Hearts on Fire Company, LLC v. Circa, Inc.

Filing 59

Magistrate Judge Donald L. Cabell: ORDER entered granting in part and denying in part 48 Motion to Strike ; granting in part and denying in part 36 Motion in Limine. (DLC, law3)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

HEARTS ON FIRE COMPANY,LLC
Plaintiff,
No. 14-cv-11044-DLC
v.
CIRCA, INC.,
Defendant.

MEMORANDUM OF DECISION AND ORDER ON PLAINTIFF’S MOTION TO
EXCLUDE THE OPINIONS AND TESTIMONY OF DEFENDANT’S
EXPERT SHELDON KAWER (DKT. NO. 36); AND PLAINTIFF’S MOTION TO
EXCLUDE THE DECEMBER 2016 AFFIDAVIT OF DEFENDANT’S EXPERT
SHELDON KAWER (DKT. NO. 48)
CABELL, U.S.M.J.
The present lawsuit arises from a contract in which Hearts on
Fire,

LLC

(“HOF”)

agreed

to

provide

jewelry

to

CIRCA,

Inc.

(“CIRCA”) in exchange for trade credits and media advertising.
CIRCA was also permitted to charge a reasonable commission based
on the cost of the media placement services.

HOF contends that

CIRCA charged an unreasonably high commission and alleges breach
of contract and violation of M.G.L. c. 93A.

HOF has moved to

exclude the opinions and testimony of CIRCA’s expert as contained
in his initial report as well as his supplemental affidavit.

For

the reasons discussed below, both motions are DENIED to the extent
the expert would intend to merely testify regarding industry

standards and practices, but ALLOWED to the extent the expert would
intend to offer legal conclusions or opinions as to HOF’s state of
mind.
I.

RELEVANT BACKGROUND
A. The Agreement
The parties entered into a letter agreement (the “Agreement”)

in June 2009. (Compl. ¶ 3).

Under its terms, HOF was to provide

CIRCA with wholesale merchandise, namely jewelry and diamonds, in
exchange for trade credits based on the value of the merchandise
provided.

HOF could in turn then use the trade credits to obtain

media advertising through CIRCA.

(Id. ¶ 5).

In addition, HOF

reserved the right to direct CIRCA to purchase media advertising
on its behalf, half of which HOF would pay for in cash and half of
which could be invoiced against HOF’s trade credit account.
¶¶ 6-7).

(Id.

In exchange for the media related services CIRCA would

provide, the parties understood and agreed that it would charge
HOF a “reasonable commission,” although the Agreement did not
explicitly indicate what that commission would be.

(Id. ¶ 9).

In

December of 2009, the parties expanded the terms of the Agreement
to allow HOF to obtain additional trade credits in exchange for
additional wholesale merchandise.

(Id. ¶ 12).

Shortly after consummating the Agreement, HOF directed CIRCA
to purchase and place advertising on its behalf. (Id. ¶ 11).
CIRCA’s invoices to HOF did not specify the cost of the advertising
2

CIRCA placed or the commission it charged, because it claimed that
the information was proprietary.

(Id. ¶ 13).

HOF alleges that

CIRCA’s commission was per se unreasonable under the Agreement
because the commission was roughly equivalent to one half of the
amount HOF would have paid had it purchased advertising space
directly from the media outlet. (Id. ¶ 16).

As noted above, the

complaint alleges breach of contract and violation of M.G.L. c.
93A.
B. The Kawer Report (Dkt. No. 37-2)
In the course of discovery, CIRCA disclosed an expert report
written

by

Sheldon

Kawer

(the

“Kawer

Report”).

Kawer

is

a

consultant in the barter industry and CIRCA retained him to assess
whether “CIRCA violated accepted customs and practices in the
barter industry.”

Kawer’s testimony is predominantly based on 48

years of professional experience in the barter industry, during
which he was responsible for structuring and negotiating barter
deals,

drafting

barter

agreements,

consulting

clients,

and

purchasing magazine and advertising space on behalf of his barter
clients.

