Youngevity International, Corp. v. Smith et al
Filing
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ORDER Granting Plaintiff's Motion to Exclude Testimony of Timothy L. Fort and Denying Defendants' Motions to Exclude Expert Testimony (ECF Nos. 294 , 306 , 310 , 311 , 312 , 313 , 314 , 315 , 318 ). Signed by Judge Barry Ted Moskowitz on 2/13/2018. (mxn)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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Case No.: 16-cv-704 BTM (JLB)
YOUNGEVITY INTERNATIONAL,
INC. AND JOEL D. WALLACH,
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ORDER GRANTING PLAINTIFFS’
MOTION TO EXCLUDE
TESTIMONY OF TIMOTHY L.
FORT AND DENYING
DEFENDANTS’ MOTIONS TO
EXCLUDE EXPERT TESTIMONY
Plaintiffs,
v.
TODD SMITH et al.,
Defendants.
ECF NOS. 294, 306, 310, 311, 312,
313, 314, 315, 318
______________________________
AND RELATED COUNTER ACTION.
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On December 6, 2017, Plaintiffs filed a motion to exclude the expert
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testimony of Timothy L. Fort. (ECF No. 294). Defendants also filed eight motions
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to exclude the expert testimony of Dr. Philip Michael Bolger (ECF No. 306), Robert
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Geary (ECF No. 310), Dr. Michael John Glade (ECF No. 311), Dr. Samuel N. Grief
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(ECF No. 312), Dr. Edward M. Mazze (ECF No. 313), Dr. Arthur J. Miller (ECF No.
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314), Dr. David Stewart (ECF No. 315), and Brian Bergmark (ECF No. 318). For
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the reasons below, the Court grants Plaintiffs’ motion to exclude Timothy L. Fort
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and denies Defendants’ motions.
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I.
STANDARD
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Federal Rule of Evidence 702 permits expert testimony 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;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of
the case.
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Under Rule 702, expert testimony must be both relevant and reliable. Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993); Kumho Tire Co. v.
Carmichael, 526 U.S. 137, 149 (1999). The trial court must act as a “gatekeeper”
to exclude expert testimony that does not meet Rule 702's reliability standards.
Kumho Tire, 526 U.S. at 147-48.
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With respect to relevance, there must be a “valid scientific connection to the
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pertinent inquiry” in order for Rule 702’s “helpfulness” standard to be met. Daubert,
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509 U.S. at 592. As for reliability, the Court must make a preliminary assessment
of whether the reasoning or methodology underlying the testimony is scientifically
valid and whether that reasoning or methodology can be applied to the facts in
issue. Id. at 592-93. In Daubert, the Supreme Court listed several factors that
may be pertinent in assessing reliability:
(1) whether the scientific theory or
technique can be (and has been) tested; (2) whether the theory or technique has
been subjected to peer review and publication; (3) whether there is a known or
potential error rate; and (4) whether the theory or technique is generally accepted
in the relevant scientific community. Id. at 593-94.
The inquiry under Rule 702 is a “flexible” one, and the district court has “the
discretionary authority . . . to determine reliability in light of the particular facts and
circumstances of the particular case.” Kumho Tire, 526 U.S. at 158. Accordingly,
the factors identified in Daubert may or may not be pertinent in assessing reliability,
depending on the nature of the issue, the expert’s particular expertise, and the
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subject of his testimony. Id. at 150.
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Importantly, the focus of the court’s gatekeeping inquiry “must be solely on
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principles and methodology, not the conclusions that they generate.” Daubert, 509
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U.S. at 595. “When an expert meets the threshold established by Rule 702 . . . the
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expert may testify and the jury decides how much weight to give that testimony.”
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Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010).
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II.
DISCUSSION
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A.
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Plaintiffs have withdrawn Robert Geary as an expert witness. (ECF No. 385
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Robert Geary and Timothy L. Fort
at 1). Therefore, Defendants’ motion to exclude his testimony is denied as moot.
