PACKGEN v. BERRY PLASTICS CORPORATION et al
Filing
71
ORDER denying 54 Motion to Exclude Expert. By JUDGE JOHN A. WOODCOCK, JR. (MFS)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PACKGEN,
Plaintiff,
v.
BERRY PLASTICS
CORPORATION, et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
2:12-cv-00080-JAW
ORDER ON MOTION TO EXCLUDE EXPERT TESTIMONY
In anticipation of trial, Berry Plastics Corporation and Covalence Specialty
Coatings, LLC move to exclude the expert testimony of Packgen’s damages expert on
multiple grounds, including lack of qualifications, improper methodology, and lack of
facts or data supporting his opinions. The Court denies the motion because Packgen
has demonstrated that each of the arguments for exclusion go to the weight of the
expert’s testimony and should be tested by the adversary process.
I.
STATEMENT OF FACTS
A.
Procedural History
Packgen filed a five-count complaint against Berry Plastics Corporation and
Covalence Specialty Coatings, LLC (Berry)1 with the Court on March 7, 2012, alleging
Covalence Specialty Materials Corporation merged into Berry Corporation and Berry now
owns Covalence Specialty Adhesives, LLC and Covalence Specialty Coatings, LLC; the Court refers to
the Defendants collectively as “Berry.” See Defs.’ Mem. of Law in Supp. of its Previously Filed Mot.
[Doc. 54] to Exclude Pl.’s Expert, Mark G. Filler at 1 (ECF No. 64); Defs.’ Mot. for Summ. J. at 1 n.1
(ECF No. 33).
1
breach of contract, breach of express warranty, breach of implied warranty of fitness
for a particular purpose, breach of implied warranty of merchantability, and
negligence. Compl. (ECF No. 2-2). On May 24, 2012, Packgen designated Mark G.
Filler as an expert witness. Defs.’ Mem. Attach. 1 Pl.’s Expert Witness Designation 18 (ECF No. 54-1) (Expert Designation). On December 10, 2013, Berry moved to
exclude Mr. Filler’s opinions and testimony. Defs.’ Mot. and Incorporated Mem. of
Law to Exclude the Expert Test. and Ops. of Pl.’s Expert, Mark G. Filler (ECF No. 54).
Packgen objected on December 19, 2013. Pl.’s Objection to Defs.’ Mot. to Exclude the
Expert Test. and Ops. of Pl.’s Expert, Mark G. Filler (ECF No. 55).
On February 27, 2014, and continuing on March 3, 2014, the Court held a
testimonial hearing regarding Berry’s motion. Minute Entry (ECF No. 57); Minute
Entry (ECF No. 59); Tr. of Proceedings, Vol. I (ECF No. 62) (Tr. Vol. I); Tr. of
Proceedings, Vol. II (ECF No. 63) (Tr. Vol. II).
Berry filed its post-hearing
memorandum of law in support of its motion to exclude on April 21, 2014. Defs.’ Mem.
of Law in Supp. of its Previously Filed Mot. [Doc. 54] to Exclude Pl.’s Expert, Mark G.
Filler (ECF No. 64) (Defs.’ Mem.). Packgen responded on May 28, 2014. Pl.’s Mem.
of Law in Opp’n to Defs.’ Mot. to Exclude Pl.’s Expert, Mark G. Filler (ECF No. 67)
(Pl.’s Opp’n). Berry replied on June 13, 2014. Defs.’ Reply in Support of Mot. to
Exclude Mark G. Filler (ECF No. 70) (Defs.’ Reply).
B.
Factual Background
Packgen manufactures intermediate bulk containers certified for the
transportation and storage of catalyst, a hazardous chemical agent employed in
2
refining crude oil into petroleum products.
Pl.’s Opp’n at 7. In 2007, Packgen
redesigned its Cougar catalyst container and began making it out of a laminated
fabric. Id. Berry agreed to supply this laminated fabric and represented that it could
meet Packgen’s quality standards. Id. Packgen and CRI/Criterion (CRI), a catalyst
manufacturer and long-standing Packgen customer, worked together to modify the
new Cougar to meet CRI’s specialized requirements. Id. After a lengthy development
process, CRI agreed that the customized Cougars met its needs and began purchasing
large quantities of Cougars. Id.
Packgen maintains that, six months later, Cougars sold to CRI ruptured when
they were loaded with Catalyst.
Id.
It states that this created an unsafe and
dangerous situation at the many locations around the world where CRI had delivered
catalyst in Packgen’s containers. Id. CRI immediately cancelled all pending orders
for the customized Cougars and terminated its business relationship with Packgen.
Id. Packgen contends that because of the widespread negative fallout from the
product failure, Packgen lost sales to CRI and 37 North American refineries. Id.
Packgen sued Berry, claiming that the Defendant supplied it with laminated fabric
of poor quality, that the Defendant failed to properly bond the aluminum foil to this
fabric, and that the fabric was unsuitable for containers designed for catalyst. Id.
C.
Mr. Filler’s Proposed Testimony
Mr. Filler, Packgen’s damages expert, is a certified public accountant and
certified valuation analyst who has written and lectured extensively in the area of
3
business valuation, business interruption claims, and lost profits damages. Id. at 5155; Pl.’s Opp’n at 8.
Mr. Filler’s expert designation states that he “will provide expert testimony
concerning lost profits suffered by Packgen as a result of the actions of the
defendants.” Expert Designation at 1-2. To calculate net profits for lost sales to CRI,
Mr. Filler used a “deterministic model”—a model that does not account for future
contingencies. Pl.’s Opp’n at 9 (citing Tr. Vol. I 50:21-25). Packgen maintains that
“[t]he CRI damages model shows the annual net present value of Packgen’s lost
profits for each of the ten years following the product failure.” Id. at 9. To calculate
lost profits for the 37 refineries, Mr. Filler used a probabilistic model instead of a
deterministic model, which accounts for future contingencies such as changes in
technology or competition by assigning probabilities to those contingencies. Id. at 10
(citing Tr. Vol. I 50:20-51:19). Packgen contends that this model also “depicts the
annual net present value of lost profits for each year of the ten-year loss period for
the refineries.” Id. at 10-11 (citing Tr. Vol. I 75:20-76:3; Ct. Ex. 13A at 1 (ECF No.
60).
II.
THE PARTIES’ POSITIONS
A.
Berry’s Motion
Berry argues that Mr. Filler’s opinions regarding the lost profits of Packgen
are unreliable and irrelevant, and that the Court should exclude them under Daubert
v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1992), and its progeny. Defs.’ Mem.
at 9-37. It maintains that Mr. Filler’s opinions on damages for both CRI and the 37
4
refineries must be excluded because Mr. Filler is not an expert in statistics. Defs.’
Mem. at 9-13. It notes that multiple regression analysis is “subject to misuse, [and
therefore] courts cannot be expected to accept at face value conclusions derived from
such a model absent expert testimony concerning the validity of the model itself.”2
Id. at 9 (quoting Wilkens v. Univ. of Houston, 662 F.2d 1156, 1157 (5th Cir. 1981)).
Berry indicates that “Mr. Filler testified that he ‘never said [he] was a statistics
expert,’” id. at 10-11 (citing Tr. Vol. I 157:19), and, based on this statement and his
limited education in the subject, that he is “not qualified to give opinions that rely on
or are based in statistics.” Id.
With this backdrop, Berry contends that “despite acknowledging that he is not
a statistics expert, [Mr. Filler] embedded statistical calculations in each of his lost
profits opinions.” Id. at 11. It explains that Mr. Filler used a linear regression model
to allocate Packgen’s overhead costs for both CRI and the 37 refineries, and points
out—as further purported evidence that he is not qualified to use statistical
methods—that Mr. Filler relied on one or more coefficients from regressions that were
not statistically significant. Id. at 10 (quoting Tr. Vol. I 32:7-11) (“the regression
model, even though it’s not statistically significant, it’s still a 29 percent improvement
over the average [overhead cost] and it allowed me to break down overhead between
fixed expenses and variable expenses”). Quoting its own expert, Berry insists that
the use of information lacking in statistical significance “violates every statistical
Berry acknowledges that Mr. Filler used a linear regression model, while the precedent it relies
on discusses multiple regression analysis, which is more complex. Defs.’ Mem. at 10 n.4. It argues,
however, that “[r]egardless of the complexity of the statistical model, Mr. Filler is not qualified to . . .
testify to the results that include statistical analysis.” Id.
2
5
principle about why you’re doing the test in the first place.” Id. at 12 (quoting Tr.
Vol. I 217:11-12). For all of these reasons, Berry claims that Mr. Filler made a choice
“between a method for which he was qualified and one for which he is not,” and
therefore insists that “any of Mr. Filler’s opinions that use statistics must be
excluded.” Id. at 13.
Berry next focuses on Mr. Filler’s opinions regarding lost profits for CRI. Id.
at 13-24. It contends that Mr. Filler was “wholly unable” to provide corroborating
evidence at the hearing in support of the ten year timeframe for which he estimated
damages. Id. at 13. In particular, it maintains the following testimony demonstrates
that “ten years is merely a guess with no factual support,” id. at 15:
Q.
Mr. Filler, isn’t it true that you have absolutely no evidence that
that six month trajectory would continue?
A.
That’s true. I also have no evidence that it would stop. I went
with what was.
Id. at 14 (quoting Tr. Vol. I 108:5-9).