The Kawer Report contains an extensive explanation of

the barter industry as a whole, including its customs, practices,
and standards, as well as the process and principles of a barter
transaction.

In pertinent part, the Kawer Report discusses the

term “media costs” in the context of a barter agreement, and how

3

a media advertising transaction is generally structured under a
barter agreement.
The Kawer Report opines that CIRCA acted in accordance with
barter industry standards in the course of its relationship with
HOF.

More particularly, the Kawer Report opines that: (1) the

Agreement is a standard barter agreement in “most respects;” (2)
documents and testimony from HOF executives show that the value of
the products HOF used to compensate CIRCA was substantially below
wholesale

value,

and

HOF

therefore

obtained

a

significant

advantage when it used its product as a form of payment; (3)
CIRCA’s profit and invoice markup did not violate barter industry
standards; (4) HOF had the opportunity to freely negotiate the
pricing of the services provided by CIRCA and to accept or reject
its terms accordingly, which, as Kawer contends, is a standard
practice in the barter industry; and (5) HOF was free to purchase
advertising on its own rather than through CIRCA, which, as Kawer
contends, is also a standard practice in the barter industry.
C. The Kawer Affidavit (Dkt. No. 41)
HOF moved to exclude the Kawer Report (Dkt. No. 36) and CIRCA
responded

by

opposing

the

motion

and

attaching

an

affidavit

submitted by Kawer (the “Kawer Affidavit”), presumably to address
the alleged deficiencies HOF noted in its motion to exclude. (Dkt.
No. 41).

In pertinent part, the Kawer Affidavit reiterates and

elaborates upon the opinions and conclusions asserted in the Kawer
4

Report.

In response to HOF’s contentions that the Kawer Report is

largely

grounded

on

his

own

“say-so”

without

any

supporting

sources, Kawer explains that:
the standards, customs, and practices of the
barter industry are not contained in peer
reviewed articles or other academic sources
and are not the result of any formal testing
that
can
be
replicated
or
reproduced.
Instead, the industry has evolved over time
through practice, and [Kawer] ha[s] learned
the barter business, and the customs and
practices of the industry, through engaging in
hundreds of barter deals.
(Dkt. No. 41, ¶ 7).
The Kawer Affidavit also avers that, independent of Kawer’s
extensive professional experiences in the field, there is “ample
evidence” that a distinct barter industry exists, in the form of
“industry
which

pamphlets,

barter

trade

typically rely on.

websites,

and

associations

other
and

informal

major

barter

resources,”
companies

(Id. ¶ 12).

The Kawer Affidavit also outlines the particular methodology
Kawer employed

in

forming

his

opinions

and

conclusions.

It

explains that he conducted: (1) a careful review of the evidence
in the record with respect to the parties’ conduct and claims; (2)
an analysis of the nature of the Agreement and the business
relationship between the parties as to assess whether barter
industry standards are applicable to the parties’ conduct; and (3)

5

an analysis of the parties’ conduct in the context of the barter
industry’s standards, customs, and practices.

(Id. ¶ 33).

HOF moved to exclude the Kawer Affidavit on the ground that
it is untimely because it was served after the deadline for expert
disclosures, undermines the court’s professed goal of streamlining
discovery, and fails on its merits for the same reasons that the
Kawer Report fails.
II.

(Dkt. No. 48).

LEGAL STANDARD

Rule 702 of the Federal Rules of Evidence provides:
A witness who is qualified as an expert by
knowledge, skill, experience, training or
education may testify in the form of an
opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized
knowledge will help the trier of fact to
understand the evidence or to determine a fact
in issue; (b) the testimony is based on
sufficient facts or data; (c) the testimony is
the product of reliable principles and
methods; and (d) the expert has reliably
applied the principles and methods to the
facts of the case.
Fed. R. Evid. 702.

“In applying Rule 702, the district court

serves as the gatekeeper for expert testimony by ensuring that
[it] . . . both rests on a reliable foundation and is relevant to
the task at hand.”

Milward v. Rust-Oleum Corp., 820 F.3d 469, 473

(1st Cir. 2016) (quoting Daubert v. Merrell Dow Pharm., 509 U.S.
579, 597 (1993)).

