This case arises out of a fee dispute between Defendant, CMR Construction & Roofing, LLC and Plaintiff, Crescent City Remodeling, LLC. CMR contracted Crescent to perform remediation work at Tangipahoa Parish School Board buildings following Hurricane Ida. Crescent later alleged that CMR breached the parties’ Joint Work Agreement by failing to compensate Crescent for its work.
On May 22, 2023, CMR impleaded Third-Party Defendant, Castle, arguing that CMR had paid Castle the full amount due to both Castle and Crescent, but that Castle had failed to pay Crescent its share.
John Theriot is a Certified Public Accountant, Certified Forensic Accountant, and Certified in Financial Forensics. He is a member of the American Institute of Certified Public Accountants, the Louisiana Society of Certified Public Accountants, and the American College of Forensic Examiners. He received his Bachelor of Science in Accounting from Nicholls State University in 1983, and he received his Masters in Accounting from Tulane University in 2004. Theriot began his career in public accounting upon graduating from Nicholls in 1983 as a staff accountant at Malcolm M. Dienes. He is now the managing partner of the firm and has over 30 years of experience in the field of public accounting.
Jason R. Schellhaas is a Partner at Malcolm M. Dienes, LLC. He primarily practices in the areas of tax compliance and tax planning for individuals, entities and estates; forensic accounting and litigation support services; business valuations; and audits, reviews, compilations and preparation of financial statements of small businesses.
To begin with, CMR argued that the experts’ testimony is not reliable, arguing that the assumptions, provided by Crescent’s counsel, informed the experts as to what conclusion they should reach and caused the experts to render legal opinions. Specifically, CMR took issue with the second assumption, which stated: “The project manager fee and sales commissions should not impact the payment due to CCR, as these amounts should be based on CMR’s 50% of the profit, rather than the entire profit which was to be allocated between CCR and CMR 50% / 50%.”
Reliability
First, both individuals are certified public accountants; the Court believes they used reliable methods and have satisfactory skills and training. Second, the Court is not persuaded that this assumption renders the opinion unreliable; the calculations in CMR’s report applied the commission to the profit of the entire job—before the 50-50 split between CMR and Crescent. This report merely assumes a different form of calculation. To the extent that the assumption affects the experts’ reliability, that issue goes to the weight of the evidence, not to its admissibility.
Relevance
CMR also moved to exclude the experts’ report on the basis that it is not relevant. In support, it cited cases in which the trial court barred testimony because it was speculative. CMR also challenged this report based on an allegation that the opinions “are the product of incomplete and inaccurate information, as well as based on incorrect assumptions and the blanket adoption of [Crescent’s] legal position.” The Court found the opinions relevant. First, the opinions are based on data in discovery and from the report it rebuts. Second, the opinions detail what the profit would be if the commission were calculated differently than it was in CMR’s expert report. This challenge goes to the weight of the evidence, not to its admissibility. The opinions expressed by Crescent’s experts satisfy the requirements of Daubert.
Finally, the Court noted that CMR’s report has not been challenged, despite its application of a different interpretation of the underlying contract. The underlying legal issue—the interpretation of the contract—is an issue upon which the Court has not yet ruled. It would be premature to exclude only one expert’s testimony related to damages merely because it assumes a possible interpretation, absent a ruling on the proper interpretation of the contract’s language.
Held
In conclusion, the Court denied CMR’s motion to exclude the opinions of John W. Theriot and Jason R. Schellhaas.
Key Takeaway:
The opinions of Theriot and Schellhaas meet the Daubert standards as they are based on data in discovery and from the report it rebuts. Moreover, the opinions detail what the profit would be if the commission were calculated differently than it was in CMR’s expert report.
Case Details:
Case Caption:
Crescent City Remodeling,Llc V. Cmr Construction & Roofing, Llc
Plaintiff, a long-time employee of Chevron, filed his First Amended Complaint on August 22, 2023 and alleged that Chevron’s Pascagoula Refinery had been marred by racism and sexism, that his contributions to the company exceeded his compensation, and that “discriminatory practices have prevented him from being promoted.”
The issue before the Court is whether the expert witness report for Plaintiff’s damages expert should be stricken. On July 19, 2024, Plaintiff designated Charles Baum as a damages expert and provided Defendant with a copy of Baum’s expert report.
Defendant argued that Baum’s report ran afoul of Fed. R. Civ. P. 26(a)(2)(B)(ii) as the report “failed to identify all the documents upon which Baum relied in forming his expert opinions.” Specifically, Defendant contended that the following documents relied upon by Plaintiff’s expert were not clearly identified in the expert report nor were they produced by Plaintiff: (i) Income tax statement for [Plaintiff] for 2023 (ii) Chevron employee savings investment plan (January 1, 2014) (iii) Chevron employment benefits for [Plaintiff] (various dates).
Economics Expert Witness
Charles L. Baum II is a professor of economics and finance at Middle Tennessee State University. Moreover, he has a Ph.D. in economics from the University of North Carolina at Chapel Hill. In addition, he holds both a B.A. in political science and a B.A. in economics from Wake Forest University.
Regarding the “Income Tax Statement for [Plaintiff] for 2023,” Defendant claimed that Plaintiff has not produced any tax-related records for 2023.
The Court held that Defendant should not be obligated to engage in guesswork as to which document may (or may not) be the “Income Tax Statement for [Plaintiff] for 2023” relied upon in Baum’s expert report. Nor should the Court. Accordingly, the Court found that the document identified as “Income Tax Statement for [Plaintiff] for 2023” was not properly disclosed in Baum’s expert report.
Chevron employee savings investment plan (January 1, 2014)” and “Chevron employment benefits for [Plaintiff] (various dates)
As to the other documents, Defendant asserted that Plaintiff has not produced any employee savings investment plan dated January 1, 2024, nor any documents related to “employment benefits” for any date.
It is Plaintiff’s obligation under Fed. R. Civ. P. 26(a)(2)(B)(ii) to disclose “the facts or data considered by” Baum in forming his opinion. Plaintiff has not convinced the Court that he provided Defendant with the documents titled “Income tax statement for [Plaintiff] for 2023,” “Chevron employee savings investment plan (January 1, 2014),” or “Chevron employment benefits for [Plaintiff] (various dates)” as relied upon in Baum’s expert report.
Authority to Strike
Under Rule 37(c)(1), a party who fails to provide information required by Rule 26(a) “is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.”
Turning to the first factor, and as noted above, Plaintiff does not explicitly dispute whether he provided the documents at issue that were relied upon in Baum’s expert report. Rather, he contends that Defendant either possessed the documents at issue or that it was obligated to produce them. Plaintiff ignores the mandates of Fed. R. Civ. P. 26(a)(2)(B)(ii) which demands that he provide the documents relied upon in Baum’s written report. This factor weighs in favor of exclusion.
As for the second factor, Baum’s testimony is certainly important. Baum is the only expert designated by Plaintiff to support any evaluation of damages in this matter. This factor weighs against exclusion.
