Accountants & Economists
Admissibility Rate: .598 (52/87)
Microfinancial, Inc. v. Premier Holidays Int'l, Inc., No. 04-1493 (1st Cir. Oct. 5, 2004) (unpublished). In bench trial of fraud and breach of contract claim, plaintiffs' expert Gerald Killion analyzes flow of funds to and from financial account and opines that transactions were structured in fraudulent manner. Trial court finds for plaintiffs and awards $23 million in damages. Admissibility affirmed. Defendants did not object at trial court level and so review is for plain error. Defendants say expert is unqualified, but he spent 33 years as IRS agent, mostly investigating financial fraud. Defendants also fault expert for basing analysis solely on bank records supplied by plaintiffs, rather than broader array of transactions, but this objection goes to weight, not admissibility.
Seahorse Marine Supplies, Inc. v. P.R. Sun Oil Co., 295 F.3d 68 (1st Cir. 2002). Seahorse Marine sues Sun Oil under Petroleum Marketing Practices Act for wrongful termination of Seahorse Marine's franchise. As its damages expert, Seahorse Marine offers Heidie Calero, whose testimony is admitted over Sun Oil's objections. Jury awards damages to Seahorse Marine. Admissibility affirmed. Sun Oil argues that Calero's damage estimate did not properly account for Seahorse Marine's tax obligations, but "inexplicably," Sun Oil neither pinpoints expert's disputed testimony nor discusses actual figures that would undercut expert's analysis. In fact, Calero did reckon with tax obligations in framing her damage estimates. Sun Oil also argues, more persuasively, that Calero should not have been permitted to offer damage estimate for future lost profits over ten-year period, absent reason to believe franchise relationship would have lasted for so long. But any error in permitting that testimony was harmless, because jury's award fell far short of expert's ten-year estimate.
Cummings v. Standard Register Co., 265 F.3d 56 (1st Cir. 2001). Plaintiff's economic expert testifies to lost wages in discrimination suit. Admissibility affirmed. Defendant argues economist should have used company-specific data re plaintiff's compensation, but on cross-examination, expert offered reasons for using data he did, and defendant did not show how expert's assumptions were incorrect or unreasonable. Defendant also highlights computational error exposed during expert's testimony, but trial court permitted defendant to argue that point to jury. Still, where jury returned award closely matching expert's original erroneous estimate and in excess of his corrected one, probability of jury confusion warrants remittitur to damages not exceeding corrected estimate.
Bragdon v. Davenport, No. 99-1643 (1st Cir. Apr. 18, 2000) (unpublished). Realty trust purchases investor's shares for relative pittance after misleading investor re their true value. In suit against trustees for securities fraud, common law fraud, and breach of fiduciary duty, investor offers testimony from two experts to estimate value of trust as of date of sale. First, William Currey, real estate appraiser, values all holdings in which trust held interest, in toto. Second, Stephen Grizey, accountant, reduces appraiser's figure to account for fact that trust had only partial interest in some holdings. Jury finds for plaintiff. Admissibility affirmed. Trustees say plaintiffs' method of proof could have caused confusion and created impression that trust was worth more than it actually was. But experts clearly and coherently explained their two-step approach.
Foster-Miller, Inc. v. Babcock & Wilcox Can., 210 F.3d 1 (1st Cir. 2000). After hearing economist testify for corporation #1 re damages, jury returns $5 million verdict against corporation #2 for using confidential technology belonging to corporation #1. Admissibility affirmed. Corporation #2 errs in contending that district court failed to conduct Daubert analysis of testimony from corporation #1's economist. It is true that district court said economist's testimony "raises no issues that implicate the rule of Daubert," but corporation #2 takes this quotation out of context. District court's meaning was not that Daubert's gatekeeping mandate was inapplicable, but rather that in performing its gatekeeping function, district court found no reliance by economist on unconventional hypotheses or unorthodox methods. As for soundness of district court's Daubert ruling, it is noteworthy that corporation #2 does not even argue, on appeal, that jury award was founded on speculative or unreliable testimony. [Link is to original opinion dated March 31, 2000. Also available at First Circuit's website are two amendments effecting minor textual revisions, the first dated April 27, 2000, and the second dated May 10, 2000.]
Playtex Prods., Inc. v. Procter & Gamble Co., No. 03-7651 (2d Cir. Mar. 28, 2005) (unpublished). To show lost profits in suit against competitor for false advertising, Playtex offers expert testimony from "Dr. Lynde." Trial court admits testimony and jury awards damages. Competitor appeals. Admissibility affirmed. Expert did not attribute all of Playtex's lost profits to competitor's advertising, but allocated substantial fraction to competitor's market entry. Absent sufficient data for regression analysis, expert's method of determining "residual impact" of competitor's advertising when two products were in oligopolistic competition sufficed as reliable proxy for jury to evaluate lost profits.
Lippe v. Bairnco Corp., No. 03-7360 (2d Cir. Apr. 9, 2004) (unpublished). Trustees for creditors of bankrupt asbestos company bring fraudulent conveyance action, relying on business valuation experts Thomas E. Dewey, Jr., and Jocelyn D. Evans to establish value of assets sold. District court excludes their testimony, denies creditors' motion to substitute new valuation expert, and awards summary judgment to company. Exclusion affirmed. Creditors argue that company's quarrels with experts' approach went to weight, not admissibility, but district court identified no fewer than eighteen deficiencies, and testimony was riddled with implausible and unexplained assumptions. No abuse of discretion.
Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48 (2d Cir. 2002). Fashion Boutique enjoys thriving commerce as exclusive metropolitan outlet for Fendi's international line, until Fendi Stores opens competing store, whereupon Fashion Boutique's business withers and dies. Fashion Boutique blames bad-mouthing by its competitor, and sues under Lanham Act and common law theories of slander and product disparagement. Court awards summary judgment to Fendi Stores on Lanham Act claims. At trial of remaining state law claims, district court excludes testimony from Fashion Boutique's damages expert, Dr. Dov Frischberg, that value of Fashion Boutique's business approximated $15 million. Jury awards Fashion Boutique $35,000 in compensatory damages for lost sales from five named customers, $5 for damage to its reputation, and $75,000 in punitive damages. Exclusion affirmed. Expert was qualified to opine only on value of Fashion Boutique's business, not on cause of business's demise, and Fashion Boutique did not offer sufficient evidence from any other source that Fendi Stores caused boutique's failure. To permit expert to testify that Fendi Stores caused $15 million in damages, therefore, would have assumed facts not in evidence, and would have invited jury to award damages on speculative basis. Moreover, to be relevant to product disparagement claim, testimony would have to address New York law's requirement that damages be itemized for named customers, as expert's $15 million estimate did not.
United States v. Robinson, No 00-1681 (2d Cir. Jan. 8, 2002) (unpublished). At criminal fraud trial, prosecution calls expert to explain complex financial terms. Over defendants' objections, expert offers opinions on what financial instruments "really meant," stating that certain items are "bogus" and have "no legitimate meaning," and testifying that certain words used by defendants "are often used by wrongdoers who are trying to scam money." Jury convicts. Affirmed. Witness statements to which defendants object were not necessary to respond to prosecution's questions and arguably crossed line between legitimate expert opinion and impropriety. But any error was harmless, because court instructed jury to form its own conclusions on criminal intent.
Wal-Mart Stores, Inc. v. Visa U.S.A., Inc. (In re Visa Check/MasterMoney Antitrust Litig.), 280 F.3d 124 (2d Cir. 2001), cert. denied, 536 U.S. 917 (2002). In merchants' antitrust action against credit and debit card companies, plaintiffs support motion for class certification with report from economist, who opines that four issues can be resolved on class-wide basis: (1) whether credit and debit cards have distinct characteristics; (2) whether defendants have market power in credit cards; (3) whether defendants' tying arrangements cause injury-in-fact to all class members; and (4) proper formula for computing class members' damages. Defendants move to strike economist's report. District court denies motion to strike and grants class certification in partial reliance on expert's report. Defendants seek interlocutory appeal under Fed. R. Civ. P. 23(f). Appeal granted, class certification affirmed. As to appellate jurisdiction: Discretionary exercise of interlocutory jurisdiction is appropriate to resolve proper standard for evaluating expert opinions at class certification stage, although appellate jurisdiction exists only as to class certification order, not over district court's order denying motion to strike; motion to strike expert testimony under Daubert involves distinct inquiry from evaluating expert evidence in support of motion for class certification, although arguments in both contexts may be similar, and district courts should not postpone class certification decisions for sake of awaiting Daubert rulings, which typically occur later in litigation. As to certification decision: Standard of review on class certification is deferential (abuse of discretion). Defendants complain that plaintiffs' expert did not offer credible basis for certification. But courts do not examine merits of claims in deciding class certification motions. Duty of district court was rather to ensure that basis of expert's opinion was not so fatally flawed as to render his opinion inadmissible as matter of law. Any claim that district court failed to discharge that duty is meritless. Judge Jacob dissents.
Crawford v. SAP Am., Inc., No. 04-1849 (3d Cir. Apr. 7, 2005) (unpublished). District court excludes plaintiffs' expert testimony on damages in franchise dispute and awards summary judgment to defendants. Exclusion affirmed. Expert was unfamiliar with plaintiffs' business, and testimony was speculative.
Elliott v. Kiesewetter, No. 03-1681 (3d Cir. Oct. 18, 2004) (unpublished). In fraudulent conveyance action involving intra-familial dispute over asset transfer, beneficiaries offer testimony from asset valuation expert. Trial court admits testimony, and jury finds for beneficiaries. Admissibility affirmed. Expert possessed requisite specialized expertise, employed reliable methods, and gave testimony that assisted jury.
