Lawson v. Spirit Aerosystems, Inc.
MEMORANDUM AND ORDER. The parties' Motions to Exclude (Dkt. 508 , 510 , 513 ) are DENIED. Signed by District Judge Eric F. Melgren on 6/4/2021. (mam)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
LARRY A. LAWSON,
Case No. 18-1100-EFM
SPIRIT AEROSYSTEMS, INC.,
MEMORANDUM AND ORDER
Before the court are three motions seeking to exclude the testimony of four proposed
expert witnesses. Plaintiff Larry Lawson proposes to use the testimonies of Dr. William
Rogerson (Ph.D.) and Dr. Daniel Dennies (Ph.D.) to establish that defendant Spirit and Arconic
were not in the same “business,” and thus his association with the effort to join Arconic’s
management was not a breach of the Retirement Agreement. Defendant Spirit proposes to use
the testimony of Richard Aboulafia to show that such a breach occurred. Lawson also proposes
the testimony of Dr. Kevin Murphy (Ph.D.) to support his damages claims. For the reasons stated
herein, the motions to exclude are denied.
Federal Rule of Evidence 702 governs expert testimony:
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:
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;
the testimony is based on sufficient facts or data;
the testimony is the product of reliable principles and methods; and
the expert has reliably applied the principles and methods to the facts of
Rule 702 imposes a “gatekeeping role” upon the district court to ensure that expert
testimony is relevant and reliable.1 To fulfill this role, the district court must “make specific
factual findings on the record which are sufficient for an appellate court to review the trial court's
conclusion concerning whether the testimony was scientifically reliable and factually relevant.”2
The first step of the district court's gatekeeping inquiry is to determine whether the expert
“has a reliable basis in the knowledge and experience of his or her discipline.”3 District courts
have broad discretion to determine whether a proposed expert may testify.4 To be qualified, “[a]n
expert must possess ‘such skill, experience or knowledge in that particular field as to make it
appear that his opinion would rest on substantial foundation and would tend to aid the trier of
fact in his search for truth.’”5 An expert who “possesses knowledge as to a general field” but
“lacks specific knowledge does not necessarily assist the jury.”6
The second step of the Court's gatekeeping inquiry is to determine if the expert's
proffered testimony is reliable. To be reliable, the expert's testimony must be based on sufficient
facts and data. The Tenth Circuit recently explained this requirement:
Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).
Bitler v A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2005) (citing Dodge v. Cotter Corp., 328 F.3d
1212, 1223 (10th Cir. 2003)).
Bitler, 400 F.3d at 1232-33 (quoting Daubert, 509 U.S. at 592, 113 S.Ct. 2786) (internal quotation
marks and alterations omitted).
United States v. Nichols, 169 F.3d 1255, 1265 (10th Cir. 1999).
Rodgers v. Beechcraft Corp., 759 F. App'x 646, 658 (10th Cir. 2018) (quoting LifeWise Master Funding
v. Telebank, 374 F.3d 917, 928 (10th Cir. 2004)).
City of Hobbs v. Hartford Fire Ins. Co., 162 F.3d 576, 587 (10th Cir. 1998) (citation omitted).
The Supreme Court's decision in General Electric v. Joiner offers a good
illustration of the requirement that expert testimony must be based on sufficient
facts or data. The Court held that the district court did not abuse its discretion in
rejecting expert opinions that plaintiff's exposure to toxins caused his lung cancer
because the opinions were based on animal studies that could not be extrapolated
to humans. Opinion evidence need not be admitted when it “is connected to
existing data only by the ipse dixit of the expert. A court may conclude that there
is simply too great an analytical gap between the data and the opinion proffered.”7
The Tenth Circuit also explained how Rule 703 works in conjunction with the sufficient facts
and data requirement of Rule 702.
Federal Rule 703 complements Rule 702(c). It provides that “facts or data in the
case that the expert has been aware of or personally observed” may be the basis
for the expert's opinion and need not be admissible “[i]f experts in the particular
field would reasonably rely on those kinds of facts or data in forming an opinion
on the subject.”8
The reliability inquiry also requires a “preliminary assessment of whether the reasoning or
methodology underlying the testimony is scientifically valid and of whether that reasoning or
methodology properly can be applied to the facts in issue.”9 In making this determination, the
district court must focus on the expert's methodology rather than the expert's conclusions.10 A
court may consider the following factors in determining whether an expert's methodology is
(1) whether the opinion or theory is susceptible to testing and has been subjected
to such testing; (2) whether the opinion or theory has been subjected to peer
review; (3) whether there is a known or potential rate of error associated with the
methodology used and whether there are standards controlling the technique's
Rodgers, 759 F. App'x at 658 (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139
L.Ed.2d 508 (1997)).
Id. (quoting Fed. R. Evid. 703) (alterations in original).
Id. at 659 (quoting Daubert, 509 U.S. at 592-93, 113 S.Ct. 2786).
