’ assertion that a Daubert analysis was unnecessary. It stated that all experts, regardless of their expertise based on experience, are subject to the relevance and reliability assessments mandated by Daubert.
In Burg’s report, he presented opinions based on his extensive experience but omitted explanations regarding the analysis behind these opinions. The Court emphasized that despite the non-scientific nature of the issues, all experts are required to elucidate their methodology for reaching opinions, enabling the court to evaluate relevance and reliability. Since Burg failed to provide this essential methodology, the Court determined his experience alone couldn’t establish the required reliability under Rule 702, citing Zenith Electronics Corp. v. WH-TV Broadcasting Corp., 395 F.3d 416, 419 (7th Cir. 2005). Notably, Rule 702(d) was amended to stress that each expert opinion must stem from a dependable application of the expert’s basis and methodology. Even for non-scientific matters, experts are obligated to use reliable methods and principles, which Burg failed to do in this instance.
Burg’s qualifications suggest expertise in the scientific method and accident investigations, yet he failed to apply any methodology in forming opinions regarding the necessity of a lock-out procedure or a retractable hose. He admitted to not conducting an investigation into the accident but rather relied on others’ investigations. Additionally, he didn’t perform any inspections and provided no explanation or analysis supporting his conclusions. Rule 702 necessitates that an expert’s opinion goes beyond a mere “bottom line” and demands a clear explanation of the methodologies and principles behind their opinion. Burg’s failure to elucidate his methodologies led to his expert opinions on this matter being deemed inadmissible under Rule 702’s admissibility requirements.
Ferrellgas moved to exclude Burg’s opinions stating that Ferrellgas, as a “creating employer,” for creating the hazard by not having safeguards on their equipment and the application of the “multiemployer worksite doctrine” subject them to OSHA regulations. They argued that Burg’s attempt to apply OSHA regulations lacked methodological support as Ferrellgas, being the installer of propane equipment, wasn’t under OSHA regulations for Faurecia’s employees. Ferrellgas contended that Burg’s reference to the “multiemployer doctrine” was legally unsound and unsuitable for opinion testimony.
Burg’s opinions lacked analytical support, failing to explain how he reached his conclusions. His assertion that Ferrellgas qualifies as a “creating employer” and the application of the “multiemployer” doctrine constituted improper opinions since experts aren’t permitted to opine on legal conclusions. The Court deemed this opinion testimony unhelpful to the fact-finder, stating that legal conclusions could lead to unfair prejudice, confusion, or misguidance of the jury. As a result, the Court decided to exclude Burg’s expert testimony concerning Ferrellgas’s purported violations of OSHA standards and the multiemployer doctrine.
Held
Ferrellgas’ motion to exclude Frank Burg’s expert opinion testimony was granted by the Court.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
The case highlights several critical aspects regarding expert witness testimony. One crucial factor is the necessity for a clear and well-defined methodology behind an expert’s conclusions. Whether grounded in experience or scientific analysis, the Court emphasizes that a detailed methodology is vital to establish the reliability and relevance of expert opinions, aligning with standards set by Daubert and Rule 702. Experts are obligated to provide explanations beyond mere conclusions, offering insights into their methodologies to aid the Court in evaluating the weight and credibility of their testimony.
Moreover, experts are cautioned against delving into legal conclusions. The focus of their opinions should remain within their area of expertise, steering clear of offering legal assessments, as this can confuse or unfairly influence the jury. The case underlines the importance of separating expert analysis from legal interpretations, preserving the clarity and objectivity of expert testimony.
In this context, the admissibility of expert testimony hinges on meeting stringent criteria: reliability, relevance, and the articulate presentation of methodologies used in forming opinions. Experts are expected to uphold these standards, ensuring their insights provide valuable, factual analysis rather than legal conjecture.
The Plaintiffs—Michael Johnson, Charles Cunningham, Jerry Bailey, Eric Woodward, Michael Darbonne, Michael McCullough, Christopher Harrington, Demon Benjamin, and Pamela Green—filed a lawsuit against Packaging Corporation of America (“PCA”), Boise Packaging & Newsprint, LLC (“BPN”), Boise, Inc. (“Boise”), and Rick Butterfield after a tragic explosion at PCA’s DeRidder, Louisiana paper mill on February 8, 2017. During the mill’s annual shutdown for maintenance, inspections, and upgrades, a foul condensate tank (“FCT”) exploded, causing injuries to individuals employed by Elite Specialty Welding, LLC and Top Deck, Inc., the contracting companies involved in the maintenance work.
The Plaintiffs asserted that the Defendants were fully aware that the foul condensate tank (“FCT”) posed a significant risk of causing severe and life-threatening injuries. In an attempt to invoke the intentional act exception to worker’s compensation immunity, the Plaintiffs argued that the Defendants were conscious of the high probability of the incident at the mill, given their prior knowledge of hazards linked to flammable emissions from tanks used in mill operations.
They further alleged that the Defendants knowingly disregarded established rules, regulations, and safety norms by directing work in close proximity to tanks containing these known dangers, which could serve as sources of ignition. The Plaintiffs contended that the Defendants should be held accountable for the outcomes of their actions, asserting that all the necessary elements for an explosion—fuel, ignition source, and oxygen—were present at the time of the incident. The Plaintiffs attributed the knowledge of these elements to the Defendants based on statements made by the Defendants’ employees. They argued that since the Defendants were aware of the flammable gases in the foul condensate tank, anticipated oxygen entry, and knew about welding activities above the tank, they effectively understood that an explosion was unavoidable.
The Defendants requested a summary judgment on all of the Plaintiffs’ claims. On July 27, 2021, the Court granted the Defendants’ motion regarding the intentional act exception. The Court concluded that the Plaintiffs failed to demonstrate a genuine issue of material fact concerning whether the Defendants “intended” the explosion to happen as outlined in the exception. The Court specified that the evidence presented by the Plaintiffs in support of the summary judgment only indicated that the Defendants were aware that fuel, oxygen, and an ignition source would be in close proximity. However, the Plaintiffs did not establish that the Defendants were “substantially certain” that the explosion would take place.
The Plaintiffs put forth Eric Van Iderstine as a liability expert to provide testimony during the trial based on his “engineering investigation” of the explosion in question. The Defendants objected to this, contending that Van Iderstine’s opinions and testimony regarding the Defendants’ alleged knowledge and state of mind wouldn’t assist the fact-finder in comprehending the evidence or establishing a pertinent fact, as mandated by Federal Rule of Evidence 702. Consequently, the Defendants sought to have Van Iderstine’s testimony excluded.
Mechanical Engineering Expert Witness
Eric Van Iderstine is a Consulting Mechanical Engineer and Director of Mechanical Engineering at McSwain Engineering located in Pensacola, Florida. He earned a Bachelor of Science in Mechanical Engineering from Mississippi State University, where he graduated with honors. Van Iderstine is currently a registered Professional Engineer in the states of Florida and Alabama. Van Iderstine has testified in state and federal courts, having been qualified as a Mechanical Engineer in the areas of failure analysis and mechanical engineering design.
Discussion by the Court
Van Iderstine’s expert report and deposition centered on his assessments regarding the Defendants’ supposed awareness and mindset concerning the potential for an explosion at the Mill. His report stated that, drawing from previous similar incidents, the conditions leading to the DeRidder explosion were familiar within the industry and would likely have been within the Defendants’ knowledge. Van Iderstine concluded that there existed a substantial certainty that an incident of this nature would occur and that the Defendants would have been aware of this heightened risk.
He expressed the belief that the Defendants neglected this risk when they made the decision not to empty the contents of the foul condensate tank (“FCT”)—specifically, to drain, flush, and open the vessel—before undertaking hot work.
The Court determined that Van Iderstine lacked the qualifications—pertaining to knowledge, skill, experience, training, or education—to provide testimony regarding the Defendants’ knowledge or state of mind.
The Plaintiff conceded that, concerning opinions related to the Defendants’ actual subjective knowledge and state of mind, the motion became moot. The Plaintiffs decided not to present these opinions during the trial. However, they urged the Court to reject the motion concerning other opinions expressed by Van Iderstine, as referenced in the Defendants’ motion. The Plaintiffs argued that regardless of the admissibility of expert opinions regarding a party’s subjective knowledge, the law allows an expert to utilize training and experience to assist the jury in assessing a party’s knowledge based on evidence of what someone in the party’s position would likely have known. Therefore, the Plaintiffs asserted that these opinions should be admissible.
The Court rejected the nuanced attempt at distinction, deeming it unconvincing. It concluded that Van Iderstine lacked specialized knowledge or experience within the pulp and paper industry. Consequently, the Court ruled that Van Iderstine would not be allowed to provide opinion testimony regarding what a reasonable owner or operator of a pulp and paper mill should have known based on industry knowledge.
The Court dismissed the Plaintiff’s argument stating that inquiries about the basis and sources of an expert’s opinion pertain to the weight given to that opinion rather than its admissibility. Recent revisions to FRE 702 and the official comments clarified that this understanding of the Court’s inquiry under Daubert and FRE 702 was inaccurate. The rule change aimed to guide district courts to specifically conduct the gatekeeping examination outlined in Daubert and focus on determining admissibility and refrain from bypassing the admissibility determination in favor of a question of weight to be decided by a fact finder.
The Committee Notes highlighted that some courts had previously regarded the sufficiency of an expert’s basis and the application of their methodology as matters of weight rather than admissibility. However, the Notes pointed out that such rulings were viewed as an incorrect application of Rules 702 and 104(a).
The Court’s ruling barred Van Iderstine from providing opinions regarding what the Defendants knew. Additionally, he was not permitted to offer opinions on what a prudent owner or operator should have known based on industry knowledge. The Court deemed that the jury was fully capable of connecting the dots between industry knowledge and best practices to the conditions leading to the alleged explosion. Van Iderstine’s proposed opinion about what the Defendants should have known was considered excessive and intruded into the jury’s province to determine if the Defendants adhered to a reasonable standard of care.
Held
The Court granted the Defendants Motion in Limine to Exclude the Opinions and Testimony of Plaintiffs’ Expert Eric Van Iderstine Regarding Defendants’ Knowledge and State of Mind.
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 this case, the importance of expert testimony was highlighted through a series of key determinations by the Court. Firstly, the Court emphasized the critical nature of an expert’s qualifications. Specifically, the Court assessed the expertise of Van Iderstine, ultimately finding that his lack of specialized knowledge in the industry impacted the admissibility of his opinions. Secondly, the limitations concerning expert testimony on a party’s subjective knowledge or state of mind were underscored; such opinions might be restricted or considered moot in Court proceedings. Moreover, the Court outlined the boundaries for experts, emphasizing that opinions extending beyond their specialized knowledge could face exclusion or limitations, especially if they encroached upon the jury’s decision-making domain. Recent revisions to the Federal Rules of Evidence (FRE 702) clarified the distinction between the admissibility and weight of expert opinions, prompting courts to focus on admissibility rather than solely evaluating the weight of such opinions. Additionally, the Court’s gatekeeping role in determining the admissibility of expert testimony, primarily focusing on an expert’s basis and methodology as per Daubert principles, was highlighted. Lastly, the jury’s role in connecting industry knowledge, best practices, and the circumstances leading to an incident was emphasized. Expert opinions should aid in understanding complex matters without infringing upon the jury’s responsibility in determining reasonable standards of care.