LePage's, Inc. v. 3M, 324 F.3d 141 (3d Cir. Mar. 25, 2003) (en banc), cert. denied, 542 U.S. 953 (2004). LePage's sues 3M for monopolizing transparent tape market through exclusivity agreements and bundled rebates. To prove damages, LePage's offers testimony from Terry Musika, who estimates lost LePage's lost profits based on "lost market share" model, which involves estimating LePage's market share, sales, and profits in offense-free world and comparing these to actual figures from relevant period. Based on this method, Musika estimates $36 million in lost profits. Jury returns verdict for LePage's and sets damages at $22.8 million before trebling. Admissibility affirmed. 3M concedes validity of Musika's basic approach to calculating damages, but challenges his underlying assumptions. However, district court permissibly found that assumptions enjoyed support in record, and expert's credibility was for jury to determine. 3M also complains that Musika did not disaggregate damages to separate lost profits attributable to 3M's violations from damages occasioned by 3M's lawful conduct. But 3M's actions taken taken together were found to violate antitrust law, and disaggregation was neither necessary nor feasible.
Elcock v. Kmart Corp., 233 F.3d 734 (3d Cir. 2000). On encountering waxy buildup on Kmart floor, woman slips and falls. At trial of her personal injury claims, she offers psychologist cum vocational rehabilitationist to testify re scope and duration of her disability, and economist to testify re damages. District court reluctantly qualifies psychologist as vocational rehabilitation expert and declines to entertain Daubert challenge to psychologist's testimony because no scientific issues are involved (Kumho Tire not yet having been decided). Economist is also permitted to testify over defendants' Daubert objections. Admissibility reversed. Psychologist did have some vocational rehabilitation experience and kept up with literature, but his qualifications are at outer limit of admissibility. District court would have discretion to qualify him as vocational rehabilitation expert or not. But in light of Kumho Tire, district court should have held Daubert hearing re psychologist's testimony, and trial record suggests that serious questions concerning its reliability would arise. Economist should not have been permitted to offer testimony based on unfounded assumptions re plaintiff's earning power. Remanded for Daubert hearings and new trial.
Pharmanetics, Inc. v. Aventis Pharms., Inc., No. 05-1621 (4th Cir. May 31, 2006) (unpublished). To show lost profits in Lanham Act suit, plaintiff offers expert testimony from Richard Troxel. District court excludes testimony as too speculative and too disconnected from facts of case, and awards summary judgment to defendant. Exclusion affirmed. District court did not abuse its discretion in concluding that expert's lump sum estimates were too misleading to present as expert testimony, nor in ruling that expert's estimates on lost profits from sales of new technology were too speculative.
Berlyn, Inc. v. Gazette Newspapers, Inc., No. 02-2152 (4th Cir. Aug. 18, 2003) (unpublished). Antitrust plaintiffs offers James Shaffer as expert in relevant product market. District court excludes testimony and awards summary judgment to defendants. Exclusion affirmed. Witness is unqualified to opine on relevant product or geographic markets. Witness has MBA and significant executive experience in relevant industry, but subscribes to no economics journals, can identify no economics journals, has published no economics-related articles, is unfamiliar with basic terms employed by economists in antitrust analysis, has never conducted any relevant market analysis, and has read only materials provided to him by counsel.
TFWS, Inc. v. Schaefer, 325 F.3d 234 (4th Cir. 2003). Maryland liquor regulations prescribe post-and-hold pricing system, in which wholesalers must post prices with state comptroller each month and adhere to those prices until next posting. This violates Sherman Act, but state may have defense based on its 21st Amendment interest in promoting temperance. To show it does, state offers testimony from various experts including economist David T. Levy, who testifies re empirical investigation showing Maryland's liquor prices to be higher than prices in other states. District court rejects motion to exclude Dr. Levy's testimony and awards summary judgment to state. Admissibility affirmed. Liquor company does not allege that Dr. Levy's analysis fails to comport with Daubert factors, but rather argues that his calculations do not support his conclusion. This is not true Daubert challenge, but rather goes to weight. However, 21st Amendment defense involved factual questions that district court could not resolve on summary judgment.
Bell v. Ascendant Solutions, Inc., 422 F.3d 307 (5th Cir. 2005). To oppose class certification in securities case, defendants argue that reliance will present individual issues, because plaintiffs cannot rely on "fraud on the market" theory, since stock did not trade in efficient market. Plaintiffs respond with expert report opining that market for stock was in fact efficient. District court excludes plaintiffs' expert testimony on market efficiency as unreliable, finds insufficient alternative evidence to support market efficiency, and denies class certification. Plaintiffs take interlocutory appeal from adverse decision on class certification pursuant to Fed. R. Civ. P. 23(f). Affirmed. District court's order excluding plaintiffs' expert testimony does not fall within scope of interlocutory appellate jurisdiction under Rule 23(f), and district court did not abuse discretion in finding other evidence of market efficiency insufficient. [See our commentary.]
El Aguila Food Prods., Inc. v. Gruma Corp., No. 04-20125 (5th Cir. May 17, 2005) (unpublished). At trial of antitrust claim involving tortilla market, plaintiffs offer testimony on damages from expert Kenneth McCoin and on causation and antitrust injury from expert Gregory Gundlach. Trial court excludes testimony from both, dismisses jury, and awards judgment to defendants. Exclusions affirmed. McCoin's damage model simply assumed without support that plaintiffs' firms would have earned average industry profit margin, without tying lost profits to specific conduct of defendants. Gundlach's opinions were permissibly excluded as abstract propositions not sufficiently grounded in facts of case.
Brennan's, Inc. v. Dickie Brennan & Co., Inc., 376 F.3d 356 (5th Cir. 2004). Operators of restaurant sue for breach of contract and trademark infringement when other family members open competing restaurants under same family name. To show lost profits, plaintiffs offer expert report from William Legier, who computes plaintiffs' historical patronage as percentage of convention center attendance and compares actual versus projected market shares. Defense expert files responsive report suggesting that Legier did not employ correct convention data. Legier files supplemental report relying on data suggested by defense expert. Defendants seek to exclude supplemental report as unreliable and on other procedural grounds, but district court admits testimony and jury awards damages to plaintiffs. Admissibility affirmed. Defendants complain that supplemental report was unreliable because it estimated damages at just half the level suggested in expert's original report, but this change was attributable to application of expert's same methodology to adjusted data. No abuse of discretion.
Dresser-Rand Co. v. Virtual Automation, Inc., 361 F.3d 831 (5th Cir. 2004). In trade secrets case, plaintiff claims two elements of damage: development costs and lost profits. On latter front, plaintiff offers expert testimony from industry expert Dr. Meherwan Boyce and accountant Thomas Jollay, who estimate lost profits at $25 million. District court admits testimony over defendants' objection. Jury finds for plaintiff and awards $2.2 million. Affirmed. Even if district court erred in refusing to exclude testimony under Daubert, error would be harmless, because size of verdict indicates that jury rejected plaintiff's entire lost profits claim and awarded only development costs.
Dijo, Inc. v. Hilton Hotels Corp., 351 F.3d 679 (5th Cir. 2003). Casino interests back out of hotel deal with real estate developers. Developers sue for breach. At trial, developers offer lay opinion testimony from Kerry Skinner, who served as their contact with their construction lender, that developers have suffered $8 million in lost profits. Jury awards that amount. Admissibility reversed. It is true that lay opinion on lost profits is sometimes permitted, when offered by present or former officers or employees. But despite her experience and advanced degrees, this witness was neither of those things, nor was she otherwise sufficiently acquainted with company's affairs to ground any lay opinion on lost profits. Remanded for new trial on damages.
United States v. Rubio, 321 F.3d 517 (5th Cir. 2003). Persons arrested for DWI and other offenses in Webb County, Texas, are encouraged to contact local bail bondsman, who has connections and can arrange for lenient treatment in exchange for cash. In Hobbs Act prosecution, government offers testimony from economist [?] Dr. Robert Voz to show effects of lax DWI enforcement. Admissibility affirmed. Expert boasts extensive experience researching effects of DWI enforcement on law enforcement, drivers, and public in general. Defendants complain that Dr. Voz improperly relied on nationwide studies without specifically investigating whether their findings held true in Texas. But expert testified generally that weak enforcement is associated with increased DWI rates, resulting in more alcohol-related crashes, less safety, and less travel. That testimony was relevant to element of crime (effect on interstate commerce), and defendants vigorously cross-examined. No abuse of discretion.
Mathis v. Exxon Corp., 302 F.3d 448 (5th Cir. 2002). Exxon franchisees claim Exxon overcharges them for gasoline under franchise agreement. Franchisees rely in part on economist Barry Pulliam, who opines that Exxon's charges are at least four cents per gallon higher than what could be considered commercially reasonable. District court denies Exxon's motion to strike, and Exxon does not renew objection at trial. Jury returns verdict for franchisees. Admissibility affirmed. Exxon did not waive appeal of pretrial evidentiary ruling by failure to renew objection at trial, such renewal being unnecessary under Fed. R. Evid. 103(a), as amended in 2000, when the district court has made definitive pretrial rulings on motions to strike. But expert was qualified and his opinions were admissible. Exxon says expert's methods were unsophisticated, and that he should have conducted "competitive impact analysis" for each station to show that Exxon's price caused it to lose business. But purpose of expert's testimony was not to isolate precise economic effect for each station, but rather to show that Exxon had set commercially unreasonable price. Daubert analysis should not supplant trial on merits, and any defects in experts' methods could be addressed through cross-examination.
