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 20

Page 1
Not Reported in F.Supp., 1998 WL 151806 (E.D.Pa.)
(Cite as: 1998 WL 151806 (E.D.Pa.))

Only the Westlaw citation is currently available.
United States District Court, E.D. Pennsylvania.
ROBERT BILLET PROMOTIONS, INC.
v.
IMI CORNELIUS, INC., et al.
Civ. A. No. 95–1376.
April 1, 1998.
MEMORANDUM AND ORDER
HERBERT J. HUTTON, J.
*1 Presently before the Court are the Defendants' Motion in Limine to Preclude the Testimony
of Charles S. Lunden as Plaintiff's Expert on Damages (Docket No. 55), the Plaintiff's Response, and
the Defendants' Supplemental Memorandum of
Law. For the reasons that follow, the Defendant's
Motion is granted in part and denied in part.
I. BACKGROUND
The Plaintiff, Robert Billet Promotions, Inc.
(“RBP”), intends to offer an accountant, Charles S.
Lunden, as a damages expert in support of its
breach of contract claim. Lunden proposes to testify
to the amount of direct and consequential damages
RBP incurred as a consequence of the Defendants'
alleged breach. The Defendants, IMI Cornelius,
Inc. (“Cornelius”) and Remcor Products, Inc.
(“Remcor”), have moved in limine to exclude Lunden's testimony as based entirely on conjecture and
speculation. The Court held a voir dire hearing on
the matter at 9:45 a.m., on the morning of March
31, 1998.
II. DISCUSSION
Federal Rule of Evidence 702 governs the admission of expert testimony in federal court. Rule
702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the
evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, exper-

ience, training, or education, may testify thereto
in the form of an opinion or otherwise.
The Rule has three major requirements: (1) the
proffered witness must be a qualified expert; (2) the
expert must testify about matters requiring scientific, technical, or specialized knowledge; and (3) the
expert's testimony must “fit” the facts of the case.
See Kannankeril v. Terminix Int'l, Inc., 128 F.3d
802, 806 (3d Cir.1997) (citing In re Paoli R.R. Yard
PCB Litigation, 35 F.3d 717, 741–42 (3d Cir.1994)
). A Rule 702 determination is a preliminary question of law for the Court, under Federal Rule of
Evidence 104(a). See Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 592, 113 S.Ct.
2786, 125 L.Ed.2d 469 (1993).
Under the Supreme Court's Daubert decision,
the Court assumes a “gatekeeping” function to protect against the admission of expert testimony that
is unreliable or unhelpful to the trier of fact. See id.
at 592–95; United States v. Velasquez, 64 F.3d 844,
850 (3d Cir.1995). “This entails 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.” Daubert, 509
U.S. at 592–93. Although the Supreme Court first
announced this approach in the context of scientific
testimony, see id at 590 n. 8, federal courts subsequently have extended it—albeit in a more generalized form—to the evaluation of “technical” forms
of expert knowledge. See, e.g., Tyus v. Urban
Search Mgt., 102 F.3d 256, 263 (7th Cir.1997)
(applying Daubert to social science testimony);
Velasquez, 64 F.3d at 850 (handwriting expert);
Stecyk v. Bell Helicopter Textron, Inc., 1998 WL
42302, *1–2 (E.D.Pa. January 5, 1998)
(engineering experts); Lithuanian Commerce Corp.
v. Sara Lee Hosiery, –––F. R.D. ––––, 687 So.2d
1310, 1997 WL 75706, *5 (D.N.J. December 4,
1997) (accountant offered as damages expert). Accordingly, the Court will apply Daubert in evaluating the admissibility of Lunden's damages testi-

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 2
Not Reported in F.Supp., 1998 WL 151806 (E.D.Pa.)
(Cite as: 1998 WL 151806 (E.D.Pa.))

mony.

FN1
FN1. Although an accountant's damages
testimony is perhaps even less “scientific”
than an engineer's or handwriting analyst's,
the Court is obliged to employ the Daubert
approach in “an exercise of caution.”
Velasquez, 64 F.3d at 850.

*2 Returning to Rule 702, the Rule's first requirement is that the expert be qualified to testify.
See Paoli, 35 F.3d at 741. The Third Circuit has interpreted this standard liberally, and has “eschewed
imposing overly rigorous requirements of expertise.” Id. A broad range of knowledge, skills and
training can qualify an expert as such, and the
Court may not exclude proffered testimony merely
because it believes a higher degree of expertise
would be appropriate. See id.; Hammond v. International Harvester Co., 691 F.2d 646, 652–53 (3d
Cir.1982); Stecyk, 1998 WL 42302, *2.
The Rule's second requirement is that the expert testimony be reliable. See Kannankeril, 128
F.3d at 806. “Daubert explains that the language of
Rule 702 requiring the expert to testify to scientific
knowledge means that the expert's opinion must be
based on the ‘methods and procedures of science’
rather than on ‘subjective belief or unsupported
speculation’; the expert must have ‘good grounds'
for his or her belief.” Paoli, 35 F.3d at 742
(emphasis in original). In the context of scientific
testimony, a court must consider the scientific
validity of the method in dispute, with reference to
the factors announced in Daubert, 509 U.S. at
593–95, and in United States v. Downing, 753 F.2d
1224, 1238–39 (3d Cir.1985). See Paoli, 35 F.3d at
742. These factors include:
(1) whether a method consists of a testable hypothesis; (2) whether the method has been subject
to peer review; (3) the known or potential rate of
error; (4) the existence and maintenance of standards controlling the techniques's operation; (5)
whether the method is generally accepted; (6) the
relationship of the technique to methods which

