600 Cleveland owned a commercial office building located at 600 Cleveland Street, Clearwater, Florida 33601 from September 9, 2013, to April 1, 2024. Bank of America, N.A. (BANA) and 600 Cleveland assumed a lease agreement originally entered into by other parties on December 1, 1986, and both were bound by the agreement. This lawsuit arises from purported violations of the parties’ lease agreement (“Lease”). BANA counterclaimed that 600 Cleveland overcharged BANA for its share of Common Area Maintenance (“CAM”) under the Lease.
600 Cleveland filed a motion to exclude the entire expert report of Tracy P. Chelepis (“Chelepis Report”) and to bar him from testifying at the upcoming bench trial. The Chelepis Report relates to an audit performed by Chelepis’ firm, which found that 600 Cleveland overcharged BANA for CAM fees under the Lease by $160,882.01.
Accounting Expert Witness
Tracy P. Chelepis holds a Bachelor of Science in accounting from the University of Kansas where he took multiple classes on auditing, a CPA license for which he attends 80 hours a year in continuing education, and a real estate license as both agent and broker for which he also attends mandatory continuing education.
Chelepis also worked as an accountant for a major accounting firm performing financial statement audits and then spent years as a construction accountant for AT&T.
600 Cleveland made three arguments: (1) Chelepis’ methodology is unreliable; (2) his opinion is ipse dixit; and (3) his testimony would not help the trier of fact.
Cleveland argued that Chelepis should be barred from testifying because “lease auditing” does not have “articulated industry standards,” “peer review processes,” or a “regulatory governing body to which his opinions can be tested.” Cleveland contended that Chelepis’ reliance on his knowledge and experience as a CPA, purportedly without further explanation, rendered his methodology unreliable.
BANA correctly identified that, for non-scientific expert testimony, there need not be articulated industry standards, peer review processes, or a regulatory governing body. Nor did the fact that Chelepis’ methodology required him to interpret terms in the lease to determine whether certain costs were properly included make his opinion inherently unreliable.
Chelepis’ deposition testimony also undermined 600 Cleveland’s argument that his opinion is ipse dixit. Chelepis explained at length the general process he used to audit leases. He then reviewed the lease’s provisions and amendments and explained how he interpreted and applied them to reach his opinion. Chelepis similarly explained his accounting calculations and his underlying reasonable assumptions.
The Court concluded that Chelepis’ testimony would be helpful in navigating the numerous financial records and reconciling them, using accounting principles, with the lease’s guidance for what could properly be charged as operating costs.
Held
The Court denied 600 Cleveland’s Daubert motion to exclude the testimony of Tracy Chelepis.
Key Takeaway
The standards of scientific reliability, such as testability and peer review, do not apply to all forms of expert testimony and a district court may decide that non-scientific expert testimony is reliable based upon personal knowledge or experience.
The tenant-Plaintiffs in this case alleged that the Defendants, a national real estate investment and property management conglomerate, use illegal leases and engage in practices that violate the Plaintiffs’ rights under Washington’s Residential Landlord Tenant Act (“RLTA”).
The Plaintiffs also contend that the Defendants breached their duty of good faith and fair dealing. They sought damages, declaratory relief, and prospective injunctive relief.
Plaintiffs asserted additional claims which have been dismissed. Certain grounds for their claims under the RLTA, and for the breach of the duty of good faith and fair dealing, were dismissed. Additionally, their claims for violations of the Washington Consumer Protection Act, unjust enrichment, retrospective injunctive relief, rescission, restitution, and disgorgement have also been dismissed.
After their first motion to certify a class was denied without prejudice, the Plaintiffs moved for a second time for class certification, appointment of class representatives, and appointment of class counsel. Defendants filed a motion to exclude Plaintiffs’ damages expert, Robert Kneuper.
Economics Expert Witness
Robert Kneuper is currently a Managing Director and Expert Economist with McClave + Associates (“MC+A”), formerly Infotech Consulting. He has also served as an Adjunct Professor at Loyola University Chicago School of Law, Charleston Southern University, and Johns Hopkins University, where he has taught courses in antitrust economics, managerial economics, corporate finance, and political economy. With over 30 years of experience, Kneuper has worked as an antitrust, regulatory, and financial economist in both the federal government and private consulting. He has contributed to a wide variety of economic and financial consulting matters for private clients and government bodies.