Seatrax, Inc. v. Sonbeck Int'l, Inc., 200 F.3d 358 (5th Cir. 2000). In lawsuit claiming infringement of plaintiff's trademark and misappropriation of trade secrets involving plaintiff's offshore marine cranes, plaintiff offers expert with fifteen years' experience in marine crane industry to opine on defendant's profits. Exclusion affirmed. Putative expert had no formal training in accounting and conducted no independent examination of defendant's gross sales figures, which were supplied to expert by plaintiff's counsel.
Tharo Sys., Inc. v. Produkttechnik GmbH & Co., Kg, No. 05-3876 (6th Cir. Aug. 24, 2006) (unpublished). In dispute over breach of commercial contract, district court overrules defendant's Daubert objection to testimony from plaintiff's damages expert, accountant Robert Brlas. Jury finds for plaintiff and defendant appeals. Admissibility affirmed. Defendant says Brlas was unqualified because record did not establish his familiarity with German accounting principles, but nothing in record contradicts Brlas's testimony that there are no material differences between German accounting rules and those prevalent in United States. Nor did district court err in rejecting defendant's various reliability arguments.
Killian v. Yorozu Auto. Tenn., Inc., 454 F.3d 549 (6th Cir. 2006). To show damages, plaintiff in action under Family and Medical Leave Act calls hairdresser, who testifies as lay witness about potential earnings of area cosmetologists. Trial court finds for plaintiff in bench trial. Admissibility affirmed. Defendant complains that hairdresser's testimony should have been subject to scrutiny as expert, because she employed specialized knowledge. But in fact she testified based on her own knowledge and perceptions. Even if it had been error to admit her testimony as lay opinion, it would have been harmless error in this bench trial, where judge used her testimony to reduce plaintiff's award.
Stone Transport, Inc. v. Volvo Trucks N. Am., Inc., No. 03-1886 (6th Cir. Apr. 18, 2005) (unpublished). Trucking company buys numerous trucks from Volvo. Trucks require frequent repairs under their warranties because of defective parts, and Volvo takes unreasonably long time to effect repairs. Trucking company sues for consequential damages and, alternatively, for loss of business value, offering expert evidence in support of latter damage measure. District court denies motion to exclude expert's testimony. Jury awards damages under both theories. Court reduces award by amount of award for lost business value, to prevent double recovery, and denies Volvo's post-trial motion for JMOL. Volvo appeals. Admissibility reversed. It was plain error to admit expert testimony that district court itself said was so methodologically flawed as to enjoy "no basis whatsoever." But error was harmless because it went only to issue of lost business value, and record supported jury's award of consequential damages.
Ellis v. Gallatin Steel Co., 390 F.3d 461 (6th Cir. 2004). Plaintiffs bring nuisance claim after fugitive dust from steel mill migrates to their property. To prove damages, plaintiffs offer testimony from expert Roger Meade. Trial court admits testimony and awards damages. Defendants appeal. Admissibility affirmed. Defendants complain that trial court did not apply Daubert factors in evaluating testimony. But district courts do not err in omitting to mention Daubert factors that are not pertinent to specific testimony at issue. Accurate assessment of local real estate market does not require peer review or extensive scholarly writing. Defendants also note that expert applied wrong measure of damages (diminution in market value) before later applying correct one (diminution in value of use of property). But district court awarded damages based on correct measure, and any flaw associated with expert's vacillation on damage measure was addressed through weight assigned by trial court to expert's testimony. Finally, defendants protest that expert failed to consider alternative sources of dust. But expert's testimony need not eliminate all other potential causes of injury to be admissible on causation.
JGR, Inc. v. Thomasville Furniture Indus., Inc., 370 F.3d 519 (6th Cir. 2004). Plaintiff in action for breach of contract offers testimony on lost profits and loss of business value from CPA James Gornik. District court admits testimony as lay opinion and jury awards damages. Admissibility reversed. Courts have permitted owners and officers of businesses to offer lay opinion on damages, based on their familiarity with enterprise. But plaintiff's witness was neither owner nor officer, and his testimony therefore should have been evaluated for admissibility as expert opinion under Fed. R. Evid. 702. Remanded for new trial on damages.
Regal Cinemas, Inc. v. W & M Props., No. 02-3450 (6th Cir. Jan. 27, 2004) (unpublished). In trial of Regal Cinema's fraud action against shopping center developers, Regal presents testimony on lost profits from damage experts Robert Greenwald and James Barwick. District court admits testimony and jury finds for Regal. Admissibility affirmed. Defendants complain that experts incorrectly accounted for effects of theater size and stadium-style seating on revenues, and also that Greenwald had no specific experience with movie theaters. But Greenwald is CPA who has testified in fifty court cases, and defendants' other arguments amount to methodological quibbles, which were fully explored before jury. No abuse of discretion.
United States v. Tarwater, 308 F.3d 494 (6th Cir. 2002). Accountant is convicted of making false statements to IRS after prosecution offers testimony from IRS agent Mary Barton that accountant underreported his income. Admissibility affirmed. District court did not abdicate its gatekeeping function, as appellant contends, but expressly and correctly found that agent applied reliable principles of bookkeeping and accounting.
Avery Dennison Corp. v. Four Pillars Enter. Co., No. 00-4020 (6th Cir. Sept. 3, 2002) (unpublished). Avery sues Four Pillars for stealing its formulas for label adhesive and modifying them for use in Four Pillars' own products. At trial, Avery offers putative lay opinion testimony from its own employee, based on "things he knows from his experience and work," re codes used by Avery to protect formulas, Four Pillars' decipherment of those codes, and cost of developing new adhesive. Avery also offers opinion of economist John Neels re Avery's damages. Jury returns verdict for Avery. Admissibility affirmed. Employee's testimony was given prior to amendment of Fed. R. Evid. 701 in 2000 to prohibit lay opinion testimony embodying scientific or other specialized knowledge subject to Fed. R. Evid. 702. Even assuming that sophisticated lay opinion testimony like employee's did fall subject to Daubert's requirements before amendment to Rule 701 took effect, employee's testimony passes muster. Four Pillars says employee's cost figures were "estimated" rather than "proven," but this is not grounds for challenge under Daubert. Employee employed reliable methods, and Four Pillars raises no real challenge to these. As for economist, Four Pillars says his calculations were unreliable because premised on several questionable factual assumptions: i.e., that Four Pillars did misappropriate Avery's trade secrets, used them, and thereby reduced costs. But these are not scientific facts whose validity could be assessed under Daubert, but rather central factual questions on liability that were properly presented to jury. District court did not err in concluding that economist's assumptions did enjoy factual support.
Busch v. Dyno Nobel, Inc., No. 00-1808 (6th Cir. July 18, 2002) (unpublished). In business dispute arising from failed joint venture, district court rejects testimony from plaintiffs' damages expert, Fredrich Pertner, on value of plaintiffs' business and amount of lost profits. Exclusion reversed. District court merely recited standard for admissibility under Daubert and ruled in conclusory fashion, after ten minutes of oral argument, that expert's testimony was wanting in reliability. District court's ruling was wholly lacking in analysis of testimony. This, together with district court's refusal to entertain plaintiffs' motion for rehearing or to consider plaintiffs' supplemental affidavit rebutting defendants' criticisms, constituted abuse of discretion.
Conwood Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768 (6th Cir. 2002), cert. denied, 537 U.S. 1148 (2003). In antitrust action alleging monopolization of moist snuff market, Dr. Richard Leftwich opines for plaintiff re damages. Jury returns verdict for plaintiff. Admissibility affirmed. Expert used regression analysis to test hypothesis that plaintiffs' growth was most suppressed in states where it had only small market share when defendants began their anticompetitive practices. Regression analysis is accepted technique in antitrust damage analysis. Defendants say expert did not account for alternative causes, but expert did rule out other causes for which data were available, including all potential causes raised by defendants' expert.
Gross v. Comm'r, 272 F.3d 333 (6th Cir. 2001), cert. denied, 537 U.S. 827 (2002). Taxpayers challenge IRS valuation of gifts of stock in closely held subchapter S corporation. At trial in U.S. Tax Court, experts for both sides agree on use of discounted future cash flow method, but disagree on how to factor in taxes, inasmuch as subchapter S corporations pay no federal income tax themselves, their income being passed through to shareholders. Taxpayer experts favor "tax affecting" using assumed tax rate of 40%, arguing that this is required under Uniform Standards of Professional Appraisal Practice (USPAP). IRS expert uses assumed tax rate of 0%, effectively not "tax affecting" at all. IRS expert also concludes, based on challenged methodologies, that appraisal should apply "lack of marketability" discount of no more than 25%. Trial court denies taxpayers' motion in limine. Admissibility affirmed. Taxpayers argue that "tax affecting" was generally accepted method as of date of gift in 1992, but record shows growing dispute in 1992 over validity of "tax affecting" for closely held corporations, and taxpayers' expert conceded that if valuing stock today, he would have to give further consideration to whether to tax affect at all. Taxpayers' attack re "tax affecting" is more on correctness of IRS expert's valuation than on reliability of IRS expert's methodology. As for marketability discount, taxpayers complain that IRS appraiser's empirical sample improperly included transactions occurring after gift, but those transactions occurred within one year of gift and could have been anticipated at time of gift. Also, when IRS expert ran same analysis without post-gift transactions in his sample, he arrived at even smaller marketability discount.
Official Unsecured Creditors Comm. of Valley-Vulcan Mold Co. v. Ampco-Pittsburgh Corp. (In re Valley-Vulcan Mold Co.), No. 99-4129 (6th Cir. Feb. 26, 2001) (unpublished). Creditors committee alleges fraudulent conveyance in adversary bankruptcy proceeding. Bankruptcy court finds for defendants, relying in part on testimony from defendants' solvency expert. Admissibility affirmed. Creditors argue that field of solvency expertise is not widely accepted, but: (a) bankruptcy court expressed need for expert assistance; (b) courts have wide discretion to admit expert testimony under Daubert; (c) expert's qualifications were well-established; and (d) expert's valuations were based on well-recognized methodology for determining going-concern values (discounted cash-flow valuation).