This case involved a dispute between Tankmax, Inc. (Tankmax) and its former employee, Wayne Duran, as well as Duran’s new company, American Gas Services LLC (AGS). Tankmax sued Duran and AGS for violations of trade secret laws, computer fraud, tortious interference, unjust enrichment, breach of fiduciary duties and conversion.Wayne Duran was employed by Tankmax and its predecessor, Pacific Meter & Equipment, from 2003 until January 3, 2022. Subsequently, Duran went on his own venture under American Gas Services LLC, which currently competes with Tankmax. The Plaintiff claims that the Defendant unlawfully appropriated trade secrets, specifically customer lists and scheduling calendars. Additionally, the Plaintiff asserts that Duran either stole or neglected to return parts and equipment owned by Tankmax.
The facts, considered in favor of the Plaintiff, reveal that Tankmax, a Washington corporation based in Spokane, hired Wayne Duran in 2003. In March 2021, Pacific Meter & Equipment Inc. (PME), Duran’s former employer, merged with Tankmax. The merger was formalized through a Stock Purchase Agreement, involving the acquisition of PME for around $2 million. As part of this acquisition, all of PME’s assets, encompassing goodwill, phones, customer lists, and related information, were successfully purchased by the Plaintiff.
Following the merger, the Plaintiff initiated a mobile-based operation at PME, introducing a new position known as the Mobile Proving Service Manager. On March 29, 2021, Defendant Duran was promoted to this role. His responsibilities encompassed traveling to customer locations in Washington, Oregon, and Idaho to conduct tests, calibrations, and repairs on propane equipment. He was also tasked with managing company test schedules for specific locations and ensuring compliance with Department of Transportation (DOT) standards by testing and inspecting cargo tanks. Subsequent to the promotion, Defendant spent the majority of his working hours outside the shop.
The Plaintiff equipped Defendant with essential tools for his role, providing an iPhone, a laptop computer, and a tablet computer. Access to these devices required passwords. Defendant chose his own password for the iPhone, while for the laptop computer, he utilized the password designated by the Plaintiff.
During the final years of Defendant’s employment with PME, the company covered the costs of his monthly cell service bill, although it did not buy the phone itself. In the summer of 2021, Plaintiff purchased a new iPhone for Defendant after his original phone was damaged. Despite Plaintiff instructing Defendant to set up an Apple ID using his Tankmax email address, Plaintiff used his personal email for this purpose. Consequently, all the data from Defendant’s previous PME phone was transferred to the iPhone purchased by Plaintiff. Defendant utilized this information, including customer contacts, while scheduling on behalf of Plaintiff.
The iPhone also contained Defendant’s personal data, such as banking information, contacts for friends and family, and photos taken by him. Before terminating his employment with Plaintiff, Defendant acquired a new iPhone for AGS and configured it using the same Apple ID used for the phone provided by Plaintiff. This allowed him to transfer all the data to his new AGS iPhone.
Due to Defendant Duran’s aversion to computers, he maintained customer and tank inspection records on index cards, including customer names, unit numbers, and inspection dates. These cards lacked phone numbers and were exclusively used by Defendant. Customer contact information for scheduling services and testing of truck-mounted propane tanks was stored on Defendant’s iPhone, purchased by Plaintiff. The card file was kept at the shop when Defendant worked there, but upon becoming a mobile prover, he stored it at his house, where it remains. Defendant also used a day planner for scheduling work with customers, and this information was never transferred to any electronic format.
Defendant resigned from Plaintiff’s employment on January 3, 2022, and immediately commenced servicing Plaintiff’s customers the following day. Subsequently, Defendants hired Adam Wright, a former employee of Plaintiff, in May 2022.
Defendant allegedly took various steps while still employed to compete with Plaintiff, including registering his business, American Gas Services, using his work iPhone for competitive purposes, intentionally neglecting to schedule work for Plaintiff after his resignation, ordering equipment for customers to serve under AGS, withholding customer needs from colleagues, resetting his iPhone without authorization, deleting emails, failing to return Plaintiff’s property, returning a non-working mobile prover, providing incorrect information to Ferrellgas, and copying decals, forms, pricing, and the mobile operation concept from Plaintiff.
During the Discovery process, Defendants requested Tankmax to provide evidence supporting the allegations of theft and the value of the stolen parts and equipment. In response, Tankmax submitted 26 pages of ledgers and receipts. The production comprised four documents:
1. An accounting of Tankmax’s Kent shop as of October 1, 2021 (pages 1-14).
2. An accounting of Tankmax’s Kent shop as of July 27, 2022 (pages 15-22).
3. An inventory dated January 20, 2022, detailing parts and supplies Tankmax purchased to replenish what went missing from the truck utilized by Duran (page 26).
4. An inventory dated May 16, 2022, outlining parts and supplies Tankmax purchased to replenish what was missing from the truck utilized by Adam Wright (page 25).
To substantiate its damages claim, Tankmax engaged economist Erick West, who published a report evaluating the purported lost income stream. West also offered an opinion on the damages related to tools, equipment, and inventory that Tankmax accused Mr. Duran of stealing.
In addressing the equipment loss, economist West dedicated three paragraphs in his expert report. According to Tankmax’s claims, it was asserted that Duran failed to return certain tools, equipment, service parts, and gas bottles upon the termination of his employment. Howard, in response to RFP No. 18, provided a QuickBooks report comparing the inventory valuation of the Kent shop on October 21, 2021, to July 27, 2022. This report indicated a missing inventory worth $61,023, attributed to items allegedly taken by Duran before January 3, 2021.
Another document produced in response to RFP No. 18, dated May 18, 2022, summarized the value of missing items amounting to $11,001 from the truck returned at the end of Adam Wright’s employment at Tankmax. Howard attributed these missing items from the truck to additional items allegedly taken and used for the financial benefit of the Defendants. In total, West included $72,024 in damages related to the equipment loss. He noted that this analysis would be updated as additional documentation became available through the ongoing discovery process.
Defendants aimed to exclude the testimony of Plaintiff’s forensic economic expert concerning the $72,024 in damages associated with equipment loss attributed to Defendants. Defendants sought to exclude this particular opinion, arguing that West’s valuation of the missing tools, equipment, and inventory was deemed entirely unreliable. His opinion on this topic fell outside his expertise, lacked foundation, and was unhelpful to the jury.
Forensic Economics Expert Witness
Erick C. West has over two decades of experience as an economics expert. He holds both bachelor’s and master’s degrees in economics from Washington State University. Over the course of his career, West has previously worked as a Financial Advisor at Merrill Lynch,and was a Senior Economist at Harper Incorporated. He currently leads West Economics, Inc. as President, specializing in areas such as business valuation, forensic financial analysis, appraisal services, and quantifying economic losses to both personal and commercial matters.
Discussions by the Court
District Courts serve as gatekeepers for expert testimony, applying Rule 702 to ensure its relevance and reliability. This obligation, established by Daubert, involves assessing if the expert’s knowledge aids the trier of fact, is based on sufficient facts, relies on reliable principles, and has been reliably applied. The proponent of the evidence bears the burden of proving adherence to Rule 702. The trial judge must balance admitting helpful testimony with excluding potentially misleading or confusing content. The relevance of expert opinion testimony hinges on its valid connection to the pertinent inquiry.
Defendants contested that the opinion presented by West, asserting that Tankmax incurred $72,024 in damages due to equipment loss attributed to Defendants, was considered beyond the scope of his training or experience. West lacked the qualifications to provide an opinion on the reasonable value of missing inventory. He was unable to identify the missing parts or equipment, nor could he determine their fair market value. The argument contended that his opinion amounted to merely endorsing a ledger printed out by Tankmax, as acknowledged in his own report.
Even if the Court were to acknowledge that West had the qualifications to express an opinion on the value of the missing inventory, the argument contended that his opinion would not be helpful to the jury. The assertion was that West’s contribution was limited to a simple computation, wherein he added two figures provided by Tankmax’s co-owner, Kelly Howard. The argument emphasized that this task did not demand advanced skill, training, or experience and could be accomplished by anyone with a basic education, even at the grade school level.
West, according to the argument, took no steps to verify any of the figures presented in the ledgers. He did not examine the invoices that formed the basis of the ledgers to ensure their accuracy in reflecting the value of the missing inventory. No inquiry was made into the procedures for inspecting, cataloging, or entering the inventories. West lacked knowledge regarding whether the ledgers underwent reconciliation because he did not inquire. Additionally, he had no information about whether the equipment or parts were new or used, and he was unaware of their reasonable market values. Furthermore, there was no adjustment made for depreciation or appreciation of the inventory in his analysis.
West was not presented with any evidence to indicate that Defendants had actually taken the purportedly missing inventory. Instead, he straightforwardly accepted Howard’s attribution that the items were taken by Defendants.
In summary, the argument asserted that there was no foundation for West’s opinion on equipment loss, and his conclusions were deemed mere speculation.
The Court determined that Defendants’ arguments pertain to the weight of West’s testimony, not its admissibility. The contention is that if the jury believes West’s testimony, it would be beneficial in calculating damages. Defendants have the opportunity to challenge the reliability of West’s damage calculations through cross-examination.
Genuine factual disputes exist regarding whether certain information qualifies as trade secrets under state and federal laws, and if Plaintiff took reasonable secrecy measures. Questions also arise about Defendant’s potential unauthorized access to his iPhone, preventing summary judgment on the Computer Fraud and Abuse Act claim. The Court refrains from granting summary judgment on remaining state law claims, as preemption and other issues require trial evidence. The unjust enrichment claim is not preempted. Overall, because a reasonable jury could rule in Plaintiff’s favor on misappropriation and related claims, Defendants are not entitled to summary judgment.
Held
The Court denied Defendant’s Motion for Summary Judgment and also denied Defendants’ Motion to Partially Exclude the Expert Testimony of Erick West. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
Defendants filed a motion to exclude expert testimony from Plaintiff Tankmax’s forensic economic expert related to $72,024 in damages attributed to allegedly stolen equipment. Defendants argued the expert’s methodology for calculating these damages was unreliable.
The Court denied Defendants’ motion and found the expert’s testimony admissible. The judge ruled that the objections raised by Defendants did not warrant exclusion under Daubert, but rather went to the weight and reliability of the testimony – issues that could be adequately addressed through cross-examination at trial.
Specifically, the Court found that the expert’s specialized knowledge in calculating economic damages would be helpful to the jury if required to determine a damages award. Additionally, the judge ruled that the expert had applied reliable principles and methods to the available facts of the case.
Therefore, the key takeaways regarding expert testimony here are that challenges to an expert’s data and assumptions generally go to credibility rather than outright exclusion. The Court also emphasized cross-examination provides the appropriate venue for scrutinizing expert methodology. Absent particular red flags, expert opinions meeting the basic thresholds of relevance and reliability under Rule 702 warrant admission, not exclusion.
