Expert Witness Profiler

Tag: Damages

  • Court admits Expert Testimony on the Value of NIL Rights in Broadcasts in this Antitrust Lawsuit

    Court admits Expert Testimony on the Value of NIL Rights in Broadcasts in this Antitrust Lawsuit

    Consolidating separate cases involving student-athletes Sedona Prince, Grant House, and Tymir Oliver, the litigation contested National Collegiate Athletic Association (“NCAA”) regulations limiting student-athletes’ NIL (name, image, likeness) compensation. Plaintiffs alleged antitrust violations, asserting that these rules restrained fair compensation and artificially suppressed NIL prices. In June 2021, the Court dismissed some of Oliver’s claims seeking injunctive relief but denied the rest of the motions to dismiss. Following the consolidation approval in July, the Plaintiffs, through the Consolidated Amended Complaint (“CAC”) submitted on July 26, 2021, broadened their accusations by incorporating details about an interim NIL policy implemented by the NCAA on July 1, 2021.

    The CAC contended that the interim policy, although seemingly easing restrictions, still hindered NIL opportunities for student-athletes. It highlighted that while some prohibitions were temporarily suspended, rules preventing institutions from compensating student-athletes for NIL use and restricting NIL compensation tied to athletic participation remained intact. Moreover, the NCAA reserved the right to reinstate all suspended NIL limitations at any time.

    Plaintiffs argued that these NCAA rules, even in their suspended state, constituted anticompetitive behavior, violating Section 1 of the Sherman Act. They alleged that these regulations artificially depressed compensation levels for student-athletes’ NIL and stifled their ability to capitalize on commercial opportunities while participating in Division I teams. In the absence of these nationwide constraints, the Plaintiffs contended that Division I conferences and schools would have engaged in competitive practices, allowing student-athletes to exploit NIL opportunities and share in the economic benefits arising from their names, images, and likenesses.

    The CAC elaborated on a scenario where, without the contested rules, conferences and schools would have sought to enhance the value of athletes’ personal brands by redirecting funds from extravagant facilities and coaching salaries towards marketing and educational resources. This strategic reallocation aimed to foster opportunities for co-marketing student-athletes’ NIL with the school’s brand, further benefiting the athletes commercially.

    In seeking legal recourse, the Plaintiffs pursued similar relief as their initial complaints, including injunctions, declaratory judgments, damages, and attorneys’ fees. These claims persisted despite the new allegations about the interim NIL policy, asserting that the NCAA’s regulations, whether suspended or not, unfairly restricted student-athletes’ ability to profit from their NIL.

    Defendants filed a motion to exclude under Federal Rule of Evidence 702 certain opinions of Edwin S. Desser, Plaintiffs’ expert on sports media and broadcasting rights, and Daniel A. Rascher, Plaintiffs’ economics expert.

    Broadcasting Industry Expert Witness 

    Edwin S. Desser has worked in the sports media industry since 1977 and has decades of experience in negotiating and valuing professional sports broadcast agreements. He spent 23 years as a media executive for the National Basketball Association (NBA), negotiating major broadcast agreements with ESPN, Turner, and NBC. He now serves as President and Owner of Desser Sports Media, Inc. – a sports media consulting firm where he advises clients on rights negotiations and valuations. He has strong academic credentials including a B.A. in Economics from the University of California, Los Angeles and an M.B.A. focused on Marketing from the USC Marshall School of Business. 

    Economics Expert Witness 

    Dr. Daniel A. Rascher holds an academic appointment as a Professor and Director of Academic Programs for the Master of Science in Sport Management at the University of San Francisco. Additionally, he serves as a Partner at OSKR, LLC, an economic consulting firm, and is the President and Founder of SportsEconomics, LLC. He received his Doctor of Philosophy degree in Economics from the prestigious University of California, Berkeley.  

    Discussion by the Court

    Desser undertook the task of assessing the estimated value of student-athletes’ broadcast NIL (BNIL) in major collegiate sports like Power Five Football Bowl Subdivision (FBS) games, men’s Division I basketball, and women’s Division I basketball. His conclusion posited that around ten percent of the revenue generated from broadcast rights for these sports could be attributed to the inclusion of student-athletes’ NIL within the broadcasts. This determination was based on his extensive background in negotiating professional sports broadcast agreements and an analysis that incorporated data, including royalty rates from professional sports group licensing.

    Additionally, Desser was tasked with estimating the allocation of revenue per sport within Defendants’ multi-sport broadcast agreements. He determined an approximate breakdown wherein seventy-five percent of the revenue was allocated to football, fifteen percent to men’s basketball, five percent to women’s basketball, and the remaining five percent distributed among all other sports covered by these agreements. This allocation opinion stemmed from his wealth of experience in negotiating sports media deals, conversations with numerous network and college conference executives, and a comprehensive review of pertinent evidence, such as audited financial statements, various broadcast contracts for college sports, and publicly available information indicating the popularity of different collegiate sports.

    Defendants sought to exclude Desser’s ten percent opinion, arguing its unreliability based on several grounds. They claimed that the opinion lacked a factual basis due to the absence of any prior separate valuation of student-athletes’ NIL in broadcasts, asserting the absence of a “real-world” market or data for reliable valuations. Additionally, Defendants contended that Desser’s industry experience wasn’t sufficient as he hadn’t specifically negotiated college sports broadcast rights.

    In opposition to the motion, Plaintiffs argued that professionals like Desser, with expertise in negotiating broadcasting rights, often rely on their experience to estimate the worth of various components within these rights. They highlighted Desser’s detailed explanation of how his extensive industry background supported the ten percent opinion. Moreover, Plaintiffs asserted that Desser substantiated this opinion by examining comparable data points, such as the royalty rates for professional football and basketball players’ NIL in merchandise and video games. Lastly, Plaintiffs pointed out that the absence of concrete real-world data regarding the value of student-athletes’ NIL in broadcasts was a consequence of Defendants’ limitations on student-athlete compensation.

    In his report, Desser outlined his methodology for estimating that at least ten percent of the value of Defendants’ broadcast agreements could be attributed to student-athletes’ NIL in FBS football and Division I men’s and women’s basketball broadcasts. He drew upon his extensive experience in negotiating professional sports media rights, estimating that roughly half of the total value of sports broadcasts was due to athletes’ contributions, encompassing both their athletic performance and NIL. From his experience, Desser deduced that the majority of this value stemmed from athletic performance, with a minority—approximately twenty to thirty percent—attributed to their NIL. Consequently, he conservatively concluded that ten percent was a plausible estimate for the value of student-athletes’ NIL in these specific broadcasts.

    Furthermore, Desser supported this estimation not only through his experience but also by examining royalty rates in group licensing agreements for merchandise and video games utilizing professional athletes’ NIL. He underscored the relevance of video game royalty rates, deeming them highly indicative as video games emulate real-life sporting scenarios without involving athletes’ actual performance, isolating the value of their NIL. Given Desser’s comprehensive explanation rooted in his expertise and the relevance of the royalty data he analyzed, the Court deemed his ten percent opinion reliable and not subject to exclusion.

    Defendants attempted to discredit Desser’s opinion by arguing that the concept of valuing NIL rights in broadcasts was fabricated solely for this litigation and lacked a real-world market due to the absence of separate valuations of student-athletes’ NIL in past college sports broadcast agreements. They contended that this absence invalidated the factual basis for attributing value to student-athletes’ NIL and suggested that, as a result, Desser’s estimation lacked credibility.

    However, the Court dismissed this argument, highlighting the disagreement between the parties regarding the existence of value for student-athletes’ NIL in broadcasts. It clarified that the dispute over whether student-athletes’ NIL possess value didn’t warrant exclusion of Desser’s opinion. The Court emphasized that the determination of Desser’s opinion’s reliability rested on its foundational basis rather than the specific conclusion it reached. Additionally, it underscored the different standards applicable to damages calculations in antitrust cases compared to those in patent cases, indicating that the relaxed standard for antitrust cases acknowledges the necessity of drawing inferences or assumptions due to the nature of the conduct being scrutinized.

    Desser’s opinion on the value of student-athletes’ NIL in broadcasts was backed by a comprehensive explanation despite the absence of separate valuations in previous broadcast contracts. He acknowledged the lack of standalone valuation for NIL in existing contracts, noting that broadcast agreements typically bundle rights without isolating specific components unless a distinct business reason necessitates it.

