Opinion · District Court, N.D. Texas
VeroBlue Farms USA Inc v. Wulf
VeroBlue Farms USA Inc v. Wulf, No. 3:19-cv-00764, UP10452300 (District Court, N.D. Texas Jan. 20, 2023)
- Type
- Opinion
- Court
- District Court, N.D. Texas
- Jurisdiction
- Texas
- Date
- 2023-01-20
- Topic
- general
IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION VEROBLUE FARMS USA INC., § § Plaintiff, § § V . § No. 3:19-cv-764-X § LESLIE A. WULF, ET AL., § § Defendants. § MEMORANDUM OPINION AND ORDER1 Plaintiff VeroBlue Farms USA, Inc. has filed a Motion to Strikes Defendants’ Experts, see Dkt. No. 495 (the “Experts Motion”), in which “VBF moves to strike certain expert witnesses designated by Defendants Leslie A. Wulf, Bruce A. Hall, John E.
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
VEROBLUE FARMS USA INC., §
§
Plaintiff, §
§
V . § No. 3:19-cv-764-X
§
LESLIE A. WULF, ET AL., §
§
Defendants. §
MEMORANDUM OPINION AND ORDER1
Plaintiff VeroBlue Farms USA, Inc. has filed a Motion to Strikes Defendants’
Experts, see Dkt. No. 495 (the “Experts Motion”), in which “VBF moves to strike
certain expert witnesses designated by Defendants Leslie A. Wulf, Bruce A. Hall,
John E. Rea, James Rea (collectively, the “Four Founders”) and Defendant Keith
Driver (“Driver”) [(collectively, “Founders” or “Defendants”)].
Specifically, VBF seeks to strike (1) Gary Durham (“Durham”), designated as
a retained expert witness by the Four Founders; and (2) (a) Mark Nelson (“Mr.
Nelson”) and (b) Rick Sheriff (“Mr. Sheriff”), designated as a nonretained expert
1 Under § 205(a)(5) of the E-Government Act of 2002 and the definition of Awritten
opinion@ adopted by the Judicial Conference of the United States, this is a Awritten
opinion[] issued by the court@ because it Asets forth a reasoned explanation for [the]
court’s decision.@ It has been written, however, primarily for the parties, to decide
issues presented in this case, and not for publication in an official reporter, and
should be understood accordingly.
-1-
witnesses by Four Founders; and (c) Driver, designated as a nonretained expert
witness by Driver himself, see id. at 1.
VBF asserts that, “[b]ecause Mr. Durham’s testimony is unreliable, and Mr.
Nelson’s, Mr. Sheriff’s, and Driver’s disclosures are deficient, the Court should strike
Founders’ designation of these four expert witnesses and preclude them from offering
expert opinions and testimony at trial.” Id.
More specifically, VBP contends that the Court should strike the expert
testimony of Durham as unreliable under Federal Rule of Evidence 702 because his
expected testimony is based on incorrect or insufficient information; because his
opinions are unproven and unsupported assertions resting only on his authority and
should be excluded; and because a number of his opinions should be excluded as the
improper subject of expert testimony. See id. at 6-12.
And VBF asserts that the Court should strike the expert testimony of
Founders’ nonretained witnesses because their Federal Rule of Civil Procedure
26(a)(2)(C) disclosures are deficient for Mark Nelson, Rick Sheriff, and Keith Driver;
because, even if properly disclosed, Founders’ nonretained witnesses are not qualified
under Rule 702 to give expert testimony; and because the Founders’ failure to comply
with Rule 26 is not substantially justified or harmless. See id. at 12-22. And, VBF
explains,
Driver designated two witnesses to provide expert testimony: (1) his
counsel, Mr. R. Heath Cheek, to provide testimony regarding Driver’s
request for attorneys’ fees; and (2) Driver himself as a nonretained
witness to testify regarding “his experience at VBF, including the
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technical knowledge and opinions regarding VBF’s performance.”
Although Driver purports to “cross-designate[ ] all retained and non-
retained experts designated by Plaintiff and other Defendants,” VBF is
not aware of any authority, and Driver cites none, that suggests that he
may cross-designate other parties’ experts without providing the
required report(s) or disclosure(s) for such experts under Rule 26(a)(2).
Accordingly, VBF only addresses Driver’s designation of himself as
nonretained witness for purposes of this Motion. [VBF is not challenging
Driver’s designation of Mr. R. Heath Cheek, who “may testify regarding
whether Driver’s attorneys’ fees and expenses are reasonable and
necessary.” Driver’s First Amended Rule 26 Initial Disclosures, Ex. 2 at
5; App. at 052. VBF understands that the issue of attorneys’ fees and
costs will be determined in accordance with Rule 54(d)(2) of the Federal
Rules of Civil Procedure.]
Id. at 2 & n.1 (cleaned up).
The Founders filed a response to the Experts Motion, see Dkt, No. 501, arguing
that it “should be denied for the following reasons: [A] VBF failed to, and cannot,
establish that Gary Durham’s expert report is unreliable; [B] The Court’s role is to
determine whether Mr. Durham’s testimony is admissible, not credible; [C] Mr.
Durham’s testimony assists the jury in understanding (1) VBF’s position as it relates
to its alleged damages and (2) that Brandi Kleinman’s – and, therefore, VBF’s –
damage model is fatally flawed; [D] Mr. Durham was not required to review every
single document Ms. Kleinman purportedly did; [E] Mr. Durham’s expert report is a
proper expert rebuttal report; and [F] Mr. Durham’s opinions are not ‘encroaching
upon a legal conclusion, but rather, are either mere factual observations or opinions
centering on financial causation.” Dkt. No. 501 at 1-2 (cleaned up).
