Oracle Corporation et al v. SAP AG et al

Filing 1157

Declaration of Tharan Gregory Lanier in Support of 1156 Opposition/Response to Motion Declaration of Tharan Gregory Lanier in Support of Defendants' Oppositions to Oracle's Motions in Limine filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23)(Related document(s) 1156 ) (Froyd, Jane) (Filed on 5/10/2012)

EXHIBIT 18

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Only the Westlaw citation is currently available.
United States District Court,
D. Colorado.
NETQUOTE, INC., a Colorado corporation,
Plaintiff,
v.
Brandon BYRD, an internet user making use of the
IP Addresses 64.136.27.226 and 64.136.26.227, and
Mostchoice.Com, Inc., a Georgia corporation, Defendants.
Civil Action No. 07-cv-00630-DME-MEH.
April 29, 2008.
Daniel D. Williams, Teresa Taylor Tate, Faegre &
Benson, LLP, Boulder, CO, David W. Stark, Heather Carson Perkins, Faegre & Benson, LLP, Denver,
CO, for Plaintiff.
Melvin L. Hewitt, Jr., Ryan Lance Isenberg, Isenberg & Hewitt, P.C., Atlanta, GA, for Defendants.
RECOMMENDATION ON MOTION TO EXCLUDE EXPERT TESTIMONY
MICHAEL E. HEGARTY, United States Magistrate Judge.
*1 Pending before the Court is Defendants'
Motion to Exclude Expert Testimony [filed December 14, 2007; docket # 151]. Pursuant to 28 U.S.C.
§ 636(b)(1)(A) and D.C. Colo. LCivR 72.1 C, the
Motion has been referred to this Court for recommendation. The Court held an evidentiary hearing
on this matter on April 14, 2008. For the reasons
stated below, this Court recommends that the DisFN1
trict Court deny the Motion to Exclude.
FN1. Be advised that all parties shall have
ten (10) days after service hereof to serve
and file any written objections in order to
obtain reconsideration by the District
Judge to whom this case is assigned.
Fed.R.Civ.P. 72. The party filing objec-

tions must specifically identify those findings or recommendations to which the objections are being made. The District Court
need not consider frivolous, conclusive or
general objections. A party's failure to file
such written objections to proposed findings and recommendations contained in
this report may bar the party from a de
novo determination by the District Judge of
the proposed findings and recommendations. United States v. Raddatz, 447 U.S.
667, 676-83 (1980); 28 U.S.C. § 636(b)(1).
Additionally, the failure to file written objections to the proposed findings and recommendations within ten (10) days after
being served with a copy may bar the aggrieved party from appealing the factual
findings of the Magistrate Judge that are
accepted or adopted by the District Court.
Thomas v. Arn, 474 U.S. 140, 155 (1985);
Moore v. United States, 950 F.2d 656, 659
(10th Cir.1991); Niehaus v. Kansas Bar
Ass'n, 793 F.2d 1159, 1164 (10th Cir.1986)
.
BACKGROUND
The District Court in this case has previously
set forth the background of this matter as follows.
Plaintiff NetQuote, Inc., is a Colorado-based company that sells insurance referrals. NetQuote operates a website that offers individuals a way to submit information about themselves and their insurance needs, and NetQuote sells that information to
its clients-insurance brokers and agents-who then
contact the individuals with an insurance quote.
NetQuote has brought suit against Defendants
MostChoice, a Georgia-based competitor that also
collects and sells insurance referrals through a website, and Brandon Byrd, a resident of Georgia who
was employed by MostChoice at the time of the
events in question. NetQuote alleges that
MostChoice hired Byrd for the purpose of pretending to be individuals interested in insurance quotes

