National Union Fire Insurance Company of Pittsburgh, PA et al v. Porter Hayden Company

Filing 371

MEMORANDUM. Signed by Judge Catherine C. Blake on 3/31/2014. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA., et al.
v.
PORTER HAYDEN COMPANY, et al.

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* Civil Nos. CCB-03-3408, CCB-03-3414
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MEMORANDUM
Now pending before the court are two motions to exclude expert testimony filed by
Porter Hayden Company (“Porter Hayden”). National Union Fire Insurance Company of
Pittsburgh, Pa. and American Home Assurance Company (collectively, “the Insurers”) offer as
evidence the purported expert opinions of Dr. Michael A. Brown (“Brown”) and Dr. Charles H.
Mullin (“Mullin”). Brown intends to testify that: (1) the Porter Hayden Bodily Injury Trust (“the
Trust”) has resolved “unimpaired non-malignant claims,” or claims from individuals without
physical impairment,1 that are not compensable in the tort system;2 and (2) the Trust’s screening
procedures are unreliable, as it has likely paid claimants despite insufficient evidence of asbestos
exposure. (See Brown’s Rep., ECF No. 341-1, at 6–7.) Mullin intends to testify as to (1) how
the Trust’s valuation of claims compares to “historical” amounts paid by Porter Hayden in the

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The Trust resolves asbestos claims against Porter Hayden pursuant to Trust Distribution
Procedures (“TDP”), which use the following categories of claims: “Bilateral Asbestos-Related
Non-Malignant Disease (Level I), Disabling Severe Asbestosis (Level II), Other Cancer (Level
III), Lung Cancer (Level IV)[,] and Mesothelioma (Level V).” (Insurers’ Corrected Mot. for
Summ. J., ECF No. 345, at 8.) Brown asserts that Level I claims are mostly comprised of
unimpaired nonmalignant claims. (See, e.g., Dep. of Brown, ECF No. 352-1, at 81:9–12.)
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Brown explains that unimpaired nonmalignant claims are not compensable in the tort system
because those claims are placed on the inactive docket and do not move to the active docket
unless there is evidence of physical impairment.
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tort system and (2) the loss allocable to Porter Hayden’s excess insurance policies, which were
issued by the Insurers. (See Mullin’s Rep., ECF No. 347-1, at 7–8; see also Jan. 2, 2014, Mem.,
ECF No. 367, at 1–2 & n.1 (describing the difference between “primary” and “excess” insurance
and explaining that Porter Hayden’s coverage program included both primary and excess liability
insurance).) The issues in this case have been fully briefed, and oral argument was held on
November 20, 2013. For the reasons stated below, the court will grant Porter Hayden’s motion
to exclude the expert testimony of Brown, and will grant in part and deny in part the motion to
exclude the expert testimony of Mullin.
ANALYSIS
Rule 702 of the Federal Rules of Evidence, which governs the admissibility of expert
testimony, states:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the testimony is based
on sufficient facts or data; (c) the testimony is the product of reliable principles
and methods; and (d) the expert has reliably applied the principles and methods to
the facts of the case.
The party seeking to introduce expert testimony has the burden of establishing its admissibility
by a preponderance of the evidence. Daubert v. Merrell Dow Pharm., 509 U.S. 579, 592 n.10
(1993). A district court is afforded “great deference . . . to admit or exclude expert testimony
under Daubert.” TFWS, Inc. v. Schaefer, 325 F.3d 234, 240 (4th Cir. 2003) (citations and
internal quotation marks omitted); see also Daubert, 509 U.S. at 592–95 (“The inquiry
envisioned by Rule 702 is . . . a flexible one . . . .”). “In applying Daubert, a court evaluates the
methodology or reasoning that the proffered scientific or technical expert uses to reach his
conclusion; the court does not evaluate the conclusion itself,” Schaefer, 325 F.3d at 240,

