Encompass Advisors, Ltd. v. Unapen, Inc. et al
Filing
116
ORDER denying 103 Motion to Preclude. Signed by Judge Donna F. Martinez on 12/5/13. (Nichols, J.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ENCOMPASS ADVISORS, LTD.,
Plaintiff,
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v.
UNAPEN, INC. et al.,
Defendants.
CASE NO. 3:09CV1949(DFM)
RULING ON MOTION TO PRECLUDE EXPERT
Plaintiff, an investment advising and wealth management
corporation, brings this breach of contract action alleging that
computer programs designed and licensed by defendants did not
function as promised.
Pending before the court is defendants'
Motion to Preclude Plaintiff's Expert.
(Doc. #103.)
For the
reasons that follow, the motion is denied.
A.
Background
In the Amended Complaint (doc. #47), plaintiff alleges as
follows.
Prior to contracting with defendants, plaintiff used a
client contact management program called Junxure and a separate
program called Schwab PortfolioCenter from which it could run
reports on clients' portfolios.
Plaintiff told defendants that
it sought a client management program that could directly link
to data in PortfolioCenter, which Junxure could not do.
Plaintiff explained that he was seeking daily, dynamic portfolio
performance reporting for each of his clients' portfolios
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similar to that available in a program called Black Diamond.
Defendant promised to deliver a program called ClientLogix that
had the following attributes:
daily dynamic portfolio performance reporting for each of
the clients' portfolios equivalent to Black Diamond,
dashboard allowing investment advisor to customize the
performance reporting screen for each client, which Black
Diamond could not do,
lower cost than Black Diamond,
state of the art Client Relations Management (CRM) system
designed for Registered Investment Advisors (RIAs), and
seamless retrieval of data from Schwab PortfolioCenter,
eliminating the need to run separate reports in
PortfolioCenter.
In January 2007, the parties entered a contract to license
ClientLogix.
In January 2008, plaintiff terminated the contract
citing deficiencies in the product.
Plaintiff commenced this action in May 2009 claiming fraud,
breach of contract and violation of the Connecticut Unfair Trade
Practices Act in connection with ClientLogix.
Plaintiff also
claims breach of contract in connection with another program
called ClientRep Lite.
(Doc. #47.)
of contract counterclaims.
Defendants make two breach
(Doc. #52.)
2
In December 2012,
plaintiff disclosed the report of proposed expert witness Joel
Bruckenstein whose field of expertise is applied technology for
financial service professionals.
Plaintiff supplemented its
disclosure three times to cure deficiencies identified by
defendants.
In July 2013, in a deposition, the witness
testified that he directly examined ClientLogix a single time
after he had already submitted his first expert report.
The
witness testified that, on a second occasion, he remotely
observed a session in which defendants, for discovery purposes,
performed a review of ClientLogix on plaintiff's computer
system.
(Doc. #103-2.)
In October 2013, defendants filed the
pending Motion to Preclude on grounds that the expert's opinion
is unreliable.1
1
Plaintiff filed an opposition brief (doc. #106) to which
defendants replied (doc. #109). In a sur-reply, plaintiff
submitted an affidavit from an undisclosed "expert," John Olsen,
attempting to bolster the reliability of Bruckenstein's
conclusions. (Doc. #113.) Plaintiff did not seek leave to file
the sur-reply, and the court has not considered it. See D.
Conn. L. Civ. R. 7 (no provision for sur-replies); DeRay v.
Larson, No. 3:02CV2139(JCH), 2004 WL 2211939, at *4 (D. Conn.
Sep. 29, 2004) ("sur-replies are not permitted under the Local
Rules of the District of Connecticut"); Marczeski v. Law, 122 F.
Supp. 2d 315, 317 n.2 (D. Conn. 2000) (sur-reply briefs may be
filed only with leave of court).
Plaintiff also proffers Olsen's testimony to bolster
Bruckenstein's reliability in the event of a Daubert hearing. A
Daubert hearing is not necessary under the circumstances. See
United States v. Williams, 506 F.3d 151, 160–61 (2d Cir. 2007)
(court's Rule 702 gatekeeping function "does not necessarily
require that a separate [Daubert] hearing be held"); Sawant v.
Ramsey, No. 3:07CV980(VLB), 2012 WL 3265020, at *17 (D. Conn.
Aug. 09, 2012) (citing examples). Regardless, Olsen may not
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B.
Legal Standard
Rule 702 of the Federal Rules of Evidence 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,
experience, training, or education, may testify
thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or data,
(2) the testimony is the product of reliable
principles and methods, and (3) the witness has
applied the principles and methods reliably to the
facts of the case.
"[T]he district court has a 'gatekeeping' function under Rule
702 — it is charged with 'the task of ensuring that an expert's
testimony both rests on a reliable foundation and is relevant to
the task at hand.'"
Amorgianos v. Nat'l R.R. Passenger Corp.,
303 F.3d 256, 265 (2d Cir. 2002) (quoting Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 597 (1993)).
If the
evidence is relevant under the Rule 401 standard, the court in
its gatekeeping role "must determine whether the proffered
testimony has a sufficiently reliable foundation to permit it to
be considered" using the Rule 702 indicia of reliability.
Amorgianos, 303 F.3d at 265 (citations and quotation marks
omitted).
" In short, the district court must 'make certain that
an expert, whether basing testimony upon professional studies or
testify because he was not disclosed as an expert as required by
Fed. R. Civ. P. 26(a). See Fed. R. Civ. P. 37(c)(1) (if
information or witness was not disclosed as required by Rule
26(a) or (e), party may not use it to supply evidence on motion,
at hearing or at trial).
