Expert Witness Profiler

Tag: Damages

  • Court Rejects Accident Reconstruction Expert Witness’ Attempt to Springboard OSHA Regulations Outside of the Work Environment

    Court Rejects Accident Reconstruction Expert Witness’ Attempt to Springboard OSHA Regulations Outside of the Work Environment

    On September 19th, 2021, Co-Plaintiff Cándida Cabrera visited the restaurant called Romano’s Macaroni Grill, located at Las Catalinas Mall in Caguas, Puerto Rico. At a certain point, Co-Plaintiff Cándida Cabrera was in the process of exiting the seating booth, and one of her feet slightly tripped on one of the spikes under the table. Given the elevation of the surface (step), Cabrera fell off the booth as she was trying to step outside, suffering the grave damages alleged in this complaint.

    Plaintiffs Cándida Cabrera Escobar and her husband Osvaldo Cabrera sought to recover damages for the alleged negligence of Co-Defendants International Restaurant Services, Inc., owner and operator of a franchise which runs “Romano’s Macaroni Grill,” and its insurer, American International Insurance Company of Puerto Rico.

    Defendants filed a motion in limine to preclude the testimony of Plaintiffs’ expert, engineer Otto González Blanco. 

    In their motion in limine to exclude Plaintiffs’ expert, Defendants argued that González’s testimony should be excluded because he did not base his opinion or testimony in appropriate scientific data, facts, or analysis and further that he did not review or consider all the evidence available in the case.

    Accident Reconstruction Expert Witness

    Otto González Blanco received training in accident reconstruction for fall and traffic accidents and has served as an expert in hundreds of fall cases. He has been working as an engineer since 1977. From 2008 to 2012, he enrolled in the Public Safety Program at University of North Florida, Jacksonville to become an expert in the field of accident reconstruction.

    Get the full story on challenges to Otto González Blanco’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Defendants sought to exclude González’s testimony pursuant to Federal Rules of Evidence 702 and 703, as well as pursuant to Daubert and its progeny, on grounds that it is speculative, unreliable, and insufficiently grounded in appropriate scientific data, facts, or analyses. Defendants discussed González’s failure to review all the evidence of record, including architect Arch. Otheguy report and statement under penalty of perjury, as well as Cabrera’s deposition testimony. Specifically, Defendants argued that González’s opinions are based on “speculation and conjecture” because he did not review the aforementioned information. 

    Knowledge of the circumstances of the fall is relevant to González’s ability to offer his expert opinion

    Defendants’ claim that González has “no knowledge of how the accident occurred according to Plaintiff Cabrera” because González did not read her deposition testimony, though relevant for vigorous cross examination, is not in and of itself sufficient to strike him as an expert.

    The Court held that the knowledge of Cabrera’s account of how she fell can come from more than one source, although González should have clearly spelled out the source in his report or deposition testimony.

    González’s unawareness or, at a minimum, lack of specificity in his report as to which foot of Cabrera got tangled with the table and where exactly her other foot landed leaves much to be desired for purposes of an accident reconstructionist. The Court held that it was not until González submitted a statement under penalty of perjury in support of an opposition to a motion for summary judgment that the details of the fall seemed to perfectly align with the details of Cabrera’s deposition testimony.

    Nevertheless, in writing his report, it is clear that González was made aware of certain facts, data, and allegations in the case. Further, Eng. González visited the restaurant facilities personally on September 22, 2023, to take measurements and observe the scene of the accident.

    Therefore, the Court refused to exclude González’s expert opinion on foundational grounds.

    González need not have discussed every claim in Plaintiffs’ complaint in order to testify as to how the accident occurred

    Defendants also argued that González has “no experience or training in the design of restaurant interiors,” and while he was involved in structural and site design of restaurants in the past, he has not “taken part in any such designs during the last fifteen (15) years.” The Court held that González’s educational background and professional experience qualify him to render an opinion in this case as an accident reconstructionist.

    Defendants also argued that González’s report did not address every claim in Plaintiffs’ complaint; specifically, his report did not state “any opinion relative to the platform and/or the height of the same; the recessed lighting and/or lack of adequate warnings” and whether “these factored into Cabrera’s fall.”

    The Court held that González does discuss both the platform height and the lack of warnings of the height in his report. It is true that González did not address Plaintiffs’ claim as to dimmed or recessed lighting; however, González need not have discussed every claim in Plaintiffs’ complaint in order to testify as to how the accident occurred.

    González points to no codes, regulations or restaurant industry standards to support his report conclusions

    González points to no codes, regulations or restaurant industry standards to support his report conclusions that tripod style tables are unacceptable for restaurant booths, that post square table bases should be used instead, and that platforms where booths rest must rise at least 4 inches from the floor. He also invoked OSHA safety standards which are applicable to workers, not guests such as Cabrera.

    The only hint left of scientific reliability to a standard is González’s references in his report to two American National Standards Institute (ANSI)  codes to justify the placement of a tape on a platform’s edge, the existence of which Cabrera admitted in her deposition she was aware as she stepped into the booth without any difficulties. However, as previously discussed, despite given multiple opportunities to explain whether, why or how those codes made the absence of a visual marking on the booth platform’s edge an unreasonably dangerous condition for guests at Romano’s Macaroni Grill, at his deposition González insisted that he did not come to testify about deviations from codes and regulations, but instead about deviations from the original design.

    There is a clear contradiction between González’s deposition testimony and the statement under penalty of perjury submitted to defeat Defendants’ motion for summary judgment

    In support of Plaintiffs’ opposition to Defendants’ motion for summary judgment, however, González sings a different tune from the one heard at the deposition and now suddenly feels compelled to make statements in his statement under penalty of perjury about deviations from codes and regulations.

    Basically, there is a clear contradiction between González’s deposition testimony and the statement under penalty of perjury submitted to defeat Defendants’ motion for summary judgment. In the statement under penalty of perjury, González opined that the ANSI code was a standard “that was violated by the restaurant.” However, as previously explained in detail, González’s prior deposition testimony strayed far away from ANSI regulations or standards. This is in stark contrast to his statement under penalty of perjury, where he makes it clear that Defendants violated the ANSI standard.

    Second, Defendants objected to several of González’s statements under penalty of perjury as they contain new information not included in his expert report or deposition. In his expert report, González does not specify or discuss the specifics of Cabrera’s fall but in his statement under penalty of perjury, González specifies exactly how Cabrera fell.

    Therefore, if while under oath at his deposition González adopted his report as containing the entirety of his opinions, and his report he says that “her feet” (in plural) slightly tripped on one of the spikes under the table, he cannot now say that Cabrera’s right foot (in singular) got tangled with one of the spikes.

    Analysis

    The Court held that González does not cite any standards as to the type of table to be used or the required height of the platform where the booth rests. His attempt to springboard OSHA regulations outside of the work environment and impose them on restaurant guests is not admissible, particularly as there is not even evidence on the record that waiters at Romano’s Macaroni Grill actually go in and out of restaurant booths to do their jobs (as opposed to simply standing in front of the booth to take an order).

    He was unable to answer with specificity questions at his deposition about the ANSI codes cited in his report and the OSHA standards. His assertions regarding said standards in his statement under penalty of perjury issued post deposition have been stricken. González cannot testify about recessed lighting because he is completely silent about that topic in his expert report.

    Moreover, he – who has been retained as an accident reconstructionist – will not be able to even say what Cabrera has said under oath, namely that it was her right foot, not both of her feet, which allegedly got tangled with a leg of the table. Under these circumstances, it cannot be said that González’s conclusions were made “in a scientifically sound and methodologically reliable fashion.”

    Held

    The Court granted Defendants’ motion in limine to strike Otto González Blanco’s testimony.

    Key Takeaway:

    • González’s attempt to springboard OSHA regulations outside of the work environment and impose them on restaurant guests is not admissible, particularly as there is not even evidence on the record that waiters at Romano’s Macaroni Grill actually go in and out of restaurant booths to do their jobs (as opposed to simply standing in front of the booth to take an order). 
    • González points to no codes, regulations or restaurant industry standards to support his report conclusions that tripod style tables are unacceptable for restaurant booths, that post square table bases should be used instead, and that platforms where booths rest must rise at least 4 inches from the floor.

    Case Details:

    Case Caption: Cabrera Et Al V. International Restaurant Services, Inc. Et Al
    Docket Number: 3:22cv1449
    Court: United States District Court, Puerto Rico
    Order Date: November 27, 2024
  • Medical Billing Expert Witness’ Report Precluded Because it Reviews the Amounts Previously Billed

    Medical Billing Expert Witness’ Report Precluded Because it Reviews the Amounts Previously Billed

    This matter stems from a motor vehicle accident that occurred on May 21, 2023 when the vehicle driven by Plaintiff, Juwan Brown, and occupied by his parents, Clarence and Tawanna Brown, was struck by a commercial vehicle driven by Dashawn Brooks.

    The commercial vehicle was owned by Penske Truck Leasing Co. and leased by Defendant Mayflower Laundry & Linen. As a result of the accident, Plaintiffs have alleged that they have sustained various injuries and damages.

    The Defendant retained Yvonne Dailey “to coordinate an analysis of the billing and reimbursement dates for services provided to [Plaintiffs] due to” the motor vehicle accident at issue in this case.

    In her report, Dailey compared the amounts charged for Plaintiffs’ medical care arising from the accident with the amounts permitted by the fee schedules under the New Jersey Personal Injury Protection (“NJ PIP”) fee schedule and Pennsylvania’s “Act 6” schedule. However, Dailey’s analysis did not include the amounts that were actually paid for the services.

    Plaintiffs challenged the reliability, relevance, and fit of Dailey’s opinion, asserting that her testimony should be precluded under Federal Rule of Evidence 403. Plaintiffs argued that the charges reflected in Dailey’s report “have already been reconciled with Plaintiffs’ health insurers [and] will be presented to the jury in the form of liens which will be sanitarily presented in compliance with the collateral source rule.

    Medical Billing Expert Witness

    Yvonne Dailey has over 20 years of experience in the medical billing and coding field. As a Certified Professional Coder (CPC) and Certified Professional Biller (CPB), she helps clients understand the importance of accurate coding and documentation in the reimbursement process.

    Her specialties include Infectious Disease, Family Practice, Endocrinology, Interventional Radiology, Internal Medicine, OB-Gyn, Chiropractic, Mental Health, Podiatry, Substance Abuse, Oncology, Hematology, Ophthalmology, Dental (medical side), and Orthopedics.