According to the Founders,
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VBF’s motion to strike the Founders’ retained financial expert rests on
the fundamental flaw that a rebuttal expert has to reinvent the wheel.
In other words, VBF thinks a rebuttal expert must create an
independent damages model in order to identify flaws in the proponent’s
damage model. The Founders are not legally required to proffer an
expert that sponsors a viable damage model. The role of the rebuttal
expert is instead to identify problems and errors with the proponent’s
methodology, but he does not have to fix it. The truth here is that
because VBF’s expert offers such an error-riddled off-the-wall damages
theory, it did not require that the Founders’ expert, Gary Durham,
painstakingly pour over a gazillion documents.
VBF’s chief complaint about Mr. Durham’s report is that it does
not clean up the mess made by VBF’s expert, Brandi Kleinman. VBF
brands Mr. Durham’s report as unreliable because (1) it is “largely
argumentative rather than technical or accounting-based”; (2) Mr.
Durham did not review all documents that Ms. Kleinman allegedly
reviewed; (3) Mr. Durham challenges Ms. Kleinman’s opinions and
conclusions without providing his independent analysis or outlining
what Ms. Kleinman should have done; and (4) “Mr. Durham’s opinions
are encroaching upon a legal conclusion, which is improper.” As for the
first three points, VBF confuses what (a) this Court’s role is in
determining an expert’s admissibility and (b) who – the Court or the jury
– determines Mr. Durham’s credibility. As for VBF’s fourth issue, Mr.
Durham pointing out that VBF’s investors are not parties to this lawsuit
is not a legal conclusion, it is a fact. And Mr. Durham observing that Ms.
Kleinman failed to provide a proper financial causation analysis also is
not a legal conclusion. None of this is accurate and, for the reasons set
forth below, Mr. Durham’s report falls squarely within the boundaries
of a proper expert rebuttal report.
VBF also complains that the Founders failed to comply with Rule
26 in designating Mark Nelson as a non-retained expert. The Founders
designated Mr. Nelson as a non-retained expert witness because, while
his testimony is largely based on his knowledge as a fact witness, VBF
will predictability gripe that he is purporting to offer an opinion.
Regardless, the Founders’ disclosures suffice under Rule 26. The Court
can more efficiently evaluate Mr. Nelson’s testimony at trial. Any
technical non-compliance with Rule 26 is harmless, in any event.
Dkt. No. 502 at 1-2 (cleaned up).
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The Founders explain that “VBF also contends that the Founders failed to
comply with Rule 26 concerning their disclosure of Rick Sheriff as a non-retained
expert. The Founders, however, withdraw their designation of Mr. Sheriff as a non-
retained expert witness and therefore will not be addressing VBF’s arguments
regarding Mr. Sheriff in this Response.” Id. at 2 n.2.
Driver filed a response to the Experts Motion, see Dkt, No. 504, arguing that
he
was the Chief Operating Officer for VeroBlue during part of the time in
which VeroBlue now alleges that fraudulent representations and
omissions were made regarding VeroBlue’s operations. Driver
designated himself as a non-retained expert with regard to several
aspects of VeroBlue’s operations because he is the single most
knowledgeable person to testify about VeroBlue’s operations prior to
September 2016, the representations he allegedly made regarding such
operations, whether his representations were accurate, and the
information available to him at the time as it relates to VeroBlue’s
operations. This expert testimony is critical to Driver’s defense against
VeroBlue’s sixteen causes of action against him for which it seeks over
100 million dollars, all relating to his short 3-month stint as VeroBlue’s
Chief Operating Officer.
Driver’s designation satisfies Rule 26’s requirements as he
designated the topics on which he would be providing expert testimony
on and referred VeroBlue to his January 2021 deposition for a summary
of such opinions. Since January 2021, VeroBlue has not sought any
clarification, supplementation, or additional deposition time with regard
to Driver’s expert opinions. Instead, VeroBlue waited over a year to file
this Motion to Strike, arguing such disclosures were insufficient and
Driver is not qualified to provide the expert opinions. However, under
this Court’s precedent, referring to a deposition for the summary of your
expert opinions satisfies Rule 26’s disclosure requirements.
Additionally, despite VeroBlue’s cherry-picked out-of-context deposition
excerpts it includes in its Motion to Strike, Driver is well qualified to
provide his expert opinions, as shown in the deposition testimony
attached.
-5-
Accordingly, VeroBlue’s Motion to Strike Driver’s designation of
himself as a nonretained expert should be denied.
Dkt. No. 504 at 1-2.
VBF filed a reply, see Dkt, No. 522, asserting that
[t]he Court’s gatekeeping role under Rule 702 is to “permit only reliable
and relevant testimony from qualified witnesses.” Fracalossi v.
MoneyGram Pension Plan, No. 3:17-CV-003336-X, 2021 WL 5505604
, at
*4 (N.D. Tex. Nov. 24, 2021). Defendants’ proposed experts all fail at
least one of these requirements.
1. Defendants’ “non-retained experts” are fact witnesses, not
experts.
Neither Nelson, Sheriff, nor Driver is qualified as an expert; each
is instead a fact witness who participated in the operation of VBF during
the time in question. Allowing any of them to present “expert” testimony
would violate Rule 702 and cause prejudice to VBF.
a. Defendants agree that Sheriff should not be an expert
witness.