Berry rejects Mr. Filler’s “position that ten years is an acceptable guess[,]”
characterizing his reasoning that there is “no evidence that [the six month trajectory
in which sales were strong] would stop” as “nonsensical.” Id. at 15. It distinguishes
the “lack of evidence that the [six-month] trajectory [of existing sales] would stop”
from “evidence to support his affirmative position that CRI’s six month volume of
purchasing would continue for ten years,” and argues that Packgen’s burden of proof
on admissibility “obligate[s] [it] to demonstrate that his opinion was supported by
more than conjecture.” Id. (citing Atlantic Research Marketing Systems, Inc. v. Saco
Defense, Inc., 997 F. Supp. 159, 167 (D. Mass. 1998)). It further argues Packgen has
6
ignored evidence that CRI could have stopped its buying pattern, explaining that
“between 2003 and 2005 CRI increased purchases . . . , but in 2006 reduced purchases
by almost 50% . . . .” Id. (citing Tr. Vol. II 289:12-21). Berry submits that “Mr. Filler’s
ten year projection based upon a mere six months of sales without any corroborating
support is also inimical to Maine law,” referring to a case in which the Maine Law
Court rejected a claim of lost profits for a single year when it was based “merely on
one year’s past performance.” Id. at 16 (quoting Eckenrode v. Heritage Mgmt. Corp.,
480 A.2d 759, 766 (Me. 1984) and citing Reardon v. Lovely Dev., Inc., 2004 ME 74, ¶¶
10-12, 852 A.2d 66, 69-70). It maintains that other jurisdictions have also concluded
“that lengthy, but factually unsupported, damages periods are unreliable.” Id. (citing
Beverly Hills Concepts, Inc. v. Schatz & Schatz, Ribicoff & Kotkin, 717 A.2d 724, 739
(Conn. 1998) (twelve years); Sun Ins. Mktg. Network, Inc. v. AIG Life Ins. Co., 254 F.
Supp. 2d 1239, 1248 (M.D. Fla. 2003) (ten years)).
Berry also takes issue with Mr. Filler’s forecasting methodology, arguing that
he “improperly combines . . . lost profits and business valuation” and referring to his
approach as a “unique, untested methodology that has no basis in accounting theory
or legal precedent.” Id. at 19; see also id. at 24-26. It also argues that Mr. Filler
justified his ten-year term of damages as a “rule of thumb” but that “[t]he record has
zero factual, legal or professional literature to support this purported rule . . . .” Id.
at 22. Berry suggests that “Mr. Filler simply opted for the longest period he has
‘seen,’ without any explanation or any facts that can be evaluated by the finder of
fact.” Id. at 23. In sum of its position regarding CRI, Berry concludes that “the lack
7
of evidence to support the ten year period, the lack of any rule of thumb and the
untested method are each an independent basis to exclude Mr. Filler’s opinions.” Id.
at 26.
Next, Berry focuses on Mr. Filler’s opinion regarding lost profits for the 37
other refineries, arguing that it is also inadmissible. Id. at 27-37. Berry notes that
Mr. Filler used XLSim, a computer simulation program that incorporates statistical
analysis, see id. at 3, to reach his conclusions on damages related to the 37 refineries.
Id. at 28. Reiterating its earlier arguments about Mr. Filler’s lack of qualifications
as a “statistics expert,” Berry contends that he must be barred from rendering this
opinion because, by running a statistical simulation with XLSim, he “[s]imply
plugg[ed] in numbers and let[ ] a program make calculations for which the witness is
otherwise unqualified[, which] avoid[s] the threshold question of whether the expert
is qualified.” Id. at 27 (citing LifeWise Master Funding v. Telebank, 374 F.3d 917,
928 (10th Cir. 2004); Chemipal Ltd. v. Slim-Fast Nutritional Foods Int’l, Inc., 350 F.
Supp. 2d 582, 592 (D. Del. 2004)). It claims that “[b]ecause Mr. Filler is wholly
unqualified, there can be no ‘vigorous cross-examination’ of how XLSim works, the
statistical validity of the model or the interpretation of the results.” Id. at 27-28.
They also point to testimony by their expert, who testified that a qualified statistician
would not have used the computer simulation for that exercise, and that the very
choice of data and parameters is so integral to the outcome[] that one without
statistical experience cannot reliably make those choices. Id. at 28 (citing Tr. Vol. I
201:18-203:13).
8
Berry also criticizes Mr. Filler’s assumption that Packgen had a one-in-ten
chance of selling Cougars to each of the 37 refineries, insisting it is an inadmissible
“guess” that is “not based on reliable or relevant facts, data or methodology.” Id. at
29-34. Berry maintains that “this is not simply a matter of an expert exercising
discretion as to . . . facts and data . . . .[,]” because the First Circuit has held that
“where there is a gap in data related to the number of potential sales, experts must
obtain relevant, reliable data, rather than base his or her opinion on surmise and
conjecture.” Id. at 30 (citing Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 195
(1st Cir. 2012)). It listed certain means for obtaining relevant, reliable data, such as
information from customers, market research, and sales data from competitors, and
noted that “while these endeavors can be ‘difficult, time-consuming and expensive
efforts . . . , without them [the expert’s] report [is] merely a basis for jury speculation
and his testimony [is] properly excluded.”
Id. (quoting Paul, 684 F.3d at 195)
(alteration in original). Pointing to Mr. Filler’s testimony that “[t]here is no empirical
data” supporting his ten percent success rate, id. at 31 (quoting Tr. Vol. I 168:20),
Berry argues that “the entire opinion is pure speculation and conjecture” and that
“only Mr. Filler’s ipse dixit connects the existing data to Mr. Filler’s” ten percent
estimation. Id. at 32, 34.
Last, Berry contends “the evidence shows that the 37 refineries were not
purchasing cougars for reasons separate and distinct from the alleged issue with the
Berry product.” Id. at 34. It argues that “Mr. Filler avoided this obvious gap in the
evidence by incorrectly assuming that the Berry product caused the 37 refineries not
9
to purchase Packgen’s product[,]” and—after putting forth what it submits is evidence
that some refineries had unrelated reasons for not purchasing Packgen’s containers—
argues that Mr. Filler’s opinions are inadmissible on this ground. Id. at 34-36.
Summarizing its arguments related to Mr. Filler’s lost profits analysis of the
37 refineries, Berry argues that “[a]s with CRI, any one of these issues is sufficient to
exclude Mr. Filler because it will render the entirety of his opinion unreliable.” Id.
at 36-37.
B.
Packgen’s Opposition
Packgen submits that the Defendants have disregarded the principle that “the
district court’s gatekeeping function ought not to be confused with the jury’s
responsibility to separate wheat from chaff.” Pl.’s Opp’n at 3 (quoting Crowe v.
Marchand, 506 F.3d 13, 18 (1st Cir. 2007)). It points out that “‘but for’ damages
calculations force experts to construct . . . an uncertain and to some extent
unknowable world in which the defendant’s wrongful actions never occurred,” id. at
4-5, that damages experts “must rely on assumptions and on information provided by
the client,” id. at 5, and that, therefore, expert opinion “necessarily involves some
speculation.” Id. (quoting Weitz Co. v. MH Washington, 631 F.3d 510, 528 (8th Cir.
2011)). Packgen acknowledges that “[a] damages expert must, of course, rely on facts
and data, not unsupported speculation.” Id. However, it maintains that “the trial
court examines the quantity—not the quality—of those facts and data.” Id. (citing
Manpower, Inc. v. Ins. Co. of Pennsylvania., 732 F.3d 796, 809 (7th Cir. 2013)). As
such, “if the damages expert emphasizes certain facts or disregards others, this goes
10
to the weight of the opinions” and therefore “the selection of data inputs . . . is not
pertinent to the reliability of the methodology itself.” Id. (citing Manpower, 732 F.3d
at 807, 809).
With this backdrop, Packgen explains that it retained Mr. Filler to compute
Packgen’s lost profit damages incurred as a result of the product failure, which Mr.
Filler defined as “sales not made minus costs avoided.” Id. at 8 (quoting Tr. Vol. I
10:4). It maintains that he is “well-qualified for this task”; his credentials include
being “a certified public accountant and an expert in business valuation, business
interruption claims, and lost profits damages” who has served as an expert witness
in over 100 cases. Id. In the course of his work for Packgen, Mr. Filler “investigated
Packgen’s finances and operations” by reviewing financial data including both CPAreviewed and internal financial statements, sales history, and corporate tax returns.
Id. He made three trips to Packgen’s manufacturing plant, where he questioned its
bookkeeper and interviewed its company president on topics such as Packgen’s
manufacturing capacity, the market for catalyst containers and the many factors that
could affect sales, and the impact of the product failure. Id. He also consulted a
database of purchase and sale transactions in the industry for companies similar to
Packgen. Id. at 9; Tr. Vol. I 14:1-7. Packgen then explains that Mr. Filler considered
the “appropriateness” of each of the “four accepted methodologies for computing lost
profits,” and ultimately “chose the sales projection methodology as the most
appropriate” for computing Packgen’s damages. Pl.’s Opp’n at 9. It explains that
11
“[t]he purpose of [this] method is to project sales that would have occurred but for the
incident in question.” Id.
Next, Packgen explains the models Mr. Filler used to calculate lost sales for
CRI and for the 37 refineries. For CRI, Packgen notes that Mr. Filler relied on “actual
sales . . . , not internal sales forecasts” and that he projected sales that “would have
occurred but for the product failure by using the number of units sold and unit prices
from the six-month sales history of the customized Cougars.” Id. It states that he
then analyzed CRI’s costs and deducted them from gross revenues to arrive at net
profits, after determining and applying an appropriate discount rate. Id. The model
“shows the annual net present value of Packgen’s lost profits for each of the ten years
following the product failure.” Id.
For the refineries, Mr. Filler chose a “probabilistic model . . . to account for
future contingencies,” such as changes in technology or competition because “Packgen
did not have a lengthy track record selling the new foil-laminated Cougars to
refineries.” Id. at 10. To implement this model, he “used a simulation software
program to run 5,000 trials with a broad range of potential outcomes” given the
possibility of contingencies—contingencies that he translated into estimates of “best
case, most likely case, and worst case scenarios for unit sales, unit prices, and costs.”