As for the third factor, Defendant contends that, without an adequate report, it has been prejudiced. Specifically, Defendant argues that it has been prevented from “adequate[ly] prepar[ing] for its expert designation, which is due August 20, 2024.” This factor slightly favors exclusion, but, as discussed below, any such prejudice can be cured. Finally, the Court may cure any prejudice to Defendant by allowing Plaintiff to supplement Baum’s report and by granting an extension of Defendant’s expert designation deadline.
On balance, the Court found that striking Baum’s report is too harsh a remedy under the circumstances.
Held
In conclusion, the Court granted in part and denied in part the Defendant Chevron U.S.A., Inc.’s motion to strike the report of Plaintiff’s expert economist, Charles Baum.
Key Takeaway:
First, the mere fact that the information relied upon in the report is public information does not absolve Plaintiff from disclosing it.
Second, Plaintiff ignored the mandates of Fed. R. Civ. P. 26(a)(2)(B)(ii) which demanded that he provide the documents relied upon in Baum’s written report.
Case Caption:
Harness V. Chevron U.S.A., Inc.
Docket Number:
1:23cv210
Court:
United States District Court, Mississippi Southern
This action stems from a trip and fall incident that occurred on July 19, 2019, while Plaintiff, Carolyn Simmons was walking and tripped along a dangerous and defective sidewalk located in front of Rite Aid in Ridgeland, South Carolina. The Defendant, Rite Aid of South Carolina, Inc., Walgreens, and Sitaras and Tzioros Properties, Inc., (hereafter referred to as “Defendant”), is a national drug store chain located in Ridgeland, State of South Carolina.
Defendant Sitaras and Tzioros Properties, Inc.’s (hereafter “Defendant”) filed a motion to exclude the testimony of Plaintiff’s expert Gerald Neal.
Construction Expert Witness
Gerald Neal is licensed general contractor with eighteen years of experience in project management and facilities engineering. Moreover, he has extensive experience constructing and renovating homes, offices, apartments, restaurants, and churches.
While the case was still pending in state court, Plaintiff identified Neal as an expert witness and indicated, in response to Defendants’ interrogatories, that Neal was “compiling” documents and would forward these upon receipt.
After the case was removed to United States District Court, the Plaintiff’s expert report was due by March 26, 2024. According to Defendant’s motion, no expert report meeting Rule 26(a)(2)(B) requirements had been produced by Plaintiff under the Court’s scheduling order.
Also, Neal was deposed while the case was still pending in state court. Besides, he stated in his deposition that he lacked certain important information that was necessary to finalize his opinions. Specifically, Neal testified that he needed the date of the building’s certificate of occupancy because that would determine the specific building code that was applicable to this incident.
Subsequently, Defendant filed its motion to exclude more than two months after the deadline in the scheduling order for the production of expert reports. Defendant’s assertions that it has never been provided an expert report from Neal and that his deposition testimony was “incomplete and inconclusive” have gone unchallenged by Plaintiff since no response to the motion to exclude was filed.
Ultimately, the Court found that no good cause or substantial justification has been shown for the failure to timely produce an expert report and the failure to comply has not been shown to be harmless.
Held
To conclude, the Court granted Defendant’s motion to exclude the testimony of Gerald Neal as an expert witness at trial.
Key Takeaway:
To conclude, the Court found that no good cause or substantial justification had been shown for the failure to timely produce an expert report. Furthermore, the failure to comply has not been shown to be harmless.
In short, when considering a motion to exclude an expert witness for failure to produce a required expert report, the Court must address two applicable rules. First, Fed. R. Civ. P. 16(b)(4) provides that a scheduling order may be modified only “for good cause and with the judge’s consent.” Second, even where a timely expert report has not been produced, an expert will not be excluded so long as the failure to timely produce the report is “substantially justified or is harmless,” as per Fed. R. Civ. P. 37(c)(1).
A district judge in Alabama excluded the testimony of the firearms & ballistics expert because he did not offer any evidence to show any of the alleged dangerous conditions in order to support the product liability claims.
Plaintiff James Andrew Scott, II filed a complaint against Remington Arms Company, LLC (“Remington”) alleging that defects in the trigger mechanism for a Remington Model 770 bolt-action rifle caused it to fire unexpectedly, resulting in the death of his daughter, Alyssa Brooke Scott.
On November 13, 2017, 15-year-old Alyssa and her godmother Christal Davis went deer hunting together. After Alyssa and Davis decided to end the hunt, Davis closed the rifle’s bolt and tied a nylon rope through the trigger guard to lower the rifle to Alyssa. Davis testified that she tied the rope behind the trigger and made sure there was no slack in the knot. Alyssa told Davis that she turned on the rifle’s manual safety switch before she handed over the gun, but Davis does not remember personally checking the position of the safety before she began to lower the rifle from the deer stand.
Davis lowered the rifle with the muzzle pointing down and the rope fastened through the trigger guard. About halfway down, the gun fired and the bullet struck and killed Alyssa.
Before the Court is Remington’s combined motion to exclude the opinions of Plaintiff’s proffered liability expert, Jerry Morris and motion for summary judgment.
Firearms & Ballistics Expert Witness
Jerry Morris has been a gunsmith for 51 years and has worked on hundreds of makes and models of firearms, serviced over 10,000 firearms,” and taught classes on gunsmithing. His expert report represented that he “had extensive knowledge and experience with the Remington 770 rifle, and the trigger system in particular.”
Remington argued that Morris’ affidavit is a violation of Rule 26 since it was untimely under the existing scheduling order and consisted of new reasoning and opinions.
The Court held that Scott “was not allowed to use [the Morris affidavit] to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.”
But Scott did not argue that the failure to timely disclose this evidence was substantially justified or harmless, despite being given the opportunity to do so. Instead, Scott stuck to his argument that the evidence was an expansion or elaboration of Morris’ previous testimony, which the Court rejected.
The Court held that the affidavit did not qualify as a supplementation under Rule 26(e) because it went well beyond correcting or completing inaccuracies or omissions in the original expert report.
Rule 702
Remington challenged all of Morris’ opinions. First, Remington contended that he was not qualified to offer his defect opinion and that this opinion was not based on any reliable method-based testing, literature, observations, or experience. Second, Remington argued that Morris’ causation opinion was not supported by any testing, the evidence in this case, or his personal experience.
1. Qualification
Morris based his opinion on the manufacturing process of the Model 770’s trigger and sear. He claimed that Remington uses “inferior powdered metal in the components of the trigger system” and that the rough sear contact was unpredictable and inconsistent.
The Court held that Morris may know a lot about guns, but there is no evidence that he ever investigated or studied the materials in the Model 770 trigger mechanism. He has not designed any fire controls or fire control components and has not reviewed any manufacturing or design records related to the Model 770 rifle. In fact, he admitted that he has only repaired two 770 rifles and cleaned about a dozen in his long history as a gunsmith. And as to this particular gun, he did not measure the sear engagement or contact points between the trigger and sear since he did not have the proper tools. In other words, Morris was not qualified to offer an opinion on the metallurgical properties or design process of the trigger or sear in the Remington Model 770 rifle.
