United States District Court, E.D. Texas, Tyler Division
MEMORANDUM OPINION AND ORDER
D. LOVE UNITED STATES MAGISTRATE JUDGE.
the Court is Defendants' Telebrands Corporation and
Bulbhead.com LLC (collectively "Defendants") Motion
to Exclude Plaintiffs' expert Alan Ratliff s Opinion on
Lost Profits, including price erosion. (Doc. No. 335.)
Plaintiffs Tinnus Enterprises, LLC and ZURU Ltd.
(collectively "Plaintiffs") filed a response (Doc.
No. 366), to which Defendants filed a reply (Doc. No. 379),
and Plaintiffs filed a sur-reply (Doc. No. 388). On September
7, 2017, the Court held a hearing. For the reasons stated
herein, Defendants' Motion (Doc. No. 335) is
January 26, 2016, Plaintiffs filed the instant action against
Telebrands, alleging infringement of U.S. Patent No. 9, 242,
749 ("the '749 Patent"). (Doc. No. 1.) On April
19, 2016, Plaintiffs amended their complaint to add
allegations of infringement of U.S. Patent No. 9, 315, 282
("the '282 Patent"). (Doc. No. 3.) This case
proceeded on a trial schedule through the completion of
discovery and expert discovery and through the filing of
dispositive motions. On July 7, 2017, Defendants filed a for
partial summary judgment, alleging for the first time that
Defendants were entitled to summary judgment on
Plaintiffs' claim for lost profits because ZURU Ltd. had
not made the sales of the Bunch O Balloons products in the
United States, but rather ZURU Inc. had made those sales and
was not a named party to this action. (Doc. No. 334.) On that
same day, Defendants filed the instant motion seeking to
strike portions of Mr. Ratliff s report regarding lost
702 provides that an expert witness may offer opinion
testimony if: (a) the expert's scientific, technical, or
other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b)
the testimony is based on sufficient facts or data; (c) the
testimony is the product of reliable principles and methods;
and (d) the expert has reliably applied the principles and
methods to the facts of the case. Fed.R.Evid. 702.
Rules also "assign to the trial judge the task of
ensuring that an expert's testimony both rests on a
reliable foundation and is relevant to the task at
hand." Daubert v. Merrell Dow Pharms. Inc., 509
U.S. 579, 594, 597 (1993). "The relevance prong [of
Daubert] requires the proponent [of the expert
testimony] to demonstrate that the expert's
'reasoning or methodology can be properly applied to the
facts in issue.'" Johnson v. Arkema, Inc.,
685 F.3d 452, 459 (5th Cir. 2012) (quoting Curtis v. M
& S Petroleum, Inc., 174 F.3d 661, 668 (5th Cir.
1999)). "The reliability prong [of Daubert]
mandates that expert opinion 'be grounded in the methods
and procedures of science and. . .be more than unsupported
speculation or subjective belief" Johnson, 685
F.3d at 459 (quoting Curtis, 174 F.3d at 668).
assessing the "reliability" of an expert's
opinion, the trial court may consider a list of factors
including: "whether a theory or technique . . . can be
(and has been) tested, " "whether the theory or
technique has been subjected to peer review and publication,
" "the known or potential rate of error, "
"the existence and maintenance of standards, " and
"general acceptance" of a theory in the
"relevant scientific community." Daubert,
509 U.S. at 593-94; see also Kumho Tire Co., Ltd. v.
Carmichael, 526 U.S. 137, 150 (1999)
("Daubert makes clear that the factors it
mentions do not constitute a 'definitive
checklist or test.'"); U.S. v. Valencia,
600 F.3d 389, 424 (5th Cir. 2010). "The proponent need
not prove to the judge that the expert's testimony is
correct, but she must prove by a preponderance of the
evidence that the testimony is reliable."
Johnson, 685 F.3d at 459 (quoting Moore v.
Ashland Chem., Inc., 151 F.3d 269, 276 (5th Cir. 1998)
(en banc)). At base, "the question of whether the expert
is credible or the opinion is correct is generally a question
for the fact finder, not the court." Summit 6, LLC
v. Samsung Elecs. Co., Ltd., 802 F.3d 1283, 1296 (Fed.
move to exclude Plaintiffs' damages expert, Alan Ratliff
s, opinions on lost profits, including price erosion, on
three bases: (1) Mr. Ratliff failed to consider whether
either of the Plaintiffs actually sell or profit from the
sale of Bunch O Balloons; (2) Mr. Ratliff erroneously
attributes price erosion damages to Battle Balloons'
alleged infringement of the '749 and '282 Patents;
and (3) Mr. Ratliff s price erosion analysis is inconsistent
with economic reality. (Doc. No. 335, at 4.)
argue that Defendants' motion is improperly focuses on
the weight of Mr. Ratliff s opinion, rather than reliability.
(Doc. No. 366, at 6.) Plaintiffs argue that Mr. Ratliff s
opinions are reliable and grounded in the facts because
numerous purchase orders show that Walmart, ZURU's
largest customer, was at least placing orders with ZURU Ltd.
for Bunch O Balloons. (Doc. No. 336, at 7, citing Ex. 4,
Sample ZURU Ltd. Purchase Orders.) Plaintiffs argue that
whether ZURU Ltd. can claim lost profits for the activities
of other ZURU entities is not a subject for a damages expert
opinion. Id. at 8.
the issue of sales resulting in lost profits, the Court has
concurrently issued an order regarding the sales for which
ZURU Ltd. may seek lost profits in ruling on Defendants'
motion for summary judgment. Consistent with the Court's
rulings, the Court GRANTS-IN-PART
Defendants' Motion (Doc. No. 335); however, Mr. Ratliff
will be permitted an opportunity to file an amended expert
report to address the ZURU Ltd. sales associated with the
generation of lost profits. It is therefore
ORDERED that within 7 days
of the issuance of this Order, the parties shall complete any
additional fact discovery. Within 14 days of
the issuance of this Order, Mr. Ratliff shall serve an
amended expert report. Defendants' expert may file a
rebuttal report within 7 days of being
served with Mr. Ratliff s supplemental report. The parties
are permitted one supplemental deposition of each damages
expert not to exceed 4 hours. Further expert depositions
shall be completed prior to the pretrial
conference in this matter.
Defendants' objections to Mr. Ratliff s opinions on price
erosion, Defendants argue that Mr. Ratliff s opinions cannot
be squared with the evidence in this case because: (1) Mr.
Ratliff acknowledges that ZURU priced Bunch O Balloons prior
to competitors entering the market; (2) he already opined
that Balloon Bonanza drove Bunch O Balloons prices down; and
(3) he admits that Battle Balloons debuted after the alleged
price erosion occurred. (Doc. No. 335, at 9.) These
criticisms of Mr. Ratliff s opinions go to the weight of his
opinions not the admissibility. Therefore, on these bases,
the Court finds no reason to strike Mr. Ratliff s price