Billstein et al v. Goodman et al
Filing
509
OPINION and ORDER Denying 389 SEALED MOTION to Strike Preliminary Expert Report of Paul T. Barnes by All Defendants, and Granting 391 MOTION to Strike Testimony of Alicia Davis by All Defendants. Signed by Magistrate Judge R. Steven Whalen. (JCur)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ROBERT BILLSTEIN, SR., et.al.,
Case No. 08-13415
Plaintiffs,
District Judge Arthur J. Tarnow
v.
Magistrate Judge R. Steven Whalen
MARK GOODMAN, et.al.,
Defendants.
/
OPINION AND ORDER
Before the Court are Defendants’ Motion to Strike Preliminary Expert Report and
Testimony of Paul T. Barnes [Doc. #389], and Defendants’ Motion to Exclude the
Testimony of Alicia Davis [Doc. 391]. For the reasons discussed below, the motion to
strike Mr. Barnes’ report and testimony [Doc. #389] is DENIED, and the motion to
exclude the testimony of Ms. Davis [Doc. #391] is GRANTED.
I.
The admissibility of Mr. Barnes’ and Ms. Davis’ testimony is governed by
Fed.R.Evid. 702, which provides as follows:
“If scientific, technical, or other specialized knowledge will assist the trier
of fact to understand the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience, training, or
education, may testify thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or date, (2) the testimony is the
product of reliable principles and methods, and (3) the witness has applied
the principles and methods reliably to the facts of the case.”
Rule 702, as amended in 2000, codifies the Supreme Court's decisions in Daubert
v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael,
526 U.S. 137 (1999). See Rule 702 advisory committee's notes, 2000 amend. (“In
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Daubert the Court charged trial judges with the responsibility of acting as gatekeepers to
exclude unreliable expert testimony, and the Court in Kumho clarified that this gatekeeper
function applies to all expert testimony, not just testimony based in science.”). The
admissibility of expert testimony under Rule 702 is addressed to the trial judge’s
discretion. Id.; Daubert, 509 U.S. at 594. In In re Scrap Metal Antitrust Litig., 527 F.3d
517, 528-29 (6th Cir.2008), the Sixth Circuit described the Rule 702/Daubert process as
follows:
“Parsing the language of the Rule, it is evident that a proposed expert's
opinion is admissible, at the discretion of the trial court, if the opinion
satisfies three requirements. First, the witness must be qualified by
‘knowledge, skill, experience, training, or education.’ Fed.R.Evid. 702.
Second, the testimony must be relevant, meaning that it ‘will assist the trier
of fact to understand the evidence or to determine a fact in issue.’ Id. Third,
the testimony must be reliable. Id. Rule 702 guides the trial court by
providing general standards to assess reliability: whether the testimony is
based upon ‘sufficient facts or data,’ whether the testimony is the ‘product
of reliable principles and methods,’ and whether the expert ‘has applied the
principles and methods reliably to the facts of the case.’ Id. In addition,
Daubert provided a non-exclusive checklist for trial courts to consult in
evaluating the reliability of expert testimony. These factors include:
‘testing, peer review, publication, error rates, the existence and maintenance
of standards controlling the technique's operation, and general acceptance in
the relevant scientific community.’ United States v. Langan, 263 F.3d 613,
621 (6th Cir.2001) (citing Daubert, 509 U.S. at 593-94, 113 S.Ct. 2786).
II.
A.
Paul Barnes [#389]
Plaintiffs have offered Paul T. Barnes as an expert witness in supply chain
management, business operations, and customs and practices in the steel industry.
Plaintiffs summarize Mr. Barnes’ expertise and the scope of his proposed testimony as
follows:
“Plaintiffs’ expert Paul Barnes is a mettalurgical engineer with a Masters in
Business Administration in Managerial Accounting. His expertise is in
business, operations, and supply chain management. Plaintiffs noted on
their Expert Witness List that Barnes may offer opinions regarding, inter
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alia, the business relationship between Hercules Drawn Steel (“HDS”) and
the various Goodman-owned companies that leach profits out of HDS;
customs and practices in the steel industry; and damages.” Plaintiffs’
Response [Doc. #427], at 1.