Id. (citing Daubert, 509 U.S. at 595, 113 S.Ct. 2786).
operation; and (4) whether the theory has been generally accepted in the scientific
These factors are not exclusive.12 “Regardless of the specific factors at issue, the purpose
of the Daubert inquiry is always ‘to make certain that an expert, whether basing testimony upon
professional studies or personal experience, employs in the courtroom the same level of
intellectual rigor that characterizes the practice of an expert in the relevant field.’”13
The third and last step of the district court's gatekeeping function requires the court to
analyze “whether [the] proposed testimony is sufficiently relevant to the task at hand.”14
“Relevant evidence ‘means evidence having any tendency to make the existence of any fact that
is of consequence to the determination of the action more probable or less probable than it would
be without the evidence.’”15 Even if the expert's evidence is scientifically valid and follows
reliable methodologies, it might not be relevant to the issue at hand.16
The party offering the expert testimony bears the burden of showing that the expert's
testimony is admissible.17 Ultimately, “rejection of expert testimony is the exception rather than
the rule.”18 While Daubert makes the court the gatekeeper for expert testimony, “[v]igorous
cross-examination, presentation of contrary evidence, and careful instruction on the burden of
Hoffman v. Ford Motor Co., 493 F. App'x. 962, 974 (10th Cir. 2012) (citing Daubert, 509 U.S. at 59394, 113 S.Ct. 2786).
Id. (citing Daubert, 509 U.S. at 594, 113 S.Ct. 2786).
Dodge, 328 F.3d at 1222-23 (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152, 119 S.Ct.
1167, 143 L.Ed.2d 238 (1999)).
Bitler, 400 F.3d at 1234 (internal quotation marks and citation omitted)
Id. (quoting Fed. R. Evid. 401).
United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009) (citing Ralston v. Smith & Nephew
Richards, Inc., 275 F.3d 965, 970 n.4 (10th Cir. 2001)).
Fed. R. Evid. 702, advisory committee's notes to 2000 amendments.
proof” remain “the traditional and appropriate means of attacking shaky but admissible
Because motions by both parties argue that an opponent’s expert presents opinions which
are irrelevant under the prior rulings of the court, a brief review of the issues in the action, and
the court’s rulings, may be helpful.
Under Paragraph 4(c) of the Employment Agreement (later adopted into his Retirement
Agreement), Lawson agreed that for two years after leave Spirit, he would not:
directly or indirectly own, manage, operate, control, be employed by, serve as an
officer or director of, solicit sales for, invest in, participate in, advise, consult
with, or be connected with the ownership, management, operation, or control of
any business that is engaged, in whole or in part, in the Business, or any business
that is competitive with the Business or any portion thereof, except for our
The Agreement explicitly defines Spirit’s “Business” as:
the manufacture, fabrication, maintenance, repair, overhaul, and modification of
aerostructures and aircraft components, and market and sell our products and
services to customers throughout the world (together with any other businesses in
which Spirit may in the future engage, by acquisition or otherwise, the
The court first construed this provision in resolving the Spirit’s motion to dismiss the
action. In its August 20, 2018 Order, the court rejected the possibility that another corporation
would be deemed to be in the same “business” as Spirit simply because Spirit might produce or
market the same products in the future. Rather, the Agreement
must be interpreted on an ongoing basis; when Spirit does engage in a new
business, then it becomes part of the “Business.” Rather than providing a static
definition, the parties clearly intended for “the Business” to have a definition
capable of evolving over time.
Daubert, 509 U.S. at 596 (citation omitted)
Accordingly, the plain language of the Employment Agreement must be
read to mean that “the Business” refers to the specific products and services
provided, marketed, or sold by Spirit at the time of contracting, as well as the
products and services Spirit later chooses to provide, market, or sell, if and when
Spirit chooses to do so.20
On April 16, 2021, the court denied the parties’ cross-motions for summary judgment.
The court determined that “the term ‘Business’ as defined in the parties’ agreements is
ambiguous and that extrinsic and parol evidence may therefore be used to clarify the
ambiguity.”21 As to the two key elements of Lawson’s performance of the contract and Spirit’s
breach, the court identified numerous remaining questions of material fact. Common to both
issues was whether Lawson’s (or Elliott’s and Arconic’s) actions “fell within the notion of
‘Business’ as defined in the Employment Agreement.”22
The court denied the motions to strike, many of which raised arguments similar to those
in the present motions. The court resolved these as motions to strike rather than Daubert
motions, but the court also stressed that, given the early stage of the proceedings, “similar
concerns [as to expert reliability] are reduced where “[t]here is no independent fact-finder who
requires shielding from inadmissible evidence and improper opinions at this stage in the
proceedings.”23 “This is especially true, the court observed, “since this case will not be tried
before a jury.”24
Order, Dkt. 25, at 15-16 (emphasis in original).
Order, Dkt. 511, at 21.
Id. at 22-23.
Order, Dkt. 511, at 18-19 (citing Wallace B. Roderick Revo. Living Trust v. XTO Energy, No. 08-1330EFM (D. Kan. May 4, 2016).