Id. Packgen asserts that “[u]sing simulation software for this purpose is an accepted
methodology for damages experts.” Id. On the basis of these methods and procedures,
Packgen contends that it has met its Daubert burden. Id. at 11.
12
Packgen asserts that Mr. Filler’s opinions are admissible under Daubert and
rejects Berry’s contention that Mr. Filler “is not qualified to offer opinions ‘that rely
in any way on statistics,’” as a “sweeping generalization [that] finds no support in
either the case[]law or financial damages treatises.” Id. at 11 (quoting Defs.’ Mem. at
9). Packgen contends that “linear regression is a simple statistical tool taught in
introductory college statistics courses such as that taken by Filler,” and by
consequence that the “Defendants’ argument is akin to suggesting that a damages
expert cannot use algebra equations unless he has a Ph.D. in mathematics.” Id. It
also indicates that “[d]amages and business valuation experts like Filler routinely
use this statistical tool in their work,” and point out that treatises written for such
experts—including a treatise edited by the Defendants’ damages expert and
counsel—explain linear regression and instruct experts on how to use such methods
but do not include any caveats that only statisticians can employ such methods. Id.
at 12 (citing NANCY FANNON & JONATHAN M. DUNITZ, eds., THE COMPREHENSIVE
GUIDE TO LOST PROFITS AND OTHER COMMERCIAL DAMAGES, 35, 232 (3rd ed. 2014)).
Packgen also contends that caselaw fails to support the Defendants’ position, arguing
that cases cited by Berry “do not even discuss Daubert, lost profits damages, or linear
regression.”
Id. at 13.
By contrast, Packgen cites lost profits cases where
“nonstatisticians offer opinions predicated on linear regressions.” Id. (citing Conwood
Co., L.P. v. U.S. Tobacco Co., 290 F.3d 768, 780 & 793 (6th Cir. 2002); Honeywell Int'l
Inc. v. Air Products & Chems., Inc., 858 A.2d 392, 426 (Del. Ch. 2004)).
13
With this backdrop, Packgen maintains that Mr. Filler “is particularly wellsuited as a damages expert to use linear regression . . . because he has extensive
experience with statistical tools.”
Id.
He participates in annual continuing
professional education that includes statistics, employs daily use of statistical tools
and has an extensive library on statistical resources, and writes and teaches on the
use of statistical tools in lost profits analysis. Id. at 13-14. Packgen also emphasizes
the limited scope of Mr. Filler’s statistical analysis, noting he used linear regression
“solely” for the purpose of allocating overhead costs among the three broad sales
categories for Packgen. Id. at 14; Tr. Vol. II 352:18-19. Acknowledging that the linear
regression test was not statistically significant, Packgen maintains that Mr. Filler
found the test “helpful and an improvement over the simple average,” and
emphasized that his overhead allocation would not have changed if he had used a
simple average. Pl.’s Opp’n at 14. For these reasons, Packgen claims Mr. Filler is
qualified as an expert by “knowledge, skill, experience, training, or education” under
Federal Rule of Evidence 702 and points out that the First Circuit has emphasized
that “expert witnesses need not have overly specialized knowledge to offer opinions.”
Id. (citing Levin v. Dalva Bros., Inc., 459 F.3d 68, 78 (1st Cir. 2006)).
Packgen separately rejects the Defendants’ theory that Mr. Filler is not
qualified to render opinions based on a statistical simulation model. Id. at 15-19. It
argues that simulation programs are designed for users lacking expertise in
statistics, that Mr. Filler would be qualified even if statistical expertise were
required, that he is qualified to explain the model and interpret its results, and that
14
his overall lost profits model is a straightforward mathematical calculation requiring
no statistical expertise. Id at 15-16. Packgen points out that the First Circuit
“demands only that ‘a testifying expert should have achieved a meaningful threshold
of expertise in the given area,’” id. at 18 (quoting Levin, 459 F.3d at 78), and insists
that Mr. Filler “easily surpasses this requirement.” Id.
Packgen next puts forth that Mr. Filler’s opinion that damages regarding CRI
should be calculated to extend for ten years is admissible.3 Id. at 19-31. It argues
that Berry’s insistence that no data supports the ten-year period “ignores the facts
and data to which Filler testified at the Daubert hearing . . . .” Id. at 20. Packgen
submits that Mr. Filler looked carefully at its customer relationship with CRI—a
“steady and sizable customer for six years.” Id. Packgen redesigned its Cougar
container in 2007 and worked to customize the new product for CRI’s use through a
“long back-and-forth process of design changes . . . to precisely fit CRI’s needs.” Id. at
20-21.
Mr. Filler determined that this demonstrated CRI’s commitment to the
customized Cougar, which was confirmed when CRI proceeded to purchase “large
numbers” of them—an average of 1,269 per month—for six months and had ordered
1,379 more for a seventh month. Id. at 21. Packgen contends Mr. Filler’s damages
model is actually relatively conservative insofar as it does not build in any increases
in unit sales or unit prices “even though Packgen’s revenues from CRI likely would
Packgen also notes Berry’s insistence that the entire lost profits opinion for both CRI and the
refineries must be excluded if Mr. Filler’s ten-year loss periods are inadmissible, but it argues that the
“Defendants overreach” on this line of reasoning. Id. at 34-35. Packgen points out that Mr. Filler
broke down damages year-by-year, and based on this method argues that “even if it is accepted for
purposes of argument that Packgen has not met its burden as to one or more years of either loss period,
the damages can be cut off accordingly.” Id. at 34-35.
3
15
have increased” but for the product failure. Id. at 23. Packgen maintains that “[t]he
product failure changed everything.
After the containers assembled from
Defendants’ material ruptured, CRI immediately terminated its long-term business
relationship with Packgen and cancelled the pending orders . . . .” Id. at 21. Packgen
also submits that CRI has not purchased from Packgen since and has stated it will
not do so in the future. Id.
With respect to the market for catalyst containers, Packgen explains that Mr.
Filler noted that only two options were on the market in 2008 and determined that
“CRI saved substantial amounts of money” by purchasing Packgen’s new product. Id.
at 21-22.
Mr. Filler further relied on Packgen’s industry expert’s opinion that
“Packgen has excellent market presence and expertise in the catalyst container
industry.” Id. at 22. Packgen also maintains that the events of the last six years
informed Mr. Filler’s loss period for the CRI damages. Id. Packgen “continues to
successfully operate its business and to manufacture and sell catalyst containers” and
“the competitive environment in which Packgen operated when it sold customized
Cougars to CRI has not changed.” Id. Finally, Mr. Filler considered and ruled out
political, economic, technological, and other reasons why CRI would have stopped
buying Cougars if the product failure had not occurred. Id. at 22-23.
Packgen argues that these facts and data “support [Mr. Filler’s] opinion that
Packgen would have continued to sell Cougar containers to CRI during the past six
years in the same amounts and at the same prices as before the incident,” and that
those sales would have continued for at least the next four years. Id. at 23. It points
16
out that Mr. Filler was “forced to make assumptions where it was impossible to gather
more concrete information because of the product failure,” and that where he did so
he properly based his assumptions on his assessment of Packgen’s history with CRI
and the potential for future sales in light of market conditions. Id. at 23-24. Further,
Packgen rejects Berry’s reliance on a temporary dip in purchases in 2006 as proof
that Mr. Filler “ignored evidence that CRI could change its buying patterns,”
explaining that CRI was not purchasing the new, customized Cougars at that time,
and arguing that even if a damages expert “emphasizes certain facts or disregards
others, this goes to weight.” Id. at 25. Packgen also disputes Berry’s characterization
of Mr. Filler’s testimony regarding the ten year loss period as a “rule of thumb,”
insisting that he “merely observed that “[i]t depends on the situation, but I have
generally never seen anything past ten years.” Id. at 31.
Packgen likewise rejects Berry’s interpretation of Maine law. It argues that
Berry has confused the admissibility of expert opinions under the Daubert standard
with the issue presented in the Maine Law Court cases that Berry cites; in those
cases, Packgen submits, the issue was whether a plaintiff presented enough evidence
to permit a factfinder to award damages.
Id. at 25-26 (“Defendants shift from
scrutinizing the quantity of the facts and data, which is the proper focus of a Daubert
inquiry, to assessing the quality of the evidence”). Packgen argues that this issue “is
the domain of summary judgment and post-trial motions, not Daubert.” Id. at 26. It
also argues these cases do not establish that the ten year loss period contravenes
Maine law. Id. Packgen explains that in Eckenrode, the plaintiff sought future lost
17
profits from a golf pro shop he had operated for only one season and—without any
damages expert—“presented no evidence whatsoever as to the profitability of the pro
shop during the following year.” Id. at 26 (citing Eckenrode v. Heritage Mgmt. Corp.,
480 A.2d 759 at 766 (Me. 1984)). Under these facts, the Law Court overturned the
damages judgment in the plaintiff’s favor. Eckenrode, 480 A.2d at 766. Packgen
similarly rejects Berry’s citation to Reardon, where the plaintiff “relied on evidence
of profits from the first few days of the restaurant’s operation” to justify a reward of
lost profits, a “meager track record [that] was insufficient to support the judgment.”
Pl.’s Opp’n at 26 (citing Reardon v. Lovely Dev. Inc., 2004 ME 74, ¶ 12, 852 A.2d 66,
70). By contrast, Packgen argues, it “is an established business with an extensive
track record of sales to CRI, and the evidence shows that the circumstances
generating those sales have not changed since the product failure.” Id. Packgen
further asserts that “cases in other jurisdictions allow damages periods of ten years,”
and that “the length of the damages period is a question for the jury.” Id. at 27
(collecting cases).
