United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
L. HORAN UNITED STATES MAGISTRATE JUDGE.
Sara Lee Corporation (“Sara Lee”) has filed an
Amended Motion to Exclude Testimony of Plaintiff's
Damages Expert, see Dkt. No. 188, which United
States District Judge Sam A. Lindsay has referred to the
undersigned United States magistrate judge for determination,
see Dkt. No. 191. Plaintiff Jacked Up, LLC
(“Jacked Up”) filed a response, see Dkt.
No. 192, and Sara Lee filed a reply, see Dkt. No.
163. For the reasons and to the extent explained below, the
Court GRANTS Sara Lee's Amended Motion to Exclude
Testimony of Plaintiff's Damages Expert [Dkt. No. 188].
September 2011, Jacked Up and Sara Lee entered into a
licensing agreement (the “Licensing Agreement”),
in which Jacked Up agreed to license its brand name and
proprietary energy drink ingredients to Sara Lee in exchange
for royalties. In October 2011, Sara Lee announced the sale
of its North American Beverage Division to J.M. Smucker
Company (“Smucker”), and, amidst concerns that
Smucker would not assume the Licensing Agreement with Jacked
Up and that Jacked Up would not move forward with market
testing, the deal broke down.
November 7, 2011, Jacked Up brought a breach of contract
claim against Sara Lee in Texas state court. Sara Lee then
removed the action to this Court, and Jacked Up added Smucker
as a defendant, alleging, among other things, that Smucker
interfered with the Licensing Agreement. Jacked Up later
added a claim against Smucker for common law trade secret
misappropriation and added claims against Sara Lee for breach
of fiduciary duty, fraud, and fraudulent inducement.
close of discovery, Smucker, Sara Lee, and Jacked Up each
moved for summary judgment and asked the Court to strike
certain summary judgment evidence. The Court granted
Smucker's and Sara Lee's motions for summary judgment
and entered judgment in favor of Sara Lee and Smucker. Jacked
appeal, the United States Court of Appeals for the Fifth
Circuit affirmed the Court's grant of summary judgment in
favor of Smucker, affirmed the Court's grant of summary
judgment in favor of Sara Lee on Jacked Up's breach of
fiduciary duty claim, and reversed the Court's grant of
summary judgment in favor of Sara Lee on Jacked Up's
breach of contract claim and fraud and fraudulent inducement
Fifth Circuit panel declined to affirm summary judgment on
the alternative ground that Sara Lee and Smucker had
asserted: “that Jacked Up's evidence of lost
profits is speculative.” Jacked Up, L.L.C. v. Sara
Lee Corp., 854 F.3d 797, 816 (5th Cir. 2017). The Court
of Appeals noted that “Jacked Up's evidence of lost
profits - an expert report prepared by EJ Janik (‘Janik
Report') - is critical to its claim for damages. Indeed
this expert report is the only evidence of damages in the
record.” Id. But the panel left “it to
the district court to determine whether Jacked Up has put
forth sufficient evidence of damages, ” further
[t]he district court may choose to conduct a Daubert
inquiry to determine whether the Janik Report is admissible.
Indeed, Sara Lee and Smucker moved to exclude the Janik
Report, and this motion was still pending when the district
court granted the summary judgment. We leave it to the
district court to determine whether the Janik Report is
admissible, and if it is admissible, whether it establishes
lost profits with reasonable certainty.
Id. at 817.
light of the Fifth Circuit's invitation, on remand, Sara
Lee filed a Motion for Leave, see Dkt. No. 184,
seeking to refile its Motion to Exclude the Testimony of
Plaintiff's Damages Expert, see Dkt. No. 85,
which the Court had denied as moot in its order granting
summary judgment in favor of Smucker and Sara Lee,
see Dkt. No. 152. After Jacked Up filed its
response, the Court granted Sara Lee's Motion for Leave,
see Dkt. No. 187, and Sara Lee filed the Amended
Motion to Exclude Testimony of Plaintiff's Damages Expert
(the “Motion to Exclude”) that is before the
Court, see Dkt. No. 188.
Motion to Exclude, Sara Lee asks the Court to exclude
Janik's opinions because they are unreliable and
Lee argues that Janik's opinions are unreliable because
Janik (1) fails to test or verify the reliability of the Sara
Lee's pro forma on which he relied (the “Sara Lee
Pro Forma”); (2) makes other untested and unverified
assumptions to increase Jacked Up's purported damages;
(3) fails to consider or explain conflicting evidence and
other relevant considerations; and (4) fails to deduct Jacked
Sara Lee argues that Janik's opinions are irrelevant
because (1) Jacked Up is not entitled to lost profits under
Illinois law and (2) the Licensing Agreement limits Jacked
Up's potential recovery to only one year.
response, Jacked Up argues that Janik's opinions are
reliable because (1) the Sara Lee Pro Forma is objectively
reliable because it was created and used by Sara Lee in
entering the Licensing Agreement; (2) Janik did not rely
exclusively on the Sara Lee Pro Forma to develop his
opinions; (3) Janik accounted for Jacked Up's expenses;
and (4) Janik applies a discount to his model. Jacked Up
further contends that Sara Lee's arguments about the
reliability of Janik's opinions go to the weight, and not
the admissibility, of Janik's expert testimony and that
“these are issues to be resolved by the trier of fact,
not through a ... Daubert [m]otion.” Dkt.
No. 192 at 27 of 28.
to the relevance of Janik's opinions, Jacked Up argues
that its recovery of lost profits is not barred under
diversity case, the admissibility of evidence is a procedural
issue governed by federal law. See Reed v. Gen. Motors
Corp., 773 F.2d 660, 663 (5th Cir. 1985). Federal Rule
of Evidence 702 governs the admissibility of expert testimony
and provides that
[a] witness who is qualified as an expert by knowledge,
skill, experience, training, or education may testify in the
form of an opinion or otherwise 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
(d) the expert has reliably applied the principles and
methods to the facts of the case.
Fed. R. Evid. 702.
trial court acts as a “gatekeeper” to ensure that
“any and all scientific evidence admitted is not only
relevant, but reliable.” Daubert v. Merrell Dow
Pharms., Inc., 509 U.S. 579, 589 (1993).
“Daubert's general holding - setting forth
the trial judge's general ‘gatekeeping'
obligation - applies not only to testimony based on
‘scientific' knowledge, but also to testimony based
on ‘technical' and ‘other specialized'
knowledge.” Kumho Tire Co. v. Carmichael, 526
U.S. 137, 141 (1999).
gatekeeping role, the Court determines the admissibility of
expert testimony based on Rule 702 and Daubert and
its progeny. “The court may admit proffered expert
testimony only if the proponent, who bears the burden of
proof, demonstrates that (1) the expert is qualified, (2) the
evidence is relevant to the suit, and (3) the evidence is
reliable.” E.E.O.C. v. S&B Indus., Inc.,
No. 3:15-cv-641-D, 2017 WL 345641, at *2 (N.D. Tex. Jan, 24,
2017) (internal quotation marks ...