Kneuper’s August 15, 2023 opinion was on the putative maintenance and repair subclass’s damages. The putative maintenance and repair subclass and its claims are not suitable for class certification. Accordingly, the Court decided that Kneuper’s opinion on Plaintiffs’ classwide RLTA repair and maintenance damages claims is not “relevant to the task at hand” relating to those claims.
September 17, 2024 Supplemental Opinion
In his September 17, 2024 supplemental declaration, Kneuper opined that “expert economic analysis is unnecessary” with respect to the other subclasses’ damages claims. He contended that fees charged could be presented to a factfinder in a “summary fashion, such as through a ‘summary, chart, or calculation’ which [he] underst[ood] is permitted under Rule 1006 of the Federal Rules of Evidence.” According to Kneuper, “a person with general familiarity and experience with reviewing financial documents (e.g. an accountant) could review and analyze Defendants’ ledgers and perform such calculations.”
The Court excluded Kneuper’s opinion, that no expert economic analysis is necessary to determine the remaining subclasses damage because there is no showing that this opinion will “help the trier of fact to understand the evidence or to determine a fact in issue.”
Further, to the extent that Kneuper opines on whether the subclasses’ damages evidence is admissible under Rule 1006 of the Federal Rules of Evidence, it was held that those are determinations for the Court.
Held
The Court granted in part and denied in part the Plaintiffs’ amended motion for class certification and for appointment of class representatives and class counsel.
The Court granted Defendants’ motion to exclude the opinions of Robert Kneuper, Ph.D.
Key Takeaway:
Kneuper’s opinion that no expert economic analysis is necessary to determine the remaining subclass’s damages was considered unhelpful. Moreover, Kneuper was not allowed to opine on whether the subclass’s damages evidence is admissible under Rule 1006 of the Federal Rules of Evidence because the Court was meant to determine that issue.
Case Details:
Case Caption:
Richmond Et Al V. Home Partners Holdings Llc Et Al
On July 12, 2019, Plaintiff Karen Morgan went shopping for her son at Defendant’s Dick’s Sporting Goods (“DSG”) store in Gaithersburg, Maryland. As she walked through the store, she stopped to look at a display of women’s clothing. After she stooped down to look at the clothes on the bottom shelf, she felt a sudden pain on the top of her head. When she looked around, she saw a sign laying on the ground beside her. The sign was a large but lightweight object. Morgan did not notice the sign before the incident and she does not know why it fell. No one saw the sign fall but a DSG employee heard a loud bang around the time it happened. Plaintiffs alleged that they were injured after Morgan was struck by the sign.
DSG filed a motion to exclude evidence from Plaintiffs’ liability expert, Jerry Birnbach, because his opinions are unreliable and speculative.
Architectural Design Expert Witness
Jerry Birnbach has bachelor of science degrees in architectural technology and architecture, and is a member of a number of professional organizations. He has experience as a quality control engineer, as a director of store planning, maintenance, and new store construction, and as an executive in charge of store design, display design, and retail safety.
To begin with, Birnbach is a “retail safety expert.” Birnbach’s opinions are not based on any particular scientific theory that can be tested. And they are not based on a methodology subjected to the rigors of peer review and publication. Instead, his opinions are based on his experience. When considering whether an opinion based on an expert’s experience is reliable, courts consider whether the expert has explained “how [his] experience leads to the conclusion reached, why [his] experience is a sufficient basis for the opinion, and how [his] experience is reliably applied to the facts.”
The Court held that Birnbach’s opinions would not be helpful to a jury because they are not based on any specialized knowledge. Laypeople know that signs should not fall on customers’ heads while they are shopping in a store. They know that objects placed in high places can fall down if not properly secured. And they know that falling objects can cause injury. They do not need an expert to tell them these things.
Held
The Court granted DSG’s motion to exclude evidence from Plaintiffs’ liability expert, Jerry Birnbach.
Key Takeaway:
Because Birnbach’s opinions would not help the jury, their admission would be improper under Rule 702. The Court excluded Birnbach’s opinions because they did not require specialized knowledge and were opinions a layperson could form, and would thus not be helpful to a jury.