United States v. Ahee, No. 99-1991 (6th Cir. Feb. 15, 2001) (unpublished). Chiropractor convicted of filing false tax returns argues that testimony from two IRS witnesses, including one CPA, should have been excluded under Daubert. Admissibility affirmed. Witnesses never offered expert testimony in first place, and suitable foundation was laid for their opinion testimony.
Summers v. State Street Bank & Trust Co., 453 F.3d 404 (7th Cir. 2006) (see the briefs). In investor class action against United Airlines' ESOP, plaintiffs offer expert testimony from experienced trust officer, Lucian Morrison, who opines that ESOP should have foreseen that UAL's stock would plummet and should have sold the stock before it did. District court excludes testimony because Morrison holds no economics degree, and awards summary judgment to defendants. Exclusion reversed. Witness's experience as trust officer was sufficient to render him qualified. But error was harmless, because trusts have no general duty to outsmart market.
Kempner Mobile Elecs., Inc. v. Southwestern Bell Mobile Sys., 428 F.3d 706 (7th Cir. 2005) (see the briefs). Kempner enters into agreement with Southwestern Bell (d/b/a "Cingular") to market Cingular's products. When deal goes south, Kempner sues for breach of contract, fraud (Kempner turned down lucrative deal with Nextel in reliance on Cingular's representations that Kempner would receive same equipment and service pricing as was available through Cingular's internal channels), and tortious interference (Cingular wrongfully contacted Kempner's customers). District court bifurcates trial on issues of liability and damages. In liability trial #1, jury returns verdict against Cingular on all claims, but district court grants new trial to Cingular on liability for tortious interference. In preparation for damages phase, district court grants Cingular's motion to exclude Kempner's expert evidence on fraud damages, because expert's evidence on damages fails to match theory of fraud liability on which Kempner prevailed at trial. In liability trial #2 on tortious interference, jury again finds for Kempner. Parties stipulate to actual damages, eliminating need for further proceedings on damages pending appeal. Exclusion affirmed. Kempner's expert failed to segregate (a) profits that Kempner would have earned by selling for Nextel from (b) profits gained by sale of Cingular products. Based on this fundamental disconnect between Kempner's theory of fraud liability and its damages evidence, district court properly concluded that expert's testimony would not assist trier of fact. District court meanwhile erred in not granting JMOL to Cingular on Kempner's tortious interference claim.
Zenith Elecs. Corp. v. WH-TV Broad. Corp., 395 F.3d 416 (7th Cir.) (see the briefs), cert. denied, 125 S. Ct. 2978 (2005). Puerto Rico digital television broadcaster contracts to purchase set-top boxes from Zenith. Boxes supplied by Zenith do not meet digital video broadcast (DVB) standards prevalent at time of sale. Broadcaster sues Zenith, claiming its subscription base would have expanded dramatically but for problems caused by deficiencies in boxes. In support, broadcaster offers testimony from industry expert Peter Shapiro. District court excludes testimony as unreliable and awards summary judgment against broadcaster for want of proof of damages. Exclusion affirmed. Expert did not base his estimates on data from comparable markets, insisting that Puerto Rico was unique. Asked what methods he used to project broadcaster's potential subscriber base, he fell back to reliance on his general expertise and his curriculum vitae, and his failure, e.g., to perform multivariate regression was left unexplained. His extrapolations were mere ipse dixit.
United States v. Pree, 384 F.3d 378 (7th Cir. 2004), amended, 408 F.3d 855 (7th Cir. 2005). IRS agent testifies as "summary witness" for prosecution in tax evasion case. Jury convicts. Admissibility affirmed. Defendant did not object at trial, and so review is for plain error. If summary witness merely testifies to what government's evidence shows, he need not be qualified as expert. Defendant complains, however, that IRS agent went further and offered expert opinion when he testified that defendant had zero basis in her stock. But his qualifications to do so were in evidence: 18 years of experience as IRS agent, bachelor's degree in accounting, and master's degree in taxation. No plain error.
Cullen v. Ind. Univ. Bd. of Trs., 338 F.3d 693 (7th Cir. 2003) (see the briefs). To support her claim of salary discrimination, faculty member offers regression analysis performed by economics professor Paul Carlin, in which Carlin finds statistically significant gender differences, and also finds that faculty member's salary is more than one standard deviation below its predicted value. Carlin testifies he cannot rule out discrimination as the reason. University contends that faculty member's lower salary is explained by nondiscriminatory factors. District court admits regression study but awards summary judgment to university. Admissibility affirmed. University says that Carlin's regression study is inadmissible under Daubert, because factors like productivity are difficult to quantify. But under Bazemore v. Friday, 478 U.S. 385 (1986), omission of particular variables in regression analysis ordinarily goes to weight, not admissibility. However, regression study was insufficient to establish prima facie case.
Zelinski v. Columbia 300, Inc., 335 F.3d 633 (7th Cir. 2003). Defendant sells bowling balls under plaintiff's federally registered mark. At trial, plaintiff's damages expert, J. Timothy Cromley, offers estimates for lost royalties and cost of advertising campaign to rehabilitate mark. Jury returns verdict for plaintiff. Admissibility affirmed. Defendant complains that Cromley's projected costs for rehabilitative advertising do not vary as function of magnitude of infringement. But number of infringing bowling balls affects only reasonableness of corrective ad campaign, not cost of running ads, and proposed campaign was reasonable where defendant sold roughly 3000 balls. Defendant also faults computations by which Cromley purported to show that rehabilitating mark would be less expensive than adopting new one, but Cromley explained his methodology, and defendant presented no evidence suggesting that experts would normally use some different technique. Finally, defendant contests Cromley's royalty calculations, but defendant did not raise that issue in district court, and assumptions in Cromley's royalty calculations were defensible.
Tuf Racing Prods., Inc. v. Am. Suzuki Motor Corp., 223 F.3d 585 (7th Cir. 2000). Plaintiff in franchise termination suit offers CPA to estimate damages. Admissibility affirmed. Defendant complains that CPA held no degree in economics, statistics, mathematics, or any other academic field that would qualify him to perform damage calculations. But idea that Daubert requires some particular form of credentials for expert witnesses is radically unsound. Rules of evidence do not require that experts have particular academic training or opine on questions of "science." Anyone with relevant expertise may be qualified, and Daubert holds only that if expert testifies on scientific questions, expert's testimony must be based on real science, not junk science. This expert was not doing science, he was doing accounting. Based on financial information furnished by plaintiff and assumptions supplied by counsel, he calculated discounted present value of lost future earnings. Accountants are qualified to do that.
Lang v. Kohl's Food Stores, Inc., 217 F.3d 919 (7th Cir. 2000), cert. denied, 531 U.S. 1076 (2001). Kohl's pays personnel in its produce departments more than employees in its bakery and deli departments. Employees in produce are mostly men; in bakery and deli departments, mostly women. If jobs involve substantially equal tasks, performed under similar conditions, then this pay disparity might violate federal Equal Pay Act. Class representatives offer testimony from Ph.D. in labor relations and economics, Dr. Howard Risher, who opines that jobs in all three departments are essentially identical. District court excludes testimony as unhelpful to trier of fact. Via special interrogatory on "equal jobs" question, jury returns verdict for Kohl's. Exclusion affirmed. Dr. Risher's report, which runs to only three pages, merely lists employees' duties and advances unreasoned assertion that listed duties are virtually identical. District court could properly find that this conclusory characterization would not assist jury. In supplemental report, Dr. Risher also offers analysis based on "focus group" of female workers, but merely parroting class members' own opinions involves no exercise of expertise. Supplemental report also says Dr. Risher analyzed jobs under Willis job evaluation system, but does not explain what that system is or how it was applied.
Matthew Headley Holdings, LLC v. McCleary, Inc., No. 05-2122 (8th Cir. May 19, 2006). Distributor and snack food company enter into exclusive distributorship agreement for three-state territory including Missouri. After distributor fails to take steps to enter St. Louis market, snack food company sues for breach. To show lost profits, it relies on testimony from CPA Ed Crumm. Jury finds for snack food company. Admissibility affirmed. Distributor raises numerous objections, all focusing on factual assumptions woven into expert's damage estimate. But witness, who boasted 27 years' experience as CPA, did not proceed based on mere conjecture. He offered grounds for his assumptions, and his need to make any assumptions at all arose largely from distributor's breach. Alleged flaws in factual underpinnings of expert testimony generally go to weight, not admissibility. No abuse of discretion.
Neb. Plastics, Inc. v. Holland Colors Ams., Inc., 408 F.3d 410 (8th Cir. 2005). Supplier sells pigment to manufacturer of colored PVC fencing. Color fades when fencing is exposed to elements, causing pigment to fade. Manufacturer is therefore forced to honor numerous consumer warranty claims. In manufacturer's suit against supplier, it offers expert testimony on future damages from William Cheese. Trial court excludes testimony. Exclusion affirmed. Expert assumed that 100% of pigmented fencing already sold would be subject to consumer warranty claims, but that assumption was unsupported. Indeed, at time district court excluded testimony, warranty claims had been filed on only 3.5% of fencing manufactured with defective pigment. District court permissibly found, on this basis, that expert's testimony failed Daubert's "fit" requirement.
