Expert Witness Profiler

Tag: Documentation

  • Marketing Expert Witness’ Testimony About the Digital Marketing Strategy Employed and Its Potential Returns Excluded

    Marketing Expert Witness’ Testimony About the Digital Marketing Strategy Employed and Its Potential Returns Excluded

    Plaintiff La Canada Ventures, Inc., is a health and beauty retailer offering cosmetic products. Defendant MDalgorithms is a company that offers computer software and app technology for education and advice about the treatment of acne. Both parties create and market skin and haircare products with the root mark “MD.”

    Plaintiff brought this action against Defendant, advancing several claims related to trademark infringement and false advertising.

    Plaintiff owns seven trademarks. Defendant creates and sells MDacne and MDhair, which are customizable skincare and haircare product kits. Plaintiff does not sell a product called MDacne but does have an acne skincare product that displays the mark “MD” on the packaging. Plaintiff avers that its customers nonetheless confuse the source of MDalgorithm’s products as coming from Plaintiff. Where a customer confuses the source of the junior user’s product as the senior user, that is known as “forward confusion.” Other types of confusion actionable under the Lanham Act include “reverse confusion,” which occurs when consumers approach the senior user, mistakenly believing they are dealing with the junior user, as well as the newly minted “initial interest confusion,” which occurs when customers are drawn to one party’s brand during their search for its competitor’s products, and the former “capitalizes on the goodwill associated with [the latter’s] mark.”

    Defendant filed a motion to strike the opinion of Plaintiff’s expert, Richard Kostick. In his report, Kostick opined that (1) Plaintiff consistently followed best practice for effective digital marketing and (2) the sales and revenue generated by Plaintiff do not reflect the expected return from its digital marketing investment. Defendant challenged Kostick’s research methodologies as deficient and self-serving.

    Marketing Expert Witness

    Richard Kostick is the Founder and CEO of Purity Cosmetics (100% PURE) and has demonstrated expertise in leading and growing a successful cosmetics company with a strong focus on natural and organic beauty products. Under his leadership, Purity Cosmetics became a leader in prestige natural and organic beauty products. The flagship brand, 100% PURE, was committed to producing the purest and healthiest products while promoting environmental sustainability and improving the lives of both people and animals. With almost two decades of experience as the CEO of Purity Cosmetics, he gained extensive knowledge and expertise in the digital marketing strategies and tactics employed within the beauty industry. He employed this knowledge for the strategic decision-making that was instrumental in positioning Purity Cosmetics as a recognized brand in the market.

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

    Discussion by the Court

    There are several reasons why an expert’s proposed testimony may be excluded, including the expert’s lack of qualification, the inapplicability of the proposed testimony, and the unreliability of the proposed testimony. Defendant primarily contended that Kostick’s report and any associated testimony should be excluded because it is unreliable.

    Kostick’s opinion that Plaintiff engaged in best practices for digital marketing

    Plaintiff argued that Kostick’s methodology is adequately stated and that cross-examination, not exclusion, is the appropriate way for Defendant to attack his opinions.

    The Court observed that none of the other four analytical steps enumerated in Kostick’s report provide any greater insight into his actual methods, making it impossible to test his results.  Kostick described the steps of his analysis in only the most general of terms. For example, he stated in only four lines of text that he conducted a “website audit” using three tools: Google Search Console, Google Optimize, and GTMetrix. He did not state what he actually did with these tools. Further, while Kostick stated that the audit provided “valuable insights” and “potential areas for improvement,” he did not elaborate as to either. 

    Moreover, Kostick did not record his work. Kostick’s report might be admissible if its vagueness could be cured by complete contemporaneous notes and documentation because Defendant could use that documentation effectively to cross-examine him. The Court noted that no such documentation exists.

    Kostick’s report simply states that he used GTMetrix to conduct his website audit. When asked at his deposition if he took any notes during that process, Kostick replied that he could not recall and that he provided Plaintiff with any notes he did write, but Plaintiff has not produced any notes regarding GTMetrix. Similarly, Kostick’s report states that he used Ubbersuggest to conduct keyword research, but he does not recall whether he preserved any results or data from his use of that program and no such documents have been produced by Plaintiff. 