The Four Founders have “withdraw[n] their designation of Rick
Sheriff as a non-retained expert witness.” Founders Br. at 2, n.2, 13. The
Court may grant the Motion with respect to him.
Dkt. No. 522 at 1-2. And VBF further replies that:
“Nelson is not qualified, and his opinions are not reliable”;
“Driver is not qualified, and his opinions are not reliable”;
“Durham’s opinions are not reliable and will not assist the jury”; and
“Defendants’ experts were not properly disclosed,” where “[t]he opinions of
Nelson and Driver are not appropriately identified” and where “Durham’s non-
written opinions, which VBF became aware of after VBF’s [Experts] Motion
was filed, were not properly disclosed and should be barred.”
Id. at 1-10.
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United States District Judge Brantley Starr has referred the Experts Motion
to the undersigned United States magistrate judge for a hearing, if necessary, and
determination under 28 U.S.C. § 636
(b). See Dkt. No. 533; see also Jacked Up, L.L.C. v. Sara Lee Corp.,807 F. App’x 344
, 346 n.2 (5th Cir. 2020) (the admissibility of an expert report is “a non-dispositive matter,” which can be “’‘referred to a magistrate judge to hear and decide’” under Federal Rule of Civil Procedure 72(a) and28 U.S.C. § 636
(b)(1)(A)).
For the reasons and to the extent explained below, the Court grants in part
and denies in part Plaintiff VeroBlue Farms USA, Inc.’s Motion to Strikes
Defendants’ Experts [Dkt. No. 495].
Background and Legal Standards
The parties and the Court are familiar with the background of this case, so the
Court will not repeat it here. See VeroBlue Farms USA, Inc. v. Wulf, 465 F. Supp. 3d 633
(N.D. Tex. 2020).
As Judge Starr recently laid out,
Federal Rule of Evidence 702 governs the admissibility of expert
testimony as evidence. Rule 702 permits opinion testimony from a
witness “qualified as an expert by knowledge, skill, experience, training,
or education” if the expert’s knowledge will assist the trier of fact, and
(1) “the testimony is based on sufficient facts or data;” (2) “the testimony
is the product of reliable principles and methods;” and (3) “the expert
has reliably applied the principles and methods to the facts of the case.”
Ramos v. Home Depot Inc., No. 3:20-cv-1768-X, 2022 WL 615023
, at *1 (N.D. Tex.
Mar. 1, 2022) (cleaned up).
-7-
“In its gatekeeping role, the Court determines the admissibility of expert
testimony based on Rule 702 and [Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589
(1993),] and its progeny.” Jacked Up, LLC v. Sara Lee Corp.,291 F. Supp. 3d 795, 800
(N.D. Tex. 2018), aff’d, No. 3:11-cv-3296-L,2018 WL 2064126
(N.D. Tex.
May 2, 2018). Under Rule 702 and Daubert,
[a]s a gatekeeper, this Court must permit only reliable and relevant
testimony from qualified witnesses to be admitted as expert testimony.
The party offering the expert testimony has the burden of proof, by a
preponderance of evidence, to show that the testimony is reliable and
relevant.
Ramos, 2022 WL 615023
, at *1 (cleaned up). And “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).
Applying this analytical framework under Rule 702 and Daubert, a “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.” Galvez v. KLLM Transp. Servs., LLC, 575 F. Supp. 3d 748
, 759 (N.D. Tex. 2021).
“First, an expert must be qualified. Before a district court may allow a witness
to testify as an expert, it must be assured that the proffered witness is qualified to
testify by virtue of his knowledge, skill, experience, training or education.” Aircraft
Holding Sols., LLC v. Learjet, Inc., No. 3:18-cv-823-D, 2022 WL 3019795
, at *5 (N.D.
-8-
Tex. July 29, 2022) (cleaned up). “The distinction between lay and expert witness
testimony is that lay testimony results from a process of reasoning familiar in
everyday life, while expert testimony results from a process of reasoning which can
be mastered only by specialists in the field.” Holcombe, 516 F. Supp. 3d at 679-80
(cleaned up); accord Arnold v. Allied Van Lines, Inc., No. SA-21-CV-00438-XR, 2022 WL 2392875
, at *18 (W.D. Tex. July 1, 2022) (“Testimony regarding first-hand, historical perceptions constitutes lay, not expert, opinion testimony.”). “A district court should refuse to allow an expert witness to testify if it finds that the witness is not qualified to testify in a particular field or on a given subject.” Aircraft Holding,2022 WL 3019795
, at *5 (cleaned up).
And, if the expert is qualified, “Rule 702 charges trial courts to act as gate-
keepers, making a ‘preliminary assessment of whether the reasoning or methodology
underlying the testimony is scientifically valid and of whether that reasoning or
methodology properly can be applied to the facts in issue. Expert testimony must be
both relevant and reliable to be admissible.” Hall v. State, No. CV H-21-1769, 2022 WL 2990912
, at *4 (S.D. Tex. July 28, 2022) (cleaned up).
Expert testimony is relevant if it assists the trier of fact in
understanding the evidence or determining a fact in issue. Federal Rule
of Evidence 401 further clarifies that relevant evidence is evidence that
has “any tendency to make a fact more or less probable than it would be
without evidence” and “is of consequence in determining the action.”
Id.