Storage Tech. Corp. v. Cisco Sys., Inc., 395 F.3d 921 (8th Cir. 2005). Prior to its acquisition by Cisco Systems for $450 million, NuSpeed hires away key Storage Tech personnel to develop NuSpeed's internet data storage product. Storage Tech sues NuSpeed's successor, Cisco, seeking damages for unjust enrichment. District court excludes testimony from Storage Tech's damages expert, George Norton, and awards summary judgment to Cisco. Exclusion affirmed. Principal problem with Norton's testimony was that he imputed entire value of NuSpeed, as measured by its acquisition price, to trade secrets and know-how allegedly misappropriated from Storage Tech, even though NuSpeed had other assets.
Wash Solutions, Inc. v. PDQ Mfg., Inc., 395 F.3d 888 (8th Cir. 2005). Wash Solutions (WSI) is exclusive regional distributor for PDQ car washes until PDQ prematurely terminates WSI's distributorship agreement. WSI sues PDQ. To prove damages, WSI relies on accounting expert Scott Stringer, who calculates profits WSI would have earned based on scheduled future sales to existing customers. Trial court admits testimony and jury awards damages to WSI. Admissibility affirmed. PDQ faults Stringer's failure to address WSI's historical sales performance and his unfamiliarity with car wash industry. But given WSI's theory of recovery, it was unnecessary for expert to address those issues. Stringer made no attempt to project future sales to unknown customers. He merely calculated profitability of purchases already planned by existing customers. Record contains ample evidence that Stringer was qualified to perform such calculations based on his expertise in accounting and financial reporting.
Craftsmen Limousine, Inc. v. Ford Motor Co., 360 F.3d 865 (8th Cir. 2004). Craftsmen alleges that Ford conspired with others to prevent Craftsmen from advertising in limousine industry trade publications and from attending trade shows, in violation of section 1 of Sherman Act. To show damages, Craftsmen offers opinion from accountant David Cole, who relies on tax returns and financial statements to calculate that Craftsmen enjoyed average growth rate of 62% during pre-conspiracy period spanning 1991-1994. Cole then compares Craftsmen's actual versus projected sales for post-conspiracy period spanning 1995-1998, sets off operating expenses, and calculates lost profits for 1995-1998 at $2.1 million. District court admits testimony, and jury awards $2.1 million in pre-trebling damages. Admissibility reversed. Expert simply assumed that Craftsmen's entire lost growth from 1995-1998 was attributable to conspiracy, without addressing other possible factors, such as emergence of direct competitors during that period. Rule of reason required that expert consider such other factors to arrive at opinion that would "incorporate all aspects of the economic reality." Revised opinion addressing such issues could be admissible at new trial on remand.
Children's Broad. Corp. v. Walt Disney Co., 357 F.3d 860 (8th Cir. 2004). District court conducts damages trial in trade secret misappropriation case following remand in Children's Broad. Corp. v. Walt Disney Co., 245 F.3d 1008 (8th Cir. 2001). Children's Broadcasting offers damages expert Dr. Jonathan Putnam, who gives damage estimates for three different "acceleration intervals" -- i.e., intervals by which defendants' misappropriation may have accelerated defendants' entry into children's radio market. Dr. Putnam also testifies that actual length of acceleration interval would depend on how long it would have taken defendants to create misappropriated information themselves. Jury awards damages. Admissibility affirmed. Dr. Putnam has suitable credentials for valuing trade secrets and employed academically accepted methods. Defendants' arguments concerning factual bases of Dr. Putnam's opinions went to weight, not admissibility. No abuse of discretion.
United States v. Cuervo, 354 F.3d 969 (8th Cir.), cert. denied, 543 U.S. 865 (2004). In narcotics conspiracy trial, prosecution offers ATF auditor Brad Richards to opine that defendant's wealth is disproportionate to his reported income, because defendant's investments for period from 1992 through 1998 totaled $2.9 million, whereas his available income for same period totaled only $262,200. Admissibility affirmed. Defendant argues auditor should have followed "net worth method" applicable in tax prosecutions under Holland v. United States, 348 U.S. 121 (1954). But Holland need not be followed in non-tax cases. Unlike tax prosecutions, narcotics conspiracy charges do not involve financial gain as necessary element of offense, and so less stringent standards are permissible.
Archer Daniels Midland Co. v. Aon Risk Servs., Inc., 356 F.3d 850 (8th Cir. 2004). ADM sustains business losses because flooding disrupts its corn supply. It cannot recoup losses via contingent business interruption or extra-expense insurance because its insurance broker failed to secure coverage. At trial of ADM's claims against broker, ADM offers testimony from Dr. Bruce Scherr, damages expert, who says flood caused corn prices to increase by about 25 cents per bushel, causing ADM to incur $113 million in additional expense. Jury finds for ADM. Admissibility affirmed. Broker complains that expert failed to take hedging into account, but testimony was relevant, and district court did not err in finding it sufficiently reliable to go to jury.
Group Health Plan, Inc. v. Philip Morris USA, Inc., 344 F.3d 753 (8th Cir. 2003). Cigarette companies conspire to mislead public re health risks of smoking. HMOs sue under Minnesota consumer fraud statutes to recoup members' health care costs stemming from defendants' misrepresentations. To show nexus between defendants' conduct and their damages, HMOs offer testimony from physician and economics professor Dr. Jeffrey Harris, who posits "counterfactual" world in which conspiracy does not retard development of safer cigarettes, and in which fewer people smoke because consumers are not misled. He computes damages by comparing actual incidence of health problems versus incidence to be expected in "counterfactual" world. District court excludes testimony as speculative and awards summary judgment to tobacco companies. Exclusion affirmed. Some speculation is inevitable in expert testimony, and admissibility of Dr. Harris's testimony may be closer question than district court believed, but some of Dr. Harris's conclusions represent "inspired guesses" at best, and district court did not abuse discretion in excluding testimony. Moreover, Dr. Harris's damage computation was based partly on cigarette companies' failure to introduce low-tar and low-nicotine cigarettes sooner, whereas HMOs theory of case was that marketing of low-tar-and-nicotine cigarettes actually formed part of conspiracy, and so Dr. Harris's testimony does not "fit" facts of HMOs' case.
Eckelkamp v. Beste, 315 F.3d 863 (8th Cir. 2002). Employees sue company's employee stock ownership plan (ESOP) and certain of its officers under ERISA, alleging breach of fiduciary duty. On defendants' motion for summary judgment, plaintiffs' appraisal expert, Daniel Callanan of ComStock Valuation Advisors, testifies that officers overcompensated themselves, and that annual appraisals consistently undervalued company. District court discounts testimony and awards summary judgment. Exclusion affirmed. District court did not explicitly discuss Daubert but did assess expert's methodology and find it wanting. Expert's overcompensation analysis did not work from truly comparable enterprises, involved no employee interviews, and skimped on other research. Expert's valuation analysis included questionable control premium and other arguable methodological flaws. Plaintiffs have counterarguments, but record does not reflect that district court abused its discretion.
Hartley v. Dillard's, Inc., 310 F.3d 1054 (8th Cir. 2002). Dillard's fires 64-year-old store manager and replaces him with 32-year-old. Dillard's says manager's termination resulted from store's poor sales and profitability, but terminated manager alleges age discrimination. At trial, manager offers economist, Dr. Charles Venus, to testify that mall and retail stores were suffering similar difficulties nationwide during relevant period. District court admits testimony over Dillard's objection, and jury awards verdict to plaintiff. Admissibility affirmed. Dillard's says that factual materials on which economist relied fail to support his testimony, and also complains that economist did not analyze factors bearing on profitability at this specific store. But generally, factual basis of expert testimony goes to weight, not admissibility. Exclusion is required only if expert testimony is so fundamentally unsupported as to offer no assistance to jury. This economist has performed similar analyses for fifteen years, and his testimony on nationwide profitability trends could assist jury in evaluating motives for manager's termination notwithstanding economist's failure to focus on specific store. District court did not abuse its discretion in admitting his testimony.
Children's Broad. Corp. v. Walt Disney Co., 245 F.3d 1008 (8th Cir. 2001). ABC Radio agrees to conduct advertising sales, affiliate development, and consulting for Children's Broadcasting, but exercises its right to terminate after Disney acquires ABC and wants to launch its own children's radio venture. Children's brings claims against Disney and ABC for fraud, breach of contract, breach of fiduciary duties, and misappropriation of trade secrets. Jury awards $20 million to Children's, finding breach of contract by defendants as to advertising sales and confidentiality and misappropriation of trade secrets as to Children's advertiser lists, advertising rates, and programming methods. Trial court awards judgment as matter of law and conditional new trial to defendants for want of sufficient evidence on causation and damages, because testimony from Children's accountant expert Stephen Willis should have been excluded and (at least as to damages) tainted jury's findings. As to causation, Willis's testimony: (a) was mere speculation; (b) lacked any credible supporting analysis; (c) was based on no facts; (d) afforded no evidence that any particular breach or misappropriation directly caused any specific damage; and (e) failed to address other factors that could also have limited Children's profitability. As to damages, Willis's $177 million estimate was based on unreliable financial projections that assumed long-term relationship between ABC and Children's and failed to reckon with impact of Disney's competition. Judgment reversed and cause remanded for new trial on damages (but "exclusion" affirmed). Judgment for defendants as matter of law was unwarranted. As to causation, Willis testified [competently, even though Willis's "theory of causation was questionable"?] that ABC's failure to exercise reasonable efforts in advertising sales led to decline in Children's revenues. Other witnesses also testified to causation, and internal ABC documents likewise supported it. Viewing entire record in light most favorable to Children's, jury could reasonably find causation. As to damages, Willis admitted that adjustment of his $177 million estimate would be necessary if other reasons for decline in Children's revenue were in play. Ample additional evidence was also probative of damages. Jury's award need not precisely match estimates in evidence if award is within parameters established by evidence. As for new trial, as to damages, Willis used uncontroversial accounting methods (discounted cash flow), but failed to take non-wrongful Disney competition into account. Willis also testified that any breach of contract, any use of confidential information, and any misappropriation of trade secrets would have caused exactly the same damages. Children's argues that Daubert sanctions only evaluation of experts' methods, not their conclusions, but Joiner teaches that methods must be linked to conclusions by stronger ties than expert's mere ipse dixit. Willis's conclusions remained unaltered even though several claims had not survived. District court did not abuse discretion in concluding that Willis's testimony should have been excluded. Jury award of $20 million in damages for breach of contract terminable on 90 days' notice suggests jury gave weight to Willis's estimate, and new damage trial is therefore appropriate on theory that his $177 million estimate tainted first trial.
