hibu Inc. v. Peck
MEMORANDUM AND ORDER granting in part and denying in part 212 MOTION TO STRIKE HIBU EXPERT STEVE BROWNE'S LOST PROFITS OPINION. Mr. Browne's opinions regarding future lost profits beyond March 31, 2017, are stricken. Signed by District Judge J. Thomas Marten on 11/6/2017. (mam)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
Case No. 16-1055-JTM
MEMORANDUM AND ORDER
This matter comes before the court on the defendant Chad Peck’s motion to
strike plaintiff Hibu, Inc.’s rebuttal expert Steve Browne’s lost profits opinion pursuant
to Federal Rule of Civil Procedure 37(c)(1). (Dkt. 212). Defendant claims that Mr.
Browne is really an affirmative damages expert that plaintiff failed to timely disclose.
For the reasons stated below, defendant’s motion is denied in part and granted in part.
Mr. Browne’s opinion for future lost profits beyond March 31, 2017, exceeds the scope
of defendant’s expert Rodney Sowards’s opinion, and will be excluded.
In the parties’ pretrial order, plaintiff seeks damages it incurred as a result of
defendant’s alleged breach of contract and tortious interference with business
Plaintiff claims at least $2,077,063, which includes amounts for lost
revenue, training and recruitment costs, cover damages, defendant’s severance
payment, and goodwill. Plaintiff also seeks punitive damages and attorneys’ fees.
Plaintiff submitted a detailed calculation of its damages in its disclosures and
provided CFO Bryan Turner’s testimony in support. Mr. Turner testified on October 14,
2016, and discussed five categories of damages. One category is Lost Revenue from
April 1, 2016, to March 31, 2017, for print services, and from January 1, 2016, to
December 31, 2016, for digital services. However, there was no claim for Lost Profits.
Defendant retained Mr. Sowards as its damages expert. Mr. Sowards disagrees
that the proper claim for damages is Lost Revenue—which does not factor in plaintiff’s
costs it would have incurred to earn this revenue. Instead, Mr. Sowards opines that the
proper damages claim is Lost Profits—lost revenue minus avoided costs—and provides
an “alternative calculation of lost profit damages.” (Dkt. 215-2, at 12). Mr. Sowards
noted that he was missing information regarding plaintiff’s avoided costs, and looked
at Dex Media’s print and digital sales made in the Wichita Market from March 2016 to
On May 26, 2017, the last day of its deadline, plaintiff designated Mr. Browne as
a rebuttal damages expert. Mr. Browne prepared a report and opined that plaintiff’s
damages for lost profits was between $2.2 to $2.6 million in lost profits over a 6 to 10
year future loss period.
Defendant argues that plaintiff did not timely disclose Mr. Browne as an
affirmative damages expert as opposed to a rebuttal expert. “If a party fails to provide
information or identify a witness as required by Rule 26(a) or (e), the party is not
allowed to use that information or witness to supply evidence on a motion, at a hearing,
or at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P.
The court finds that plaintiff timely designated Mr. Browne as a rebuttal expert
within the deadline for rebuttal experts. As addressed below, Mr. Browne is a rebuttal
expert, not an affirmative damages expert. Therefore, defendant’s request to strike Mr.
Browne as an expert witness in general is denied. But Mr. Browne’s opinions exceed
the scope of proper rebuttal.
Rebuttal evidence is “evidence which attempts to ‘disprove or contradict’ the
evidence to which it is contrasted.” Tanberg v. Sholtis, 401 F.3d 1151, 1166 (10th Cir.
2005) (citing Black’s Law Dictionary 579 (7th ed. 1999)). Rebuttal evidence on a matter
is permissible once a party has opened the door to that matter. Id. It is within the
court’s discretion whether to admit or exclude rebuttal evidence. Id.
The court agrees with plaintiff that defendant’s expert, Mr. Sowards, introduced
the alternative theory of lost profits in lieu of lost revenue. Thus, plaintiff is allowed to
consider and evaluate damages from lost profits to rebut Mr. Sowards. However,
plaintiff specifically limited its damages to lost revenue from April 1, 2016, to March 31,
2017, for print services, and from January 1, 2016, to December 31, 2016, for digital
services. At no time did plaintiff claim damages for future lost revenue, and the court
does not consider plaintiff’s general claim for total damages exceeding $2 million or loss
of goodwill in the future to equate to a claim of damages for future lost revenue. These
categories do not overlap.
Nor does the court read Mr. Sowards’s report to state—as presented by plaintiff
in its response—“[o]nly the time period of March 2016 until January 2017 should be
considered in evaluating Hibu’s lost profits.”
(Dkt. 237, at 6).
“calculation of damages in this matter is based upon an evaluation of Dex’s Print and
Digital sales made in the Wichita Market from March 2016 to January 2017. Only Dex’s
sales related to a prior hibu account have been included in [Mr. Sowards’s] analysis.”
(Dkt. 215-2, at 13). The court finds that plaintiff—not Mr. Sowards—limited the time
period to January 1, 2016, through March 31, 2017, for damages for lost revenue on print
and digital services. Therefore, Mr. Browne’s calculations and opinions for damages
beyond March 31, 2017, are not proper rebuttal and are stricken.
IT IS THEREFORE ORDERED this 6th day of November, 2017, that defendant’s
motion to strike plaintiff’s rebuttal expert Steve Browne’s lost profits opinion pursuant
to Fed. R. Civ. P. 37(c)(1) (Dkt. 212) is denied in part and granted in part. Mr. Browne’s
opinions regarding future lost profits beyond March 31, 2017, are stricken.
s/ J. Thomas Marten
J. Thomas Marten, Judge
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