Over three decades ago, Plaintiff Sherry Morton founded a health and fitness company called Millennium Health & Fitness, Inc. On November 1, 2023, Morton and Defendant BCAP GDI 1, Inc. (“Defendant” or “BCAP”) entered into a Stock Purchase Agreement, whereby Morton agreed to sell
Millennium to BCAP.
The same day, Plaintiff National Aerobics & Fitness Trainers Association (“NAFTA”) and BCAP entered into a separate agreement (“NAFTA Agreement”), whereby BCAP agreed to pay NAFTA $100,000 per year for at least 750 health and fitness trainings and certifications per year up until October 31, 2028. Per the agreement, NAFTA was obligated to
perform its services in accordance with the “highest industry standards.”
On December 31, 2024, Plaintiffs filed the present action, accusing BCAP of breaching the Stock Purchase Agreement by retaining a portion of the purchase price as an “Indemnity Holdback.” Plaintiffs also accused BCAP of improperly terminating the NAFTA Agreement after one year, alleging that BCAP “manufactured false allegations of ‘cause’ for termination and . . . unilaterally declared the NAFTA Agreement to have been terminated.”
According to BCAP, Morton had confidential Millenium files downloaded to an external hard drive and deleted from Millennium’s system, thus depriving Millennium of information needed to successfully bid on three government contracts pertaining to health and fitness services for the Federal Bureau of Investigation (“FBI”), U.S. Immigration and Customs Enforcement (“ICE”) and the U.S. Marine Corps (“USMC”).
Plaintiffs sought to exclude all testimony of Defendant’s industry expert, Anthony A. Abbott, and Defendant’s damages expert, Kellie M. Fedkenheuer. BCAP also sought to exclude certain testimony relating to causation and liability from Plaintiffs’ rebuttal damages expert, Julia Alcarez.
Exercise Expert Witness
Anthony Almon Abbott holds a doctorate in exercise science and physiology and has over forty-five years of experience as a physical fitness instructor, personal trainer and facility manager.
Among other accolades, Abbott developed the first nationally accredited personal trainer certification with the National Strength & Conditioning Association.
Accounting Expert Witness
Kellie Mathis Fedkenheuer is a Certified Public Accountant with over fifteen years of forensic accounting experience.
Julia Alcarez is a Certified Public Accountant with over fifteen years of experience working on government contract and forensic accounting matters.
Discussion by the Court
A. Plaintiffs’ Motion to Exclude Testimony of Anthony Abbott
Highlighting several allegedly insufficient aspects of NAFTA’s training programs (including lack of accreditation and short timeframe), Abbott ultimately opined that NAFTA failed to provide services according to the “highest industry standards” as required by the parties’ agreement.
Plaintiffs argued that Abbott’s testimony should be excluded as unreliable because he relied purely on improper ipse dixit in rendering his opinions on the quality of NAFTA’s trainings and certifications.
In BCAP’s view, NAFTA is a “pay-to-play, flight-by-night” fictional association “created by Plaintiff Sherry Morton,” and Abbott is allowed to rely on his experience in rendering his opinions. BCAP also insisted that Abbott sufficiently researched NAFTA’s training programs to render a reliable and informed opinion as to their quality. The Court ultimately agreed with BCAP that Abbott’s proffered testimony met the reliability requirement.
Abbott’s opinions are more than ipse dixit; he appears to have sufficiently investigated NAFTA’s training programs to be able to render an opinion as to the quality of those programs. He reviewed NAFTA advertisements as well as the accreditation status, length of time entailed, course materials and in-person requirements of NAFTA certification courses.
That Abbott did not take or review a NAFTA certification exam does not mean that his opinions are based purely on ipse dixit.
Because Abbott’s opinion on the quality of NAFTA’s services is supported by sufficiently “good grounds” to be reliable, the Court denied Plaintiffs’ motion to exclude Abbott’s testimony.
B. Plaintiffs’ Motion to Exclude Testimony of Kellie Fedkenheuer
In her opening report, Fedkenheuer indicated that she was not offering an opinion on whether Millennium would have obtained the FBI, ICE and USMC government contracts had Morton not allegedly deleted the confidential Millenium files.
To estimate lost profits damages for the three lost government contracts, Fedkenheuer identified “three ongoing contracts in 2024 and 2025 that had a size and/or scope that was similar to those of the FBI, ICE and USMC awards.” And for future lost profits damages, she applied a discount rate of 9% based, at least in part, on Delaware’s usury statute.
1. Discount Rate Analysis
Plaintiffs vehemently disputed the propriety of the 9% discount rate Fedkenheuer used for future lost profits. In Plaintiffs’ view, this discount rate should be excluded as unreliable because Fedkenheuer arbitrarily selected the rate based on Delaware’s usury statute, which provides that pre-judgment interest will be “5% over the Federal Reserve discount rate.”
The Court agreed with BCAP that Fedkenheuer’s discount rate analysis is based on sufficiently “good grounds” to meet the reliability requirement.
Fedkenheuer considered Millenium’s Weighted Average Cost of Capital (WACC) and Weighted Average Cost of Debt (WACD) in determining that the 9% rate was appropriate.