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and submitting hundreds of false inquiries to
NetQuote's website, knowing that NetQuote's clients would receive bad information that could not
lead to an insurance purchase. NetQuote alleges
that its clients complained about the inaccurate information and some terminated their business with
NetQuote. NetQuote also claims that, as a result of
the false submissions, MostChoice promoted itself
to potential clients as having superior accuracy and
reliability in insurance referrals compared to
NetQuote.
NetQuote's amended complaint asserts the following claims: fraud (against all Defendants); tortious interference with business relations (against
all Defendants); common law unfair competition
(against MostChoice); false advertising under the
Lanham Act (against MostChoice); and deceptive
trade practices under the Colorado Consumer Protection Act (against MostChoice). Doc. # 13.
A. Expert Report
Based upon the assumption that MostChoice's
employee, Defendant Byrd, submitted false insurance leads to NetQuote for the period October 2006
through July 2007, Stephen Duree, an expert retained to evaluate and quantify NetQuote's damages, opined that:
(1) NetQuote lost 157 local insurance agent accounts as a result of MostChoice's false applications;
(2) Netquote's damages for two lost national accounts total approximately $1.1 million;
(3) NetQuote's damages for the lost local accounts total $1.1-1.5 million;
(4) NetQuote suffered $128,000 in damages related to responding to MostChoice's attack; and
(5) MostChoice made at least $51,000 in sales to
NetQuote customers affected by false applications.
In coming to these conclusions, Duree first

identified accounts allegedly lost as a result of
MostChoice's conduct by eliminating those accounts that were affected by the false leads but had
not been terminated (“identification phase”). Then,
with the remaining accounts, Duree considered a
number of factors (including the duration that the
agent had been a NetQuote customer, the timing of
the receipt of false applications relative to the termination or inactivity of the account, and the number of false leads received by type of insurance
product) by which to draw an inference that
MostChoice's conduct caused the accounts to terminate. Using this method, Duree identified 157
local (as opposed to national) accounts allegedly
lost as a result of the false leads.
*2 Second, Duree quantified the losses from
these 157 accounts by relying on a valuation of
NetQuote's business, which was performed by
Quist Valuation, Inc. (“Quist”) in 2005
(“quantification phase”). The Quist Report was prepared in connection with NetQuote's acquisition by
its current owner for purposes of allocating the
price the owner paid to acquire NetQuote to the assets it acquired, in order to record the allocated values on financial statements. PricewaterhouseCoopers (PwC) then audited NetQuote's 2005 financial statements, and in so doing, evaluated the
Quist Report and found its conclusions reasonable.
To quantify damages, Duree first assumed that
NetQuote's customer relationships would decay
over a seven-year period, based on a similar assumption used in the Quist Report to determine the
book value of NetQuote's customer relationships.
Duree also testified that he independently determined that the seven-year decay period was appropriate for NetQuote's local accounts, based upon his
experience in conducting valuations of companies
similar to NetQuote.
Second, Duree evaluated and then employed
the revenue projections related to NetQuote's existing customers, as set forth in the Quist Report.
These projections of NetQuote's expected revenue
from existing customers over the seven-year decay

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period were found to be reasonable by PWC in its
audit of NetQuote's 2005 financial statements. Duree then applied the seven-year decay period and a
twenty-five percent business risk discount rate (also
applied by Quist and found to be reasonable by
PWC) to arrive at a present value of the revenue
stream of NetQuote's existing customer relationships before related costs. Duree compared that
present value figure for the existing customer relationships of $123,557,589 with the annualized 2005
revenues for the existing customers, and determined
that the relationship of the present value of the customer revenues to the annualized base-year revenues for the same customers was a 3.2 value multiple. In other words, for purposes of valuation, the
value of a customer equates to 3.2 times the annual
revenue generated from that customer.
Duree then determined the value of each lost
account by calculating each account's average
monthly revenue, annualizing that revenue, and
multiplying the annualized revenue by 3.2. Based
on this analysis, Duree determined that the fair
value of the lost national accounts was $1,122,368
and the fair value of the lost local accounts was
$2,021,193. After giving consideration to other possible causes of customer losses, Duree concluded
that a range of 50-75% of the damages resulting
from lost local accounts were caused by
MostChoice's false applications. Duree testified that
he based this range on his professional judgment
and experience, as well as on his analysis of the
customer data during the identification phase of the
analysis.
B. Motion to Exclude
MostChoice claims that Duree's methodology
is neither reliable nor relevant for several reasons:
(1) Duree improperly speculates about the causation of damages by using visual inspection of the
accounts, rather than direct communications with
account customers, to identify accounts lost as a
result of Byrd's false leads; (2) Duree is not qualified in the industry of insurance sales leads necessary to perform a visual inspection of the accounts;