    The Court held that Kostick’s report ran afoul of Rule 26 which requires that an expert’s report contain “the facts or data considered by the witness in forming” their opinions. “

    Kostick’s opinion that Plaintiff did not achieve the expected return from its digital marketing investment

    The Defendant moved to strike an additional opinion in Kostick’s report; specifically, that “a solid investment in digital marketing should result in a return of 2-5 times during the short term and more in lifetime value of the customer.” However, the Court held that the report did not provide any additional information about this claim or its basis. When asked during his deposition about the claim, Kostick confirmed that he had not cited a source and could not identify a potential source supporting this claim despite it being supposed common knowledge.

    The ten blog posts and articles that Kostick had listed as “authoritative sources” to shed light on the potential returns from the kinds of marketing investments employed by the Plaintiff added nothing to support his report’s reliability. Since he had not provided citations for any of these ten sources, Kostick failed to make clear exactly what articles he was relying on. However, even a cursory search for these ten sources made clear that they were not from reliable peer-reviewed publications. Instead, Kostick had apparently cited industry magazines and blogs run by technology companies who were likely writing with incentives irrelevant here.

    Held

    The Court granted Defendant’s motion to strike and exclude the report and associated testimony of Richard Kostick.

    Key Takeaway:

    • Whether Kostick’s methodology is sound is unknowable because he does not state his methodology with sufficient specificity to satisfy even the very liberal standard under Daubert.
    • Defendant challenged Kostick’s failure to document and disclose his methods. Basic documentation of an expert’s analytical process is not, as Plaintiff argues, merely additional information that Defendant would like to see, but rather an essential part of an expert report that cuts to the heart of whether the method “can be or has been tested.”

    Case Details:

    Case Caption: LA Canada Ventures, Inc. v. Mdalgorithms, Inc.
    Docket Number: 3:22cv7197
    Court: United States District Court for the Northern District of California
    Order Date: August 02, 2024
  • Contracts Expert Witness Testimony Grounded in Extensive Factual Record

    Contracts Expert Witness Testimony Grounded in Extensive Factual Record

    BAE Systems Norfolk Ship Repair Inc. received a contract from the Navy to maintain, modernize, and repair the USS Tortuga. The contract included a Heavy Weather Plan (“HWP”), which granted the Navy the authority to order work stoppage when severe weather threatened the ship. According to the HWP, costs associated with its implementation, including delays, are reimbursable if they meet the criteria of being reasonable, allowable, and allocable.

    On September 2, 2019, in response to the threat posed by Hurricane Dorian, the Navy directed BAE to implement the contract’s HWP. Under the HWP, BAE had to protect the USS Tortuga by demobilizing temporary services, equipment, staging, and other items to secure the USS Tortuga against heavy weather damage and take other actions to protect the ship from water incursion. After the threat of Hurricane Dorian passed, on September 6, 2019, the Government instructed BAE to begin remobilization efforts. BAE followed the Government’s request and alleged that the HWP resulted in a twenty-one (21) day delay to the contract schedule. Compensation for that delay is the subject of the present dispute.

    To sum up, the Government acknowledged BAE and its subcontractors’ entitlement to compensation for the costs incurred while implementing the HWP, but rejected BAE’s claim for the HWP-related contract delay.

    Therefore, the United States through the Department of the Navy (“Navy or the Government”) retained Martin Gordon to review BAE NRS’s claimed costs for reimbursement related to implementing the HWP and the asserted delay claim.

    BAE contended that Gordon’s opinions were “so factually and scientifically unreliable and speculative that his proposed testimony fell well short of satisfying the exacting admissibility standard of Rule 702 and Daubert.” 

    Contracts Expert Witness

    Martin Gordon has worked as a government auditor for over thirty-one years. Gordon worked as an Auditor, a Senior Auditor, and a Team Leader, supervising other auditors. He has audited at least 351 contracts, with a total dollar value that exceeds $16 billion.

