GSI Technology, Inc. v. Cypress Semiconductor Corporation

Filing 260

REDACTED ORDER denying 80 , 82 , 84 Motions to Exclude Testimony of Plaintiff's Expert Witnesses. Signed by Judge Edward J. Davila on 1/27/2015. (ejdlc1S, COURT STAFF) (Filed on 1/27/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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GSI TECHNOLOGY, INC.,

Case No. 5:11-cv-03613-EJD

Plaintiff,
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ORDER DENYING DEFENDANT’S
MOTIONS TO EXCLUDE TESTIMONY
OF PLAINTIFF’S EXPERT WITNESSES

v.
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United States District Court
Northern District of California

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CYPRESS SEMICONDUCTOR
CORPORATION,

[Re: Dkt. Nos. 80, 82, 84]

Defendant.

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In conjunction with a Motion for Summary Judgment, Defendant Cypress Semiconductor

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Corporation (“Cypress”) filed motions to exclude three of Plaintiff GSI Technology, Inc.’s

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(“GSI”) expert witnesses pursuant to Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993)

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(“Daubert”). The first motion seeks an order precluding any testimony from GSI’s retained

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economist, Dr. Robert Harris (“Harris”). See Docket Item No. 80. The second seeks a similar

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order as to GSI’s technical expert, Robert Murphy (“Murphy”). See Docket Item No. 82. The

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third seeks to exclude testimony from GSI’s damages expert, D. Paul Regan (“Regan”). See

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Docket Item No. 84.
The relevant factual background is contained in the order addressing Cypress’ summary

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judgment motion and is not repeated here. After carefully considering the parties’ arguments with

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respect to each expert, the Daubert motions are DENIED.

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I.

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LEGAL STANDARD
Cypress moves to exclude GSI’s experts pursuant to Federal Rules of Evidence 403, 702

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Case No.: 5:11-cv-03613-EJD
ORDER DENYING DEFENDANT’S MOTIONS TO EXCLUDE TESTIMONY OF
PLAINTIFF’S EXPERT WITNESSES

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and the standards contained in Daubert and its progeny. Looking first at Rule 702, it provides:

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A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if:

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(a) the expert’s scientific, technical, or other specialized knowledge
will help the trier of fact to understand the evidence or to determine
a fact in issue;

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(b) the testimony is based on sufficient facts or data;

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(c) the testimony is the product of reliable principles and methods;
and

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(d) the expert has reliably applied the principles and methods to the
facts of the case.

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Read together, Daubert and Rule 702 broadly require that an expert not only be qualified,

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but also that the expert’s testimony be reliable and relevant. Daubert, 509 U.S. at 589-91. Thus,

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when faced with a challenge to an expert, “[t]he trial judge must perform a gatekeeping function to

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ensure that the expert’s proffered testimony” meets this standard. United States v. Redlightning,

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624 F.3d 1090, 1111 (9th Cir. 2010). This role is a flexible one, such that the trial judge is

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afforded “considerable leeway in deciding in a particular case how to go about determining

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whether particular expert testimony is reliable.” Kumho Tire Co., Ltd. v. Carmichael, 526 U.S.

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137, 152 (1999). The party offering the expert evidence bears the burden of proving its

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admissibility by a preponderance of proof. Id. at 593 n.10.
Under Rule 403, relevant evidence may be excluded “if its probative value is substantially

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outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues,

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misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.”

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Whether or not to admit potentially prejudicial evidence under Rule 403 is a discretionary question

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for the trial court. Boyd v. City & Cnty. of S.F., 576 F.3d 938, 948 (9th Cir. 2009).

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II.

DISCUSSION

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A.

Robert Murphy

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According to his report, Murphy
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ORDER DENYING DEFENDANT’S MOTIONS TO EXCLUDE TESTIMONY OF
PLAINTIFF’S EXPERT WITNESSES

. See Expert Report of Robert Murphy

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(“Murphy Report”), Docket Item No. 83, at Ex. 1, ¶ 6.

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Id. at ¶ 8.

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Cypress challenges Murphy’s opinions on the following grounds: (1) Murphy is an

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engineer who is not qualified to offer opinions on economic concepts that include relevant product

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market, market power, and barriers to entry; (2) Murphy bases his opinions on QDR-III and the

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development time for SigmaQuad IIIe on a hunch rather than an established methodology; and (3)
Murphy’s opinion regarding the QDR Consortium does not reflect specialized experience, but

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only legal advocacy. Each argument will be addressed in turn.

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Opinions on Economic Concepts

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Murphy opined

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Id. at ¶ 83.

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Cypress argues that Murphy’s experience

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does not qualify him to provide an opinion on economic concepts that include relevant

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market definition, market power, or barriers to entry.

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These arguments are misplaced. Upon considering Murphy’s analysis as a whole,
Murphy’s opinions are not economic in nature.