See also Bogosian v. Mercedes-Benz of N. Am.,

104 F.3d 472,476 (1st Cir. 1997) (testimony is “helpful to the
trier of fact” where it is relevant and “rests on a reliable
6

foundation”).

“In carrying out this responsibility, the trial

court must bear in mind that an expert with appropriate credentials
and an appropriate foundation for the opinion at issue must be
permitted to present testimony as long as the testimony has a
tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable
than it would be without the evidence.”

Pages-Ramirez v. Ramirez-

Gonzalez, 605 F.3d 109, 115 (1st Cir. 2010) (quoting Fed. R. Evid.
401). “The party seeking to introduce the evidence has the burden
of establishing both its reliability and its relevance.”

Fertik

v. Stevenson, No. 12-10795-PBS, 2016 WL 4148193, at *2 (D. Mass.
Aug. 4, 2016) (quoting Milward, 820 F.3d at 473).

“A district

court enjoys substantial discretion to decide whether to admit or
exclude relevant expert testimony.”

Pages-Ramirez, 605 F.3d at

115.
III. ANALYSIS
Reading

the

Kawer

Report

and

Affidavit

together,

Kawer

intends to opine in broad terms that the Agreement is a barter
transaction

governed

by

barter

industry

standards,

that

the

commissions CIRCA charged for its media placement services were
reasonable

under

barter

industry

standards,

therefore did not breach the Agreement.

and

that

CIRCA

Before addressing the

propriety of this anticipated testimony, the court stresses that
its ruling on the motions is not meant to signal or rule that any
7

particular industry standard should govern the interpretation of
the Agreement.

That issue is not presented by the present motions

and remains an issue for the trial.
Turning then to the motions, HOF argues that the opinion
testimony contained in the Kawer Report should be excluded on
relevance grounds because the Agreement can be understood without
the assistance of expert testimony, and because there is no overt
evidence

that

standards.
reflected

the

Agreement

is

governed

by

barter

industry

HOF also argues that Kawer’s anticipated testimony as
in

the

Kawer

Report

is

based

on

an

unreliable

methodology, offers impermissible factual conclusions intruding on
the

jury’s

fact-finding

role,

and

offers

impermissible

legal

conclusions regarding HOF’s state of mind, its conduct and its
liability.
As

noted

above,

CIRCA

subsequently

submitted

Affidavit in part to respond to HOF’s arguments.

the

Kawer

For that reason,

the court pauses to first consider whether the Kawer Affidavit
should be excluded as HOF urges.

HOF argues among other things

that the Kawer Affidavit is untimely because it was served after
the expert discovery deadline of September 21.

The court finds,

however, that the Kawer Affidavit is not untimely.
Under Fed. R. Civ. P. 26(a), a party who has disclosed the
identity of its expert witness must accompany that disclosure “with
a written report, prepared and signed by the witness . . . [that]
8

must contain a complete statement of all opinions the witness will
express and the basis and reasons for them.”
26(a)(2)(B).

Fed. R. Civ. P.

A party who has made such a disclosure under Rule

26(a) has an ongoing duty to “supplement or correct its disclosure
or response . . . in a timely manner if the party learns that in
some material respect the disclosure or response is incomplete or
incorrect . . .”

See Fed. R. Civ. P. 26(e)(1)(A).

A party is not

permitted to submit a supplemental expert report after the end of
expert discovery if the supplement “differs substantially from the
report, offers a whole new theory, opinion, or methodology, or is
outside the scope or general scheme of the report.”

Mass. Mutual

Life Ins. Co. v. DB Structured Products, Inc., No. 11-30039-MGM,
2015 WL 12990692, at *4 (D. Mass. Mar. 31, 2015) (citing Macaulay
v. Anas, 321 F.3d 45, 52 (1st Cir. 2003); Thibeault v. Square D
Co., 960 F.2d 239, 247 (1st Cir. 1992)).