Defendants argue that Mr. Barnes is not properly qualified as a witness, and that
his opinions are not based on reliable methodologies. They cite Mr. Barnes’ deposition
testimony that he has no experience in the cold drawn steel industry or for that matter in
the steel industry in general.
Mr. Barnes has a degree and experience in mettalurgical engineering, and an
M.B.A. in Managerial Accounting. As shown in his report, he has experience in
manufacturing engineering, operations management, sales and marketing, cost estimation,
shipping and supply chain management, albeit not specifically in the steel industry.
Notwithstanding their statement that Mr. Barnes will offer testimony concerning
“customs and practices in the steel industry,” Plaintiffs now concede, or at least clarify,
that “Barnes has never been offered as a ‘steel industry expert.’” Plaintiffs’ Response, at
1. Instead, they state that “[h]is opinions and testimony in this case are primarily focused
on costing issues, supply chain issues, and business structuring.” Id. By dint of his
education and experience, Mr. Barnes is qualified to offer expert testimony on those
issues. That he has no specific experience in the steel industry is not disqualifying. In
Laski v. Bellwood, 132 F.3d 33 (Table), 1997 WL 764416, *3 (6th Cir. 1997), the district
court had “denied the plaintiff full examination of his experts on the issue of injury
causation because those witnesses were ‘only’ medical specialists and not experts in
biomechanics or accident reconstruction.” The Sixth Circuit, however, soundly rejected
the proposition that specialization is a prerequisite to expert testimony:
“Requiring such specialization thwarts the goals and purposes of the
Federal Rules. Our sister circuits have recognized as much. In DaSilva v.
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American Brands, Inc., 845 F.2d 356, 361 (1st Cir.1988), for example, the
court rejected a suggestion that a mechanical engineer was not qualified to
render an opinion on the safety design of a machine because he had no
design experience with it. Instead, the court allowed the expert testimony so
as not to require, in essence, “that the only experts who could testify
regarding a machine are those who have an interest in defending its design.”
Id. See also Doe v. Cutter Biological. Inc., 971 F.2d 375, 385 (9th Cir.1992)
( “courts impose no requirement that an expert be a specialist in a given
field”). More recently, the Third Circuit forcefully held in Holbrook v.
Lykes Bros. S.S. Co., Inc, 80 F.3d 777, 782 (3d Cir.1996), that a district
court abuses its discretion in excluding expert testimony “simply because
the trial court does not deem the proposed expert to be the best qualified or
because the proposed expert does not have the specialization that the court
considers most appropriate.” (Citing In re Paoli R.R. Yard PCB Litig., 916
F.2d 829, 856 (3d Cir.1990)).” Id. at 3-4.
Mannino v. International Mfg. Co., 650 F.2d 846, 850 (6th Cir. 1981), is a preDaubert case, but its words apply with undiminished relevance today:
“If we were to declare as a rule of law that one must actually have practical
experience in a given industry in order to qualify as an expert in litigation
involving its products, we might very well place an onerous burden on
plaintiffs in some cases. But the key experts of an industry would normally
be available to the defendant.” (Internal citations and quotation marks
omitted).
Mannino concluded, “Under the Federal Rules of Evidence, the only thing a court
should be concerned with in determining the qualifications of an expert is whether the
expert's knowledge of the subject matter is such that his opinion will likely assist the trier
of fact in arriving at the truth. The weight of the expert's testimony must be for the trier of
fact.” Id. at 851.
So too in this case, Mr. Barnes has sufficient education and experience to offer
expert testimony in the areas of operations management, sales and marketing, cost
estimation, shipping, supply chain management and related subjects. He may not,
however, offer opinions as to customs and practices that are peculiar to the steel industry,
because that is a narrow area in which he does not have relevant experience or training.
As to Defendants’ concern about the reliability of Mr. Barnes’ methodology, that
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too is better addressed through cross-examination and rebuttal experts. I recognize that
Mr. Barnes’ testimony is not unimpeachable. However, cautioning against being “overly
pessimistic about the capabilities of the jury and of the adversary system generally,” the
Court in Daubert endorsed a flexible standard of admissibility, stating, “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.” Id., 509 U.S. at 596.
B.
Alicia Davis [No. 391]
Ms. Davis is a lawyer who teaches courses in corporations/business law at the
University of Michigan. As was the case with Mr. Barnes, Defendants challenge Ms.