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While these

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terms may have an economic meaning, Murphy did not use them in that manner. Murphy’s spare

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use of these terms is not sufficient to render his opinion inadmissible.

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2.

Opinions on QDR-III and Development Time for SigmaQuad-IIIe

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Murphy opined

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Murphy Report at ¶ 99.

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United States District Court
Northern District of California

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Id. at ¶ 116.

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Cypress argues that these opinions are inadmissible because Murphy fails to apply a

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discernible methodology in forming them, but relies only on his prior experience and intuition.

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Cypress also argues that Murphy bases his conclusions on unsupported conjectures and subjective

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beliefs.

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The Ninth Circuit has found opinions based on an expert’s experience in the industry to be

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proper: “When evaluating specialized or technical expert opinion testimony, the relevant reliability

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concerns may focus upon personal knowledge or experience.” United States v. Sandoval-

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Mendoza, 472 F.3d 645, 655 (9th Cir. 2006) (quoting Kumho Tire Co., 526 U.S. at 150 (1999)

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(internal quotations omitted)). Subjective beliefs and opinions are proper expert testimony. See

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PixArt Imaging, Inc. v. Avago Tech. Gen. IP (Singapore) Pte. Ltd., 2011 WL 5417090, at *8

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(N.D. Cal. Oct. 27, 2011) (Ware, J.) (expert testimony grounded on the expert’s personal

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knowledge and experience was admissible in light of his extensive background in the area);

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Toomey v. Nextel Commc’ns, Inc., 2004 WL 5512967, at *8 (N.D. Cal. Sept. 23, 2004) (Chesney,

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J.) (same). Here, Murphy
Murphy Report at ¶ 3.

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Id.

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, Murphy relied on his industry experience to form an opinion. Id. at ¶¶ 102-06.

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This methodology is proper, thus Murphy’s opinion is admissible.
Opinion Regarding the QDR Consortium’s “Consolidation of Market Power”

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and Its Failure to Innovate

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Murphy opined

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Murphy

United States District Court
Northern District of California

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Report at ¶ 83.

Id.

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Moreover, Murphy opined

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Id. at ¶¶ 91, 93.
Cypress argues that
It further argues that his opinions should be excluded because it is not

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helpful to a jury since it mirrors what a lay person could do. Cypress contends that the jury can,

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just as Murphy,

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conclusion.

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themselves to arrive at their own

As discussed above, taken as a whole,
Rather, Murphy

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This

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testimony is proper in light of Murphy’s expertise in the field. Moreover, the jury cannot, as

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Cypress suggests,

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Given that
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ORDER DENYING DEFENDANT’S MOTIONS TO EXCLUDE TESTIMONY OF
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, his testimony will be very

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helpful to the jury. Therefore, Murphy’s opinion is proper and admissible.

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Conclusion

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Murphy relied on his personal experiences and examined the record to derive his opinions.

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See Williams v. Illinois, 132 S. Ct. 2221, 2228 (2012) (“Under settled evidence law, an expert

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may express an opinion that is based on facts that the expert assumes, but does not know, to be

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true.”). Cypress challenges to Murphy’s opinions pertain to the weight of his opinions rather than

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its admissibility. As such, Cypress can cross-examine Murphy to identify any deficiencies. See

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Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998, 1017 n.14 (9th Cir. 2004)
(“[Q]uestions regarding the nature of [an expert witness’] evidence [go] more to the ‘weight’ of

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his testimony - an issue properly explored during direct and cross-examination.”); Children’s

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Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 865 (9th Cir. 2004) (“[T]he factual basis of an

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expert opinion goes to the credibility of the testimony, not the admissibility, and it is up to the

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opposing party to examine the factual basis for the opinion in cross-examination.”). Murphy’s

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opinions are within the scope of his expertise, and have a high probative value
Accordingly, Cypress’ motion directed at Murphy is

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DENIED.

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B.

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Robert Harris
According to his report, Harris

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See Expert Report of Robert Harris (“Harris Report”), Docket

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Item No. 81, at Ex. 1 at 3. To form his opinions,

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See id. at Ex. 3. In sum,

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Id. at 35.

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Id. at 35-36.

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Id. at 36.

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Cypress challenges Harris’s methodology arguing that he did not have the necessary
quantitative data for the analysis, and
Id. at 1-2. Consequently, Cypress argues that Harris failed to meaningfully utilize

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fundamental market-based economic principles in considering whether other products were in the

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relevant product market. Id. at 2.