EFCO Corp. v. Symons Corp., 219 F.3d 734 (8th Cir. 2000). In trade secret misappropriation case, plaintiff's expert economist testifies to damages, extrapolating from sales and financial data provided by both parties. Admissibility affirmed. District court conducted two-day Daubert hearing and properly found expert qualified by virtue of Ph.D. in economics and extensive experience in forensic economics. Defense expert favored different theory from plaintiff's, but plaintiff's expert's methods were not so unreliable as to require exclusion, and district court did not abuse discretion in permitting testimony from both parties' experts to go to jury.
Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039 (8th Cir.), cert. denied, 531 U.S. 979 (2000). Twenty-four recreational boat manufacturers bring Sherman Act and Clayton Act claims against Brunswick, which manufacturers stern drive engines. Plaintiffs contend that Brunswick violated antitrust laws by offering market-share discounts and through program of acquisitions. Plaintiffs' economist relies on Cournot model of economic theory, which posits that firms maximize profits by taking observed output of other firms as given and equating their own marginal costs and marginal revenues on that assumption. Economist applies this model by positing hypothetical market in which Brunswick has one competitor and concluding that any market share by Brunswick exceeding 50% must result in overcharges stemming from anticompetitive conduct. Jury returns verdict for plaintiffs. Admissibility reversed. District court appears to have admitted economist's testimony based in part on plaintiffs' counsel's assurances that economist's model would differentiate effects of lawful competitive conduct from effects due to unlawful antitrust violations, but economist's model did not do so and furthermore departed from market realities. Economist failed to reckon, for example, with plaintiffs' purchase of Brunswick motors in excess of amounts required to obtain market-share discounts. It may be, as district court concluded, that Brunswick did not challenge theoretical basis of Cournot model itself, but Daubert objections may legitimately be founded on misapplication of accepted economic principles to facts of case. Moreover, even assuming admissibility of economist's testimony, plaintiffs established neither antitrust injury nor causation. Judgment as matter of law should be entered for Brunswick (citing Weisgram).
Steinberg Moorad & Dunn, Inc. v. Dunn, No. 03-55953 (9th Cir. Mar. 30, 2005) (unpublished). Party to lawsuit involving claims of unfair competition offers testimony from "Dr. Rausser" regarding damages. Admissibility affirmed. No abuse of discretion.
Dorn v. Burlington N. Santa Fe R.R., 397 F.3d 1183 (9th Cir. 2005). Train strikes truck at crossing, killing driver. Driver's widow files wrongful death and survivorship action against railroad. Widow offers testimony from economist Stan V. Smith, Ph.D., on general subject of hedonic damages. Railroad challenges his opinion as unreliable, but district court denies railroad's motion to exclude it. Railroad then attempts to offer testimony from its own economist, Thomas Ireland, Ph.D., that economists lack tools to determine value of human life. Widow objects that court has already determined Dr. Smith's testimony on that subject to be reliable. District court sustains objection to Dr. Ireland's testimony, and jury awards $6.7 million to widow. Exclusion reversed. Admissibility of testimony from widow's expert did not imply inadmissibility of contrary testimony from railroad's expert. Weighing experts' competing testimony on this point was for trier of fact. Because case is remanded for new trial on this and other grounds, admissibility of widow's expert economic testimony is not reached. However, railroad raises valid concern: Dr. Smith's methodology called for use of market-based figures to estimate hedonic damages, but his actual estimate also incorporated figures from government safety programs that did not reflect individuals' market valuations of their own safety or welfare.
United States v. Fox, No. 02-50022 (9th Cir. Jan. 6, 2005) (unpublished). Defendant is charged with securities fraud, mail fraud, and money laundering. Prosecution offers expert testimony from FBI accountant Steve Eidson, who reviews and analyzes financial records to trace funds. Defendant objects that accountant's testimony merely summarizes facts that jury could analyze for itself and therefore fails to satisfy Daubert's helpfulness-to-jury requirement. District court admits testimony and jury convicts. Admissibility affirmed. Funds flowed through twelve separate accounts, and expert analyzed 100 boxes of financial records. District court permissibly relied on testimony to make these complex transactions accessible to jury via expert's summary and analysis.
Cooper v. Travelers Indem. Co. of Ill., No. 03-15551 (9th Cir. Oct. 13, 2004) (unpublished). In bench trial of insurance claim, district court excludes testimony on lost profits from plaintiff's economist Robert Johnson and awards judgment to defendant insurer. Exclusion affirmed. Economist himself testified that in his ordinary practice he would verify client-supplied data but did not do so here.
Renfrew v. Toms, No. 02-17386 (9th Cir. Aug. 2, 2004) (unpublished). District court declines to entertain objectors' Daubert challenge to forensic economist who estimates company's stock value in settlement approval proceedings. Affirmed. Trial court was not required to entertain Daubert challenge, but only to hold hearing where objecting parties could air their views.
Porges ex rel. United States v. RQ Constr., Inc., No. 02-56168 (9th Cir. Oct. 29, 2003) (unpublished). In action alleging breach of contract for electrical work on Navy housing development, district court awards damages after hearing testimony from plaintiff's expert on lost profits during bench trial. Admissibility affirmed. Expert's testimony was not unreliable as matter of law, and district court was free, as trier of fact, to evaluate evidence as it saw fit.
CDM Mfg. v. Complete Sales Representation, Inc., No. 01-56138 (9th Cir. Oct. 29, 2002) (unpublished). Jury returns verdict for plaintiff in action for unpaid sales commissions after plaintiffs' expert testifies re damages. Admissibility affirmed. Plaintiff's expert was qualified, and used mathematical extrapolation, straight line linear progression, and averaging to arrive at his figures. Defendants attack none of these methodologies, and their objections go to weight, not reliability.
United States v. Rosales, No. 00-50272 (9th Cir. Apr. 12, 2001) (unpublished). On trial for filing false tax returns, defendant offers "tax expert" to testify that she was not required to report certain income on personal return. District court excludes testimony. Exclusion affirmed. Proposed testimony represented legal conclusion, and it is judge's role to instruct jury on law.
Robertson v. Commissioner of Internal Revenue, No. 99-71368 (9th Cir. Mar. 5, 2001) (unpublished). Tax court concludes that computer sale-leaseback was sham transaction and assesses penalties for negligence after finding testimony by taxpayer's expert [accountant?] unreliable and irrelevant. Exclusion affirmed. "The tax court in this case found that Appellants' expert testimony was not objective; it therefore did not abuse its discretion in deeming the testimony unreliable."
Champagne Metals v. Ken-Mac Metals, Inc., No. 04-6222 (10th Cir. Aug. 7, 2006). Aluminum is sold to end users through distributors known as "service centers" and also directly by aluminum mills. One service center, Champagne Metals, brings antitrust action against competing service centers, alleging that they have threatened to engage in concerted boycotts of any mills selling to Champagne. Champagne's competitors move for summary judgment. Champagne responds with affidavit from its economic expert, Dr. Donald Murry, who opines that competitors have substantial power in upstream market, based on their sales and market shares in downstream market. District court grants defendants' motion to exclude Murry's testimony as unreliable and awards summary judgment to defendants. Exclusion affirmed. Champagne argues it was legitimate for Murry to infer upstream market power from downstream market share, because "any given distributor will sell downstream what it purchased upstream." But this explanation constitutes mere argument from counsel. Murry himself offered no methodological justification for equating market power in upstream and downstream markets. In addition, Murry appears to have simply accepted as true certain self-serving factual characterizations offered by Champagne. District court did not abuse its discretion in excluding Murry's testimony on these grounds.
Procter & Gamble Co. v. Haugen, 427 F.3d 727 (10th Cir. 2005). Amway distributor Randy Haugen disseminates voice-mail message to thousands of other Amway distributors, falsely stating that president of Procter & Gamble ("P&G") recently appeared on television, proclaimed affiliation with Church of Satan, and announced that substantial portions of P&G's profits from 43 products go to support Church of Satan. Believing that its sales may have suffered among customers not wishing to provide Satan with financial succor, P&G brings Lanham Act claims against Haugen. To show lost sales, P&G retains Drs. Robert Hall and Harvey Rosen, who consult sales data downloaded by P&G from third-party source to prepare their analyses. P&G ultimately decides to limit its claims for lost profits to three products on which Dr. Rosen focuses in his report. Haugen, however, wants additional data on other products that P&G allegedly could have downloaded from third-party source, but which P&G says it did not in fact obtain. When P&G fails to produce data in discovery, Haugen moves for sanctions. District court dismisses P&G's claims on two grounds: (1) by way of sanction for P&G's alleged failure to preserve electronic data; and (2) because any damages testimony from P&G's experts would be inadmissible under Daubert if based on data for just three out of 43 supposedly Satan-subsidizing products. Exclusions reversed. Dismissal was not warranted as discovery sanction. Among other things, P&G says it does not have data sought by Haugen, and that acquiring it for Haugen would cost $30 million. Nor was dismissal justified on theory that P&G's expert testimony would be inadmissible under Daubert. District court afforded no warning to P&G that admissibility of its expert testimony was even at issue. Consequently, there was no briefing on any Daubert issues, and district court's ruling included no specific or detailed findings. In short, lower court's sua sponte, "off-the-cuff" ruling abused its discretion. Remanded for proceedings consistent.