This case involves a lawsuit filed by Donald F. Greene and Nicole F. Greene (“Plaintiffs”) against Ledvance LLC (“Defendant”) regarding injuries Donald Greene sustained when a fluorescent light bulb he was changing allegedly exploded. The incident occurred on June 11, 2020 at Donald Greene’s workplace.
According to the allegations, On June 11, 2020, Donald Greene, employed as a site manager for Waste Connections, was in the process of changing a fluorescent light bulb located on a wall in the garage of his workplace when the light bulb suddenly and abruptly exploded without warning. Donald Greene sustained severe injuries, primarily to his left arm. He was taken by ambulance to the hospital where his left bicep wound was treated and closed surgically. He later underwent two additional surgeries on his left bicep performed by orthopedic surgeon Joshua P. Moss, who continued treating Donald Greene’s injuries.
Plaintiffs brought suit against Defendant, the alleged designer, manufacturer, seller and distributor of the subject fluorescent light bulb, under the Tennessee Product Liability Acts. Plaintiffs alleged that because a fluorescent light bulb does not normally “violently explode” during normal handling, Defendant was also liable under the common law doctrine of res ipsa loquitur, contending that the nature of the incident itself implies negligence.
In the course of expert disclosures, Plaintiffs identified Moss as the treating physician for Plaintiff Greene. Moss intended to testify on causation, medical necessity, and details of Greene’s treatment, along with the impact of the injury on Greene’s physical abilities. His opinions emphasized that on June 11, 2020, Greene suffered a serious injury to his left arm when a fluorescent light bulb exploded during a change, causing immediate tissue disruption and bleeding in the left biceps area. Moss, drawing on his experience as an orthopedic surgeon for military personnel, asserted that the traumatic laceration of tissue in Greene’s left arm resulted from a force comparable to that experienced by military personnel injured by explosive ordnance of fragmentation devices. This distinction was crucial, indicating a highly violent force, as opposed to the type of injury that would typically result from a simple fall onto the bulb.
The Defendant sought to exclude specific testimony from Moss, specifically objecting to any opinions related to the fluorescent lamp at issue and the manner in which broken glass from the lamp might have caused Greene’s injury. The motion specifically aimed at precluding Moss from asserting that Greene’s injury resulted from an explosion or, based on his military experience, that the traumatic laceration was due to a highly violent force comparable to injuries sustained by soldiers exposed to explosive ordnance or fragmentation devices.
On May 26, 2023, the Plaintiffs revealed Thomas Kelly as their expert in the case. Kelly, a licensed electrical engineer employed by the Warrant Group, Inc. since 2017, specialized in consulting on property damage and injuries related to electrical equipment.
As part of his investigation, Kelly conducted three key activities: (1) examined the clothing worn by Plaintiff Greene on the day of the incident, (2) scrutinized lamps retrieved from adjacent fixtures at the facility, and (3) conducted a meeting with Plaintiff Greene to inspect, document, and photograph the light fixture and facility in question. In addition to these on-site activities, Kelly also reviewed various documents, including Plaintiff Greene’s deposition transcript, the emergency medical services and police reports from June 11, 2020, an invoice from Lloyd’s Electrical Service dated December 31, 2013, Safety Data Sheets for Sylvania fluorescent light bulbs, and photographs taken at the scene of the incident.
In his analysis, 1) The lamp’s power was cut off via the circuit breaker panel before the lamp-changing process, disconnecting the energy source for the fixture. The incident was not a result of an electrical failure in the building’s electrical system.
2) The light fixture in question contained a single electronic ballast, with no battery backup or stored energy. Power to the fixture had been deactivated by opening the related circuit breaker before the process began. Plaintiff Greene showed no observable burn marks on his hands, indicating no contact with an energized source. The light fixture was returned to service after replacing the lamps post-incident, and the issue was not caused by an electrical failure in the fixture.
3) Fluorescent lamps are constructed with thin glass tubing, coated with phosphorus on the inside. Glass end caps, tungsten filaments, and mercury vapor are components added during the assembly process, with stress accumulating during these steps. A defect in any component, influenced by these stresses, can act as a trigger. Kelly’s analysis concludes that the failure of the lamp resulted from a defect in the fluorescent lamp assembly, to a reasonable degree of engineering certainty.
On May 26, 2023, the same day Plaintiffs revealed Kelly as their expert, Defendant initiated a motion for summary judgment. In support of this motion, Defendant submitted declarations from its experts: David W. Powell, a mechanical engineer, and Erick H. Knox, Ph.D., P.E., a biomedical engineer. Additionally, Defendant filed a declaration from its corporate representative, Danielle Sohl. In response, Plaintiffs submitted Kelly’s Declaration:
It clarifies discrepancies in Plaintiff Greene’s initial description of the lamp removal process. He reaffirms his opinions on the lamp failure despite the correction in the direction of movement. Kelly discusses the ladder’s specifications, noting that the fly section’s load-bearing capacity is contingent on the entire assembly supporting the rated weight. He addresses marks on the walls, attributing them to various tools and parts rather than the ladder. Refuting Defendant’s hypothesis on the ladder’s position during the incident, Kelly highlights inconsistencies with the broken cover plate and plastic piece. He mentions challenges in evaluating debris due to safety concerns during the pandemic, emphasizing Greene’s account and post-incident photographs as primary evidence. Kelly references NFPA 921, asserting that while the lay term “explosion” was used, the circumstances don’t align with the standard’s definition. He applied NFPA 921 guidelines considering witness statements and photographic evidence. Regarding the SDS for the lamp, Kelly contends that the lack of warnings left Greene unaware of the hazard’s severity, leading to Defendant’s failure in providing adequate warnings.
Defendant filed two motions seeking to exclude certain expert testimony from Plaintiffs’ expert Thomas Kelly, an electrical engineer, as well as a motion to strike Kelly’s subsequent declaration.
Electrical Engineering Expert Witness
Thomas J. Kelly has substantial educational background including a Bachelor of Science in Electrical Engineering and a Master of Science in Electrical Engineering from Florida Atlantic University. He further completed Master of Business Administration from Winthrop University. He investigates the cause and scope of damage for fire, explosion, and property loss incidents. He is certified as a Fire and Explosion Investigator. He is employed with The Warren Group, Inc., as a senior consulting engineer
Orthopedic Surgery Expert Witness
Dr. Joshua P. Moss has an educational background consisting of a Bachelor of Science from the University of Notre Dame and a Doctor of Medicine from Vanderbilt University School of Medicine. His residency was in Orthopaedic Surgery at the University of North Carolina, Chapel Hill School of Medicine. He then completed a fellowship in Mary S. Stern Hand Surgery at the University of Cincinnati. Moss is board certified by the American Board of Orthopaedic Surgery . His specialties include orthopedics and hand surgery. He began his practice at University Orthopaedic Surgeons in 2016.
Discussions by the Court
The Defendant put forth several grounds in support of its motion to exclude specific aspects of Moss’s testimony. Firstly, the Defendant contended that Moss lacked sufficient knowledge concerning fluorescent light bulbs, emphasizing his absence of experiments to determine whether Greene’s injury could have resulted from impaling an arm on the broken end of a fluorescent lamp. Additionally, the Defendant asserted that Moss lacked experience in designing or manufacturing fluorescent light bulbs. Citing Moss’s deposition testimony, the Defendant argued that he conceded the existence of a viable alternative cause for Plaintiff Greene’s injury. Ultimately, the Defendant sought the Court’s intervention to exclude these opinions from Moss as unreliable.
Plaintiffs responded by asserting that Moss’s anticipated testimony was well within the scope of his expertise. They emphasized his background as an orthopedic surgeon for military personnel and his direct involvement in treating Plaintiff Greene. Plaintiffs argued that Moss’s opinions, rooted in his relevant experience, were reliable. While acknowledging that Moss is not an expert on light bulbs, Plaintiffs contended that the Defendant failed to provide a valid basis for excluding his opinions. They further asserted that the Defendant misrepresented Moss’s deposition testimony and contended that the challenges to his opinions were more appropriately addressed through cross-examination during the legal proceedings.
The Defendant, in its reply, maintained that Moss should not be permitted to present causation opinions during the trial. The Defendant argued that Moss had not personally conducted any testing to determine if Plaintiff Greene’s injuries could have resulted from an allegedly exploding fluorescent lamp. The Defendant emphasized that Moss had not undertaken any investigation into the accident beyond examining Plaintiff Greene’s wounds. Additionally, the Defendant highlighted Moss’s lack of experience in the manufacturing of fluorescent light bulbs. Based on these points, the Defendant asserted that excluding Moss’s causation opinion was justified.
During the hearing, the Defendant clarified its stance, indicating that it did not contest Moss’s opinions regarding the similarity of Plaintiff Greene’s injury to battlefield injuries or the assertion that the injuries resulted from glass. The Defendant also expressed lesser concern about Moss’s testimony characterizing the injuries as consistent with a “highly violative force.” However, the Defendant argued that Moss should be prevented from asserting that Plaintiff Greene’s injury specifically resulted from an exploding or imploding light bulb. In response, the Plaintiffs contended that the challenges raised by the Defendant pertained more to the weight of Moss’s opinions rather than their admissibility.
Citing relevant cases such as In re Aredia & Zometa Prods. Liab. Litig., 754 F. Supp. 2d 934, 937 (M.D. Tenn. 2010), there is a fundamental distinction between a treating physician’s ability to diagnose a medical condition based on clinical experience and their capacity to offer an opinion on the causation of the patient’s injuries. The case emphasizes that while a treating physician can provide a diagnosis, their opinions on the source or causation of the diagnosed condition may be restricted. It underscores the principle that a treating physician, without an expert report, is not allowed to go beyond information acquired during the treatment to offer opinions on the causation of injuries.
Plaintiffs argued that Moss had experience treating individuals with injuries related to glass. However, Moss admitted that, apart from installing them in his garage, he lacked familiarity with fluorescent light bulbs and did not consider himself an expert on them. Federal Rule of Evidence 702 was referenced to underscore the requirement that expert testimony should be based on an accepted body of learning or experience in the expert’s field. Moreover, Moss, aside from relying on Plaintiff Greene’s account, had not conducted an independent investigation into the accident to verify that the light bulb had indeed exploded.
Additionally, Moss acknowledged an inability to rule out alternative causes for Plaintiff’s injuries. Citing the case, Wilson v. Taser Int’l, Inc., 303 F. App’x 708 (11th Cir. 2008), where a treating physician’s testimony attributing an injury to a taser gun was deemed unreliable, the Court concluded that Moss was not permitted to provide opinions concerning the fluorescent lamp in question or how broken glass from that lamp may have caused injury to the Plaintiff.
