TRANE US INC v. YEAROUT SERVICE LLC, et al
Filing
184
ORDER GRANTING 82 Motion in Limine Regarding Motion to Exclude Testimony of Randy Lynn; and GRANTING 129 MOTION to renew 82 Motion to Exclude the Testimony of Randy Lynn. Ordered by US DISTRICT JUDGE MARC THOMAS TREADWELL on 6/20/2019. (kat)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
TRANE US INC.,
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Plaintiff,
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v.
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YEAROUT SERVICE, LLC, et al.,
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Defendants.
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__________________________________)
CIVIL ACTION NO. 5:17-cv-42-MTT
ORDER
Defendants GSC Construction, Inc. and Allied World Specialty Insurance
Company moved to exclude expert testimony by Randy P. Lynn, proffered by Defendant
Yearout Service, LLC. Docs. 82; 129. Yearout then moved to exclude GSC’s and
Allied World’s expert, Robert Colby. Doc. 127. Both motions were untimely because
they were filed or renewed shortly before the pretrial conference, long after the deadline
for filing Daubert motions. Yearout’s motion was particularly irksome because it was
filed as a routine motion in limine. The Court summarily denied Yearout’s motion. Doc.
131. GSC’s Daubert motion was untimely only because it had not been timely renewed
after the Court dismissed the motion without prejudice upon the cancellation of a
previous trial setting. But at least it had been fully briefed. Still, the late renewal of the
motion allowed little time for consideration of the significant issues it raised. So while
the Court could have ignored both motions, the parties’ respective expert disclosures
contained so many problematic opinions that the Court could not allow their experts to
take the stand without some vetting. Accordingly, there unfolded the rather truncated
events discussed in this Order.
I. BACKGROUND
This case concerns a dispute between GSC, the general contractor on a designbuild hangar renovation at Robins Air Force Base, and Yearout, a subcontractor
responsible for providing a “turnkey mechanical and plumbing system.” Docs. 18-1 at
10; 109 at 1. 1 The trial had long been specially set to begin the week of June 3, 2019,
and the parties filed their Daubert motions shortly before the May 15, 2019 pretrial
conference. Docs. 116; 127; 129; 137. Because of the Court’s doubts about both
experts, it ordered the parties to designate the particular expert opinions which they
believed, consistent with the obligations of Rule 11, were admissible. Id. In response to
that Order, GSC and Allied World made clear that they only intended to use Colby to
rebut Lynn’s opinions. Doc. 142. Yearout withdrew some, but not all, of Lynn’s
opinions. Specifically, Yearout maintained that Lynn’s opinions on the following costs
incurred by Yearout were admissible: (1) the actual cost of the expedited delivery of
fans, (2) the estimated cost of “extended general conditions,” (3) the actual cost of
overtime, (4) inefficiency “costs” due to overtime, and (5) inefficiency “costs” due to
working two shifts. Doc. 147 at 3; see Doc. 158-2. Yearout also maintained that Lynn’s
testimony regarding certain claims by GSC against Yearout was admissible. Doc. 147
at 3. The Court convened a Daubert hearing on May 29, 2019, and as Lynn took the
1 Initially, Yearout sued GSC’s surety, Allied World. Yearout v. Darwin, 5:16-cv-568, Doc. 1 (Dec. 29,
2016). Then Trane U.S. Inc., a company hired by Yearout to provide makeup air units for the project,
filed its own complaint against both Allied World and GSC. Doc. 1. The cases were consolidated under
5:17-cv-42, with Trane as the Plaintiff. Doc. 20. Trane settled its claims, Doc. 159 at 2, and the
remaining claims are disputes between Yearout, on the one hand, and GSC and Allied World, on the
other.
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stand, Yearout withdrew his testimony regarding GSC’s claims. After Lynn’s testimony,
the Court excluded his opinions on expedited fan delivery, extended general conditions,
and actual overtime costs because those opinions did not even purport to be based on
any specialized knowledge or methodology; rather, Lynn just provided his interpretation
of the facts and, frequently, his opinion on legal issues, such as contract interpretation.
See Doc. 158. His opinions on inefficiency “costs” from overtime and shift work, by
contrast, at least purported to be based on some methodology. Accordingly, although
the Court made an oral ruling excluding his opinions on those inefficiency “costs,” it
noted that a written order would follow.
II. DISCUSSION
A. Daubert Standard
Rule 702 of the Federal Rules of Evidence 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.