Lifewise Master Funding v. Telebank, 374 F.3d 917 (10th Cir. 2004). Plaintiff in commercial dispute offers three consecutive damage models. District court strikes all three as unreliable. Plaintiff submits fourth and final model via its CEO Mark Livingston. In granting defendant's motion for summary judgment on damages, district court holds that fourth model is unduly speculative under New York law, unreliable and unhelpful to trier of fact, and unduly prejudicial, and that Livingston is unqualified to testify in support of it. Exclusion affirmed. Expert exhibited "utter lack of any familiarity, knowledge, or experience with damages analysis"; his methods were "misleading, not reliable, and unsupported by use in any other comparable setting" and did not fit facts of case; and his testimony would have confused jury rather than assisting it.
Lantec, Inc. v. Novell, Inc., 306 F.3d 1003 (10th Cir. 2002). Novell abandons software project with Lantec when Novell merges with WordPerfect. Lantec brings antitrust claim, alleging Novell and WordPerfect have conspired to monopolize worldwide market in relevant software. To establish existence of relevant market, Lantec offers trial testimony from economist, Dr. John C. Beyer. District court excludes testimony and awards judgment as matter of law to Novell. Exclusion affirmed. District court properly concluded that Dr. Beyer: (1) used unreliable data; (2) did not understand computers or computer markets; (3) invoked no consumer surveys to support his conclusions, despite testifying that relevant market was determined by consumer purchasing patterns; (4) did not calculate cross-elasticity of demand to identify substitute products; (5) changed his testimony from his earlier report; and (6) did not address changes in computer market. Particularly troubling is Dr. Beyer's attempt to spin handful of informal conversations with consultants from limited geographic area into rigorous evidence of worldwide product market.
Rogers v. United States, 281 F.3d 1108 (10th Cir. 2002). Individual purchases substantial interest in Kansas City Royals baseball team. Hounded by creditors, same individual later borrows $34 million from Royals via nonrecourse note secured by his interest in team. On repayment date, individual transfers his interest to team in lieu of foreclosure. Come tax time, team's owner deducts $34 million as bad debt, claiming collateral to be without value. IRS denies deduction, because it views repayment transaction as redemption of stock. IRS offers testimony from four experts, including Andrew Zimbalist, who appraised value of team as of date of loan. Owner moves to strike. District court denies motion to strike and awards summary judgment to IRS. Affirmed. Because transaction was sale, not loan, Mr. Zimbalist's testimony is irrelevant, and its reliability need not be reached. Were it to be reached, owner has not met burden of establishing that admitting testimony was abuse of discretion under Kumho Tire.
United States v. Caballero, 277 F.3d 1235 (10th Cir. 2002). In criminal fraud and conspiracy trial, INS financial analysts summarize defendants' financial records. Admissibility affirmed. Because witnesses did not give opinion testimony, they were not testifying as experts. They merely summarized defendants' financial records, as Fed. R. Evid. 1006 permits. Consequently, neither Daubert nor the expert discovery provisions of Fed. R. Crim. P. 16 were applicable.
Turck v. Baker Petrolite Corp., No. 00-5082 (10th Cir. May 31, 2001) (unpublished). To prove damages in wrongful retaliatory discharge claim, worker offers testimony from accountant, which district court admits over defendant's objection. Admissibility affirmed. Accountant was qualified because he held bachelor's degree in accounting, had worked as accountant since 1972, and had run his own accounting business since 1983. As for reliability, accountant used salary data supplied by plaintiff to project future lost wages with aid of computer program. District court did not abuse discretion in admitting testimony.
United States v. Sparks, No. 99-6387 (10th Cir. May 2, 2001) (unpublished). Defendants solicit deposits for "bank" and convert "deposits" to their own use. On trial for mail fraud and money laundering, defendants offer accountant to testify that "bank's" holding company had sufficient funds to cover deposits. Trial judge excludes further testimony from accountant because: (a) authenticity of documents on which accountant has relied is questioned and questionable; and (b) holding company's possession of funds is irrelevant to show solvency of "bank" absent legal obligation by holding company to back "bank's" deposits. Exclusion affirmed. Accountant could not establish authenticity of documents, which he received from defendants, nor was documents' authenticity reliably established by defendants' own testimony. And accountant himself testified that nothing in documents established any obligation by holding company to back or guarantee deposits in defendants' "bank."
United States v. Arney, 248 F.3d 984 (10th Cir. 2001). On trial for bank fraud, defendant offers testimony from Nelson Bonifeld, CPA and former IRS agent, re: (1) applicable accounting methods and IRS reporting requirements for farmers; and (2) unlikelihood that banks would place material reliance on falsified tax returns submitted by defendant. District court excludes testimony and defendant is convicted. Exclusion affirmed. Defendant argues that CPA's testimony on first point was relevant to fraudulent intent. Any such relevance is questionable, but in any event, district court permissibly excluded testimony as cumulative and likely to confuse jurors. Defendant had opportunity to testify re his intent, and CPA presumably did not have greater expertise on this subject than defendant himself. As for second point, district court permissibly excluded CPA's testimony because it found his expertise did not extend to knowledge of types of documents on which banks rely in extending credit.
Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138 (10th Cir. 2000). In dispute over gas lease for carbon dioxide production, lessors offer economist to testify on fair market value. Economist's theory is that market prices do not provide reliable indicator of value, because most carbon dioxide producers are vertically integrated and produce primarily for their own use, creating incentives to keep prices artificially low. Economist would instead compute fair market value by equating price in hypothetical competitive market with economic benefit derived by purchaser from use of carbon dioxide. District court holds hearing on motion in limine and permits economist to testify only based on actual sales data in West Texas. Exclusion affirmed. District court found that economist had developed his views for litigation, had not employed same methods on previous occasions to determine market value of carbon dioxide, and had not subjected his methods to peer review. District court also found that economist failed to take account of actual prices of carbon dioxide in West Texas and comparable markets. Although economists can and sometimes must estimate price by hypothetical means, courts prefer data from actual markets. Judged by this standard, district court did not err in concluding that economist strayed too far from actual data. Tenth Circuit might reach different conclusion from district court if addressing issue in first instance, but standard of review on Daubert issues is deferential.
Smith v. Ingersoll-Rand Co., 214 F.3d 1235 (10th Cir. 2000). Operator of construction equipment fails to notice coworker, whose leg is consequently crushed by machine and subsequently amputated. Should machine have had mirrors, which might have rendered injured worker visible to operator? Or would mirrors just foster undue operator complacency, thereby causing more accidents than they prevented? In product liability suit against machine's manufacturer, injured worker offers testimony on design defects from human factors engineer and from safety consultant, as well as nonquantitative testimony on hedonic damages from forensic economist. Jury returns verdict of $27 million in compensatory and punitive damages. Admissibility affirmed. Manufacturer objects that neither engineer nor safety consultant had firsthand experience with relevant machine, but such firsthand knowledge is not prerequisite to admissibility of expert testimony. This objection goes to weight. As for forensic economist, defendant succeeded in excluding economist's testimony on value of plaintiff's hedonic damages, and so economist testified only to commonsense qualitative proposition that value of life is not measured exclusively by individual's earning power. District court soundly exercised discretion in permitting this component of economist's testimony, so that jury would not overlook component of damages permitted under relevant law.
Questar Pipeline Co. v. Grynberg, 201 F.3d 1277 (10th Cir. 2000). In civil action arising from dispute over natural gas contracts, purchaser objects to trial testimony from seller's damages witness but only after testimony has concluded. District court initially overrules objection as untimely but issues post-trial ruling that testimony was methodologically unsound and should not have been presented to jury. Exclusion reversed. Purchaser waived objection by withholding objection until testimony was complete. Purchaser argues that district court could exclude evidence sua sponte, but Daubert does not abrogate requirement of timely objection, and district court's post-trial reconsideration prejudiced seller, which had no way to know during trial that it needed to present further evidence on issue. Moreover, purchaser points to no record material indicating that witness was even testifying as expert.
United States v. Hamaker, No. 03-12544 (11th Cir. July 14, 2006). At bank fraud trial, prosecution offers testimony re bank records from FBI financial analyst Norman "Pete" Odom. District court overrules defendants' objection that Odom was not designated as expert during discovery. Jury convicts. Admissibility affirmed. Witness offered lay testimony only. He testified that although his expertise and computer software made his review of bank records more efficient, his testimony ultimately depended only on basic math within ken of average juror.
Club Car, Inc. v. Club Car (Quebec) Import, Inc., 365 F.3d 775 (11th Cir. 2004), cert. denied, 543 U.S. 1002 (2005). Golf cart distributor sues over termination of distributorship. Defendant counterclaims, offering testimony on lost profits from accountant Peter Ryan. District court excludes testimony. Exclusion affirmed. Accountant based testimony on gross sales and gross profit figures, without taking associated expenses into account. That approach does not square with Georgia law on calculation of lost profits, and does not enjoy general accounting acceptance. No abuse of discretion.