Packgen insists that the Defendant has “wrong[fully] accuse[d] Filler of
commingling lost profits and business valuation methodologies” with respect to
Packgen’s damages, and that even if Mr. Filler had blended the methods, it would not
render his opinions inadmissible. Id. at 28. It argues that Mr. Filler “indisputably
determined Packgen’s lost profits,” id at 30, and explains that this method was
appropriate because Packgen “lost a substantial income stream when CRI stopped
buying . . . . Lost profits are the proper measure of this income stream.” Id. at 29. It
18
also argues that “[e]ven if [he] had commingled the methodologies—which he did
not—this would not render his opinions inadmissible because they are two sides of
the same coin: both calculate future profits, but they ultimately use this calculation
for different purposes.” Id. at 30. It notes that the Defendant has “ignore[d] the fact
that the purpose of th[e] distinction [that lost profits and lost asset value are distinct
damage categories] is to avoid duplicative damages, not to prescribe the
methodologies that damages experts must unerringly follow.” Id. at 30-31. Packgen
claims that the “Defendants cite no cases holding that the purpose of the distinction
between lost profits and business value damages is to dictate the methodologies that
damages experts must employ.” Id. at 31. It also maintains that Berry’s theory
“would incorrectly preclude an existing business from recovering damages if a thirdparty’s wrongful actions nullified an income stream that the business could not—
through no fault of its own—regain.” Id. at 36.
Next, Packgen argues that “[a]s with the CRI damages, Defendants overlook
the facts and data available to Filler,” id. at 32, and submits that the facts and data
reviewed, “plus Filler’s professional judgment and experience as a damages expert,
support the ten-year damages period for the refineries.” Id. at 34. Packgen explains
Mr. Filler learned it had actively marketed its new Cougar containers, concentrating
on refineries that would reap significant cost savings from using them. Id. at 32. All
refineries included in the damages model had informed Packgen’s sales manager that
they would be placing orders within a year, so Mr. Filler’s calculations were limited
“to the refineries [Packgen] lost as customers because of the product failure.” Id. Mr.
19
Filler also considered the “substantial economic advantages of Cougars” and
Packgen’s business reputation, and he reviewed Packgen’s actual sales of Cougars
during the past six years, through which he confirmed the “validity of a ten-year loss
period” on the basis that “it would take five years for the negative effects of the
product failure to dissipate and then five years for refinery sales to recover to the
level they would have reached if the product failure had not occurred.” Id. at 33-34.
Packgen also disputes the contention that it “cannot claim . . . as damages profits that
[it] would not have earned in the first place because the product was new and in the
process of ramping up,” Defs.’ Mem. at 18 n.16, insisting that the “Defendants
apparently fail to understand that Filler’s damages model for the refineries
recognizes this fact: his ‘but for’ sales start with 8.2% of refineries’ needs in year one
and slowly build up to 51% in year ten.” Pl.’s Opp’n at 34.
Based on much of the same data supporting Mr. Filler’s conclusion as to the
appropriate loss periods, Packgen also maintains that Mr. Filler’s assumption of
Packgen having a one-in-ten chance each year of selling the new Cougars “more than
meets Daubert standards.” Id. at 38. It notes that Packgen informed Mr. Filler it
believed the success rate would have been “much higher than 10%,” but Mr. Filler
rejected his client’s belief after finding no hard evidence to confirm a higher number.
Id. It also notes that “[t]he flip side of Filler’s success rate” is further evidence of a
reliable opinion because it effectively assigns a 90% chance of not selling Cougars
“even though Packgen expected to make sales to all these refineries within one year”
but for the product failure. Id.
20
Rejecting the Defendants’ argument that “no empirical data” supports the
success rate, Packgen concludes that “[r]elying on the available information, Filler
exercised his professional judgment to choose an appropriate success rate. This is
what damages experts do.” Id. at 39. It maintains that “Defendants’ damages expert
conceded that such experts need to make professional judgments when they quantify
issues [for which] no data exists, such as the lack of patents or the quality of a
customer relationship.” Id. Packgen also explains how Berry “fault[s] Filler for not
doing a market survey of the refineries,” but argues the “Defendants make no effort .
. . to show that a valid market survey would be feasible years after the large-scale
failure . . . .” Id. It also argues the market survey issue is simply an argument that
“[Mr.] Filler should have done more, which raises only a question of weight, not
admissibility.” Id. at 39-40. Similarly, Packgen puts forth that Mr. Filler did not
consider its historical success rate with the 37 refineries only after applying his
judgment based upon the facts—because the Cougar was a new product and
“historical sales of a different product were not meaningful.” Id. at 41. It insists that
any opinion to the contrary is an issue for direct testimony and cross-examination
that the jury must sort through. Id.
Finally, Packgen rejects Berry’s contention that Mr. Filler’s opinions are
inadmissible for “overlook[ing] evidence that the refineries did not purchase Cougars
for reasons unrelated to the product failure.” Id. at 41 (citing Defs.’ Mem. at 34-36).
It insists that Berry has twisted, misunderstood, and selectively used the deposition
testimony of Packgen’s sales manager to manufacture such an inference from the
21
record, and maintains that “[r]egardless, Defendants’ argument concerning the
reasons for the lost sales is, at the most, more grist for the cross-examination mill. It
has no bearing on the admissibility of Filler’s opinions under Daubert.” Id. at 42.
In conclusion, Packgen insists that Berry is disputing “the quality of the facts
and data available to Filler and the propriety of [his] conclusions . . . .” Id. at 43. It
submits that “[t]hese disputes go to the weight of Filler’s testimony and are tested by
the adversary process and determined by the jury.” Id.
C.
Berry’s Reply
Berry argues that Packgen “recast[s] speculation as fact and data, take[s]
mutually exclusive positions on identical evidence, obfuscate[s] failed methodology
and ignore[s] well-settled burdens.” Defs.’ Reply at 1. It insists that “Mr. Filler’s
alchemy . . . is patently unreliable, irrelevant, and inadmissible.” Id.
Berry explains that “Plaintiff’s claim that Mr. Filler’s 10 year loss period for
refineries is not speculative” is “a prime example” of Packgen’s “attempts to recast
speculation as facts and data.” Id. Berry insists that “none of [Packgen’s] evidence
has anything to do with Mr. Filler’s opinion that it will take 5 years for the harm to
blow over and 5 years to recover.” Id. at 2. It notes that the Supreme Court has
addressed this issue in holding that “nothing in either Daubert or the Federal Rules
of Evidence requires a district court to admit opinion evidence which is connected
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 opinion offered.” Id. (quoting Gen. Elec.
Co. v. Joiner, 522 U.S. 136, 146 (1997)). Tying this comment to the ten-year loss
22
period, Berry argues “[n]othing cited by Plaintiff connects the cited data to the
conclusion.” Id.
Berry next takes issue with Packgen’s statement that “sales to other catalyst
manufacturers would not replace CRI sales, but would be in addition to them.” Id. at
3 (quoting Pl.’s Opp’n at 36). It argues Packgen has no evidence to support such a
statement, and the actual evidence shows “Mr. Filler cannot reliably establish that
Plaintiff can meet even the volume of sales required by his opinions.” Id. Looking at
Mr. Filler’s growth projections, Berry submits that the 2004 revenue for CRI and the
37 refineries totaled $550,552, while the 2017 projection for revenue “but for” the
product defect is $7.7 million, a 1,400% increase before inflation. Id.
According to Berry, “[t]he question, therefore, is whether there is evidence to
support Plaintiff’s claim that it can both meet and exceed the volume of sales in Mr.
Filler’s opinions, including the sudden, steep, hockey stick of growth.” Id. at 4. It
insists Mr. Filler’s opinion is not supported by such evidence. Id. First, Berry notes
that Mr. Filler did not program total volume of sales as an output cell in his computer
simulations, so that “there is obviously no way to tell if Plaintiff could meet that
capacity.”
Id.
Second, it maintains that “even if the volume was known, the
capability of Plaintiff’s production facility is unknown.” Id. Berry provides a portion
of Mr. Filler’s testimony, Tr. Vol. I 123:16-22, 124:9-125:1, 125:21-126:3, and argues
this testimony demonstrates that he “does not know how long it takes to make a
Cougar.” Defs.’ Reply at 5. Berry contends that without knowing this information,
Mr. Filler “cannot possibly know if Plaintiff can meet the demand he calculated.” Id.
23
at 5. Honing in on his statement that “it probably takes somewhere between three
and four minutes to make a Cougar,” id. (quoting Tr. Vol. I 125:24-25), Berry
maintains that even a one minute difference in production time is “critical” because
it translates to a difference in annual units of 31,200 and a corresponding difference
in gross revenue of at least $6,142,032. Id. at 5-6. Berry thus contends there is no
“reliable or relevant evidence that Plaintiff can meet the demand for [Mr. Filler’s
projected] growth rate.” Id. at 6.
Next, Berry disputes whether Packgen has provided evidence supporting Mr.
Filler’s use of a ten percent chance of selling to the refineries. Id. at 7. It argues that
“facts and data related to the development of a new product and potential, though not
closed sales, do not provide a reliable basis for arriving at a success rate for sales.”
Id. at 7. It suggests Mr. Filler “had no idea why the refineries were purchasing at
this time,” and insists “we are left with only correlation that sales have picked up,
and it is well-settled that correlation is not causation.” Id. at 8. It argues “the
hindsight suggestion that Mr. Filler’s 1 in 10 success rate is anything but conjecture
is belied by his admission that ‘it still came down to something about – I wanted
something that was small, but not inconsequential.’” Id. at 8-9 (quoting Defs.’ Mem.