However, “a late expert

declaration submitted in response to criticisms of the expert’s
opinion or methodology contained in a Daubert motion . . . is
permissible as long as it is consistent with the overall opinion
or

methodology

in

the

original

report

and

merely

provides

additional subsidiary details, support or elaboration.”

Mass.

Mutual Life, 2015 WL 12990692, at *4 (citing Curet-Velazquez v.
Acemla De Puerto Rico, Inc., 656 F.3d 47, 56 (1st Cir. 2011)).
See

also

Zeolla

v.

Ford

Motor

Co.,

No.

09-40106-FDS,

2013 WL 308968, at *10 (D. Mass. Jan. 24, 2013) (“the bar on late
9

supplemental expert reports does not preclude either party from
submitting

additional

affidavits

intended

to

establish

the

reliability of proffered opinions in response to a motion to
exclude”).
In

the

present

case,

the

Kawer

Affidavit,

while

unquestionably submitted after the deadline, does not materially
differ in substance and effect from the Kawer Report.

Nor does it

offer a wholly new theory, opinion, or methodology than those
contained in the Kawer Report.

Rather, it provides evidence that

helps to establish the reliability and credibility of the opinions
offered in the Kawer Report.
appropriate

basis

to

allow

As courts have found this to be an
a

party

to

submit

a

supplemental

affidavit past the expert discovery deadline in response to a
motion to exclude, there is no basis to find that CIRCA ran afoul
of the pertinent rules of procedure here. Mass Mutual Life, 2015
WL 12990692, at *4; Zeolla, 2013 WL 308968, at *10.
To be sure, HOF argues independently that it will suffer
prejudice if the Kawer Affidavit is not excluded because the
disclosures

in

the

affidavit

will

hamper

effectively prepare its theory of the case.
find this argument compelling.

HOF’s

ability

to

The court does not

As the Kawer Affidavit was served

well before trial, which to date has not yet been settled, and
echoes for the most part the findings in the Kawer Report, any
prejudice HOF might suffer is minimal at best.
10

Against
anticipated

this

backdrop,

testimony,

as

the

court

reflected

by

finds
the

that

Kawer

Kawer’s

Report

and

Affidavit read in tandem, is relevant and reliable, and there is
no basis to exclude it to the extent it sets forth opinions
regarding

descriptions

of

industry

customs

and

practice,

or

opinion testimony that might help a court or jury understand the
evidence.

However, the court will exclude those portions of the

materials

that

contain

legal

argument,

legal

analysis,

legal

conclusions, or speculation about HOF’s state of mind, because
such material is outside the permissible scope of expert opinion.
A. Kawer’s Anticipated Testimony is Relevant
“To be admissible, expert testimony must be relevant not only
in the sense that all evidence must be relevant, but also in the
incremental sense that the expert’s proposed opinion, if admitted,
likely would assist the trier of fact to understand or determine
a fact in issue.”

Ruiz-Troche v. Pepsi Cola of Puerto Rico

Bottling Co., 161 F.3d 77, 81 (1st Cir. 1998) (citing Daubert, 509
U.S. at 591-92; Fed. R. Evid. 402)).

“The fundamental question

that a court must answer in determining whether a proposed expert’s
testimony will assist the trier of fact is [w]hether the untrained
layman would be qualified to determine intelligently and to the
best degree, the particular issue without enlightenment from those
having

a

involved.”

specialized

understanding

of

the

subject

matter

U.S. v. Shay, 57 F.3d 126, 132 (1st Cir. 1995) (quoting
11

U.S. v. Montas, 41 F.3d 775, 783 (1st Cir. 1994)).

Where expert

testimony does not relate to an issue in the case “it is not
relevant and, ergo, non-helpful.”

McGovern ex rel. McGovern v.

Brigham & Women’s Hospital, 584 F. Supp. 2d 418, 423 (D. Mass.
2008).
Kawer’s testimony is relevant here because it could help the
jury in determining what a reasonable commission rate would be if
the jury were to conclude that the transaction generating the
commission was a barter transaction governed by barter industry
standards.

To that extent, even accepting that the jury might

choose not to credit such testimony, there is a basis in the record
to support CIRCA’s effort to characterize the Agreement as one
that should be governed by barter industry standards.