    Desser emphasized the inherent value of student-athletes’ NIL within sports broadcasts, highlighting their significance in enhancing viewer interest. He asserted that omitting NIL—such as players’ faces or names—would diminish the appeal of sports broadcasts to audiences and consequently reduce attractiveness to advertisers. Moreover, Desser pointed to the actions of media companies securing rights to student-athletes’ NIL within broadcast agreements, underscoring their insistence on contractual assurances from entities like the Power 5 conferences or the NCAA. These assurances were deemed necessary by broadcast partners to ensure the usage rights of athlete NIL across the country, despite any legal assertions by the NCAA regarding these rights.

    The Court recognized that while these opinions might be novel, they were supported by Desser’s thorough explanations, validating the assertion that student-athletes’ NIL indeed hold value within broadcasts. Additionally, Desser’s specific estimation of at least ten percent of Defendants’ broadcast revenues being attributed to student-athletes’ NIL was deemed adequately substantiated based on the aforementioned reasoning. The Court emphasized that the novelty of these opinions wasn’t a sufficient reason for their exclusion, given their substantial support.

    Defendants raised concerns about Desser’s lack of experience in negotiating college sports media agreements as a basis for questioning the reliability of his ten percent opinion. However, Desser provided a thorough rationale explaining the relevance of his extensive background in negotiating professional sports media contracts. He highlighted the substantial similarities between professional and college sports broadcasting deals, emphasizing the commonalities in media license agreements, networks involved, production teams, equipment used, sponsorships, distribution methods, and viewer demographics.

    Moreover, Desser’s involvement as a consultant in college media rights further supplemented his expertise in this domain. The Court noted that challenges to Desser’s experience mainly addressed the weight to be assigned to his opinion rather than its admissibility.

    Defendants also contested the validity of the professional sports group licensing royalty rates that Desser relied upon to support his ten percent opinion. They argued that these rates weren’t suitable comparators for estimating the value of student-athletes’ NIL in broadcasts as they pertained to products like apparel and video games, not sports broadcasts themselves. However, the Court deemed these challenges as matters affecting the weight of Desser’s opinion rather than its admissibility. Desser adequately justified his reliance on these group licensing royalty rates, explaining their relevance in estimating the value of student-athletes’ NIL within broadcasts.

    Defendants sought to exclude Desser’s allocation opinion regarding the distribution of broadcast revenues across various sports in multi-sport contracts, citing concerns about its reliability. They argued that Desser’s reliance on his experience lacked sufficient explanation, doubted the consistency of allocation ratios of multi-sport broadcast revenue to various sports across conferences, and pointed to evidence contradicting his allocation opinion, such as disparities in allocations within the Southeastern Conference and the increasing popularity of women’s sports.

    In response, Plaintiffs defended Desser’s allocation opinion as reliable, emphasizing its foundation in his extensive experience in sports media deal negotiation, discussions with industry executives, and analysis of relevant evidence, including audited financial statements and broadcast contracts for college sports. Desser’s rationale centered on the dominance of FBS football as the primary revenue driver due to its widespread popularity compared to other sports. He reasoned that men’s basketball, while popular, significantly trailed football in value contribution, while women’s basketball, less popular than its male counterpart, held even less value. Other sports collectively contributed the least due to minimal popularity, often relegated to streaming platforms or conference networks.

    Defendants disputed the validity of Desser’s allocation opinion, claiming it lacked foundation as they interpreted it to imply uniform allocation percentages across all conferences, which they argued was unrealistic. However, Desser clarified that his opinion represented an “overall average allocation” applicable across multi-sport broadcast agreements for all Defendants involved in the case. This opinion did not propose a conference-specific, season-specific, or school-specific allocation but aimed to offer a reasonable allocation to apply across the multi-sport college broadcast agreements. The Court dismissed Defendants’ misinterpretation of Desser’s opinion as insufficient grounds for exclusion.

    Moreover, Defendants raised concerns about the need for specific, annual revisions in allocating revenues due to variations across schools, conferences, and years. Desser, however, justified his “overall average allocation” by explaining that any such variations were already factored into the final rights fees received by Defendants. He asserted that his allocation opinion accounted for these variations, as it was applied to the final rights fees after considering the diverse factors at play. The Court concluded that criticisms regarding the specifics of Desser’s approach affected the weight of his opinion rather than its admissibility.

    Defendants also criticized the evidence Desser relied upon, arguing that he cherry-picked supportive aspects while disregarding contradictory elements in the documents. However, the Court deemed these criticisms as impacting the weight given to Desser’s allocation opinion rather than challenging its admissibility.

    Rascher was tasked with developing methodologies to estimate injury and damages for alleged harm suffered by certain members of proposed classes related to broadcast NIL (BNIL) injury and damages, as well as third-party NIL injury and damages.

    For BNIL injury and damages estimation, Rascher constructed a methodology centered on the absence of rules prohibiting conferences and schools from paying student-athletes for their NIL in broadcasts, while other NCAA rules regarding payment for athletic performance remained intact. He envisioned a hypothetical scenario where Power Five Conferences would compete to attract student-athletes by offering payments for their NIL in broadcasts, maximizing conference broadcast revenues. Rascher posited that this competition would prompt conferences to engage in group-licensing agreements with incoming FBS football and Division I basketball student-athletes, providing equal payments for their NIL in broadcasts.

    To estimate the economic value conferences would have paid the proposed class members, Rascher combined Desser’s ten percent opinion with his own analysis of relevant data, including professional sports group licensing royalty rates. He estimated the collective value of proposed class members’ broadcast NIL as around ten percent of the revenues received by Power Five Conferences from broadcasting contracts for FBS football and Division I basketball. Additionally, Rascher relied on Desser’s allocation opinion and his own assessment of data to determine the allocation of revenues from multi-sport contracts to specific sports.

    Next, Rascher calculated the student-athlete share of each conference’s broadcast revenues for each sport by multiplying the total revenues of each conference by ten percent, representing the value of student-athletes’ NIL compared to broadcast contracts. He then divided this share by the number of proposed class members in each conference, year, and sport to estimate the individual payment each member would have received annually in the absence of the challenged rules. These estimations are preliminary, with final adjustments planned upon completion of discovery.

    Rascher developed a “before-and-after” methodology to estimate third-party NIL injury and damages for eligible members of proposed classes affected by the challenged NCAA rules. This method focused on estimating third-party NIL payments student-athletes would have received if the rules prohibiting such payments had not been in place.

    The “after period” considered payments made after July 1, 2021, when the NCAA suspended the rules prohibiting third-party NIL payments until the date of class certification. Rascher used these “after period” payments as a baseline to estimate the potential third-party NIL payments that would have occurred in the “before period,” ranging from the 2016-2017 academic year to July 1, 2021, in the absence of the challenged rules.

    Rascher deemed the “after period” payments as reliable estimates of the economic value of third-party NIL payments, capturing effects based on individual student-athletes’ identities, sports, positions, and schools. To calculate a preliminary estimate for the “before period,” Rascher used one year of “after period” payments, acknowledging data limitations. He utilized reported third-party NIL payment information from student-athletes to estimate these payments in the “after period,” excluding individuals who did not receive such compensation during this period.

    Rascher plans to refine his estimates in the forthcoming merits report, considering supply and demand variations between the “before and after periods” for each student-athlete. These adjustments would account for factors like transfers between schools or conferences, changes in the athlete’s role impacting NIL compensation, and the pandemic’s impact on demand for Division I college sports during the “before period.” Rascher intends to use available data, including school records or publicly available information, to make these adjustments, showcasing the methodology’s reliability in measuring third-party NIL compensation while considering significant supply and demand differences.

    Defendants aimed to exclude Rascher’s BNIL methodology, alleging its unreliability due to multiple reasons. First, they asserted that Rascher’s reliance on Desser’s ten percent opinion was speculative and unsupported. Additionally, Defendants claimed that the assumption of equal broadcast NIL payments for all proposed class members contradicted economic theory and failed to consider variations in conferences’ broadcasting revenues. Lastly, they argued Rascher’s approach overlooked legal factors post-July 2021 that might prohibit NIL payments.

    However, the Court rejected these grounds for exclusion. It determined that Rascher’s BNIL methodology wasn’t solely reliant on Desser’s ten percent opinion but also incorporated Rascher’s analysis of group licensing royalty rates for professional athletes’ NIL, validating the ten percent estimate. Rascher’s analysis was deemed reasonable and adequately supported.

    Regarding the equal payments assumption, Rascher justified this by arguing that in the absence of the challenged rules, rational economic behavior by conferences would entail equal NIL payments to student-athletes. He emphasized that unequal payments would not align with economic rationality at a conference level, potentially placing less elite schools at a recruiting disadvantage.

    The Court found Rascher’s argument compelling, citing real-world evidence of professional athletes sharing licensing revenue equally and explained that Rascher’s methodology was founded on economic principles and evidence. Rascher’s response to criticisms, backed by economic reasoning, supported the conclusion that equal payments for broadcast NIL were rational within the context of conference-level competition.