(3) the Quist Report is inadmissible hearsay, and
thus, may not be used as a basis upon which to rely
for valuation; (4) the Quist Report expressly
provides that it may not be used for any purpose
other than that specified in the report; and (5) reliance on the Quist Report is improper in certain respects, including the seven-year decay period for
customer accounts.
*3 In response to each of MostChoice's reasons, NetQuote states:
(1) Duree considered objective customer data,
including the customer's status, the duration of the
relationship, the total number of false leads received by type of insurance lead, and revenue by
type of insurance lead. NetQuote claims that, while
Duree applied his professional judgment to the objective data in determining which accounts were
sufficiently affected by MostChoice's false leads to
include in his analysis at the quantification phase,
that does not render his entire methodology speculative. At the hearing, Duree also explained his decision not to interview NetQuote account holders,
as MostChoice contends he should have done, on
the basis that conducting interviews with customers
“so far after the fact” would be too speculative for
his analysis, based on his experience in having engaged in that precise exercise in other contexts.
(2) While not directly responding to the qualifications issue, NetQuote argues that contrary to
MostChoice's assertion, Duree did not apply the
50-75% range in the identification phase to reach
the conclusion that NetQuote's overall customer attrition is 50-75% attributable to MostChoice's false
applications. Rather, the 50-75% range was applied
in the quantification phase for the purpose of accounting for the possibility that certain of the lost
accounts (all of which received multiple false
leads) may have been lost for a combination of
reasons (of which MostChoice's false applications
may have been only one), or for reasons other than
MostChoice's conduct. Second, NetQuote contends
that the 50-75% range does not equate to “error
rate” as that term was used in Daubert, and that for

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non-scientific evidence such as Duree's analysis, “ ‘
Daubert factors (peer review, publication, potential
error rate, etc.) simply are not applicable to this
kind of testimony, whose reliability depends heavily on the knowledge and experience of the expert,
rather than the methodology or theory behind it.’ “
See Hangarter v. Provident Life & Accident Inc.
Co, 373 F.3d 998, 1017 (9th Cir.2004) (internal
citations omitted).
(3) NetQuote argues that Rule 803(6) of the
Federal Rules of Evidence provides an exception to
the hearsay rule for business records if they are
“kept in the course of a regularly conducted business activity, and if it was the regular practice of
that business activity to make the memorandum
[record].” Fed.R.Evid. 803(6). NetQuote contends
that the Quist Report, which was incorporated into
NetQuote's financial reporting and audited by
PricewaterhouseCoopers, is thus admissible under
Rule 803(6), and that because the Quist Report is
admissible, Duree's reliance upon it is permitted.
(4) NetQuote claims that Fed.R.Evid. 703 explicitly permits an expert to rely upon any matter
that an expert in the field would reasonably rely
upon to form the offered opinion, and permits experts to base their opinions on “all manner of underlying data that might otherwise not be admissible in evidence, including interviews, reports prepared by third parties, clinical and other studies,
and technical publications.” In re Sulfuric Acid Antitrust Litig., 235 F.R.D at 654 (citing 4 Weinstein's
Federal Evidence § 703.04[3] ). Nequote asserts
that Rule 703 merely requires that the facts or data
on which Duree based his opinions be of a type
reasonably relied upon by experts in the particular
field in forming opinions or inferences on the subject.
*4 Moreover, NetQuote argues that Duree concluded that the data and analysis contained in the
Quist Report was reliable based upon his education
and nearly 40 years of experience as a CPA, including his experience with preparing, evaluating and
reviewing analyses such as that contained in the