Among other

things, after executing the Agreement in June 2009, HOF drafted an
expansion which the parties signed in December 2009. The expansion
indicated that “CIRCA and [HOF] entered into [the Agreement]
regarding a barter transaction for a specific amount of merchandise
. . . [and] that all barter transactions agreed to by the parties
will be subject to the terms of the Agreement.”

(Dkt. No. 37)

(emphasis added). See F.D.I.C. v. Singh, 977 F.2d 18, 21-22 (1st
Cir. 1992) (“[W]hen several writings evidence a single contract or
comprise constituent parts of a single transaction, they will be
read together.”); Matthews v. Planning Bd. of Brewster, 72 Mass.
App. Ct. 456, 463 (2008) (“[I]nterlocking documents [that] are
12

part of a single transaction and are interrelated in purpose must
be read together to effectuate the intention of the parties”).
Moreover, HOF’s Vice President, who signed the Agreement on HOF’s
behalf,

agreed

at

her

deposition

component” to the Agreement. 1

that

there

(Dkt. No. 37-4).

was

a

“barter

Further, while

less significant, HOF’s own counsel acknowledged at the deposition
of HOF’s CEO that there was no dispute that the Agreement is a
“barter deal.”

2

(Dkt. No. 37-9).

HOF suggests that the Agreement is an “exceedingly simple”
document that does not require expert interpretation.

While that

1

The deposition transcript of HOF Vice President Ellen Maloney
indicates, in pertinent part, as follows:
Q:
Ms. Maloney, again, prior to June 26, 2009, in the discussions
you mentioned having about [sic] potential relationships with
CIRCA, did you discuss with [the President of HOF] barter
deals in general?
A:
To the best of my recollection, the only barter deal
discussion we had was in relation to CIRCA.
Q:
Okay. Describe those discussions.
A:
I was not – I was aware that there was a barter component,
but that was not my area of responsibility or oversight at
the time.
Dkt. No. 37-4 (emphasis added).
2 The deposition transcript of HOF Chief Executive Officer Glenn Rothman
indicates the following exchange between counsel for HOF and counsel for
CIRCA:
Counsel for HOF:
I know it’s a barter deal. I understand that.
I have read the contract. Right? We don’t
have a disagreement with that.
Counsel for CIRCA:
Okay.
Well, I’m glad you’re clear about
that, because I didn’t know if you were
disputing that it’s a barter deal.
Counsel for HOF:
Not in any way.

Dkt. No. 37-9.
13

may be so, the jury still might appreciate more rather than less
evidence on this issue, and testimony as to industry standards,
customs, and practices is commonly admitted.

See Levin v. Dalva

Brothers, Inc., 459 F.3d 68, 79 (1st Cir. 2006) (“Expert testimony
on industry standards is common fare in civil litigation.”);
Pelletier v. Main Street Textiles, LP, 470 F.3d 48, 55 (1st Cir.
2006) (same).

Moreover, expert testimony as to the applicable

industry practice is particularly relevant here, as adherence to
those

industry

standards

is

recognized

as

one

factor

considered in determining liability under chapter 93A.

to

be

See James

L. Miniter Ins. Agency, Inc. v. Ohio Indem. Co., 112 F.3d 1240,
1251 (1st Cir.1997).
To be clear, though, this does not mean that a party must
introduce expert evidence as to how to interpret the Agreement.
Rather, it is left to each party to decide the type of evidence
that would be necessary to make its case to the jury.
B. Kawer’s Anticipated Testimony is Reliable
HOF

contends

that

Kawer’s

unreliable foundation because:

methodology

is

based

on

an

(1) he failed in the Kawer Report

to identify any evidence of scientific testing or peer review with
respect to the barter industry; (2) he failed in the Kawer Report
to offer any evidence that the purported barter industry standards
he discusses are in fact accepted within the barter industry; and
(3) he failed in the Kawer Report to cite to any supporting
14

secondary sources such as manuals or industry publications.
No. 37).

(Dkt.