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although “conclusions and methodology are not entirely distinct from one another.” General
Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). In essence, the court acts as gatekeeper, only
admitting expert testimony where the underlying methodology satisfies a two-pronged test for
(1) reliability and (2) relevance. See Daubert, 509 U.S. at 589.
A. Motion to Exclude Brown’s Testimony
Porter Hayden argues that Brown’s testimony must be excluded because: (1) he is not
qualified; (2) even if he were qualified, he is unable to identify any claims that were not properly
reviewed or should not have been paid by the Trust; and (3) he is unable to identify the
methodology used to evaluate the Trust’s procedures. The court need not delve into Brown’s
qualifications, as it determines his testimony is not based on reliable methodology or sufficient
facts and does not constitute “scientific, technical, or other specialized knowledge” under Rule
702(a).3 His testimony, in short, would not be helpful to the trier of fact.
The court agrees with Porter Hayden that, in reaching his conclusions, Brown did not use
reliable methodology or sufficient facts. When asked to describe the “standards” used to
determine the Trust’s procedures are unreliable, Brown simply stated that he used “[e]ssentially
logic.” (See Dep. of Brown, ECF No. 341-2, at 47:14–17.) Indeed, although he concludes that
the Trust’s screening procedures are unreliable, he does not identify any claims that should not
have been approved. Moreover, his report does not monetize the impact of the Trust’s alleged
failure to use reliable procedures. (Id. at 170:23–171:10.)
Brown also admitted that, in determining the Trust has paid “thousands” of unimpaired
nonmalignant claims, (Brown’s Rep. at 6), he did not use quantitative analysis. (See Dep. of
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The court notes, however, that Brown has no medical experience, and so he is unable to
determine whether any particular claimant is physically impaired. (See Dep. of Brown, ECF No.
341-2, at 73:6–16, 88:23–89:9.) Moreover, Brown has never been qualified as an expert witness
in court. (See id. at 30:25–31:3.)
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Brown, ECF No. 341-2, at 76:18–24.) Indeed, he did not review any Level I claims paid by the
Trust, despite the fact that he had access to this information through the claims database. (Id. at
76:25–77:21; see also Dep. of Brown, ECF No. 352-1, at 81:3–82:3.)4 Brown cannot identify a
single Level I claim paid by the Trust that qualifies as an unimpaired nonmalignant claim. (Dep.
of Brown, ECF No. 341-2, at 88:23–89:3.)
Rather than describe the basis for his conclusions, Brown made sweeping statements
regarding his confidence and experience. For example, when asked how he could determine the
“majority” of Level I claims were from individuals without physical impairment, if he cannot
make that determination as to any individual claim, Brown answered, “I suppose I am drawing in
part on my experience.” (Id. at 89:4–9.) He also stated, “I know the vast majority of [Level I]
claims would be unimpaired nonmalignant claims by any reasonable definition.” (Dep. of
Brown, ECF No. 352-1, at 81:25–82:3; see also id. at 81:9–12 (“I would be extremely confident
that the vast majority of claims in Category 1 . . . would not be considered impaired under any
reasonable definition.”).) The court cannot admit Brown’s testimony based on his unsupported
statement that he is relying on his “experience” when he has not established what that experience
is and how it would assist him to form his opinion. Nor is Brown’s confidence in his testimony a
proper basis for admitting it. See Joiner, 522 U.S. at 146 (reasoning that the court need not

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The court agrees with Porter Hayden that the fact that Brown is opining about claims already
paid and had access to the claims database makes this case entirely different from the two
Delaware bankruptcy cases cited by the Insurers. See In re Armstrong World Indus., 348 B.R.
111 (D. Del. 2006); In re Federal-Mogul Global, Inc., 330 B.R. 133 (D. Del. 2005). The experts
in Armstrong and Federal-Mogul determined potential liability for pending and future asbestos
claims, and so they had to estimate the number and value of those claims. Armstrong, 348 B.R.
at 125–32; Federal-Mogul, 330 B.R. at 157–65. Here, by contrast, Brown did not need to
estimate the number of different kinds of claims resolved by the Trust, as he had access to this
information through the database.
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accept the ipse dixit of the expert in deciding whether his testimony is admissible). His
testimony, lacking proper support, amounts to mere speculation.
Moreover, Brown’s testimony does not reflect “scientific, technical, or other specialized
knowledge,” as required by Rule 702(a). The Fourth Circuit has explained that expert testimony
may be appropriate when, for example, it elucidates complicated evidence. See United States v.
Benkahla, 530 F.3d 300, 309–10 (4th Cir. 2008). “Expert” testimony is not necessary, however,
when facts are “common knowledge” or may be easily understood by the trier of fact. See
Persinger v. Norfolk & Western Ry. Co., 920 F.2d 1185, 1188 (4th Cir. 1990).
Although the Insurers offer Brown’s testimony for his expertise in statistical analysis, his
report does not discuss statistical analysis, and he did not conduct such an analysis in concluding
that thousands of claims presented to the Trust were noncompensable and that the Trust’s
procedures are unreliable. During the November 20, 2013, motions hearing, the Insurers
clarified that Brown’s testimony is meant to provide context for the Trust’s system of evaluating
and resolving claims.5 But this testimony does not present any facts beyond the comprehension
of the trier of fact. Rather, Brown provides an explanation that could be made by calling a
nonexpert, fact witness. Indeed, there are other witnesses the Insurers may call to explain the
Trust’s procedures, such as Trustee T. Dennis Feeley. The court, therefore, does not find an
expert is necessary. Porter Hayden’s motion to exclude Brown’s testimony will be granted.