Quist Report. NetQuote claims that Duree's reliance
on the Quist Report in his damages quantification is
reasonable because: (1) the Quist Report was prepared prior to the start of MostChoice's attack on
NetQuote and for reasons wholly unrelated to this
litigation, (2) PricewaterhouseCoopers (PwC) had
conducted audit procedures on the Quist Report, (3)
reliance on such analysis is permitted by relevant
accounting industry professional standards, (4)
Duree has regularly relied upon the types of information contained in the Quist Report, both in his
work as a consultant and in his work as a CPA, (5)
Duree interviewed Quist personnel and satisfied
himself that they had appropriately conducted the
procedures required by FASB No. 141, and (6)
Duree confirmed that PWC reviewed, evaluated,
and relied upon the Quist Report in the audit of
NetQuote's 2005 financial statements.
(5) NetQuote claims that Duree specifically
considered whether the Quist Report was a sufficiently reliable source of information for use in his
analysis and concluded that it was based upon his
extensive experience. In addition, with respect to
the seven-year decay period, NetQuote contends
that Duree independently concluded that the decay
period was consistent with decay rates used for analysis of similar assets in his experience. NetQuote
argues that the seven-year decay factor is an accounting assumption, analogous to the assignment
of a useful life for a tangible asset over which period of time the tangible asset will be depreciated.
Duree testified that, in his experience in conducting
valuations of businesses similar to NetQuote, he
has found that decay periods ranging from 5 to 10
years are appropriate for customer relationships
similar to NetQuote's relationships with its local
agents, depending on a variety of factors.
In reply, MostChoice counters that Duree is not
qualified to testify as to whether the false leads
caused damage to NetQuote, because Duree is not
an expert and has no experience in the field of insurance lead generation or sales. MostChoice argues that an expert who is relying solely on experi-

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ence must explain how that experience leads to the
conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience
is reliably applied to the facts. See Highland Capital Mgmt, L.P. v. Schneider 379 F.Supp.2d 461
(S.D.N.Y.2005). Moreover, MostChoice claims that
the record is devoid of any evidence that another
expert could reach the same conclusion as to causation of lost customers based on a visual inspection
that fails to include any review of NetQuote's communications with customers or any direct communications with customers himself. MostChoice criticizes Duree for using no random sampling techniques to test his methodology.
*5 Further, MostChoice asserts that the Quist
Report is not admissible under Fed.R.Evid. 703 or
803(6), and that it cannot be used for any purpose
other than that specified in the report itself. In addition, MostChoice finds fault with Duree's reliance
on the seven-year decay period for customer relationships, which is taken from the Quist Report.
MostChoice argues that NetQuote has the means to
determine the actual average life for a customer
(which MostChoice has calculated to be less than
one year) and that, in fact, a NetQuote representative has determined that the life of a national account, which is arguably longer than a local account, is approximately three to three-and-one-half
years. See Def. Hearing Exh. 1. Finally,
MostChoice contends that Duree's calculation for
the value of NetQuote's customer relationships at
$123 million is not credible considering that the
2005 Quist Report values customer relationships at
roughly $11 million and that, in 2007, Quist valued
the entire company at between $7 million and $77
million. Therefore, MostChoice concludes that
there is no sound basis for the methodology created
and/or used by Duree in quantifying NetQuote's
damages.
DISCUSSION
Rule 702 of the Federal Rules of Evidence allows the parties to present scientific testimony
through a qualified expert where such evidence

“will assist the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid.
702 (2008). In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 n. 7 (1993), the
Supreme Court defined the role of the trial judge in
admitting scientific testimony under Rule 702 as
that of a “gatekeeper.” The Court listed four nonexclusive factors which it deemed relevant in deciding whether to admit expert scientific testimony:
(1) whether the opinion at issue is based on sciFN2
entific knowledge,
is susceptible to testing, and
has been subjected to such testing; (2) whether the
opinion has been subjected to peer review; (3)
whether there is a known or potential rate of error
associated with the methodology and whether there
are standards controlling the technique's operation;
and (4) whether the theory has been accepted by the
scientific community. Id. at 593-94.
FN2. The Supreme Court explained that
scientific knowledge “implies a grounding
in the methods and procedures of science”
which must be based on actual knowledge
and not “subjective belief or unsupported
speculation.” Daubert, 509 U.S. at 590.
In other words, “an inference or assertion
must be derived by the scientific method ...
[and] must be supported by appropriate
validation-ie. ‘good grounds,’ based on
what is known.” Id.
The objective of Daubert's gatekeeping requirement is to ensure the reliability and relevancy
of expert testimony. “It 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.” Kumho Tire Co., Ltd v. Carmichael, 526
U.S. 137, 152 (1999). As an example of a useful
factor in a situation where the witness' expertise is
based purely on experience, the Supreme Court
suggested inquiring “whether [the expert's] preparation is of a kind that others in the field would recognize as acceptable.” Id. at 151. Accordingly, a

