Expert Witness Profiler

Tag: Stock

  • Valuation Expert Allowed to Opine on Stock Drop

    Valuation Expert Allowed to Opine on Stock Drop

    In this defamation action, Plaintiffs Techtronic Industries Company Limited and Techtronic Industries Factory Outlets, Inc. (“Plaintiffs” or “TTI”) sued Defendant Victor Bonilla (“Defendant” or “Bonilla”) for statements made about TTI and its business practices by Bonilla in two reports he authored and published on his website Jehoshaphat Research in February and June 2023.

    Bonilla filed a motion to exclude TTI’s expert Jeffrey W. Kopa, CFA under Fed. R. Evid. 702, arguing that Kopa’s qualifications and opinions failed to meet the standards required by Daubert and the Federal Rules of Evidence.

    Valuation Expert Witness

    Jeffrey William Kopa, CFA is a partner and managing director at AlixPartners in the Investigations, Disputes and Risk practice. He holds a Bachelor of Business Administration degree with an emphasis on finance and accounting from the University of Michigan and a Master of Business Administration degree and Master of Science degree in Finance from Indiana University School of Business. Kopa has developed an extensive litigation-consulting, financial, valuation, and investing practice over his past 20 years of professional experience.

    He has analyzed damages through his litigation-consultant services in a variety of areas including antitrust, audit malpractice, breach of contract, false advertising, intellectual property litigation, purchase price and transaction disputes, shareholder disputes, fraudulent conveyance, and preference actions. Kopa has experience examining damages and lost profits caused by alleged wrongful acts and has been qualified as an expert to present damages opinions and statistical analyses in state, federal, and bankruptcy courts. In addition to performing damages analyses, he has performed accounting investigations, assessed credit worthiness, advised creditors and board members, participated in capital raising efforts and worked to restructure and refinance companies.

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

    Discussion by the Court

    In his initial report, Kopa offered the following opinions:

    • The market for the common stock of TTI was open, developed, and efficient before and around the time of the Jehoshaphat Reports (“JR”) were publicly issued based on the results of standard market efficiency tests.
    • The share price of TTI’s common stock declined in February 23, 2023 and June 6, 2023, following the First Report and Second Report, respectively, and the negative abnormal return following the First Report’s publication was highly statistically significant.
    • Defendant profited from trading activity associated with the JR Reports.
    • TTI incurred approximately US$152 thousand in incremental professional fees to address the JR Reports.
    • TTI’s incremental compensation plans have a total attributable value to the JR Reports of approximately US$23.6 million.

    Defendant challenged Kopa’s second, fourth, and fifth opinions referenced above. Defendant noted that, with respect to the third opinion, Bonilla’s profits are not an item of damages that Plaintiffs may claim, but he did not otherwise challenge Kopa’s analysis or conclusion that Bonilla profited from trading activity associated with the reports.

    Qualifications

    Bonilla contended that Kopa offered no testimony on the salient issues that would be helpful to the jury, such as identifying which damages resulted from the alleged false and defamatory statements and whether the LTIP executive compensation program was necessary. This argument appeared to go to the last prong of the Daubert analysis and not to Kopa’s qualifications to offer a damages opinion in this case. As courts in this Circuit have noted, “the qualification standard for expert testimony is ‘not stringent’ and ‘so long as the expert is minimally qualified, objections to the level of the expert’s expertise go to credibility and weight, not admissibility.’”

    Given Kopa’s education, experience, and credentials, the Court found that Kopa is at least minimally qualified to offer damages opinions in this case.

    Methodology

    In formulating his opinions, Kopa utilized the methodology of an “event study” to analyze the impact of Bonilla’s reports on TTI’s stock. An event study is a statistical regression analysis that examines the effect of an event—such as the release of information—on a dependent variable, such as a corporation’s stock price. Kopa testified that he combined a quantitative analysis of the change in TTI’s stock with a qualitative loss causation analysis of TTI-focused news. 

    Bonilla argued that although Kopa purports to conduct an event study to show the connection between the First and Second Reports and the stock drop, he did not use any methodology to determine if the stock drops were due to the alleged false and defamatory statements, as opposed to being due to true statements or opinions in the reports.

    As event studies are a “common method” of establishing loss causation, the Court found Kopa’s methodology to be generally accepted in the scientific community and therefore reliable.

    Kopa also used the net present value technique, a commonly accepted methodology, to calculate TTI’s damages. Bonilla argued that Kopa’s analysis of the legal and accounting bills did not use an accepted methodology at all; rather, he just added them up. Bonilla complained that Kopa did not analyze whether the legal and accounting work performed was necessary.