Daubert gate-keeping, after all, serves to “prevent the jury” from hearing unreliable
scientific evidence.25 Because the doctrine is “designed to protect juries [it] is largely irrelevant
in the context of a bench trial.”26 “There is less need for the gatekeeper to keep the gate when the
gatekeeper is keeping the gate only for himself.”27
1. William Rogerson
Spirit has moved to exclude the opinions of Dr. William Rogerson, a professor of
economics at Northwestern University, who has submitted a Report stating generally that Spirit
and Arconic are not competitors. Spirit argues that Rogerson’s assessment of the aerospace
market should be excluded because (1) he is not qualified to render the opinion, (2) his
conclusions are irrelevant to the issues in the case, (3) his opinions are unreliable and would not
assist the trier of fact.
With respect to Rogerson’s qualifications, Spirit stresses that he has listed his areas of
expertise as “industrial organization, competition policy, antitrust economics, defense
procurement, and telecommunications”—and not, specifically, any experience in the aerospace
industry. The defendant further contends that, Rogerson could not have acquired the necessary
learning and expertise, as he acknowledged in his deposition that he spent only 80 or so hours
preparing his report and rebuttal.
Daubert, 509 U.S. at 597, 113 S. Ct. at 2798.
Deal v. Hamilton Cnty. Bd. of Educ., 392 F.3d 840, 852 (6th Cir. 2004).
United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005).
Dr. Rogerson, the Charles E. and Emma H. Morrison Professor of Economics at
Northwestern University, and has twice served as Chair of its Economics Department. He is the
Co-Director of the Center for the Study of Industrial Organization at Northwestern, and the
Research Director for Antitrust Economics and Competition Policy at the Center on Law,
Business and Economics at Northwestern’s Pritzker School of Law. He received his bachelor’s
degree in economics in 1976 from the University of Alberta, and a Ph.D. in 1980 in Social
Sciences from the California Institute of Technology.
Rogerson has served as a consultant to numerous government or government related
agencies, including the Institute for Defense Analysis, the Logistics Management Institute, the
Office of the Secretary of Defense (Program Analysis and Evaluation), and the RAND
Corporation. From 1998 to 1990, he was the Chief Economist at the Federal Communications
Rogerson has extensive experience in industrial organization and competition. While
Spirit contends that Rogerson lacks experience in the aerospace industry, his deposition indicated
that he consulted, either with the United States government or private entities, on seven major
aerospace industry mergers from 1990 to 2008, including antitrust and competition issues.28
More importantly, Spirit has not shown how a lack of particularized experience in the
aerospace industry in general, or a pre-existing familiarity with both Spirit and Arconic should
disqualify him from testifying. Lawson did not designate Rogerson as an expert in the aerospace
Dep. at 41-42, 57-58.
industry, but in competition. The court in its April 16 Order specifically recognized the extent of
competition as a material fact dispute between the parties.29
Spirit next contends that Rogerson’s opinions are irrelevant because they are inconsistent
with the court’s prior construction of the restrictive covenant. In particular, Spirit notes
Rogerson’s conclusion that “[f]irms in an industry compete with one another if they produce
products or services that potential purchasers view as being substitutes for one another.”
Aerospace products are specifically contracted for and specifically engineered, which means that
manufacturers are usually the sole source for a given product.
According to the defendant, Rogerson’s focus on head-to-head competition (or rather its
absence) “ignores the constantly changing and blurring lines between buyers and sellers” in the
aerospace market.30 And Spirit argues that that a violation of the Employment Agreement may
arise when Spirit and another company market similar “types” of products, and thus Rogerson’s
focus on head-to-head competition as to specific products is contrary to the law of the case.
With respect to the “constantly changing and blurring lines” in the aerospace industry,
Spirit does not independently establish this as a fact beyond dispute. Rather, it simply cites to its
response to a requested finding of fact in Lawson’s summary judgment motion.31 But the court
declined to make any factual finding on the issue in its Order of April 16, with the result that the
issue remains within the “many remaining genuine disputes of material fact.”32
See Order, Dkt. 511, at 23 (including, among remaining factual questions, “whether, and to what extent,
Arconic was a competitor of Spirit; [and] whether, and to what extent, Arconic’s business overlapped
Dkt. 510, at 12-13.
Dkt. 468, Statement of Fact ¶ 48; Dkt. 445, at 14.
Order, Dkt. 511, at 22.
Spirit supports its contentio,n that the marketing of overlapping types of products falls
within the covent, by pointing to both this court’s August 20, 2018 Order denying in part Spirit’s
motion to dismiss, as well as a subsequent ruling by Magistrate Judge Mitchell. Neither order
provides conclusive support for Spirit’s argument.
In her ruling, Judge Mitchell simply sought to construe the earlier August 20, 2018 Order
for purposes of resolving a discovery dispute. She did not independently construe the terms of
the Employment Agreement. Further, “[a] magistrate judge’s ruling on a nondispositive matter
does not constitute the law of the case.”33
With respect to the court’s earlier ruling, Spirit correctly notes that at one point the Order
states that the term “Business” encompasses “those businesses that manufacture the same types
of aircraft components that Spirit does.”34 However, this statement occurs early in the court’s
extended discussion of the Employment Agreement, and fails to acknowledge the ultimate
conclusion of the court — that the focus of the inquiry as to “Business” should be on “the
specific products and services provided, marketed, or sold by Spirit at the time.”35
This section of the 2018 Order was largely concerned with the general construction of the
restrictive covenant, and in particular the timing of any alleged overlap in business. The court
held that Lawson was precluded from working for another firm only “if and when” Spirit begins
producing products made by that firm, and thus that hypothetical or future competition between
See Taverna Imports, Inc. v. A&M Wine & Spirits, 2020 WL 6498242, at *6 (S.D. Fla. Nov. 2, 2020)
Dkt. 25, at 14.
