Expert Witness Profiler

Tag: Timeliness

  • Management Consulting Expert Witness’ Rebuttal Report on Breach of Warranty Counterclaim Admitted

    Management Consulting Expert Witness’ Rebuttal Report on Breach of Warranty Counterclaim Admitted

    This case involves contract disputes. The first contract between Plaintiff, SIS, LLC (“SIS”)  and Defendant, Orion Group Holdings, Inc. was the Professional Services Agreement (“PSA”). It was entered into in June 2010. Under the PSA, Plaintiff provided software consulting services for Defendant. After over ten years of performance under the PSA, the parties entered into a second agreement, the SaaS Services Agreement (“SaaS Agreement”), which was to last five years. It was entered into in 2020. Under that agreement, Plaintiff provided Defendant with different software, including but not limited to Microsoft Dynamics 365, which Defendant purchased as part of a project to implement a new enterprise-wide software system.

    Eventually, a disagreement occurred, and Defendant stopped payment under the SaaS Agreement. Defendant only paid one of the five required payments. Plaintiff sued Defendant to recover the remaining payments. As part of Defendant’s answer, it asserted a counterclaim. The counterclaim alleges that Plaintiff’s “services” under the PSA failed in their entirety.”

    Plaintiff argues that (1) the PSA makes no warranties as a matter of law, and (2) Defendant failed to plead compliance with a condition precedent to recovery.

    Pursuant to the First Amended Scheduling Order (the “Scheduling Order”), SIS
    designated its two experts on January 5, 2023. Neither expert served the required report.

    James Bowman and Mark Kershteyn had been designated to testify whether the professional services rendered by SIS to Orion under the parties’ Professional Services Agreement, especially those intended to aid Orion in selecting, purchasing, and utilizing the Microsoft and SIS software defined as “Services” in the parties’ SaaS Agreement, (1) met or exceeded industry standards, (2) complied with all federal, state, local laws, statutes, and ordinances, and (3) otherwise fulfilled all warranties made by SIS to Orion regarding those professional services.

    The Court addressed the Motion to Strike concerning Bowman’s designation as a liability expert and his report (the “Bowman Report”). The motion sought to strike the report for three main reasons: (i) the report was served on June 16, 2023, five months beyond the deadline specified in the Court’s Agreed Scheduling Order; (ii) Bowman failed to demonstrate his competence to render liability expert opinions; and (iii) the report was deemed wholly conclusory without citing any evidence, thereby violating Rule 702 of the Federal Rules of Evidence and Rule 26(a)(2) of the Federal Rules of Civil Procedure.

    Additionally, although Kershteyn was timely designated, he never served a report. SIS was deemed to have no excuse for its failure to produce Kershteyn’s report on any topic. Despite subsequent interrogatories revealing SIS’ alleged damage claim as $2,186,316, representing the remaining contract balance for the last four years of the SaaS Agreement, Kershteyn asserted that SIS’ lost net profit was “irrelevant.” SIS refused to produce its lost profits evidence, contrary to the legal standard for breach of contract damages. Consequently, Kershteyn’s damages methodology was considered fundamentally flawed as a matter of law. Orion also objected to SIS’ designation of Mark Kershteyn and moved to strike the same.

    Management Consulting Expert Witness

    James Bowman has more than 40 years of experience as an executive, entrepreneur and thought leader in the technology services arena, including 17 years as president and CEO of SBS Group where he oversaw growth from a small, local partner to a leading international Microsoft solution provider. He has demonstrated acumen in consulting services, sales, marketing, and daily operations overseeing multiple business units. He boasts of extensive experience within the Professional Services, Distribution, and Manufacturing industries.

    Discussions by the Court

    Orion sought to strike the expert designation and report of James Bowman (“Bowman”), who was designated as SIS’ expert for rebutting liability in relation to Orion’s breach of warranty counterclaim. Orion argued that Bowman’s report was both untimely and conclusory. Furthermore, Orion asserted that Bowman lacked the competence required to provide liability expert opinions under the Daubert standard. The Court initially addressed the issue of Bowman’s competence to testify as an expert under Daubert.