(cleaned up). “Relevance depends upon whether [the expert’s] reasoning or
methodology properly can be applied to the facts in issue.” Aircraft Holding, 2022 WL
-9-
3019795, at *6 (cleaned up). “To be relevant, the expert’s reasoning or methodology
[must] be properly applied to the facts in issue.” In re: Taxotere (Docetaxel) Prod. Liab.
Litig., 26 F.4th 256, 268
(5th Cir. 2022) (cleaned up).
“When performing [the required gate-keeping Rule 702 and Daubert] analysis,
the court’s main focus should be on determining whether the expert’s opinion will
assist the trier of fact.” Puga v. RCX Sols., Inc., 922 F.3d 285, 293
(5th Cir. 2019). “Assisting the trier of fact means the trial judge ought to insist that a proffered expert bring to the jury more than the lawyers can offer in argument,” but “the helpfulness threshold is low: it is principally ... a matter of relevance.”Id. at 293-94
(cleaned up).
As to reliability, the required “analysis applies to all aspects of an expert's
testimony: the methodology, the facts underlying the expert's opinion, the link
between the facts and the conclusion, et alia,” and “mandates that expert opinion be
grounded in the methods and procedures of science.” Jacked Up, 291 F. Supp. 3d at 801
(cleaned up). “Expert evidence that is not reliable at each and every step is not admissible.” Jacked Up, 807 F. App’x at 348 (cleaned up). “Expert testimony is reliable if the reasoning or methodology underlying the testimony is scientifically valid.” Ramos,2022 WL 615023
, at *1 (cleaned up).
“Such testimony must be more than subjective belief or unsupported
speculation.” Id.
(cleaned up). “In other words, this Court need not admit testimony that is connected to existing data only by the ipse dixit [– that is, an unproven and unsupported assertion resting only on the authority –] of the expert.”Id.
(cleaned up).
-10-
“[W]ithout more than credentials and a subjective opinion, an expert’s testimony that
‘it is so’ is not admissible.” Holcombe, 516 F. Supp. 3d at 687 (cleaned up).
“Experts are permitted to rely on assumptions when reaching their opinions,”
but “those assumptions must have some factual basis in the record and an underlying
rationale.” Jacked Up, 291 F. Supp. 3d at 807-07
(cleaned up). “But there is no requirement that an expert derive his opinion from firsthand knowledge or observation.”Id. at 801
(cleaned up). More specifically, “[e]xperts are permitted to assume the fact of liability and opine about the extent of damages,” and “[a]n expert’s reliance on assumptions does not itself make the expert opinion unreliable or inadmissible.” ENGlobal U.S. Inc. v. Native Am. Servs. Corp., No. CV H-16-2746,2018 WL 1877015
, at *8 (S.D. Tex. Apr. 19, 2018) (cleaned up).
And Federal Rule of Evidence 703 “permit[s] an expert witness to base his
opinion on ‘facts or data ... that the expert has been made aware of or personally
observed’ and to opine [and based his opinion] on inadmissible evidence if ‘experts in
the particular field would reasonably rely on those kinds of facts or data in forming
an opinion on the subject.’” Taxotere (Docetaxel) Prod. Liab. Litig., 26 F.4th at 269
& n.10 (cleaned up). More specifically, courts have concluded that, although a party’s damages expert “did not personally observe the facts or data in [another expert’s report], as a damages expert, he may rely on hearsay, including other expert reports, in forming his opinions.” ENGlobal,2018 WL 1877015
, at *11 (cleaned up).
-11-
Still, “Rule 702 and Daubert require an expert witness independently to
validate or assess the basis for his or her assumptions,” and “[t]he party seeking to
have the district court admit expert testimony must demonstrate that the expert’s
findings and conclusions are based on the scientific method, and, therefore, are
reliable,” which “requires some objective, independent validation of the expert’s
methodology.” Taxotere (Docetaxel) Prod. Liab. Litig., 26 F.4th at 268
(cleaned up). “Although the basis of an expert’s opinion usually goes to the weight and not the admissibility of expert testimony, in some cases the source upon which an expert’s opinion relies is of such little weight that the jury should not be permitted to receive that opinion. In the words of the Third Circuit, the suggestion that the reasonableness of an expert’s reliance on facts or data to form his opinion is somehow an inappropriate inquiry under Rule 702 results from an unduly myopic interpretation of Rule 702 and ignores the mandate of Daubert that the district court must act as a gatekeeper.” Jacked Up, 807 F. App’x at 348 (cleaned up). “In some circumstances, an expert might be able to rely on the estimates of others in constructing a hypothetical reality, but to do so, the expert must explain why he relied on such estimates and must demonstrate why he believed the estimates were reliable.” Id. at 348-49 (cleaned up). “The expert’s assurances that he has utilized generally accepted scientific methodology is insufficient.” Taxotere (Docetaxel) Prod. Liab. Litig.,26 F.4th at 268
(cleaned up).
-12-
“The Court normally analyzes questions of reliability using the five
nonexclusive factors known as the Daubert factors, [which are: (1) whether the
expert’s technique can be or has been tested; (2) whether the method has been
subjected to peer review and publication; (3) the known or potential rate of error of a
technique or theory when applied; (4) the existence and maintenance of standards
and controls; and (5) the degree to which the technique or theory has been generally
accepted in the scientific community].” Ramos, 2022 WL 615023
, at *1 & n.11 (cleaned up). “But these factors may or may not be pertinent in assessing reliability, depending on the nature of the issue, the expert’s particular expertise, and the subject of [the] testimony.” Kim v. Nationwide Mut. Ins. Co., No. 3:21-cv-345-D,2022 WL 2670393
,
at *5 (N.D. Tex. July 11, 2022) (cleaned up). “The point of this inquiry is 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.” Holcombe, 516 F. Supp.