    Rascher defended his BNIL methodology by highlighting that paying higher amounts based on athletes’ superstar status would essentially constitute compensation for their athletic performance, which is prohibited by NCAA rules. His methodology operated on the assumption that the NCAA’s restrictions on performance-based compensation would persist, as these were not challenged by the Plaintiffs in the legal action. The Court determined that Defendants’ objections to Rascher’s assumptions were more about the weight given to his opinions rather than questioning their admissibility.

    Defendants argued against the reliability of Rascher’s BNIL methodology, claiming it was flawed due to the assumption that each conference would pay ten percent of its broadcast revenue to recruit student-athletes in football and basketball. They contended that this assumption was economically unsound and could disadvantage conferences with lower broadcasting revenue. However, the Court disagreed with this assertion, noting that Rascher provided reasoning for the economic viability of this assumption in his constructed scenario, emphasizing that existing revenue differences among conferences already influenced investment levels in various aspects impacting athletes’ decisions.

    Defendants also challenged Rascher’s but-for world, claiming it was impossible as it didn’t account for Title IX concerns, diversity and equity considerations, or state laws implemented in July 2021, which allegedly prohibited NIL payments to student-athletes. However, the Court found these objections insufficient to deem Rascher’s BNIL methodology unreliable. It concluded that disagreements over Rascher’s considerations in constructing the scenario were issues related to the weight of his methodology, not its admissibility.

    Defendants sought to exclude Rascher’s third-party NIL methodology, claiming it was unreliable because it supposedly overlooked critical factors that could influence the market for student-athletes’ NIL between the before and after periods. They argued that Rascher’s method presumed uniformity in NIL values across periods without considering changes in athlete popularity, performance, or alterations in the NIL market.

    However, the Court rejected this argument. It found that Rascher’s methodology wasn’t based on a simplistic assumption that NIL values remained constant across time. Instead, it used the observed NIL values in the “after period” as a starting point to estimate values in the “before period.” Rascher accounted for potential variations by adjusting the baseline for factors like athlete transfers, changes in roles, and the pandemic’s impact on sports demand. Additionally, Rascher tested this methodology with specific class members, demonstrating its ability to calculate third-party NIL payments while considering various factors affecting the market.

    The Court concluded that Rascher’s approach wasn’t unreliable due to Defendants’ objections. It emphasized that challenges to Rascher’s failure to adjust for certain factors impacted the weight of his methodology, not its admissibility.

    Held

    The Court denied Defendants’ motion to exclude certain opinions by Edwin S. Desser and Daniel A. Rascher. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaway

    In the case, expert witnesses Desser and Rascher employed methodologies and formed opinions crucial to estimating the value of student-athletes’ Name, Image, and Likeness (NIL) in broadcast agreements. Desser’s estimation of around ten percent of broadcast revenues being attributed to student-athletes’ NIL was supported by his negotiation expertise and an analysis of relevant data, despite challenges regarding the absence of standalone valuations in previous college sports broadcast contracts. Rascher’s methodologies, particularly in estimating Broadcast NIL (BNIL) injury and damages, faced objections from Defendants questioning the assumptions of equal payments and overlooking post-July 2021 legal factors. However, the Court defended the reliability of both Desser and Rascher’s methodologies, highlighting their foundations in economic principles, real-world evidence, and expert analyses despite challenges to specific elements of their approaches.

  • Court admits the testimony of Industrial Hygiene & Mold Expert Witness with regard to source of water intrusions that caused the mold growth

    Court admits the testimony of Industrial Hygiene & Mold Expert Witness with regard to source of water intrusions that caused the mold growth

    Zahid Hotel Group, LLC, the owner of a LaQuinta Inn insured by AmGUARD Insurance Company, claimed extensive damage to the property following Hurricane Ida in August 2021. Although AmGUARD disbursed $1,032,617.92 for building repairs and mitigation, Zahid contended that the sum fell short of covering repair expenses and failed to compensate for business personal property and income loss as outlined in the policy.

    Zahid initiated legal action against AmGUARD, alleging breach of contract, failure to adhere to statutory payment deadlines, and breach of the duty of good faith and fair dealing. The sought-after damages included diminution in property value, actual repair costs, reimbursement for personal property repairs, loss of business income, consequential damages, attorney’s fees, and statutory penalties.

    In response, AmGUARD launched a counterclaim against Zahid, asserting breach of contract, bad faith breach of contract, and a declaration of no coverage for misrepresentation. AmGUARD accused Zahid of overstating damages, attributing pre-existing damages to Hurricane Ida despite knowledge of their non-Ida origins, and failing to mitigate the damages caused by the hurricane.

    Zahid filed a Daubert motion to exclude the testimony of AmGUARD’s mold expert, Dr. Coreen A. Robbins (“Robbins”), a Certified Industrial Hygienist, about severe mold growth and questions about the source of the water intrusions that caused the mold growth on the basis that her testimony will not assist the trier of fact, is not based on sufficient facts or data, and is not the product of reliably applied principles and methods. 

    Industrial Hygiene & Mold Expert Witness

     Dr. Coreen A. Robbins MHS, Ph.D, CIH is a Senior Vice President and Principal Industrial Hygienist at J.S. Held, LLC. She holds a Bachelor of Science (BS) in Zoology from Michigan State University, a Master of Health Science (MHS) in Industrial Hygiene and Safety Sciences, and a Ph.D. from Johns Hopkins University. She has been a Certified Industrial Hygienist (CIH) since 1992. Robbins has worked as an industrial hygienist since 1986 and has served as a consultant and expert in investigations throughout the U.S. Her activities include exposure assessment in residential, commercial, and occupational environments and contexts (consumer, industrial products) and time frames (recent or current exposure, historical). Across these environments, contexts and time frames, she has experience and expertise with a wide variety of agents including animal and dust mite antigens, asbestos, benzene, carbon monoxide (CO), diacetyl, formaldehyde, fiberglass and other mineral fibers, glutaraldehyde, mold and bacteria, odors, and smoke residue/soot/ash. She has provided technical and expert consulting services and expert testimony in these and other areas in relation to exposure science and industrial hygiene. 

    Discussion by the Court

    Zahid contested the necessity of Robbins’ testimony on surface mold growth, asserting that Louisiana jurors possess adequate familiarity with mold growth patterns. They labeled Robbins’ deduction regarding the water intrusion source as an “educated guess,” lacking scientific foundation, particularly due to her purported failure to review historical hotel data. Zahid pointed out discrepancies between Robbins’ analysis of top-down water intrusion and pre-existing inspectors’ observations, challenging the coherence of her methodology.

    Contrarily, AmGUARD defended Robbins’ expertise, emphasizing her qualifications as unquestionable despite differing conclusions from other experts. They highlighted her ability to differentiate between bulk event mold growth and condensation mold growth, enabling her to elucidate the varying mold appearances in different rooms and deduce the infiltration path of water into the building. AmGUARD addressed Zahid’s focus on grievances involving individuals not relevant to the Daubert motion, such as claims adjuster Michael Barrett and engineer, Kurt Mulder.

    The Court determined that Robbins’ testimony was deemed beneficial to the fact-finding process, offering expertise beyond the common knowledge of a Louisiana juror regarding mold growth. Given the severity of mold issues and the inquiries into water intrusion sources, Robbins’ testimony provided scientific context, enhancing the parties’ arguments and findings about mold growth under various conditions. The fact that Robbins’ conclusions differed from other experts didn’t render her testimony as mere assertions (ipse dixit), as she applied scientific methodologies and conducted on-site inspections to substantiate her opinions.

    Zahid’s challenge regarding Robbins’ methodology largely revolved around her perceived oversight of contradictory evidence, like Mulder’s photographs, a matter deemed appropriate for jury consideration rather than exclusion of testimony.

    Held

    Consequently, the Court denied Zahid Hotel Group, LLC’s motion to exclude Corren Robbins’ testimony based on the aforementioned reasons. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaways

    In the legal dispute between Zahid Hotel Group and AmGUARD Insurance Company concerning property damage post-Hurricane Ida, Zahid sought to exclude the testimony of AmGUARD’s mold expert, Coreen Robbins, via a Daubert motion. Zahid argued that Robbins’ testimony lacked merit, citing her deductions as lacking scientific foundation due to alleged oversight of historical hotel data and discrepancies in her analysis. Conversely, AmGUARD defended Robbins’ expertise, highlighting her ability to differentiate mold growth types and provide crucial scientific context regarding severe mold issues post-hurricane. The Court deemed Robbins’ testimony valuable, extending beyond common knowledge and aiding in understanding intricate mold growth patterns. Despite differing conclusions from other experts, the Court found her methodologies sound, denying Zahid’s motion to exclude Robbins’ testimony from the case.