    For the same reason, he challenged Kopa’s testimony about the executive compensation issue contending Kopa merely asserts a but-for test that is unscientific and unreliable. Whether or not the services were needed does not appear to be an opinion that Kopa is offering.

    Net present value analyses are an acceptable and common methodology used by financial experts. Basically, the Court found that Kopa’s causation assumption did not render his damages opinion inadmissible.

    Helpfulness to the Jury

    TTI contended that Kopa did not simply look at a stock market drop as Bonilla suggests. TTI represented that Kopa’s opinions are formed based upon a statistical causal analysis utilizing an event study. Bonilla’s arguments to the contrary in an effort to exclude the opinions go more to the weight the jury should give the opinions and not to their admissibility. Finally, Bonilla complained that some of the calculations are simple math calculations for which an expert is not needed. However, this is not a basis to exclude the expert.

    Held

    The Court denied Defendant Bonilla’s Daubert motion with respect to Jeffrey W. Kopa’s damages opinions.

    Key Takeaway

    Relevant expert testimony logically advances a material aspect of the proposing party’s case and fits the disputed facts.

    While performing simple mathematical calculations or conversion of money from Hong Kong to U.S. dollars may not necessarily require expert testimony, to the extent that Kopa is permitted to testify, his performance of these calculations and conversions will be helpful to the jury.

    Case Details:

    Case Caption: Techtronic Industries Company Limited V. Bonilla
    Docket Number: 8:23cv1734
    Court Name: United States District Court, Florida Middle
    Order Date: March 06, 2026
  • Economics Expert’s Testimony About Tivity’s Stock Price Drop Excluded

    Economics Expert’s Testimony About Tivity’s Stock Price Drop Excluded

    This securities fraud putative class action is based on allegations that Tivity, a publicly traded company, as well as various high-ranking executives, made false or misleading statements and omissions, and had a scheme to defraud investors regarding, facts material to both: the purported success of Tivity’s acquisition of Nutrisystem, Inc. (“Nutrisystem”) in Q1 of 2019 (“Nutrisystem Claim”); and the valuation of Tivity’s goodwill and the Nutrisystem tradename throughout 2019 (“Goodwill Claim”). 

    According to Lead Plaintiff, Defendants’ materially false or misleading statements and omissions on these issues led to significant losses in shareholder value when, on February 19, 2020, Defendants disclosed Tivity’s financial results for 2019 and forecasts for 2020, and announced the resignation of the Nutrition Segment’s President, Keira Krausz as well as the termination, without cause, of Tivity’s CEO, Donato Tramuto.

    Predictably, the effect (or lack thereof) of the allegedly fraudulent statements and omissions on the Corrective Disclosure and Tivity’s eventual decreased stock price is a central contested factual issue of this case. W. Scott Dalrymple sought to opine on the amount of loss Tivity shareholders experienced from Defendants’ scheme to defraud them, as well as their false and misleading statements and omissions, through evaluation of five items in the Corrective Disclosure.

    Defendants filed a motion to exclude the testimony of Dalrymple.

    Economics Expert Witness

    W. Scott Dalrymple is an economist specializing in quantitative valuation, econometrics, statistics, securities analysis, antitrust, financial markets, and intellectual property.

    Dalrymple has led numerous consulting, commercial litigation, and restructuring engagements on behalf of multinational companies, investors, financial institutions, and government agencies in the U.S., Europe, and Australia.

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

    Discussion by the Court

    Dalrymple is supposed to analyze the impact of the Corrective Disclosure on Tivity’s stock price.

    Dalrymple’s Analysis

    First of all, Dalrymple assumed that Tivity’s stocks had been trading on a semi-strong form of an efficient market prior to Tivity’s release of the Corrective Disclosure on February 19, 2020. Then, Dalrymple conducted a market model event study by using a regression model to predict expected returns on Tivity’s stock during the event window (i.e., the day of the Corrective Disclosure).

    Tellingly, Dalrymple made no attempt to separate the varying purported causes of Tivity’s stock drop included in the Corrective Disclosure—to determine whether some, all, or none of that information was attributable to Defendants’ fraud. 

    Dalrymple explained this seemingly glaring omission in his analysis. He contended that isolating the effects of the five items in the Corrective Disclosure is unnecessary given all that information is within what Lead Plaintiffs believe to be the zone of risk of Defendants’ concealed fraud.

    The Court held that Dalrymple failed to both (1) bridge any connection between the alleged corrective information, Defendants’ fraud, and Tivity’s stock decline, and (2) apply any principled or economic method to support his conclusion that the items in the Corrective Disclosure did not constitute confounding information that required removal from his total damages calculation.