Order, Dkt. 25, at 16 (emphasis in original).
Spirit and another company is not a bar to employment. The clause only bars employment where
there is a contemporaneous overlapping manufacture or marketing of the same products.
But the Order did not resolve, and was not intended to resolve, the degree of product
similarity required. As Spirit notes, one portion of the Order discusses overlapping production of
the same “type” of products. Another portion, cited by Lawson, provides that employment is
barred if Spirit and another company are making or marketing the same “specific” products.
Given the preliminary stage of the litigation, the court did not attempt to further define how
similar the “specific” product must be. This reticence is supported by the more recent conclusion,
after discovery and the parties’ extensive summary judgment briefing, that the clause remains
Accordingly, for purposes of resolving the present Daubert motions, the court does not
consider the degree of product similarity a closed matter. With respect to the present motion, the
head-to-head analysis provided by Rogerson is a reasonable consequence of his determination
that aerospace companies compete to become the sole supplier of particular products. As a result,
this assessment naturally focuses on the existence of actual competition. The court finds that the
testimony is relevant to an issue—the construction of the restrictive clause in the Employment
Agreement—which the court has determined is ambiguous.
Next, Spirit argues that Rogerson opinion is unreliable because he merely relied on and
summarized documents provided to him by counsel (including SEC reports and an internal Spirit
“360 analysis”) or research supplied by the Cornerstone consulting firm, and that he allegedly
looked at the wrong time frame, examining the state of the industry from February 2017 to July
Order, Dkt. 511, at 21.
2018. Spirit also complains that Rogerson’s opinion is unreliable for failing to acknowledge a
variety of evidence including marketing materials, the existence of seven similar products37 by
both Spirit and Arconic, that fact that both companies have the some of the same manufacturing
equipment, that they did in one instance engage in head-to-head competition for Boeing work in
January, 2017, and that Rogerson discounts the importance of components sold by Spirit in the
The court finds no reason to find Rogerson’s opinion is unreliable on these grounds. First,
Spirit has failed to demonstrate that an expert is subject to per se exclusion simply because he
has relied on documents supplied by counsel. In fact, the rule is to the contrary.38 Nor does it
appear that Rogerson is taking out of context or merely repeating information from a small
ground of selected documents, such as Spirit’s 360 analysis and SECE filings. Rather,
Rogerson’s deposition and report (Dkt. 457-1) reflect an attempt to integrate a huge volume of
materials into his specific conclusions about the extent of competition between Spirit and
Arconic. The report indicates that that he conducted some independent research and he twice
spoke with Dr. Daniel Dennies, plaintiff’s product expert.
Moreover, a detailed review of Rogerson’s Report indicates that he did consider the
issues now cited by Spirit, such as the seven overlapping products,39 the manufacturing
machinery of Spirit and Arconic,40 and aftermarket production.41 He simply doesn’t agree with
Depending on how they are counted, the overlapping products are sometimes numbered as six, and
Harris v. Heubel Material Mahndling, Inc., No. 09-1136-EFM, 2010 WL 3270094, at *4 (D. Kan. Aug.
17, 2020) (“the federal rules of evidence contemplate an expert's reliance on information provided by
Report, at ¶¶ 58-68; Dep. at 174-75.
Report, at ¶¶ 72-74.
Spirit that these facts warrant a different result, and explains the reasons for his conclusions. To
the extent Spirit argues Rogerson errs, its argument is properly addressed to the weight of the
Spirit has failed to show that any substantial error in the research materials supplied by
Laurien Gilbert, and Emre Udayan, the two Cornerstone consultants, or why their product should
be considered suspect. Rogerson testified that he has used Cornerstone researchers on prior
occasions.43 Gilbert has a Ph.D. in economics and is an experienced research assistant at
Cornerstone; Udayan has a senior position at the firm.44 Gilbert and Udayan provided their
research to Rogerson based on his instructions,45 and he oversaw their work.46 The information
gathered is typical to what economists use in evaluating the extent of competition.47
An expert may testify on the basis of information reasonably relied on by experts in the
field; “[w]e do not require an expert to base his or her opinions on independent data collection or
field research.”48 It is not atypical for an economist to rely on information collated or collected
by others, and the material relied on by Rogerson is sent out in the extensive Appendix B to his
report. This information includes pleadings, depositions, publicly-available documents, and
Id. at ¶¶ 76-78.
See In re EpiPen Marketing, No. 17-2785-DDC, 2020 WL 1164869, at *4 (D. Kan. March 10, 2020)
(finding plaintiffs’ criticisms of expert’s methodology went to weight rather than admissibility)
Rogerson Dep. at 16-17.
Id. at 20.
Id. at 23.
Report, Dkt. 475-1, at 3.
Id. ¶ 28.