Case Details:
Case Caption:
Morgan Et Al V. Dick Sporting Goods, Inc.
Docket Number:
8:22cv1633
Court:
United States District Court for the District of Maryland
This matter asrises from a slip and fall incident that occurred on May 10, 2020, at the Smith’s grocery store located at 7130 North Durango Drive in Las Vegas, Nevada. Plaintiff, Sierra Golia-Huffman alleged that she slipped and fell on liquid in the floral department while holding her child. Smith’s has produced surveillance footage indicating that (1) Plaintiff walked through the area of incident twice within one minute, the first time being without any incident; (2) Plaintiff was carrying flowers she had just taken from a pot of water on her second time through the area, thereafter slipping and falling; and (3) Plaintiff got up and left the area of incident without letting any employees of Smith’s know that she suffered an incident and without showing any signs of distress.
Smith’s filed motions to exclude the testimony and opinions of Golia-Huffman’s retained forensic engineering and safety expert, Dr. Frank Perez and spine surgeon, William Muir, for a variety of reasons.
Forensic Engineering Expert Witness
Frank A. Perez has a doctorate in mechanical engineering and since 1995 has worked as a forensic engineer in mechanical engineering, accident reconstruction, human factors, and safety. He has previously testified in atleast 300 depositions and at least 100 trials as an expert witness.
William S. Muir, MDis Board-Certified with the American Board of Orthopedic Surgeons & fellowship trained Pain Management Expert for 30 years. He graduated from Brigham Young University with honors after he completed a graduate program at Stanford University in physical therapy. He practiced physical therapy in Las Vegas for several years prior to attending medical school at the University of Nevada School of Medicine.
Smith’s argued that Perez’s opinions on the conditions of the Smith’s floral department floor should be excluded as unhelpful to the trier of fact because Perez tested and inspected the floor two years after Golia-Huffman’s incident, and because it is “common knowledge that water causes a floor to become slippery.
The Court held that Golia-Huffman sued Smith’s for negligence, based on the floral department floor being wet. So, Perez’s opinions regarding the slipperiness of the floral department floor when wet are pertinent to the negligence inquiry and helpful to the trier of fact. Also, Smith’s did not contend that anything changed in its floral department between Golia-Huffman’s incident and Perez’s examination.
Based on Speculation and Omitting Key Details
Smith’s argued that Perez’s opinions are based on speculation, not objective evidence, and because Perez omits important details from his analysis.
Smith listed a variety of Perez’s opinions that it argued “were not actually based on evidence,” as well as several issues it claimed Perez had omitted.
The Court held that the alleged problems with Perez’s report that Smith’s raises are more properly addressed during cross-examination.
Retail Standard of Care
Smith’s argued that “Perez is not qualified to discuss any type of retail standard of care that should have been exercised by [Smith’s] or its employees or agents” because he does not have any qualifications “regarding retail safety standards or standards regarding inspections of retail establishments, physical sweeping of stores, or experience with floral departments.”
The Court held that Perez’s extensive experience in premises liability cases, as well as his review of the evidence in this case, qualify him to testify as to his opinions on the retail standard of care Smith’s should have used.
Improper Rebuttal Testimony
Smith’s argued that in his third supplemental report, Perez includes opinions that are not proper rebuttal testimony and must be excluded because Perez should have included them in his initial report. These are Perez’s opinions on “the manner in which the water may have fallen on the ground” and his “opinions as to where the water came from that [Golia-Huffman] slipped on.”
In the parties’ third joint stipulation to extend discovery, the parties stated that they did not seek to extend the expert disclosure deadline, but instead “plan[ned] to work together to allow all experts to prepare proper supplemental disclosures.” The Court held that since Perez is responding to new evidence that was not available to him at the time of his initial disclosure, his supplemental reports are not excluded for offering opinions that should have been disclosed in his initial report.
William Muir
Smith’s moved to exclude medical expert Dr. William Muir’s testimony as untimely and lacking foundation. They argued that Muir’s reports are untimely because in his second supplemental report, he reviewed documents that were over two years old, but he did not explain why he included these documents in the second supplemental report instead of in his initial report. Smith’s acknowledged that the parties said they would work together to allow their experts to properly supplement their reports, but Smith’s did not consider a two-year delay a proper supplement. Smith’s also argued that several of Muir’s opinions are flawed because they lack foundation.