When read in conjunction with the Kawer affidavit,

however, the court finds that Kawer’s anticipated testimony is on
balance sufficiently reliable.
In considering whether an expert opinion rests on a “reliable
basis,” the Supreme Court has articulated four general guidelines:
“(1) whether the theory or technique can be and has been tested;
(2) whether the technique has been subject to peer review and
publication; (3) the technique’s known or potential rate of error;
(4)

the

existence

operation;

and

of

(5)

standards

the

level

controlling

of

the

theory

acceptance within the relevant discipline.”

the

technique’s

or

technique’s

U.S. v. Monteiro, 407

F. Supp. 2d 351, 357 (D. Mass. 2006) (citing Daubert, 509 U.S. at
593-94).

“These

factors,

however,

are

not

definitive

or

exhaustive, and the trial judge enjoys broad latitude to use other
factors to evaluate reliability.”

U.S. v. Mooney, 315 F.3d 54, 62

(1st Cir. 2002).
Where,

as

here,

an

expert

opinion

is

predicated

on

experience, “[t]he critical inquiry is whether the expert employs
in

the

courtroom

the

same

level

of

intellectual

rigor

that

characterizes the practice of an expert in the relevant field.”
Monteiro,

407

F.

Supp.

at

357

(quoting

Carmichael, 526 U.S. 137, 156 (1999)).
grounds

his

opinions

and

conclusions
15

Kumho

Tire

Co.

v.

In large part, Kawer
in

his

forty

year-plus

professional experience in the barter industry, during which he
engaged in hundreds of barter negotiations and transactions on
behalf of his clients.

(Dkt. No. 41).

Assuming arguendo that

Kawer’s experience and knowledge as set forth in the Kawer Report
were

not

sufficient

standing

alone

to

meet

the

standard

for

admissibility under Rule 702, the Kawer Affidavit additionally
provides a list of objective, third-party barter industry sources
which confirms the existence of the barter industry and lends
support to his anticipated testimony.
To be sure, the Kawer Affidavit notes that the barter industry
is not subject to peer review in the traditional sense, so that it
is not scientifically possible to determine what a “reasonable”
barter industry markup would be in the first instance.

HOF would

certainly be free to explore the significance of this deficiency
on cross-examination but the court does not find that it should
serve to categorically disqualify Kawer from testifying in light
of his considerable experience in the barter industry. See DaSilva
v. American Brands, Inc., 845 F.2d 356, 361 (1st Cir. 1988)
(admitting testimony of expert who had 23 years of experience in
relevant field and familiarity with relevant industry principles).
C. But, Kawer Cannot Offer Legal Conclusions Or Speculate As
To HOF’s State Of Mind
“It is black-letter law that [i]t is not for witnesses to
instruct the jury as to applicable principles of law, but for the

16

judge.”

Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 99 (1st

Cir. 1997) (quoting United States v. Newman, 49 F.3d 1, 7 (1st
Cir. 1995)).

Furthermore, experts cannot testify on an opposing

party’s intent or state of mind.

Bacchi, 2016 WL 1170958, at *3.

Therefore, to the extent that Kawer would intend to offer such
testimony, such testimony would be categorically improper and the
Report and Affidavit should be stricken to the extent they contain
such provisions.

Accordingly, Kawer cannot testify that the

Agreement is governed by barter industry standards. He also cannot
testify that HOF’s position was unreasonable, or that CIRCA’s
position was reasonable.

Finally, he cannot testify that CIRCA

did not breach the Agreement.
IV.

CONCLUSION

For

the

foregoing

reasons,

HOF’s

Motion

to

Exclude

the

Opinions and Testimony of Defendant’s Expert Sheldon Kawer is
DENIED in part and ALLOWED in part (Dkt. No. 36), and HOF’s Motion
to Exclude the December 2016 Affidavit of Defendant’s Expert
Sheldon Kawer is DENIED in part and ALLOWED in part (Dkt. No. 48).
SO ORDERED.
/s/ Donald L. Cabell
DONALD L. CABELL, U.S.M.J.

DATED:

September 29, 2017

17