For the same reasons, the Court is also unpersuaded that Fedkenheuer “applied no methodology” in selecting the rate and acted merely as a mouthpiece for Defendant’s attorneys.
2. Gross Profit Margin
Plaintiffs next argued that Fedkenheuer’s gross profit margin determination should be excluded as unreliable because, in selecting comparable contracts to the lost bids, she purportedly relied solely on her conversations with BCAP Vice President and Millennium Operating Partner Jeffrey Eagan.
However, Fedkenheuer’s methodology in selecting comparable contracts was sufficiently reliable and did not, as Plaintiffs contend, “blindly adhere” to data provided by Eagan “absent any sort of independent investigation.”
In other words, Fedkenheuer did more than merely speak with Eagan to identify comparable contracts. She analyzed information regarding Millennium’s historical contracts (e.g., revenue) to identify contracts that she deemed comparable to the lost bids.
3. Factual Narrative Underlying Counterclaims IV and IX
BCAP filed its Counterclaims, alleging (among other things) that Morton breached the Stock Purchase Agreement by failing to deliver (and stealing) Millennium intellectual property (Counterclaim IV) and by failing to disclose a liability pertaining to Millennium and the U.S. Environmental Protection Agency (“EPA”) (Counterclaim IX).
Plaintiffs argued that Fedkenheuer’s factual narratives of Counterclaims IV and IX are an inappropriate rehashing of BCAP’s theory of the case that will not assist the trier of fact.
If this case were proceeding to a jury trial, the Court would likely agree that several statements in Fedkenheuer’s expert report venture “into areas in which the jury needs no aid or illumination.”
That being said, the concerns underlying Federal Rule of Evidence 403, such as confusion and unfair prejudice, are minimal where, as here, the case proceeds via bench trial. Therefore, the Court will not exclude Fedkenheuer’s factual narratives underlying Counterclaims IV and IX because they are limited and provide context to her opinions.
4. Calculation of Damages Underlying Counterclaim IX
Finally, Plaintiffs argued that Fedkenheuer’s calculation of damages underlying Counterclaim IX amounts to “mere arithmetic” and is therefore “outside the remit of an economic damages expert and would not assist the trier of fact.”
Fedkenheuer’s damages calculations with respect to Counterclaim IX consist of merely adding collections received from EPA personnel to costs allegedly incurred by BCAP as a result. And BCAP did not seriously dispute that Fedkenheuer’s calculation of damages for Counterclaim IX constitutes “mere arithmetic.” The Court, as fact finder, is “more than capable of adding the specific costs associated with” the alleged damages with respect to Counterclaim IX “that will be offered by Plaintiffs through their fact witnesses.”
But considering this is a bench trial, the testimony will be conditionally admitted subject to a later Rule 702 determination by the trial judge.
C. Defendant’s Motion to Exclude Testimony of Julia Alcarez
1. Qualification
BCAP first argued that Alcarez is not qualified to opine on causation with respect to Counterclaim IV.
BCAP took great pains to highlight her apparent lack of experience serving as a contracting officer. But BCAP overlooked the fact that Alcarez has worked on government procurement matters for sixteen years.
Indeed, according to her CV, she has experience with “preparation, review, analysis, and testimony related to claims submitted by contractors to US
Government agencies.”
The Court is ultimately unpersuaded that Alcarez’s lack of experience serving as a contracting officer warrants exclusion of her causation opinions.
2. Legal Conclusions
BCAP next argued that Alcarez’s causation opinions should be excluded because they constitute inadmissible legal conclusions regarding the Federal Acquisition Regulations (“FAR”).
However, Alcarez provided a detailed summary and interpretation of Federal Acquisition Regulations. This summary of the relevant regulations and analysis as to their meaning appears to constitute impermissible legal conclusions.
However, the case proceeds via bench trial. The presiding judge is more than capable of parsing the causation opinions offered at trial and excluding any improper legal opinions as appropriate.
3. Improper Rebuttal Testimony
BCAP also argued that Alcarez’s causation opinions should be excluded as improper rebuttal testimony that exceeds the scope of BCAP’s opening reports.
This argument is one that belongs in a motion to strike under Rule 37 – not in a Daubert motion. The Court will not address issues regarding expert testimony that should have been raised elsewhere.
Held
The Court denied the Plaintiffs’ motions to exclude the testimony of Anthony Abbott and Kellie Fedkenheuer as well as the Defendant’s motion to exclude certain testimony of Julia Alcarez.
Key Takeaway
Expert testimony on issues of law are not admissible for the purposes of proving that the government’s interpretation of the Cost Accounting Standards (‘CAS’) and Federal Acquisition Regulations (‘FAR’) are not correct. But again, this case is proceeding to a bench trial. The presiding judge is more than capable of parsing the causation opinions offered at trial and excluding any improper legal opinions as appropriate.
Case Details:
| Case Caption: | Morton V. Bcap Gdi 1, Inc. |
| Docket Number: | 1:24cv1432 |
| Court Name: | United States District Court for the District of Delaware |
| Order Date: | July 16, 2026 |