  • Methodology employed by the Business Valuation Expert Witness to compute damages passes the Daubert test amidst alleged violations of consumer protection laws

    Methodology employed by the Business Valuation Expert Witness to compute damages passes the Daubert test amidst alleged violations of consumer protection laws

    This case involved a dispute over the admissibility of expert testimony regarding damages in a lawsuit filed by Innovative Solutions International, Inc. (“Plaintiff”) against multiple Defendants, including Houlihan Trading Company, Inc. and Pilgrim’s Pride Corporation (“Pilgrims”). 

    Pilgrims, a company involved in preparing and packaging chicken for resale, supplied chicken that went through several vendors before reaching Defendant Houlihan Trading Co., Inc., who then sold it to the Plaintiff. The Plaintiff used the chicken in various food products that were ultimately sold to Trader Joe’s. Following customer complaints about bones in the products, Trader Joe’s terminated its contract with the Plaintiff. Consequently, the Plaintiff initiated legal proceedings against several entities in the supply chain, including Houlihan and Pilgrims. The lawsuit was filed on the grounds of multiple breaches of warranty and contract, misrepresentation, negligence, and violations of consumer protection laws. To support its claim for damages, the Plaintiff sought the admission of expert testimony from Steven J. Kessler. However, Pilgrims petitioned the Court to exclude or limit Kessler’s expert testimony, citing Rule 702 and the Daubert v. Merrell Dow Pharmaceuticals case (509 U.S. 579, 1993).

    Business Valuation Expert Witness

    Steven J. Kessler, C.P.A., A.B.V., C.F.F., has significant experience in the valuation and analysis of economic damages for business and personal injury cases and contested economic damages litigation cases. He is a Certified Public Accountant. He earned professional certifications such as Accredited in Business Valuation (ABV), Certified Valuation Analyst (CVA) and Certified in Financial Forensics (CFF), among many others.

    Discussions by the Court

    Pilgrims initially argued for the exclusion of Kessler’s testimony, contending that his method of calculating profits did not adhere to a “generally accepted way.” The Court noted that Pilgrims incorrectly applied the Frye standard, emphasizing that it had been superseded by Federal Rule of Evidence 702 according to the Daubert decision. The Daubert standard represented a departure from the stringent “general acceptance” standard set by Frye, emphasizing that while general acceptance within a scientific community could be a relevant factor, Daubert aimed to establish a more flexible test for the admissibility of expert testimony. Daubert clarified that expert testimony must be both reliable and relevant to the trier of fact, with general acceptance of a methodology, being just one factor among others in the non-exhaustive list of considerations.

    In the Daubert inquiry, Kessler’s methodology for establishing expert evidence was assessed. Kessler began by calculating the Plaintiff’s average sales growth rate, determining it to be slightly over 10% based on a seven-year period from 2013 through 2019. Next, he calculated the Plaintiff’s estimated lost profits for 2022 by using the 2019 sales volume as a base, applying the 10% annual growth rate, and factoring in the average selling price per pound for that year. In performing these calculations, Kessler employed actual figures for products sold, sales price, overhead costs, and other relevant variables for the relevant year. Lastly, Kessler utilized the annual growth rate and net loss in profits as inputs to calculate future lost profits for the subsequent 14 years. This projection involved applying the appropriate growth rate to the estimated lost profits amount.

    According to Daubert, a proponent of expert testimony must provide a precise explanation of how conclusions were reached and reference objective sources to support reliability. Mere assertions of “universal acceptance” are insufficient; instead, the proponent must demonstrate in an objective manner that the chosen scientific method is reliable. Despite Pilgrims’ challenge to the reliability of Kessler’s report, which it claimed lacked evidence of widespread acceptance, the Court noted that Daubert’s focus is on reliability and relevance rather than general acceptance.

    The Court found Kessler’s methodology, as detailed in calculating the Plaintiff’s damages, to be both reliable and relevant. The method, involving the comparison of profits over benchmark periods before and after an alleged injury, is widely accepted across jurisdictions. The Court cited the “before and after” or “profit history” method, endorsed in cases such as Bigelow v. RKO Radio Pictures 327 U.S. 251 (1946). Despite Kessler not explicitly labeling his approach as such, the Court deemed it fundamentally the same as the endorsed methods.

    In light of Daubert’s liberal approach, the Court found Kessler’s method reliable. Any disagreement with specific calculations could be addressed through cross-examination during trial, as per Daubert’s recommendation for challenging admissible evidence.

    In the alternative, Pilgrims sought to exclude Kessler’s testimony, claiming faulty data. According to Federal Rule of Evidence 702(b), expert testimony must be based on sufficient facts. However, the emphasis of Rule 702(b) is not to allow the Court to exclude testimony based on a belief in one version of the facts over another. Pilgrims’ argument was deemed unsuccessful, as it essentially amounted to a disagreement about the underlying set of facts, which Rule 702(b) prevents from being a basis for exclusion.

    Pilgrims’ additional argument contends that Kessler’s failure to include mitigation in his calculation of damages renders his testimony unreliable. Specifically, Pilgrims asserted that Kessler should have factored in Plaintiff’s potential profits to offset the damages outlined in his report. However, the Court disagrees with this stance, noting that although the failure to mitigate can be considered in a damage award, there is no authoritative basis for excluding testimony solely due to the omission of mitigation in the damages calculation. According to Daubert, Kessler’s decision not to include mitigation does not render his testimony unreliable or irrelevant, as the question of whether Plaintiff could have mitigated its damages is a matter of fact for the jury to determine.

    Pilgrims challenged Kessler’s inclusion of a 15-year projected loss of profits, claiming insufficient basis for extending sales projections post-recall. However, Kessler’s report clarified that the projected loss of profits across a 15-year period aligned with the Plaintiff’s sales relationship with Trader Joe’s, which spanned 15 years. Court acknowledged Pilgrims concern that a longstanding business relationship didn’t guarantee future business but highlighted that such a guarantee wasn’t a requirement for the admissibility of the expert testimony.

    Defendant challenged a crucial assumption in Kessler’s damages computation, specifically his exclusion of the year 2020 due to the COVID pandemic. Again, Pilgrim’s fails to explain why decisions made by an expert are anything more than questions of reasonableness best left for a jury to decide. Emphasizing the principles in Daubert, the Court asserted that once an expert meets the reliability threshold, questions regarding the weight of the testimony are within the jury’s purview, not the Court’s. In essence, the Court clarified that the reasonableness of Kessler’s assumptions in calculating damages is a matter for the jury to decide and does not constitute grounds for exclusion.

    Held

    The Court denied Defendant Pilgrims’ Pride Corporation’s motion to exclude or limit the expert testimony of Steven J. Kessler. 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 that under the Daubert standard that now governs the admissibility of expert testimony, the focus is on the reliability and relevance of the expert’s principles and methodology, not the rigorous “general acceptance” standard. While the Defendant argued that the methodology employed by Plaintiff’s expert, Steven Kessler’s wasn’t generally accepted, the Court found it satisfied Daubert because it was reliable and relevant. Where the expert meets the reliability threshold as explained in Daubert, questions regarding the weight to be accorded to the testimony are for the jury, not the Court. Secondly, the Court held that outright exclusion is not warranted if the expert does not include mitigation as part of his calculation of damages. Finally, opposing parties can challenge the facts underlying an expert’s assumptions through cross-examination rather than exclusion. Disagreements about the facts are not enough to exclude expert testimony as unreliable.

  • “Unexplained” Methodology employed by Accounting Expert Witness passes Daubert Test after Court notes that merits and drawbacks of the Methodology have been discussed

    “Unexplained” Methodology employed by Accounting Expert Witness passes Daubert Test after Court notes that merits and drawbacks of the Methodology have been discussed

    Plaintiffs BRP Colleague Inc. (“BRP Colleague”) and Baldwin Krystyn Sherman Partners, LLC (“BKS”) jointly referred to as “BRP,” had initiated legal proceedings against Defendants Edward (Teddy) Gillen (“Gillen”) and Edgewood Partners Insurance Center Inc. (“EPIC”) concerning Gillen’s prior association with BRP and his subsequent employment with EPIC, a direct competitor of BRP. BRP (together with BRP Group, Inc. and its affiliated entities, collectively “BRP Group”) offers insurance, benefits, and risk management solutions for individuals and businesses across the country, with a particular focus in the Southeast. EPIC is a direct competitor of BRP. It is an insurance brokerage and consulting firm selling property and casualty insurance, employee benefits insurance and specialty program insurance, including medical malpractice insurance.

