AFT Michigan v. Project Veritas et al
Filing
226
OPINION AND ORDER re: 211 and 219 Signed by District Judge Linda V. Parker. (AFla)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AFT MICHIGAN,
Plaintiff,
Case No. 17-cv-13292
Honorable Linda V. Parker
v.
PROJECT VERITAS and
MARISA L. JORGE,
Defendants.
____________________________/
OPINION AND ORDER
Plaintiff AFT Michigan filed this lawsuit against Defendants Project Veritas
and Marisa L. Jorge, after Jorge—acting on behalf of Project Veritas—
misrepresented herself to secure an unpaid, three-month internship with AFT
Michigan. During her internship, Jorge covertly obtained AFT Michigan
documents and recorded the conversations of AFT Michigan staff members. AFT
Michigan currently has the following claims pending against Defendants based on
this conduct: (Count I) fraudulent misrepresentation; (Count II) trespass; (Count
III) violations of Michigan’s eavesdropping statute, Mich. Comp. Laws
§ 750.539c, to the extent Jorge was not a participant in private conversations she
recorded; 1 (Count V) civil conspiracy; (Count VI) misappropriation of trade secrets
in violation of Michigan’s Uniform Trade Secrets Act, Mich. Comp. Laws
§ 45.1901; (Count VII) breach of duty of loyalty; 2 and (Count VIII) unlawful
interception of oral communications in violation of the Wire and Electronic
Communications Interception and Inception of Oral Communications Act, 18
U.S.C. §§ 2511, 2520. 3 (See ECF No. 104.)
The matter is presently before the Court on two motions related to the
parties’ experts. First, Defendants seek to disqualify AFT Michigan’s expert, Nitin
V. Paranjpe, Ph.D., and exclude his opinion and testimony at trial. (ECF No. 211.)
Defendants’ motion is fully briefed. (ECF Nos. 218, 220.) Second, AFT Michigan
moves to strike the report of Defendants’ expert, Robert J. Winiarski. (ECF No.
219.) That motion also is fully briefed. (ECF Nos. 222, 223.)
The Court dismissed this claim to the extent it was based on conversations to
which Jorge was a party, finding that the statute is not violated when a
conversation is recorded by one of its participants. (See ECF No. 202.)
1
The Court dismissed AFT Michigan’s breach of fiduciary duty claim, which was
included in Count VII. (ECF No. 104 at PageID. 2540.)
2
The Court dismissed AFT Michigan’s claims alleging larceny by trick (Count IV)
and violations of the Electronic Communications Privacy Act, 18 U.S.C. § 2701
(Count IX). (ECF No. 104 at PageID. 2543, 2545.)
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2
Defendants’ Motion to Disqualify Dr. Paranjpe’s Report and to Exclude His
Opinion and Testimony at Trial
Summary of Dr. Paranjpe’s Report
Dr. Paranjpe is AFT Michigan’s damages expert. He identifies three
categories of damages to AFT Michigan as a result of Defendants’ infiltration
through Jorge’s internship. The first category reflects the value of the time AFT
Michigan employees spent with Jorge during her internship, resulting in “lost
opportunity” (“opportunity costs”). Dr. Paranjpe calculated these damages by
obtaining from AFT Michigan employees the number of hours they expended
interacting with Jorge during her internship. Neither AFT Michigan nor the
employees contemporaneously recorded the time employees worked on individual
tasks or with Jorge, specifically. Therefore, the employees had to estimate the time
they spent with Jorge based on any other available information, such as calendar
entries. Dr. Paranjpe then applied the total earnings AFT Michigan pays these
employees, as provided by AFT Michigan’s controller, to estimate the value of the
time spent. So, for example, if an employee spent 60 minutes working with Jorge,
Dr. Paranjpe calculated how much that employee earned for 60 minutes of work
based on the employee’s annual earnings and included that amount in his
“opportunity costs” calculation.
The second category of damages reflects the time AFT Michigan employees
spent responding to the infiltration. This time includes trying to identify the extent
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of the infiltration (e.g., the documents Jorge gained access to), meeting with other
employees and AFT Michigan’s leadership and legal counsel, and involvement in
this litigation. These damages were calculated in the same manner as the first
category.
The third category of damages reflects the cost of a forensic investigation to
assess the documents and information Jorge accessed. AFT Michigan’s national
counterpart (“AFT”) paid Atlantic Data Forensics, Inc. to perform the
investigation.