3d at 674 (cleaned up).
“The Court also does not need to admit testimony based on indisputably wrong
facts.” Ramos, 2022 WL 615023
, at *1 (cleaned up). “The Fifth Circuit has recognized that [t]he Daubert reliability analysis applies to, among other things, ‘the facts underlying the expert's opinion,’” and “an opinion based on insufficient, erroneous information, fails the reliability standard.” Jacked Up,291 F. Supp. 3d at 802
(cleaned up). “And although the Daubert reliability analysis is flexible and the
-13-
proponent of the expert evidence need not satisfy every one of its factors, the existence
of sufficient facts ... is in all instances mandatory.” Id.
(cleaned up).
But, “[i]n conducting its analysis, the Court focuses on the reasonableness of
the expert’s approach regarding the matter to which his testimony is relevant and
not on the conclusions generated by the expert’s methodology.” Ramos, 2022 WL 615023
, at *1 (cleaned up). A motion to exclude is not properly based on an “objection that goes to whether [the proffered expert’s] opinion is correct, not whether it is reliable,” where “[t]he proponent need not prove to the judge that the expert’s testimony is correct, but,” rather, “by a preponderance of the evidence that the testimony is reliable.” Aircraft Holding,2022 WL 3019795
, at *8 (cleaned up). “Even when a court rules that an expert’s testimony is reliable, this does not necessarily mean that contradictory expert testimony is unreliable.” United States v. Hodge,933 F.3d 468, 477
(5th Cir. 2019), as revised (Aug. 9, 2019) (cleaned up). And, so, “[w]hen the parties’ experts rely on conflicting sets of facts, it is not the role of the trial court to evaluate the correctness of facts underlying one expert’s testimony.” ENGlobal,2018 WL 1877015
, at *8 (cleaned up).
The Court cannot accept arguments that “urge[] the Court to establish an
unattainable goalpost, essentially arguing that each item of expert testimony is
unreliable insofar as it fails to conclusively prove [the expert testimony’s proponent’s]
theory of its case or an element of a claim or defense,” and thereby “confus[e]
admissibility with sufficiency, and sufficiency with certainty.” Holcombe, 516 F.
-14-
Supp. 3d at 675 (cleaned up). That “is not the standard for admissibility,” or “even
the standard for success on the merits,” and “[i]t is not the Court’s role, in the context
of a Daubert motion, to judge the conclusions that an expert’s analysis generates; the
ultimate arbiter of disputes between conflicting opinions is the trier of fact.” Id.
“If, however, there is simply too great an analytical gap between the [basis for
the expert opinion] and the opinion proffered, the court may exclude the testimony as
unreliable.” Kim, 2022 WL 2670393
, at *5 (cleaned up). For example, “the Court may
exclude [an expert witness’s] analysis if the studies that he relies on are so dissimilar
to the facts presented that [the expert witness’s] opinions cannot be sufficiently
supported by the studies.” Holcombe, 516 F. Supp. 3d at 675 (cleaned up). “But the
notion that expert testimony is only admissible to the extent that it is based on
studies of identical individuals under identical circumstances would not only turn the
‘flexible’ inquiry envisioned under Rule 702 on its head, but such rigid constructions
of reliability and relevance would defeat the very purpose of expert testimony: to help
the trier of fact understand and evaluate the evidence.” Id. at 676-77 (cleaned up).
The “evidentiary gates [provided by Rule 702 and Daubert] exist to keep out
error that may impermissibly affect the jury” and “to protect juries from unreliable
and irrelevant expert testimony.” Taxotere (Docetaxel) Prod. Liab. Litig., 26 F.4th at 264, 268
. But “[t]he court’s inquiry is flexible in that [t]he relevance and reliability of expert testimony turns upon its nature and the purpose for which its proponent offers it.” Aircraft Holding,2022 WL 3019795
, at *6 (cleaned up). And, “[p]articularly in a
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jury trial setting, the court’s role under Rule 702 is not to weigh the expert testimony
to the point of supplanting the jury’s fact-finding role – the court’s role is limited to
ensuring that the evidence in dispute is at least sufficiently reliable and relevant to
the issue so that it is appropriate for the jury’s consideration. Thus, [w]hile the
district court must act as a gatekeeper to exclude all irrelevant and unreliable expert
testimony, the rejection of expert testimony is the exception rather than the rule.”
United States v. Perry, 35 F.4th 293
, 330 (5th Cir. 2022) (cleaned up).
And “[t]he Fifth Circuit has noted that [a]s a general rule, questions relating
to the bases and sources of an expert’s opinion affect the weight to be assigned that
opinion rather than its admissibility and should be left for the jury’s consideration,”
and, “[a]ccordingly, [v]igorous cross-examination, presentation of contrary evidence,
and careful instruction on the burden of proof are the traditional and appropriate
means of attacking shaky but admissible evidence.” Ramos, 2022 WL 615023
, at *3
(cleaned up). Generally, an opposing party’s “doubts about the bases for [an expert’s]
opinions do not render his opinions so unsupported as to create ‘too great an
analytical gap’ between the evidence he relies on and his opinions.” Holcombe, 516 F.
Supp. 3d at 675 (cleaned up).