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trial court should consider the specific factors identified in Daubert where they are reasonable measures of the reliability of expert testimony, but consideration of other factors is not precluded where
appropriate. Id. Expert testimony may be admitted
based on the expert's professional knowledge, training, experience, and personal observations, where
supported by solid evidence in the scientific community. See St. Martin v. Mobil Exploration & Producing U.S., Inc., 224 F.3d 402, 406-07 (5th
Cir.2000) (holding that an ecologist's first-hand observation of flooded marsh combined with his expertise in marshland ecology were sufficiently reliable bases of his opinion on causation under
Daubert to admit the testimony).
*6 In determining whether an expert opinion is
reliable, the court's focus is on “scientific principles
and methodology, not on the conclusions that they
generate.” Daubert, 509 U.S. at 595. Although it is
not always a straightforward exercise to distinguish
between method and conclusion, “when the conclusion simply does not follow from the data, a district
court is free to determine that an impermissible
analytical gap exists between premises and conclusion.” Bitler v. A.O. Smith Corp., 391 F.3d 1114,
1121 (10th Cir.2004) (citing General Elec. Co. v.
Joiner, 522 U.S. 136, 146 (1997)). When examining an expert's method, however, the inquiry should
not be aimed at “the exhaustive search for cosmic
understanding but for the particularized resolution
of legal disputes.” Daubert, 509 U.S. at 597. Thus,
it is the specific relation between an expert's method, the proffered conclusions, and the particular
factual circumstances of the dispute that renders
testimony both reliable and relevant. Bitler, 391
F.3d at 1121.
Relevant evidence “means evidence having any
tendency to make the existence of any fact that is of
consequence to the determination of the action
more probable or less probable than it would be
without the evidence.” Fed.R.Evid. 401. The Supreme Court has described the consideration of relevant evidence as one of “fit.” Daubert, 509 U.S. at

591. A trial court must look at the logical relationship between the evidence proffered and the material issue that evidence is supposed to support to determine whether it advances the purpose of aiding
the trier of fact.
The trial court is not charged with weighing the
correctness of an expert's testimony, nor must the
court choose between the testimony of competing
expert witnesses. Rather, “vigorous crossexamination, presentation of contrary evidence, and
careful instruction on the burden of proof are the
traditional and appropriate means of attacking
shaky but admissible evidence.” Daubert, 509 U.S.
at 596. The proponent has the burden of establishing admissibility of the expert testimony under Rule
702 by a preponderance of the evidence. See
Fed.R.Evid. 104(a); Fed.R.Evid. 702 (Advisory
Committee Notes for 2002 Amendments); Bourjaily
v. United States, 483 U.S. 171 (1987).
With the foregoing legal principles in mind, I
consider the evidence presented to determine
whether the proffered expert testimony is admissible to prove the Plaintiff's damages.
A. Duree's Qualifications to Perform the Analysis
Recognizing that expertise may be acquired
through a broad range of experience, skills or training, Rule 702 does not impose an “overly rigorous”
requirement of expertise. See First Data Corp. v.
Konya, 2007 WL 2116378, *9 (D.Colo. July 20,
2007) (citing United States v. Velasquez, 64 F.3d
844, 849 (3d Cir.1995)). “The trial court should not
exclude expert testimony simply because the court
feels that the proffered witness is not the most qualified or does not have the specialization considered
most appropriate by the court.” Id. (citing Holbrook
v. Lykes Brothers Steamship Co., Inc., 80 F.3d 777,
782 (3d Cir.1996)). The Tenth Circuit has acknowledged that “[a]s long as an expert stays ‘within the
reasonable confines of his subject area,’ our case
law establishes ‘a lack of specialization does not affect the admissibility of [the expert] opinion, but
only its weight.” Ralston v. Smith & Nephew