Jaasma v. Shell Oil Co., 412 F.3d 501, 514 (3d Cir. 2005).
internal corporate documents. Rogerson’s testimony is not inadmissible under Daubert or Rule
702 on the cited grounds.49
Finally, the court finds no fatal error in the supposedly wrong time frame employed by
Rogerson. His assessment looks from the time Lawson started with the Arconic project to end of
the restrictive period. Spirit has not shown that any larger or wider time frame would be
somehow more appropriate, or that such a time frame would likely have produced a different
result to Rogerson’s conclusions.
2. Daniel Dennies
Dennies is a metallurgical professional engineer, and has experience in “materials,
manufacturing processes, and testing methods, as well as design, testing, and failure analysis.”
Spirit contends Dennies’s opinions are irrelevant, arguing that his focus on specific products is
an attempt to construe “Business” as defined in the Employment Agreement, despite having
acknowledged that he has no experience in “the business aspect of the aerospace industry.” The
defendant further argues that his testimony is unreliable, as Dennies performed no technical
review of the seven allegedly overlapping products, which would have required technical
engineering drawings, and ignored important evidence, such as the fact that both companies
produced airplane seat tracks.
The court finds the evidence is not excludable. The witness’s focus on specific products
is not at variance with the orders of the court in the case, or the proper construction of the
See AngioDynamics, Inc. v. C.R. Bard, Inc., 2021 WL 1792394, at *43 (N.D.N.Y. May 5, 2021)
(“experts have wide latitude with respect to the data on which they rely”).
Employment Agreement. As noted above, in resolving the motion to dismiss the court explicitly
determined that “Business” under the Employment Agreement includes a focus on “specific
products” of Spirit and any company employing Lawson.50
Dennies did not examine technical drawings of the disputed parts. Lawson argues this is
simply because Spirit refused to produce the drawings. Indeed, one explicit conclusion advanced
in Dennies’s Report is that, because the documents which Spirit did produce are not “specific
technical engineering documents,” there is no basis for any one finding actual similarity in the
products.51 Dennies did examine non-technical documents, invoices and marketing materials.
From these materials, Dennies reached the opinion that the seven parts were not substantially
The seven allegedly overlapping products are: (1) seat tracks, (2) fan cowl doors and
hinges, (3) lavatory access panels, (4) spoilers/flaps, (5) structural hook pressure relief, (6)
trailing edge flaps, and (7) ailerons and wing ribs. Dennies concludes that both Spirit and
Arconic may have both listed airplane products with these general names, but an individualized
examination of all the available documents fails to show that the actual products are actually the
same. The products were most likely either actually different, or were products which Arconic
sold to Spirit, which Spirit then integrated the part into a larger aerostructure and sold to another
customer. Hence, Dennies concludes, Spirit and Arconic were not competitors as to any of these
Of course, as noted above, Spirit objects to Dennies testifying as to “competition” on the
grounds that the Executive Agreement does not explicitly mention the term, and Dennies is not
Order, Dkt. 25, at 16 (emphasis in original).
Report, Dkt. 469-82, at 11.
an expert in economics. But the court’s Order of April 16 expressly identifies the extent of
competition between Arconic and Spirit as one of the remaining material issues of fact.52 And
Dennies’s express definition of “competition” as stated in his report, “two or more independent,
qualified manufacturers of the same specific part for an aircraft,”53 is consistent with the court’s
prior observation that the focus should be on specific products.
Moreover, while Dennies does sometimes use the term “competitor,” the overwhelming
focus of his Report is an individualized assessment of each of the seven allegedly overlapping
parts, and the documentation for the claim that they are the same or similar. Dennies’s use of the
term does not warrant his exclusion as a witness. And, to the extent Dennies may use the term at
trial, the court can recognize that his expertise lies in product rather than economic analysis.
The other issues raised by Spirit are matters which go to the weight to assign Dennies’s
testimony rather than a basis for exclusion. For example, as with Rogerson, Spirit argues that
Dennies used the wrong time frame for his analysis. But, as with Rogerson, the defendant fails to
show how the time frame selected was erroneous, or would have likely yielded a different result.
Spirit takes as an example of the supposed errors in Dennies’s analysis his failure to
account for the fact that both Arconic and Spirit produced titanium seat track. However, Dennies
does address the issue, concluding that, for aircraft other than the Boeing 787, Spirit and Arconic
“were fabricating parts with the same name but for different aircraft and from two different metal
alloys,” with Spirit producing aluminum tracks and Arconic titanium tracks.54 Spirit did install
Order, Dkt. 511, at 23.
Report, at 3.
Id., at 12.
titanium tracks in the 787, but these were actually made by Arconic, with the result that Arconic
was acting as a supplier to Spirit.
Finally, Spirit argues that the testimony of Dennies should excluded because it
contradicts that of Rogerson. The court finds no substantial contradiction. Rogerson focuses on
the absence of head-to-head competition as showing that Spirit and Arconic are not in the same
business. Dennies’s testimony addresses the degree of similarity between the products of Spirit
3. Richard Aboulafia
Lawson moves to exclude Dr. Richard Aboulafia’s opinions on three grounds. First, he
argues that Aboulafia is an industry analyst without any specific training or expertise in
competition or product engineering. Second, he argues that Aboulafia’s opinions, which focus on
the potential for competition between Spirit and Arconic rather than actual competition are
irrelevant and contrary to the court’s prior construction of the restrictive covenant in the
Employment Agreement. Finally, Lawson argues that Aboulafia’s “vertical silo” theory is not
grounded on sufficient facts or reliable methods.