    His analysis and evaluations cover a wide range of financial, procurement and contract administration management processes across the U.S. Army, Navy, Air Force, Marine Corps and the Office of the Secretary of Defense.

    Discussion by the Court

    As summarized in his report, Gordon sought to offer the following opinions: BAE’s alleged delay costs are not compensable because there is (1) no documentation of actual costs incurred; (2) no specification of exact days encompassed by the 21-day extension; (3) BAE NSR did not submit an invoice with the corresponding Tortuga contract number; and (4) no invoices were submitted to verify and describe the work performed by BAE and its subcontractors on the Tortuga during the 21-day extension.

    Gordon also intended to opine that the information set forth above was necessary to ensure proper billing in accordance with federal guidance. He pointed to the specific circumstances of the Tortuga repairs that suggested strict adherence to the regulations was necessary. Other work delays plagued the Tortuga project, and several other Navy ships at the BAE yard had already submitted claims for delay. Thus, to avoid potential repeat billing, it was imperative for BAE NSR to tie its Tortuga-related costs to the Tortuga contract number or cost charge code. Finally, Gordon observed that the Tortuga’s high daily delay costs far exceeded the other ships’ daily costs and cited one subcontractor which failed to include actual incurred costs detailing the direct labor and material costs—and corresponding work—to support the 21-day extension.

    Gordon is Qualified to Offer Expert Opinions About BAE NSR’s Documentation of HWP Implementation Costs

    BAE NSR first argued that Gordon lacked the specialized knowledge necessary to qualify as an expert in this case. BAE challenged Gordon’s lack of familiarity with ship repair generally—and the course of dealing which it argued should inform the Navy’s decision making.

    The Company highlighted that Gordon (1) had only audited one other ship; (2) “was unsure whether he had ever audited a claim for repair and modernization of a Navy vessel” (3) “this was his first audit of a contractor’s request for compensation for a heavy weather claim … and his first audit of a claim for schedule delay,” among other things.

    After reviewing the cited deposition testimony, the Court found that BAE overstated Gordon’s supposed lack of experience and mischaracterized his disclosed opinions. BAE’s alleged shortcomings had little bearing on Gordon’s ability to apply his over thirty-one years of experience as a government auditor to the instant dispute.

    Gordon had the necessary skills to consider the documentation required by the government contract and regulatory scheme in this case—regardless of his limited familiarity with the narrow subject matter of the contract itself. Indeed, BAB did not contend that Gordon misquoted its contract or regulatory language—or that the regulations he cited did not apply.

    Gordon’s Testimony is Not Pure Speculation

    Plaintiff argued that Gordon ignored any evidence that did not support his opinions and improperly based his opinions on nothing more than mere speculation. The Court held that Plaintiff was questioning the factual underpinnings of Gordon’s opinion, which affected the weight and credibility of the witness’ assessment, not its admissibility.

    For example, Plaintiff contended that Gordon disregarded the Contracting Officer’s testimony that there was no set formula for determining the appropriate number of days for schedule delay. However, the fact that the Contracting Officer described delay compensation in this way did not contradict the Navy’s argument that there had to be support for the 21-day figure for BAE NSR and each of its subcontractors. In his report, Gordon did not apply a rigid formula but rather considered, based on his experience, if facts such as this had ever been found to justify payment under the applicable regulations. Plaintiff might have disagreed with Gordon’s findings, but that did not warrant exclusion.

    Plaintiff also contended that Gordon ignored the Technical Advisory Report (“TAR”). However, the Navy had consistently maintained that it was not bound by the TAR, and thus Gordon was not bound by it.

    Similarly, BAE NSR argued that Gordon “ignored information related to the extensions given on the other ships.” However, the Navy had all along maintained that the “facts and circumstances of other ships were not relevant to ascertaining schedule delay on the USS Tortuga.” And, Gordon’s report specifically addressed the other ships’ delay as a basis to insist on strict compliance with the contract requirements for Tortuga. Gordon was not required to accept BAE NSR’s view of the extensions granted on other ships or to agree that compensation added on these extensions precluded the Navy from adopting a different practice on this contested claim.