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The relevant product market consists of “those products to which consumers will turn,
given reasonable variations in price.” Lucas Auto. Eng’g, Inc. v. Bridgestone/Firestone, Inc., 275

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F.3d 762, 767 (9th Cir. 2001). “Where an increase in the price of one product leads to an increase

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in demand for another, both products should be included in the relevant product market.” Id. To

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assist in the determination of the relevant market, “practical indicia,” such as “industry or public

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recognition of the submarket as a separate economic entity, the product’s peculiar characteristics

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and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price

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changes, and specialized vendors” can be considered. Newcal Indus., Inc. v. Ikon Office Solution,

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513 F.3d 1038, 1045 (9th Cir. 2008) (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 325

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(1962)).

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Since the Ninth Circuit allows a qualitative approach when determining the relevant
market, Cypress’ argument fails. Harris

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See Harris Report at 41 & nn. 116, 124, 126, 128-30, 132-33.

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Moreover, Harris’s consideration of Murphy’s testimony is proper because economic experts are

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entitled to consider the opinions of technical experts. See Mediatek, Inc. v. Freescale

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Semiconductor, 2014 WL 971765, at *1 (N.D.Cal. Mar. 5, 2014) (Gonzalez Rogers, J.); DataQuill

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Ltd. v. High Tech Computer Corp., 887 F. Supp. 2d 999, 1026 (S.D. Cal. 2011). Harris is

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qualified to conduct an economic analysis, and his application of a qualitative approach is a

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potential topic for cross-examination rather than a reason to exclude his opinions. Accordingly,

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Harris’s opinion is admissible. Cypress’ motion directed at Harris is DENIED.

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C.

D. Paul Regan
According to his report, Regan

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See Expert Report of D. Paul Regan, CPA/CFF, CFE (“Regan Report”), Docket

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Item No. 85, at Ex. 1, ¶ 3.

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Id. at ¶ 21.

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Id. at ¶ 48.

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Breaking down the first step of his analysis,

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Id. at ¶ 22.

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Id. at ¶ 27.

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Id. at ¶ 31.

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Cypress challenges Regan’s profits calculation for each time period.1

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To the extent Cypress challenges Regan’s qualifications to serve as an expert in the field of
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Cypress also takes issue with

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Cypress contends that Regan should have performed

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additional economic or market analysis

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Northern District of California

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According to Cypress, these shortcomings leave Regan’s opinion without a
factual foundation or an objective basis, and render it inadmissible.
These arguments are misplaced, at least for a motion seeking to entirely exclude an
expert’s opinion. While it is true, as Cypress points out,
he is entitled to do so in forming an

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expert opinion. See Williams, 132 S. Ct. at 2228 (“Under settled evidence law, an expert may

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express an opinion that is based on facts that the expert assumes, but does not know, to be true.”).

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It will be GSI’s burden at trial to establish the factual bases for his assumptions. Id. If GSI does

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not do so, Cypress can cross-examine Regan to identify any deficiency. See Hangarter, 373 F.3d

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at 1017 n.14 (“[Q]uestions regarding the nature of [an expert witness’] evidence [go] more to the

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‘weight’ of his testimony—an issue properly explored during direct and cross-examination.”);

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Children’s Broad. Corp., 357 F.3d at 865 (“[T]he factual basis of an expert opinion goes to the

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credibility of the testimony, not the admissibility, and it is up to the opposing party to examine the

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factual basis for the opinion in cross-examination.”).

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In addition, the court does not concur that Regan’s analysis lacks an objective basis.

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economic damages, such a challenge is rejected.
See Regan Report, at ¶¶ 4-5.

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Id. at ¶ 5.
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ORDER DENYING DEFENDANT’S MOTIONS TO EXCLUDE TESTIMONY OF
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See Fed. R.

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Evid. 705 (“[A]n expert may state an opinion—and give the reasons for it—without first testifying

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to the underlying facts or data.). Again, while Cypress is free to question the basis for Regan’s

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opinion during cross-examination, and may also present counter-testimony through its own

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experts, it has not provided reason sufficient to exclude Regan’s testimony as ipse dixit or

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“inadmissible speculation.”
Cypress’ other criticisms are similarly unpersuasive.

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Northern District of California

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However, when an expert like Regan is qualified to

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undertake the economic calculations described in his report, his choices are potential, or perhaps

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substantial, topics for cross-examination rather than reasons to exclude his opinion under Daubert.

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Nor does any prejudicial effect from the testimony outweigh its probative value. Accordingly,

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Cypress’ motion directed at Regan is DENIED.

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III.

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CONCLUSION
Based on the foregoing, Cypress’ Motions to Exclude Testimony of GSI’s Expert

Witnesses Murphy, Harris, and Regan are DENIED.

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IT IS SO ORDERED.

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Dated: January 20, 2015

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EDWARD J. DAVILA
United States District Judge

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Case No.: 5:11-cv-03613 EJD
ORDER DENYING DEFENDANT’S MOTIONS TO EXCLUDE TESTIMONY OF
PLAINTIFF’S EXPERT WITNESSES