The Court held that the disclosures were timely per the parties’ agreed upon extension of the deadlines and refused to exclude Muir’s testimony for lack of foundation, as this goes to impeachment and may be addressed by Smith’s on cross-examination.
Held
The Court denied Smith’s motions to exclude the testimony and opinions of Golia-Huffman’s retained forensic engineering and safety expert, Dr. Frank Perez and spine surgeon, William Muir.
Key Takeaways:
Perez’s opinions regarding the slipperiness of the floral department floor when wet are pertinent to the negligence inquiry and helpful to the trier of fact.
Perez’s extensive experience in premises liability cases, as well as his review of the evidence in this case, qualify him to testify as to his opinions on the retail standard of care Smith’s should have used.
Case Details:
Case Caption:
Golia-Huffman V. Smith’s Food & Drug Centers, Inc.
Docket Number:
2:21cv1260
Court:
United States District Court for the District of Nevada
Plaintiff Sandra Corbin filed a civil rights action against the Defendants Bill Prummell, Jr., as sheriff of the Charlotte County, David Gensimore, and Aaron Williams as a result of Corbin sustaining a fractured leg, and a litany of related and subsequent damages due to excessive force employed by Williams.
On November 29, 2019, at around 9:45 PM, Plaintiffs, John Corbin and Sandra Corbin were stopped by Charlote County Deputies Michael Davidson and Aaron Williams. Plaintiffs were stopped upon leaving a restaurant/bar where both Mr. Corbin and Mrs. Corbin consumed a couple of beers.
During the traffic stop of Plaintiffs, Mr. Corbin was removed from the vehicle by Deputy Davidson to perform a field sobriety test (FST), while Mrs. Corbin remained in the vehicle. Mrs. Corbin attempted to go around Deputy Williams to observe what was happening with Mr. Corbin; and at that moment Deputy Williams deployed a “leg sweep” or “leg whip” with such force it took Mrs. Corbin to the ground; and fractured her leg.
Corbin filed a motion to exclude the testimony of Defendants’ proposed expert, Teri L. Stockham, a forensic toxicologist who opined that Sandra Corbin was intoxicated such that her normal faculties were impaired at the time of this incident. This opinion is based on scientific evidence of the hospital serum ethanol result of 206 mg/dL almost two hours after the incident.
Toxicology Expert Witness
Teri Stockham holds three degrees: A Bachelor of Science in chemistry, a Master of Science in forensic science and forensic toxicology, and a Doctor of Philosophy in pharmacology and toxicology. She has thirty-five years of toxicology experience, including a stint as Chief Toxicologist at Broward County Medical Examiner’s office.
The Corbins argued that Stockham was not qualified to testify on Sandra Corbin’s state of mind, behavior, etc., that her opinion was not based on reliable scientific or technical testing, and that the testimony will not assist the trier of fact.
Plaintiffs argued that Stockham, as a toxicologist, is not qualified to opine on how Sandra Corbin comported herself during the night in question since Stockham “never met with Sandra Corbin, nor discussed the events of November 29, 2019.”
The Court held that Stockham is not testifying that she personally knows Corbin behaved a certain way during the night in question. She is offering testimony regarding Corbin’s blood alcohol content (BAC) and the “signs and symptoms” she would “expect” with that BAC.
Hence, the Court held that Stockham is qualified as an expert to interpret BAC “not because of her familiarity with Sandra Corbin, but because of her familiarity with the analysis she was tasked with performing.”
Reliability
Plaintiffs argued that Stockham’s testimony was not reliable for many reasons, including because it relied not on statistical data but on Sandra Corbin’s blood alcohol level taken two hours after the event and did not consider pertinent deposition testimony or Sandra Corbin’s alcohol tolerance level.
Stockham’s opinion is based “on scientific evidence of the hospital serum ethanol result of 206 mg/dL” which she converted to BAC. The Court held her opinion is reliable because it is generally accepted that alcohol content levels give reliable estimates of a person’s intoxication, and “[a]nalysis of blood samples gives the most accurate results.”
Assistance to the trier of fact
The third requirement asks “whether that reasoning or methodology properly can be applied to the facts in issue.”