The court denies the plaintiff’s motion. Aboulafia does not have particularized experience
or training in antitrust issues or product engineering. But this is not an action alleging
infringement of antitrust laws; it is a claim for breach of a contract which the court has expressly
determined is ambiguous. How Lawson and Spirit, both extremely knowledgeable and
experienced participants in the aerospace industry, would have understood the contract is a
critical element of the case. As an expert in the aerospace industry, Aboulafia appears wellpositioned to given information as to such understandings.
Aboulafia has served as an analyst in the aerospace industry for 33 years. He is the Vice
President of Analysis at Teal Group, a leading aerospace market analysis consultancy. He writes
and edits the group’s forecasting tool, “World Military and Civil Aircraft Briefing,” which
addresses 135 aircraft programs and markets. He is employed regularly by aerospace companies,
including most prime and many second- and third-tier contractors in the United States, Europe,
and Asia. He advises financial institutions about the industry, and writes regular columns in
Aviation Week & Space Technology magazine and at Forbes.com. He was also written articles
for other publications, including the Wall Street Journal, Slate, AIAA’s Aerospace America, the
Financial Times, and Professional Pilot.
The court also finds that Aboulafia’s opinions are relevant. As noted earlier, in resolving
the parties’ summary judgment motions the court concluded that there are extensive factual
issues remaining as to the extent of competition and business overlap between Spirit and
Arconic.55 Lawson correctly observes both that Aboulafia’s term “vertical silo” appears to be a
construction of the witness, rather than a term generally within the aerospace industry, and that
to some extent Aboulafia’s report appears to focus on hypothetical competition rather than actual
competition. As noted earlier, in resolving the motion to dismiss, the court construed the term
“Business” to mean Spirit’s existing products, or new products “if and when” they are made,
marketed, or sold.
Nevertheless, the court denies plaintiff’s motion to exclude. The term “vertical silos” may
not be common parlance in the aerospace industry, but then, that industry is primarily devoted to
building airplanes, not seeking to construe ambiguous language from one executive’s
Order, Dkt. 511, at 23.
employment contract. And while the term may have been coined by Aboulafia, the concept is not
unique to him. Aboulafia expressly analogizes the term to the distinct treatment of “major
supplier groupings” in a leading industry authority.56
In Aboulafia’s view, the standard division of the aerospace industry into tiers is useful,
but fails to capture the dynamic nature of the industry, and the growth of some firms into
multiple tiers.57 Although some of his Report does appear to reflect future or hypothetical
competition between companies, his analysis also addresses present-tense competition existing
“on an ongoing basis,” in which “the larger companies within the aerostructure silo are
constantly competing with each other for new work.”58 For Aboulafia, given the nature of the
industry, competition exists at the bidding process for a given aerostructure, rather than for
specific parts it comprises.
At least for Tier 1 and Tier 2 level structures and components, these suppliers will
often, barring performance issues or unexpected circumstances, have the
contractual right to continue to produce the subcontracted parts in the work
packages for a long period of time, up to the life of the airplane program, and will
often be the sole provider of such work packages. For this reason, after the work
is awarded to the supplier, competition occurs infrequently for the exact same part
on the exact same airplane program. Accordingly, competing within the aerospace
industry is not limited to the infrequent instances where companies build precisely
the same part for precisely the same program. Indeed, any attempt to describe
competitiveness in the aerospace manufacturing industry in this limited way
would essentially mean that there are no competitors in the industry, which is
obviously not reality.59
Economic forces are driving firms outside of their tiers, expanding up and down the standard
supply chain. Aboulafia examined the history of both Spirit and Arconic, finding just such
Kevin Michael, AeroDynamic, (Am. Inst. Aeronautics and Astronautics, 2018). See Report at 4 n. 4.
Report, at 4.
Id. at 6-7.
Id. at 8.
expansion.60 The two companies are “similarly situated” in their ability to produce products for
other companies, and “market to common customers that they can manufacture the same types of
structures and components.”61 Aboulafia concludes:
Suppliers’ competitive concerns lie beyond head-to-head bidding for specific
parts made for specific airplane programs and the rare instance where a suppliers
provide the exact same part for the exact same airplane program. Properly placed
in the context of the aerospace manufacturing industry, and more specifically, the
aerostructures vertical silo, Spirit and Arconic engage in intense competition.
They have overlapping manufacturing capabilities, vertical integration strategies,
and marketing campaigns that result in both companies attempting to obtain the
broadest possible work packages from the available airplane programs in direct
conflict with each other.62
Lawson, of course, challenges Aboulafia precisely because his opinion does not (like
Rogerson and Dennies) focus on head-to-head competition as to specific parts.63 However, while
the existence (or absence) of head-to-head competition as to specific parts may be probative of a
violation (or compliance) with the restrictive covenant, it may not be dispositive. Additional
questions raised by the plaintiff go to the weight of the proposed testimony.