During the Daubert hearing on November 16, 2023, Kelly provided testimony about his professional background, detailing his fifteen years in facilities management with formal training on equipment such as ladders and fire extinguishers. In his current role, he specializes in fire, shock, and electrical investigations. Kelly asserted that the incident resulted from the fluorescent light bulb imploding and expelling glass material. He clarified the distinction between “implosion” and “explosion” based on NFPA definitions, highlighting that an implosion, as observed in this case, may be colloquially perceived as an explosion. To reach his conclusions, Kelly examined the building’s use, assessed the electrical circuit and wiring, disassembled the light fixture, and met with Plaintiff Greene to understand his perspective. Confirming the functionality of the fixture and finding no defects, Kelly ruled out electrical failure. He utilized his knowledge and experience to hypothesize, evaluate potential causes, and ultimately concluded that a manufacturing defect in the light bulb caused the incident.
During the testimony, Kelly affirmed his familiarity with the light bulb in question, citing his experience using and purchasing it during his tenure as a facilities manager. He also acquired knowledge of the bulb’s manufacturing process from a documentary. Kelly supported his opinion that the incident was not caused by improper handling by referencing Plaintiff Greene’s demonstration and noting the absence of trauma to Greene’s hands.
Kelly clarified that his opinions in the Declaration were responsive to the declarations of Defendant’s experts supporting the summary judgment motion. Regarding paragraph 6 of his Declaration, Kelly explained his interpretation of ladder weight limits based on his experience and training. The opinions in paragraph 8 stemmed from his review of photographs and professional experience, where he observed no scuff marks on the floor, indicating the ladder did not slide down the wall.
In his Declaration, Kelly mentioned concerns about bloodborne pathogens and pandemic-related cleanup. During testimony, he emphasized his knowledge of injuries involving bleeding, his multiple bloodborne pathogens training sessions, and his participation in a medical emergency response team with a previous employer.
During the Daubert hearing, Kelly testified to his extensive experience in facilities management, emphasizing his training in ladders, fire safety, and electrical investigations. He explained his conclusion that the incident resulted from the fluorescent light bulb imploding and ejecting glass, clarifying the technical definition of “explosion” and detailing his examination of the building’s usage, electrical circuit, and the light fixture’s components.
Kelly affirmed his familiarity with the specific light bulb through prior usage and purchases, as well as viewing a documentary on its manufacturing process. He defended his opinions in response to Defendant’s expert declarations, providing context for his interpretations. On cross-examination, Kelly acknowledged his lack of expertise as a ladder specialist or accident reconstructionist but defended his hypothesis about the light bulb’s spontaneous failure due to a manufacturing defect.
Kelly admitted to not having investigated the manufacturing process, quality control, or conducting specific tests on exemplar bulbs. He highlighted his reliance on Plaintiff Greene’s account and dismissed alternative causes, emphasizing his inability to test the actual subject light bulb. The defense questioned his analysis of marks on the wall and ladder placement, challenging the adequacy of his investigation. Kelly defended his lack of testing, citing unavailability of the subject light bulb and reliance on Plaintiff Greene’s account.
In re-direct examination, Kelly maintained that something caused the light bulb to implode, stressing factors like temperature changes. He admitted to the absence of testing records due to the closure of the manufacturing plant. Kelly clarified that his failure-to-warn opinion was a facilities manager’s perspective, not an engineering standpoint, responding to Powell’s description of implosion in his testimony.
Defendant seeks to exclude Kelly’s testimony, contending it lacks relevance and is based on insufficient facts or unreliable methodology under Rule 702 and Daubert. Defendant moves to strike Kelly’s opinions expressed in his Declaration, claiming they are untimely under the Scheduling Order and inadmissible. Plaintiffs argue that Kelly is qualified, and his opinions are based on thorough review, utilizing a valid process of elimination. Plaintiffs assert that Sohl’s deposition undermines Powell’s theory. Defendant’s reply insists on Kelly’s failure to identify a product defect, lack of proper testing, and presents new opinions beyond his expertise. The debate also touches on the timeliness of Kelly’s Declaration and the potential for a supplemental deposition.
The Court emphasized the flexibility of the Daubert test, acknowledging various factors in assessing reliability. The burden of proving admissibility lies with the party offering the expert. In this case, the Court determined that Kelly’s opinion on the cause of the incident lacked reliability, leading to its inadmissibility. The Court also questioned Kelly’s qualifications regarding warnings and considered his opinion on the cleanup process as speculative.
The Court, in assessing Kelly’s qualification to opine on Plaintiff Greene’s handling of the light bulb, found the opinion lacked reliability due to insufficient facts and data. Kelly’s reliance on Plaintiff Greene’s reenactment, without proper testing or verification of key aspects, raised concerns about the accuracy of the conclusion. The Court highlighted discrepancies in the reenactment, such as the ladder type used, rung spacing, and the attempt to change the bulb using the ladder’s top fly section. Additionally, Kelly’s speculative opinions on wall marks, scuff marks, electrical conduct, and debris investigation were deemed unreliable and unsupported. The Court referenced the analytical gap between data and opinion, emphasizing the need for a valid scientific basis.
The Court contested Kelly’s qualifications to assert a manufacturing defect in the light bulb assembly, challenging his expertise as a licensed professional engineer and facilities manager. Despite his background, the Court found Kelly lacked the necessary qualifications to testify on a manufacturing defect in a fluorescent light bulb. His limited familiarity, derived from watching a video, and the absence of experience in designing or manufacturing such bulbs were deemed insufficient. Moreover, the Court critiqued Kelly’s methodology, citing the Pride v. BIC Corp., 218 F.3d 566, 578 (6th Cir. 2000) case and emphasizing the failure to conduct reliable laboratory testing to validate his hypotheses. Kelly’s reliance on Plaintiff’s statements without proper testing and failure to verify key aspects rendered his opinion on manufacturing defects inadmissible.
The Court contested Kelly’s qualifications to opine on warnings, as Plaintiffs failed to establish his expertise in the field relevant to warnings. While Plaintiffs argued Kelly’s experience as a facilities manager and familiarity with Occupational Safety and Health Administration (“OSHA”) standards rendered him capable, the Court found this insufficient, emphasizing the absence of qualifications in the adequacy of warnings based on Kelly’s curriculum vitae. Therefore, the Court deemed Kelly unqualified to offer an opinion on warnings. Additionally, the Court addressed Kelly’s opinion about the cleanup process, finding it speculative and inadmissible due to the lack of factual foundation for his statement about the disposal of debris.
Rule 26(a)(2) of the Federal Rules of Civil Procedure governs expert disclosures, requiring parties to disclose witnesses and provide a written report for retained experts. The Scheduling Order sets deadlines for expert disclosures and permits rebuttal opinions within 30 days after the other party’s disclosure. Rule 26(a)(2)(D)(ii) defines rebuttal evidence as intended to contradict or rebut evidence on the same subject matter. Plaintiffs, in this case, disclosed expert opinions within the specified deadlines, and Defendant contested certain opinions in Kelly’s Declaration as untimely. Defendant challenged four opinions in Kelly’s Declaration: “(1) certain black marks on the wall are as likely to be from other sources from the ladder [Plaintiff] Greene was using, (2) a plastic piece on the floor does not match the missing portion of an electrical outlet cover, (3) certain NFPA guidelines do not apply to this case, and (4) [Defendant] failed to warn that if broken, a fluorescent lamp can implode, dispersing glass fragments.” The Court ruled against striking most opinions but found one regarding failure to warn untimely, excluding it under Rule 37.
Defendant contends that Kelly is introducing new information in his analysis, which could have been considered earlier. Plaintiffs argue that Kelly’s opinions are valid rebuttals to Knox, responding to inconsistencies in Plaintiff Greene’s account of certain black marks on the wall and a plastic piece on the floor highlighted by Knox. The Court deems Kelly’s opinions on these matters as appropriate rebuttal testimony and rejects the motion to strike them.
Defendant claims that Kelly’s statement in his declaration about the lamp failure not fitting the NFPA 921 standard is an attempt to alter his previous deposition testimony. Plaintiffs argue that their response to Defendant’s summary judgment motion required Kelly to review and address new information provided by the Defendant. The Court determines that Kelly’s statement is not an effort to change his deposition testimony, and as a result, declines to strike it.
The Court determines that regardless of whether Kelly’s opinion introduces a new theory of liability, it is not a proper rebuttal opinion. Defendant’s experts did not provide opinions on warnings, as acknowledged by Kelly during the Daubert hearing. Since failure to warn is alleged in the Amended Complaint and Kelly disclosed in his initial disclosure that the light bulb exploded, the Court concludes that Plaintiffs should have initially disclosed an opinion from an expert with the requisite qualifications regarding warnings. As they disclosed Kelly’s new opinions that he is not qualified to render, the Court finds that these opinions are not genuine rebuttal evidence and may be excluded.
The Court cites Rule 37(c)(1) of the Federal Rules of Civil Procedure, stating that if a party fails to provide required information or identify a witness as per Rule 26(a), they cannot use that information or witness unless the failure was substantially justified or harmless. The burden to show substantial justification or harmlessness lies with the potentially sanctioned party. The Court references the Sixth Circuit’s five factors for assessing whether a party’s omitted or late disclosure is “substantially justified” or “harmless,” including the surprise to the opposing party, the ability to cure the surprise, the extent of trial disruption, the importance of the evidence, and the nondisclosing party’s explanation for the failure to disclose the evidence. The Court refers to Howe v. City of Akron, 801 F.3d 718, 747-48 (6th Cir. 2015) for these factors.
The Court concludes that a majority of the factors favor the exclusion of Kelly’s opinions. Despite the Plaintiffs’ assertion that the Defendant cannot be surprised because Kelly’s original report allowed for supplementation with additional opinions, the Court emphasizes that such allowance does not permit the introduction of entirely new opinions in violation of the Scheduling Order. It notes that the Defendant lacks the ability to cure the surprise, even with the Plaintiffs’ offer to provide Kelly for a second deposition, as the Defendant would need to potentially retain its own warnings expert and prepare a rebuttal report. The Court underscores that there will be no trial disruption, but the discovery deadline has already expired. The Court also deems the importance of the evidence as favoring exclusion, pointing out that Kelly is not qualified under Rule 702 and Daubert to render the opinion on warnings. Finally, in terms of explanation, the Court rejects the Plaintiffs’ argument that Kelly’s opinion is a rebuttal, determining that it is not, and notes that the Plaintiffs were aware of the Defendant’s intention to submit evidence related to glass tube dispersion. The Court concludes that the Howe factors lean towards excluding Kelly’s opinions on warnings.
Held
The Court ultimately granted Defendant’s motion to exclude the testimony of Thomas J. Kelly in its entirety. The Court also granted in part and denied in part Defendant’s motion to strike the declaration of Thomas J. Kelly. The Court granted the Defendant’s motion to exclude specific testimony from Plaintiff’s expert witness, Joshua Moss.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case involved an injury allegedly caused by an exploding fluorescent light bulb. The Plaintiff disclosed his treating orthopedic surgeon, Joshua Moss, as an expert witness to testify about the cause of the injury, the details of treatment provided, the impact on the Plaintiff’s abilities, and the reasonableness of medical expenses. However, the Court granted the Defendant’s motion to exclude certain aspects of Moss’s proposed testimony.