Attach 1 Dep. of Mark G. Filler 97:2-4 (ECF No. 64-1)). Id. at 8-9. It submits that
the ten percent rate is inadmissible ipse dixit. Id. at 9. It also claims “[t]he suggestion
that a market survey would not have been feasible is unsubstantiated,” id. at 10 n.9,
and argues the “decision to rely on Mr. Filler’s guesswork rather than empirical data,
24
such as a market survey, to replace the data he excluded is fatal to Mr. Filler’s
opinion.” Id. at 10.
Berry also reasserts that Mr. Filler’s opinions on CRI damages are
inadmissible. Id. at 11-13. Focusing first on sales volume, it characterizes Packgen’s
position as suggesting that “Mr. Filler’s admitted lack of ‘hard evidence’ that the
volume of sales would continue for ten years can be ignored because, among other
things, he testified that CRI ‘had a sales history dating back to 2003.’” Id. at 11.
Berry maintains “the problem is that Mr. Filler did not consider the sales history in
his calculation of the volume of sales” and that “[h]ad he done so, he would have seen
that CRI purchase volume from Packgen was volatile and inconsistent . . . .” Id.
Berry thus contends “there is no evidence that sales volume would remain consistent
for 10 years.” Id. at 12. Second, Berry disputes Packgen’s argument that “lost profits
and business valuation are [ ] interchangeable as two sides of the same coin.” Id. at
12. It contends that “[w]here loss of future profits extends into perpetuity, the courts
have found that loss of business value is the proper measure of the loss.” Id.
Finally, Berry reiterates its argument that Mr. Filler’s statistical analyses are
generally inadmissible. Id. at 13-16. Repeating its argument that “if the overhead
costs are inadmissible . . . , the entire opinion is inadmissible,” Berry disputes
Packgen’s efforts “to downplay this issue.” Id. at 13. It insists such an argument is
akin to “saying ‘it is just the foundation of the house; the rest will be fine if it
crumbles.’” Id. at 13-14. It argues “the purported credentials cited by Plaintiff fail
to qualify him,” and offers Mr. Filler’s “attempts to explain” his application of
25
statistics—namely, his use of a linear regression coefficient that was not statistically
significant—as “[t]he proof that he is not qualified.” Id. at 14.
Regarding XLSim, the computer simulation program, Berry argues that
“merely having an accounting background is not sufficient to appropriately use or
interpret the results of a simulation.” Id. at 15. It insists that “Mr. Filler does not
have the necessary econometric background” to use the simulation program, and
contends that Packgen’s response “wholly ignores Mr. Filler’s ability to interpret, test
and implement statistical solutions to any errors in the program.” Id. “Without the
expertise to identify and correct problems,” Berry contends, “Mr. Filler’s blind input
of data is neither expert nor reliable.” Id. It also argues “Mr. Filler’s lack of expertise
caused him to choose inputs and distributions in a manner that was inherently
unreliable,” and that he “failed to account for (or realize the model did not account
for) variability that obviously exists and that clearly impacts the reliability of the
model.” Id. at 16. Berry concludes “Mr. Filler’s use of XL Sim is based on pseudodistributions with false inputs that are intended to look like science. This is precisely
the type of evidence Daubert was intended to exclude.” Id. at 16.
III.
DISCUSSION
A.
Legal Standard: Rule 702 and Daubert Motions to Exclude
Federal Rule of Evidence 702 governs the admissibility of expert testimony.
Rule 702 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
26
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 (4) the
expert has reliably applied the principles and methods to the facts of the
case.
FED. R. EVID. 702.
In Daubert, the Supreme Court designated trial judges as
gatekeepers responsible for determining whether Rule 702’s requirements are met in
any given case.4 509 U.S. at 589. “A judge exercising the gatekeeper role must
evaluate whether the challenged expert testimony is based on reliable scientific
principles and methodologies in order to ensure that expert opinions are not
‘connected to existing data only by the ipse dixit of the expert.’” Kirouac v. Donahoe,
No. 2:11-cv-00423-JAW, 2013 U.S. Dist. LEXIS 6331, at *5 (D. Me. Jan. 16, 2013)
(quoting Knowlton v. Bankers Life & Cas. Co., No. 1:09-cv-00334-MJK, 2012 U.S.
Dist. LEXIS 1365, at *2-3 (D. Me. Jan. 6, 2012) (quoting Gen. Elec. Co. v. Joiner, 522
U.S. 136, 146 (1997))). However, “[w]hen the adequacy of the foundation for the
expert testimony is at issue, the law favors vigorous cross-examination over
exclusion.” Id. (quoting Zuckerman v. Coastal Camps, Inc., 716 F. Supp. 2d 23, 28
(D. Me. 2010)); see Daubert, 509 U.S. at 596 (“Vigorous cross-examination,
presentation of contrary evidence, and careful instruction on the burden of proof are
The Daubert Court set out four non-exclusive factors that a trial judge may consider in
determining the reliability of expert testimony. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
149-50 (1999) (listing the four factors)). However, the Supreme Court subsequently emphasized that
the key word is “may”: the Court has held that “whether Daubert’s specific factors are, or are not,
reasonable measures of reliability in a particular case is a matter that the law grants the trial judge
broad latitude to determine.” Id. at 152. Here, Berry lists the four factors in providing background on
the governing legal standard. Defs.’ Mem. at 5. However, neither party formally relies on these factors
in explaining their respective positions on Mr. Filler’s opinions. Heeding the guidance in Kumho Tire,
this Court does not specifically consider the four factors from Daubert in its analysis. Instead,
mirroring the arguments made by the parties, it draws upon caselaw that is more appropriate—for
this particular case—in exercising the Court’s gatekeeper role under Rule 702 as articulated in
Daubert.
4
27
the traditional and appropriate means of attacking shaky but admissible evidence”);
Ruiz-Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77, 85 (1st Cir. 1998) (same).
B.
Analysis
1.
Mr. Filler’s Qualifications
Under both Rule 702 and Daubert, Mr. Filler must be qualified to testify by
“knowledge, skill, experience, training, or education,” FED. R. EVID. 702; the First
Circuit has commented that this means an expert “should have achieved a
meaningful threshold of expertise in the given area.” Levin, 459 F.3d at 78 (internal
quotation marks omitted). Berry argues Mr. Filler is not qualified to testify to any
opinions that embed statistical analysis because he lacks the expertise to use
statistical methodologies and because this “lack of expertise” is “amply
demonstrate[d]” by his use of statistics in this case. Defs.’ Mem. at 12-13. It focuses
particular attention on Mr. Filler’s formal education in statistics. See Defs.’ Reply at
14 n.14 (“All that Mr. Filler can point to is an introductory course in statistics”).
Berry looks at Mr. Filler’s qualifications too narrowly. The record amply
demonstrates that Mr. Filler has achieved a meaningful threshold of expertise in lost
profits calculations that use statistical analysis—including, more specifically, linear
regression—through a combination of his “knowledge, skill, experience, training,
[and] education” as set forth in Rule 702. Mr. Filler’s curriculum vitae sets forth that
he has been a certified public accountant since 1972, a certified valuation analyst
since 1994, and a certified business appraiser since 1999. Expert Designation at 51;
Ct. Ex. 22 at 1 (ECF No. 60). In addition to taking a college course in statistics, Mr.
28
Filler participates in continuing professional education that includes statistics each
year, maintains an extensive library on the use of statistics, and employs statistical
tools on a regular basis in his valuation practice. Pl.’s Opp’n at 13.
His extensive teaching and writing in the area further bolsters his overall
“knowledge, skill, experience, [and] training” related to the use of statistics in lost
profits calculations. For example, he has given many presentations in this area, such
as “Lost Profits: Help Demonstrate Causation and Prove Damages with Statistical
Analysis,” which he presented to both a national continuing legal education
conference and the National Association of Certified Valuation Analyst’s “Litigation
Boot Camp.” Expert Designation at 53. Similarly, his published writings on the
subject include an essay entitled “Economic Forecasting in a Lost Profits Case” and
an article entitled “A Second Course in Regression Analysis as Applied to Valuation
and Lost Profits.” Id. at 52. Mr. Filler is well-qualified to testify as to lost profits
calculations that use statistical analysis, including calculations based on use of the
XLSim program.5
Berry relies on LifeWise Master Funding v. Telebank to support its argument
that Mr. Filler is unqualified to render an opinion based on XLSim, Defs.’ Mem. at
27-28 (citing 374 F.3d at 928). LifeWise, however, actually highlights the difference
The Defendants’ argument that he should not be permitted to use the XLSim program is, “[i]n
short, [that] Mr. Filler should not be permitted to hide behind a computer program to avoid his
admitted lack of expertise in statistics.” Defs.’ Mem. at 29. Because the Court concludes that Mr.
Filler is qualified to use statistical analysis in lost profits calculations, it rejects Berry’s argument as
to XLSim on this basis and does not reach the issue of whether financial experts must always be
qualified in statistics to issue opinions that employ simulation. See Pl.’s Opp’n at 15-19 (arguing that
Mr. Filler’s expertise is qualified to use simulation in his refineries damages model based on four
grounds).
5
29
between an “unqualified” individual and Mr. Filler. In that case, the so-called expert
confessed that he was “not a damages modeler.” 374 F.3d at 928. The Tenth Circuit
further noted that that he was “not an accountant . . . [,] took no accounting or finance
courses, had no training in damage analysis, had never testified as a damages expert
. . . , had never taught a course or lectured on damages, and has never been published
in the field.” Id. The appellate court therefore found the so-called expert to be
“utter[ly] lacking of any familiarity, knowledge, or experience with damages
analysis,” and concluded the district court had not abused its discretion in ruling that
he could not testify on “such a complex subject matter” as the damages model at issue.
Id. at 928-29.