have been established to be reliable; (7) the qualifications of the expert witness testifying based on
the methodology; and (8) the non-judicial uses to
which the method has been put.
Kannankeril, 128 F.3d at 807 n. 6.
Of course, these factors were designed to test
the reliability of scientific methods of proof. In the
context of more technical testimony, like the validity of an accountant's assessment of contractual
damages, the Daubert approach must be applied in
a more general manner. See Tyus, 102 F.3d at 263.
See generally 29 Charles A. Wright & Victor J.
Gold, Federal Practice and Procedure: Evidence §
6266 nn. 62–63 (1997) (noting areas in which
courts have extended and refused to extend the
Daubert analysis). Therefore, the Court must consider the above factors—to the extent they are applicable—in an effort to determine whether Lunden's opinion is based on “good grounds,” with an
emphasis on the process employed rather than the
conclusions reached. See Kannankeril, 128 F.3d at
FN2
806; Paoli, 35 F.3d at 742.
FN2. However, the Court must not be
overly concerned with reliability where expert testimony will truly help a jury.
“[T]he reliability requirement must not be
used as a tool by which the court excludes
all questionably reliable evidence. The ultimate touchstone [of admissibility] is
helpfulness to the trier of fact.” Velasquez,
64 F.3d at 849–50.
*3 Finally, Rule 702's third requirement is that
the testimony must “fit” under the facts of the case.
See Velasquez, 64 F.3d at 850. This means that the
expert's testimony must actually assist the jury, by
providing it with relevant information, necessary to
a reasoned decision of the case. See Paoli, 35 F.3d
at 743.
A. Qualifications
Turning to the present question of admissibility, the Court must first consider Lunden's qualific-

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 3
Not Reported in F.Supp., 1998 WL 151806 (E.D.Pa.)
(Cite as: 1998 WL 151806 (E.D.Pa.))

ations as a damages expert.
At voir dire, the Court learned that Lunden is a
1980 graduate of University of Pennsylvania's
Wharton School of Business, with a B.S. in economics. Lunden has sixteen years experience as a
certified public accountant in the Commonwealth of
Pennsylvania, and has acquired a number of professional designations in that capacity, including sponsorship by the American Institute of Certified Public Accountants and accreditation as an expert in
business valuations, management accounting, fraud
examining and life insurance underwriting. In the
course of his continuing professional training as an
accountant, Lunden has attended at least six annual
conferences on the calculation of damages in civil
litigation. At one of these conferences, Lunden
presented a speech on the computation of damages
in a commercial setting. Finally, Lunden has appeared as a damages expert in previous litigation
before the Honorable Eduardo C. Robreno of this
Court. In that case, Lunden computed profits a
business claimed to have lost when an employee
left with some of its customers. Given the above,
and the Third Circuit's liberal qualification standards, the Court has no difficulty finding that Lunden is qualified to testify as an expert on damages.
See Paoli, 35 F.3d at 741.
B. Reliability
Under Rule 702's reliability prong, the Court
must inquire into Lunden's methodology. Lunden
testified that in preparing his damages report he interviewed Robert Billet, and reviewed documents
produced in the course of this litigation, beverage
industry documents, the treatise Dunn on Damages,
and accounting rules for measuring damages to a
new venture. For direct damages, Lunden constructed a model that would arrive at a figure of loss per
Drink Tank unit. For consequential damages, Lunden estimated the potential promotions market, and
projected the number and value of promotion opportunities lost as a consequence of the alleged
breach.

has applied an appropriate methodology, upon
which businessmen and accountants would rely in
the ordinary course of their trades. There are,
however, some aspects of Lunden's proffered testimony that give the Court pause. First, Lunden has
based his calculations on the July 21 draft, a document that the Plaintiff has already conceded to be
an unenforceable draft agreement. The Court will
indulge Lunden's use of this document, however,
because the Plaintiff's litigation position is that the
parties' oral contract contains substantially the same
terms as those enumerated in the July 21 draft.
*4 Lunden's second major assumption is that,
under the terms of the July 21 draft, Cornelius
would have renewed the agreement for a second
term. Nothing in the text of the unenforceable draft
agreement suggests an obligation to do so. At voir
dire, however, Lunden represented that the text
Dunn on Damages allows a damage assessor to
make this assumption under the financial circumstances present in this case. As an expert, Lunden is
entitled to rely on the Dunn treatise, if reasonably
relied upon by experts in his field in the ordinary
course of business. See Fed.R.Evid. 703. Therefore,
the Court will defer to Lunden on this point and
permit the testimony.
The most serious flaw in Lunden's methodology is his assumption of the number of Drink Tank
units to be sold under the contract. Although the
Court accepts Lunden's method of computing loss
per unit, it finds his method of arriving at units sold
to be unacceptably speculative for the purpose of
direct damages. Assuming, as Mr. Lunden has, that
the July 21 draft reflects the terms of an enforceable oral agreement, the number of units for which
Cornelius has committed itself cannot possibly exceed 3,750—1,250 for the first term and 2,500 for
the second term. Lunden, however, intends to testify that the parties expected to sell 8,000 units in the
course of the contract period. He derived this figure
from Cornelius' business justification documents,
internal financial projections through which Cornelius determined that a relationship with the