    Under Daubert, trial courts are tasked with a gatekeeping function to assess the scientific validity of expert testimony and its applicability to the facts in question. The text outlines Rule 702 criteria, stating that a qualified expert can testify if their specialized knowledge assists the trier of fact, rests on sufficient facts and reliable principles, and the witness has reliably applied those principles to the case’s facts. The proponent of expert testimony must demonstrate its reliability by a preponderance of the evidence.

    The Court examined Bowman’s credentials, revealing that he served as Chairman of the Board at Velosio, a competitor of SIS and Microsoft’s largest independently owned solution provider for Business Applications. Bowman’s resume indicated his role as Chief Revenue Officer at Velosio from 2018 to 2021, overseeing Sales, Marketing, and Cloud efforts, acting as the primary relationship manager for Velosio’s Microsoft connection, and liaising with service/implementation teams. SIS contended that Bowman was qualified to testify as an expert based on his extensive work experience, attendance at industry conferences, participation in industry organizations, and involvement in sales and acquisitions.

    The Court determined that Bowman’s background and experience were satisfactory, establishing by a preponderance of the evidence that he was qualified to testify as a rebuttal expert regarding SIS’ performance under the PSA. The Court cited Federal Rule of Evidence 702(a)-(d), emphasizing Bowman’s “knowledge, skill, experience, training, or education.” SIS pointed out that Bowman possessed over thirty years of industry experience and had participated in “more than 500 implementations,” including those relevant to the ongoing lawsuit.

    According to the First Amended Scheduling Order, the deadline for designating Plaintiff’s experts and providing reports was January 5, 2023. SIS conceded that Bowman did not submit an expert report by the specified date. However, SIS argued that Bowman’s report was intended solely for rebuttal, addressing Orion’s counterclaim, and was thus timely filed on June 16, 2023. The Court, in the Amended Order Granting Defendant’s Unopposed Motion, allowed Plaintiff’s designated retained expert to serve a rebuttal report within 30 days after Defendant’s expert reports were served. Orion contended that the report was untimely and should be dismissed due to not meeting the original January deadline. The Court determined that Bowman was explicitly designated as a rebuttal expert witness, and therefore, his rebuttal report, filed on June 16, 2023, was considered timely within the 30-day window following Orion’s submission of expert reports on May 19, 2023.

    Orion raised concerns about the content of Bowman’s report, asserting that it did not adequately establish or address the designated components: industry standards, compliance, and warranties. Orion further argued that Bowman failed to cite any evidence and did not rebut any portion of Orion’s liability expert, Greg Crouse, or mention Crouse’s report. In the appendix to his rebuttal report filed on June 16, 2023, Bowman provided a list of documents he relied on, including recordings of internal meetings between SIS and Orion during the relevant period. SIS countered by highlighting that Bowman’s opinions were firmly grounded in a Statement of Facts, wherein he precisely identified the basis for each observation.

    The Court rejected Orion’s motion to strike Bowman’s rebuttal report but issued a caution. Bowman was restricted to providing testimony exclusively in rebuttal. During the trial, he was confined to presenting opinions that were both outlined in his report and specifically offered as direct rebuttals to Orion’s designated liability expert concerning the breach of warranty counterclaim.

    SIS designated Mark Kershteyn (“Kershteyn”), a co-owner of SIS, to serve as a fact witness concerning SIS’ damages under the SaaS Agreement. Additionally, Kershteyn was designated as a non-retained expert to provide testimony on SIS’ standard of performance under the PSA. According to Rule 26(a)(2)(C), a witness who is not “retained or specially employed to provide expert testimony in the case” is classified as a non-retained witness and is not required to file a report. The distinction lies in the fact that a retained expert is recruited solely to offer expert testimony without prior personal knowledge of the case’s facts, while a non-retained expert’s testimony stems from their direct involvement in the events leading to the litigation.

    As a non-retained expert witness, Kershteyn was not obligated to provide an expert report on the issue of SIS’ standard of performance under the PSA. Similarly, he was not required to submit a report on SIS’ damages under the PSA, as he qualified as a lay witness testifying from personal knowledge of the transaction. Orion contended that Kershteyn’s interrogatory responses on the issue of damages should be excluded due to his alleged failure to identify SIS’ claimed lost profits. The Court, in a previous ruling, had already stated that Kershteyn’s affidavit was enough to raise a genuine issue of fact as to direct lost profits damages associated with the alleged breach.