By contrast, Mr. Filler’s qualifications include all of the above-
described professional experiences found lacking in Lifewise, including a forty-plus
year career as a CPA and the proper formal and ongoing education required for this
certification, extensive teaching and writing in the area of business valuation, and
work as an expert witness in over one hundred cases. See Expert Designation at 5158 (Mr. Filler’s curriculum vitae). Thus, by analogy, LifeWise supports rather than
casts doubt upon the sufficiency of Mr. Filler’s qualifications.
The second prong of Berry’s argument concerning Mr. Filler’s qualifications is
that Mr. Filler misapplied statistics in this case and this flawed analysis
demonstrates his lack of qualification as to statistics; namely, using a coefficient from
a linear regression that was not statistically significant to allocate overhead costs
among Packgen’s three broad sales categories. See, e.g., Defs.’ Reply at 14; Pl.’s Opp’n
at 14-15.
Having concluded that Mr. Filler is qualified to offer opinions that
30
incorporate statistical analysis, the Court will not entertain this argument as “proof”
that Mr. Filler is unqualified. Instead, it considers this as akin to arguing that some
or all of Mr. Filler’s opinions regarding damages should be excluded because his
statistical calculations are not relevant or reliable. This argument goes beyond the
Court’s gatekeeping role and must be tested by the adversary process and resolved
by a jury. While Berry insists Mr. Filler’s use of the coefficients is unacceptable,
Packgen counters that Mr. Filler recognized his test was not statistically significant
but still found it “helpful and an improvement over the simple average” for purposes
of allocating overhead. Pl.’s Opp’n at 14. Further, Mr. Filler testified that his answer
would not have changed if he had used the simple arithmetic mean to allocate costs,
id. (citing Tr. Vol. II 352:15-353:1), and that even the Defendants’ statistics expert
conceded that this usage might be a matter for Mr. Filler’s professional judgment. Id.
at 14-15 (citing Tr. Vol. I 240:10-21). These differences of opinion are properly placed
before the factfinder; the Court finds that the issues raised by Berry as to Mr. Filler’s
use of statistics go to the weight of his testimony, not its admissibility.
2.
Mr. Filler’s Opinions on Damages Related to CRI and to
the 37 Refineries
Berry’s core argument regarding Mr. Filler’s calculation of damages for CRI is
that the ten-year loss period is “merely a guess with no factual support,” Defs.’ Mem.
at 15, and that at the evidentiary hearing he “was wholly unable to provide any
corroborating evidence to establish the ten year time period.”
Id. at 13.
This
assertion fails to account for the facts and data that Mr. Filler considered and relied
upon in determining the damages period. He decided upon a ten year period after
31
reviewing Packgen’s financial statements, sales history, and tax returns, consulting
with Packgen’s bookkeeper on financial issues, and gathering information from
Packgen’s company president regarding factors such as the company’s manufacturing
capacity and expectation of sales to CRI and refineries, the market for catalyst
containers, and the impact of the product failure. See Pl.’s Opp’n at 8. He also
considered important information, such as that CRI had been a steady and sizable
customer for six years,6 see, e.g., Tr. Vol. I 14:24-15:2, 190:13-22, and that CRI and
Packgen had engaged in a “long back-and-forth process of design changes and
additions” to customize the new Cougar for CRI’s needs. Pl.’s Opp’n at 21. Thus, Mr.
Filler’s ten-year period was supported by both a detailed platform of factual
information regarding Packgen’s finances and its historical and current business
relationship with CRI.
Further, Mr. Filler considered that CRI could have turned to only one other
supplier for catalyst containers at the time of the alleged product failure, that the
competitive environment for catalyst containers has not changed in the years
following the failure, and that Packgen had “excellent market presence and
expertise.” Tr. Vol. I 77:15-78-14, 103:2-15; Tr. Vol. II 353:2-13. The benefit of
“hindsight” with respect to the competitive environment warrants further emphasis:
in some regards, Mr. Filler’s loss period incorporates the systemic uncertainty of only
four years’ worth of market conditions and not ten, because he has the benefit of
knowing the market conditions that actually took place during the first six years of
Packgen notes that the evidence at trial will also show that “Packgen’s predecessor company
had a customer relationship with CRI before 2002.” Pl.’s Opp’n at 20.
6
32
the damages period—from April 2008 until the present. “The actual events of the
past six years” confirm that Packgen has “continue[d] to successfully operate its
business” and that “the competitive environment in which Packgen operated when it
sold customized Cougars to CRI has not changed.” Pl.’s Opp’n at 22; Tr. Vol. I 103:215; Tr. Vol. II 353:2-13. Thus, his calculation is further strengthened by the simple
fact that it is 2014—his ten-year “forecast” contains fewer unobservable variables
than it would if he were responsible for looking ten years into the future.
Mr. Filler also considered that CRI saved “substantial amounts of money” by
purchasing Packgen’s customized Cougars. Pl.’s Opp’n at 22. Additionally, early
indicators of a promising sales future with CRI were corroborated by a two-month
ramp-up of actual sales followed by six months of robust sales and a seventh month
with similar orders in place, until the orders were canceled shortly after the product
failure. Tr. Vol. I 17:7-18. Finally, even considering all these factors suggesting that
CRI could potentially increase its sales—as well as the direct statement from CRI
informing Packgen that it would be increasing its purchases—Mr. Filler’s damages
model does not build in increases in revenue over time due to increased sales or prices.
Pl.’s Opp’n at 23; see Dep. Tr. I 109:8-20.
These facts and data formed the basis for Mr. Filler’s use of a ten-year loss
period in calculating CRI damages.
In effect, Berry argues that the only data
supporting the ten-year loss period is Packgen’s six-month sales history (and
considers these months of sales in isolation), but this position ignores the wealth of
foundational information taken into account by Mr. Filler. Although Mr. Filler made
33
assumptions based on the facts and data provided, his assumptions are permissible
because, “[a]s in any damages case, the calculation had to address a hypothetical
world that never existed, one in which other things remained the same but the breach
had not occurred.” Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 709 F.3d 872,
881 (9th Cir. 2013).7 Faced with the assignment of forecasting what would have
happened but for the product failure, the Court finds that Mr. Filler used sufficient
facts and data under Rule 702 in deciding upon a ten-year damages period. Although
Berry raises sound reasons to doubt Mr. Filler’s assumptions, the place to question
the use of his properly supported assumptions is at trial. As the Court has noted, “[i]f
the factual underpinnings of [the expert's] opinions [are] in fact weak, that [is] a
matter affecting the weight and credibility of [the experts’] testimony.” Kirouac, 2013
U.S. Dist. LEXIS 6331, at *5-6 (quoting Payton v. Abbott Labs., 780 F.2d 147, 156 (1st
Cir.1985)).
The same conclusion must be drawn with respect to Berry’s argument that the
ten-year damages period is an inadmissible “guess” in light of evidence that CRI
“could stop its buying pattern.” Defs.’ Mem. at 15. Berry notes that CRI’s historical
purchase volumes were volatile, and relatedly that they decreased substantially in
2006 after increasing from 2003 to 2005. See Defs.’ Mem. at 15; Defs.’ Reply at 11-12.
For the Court to find that Mr. Filler’s ten-year period is inadmissible based upon such
facts, however, it would be obliged to accept Berry’s interpretation of the facts. “To
express an opinion, an expert must typically assume some set of facts and assuming
The Ninth Circuit concluded that the moving party’s challenges were “colorable, but none go
to admissibility. They amount to impeachment.” Alaska Rent-A-Car, Inc., 709 F.3d at 882.
7
34
one party's version as opposed to another's is not grounds for exclusion.” Kirouac,
2013 U.S. Dist. LEXIS 6331, at *6. Mr. Filler based his ten-year period on the facts
set forth above. Berry has the right to challenge the assumptions that Mr. Filler has
drawn from such information, but the evidence in support of its position goes to the
weight and credibility of Mr. Filler’s expert opinion, not its admissibility.
Berry also characterizes “Mr. Filler’s ten year projection [of damages relating
to CRI] based upon a mere six months of sales without any corroborating support” as
“inimical to Maine law.” Defs.’ Mem. at 16; see also Defs.’ Mem. at 16-18. Berry is
correct insofar as Maine law requires “‘credible evidence’ sufficient to support a
damages award for lost profits.” Reardon, 2004 ME 74, ¶¶ 10, 14, 852 A.2d at 69-70;
see Eckenrode, 480 A.2d at 766. However, in both cases cited by Berry, the Maine
Law Court addressed the overall evidentiary threshold that would be sufficient to
allow a jury to consider a lost profits claim. The legal sufficiency of the evidence
supporting a ten-year loss period is an issue to be addressed during summary
judgment as well as trial and post-trial motions, not Daubert motions.
Notwithstanding the difference between a Daubert issue and a sufficiency-ofthe-evidence issue, neither Reardon nor Eckenrode establishes that Mr. Filler’s tenyear loss period would contravene Maine law. In Eckenrode, the plaintiff “relied
heavily on his 1978 federal income tax return to predict his profits for the period in
1979 covered by his contract.” 480 A.2d at 766. The plaintiff had income information
from only this single year, retained no damages expert, and “produced no evidence as
to the actual profitability . . . or volume of business” for the relevant period.” Id. The
35
Law Court unsurprisingly concluded that the plaintiff’s own opinion testimony about
expenses and profits “was not an informed opinion based on relevant facts in evidence
upon which the jury could rely in assessing damages for claimed lost profits.” Id.
Packgen’s history, Mr. Filler’s qualifications, and the facts and data he relied upon in
forming an opinion render the instant case orders of magnitude different from
Eckenrode.
Similarly, the lay plaintiff in Reardon himself testified that lost profits were to
be estimated at $100 per day for ten months. 2004 ME 74, ¶¶ 10, 852 A.2d at 69.
