Ameritox, LTD. v. Millennium Laboratories, Inc.

Filing 448

ORDER granting in part and denying in part 334 Motion to exclude Dr. Cantor. Signed by Judge Susan C Bucklew on 5/5/2014. (JD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
AMERITOX, LTD.,
Plaintiff,
v.

Case No.: 8:11-cv-775-T-24-TBM

MILLENNIUM LABORATORIES, INC.,
Defendant.
_______________________________/
ORDER
This cause comes before the Court on Millennium’s Motion to Exclude Expert
Testimony of Dr. Robin Cantor. (Doc. No. 334, S-348). Ameritox opposes the motion. (Doc.
No. S-375). The Court held a hearing on the motion on May 2, 2014. As explained below, the
motion is granted in part and denied in part.
I. Background
Ameritox and Millennium are clinical laboratories that screen urine specimens for the
presence of drugs. They are competitors in the industry and have been engaged in extensive
litigation for several years.
Currently, Ameritox has seven claims pending against Millennium: (1) Lanham Act false advertising (Count I), (2) violation of Florida’s Deceptive and Unfair Trade Practices Act
(Counts II and III), (3) unfair competition under California law (Count IV), (4) unfair
competition under New Hampshire law (Count V), (5) common law tortious interference with
business relationships in Arizona, Florida, California, New Hampshire, Tennessee, and Texas
(Count VI), and (6) common law unfair competition in Arizona, Florida, New Hampshire, and

Texas (Count VII).1 (Doc. No. 92). Part of Millennium’s conduct that Ameritox challenges
consists of: (1) Millennium’s provision of free POCT cups to doctors; (2) Millennium’s
arrangement of chemical analyzers at below-market pricing; and (3) Millennium’s revenue
model that encourages doctors to perform revenue-based testing. Ameritox contends that it has
been damaged by this conduct, and Ameritox has submitted the expert opinion of Dr. Cantor in
support of its damages and disgorgement claims. In response, Millennium has filed the instant
motion to exclude Dr. Cantor’s testimony.
II. Daubert Motion
When determining whether an expert’s testimony is admissible, the Court looks to
Federal Rule of Evidence 702, which provides:
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:
(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.
F.R.E. 702.
When evaluating the admissibility under Rule 702, the Eleventh Circuit has stated:
[Courts] must engage in a rigorous three-part inquiry, considering
whether: (1) the expert is qualified to testify competently regarding
the matters he intends to address; (2) the methodology by which the
expert reaches his conclusions is sufficiently reliable as determined
by the sort of inquiry mandated in Daubert [ v. Merrell Dow Pharm.,

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The Court dismissed Ameritox’s common law unfair competition claim to the extent that
it was based on unfair competition in California and Tennessee. (Doc. No. 132).
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Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L.Ed.2d 469 (1993)]; and (3)
the testimony assists the trier of fact, through the application of
scientific, technical, or specialized expertise, to understand the
evidence or to determine a fact in issue. While there is inevitably
some overlap among the basic requirements—qualification,
reliability, and helpfulness—they remain distinct concepts and the
courts must take care not to conflate them
Rosenfeld v. Oceania Cruises, Inc., 654 F.3d 1190, 1193 (11th Cir. 2011)(quoting U.S. v. Frazier,
387 F.3d 1244, 1260 (11th Cir. 2004)(internal quotation marks and citation omitted)). Ameritox,
as the party offering Dr. Cantor’s expert testimony, has the burden of laying the proper
foundation for its admission, and admissibility must be shown by a preponderance of the
evidence. See Kilpatrick v. Breg, Inc., 613 F.3d 1329, 1335 (11th Cir. 2010)(citations omitted).
Additionally, the Eleventh Circuit has noted:
[I]t is not the role of the district court to make ultimate conclusions
as to the persuasiveness of the proffered evidence. Quite the
contrary, vigorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but admissible
evidence. Indeed, in most cases, objections to the inadequacies of a
study are more appropriately considered an objection going to the
weight of the evidence rather than its admissibility.
Rosenfeld, 654 F.3d at 1193 (internal quotation marks and citations omitted).
In its motion to exclude Dr. Cantor’s testimony, Millennium does not challenge Dr.
Cantor’s qualifications as an expert. Instead, Millennium argues that Dr. Cantor used “unreliable
methodology” because: (1) she failed to consider alternative causal factors for Ameritox’s losses
and Millennium’s growth, and (2) she excluded known competitors from the market. (Doc. No.
334, p. 19 of 30).
Dr. Cantor’s opinions are based on two models. First, the “2008-2009 Model” is based
on an analysis of 59 customers that switched from Ameritox to Millennium during that time, and
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Dr. Cantor analyzes the customers’ confirmatory sample volume during the times that they were
customers of Ameritox and compares it with their volume during the times that they were
customers of Millennium. This model tests the hypothesis that customers were influenced by
Millennium’s revenue model.
According to Dr. Cantor, her analysis shows that after customers switched from
Ameritox to Millennium, the average monthly sales volume for the customers that switched
increased. (Doc. No. 316-3, ¶ 77 & Fig. 12). Thus, according to Dr. Cantor and Ameritox, this
analysis tests the hypothesis that these customers switched because of Millennium’s revenue
model and that the analysis shows that these customers ordered more confirmatory tests after
they switched from Ameritox to Millennium. Ameritox argues that Dr. Cantor used a reliable
methodology by analyzing the customers’ actual conduct rather than their explanation
regarding their conduct that took place years ago.
The Court agrees that analyzing customer behavior provides some insight into why the
customers may have acted in the way that they did; however, the Court finds that such
circumstantial evidence is not necessarily conclusive evidence regarding the actual reason why
customers switched from Ameritox to Millennium. Millennium challenges Dr. Cantor’s analysis
in the 2008-2009 Model, arguing that Dr. Cantor has not asked these 59 customers why they
switched from Ameritox to Millennium (and Millennium contends that had she done so, she
would have learned that the customers were unhappy with Ameritox’s service). Millennium
makes a persuasive argument, as it is entirely possible that customers left Ameritox because they
were dissatisfied with Ameritox and never would have returned regardless of whether
Millennium existed. However, Millennium can present evidence at trial regarding customers’