    Want to know more about the challenges Yvonne Dailey has faced? Get the full details with our Challenge Study report.   

    Discussion by the Court

    The defense expert created spreadsheets identifying the charges from Plaintiffs’ medical providers, and opining as to the allowable amounts under NJ PIP and Act 6 for each charge. However, as Plaintiffs pointed out, Plaintiffs’ health and auto insurers have already paid for the treatment which Dailey analyzed.

    Under Pennsylvania law, “if the exact amount of [past medical] damages has been decided, or payment has been made and accepted in full, the Plaintiff’s recovery is limited to that amount and there is no issue for the factfinder to determine.”

    Plaintiffs asserted that Dailey’s report reviews the amounts previously billed which have already been paid and Defendants did not dispute this characterization. Because the measure of damages for past medical damages is the amount accepted by the provider as payment in full and that amount is readily available, the Court concluded that Dailey’s analysis is not relevant to any issue the jury must decide and would not aid the jury.

    Held

    The Court granted the Plaintiffs’ motion to preclude the testimony of Yvonne Dailey.

    Key Takeaways

    Under Pennsylvania law, “if the exact amount of [past medical] damages has been decided, or payment has been made and accepted in full, the Plaintiff’s recovery is limited to that amount and there is no issue for the factfinder to determine.”

    Because the measure of damages for past medical damages is the amount accepted by the provider as payment in full and that amount is readily available, the Court concluded that Dailey’s analysis is not relevant to any issue the jury must decide and would not aid the jury. Therefore, Dailey’s analysis was precluded.

    Please refer to the blog previously published about this case:

    Nursing Expert Witness’ Opinions on the Propriety of Treatment Recommendations Admitted

    Case Details:

    Case Caption: Brown Et Al V. Brooks Et Al
    Docket Number: 5:23cv2966
    Court: United States District Court, Pennsylvania Eastern
    Order Date: November 22, 2024
  • Marketing Expert Witness’ Testimony on Students’ Exposure to Fraudulent Rankings Admitted

    Marketing Expert Witness’ Testimony on Students’ Exposure to Fraudulent Rankings Admitted

    Plaintiffs Iola Favell, Sue Zarnowski, Mariah Cummings, and Ahmad Murtada (“Plaintiffs”) alleged that Defendant University of Southern California (“USC”) engaged in a scheme to artificially inflate the U.S. News & World Report (“US News”) ranking of USC’s Rossier School of Education (“USC Rossier”) by submitting incomplete data to US News — and then marketed that fraudulent ranking to the public.

    An internal investigation conducted by USC’s outside counsel, Jones Day, determined that USC had submitted student selectivity data only for USC Rossier’s highly selective, in-person PhD program — but not from its less-competitive EdD program.  The less-competitive EdD program was offered online after 2015 in collaboration with 2U, a company that offers technology platforms for online programs and provides advertising and recruiting for those online programs. 

    Plaintiffs alleged that USC, knowing the importance of the rankings on prospective students’ school choice, heavily marketed USC Rossier’s rapidly rising ranking to the public to boost enrollment in the online programs. USC orchestrated this scheme, Plaintiffs alleged, through its submission of false/incomplete data and then promoted the resulting ranking knowing that it was misleading.

    USC filed Daubert motions seeking to exclude three of Plaintiffs’ expert witnesses, Dr. John Chandler, Sara Neher and J. Michael Dennis.

    Marketing Expert Witness

    Dr. John Chandler is a professor of marketing at the University of Montana who holds a master’s degree in mathematics and a doctorate in statistics and has worked in analytics and data science for 25 years with a focus on digital marketing. 

    Want to know more about the challenges John Chandler has faced? Get the full details with our Challenge Study report.

    Education & Schools Expert Witness 

    Sara Neher is a partner at Kennedy & Company Higher Education Strategies, a higher education consulting firm. She has an MBA and has worked in higher education for more than twenty years, including academic leadership positions at two business schools. Neher has experience consulting higher education clients about their US News rankings, including constructing models like the one she submits in this case, and has also been part of the submission of data to US News for multiple schools. 

    Get the full story on challenges to Sara Neher’s expert opinions and testimony with an in-depth Challenge Study. 

    Survey Research Expert Witness

    J. Michael Dennis is the Senior Vice President of the National Opinion Research Center, which is a survey research organization affiliated with the University of Chicago. Dennis has worked in survey research for more than 20 years, has authored more than 60 articles, and has been found qualified by numerous courts to provide expert opinions on consumer surveys.

    Want to know more about the challenges J. Michael Dennis has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    John Chandler

    John Chandler submits a 95-page report explaining digital marketing practices in the context of student recruitment for graduate programs, the stages of a prospective student’s journey through the “marketing funnel,” what marketing strategies are typically deployed for student recruitment, and how USC Rossier applied these principles in its marketing strategy.

    The first portion of Chandler’s report expresses extensive opinions on marketing practices, the enrollment journey, and the comprehensive marketing strategy that USC and 2U deployed to market USC Rossier.  The second part of Chandler’s report discusses the exposure — i.e., the reach — of USC Rossier’s marketing materials containing the allegedly fraudulent ranking information.  In the end, Chandler’s bottom line conclusion is: “Given the extensive and varied exposure methods outlined above, I can state with a reasonable degree of scientific certainty that all or nearly all students at USC Rossier in the MAT and OCL programs during the period of ranking manipulations were exposed to the fraudulent rankings. The pervasiveness of these rankings across multiple touchpoints ensured their near-universal reach.”

    Reliability

    USC did not challenge Chandler’s opinions on general marketing principles or the specifics of the extensive marketing strategy 2U and USC implemented with regard to USC Rossier. Instead, USC challenged the exposure/reach aspects of Chandler’s opinions. The crux of USC’s argument is that Chandler has no quantitative basis to opine that all or nearly all prospective students were exposed to fraudulent rankings through emails and/or other means.

    USC further contended that Chandler did not have reliable site traffic data to substantiate an opinion that the vast majority of students visited the USC Rossier website and were exposed to a ranking representation.

    The Court first observed that Chandler’s report extensively details the marketing strategy that USC and 2U deployed on behalf of USC Rossier, including specific opinions on how the marketing strategy was designed to move interested students through the marketing funnel from “awareness” to “enrollment.”

    To arrive at his exposure conclusions, Chandler relied heavily on testimony from 2U’s 30(b)(6) representative, Dr. Joana Gerber. The Court has reviewed Gerber’s deposition transcript, as well the arguments both USC and Plaintiffs make about her testimony. 

    The Court agreed with Plaintiffs that the thrust of Gerber’s testimony and Chandler’s report is that 2U orchestrated an extensive marketing strategy designed to move all prospective students through the marketing funnel. It also agreed with Plaintiffs that Chandler’s opinions are the result of extensive review of record evidence, including Gerber’s testimony, and that USC’s placement of rankings on the USC Rossier website and in social media further supports his exposure conclusions.

    Sara Neher

    Sara Neher submitted a 13-page expert report explaining a model she constructed to project the US News ranking USC Rossier would have received if USC had submitted accurate data. US News publishes its methodology each year, including the relative weights of the various factors that underlay its rankings, with each school receiving an assigned rank based on its overall score on a 100-point scale. 

    Neher’s model standardizes the data in each category

    Neher begins her reconstructed model with the data published by US News. First, Neher’s model standardizes the data in each category using z-scores, which are multiplied by the relative weights published by US News and added together to create a total for each school. Then, the total is indexed such that the top score always equals 100. The critical component — and the factor USC most vigorously challenges — is what Neher does to account for the information US News does not release. Neher acknowledged that she does not have access to information US News does not make publicly available, including the number of faculty with awards, the number of doctoral students who submitted a GRE score, the overall score for the lowest ranked 25% of schools, and the process for applying a logarithmic transformation to the student-faculty ratio. 

    Neher replaced the data USC Rossier actually submitted to US News with accurate data USC should have submitted

    To account for this unavailable information, Neher calculated what she labels a “hidden-data constant” by comparing how much her model’s raw score (using the publicly available data) deviates from the school’s actual US News ranking. This, Neher reports, “captures the difference between what our model is able to calculate as the indexed score and what US News reports as the final score.” Then Neher replaced the data USC Rossier actually submitted to US News with accurate data USC should have submitted, based on an internal report from USC’s Director of Institutional Research who was instructed to investigate the matter. After generating a new overall score for USC Rossier using this information, Neher applies the hidden-data constant to account for the information she cannot recreate. 

    The result led to a dramatic decrease in USC Rossier’s ranking. Under Neher’s model, USC Rossier’s rank would have dropped from 15 to 48 in 2018; from 10 to 34 in 2019; from 12 to 61 in 2020; from 11 to 63 in 2021; and from 11 to 64 in 2022. 

    USC argued that Neher’s opinions regarding USC Rossier’s adjusted US News rankings must be excluded because they are the result of an unreliable methodology. Specifically, USC argued that the “hidden data constant” Neher calculates varies both school-to-school and year-to-year, resulting in a score that is sometimes close to US News’ ranking, but other times is dramatically far off. In other words, USC argued that there is no consistency to the hidden-data constant, so the methodology cannot be reliably used to predict adjusted scores based on different data input.

    Qualifications

    USC challenged Neher’s qualifications on the grounds that she does not have the training, experience, or specialized knowledge to qualify as an expert in statistical modeling. In addition, USC argued that she has never worked for or been trained by US News and has never before tried to replicate US News’s model; instead, she knows only what US News publicly discloses. 

    As USC sees it, absent insider knowledge about US News’s rankings, it is not possible to reliably replicate US News’ ranking at all — and any attempt to do so is “a pure guessing game.” 

    The Court declined USC’s invitation to announce a rule — especially in a discretionary evidentiary ruling — that the only way to reliably prove rankings fraud is to use (or, more likely, to misappropriate) insider knowledge of US News’s proprietary methodology. The Court is not convinced that any attempt to do so is necessarily a “pure guessing game” that categorially forecloses Neher’s proffered reconstructed rankings. This is especially true considering that Plaintiffs have identified other consulting firms and academic research that attempt to reconstruct US News rankings. 

    The Court held that Neher’s extensive experience working in higher education consulting constitutes a sufficient foundation to qualify her to offer her proffered opinions. 

    Reliability

    The Court would begin by observing that neither Plaintiffs nor Neher purport to represent the proffered adjusted rankings model as a perfectly exact replication of the US News rankings. In addition, though USC did not challenge in its moving papers the result of Neher’s model — i.e., that USC Rossier’s ranking would experience a large decline — it indicated at the hearing that it does challenge Neher’s ultimate conclusion that rankings would have dropped.