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personal experience, employs in the courtroom the same level of
intellectual rigor that characterizes the practice of an expert
in the relevant field.'"
Id. at 265-66 (quoting Kumho Tire, 526
U.S. at 152).
The Rule 702 inquiry is flexible and must be tied to the
facts of a particular case.
Id. at 266.
In undertaking this flexible inquiry, the district
court must focus on the principles and methodology
employed by the expert, without regard to the
conclusions the expert has reached or the district
court's belief as to the correctness of those
conclusions. . . . [W]hen an expert opinion is based
on data, a methodology, or studies that are simply
inadequate to support the conclusions reached, Daubert
and Rule 702 mandate the exclusion of that unreliable
opinion testimony.
Id. (citations omitted).
But "the rejection of expert testimony
is the exception rather than the rule."
Advisory Committee's Note (2000).
Fed. R. Evid. 702
"This limitation on when
evidence should be excluded accords with the liberal
admissibility standards of the federal rules and recognizes that
our adversary system provides the necessary tools for
challenging reliable, albeit debatable, expert testimony."
Amorgianos, 303 F.3d at 267 (citing Daubert, 509 U.S. at 596).
C.
Discussion
1.
Expertise
Defendants first argue that plaintiff lacks sufficient
expertise because he has no education or training in computer
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programming.
The claims in this case turn on whether defendants
promised to deliver a computer program that would suit the needs
of plaintiff's Registered Investment Advisor.
The witness
worked close to 15 years as an investment broker.
In addition,
he has worked as technology columnist for Financial Planning
Magazine and Financial Advisor Magazine where he reviewed the
functionality of programs for investment advisors similar to the
one at issue here.
He has written two books on practice
management and co-founded an annual technology conference for
financial advisors.
"Experience in conjunction with other
knowledge, skill, training or education . . . [may] provide a
sufficient foundation for expert testimony," and "[i]n certain
fields, experience is the predominant, if not sole, basis for a
great deal of reliable expert testimony."
Fed. R. Evid. 702
Advisory Committee Note (2000); see also Kumho Tire, 526 U.S. at
156 ("no one denies that an expert might draw a conclusion from
a set of observations based on extensive and specialized
experience").
The witness has the requisite qualifications to
provide reliable insight on the usefulness of defendant's
program to an investment advisor.
2.
Methodology
Defendants next argue that the witness's methodology is
unreliable.
They first object that the witness lacks sufficient
data because he did not directly examine the subject computer
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program until after he made his first expert disclosure.
He has
since examined the program and supplemented his disclosures,2 so
the objection is moot.
Defendants next object that the witness did not employ a
method that could be reconstructed or objectively verified.
Instead, he "clicked around a little bit" with certain
functionalities in mind based on 15 years of discussion in the
field rather than a formal set of criteria.
In arguing that
this methodology precludes admissibility of the testimony,
defendants adhere too rigidly to the four factors set forth in
Daubert — testing, peer review, error rates, and general
acceptability.
The test of reliability under Rule 702 is
flexible, and the Daubert factors set forth in do not constitute
a "definitive checklist or test."
See Kumho Tire, 526 U.S. at
150 (quoting Daubert, 509 U.S. at 593).
The pertinence of the
Daubert factors depends on "the nature of the issue, the
expert's particular expertise, and the subject of his
testimony."
Id.
Although the Daubert questions "will often be
appropriate," the trial judge "must have considerable leeway in
deciding in a particular case how to go about determining
whether particular expert testimony is reliable."
Id. at 152.
Here, witness's expertise is specialized but neither scientific
2
There was no challenge to the supplementation. Cf.
Levinson v. Westport Nat. Bank, No. 3:09CV269(VLB) et al., 2013
WL 3280013, at *4 (D. Conn. June 27, 2013).
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nor particularly technical.
He proffers opinions on what
functions a Registered Investment Advisor would desire, whether
defendants' computer program had those functions and whether
certain competitor programs — to which defendants allegedly
compared their product during contract negotiations — had those
functions.
The witness can opine reliably on these issues based
on his experience, direct examination and remote observation of
the program on separate occasions, and review of the testimony
of the parties.
To the extent that defendants contend that there are errors
or omissions in the witness's report, those contentions go to
the weight of the evidence, not its admissibility.
"Although
expert testimony should be excluded if it is speculative or
conjectural, or if it is based on assumptions that are so
unrealistic and contradictory as to suggest bad faith, or to be
in essence an apples and oranges comparison, other contentions
that the assumptions are unfounded go to the weight, not the
admissibility, of the testimony."
Cohalan v. Genie Indus.,
Inc., No. 10 Civ. 2415, 2013 WL 829150, *5 (S.D.N.Y. Mar. 1,
2013) (quoting Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18,
21 (2d Cir. 1996)); see also GlobalRock Networks, Inc. v. MCI
Communications Services, Inc., --- F. Supp. 2d ----, No.
1:09CV1284(MAD/RFT), 2013 WL 1891303, at *17-18 (N.D.N.Y. May
06, 2013) (argument that expert neglected to perform essential
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tests goes to weight, not admissibility).
Defendants will have
the opportunity to challenge the usefulness of the testimony
through vigorous cross-examination and presentation of contrary
evidence.
D.
Conclusion
For the foregoing reasons, the Motion to Preclude
Plaintiff's Expert (doc. #103) is DENIED.
SO ORDERED at Hartford, Connecticut this 5th day of
December, 2013.
____________/s/______________
Donna F. Martinez
United States Magistrate Judge
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