    The basis of BRP’s claims revolved around alleged violations by Gillen of the Defend Trade Secrets Act, the Georgia Trade Secrets Act, and tortious interference with contractual and business relationships. The focal point was Gillen’s departure from BRP and his purported violation of a legally binding and enforceable restrictive covenant agreement known as the Employee Covenant Agreement (“Agreement”). Plaintiffs also claimed that EPIC had tortiously interfered with contract, business relationships, and expectancies by unlawfully taking Plaintiffs’ business for itself (and Gillen) after Plaintiffs rejected EPIC’s attempt to purchase Plaintiffs’ business. Plaintiffs sought attorney’s fees from both Gillen and EPIC.  

    Gillen, a former insurance producer for BRP specializing in the sale of medical malpractice insurance policies, was accused of breaching various legal obligations and engaging in actions detrimental to BRP’s interests. Notably, BRP contended that Gillen misappropriated confidential and proprietary information, including trade secrets, during his tenure with BRP. This misappropriation was alleged to have been utilized by Gillen to illicitly solicit and service BRP’s customers on behalf of, and to the advantage of, EPIC, his current employer.

    The crux of the matter lay in Gillen’s alleged theft of confidential and proprietary information, constituting trade secrets, and the subsequent utilization of these unlawfully obtained assets to serve EPIC’s interests. BRP contended that Gillen, in defiance of his restrictive covenants and applicable laws, had engaged in the solicitation and servicing of BRP’s clients for EPIC’s benefit.  

    EPIC, according to BRP’s assertions, was not a passive beneficiary of Gillen’s actions but actively participated in and facilitated the breach of Gillen’s legal obligations to BRP. BRP accused EPIC of knowingly benefiting from Gillen’s illicit conduct and further asserted that EPIC conspired with Gillen to undermine BRP’s contractual, statutory, and common law rights. This ongoing wrongful conduct by the Defendants, BRP argued, had resulted in irreparable harm and substantial damages to BRP.

    In response to the alleged misconduct, BRP sought both preliminary and permanent injunctive relief to halt and prevent the continued harm arising from the Defendants’ actions. Additionally, BRP sought monetary damages and other available relief as a remedy for the harm caused by Gillen and EPIC’s wrongful conduct. 

    The financial aspects of the case involved BRP’s claims for lost profits and unjust enrichment damages against the Defendants. BRP, supported by expert witnesses Joseph J. Egan and Myles D. Kaluzna, estimated its lost profits (both past and future) to amount to $991,755. Furthermore, BRP’s economics experts opined that EPIC had been unjustly enriched by $710,528 through its wrongful acts. Notably, Defendants had engaged J. Lester Alexander III (“Alexander”) to counter BRP’s expert report, suggesting a contested battleground over the quantification of damages.

    Plaintiff filed an initial motion to exclude the testimony of J. Lester Alexander III which was dismissed without prejudice by the Court on account of noncompliance with the local rules. After the Plaintiff’s re-filed the motion as per the Court’s directions, the Court addressed Plaintiffs’ Motion to Exclude Expert Report and Opinions of Alexander, which sought the exclusion of Defendants’ rebuttal damages expert, Alexander, under Federal Rule of Evidence 702 and Daubert. Plaintiffs asserted two primary reasons for the exclusion: first, that Alexander’s opinions were grounded in speculation and an unexplained methodology, and second, that his testimony would not contribute to the jury’s understanding of the evidence. 

    Accounting Expert Witness

    J. Lester Alexander III B.S., C.P.A., C.F.E. is the Executive Vice President of J.S. Held LLC. He has served as the Founder and Chief Executive Officer of AEA Group. He is a former partner of PwC and the former southeastern practice leader of one of its legacy firm’s consulting practices. Alexander practiced for more than three decades, performing audit, tax, and consulting services. In recent years, he concentrated his practice in the areas of economic research, financial investigations, forensic accounting, and valuation services. He had been admitted as an expert witness and testified in Federal and state courts on a variety of financial subjects.

    Discussions by the Court

    In response to the motion to exclude Alexander’s testimony, the Court had engaged in a comprehensive analysis of the admissibility of expert testimony, applying the standards set forth in Federal Rule of Evidence 702 and the Daubert framework. The Court had begun by outlining the criteria for admitting expert testimony under Rule 702, emphasizing that an expert’s testimony should assist the trier of fact in understanding the evidence or determining a factual issue. 

    The Court had acknowledged that Rule 702 required that expert testimony be based on sufficient facts or data, be the product of reliable principles and methods, and that the expert had reliably applied those principles and methods to the facts of the case. The Court then had turned to the Eleventh Circuit’s three-part test, as articulated in City of Tuscaloosa v. Harcros Chemicals, Inc., 158 F.3d 548, 562 (11th Cir. 1998), which mandated that the expert must be qualified, the methodology must be sufficiently reliable, and the testimony must assist the trier of fact in understanding the evidence or determining a fact in issue. Plaintiffs alleged that Alexander’s testimony was inadmissible under both the second and the third elements of the Harcos Chemicals test.

    The Plaintiff argued that Alexander’s testimony regarding the methodology he allegedly employed in preparing his calculation of Plaintiffs’ lost profits manifested his repeated reliance on his subjective viewpoint under the cloak of purported reliance on industry standards and publications. For instance, Alexander’s report and calculation of lost profits were based on the presumption that economic damages cannot exceed the total value of the lost business, but when asked to explain the basis for this assertion, he failed to cite a source. Although he mentioned publications like “Valuation Services Practice A for Lost Profits 2020” and the “Litigation Handbook” as supporting his methods, he did not specify which parts of those publications supported the propriety of his method.

    Due to his failure to cite all the sources he used, show his calculations, or even remember the numbers he used to calculate his final figures, Alexander’s findings were impossible to duplicate, confirm, or refute.

    Alexander engaged in speculation when calculating Plaintiffs’ lost profits. In reaching his final damages conclusion, Alexander multiplied Plaintiffs’ total 2021 lost revenue by a revenue multiple of 2.03 without providing support for the assertion that the revenue multiple was more reliable than other methods of calculating damages.

    Furthermore, Alexander chose his revenue multiple by taking the median revenue multiple
    of four transactions he pulled from DealStats. One of the four transactions is from the Pittsburgh
    market, while the other three are from Florida. With no analysis or investigation for this assertion,
    Alexander stated that the Atlanta and Pittsburgh markets were on par “from the point of view of
    profitability of an insurance agency.”

    The Plaintiffs noted Alexander’s reliance on alleged comparable transactions to calculate the revenue multiple without articulating a basis for his subjective definition of a comparable transaction. Alexander failed to adequately respond when confronted with the ways in which his transactions substantively differed from the business at issue in this case.

    The Plaintiffs further accused Alexander of failing to seek out and rely on relevant data, instead making unfounded assumptions. The Plaintiffs asserted this speculative approach rendered Alexander’s methodology unreliable.

    Finally, the Plaintiffs contended Alexander’s flawed methodology would not help the jury assess the validity of the Plaintiffs’ expert’s calculations. Rather, they argued his testimony would confuse the issues and prejudice the Plaintiffs by providing a veneer of expertise without a sound analytical basis.

    In response, the Defendants argued Alexander’s methodology was reliable and his testimony would aid the jury. They stated Alexander relied on established principles of valuation science and damages calculation. The Defendants stated that any questions regarding the credibility of Alexander’s methodology were reserved for the jury. The Defendants further argued Alexander’s decades of experience in the industry provided a sufficient basis for his choices.

    The Court agreed with the Defendants and denied the motion to exclude. It found Alexander sufficiently explained his methodology during his deposition. The Court held that while Plaintiffs’ selected quotes arguably implicated Alexander’s credibility as a witness, the context of those quotes demonstrated that Alexander’s testimony was based on more than mere speculation.

    Specifically, the Court noted Alexander based his opinions on his professional training and 2006 American Institute of Certified Public Accountants’ Guide, not just common sense. It also observed Alexander used a different methodology than the Plaintiffs’ expert, calculating damages using a market-based approach instead of an income-based approach. The Court stated Alexander extensively discussed his techniques in his deposition.

    The Court concluded Alexander’s methodology was sufficiently reliable under Daubert. It also found Alexander’s testimony would be relevant in assessing damages, meeting Rule 702’s low bar for assisting the trier of fact. 