    Therefore, Kershteyn, as a non-retained expert, was not mandated to submit a report on Orion’s breach of warranty counterclaim. Additionally, Kershteyn was permitted to testify as a lay witness regarding SIS’ alleged damages based on the SaaS Agreement.

    Held

    The Court denied Orion’s Motion to Strike SIS’ Designation of Experts and the Expert Report submitted by James Bowman. 

    The Court has not arrived on an outcome for this case since the remaining issues involved in this case still await resolution.

    Key Takeaways

    In this case involving contract disputes between SIS, LLC (“SIS”) and Orion Group Holdings, Inc., the Court addressed challenges to expert testimony provided by James Bowman and Mark Kershteyn. The dispute centered around SIS’ performance under the Professional Services Agreement (PSA) and the SaaS Services Agreement (SaaS Agreement). Bowman, designated as an expert for rebutting liability in Orion’s breach of warranty counterclaim, faced objections over his competence to render liability expert opinions. Kershteyn, a co-owner of SIS, served as a fact witness and non-retained expert. The Court determined that Kershteyn was not required to serve an expert report as a non-retained expert on Orion’s breach of warranty counterclaim.The key takeaway underscores the Court’s careful consideration of objections related to expert testimony, ensuring compliance with procedural rules and evaluating the sufficiency of evidence presented in the context of contract disputes.

    Case Details

    Case Caption Sis, Llc V. Orion Group Holdings, Inc. Et Al
    Docket Number 4:22cv891
    Court United States District Court, Texas Southern
    Citation 2023 U.S. Dist. LEXIS 233454
    Order Date   December 21, 2023
  • Questions relating to the bases and sources of an expert’s opinion affect the weight to be assigned that opinion, not admissibility; Court admits the testimony of Structural Engineering Expert Witness in insurance coverage dispute

    Questions relating to the bases and sources of an expert’s opinion affect the weight to be assigned that opinion, not admissibility; Court admits the testimony of Structural Engineering Expert Witness in insurance coverage dispute

    This insurance coverage dispute arose when the Plaintiff, Fiberco’s building was damaged by a hailstorm in April 2020 while insured under a policy issued by Defendant, Acadia Insurance Company effective from April 10, 2020 to April 10, 2021. FiberCo subsequently filed a claim with Acadia for the hail damage to the building. After an assessment, Acadia’s engineer identified at least seven places on the roof of the building with openings at the seams of overlapping metal panels, which reduced the water shedding capability of the roof in those areas, and additional hail dents. Acadia denied FiberCo’s claim, explaining that while the seven open seams were considered a covered loss, the dents to the roof fell under the Policy’s cosmetic damage exclusion. Consequently, the overall amount of the covered loss was deemed to be below the Policy’s deductible amount. In response, FiberCo initiated legal proceedings by filing a lawsuit against Acadia Insurance Company and also Union Standard Lloyds, underwriter of the insurance policy to which Fiberco and Acadia Insurance Company (Acadia) were parties.

    During discovery, Fiberco’s expert David Day provided a report concluding that all of the building’s metal roofing needed replacement due to the functional damage arising from the hail and the wetted insulation also needed replacement. He also opined that the hail dents which have not opened seams would cause accelerated corrosion and reduce the roof’s useful life by 25%. Fiberco provided initial expert designations and first amended designations to Acadia and Union, which had listed Day as a retained expert. Acadia and Union then deposed Day and learned his assistant, not Day himself, had inspected Fiberco’s building. Later, Day personally inspected the building for the first time. Fiberco subsequently filed a second amended expert designation for Day, after the deadline and without leave of court. The second designation did not include a supplemental report or declaration from Day at that time, but stated Day’s testimony would rely on his previous deposition and later inspection of the property. 

    Acadia and Union Standard moved to strike Day’s expert testimony, objecting to Day’s characterization of the dents as “functional” and questioning the scope and reasonableness of the necessary repairs to FiberCo’s building. They argued that Day’s opinions lacked a basis in reliable facts or data, were not the product of reliable scientific principles and methods, had not applied any reliable principles and methods to the facts of the case, and did not aid the trier of fact. Additionally, they claimed that Day’s second expert designation was untimely and prejudicial.

