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Robroy Industries-Texas LLC v. Thomas & Betts Corp.

United States District Court, E.D. Texas, Marshall Division

April 10, 2017

ROBROY INDUSTRIES - TEXAS, LLC, a Texas corporation, and ROBROY INDUSTRIES, INC., a Pennsylvania corporation, Plaintiffs,
v.
THOMAS & BETTS CORPORATION, a Tennessee corporation, Defendant. THOMAS & BETTS CORPORATION, a Tennessee corporation, Plaintiff,
v.
ROBROY INDUSTRIES - TEXAS, LLC, a Texas corporation, and ROBROY INDUSTRIES, INC., a Pennsylvania corporation, Defendants.

          MEMORANDUM OPINION AND ORDER

          WILLIAM C. BRYSON UNITED STATES CIRCUIT JUDGE.

         Before the Court are Plaintiffs' Motion to Exclude the Testimony and Report of Ambreen Salters, Dkt. No. 133 (“Robroy's Motion to Exclude”), and Thomas and Betts' Motion to Exclude Opinions of Chase A. Perry Regarding Damages, Dkt. No. 136 (“T&B's Motion to Exclude”). The plaintiffs' motion is GRANTED IN PART and DENIED IN PART. Thomas & Betts' motion is DENIED.

         BACKGROUND

         Both the plaintiffs (“Robroy”) and the defendant (“T&B”) propose to call an expert witness to testify about damages. In addition, T&B's expert witness intends to testify about the absence of a causal link between the allegedly improper conduct of T&B representatives and any losses suffered by Robroy. Both proposed expert witnesses are “professional witnesses, ” as opposed to “industry witnesses, ” in that neither has expertise in the industry at issue in this case, and both are associated with consulting groups that offer analysis and expert testimony on economic and financial issues to parties in legal proceedings.

         1. Robroy's expert witness, Chase A. Perry, proposes to testify in support of Robroy's claim for damages. He has a law degree and an M.B.A., and he is employed by a consulting group where he has provided economic analysis and testimony in numerous commercial disputes, including unfair competition cases. In his expert report, Mr. Perry explains (1) that he assumes T&B will be held liable for one or more of Robroy's claims; (2) that he does not offer an opinion on the liability issue; and (3) that he addresses only the issue of the damages resulting from T&B's allegedly unlawful acts. Expert Report of Chase A. Perry Regarding Damages, Dkt. No. 136-4, at 3 (“Perry Report”). Based on his analysis of the evidence from T&B, Mr. Perry concludes in his supplemental report that Robroy is due damages in the form of disgorgement of T&B's profits in the amount of no less than $8.1 million, and as much as $22.9 million. Supplemental Expert Report of Chase A. Perry Regarding Damages, Dkt. No. 136-1, at 9 (“Perry Supplemental Report”). In the alternative, he testifies, Robroy is due lost profits damages of no less than $6.6 million and as much as $18.7 million. Perry Supplemental Report, Dkt. No. 136-1, at 10.

         Mr. Perry proposes to testify about those projects for which data is available and in which, according to Robroy, T&B won the conduit contract as a result of false statements to customers. He proposes to testify that he derived his estimate of the profits T&B earned on those projects by subtracting the expenses T&B incurred from the dollar value of the sales, and that he derived the profits that Robroy would have earned on those projects by estimating the expenses that Robroy would have incurred and subtracting them from the gross revenue Robroy would have obtained from the projects in question.

         T&B has moved to exclude Mr. Perry's testimony for three reasons: (1) because Mr. Perry “presents no reliable link between the alleged false statements” and the projects that he uses to calculate damages, T&B's Motion to Exclude, at 1, 8; (2) because Mr. Perry “relied on speculative and unreliable data to assign an ‘estimated minimum and maximum sales value' of potentially lost sales for each . . . project, ” id. at 11; and (3) because Mr. Perry describes only “speculative and attenuated harm that the statements-at-issue merely enabled T&B to potentially make conduit sales to a customer, ” id. at 14.