    Dalrymple Fails to Properly Analyze the “Corrective” Nutrition Segment Financial Disclosures

    The Court held that Dalrymple’s aggregation of the five items in the Corrective Disclosure (the Q4 and 2019 earnings results, Q1 and FY 2020 earnings guidance, impairments to Tivity’s goodwill and the Nutrisystem tradename, and the announcements of Tramuto’s termination and Krausz’s resignation) as a single bundle of new information, despite acknowledgement that some of the information implicated information beyond Defendant’s alleged fraud, demonstrated the issue with his approach. 

    Dalrymple made no effort to determine whether the Q4 and 2019 earnings results, Q1 and FY 2020 earnings guidance, and impairments to Tivity’s goodwill and the Nutrisystem tradename were actually “corrective.”

    Nor did he account for that some of that financial information—information that, according to Lead Plaintiff, made the stock price fall—had already been anticipated by the market based on prior disclosures that the Nutrisystem acquisition may prove unsuccessful. 

    Because Dalrymple knew the market already anticipated that the Nutrisystem merger may have failed irrespective of Defendants’ fraud, the Court held that his analysis “should have carefully considered whether other factors [other than Defendants’ alleged fraud] might have been at play” in causing Tivity’s stock price decline. 

    Dalrymple Fails to Properly Analyze the “Corrective” Executive Departure Announcement Disclosures

    Dalrymple’s treatment of Tivity’s executive departures revealed in the Corrective Disclosure is equally flawed. As with Dalrymple’s acknowledgement that Tivity’s financial information could contain non-fraud related information, he understood “that Tramuto’s eventual departure from the company may have been anticipated.”

    The Court held that Dalrymple’s analysis of the purported corrective disclosures announcing Tramuto’s termination and Krausz’s resignation suffers from another flaw: these items are, as a matter of law, not within the zone of risk of Defendants’ alleged fraud. There is no evidence in the record that Tivity’s announcements of Krausz’s resignation and Tramuto’s termination revealed any fraud perpetuated by Defendants.

    Because Dalrymple does not provide any bridge between his opinion that the announcement of Tivity’s executive departures had “limited, if any, negative impact” on Tivity’s share price and an analytical framework supporting that conclusion, the Court held that Dalrymple’s attempt to remove this non-fraud information from his equation is merely inadmissible ipse dixit.

    Dalrymple’s Demeanor at the Daubert Hearing Underscores Why His Opinions Should Be Excluded

    The shortcomings of Dalrymple’s analyses are compounded by his demeanor on the stand. Dalrymple has extensive experience as an expert in litigation. He has appeared as an expert at trials and hearings on nine prior occasions and has sat for twenty depositions.

    However, during one exchange with Defendants’ counsel, Dalrymple directly contradicted his prior deposition testimony that he it did not causally connect any alleged misstatements to any of the five items from the Corrective Disclosure he based his opinions on by attempting to assert the opposite during the Daubert hearing. While testifying is no doubt a stressful experience, even for those familiar with the courtroom, Dalrymple’s contradictory positions about such basic elements of his reports and the tone and tenor of his testimony further underscores the problems with Dalrymple’s testimony and opinions.

    Dalrymple’s Testimony and Opinions Are Inadmissible Under Rule 702

    In this case, Dalrymple ignored the possibility that a portion of the five items in the Corrective Disclosure did not relate to Defendants’ fraud, and he also chooses to ignore his own knowledge confirming as much. 

    He then failed to properly deploy any reliable methodology based on sufficient data about the market to analyze whether there were any non-fraudulent factors within the Corrective Disclosure contributing to a drop in Tivity’s stock.

    Because Dalrymple did not reliably determine whether the information he relied upon was corrective of Defendants’ fraud, and did not reliably calculate the loss in value, if any, of Tivity’s stock that was caused by only non-fraudulent factors, the Court held that his testimony is also unhelpful to the jury. 

    Held

    The Defendants’ motion to exclude W. Scott Dalrymple’s testimony was granted by the Court.

    Key Takeaway:

    By presuming that analysts had already priced in all goodwill, integration, and diet-season risks in the Nutrition segment, Dalrymple treats any price drop from the five items in the Corrective Disclosure as necessarily fraud-related. But he finds support of this assumption only in the stock drop itself. For this, and the reasons stated above, his lack of methodological reasoning in disaggregating the fraud and non-fraud information in the Corrective Disclosure raises several “red flags that caution against certifying an expert includ[ing] reliance on anecdotal evidence, improper extrapolation . . . lack of testing, and subjectivity.” 

    Case Details:

    Case Caption: Strougo V. Tivity Health, Inc. Et Al
    Docket Number: 3:20cv165
    Court Name: United States District Court, Tennessee Middle
    Order Date: May 15, 2025