Trial courts are to act as “gatekeepers” to ensure that speculative and unreliable
opinions do not reach the jury. Daubert v. Merrell Dow Pharms, Inc., 509 U.S. 579, 589,
n.7 (1993). Trial courts must (1) determine whether the expert has the qualifications to
offer his opinions, Poulis-Minott v. Smith, 388 F.3d 354, 359 (1st Cir. 2004); see also
United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004); (2) “‘conduct an exacting
analysis’ of the foundations of expert opinions to ensure they meet the standards of
admissibility,” Frazier, 387 F.3d at 1260 (quoting McCorvey v. Baxter Healthcare Corp.,
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298 F.3d 1253, 1257 (11th Cir. 2002)) (emphasis in original); and (3) ensure that the
expert testimony is relevant and will assist the jury, see Daubert, 509 U.S. at 591.
B. Analysis
Lynn opined that Yearout incurred expenses of $281,481.96 due to overtime
inefficiency and $50,390.59 due to shift work inefficiency. Doc. 158-2 at 69-70. Lynn
used one methodology to calculate Yearout’s loss due to overtime inefficiency and
another to calculate its loss due to shift work inefficiency. Both methodologies are
seriously flawed.
1. Overtime inefficiency
Lynn estimated Yearout’s overtime inefficiency costs simply by using payroll
records and a “‘productivity index’ table” from “Management Methods Bulletin OT1 –
2011,” a publication of the Mechanical Contractors Association of America, or MCAA.
Docs. 158-2 at 67-68; 158-4. This trade bulletin attempts to quantify two ideas: first,
that as a construction worker works more hours, productivity can diminish. A person
working 60 hours per week may perform more total work than someone working forty
hours per week, but still perform less work per hour. Second, a person working
overtime may suffer diminished productivity in consecutive overtime weeks. A person
placed on a fifty-hours-per-week schedule may be more productive in the first week
than in the second, and more productive in the second than in the third.
It is helpful at the outset to address what the MCAA attempts to do in this bulletin
and in its bulletin addressing shift work inefficiency, discussed below. The MCAA is a
trade organization for mechanical contractors. The overarching purpose of the MCAA
bulletins is to provide mechanical contractors with negotiating tools: primarily
prospectively, to obtain more favorable contract terms, but also retrospectively, to
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support claims for additional compensation. The bulletins are not, nor do they purport to
be, peer-reviewed studies determining whether overtime and shift work “inefficiencies”
exist and, if they do, how these “costs” can be calculated. Significantly, as Lynn
acknowledged, there is in the industry a methodology for precisely determining such
costs when they are established to exist. It is called the “measured mile.” The
measured mile methodology uses actual facts and data from a project to demonstrate
whether a contractor or subcontractor has incurred additional costs as the result of
inefficiencies and quantifies those costs based upon actual data.
Although the MCAA itself “has not prepared an empirical study,” its bulletin uses
data compiled from four other studies to estimate overtime inefficiency. Doc. 158-4 at
126. The data are summarized in a table with the number of consecutive weeks listed
in the leftmost column and the number of hours per week listed in the topmost row. The
table contains an entry for each combination: so, for example, if a worker were in his
second consecutive week of working 70 to 72 hours, he would work at 80% efficiency
that week, according to the table. Id. at 134. Mr. Lynn went through Yearout’s payroll
records to determine, for each employee, the length of the workweek and the number of
consecutive weeks worked; then applied the appropriate percentage from the MCAA
productivity index; and then determined how many hours were lost to inefficiency. He
used those numbers to calculate the total value of the time lost: $202,388.00. Doc. 1582 at 67-69; Exh. DY-109. He then added markups: 4% for tools, 4% for consumables,
12.5% for additional foremen costs, and 10% for overhead; then 5% for profit; for a total
of $281,481.96 in costs. Doc. 158-2 at 69.
The problems with Lynn’s testimony start with the MCAA bulletin, which bases its
percentages table on the four studies. The bulletin, however, provides almost no
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information about the studies themselves. The first study, the Business Round Table,
examined data from twelve weeks of one construction project to “demonstrate[] that, in
general, inefficiency increases as the overtime schedule extends in duration.” Doc.
158-4 at 129. A second source of the MCAA numbers is a study by an electrical
contractors’ trade group, NECA, based on a survey of electrical contractors. Id. The
MCAA argues that the NECA study translates to mechanical contracting because “[i]t is
a generally accepted axiom in the construction industry that efficiency impacts
sustained by the mechanical trades are similar in nature to the inefficiency impacts
sustained by the electrical trades given reasonably comparative adverse conditions.”
