United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
before the Court is Defendant William E. Mapp, III's
Corrected Motion to Strike Plaintiff's Expert (Dkt.
#111). After reviewing the relevant pleadings, the Court
finds that Defendant's motion should be granted in part
and denied in part.
Inc. (“Servergy”) is a computer hardware company
that develops secure, cloud-based data storage servers. From
November 2009 to September 2013, Servergy raised
approximately $26 million in private securities offerings to
develop what it claimed was a revolutionary new server, the
CTS-1000. William E. Mapp, III (“Mapp”),
Servergy's co-founder and then-CEO, was responsible for
the fundraising campaign. The Securities and Exchange
Commission (“SEC”) claims that Mapp violated
Sections 5(a) and 5(c), 17(a) of the Securities Act, and
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder,
based, in part, on representations made to potential
investors in Servergy's offering materials.
March 28, 2017, the SEC served Mapp with its designation of
Charles Marler as a non-retained expert witness pursuant to
Rule 26(a)(2)(C), stating the subject matter on which Marler
would testify and a summary of the facts and opinions to
which he would testify (Dkt. #111, Exhibit A).
September 13, 2017, Mapp filed his Motion to Strike
Plaintiff's Expert (Dkt. #110). On September 15, 2017,
the motion was found to be deficient and required refiling.
The same day, Mapp filed his Corrected Motion to Strike
Plaintiff's Expert (Dkt. #111). In his motion, Mapp
argued that Marler is a retained expert and the SEC's
designation was insufficient because Marler's designation
did not contain a written expert report required by Rule
September 29, 2017, the SEC filed its response (Dkt. #115).
In its response, the SEC conceded that Marler is a retained
expert and, thus, was required to provide an expert report
pursuant to Rule 26(a)(2)(B). The SEC attached a Supplemental
Expert's Report as an exhibit to its response (Dkt. #115,
Exhibit 1). Contemporaneously with its response, the SEC
filed an Unopposed Motion for Leave to Supplement
Marler's Expert Report (Dkt. #114). The Court granted the
motion on October 2, 2017 (Dkt. #117). Accordingly,
Mapp's argument regarding the timeliness of Marler's
disclosure is moot, and the Court need only address the
admissibility and scope of Marler's testimony.
October 27, 2017, Mapp filed his reply (Dkt. #127). On
November 3, 2017, the SEC filed its sur-reply (Dkt. #138).
Rule of Evidence 702 provides for the admission of expert
testimony that assists the trier of fact to understand the
evidence or to determine a fact in issue. Fed.R.Evid. 702. A
district court must make a preliminary determination, when
requested, as to whether the requirements of Rule 702 are
satisfied with regard to a particular expert's proposed
testimony. See Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579, 592-93 (1993). Courts act as gatekeepers of
expert testimony “to make certain that an expert,
whether basing testimony upon professional studies or
personal experience, employs in the courtroom the same level
of intellectual rigor that characterizes the practice of an
expert in the relevant field.” Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 152 (1999).
party offering the expert's testimony has the burden to
prove by a preponderance of the evidence that: (1) the expert
is qualified; (2) the testimony is relevant to an issue in
the case; and (3) the testimony is reliable.
Daubert, 509 U.S. at 590-91. A proffered expert
witness is qualified to testify by virtue of his or her
“knowledge, skill, experience, training, or
education.” Fed.R.Evid. 702. Moreover, in order to be
admissible, expert testimony must be “not only
relevant, but reliable.” Daubert, 509 U.S. at
589. “This gate-keeping obligation applies to all types
of expert testimony, not just scientific testimony.”
Pipitone v. Biomatrix, Inc., 288 F.3d 239, 244 (5th
Cir. 2002) (citing Kuhmo, 526 U.S. at 147).
deciding whether to admit or exclude expert testimony, the
Court should consider numerous factors. Daubert, 590
U.S. at 594. In Daubert, the Supreme Court offered
the following, non-exhaustive list of factors that courts may
use in evaluating the reliability of expert testimony: (1)
whether the expert's theory or technique can be or has
been tested; (2) whether the theory or technique has been
subjected to peer review and publication; (3) the known or
potential rate of error of the challenged method; and (4)
whether the theory or technique is generally accepted in the
relevant scientific community. Id. at 593-94;
Pipitone, 228 F.3d at 244. When evaluating
Daubert challenges, courts focus “on [the
experts'] principles and methodology, not on the
conclusions that [the experts] generate.”
Daubert, 509 at 594.
Daubert factors are not “a definitive
checklist or test.” Id. at 593. As the Court
has emphasized, the Daubert framework is “a
flexible one.” Id. at 594. Accordingly, the
decision to allow or exclude experts from testifying under
Daubert is committed to the sound discretion of the