This opinion testimony, by itself, was found insufficient because the business at issue
had been open for only “a few days” before the events giving rise to the lost profits
lawsuit. Id. ¶ 12. The Law Court also found the testimony of the plaintiff’s expert
insufficient as a second basis to support a damages award. Id. ¶ 13. The Reardon
Court noted that the witness who prepared the profit and loss statement documented
an estimated daily profit of only nine or ten dollars per day; further, there were
“additional reason[s] to question” whether “a finding of any amount of lost profits”
was supported by her evidence because: (1) the profit and loss statement was
prepared for use in the lawsuit; (2) it did not reflect certain debts; and (3) the witness
prepared a tax return for the same timeframe that reflected a loss of $13,483
(compared to overall profits for the year of $2353 in her profit and loss statement
prepared for litigation). Id. (emphasis in original). On this basis, the Law Court
concluded that “[t]he evidence cited by Reardon is not the ‘credible evidence’ needed
to support an award of lost profits.” In contrast, Mr. Filler’s ten-year loss period is
36
supported by an abundance of underlying facts and data, especially when compared
to the Maine Law Court cases cited by Berry. Although Berry vehemently disagrees
with the assumptions drawn from the facts that Mr. Filler used, Mr. Filler’s opinion
rests upon a factual foundation that incorporates many factors, such as competition
in the market and the number of competitors, the opportunity for cost savings
associated with the new Cougars, and the long-term customer relationship with CRI
and seven-month sales record for the specific product at issue.
Next, Berry argues that Mr. Filler’s damages calculation for CRI “improperly
combines” forecasting methodologies by borrowing from the business valuation model
to calculate lost profits. Defs.’ Mem. at 19-21, 24-26; see also Defs.’ Reply at 12-13.
Berry relies on Schonfeld v. Hilliard, 218 F.3d 164, 176 (2d Cir. 2000), for the
proposition that lost profits and “loss of value” are distinct methodologies, but that
case does not support a finding that Mr. Filler’s methodology was improper. The
Schonfeld Court addressed whether the district court erred by failing to allow the
plaintiff to seek recovery of the market value of certain supply agreements in addition
to seeking recovery of lost profits.8 Id. at 176. In contrast, this case does not involve
any dispute over the overarching definition of what damages are being sought—
Packgen seeks recovery for the present value of its lost profits, or “[s]ales not made
minus costs avoided.” See Tr. Vol. I 9:23-10:4.
The Second Circuit separately concluded that the plaintiff had not met the standard of proof
required to survive summary judgment on the lost profits component of his case. Schonfeld, 218 F.3d
at 172-75.
8
37
Similarly, Berry relies on a Court of Federal Claims case to support its
argument that Mr. Filler’s methodology is inadmissible, but that case, paradoxically,
support’s Packgen’s position. Defs.’ Mem. at 20 (citing Spectrum Sciences & Software,
Inc. v. United States, 98 Fed. Cl. 8, 16 (Fed. Cl. 2011)). The Spectrum Sciences Court
opined that the plaintiff was entitled to pursue its lost asset theory, as opposed to a
lost profits theory, because “many lost profits limitations simply do not apply” to lost
asset cases; the Court of Claims’ purpose in making this distinction was to point out
that the defendant had mischaracterized the plaintiff’s position by invoking lost
profits cases for the proposition that plaintiff’s lost asset theory of recovery should be
limited.
Spectrum Sciences & Software, 98 Fed. Cl. at 16 (“Whether a case of
mistaken identity or willful blindness, this mischaracterization of plaintiff’s position
is a prelude for defendant and its expert to invoke various lost profits cases”). Thus,
the Federal Court of Claims’ analysis does not stand for the proposition that Mr.
Filler’s methodology must be considered unreliable if it “borrows” from a related
methodology in calculating lost profits.
Instead, the Spectrum Sciences Court
supports Packgen’s position; the purpose of recognizing a conceptual distinction
between a lost profits theory and other theories, such as business valuation, “is to
avoid duplicative damages, not to prescribe the methodologies that damages experts
must unerringly follow.” Pl.’s Opp’n at 30-31; see, e.g., Farmington Dowel Products
Co. v. Forster Mfg. Co., 421 F.2d 61, 82 (1st Cir. 1969) (“it seems crystal clear to us
that lost profits for that period could not be properly awarded . . . . To do so would
result in a clear duplication: Farmington would get its present value . . . plus its
38
future profits, but the latter figure would be a major element in determining the
former”).
Here, the distinction between theories is without a difference: the parties do
not argue that Packgen seeks “double recovery,” nor does any such indication
otherwise exist in the record before the Court. In characterizing Mr. Filler’s lost
profits methodology, Berry has not demonstrated that Mr. Filler’s methodology is
based on an improper method under Rule 702. The Court therefore rejects Berry’s
argument that Mr. Filler’s lost profits methodology is contrary to appropriate
damages calculation methodology.
The Court next considers Berry’s arguments regarding the calculation of lost
profits relating to the 37 refineries. Berry argues that Mr. Filler’s assumption of
Packgen having a one-in-ten chance each year of selling Cougars to the 37 refineries
is inadmissible, as a “guess” not supported by “objective facts and data.” Defs.’ Mem.
at 30. As with Berry’s argument relating to the ten-year period for CRI damages, the
“lack of evidence” regarding the one-in-ten success rate is more properly put forth as
a subjective assessment of the evidence that Mr. Filler has offered in support of that
rate.
Therefore, based on the facts and data considered by Mr. Filler that are
discussed below, this issue must also be sorted out before a jury.
Significantly, the list of 37 refineries was not generated in the context of this
litigation. Instead, it effectively existed before the product failure because, at the
time of the product failure, “all of the refineries included in [Mr.] Filler’s damages
model had informed . . . Packgen’s sales manager[] that they would be placing orders
39
during the next catalyst cycle, i.e., within a year.” Pl.’s Opp’n at 32 (citing Defs.’ Mem.
Attach 3 Dep. of Packgen (Celest Horton) 9:17-23, 10:19-11:9, 17:17-24, 87:15-22 (ECF
No. 64-3) (Horton Dep.)). These commitments to buy were the result of marketing
efforts during the six months before the product failure, when Packgen had actively
marketed its new Cougar to these and other refineries (the list of 37 refineries
comprise only one-quarter of North American refineries) and concentrated its efforts
on refineries that would “enjoy substantial cost savings” from using the new product.
Id. at 32, 37-38 (citing Tr. Vol. I 52:3-53:12). The 37 refineries were not only targeted
by Packgen’s sales team—because of the cost savings Packgen believed they would
obtain—but also had represented to Packgen’s sales manager that they would be
placing orders for the following catalyst cycle.
In conjunction with this information, Mr. Filler considered the opinion of
Packgen’s catalyst industry expert regarding the Cougars’ “substantial economic
advantages” over the products of competitors when distance, time, or storage were
key components to their customers’ refinery business. Id. at 33; Tr. Vol. I 52:3-21,
58:21-59:6.
More specifically, Mr. Filler based his analysis, in part, on data
suggesting that the refineries would save between twenty-five and fifty percent on
catalyst moving costs—a “significant savings.” Tr. Vol. I 69:5-21. Additionally, the
industry expert forecasted demand for catalyst to increase three to five percent per
year during the relevant time period, which is evidence that the demand for catalyst
storage containers would at least be stable (and potentially benefit from modest
growth) throughout that time period. See id. 101:21-102:23.
40
Given the nature of Packgen’s list of 37 refineries, the potential cost savings
associated with the use of Cougars, and the overall market conditions, a jury could
find that Mr. Filler’s ten percent success rate was a conservative estimate. In fact,
Packgen informed Mr. Filler that the success rate for the 37 refineries would be “a lot
higher than 10 percent,” id. 68:13-21; Packgen’s product manager testified that the
relevant success rate for the 37 refineries was dramatically higher than Mr. Filler’s
estimate—eighty-five to ninety percent. Horton Dep. 47:3-22. Mr. Filler, however,
“found no hard evidence to confirm this and rejected his client’s belief.” Pl.’s Opp’n
at 38. Berry attempts to discredit Mr. Filler’s use of such facts and data by insisting
that “facts and data related to the development of a new product and potential,
though not closed, sales do not provide a reliable basis for arriving a success rate for
sales.” Defs.’ Reply at 7. As mentioned with respect to the ten-year damages period,
Mr. Filler did not have a deep well of data-points to work from; instead, he was tasked
with evaluating a hypothetical situation that never came to pass (profits that would
have been realized but for the product failure) and that was based upon a relatively
small competitive set (two suppliers in the relevant market). See Alaska Rent-A-Car,
709 F.3d at 881-82. Mr. Filler considered the facts and data available to him, drew
inferences, and made assumptions based upon that information. Critiques of these
assumptions go to “a matter affecting the weight and credibility of [his] testimony.”
Kirouac, 2013 U.S. Dist. LEXIS 6331, at *6.
The Court also notes Berry’s criticism of Packgen for failing to conduct a
market survey or related method that could have gathered “empirical data.” Defs.’
41
Mem. at 32-34. As with Berry’s other concerns about the admissibility of the one-inten success rate, the market survey consideration properly goes to the weight of Mr.
Filler’s opinion. A market survey would attempt to procure information about the
likelihood of any particular refinery purchasing Cougars. However, Packgen’s list of
37 refineries speaks to the same issue and, furthermore, a juror could reasonably
entertain whether the list—consisting of refineries that, during the actual course of
business, had expressed an intent to purchase Cougars—was more or less credible
evidence than any market survey. Cf. Reardon, 2004 ME 74, ¶ 12, 852 A.2d 66, 70
(finding insufficient evidence to support an award of lost profits because, inter alia,
the expert’s profit and loss statement was prepared specifically for use in the lawsuit).