The goal of the court is to give effect to the parties’ agreement, and the court expressly
concluded in its most recent Order that “the aircraft manufacturing industry does not utilize
broadly accepted, standardized vocabulary,” and that “terms and phrases can reasonably be
Id. at 12-15.
Id. at 16.
Id. at 17.
Lawson also argues (Dkt. 526, at 7) that Aboulafia lacks economic expertise, and thus cannot reliability
testify about market share and competition, citing decisions such as Berlyn v. Gazette Newspapers, 214
F.Supp.2d 530, 536 (D. Md. 2002). In Berlyn, the court excluded a proposed expert who lacked any
training in antitrust or economic analysis from testifying as to the relevant product market. But the court
there expressly addressed the issue in the technical context of “relevant market in antitrust analysis.” Id.
at 537 (emphasis added). As noted above, the court here addresses not an antitrust action, but a contract—
and the likely construction of the contract’s language by persons experienced in the aerospace industry.
Given this broader perspective, Aboulafia’s experience in the industry may be helpful.
interpreted by industry insiders to mean widely varying things,” with the ultimate a result the
restrictive covenant “is ambiguous and that extrinsic and parole evidence may therefore be used
to clarify the ambiguity.”64 The court then concluded that broad issues of material fact exist as to
the degree of competition and business overlap between Spirit and Arconic. Aboulafia’s report
and testimony appears to provide evidence relevant to the inquiry.
Finally, the plaintiff argues that Aboulafia’s opinions are not tied to specific facts or
reliable methods. However, Aboulafia grounds his opinion on a variety evidence, including
Spirit documents, Arconic documents, publicly available information, and witness testimony.
The motion to exclude is hereby denied.
4. Kevin Murphy
To help establish the amount of his damages, Lawson proposes to use the opinion
testimony of Dr. Kevin Murphy. Dr. Murphy has extensive experience in economics and
executive compensation.65 Spirit argues that Murphy’s expert testimony should be excluded
because his opinion in not based on his economic expertise. Instead, it contends, he merely
Order, Dkt. 511, at 21.
The court summarized Dr. Murphy’s qualifications in its Order of April 16, 2021 (Dkt. 511, at 13-14):
Murphy is a professor of finance at the University of Southern California Marshall
School of Business. He holds a Ph.D. in Economics from the University of Chicago. For
over 36 years, Murphy has studied executive compensation and incentive structures,
including authoring more than 50 academic publications on the topic. He has advised the
SEC in promulgating disclosure rules relating to management compensation, and in 2009,
was the U.S. Treasury Department’s Special Master of Executive Compensation, in
charge of approving compensation for executives at firms that received funds via the
Troubled Asset Relief Program. He has also testified before the U.S. House of
Representatives Financial Services Committee and presented at the Board of Governors
of the Federal Reserve.
supplies mathematical calculations based on “post-vesting trading” information. Defendant
argues that as a matter of law, Lawson’s damages are fixed and easily calculable from the date of
the alleged breach.66 Spirit also argues more generally that damages are in any case
inappropriate, as Lawson made more with his consulting agreement than he would have made
under the Retirement Agreement.
Pursuant to the Retirement Agreement effective on July 31, 2016, Lawson was
contractually entitled to $150,000 per year for two years for consulting and transition services,
his then-current base salary of $1,274,00 and COBRA benefits for a year, a bonus payment of
$1,115,000, and $2,000,000 in deferred compensation credit. He was also given, “as if he were
an active employee,” the opportunity to vest 408,596 unvested Long-Term Incentive Plan shares.
These LTIP shares would included (1) time-based restricted stock, which would vest in
scheduled installments over a period of three to four years, and (2) performance share units
The court will deny the motion to exclude. The calculation of the plaintiff’s damages
requires more than simple mathematical calculation. The values of the PSUs are determined by
Spirit’s total shareholder return (TSR) in relation to other aerospace companies over a three year
period. The PSU’s may also vest at multiples of their target, depending on the relevant TSR.
As noted earlier, Spirit argues that Murphy cannot testify as an expert, and that his
opinions reflect simple mathematical calculations, citing in support Jayhawk Capital Mgmt. v.
Defendant cites decisions such as Kearl v. Rausser, 293 Fed. Appx. 592, 606–07 (10th Cir. 2008) (“the
date of breach is not only central to the calculation of damages, but it is often the only real issue of the
jury to decide on damage. After the date of breach has been determined, calculating damages frequently
becomes a simple math problem”).
LSB Industries.67 In that case, the court concluded that proposed testimony as to the plaintiffs’
damages for undelivered common stock would not be considered expert testimony as it “does not
appear to involve specialized knowledge but instead seems to be a straightforward mathematical
calculation.”68 However, the single instance of multiplication in Jayhawk Capital bears little
resemblance69 to the complicated structure of Lawson’s compensation package as to the timing
and valuation of the undelivered LTIP stock. Further, the Jayhawk Capital court ultimately
allowed the witness to give lay testimony as his calculations, stressing that “the trial is to the
bench, and Defendants will be able to question [him] during trial. To the extent [his] testimony
may go into specialized knowledge or involves flawed mathematical calculations, Defendants
may point this out to the Court.”70 The same result is appropriate here.