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dissatisfaction with Ameritox and argue that, consequently, Dr. Cantor’s opinion on this issue is
not entitled to great weight.
Dr. Cantor’s second model, the “Composite Benchmark Model,” estimates profits from
2010 through 2012 based on Medicare data. Dr. Cantor contends that this model shows
Ameritox’s damages from all three types of the challenged conduct, not just the revenue model.
Based on this Court’s review of Dr. Cantor’s expert report, it appears that the Composite
Benchmark Model assumes that Millennium’s growth after the first quarter of 2010, to the extent
that it exceeded the growth of all other specialty labs, was entirely due to the challenged
conduct. (Doc. No. 316-3, Tables 8 & 11). Millennium challenges the Composite Benchmark
Model, arguing that Dr. Cantor erroneously excludes relevant competitors (namely general labs,
such as Quest), even though some customers switched from Ameritox to the excluded
competitors. Dr. Cantor addressed this argument at the hearing and explained that by
initially excluding the general labs from the analysis, she created a more conservative (lower)
estimate of Ameritox’s damages than if she had initially included the general labs. Furthermore,
with respect to Table 8 in her opinion, Dr. Cantor points out that the general labs are included
later in her analysis, wherein she allocates a portion of the lost sales away from Ameritox and in
favor of the general labs. (Doc. No. 316-3). The Court is satisfied with this response.
Millennium also challenges the Composite Benchmark Model, arguing that Dr. Cantor
makes erroneous assumptions regarding Millennium’s growth and Ameritox’s losses during this
period, such as: (1) Dr. Cantor erroneously assumes that all of Millennium’s growth in market
share in each quarter after the first quarter of 2010 was solely due to the challenged conduct; (2)
she erroneously assumes that all other market participants’ market share would have remained

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constant for the three years after the first quarter of 2010 if the challenged conduct would not
have occurred; (3) she failed to consider evidence that Ameritox’s customers were dissatisfied
with Ameritox’s service; (4) she failed to consider Millennium’s competitive advantages,
including its cutting edge technology, its faster turn-around times, and its superior customer
service; (5) she erroneously assumed that all alternative causes that were present before the first
quarter of 2010 impacted everyone’s performance in the same way after the first quarter of 2010;
and (6) she failed to consider alternative causal factors that occurred after the first quarter of
2010, such as: (a) Millennium becoming in-network with 130 insurers across the country, (b)
Millennium’s expanded sales force, (c) Ameritox’s loss of customers in Florida when it removed
specimen processors in Florida, (d) Ameritox’s $16.3 million payment to settle a healthcare
fraud claim that received widespread press, and (e) the false advertising claim that Ameritox lost
regarding one of its products. The Court agrees with Millennium that these are valid arguments
and they have caused the Court great concern with Dr. Cantor’s opinion, because it seems more
than reasonable that at least some of these variables led to Millennium’s growth in excess of the
growth of the other specialty labs.
However, Ameritox responds that Dr. Cantor considered these variables and concluded
that they did not explain Millennium’s growth. Therefore, Dr. Cantor’s damages and
disgorgement opinions are based on the disputed factual belief (which Millennium can challenge
at trial) that Millennium’s growth after the first quarter of 2010, to the extent that it exceeded the
growth of all other specialty labs, was entirely due to the challenged conduct. If Millennium’s
growth was entirely due to the challenged conduct, then Dr. Cantor’s analysis set forth in Tables
8 and 11 is based on reliable methodology. However, to the extent that Millennium shows that