2. Reliability
The Court held that even if Morris had the qualifications to offer his opinions, they would fail the reliability prong of the Daubert inquiry.
To begin with, Morris did not provide any measurements or objective observations of rough contact points or surfaces between the sear and trigger in the rifle at issue here. In fact, he admitted that he did not have the tools to measure them. Likewise, when Morris offered the opinion that the low and inconsistent trigger pull forces he documented resulted from a chipped trigger or rough contact points between the trigger and sear, his testimony merely assumed the presence of a chipped trigger or rough contact points without any evidence supporting that assumption.
The Court found that Morris did not perform any testing or offer any evidence to show that any of the alleged dangerous conditions—“powdered metal” trigger components, rough sear contact points, a chipped trigger, or inconsistent trigger pull weights—caused the rifle to fire without activating the trigger.
3. Assisting the Trier of Fact
The Court found that Morris’ theory that the gun could have bumped the tree as it was lowered to the ground lacked evidence; instead, the uncontroverted evidence from the single surviving eyewitness is that the gun did not bump the tree.
The Court concluded that multiple portions of Morris’ opinions were not based on facts in evidence, and thus would not assist the trier of fact.
With the exclusion of Morris’ expert opinions, Remington contended that Scott did not offer sufficient evidence to support his product liability claims. The Court agreed and entered final judgment in favor of Remington and against Scott.
Held
The Court granted Defendant’s motion to exclude the opinions of Plaintiff’s proffered liability expert, Jerry Morris.
Key Takeaway:
Morris based his defect and causation opinions on the materials and process Remington used to manufacture the trigger and sear. The Court excluded his opinions because he did not produce any literature, reports, or other documentation to support his contention that the Model 770’s components are inferior to other fire controls using different processes or materials. Importantly, he did not provide any testing, explanation, or other support for his theory that using hardened forged steel would create a more consistent contact point between the sear and the trigger. Instead, there is simply no explanation in the record for the methodology he used in reaching his conclusions. Morris has not designed any fire controls or fire control components and has not reviewed any manufacturing or design records related to the Model 770 rifle.
This is a case under New York’s Debtor & Creditor law to set aside a February 2019 transfer of the “Halston” and “Halston Heritage” trademarks to Defendants. Comfortex, a garment manufacturer based in Hong Kong alleged that Xcel had used its domination over House of Halston (“HOH”) and its wholly owned subsidiaries (defined below as the “Halston Entities”) to obtain the trademarks for $9 million when the Halston Entities were insolvent and fair consideration would have been $21 million or more.
On July 6, 2018, Xcel obtained an appraisal of the trademarks prepared by Consensus Securities LLC. By August 4, 2018, the Halston Entities owed the Bank of HaPoalim, an Israeli bank, approximately $5.5 million dollars. On October 9, 2018, Xcel and the Halston Entities signed a letter of intent to transfer the “Halston” and “Halston Heritage” trademarks to Xcel for $11 million dollars. Consensus provided a second appraisal of the trademarks to Xcel on November 18, 2018.
At some time before January 2019, Xcel asked Consensus to prepare a fairness opinion to determine an appropriate purchase price for the “Halston” and “Halston Heritage” trademarks. On January 23, 2019, Consensus Valuation Benchmarking and Analytical Services had presented its findings (the “Consensus Report”). The Consensus Report provided a $17,170,000 low value estimation, $21,655,000 middle value estimation, and $29,088,000 high value estimation. On October 31, 2022, Xcel served an expert report prepared by Andrew Jassin. Jassin provided an expert opinion on the elements of a fair market valuation of a trademark and whether the Consensus Report had included a fair market valuation of the “Halston” and “Halston Heritage” trademarks.
Plaintiff Comfortex Company Limited filed a motion pursuant to Federal Rules of Evidence 403 and 702, to exclude the opinion testimony and expert report of Andrew Jassin.
Management Consulting Expert Witness
Andrew V. Jassin is founder and managing director of the Jassin Consulting Group, a management consulting firm providing strategy development and implementation services exclusively to the fiber, textile, apparel and home furnishings industries and related supply chain companies.
In 1989 he formed the Marketing Management Group, Inc. (“MMG”), a consulting firm which helped fashion and retail businesses function effectively and provided independent expert counsel to top management on issues related to brand management, licensing, marketing and product evaluation. Jassin became one of the most influential and respected advisors in the fashion industries.
Jassin opined that the Consensus Report was not a fair market valuation because it was prepared for Xcel, a buyer, when “fair market valuations are created for the benefit of the seller not for the buyer.” Specifically, Jassin stated a fair market valuation would contain 14 different factors, as he defined them.
Moreover, Jassin’s report did not include any financial estimates about the value of the trademarks.
Jassin failed to review the July 6, 2018 and November 21, 2018 appraisals conducted by Consensus
Here, Jassin’s conclusion that the Consensus Report did not include a fair market valuation of the “Halston” and “H by Halston” trademarks was based, in part, on the Report’s failure to include a discussion of the 14 factors that Jassin contended were required to qualify as a fair market value report. As Comfortex pointed out, the Consensus Report explicitly referred to and incorporated prior appraisals prepared by Consensus on July 6 and November 21, 2018. It was undisputed that Jassin did not review the appraisals, both of which were produced in discovery and were available to the Defendants.
The Defendants argued that Comfortex failed to explain why the July 6 and November 21, 2018 appraisals would affect Jassin’s methodology.
But Comfortex noted that the appraisals included a recitation of the 14 factors Jassin opined were necessary for a fair market value report. Defendants never disputed this point. In other words, Jassin did not review directly relevant parts of the record, which rendered his opinion unreliable.
Because Jassin did not review relevant parts of the record, the Court found Jassin’s expert report was based on data that was “simply inadequate to support the conclusions reached,” such that Jassin lacked good grounds for his opinion that the Consensus Report was not a fair market value report.
Jassin did not offer an opinion as to the value of the trademarks
Comfortex argued that the report should be excluded under Rule 403 because it did not offer an opinion as to the value of the trademarks, and thus had no probative force. However, because Jassin’s expert report did not meet the requirements of Rule 702, the Court need not analyze whether it should also be excluded pursuant to Rule 403.
Held
The Court granted Comfortex’s motion to exclude Andrew Jassin’s expert report.
Key Takeaways:
Inadequate Data: When an expert opinion is based on data or a methodology that are simply inadequate to support the conclusions reached, Daubert and Rule 702 mandate the exclusion of that unreliable opinion testimony.