    For present purposes, the crux of USC’s challenge is how close Neher got in making a rankings prediction.

    The Court also disagrees with USC that Neher’s methodology cannot be tested. Neher has described the methodology she deploys in her model in transparent and understandable terms, meaning USC and its experts can verify it, test it against different data, and/or critique the application of the hidden data constant. 

    USC does, however, point to numerous examples where the hidden data constant does not come close to replicating the school’s actual US News ranking, and that it also varied year-to-year. The question becomes, then, whether the inconsistencies with the outcome of Neher’s model compared to US News’s actual rankings are the result of unreliable methodology or instead go to the weight of the evidence. The Court notes that USC does not challenge Neher’s replication of the published aspects of US News’s methodology, only the methodological step of capturing the “hidden data constant.” 

    J. Michael Dennis

    J. Michael Dennis submitted a 55-page report proposing two yet-to-be-conducted choice-based conjoint surveys that would estimate what USC Rossier’s tuition prices would have been but for USC’s alleged conduct. Dennis defines a choice-based conjoint survey as a “standard marketing research technique for quantifying consumer preferences for products and for the component features that make up a product. Conjoint analysis can be used to break down the value of a conceptual feature ( i.e., claims about the USC Rossier’s credentials) into its component parts (i.e., the claim that USC Rossier is a ‘top ranked’ program, or more specifically, that it was ranked between 10-15 by U.S. News & World Report in the 2017-2022 time period). Conjoint surveys take advantage of the fact that consumers are profoundly familiar with the task of shopping — comparing products, evaluating them, and making choices. Consumers are accustomed to making choices in their real-world shopping experiences.”

    To calculate damages, Dennis explains:

    “I define the but-for world as a world where the actual U.S. News rankings were in fact between 34 and 64 (corresponding to my fourth level of “30 to 59” for the “Rankings” attribute). In contrast, class members paid program costs when the advertised rankings were between 10 and 15 (i.e., corresponding to my second level of “10 to 19” for the “Rankings” attribute). If Plaintiffs’ allegations have merit, the market-clearing prices in the but-for worlds will be lower than the prices paid by class members.”

    Reliability

    USC first argued that Dennis’ opinions must be excluded because they rely on Neher’s inadmissible opinions. However, the Court would not exclude Neher’s opinions, thereby rendering this argument moot.

    USC next argued that Dennis’ opinions must be excluded under Fed. R. Evid. 702(b) because they are based on insufficient facts or data.

     USC argued that higher education does not operate in normal supply-and-demand conditions because of the impact of other economic incentives, including scholarships, fellowships, and grants. In addition, USC argued that universities address scarcity through selective admissions, not tuition price. USC’s argument, then, is that Dennis has no evidence justifying his assumption that the market value of an education from USC Rossier is anything other than what USC Rossier decides to charge. 

    Relatedly, USC also argued that Dennis has no evidence supporting his assumption that USC Rossier’s tuition responded to US News rankings. USC relies on a report from its expert witness to argue that there is no empirical analysis showing that tuition for EdD programs is affected by changes in school rankings.

    This Court agrees that the real-world and market realities evidence upon which USC relies speak to the weight of Dennis’ analysis — which certainly could persuade a jury — but are not supportable reasons for excluding Dennis’ expert report and testimony.

    Finally, the fact that Dennis’ survey has not been fully developed or implemented does not warrant exclusion at this juncture. There is no basis to exclude Dennis’ proposed conjoint survey. However, the Court will not preclude USC from bringing a later Daubert challenge to Dennis’ final report and testimony after his conjoint survey has been fully executed.

    Held

    The Court denied USC’s Daubert motions to exclude the expert report and testimony of Dr. John Chandler, Sara Neher, and Dr J. Michael Dennis.

    Key Takeaways:

    • While Chandler is not able to offer at this juncture a quantifiable number of students exposed to fraudulent rankings — an issue that might make the specific contours of his testimony subject to a later motion in limine — the Court does not find too great of an analytical gap between the record evidence and his exposure opinions. The core of USC’s argument goes to the weight of Chandler’s opinion and the identified shakiness of Gerber’s testimony, but “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.”
    •  The fact remains that Plaintiffs intend to use Neher’s model to show how consumers would react to USC Rossier’s adjusted rankings range, as compared to being a top-ranked school. With this in mind, the argument USC makes about the exact precision of Neher’s estimation cannot carry the weight that USC places upon it. But to be sure, USC has identified several weaknesses of Neher’s model which can be subject to “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof.” The Court cannot and will not consider whether Neher’s model is right or wrong; it is satisfied at this juncture that Neher transparently and thoroughly explained her methodology in a way that can be tested and cross-examined. The Court is therefore not convinced that Neher’s model is the product of such unreliable methodology as to fail Daubert‘s gatekeeping standard.
    •  The Court noted that Dennis extensively details the structure of his survey and has considerable experience executing similar surveys. And as just examined, the Court is satisfied at this juncture that Dennis is qualified and has proposed a reliable methodology. Accordingly, there is no basis to exclude Dennis’ proposed conjoint survey.

    Case Details:

    Case Caption: Iola Favell Et Al V. University Of Southern California Et Al
    Docket Number: 2:23cv3389
    Court: United States District Court, California Central
    Order Date: November 13, 2024
  • Standard Out-Of-Pocket Damages Methodology Employed by Economics Expert Witness Deemed Reliable

    Standard Out-Of-Pocket Damages Methodology Employed by Economics Expert Witness Deemed Reliable

    In 2007, SCANA received legislative approval to construct two nuclear reactors at the V.C. Summer Nuclear Generating Station in Fairfield County, South Carolina” (the “Nuclear Project”). Deloitte served as SCANA’s external auditor for over 70 years. International Brotherhood of Electrical Workers Local 98 Pension Fund alleges that, “[t]hroughout the Class Period, Deloitte repeatedly violated its professional responsibilities, failed in its role of gatekeeper and deceived investors about SCANA’s accounting for, and expected completion of” the Nuclear Project.

    Deloitte allegedly “gave unqualified, ‘clean’ audit reports on SCANA’s financial statements and internal control over financial reporting, misleading investors into believing that SCANA would complete the Nuclear Project in time to obtain $1.4 billion in nuclear tax credits[,] despite voluminous evidence that SCANA could not possibly achieve this goal.”

    The Consolidated Complaint alleged that SCANA, its investors, government regulators, and Deloitte understood that the success of the Nuclear Project depended on SCANA obtaining $1.4 billion in federal production tax credits and being able to raise energy rates on consumers to cover construction costs.

    Plaintiff International Brotherhood of Electrical Workers Local 98 Pension Fund filed a motion for class certification, appointment of class representative, and appointment of class counsel (the “Class Certification Motion”) while Deloitte filed a motion to exclude the damages-related opinion offered in Dr. Matthew D. Cain’s expert report.

    Economics Expert Witness

    Matthew D. Cain is a Ph.D in Finance, a Senior Fellow at the Berkeley Center for Law and Business, and a Senior Visiting Scholar at Berkeley Law School, University of California. He teaches courses, delivers guest lectures, participates in academic seminars, and conducts research in various topic areas related to finance, economics, accounting, law, and business.

    His research is focused on topics including empirical corporate finance, corporate governance, board independence, mergers and acquisitions, hostile takeovers, shareholder lawsuits, negotiations, financial contracting, disclosures of financial information, and shareholder activism. Cain worked at the SEC between 2014 and 2018 as a Financial Economist. Before working at the SEC, he was an Assistant Professor of Finance at the University of Notre Dame. Cain has also published research in leading peer-reviewed finance, accounting, law, and economics journals.

    Want to know more about the challenges Matthew Cain has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Deloitte did not challenge Cain’s qualifications, and the Court concluded that Cain is qualified to opine on the matters discussed in his reports.

    Based on his analysis, Cain “formed the opinions that the market for shares of SCANA’s Common Stock was efficient during the Class Period” and that “damages in this matter can be calculated on a class-wide basis subject to a common methodology.” Deloitte challenged only Cain’s opinion regarding damages and, thus, the Court limited its discussion to Cain’s damages-related opinion.

    Cain’s first report, dated April 30, 2021 (the “First Report”), explained that “[t]he ‘out-of-pocket’ method of calculating damages represents a standard and well-accepted methodology under Section 10(b) of the Exchange Act” and that the “approach calculates damages formulaically as the artificial inflation in the share price at the time of purchase minus the artificial inflation in the share price at the time of sale.”

    Deloitte challenged Cain’s damages-related opinion on two bases. First, Deloitte argued that IBEW asserted two damages theories––a materialization of risk theory and a corrective disclosure theory––but that Cain’s report ignored the materialization of risk theory.

    Deloitte’s Challenge Regarding the Materialization of Risk Theory

    Deloitte contended that Cain’s report appears to be referencing corrective disclosures rather than risk.

    However, as the Fourth Circuit has explained, “the ultimate loss causation inquiry under either the corrective disclosure theory or the materialization of a concealed risk theory is the same: whether a misstatement or omission concealed something from the market that, when disclosed, negatively affected the value of the security.”

    The First Report stated that Cain will use the out-of-pocket method for
    calculating damages on a class-wide basis. The out-of-pocket method calculates the difference between the price at which the stock sold and the price at which the stock would have sold absent any artificial inflation cause by a Defendant’s alleged misrepresentations or omissions.

    Accordingly, the Court concluded that Cain has offered a reliable damages model consistent with IBEW’s liability case and has demonstrated that IBEW’s damages are attributable to that theory of liability.

    Deloitte’s Challenge Regarding Damages Attributable Only to Deloitte

    Deloitte next argued that Cain failed to identify or offer a “methodology by which damages attributable to SCANA, its officers, or others could be separated from damages attributable to Deloitte.” However, at the class certification stage in a securities fraud class action, a methodology is not required “to make an allowance for any damages caused by things other than the Defendants’ alleged fraud.”

    Moreover, Cain has explained that “event studies are widely-employed to calculate artificial inflation [and] measure stock price reactions to corrective disclosures which reveal the relevant truth that was concealed by alleged material omissions and/or misrepresentations.”

    Additionally, Cain opined, “to the extent that reliable evidence is introduced to show that a material portion of the difference in the artificial inflation between the purchase and sale of the securities may be attributed to non-fraud related factors, the impact of such ‘confounding information’ on the price of SCANA securities can be determined on a common, classwide basis using various accepted methodologies.” Accordingly, the Court concluded that Cain’s damages-related opinion should not be excluded.