         2. T&B intends to call Ambreen Salters as an expert witness at trial. She has a background as an economist, with a B.A. in business administration and an M.S. in economics. She is employed by a firm that, among other things, provides expert witnesses in legal proceedings. Like Mr. Perry, she does not purport to be an expert in the electrical conduit industry or any related industry.

         From Ms. Salters' report, Rule 26 Expert Report of Ambreen Salters on Behalf of Defendant Thomas & Betts Corporation, Dkt. No. 133-1 (“Salters Report”), it appears that T&B intends to offer Ms. Salters' testimony for several purposes: (1) to show that Robroy has not established a causal nexus between the defendants' allegedly wrongful conduct and the resulting harm to Robroy, id. at ¶¶ 41-44; (2) to testify as to the considerations that influence purchasing decisions by customers of PVC-coated conduit, id. at ¶¶ 45-57; (3) to establish that customers can readily verify whether a particular product complies with applicable standards for PVC-coated conduit, id. at ¶¶ 58-60; and (4) to respond to Robroy's evidence regarding damages, id. at ¶¶ 61-82. The first three categories all go to the question whether the alleged false statements made by T&B caused actionable injury to Robroy.[1] The Court will therefore deal with those portions of Ms. Salters' testimony collectively under the rubric of “causation.”

         Robroy has moved to exclude Ms. Salters' testimony on the ground that her opinion testimony and report “are based on unreliable principles and methodology [and] would not be helpful to the jury.” In its motion to exclude, Robroy argues: (1) Ms. Salters' conclusions as to the issue of causation are inadmissible, both because Mr. Perry will not be testifying as to causation and because Ms. Salters' opinions as to causation constitute impermissible attempts to offer testimony as to a legal conclusion; (2) her opinions on the issue of damages are based only on her review of particular information provided to her by counsel and are therefore unreliable; (3) her “regurgitation of facts” from depositions and other sources does not qualify as expert testimony; (4) her opinions as to the reasons that consumers make purchasing decisions in the PVC-coated conduit market are not based on an adequate foundation; and (5) because she is not an expert in the PVC-coated conduit market, her opinions on that subject would not be helpful to the jury.

         DISCUSSION

         At the outset, four points need to be made. First, even though Robroy's motion purports to be directed to the exclusion of both Ms. Salters' report and her testimony, it is clear that her report (like Mr. Perry's report) is inadmissible. See Hunt v. City of Portland, 599 F. App'x 620, 621 (9th Cir. 2013) (expert's written report “is hearsay to which no hearsay exception applies”); Worldwide Sorbent Prods., Inc. v. Invensys Sys., Inc., Civil Action No. 1:13-cv-252, 2014 WL 12596585, at *4 (E.D. Tex. Oct. 29, 2014); Bianco v. Globus Med., Inc., 30 F.Supp.3d 565, 570 (E.D. Tex. 2014) (citing cases); Sommerfield v. City of Chicago, 254 F.R.D. 317, 329 (N.D. Ill. 2008) (citing cases). Other than in the caption of Robroy's Motion to Exclude, neither party has indicated that it intends to offer its expert's report into evidence, but just for clarity, the reports themselves are plainly hearsay and will not be admitted into evidence absent stipulation by the parties; all that is at issue here is the question of the admissibility of the opinion testimony that the parties intend to offer through their expert witnesses.

         Second, both experts' reports are divided into a background section and a section summarizing their opinions. The background sections contain some material that seems uncontroversial, such as Ms. Salters' summary of the allegations of the complaint and of the contents of Mr. Perry's expert report, which are found in paragraphs 34-38 of Ms. Salters' report. Some of that material may be admissible through the experts' testimony as necessary introductory information explaining the basis for their opinions. For example, Ms. Salters' description of Mr. Perry's opinions on damages in paragraphs 36-38 may be necessary in order to introduce Ms. Salters' critique of Mr. Perry's opinions.