Specifically, the Court found that while Moss could testify to his diagnosis and treatment of the Plaintiff’s injuries, he lacked sufficient knowledge and investigation to reliably opine on the cause of the injuries being an exploding light bulb. Moss admitted he was not an expert on fluorescent bulbs, did not investigate the accident scene, and could not rule out alternative causes. Thus, the key takeaways are that treating physicians can testify to diagnosis/treatment but cannot reliably testify to causation without proper expertise in the injury mechanism at issue and investigation excluding alternative causes. Lacking such foundation, the Court will exclude unreliable causation opinions even from an otherwise qualified expert.
The Court also excluded all opinions from Plaintiffs’ proffered electrical engineering expert Thomas Kelly after finding him generally unqualified and his methodology unreliable. Specifically, Kelly lacked specific qualifications and expertise to opine on alleged manufacturing defects in fluorescent light bulbs or the adequacy of product warnings. His opinions were also not grounded in sufficient facts, data, or testing to validate his hypotheses. He failed to properly test or investigate alternative theories. This reliability gap proved fatal to the admissibility of his causation opinions.
The case shows that practical experience alone may not qualify someone to provide expert opinions if that experience does not directly correlate to the specific issues in the case. It also demonstrates that while an expert can rely on a hypothesis and process of elimination, testing and factual data are still required to establish opinions as reliable and admissible. Failing to follow reliable principles and methods consistent with the facts renders expert testimony unreliable and subject to exclusion no matter the expert’s qualifications. Parties must vet experts thoroughly regarding qualifications and methodology before disclosure.
The case involved a dispute over insurance coverage concerning damages resulting from a roof leak in a residential property. Great Lakes Insurance SE, the Defendant, denied the Plaintiff’s claim, contending that the leak stemmed from rot, wear and tear, and an accumulation of pine needles—causes not covered under the policy. The crux of the matter for the Defendant’s motion for summary judgment was whether the Plaintiff could demonstrate that the leak arose from a storm, a covered cause of loss. The Court ruled in favor of summary judgment, determining that the Plaintiff failed to present sufficient evidence to establish that the loss fell within the policy coverage, thereby supporting the Defendant’s decision to deny the claim.
Apex REI Series, LLC, managed by Rahim Meghani, owned and leased a residential property in Humble, Texas. Great Lakes Insurance SE provided insurance coverage for the property from January 1, 2020, to January 1, 2021, safeguarding against “direct physical loss” unless specifically excluded or limited in the policy.
The insurance policy contained exclusions barring coverage for damages caused, directly or indirectly, by “surface water,” “fungus,” wet or dry rot, and bacteria. Additionally, the policy imposed limitations, specifying that damage to the interior of any building or structure, or personal property within, resulting from rain, snow, sleet, ice, sand, or dust—whether wind-driven or not—was not covered unless the building or structure initially sustained damage to its roof or walls due to a Covered Cause of Loss. In essence, coverage for interior damage resulting from rain, snow, or similar elements required prior damage to the roof or walls caused by a covered incident, through which the rain, snow, sleet, ice sand or dust entered. Put simply, the insurance policy didn’t provide coverage for damage caused by water entering the property through the roof, unless the leak itself resulted from a “Covered Cause of Loss,” specifically a direct physical loss like a windstorm or hailstorm.
In April 2020, tenants informed Meghani about water seeping into the home through the roof, leading to interior damage. Meghani promptly filed a claim with Great Lakes, citing April 6, 2020, as the date of loss. Great Lakes appointed an adjuster who assessed the property without inspecting the roof directly. Upon the adjuster’s findings attributing the interior damage to surface water in the backyard and mold growth—both excluded causes under the policy—Great Lakes rejected the claim.
Around June or July 2020, Meghani requested a second inspection of the property. Interestingly, without a direct request from Meghani, Great Lakes initiated a new claim, dating it June 30, 2020. They then appointed a second adjuster to conduct a reinspection of the property. This subsequent assessment by the adjuster determined that the roof leak hadn’t been a result of a storm and that neither wind nor hail had caused damage to the roof.
In October 2020, Great Lakes appointed a third adjuster to examine the property. This adjuster’s report highlighted findings of “rotted fascia” and “heavy rot on the roof decking.” Additionally, observations noted “heavy granule loss and reduced pliability of the shingles.” The adjuster also remarked that the roof vents seemed to be part of the original construction of the home.
In December 2020, Great Lakes denied the June 30, 2020, claim, explaining that the leak had been caused by rot, wear and tear, and lack of maintenance—all excluded causes of loss under the policy.
Following the denial, Meghani engaged OnPoint Claim Recovery to assess the property damage. OnPoint conducted an inspection and tasked adjuster Ana Nguyen with preparing a loss estimate and report. Nguyen’s assessment attributed the primary cause of the property damage to an “intense wind and hailstorm.”
However, in July 2021, Great Lakes enlisted an engineer to inspect the property. The engineer’s findings diverged, asserting that the roof leak hadn’t stemmed from a windstorm or hailstorm but rather from “pine needles that had accumulated within the roof valley.”
Plaintiff, Apex REI Series, LLC asserted claims for breach of contract, violations of the Texas Insurance Code, § 542.051 et seq., and breach of the duty of good faith and fair dealing against the Defendant, Great Lakes Insurance SE, seeking damages for “the loss of the benefits that should have been paid pursuant to the Policy.”
Great Lakes has moved for summary judgment, and to exclude Ana Nguyen’s expert testimony, report, and estimate.
Insurance Coverage Expert Witness
Ana Nguyen is the Founder and CEO of OnPoint Claim Recovery Services. She is a Licensed Professional Public Adjuster, among other roles, with over 20 years of administrative and managerial experience in the insurance and healthcare sectors. Ana Nguyen has helped victims of flood damage, roof damage and other home damages recovery claims.
Discussion by the Court
According to Texas law, the insured is responsible for demonstrating that a loss falls within the coverage specified in an insurance policy. Once the insurer demonstrates that an exclusion is applicable, the insured must then prove the application of an exception to that exclusion. This was established in the case Fiess v. State Farm Lloyds, 392 F.3d 802, 807 (5th Cir. 2004).
Great Lakes contends that Apex failed to provide evidence that the property sustained damage due to a covered loss within the policy period. They highlighted Meghani’s deposition testimony, noting his lack of recollection regarding specific weather events in April and June 2020, along with Apex’s failure to determine the precise cause of the leak. Great Lakes argued that Meghani’s testimony about a roof leak causing interior damage during the policy period lacked legal sufficiency.
In response, Apex asserted that pinpointing the exact date of loss wasn’t a requirement. They emphasized that every date associated with the claim for roof and property interior damage fell within the policy period. Apex relied on Meghani’s testimony, affirming the prompt filing of the claim following tenant reports and the absence of prior roof or water issues before April 2020. Additionally, they referenced the expert report, estimate, and affidavit from Nguyen to support their position.
Nguyen’s affidavit highlighted that, drawing upon expertise and experience as an adjuster, along with an assessment of Property photos and scope notes from an OnPoint Claim Recovery field adjuster, the evaluation led to a conclusion. Nguyen stated that, considering conversations with Meghani, who possessed knowledge of the Property’s condition before and after the storm, along with the claim’s history, the observed damage detailed in the estimate pointed to being a result of a wind and/or hail storm occurring within the policy period.
Nguyen’s report concluded that the “primary cause” of the property damage was an “intense wind and hailstorm.” This determination was based on findings from a weather report by HailTrace, indicating significant weather conditions with winds reaching 60 mph and hail up to 1.25 inches—conditions capable of causing substantial property damage at the time when the homeowner noticed the damage and leaks. Nguyen also observed that hailstones had created notable dents and punctures on the roof, causing several shingles to be dislodged and exposing the underlying wood. Additionally, there were golf ball-sized indentations on the soft metals, aligning with the reported hail impact.
Rule 702 “charges trial courts to act as ‘gate-keepers,’ making a ‘preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue.’”
Great Lakes submitted a motion to exclude Nguyen’s report, estimate, and affidavit based on Federal Rule of Civil Procedure 702. Their argument centered on the assertion that Nguyen’s opinion attributing the damage to a wind or hailstorm during the policy period was considered conclusory. They contended that Nguyen’s conclusion contradicted Meghani’s testimony, leading them to seek the exclusion of Nguyen’s findings and statements from consideration.
The Court determined that Nguyen’s causation opinion lacked specificity and was unduly conclusory. Nguyen’s assertion regarding the damage’s cause rested on her general “skills, knowledge, training, and experience,” without detailing specific observations supporting the conclusion of wind or hail as the cause. Despite referencing a weather report from HailTrace, Nguyen didn’t provide the report’s data or specific dates of relevant wind or hail events. The Court found that that Nguyen’s causation opinion was “connected to existing data only by [her] ipse dixit.”The Court deemed Nguyen’s causation opinions as unsupported and consequently, her report, estimate, and affidavit were excluded from the summary judgment record.
Without Nguyen’s causation opinion, Apex lacked substantial evidence to support its position on the cause of the damage. Meghani’s deposition testimony only indicated that the roof began leaking when reported by tenants in April 2020, falling short of establishing the damage resulted from a covered loss during the policy period. Under the policy, water damage from a roof leak is covered if caused by a “Covered Cause of Loss,” such as a wind or hailstorm. However, all evidence, excluding Nguyen’s inadmissible opinion, indicated that the cause wasn’t covered.
Great Lakes’ adjuster attributed the roof leak to “heavy rot” in the roof decking surrounding the HVAC Vent, also noting “wear and tear,” improper maintenance, and repairs as contributing factors. Furthermore, another adjuster from Great Lakes found no wind or hail damage to the roof. The engineer hired by Great Lakes similarly concluded that neither wind nor hail had caused roof damage, attributing the leak to pine needles accumulating within the roof valley. Apex did not contest that these identified causes were not covered losses under the policy terms. Therefore, considering the evidence, it supported the conclusion that the identified causes were not within the policy coverage.
The Court noted that Apex failed to raise a factual dispute material to determining whether the property was damaged by a covered loss during the policy period.
Great Lakes contends that Apex’s extra-contractual claims beyond breach of contract should be dismissed since Apex’s breach of contract claim itself lacks merit, and Apex hasn’t presented any distinct injury apart from the loss of policy benefits. Apex acknowledges its sole injury as the loss of policy benefits but argues that its extra-contractual claims persist based on the assertion that there’s sufficient evidence linking the damages to a storm within the policy period.
However, according to legal standards, an Insurance Plaintiff can pursue extra-contractual claims distinct from the breach of the insurance policy only if the alleged statutory violations led to an injury separate from the right to recover policy benefits. As clarified, Apex’s breach of contract claim doesn’t stand legally, and Apex hasn’t put forward any separate injury beyond the denial of policy benefits. Consequently, the Court deems summary judgment appropriate concerning Apex’s extra-contractual claims.
Held
The Court granted Great Lakes’ motion for summary judgment as well as motion to exclude Ana Nguyen’s expert testimony, report, and estimate.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
Expert testimony in insurance claims plays a critical role in establishing causation and substantiating claims within the policy coverage.