    Held

    • The Court denied Deloitte’s motion to exclude damages-related expert opinion of Dr. Matthew D. Cain.
    • The Court granted IBEW’s motion for class certification, appointment of class representative, and appointment of class counsel.

    Key Takeaways:

    Cain’s damages-related opinion were admissible because Cain has offered a reliable damages model consistent with IBEW’s liability case and has demonstrated that IBEW’s damages are attributable to that theory of liability.

    Moreover, at the class certification stage in a securities fraud class action, a methodology is not required “to make an allowance for any damages caused by things other than the Defendants’ alleged fraud.”

    Case Details:

    Case Caption: International Brotherhood Of Electrical Workers Local 98 Pension Fund V. Deloitte & Touche Llp Et Al
    Docket Number: 3:19cv3304
    Court: United States District Court, South Carolina
    Order Date: November 12, 2024
  • Insurance Expert Witness’ Testimony Limited Because it is Needlessly Cumulative

    Insurance Expert Witness’ Testimony Limited Because it is Needlessly Cumulative

    This lawsuit stems from claims of breach of contract and statutory and common-law bad faith.

    It all started when Plaintiff, Paul Schulz, was injured when his motorcycle struck an oil spill in the roadway, causing the front tire to slide out and the motorcycle to overturn. Shortly thereafter, Schulz filed a claim with his insurer, Shelter Mutual Insurance Company (“Shelter”), for uninsured/underinsured motorist (“UIM”) coverage. After speaking with Schulz about the accident and the injuries he sustained, the claims adjuster determined Schulz was 100% at fault for the accident and denied coverage. When Schulz hired an attorney, Shelter agreed to consider any other information that might bear on the claim and ordered the police report. Nine days later, Shelter again denied the claim on the basis that Schulz was more than 50% at fault.

    Defendant filed a motion to strike certain opinions of Plaintiff’s industry standard expert Brian Seigal.

    Insurance Expert Witness

    Brian Seigal has been involved in the insurance industry throughout his career since 1995, working in and being responsible for claims departments. He has a multi-line background in P & C and Health Insurance. He has managed claims departments for carriers and TPAs, with experience spanning primary, excess, and reinsurance levels. Over the years, he has managed and trained hundreds of adjusters and has been involved with thousands of claims. He has also held department reserve and settlement authority.

    Get the full story on challenges to Brian Seigal’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Seigal should be precluded from relying on averments in Shelter’s amended answer to the complaint

    Shelter first argued Seigal should be precluded from relying on averments in Shelter’s amended answer to the complaint to draw conclusions about the adequacy vel non of Shelter’s investigation. Essentially, in response to a series of allegations regarding the cause of the crash, the nature of Schulz’s injuries, and Shelter’s initial investigation, Shelter responded that it was without sufficient information to admit or deny those allegations. Seigal opined these answers demonstrate Shelter’s investigation was inadequate because they suggest Shelter was unclear as to the basic facts of the accident, the nature and extent of Schulz’s damages, and the results of its own investigation.

    The Court held that the relevant facts regarding Shelter’s initial investigation are recited in Shelter’s claim file notes and were the subject of inquiry at the 30(b)(6) depositions of the corporate representatives. Expert testimony regarding Shelter’s pleadings about these same matters therefore also would be needlessly cumulative and wasteful of limited trial time.

    Seigal’s opinion suggests Shelter’s investigation was unreasonable for failing to engage experts to vet Schulz’s claim prior to the initiation of litigation

    Seigal stated there exist a variety of tools of which a carrier may take advantage to fulfill its duty of reasonable investigation, and while there is no formulaic approach, not pursuing a particular investigative avenue may indicate a lack of good faith in particular circumstances. Seigal suggests this case presented a circumstance in which the adjuster should have engaged one or more experts as part of the investigation of the claim.

    Shelter points out that the insured bears the initial burden of producing sufficient evidence to suggest his damages were caused by an event that comes within the coverage of the policy.

    The Court held that it is not objectionable for Seigal to opine that Schulz’s case was one which warranted the retention of one or more experts as part of Shelter’s investigation.

    Seigal testified that Shelter’s attempt to condition payment of Schulz’s policy limits on his execution of a release was impermissible and unreasonable

    Shelter sought to preclude Seigal from testifying that Shelter’s attempt to condition payment of Schulz’s policy limits on his execution of a release was impermissible and unreasonable.

    Shelter attached a Release and Trust Agreement to his settlement letter which, inter alia, would have required Schulz to release Shelter from “all liability under any Uninsured Motorist/Underinsured Motorist/Uninsured Motorist Property Damage policy provisions for bodily injury, sickness, disease, or property damage (collectively “damages”) arising from the accident.”

    The Court denied the motion to exclude this portion of Seigal’s testimony because the insurer breaches its duty not to unreasonably delay or deny payment of undisputed benefits, even if additional benefits remain in dispute. Shelter’s recommendations with regard to the payment of benefits suggested that Shelter acknowledged Schulz was entitled to a payment of more than $138,000, but suggested withholding the remainder of the policy limits until he signed a release.

    Seigal opined, in regard to the withholding of the Fisher payment, that “other courts in Colorado have dealt with similar issues and provided orders against carriers who utilized these practices”

    Lastly, and relatedly, Shelter objected to Seigal testifying, in regard to the withholding of the Fisher payment, that “other courts in Colorado have dealt with similar issues and provided orders against carriers who utilized these practices.” Seigal’s supplemental report suggested that he will provide these cases in a further supplemental appendix, and Schulz claims by his response that they have been provided to Shelter in discovery (although Shelter disputes that suggestion).

    Critically, however, these cases are nowhere to be found in the record before the court. It therefore is impossible for the court to determine whether these cases are indeed analogous, as Seigal suggests. Even if they were, the Court held that allowing Seigal to discuss these other cases at trial runs too great a risk of confusing and misleading the jury, as well as wasting time on matters that can be, at best, merely tangential to the issues this jury will be asked to decide.

    Held

    The Court granted in part and denied in part Defendant’s motion to strike certain opinions of Plaintiff’s industry standard expert Brian Seigal.

    Key Takeaway:

    • The insured bears the initial burden of producing sufficient evidence to suggest his damages were caused by an event that comes within the coverage of the policy. As a result, Shelter’s investigation was unreasonable for failing to engage experts to vet Schulz’s claim prior to the initiation of litigation.
    • According to Shelter’s recommendations with regard to the payment of benefits, Shelter was aware that Schulz was entitled to a payment of more than $138,000, but suggested withholding the remainder of the policy limits until he signed a release. However, the insurer breaches its duty not to unreasonably delay or deny payment of undisputed benefits, even if additional benefits remain in dispute.

    Case Details:

    Case Caption: Schulz V. Shelter General Insurance Company
    Docket Number: 1:23cv1657
    Court: United States District Court, Colorado
    Order Date: September 12, 2024
  • Economics Expert Witness’ Conjoint Analysis and Damages Model Deemed Admissible

    Economics Expert Witness’ Conjoint Analysis and Damages Model Deemed Admissible

    Plaintiff David Swartz brought this case against Defendants Dave’s Killer Bread, Inc. and Flowers Foods, Inc. under the California Unfair Competition Law, alleging that Defendants violated Food and Drug Administration (“FDA”) regulations, and therefore California’s Unfair Competition Law (“UCL”), by including unlawful labels on their bread products.

    Plaintiff moved to certify a class on a single UCL claim. In response, Defendants filed a motion to strike the declaration of Plaintiff’s expert, Colin B. Weir.

    Defendants filed objections against the conjoint analysis and damages model provided by Weir and contended that his proposed methodology is not scientifically valid.

    Economics Expert Witness

    Colin B. Weir is Vice President at Economics and Technology, Inc. Weir conducts economic, statistical, and regulatory research and analysis, and testifies as an expert witness. Weir’s experience includes work on a variety of issues, including: economic harm and damage calculation; liquidated damages provisions; lost profits; false claims; diminution in value; merger/antitrust analysis; Early Termination Fees (ETFs); Late Fees; determination of Federal Excise Tax burden; and development of macroeconomic analyses quantifying the economic impact of corporate actions upon the US economy and job markets. Weir holds an MBA with honors from Northeastern University. He also holds a Bachelor of Arts degree cum laude in Business Economics from The College of Wooster.

    Want to know more about the challenges Colin B. Weir has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    The Court held that Weir’s damages model satisfies the requirements articulated in Comcast Corp. v. Behrend. To the extent there are any flaws in the methodology, they go to weight, and not admissibility, and do not support striking the declaration. Also, Weir’s methodology sufficiently tests the liability theory upon which the Court allowed Plaintiff to proceed. It measures any premium associated with Defendants’ violation of the regulations at issue, and is therefore permissible.

    Scientific Validity of Weir’s Methodology

    1. The Model’s Pricing Assumptions

    Weir stated that his data set included “through the register transaction data” for California during the class period, sourced from Information Resources, in addition to other methods. The Court held that such real-world sales data is sufficient for admissibility.

    2. Conjoint Survey Scientific Validity

    Defendants provided seven methodological arguments regarding Weir’s survey methodology. 

    First, Defendants argues that Weir’s survey will artificially focus participants on the protein statements, but this argument did not persuade the Court because “district courts have found that alleged focalism bias goes to the weight of the expert’s opinion, not its admissibility.”

    Defendants’ second and third arguments urge that Weir’s surveys design relies on undocumented interviews. The Court held that the survey design interviews at issue are merely a tool used in a survey design, and failure to take notes does not warrant exclusion. Defendants may still “cross-examine” Weir “about the questions in his survey,” regarding its questions, methodology, and the lack of development drafts. 

    Defendants’ fourth and fifth arguments posit that Weir’s survey will cause confusion because some label statements do not perfectly replicate labels as they would be seen in a store. However, the Court held that criticisms about a survey’s failure to replicate real world conditions . . . go to the weight of the survey rather than its admissibility.

    Defendants’ sixth and seventh arguments criticized Weir’s methodology for not accounting for whether some consumers were or were not misled, or for different geographies, retailers, or time periods. Whether consumers were misled is not relevant to Plaintiff’s theory, however, and Weir’s analysis does account for different geographies, retailers, and time periods. The Court held that Weir has provided enough specificity, and any methodological issues with addressing changes over time can be addressed after the study is carried out.