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Richards, Inc., 275 F.3d 965, 969 (10th Cir.2001)
(quoting Wheeler v. John Deere Co., 935 F.2d
1090, 1100 (10th Cir.1991)).
*7 Stephen Duree testified that he has been licensed as a Certified Public Account for nearly 39
years, ten of which he has worked in auditing,
25-30 years in business valuation, and 25-30 years
in damages analysis. He is certified in business
valuation and has conducted approximately 6-10
business valuations in his career. He was primarily
responsible for issuing a report, much like the Quist
Report at issue in this case, for a cellular telephone
company. He has been a principal of the Duree Barton firm since 1985, and has been qualified as an
expert by various courts in the areas of business
valuation, forensic investigation and economic/damages analysis.
MostChoice contends that, although Duree may
be an expert in business valuations and economic
analysis, he is not an expert in insurance lead generation or sales and thus, not qualified to testify as
to the causation of customer accounts lost as a result of the false leads submitted in 2006 and 2007.
However, Duree's lack of professional experience
in the insurance leads industry is not dispositive as
to the issue of his qualifications and will not warrant his disqualification as an expert in this case.
Firsthand knowledge is not requisite to the admissibility of an expert opinion. Smith v. Ingersoll-Rand
Co., 214 F.3d 1235 (10th Cir.2000) (citing
Daubert, 3509 U.S. at 592 (“[A]n expert is permitted wide latitude to offer opinions, including those
that are not based on firsthand knowledge or observation.”)). As long as the expert stays “within the
reasonable confines of his subject area,” Tenth Circuit case law establishes that “a lack of specialization does not affect the admissibility of [the expert]
opinion, but only its weight.” Wheeler v. John
Deere Co., 935 F.2d 1090, 1100 (10th Cir.1991)
(mechanical engineer with expertise in the design
of farm equipment permitted to testify on consumer
expectations despite lack of experience in consumer
sampling). Thus, MostChoice may properly address

any shortcomings that its perceives in Duree's academic or professional background during crossexamination. See Daubert, 509 U.S. at 596
(“vigorous 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”). This Court recommends finding that Duree
has the necessary knowledge, training and experience to qualify as an expert witness under Rule 702
.
B. The Reliability and Relevance of Duree's
Analysis
A trial court has considerable discretion in determining whether particular expert testimony is reliable. Kumho Tire, 526 U.S. at 152. “No single
factor should be dispositive in weighing the reliability of an expert's opinions.” First Data Corp.,
2007 WL 2116378 at *11 (citing Ruiz-Troche v.
Pepsi Cola of Puerto Rico, 161 F.3d 77, 85 (1 st
Cir.1998)). Ultimately, the court's inquiry must focus on three areas: (1) whether the expert's testimony is based on sufficient facts or data; (2)
whether the expert used reliable principles and
methodologies; and (3) whether the expert applied
these principles and methods reliably to the facts of
the case. Fed.R.Evid. 702 (2008). If the court concludes that an expert's testimony satisfies these
evidentiary requirements of reliability, “it is up to
the jury to decide whether the expert used the best
or most reliable methodology, what weight to accord to his testimony and which of competing experts' opinions should be credited.” Cook v. Rockwell International Corp., 2006 WL 3533049, *6
(D.Colo.2006). Here, MostChoice challenges Duree's methodology and conclusions in both the identification and quantification phases of his analysis.
1. Identification Methodology
*8 MostChoice's primary concern regarding
Duree's identification of lost local accounts is that
he developed a method to identify accounts lost as a
result of the false leads based on a visual inspection
of the accounts, rather than communicating directly

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with the account holders to determine the reasons
for termination. The Court has significant concern
for the same reason.

loss of the accounts.
“M/C Substantial and Other”: in 54 of the
fected accounts, the magnitude and timing of
false leads is significant and substantial to
loss of the customer relationships, but are not
only potential causes of the loss.