In this case, Nguyen’s expertise as an adjuster was essential in linking the property damage to a wind or hailstorm during the policy period. However, the Court excluded Nguyen’s opinions, finding them lacking in specificity and overly conclusory. Without Nguyen’s testimony, Apex struggled to provide substantial evidence supporting their claim of a covered loss.
The exclusion of Nguyen’s opinions left Apex reliant solely on Meghani’s deposition testimony, which fell short in establishing the damage as a covered loss within the policy period. While Apex contested the exclusion, arguing that pinpointing the exact date of loss wasn’t obligatory and emphasizing that reported dates fell within the policy period, this was insufficient without expert testimony to substantiate the claim.
The insurer, Great Lakes, reinforced their stance by presenting adjusters’ and an engineer’s assessments that attributed the roof leak to causes not covered under the policy. These findings, unchallenged by Apex, further undermined the assertion of a covered loss during the policy period.
Ultimately, the exclusion of crucial expert testimony weakened Apex’s position in demonstrating a covered loss, leading the court to rule in favor of Great Lakes on both the breach of contract and extra-contractual claims due to the absence of sufficient evidence and distinct injury beyond the denial of policy benefits.
This case involved a dispute between Plaintiffs Toa Trading LLC and MunshiBari LLC and Defendants Mullen Automotive, Inc. and Mullen Technologies, Inc. over an alleged breach of contract. The Plaintiffs claimed that the Defendants failed to pay them a finder’s fee as required by an agreement between the parties. The Defendants argued that they were not required to pay the fee because the Plaintiffs had acted as unlicensed broker/dealers in violation of Securities and Exchange Commission (SEC) regulations, rendering the contract null and void. To support their argument, the Defendants intended to offer expert testimony from Lauren Cohen. They disclosed Cohen as a “hybrid non reporting expert witness” who would testify about SEC regulations, specifically Section 3(a)(4) and Section 15(a) related to the brokers and whether the Plaintiffs acted as unlicensed broker/dealers.
On April 7, 2023, the Judge issued a scheduling order outlining key deadlines for the legal proceedings. The order mandated that by June 23, 2023, the involved parties were required to disclose their experts, along with summaries and reports related to expert witnesses. Subsequently, on August 4, 2023, a deadline was set for the exchange of rebuttal expert witness summaries and reports. All discovery, including expert discovery, was slated to conclude by August 25, 2023. Finally, a trial date of February 12, 2024, was entered.
On June 23, 2023, the Defendants initially disclosed Cohen as a “retained expert” in accordance with Federal Rules of Civil Procedure 26(a)(2)(B) and 26(a)(2)(C). In this disclosure, Cohen’s anticipated expert testimony was outlined, focusing on findings, observations, opinions, and discussions related to Securities and Exchange Commission regulations and the legality of the contracts in question, along with any associated fair market value. The Defendants affirmed that the attached exhibit, including Cohen’s CV, publication list, relevant testimony, and credentials, adhered to the requirements of Rule 26(a)(2)(B). Notably, the June 23 disclosure did not include a report prepared by Cohen.
On June 27, 2023, the Plaintiffs communicated via email to the Defendants, expressing their belief that the initial disclosures made by the Defendants were deemed “procedurally and substantively insufficient” and urged for a discussion to address these concerns before considering the filing of a motion to strike.
On July 10, 2023, the Defendants made amendments to their expert witness disclosures, referred to as “Amended Disclosures.” Notably, these revised disclosures still did not include an expert report prepared by Cohen. Instead, Cohen was re-categorized as a “hybrid” witness, blending both factual and expert roles under Fed. R. Civ. P. 26(a)(2)(C). The previous concise summary of Cohen’s expected testimony was omitted, and a new description was provided. In this updated information, Cohen was said to be expected to provide both factual testimony and opinion, permitted by FRCP 26(a)(2)(C) as a hybrid witness, specifically regarding Securities and Exchange Commission regulations. The focus areas included Section 3(a)(4) and Section 15(a), addressing conduct that the SEC may deem indicative of individuals acting as brokers. The testimony would also cover agreements involving transaction-based compensation and specific conduct relevant to determining whether TOA TRADING’s and MUNSHIBARI’s principals and agents acted as unlicensed broker/dealers in connection with the reverse triangular merger outlined in the Complaint.
Days later, during the July 12 conferral, the Plaintiffs once again contested the adequacy of the Defendants’ Amended Disclosures. Their arguments centered around several key points: (1) the Defendants’ failure to provide an expert report, as mandated by FRCP 26(a)(2)(B); (2) the absence of evidence supporting Cohen’s classification as a ‘hybrid’ fact and expert witness, as required by FRCP 26(a)(2)(C); (3) even if FRCP 26(a)(2)(C) applied, deficiencies in the Amended Disclosures for not specifying Cohen’s opinions and their bases; and (4) concerns that the Amended Disclosures hinted at improper expert testimony on the applicability of SEC regulations, deeming it unnecessary for an expert to educate the Court on these legal matters. Notably, the Defendants’ Amended Disclosures did not reveal any involvement by Cohen in the facts of the case that would appropriately categorize him as a fact witness, nor did they disclose any statement regarding Cohen’s compensation as a witness.
In response to the Defendants’ refusal to withdraw Cohen’s testimony, the Plaintiffs took action and, on July 26, 2023, filed a motion to strike the proposed testimony.
Business Administration and Management Expert Witness
Lauren H. Cohen is the L.E. Simmons Professor in the Finance & Entrepreneurial Management Units at Harvard Business School and a Research Associate at the National Bureau of Economic Research. Cohen teaches in the MBA Program, Executive Education Program, Doctoral Program, and Special Custom Programs at the Harvard Business School, teaching across Family Enterprise, Investment Management, and Innovation Course Offerings. He is an award-winning researcher, and best-selling case writer, with works published in the top journals in Finance and Economics. His work is frequently profiled in various media outlets including The Wall Street Journal, The New York Times, The Washington Post, The Economist, and Forbes. Cohen frequently advises government organizations in the U.S. and abroad, including the United States Securities and Exchange Commission and United States Patent & Trademark Office.
Discussions by the Court
The exclusion of Cohen’s testimony in this case was warranted for three main reasons. Firstly, the Defendants neglected to submit the expert report mandated by Fed. R. Civ. P. 26(a)(2)(B) within the specified deadline. Secondly, the Defendants’ non-compliance with Fed. R. Civ. P. 26(a)(2) was found to lack substantial justification and was not deemed harmless to the Plaintiffs. Lastly, it was argued that Cohen’s proposed testimony ran afoul of Eleventh Circuit law and was considered improper.
The Defendants were unable to substantiate that Cohen played any role other than that of a retained expert in this case. The available evidence in the record did not indicate any first hand involvement by Cohen in the relevant facts or transactions under consideration. Specifically, during the October 31 hearing on the case, the Defendants acknowledged that Cohen had no prior knowledge of the case before being engaged as a paid expert by the Defendants’ counsel to offer testimony in this matter.
In accordance with Rule 26(a)(2)(B), when a witness is retained or specifically employed to provide expert testimony in a case, the disclosure must be accompanied by a written report. This report, which must be “prepared and signed by the expert witness,” and is required to include the following:
(i) A comprehensive statement outlining all opinions the witness will express and the basis and reasons supporting those opinions.
(ii) Details regarding the facts or data considered by the witness in forming their opinions.
(iii) Any exhibits that will be used to summarize or support the opinions.
(iv) The witness’s qualifications, including a list of all publications authored within the preceding 10 years.
(v) A list of all other cases in which the witness testified as an expert, either at trial or through deposition, within the preceding 4 years.
(vi) A statement indicating the compensation to be paid for the study and testimony in the case.
In the case of Cedant v. United States, 75 F.4th 1314, 1321 (11th Cir. 2023), as of 2023, the Eleventh Circuit clarified that the classification of an expert witness as “retained” or “non-retained” depends on the nature of the relationship between the expert and the party for whom the expert is intended to testify, rather than the actual content of the expert’s testimony. This interpretation, outlined in Cedant, emphasizes the importance of examining the initial reason and timing of the expert’s retention by a party, specifically assessing whether the retention was for the purpose of providing expert testimony in the case or for some other objective. The Court instructed that a textual reading of Rule 26(a)(2)(B) indicates that an expert’s status as a retained witness hinges on the original purpose of their retention (For instance, in the context of medical expert testimony, the determination of whether a doctor is retained or not depends on whether they were hired to testify or to provide treatment).
Following the plain language of Rule 26(a)(2) and the guidance from the Cedant decision, it was determined that Cohen was unequivocally a retained expert. Throughout the litigation, his sole association with the case was as a paid witness hired by the defense counsel to provide expert testimony. This conclusion aligns with the Court’s assertion in Cedant that an expert is considered retained “if his connection to the litigation was, from the beginning, as a paid expert witness.” Cohen lacked any “first-hand factual awareness of the subject matter of the suit,” as per Cedant, and the Defendants did not dispute this fact. Rather, Cohen’s involvement with the Defendants commenced specifically when he was retained to testify in the litigation, with no other purpose or connection to the case beyond potentially offering expert testimony after the fact.
As Cohen was correctly identified as a “retained” expert witness, the Defendants were obligated, in accordance with Fed. R. Civ. P. 26(a)(2)(B) and Judge’s scheduling order, to furnish the Plaintiffs with a comprehensive expert report for him by the specified deadline of June 23, 2023. However, the Defendants failed to fulfill this requirement. Despite being alerted to this issue by the Plaintiffs, and despite the passage of several months, the Defendants did not take corrective measures to address their failure and provide the Plaintiffs with the necessary expert report and information.
Cohen’s testimony and opinions were rightfully excluded in this case due to the Defendants’ failure to furnish the necessary expert report by the deadline specified in the scheduling order. The Defendants did not demonstrate that this failure was substantially justified or harmless, leading to the appropriate exclusion of Cohen’s testimony and opinions from consideration in the case.
Violations of Rule 26(a)(2)(B)’s disclosure requirements necessitate the exclusion of undisclosed information or witnesses unless the violation is justified or deemed harmless, citing Fed. R. Civ. P. 37(c)(1). This is something held by the Court, that substantial justification, in this context, requires a level of justification that could reasonably convince a person that parties may differ on whether compliance with the disclosure request was necessary. The proponent’s position must have a reasonable basis in law and fact, quotingChapple v. Alabama, 174 F.R.D. 698, 701 (M.D. Ala. 1997). Assessing whether there was substantial justification or harmlessness in failing to disclose involves considering four factors: (1) the significance of the excluded testimony; (2) the party’s explanation for the failure to comply with the disclosure requirement; (3) the potential prejudice resulting from allowing the testimony; and (4) the availability of a continuance to provide remedy for such prejudice, as outlined in Chappell.