    3. Market Simulation Scientific Validity

    After conducting a consumer survey, Weir will use a market simulation tool to provide an estimate of any price premium that purchasers paid solely as a result of front-of-package protein claims. Defendants argued that this step fails to account for competition because it does not include competitive offerings. Competitive offerings are accounted for in the data, however, because Weir includes questions about their labels in the survey. The simulator then holds competition constant to compare real world pricing and but-for world pricing. The Court held this method to be sufficiently scientific.

    4. Supply Side Equilibrium Analysis

    Defendants argued that Weir’s analysis should include a supply-side equilibrium analysis, rather than a method that considers supply-side factors through real-world pricing data. Moreover, this method did not account for the effect of a seller’s willingness to sell the products on the price of the products. Conjoint analyses “can adequately account for supply-side factors . . . when (1) the prices used in the surveys underlying the analyses reflect the actual market prices that prevailed during the class period; and (2) the quantities used (or assumed) in the statistical calculations reflect the actual quantities of products sold during the class period.” The Court held that Plaintiff satisfied both prongs.

    Held

    I. The Court granted Plaintiff’s motion for class certification under Rule 23(b)(3) for a class defined as:

    “All persons in the State of California who purchased the Products between December 29, 2017 and September 5, 2023.”

    II. The Court denied Defendants’ motion to strike the declaration of Colin Weir.

    Key Takeaways:

    • Weir has provided enough specificity because his analysis accounts for different geographies, retailers, and time periods.
    • Weir’s analysis adequately accounts for supply-side factors.
    • Defendants argued that Weir’s use of a market simulation tool fails to account for competition because it does not include competitive offerings. The Court held that competitive offerings are accounted for in the data, however, because Weir includes questions about their labels in the survey.

    Case Details:

    Case Caption: Swartz V. Daves Killer Bread, Inc. Et Al
    Docket Number: 4:21cv10053
    Court: United States District Court, California Northern
    Order Date: September 20, 2024
  • Economics Expert Witness’ Improper State-of-Mind Testimony Excluded

    Economics Expert Witness’ Improper State-of-Mind Testimony Excluded

    Plaintiffs Richard Dennis, Port 22, LLC, and Michael Glass asserted Commodity Exchange Act and Sherman Antitrust Act claims, alleging that the Andersons, Inc. and Cargill Incorporated, who were supposed competitors, operated multiple grain storage warehouses in Ohio and collaborated to manipulate prices of soft red winter wheat futures and options contracts on the Chicago Board of Trade. 

    According to the Plaintiff, the Andersons, Inc. sold SRW wheat to the major purchasers in October and November 2017 to suppress demand for physical SRW wheat and then, on November 29, 2017, registered for delivery two thousand certificates of CBOT December 2017 SRW wheat.

    This registration (falsely, Plaintiffs say) signaled that TAI would sell ten million bushels of physical SRW wheat to parties holding long positions in December 2017 SRW wheat futures and caused a marked price decrease in the December 2017 SRW wheat futures contract and widened the spread between the December 2017 and March 2018 SRW wheat futures contracts.

    TAI and Cargill later repurchased some of the shipping certificates TAI had delivered at the decreased prices. Plaintiffs allegedly transacted in December 2017 and March 2018 SRW wheat futures and lost money because of the decreased prices caused by the scheme.

    Plaintiffs’ expert Craig Pirrong opined in relevant part that Defendants artificially depressed prices of the December 2017 and March 2018 SRW wheat futures through a market manipulation that injured Plaintiffs on a class-wide basis; Pirrong also provided a methodology for determining individual damages. Through the report of their expert, Professor Justin McCrary, Defendants purported to challenge the reliability of Pirrong’s studies. Plaintiffs attacked Professor McCrary’s qualifications.

    Economics Expert Witnesses

    Justin McCrary is an “economist with expertise in microeconomics, economic modeling, and statistical method,” who teaches at the Law School at Columbia University. He has taught courses on economic theory econometric theory, antitrust, law and economics, and statistics and is a reviewer for leading peer-reviewed economics journals. He served on the Board of Directors of the American Law and Economics Association and has published papers in prominent economic journals.

    Get the full story on challenges to Justin McCrary’s expert opinions and testimony with an in-depth Challenge Study. 

    Craig Pirrong‘s extensive qualifications includes approximately 30 years of concentrating professionally on competition and manipulation of prices with a focus on Chicago Mercantile Exchange wheat, soybean, and corn futures contracts; publishing a dozen peer-reviewed articles and a book on commodity futures manipulation and pricing; presenting to and consulting with federal agencies on manipulation; and testifying as an expert.

    Want to know more about the challenges Craig Pirrong has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Professor Justin McCrary

    Plaintiffs argued McCrary: (1) is unqualified to give an opinion in this class action alleging market manipulation in wheat futures and options; (2) tenders opinions that are unreliable because they lack a scientific basis and he has never performed such quantitative work before; and (3) offers irrelevant opinions.

    McCrary’s Qualifications

    Plaintiffs insisted McCrary is unqualified to render an opinion in the realm of the commodity futures market, a conclusion they say is underscored by his professed unfamiliarity with “basic industry terminology” like “front month,” “spot month,” “strong stopper,” and “cash contract.”

    The Court held that Plaintiffs’ surface-level attack on McCrary’s background and education is insufficient to demonstrate his lack of qualification, and the Court declines to exclude McCrary’s opinions, which Plaintiffs do not deny are rooted in statistics and economics, merely because he neither purports to be nor appears to be an expert in commodities futures trading or manipulation.

    Reliability of McCrary’s Opinions

    Plaintiffs argued McCrary’s opinions are unreliable, first, for lacking a scientific basis—because he opines Pirrong’s analyses fail to account for confounding fundamental factors that McCrary himself neither identified nor analyzed to determine any potential impact. But, as Defendants retort, that was not McCrary’s task; neither Daubert nor Rule 702 required McCrary to perform independent studies.

    Although Plaintiffs labelled McCrary’s analysis thin and McCrary a mere mouthpiece for the defense, the Court finds he sufficiently explained the underpinnings for his opinions, which flow from his review of relevant literature, his expertise, experience and knowledge.

    Finally, Plaintiffs attacked an isolated sentence of McCrary’s opinion regarding Pirrong’s event study and further attacked his criticism of Pirrong’s damages model because McCrary had “never worked with” data types he used in performing his calculations. The Court agreed with Defendants that the former argument takes McCrary’s statement out of context , and the latter argument lacks force because Plaintiffs identified no errors in McCrary’s calculations.

    Relevance of McCrary’s Opinions

    Plaintiffs finally briefly recycle most of the foregoing arguments, which the Court already has rejected, into an argument that Professor McCrary’s opinions will not help the trier of fact. Again, the Court disagreed. Although Professor McCrary does regurgitate some record evidence (such as that SRW wheat would be aging between December 2017 and March 2018), he does not merely repeat evidence but adds his opinions to the evidence he recites, including that Pirrong should have accounted for the aging of the wheat and other factors. For these reasons and those set forth above in addressing Plaintiffs’ prior arguments, the Court declines to strike McCrary’s opinions because they are relevant to understanding and analyzing Pirrong’s opinions regarding class certification.

    Craig Pirrong

    Plaintiffs proffered their expert witness, Dr. Craig Pirrong, an economist, who intended to testify that Defendants’ alleged manipulation artificially deflated prices in the December 2017 and March 2018 SRW wheat futures markets and caused damages to the proposed class that are capable of calculation on a class-wide basis. 

    In support, he presented: (1) an event study with regression analysis meant to measure the existence and amount of alleged price-artificiality in the December 2017 and March 2018 SRW futures and options contracts that is attributable to Defendants’ conduct rather than chance or other market factors; and (2) a damages model that takes the output from the event study as an input to calculate a range of aggregate damages. Such models may meet Plaintiffs’ burdens at the class certification stage. 

    A. Pirrong’s Event Study with Regression to Predict “But For” Wheat Prices

    Pirrong first employed an event study with regression analysis intended to predict what prices would have been absent Defendants’ actions and statements. 

    In the context of this case, Pirrong’s regression model uses other grain commodities traded on CBOT as control variables; he estimates the historical relationship among the SRW wheat futures prices and the control variables by using “a control period consisting of data from March 1 to November 29 for the CBOT wheat futures contract for each year from 2005 through 2017.”

    According to Pirrong, the model computes what would have been, but for Defendants’ conduct, the prices for December 2017 and March 2018 SRW wheat futures for each trading day between November 30, 2017 and December 14, 2017. He attributed the difference between his model’s output of estimated prices for December 2017 and March 2018 SRW wheat futures prices and the actual December 2017 and March 2018 SRW wheat futures prices to a “price artificiality” due to Defendant’s conduct. 

    Thought Defendants acknowledged that statistical regression is an established methodology, they argued that Pirrong “employed a ‘reliable methodology in an unreliable way” because the “results” are not “statistically significant” under generally accepted statistical principles and lead to an unacceptably high rate of false positives (predicted price manipulation in years in which none is alleged). They insisted that the study “cannot rule out” other potential causes of the SRW wheat futures price changes and has “dubious predictive value.”

    1. Statistical Significance

    Pirrong himself described p-values as “giving the probability of observing the residual,” which, here, is price artificiality, and conceded that “conventional thresholds” for statistical significance are five percent (0.05) and ten percent (0.1).

    Defendants asserted that p-values above 0.05 indicate unreliable regression study results and emphasize “Pirrong offered no thresholds for determining when his event study results should be considered statistically significant,” despite having agreed that one must “choose a threshold” to “establish statistical significance.”

     The Court is unconvinced that all of his results should be excluded due to some p-values above 0.05, particularly where seven of eleven days (November 30 through December 8, 2017) within the December 2017 SRW wheat contracts regression analysis returned p-values with statistical significance at the five percent level. Nor does the Court find that Pirrong’s non-articulation of a statistical significance threshold warrants blanket exclusion of his results here.

    Second, even if Defendants sought to exclude just dates for which a p-value above 0.05 was returned, the Court under these circumstances declines to adopt a “hard and fast rule” requiring p-values of 0.05 or below, which in essence “evaluates statistical significance as a binary question” where “statistical significance lies at the 4.99% level but not at the 5.01% level.’”

    Pirrong also emphasized that “eminent statisticians” have increasingly criticized the use of statistical significance cutoffs “because it is misleading and leads to erroneous conclusions” and that one should avoid “‘dichotomization as statistically significant or not.’”

    The Court held that Defendants’ arguments go to the weight, rather than the admissibility, of the regression study results. Pirrong’s event study results in the December 2017 and March 2018 SRW Wheat futures contracts are sufficiently reliable for consideration.