afthe
the
the

During the hearing, Duree explained that in his
experience with accounts receivable, he has learned
that communications with account holders regarding termination of an account well after the fact is
typically unreliable. That is, after some time has
elapsed, Duree found that account holders tend to
give a reason for termination that will quickly end
the communication rather than reveal the true
motive behind the termination. Also, there was
testimony that, even when asked contemporaneously about a departing customer's motive, the
customer will often use a false reason to amend an
uncomfortable situation. Consequently, Duree determined that a better method was to review records
that were contemporaneous with the account terminations, and to consider factors such as the duration that the account holder had been a NetQuote
customer, the timing of the receipt of false applications relative to the termination or inactivity of the
account, and the number of false leads received by
the type of insurance product.

See Duree Barton Supplemental Report, February 18, 2008. This supplemental information reflects a more thorough analysis of the contemporaneous records available for review of customer accounts. See Bitler, 391 F.3d at 1122 (fire investigator's personal experience, training, method of observation and deductive reasoning was sufficiently reliable to constitute “scientifically valid” methodology).

In this case, the false leads were submitted and
accounts were terminated from the fall 2006
through the summer 2007. Duree conducted the
analysis for his original report in or about the fall
2007; then, after receiving copies of NetQuote's
customer service records in or about January 2008,
Duree supplemented his report to reflect contemporaneous information received from certain customers regarding termination. From the customer
service records, Duree was able to discern that certain customers most likely terminated as a result of
the false leads and that others did not. Therefore,
Duree divided the 157 lost local accounts into the
following categories:

*9 Nevertheless, MostChoice contends that
certain of the accounts categorized as “M/C Substantial” reflect causes for termination other than
the false leads. See Def. Exhs. # 5 and # 6.
However, such argument goes to the weight of the
evidence rather than to its admissibility, and may
be more properly addressed in cross-examination.
See LeMaire by and through
LeMaire v. United
States, 926 F.2d 949, 953 (10th Cir.1987) (“the fact
that the expert cannot support his opinion with certainty goes only to its weight, not to its admissibility”). Here, the Court recommends finding that
Duree's methodology in identifying lost customer
accounts is reliable under Rule 702.

“M/C Substantial”: in 57 of the affected accounts, the magnitude and timing of the false
leads is significant and substantial to the loss of
the customer relationships, and the customer service records do not suggest other causes of the

2. Quantification Methodology
MostChoice's primary concern with Duree's
quantification of damages in this case is his reliance
on the seven-year decay period for customer rela-

“M/C Not Substantial”: in 32 of the affected accounts, the customer service records suggest other overriding reasons for the loss of the accounts.
“Other non-damage sub-classifications”: the customer service and subsequent records reflect that
14 of the 157 accounts should be excluded from
the damages calculation.

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Not Reported in F.Supp.2d, 2008 WL 2442048 (D.Colo.)
(Cite as: 2008 WL 2442048 (D.Colo.))

tionships, which Duree apparently derived from the
Quist Report. MostChoice alleges three problems
with the Quist Report: (1) it is inadmissible
hearsay; (2) it is to be used only for the purpose
stated in the report itself; and (3) reliance on the report is improper, since NetQuote has other means
for determining the decay period of customer relationships.
With respect to the first issue, the Court recommends finding that the Quist Report is admissible
as a business record under Fed.R.Evid. 803(6). See
Paddack v. Dave Christensen, Inc., 745 F.2d 1254,
1257 n. 3 (9th Cir.1984) ( “Although a financial
statement audit is based in part on hearsay, it is
generally admissible as a business record of the
audited entity under Fed.R.Evid. 803(6)”). As to the
second issue, Duree testified that he interviewed
representatives of Quist and was granted permission to use the report for his analysis. See Walker v.
Soo Line Railroad Co., 208 F.3d 581, 588 (7th
Cir.2000) (acknowledging that “courts frequently
have pointed to an expert's reliance on the reports
of others as an indication that their testimony is reliable”).
With respect to the third issue, Duree testified
that he determined a decay period of seven years
not just from the Quist Report, but also from his
own experience in valuing businesses and concluding that customer relationships typically last 5-10
years. In response, MostChoice contends that the
evidence demonstrates NetQuote's customer relationships typically last less than one year, and that
NetQuote's own representatives believe their customer relationships last three to three-and-one-half
years. As a general rule, the factual basis of an expert opinion goes to the credibility of the testimony
rather than the admissibility, and it is incumbent
upon the opposing party to examine the factual
basis for the opinion in cross examination. Werth v.
Makita Elec. Works, Ltd., 950 F.2d 643, 654 (10th
Cir.1991) (holding that doubts concerning the sufficiency of the factual basis to support the expert
opinion go to its weight and not to its admissibil-