As for the required disclosures for nonretained experts under Federal Rule of
Civil Procedure 26(a)(2)(C), Judge Starr recently explained that Federal Rule of Civil
Procedure
26(a)(2)(A) requires parties to disclose “the identity of any witness it
may use at trial to present evidence under Federal Rule of Evidence 702,
-16-
703, or 705.” If the expert witness is not required to provide a written
report, the party’s disclosure must provide “the subject matter on which
the witness is expected to testify” and “a summary of the facts and
opinions to which the witness is expected to testify.” The advisory
committee report notes clarify that Rule 26(a)(2)(C) “mandate[s]
summary disclosures of the opinions to be offered by the expert
witnesses who are not required to provide reports under Rule 26(a)(2)(B)
and of the facts supporting those opinions.” While this summary is
“considerably less extensive than the report required by Rule
26(a)(2)(B)[,] and [c]ourts must take care against requiring undue
detail,” “[t]his less extensive disclosure standard ... does not obviate the
need to provide the disclosures expressly required by this rule.”
Fracalossi v. MoneyGram Pension Plan, No. 3:17-cv-336-X, 2021 WL 5505604
, at *13 (N.D. Tex. Nov. 24, 2021) (cleaned up). Rule 26(a)(2)(C) “is intended to ensure that an opposing party has some notice of what an expert witness who is not retained or specially employed will testify about,” and “[t]he disclosure must at least state opinions, not merely topics of testimony[,] and contain ... a summary of the facts upon which the opinions are based.” Aircraft Holding,2022 WL 3019795
, at *5 (cleaned up). “[T]he requirement of a ‘summary’ may be satisfied by an abstract, abridgement, or compendium of the opinion and facts supporting the opinion,” and “[t]he court must take care against requiring undue detail, keeping in mind that these witnesses have not been specially retained and may not be as responsive to counsel as those who have.”Id.
(cleaned up).
If a party fails to comply with Rule 26, the Court may strike the
evidence unless the failure was substantially justified or is harmless.
Exclusion is not mandatory but within the Court’s discretion. The Court
looks to four factors in deciding whether to exercise its discretion: “(1)
the importance of the evidence; (2) the prejudice to the opposing party
of including the evidence; (3) the possibility of curing such prejudice by
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granting a continuance; and (4) the explanation for the party’s failure to
disclose.”
Fracalossi, 2021 WL 5505604
, at *13 (cleaned up). “The court considers the four- factor test holistically. It does not mechanically count the number of factors that favor each side.” Galvez v. KLLM Transp. Servs., LLC,575 F. Supp. 3d 748
, 757 (N.D. Tex.
2021) (cleaned up). “[T]he exclusion of evidence is a harsh penalty and should be used
sparingly.” Id. at 758 (cleaned up).
And, as to allegedly untimely supplemental expert reports, Federal Rule of
Civil Procedure 26(e)(1) provides that “[a] party who has made a disclosure under
Rule 26(a)... must supplement or correct its disclosure or response: (A) in a timely
manner if the party learns that in some material respect the disclosure... is
incomplete or incorrect, and if the additional or corrective information has not
otherwise been made known to the other parties during the discovery process or in
writing; or (B) as ordered by the court.”
“[T]he line between supplemental opinions and new opinions is not always
clear, and the decision regarding how to make the distinction ... depends on the facts
of the case.” Aircraft Holding, 2022 WL 3019795
, at *2 (cleaned up). But “[c]ourts routinely reject untimely ‘supplemental’ expert testimony where the opinions are based upon information available prior to the deadline for expert disclosures and disclosure ‘departs from [or] expands upon [the] original report in [any] material respects.” Holcombe v. United States,516 F. Supp. 3d 660
, 670 (W.D. Tex. 2021)
(cleaned up). “The purpose of supplementary disclosures is just that – to supplement.
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Such disclosures are not intended to provide an extension of the expert designation
and report production deadline.” Aircraft Holding, 2022 WL 3019795
, at *2 (cleaned up). “Thus [w]hen the analysis and opinions in the second report [are] largely new rather than supplementary, they cannot qualify as a supplemental expert report under Rule 26(e).”Id.
(cleaned up).
And, even if an allegedly supplemental report is untimely, “[i]n assessing
whether to permit testimony based on an untimely supplemental expert report, the
court, in exercising its discretion, considers (1) the explanation for making the
supplemental disclosure at the time it is made; (2) the importance of the
supplemental information to the proposed testimony of the expert, and the expert’s
importance to the litigation; (3) potential prejudice to an opposing party; and (4) the
availability of a continuance to mitigate any prejudice.” Id.
at *3 n.3 (cleaned up).
Analysis
As explained above, the Court should not, in its gatekeeping role under Rule
702 and Daubert, exclude a proffered expert witness’s opinion or testimony because
(1) it is not correct; (2) it contradicts other expert testimony or relies on a sets of facts
that conflicts with that relied on by contradictory expert testimony, even if that
contradictory expert testimony has been found to be reliable; or (3) it does not
conclusively prove the proponent’s theory of its case or an element of a claim or
defense.
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But the Court should refuse to allow an expert witness to testify if it finds that
the witness is not qualified to testify in a particular field or on a given subject.
And the party offering the expert testimony bears the burden of proof, by a
preponderance of evidence, to show that a qualified expert’s testimony is relevant
(that is, 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, and the expert’s
reasoning or methodology properly can be applied to the facts in issue) and reliable
(that is, the testimony is based on sufficient facts or data and is the product of reliable
principles and methods).