Such a survey would have to ask a hypothetical question—one that potential
purchasers would know was hypothetical—that would concern a product from a
supplier whose reputation may have been “severely tarnished” by the product failure.
See Pl.’s Opp’n at 39 (“The evidence will show that [the product] failure severely
tarnished the reputation of Cougars (and Packgen) in this narrow market.”). Again,
adopting Berry’s proposed conclusion would require the Court to impermissibly
evaluate the persuasive quality of the data that Mr. Filler relied upon. Berry’s
quarrel with Mr. Filler’s assumptions underlying the ten percent success rate must
be sorted out at trial.
Berry also argues that a recent First Circuit decision supports its contention
that Mr. Filler’s ten percent success rate is “base[d] . . . on surmise and conjecture.”
Id. at 30-34 (citing Fishman Transducers, Inc. v. Paul, 684 F.3d 187, 195 (1st Cir.
42
2012). There are important differences between Fishman, where the First Circuit
concluded that there was insufficient information to allow the jury to estimate
trademark infringement damages, and the instant case. In Fishman, the plaintiff’s
expert noted only that although the plaintiff had projected revenues to increase from
2006 to 2007, revenues had actually decreased by $750,000 instead. Id. The First
Circuit explained that “by limiting annual sales data to the period from 2005 to 2007,
[the expert] does not address the possibility that Fishman’s decline in sales was
merely an ordinary year-to-year fluctuation.” Id. The expert likewise provided no
information whatsoever regarding the relationship between the defendant’s supposed
adverse action and the relevant decline in sales. Id. Finally, the report did not even
provide information “about . . . profit margins or any financial information other than
revenues that a jury could use to estimate lost profits, which is the ultimate measure
of damages.” Id. (emphasis in original). There is little to compare between the
expert’s excluded testimony in Fishman and Mr. Filler’s proffered testimony. Mr.
Filler used a ten percent success rate after considering all of the factors described
above. He also reviewed a wealth of financial information relating to Packgen, in
order to determine not only revenues but also the other components needed to reach
a meaningful net profits figure, such as material, freight, labor, and fixed and
variable overhead costs, and appropriate discount rate. See Pl.’s Opp’n at 9; Tr. Vol.
I 20:2-34:6; Ct. Ex. 1A (spreadsheet of CRI damages model) and Ct. Ex. 13A
(spreadsheet of lost sales to 37 refineries model) (ECF No. 60). The Fishman Court’s
conclusion that the expert’s report “was merely a basis for jury speculation and his
43
testimony was properly excluded” is inapposite here.9 For all of these reasons, the
Court concludes that Mr. Filler’s ten percent success rate is based on sufficient facts
or data under Rule 702.10
Berry also insists there is a causation problem with Mr. Filler’s damages
opinion for the 37 refineries. Defs.’ Mem. at 34-36. Berry maintains that Mr. Filler
assumed the product failure caused the 37 refineries not to produce Packgen’s product
and admitted his damages opinion would be inaccurate if refineries had reasons
unrelated to the product failure for not buying from Packgen. Id. (citing Tr. Vol. I
Packgen also argues that Fishman is not pertinent because the issue before that court was
causation for a mass market product, and that “[t]he court held that an economist failed to establish
causation as to why the plaintiff’s sales of a consumer product declined and whether the defendant’s
infringement had anything to do with this decline.” Pl.’s Opp’n at 40. The Court does not reach the
issue of whether Fishman is not pertinent on this ground, because the factual differences between
Fishman and this case, as described above, make clear that Fishman does not compel this Court to
exclude Mr. Filler’s testimony.
10
In a footnote, Berry attacks the admissibility of Mr. Filler’s ten-year loss period for sales to the
37 refineries. Defs.’ Mem. at 16 n.18. It asserts that “Mr. Filler’s opinion is based solely on his
conversations with Mr. Lapoint during which they decided that the recovery period for the refineries
should be ten years – five years for the incident to ‘wear off’ and five years to recover.” Id. (citing Tr.
Vol. I 74:13-21). It concludes that “[m]uch like the ten years for CRI there are no verifiable facts or
data for a jury to review to evaluate the efficacy of the ten year period.” Id.
For largely the same reasons that the Court has concluded that Mr. Filler’s ten percent success
rate is admissible, it also concludes the ten-year loss period is admissible. The following facts—many
of which also form the basis for Mr. Filler’s admissible loss period for CRI damages—contribute to Mr.
Filler’s opinion on the loss period for the 37 refineries: Packgen had actively marketed its new Cougar
containers for six months to those who would enjoy substantial costs savings from doing so; Packgen
had been informed that all 37 refineries included in Mr. Filler’s damages model (a list that was not
prepared for litigation) would place orders within the next year; the 37 refineries comprised only one
quarter of North American refineries; shifting to the use of Cougars would save refineries between
twenty-five and fifty percent on transportation costs; and the market for catalyst containers would not
change significantly during the ten-year timeframe. See supra pp. 31-33, 39-40. Significantly, Mr.
Filler also has the benefit of hindsight for the first six of these ten years—his estimate does not bear
the uncertainty and unpredictability of forecasting market conditions ten years into the future because
there is a historical record of the six years that have passed since the product failure in April 2008,
confirming that the competitive environment in which Packgen operated in 2008 remains the same.
See supra p. 32. Further, Mr. Filler reviewed facts and data relating to historical sales to the
refineries; some of the 37 refineries were already Packgen customers before the new Cougar came on
the market. Tr. Vol. I 168 21-23. Based upon all these facts and data, and for the reasons indicated
with respect to Mr. Filler’s ten-year damages period for CRI, supra, the Court concludes that Mr.
Filler’s ten-year damages period for the 37 refineries is admissible.
9
44
99:18-22). Based on these two factors, Berry characterizes certain testimony of
Packgen’s sales manager as an “admission that some of the 37 refineries had
unrelated reasons for not buying from Packgen,” and concludes that “Mr. Filler’s
opinions are clearly unreliable, irrelevant and inadmissible” on this basis. Id. at 36
However, Packgen responds that this testimony “ignore[s] [Packgen’s sales manger’s]
unequivocal testimony that the 37 refineries . . . did not buy catalyst containers due
to the failure of the defective material supplied by defendant.” Pl.’s Opp’n at 41; see
also Horton Dep. 9:17-23, 10:19-11:9, 17:17-18:11, 20:6-11, 43:17-21, 87:8-22).
Packgen’s record citations support its position: Ms. Horton repeatedly testified that
Packgen had lost sales for the 37 refineries because of the product failure. The Court
agrees with Packgen that Berry’s “argument concerning the reasons for the lost sales
is, at the most, more grist for the cross-examination mill.” Id. at 42.
In its reply, Berry raises the argument that “Mr. Filler cannot reliably
establish that Plaintiff can meet even the volume of sales required by his opinions.”
Defs.’ Reply at 3.
Again, Berry has raised well-reasoned arguments, but such
considerations go to the weight of Mr. Filler’s opinion rather than its admissibility.
In ruling on a Daubert motion, the Court’s role is not to ensure that every single
variable that could conceivably relate to lost profits has been considered by the
expert; in addition to being impractical, such an approach would be “overly
pessimistic about the capabilities of the jury and of the adversary system generally.”
Daubert, 509 U.S. at 596; cf. Manpower, 732 F.3d at 808 (“arguments about how the
selection of data inputs affect the merits of the conclusions produced by an accepted
45
methodology should normally be left to the jury”). Packgen’s production capacity can
be determined following robust cross-examination, presentation of competing
evidence, and proper instruction on the burden of proof. See Daubert, 509 U.S. at
596. Further, Mr. Filler considered this issue. During the evidentiary hearing, Mr.
Filler repeatedly mentioned and discussed the issue of production capacity at
Packgen’s plant, demonstrating an awareness that his lost profits calculations needed
to reflect Packgen’s capacity constraints. See Dep. Tr. I 13:2-21, 66:22-68:12 and Dep.
Tr. II 351:19-24. For these reasons, Mr. Filler’s testimony cannot be excluded based
upon the alleged uncertainty surrounding Packgen’s production capacity.
C.
Summary
In Ruiz-Troche, the First Circuit stated:
Daubert does not require that a party who proffers expert testimony
carry the burden of proving to the judge that the expert’s assessment of
the situation is correct. As long as an expert’s scientific testimony rests
upon “good grounds, based on what is known,” Daubert, 509 U.S. at 590,
(internal quotation marks omitted), it should be tested by the adversary
process—competing expert testimony and active cross-examination—
rather than excluded from jurors’ scrutiny for fear that they will not
grasp its complexities or satisfactorily weigh its inadequacies.
Ruiz-Troche, 161 F.3d at 85. An observation in Daubert itself captures the essence of
the Court’s view of this motion:
[R]espondent seems to us to be overly pessimistic about the capabilities
of the jury and of the adversary system generally. Vigorous crossexamination, presentation of contrary evidence, and careful instruction
on the burden of proof are the traditional and appropriate means of
attacking shaky but admissible evidence.
Daubert, 509 U.S. at 596. The Court is not convinced that Mr. Filler’s testimony is
“shaky”, but the Court is confident that if Mr. Filler’s testimony is as woefully
46
inadequate as Berry contends, Berry’s fine attorneys are fully capable of making that
point to a jury. The Court concludes that the issues Berry has raised go to the weight
of Mr. Filler’s testimony and are questions to be tested by the adversary process and
determined by the jury. The Court therefore denies Berry’s motion.
IV.
CONCLUSION
The Court DENIES Berry’s Motion and Incorporated Memorandum of Law to
Exclude the Expert Testimony and Opinions of Plaintiff’s Expert, Mark G. Filler
(ECF No. 54).
SO ORDERED.
John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
CHIEF UNITED STATES DISTRICT JUDGE
Dated this 12th day of September, 2014
47
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?