    Held

    The Court denied Plaintiffs’ Motion to Exclude Expert Report and Opinions of Defendant’s expert, J. Lester Alexander, III. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaways

    • The Court found that Alexander was sufficiently qualified based on his training and experience as an accountant. His methodology of using a market-based approach to calculate damages was deemed reliable, even if it differed from the Plaintiff’s expert’s income-based approach.
    • The Court determined that Alexander’s testimony regarding damages calculations would be helpful to the jury in understanding the evidence and determining facts at issue in the case. Therefore, it met the relatively low threshold for relevance and assisting the trier of fact.
    • While the Plaintiffs argued Alexander’s opinions were speculative, the Court found in the full context of his deposition he provided adequate explanation of his methodology grounded in accounting standards and training. Questions about his credibility were for the jury.
    • The Court denied the motion to exclude Alexander’s testimony, finding it met the qualifications, reliability, and helpfulness requirements for expert testimony under Rule 702 and Daubert. This provides a good overview of how courts assess expert witness admissibility.
  • Damages cannot be awarded for speculative losses; Court limits testimony on lost wages and lost earning capacity of the Plaintiff 

    Damages cannot be awarded for speculative losses; Court limits testimony on lost wages and lost earning capacity of the Plaintiff 

    Plaintiff John Doe, who was referred to by a pseudonym by the Court, brought an action against the Trustees of Dartmouth College (“Dartmouth”) alleging that Dartmouth had violated Title IX of the Education Amendments of 1972 and had breached a contract by expelling him from Dartmouth’s Geisel School of Medicine. This expulsion followed Dartmouth’s determination that he had sexually assaulted another medical student. Doe had been a fourth-year medical student at Geisel, and Dartmouth had subjected him to an internal disciplinary proceeding in response to allegations made by his former roommate, Sam Smith. Smith had alleged that Doe had performed oral sex on him without his consent. Following this proceeding, Dartmouth concluded that Doe had indeed sexually assaulted Smith, leading to Doe’s expulsion from Geisel. Subsequently, Doe initiated this legal action seeking injunctive and monetary relief. He contended that Dartmouth’s disciplinary procedure had failed to adhere to the requirements of Title IX, as well as Dartmouth’s own policies, constituting a breach of contract. 

    The Court had considered Dartmouth’s motion to exclude Doe’s expert, Cyndi J. Livermore, on matters related to lost wages and lost earning capacity, as per Federal Rule of Evidence 702, Daubert v. Merrell Dow Pharmaceuticals, Inc, and its progeny.  

    Livermore’s report had analyzed the lost wages and lost earning capacity incurred by Doe due to his expulsion, considering two potential career paths: internal medicine and cardiology. Her ultimate determination was that Doe had already suffered damages amounting to at least $429,000 (in the case of pursuing internal medicine) and up to $784,000 (if he had pursued cardiology). She also concluded that Doe’s future lost earnings would have ranged from $1.52 million (as a practitioner of internal medicine) to $3.97 million (as a cardiologist). In arriving at these figures, Livermore had considered several factors, including: (1) an estimation of Doe’s remaining work life; (2) Doe’s anticipated life expectancy; (3) the probability of employment in each career path; and (4) Doe’s projected earnings for each career path had he not been expelled. To determine his projected earnings but-for his expulsion, Livermore had factored in: (a) Doe’s earnings prior to his expulsion from Dartmouth; (b) the probability, expectancy, and reasonability of future earnings; and (c) future growth. Additionally, Livermore had taken into account Doe’s post-expulsion income and projections of actual or mitigated earnings. 

    Business Valuation Expert Witness 

    Cyndi Livermore is a Vice President at Management Planning Inc. She has performed hundreds of business valuations ranging from pre-revenue start-up to $1B revenue pre-IPO companies, and across many industries, including: Agribusiness, Automotive, Banking, Construction, Family Offices, Precision Machinery, Real Estate Holding. Cyndi J. Livermore successfully earned her Bachelor of Science degree in Business Administration from DeVry University, followed by the attainment of her Master of Business Administration (M.B.A.) from the Southern Methodist University – Cox School of Business. Livermore was the director of ComStock Advisors, a provider of professional services in the area of business valuation, litigation support services, and management consulting prior to joining Management Planning Inc. 

    Discussions by the Court 

    Dartmouth had initially argued that Livermore lacked the necessary expertise to testify as an expert regarding Doe’s lost wages and lost earning capacity. Dartmouth contended that her specialization in business valuation rendered her unqualified to provide opinions on these matters, especially in the context of a medical student’s interrupted education. Additionally, Dartmouth emphasized that Livermore had never testified as an expert in cases involving medical students or doctors’ lost wages or earning capacity. However, the Court found Dartmouth’s argument unconvincing. Livermore, an economist with more than a decade of experience in financial analysis, held both a bachelor’s and a master’s degree in business administration. At the time of preparing her report, she served as the director of ComStock Advisors, a firm specializing in business valuation, litigation support, and management consulting. While Livermore acknowledged her primary focus on business valuation, she testified that she possessed substantial experience in conducting financial valuations of primary care physicians and cardiologists. Furthermore, she had previous experience in performing lost wages and lost earning capacity analyses. The fact that Livermore had not previously undertaken such an analysis for someone in Doe’s precise situation did not render her unqualified considering an expert need not be a preeminent practitioner in the relevant field to possess sufficient knowledge. 

     
    Dartmouth had contended that Livermore’s expert opinion regarding Doe’s lost future earnings wouldn’t be beneficial to the jury in determining a fact in issue, as Doe was seeking equitable relief in the form of reinstatement at Geisel, making Livermore’s opinion on lost earning capacity immaterial. Dartmouth argued that if Doe succeeded at trial, he would return to Geisel and regain his ability to earn a doctor’s income, and if he failed, he would have no basis for recovering damages related to lost earning capacity. However, the Court disagreed with Dartmouth’s argument. Doe had brought claims against Dartmouth based on contract and Title IX, seeking both injunctive relief in the form of reinstatement and monetary damages. Typically, Courts do not order equitable relief in Title IX or contract-related cases when monetary damages would suffice to compensate the Plaintiff. As highlighted in Doe’s objection, the Court had the discretion to decide not to grant the injunctive relief sought even if he prevailed on one or more of his claims. Consequently, evidence concerning Doe’s lost earning capacity would indeed assist the jury in comprehending the evidence and determining a relevant fact in the case. 

     
    Dartmouth had argued that Livermore’s expert opinion lacked a reliable methodology because, during her deposition, she had acknowledged that a comprehensive damages analysis should include a “skills analysis” (examining the range of jobs suited to an individual’s transferable skills and talents) as well as a “labor market analysis” (evaluating the available job opportunities and earning potential for individuals with Doe’s skills). Additionally, Dartmouth raised concerns about Livermore’s failure to consider the potential for bonuses, stock options, or promotions in Doe’s current job. 

    Upon reviewing Livermore’s report, the Court concluded that her methodology was indeed reliable in forming her conclusions. In her assessment of Doe’s lost wages and earning capacity, Livermore began by considering factors such as Doe’s remaining life expectancy and the portion of that life expectancy during which he would be expected to work. She also factored in Doe’s probability of employment, which encompassed his present employment, the likelihood of him completing his medical degree if his expulsion were reversed, the chances of degree completion if his expulsion were not reversed, and the probability of Doe securing a residency if he completed his degree. Moreover, Livermore took into account projections of Doe’s future earnings in specific medical professions based on published data. She further applied a discount to calculate the present value of future earnings and estimated annual inflation-based raises. 

    The Court agreed with Doe, emphasizing that Dartmouth’s objections pertained more to the factual inputs used in Livermore’s analysis rather than the reliability of her methodology. Dartmouth’s contentions, particularly those related to alternative job opportunities for Doe and the potential for promotions, stock options, or bonuses in his current position, were deemed suitable for cross-examination rather than grounds for excluding Livermore’s testimony. 

    Dartmouth had argued that Livermore’s opinions regarding Doe’s lost wages and lost earning capacity as a cardiologist were not aligned with the facts of the case and should not be presented to the jury. The Court concurred with Dartmouth on this matter. Doe’s complaint explicitly indicated his intention to pursue a career as a primary care physician, with no mention of considering a career in cardiology. Additionally, during his deposition, Doe confirmed his plan to become a primary care physician upon completing his medical degree. 

    Under New Hampshire law, which applied to Doe’s breach of contract claims, damages cannot be awarded for “speculative losses”, as was held in Miami Subs Corp. v. Murray Family Trust & Kenneth Dash Partnership. The remedies available in private Title IX actions paralleled those found in traditional contract claims. Rather than compensating for speculative losses, contract damages were designed to restore the prevailing party to the position they would have been in had the contract been performed. In this case, Doe’s expressed intent was to pursue a career as a primary care physician if allowed to complete his medical degree. Consequently, Livermore’s opinions concerning Doe’s lost wages and earning capacity as a cardiologist were deemed irrelevant, not assisting the jury in determining a fact in issue, and not grounded in the factual circumstances of the case. 