The Court should exclude expert testimony where (1) the expert cannot bring
to the jury, on a matter of relevance, more than the lawyers can offer in argument;
(2) the expert testimony is based only on subjective belief or unsupported speculation
or is connected to existing data only by the unproven assertion of the expert, resting
solely on the expert’s authority; (3) there is simply too great an analytical gap
between the basis for the expert opinion and the opinion proffered (such as if the
studies that the expert relies on are so dissimilar to the facts presented that the
expert’s opinions cannot be sufficiently supported by the studies); (4) the expert
testimony is based on indisputably wrong or erroneous or insufficient facts; (5) the
proponent fails to provide some objective, independent validation of the expert’s
methodology; (6) the source on which an expert’s opinion relies is of such little weight
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that the jury should not be permitted to receive that opinion; or (7) the expert relies
on assumptions that have no factual basis in the record or no underlying rationale.
I. Gary Durham
VBF explains that Durham’s Rebuttal Report “is largely argumentative rather
than technical or accounting-based” and that “Durham gives his opinion that the
opinions and conclusions set forth in the Kleinman Report are ‘flawed, improper,
speculative and unreliable’” and asserts that “Mr. Durham’s testimony is unreliable
because it is based on incorrect or insufficient information” where he “offers opinions
as to various facts and conclusory and argumentative statements regarding the
Kleinman Report based on a very limited review of documents in this case.” Dkt. No.
495 at 6, 7.
But challenges to the quantity or breadth of the sources and bases for
Durham’s expert opinion go to the weight that it may be afforded and not to its
admissibility. And the Court agrees with the Founders that, as a rebuttal expert,
Durham is not required, in “point[ing] out [alleged] flaws in Ms. Kleinman’s report,”
to “(1) hav[e] reviewed all the documents Ms. Kleinman purportedly did and (2) offer[]
an alternative methodology as to what the proper analysis should have been.” Dkt.
No. 502 at 8-9. And his not having done so does not “make[] his opinion amount to
nothing more than subjective belief or unsupported speculation.” Dkt. No. 495 at 11.
And the Court is not persuaded that Durham’s challenges to Kleinman’s
opinions regarding who suffered losses or damages amount to improper legal
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conclusions, for the reasons that the Founders persuasively explain in response. See
Dkt. No. 502 at 10-12.
In reply, VBF clarifies that the core of its challenge to Durham’s Rebuttal
Report is that “[w]hat Durham is actually doing is pointing out what he perceives to
be ‘flaws’ in Kleinman’s conclusions, much like what opposing counsel would do in
the course of cross-examination” but “[h]e is doing so … without the benefit of
reviewing any of her underlying materials and based on fundamental
misunderstandings of what Kleinman actually did,” where, “[f]or example, Durham
asserts that Kleinman assumed VBF’s investors were also plaintiffs, but she made no
such assumption,” and “also stated that there was no independent data for
Kleinman’s misappropriations calculation, but she cited specifically to the
transactions and evidence that result in that number, which he did not review.” Dkt.
No. 522 at 7-8 (cleaned up). VBF contends that “[t]hese misunderstandings of
Kleinman’s report render Durham’s conclusions about that report unreliable” and
“also render Durham’s conclusions unhelpful to the jury because they are contrary to
the actual evidence and simply reflect a ‘dressed-up’ line of cross examination
questioning.” Id. at 8 (cleaned).
But VBF’s challenges to Durham’s conclusions and his support for them do not
show a failing under Rule 702’s reliability requirement but rather matters for cross-
examination at trial.
And, to “[a]ssist[] the trier of fact,” Durham must “bring to the jury more than
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the lawyers can offer in argument,” but “the helpfulness threshold is low: it is
principally ... a matter of relevance.” Puga, 922 F.3d at 293-94
(cleaned up). The Court
is not persuaded that Durham’s rebuttal opinions as to Kleinman’s damages opinions
are on the level of his acting as “merely a party’s lawyer’s avatar.” Dkt. No. 522 at 8
(cleaned up).
The Court denies VBF’s request to exclude Durham’s timely-disclosed expert
testimony.
But the Court is persuaded that Durham’s late-disclosed supplemental opinion
is untimely and must be excluded under Rule 26, where, as VBF explains, the
“Founders have not offered any explanation for why they have not provided a written
report containing Durham’s new opinions or why these opinions were first disclosed
at his deposition on July 29, 2022”; “[t]The prejudice of allowing Durham to testify at
trial to opinions that he has not even reduced to a written report as required by Rule
26 and on which VBF therefore had no opportunity to meaningfully depose him, or
respond to, is significant”; “[e]xpert discovery has now closed”; and the Founders “had
four months from the receipt of Kleinman’s Supplemental Report to disclose a new
opinion and provide a written report” and failed to do so. Dkt. No. 522 at 10 (cleaned
up).
The Court excludes Durham’s “supplemental” expert opinion that was not in
his written report and was not disclosed until his deposition, along with any
testimony relating to it.
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II. Mark Nelson and Rick Sheriff
“The Founders withdraw their designation of Rick Sheriff as a non-retained
expert witness.” Dkt. No. 502 at 13. VBF asks the Court to therefore grant the motion
to exclude as to him, but the Court will deny the motion as moot as to Sheriff.
As to Nelson, VBF asserts that “[t]he Founders’ disclosures regarding their
nonretained witnesses fail to comply with Rule 26(a)(2)(C)’s requirement to provide
a summary of the facts and the opinions as to which the expert is expected to testify”
where the “summaries are vague and inadequate to give VBF proper notice of
Founders’ nonretained experts testimony and should therefore be stricken.” Dkt. No.