Id. n.9. Nowhere is this “axiom” supported. 2 The third study, authored by an engineer,
appears to only have data for overtime loss for 50-hour weeks. Id. at 129-133.
“Appears” because the Court, short of purchasing a copy of the study, has no way to tell
what the study actually did. 3 The fourth study, by the Army Corps of Engineers, “was
widely used . . . until the Corps formally withdrew this publication several years ago for
unspecified reasons.” Id. at 130. Despite the ACOE’s formal withdrawal of their study,
the MCAA finds it “noteworthy that Publication EP 415-1-3, which contained the Corps’
overtime study, has never been repudiated by the Army Corps of Engineers.” Id.
(emphasis added). The distinction between “withdrawn” and “repudiated” eludes the
Court. 4
2
At the hearing, the Court noted that the bulletin “uses several times the words ‘axiom’ and ‘axiomatic.’”
“As an expert in this field,” the Court asked Lynn, “what does that mean to you?” Lynn: “That doesn’t
mean anything to me, Your Honor.” The Court: “It doesn’t mean anything to me, either."
3 The same holds true for the others: none of the four studies was made available to the Court, and
Bulletin OT1’s review of the studies is cursory.
4
The MCAA likewise defends all four studies by observing that, although the studies have been criticized,
“the baseline data in any of these studies have never been proven to be inaccurate.” Doc. 158-4 at 4.
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The MCAA OT1 methodology, therefore, depends on four studies: one which
only focused on one project, another based on a survey of electricians, and another of
which has been withdrawn by its publisher. And none of which has been made
available to the Court. Further, certain entries in the overtime table may not even be
based on all four studies: for instance, the table contains entries for “84 hrs/wk,” but
based on the bulletin’s graphs, the NECA study was the only one that even gathered
any data on 84-hour weeks. Id. at 133-34. Similarly, the data for 70-hour weeks, which
were used frequently by Lynn’s report, appear to be based only on the NECA study and
the (withdrawn) COE study. Id.
Without access to the underlying studies, the Court had to rely upon Lynn’s
knowledge of the studies. However, Lynn has not even read the studies. 5 So even if
the MCAA’s asserted “axiom” that the relationship between overtime and inefficiency is
the same for electrical contractors and mechanical contractors were true, and even if
the Court were to accept the MCAA’s contention that the COE study has only been
withdrawn, not repudiated, the Court still could not conclude that this methodology has
any reliability.
In its briefing, Yearout represented that other courts had accepted the MCAA
methodology. After the Court ordered the parties to submit only the Daubert opinions
Ipse dixit—it is true because I say it is true—in the world of Daubert is bad, but this is worse. The four
studies’ data are valid, says the MCAA, because no one has proved them invalid.
Also, defending the accuracy of the data misses the issue: the problem with the Business Round
Table study, for instance, is not that the underlying data are inaccurate, but that the underlying data are
limited to one project over twelve weeks. The problem with the NECA study is not that its data are
inaccurate, but that it considered electrical work, not mechanical work. So the MCAA’s observation that
no one has proved the underlying data inaccurate is not only logically flawed, but also unresponsive to
the studies’ critics.
5
At least, he had not “read the whole study” by the Business Roundtable, though he “might have seen
excerpts” of the NECA one. Nor did he know the methodologies used by any of the four studies, whether
they had been peer-reviewed, or those studies’ limitations.
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they believed, consistent with Rule 11, were admissible (Doc. 137), Yearout
represented that “Mr. Lynn’s opinions with respect to the quantification of Yearout’s lost
productivity claim are based on [his own experience and] his use of industry studies that
have been accepted and used in federal contract disputes.” Doc. 146 at 8. That
representation was not true—at least not based on the cases Yearout cited. Instead,
those cases, most of which were before the Board of Contract Appeals, referred to
something called “Factors Affecting Labor Productivity.” That methodology, published in
Bulletin No. PD2, lists sixteen different factors which may cause overtime inefficiency,
including “Stacking of Trades,” “Morale and Attitude,” or “Season and Weather Change.”
Bulletin PD2 then provides percentage impacts for different levels of severity for each of
the sixteen factors. The cases Yearout cited referenced the sixteen-factor methodology
in Bulletin PD2, not the methodology from Bulletin OT1 used by Lynn. 6 At the hearing,
the Court showed Lynn a copy of Bulletin PD2 and asked Lynn whether he had used
that methodology. He responded that he had not. In short, Yearout’s briefing did not
support the methodology Lynn used.