In addressing the substantial justification factors outlined in Chappell, the Defendants were unsuccessful in demonstrating the significance of Cohen’s proposed testimony. The Defendants asserted that the testimony’s sole purpose was to educate the jury about relevant securities laws. However, this proposed testimony was considered improper and inadmissible because it appeared to go beyond presenting factual information and delved into expressing Cohen’s opinion on the ultimate legal conclusion of whether the Defendants qualified as brokers under applicable securities laws and regulations. Citing, Montgomery v. Aetna Cas. & Sur. Co., 898 F.2d 1537, 1541 (11th Cir. 1990), which stipulates that a witness is not permitted to testify about the legal implications of conduct, as the Court must be the sole source of law for the jury. Despite the Defendants’ assertion that Cohen’s testimony would refrain from providing ultimate legal conclusions and would solely instruct the jury about applicable securities law, such proposed testimony was deemed inadequate. This alone justified the exclusion of Cohen’s testimony. Furthermore, even if we overlook the inappropriateness of the proposed expert testimony concerning domestic securities law, any attempt by the Defendants to present Cohen’s testimony to educate the jury about pertinent securities laws was deemed unnecessary. This is because the Judge would provide instructions to the jury at the trial regarding the relevant law.
The Defendants failed to provide a satisfactory explanation for their failure to disclose expert testimony appropriately. Despite the Plaintiffs’ objections and the clear language of Rule 26(a)(2), the Defendants consistently asserted, contrary to the rules, that they were not obligated to produce an expert report under Rule 26(a)(2)(B) for Cohen. Refusing to acknowledge the plain language of Rule 26(a)(2) and the inapplicability of Rule 26(a)(2)(C) to an expert with no connection to the case except for compensated retention for trial testimony, the Defendants chose not to rectify their expert disclosure violations by submitting an expert report or requesting an extension of the deadlines set by the Judge. Instead, they opted to risk violating the Judge’s scheduling order, the Federal Rules of Civil Procedure, and Local Rule 16.1(b)(6), persisting in their unjustified interpretation of Rule 26(a)(2) even after the Plaintiffs filed their motion to strike. Even at the hearing on the Plaintiffs’ motion, the Defendants still lacked a report for Cohen, and they could not articulate Cohen’s opinions on the pertinent securities laws, beyond stating that he would testify about them.
Due to the Defendants’ inadequacies in disclosing information about Cohen, admitting his testimony at trial would have severely prejudiced the Plaintiffs. Apart from the previously discussed improprieties in Cohen’s proposed testimony, there was a significant risk that his testimony could confuse or mislead the jury by serving as a competing source of law, potentially conflicting with the Judge’s instructions and creating confusion about the applicable law. The absence of an expert report that adequately presented Cohen’s opinions and their basis prevented the Plaintiffs and the Court from mitigating these prejudicial possibilities. Furthermore, the lack of a requisite report detailing Cohen’s opinions and their basis denied the Plaintiffs the opportunity to identify and retain a possible rebuttal expert, as they had no information about the opinions Cohen might express that would necessitate a rebuttal. The actual opinions held by Cohen regarding the relevant securities laws remained unknown. Moreover, the Plaintiffs were deprived of a realistic chance to depose Cohen within the discovery period due to insufficient and denied information, impeding the ability to conduct a meaningful deposition. Consequently, the Plaintiffs were also denied the capacity to prepare for and conduct a meaningful cross-examination of Cohen at trial if he were allowed to testify.
Finally, the Defendants failed to demonstrate how a continuance could rectify the prejudice faced by the Plaintiffs. Addressing the prejudice resulting from the Defendants’ expert disclosure violations would necessitate more than a mere continuance in this case. If the Defendants were to eventually produce the required expert report for Cohen, the Plaintiffs would then need time to locate and retain a rebuttal expert, and expert discovery in the case would need to be reopened to address the competing opinions of the experts. Moreover, a continuance would not remedy the fact that Cohen’s proposed testimony was improper and inadmissible. In these circumstances, a continuance would not alleviate the prejudice caused by the Defendants’ violations of their expert disclosure obligation; instead, it would result in undue delay, exacerbating the prejudice to the Plaintiffs. The Defendants were well aware of the issues surrounding Cohen’s proposed testimony and had ample opportunities to provide a timely expert report and take steps to remedy their disclosure violations in a manner that would minimize the prejudice to the Plaintiffs. However, the Defendants persistently defended their unwarranted Rule 26(a)(2) arguments and refused to take corrective actions to address their noncompliance with the required expert disclosure requirements or mitigate the resulting prejudice.
Held
The Plaintiffs’ Motion to Strike was granted, and the Defendants’ expert witness, Lauren Cohen, was precluded from testifying at trial.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case demonstrates the importance of properly disclosing expert witnesses under Rule 26(a)(2) and providing expert reports by Court-ordered deadlines. The Defendants failed to classify their expert, Cohen, appropriately or provide the required report. As a retained expert hired to provide testimony, Cohen was subject to Rule 26(a)(2)(B), not the less stringent “hybrid witness” disclosures under Rule 26(a)(2)(C). By missing the deadline to submit Cohen’s report, the Defendants violated the Court’s scheduling order.
The magistrate judge excluded Cohen’s testimony as a sanction for these disclosure violations under Rule 37(c). Key factors were the Defendants’ lack of justification for noncompliance and the resulting prejudice to the Plaintiffs. Without a proper report, the Plaintiffs could not prepare to cross-examine Cohen or retain rebuttal witnesses.
Courts have broad discretion to exclude expert testimony for failure to satisfy disclosure requirements. Here, exclusion was appropriate despite the importance of Cohen’s testimony to the defense. This case demonstrates Courts may impose exclusion even when it impacts a core defense, if discovery violations are unjustified and incurable. Attorneys should ensure meticulous compliance with Rule 26 procedures to avoid exclusion of retained experts.
This case concerned claims brought by Plaintiffs Miguel Coca and Alejandro Rangel-Lopez under Section 2 of the Voting Rights Act (“VRA”) and the Fourteenth Amendment’s Equal Protection Clause. Plaintiffs alleged that Defendants, the City of Dodge City and members of the Dodge City Commission, violated Section 2 by holding at-large elections for Commission seats. To support their claims at both summary judgment and trial, Plaintiffs submitted expert reports from Matthew Barreto and Rubén Martinez.
Barreto’s qualifications as an expert in voting rights cases were undisputed, and the Court found no need to enumerate them. It was established that Barreto possessed commendable credentials, significant acclaim, and a deep immersion in the academic discourse on voting rights in the United States, particularly concerning Latino voters. He was also a coauthor of eiCompare, a software designed for analyzing election results to evaluate racially polarized voting. At the time, Barreto held a teaching position at the University of California, Los Angeles (“UCLA”). The current case originated from a class project supervised by Barreto at UCLA, where he, along with attorney Chad Dunn, co-founded the UCLA Voting Rights Project. Notably, attorneys from the UCLA Voting Rights Group, including Chad Dunn, represented Plaintiffs in the case.
In the context of the present case, Plaintiffs relied on Barreto’s expert opinion to demonstrate that racially polarized voting existed in Dodge City, meeting the criteria outlined in the second and third Gingles factors. This reliance on Barreto’s testimony aimed to support the Plaintiffs’ claim under Section 2 of the Voting Rights Act, specifically regarding vote dilution, as established in Thornburg v. Gingles, 478 U.S. 30, 50 (1986).
In formulating his opinion, Barreto employed homogenous precinct analysis and ecological inference analysis, considering both endogenous and exogenous elections. His ultimate conclusion was that both Hispanics and whites in Dodge City consistently voted en bloc, and the cohesive white bloc votes hindered the election of preferred Hispanic candidates.
Barreto’s examination encompassed four Commission elections spanning from 2014 to 2021, along with an additional 20 general elections between 2014 and 2022. During the November 2022 general election, he asserted there were 11,743 registered voters across nine precincts in Dodge City, with 4,037 voters within the “three majority-Latino precincts.” However, Barreto did not specify which precincts were considered Latino-majority, nor did he provide supporting numbers or other population data for this claim. Nevertheless, data from the 2021 Commission election did indicate the three precincts with the highest Latino voter population: Precinct 3 with 59.9% Latino voters, Precinct 2 with 54.5% Latino voters, and Precinct 1 with 39.1% Latino voters.
Plaintiff also introduced the expert opinions of Ruben Martinez, who served as the Director of the Julian Samora Research Institute at Michigan State University, focusing on supporting Latino communities in the Midwest. His scholarly work concentrated on social inequality, intergroup relations, social movements, and political power.
Before this case, Martinez had not engaged in any research or analysis related to Kansas history, Dodge City history, the Voting Rights Act, or election systems. Additionally, he had no prior studies on the impact of at-large voting systems versus multi-district voting systems on any specific population.
In preparation for his testimony in this case, Martinez conducted a review of various sources related to historical segregation in Dodge City. He also spent two days physically present in Dodge City, during which he informally interviewed an individual who expressed concerns about the City’s delayed efforts to pave brick streets in his neighborhood. Notably, Martinez did not take substantial notes during the meeting, could not recall the interview’s location, and did not request the individual’s name. Additionally, he spent some time driving around Dodge City, claiming the ability to distinguish between Hispanic and white neighborhoods from his car.
The Defendants’ motion for summary judgment, integral to the case, was awaiting the Court’s decision. The focal point of the summary judgment motion was the present Motions to Exclude, wherein Defendants aimed to prevent the inclusion of Plaintiffs’ expert testimony on racially polarized voting in Dodge City and historical discrimination in the same area. Therefore, the Defendants sought to bar these reports, putting forth various grounds for exclusion.
Political Science Expert Witness
Dr. Matthew A. Barreto holds a Ph.D. in Political Science from the University of California, Irvine. His doctoral studies focused on American politics, race and ethnicity in politics, and political methodology. He also holds a Master’s degree in Social Science from UC Irvine and a Bachelor’s degree in Political Science from Eastern New Mexico University. Barreto currently serves as a Professor of both Political Science and Chicana/o Studies at the University of California, Los Angeles. Additionally, he holds positions as Co-Founder and Faculty Director of the Latino Policy & Politics Initiative and the UCLA Voting Rights Project.
Sociology Expert Witness
Dr. Rubén O. Martinez holds a Ph.D. in Sociology from the University of California, Riverside. He also obtained his Master’s in Sociology from Arizona State University and a Bachelor’s degree With Distinction in Behavioral Science from the University of Southern Colorado. His areas of specialization include sociological theory, social stratification, and race and ethnic relations. Ruben Martinez is a professor emeritus of sociology at Michigan State University and is also the editor of the Latinos in the United States Book series published through Michigan State University Press.
Discussions by the Court
Rule 702 of the Federal Rules of Evidence governs the admissibility of expert testimony. The Court’s responsibility is to assess the expert’s qualifications, reliability of methods, and relevance to the case. The burden lies with the party presenting the expert testimony to demonstrate admissibility. The Court has the discretion to perform its gatekeeping function under Daubert, especially in bench trials, where it has greater leeway in admitting evidence. In this case, the Court determined that a Daubert hearing was unnecessary, and it could decide the motions based on the parties’ briefs. The Court emphasized that the focus is on preventing unreliable scientific evidence from reaching the jury.
The Defendants argued for the exclusion of Matthew Barreto’s report, contending that it was scientifically unreliable. Their objections centered on Barreto’s use of homogeneous precinct analysis and ecological inference analysis. Additionally, the Defendants asserted that Barreto exhibited bias to such an extent that his entire testimony should be excluded. The Court proceeded to address each of these arguments individually.