Plaintiffs argued that “an opinion or determination of intoxication” is unhelpful here as Florida’s driving under the influence statute is irrelevant and “there is no requisite or comparable BAC level under” Florida’s disorderly intoxication statute.
The Court held that Stockham’s opinions regarding Corbin’s BAC and the effects expected of a person with that level of BAC “are helpful for the factfinder because, although the general effects of alcohol consumption are commonly known, the methodology for determining an individual’s BAC and an opinion on the associated physiological manifestations of a specific BAC level are beyond the understanding and experience of the average lay citizen and goes to the ultimate finding” of whether Corbin was intoxicated.
Held
The Court denied the Plaintiffs’ motion to exclude the testimony of Teri L. Stockham.
Key Takeaways:
None of Plaintiffs’ arguments to exclude Stockham’s testimony are persuasive. Stockham is qualified, her outlined opinion above is reliable, helpful, relevant, and its probative value does not outweigh the danger of unfair prejudice, confusion of the issues, or misleading of the jury.
Even if accepted as true that, for example, certain deposition testimony was omitted, misstated, or contradicted and that pertinent information such as Corbin’s age, fatigue, or food consumption was overlooked, any such shortcomings would go to the weight of the evidence, not to admissibility.
Plaintiffs’ argument misconstrued Stockham’s offered testimony and applied a higher bar for the qualification of an expert than precedent required.
Named Plaintiffs Mary Alice Clark, Christopher Coulter, Aaron Perez, Kevin Nelson and Phillip Roscher (collectively, “Plaintiffs”), individually and on behalf of all others similarly situated, brought this putative collective action against Defendant Capital Vision Services, LLC d/b/a MyEyeDr (“MyEyeDr” or the “Company”), claiming that MyEyeDr misclassified all General Managers (“GMs”) and General Managers-in-Training (“GMITs”) as exempt from the overtime pay requirements imposed by the federal Fair Labor Standards Act (“FLSA”), as well as Massachusetts and Pennsylvania law.
Liesl M. Fox, Ph.D. is a Senior Consultant and Partner at Quantitative Research Associates, a firm that provides statistical and computing consulting services. 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.
Furthermore, she has consulted on and testified in numerous matters involving wage-and-hour disputes, including claims under the Fair Labor Standards Act of 1938 (“FLSA”). These matters have involved allegations of unpaid overtime, off-the-clock work, employment misclassification, minimum wage violations, time-shaving, record-keeping violations, and other wage-and-hour issues.
Initially, MyEyeDr challenged Fox’s opinions on several grounds. As to the calculation of potential backpay, she assumed that all of the GMs’ training last eight weeks when there was testimony from MyEyeDr’s Chief Revenue Cycle Officer that such period could be shortened, and two class members for which she had made such calculation, testified that neither undertook such training and others testified to a shorter training period.
Consequently, the Court held that the fact that Fox’s calculation for backpay were premised on such unsupported assumptions undermined the reliability of those calculations. Similarly, in her opinion regarding whether Plaintiffs supervised the equivalent of two full-time employees (for the purposes of determining if the executive exemption applied), the Court found that she did not account for inventory hours spent by these employees “which artificially deflated the labor hours GMs supervised.”
Moreover, according to the Court, the key is that there is no explanation of a reliable methodology in which she included some work hours in her analysis and excluded others.
Helpfulness to the Trier of Fact
Next, the Court questioned whether Fox’s opinions will be helpful to the trier of fact.
If MyEyeDr is found to have violated the FLSA, it would owe backpay for uncompensated overtime hours worked by GMs at a rate of one and a half times their hourly rate. Upon determining the number of overtime hours each GM worked, the jury would be tasked with calculating each individual’s hourly rate by dividing the weekly salary by the number of hours worked that week. To calculate the backpay, the jury would (1) multiply the hourly rate by one and a half and (2) multiply that by the GM’s overtime hours that given week. Such calculations constituted basic math that a jury can compute without the opinion of an expert.
However, Plaintiffs noted that the payroll data in this case “contains more than 95,400 rows of data” spanning five years with “81 different earnings code[s] some of which are included in the damage calculations and others that are not properly included in the regular rate,” and “it contains unpaid and paid time off hours that need to be excluded from hours work estimates, and . . . bonuses that need to be spread over the time periods during which they are earned.” They argued that, given the enormity of the data, a jury is unlikely to have the ability to do these calculations.