495 at 12-13.
The Founders respond that “Nelson is primarily a fact witness” but “has
specialized knowledge regarding the performance of fish and growing technologies
that were implemented at VBF’s facilities” and “regarding the capabilities and actual
results achieved by using the technology implemented by VBF.” Dkt. No. 502 at 13-
14. According to the Founders, “[a]s it relates to Mr. Nelson potentially providing
expert testimony that refutes the conclusions reached in the Whitehair Report about
VBF’s operations, technology and the projections, this testimony would be based on
statements made by Mr. Nelson himself in correspondence and his involvement in
VBF – i.e., based on his personal experience and specialized knowledge.” Id. at 16.
But none of the Founders’ explanations regarding Nelson’s qualifications and
possible limited expert testimony cure their deficient Rule 26(a) disclosures that are
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limited to, at best, and even with the explanations in their response, broad topics. For
purposes of Rule 26(a)(2)(C), “disclosure must, at the very least, state opinions, not
merely topics of testimony, and contain ... a summary of the facts upon which the
opinions are based.” Galvez, 575 F. Supp. 3d at 756 (cleaned up).
And the Court does not find the Founders’ non-compliance to be harmless,
considering (1) the importance of the evidence; (2) the prejudice to the opposing party
of including the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party’s failure to disclose.
The Founders contend only that “[a]ny non-compliance with Rule 26 by the
Founders has not harmed VBF” where “[t]he Founders timely disclosed Mr. Nelson
as a non-retained expert, and VBF deposed Mr. Nelson and had the opportunity to
inquire about Mr. Nelson’s experience and opinions.” Dkt. No. 502 at 16.
That rings hollow where, even today, as VBF points out, the Founders’
disclosure provides no expert opinions that Nelson may testify to, and neither does
its response. See Dkt. No. 522 at 9. In the face of that reality, whatever the importance
of “the potential that his testimony might include limited opinion testimony,” Dkt.
No. 502 at 13-14, the prejudice to VBF is considerable, and the Founders have offered
no explanation for their failure to properly disclose. See Dkt. No. 502 at 17
(“Separately, the Founders will be relying on Mr. Nelson primarily, if not exclusively,
as a fact witness, which renders VBF’s complaints regarding the Founders’ disclosure
of Mr. Nelson moot.”).
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The Court excludes any expert testimony by Nelson.
III. Keith Driver
VBF challenges Driver’s designation of himself as a nonretained witness to
testify regarding “his experience at VBF, including the technical knowledge and
opinions regarding VBF’s performance,” and “regarding feed conversion ratios,
pricing, water treatment, mortality rates, the fish market, and opposing flow
technology” and “regarding his representations about these and other subjects” and
“to testify and opine consistent with his deposition in this matter” as deficient and
failing to comply with Rule 26(a)(2)(C).
The Court agrees, where “Driver broadly identifies the subject matter his
expected testimony” but “provides no summary of the facts and the substantive
opinion to which he is expected to testify, as required by Rule 26(a)(2)(C)”; “does not
state what his opinions are regarding any of the topics he identifies”; “does not state
what his view or judgment is regarding any of the topics he identifies in his
disclosure”; and “does not articulate a summary of the facts supporting any of his
opinions, as required by Rule 26(a)(2)(C).” Dkt. No. 495 at 16.
These disclosures provide less than the combination of pointing to deposition
testimony and a bullet-point list of opinions that the Court found sufficient in Everett
Fin., Inc. v. Primary Residential Mortg., Inc., No. 3:14-cv-1028-D, 2017 WL 90366
, at
*2-*3 (N.D. Tex. Jan. 10, 2017).
And the Court does not find Driver’s non-compliance to be harmless,
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considering (1) the importance of the evidence; (2) the prejudice to the opposing party
of including the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party’s failure to disclose.
Driver protests that he “is the single most knowledgeable person to testify
about VeroBlue’s operations because he is the single most knowledgeable person to
testify about VeroBlue’s operations prior to September 2016, the representations he
allegedly made regarding such operations, whether his representations were
accurate, and the information available to him at the time as it relates to VeroBlue’s
operations.” Dkt. No. 504 at 6. But, as VBF notes in reply, “[n]one of those topics
require any specialized knowledge, skill, training, or education,” and “[t]hree of the
four describe factual testimony – what Driver said and heard during his time at VBF.”
Dkt. No. 522 at 3.
And Driver “can still testify as a fact witness” – “he simply would not be
allowed to testify to the jury about technical matters to which he is not qualified to
testify about.” Dkt. No. 495 at 21. “Testimony regarding first-hand, historical
perceptions constitutes lay, not expert, opinion testimony.” Arnold, 2022 WL 2392875
, at *18.
But, for the reasons explained above, Driver’s disclosures do not provide
sufficient notice of the subject matter, opinions, and facts he is expected to testify on
as an expert witness, however much time has passed since Driver’s deposition,
resulting in prejudice to VBF.
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The Court excludes any expert testimony by Driver.
Conclusion
For the reasons and to the extent explained above, the Court grants in part
and denies in part Plaintiff VeroBlue Farms USA, Inc.’s Motion to Strikes
Defendants’ Experts [Dkt. No. 495].
SO ORDERED.
DATED: January 20, 2023
DAVIDL.HORAN —s—SsS
UNITED STATES MAGISTRATE JUDGE
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