         Other material in the background sections and in the curriculum vitae of the experts seems to be fertile ground for the parties to agree upon, either by stipulating to the information itself, or by stipulating to the admission of those portions of the reports, or by agreeing to permit the experts to testify as to that information. The Court would permit-and indeed welcome- any such procedure that the parties can agree upon as a way of more expeditiously laying out the factual background of the case and the experts' qualifications for the jury. See Mahnke v. Wash. Metro. Area Transit Auth., 821 F.Supp.2d 125, 154 (D.D.C. 2011) (“[P]arties may stipulate to admission of certain reports and CVs.”); Wilson v. Hartford Ins. Co. of the Midwest, No. 10-993, 2011 WL 2670199, at *2-3 (W.D. Wash. July 7, 2011) (“The Court notes that parties often, for ease of presentation of evidence, mutually agree that expert reports are admissible. The court will not, however, force parties to reach such an agreement.”).

         Third, certain portions of the background sections of the experts' opinions are more tendentious and will not be admitted absent a stipulation by the parties. For example, the background section of Ms. Salters' report contains what amounts to a summary of the defendant's theory of the case, supported by citations to witness depositions. See Salters Report, Dkt. No. 133-1, at ¶¶ 7-33. It is not clear from the parties' papers whether Ms. Salters intends to testify regarding the assertions in those portions of the background section of her report. However, to the extent that T&B intends to offer testimony from Ms. Salters that tracks the contents of those portions of the Background section of her report and Robroy objects, that evidence will be excluded. As to that evidence, she is not serving as an expert, but is simply passing along information provided by others and laying out the defendant's theory of the case. Whether viewed as a second opening statement for the defense or as the defendant's first summation, that use of expert testimony is improper. Orthoflex, Inc. v. Thermotek, Inc., 986 F.Supp.2d 776, 798 (N.D. Tex. 2013) (Fitzwater, J.) (it is impermissible for an expert witness to be called “merely to present [a party's] trial arguments as expert opinions”). The statements in that portion of Ms. Salters' report are clearly outside the scope of her competence as an expert witness and do not reflect the application of expertise to particular subject matter within the scope of her expertise. Any testimony by Ms. Salters based on that portion of her report will be excluded. This issue is discussed in more detail in section II-A, below.

         While there is less material in Mr. Perry's report that is objectionable on this ground, there is some. In particular, his summary of Robroy's complaints about the false statements allegedly made by T&B about Robroy's products, found at page 10 of his report constitutes, in effect, a summary of Robroy's position on the issue of liability and is not admissible as expert testimony absent agreement of the parties.

         Fourth, to be clear, the Court's ruling as to the inadmissibility of certain testimony by the expert witnesses does not mean that the underlying evidence on which the experts rely in their reports is inadmissible. Some of the statements alluded to in the experts' reports may well be otherwise admissible. But those statements may not be introduced through the testimony of an expert witness who purports to have acquired expertise regarding the industry as applied to the facts of this case simply by reading witness depositions and reviewing exhibits provided by counsel. See Seatrax, Inc. v. Sonbeck Int'l, Inc., 200 F.3d 358, 372 (5th Cir. 2000); Lyman v. St. Jude Med. S.C., Inc., 580 F.Supp.2d 719, 726 (E.D. Wis. 2008).

         The Court will now turn to the specific issues of admissibility of evidence from each of the expert witnesses.

         I. T&B's Motion to Exclude the Testimony of Chase

         A. Perry A. Mr. Perry's Failure to Offer Evidence of Causation

         Mr. Perry's proposed damages testimony is inadmissible, according to T&B, because “he offers no basis for showing a causal link between the 55 projects he lists as the foundation for his false-advertising damages analysis to the ‘only Ocal' statements-at-issue.” T&B's Motion to Exclude, at 8. According to T&B, the Fifth Circuit has ‚Äúrefused to allow damages testimony in false-advertising cases that failed to rely on ...


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