Nevertheless, the Court held that such data can be presented in summary fashion to the jury. Plaintiffs may explain the meaning of such numbers through lay witnesses and argue the reasonable inferences that can be drawn from same to the jury. The Court decided that this proffered “opinion” did not require specialized knowledge or would be helpful to the jury as required under Fed. R. Civ. P. 702.
Risk of Undue Prejudice and Confusion to the Jury
Furthermore, the Court held that there is a risk that the jury will attach undue significance to this opinion offered by Fox based on the deficiencies addressed above, such that any probative value of same is outweighed by the risk of undue prejudice and confusion to the jury under Rule 403.
Held
In conclusion, the Court granted the Defendants’ motion to exclude Plaintiffs’ proffered expert witness, Liesl M. Fox.
Key Takeaways:
To begin with, MyEyeDr did not challenge Fox’s credentials as a highly qualified statistical consultant, or the general relevance of her proffered opinions, but challenged their reliability on several grounds and posited that her proposed testimony would be unhelpful to the jury.
First of all, Fox’s testimony would not assist the jury because Fox’s calculations are basic math that a jury can compute without the opinion of an expert.
Secondly, Fox’s calculation for backpay were premised on unsupported assumptions. For instance, Fox assumed that all of the GMs’ training lasted eight weeks when there was testimony from MyEyeDr’s Chief Revenue Cycle Officer that such period could be shortened.
Case Details:
Case Caption:
Clark Et Al V. Capital Vision Services, Llc
Docket Number:
1:22cv10236
Court:
United States District Court for the District of Massachusetts
Alan Solomon with the University of Tennessee (“UT”) developed the 11-1F4 antibody, and the “ownership of the Antibody materials and associated materials are held by Plaintiff.” The Antibody is effective in treating amyloidosis.
In 2009, Solomon applied for and received two different orphan drug designations for two indications of the 11-1F4 Antibody. Defendant Caelum Biosciences, Inc. was founded to advance the clinical development research from Solomon. Plaintiff University of Tennessee Research Foundation alleged that Defendant’s “sole focus and mission was to commercialize the Antibody technology, which it has renamed to CAEL-101.”
Plaintiff entered into several different agreements relating to the Antibody. In 2013, Plaintiff entered an Inter-Institutional Agreement (“IIA”) with former party, The Trustees of Columbia University in the City of New York (“Columbia” or “Columbia University”), allowing it to work on clinical trials with respect to the Antibody.
According to Plaintiff, in 2017, Defendant “began publishing press releases containing false statements regarding the ownership of the 11-1F4 technology, [made] false disclosures on its website, and . . . [made] false disclosures with the U.S. Food and Drug Administration claiming that it had licensed the 11-14F4 technology from Columbia University and that [Defendant] was now the owner of the 11-14F4 Orphan Drug Designations.”
Defendant retained Neil J. Beaton, a certified public accountant, as its damages expert. University of Tennessee Research Foundation (“UTRF”) requested that the Court exclude several opinions of Neal J. Beaton pursuant to Federal Rule of Evidence 702.
Business Valuation Expert Witness
Neil Beaton is a Managing Director with Alvarez & Marsal Valuation Services in Seattle. He specializes in the valuation of public and privately held businesses and intangible assets for purposes of litigation support (lost profits claims, marriage dissolutions and others), acquisitions, sales, buy-sell agreements, ESOPs, incentive stock options and estate planning and taxation. He also performs economic analysis for personal injury claims, wrongful termination and wrongful death actions.
Specifically, UTRF requests that the Court preclude Beaton from testifying that: (1) the release between UTRF and Columbia University “shows that UTRF itself did not regard the UTRF Assets … as having any value”; (2) “the evidence shows that UTRF itself placed little or no value on the UTRF Assets”; (3) “the alleged trade secrets UTRF has identified in this case are generally known in the industry and/or are readily ascertainable,” making damages unavailable; and/or (4) opining that UTRF only is entitled to damages of $371,600 if it prevails against Caelum in this lawsuit.