Williamson Oil Co. v. Philip Morris USA, 346 F.3d 1287 (11th Cir. 2003). Class of cigarette wholesalers sues manufacturers for price-fixing. To defend against summary judgment, wholesalers offer testimony from Professor Franklin M. Fisher, who seeks to opine that various aspects of manufacturers' conduct supported inference of collusive pricing. District court excludes Fisher's testimony on that point and awards summary judgment. Exclusion affirmed. Fisher's methods did not permit Fisher or jury to distinguish between lawful conscious parallelism and unlawful price-fixing conspiracy.
Allapattah Servs. v. Exxon Corp., 333 F.3d 1248 (11th Cir. 2003), aff'd, 125 S. Ct. 2611 (2005). Class of Exxon dealers alleges that Exxon overcharged them for fuel in breach of dealer agreements. At trial, dealers offer expert testimony from economist Dr. Raymond Fishe, and jury finds for plaintiffs. Admissibility affirmed. Exxon complains that expert had no specialized knowledge of petroleum pricing and employed flawed methodology. But district court conducted six-day Daubert hearing, exhaustively canvassing reliability issues, and expert was fully subject to cross-examination. No abuse of discretion.
Tampa Bay Shipbuilding & Repair Co. v. Cedar Shipping Co., 320 F.3d 1213 (11th Cir. 2003). Ship repair company sues ship owner for balance due. At trial, repair company offers several of its personnel to testify to their lay opinion that charges were reasonable. Ship owner objects that such opinions would properly be subject of expert testimony and are therefore inadmissible as lay opinion under Fed. R. Evid. 701 as amended in 2000. District court admits testimony and finds for ship repair company. Admissibility affirmed. Business owners and managers have traditionally been competent to offer lay opinions of this sort, and commentary indicates that amendments to Rule 701 were not intended to alter that result, but rather to foreclose attempts to circumvent Rule 702 by offering testimony traditionally reserved for experts under guise of lay opinion.
Bailey v. Allgas, Inc., 284 F.3d 1237 (11th Cir. 2002). Employee of liquid propane gas supplier quits to open competitor. Supplier cuts prices and competitor is driven out of business. Competitor sues under Robinson-Patman Act, offering testimony from economist Dr. William Gunther. District court excludes economist's testimony and holds that summary judgment would be appropriate even if testimony were admissible. Summary judgment affirmed. Even if admissible, economist's testimony would be insufficient to establish Robinson-Patman claim. Among other defects, economist did not adequately consider alternative sources of residential fuel in defining relevant product market, offered inconsistent opinions on geographic market, estimated market share by questionable methods and for area inconsistent with economist's own definitions of geographic market, relied on dubious accounting data to show oligopoly, and failed to reckon with absence of significant barriers to entry.
Maiz v. Virani, 253 F.3d 641 (11th Cir. 2001). In civil RICO action arising from defendants' fraudulent real estate investment scheme, plaintiff's economist computes damages by calculating what plaintiffs' capital would have earned if invested in real estate investment trusts (REITs). Admissibility affirmed. Expert held Ph.D. in economics from Yale and had extensive experience as professional economist and in estimating damages. Expert's lack of experience with real estate development went not to qualifications but to foundations, and expert could reasonably assume that plaintiffs' funds would have been invested in REITs if not invested instead in defendants' scheme.
A.A. Profiles, Inc. v. City of Fort Lauderdale, 253 F.3d 576 (11th Cir. 2001). In commercial property owner's action for partial taking, district court admits testimony from city's expert accountant that plaintiff's business would have failed even absent city's taking. Admissibility reversed. Pertinent inquiry, for purposes of proving damages, was not whether plaintiff's business would have succeeded, but rather whether plaintiff's property suffered diminution in value. Accountant's testimony was therefore irrelevant.
MicroStrategy, Inc. v. Bus. Objects, S.A., 429 F.3d 1344 (Fed. Cir. 2005). MicroStrategy sues Business Objects for patent infringement and related business torts. Trial court excludes testimony from MicroStrategy's damages expert David E. Yurkewich and renders judgment in favor of Business Objects on most claims. Exclusion affirmed. Expert ignored other potential factors contributing to MicroStrategy's business misfortunes, including not only severe financial difficulties associated with "dot com" bubble burst but also accounting errors resulting in downward readjustment of MicroStrategy's earnings reports and decline in its stock price from high of $313/share to low of 49¢/share.
Imonex Servs., Inc. v. W.H. Munzprufer Dietmar Trenner GMBH, 408 F.3d 1374 (Fed. Cir. 2005). Trial court permits defendants' expert to opine on operating income attributable to infringement in patent case. Admissibility affirmed. Plaintiff offered no testimony of its own re Daubert factors. No abuse of discretion.
Cal. Fed. Bank v. United States, 395 F.3d 1263 (Fed. Cir.), cert. denied, 126 S. Ct. 344 (2005). Bank sues United States for breach of contract, alleging that congressional enactment of FIRREA breached earlier agreement by FSLIC that net liabilities of thrifts acquired by bank in aftermath of savings-and-loan crisis could be counted as regulatory capital and amortized over substantial period of time. By way of damages, bank alleges that it suffered lost profits when required to sell numerous adjustable rate mortgages (ARM's) to meet new regulatory capital requirements. Government denies that ARM's were sold because of breach, relying in part on expert economic testimony from Prof. Daniel Fischel and Dr. William Hamm. Trial court rules for government after bench trial. Bank appeals. Admissibility affirmed. Government's expert testimony explained why bank might have chosen to sell ARM's even in absence of breach, and also why their sale did not necessarily result in loss to bank. This was helpful to trier of fact, and testimony was not lacking in sound scientific basis.
Utah Med. Prods., Inc. v. Graphic Controls Corp., 350 F.3d 1376 (Fed. Cir. 2003). In patent infringement trial, district court excludes testimony on reasonable royalty from defense expert. Jury finds infringement and awards damages to patentee. Exclusion affirmed. District court legitimately concluded that other industry license agreements on which expert relied were not true comparables.
State Contracting & Eng'g Corp. v. Condotte America, Inc., 346 F.3d 1057 (Fed. Cir. 2003). Sued for patent infringement, construction contractors offer testimony on reasonable royalty from damages expert Herbert W. Larson. District court excludes testimony and jury awards damages against contractors. Exclusion affirmed. District court did not abuse discretion in light of expert's admission that he had no experience placing values on patents and had no knowledge re reasonable royalties for construction patents.
Atmel Corp. v. Silicon Storage Tech., Inc., No. 02-1522 (Fed. Cir. Sept. 12, 2003) (unpublished). Plaintiff in patent infringement suit offers testimony from damage experts Stephen Degnan and Dr. Marc Vellrath. District court declines to conduct Daubert hearing and admits testimony, and jury finds for plaintiff. Admissibility affirmed. No abuse of discretion.
Dow Chem. Co. v. Mee Indus, Inc., 341 F.3d 1370 (Fed. Cir. 2003). In bench trial of patent infringement suit, district court excludes testimony on damages from plaintiff Dow's expert ("Mr. Pirc"), and then rules that because Dow has not carried its burden to prove damages, none can be awarded. Reversed. Dow does not challenge Daubert exclusion on appeal, but argues that other record evidence supports damages. Dow is correct. On finding of infringement, district court must award damages not less than reasonable royalty under 35 U.S.C. § 284, and statute explicitly states that although district court "may" receive expert testimony for that purpose, expert testimony is not required. Should Dow prove infringement on remand, district court should award such reasonable damages as existing record supports.
Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387 (Fed. Cir. 2003). Plaintiff in patent infringement suit offers testimony from damages expert Edward Fiorito. Jury awards damages. Admissibility affirmed. Plaintiff says defendants waived objections, but defendants secured definitive rulings on their evidentiary objections either before or at trial. However, district court's ruling admitting testimony did not abuse trial court's discretion. Defendants fault expert for failing to base his testimony on "reliable facts." But defendants confuse Rule 702's requirement of basis in "sufficient facts or data" with Daubert's reliability requirement. Where facts are in legitimate dispute, Rule 702 does not authorize district court to exclude testimony because it credits one version of facts over another. Nor was expert's methodology suspect. Expert permissibly based his estimate on hypothetical royalty negotiation between patentee and infringer.
Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed. Cir. 2002). In litigation over lumber companies' failure to perform timber sales contracts with United States, Court of Claims admits testimony from government expert, Scott Olmstead, re damages. Admissibility affirmed. Government urges that Daubert does not even apply in bench trials. It is true that bench trials pose no risk of jury confusion, but Daubert's requirements of relevance and reliability must still be satisfied. Here, however, government expert estimated damages by reference to time value of money, and companies themselves employed same basic methodology. Trial judge properly found that any deficiencies in expert's methods went "only to the fine tuning of a relatively minor credit," and did not abuse discretion in admitting testimony under circumstances.
Tex. Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193 (Fed. Cir. 2002), cert. denied, 538 U.S. 1058 (2003). Patent holder in infringement suit offers expert testimony from J. Carl Cooper re damages, and jury finds for patent holder. Admissibility affirmed. Defendant complains that expert's profit calculations did not rely on correct cost figures, but trial court actually refused to allow expert's report until he adopted cost figures supplied by defendant. Other complaints about expert's methods and premises go to weight, not admissibility.
U.S. Valves, Inc. v. Dray, 212 F.3d 1368 (Fed. Cir. 2000). Inventor grants corporation exclusive license on patent but later begins selling patented items himself. At trial in patent dispute, licensee corporation offers testimony from economist [?] who employs computer model to project future damages. Admissibility questioned. Record does not indicate whether district court considered expert's damages testimony or whether district court conducted any Daubert analysis. However, testimony was irrelevant in any event, because district court enjoined future license violations by inventor. Moreover, in circumstances of case, estimates of future damages would be conjectural.