    2. Rate of False Positives

    Defendants next asserted Pirrong’s study is undermined by the rate of “false positives,” or instances in which Pirrong’s model predicts price artificiality in years in which no manipulation is alleged. Defendants argued the higher the threshold for statistical significance one accepts as to the event study, the higher the rate of false positives the model returns. Accepting, for example, a 43% threshold for statistical significance (drawn from the highest p-value result Pirrong endorses, 0.43, applied across both the December 2017 and March 2018 studies) suggested price manipulation on 85% of the days for which Plaintiffs did not claim manipulation. 

    Adopting a 5% statistical significance level (which would result in statistical significance for the results of just seven days in the December 2017 study and none in the March 2018 study) garners a 19.66% rate of false positives. Defendants argued that these rates of false positives show the event study does not reflect a reliable application of statistical methods to this case.

    Although the explanation regarding false positives is not robust, the Court nevertheless found that Pirrong’s testimony is “closer to shaky than unreliable.”

    B. Pirrong’s Damages Estimates

    Pirrong proffered damages methodologies to calculate individual damages and estimate aggregate class-wide damages using linear programming (the LP model).

    1. Pirrong’s Use of “Permanent Artificiality” in March 2018 SRW Wheat Futures from December 14, 2017 through March 14, 2018

    Defendants first attacked Pirrong’s opinion that the March 2018 SRW wheat futures contract had a permanent fixed artificial price depression of 1.2¢ per bushel from December 14, 2017 to March 14, 2018. Defendants asserted this use of a constant 1.2¢ residual is undermined by Pirrong’s choice to use a day-to-day approach for other transactions, as well as his opinion that publicly available information is immediately incorporated into the SRW futures marketplace.

    Pirrong, though, opined that Defendants “distorted consumption by making excessive deliveries,” only a “fraction” of which they later repurchased, causing immediate consumption of wheat that “should have remained in storage for consumption later.” The effects of their actions “persisted into the indefinite future beyond November 30, 2017,” thus “distorting supply-demand fundamentals far into the future” and causing ongoing effects on prices. This price artificiality, Pirrong asserted, would remain constant after the December 2017 SRW wheat contract expired both because Defendants’ actions in the December contract could not affect prices after the expiration, and in an efficient futures market, the impacts of Defendants’ actions would be reflected in prices quickly and permanently.

    Pirrong’s explanation provides support for his choice. And, despite Defendants’ attack, the Court held that his testimony is not “unsupported ipse dixit” because, rather than “pluck his conclusions out of thin air” he reviewed the identified records, performed studies, and applied his extensive experience in futures markets to reach those conclusions.

    2. Outputs of the Damages Model

    Defendants challenged the LP Model outputs for the model’s reliance “on the daily artificiality residual (i.e., the daily artificiality estimate produced by the event study) to calculate hundreds of thousands of hypothetical possible trade scenarios and conjures a supposed aggregate damage range for class members,” because it “cannot be applied to estimate the loss for any class member,” includes “computational errors that artificially inflate the damages estimate,” and did not “account for characteristics specific to many entities and individuals included in the group Pirrong purports to study,” like intraday traders and traders with offsets.

    The Court held that Pirrong’s calculations, based upon his event studies, are sufficient to meet Plaintiff’s low burden here.

    Defendants’ argument that “the LP model has several computational errors that artificially inflate the damages estimate” did not suggest damages cannot be calculated on a class-wide basis, and the Court is not seeking to calculate actual damages at this stage. As Plaintiffs point out, Defendants’ related argument that Pirrong’s model did not account for the characteristics of certain traders, boils down to an argument that some members of the defined class “ultimately were not harmed” by Defendants conduct, i.e., that their claims “will fail on the merits if and when damages are decided,” which is “a fact generally irrelevant to the district court’s decision on class certification.”

    C. State-of-Mind Opinions and Legal Conclusions by Pirrong

    Defendants argued that “Pirrong, an economist, lacks an analytically sound basis for ostensibly psychological conclusions” about Defendants’ “knowledge or intentions.”

    The Court held that Pirrong properly may testify regarding “conclusions drawn only in his capacity as an economist.” This includes opining on potential economic motives of a party but not testimony of what a party knew because Pirrong is not more qualified than an ordinary juror to make the latter inferences.

    Held

    The Court denied Plaintiffs’ motion to exclude the testimony of Professor Justin McCrary, and the Court granted in part and denied in part the Defendants’ motion to exclude the testimony of Craig Pirrong. 

    Key Takeaways:

    • Professor McCrary neither purports to be nor appears to be an expert in commodities futures trading or manipulation but his opinions are rooted in statistics and economics.
    • The Court, like many others presented with the question, declines to use statistical significance at the five percent level as a proxy for reliability, and thus admissibility, for the purposes of Rule 702 and Daubert. Considering the entire data set presented, Pirrong’s explanations, and the class definition Plaintiffs propose regarding transactions of December 2017 and March 2018 SRW wheat set forth above, Defendants’ arguments go to the weight, rather than the admissibility, of the regression study results. 
    • First, the Court has resolved the related argument regarding p-values, finding they do not render Pirrong’s testimony inadmissibly unreliable, in large part due to Pirrong’s explanation that “sound economic reasoning” indicates the impact of Defendants conduct would not have dispersed within days, despite the p-value results, and the spread was wider than anticipated for the December 2017 through March 2018 SRW wheat futures. Because Defendants’ false positives argument spins off from the p-values discussion and applies an across-the-board 43% threshold for statistical significance not adopted by Pirrong, the Court is disinclined to reach a different result here. Second, Defendants point to no flaws in Pirrong’s inputs to his studies. Defendants may explore false positives or other questions as to Pirrong’s studies through traditional evidentiary mechanisms. 
    • Legal conclusions are inadmissible, while state-of-mind testimony is admissible where helpful to the jury and its probative value is not outweighed by a risk of unfair prejudice. The admissibility of alleged state-of-mind assertions is more nuanced. Direct opinions regarding state of mind are improper, although an expert may testify regarding the consistency of a certain action with a particular state of mind.

    Case Details:

    Case Caption: Dennis V. The Andersons Inc.
    Docket Number: 1:20cv4090
    Court: United States District Court, Illinois Northern
    Order Date: October 07, 2024
  • Accounting Expert Witness’ Approach to Calculating Lost Profits is Accepted in the Relevant Field

    Accounting Expert Witness’ Approach to Calculating Lost Profits is Accepted in the Relevant Field

     

    Plaintiff Dick’s Sporting Goods, Inc. (“DSG”) filed a lawsuit against Defendants Forbes/Cohen Florida Properties, L.P. (“Forbes”) and The Gardens Venture LLC (“Gardens Venture”) (collectively “Defendants”). 

    DSG claimed that Forbes tortiously interfered with its business and contractual relationships, which involved Sears, Roebuck, and Co. (“Sears”) and Transform Operating Stores LLC (“Transform”), specifically regarding the sublease of the second floor of the Sears store at the Gardens Mall (the “Palm Beach Gardens location”). Forbes allegedly refused to sign necessary forms for development applications submitted to the City of Palm Beach Gardens. DSG filed a lawsuit seeking compensatory and punitive damages, including out-of-pocket costs and net cash flows from operations. 

    To support its claim for damages, DSG presented the opinion and reports of accounting expert witness Louis G. Dudney. In response, Forbes retained accounting expert witness James S. Feltman to counter Dudney’s assertions. 

    Defendants filed a Daubert motion to exclude Dudney’s testimony. Meanwhile, DSG filed a motion to exclude specific parts of Feltman’s testimony. 

    Accounting Expert Witnesses 

    Louis G. Dudney, CPA, CFF, has extensive experience across various areas, including operational, financial, valuation, litigation, bankruptcy, and management consulting. His work encompasses financing, mergers and acquisitions, damages analysis, lost profit assessments, business valuations, solvency evaluations, debtor and credit advisory services, as well as corporate investigations. 

    He serves on the Management Committee at AlixPartners and is the Global Leader of the Investigations, Disputes, and Risk practice. Before joining AlixPartners, Dudney was a partner in the Financial Advisory Services Group at PricewaterhouseCoopers. He earned a Bachelor of Business Administration in accounting from The College of William & Mary and is a Certified Public Accountant. Additionally, he holds a certification in Financial Forensics from the American Institute of Certified Public Accountants. 

    Want to know more about the challenges Louis Dudney has faced? Get the full details with our Challenge Study report.   

    James S. Feltman is a Managing Director in the Global Restructuring practice at Kroll, LLC. Kroll operates as a global advisor in valuation, corporate finance, investigations, disputes, cybersecurity, compliance, regulatory matters, and other governance-related issues. The firm employs nearly 3,500 professionals across 28 countries. 

    Feltman has qualified and testified as an expert witness in various federal and state courts. He focuses on forensic accounting and fraud investigations, bankruptcy, and solvency. Additionally, he provides expertise in commercial damages, business valuations, investment theory, and federal and state income taxation. He also addresses issues related to abusive tax shelters, accounting ethics and standards, and accounting malpractice. Furthermore, he deals with investment advisory matters and a range of other accounting, financial, and tax-related topics. 

    Get the full story on challenges to James S. Feltman’s expert opinions and testimony with an in-depth Challenge Study.   

    Discussion by the Court 

    A. Defendants’ Motion to Exclude DSG’s Expert, Louis G. Dudney 

    DSG identified Louis G. Dudney as an expert witness on causation. He assessed the damages reasonably attributed to the Defendants’ tortious interference. Dudney submitted an initial expert report in 2021 and a supplemental report in 2024. 

    1. Defendants’ Arguments 

    Defendants contended that Dudney should not testify due to unreliable methodology. They cited several reasons: 

    1. He relied on outdated data. 
    1. He altered the corporate allocation rate in his 2024 report. 
    1. He failed to consider the proper cannibalization rate. 
    1. He used “skewed or ‘cherry-picked’ ex-post data.” 

    Dudney reduced the projected corporate allocation expenses in the damages analysis.  Dudney says this was done in “accordance with DSG’s updated corporate practice for cost allocation in its pro formas.” Dudney also adopted the cannibalization rate that DSG calculated in his damages model. In his deposition testimony Dudney says he “[used the cannibalization rate] as one of the inputs to evaluate what is the impact and what the best estimate of the impact to Dick’s as a result of [Defendants’] behavior.” 

    Defendants argued the reduction in allocation expenses inflated DSG’s alleged damages. They claimed Dudney improperly relied on information from DSG, making the damages calculation unreliable. 