    Held 

    Dartmouth’s motion to exclude Cyndi Livermore’s testimony was granted in part and denied in part. Specifically, it was granted to the extent that it sought to exclude testimony related to Doe’s lost wages and lost earning capacity as a cardiologist. However, the motion was otherwise denied. 

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

    Key Takeaways 

    This case demonstrates how Courts serve as gatekeepers regarding expert witness testimony under Daubert and Rule 702. When expert testimony is challenged, the Court must assess the witness’s qualifications, the relevance of their testimony, and the reliability of their methodology. Here, the Court found the Plaintiff’s expert was qualified to testify about lost earnings despite lacking direct experience with similar cases on account of her significant experience conducting financial valuations in the exact same industry.  

    However, the Court agreed part of the expert’s testimony regarding speculative lost earnings as a cardiologist was irrelevant. This demonstrates that experts cannot testify about damages that are too speculative based on the facts of the case. Experts must tailor their testimony to the circumstances at hand. The Court also assessed the reliability of the expert’s methodology under Daubert’s flexible test. The Court found her methodology reliable amidst objections about the factual inputs she used. This shows that mere disagreement about an expert’s assumptions is fodder for cross-examination rather than exclusion. 

  • Court excludes unreliable pharmacology and neurology expert opinions in product liability case; grants summary judgment

    Court excludes unreliable pharmacology and neurology expert opinions in product liability case; grants summary judgment

    This case involved a product liability lawsuit filed by Harvey Mahler against The Vitamin Shoppe Industries, Inc. in the United States District Court for the Northern District of Illinois. Mahler alleged that he developed peripheral neuropathy after taking a multivitamin manufactured by The Vitamin Shoppe that contained arsenic and lead.  

    Mahler purchased two bottles of The Vitamin Shoppe’s One Daily Men’s 50+ vitamin supplement on June 25, 2017. He took one tablet per day from June 25 to August 16, 2017, for a total of 51 days. In mid-August 2017, Mahler began experiencing symptoms including peripheral and ulnar neuropathy, bilateral foot numbness, hypertension and renal artery thrombosis. He saw several physicians, including his primary care doctor, a nephrologist and a hematologist. None of them diagnosed Mahler with heavy metal poisoning or ordered tests to screen for heavy metals. 

    Nonetheless, Mahler sent the vitamin supplement to an independent laboratory, Eurofins, which detected arsenic and lead in the product. Eurofins sent back a report that showed the Vitamin Supplement contained a detectable amount of arsenic and lead—two types of heavy metals. Although his physicians did not link his symptoms to the vitamins, Mahler believed based on his own research that the arsenic and lead caused his health issues.  

    On June 5, 2018, Mahler visited Octavia Kincaid, a neurologist. He reported neuropathy in his feet and left hand fingers. Kincaid reviewed prior electromyography (EMG) tests and examined Mahler. She diagnosed him with peripheral neuropathy. Mahler told Kincaid about the vitamins containing heavy metals and gave her the Eurofins report. Kincaid said arsenic and lead could cause his symptoms. Her blood tests for other potential causes came back normal. She clinically diagnosed Mahler with peripheral neuropathy likely from heavy metal toxicity. 

    In his lawsuit, Mahler alleged that the arsenic and lead in the vitamin supplement caused his peripheral neuropathy. He asserted claims for strict liability, negligence, breach of warranty, negligent misrepresentation, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”)

    The Vitamin Shoppe moved for summary judgment, arguing that Mahler lacked evidence that the small amounts of arsenic and lead in its product could have caused his alleged injury. Mahler relied on neurologist Octavia Kincaid and pharmacist James O’Donnell to provide pharmacology and neurology expert opinions on causation. The Vitamin Shoppe moved to exclude them under Daubert, asserting their opinions were unreliable. Defendant also filed a Daubert motion to exclude the testimony of Plaintiff’s other two experts- Jon Edward Clark and Stanley Vladimir “Stan” Smith.

    Causation and Damages Expert Witnesses 

    James Thomas O’Donnell, PharmD, M.S., F.C.P., is highly qualified as an expert in pharmacology, toxicology, and pharmacy. He has over 30 years of experience in teaching, research, and consulting in these fields. O’Donnell holds a Doctor of Pharmacy degree from the University of Michigan and a Master of Science in Clinical Nutrition from Rush University. He is an Associate Professor of Pharmacology at Rush University Medical Center.

    O’Donnell has authored numerous books related to pharmacology, toxicology, and pharmacy law. He has also published articles in peer-reviewed journals and consulted with pharmaceutical companies. 

    His qualifications include being board certified as a Diplomate in the American Board of Clinical Pharmacology. He is a Fellow of the American College of Clinical Pharmacology and the American College of Nutrition.

    In summary, O’Donnell’s extensive education, teaching and research experience, publications, and board certifications in pharmacology, toxicology, and pharmacy make him highly qualified to provide expert testimony on the topics relevant to this case. 

    Octavia B. Kincaid, M.D. is a Neurologist who provided medical care to Harvey Mahler from June 5, 2018 to the present. She  is an adult neurologist who specializes in neuromuscular neurology. She holds board certification in adult neurology, clinical neurophysiology, and neuromuscular medicine through the American Board of Psychiatry and Neurology. She received her medical degree from The University of Texas Health Science Center at San Antonio and has been in practice for more than 20 years. 

    Octavia Kincaid is currently working as a Neurologist at NorthShore University HealthSystem. Before her current position, she served as the Assistant Dean for Curriculum in the College of Medicine at the University of Illinois, Chicago. Additionally, she held a previous role as a Neurologist at the University of Illinois Hospital & Health Sciences System.System.  

    Jon Edward Clark, M.S., has over 35 years of experience in the pharmaceutical industry, including extensive expertise with FDA regulations and practices. He holds Bachelor’s and Master’s degrees in Chemistry. He worked for 21 years at the FDA, serving in leadership roles developing and implementing policy. After the FDA, he served as an executive in the U.S. Pharmacopeia, involved with setting standards for medicines and dietary supplements. He now runs an independent consulting firm focused on FDA regulatory requirements and compliance.  

    Stanley Vladimir Smith, Ph.D. is a nationally renowned economist who received his Ph.D. from the University of Chicago. 

    Discussions by the Court  

    The Vitamin Shoppe moved to exclude the causation opinions of Kincaid and O’Donnell under Daubert and Rule 702. The Court granted both motions, finding their methodologies unreliable. 

    Plaintiff relied upon Octavia Kincaid to establish both general and specific causation—that is, that the lead and arsenic contained in the Vitamin Supplement Plaintiff took could and did cause his peripheral neuropathy. 

    However, the Court first found Mahler failed to properly disclose Kincaid as a non-retained expert under Rule 26(a)(2)(C). He did not provide a summary of the facts and opinions to which she would testify on causation. However, the Court excluded Kincaid based on unreliability even if she had been properly disclosed.  

    Kincaid testified there were likely thousands of potential causes of peripheral neuropathy, with heavy metal exposure being rare. She said Mahler told her he took vitamins containing heavy metals and provided the Eurofins report. Although Kincaid ordered blood tests for more common neuropathies, they came back normal. With no other apparent cause, she clinically diagnosed Mahler with heavy metal induced peripheral neuropathy.  

    The Court found this process unreliable under Daubert. Kincaid agreed dose and duration of exposure were relevant to causation. But she could not recall investigating the levels of arsenic/lead in the vitamins or how long Mahler took them. She speculated she probably looked up reference levels but had no notes documenting so. The Court also did not express an opinion on Kincaid’s clinical or treatment methods. Kincaid herself clarified that her conclusion was a “clinical diagnosis” made based on the available information at the time. It’s important to note that her intent was not to establish “proof” of causation in a legal sense.

    The Court cited cases requiring experts to consider dose-response in toxic tort cases. As Kincaid failed to evaluate dosage, the Court deemed her opinions inadmissible. 

    The Defendant made three main arguments for excluding O’Donnell’s expert testimony. First, it contended he lacked qualifications for some opinions. Second, it argued his opinions about raw ingredients were irrelevant. Third, it asserted O’Donnell did not use a reliable methodology for his general causation conclusions, as he failed to analyze the dose-response relationship between the levels of arsenic and lead in the Vitamin Supplement and the onset of peripheral neuropathy. Defendant argued that the factual assumptions made by O’Donnell did not support the record.