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its growth was affected by other factors, Dr. Cantor’s opinion will be entitled to much less
weight (as it would only show that outer limits of Ameritox’s proffered damages and
disgorgement amounts).
Millennium also argues that Dr. Cantor improperly refused to ask doctors why they
switched to Millennium when opining that Millennium’s challenged conduct was the sole cause
of the switch, yet Dr. Cantor relied on Ameritox’s inputting of information into a database
(salesforce.com) regarding why doctors switched when allocating damages among the three
types of challenged conduct. As previously stated, Dr. Cantor’s failure to ask doctors why they
switched is an issue that Millennium can raise at trial.
However, the Court is quite troubled regarding Dr. Cantor’s allocation of damages in the
Composite Benchmark Model, which she allocates entirely based on the information contained
in salesforce.com. (Doc. No. 316-3, ¶ 110-15). Specifically, Dr. Cantor states that when
analyzing information from Ameritox’s lost accounts, she took the reasons given by the doctors
for leaving Ameritox (as contained in the saleforce.com database) and divided the number of lost
samples from each account equally by the number of different reasons given by the doctors for
leaving. (Doc. No. 316-3, ¶ 112). Therefore, if a doctor that had 200 monthly samples left
Ameritox and gave two reasons for leaving, then 100 samples would be attributed to each reason.
(Doc. No. 316-3, p. 54 n.156). Based on this methodology, Dr. Cantor opines that the damages
and disgorgement amounts can be allocated as follows: (a) 8.8% due to the below-market
chemical analyzers, (b) 69.3% due to the provision of free POCT cups, and (c) 21.9% due to
Millennium’s revenue model. (Doc. No. 316-3, ¶ 115).
There is no scientific or other reliable basis for simply assuming that every reason given

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for leaving Ameritox was an equal reason for the doctor switching labs. Stated differently, if a
doctor that left Ameritox gave three reasons for leaving—such as: (1) dissatisfaction with billing,
(2) slow turn-around times, and (3) free POCT cups available elsewhere—the doctor may have
decided to leave Ameritox based solely on a dissatisfaction with billing but also noted other
problems (turnaround time) and benefits (free POCT cups) elsewhere. Given that there is no
reason to assume that all reasons given by the doctors were equally important to the doctor’s
decision to leave Ameritox, the Court finds that a damages allocation based simply on the
reasons given equates to unreliable methodology. Therefore, to this extent, the Court concludes
that Dr. Cantor cannot provide any opinion regarding an allocation of damages or disgorgement
amounts to the different challenged conduct.
Finally, Millennium argues that Dr. Cantor’s expert testimony cannot be used in
connection with Ameritox’s Lanham Act false advertising claim, because her opinions are based
on Millennium’s conduct rather than its representations. The Court agrees with Millennium that
Ameritox has not shown that Dr. Cantor’s opinion is based on Millennium’s representations, and
as such, her opinion cannot be used as evidence of Ameritox’s damages for its Lanham Act
claim. Furthermore, the Court has also concluded that Dr. Cantor cannot provide any testimony
regarding an allocation of damages to the different challenged conduct, which includes
representations regarding the chemical analyzers.
III. Conclusion
Accordingly, it is ORDERED AND ADJUDGED that Millennium’s Motion to Exclude
Expert Testimony of Dr. Robin Cantor (Doc. No. 334, S-348) is GRANTED IN PART AND
DENIED IN PART: The motion is granted to the extent that Dr. Cantor cannot provide any

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opinion regarding an allocation of damages to the different challenged conduct, nor can her
opinion be used as evidence of Ameritox’s damages for its Lanham Act claim; otherwise, the
motion is denied.
DONE AND ORDERED at Tampa, Florida, this 5th day of May, 2014.

Copies to: All parties and Counsel of Record

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