    Gordon’s Opinion is Based on Reliable Methodology

    BAE NSR also contended that Gordon’s opinions were not based on a reliable methodology because he ignored relevant facts and applied a general audit process, rather than one tailored to the issues here. The Court held that these criticisms ignored Gordon’s actual opinions and the extensive factual record he relied upon in reaching them. In his report, Gordon engaged with the record and laid out the basis for his opinions.

    Gordon examined documents produced by BAE NSR, its subcontractors, and MARMC. He assessed whether costs BAE NSR claimed for a proposed 21-day extension were substantiated. He reviewed the contract file documentation from BAE NSR and its subcontractors, along with pertinent documentation from the U.S. Department Defense contract Audit Agency (DCAA), and the Mid-Atlantic Regional Maintenance Center’s (MARMC) Contracting Office.

    Gordon then listed nine different forms of documentation he reviewed, including BAE subcontractor document binders, DCAA’s Audit Report on BAE NSR’s claimed Amounts, the Contracting Officer Final Decision (COFD).  

    Gordon also described the regulatory backdrop he (and the Navy) contended apply to this dispute: “The Federal Acquisition Regulations (FAR), Defense Federal Acquisition Regulations (DFARS), Code of Federal Regulations (CFR), and specific direction from Navy officials set requirements for cost tracking and reporting.” He “found a lack of sufficient documentation to support the reasonableness, allowable, and allocable requirement widespread,” which made “it impossible for [him] to recommend support for payment. Importantly—Gordon offered these opinions with respect to BAE NSR’s specific claims of 21 days of delay and PMO costs of over $111,000 per day.

    The Court held that Gordon based his opinions on the Navy’s evidence and he did not disregard facts.

    Gordon’s Opinions are not Cumulative of the DCAA

    Plaintiff believed Gordon, if he testified, would “only echo” Dianna Schweizer’s testimony. Schweizer is a Certified Public Accountant, and she assisted the Defense Contract Audit Agency (“DCAA”) in determining the costs of BAE’s implementation of the Heavy Weather Plan. The Navy properly identified Schweizer as a 30(b)(6) witness on DCAA’s audit of BAE NSR’s claim.

    Gordon, like Schweizer, intended to testify about BAE NSR’s costs of implementing the HWP. But, Gordon’s background is that of a DoDIG auditor, and as such, his focus is “on whether the government and its contractor are in compliance with applicable regulations.” Schweizer, on the other hand, performed an audit for the DCAA, and DCAA auditors “examine contractors’ financial records from a cost accounting perspective to determine whether the sums add up to those claimed by the contractor.”

    The Court held that because each witness has a different background and experience, it cannot be determined at this stage that Gordon’s testimony is cumulative and should be excluded.

    Held

    The Court denied the Plaintiff’s motion to exclude Martin Gordon’s opinions and testimony.

    Key Takeaways:

    1. Gordon’s Opinions on BAE NSR’s Claim: Gordon provided opinions on BAE NSR’s alleged delay costs, citing insufficient documentation, lack of specificity in the extension period, and missing invoices as reasons for non-compensability. He stressed the importance of adhering to federal regulations for proper billing.
    2. Qualification of Gordon as an Expert: Despite challenges to Gordon’s expertise as a contracts expert witness due to limited familiarity with ship repair and audit experience, the Court found his qualifications sufficient, relying on his extensive governmental auditing experience.
    3. Evaluation of Gordon’s Methodology: BAE NSR criticized Gordon’s methodology for ignoring relevant facts, but the Court deemed his opinions based on a reliable methodology, considering his thorough review of documentation and regulatory frameworks.
    4. Non-Cumulative Nature of Gordon’s Testimony: Despite similarities with a DCAA auditor’s testimony, Gordon’s background as a DoDIG auditor provided a different perspective, making his testimony non-cumulative and thus admissible.

    Case Details:

    Case Caption: Bae Systems Norfolk Ship Repair Inc. V. United States Of America
    Docket Number: 2:22cv230
    Court: United States District Court, Virginia Eastern
    Citation: 2024 U.S. Dist. LEXIS 45681
    Order Date: February 23, 2024