Davis’ qualifications as an expert in corporate governance in the context of this case.
They note that notwithstanding her work in academia, she had never read the Michigan
Business Corporations Act (“MBCA”) prior to being retained as an expert, and had never
taught or published articles on the MBCA. The courses she teaches center on Delaware
law and the Model Corporations Act, not Michigan law. They argue that her experience in
the private sector was limited to entry-level positions at a law firm and some brokerage
houses.
However, it is not necessary to determine whether Ms. Davis is unqualified as a
witness or whether, like Mr. Barnes, her alleged deficiencies go more to the weight of her
testimony rather than its admissibility. Even assuming that she is otherwise qualified, her
opinions are not relevant, and would be unhelpful in assisting the jury in understanding
issues that are relevant to this case. Instead, her testimony would have the opposite effect,
that is, it would tend to confuse the jurors and negatively impact their understanding and
application of the relevant legal concepts as set forth in jury instructions.
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At her deposition, Ms. Davis testified that her opinion is “now limited to only best
practices, and it’s not my job to say what the Michigan law says about particular issues.”
She added that “nothing in my report relates to the conduct of the Defendants here.”
Davis Deposition, 73-74. While she opined that “fiduciaries should follow the ALI’s
model and disclose potential corporate opportunities in advance,” she conceded that “best
practice” is not the legal standard in Michigan, and that she had no opinion as to the
appropriateness of Defendants actions. Id., 57, 63. She also stated that best practices “are
often higher than the standard of liability.” Id., 63.
The problem with Ms. Davis’ testimony is that she really does nothing more than
state her opinion as to what the law should be. It should “follow the ALI’s model.” But
that is not the law in Michigan, as she readily concedes. The Defendants’ liability will be
assessed under Michigan law, and Ms. Davis’ testimony is not consistent with the
Michigan law on which the jury will be instructed. This can have no effect other than to
confuse the jury as to the standards they are to apply.
The Plaintiff argues that Ms. Davis “is not testifying about standards of liability,”
but rather
“about corporate governance practice and the practical options available to
corporate fiduciaries in this context, as well as the type of conduct which
can foster a fair process in a conflict of interest transactions. Professor
Davis will walk the jury, as she does her students, down the avenues which
fiduciaries have available to them to comply with their obligations to their
corporation. Then, having an understanding of the options available to
Defendants, the jury, or the judge, and not Professor Davis, can decide
whether Defendants breached their duties to the corporation.” Plaintiffs’
Response [Doc. #422], at 1-2. (Emphasis added).
Yet the standard by which the jury will determine whether Defendants breached a
legal duty is a function of Michigan law, not theoretical best practices. In effect,
Plaintiffs’ argument is a tautology: “Ms. Davis is not testifying about the standards of
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liability; she is testifying about the standards by which the jury or the judge can determine
whether Defendants breached a legal duty.”
Expert testimony must be able to “assist the trier of fact to understand the evidence
or to determine a fact in issue.” Cook v. American Steamship Co., 53 F.3d 733, 738 (6th
Cir.1995). Determining whether the testimony meets that requirement is a question of
relevance. Id. On the other hand, testimony touching on the standards for determining
whether or not the Defendants breached a legal duty is a question of law that is “within
the sole competence of the court.” CMI-Trading, Inc. v. Quantum Air, Inc., 98 F.3d 887,
890 (6th Cir. 1996) (emphasis in original). Ms. Davis’ testimony must be excluded
because it is irrelevant, because it invades the sole province of the Court, and because the
potential for confusion, misdirection and unfair prejudice to the Defendants greatly
outweighs any arguable relevance it might have. See Fed.R.Ev. 403.
III.
CONCLUSION
For the reasons and under the terms set forth above, Defendants’ Motion to Strike
Preliminary Expert Report and Testimony of Paul T. Barnes [Doc. #389] is DENIED.
Defendants’ Motion to Exclude the Testimony of Alicia Davis [Doc. 391] is
GRANTED.
IT IS SO ORDERED.
s/ R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
Date: March 28, 2012
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CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record via the Court's
ECF System to their respective email addresses or First Class U.S. mail disclosed on the Notice of
Electronic Filing on March 28, 2012.
s/Johnetta M. Curry-Williams
Case Manager
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