In December 2020, Koninklijke Philips N.V. (“Philips”) initiated legal action against Defendants Telit IoT Solutions, Inc. and Telit Communications LTD (collectively “Telit”), asserting infringement of six Philips patents crucial to telecommunications standards regulated by the European Telecommunications Standards Institute (ETSI). ETSI, which stands for the European Telecommunications Standards Institute, is a “standards body dealing with telecommunications, broadcasting and other electronic communications networks and services.” These patents were deemed essential to various aspects of telecommunications standards adopted by ETSI.
Telit counterclaimed, contending that Philips violated the Intellectual Property Rights (IPR) Policy of ETSI by not disclosing its standard essential patents to ETSI before the adoption of the corresponding standards. This policy, governed by the French law, was central to the dispute. Telit moved to dismiss this case based on a lack of personal jurisdiction in Delaware, which is where the matter was being tried and presented opening and reply expert reports from Philippe Stoffel-Munck, a French law professor and purported French expert under Federal Rule of Civil Procedure 44.1, supporting their claim.
Telit’s argument centered on Philips’ alleged failure to adhere to ETSI’s IPR Policy regarding the declaration of essential patents before their adoption into standards, forming a critical aspect of their defense in the case.
Philips sought the exclusion of specific opinions expressed in Stoffel-Munck’s reports, citing Federal Rule of Evidence 702. They contended that Stoffel-Munck’s expertise and background were insufficient, lacking prior experience in cellular telecommunications technology or involvement with ETSI or any similar standard-setting organization. Philips argued that these deficiencies rendered him unqualified to offer opinions on the practices and obligations of ETSI members, as presented in the mentioned paragraphs of his reports.
Foreign Law Expert Witness
Philippe Stoffel-Munck is an accomplished legal scholar and practitioner with a distinguished career. He excelled in the rigorous “concours d’agrégation de droit” in 2001, securing the top position. Since 2005, he has held the prestigious role of Full Professor at the Panthéon-Sorbonne University (Paris I), a renowned institution in French legal education. He teaches private law, law of contracts, tort law, and law of security interests.
Beyond academia, Stoffel-Munck is a registered attorney at the Paris Bar, establishing himself as a seasoned independent arbitrator. With over fifteen years of experience, he has handled a diverse array of cases, both on international and domestic fronts, operating under the auspices of prominent arbitral institutions like the ICC, LCIA, and the Swiss Arbitration Center. His extensive involvement as a co-arbitrator or chairman in more than 50 cases over the last decade attests to his profound expertise in this field.
Moreover, his contributions expand beyond arbitration; Stoffel-Munck has showcased his adeptness as a consultant and legal expert. Notably, in 2020, he received a prestigious appointment by the Ministry of Justice to lead the law commission charged with preparing a comprehensive reform of the Civil Code. This reform specifically targeted contracts concerning sale, lease, loan, deposit, agency, services, and aleatory agreements. The draft reform bill, crafted under his leadership, was published for public consultation in July 2022.
Discussion by the Court
The amended Federal Rule of Evidence 702, effective from December 1, 2023, allowed expert witnesses to provide testimony in the form of opinions or otherwise, provided they were qualified based on knowledge, skill, experience, training, or education. To be admissible, the proponent had to demonstrate to the Court that:
(a) The expert’s specialized knowledge would assist the trier of fact in understanding the evidence or determining a fact in question.
(b) The testimony was grounded in sufficient facts or data.
(c) The testimony was derived from reliable principles and methods.
(d) The expert’s opinion was a reliable application of these principles and methods to the case’s facts.
The established principle required an expert witness to possess expertise, knowledge, or experience in a field substantial enough to suggest that their opinion would likely assist the trier of fact in seeking the truth. It was essential for a proffered expert witness to demonstrate a level of skill or knowledge beyond that of an average layperson. While the Third Circuit adopted a liberal approach in applying this standard, it did not automatically qualify every proffered witness as an expert, maintaining discretion in determining admissibility based on the specific qualifications and relevance of the expert testimony.
The Court determined that specific sections of Stoffel-Munck’s opening and reply expert reports pertained to ETSI and acknowledged that Stoffel-Munck lacked any formal background, training, or education in cellular telecommunications technology or ETSI. As he lacked expertise in this area, the Court concluded that he did not possess skills or knowledge surpassing that of an average layperson regarding ETSI. Consequently, under Rule 702, Stoffel-Munck was deemed unqualified to provide expert opinions concerning ETSI.
Telit argued that because Philips’ expert, Jean-Sebastien Borghetti, addressed the same topics as Stoffel-Munck without expertise in cellular telecommunications or ETSI, Philips’ motion should be denied. The Court held that this argument is legally irrelevant to whether the challenged paragraphs in Stoffel-Munck’s expert reports are proper. The Court also noted that Telit submitted three Daubert motions, none of which raised the argument that Borghetti was unqualified to opine on ETSI.
Philips contended that specific sections of Stoffel-Munck’s opening and reply expert reports should be excluded as he improperly applied French law to the case’s facts in those paragraphs. Philips acknowledged Stoffel-Munck’s expertise in French law but argued that foreign law experts should aid the Court in determining the content of applicable foreign law rather than applying that law to the case’s facts.
The Court sided with Philips, concurring that the role of a foreign law expert is to assist in determining the content of foreign law. However, after observing that Courts do not always strike experts who offer legal conclusions, the Court highlighted the limited weight given to opinions offering legal conclusions, suggesting little or no credibility attached to such opinions.
The Court noted that in the case of Hardy Exp/. & Prod. (India), Inc. v. Gov’t of India, Indian contract law experts offered declarations aiding the Court in interpreting Indian law. The Court considered the declarations to ascertain the content of Indian law but refrained from relying on the experts’ legal conclusions. The Court’s discretion led to retaining the expert declarations without excluding the legal conclusions from the expert’s declarations. Similarly, in Pfizer Inc v. Elan Pharm. Rsch. Corp., the Court disregarded a foreign law expert’s testimony regarding how German courts might interpret a contract agreement. But the Court did not strike the expert’s testimony or exclude such statements from the expert’s affidavit.
The Court declined the motion to exclude specific sections of Stoffel-Munck’s opening and reply expert reports because he applied French law to the case’s facts in those paragraphs.
Held
Plaintiff’s Motion to Exclude the Opinions of Defendant’s expert Philippe Stoffel-Munck was granted in part and denied in part by the Court.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
The key takeaways regarding expert testimony underscore the criteria set by Federal Rule of Evidence 702, which outline the benchmarks for admissibility. These criteria demand that an expert’s knowledge aids in comprehending evidence or determining facts, grounded in data and reliable principles, and applied reliably to the case’s specifics. Importantly, an expert’s qualification hinges on possessing expertise surpassing that of an average layperson in the relevant field. Lack of such expertise might disqualify an expert from opining on specific subjects. Additionally, the role of foreign law experts centers on aiding Courts in understanding foreign law content, rather than applying it to case specifics. Courts may not heavily rely on legal conclusions from foreign law experts, but their declarations could still inform the Court’s understanding. This discretion in admissibility extends to considering expert declarations while disregarding specific legal conclusions. Court precedents, as seen in cases like Hardy Exp/. & Prod. (India), Inc. v. Gov’t of India and Pfizer Inc v. Elan Pharm. Rsch. Corp., demonstrate this nuanced approach. Experts, especially in foreign law, are expected to elucidate the content rather than apply it directly to the case. Despite objections, Courts may exercise discretion in admitting expert testimony based on relevance and the expert’s contribution, emphasizing the Court’s role in evaluating expert opinions.