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The Insurers also stated at the motions hearing that Brown’s testimony is meant “to compare
the claims that Porter Hayden was paying in the tort system to the claims that are being paid now
by the Trust.” (See Nov. 20, 2013, Hr’g Tr. at 74:11–13.) But this comparison is made by
Mullin, whose testimony, to the extent explained below, will be admitted. Accordingly, Brown’s
testimony on comparable tort claims is not necessary.
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B. Motion to Exclude Mullin’s Testimony
According to Porter Hayden, Mullin’s testimony must be excluded because: (1) his
opinions relate to topics not relevant under Maryland law; (2) his testimony on unimpaired
claims is based on Brown’s inadmissible testimony; (3) his methodology is not reliable and
cannot be tested or duplicated; (4) his methodology is biased and ignores certain factors; and (5)
the Insurers cannot challenge the reasonableness of the Trust’s settlement values.6 While Porter
Hayden’s first argument provides a basis for excluding part of Mullin’s testimony, none of the
other arguments justify excluding the remainder of the testimony.
As an initial matter, the court agrees with Porter Hayden that, to the extent that Mullin
relies on the Insurers’ interpretation of the horizontal exhaustion rule7 to decide the loss allocable
to Porter Hayden’s excess insurance policies, his testimony must be excluded. In its January 2,
2014, opinion, the court set forth its understanding of the horizontal exhaustion rule and, in so
doing, rejected the Insurers’ interpretation of the rule. (See ECF No. 367 at 5–6.) Mullin’s
report does not apply the horizontal exhaustion rule as explained in the court’s January 2, 2014,
opinion. Instead, it clearly applies the Insurers’ interpretation in concluding that Porter Hayden
probably cannot access its excess insurance. (See Mullin’s Rep. at 8, 24–25 (suggesting that,
because operations claims are not subject to an aggregate limit under Porter Hayden’s primary
insurance policy, excess insurance may never become available); see also Dep. of Mullin, ECF
No. 343-3, at 13:9–14 (stating that Mullin relied on counsel for the Insurers for “the proper
interpretation of Maryland law” and that he “executed the allocations [among primary and excess

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The court need not respond to this fifth argument, which was rejected in another of its opinions.
The horizontal exhaustion rule refers to Maryland law governing the allocation of liability
among primary and excess liability insurers. See Mayor and City Council of Baltimore v. Utica
Mut. Ins. Co., 145 Md. App. 256, 314–16, 802 A.2d 1070, 1104–05 (2002).
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coverage] under that interpretation”).) Accordingly, Mullin’s testimony regarding the loss
allocable to Porter Hayden’s excess insurance policies will be excluded.
The court does not agree that Mullin’s testimony on Level I unimpaired claims is based
on Brown’s inadmissible testimony. Although he does mention that Brown came to a similar
conclusion, (see Mullin’s Rep. at 9), Mullin does not rely on this conclusion but rather conducts
an independent examination of the tort history of unimpaired claims and the percentage of those
claims that have moved from the inactive docket to the active docket. The court will not exclude
Mullin’s testimony on Level I claims.
The court finds Mullin’s methodology in comparing the Trust’s valuation of claims to
“historical” amounts paid by Porter Hayden in the tort system reliable. Mullin’s report details
the amounts Porter Hayden paid in the tort system for various types of asbestos claims, and then
quite simply compares those amounts to the Trust’s settlement values for those kinds of claims.
Mullin’s methodology is replicable; indeed, Porter Hayden submitted a rebuttal report from
expert Christopher P. Makuc, in which he included charts recreating Mullin’s valuation of the
Trust’s settlements. (Makuc’s Rep., ECF No. 347-3, at 3.) Mullin’s testimony regarding how
the Trust’s valuation of claims compares to amounts paid in the tort system will be admitted.
Finally, Porter Hayden’s claim that Mullin’s testimony is biased does not warrant the
exclusion of his testimony. Porter Hayden argues that (1) Mullin ignored defense costs incurred
in the tort system and (2) relied on a limited data sample in comparing the Trust’s valuation of
claims with tort settlements. Those arguments, although appropriate fodder for crossexamination, do not change the court’s earlier conclusion that Mullin’s methodology is reliable
under Rule 702(c). See Daubert, 509 U.S. at 596; see also Synergetics, Inc. v. Hurst, 477 F.3d
949, 956 (8th Cir. 2007) (explaining that, “[s]o long as the methods employed are scientifically

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valid, . . . mere disagreement with the assumptions and methodology used does not warrant
exclusion of expert testimony”). In other words, those arguments go only to the weight of
Mullin’s testimony, not its admissibility. See Mack v. AmerisourceBergen Drug Corp., 671 F.
Supp. 2d 706, 712 (D. Md. 2009) (suggesting that bias may undermine the weight given—rather
than the admissibility of—expert testimony). Thus, in sum, Porter Hayden’s motion to exclude
Mullin’s testimony will be granted in part—as to his testimony regarding the loss allocable to
Porter Hayden’s excess insurance policies—and otherwise denied.
CONCLUSION
For the reasons stated above, Porter Hayden’s motion to exclude Brown’s testimony will
be granted, and the motion to exclude Mullin’s testimony will be granted in part and denied in
part. A separate order follows.

March 31, 2014
Date

/s/
Catherine C. Blake
United States District Judge

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