    2. Plaintiff’s Counter-Argument 

    DSG countered that Defendants had not adequately challenged Dudney’s methodology. Instead, they only criticized certain inputs in his calculations. The Court agreed, noting that the Defendants’ arguments questioned the weight of Dudney’s testimony rather than its admissibility. 

    3. Analysis 

    The Court reviewed Dudney’s deposition and expert reports and determined that he met the Daubert standard. 

    Defendants did not sufficiently challenge the reliability factors required for evaluation. For instance, they argued that he relied on a construction budget from 2015 and that his damages calculation assumed DSG would generate revenue during the COVID-19 pandemic. However, Defendants did not dispute the general acceptance of Dudney’s methodology within the scientific community. 

    Defendants argued that the reduction in allocation expenses “artificially inflates DSG’s alleged damages…and the damages calculation is unreliable because Dudney improperly relied on information provided to him by DSG.” The Court held that Defendants did not challenge the principles and methodologies Dudney applied to get to his conclusions. And it is not improper for an expert to rely on information given to him or made available to him “if experts in the particular field would reasonably rely on those kinds of fact or data.” 

    Also, the Court held that Dudney’s approach to calculating lost profits is accepted in the relevant scientific field. 

    Defendants did not otherwise challenge whether other experts in the field would not have reasonably relied on the facts and or data Dudney relied on. Their remaining objections primarily targeted his conclusions, alleging bias. The Court emphasized that perceived weaknesses in expert testimony should be addressed through vigorous cross-examination, not exclusion. 

    B. DSG’s Motion to Exclude Certain Opinions Offered by Defendants’ Expert, James S. Feltman 

    Defendants identified James S. Feltman as a rebuttal expert. He provided an initial report in 2022 and a supplement in 2024. DSG moved to exclude Feltman’s opinions on mitigating damages. Additionally, DSG sought to preclude Feltman from testifying about third-party demographic data or offering any undisclosed opinions under the Federal Rule of Civil Procedure 26. 

    1. The Third-Party Demographic Data 

    Feltman’s 2024 report included a section on “Target Market Data.” This discussion consisted of data collected from two third-party software systems. DSG argued that Feltman did not analyze the data to establish a cannibalization rate. They pointed out that he admitted he was not an expert in demographic analysis and lacked formal training. DSG asserted that Feltman possessed no specialized knowledge to apply the demographic data in a way that would assist the trier of fact. 

    Defendants countered that Feltman did not need to be a demographer to serve as a rebuttal expert on damages. The Court partially agreed. 

    Feltman was a global advisor in areas such as valuation and corporate finance. He had previously been qualified and testified as an expert in commercial damages. He stated that he had training in analyzing databases and applying them to specific cases. Feltman used resources from two databases, ArcGis and Placer.ai, and applied that information to the facts of this case to reach a conclusion on mitigation of damages. 

    It was acceptable for Feltman to rely on otherwise inadmissible hearsay when forming his opinion, according to Rule 703. However, he could not serve as a conduit for hearsay. Rule 703 specified that if the facts or data were inadmissible, the proponent of the opinion could only disclose them to the jury if their probative value significantly outweighed their prejudicial effect. Defendants did not sufficiently demonstrate how the third-party demographic data met this requirement. 

    Therefore, DSG’s motion regarding the third-party demographic data was granted in part and denied in part. Feltman would be allowed to testify about the conclusions he reached using the data, but the data itself was deemed inadmissible hearsay. 

    2. Feltman’s Opinions on the Mitigation of Damages 

    DSG claimed that Feltman’s opinions on mitigation were based on unreliable methods. Defendants responded that Feltman was a rebuttal expert who relied on publicly available facts and conducted a comparative analysis. The Court agreed with Defendants. DSG did not challenge the methodology used by Feltman; instead, it suggested additional analyses that could have been performed. 

    The Court held that DSG’s objections focused on the weight of the evidence rather than its admissibility. 

    3. Feltman’s Opinions Related to the Sears Bankruptcy and New Opinions at Trial 

    Given the Court’s Supplemental Order on the bankruptcy issue, DSG’s motion regarding Feltman’s opinions on the bankruptcy was denied as moot. The Court resolved the legal implications of the Sears bankruptcy, and no evidence to the contrary would be allowed. 

    DSG’s motion to exclude any new or additional opinions was granted. Defendants were prohibited from presenting new opinions through Feltman’s testimony that DSG had not previously been informed of under Federal Rule of Civil Procedure 26. 

    Held 

    The Court denied the Defendants’ motion to exclude Plaintiff’s accounting expert witness, Louis Dudney’s testimony. 

    The Court granted in part and denied in part the Plaintiff’s motion to exclude certain opinions from Defendants’ accounting expert witness, James Feltman. 

    1. Feltman was prohibited from discussing the legal implications of the bankruptcy as it had already been resolved. 

    2. Feltman was barred from presenting any new opinions that had not been previously disclosed under Rule 26. 

    3. Feltman could provide opinions on the mitigation of damages, but he could not testify to otherwise inadmissible hearsay that he relied  

    Key Takeaway: 

    Plaintiff did not challenge the methodology that Feltman used; instead, it pointed to additional analyses that could have been done. A methodology is not rendered excludable under Daubert if it fails to include every possible test that could have been conducted. 

    Moreover, Rule 702 and Daubert are instructive that the Court’s analysis on a Daubert motion is not of the conclusions, rather the principles and methodologies applied to get to those conclusions. Defendants did not challenge the principles and methodologies Dudney applied to get to his conclusions. And it is not improper for an expert to rely on information given to him or made available to him “if experts in the particular field would reasonably rely on those kinds of fact or data.” 

    Case Details:

    Case caption: Dick’s Sporting Goods, Inc. V. Forbes/Cohen Florida Properties, L.P. Et Al
    Docket Number: 9:20cv80157
    Court: United States District Court for the Southern District of Florida
    Dated: September 9, 2024
  • Economics Expert Witness’ Testimony Limited Because His Zero Damages Opinion is Irrelevant

    Economics Expert Witness’ Testimony Limited Because His Zero Damages Opinion is Irrelevant

    Plaintiff I-Mab Biopharma (“I-Mab” or “Plaintiff”) brought trade secret misappropriation claims against Defendants Inhibrx, Inc. (“Inhibrx”) and Brendan Eckelman (“Dr. Eckelman” and collectively with Inhibrx, “Defendants”). 

    Plaintiff asserted that Defendants misappropriated nine trade secrets (that correspond to molecules designed to treat cancer) that are referred to herein as Trade Secret 1, Trade Secret 2, Trade Secret 4, Trade Secret 5, Trade Secret 6, Trade Secret 7, Trade Secret 8, Trade Secret 9 and Trade Secret 10. 

    Plaintiff sought to exclude three categories of Defendants’ damages expert Dr. Richard Manning‘s opinions.

    Economics Expert Witness

    Dr. Richard Manning’s expertise includes economic valuation and damages, intellectual property, breach of contract, fraud, and other commercial litigation. He provides testimony and consultation in all these areas and on securities litigation, tax, antitrust and competition, and public policy.

    Get the full story on challenges to Richard Manning’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    A. Manning’s reliance on the “Book of Wisdom” doctrine

    Under the reasonable royalty framework of damages permitted under the Defend Trade Secrets Act, parties rely upon a hypothetical negotiation analysis to “attempt to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before [misappropriation] began.” The hypothetical negotiation must attempt to “recreate the ex ante licensing negotiation scenario and to describe the resulting agreement.” 

    However, the analysis “permits and often requires a Court to look to events and facts that occurred thereafter and that could not have been known to or predicted by the hypothesized negotiators.” Facts that post-date the hypothetical negotiation may sometimes be relied upon in a reasonable royalty analysis as part of the “Book of Wisdom.”

    Plaintiff asserted that Manning’s opinions based on events that occurred years after the date of the hypothetical negotiation in November 2021 should be excluded because he improperly utilizes the Book of Wisdom. According to Plaintiff, while the Book of Wisdom would permit an expert to rely on post-negotiation evidence to demonstrate a party’s actual state of mind in November 2021, Manning does not rely on such evidence in this way—and instead improperly uses it to replace the inquiry into what the parties would have anticipated.

    Plaintiff asserted that Manning improperly used the Book of Wisdom with respect to two types of post-negotiation evidence: (1) evidence regarding Inhibrx’s decision to terminate INBRX-105 in January 2024 (“opinions relating to INBRX-105’s termination”) and (2) changes at I-Mab that took place in 2022 through 2024 (“opinions relating to later-occurring events at I-Mab”).

    1. Opinions relating to INBRX-105’s termination

    Parties’ Position

    Defendants argued that it would be nonsensical to use I-Mab’s information to modify INBRX-105 when doing so would require starting over on manufacturing and toxicity development to support an entirely new IND application and filing that new application with the FDA.

    The Court refused to exclude Manning’s opinions relating to INBRX-105’s termination for two main reasons. First, as Defendants point out, it was Plaintiff’s damages expert who initially opined about INBRX-105’s termination, stating that it “does not change the parties’ perspectives and negotiating positions as of a hypothetical negotiation in November 2021.”  As a general matter, it is of course appropriate for an expert’s rebuttal report to respond to another expert’s opinions. And Manning does just that in at least certain of the challenged portions of his report.

    Beyond that, Plaintiff’s argument is that at the time of the hypothetical negotiation, Defendants viewed INBRX-105 “as having significant value” and therefore the decision to terminate the program in January 2024 does not reflect what the parties were thinking in November 2021 (and thus Manning’s related opinions must be excluded). But Defendants are of course permitted to point to evidence to rebut the notion that they viewed INBRX-105 as having significant value in November 2021. Indeed, Defendants point out that Plaintiff’s own experts opine that leading up to the hypothetical negotiation, Inhibrx was concerned about INBRX-105’s likelihood of success.

    Court’s Decision

    In that vein, Defendants argued that Manning’s opinions relating to INBRX-105’s termination are consistent with Defendants’ views in November 2021 that there was much uncertainty regarding the development of INBRX-105. The Court concluded that it was not an improper use of the Book of Wisdom. In the end, it will be up to the jury to ultimately decide, based on all of the evidence, how Defendants viewed the INBRX-105 program at the time of the hypothetical negotiation. 

    Opinions relating to later occurring events at I-Mab

    Plaintiff also moved to exclude Manning’s reliance on changes at I-Mab that occurred after the November 2021 hypothetical negotiation, including its decreasing stock price in 2022, termination of its partnership with AbbVie in September 2023 and I-Mab’s restructuring in April 2024; Plaintiff argued that this was improper use of the Book of Wisdom. 