This case involved Plaintiffs Fischler Kapel Holdings, LLC, Richard Fischler, and Paula Kapel (collectively “Plaintiffs”) and Defendants Flavor Producers, LLC (“FPI”) and Jeffrey Harris (collectively “Defendants”). Plaintiffs filed a motion in limine to exclude the expert report and testimony of Defendants’ expert, Timothy S. Ramey.
The Defendants engaged in a fraudulent scheme by providing false financial information about certain companies. Their goal was to persuade Fischler and Kapel to enter employment contracts with lower salaries, relying on bonus expectations tied to the deceitful financial data. The losses incurred by Fischler and Kapel amounted to at least $1.2 million. Additionally, in a related transaction, the Defendants misrepresented the value of corporate stock to convince the Plaintiffs to relinquish their controlling interest in another company and invest in the failing company. This scheme also targeted third-party investors who were induced to invest in the same failing company. Overall, the deceptive actions of the Defendants resulted in losses totaling at least $7.5 million for both the Plaintiffs and the third-party investors through common law and securities fraud.
Fischler and Kapel owned Creative Flavor Concepts, Inc., (“CFC”) a company that designed, formulated and manufactured flavors as food ingredients, and also manufactured certain food and supplement products. In conjunction with FPI’s purchase of a majority share in CFC, FPI induced Fischler and Kapel to enter into employment contracts as part of the purchase price.
The Plaintiffs attempted to exclude the expert report and testimony of Timothy Ramey, the Defendants’ expert. They argued that Ramey’s report contained impermissible legal opinions, lacked a proper foundation, and made it difficult to ascertain whether the documents cited were disclosed during discovery. In response, the Defendants sought to admit Ramey’s report and testimony, aiming to educate the jury on mergers and acquisitions within the food, beverage, and nutrition industries, including the transactions relevant to the case.
Finance Expert Witness
Timothy S. Ramey, C.F.A., obtained his chartered financial analyst (“CFA”) designation in 1986. His professional experience included roles at Deutsche Bank, NatWest Securities, and Kidder, Peabody & Co. in equity research, with ten years served as the Director of Food, Wine, and Agribusiness Research at Deutsche Bank. Between 2000 and 2002, Ramey held the position of Vice President of Strategy and Corporate Development at Sara Lee Corporation. Subsequently, he served as the Senior Vice President of Equity Research for D.A. Davidson & Co., specializing in the food and beverage industry, before joining Post Holdings. In 2014, Ramey became the Director of Strategic Ventures for Post Holdings and, from 2014 to 2019, held the role of Senior Analyst – Food, Beverage, and Nutrition at Pivotal Research Group. Throughout his career, Ramey received various awards for his contributions as an equity research analyst.
Discussions by the Court
During the October 5, 2023 hearing, Ramey testified about his expertise, emphasizing his knowledge in the food, beverage, and nutrition industry, particularly in the context of mergers and acquisitions. He explicitly stated that he lacked expertise in analyzing legal agreements and was not an attorney. Citing Ninth Circuit precedent,United States v. Diaz, 876 F.3d 1194, 1197 (9th Cir. 2017), which prohibits expert witnesses from offering legal conclusions, the Court found that Ramey’s opinions on pages 3, 4, 5, 6, 7, 9, and 13 of the expert report constituted impermissible legal opinions. These opinions purported to interpret the Asset Purchase Agreement, Stock Purchase Agreement, October 31, 2016, Termination Letter of the Stock Purchase Agreement, and the Administrative Services Agreement based on the Court’s evaluation of the record.
The Court granted the Motion, specifically concerning the opinions detailed on pages 3, 4, 5, 6, 7, 9, and 13 of the expert report. The Court referenced legal precedents, emphasizing that expert testimony cannot be used to provide legal meaning or interpret policies as written. Additionally, it citedCrow Tribe of Indians v. Racicot, 87 F.3d 1039, 1045 (9th Cir. 1996), noting that the interpretation of a contract is a matter of law, and expert testimony is not suitable for issues of law. The Court also cited Energy Oils, Inc. v. Mont. Power Co., 626 F.2d 731, 737 (9th Cir. 1980), highlighting that admitting expert testimony on the legal effect of agreements and subjective intent of parties is erroneous, but in this case, the error was considered harmless due to justifiable findings based on custom and usage evidence.
The Court proceeded to evaluate the reliability of Ramey’s remaining opinions, encompassing his views about the financial information for Creative Flavor Concepts and Creative Concepts Holdings, LLC, among other things. Recognizing the flexible nature of the reliability test and the discretion afforded to the trial Court emphasized that Daubert’s specific factors are neither exclusive nor universally applicable.
The Court, having conducted oral argument and received testimony from Ramey during the October 5, 2023 hearing, focused on the methodology underlying his opinions regarding the financial information for Creative Flavor Concepts and Creative Concepts Holdings, LLC. Ramey asserted that his opinions were derived from his industry experience, CFA training, and adherence to Generally Accepted Accounting Principles (GAAP).
Despite Ramey’s affirmation during the Daubert hearing that his methodology relied on his industry experience, CFA background, and GAAP, the Court found his opinions lacked consistent and adequately demonstrated reasoning or methodology. Referring to United States v. Holguin, 51 F.4th 841, 854 (9th Cir. 2022), the Court highlighted the need to assess the expert’s reasoning or methodology, considering factors like testability, publication in peer-reviewed literature, known or potential error rate, and general acceptance.
The Court noted a deficiency in Ramey’s report, citing the absence of sufficient details on the relevant GAAP principles, their application, and the connection to his ultimate opinions. Additionally, for opinions purportedly not relying on GAAP, the report lacked an adequate explanation of the methodology employed to reach those conclusions. The Court concluded that without a clear demonstration of the applied methodology, the expert’s conclusions were essentially unsupported assertions.
After a thorough examination of the expert report and considering Ramey’s testimony during the Daubert hearing on October 5, 2023, the Court determined that the Defendants failed to adequately establish the reliability of Ramey’s methodology in forming his opinions regarding the financial information for Creative Flavor Concepts and Creative Concepts Holdings, LLC. The Court concluded that each of Ramey’s opinions appeared conclusory, lacking a satisfactory explanation of the applied methodology and how it was used to form each respective opinion.Upon determining that Ramey’s methodology for the remaining, non-stricken opinions in his report lacked sufficient reliability, the Court opted not to consider the relevance of these opinions. After striking Ramey’s legal opinions regarding the agreements at issue and finding the remaining opinions in the report lacking sufficient reliability, the Court granted the Motion in its entirety.