First, the Defendants contended that Barreto’s homogeneous precinct analysis, or extreme case analysis, lacked sufficient data and should be excluded under Daubert. Homogeneous precinct analysis (HPA), widely referred to as “extreme case analysis”, a recognized method used by Courts in determining racial polarization, involves examining voting percentages in racially homogeneous precincts. For example: In a precinct where the voter population is predominantly Hispanic, it was suggested that the preferred candidate of Hispanic voters could be inferred if any candidate received a substantial majority of votes. This analysis is pertinent to the second and third Gingles preconditions, providing insights into whether minority and white voters cast vote in blocs.
Barreto’s report claims there are three majority-Latino precincts as of the November 2022 election. However, he fails to identify those precincts, share the percentage of the Latino population within, or even provide a citation for this statement. The only concrete data presented to the Court indicated that in 2021, only two precincts had a majority Latino population: Precinct 2 with 54.5% Latino voters and Precinct 3 with 59.9% Latino voters. The third-highest Latino percentage was in Precinct 1, where Latinos comprised 39.1% of the eligible voting population.
The present motion originated from the Defendants’ argument that the small majorities in certain precincts provided insufficient data for a reliable homogeneous precinct analysis (HPA). Citing recent cases from the Eastern District of Michigan and the Eastern District of California, Defendants asserted that HPA is only reliable when the ethnic minority comprises 90% or more of the precinct’s population. In contrast, Plaintiffs, without citing any supporting cases, referred to scholarly articles, including two written by Barreto, stating that HPA applies even when a minority population is 50% or greater in a given precinct.
The Court, upon review, found that Barreto’s HPA, based on precincts with a Latino Citizen Voting Age Population (CVAP) of less than 60% and one with a 39.1% Latino CVAP, would not be helpful to the trier of fact. The Court noted that existing case law, like,Large v. Fremont Cnty., 709 F. Supp. 2d 1176, 1197 (D. Wyo. 2010), tends to agree that HPA is unhelpful when the ethnic minority population is less than 90% in each precinct. The Court expressed uncertainty about Barreto’s reliable application of HPA principles and methods to the dataset, especially considering the absence of statistical data to assess potential demographic changes between 2021 and 2022.
The Court observed that no precinct had a minority CVAP of 90% or greater, which aligns with the concept of HPA where the precinct’s homogeneity allows for the inference of racially polarized voting. Since there were no homogeneous precincts, the Court determined that HPA would not be helpful to the trier of fact. The Court found it implausible to consider a 60% ratio, as urged by the Plaintiff, as sufficient, stating that such a ratio would be speculative and inconsistent with HPA’s nature as an “extreme case analysis.” Consequently, the Court deemed Barreto’s HPA unreliable, asserting that it would not assist the trier of fact due to being based on insufficient facts and data. As a result, the Court granted Defendants’ Motion to exclude Barreto’s HPA analysis in this case.
The second analysis Barreto relied on ecological inference (EI), an inferential analysis promoted by Barreto himself through the development of his eiCompare software. EI had gained broad acceptance in Courts handling vote dilution cases. However, Defendants contested Barreto’s use of this technique on three grounds: (1) the failure to include confidence intervals (margin of error); (2) inadequate data concerning endogenous elections; and (3) improper reliance on exogenous elections.
Defendants stressed the importance of considering the known or potential rate of error in a particular scientific technique, quoting Daubert. They highlighted that, the Reference Manual on Scientific Evidence encourages the use of “confidence intervals” and other margins of error, defining the former as, “An estimate, expressed as a range, for a parameter. For estimates such as averages or rates computed from large samples, a 95% confidence interval is the range from about two standard errors below to two standard errors above the estimate. Intervals obtained this way cover the true value about 95% of the time.”
Defendants, while not disputing the ecological inference (EI) technique or Barreto’s qualifications, contended that his EI analysis was unreliable due to the absence of confidence intervals or other margin of error analysis in his report. Although acknowledged as relevant to a Daubert analysis, Defendants couldn’t cite any voting dilution case where an expert was excluded solely for this reason. Voting rights cases generally appeared to accept that confidence intervals might be unnecessary in this context. The Court noted that discussions about experts’ use of confidence intervals typically occurred after bench trials, suggesting that the absence of confidence intervals could be addressed post-trial without implicating the Court’s gatekeeping function under Daubert. The Court concluded that Barreto’s report wasn’t inherently unreliable for lacking confidence intervals, and thus, the Court did not exclude it on this basis.
Endogenous elections are those which involve the elected office at issue in the case at bar. In this case, Barreto referred to endogenous elections as those where citizens elected Commission members through the at-large voting system. Defendants argued that Barreto’s analysis, based on only four elections in a city with nine precincts, had an insufficient sample size to form a reliable opinion. They referenced Cisneros v. Pasadena Indep. Sch. Dist., CIVIL ACTION NO. 4:12-CV-2579 (S.D. Tex. Apr. 25, 2014), where Barreto himself testified about the challenges of limited data in endogenous elections, citing the small number of precincts as a complicating factor in analyzing voting patterns. The Court considered this argument in evaluating the reliability of Barreto’s analysis.
The Court acknowledged the irony in Defendants’ argument about limited data in endogenous elections, given that Barreto’s most recent methodology, Bayesian Improved Surname Geocoding (“BISG”), was developed to address such situations after the Cisneros case. Plaintiffs countered by asserting that BISG was specifically designed for limited data pools, and Defendants did not respond to this claim.
Despite the sparse data from endogenous elections, the Court was not inclined to deem four elections, nine precincts, and one polling location as legally insufficient for Barreto to draw conclusions. The Court noted that the sparsity of the data could be considered during the trial to assess the weight and credibility of Barreto’s testimony. However, at that moment, the Court declined to grant Defendants’ Motion on this ground.
Defendants objected to Barreto’s report, particularly concerning its reliance on partisan exogenous elections, referring to elections other than the type at issue in the pending case. Barreto relied on general partisan elections in Dodge City for state and federal offices. While Courts recognize the limited probative value of analyzing exogenous elections, they also acknowledge their relevance in voting dilution cases, particularly when data on endogenous elections is limited. Defendants failed to identify a Section 2 case where a Court excluded an expert’s opinion solely due to reliance on exogenous elections.
Barreto’s opinion did not rely solely on exogenous elections, but they served as additional support for his conclusion about racially polarized voting in Dodge City. The Court determined that any dispute between experts should be addressed at trial, where the Court could weigh the significance of this additional analysis. Consequently, the Court denied Defendants’ Motion on this ground.
Finally, Defendants sought to exclude Barreto based on bias, contending that his involvement in the case from its origin as a class project at UCLA and the association with the UCLA Voting Rights Project raised questions about his impartiality. The Court acknowledged that expert bias goes to the weight, not the admissibility, of testimony and should be addressed through cross-examination. While recognizing the suspicious circumstances regarding Barreto’s involvement, the Court declined to bar him from testifying solely based on bias, emphasizing the lack of concrete evidence indicating that he sought employment or had preconceived notions. Therefore, the Court decided not to exclude Barreto on the grounds of bias.
Next, the Defendants contested Rubén Martinez’s qualifications as an expert in the case, noting his lack of prior experience with Dodge City history, Kansas history, or the Voting Rights Act. Moreover, Martinez, being a sociologist and not a historian, was a matter of concern for the Defendants, given his opinions on the history of official discrimination in Dodge City and Kansas, as well as the historical background of the at-large election method in Dodge City and Kansas.
For an expert to qualify in a particular field, they must possess skill, experience, or knowledge in that specific area, or the subject must fall within the reasonable confines of their expertise. In this case, both parties acknowledged that Martinez lacked skill, experience, or knowledge in the specific field of voting rights and Kansas history. The dispute centered on whether these issues fell within the reasonable confines of Martinez’s expertise as a political sociologist.
The case primarily revolves around racial discrimination, particularly in a historical and sociopolitical context, which aligns with Martinez’s expertise. While Martinez lacked prior experience with Dodge City or voting rights cases, the Court noted that Defendants did not provide any analogous cases demonstrating that this specific expertise disables him to offer helpful testimony after studying Dodge City’s history for this case. Consequently, the Court denied Defendants’ Motion on these grounds.
The majority of Defendants’ Motion highlights Martinez’s reliance on secondary sources instead of conducting his own research or possessing prior knowledge. However, Defendants did not cite any case where a Court deemed an expert opinion based solely on secondary sources inadequate as a matter of law. Federal caselaw, instead, recognizes that an expert witness can express an opinion based on hearsay sources, including secondary sources. Martinez’s heavy reliance on secondary sources was considered by the Court as affecting the persuasive value of his testimony rather than rendering it inadmissible. The Court determined that the impact of this reliance could be best assessed during the trial, and consequently, it decided not to exclude Martinez’s testimony on this basis.
Defendants contested portions of Martinez’s report, asserting that they lacked sufficient data to support his opinion. Specifically, concerns were raised about Martinez’s personal observations made during his two-day trip to Dodge City, where he informally interviewed one person and drove around the city. For example:- Martinez opined in paragraph 3.22 that housing in Dodge City was highly segregated, based solely on his observations. During his deposition, he admitted not reviewing census data or demographic information and couldn’t explain how he visually identified racially compact housing. The Court deemed such unsupported conclusions about racially segregated housing to fall short of Daubert’s reliability standards, leading to the exclusion of the last sentence of paragraph 3.22.
Likewise, paragraph 3.19 in Martinez’s report detailed an informal interview with a Dodge City resident from Zacatecas, Mexico, who complained about the City not paving the brick streets in his neighborhood. However, Martinez included this information without clarity on its relevance or the resident’s identity. During his deposition, Martinez acknowledged that the individual’s complaint was not evidence of official discrimination. The Court found this information irrelevant to the history of race relations in Dodge City and, as it fell outside the scope of Martinez’s testimony. Perhaps realizing this, Plaintiffs chose not to respond to Defendants’ argument on this point. Thus, the Court excluded paragraph 3.19 in its entirety.
Held
The Court issued its rulings on the motions, granting in part and denying in part both Defendants’ Motion to Exclude Matthew Barreto and Defendants’ Motion to Exclude Ruben Martinez. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case demonstrates important considerations regarding the admissibility of expert witness testimony. First, the qualifications of the expert must match the subject matter in the case. General expertise may be sufficient if it reasonably aligns with the issues presented. Second, the principles and methodology used by the expert must be reliable as assessed under Daubert.
Additionally, sample size matters when applying techniques like homogeneous precinct analysis. If the data is too limited, the results might not assist the trier of fact. However, ecological inference may produce helpful opinions even from small data sets. Experts may also rely exclusively on secondary sources, but this affects credibility. Finally, personal observations by the expert must contain adequate factual detail connecting them to an issue in the case. Conclusory or vague observations lackevidenceof reliability.
Overall, this case shows that expert testimony requires both methodological rigor regarding the subject matter as well as factual support for any case-specific opinions. Assumptions and inferences should be clearly explained in the expert’s report. Gaps in these areas impact admissibility in Court.