    The Court found multiple reliability issues rendering O’Donnell’s opinions inadmissible. First, O’Donnell incorrectly assumed Mahler took the vitamins for four years rather than the 51 days supported by the record. He speculated all of Mahler’s vitamins contained arsenic/lead based merely on other products from China having contamination, not evidence specific to The Vitamin Shoppe’s products. The Court held this undue speculation did not satisfy Daubert. 

    Additionally, like Kincaid, O’Donnell failed to reliably consider dosage. He agreed dose response was relevant to toxicity. He knew there were acceptable daily intake levels of arsenic/lead under which toxicity would not be expected. Yet he conducted no analysis of the dose levels in the vitamins Mahler took or whether they exceeded acceptable thresholds. Instead, he reasoned that because Mahler developed neuropathy and his vitamins contained some level of arsenic/lead, they must have contained enough toxins to cause the neuropathy. The Court found this circular reasoning evidenced no reliable methodology under Daubert which rendered his opinions both unreliable and irrelevant.

    Held 

    In sum, the Court held that neither Kincaid nor O’Donnell employed reliable methods in reaching their causation opinions. Their failures to account for dosage of toxins in the vitamins rendered their testimony inadmissible under Rule 702. With no other evidence of causation, Mahler could not withstand summary judgment. Thus, the Court granted The Vitamin Shoppe’s motions to exclude Octavia Kincaid and James T. O’Donnell, and its motion for summary judgment. The Court denied as moot the motions to exclude Mahler’s other experts, Jon Clark and Stan Smith and subsequently terminated the case.

    Key Takeaways

    This product liability case illustrates the importance of ensuring expert witnesses employ reliable principles and methods under Daubert and Rule 702. The Court excluded both of Plaintiff Mahler’s causation experts because their opinions lacked sound methodology.

    • In toxic tort cases, experts must carefully consider dose and duration of exposure when rendering an opinion on causation. Both Kincaid and O’Donnell acknowledged this principle, yet failed to analyze or account for the levels of toxins in the vitamins Mahler consumed, it rendered their testimony unreliable.
    • Experts should not rely on unfounded assumptions or speculation. For example, O’Donnell unreasonably assumed that because Plaintiff was diagnosed with heavy metal-induced neuropathy and because the Vitamin Supplement that Plaintiff took contained lead and arsenic, it meant the Vitamin Supplement must have contained enough lead and/or arsenic to cause neuropathy. Expert opinions must be grounded in the facts of the specific case.
    • Additionally, Experts should avoid circular reasoning that uses the injury itself as proof of causation. The Court found O’Donnell employed this flawed logic.

    In excluding the experts, the Court demonstrated its critical gatekeeping role in vetting unreliable expert opinions before admission. Attorneys offering expert testimony must ensure their experts adhere to sound scientific principles and methods that can withstand Daubert scrutiny.

  • Court partly admits the consumer survey research and damages findings presented by the defense experts in trademark infringement suit

    Court partly admits the consumer survey research and damages findings presented by the defense experts in trademark infringement suit

    This case involved a trademark infringement lawsuit filed by Solid 21, Inc. against Richemont North America, Inc., Richemont International S.A., and Montblanc-Simplo GmbH (collectively “Defendants”). Solid 21 alleged that Defendants infringed on their RED GOLD trademark through Defendants’ use of “red gold” in advertisements for luxury watches.

    The Court previously dismissed Solid 21’s Lanham Act claims regarding one specific advertisement (“Exhibit 17”) on fair use grounds, finding that the usage of the term “red gold” in the advertisement clearly constituted fair use as a matter of law. 

    In this order, the Court ruled on Solid 21’s motions to exclude expert testimony from two of Defendants’ experts, Mark T. Keegan and Patrick F. Kennedy.

    Consumer Research and Damages Expert Witness

    Mark Keegan, has extensive experience in consumer research and survey design. He is a partner at Keegan & Donato Consulting, LLC, where he works as a litigation consultant focusing on trademark and marketing research. Over his two-decade career, Keegan has designed and executed over 700 consumer research studies involving more than 250,000 respondents on behalf of corporate and litigation clients. His research focuses on areas including consumer confusion, secondary meaning, genericness, and other consumer perception issues central to trademark disputes. Keegan has served as a survey expert in federal court litigations, submitting expert reports and providing testimony on consumer behavior and survey methodology.

    Patrick Kennedy is a Managing Director at Torrey Partners with over 20 years of experience providing analysis, consultation, and expert testimony in business and legal disputes. He has testified extensively as an expert in various courts and arbitrations across the country. Kennedy has analyzed economic damages and valuation issues in cases involving intellectual property, breach of contract, antitrust, false advertising, product liability, professional malpractice, and other claims. His intellectual property case experience includes patents, trademarks, copyrights, and trade secrets in fields such as medical devices, software, consumer products, and more. Kennedy has an economics doctorate from Stanford University and previously worked as an economist at the Federal Reserve. He has experience spanning a diverse range of industries and technologies.

    Discussions by the Court

    The Court first discussed Solid 21’s motion to exclude the expert testimony of Mark Keegan. Solid 21 argued Keegan was unqualified, his survey was irrelevant, and his findings were unreliable. The Court denied the motion. On qualifications, while Keegan lacked a specific degree relating to consumer surveys, the Court found his decades of consumer survey experience satisfied Rule 702’s threshold, distinguishing cases excluding Keegan based on insufficient indications of qualifications. On relevance, the Court found Keegan’s survey assessing whether consumers recognized “red gold” as a brand could be relevant to the descriptive use and good faith elements of fair use. Solid 21 failed to explain why the survey was irrelevant to fair use. The Court stated it would not exclude evidence potentially relevant on any ground. On reliability, the Court found Solid 21’s criticisms about the income level for Keegan’s universe, cell phone administration, and failure to filter some results went to weight not admissibility. The Court stated only substantial flaws warrant exclusion, and Solid 21 failed to demonstrate Keegan’s flaws met that standard.

    The Court then discussed Solid 21’s motion to exclude portions of Patrick Kennedy’s testimony. Solid 21 argued Kennedy improperly relied on Keegan’s survey and improperly opined on fair use. The Court granted the motion in part. It found Kennedy could not rely on Keegan’s brand awareness survey to estimate consumer preferences driving purchases for Kennedy’s apportionment analysis. The Court explained there was a fundamental mismatch between what Keegan’s survey measured (brand awareness) and how Kennedy used it (as a proxy for consumer motivations). The Court rejected Defendants’ argument that Keegan’s brand awareness findings could serve as a conservative estimate of consumer motivations. It found Kennedy conflated liability and the apportionment of profits by using Keegan’s brand awareness survey to apportion profits.

    The Court also granted Solid 21’s motion to exclude Kennedy from summarizing the Court’s prior fair use rulings or opining on what constitutes fair use, finding this would be an inadmissible legal conclusion. However, the Court denied Solid 21’s motion to exclude Kennedy from categorizing advertisements based on “red gold” usage, finding this permissible to synthesize voluminous evidence for the jury. In sum, the Court prevented Kennedy from relying on Keegan’s survey for apportionment purposes due to a mismatch with what the survey actually measured. The Court also prevented Kennedy from offering legal opinions about the Court’s prior fair use rulings, while allowing him to categorize evidence for the jury.

    Held

    In summary, the Court denied Solid 21’s motion to exclude Keegan’s survey findings entirely, finding them potentially relevant to Defendants’ fair use defense. However, the Court granted in part Solid 21’s motion to exclude Kennedy’s testimony, preventing him from relying on Keegan’s survey to estimate purchasing motivations and from opining on the Court’s prior fair use rulings. The Court found Kennedy had fundamentally misused Keegan’s brand awareness survey as a basis for apportioning profits and could not offer legal conclusions about fair use.

    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 ensuring expert witness testimony is relevant and reliably applies the expert’s methodology. The Court excluded portions of Kennedy’s testimony because he fundamentally misused survey data provided by another expert, Keegan. Kennedy sought to rely on Keegan’s survey results measuring consumer brand awareness as a basis for estimating what drove consumer purchasing decisions and apportioning profits. However, the Court found brand awareness relates to liability, while apportionment assumes liability is established and looks at what factors motivated sales. Since Keegan’s survey did not measure purchasing motivations, Kennedy could not reliably use it for apportionment purposes. This case underscores that experts must apply methodologies in a way that reliably fits the purpose for which the expert evidence is proffered. Experts also cannot offer legal opinions or summarize court rulings, as the Court barred Kennedy from opining on the legal standards for fair use. However, experts may synthesize evidence to streamline complex information for the jury. Overall, this case illustrates the need for expert opinions to be relevant, reliably applied, and avoid legal conclusions. Careful scrutiny of expert methodology and purpose is crucial.