Specifically, Plaintiff pointed to paragraphs 36, 44, and 45 of Beaton’s expert report. These paragraphs provided as follows:
36. This broad release of “all claims and liability” shows that UTRF itself did not regard the UTRF Assets as of June 12, 2017 as having any value.
44. Since UTRF essentially abandoned the UTRF Assets and Solomon transferred the Investigational New Drug (“IND”) for nothing in return, the evidence shows that UTRF itself placed little or no value on the UTRF Assets.
45. As I understand is detailed in other reports being served by Caelum, the alleged trade secrets UTRF has identified in this case are generally known in the industry and/or are readily ascertainable from publications, presentations, ATCC deposits, patents, and/or other proper means such that no real economic value would be obtained from their disclosure. Thus, it is my understanding that UTRF cannot recover damages for its trade secret misappropriation claim.
Beaton’s first two opinions would not assist the trier of fact
The Court found that the first and second opinions were not within Beaton’s specialized knowledge such that they would assist the trier of fact. Beaton acknowledged that his first opinion is based on the Court’s order dismissing Columbia from this case. And his second opinion is based on his interpretation of the facts of the case, including Solomon transferring the IND without compensation.
Beaton’s third opinion is not helpful to the jury
For his third opinion, Beaton stated that his understanding is that Plaintiff cannot recover damages because other experts have opined that Plaintiff’s purported trade secrets are generally known in the industry and/or are readily ascertainable. Plaintiff argued that this testimony is not helpful but additionally, it asserted that the “rules do not permit an expert to rely on opinions developed by another expert for purpose of litigation without independent verification of the underlying expert’s work.” Experts are permitted to rely on another expert’s opinion “[i]f experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject.”
Even so, the Court found Beaton’s testimony on this issue was not helpful to the jury. Beaton is essentially stating that if there are no trade secrets, Plaintiff’s damages are zero. But the jury need not hear from an economist to reach that conclusion. The Court therefore found Plaintiff’s arguments well taken on this ground.
The Reliability of Beaton’s Opinions
Plaintiff challenged Beaton’s alternative opinion that should Plaintiff prevail on its claims, it is entitled to only $371,600. It argued that “Beaton’s conclusion is based on incorrect facts and lumps together [Plaintiff’s] breach of contract and trade secret misappropriation claims,” rendering his opinion unreliable.
Plaintiff stated that in its Amended Complaint, it alleged that Defendant breached the Confidentiality Agreement executed on March 14, 2017, but in assessing damages on the breach of contract claim, Beaton used a date of January 1, 2017—more than two months before the contract existed. Plaintiff stated that his reliance on January 1, 2017, to calculate damages is unreliable.
Defendant responded that Beaton evaluated the UTRF Assets using the date of January 1, 2017, because this is when the 2017 Caelum/Columbia Agreement was executed. Beaton explained that choosing a different date would not affect his damages calculation. Plaintiff argued that although it has separate claims for breach of contract and trade secret misappropriation, “Beaton did not provide separate damages opinions for these claims.”
The Court could not conclude that Beaton’s opinions were unreliable or unhelpful simply because he performed an aggregate damages calculation. Plaintiff cited no authority for the proposition that an aggregated damages calculation is inherently unreliable, and to the extent the jury finds Defendant liable on the trade secret misappropriation claim and the breach of contract claim, Beaton’s opinions are helpful. The Court found cross examination and jury instructions are more appropriate than exclusion on these grounds.
Held
To conclude, the Court granted in part and denied in part the Plaintiff’s Daubert motion to exclude the testimony of Neil J. Beaton.
Key Takeaways:
Experts are permitted to rely on another expert’s opinion “if experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject.”
The Court found that Beaton’s opinions regarding the value or lack thereof of Plaintiff’s trade secrets are not helpful to the jury.
At the same time, the Court found Beaton’s damages calculation reliable and helpful.
Moreover, Beaton essentially stated that if there are no trade secrets, Plaintiff’s damages are zero. The Court held that this type of conjecture claiming ‘if there was no violation, there are no damages’ does not require expert testimony; it is a rhetorical argument to make to the jury.”
Case Details:
Case Caption:
University Of Tennessee Research Foundation V. Caelum Biosciences, Inc.
Docket Number:
3:19cv508
Court:
United States District Court for the Eastern District of Tennessee