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Defendants have offered Timothy L. Fort as an expert witness “to respond to
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the expert witness report provided by Mr. Robert F. Geary . . . and to testify
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regarding the nature of fiduciary duty related to defendant William Andreoli.” (ECF
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No. 294, Exh. B at 2). On the topic of fiduciary duty, Fort’s testimony addresses
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whether Andreoli complied with Delaware and California law with respect to the
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duty of care and duty of loyalty, and whether Andreoli breached any contractual
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duties under California law. Id. at 2-3. To the extent that Fort’s testimony rebuts
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the testimony of Geary, it is precluded. See Bakst v. Cmty. Mem'l Health Sys., Inc.,
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2011 WL 13214315, at *27 (C.D. Cal. Mar. 7, 2011) (“Because the testimony [the
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expert] was hired to rebut will not be offered, [the expert] may not testify.”). To the
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extent that Fort’s testimony concludes that Andreoli complied with California and
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Delaware law, it is also precluded. See Hangarter v. Provident Life & Acc. Ins. Co.,
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373 F.3d 998, 1016 (9th Cir. 2004) (“an expert witness cannot give an opinion as
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to her legal conclusion, i.e., an opinion on an ultimate issue of law. Similarly,
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instructing the jury as to the applicable law is the distinct and exclusive province of
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the court.”) (internal citations and quotations omitted). Therefore, Plaintiffs’ motion
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to exclude the testimony of Timothy L. Fort is granted.
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B.
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Dr. Samuel N. Grief, Dr. Michael John Glade, Dr. Arthur J.
Miller, and Dr. Philip Michael Bolger
Defendants seek to exclude, in their entirety, the testimony of Dr. Samuel N.
Grief, who evaluated the scientific validity of weight loss claims for Wakaya’s
ketogenic diet program (see ECF No. 312-3, Exh. A), Dr. Michael John Glade, who
examined Wakaya’s claims about Octodrine in its dietary supplement product as
well as Wakaya’s claims about the health benefits of ginger and turmeric (see ECF
No. 311-3, Exh. A), Dr. Arthur J. Miller, who evaluated the food safety risk of
Wakaya’s products containing ginger (see ECF No. 314-3, Exh. A), and Dr. Philip
Michael Bolger, who evaluated the risks of lead and arsenic exposure from
products containing bentonite clay (see ECF No. 306-3, Exh. A). Defendants
challenge all four experts on essentially the same two grounds: (1) the expert’s
testimony did not provide affirmative evidence that Wakaya’s statements were
false or misleading, and (2) the expert relied on incomplete information in forming
his opinion. (See ECF No. 312-2 at 1; ECF No. 311-2 at 1; ECF No. 314-2 at 1;
ECF No. 306-2 at 1). Both grounds are insufficient to warrant exclusion. The first
ground improperly challenges the conclusions of the experts rather than their
principles and methodology. See Daubert, 509 U.S. at 595 (the focus of the court’s
gatekeeping inquiry “must be solely on principles and methodology, not the
conclusions that they generate”). The second ground goes to the weight and
credibility of the expert’s testimony rather than its admissibility. See Bergen v. F/V
St. Patrick, 816 F.2d 1345, 1352 n.5 (9th Cir. 1987) (“The relative weakness or
strength of the factual underpinnings of the expert's opinion goes to weight and
credibility, rather than admissibility.”) (internal quotation omitted). Therefore,
Defendants’ motions to exclude the testimony of Dr. Samuel N. Grief, Dr. Michael
John Glade, Dr. Arthur J. Miller, and Dr. Philip Michael Bolger are denied.
C.
Dr. David Stewart
Defendants seek to exclude the testimony of Dr. David Stewart, who
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designed a research study to evaluate consumers’ perceptions of claims on
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Wakaya’s website. (See ECF No. 315-3, Exh. A at 5). Defendants’ first ground for
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exclusion rests on Stewart’s characterization that Wakaya’s income claims “lack
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substantiation,” which does not prove that the claims are false or misleading. See
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id. at 2. As explained above, this is an improper challenge to an expert’s
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conclusions rather than to his principles and methodology. See Daubert, 509 U.S.
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at 595. Defendants’ second ground for exclusion challenges the resulting data from
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Stewart’s consumer survey. (See ECF No. 315-2 at 4). This objection does not go
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to admissibility. See Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1188 (9th Cir.
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2002) (“objections to the inadequacies of a study are more appropriately
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considered an objection going to the weight of the evidence rather than its
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admissibility. Vigorous cross-examination of a study's inadequacies allows the jury
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to appropriately weigh the alleged defects and reduces the possibility of prejudice”)
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(internal citations omitted). Therefore, Defendants’ motion to exclude the testimony
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of Dr. David Stewart is denied.
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D.
Dr. Edward M. Mazze
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Defendants seek to exclude the testimony of Dr. Edward M. Mazze, who
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“evaluate[d] Wakaya Perfection’s multi-level marketing program and provid[ed] an
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opinion as to whether or not the program [was] a pyramid and endless chain
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scheme.” (ECF No. 313-3, Exh. A at 2). Defendants argue that Mazze’s testimony
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is an impermissible legal conclusion and that he relied on an incorrect legal
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standard. (See ECF No. 313-2 at 2). Mazze’s expert report describes what
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characteristics of Wakaya’s multi-level marketing program match characteristics of
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a pyramid scheme. (See ECF No. 313-3, Exh. A). This is permissible testimony.