Next, the Court considers whether “the expert has reliably applied the principles
and methods to the facts of the case.” Fed. R. Evid. 702. As noted, Lynn simply took
the payroll records and applied the percentages listed on the MCAA table. Two
examples, from the first and second pages of the dataset Yearout submitted, illustrate
his method. First, according to the payroll records, Employee BO9410 worked 69 hours
the week of 1/17/2016. Exh. DY-109 at 1. It was that employee’s first week of
6
Not to suggest that the Court finds the other, sixteen-factor methodology admissible under the Daubert
standard. The determination of whether a given factor was “minor,” “average,” or “severe” leaves the
expert wide discretion, and the determination is an inherently subjective one. The one commendable
feature of the sixteen-factor method is that, unlike Lynn’s method, it requires the expert to at least
consider the actual conditions of the project.
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overtime, so Lynn applied the Productivity Table entry for 1 consecutive week of
working 70-72 hours, which results in 14% inefficiency. 7 Based on that number, Lynn
calculated an inefficiency cost of $380. Id. Second, according to the payroll records, a
different employee, DA1093, worked overtime shifts the weeks of 1/17/2016, 1/24/2016,
2/28/2016, 3/6/2016, and 3/13/2016. Id. For the week of 2/28/2016, Lynn applied a
27% inefficiency percentage, and for the week of 3/6/2016, he applied a 32%
inefficiency percentage, which led to inefficiency expenses of $1400 for those two
weeks. Id. at 2. Both weeks were 70-72 hour weeks, and Lynn appears to have
applied the inefficiency percentages for the third and fourth consecutive weeks of 70hour-per-week overtime. Compare Exh. DY-109 at 2 with Doc. 158-4 at 134. While it is
true that Lynn’s data indicate that the weeks of 2/28 and 3/6 were DA1093’s third and
fourth weeks working overtime, they were not consecutive. Rather, the week of 2/28
was the first time in approximately a month that DA1093 worked overtime. According to
the MCAA, however,
Experience indicates that a return to a normal 40-hour schedule tends to
‘reset’ the productivity of a crew, such that if the crew returns to an
overtime schedule after a week or two of a normal schedule, the
productivity loss would ‘reset’ to that of the first week of overtime. Thus,
when utilizing any of the data provided herein, it is important to know the
work schedule of the crews working overtime. If using a study that shows
a progressively increasing loss of productivity over time, should a crew
cease overtime and return to a straight time schedule, the crew's
inefficiency upon resuming overtime work must be reset to normal
production for the first measured period.
Although it is true that Lynn’s evaluation proceeds by individual employee, rather than
by crew, he provides no explanation why a month without overtime wouldn’t “reset”
7
According to Bulletin OT1, the employee may have been slightly more efficient working 69 hours than
working 70-72 hours. However, Lynn uses the higher inefficiency rate, presumably because the MCAA
table does not provide a rate for 69 hours.
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DA1093’s schedule. While application errors could be a significant issue in Daubert
analysis, their significance here is overshadowed by the fundamental errors in the
MCAA “methodology.”
Perhaps more significantly, it was clear from Lynn’s deposition and the Court’s
Daubert hearing that he based his opinions only on the payroll records, not on any
investigation of the project itself. Again, Bulletin OT1 does not say that overtime always
diminishes labor productivity, but only that it “can result in a substantial loss of labor
productivity.” Doc. 158-4 at 139 (emphasis added). Similarly, the bulletin claims that
overtime costs “may exceed the increased costs of the premium pay associated with an
overtime work schedule.” Id. at 125 (emphasis added). At the hearing, Lynn admitted
that the bulletin does not claim that this is true for every project, and he also admitted he
did not investigate whether it was true for the hangar project. According to the bulletin,
the reasons for potential productivity loss “can include fatigue, increased absenteeism,
increased incidence of accidents, reduced morale, and a more negative work attitude.”
Id. at 2. But Lynn never performed any investigation into whether these conditions
actually existed during the relevant weeks of the Project. He did not visit the job site,
nor did he make inquiries about the actual conditions of the hangar project. Doc. 92 at
40:20-41:7. Responding to this issue at the hearing, Lynn argued that he knew Yearout
suffered labor inefficiency because it took Yearout’s workers more man-hours to
complete their work than Yearout’s management had estimated. Even if exceeding a
subcontractor’s estimate is a reliable indication that labor inefficiency in fact occurred,
there are myriad reasons a worker could work slowly: a heatwave, other contractors’
interference, mismanagement, simple mistakes, an influenza outbreak, or an overoptimistic estimate of the time required are all potential reasons why a given task may
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have taken longer than anticipated. True, loss of labor productivity due to overtime
work is one possibility. But Lynn did not offer any evidence that that possibility was a
cause of the low productivity on the hangar renovation. 8
Lynn’s testimony is based on an inconsistent and one-dimensional application of
a trade group’s statistical table based on a small set of limited or withdrawn studies that
have not been made available to the Court or even read by Lynn. And Yearout’s brief
defended the testimony by citing cases which used a different methodology altogether.