ity). “Only if the expert's opinion is so fundamentally unsupported that it can offer no assistance to
the jury must such testimony be excluded.” First
Data Corp., 2007 WL 2116378 at *12. (citing Bonner v. ISP Techs., Inc., 259 F.3d 924, 929-30 (8th
Cir.2001)); see also LeMaire, 826 F.2d at 954 (“the
fact that an expert cannot support his opinion with
certainty goes only to its weight not to its admissibility”). With the benefit of vigorous crossexamination, any perceived weaknesses in Duree's
testimony should be addressed by the jury.
*10 MostChoice also contends that Duree's
analysis valuing NetQuote's customer relationships
at $123 million is improper considering that the
Quist Report reflects customer relationships valued
at $11 million in 2005, and that in 2007, Quist valued the entire company at between $7 million and
$77 million. Again, the requirement under Rule 702
is to determine reliability, not certainty. “[E]ven if
the judge believes there are better grounds for some
alternative conclusion, and that there are some
flaws in the scientist's methods, if there are good
grounds for the expert's conclusion, it should be admitted.” Bonner, 259 F.3d at 929 (quoting Heller v.
Shaw Industries, 167 F.3d 146, 152-53 (3d
Cir.1999)); see also Quinton v. Farmland Indus.,
Inc., 928 F.2d 335 337 (10th Cir.1991) (finding that
an expert's opinion need not be generally accepted
in the scientific community to be sufficiently reliable and probative to support a jury finding). Here,
the Court recommends finding that Duree's methodology in quantifying Netquote's damages is reliable
under Rule 702.
3. Methodologies Applied to Facts
Even if an expert's proffered evidence is scientifically valid and follows appropriately reliable
methodologies, it might not have sufficient bearing
on the issue at hand to warrant a determination that
it has relevant “fit.” Daubert, 509 U.S. at 591.
Evidence appropriate for one purpose may not be
relevant for a different purpose, and it is the trial
court's responsibility to make this fitness determination. Here, while MostChoice may question

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(Cite as: 2008 WL 2442048 (D.Colo.))

whether Duree's analysis is complete, it is not proper to conclude that his proposed testimony is based
solely on speculation. At the same time, the Court
has some question about Duree's determination to
quantify damages using a range of 50-75% to account for “termination reasons other than caused by
MostChoice.” Certainly, an expert who claims to be
either 50% right or 50% wrong raises significant
uncertainty as to the credibility of his analysis.
However, such doubts are properly brought before a
jury. And, as stated above, the existence of contradictory evidence does not itself render Duree's
opinions unreliable or irrelevant for purposes of
Rule 702.
In this case, Duree's methodologies are sufficiently applied to the facts in this case to render his
opinion useful to the jury; therefore, the Court recommends finding that Duree's methodologies are
relevant under Rule 702.
CONCLUSION
Although MostChoice raises serious issues regarding Duree's methodology and conclusions,
those issues must be resolved by the fact-finder in
this case. Therefore, pursuant to 28 U.S.C. §
636(b)(1)(A) and D.C. Colo. L.Civ.R 72.1(C), I
therefore RECOMMEND that Defendants' Motion
to Exclude Expert Testimony [filed December 14,
2007; docket # 151 ] be denied.
D.Colo.,2008.
NetQuote, Inc. v. Byrd
Not Reported in F.Supp.2d, 2008 WL 2442048
(D.Colo.)
END OF DOCUMENT

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