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See F.T.C. v. BurnLounge, Inc., 753 F.3d 878, 888 (9th Cir. 2014) (affirming district
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court’s admission of expert testimony where expert “testified about whether
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[defendant] was a pyramid”). Further, Mazze’s report includes the correct criteria
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of the Federal Trade Commission’s test for what constitutes a pyramid scheme.
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See Webster v. Omnitrition Int'l, Inc., 79 F.3d 776, 781 (9th Cir. 1996) (“payment
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by participants of money to the company in return for which they receive (1) the
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right to sell a product and (2) the right to receive in return for recruiting other
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participants into the program rewards which are unrelated to sale of the product to
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ultimate users”); ECF No. 313-3, Exh. A at 7. Therefore, Defendants’ motion to
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exclude the testimony of Dr. Edward M. Mazze is denied.
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E.
Brian Bergmark
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Defendants seek to exclude the testimony of Brian Bergmark, who calculated
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damages using a lost-profit analysis and a marketing-cost analysis.1 Defendants
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object to the underlying facts that Bergmark’s analysis relied upon. (See ECF No.
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318-2). Bergmark’s report lists the specific financial documents he examined and
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explains his calculation method. (See ECF No. 318-3, Exh. 2). For example,
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Bergmark calculated lost profits using Youngevity’s historical quarterly and annual
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sales in its direct selling segment, Youngevity’s forecasted and actual revenues,
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combined annual sales experienced by some of the key distributer groups, and
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financial data from Wakaya, such as sales and sources of revenue. (See ECF No.
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318-3, Exh. 2 at 7-8). Bergmark’s lost profit damages are supported by “substantial
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evidence.” See Humetrix, Inc., v. Gemplus S.C.A., 268 F.3d 910, 919 (9th Cir.
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2001) (“We uphold awards of lost profit damages so long as they are supported by
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substantial evidence.”); In re James E. O'Connell Co., Inc., 799 F.2d 1258, 1262
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(9th Cir. 1986) (declining to overturn lost profit award based on expert testimony
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supported by financial statements, data pertaining to similar businesses, and
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market forecasts). Defendants’ objections go to the weight and credibility of the
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Defendants also seek to exclude Bergmark’s Supplemental Report as untimely. (See ECF No. 318-2 at 4).
Defendants’ rebuttal expert, Richard S. Hoffman, reviewed Bergmark’s supplemental report, sat in on Bergmark’s
deposition, and subsequently submitted his own supplemental report. (See ECF No. 369, Exh. D at 70-72). There
is no prejudice here. See Celador Int'l, Ltd. v. Walt Disney Co., 2008 WL 11342595, at *8 (C.D. Cal. Dec. 17,
2008) (“a supplemental report, and the testimony thereon, should be excluded only if there is prejudice to the
opposing party”) (citing Wendt v. Host International, Inc, 125 F. 3d 806 (9th Cir. 1997)).
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testimony rather than its admissibility. See Humetrix, 268 F.3d at 919 (“To the
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extent [defendant] sought to challenge the correctness of [plaintiff’s] experts'
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testimony [on lost profits], its recourse is not exclusion of the testimony, but, rather,
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refutation of it by cross-examination and by the testimony of its own expert
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witnesses.”); Wyler Summit P'ship v. Turner Broad. Sys., Inc., 235 F.3d 1184, 1192
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(9th Cir. 2000) (“Weighing the credibility of conflicting expert witness testimony is
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the province of the jury.”). Therefore, Defendants’ motion to exclude the testimony
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of Brian Bergmark is denied.
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III.
CONCLUSION
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For the foregoing reasons, the Court GRANTS Plaintiffs’ motion to exclude
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the expert testimony of Timothy L. Fort (ECF No. 294) and DENIES Defendants’
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motions to exclude the expert testimony of Dr. Philip Michael Bolger (ECF No.
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306), Robert Geary (ECF No. 310), Dr. Michael John Glade (ECF No. 311), Dr.
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Samuel N. Grief (ECF No. 312), Dr. Edward M. Mazze (ECF No. 313), Dr. Arthur
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J. Miller (ECF No. 314), Dr. David Stewart (ECF No. 315), and Brian Bergmark
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(ECF No. 318).
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The Court limits its ruling to the consideration of the expert evidence on the
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35 pending motions for summary judgment. If the expert is to actually be called as
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a witness at trial, a party may use one of its allotted motions in limine to seek an
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evidentiary hearing seeking to exclude the expert’s testimony.
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IT IS SO ORDERED.
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Dated: February 13, 2018
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