    Structural Engineering Expert Witness 

    David Vaughan Day holds a Bachelor of Science in Construction and is a registered professional engineer and an expert in foundation and structural defects in residential and commercial construction. He has been a structural forensic engineer since 1998 and has performed over 1,000 structural forensic inspections, and at least half are wind/hail assessment inspections. Day is the President and Chief Engineer for CASA Engineering, L.L.C., and has been designated a Diplomate in Forensic Engineering Board by the National Academy of Forensic Engineers.

    Discussions by the Court

    Federal Rule of Evidence 702 governed the admissibility of expert testimony, allowing opinion testimony from qualified experts if it assisted the trier of fact and met specific criteria. The Court, acting as a gatekeeper, required the party presenting expert testimony to prove its reliability and relevance by a preponderance of evidence. Expert testimony was considered relevant if it aided in understanding the evidence or determining a fact in question, aligning with Federal Rule of Evidence 401. Reliability necessitated scientifically valid reasoning or methodology, avoiding subjective belief or unsupported speculation. The Court, applying the Daubert factors, assessed the reasonableness of the expert’s approach rather than focusing solely on the conclusions drawn.

    The crux of the dispute concerned the reliability of Day’s testimony and the timeliness of the second amended expert designations. As an initial matter, however, Day was clearly qualified, and his reports were relevant to the issues in the case. His reports were also relevant to the issues in the case; in fact, they were highly relevant. Day’s report provided information concerning whether the building had suffered hail damage and the extent of the damage—both issues at the heart of the dispute. Thus, Day’s testimony was considered relevant because it assisted the trier of fact in determining facts in issue.

    Testimony was deemed reliable when “the reasoning or methodology underlying the testimony is scientifically valid.” Acadia and Union had urged the Court to strike Day’s expert testimony, asserting that his opinions on accelerated corrosion and microfractures lacked support from reliable sources or data and were contradictory to the publications Day referred to. FiberCo countered that these opinions were based on Day’s personal observations and experience, arguing that the Defendants’ objections were suitable for cross-examination but not grounds for striking Day’s testimony. The Court sided with FiberCo, emphasizing deference to the jury’s role in resolving conflicting expert opinions. It held that questions regarding the bases and sources of an expert’s opinion affected the weight assigned to the opinion rather than its admissibility, leaving such considerations for the jury’s deliberation.

    Ultimately, the Defendants sought to strike Day because they disagreed with his application of scientific methodology to the facts of the case, asserting that he misinterpreted the publications he relied upon. The Court, considering this disagreement, emphasized that the traditional and appropriate methods for addressing shaky but admissible evidence were vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof. Consequently, the Court denied Acadia and Union’s motion to strike Day.

    The Court, however, had taken issue with the untimeliness of FiberCo’s second amended expert designations, its failure to seek leave from the Court, and its misrepresentation that Day had examined and inspected the property, which he had not personally done. The Court found that Acadia would be unfairly prejudiced without the chance to depose Day after he had inspected the property, especially given that FiberCo had led Acadia to believe Day had already done so before his deposition. As a result, the Court had ordered that Acadia be given the opportunity to redepose Day, if it chose to, at FiberCo’s expense.

    Held

    The Court denied the motion to strike Day’s expert testimony. The Court found him qualified, his opinions relevant, and arguments about his factual bases went to weight rather than admissibility. However, the Court agreed the late expert designation was prejudicial, so it ordered Day to be re-deposed by Acadia about his late personal inspection at Fiberco’s cost. 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 demonstrates that objections with regard to an expert’s factual bases and application of methodology generally call into question the weight assigned to the testimony, not admissibility. The Court rejected Acadia’s motion to strike Day’s testimony despite Acadia’s arguments that Day misapplied the science. The Court stated that vigorous cross-examination is the appropriate means to address shaky expert opinions. However, this case also shows that unfair prejudice from a late expert designation can warrant a supplemental deposition. Here, Acadia relied on Day having inspected the property when deposing him initially. Allowing a late inspection and designation without a new deposition would be prejudicial. Finally, Courts consider if the opinions will assist the trier of fact, meaning they must be relevant to disputed issues. Courts act as gatekeepers to admit only useful expert testimony.