Held
The Court ultimately granted Plaintiffs’ motion in limine in its entirety, excluding Ramey’s expert report and testimony from being admitted as evidence. This fulfilled the Court’s gatekeeping role under Daubert to ensure expert testimony meets certain standards of reliability before it is presented to the jury. The Court issued a final ruling on October 10, 2023 dismissing the action without prejudice.
Key Takeaways
This case demonstrates several important requirements for expert witness testimony to be admissible under Daubert standards and Federal Rule of Evidence 702. First, experts cannot offer legal opinions or interpretations of contracts and agreements. The Court struck opinions from the expert report that amounted to improper legal analysis. Second, experts must demonstrate their reasoning and methodology clearly and consistently. Even if an expert is qualified based on experience and training, they must reliably apply expertise to the facts using sound methodology explained in their report and testimony. Here, the Court found the expert’s opinions conclusory, as he failed to sufficiently show his methodology. Third, the proponent of an expert witness has the burden to prove by a preponderance of evidence that the testimony is reliable and relevant. The party could not establish a reliable methodology to support this expert’s opinions. Fourth, Courts serve a gatekeeping role in screening unreliable expert testimony from reaching a jury, which the Court fulfilled by excluding this inadmissible testimony altogether.
On March 24, 2021, BPS initiated legal action against Inashco, accusing it of having breached a non-disclosure agreement (NDA) (Claim 1), misappropriation of trade secrets (Claim 2), and unjust enrichment (Claim 3). The first claim alleged that Inashco violated the NDA by using BPS’ confidential information. Similarly, Claim 2 asserted that Inashco had used BPS’ trade secrets without authorization.
BPS was a manufacturer of bulk processing and recycling equipment, with a notable recycling equipment system called the RecoverMax Fines Process. This system allowed for the recovery of minute metal pieces from incinerator bottom ash and auto shredder residue, including valuable metals like copper, silver, and gold and other precious metals that could have been reused in other applications.
Inashco, the North American branch of a Netherlands company, had processed incinerator bottom ash from power stations to recover low-grade metals to be further processed to separate the metals from the waste components. In July 2016, Inashco had become interested in BPS’ RecoverMax process, and had initiated discussions about a Mutual Non-Disclosure Agreement (NDA) to continue business discussions and the testing process. On August 2, 2016, Inashco’s president, John Joyner, signed the NDA with BPS, wherein the definition of Confidential Information included, “proprietary information concerning the components, construction, and processes of BPS’ RecoverMax technology used for crushing the mineral components of a non-ferrous metal concentrate as derived from municipal solid waste ash by means of [Inashco’s] process.”
After reviewing the internal structure of the RecoverMax machine, Inashco questioned its similarities to technology manufactured by Palla Mill. BPS had clarified the distinctions, emphasizing the RecoverMax system’s focus on recovering metals from friable materials, i.e., glass, rock, and other minerals.
Shortly after installation, Inashco raised concerns about the performance of the RecoverMax system and its hourly tonnage capacity. BPS attempted to address these issues but Inashco put BPS on notice that it was in breach of the RecoverMax Purchase Agreement. While the communication between BPS and Inashco regarding the purported breach was ongoing, Inashco had reached out to one of BPS’ suppliers to obtain a quote for a dust control system for the facility in Lancaster, Pennsylvania. On January 25, 2019, Inashco presented BPS with a proposed Mutual Release and Termination Agreement, initiating negotiations for the termination of the RecoverMax Agreement. During these negotiations, Inashco imported a Palla Mill system to the United States on August 25, 2019. One month later, on September 25, 2019, BPS and Inashco executed a Mutual Release and Termination Agreement. The Mutual Release and Termination Agreement explicitly stipulated that the previous NDA between Inashco and BPS would persist beyond the termination of the RecoverMax Agreement and would remain in effect until August 3, 2031, unless both parties mutually terminated it in writing before that date.
On December 20, 2020, Inashco imported a second Palla Mill system to the United States. It was implied that Inashco utilized information and technology acquired from BPS via the exchange of information governed by the NDA to achieve comparable outcomes to the RecoverMax system by importing the Palla Mill systems and incorporating additional components from the same vendors used by BPS.
In July 2022, Inashco enlisted the services of Dr. Jerome P. Downey, Ph.D., P.E., as an expert in the “design, development, and operation of material processing equipment.” Downey had been deposed by BPS. During his testimony, Downey revealed that Inashco’s attorneys had aided him in drafting his report. He had approximated that seventy-five percent of the 117-page report had been composed in his own words, emphasizing that any technical aspects had been directly from him.
On August 25, 2023, BPS submitted a Motion to Strike and Exclude Downey’s Expert Report and Testimony. BPS had contended that the Court should invalidate Downey’s expert report and testimony for two primary reasons. Firstly, Downey had opined about ultimate legal conclusions, specifically stating what information is confidential and had constituted a trade secret. Secondly, Downey had not personally drafted the entire content of his expert report.
Inashco had filed an Opposition, disputing BPS’ mischaracterization of the substance of Downey’s report and asserting that the law had permitted counsel to assist an expert in drafting the report.
Metallurgical Engineering Expert Witness
Jerome P. Downey earned his Ph.D. in Metallurgical and Materials Engineering at Colorado School of Mines and his B.S. and M.S. degrees in Metallurgical Engineering at Montana Tech. He is currently the Goldcorp Professor of Extractive Metallurgy at Montana Tech, where he also serves as the campus Director of the Montana University System Materials Science Ph.D. program. He is also the Chief Executive and General Manager at J. P. Downey & Associates, P.L.L.C. Downey has over 25 years of experience managing research and development projects in the chemical, metallurgical, and materials industries.
Discussions by the Court
BPS contended that Downey’s testimony consisted of “impermissible legal conclusions,” when he opined that (1) BPS failed to meet the legal requirements for trade secrets or confidentiality protection; (2) Inashco did not misappropriate BPS’ trade secrets; and (3) Inashco did not violate the NDA.
In response, Inashco argued that Courts usually permitted experts to testify as to whether the information was generally known or readily ascertainable and whether it was entitled to trade secret protection.
Federal Rule of Evidence 704, as of the relevant time, did not prohibit an expert’s opinion from embracing an ultimate issue, as stated in Fed. R. Evid. 704(a). However, it clarified that the issue embraced by the expert must be a factual one, as was cited in Berry v. City of Detroit, 25 F.3d 1342. The Sixth Circuit, emphasized the subtle but crucial distinction between opining on the ultimate question of liability (deemed impermissible) and stating opinions that offer information for the jury to draw inferences about the ultimate issue (considered permissible). Downey could opine as to the factors underlying whether certain information constitutes a trade secret. However, he would be restricted from directly opining on whether that information is, in fact, a trade secret.
