Insight Equity AP X LP v. Transitions Optical Inc.

Filing 161

MEMORANDUM ORDER: Defendant's objection to Plaintiff preparing an alternative damages theory is OVERRULED. Plaintiff is ordered to submit an alternative damages model and report by December 31, 2016. Signed by Judge Richard G. Andrews on 11/30/2016. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

INSIGHT EQUITY d/b/a VISION-EASE LENS
WORLDWIDE

Plaintiff,
No. 10-cv-635 (RGA)

v.
TRANSITIONS OPTICAL, INC.,

Defendant.

MEMORANDUM ORDER

Defendant has filed a Daubert motion to strike Plaintiffs current damages
theory that rests on a 40 store hypothetical roll out of its photochromic lens product.
(D.I. 46). At the Daubert hearing, I directed Plaintiff to prepare an alternative
damages theory. (D.I. 157 at 159). Defendant objected. (D.I. 157 at 160; D.I. 158 at
122-25, 128-130). Both parties submitted letters addressing the issue. (D.I. 159;
D.I. 160).
The Pennypack factors inform whether to allow Plaintiff to submit a revised
damages theory. See Z.F. Meritor, LLC v. Eaton Corp., 696 F.3d 254, 298-99 (3d
Cir. 2012). Those factors are (1) prejudice to or "surprise in fact" of Defendant; (2)
"the ability of [Defendant] to cure the prejudice"; (3) "the extent to which allowing
such witnesses or evidence would disrupt the orderly and efficient trial of the case
or of other cases in the court"; (4) any ''bad faith or willfulness in failing to comply
with the court's order"; and (5) "the importance of the excluded evidence." Id. at 298
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(citing Meyers v. Pennypack Woods Home Ownership Ass'n, 559 F.2d 894, 905 (3d
Cir. 1977) (internal quotation marks omitted)).
Two considerations under the Pennypack factors weigh heavily in favor of
allowing Plaintiff to submit a revised damages theory: importance and timing.
The fifth Pennypack factor directs me to consider the importance of the
evidence to be excluded. See id. "The importance of the evidence is often the most
significant factor." Id. While I have not yet made a decision on the admissibility of
the current damages theory, it is no secret that I find the assumptions underlying
the 40 store hypothetical dubious. 1 See Insight Equity d/b/a Vision-Ease Lens

Worldwide v. Transitional Optical, Inc., 2016 WL 3610155, at *12 n. 5 (D. Del. Jul.
1, 2016). Having a workable damages model is critical to Plaintiffs case moving
forward. See Z.F. Meritor, 696 F.3d at 299. Generally speaking, "[e]xpert testimony
is necessary to establish damages in an antitrust case." Id.

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A decision granting Defendant's Daubert motion and denying Plaintiff an

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opportunity to submit a revised damages theory would be dispositive. The Third

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Circuit has deemed such a move by a district court an "extreme sanction," id. at 297
(internal quotation marks omitted), and held it is particularly disfavored in the
antitrust context because it would "frustrate[]" the public interest in "deterring
antitrust violations ... ," id. at 300.

1 I decline to wait until deciding the Daubert motion to decide whether to allow Plaintiff to submit a
revised damages theory. Briefing on that motion will not be completed until January 20, 2017.
Waiting would compound any prejudice to Defendant and would complicate, for the Court and for the
parties, preparation for the trial.

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Timing also militates in favor of allowing Plaintiff a chance to revise its
damages theory. See In re Paoli R.R. Yard PCB Litig. v. Brown, 35 F.3d 717, 740741, 740 n. 6 (3d Cir. 1994) (considering the "proximity of the trial date" in
evaluating the district court's decision to exclude expert testimony). Timing speaks
to the second and third Pennypack factors: curing the prejudice to Defendant and
disruption of the efficient trial of the case. This is not a case where Plaintiff seeks a
second bite at the apple on the eve of trial. See id. at 740 n. 6 (collecting cases).
Instead trial is not scheduled for seven months. That is ample time to allow
Plaintiff to prepare an alternative damages theory and for Defendant to test it.
Defendant argues both that Plaintiff is undeserving of a second chance and
that Defendant will be unfairly prejudiced because of cost and surprise. Defendant
is correct that Plaintiff has little excuse for not having prepared an alternative
damages theory. See Z.F. Meritor, 696 F.3d at 299.
Litigation entails expense but cost is not a reason for me to issue a dispositive
evidentiary ruling. Further, the need for a revised damages model is not surprising
in fact. Defendant has long known it was challenging Plaintiffs damages theory.
Defendant has been aware since July 1st of my footnote in the summary judgment
opinion (D.I. 141at26 n.5) casting doubt on the 40 store hypothetical. I am also not
convinced that employee turnover at Defendant will handicap Defendant in
responding to a revised damages theory. Thus, any prejudice to Defendant is
substantially outweighed by the interest in allowing Plaintiff to present a revised

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damages theory. That is not to say I am granting a new fact discovery free-for-all.
Plaintiffs theories must be based on facts currently in the record.
Defendant's objection is OVERRULED. Plaintiff is ordered to submit an
alternative damages model and report by December 31, 2016.
IT IS SO ORDERED this ,3:)_ day of November 2016.

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