The testimony is clearly inadmissible under the standards of Rule 702 and Daubert.
2. Shift work inefficiency
Yearout also proffered Lynn’s testimony that Yearout incurred labor costs of
$50,390.59 as a result of inefficiency from working two shifts. On this topic, Lynn
estimated Yearout’s labor inefficiencies “using information from the MCAA Management
Methods Bulletin OT2 – 2011.” Doc. 158-2 at 69.
Bulletin OT2 – 2011 simply describes different ways in which shift work can
impact labor efficiency. Doc. 158-5 at 143. For example, when a second shift works at
night, the mechanical contractor may need to provide artificial lighting. Id. One shift
might organize the on-site tools differently from how the other shift organizes them. Id.
People tend to be more tired at night, which is when second shifts often work. Id. The
employer may have to hire new people to fill night shifts, and those new people may
8
Once again, the documentation Lynn purported to rely on for the labor cost overruns was not submitted
to the Court. Further, the fact that Yearout’s employees took longer to do the work than they had
estimated is unsurprising to anyone familiar with this litigation. Both Yearout and GSC brought claims
against each other for delaying each other’s work. It is unlikely any party would dispute Lynn’s
observation that Yearout’s workers were less productive than expected, but his statement that the cause
of that low productivity was shift work is purely conclusory. Put differently, one of the fact issues in this
case is why the project was delayed, and it is circular to argue that (i) the project was delayed by overtime
inefficiency, and (ii) there was overtime inefficiency because there was a delay.
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work more slowly than more experienced workers. Id. at 144. Workers might drink
more, or be more likely to drink, for night shifts. Id. On the other hand, shift work may
cut down on overhead (by getting more use out of items rented at a daily or monthly
rate), and sometimes the temperature is more comfortable at night than during the day.
Id. at 144-45. The three-and-a-half-page bulletin simply lists potential disadvantages
and, although fewer, potential advantages, to working two shifts. Nowhere in that
bulletin is there any data, merely speculation.
Moving on to Lynn’s application of this “methodology,” he states in his report that
on the basis of Bulletin OT2, he estimated that the first shift on the hangar project
suffered a 10% loss in productivity and the second shift suffered a 20% loss, for a total
cost of $35,670.93. Doc. 158-2 at 70. After markups for tools, consumables, additional
foremen costs, home office overhead, and profit, he claims Yearout incurred total costs
of $50,390.59 due to lost productivity from shift work.
As with overtime inefficiency, Lynn did not do any investigation to determine
whether any of the OT2 factors actually existed on the hangar project. And Bulletin OT2
says that shift work may affect productivity, not that it always will. Doc. 158-5 at 143.
Lynn, however, not only assumed that shift work did affect productivity on the hangar
renovation, but also he assigned percentages to that effect. Unable to find any basis for
those percentages in Bulletin OT2, the Court asked Lynn where his percentages had
come from. In response, Lynn first claimed the percentages came from Bulletin OT2,
then were “tempered” based on his personal experience. The Court asked him which
part of Bulletin OT2 supplied the basis for those percentages, and Lynn said he could
not answer without re-reading the relevant section of the bulletin. The Court gave him
time to do that, and Lynn then admitted those percentages came “from my experience,”
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not from Bulletin OT2. It turned out that Lynn, without any investigation into the
conditions of the project itself, simply stated percentages based on his “personal
experience.” But Lynn’s personal experience is not by itself a sufficient basis for him to
assert that Yearout actually suffered a 10% productivity loss on the first shift and a 20%
loss on the second shift during the hangar renovation at issue. With no methodology
and no factual basis for those claims, Lynn’s testimony on shift work inefficiency lacks
foundation, relevance, reliable principles and methods, reliable application, and
helpfulness to the jury. It is clearly inadmissible.
III. CONCLUSION
To be clear, the Court does not question Mr. Lynn’s qualifications or his
experience in the construction industry. His proffered testimony, however, does not
pass muster under Daubert. For the reasons noted, GSC and Allied World’s motion to
exclude Randy Lynn’s expert testimony (Docs. 82; 129) is GRANTED.
SO ORDERED, this 20th day of June, 2019.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT
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