Therefore, the Court granted BPS’ Motion to Strike and Exclude Downey’s Expert Report and Testimony, specifying that it would not take into account the portions of Downey’s report and deposition testimony that presented legal conclusions.
BPS also asserted that Downey’s report, was not entirely drafted by him and contained substantial portions which matched with Inashco’s interrogatory responses, violating Federal Rule of Civil Procedure 26. Inashco countered, asserting that the law allowed the counsel to aid an expert in drafting the report and that it was acceptable to incorporate discovery responses into an expert report.
Federal Rule of Civil Procedure 26 stipulates that expert witness disclosures must be accompanied by a written report, which must be prepared and signed by the witness. Even though the rule prohibits counsel from preparing the report on behalf of the witness, it allows counsel to assist the witness, with the assistance typically limited to ensuring compliance with Rule 26’s requirements. Counsel may participate in the fine-tuning of an expert report to ensure Rule 26(a)(2)(B) compliance, but they are not permitted to create the expert’s opinion entirely and then have the expert sign it. The key question in determining the appropriateness of counsel’s participation is whether it exceeds the bounds of legitimate assistance to the point of negating the possibility that the expert genuinely prepared their own report.
For the following reasons, the Court concluded that Downey’s expert report should not be entirely stricken.
Firstly, Downey’s deposition testimony didn’t indicate that Inashco’s counsel had entirely fabricated the report or crossed the limits of legitimate assistance. When questioned about the report’s content in his own words, Downey specified that a substantial portion of the report was his own work, particularly any technical aspects. He estimated about “seventy-five” percent was his own work, stating that the portions he did not write primarily consisted of legal standards and italicized trade secret portion of the report. As to the italicized trade secret portion of the report, Downey mentioned that Inashco’s counsel took his opinions almost verbatim and put them in there. However, Downey clarified in the deposition that his signing of the report signified his thorough review to ensure factual accuracy and consistency with his rendered opinions. He admitted his discomfort with certain legal terminologies, indicating that this was where Inashco’s counsel provided assistance.
No evidence suggested that the report did not accurately reflect Downey’s views. Inashco’s counsel’s assistance amounted to, at most, twenty-five percent of the report, signifying that Downey had personally drafted a significant portion of the report as a whole.
Secondly, BPS’ argument to strike Downey’s report on account of significant portions matching with Inashco’s discovery responses failed to persuade the Court. Downey testified that his responses or evaluations of the interrogatories were included in his report. Downey also added that he considered “Inashco’s Third Supplemental Response to BPS’ Interrogatory No. 13” before drafting his expert report. Therefore, it logically follows that portions of Downey’s expert report would align with Inashco’s discovery responses.
BPS asserted that Inashco had formulated its initial and first supplemental responses to BPS’ interrogatories before it retained Downey. These discovery responses were then carried forward into the Third Supplemental Discovery Responses, which BPS claims were directly copied into Downey’s report. According to BPS, this sequence indicated that Downey could not have participated in drafting those discovery responses.
However, the Court observed that since those responses were carried forward, Downey would have reviewed those prior responses while assisting Inashco with the third supplemental responses. Downey’s testimony also affirmed that he had thoroughly reviewed everything in the report to ensure factual accuracy and consistency with his opinions. Consequently, the fact that portions of Inashco’s discovery responses appear in Downey’s report was thus insufficient evidence to indicate that Inashco’s counsel had entirely fabricated the report in violation of Rule 26(a)(2)(B).
Held
The Court has granted in part and denied in part BPS’ Motion to Strike and Exclude the Expert Report and Testimony of Inashco’ expert Jerome P. Downey. The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways:
1) An expert cannot opine on ultimate legal conclusions, such as whether certain information constitutes a trade secret. However, the expert can testify to the underlying factors and analysis that may lead the jury towards that legal conclusion.
2) Counsel may assist an expert in drafting the report to ensure compliance with Rule 26, but cannot prepare the substantive opinions themselves.
3) Mere overlap between an expert report and discovery responses does not warrant striking the report, as long as the expert reviewed the responses and adopted them as his own opinions.
4) The Court struck the legal conclusions in Downey’s report, but denied striking the report entirely. The Court found Downey’s testimony showed the report reflected his actual views, even if counsel helped draft portions.
This product liability case involved a dispute between Mountain Country Foods (MCF) and Great West-Teeuwissen (Great West) regarding pet treats that MCF manufactured using mechanically deboned beef (MDB) purchased from Great West.
On March 27, 2017, the FDA issued a notice regarding a possible link between hyperthyroidism in dogs and products containing animal gullets that had not been completely cleared of thyroid glands. The notice made two suggestions to manufacturers to ensure their products did not contain thyroid hormones.
First, the notice recommended avoiding the use of livestock gullets as a way to guarantee the absence of thyroid in pet food. Second, it advised suppliers and manufacturers to ensure the complete removal of thyroid glands from gullets used in pet food production. Suppliers were encouraged to verify the thorough removal of thyroid glands from gullets before supplying them to manufacturers, and manufacturers were advised to assess their suppliers’ practices carefully to ensure they received raw materials and ingredients devoid of thyroid hormone-secreting tissue.
The treats were recalled in March 2018 due to potentially elevated levels of thyroid hormone by JM Smucker Company (Smuckers). On March 22, 2018, Smuckers issued a recall for dog treats that it had bought from MCF due to potential elevated levels of thyroid hormones in the products. MCF credited Smuckers $1,311,211.14 to compensate for the damages resulting from the recall.
MCF sued Great West alleging it was liable for damages caused by the product recall.
Great West disclosed John N. Schultz, a food safety expert, to provide expert testimony. Schultz had previously submitted two investigation reports to Great West’s insurer in February, 2020 and July, 2022. These reports were based on Schultz’s review of documents and deposition transcripts.
Schultz arrived at the following conclusions based on his investigation determining whether [Great West] knowingly sold MDB containing gullet meat with the thyroid gland still intact to [MCF] and subsequently listed them on his February 03, 2020 report as follows:
1. It was the expert opinion of John Schultz, Senior Food Safety Rimkus Consultant, that there had been no proof presented by MCF that the MDB shipped to MCF after the March 2017 FDA announcement by [Great West] contained thyroid glands.
2. All the MDB shipped by [Great West] to MCF was received and accepted for use as animal by-products for the manufacture of pet food.
3. Gullets were removed from the MDB and sold for pharmaceutical purposes.
In January 2021, MCF sued Great West. On June 9, 2022, Great West disclosed Schultz as an expert. On July 14, 2022, Schultz submitted an updated report based on his review of additional documents disclosed during the litigation and transcripts of deposition testimony wherein he presented the following conclusions:
1. Milo’s Kitchen Pet Treats recall announcement read: a voluntary recall of shipments of dog treats relating to the possibility of elevated levels of thyroid hormone. “Limited Shipments of Two Varieties of Milo’s Kitchen Dog Treats Voluntarily Recalled Due to Potentially Elevated Levels of Thyroid Hormone”, per the company’s announcement March 22, 2018:
a. ‘Potential elevations’ is the term that indicates that it may have been due to this issue. If the raw materials or finished pet products were not analyzed there is no definitive proof the raw materials came from [Great West]. MDB may have been traced back to Mountain Country Foods, but no definite proof that [Great West] product had elevated thyroid hormone or that the raw material contained any thyroid material.