In general, the Court is satisfied that Lunden

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 4
Not Reported in F.Supp., 1998 WL 151806 (E.D.Pa.)
(Cite as: 1998 WL 151806 (E.D.Pa.))

Plaintiff might be worth pursuing. These documents, however, are not alleged to have been part
of the contract. Although they may reflect in fact
the number of units that might have been sold, they
are irrelevant to the parties' contractual obligations
under the alleged agreement. Assuming that the July 21 draft does reflect the terms of an enforceable
contract, the greatest production obligation Cornelius undertook was for the 3,750 units that appear
within the four corners of the agreement.
In voir dire, Lunden acknowledged as much.
Although he dismissed the numbers that actually
appear as “floor” figures, these figures represent the
limit of Cornelius' potential contractual obligation.
If the parties did indeed reach a bargain, they quite
deliberately used these floor figures to protect Cornelius against the risk that the Drink Tank would be
a dud. Given these “floor” figures—the only hard
numbers to which the parties could have
agreed—the Court finds that Lunden's reliance on
Cornelius' extra-contractual business justification
documents to arrive at the number of units sold was
methodologically unsound. See Joy v. Bell Helicopter Textron, Inc., 999 F.2d 549, 568
(D.C.Cir.1993) (damage expert excluded due to
wholly speculative assumptions about the decedent's future business plans and their potential for
success); Boyar v. Korean Airlines Co., 954
F.Supp. 4, 9 (D.D.C.1996) (noting line of cases excluding expert testimony that is “plainly contradicted by the evidence”); Nakajima v. General Motors Corp., 857 F.Supp. 100, 105 (D.D.C.1994)
(excluding expert's testimony grounded on counterfactual assumption that the plaintiff would earn future income in United States rather than Japan).
Therefore, the Court finds this particular aspect of
the proffered testimony unreliable. However, it
would be unduly harsh to exclude the whole of
Lunden's expert testimony on this basis. Accordingly, the Court will permit Lunden to testify as to
direct damages based on a maximum of 3,750 units
sold.
*5 The fourth, and last, significant flaw in Lun-

den's proffered testimony lies in his computation of
consequential damages. Although Lunden consulted
a number of industry sources to arrive at the potential market for the Plaintiff's promotion and vending services, he ultimately relies on discussions he
had with Robert Billet. Although the Defendants argue that Lunden's assumptions in reaching these
figures are also speculative, and that Lunden is
merely “parroting the Plaintiff's claimed damages,”
(Def.'s Supp. Mem. of Law at 2), the Court finds
that they are sufficiently straight-forward that the
proper remedy is in cross-examination rather than
exclusion. See Diaz v. Delchamps, Inc., 1998 WL
57068, *3 (E.D.La. February 9, 1998); Boyar, 954
F.Supp. at 9. Accordingly, Lunden's testimony as to
consequential damages will be admitted.
C. Fit
The final Rule 702 criterion is fit. The Court
has no difficulty concluding that Lunden's proffered
testimony will assist the jury in determining the
amount of damages, if any, that the Plaintiff incurred as a consequence of the alleged breach of
contract.
III. CONCLUSION
In sum, the Court finds that Lunden should be
admitted to testify as an expert as to the Plaintiff's
alleged breach of contract damages. However, Lunden may not offer direct damage computations
based on a number of units in excess of 3,750, the
greatest number that may be derived from the July
21 draft. In all other respects, Lunden may testify
as proffered.
An appropriate Order follows.
ORDER
AND NOW, this 1st day of April, 1998, upon
consideration of the Defendants' Motion in Limine
to Preclude the Testimony of Charles S. Lunden as
Plaintiff's Expert on Damages, the Plaintiff's Response, and the Defendants' Supplemental Memorandum of Law, IT IS HEREBY ORDERED that the
Motion is GRANTED in part and DENIED in part.

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.

Page 5
Not Reported in F.Supp., 1998 WL 151806 (E.D.Pa.)
(Cite as: 1998 WL 151806 (E.D.Pa.))

IT IS FURTHER ORDERED that the expert
witness shall be precluded from testifying to direct
damages based on a number of units sold in excess
of 3,750.
E.D.Pa.,1998.
Robert Billet Promotions, Inc. v. IMI Cornelius,
Inc.
Not Reported in F.Supp., 1998 WL 151806
(E.D.Pa.)
END OF DOCUMENT

© 2012 Thomson Reuters. No Claim to Orig. US Gov. Works.