Similarly, Spirit’s argument that Lawson’s damages are easily determinable based on the
date of the alleged breach rests on cases which bear little resemblance to the present action.
Thus, in Simon v. Electrospace Corp., the court observes as a general matter that damages for the
nondelivery of stock “is determined by the loss sustained or gain prevented at the time and place
of breach.”71 At the same time, the court noted that there was nothing unique or unusual about
the 25,605 shares in issue, and that “their value, the record shows, was precisely determinable on
the public market, namely, at $10 per share.”72
No. 08-2561-EFM, 2011 WL 1626581, at *8-9 (D. Kan. April 28, 2011).
Id. at *8.
The evidence proposed by the Jayhawk plaintiffs was intended to show that they “did not receive an
additional 510, 437 common shares [which] they would have been able to sell [for] an average price of
$23.93 a share, resulting in approximately $12 million in damages.” Id.
Id. at *9.
28 N.Y.2d 136, at 145, 269 N.E.2d 21, at 26 (1971) (citations omitted).
28 N.Y.2d at 145-46, 269 N.E.2d at 26.
In Kearl v. Rausser, the Tenth Circuit—applying Utah law—observed that “[a]fter the
date of breach has been determined, calculating damages frequently becomes a simple math
problem.”73 But “frequently” is not “always,” and there is little simplicity in the calculation of
the damages claimed by Lawson, which involve shares of different types, vesting at different
times, based upon values relative to future corporate performance. In Kearl, the court considered
both Utah and New York law,74 and concluded that the damages awarded by the jury for nondelivered stock could not be sustained where it had been given zero “guidance as to temporal
limitations on the defendant's liability.”75
The district court's instructions erroneously permitted plaintiffs to pursue a
damages theory at trial that had no connection whatsoever to the date of breach.
Instead of seeking to measure their losses as of the date of Dr. Rausser's breach,
plaintiffs were free under the jury instructions given to argue for damages months
and even years after any possible breach date. Indeed, plaintiffs' damages theory
valued the stock as of the dates of Dr. Rausser's sales and, for the stock he
retained, the date of trial.76
Spirit advanced many of these arguments in its motion to strike section of Murphy’s
report. In denying the motion, the court on April 16 observed that because the case “will not be
tried before a jury,” Spirit “can rest assured that the Court is capable of discerning which
evidence is relevant and reliable and assigning weight accordingly.”77
293 Fed.Appx. 592, 604 (10th Cir. 2008).
As to Kansas law, which controls in the present action (Pretrial Order, at 2), Spirit cites in passing only
Empire Mfg. v. Empire Candle, Inc., 273 Kan. 72, 41 P.3d 798 (2002) which did not involve the
nondelivery of stock, and which notes that “[t]he general rule is that damages are to be measured as of the
date of the breach.”
Id. at 604.
Order, Dkt. 511, at 19.
Moreover, the court also expressly concluded that the issue was not subject to resolution
prior to trial given the conflicting evidence:
While the amount of unpaid cash is well-defined and undisputed, the proper
valuation of the LTIP shares of Spirit common stock remains disputed. The
parties have presented conflicting evidence and expert reports explaining the
commonly used valuation methods for such executive compensation plan stock
awards, resulting in widely differing share price valuations. For instance, the
shares can be valued when awarded, vested, or sold. What timing and valuation
technique was to be used in the present case—and what is commonly used in the
industry—is a crucial, factual determination about Lawson’s potential damages.78
Spirit also argues that Lawson should receive no damages at all, because his $32.6
million he received from working with Elliott exceeded any amount that he might recover under
the Retirement Agreement. To the plaintiff’s contention that his agreement with Elliott obliges
him to indemnify Elliott any amounts recovered in this lawsuit, Spirit responds that “it is
unclear” if the indemnification agreement actually applies, or indeed that “Lawson intends to
give Elliott anything at all.”79
Yet Spirit indirectly acknowledges that this is not in substance a true Daubert argument
as to Murphy’s qualifications, by arguing in its Reply that that “no expert testimony, whether
from Murphy or otherwise, is needed in connection with the disputed issue of whether Lawson
was damaged at all.”80 The defendant’s argument seeks to define the scope of plaintiff’s damages
as a matter of law, and is properly presented by a motion for summary judgment. Indeed, Spirit
did precisely that in its prior summary judgment motion, making the same argument and citing
Id. at 24.
Reply, Dkt. 528, at 2.
Id. at 2-3.
the same authorities.81 As noted earlier, the court declined to grant the relief sought, finding that
there were “multiple genuine disputes of material fact about Lawson’s damages.”82
The defendant has failed to show that Murphy’s calculations reflect simple mathematical
calculations, that they are unreliable or otherwise inadmissible, or that they yield a result which
would be contrary to Kansas law.
IT IS THEREFORE ORDERED this 4th day of June, 2021, that the parties’ Motions to
Exclude (Dkt. 508, 510, 513) are hereby DENIED.
IT IS SO ORDERED.
ERIC F. MELGREN
UNITED STATES DISTRICT JUDGE
Dkt. 433, at 47-48.
Order, Dkt. 511, at 24.
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