2. Revised specifications for MDB were completed on April 18, 2018, and approved to be sent out to raw material suppliers by Brian Ford.
3. The FDA published a notice on March 27, 2017, stating that thyroid hormone elevated amounts in dogs that became sick were possibly due to possible elevated thyroid hormone levels. “The source of thyroid hormones is likely the use of gullets from which the thyroid glands were not completely removed before adding to pet food or treats.”
4. As part of the FDA notice discussed in #3, “Manufacturers can carefully assess their suppliers’ practices and take steps to ensure that they are receiving raw materials and ingredients that do not contain thyroid hormone secreting tissue.” The responsibility ultimately was the responsibility of MCF and all testing of raw materials was the sole responsibility and cost of the manufacturing facility, MCF, not the raw material producing company [Great West].
5. No chemical analysis was completed on raw materials to confirm that any of the raw material, MDB, supplied by [Great West] to MCF contained the thyroid hormone.
a. There were several important pieces of information that needed to be addressed
i. The percentage (%) of the gullet that may contain a portion of the thyroid gland
ii. What amounts, percentage, of the total ground pet product was gullet meat
6. It had been discussed that [Great West] did not conduct a “complete breakdown cleaning” of equipment between the processing or gullet meat and MDB not containing gullet meat. Whole gullets were never used, per Douglas Haycock for MDB products. The standard in the meat industry was as long as processing the same species of animal, a complete breakdown cleaning was not mandatory. USDA inspectors were in the plant during the processing and found no apparent violation in the GWB process [sic].
7. It is unclear if any of the MDB from [Great West] was used in any other finished pet products not [sic] that were recalled.
8. All MDB does not contain gullet meat. Other companies purchasing the MDB from [Great West] were Nestle, Mars Petcare, Smucker’s, and Simmons.
9. By April 2017, all gullet meat was not used in MDB by MW [sic] in their products, it was used for the collection of the cartilage only, and the remaining product was rendered.
10. Based on the information in a letter from [Great West] to Simmons on March 13, 2017, it stated that they ‘could not and did not guarantee that 100% of the thyroid gland will be removed in every case’. [sic] Due to the processing of gullet meat ‘residual levels of thyroid gland remaining in the gullet meat when this product is processed’ was possible.
MCF filed a motion to exclude the expert testimony of John Schultz that was disclosed in two investigation reports he had previously submitted to Great West’s insurer.
Food Safety Expert Witness
John Schultz has extensive experience in food safety and quality assurance. He obtained a Bachelor of Science degree in Animal Science with a minor in Chemistry from Auburn University. Schultz was responsible for ensuring that only the highest quality products arrived at the restaurants and retail food outlets, and that they were sold to customers in a Food Safe environment and condition. He oversaw the research and development of new products, from idea creation to the supplier, and ultimately to the store for sale. He established programs and coordinated all restaurant and supplier plant audits for Quality and Food Safety, as well as adherence to specifications. Schultz developed QA/Food Safety Programs that encompassed supplier and company restaurant audits. He also developed various new products for use in restaurants, from idea development to commercialization, and modified existing products to achieve higher quality and lower cost while coordinating efforts with the culinary team. Additionally, he developed Food Safety standards and auditing programs/processes for sauces, condiments, coffee, bakery, and protein suppliers. He is currently a senior consultant with the Rimkus Consulting Group, Inc.
Discussions by the Court
The Court first addressed MCF’s argument that Schultz’s opinions would not assist the jury. The Court explained that under Rule 702, expert testimony must help the jury understand the evidence or determine a fact at issue. The Court insisted on the expert offering valid expert opinions based on his expertise if called to assess the evidence on record instead of merely reciting factual evidence, citing Graystone Funding Co. v. Network Funding, L.P.. The Court found that many of Schultz’s conclusions were bare recitations of factual evidence he reviewed such as when he stated that MCF accepted the shipments of MD beef shipped by Great West and that Great West sold the cartilage extracted from the gullets for pharmaceutical purposes. The Court ruled these factual recitations were not proper expert opinions helpful to the jury. The Court also excluded several of Schultz’s conclusions where he interpreted or weighed the evidence, like when he pointed out that MCF did not present any proof that the MDB shipped to them after the March 2017 FDA announcement by [Great West] contained thyroid glands, since he did not use his expertise in food quality and safety to arrive at those opinions. The Court determined the only proper expert opinion was Schultz’s statement about Great West not conducting complete breakdown cleaning of equipment since it was not mandated between the processing of gullet meat and MDB not containing gullet meat.
The Court next addressed MCF’s argument that the opinions should be excluded because the reports were originally prepared to determine insurance coverage for Great West’s insurer. The Court found that the original intent did not warrant outright exclusion if the opinions satisfied the rules for admission of expert testimony under the federal rules of evidence. Therefore, it denied the request to exclude Schultz’s surviving opinion on that basis.
Finally, MCF asserted that Schultz’s opinions should be excluded because they believe they violate the rule against expert testimony that tells the jury what decision they should make. MCF specifically points to Schultz’s opinion that “The standard in the meat industry is as long as processing the same species of animal, a complete breakdown cleaning is not mandatory” as problematic. But the Court held that since the standard in the meat processing industry for cleaning equipment was not an ultimate issue in this litigation, the legal conclusion Schultz’s opinion intended to proffer was not prohibited since it did not dictate the jury about the conclusions it should reach on MCF’ claims.
Held
The Court granted the motion to exclude in large part, allowing Schultz to testify only regarding the equipment cleaning standards in the meat processing industry.
The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.
Key Takeaways
This case illustrates several important principles regarding expert witness testimony. First, it shows that experts cannot simply recite factual evidence or weigh the facts for the jury. To be helpful, expert opinions must add specialized knowledge beyond the jury’s abilities. Second, the case demonstrates that just because a report was originally prepared for a different purpose, like insurance coverage, does not necessarily render it inadmissible. The critical issue is whether the expert opinions satisfy evidentiary standards for relevance and reliability.
Third, the case clarifies that experts cannot offer legal conclusions that tell the jury how to decide the ultimate issues. However, opinions regarding industry standards and norms may be permissible if they do not direct the verdict. Finally, the court’s rigorous examination of each opinion underscores the importance of judicial gatekeeping to ensure expert testimony assists the trier of fact rather than merely telling a party’s version of events. Together, these key takeaways emphasize the care courts must exercise to admit only proper expert opinions that will aid the jury based on the expert’s specialized knowledge and experience.