    The two paragraphs at issue in Manning’s rebuttal report discuss I-Mab’s termination of its partnership with AbbVie and related decreasing stock price, and they are clearly responding to points made by Plaintiff’s experts regarding I-Mab’s partnership with AbbVie. Similarly, the two paragraphs at issue in Manning’s supplemental report relate to I-Mab’s restructuring and respond to points made by Plaintiff’s damages expert regarding this event.

    The Court, once again, held that it is proper for Manning to respond to opinions raised by Plaintiff’s experts.

    Manning’s opinion regarding “actual damages”

    The DTSA provides that damages for misappropriation may be quantified in two ways: (1) damages for actual loss plus unjust enrichment or (2) a reasonable royalty.

    Manning opined that he cannot rule out the conclusion that Plaintiff’s “actual damages” are zero (the “zero damages opinion”). Plaintiff argued that Manning’s zero damages opinion should be excluded as irrelevant because Plaintiff’s damages claims are not based on actual loss, and even if Plaintiff’s actual damages were zero, Plaintiff would still be entitled to a reasonable royalty. 

    The Court agrees with Plaintiff that Defendants ignored the “actual words” that Manning used, as he did not opine in the zero damages opinion that Plaintiff’s “reasonable royalty damages” are zero (nor do Defendants point to anywhere else in Manning’s report where he opined that Plaintiff’s reasonable royalty damages should be zero). Nor did Defendants explain why an opinion that Plaintiff’s “actual damages . . . are zero” should be interpreted to actually mean that Plaintiff’s “reasonable royalty damages are zero.” 

    Moreover, the Court agreed with Plaintiff that Manning does not seem to provide any facts or analysis in support of the zero damages opinion.

    Held

    Plaintiff sought to exclude three categories of Dr. Richard Manning’s opinions. The third category was about Manning’s alternative damages theory but the Court reserved decision on the third category until it resolved Plaintiff’s motion to exclude the opinions of Roland Newman. One of Plaintiff’s arguments is that Manning’s alternative damages theory should be excluded because Manning relied only on a conversation with Newman in support. The Court granted this portion of Plaintiff’s Daubert motion regarding Manning’s opinions.

    In conclusion, the Court granted in part and denied in part the Plaintiff’s motion to exclude Manning’s opinions.

    Key Takeaway:

    Manning did not improperly utilizes the Book of Wisdom. Also, it is of course appropriate for an expert’s rebuttal report to respond to another expert’s opinions. And Manning does just that in at least certain of the challenged portions of his report. However, Manning’s zero damages opinion was excluded as the Court agreed with Plaintiff that Manning does not seem to provide any facts or analysis in support of the zero damages opinion.

    Case Details:

    Case Caption: I-Mab Biopharma V. Inhibrx, Inc. Et Al
    Docket Number: 1:22cv276
    Court: United States District Court, Delaware
    Order Date: October 17, 2024
  • Statistics Expert Witness’ Damages Calculation Limited Because She Included Extended Gap Periods in Her Analysis

    Statistics Expert Witness’ Damages Calculation Limited Because She Included Extended Gap Periods in Her Analysis

    Defendant, New Prime, Inc., is a commercial trucking company, and its drivers are required to have a Commercial Driver’s License (“CDL”). It designates its CDL-licensed drivers as A seat, B seat, and C seat. B and C seat drivers are paired with an A seat driver until they attain enough experience to be an A seat driver and are paid less than A seat drivers.

    Separately, Defendant created a program whereby individuals could receive the training necessary to obtain a CDL. This program has been referred to as the Prime Student Driver program, or “PSD program,” and participants have been referred to as “PSDs.” PSDs earn a Commercial Learner’s Permit (“CLP”) as part of that training, and at least some of those with a CLP drive a truck carrying freight for Defendant. Such PSDs are designated “D seat drivers” and must be accompanied by an A seat driver. PSDs are not paid, even when performing duties as a D seat driver.

    Plaintiff, Peter Nyachira, asserted two claims. First, he alleged the failure to pay PSDs (or, perhaps, PSDs when acting as D seat drivers) violates the Fair Labor Standards Act (the “FLSA”) and Missouri’s Minimum Wage Law (the “MMWL”). Second, he asserted the amount paid to B and C seat drivers did not meet the FLSA’s minimum wage requirement.

    One of the factual issues to be resolved is how much time B and C seat drivers worked. This issue is also relevant for PSDs if it is determined they were “employees” under the FLSA and MMWL. Another issue that must be resolved is whether the amount paid to B and C seat drivers satisfied the minimum wage requirements. Plaintiff retained Liesl Fox to testify on these matters.

    Statistics Expert Witness

    Liesl M. Fox is a Senior Consultant and Partner at Quantitative Research Associates, a firm that provides statistical and computing consulting services, where she has been employed since 1997. She has been a statistical consultant for over twenty-five years, including conducting analyses in the fields of litigation and medical research, and has testified as an expert witness.

    Get the full story on challenges to Liesl M. Fox’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

    Basis for Estimates

    Fox’s estimates of the amount of time B and C seat drivers were working were called into question. To place the issue in context: drivers recorded their time in categories pursuant to the Department of Transportation’s Hours of Service (“HOS”) regulations.

    The Court has already held in one of its previous rulings that the HOS categories did not correspond to time “worked” by drivers, and they therefore could not be relied on for that purpose. The Court further concluded drivers are working regardless of the HOS code that is entered and “this means that drivers engaged in multi-day trips are working 24 hours a day.”

    Defendant argued Fox’s estimates did not sufficiently rely on the HOS logs. However, given the Court’s ruling, there is no basis for concluding Fox’s opinion should be excluded because she did not rely on the HOS logs more than she did.

    Allocation of Time

    Defendant retained its own expert, Dr. Christopher Stanton, Ph.D, to rebut Fox’s opinions and relied on his opinion to fault Fox for “assigning all time corresponding to the full duration of a trip that spans two weekly pay periods to the weekly pay period when the trip ended.”

    It claimed this approach artificially inflates the number of hours worked in the second of the two weeks, creating a false impression that insufficient wages were paid for that week.

    Plaintiff defended Fox’s approach by contending, essentially, that (1) Defendant’s records did not permit a different calculation method that is superior to the one she employed and (2) there is no artificial inflation of damages because Defendant pays drivers a set base amount each week.

    The Court concluded that the dispute between Stanton and Fox did not affect the admissibility of Fox’s opinion. Defendant was free to cross-examine her on the issue, as well as present Stanton’s alternative calculation for the jury’s consideration.

    Starting Point for Calculations

    A collective action was certified under the FLSA for those claims, and a class was certified under Federal Rule of Civil Procedure 23 for the PSDs to assert an Missouri’s Minimum Wage Law claim.

    The class definition for the collective action includes B, C, and D seat drivers who engaged in over-the-road training or team driving since May 9, 2020. The starting point for the Rule 23 class is also May 9, 2020. However, Fox calculated damages for the FLSA claims and the MMWL claims beginning on April 13, 2020, and May 3, 2020, respectively. Plaintiff defended this approach for the FLSA claims by arguing that if Defendant’s violation of the FLSA is willful, the statute of limitations is three years. He provides no explanation for the MMWL claim.

    Defendant insists that the measure of damages is confined to the period described in the class definition. Neither party discusses the issue sufficiently to permit the Court to rule, so the Court defers ruling. Evidence of damages from before May 9, 2020, will not be permitted until the matter is resolved.

    “Blank” Codes for D Seat Drivers

    In addition to requiring drivers to record HOS time entries, Defendant maintained a calendaring system. Drivers are assigned various codes; for instance, “D” indicates they are under dispatch, and “A” indicates they are available for dispatch. In some instances, the calendaring system contains gaps; that is, there is not a code for every moment of every day. Fox defined an “Extended Gap Period” as one lasting 24 hours or more.

    For B and C seat drivers, Fox compared the time covered by Extended Gap Periods to Defendant’s Duty Status Records; if the Duty Status Records indicated the B or C seat driver was working, Fox counted the Extended Gap Period as time for which compensation was due.

    Fox treated PSDs differently. She compared the Extended Gap Period to the Duty Status record; then, if the Extended Gap Period ‘was associated with a calendar code . . . or had no calendar code, the gap remained in the analyses.’ Thus, even when confirming information was absent, Fox’s calculations assumed PSDs were working, despite neither the calendaring system nor the Duty Status records reflecting this. The Defendant argued there is no basis in the record for this assumption.

    The Record establishes the calendaring system was not used for PSDs. Moreover, in her deposition, Fox conceded that 99% of the PSDs did not have any calendar codes, but she included the Extended Gap Periods because doing so is consistent with Plaintiff’s theory.

    PSDs were entitled to compensation for the Extended Gap Periods

    Plaintiff did not explain why PSDs were entitled to compensation for the Extended Gap Periods when (1) no available records suggested they were working during that time and (2) Extended Gap Periods were reflected in a calendaring system that is not used for PSDs. The Court concluded Fox had no basis for including Extended Gap Periods in the number of hours PSDs potentially worked, and therefore this component of her analysis must be excluded.

    Orientation Time for Certain B and C Seat Drivers

    Finally, Defendant argued orientation time for certain B and C seat drivers should be excluded. The Court need not consider Defendant’s argument because the Court granted Defendant summary judgment on Plaintiff’s claim regarding orientation. In other words, damage calculations for this aspect of Plaintiff’s claim were irrelevant and will not be admitted at trial.

    Held

    The Court granted in part, denied in part and deferred in part the Defendant’ motion to strike the expert testimony of Dr. Liesl Fox.

    The Court excluded Fox’s opinions regarding (1) Extended Gap Time for D seat drivers and (2) damages incurred by B and C seat drivers related to their attendance at orientation.

    Key Takeaway:

    Based on Stanton’s alternative calculation, the Defendants claimed that Fox’s approach artificially inflates the number of hours worked in the second of the two weeks, creating a false impression that insufficient wages were paid for that week. However, the dispute between Stanton and Fox did not affect the admissibility of Fox’s opinion.

    Fox conceded that 99% of the PSDs did not have any calendar codes, but she included the Extended Gap Periods because doing so is consistent with Plaintiff’s theory. The Court concluded Fox had no basis for including Extended Gap Periods in the number of hours PSDs potentially worked, and therefore this component of her analysis must be excluded.

    Case Details:

    Case Caption: Nyachira V. New Prime, Inc.
    Docket Number: 6:21cv3211
    Court: United States District Court, Missouri Western
    Order Date: September 13, 2024