Defendants’ Challenges to Dr. Paranjpe’s Report
Defendants’ primary complaint concerning Dr. Paranjpe’s assessment of
AFT Michigan’s “time spent/lost” damages is their assertion that such costs are not
recoverable where there is no evidence that the AFT Michigan employees’
interactions with Jorge impaired their ability to do their work or that the infiltration
caused any other loss, such as decreased revenue, income, or membership.
Defendants also challenge the admissibility of Dr. Paranjpe’s calculations as they
are based on estimations of the time spent by the AFT Michigan employees with
Jorge or on other infiltration-related tasks, rather than timesheets, testimony, or
business records. Further, Defendants contend, Dr. Paranjpe performed no
economic tests, statistical analyses, or modeling, utilized no complex economic or
scientific knowledge, and did not verify the numbers provided to him by the
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employees and AFT Michigan’s controller. According to Defendants, Dr. Paranjpe
simply performed basic mathematical calculations and, therefore, his expertise is
not necessary to help the trier of fact.
With respect to AFT Michigan’s remaining damages, Defendants argue that
Dr. Paranjpe ignored that AFT Michigan did not directly pay the costs of the
forensic investigation. And as to post-internship damages, Defendants argue that
Dr. Paranjpe neglected to consider AFT Michigan’s failure to mitigate its damages.
Defendants maintain that litigation-related costs—which they claim are any costs
incurred after Jorge’s internship—are not recoverable. Defendants further maintain
that AFT Michigan could have avoided many of the costs incurred after Jorge’s
internship ended “by simply not bringing this [law]suit.” (ECF No. 211 at PageID.
6413.)
Analysis
Estimations and Daubert’s Factors
To be admissible, expert “testimony must be reliable.” In re Scrap Metal
Antitrust Litig., 527 F.3d 517, 529 (6th Cir. 2008) (citing Fed. R. Evid. 702). Rule
702 provides “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. (quoting Fed. R. Evid. 702). In
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Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Supreme
Court “provided a non-exclusive checklist for trial courts to consult in evaluating
the reliability of expert testimony.” In re Scrap Metal Antitrust Litig., 527 F.3d at
529 (citing United States v. Langan, 263 F.3d 613, 621 (6th Cir. 2001)). The
checklist includes “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.” Id. (quoting Langan, 263 F.3d at
621).
“The test of reliability is ‘flexible,’” however, “and the Daubert factors do
not constitute a ‘definitive checklist or test,’ but may be tailored to the facts of a
particular case.” Id. (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150
(1999)). In fact, the Sixth Circuit “h[as] recognized that the Daubert factors ‘are
not dispositive in every case’ and should be applied only ‘where they are
reasonable measures of the reliability of expert testimony.’” Id. (quoting Gross v.
Comm’r of Internal Revenue, 272 F.3d 333, 339 (6th Cir. 2001)). Daubert’s factors
“may be of limited utility in the context of non-scientific expert testimony.” First
Tenn. Bank Nat’l Ass’n v. Barreto, 268 F.3d 319, 334 (6th Cir. 2001) (citing United
States v. Jones, 107 F.3d 1147, 1158 (6th Cir.), cert. denied, 521 U.S. 1127 (1997));
see also id. (quoting Berry v. City of Detroit, 25 F.3d 1342, 1349 (6th Cir. 1994),
cert. denied, 513 U.S. 1111 (1995)) (recognizing that “‘the distinction between
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scientific and non-scientific expert testimony is a critical one’ and that Daubert is
‘only of limited help’ in assessing technical or experiential expertise’”) (alterations
omitted).
Dr. Paranjpe’s opinion constitutes the type of non-scientific expert testimony
for which Daubert is of limited help. Therefore, the Court rejects Defendants’
criticisms of the opinion based on the lack of peer review, publication, testing, the
construction of models, or the like. The reliability of Dr. Paranjpe’s opinion rests,
instead, on the data on which it is based.
Defendants maintain the data is unreliable because the hours AFT Michigan
employees spent with Jorge during her internship or responding to the effects of the
infiltration are only the employees’ estimations—made “nearly two-and-one-half
years” later. Defendants also point out that Dr. Paranjpe did not verify the
employees’ salary information provided by AFT Michigan’s controller. The Court
rejects Defendants’ challenges to the reliability of this information due to the lack
of verification from underlying data or resources, such as “time sheets[,]” “video
or audio recordings[,]” or “annual reports, IRS filings, balance sheets, income
statements, or profit and loss statements for AFT Michigan.” (See ECF No. 211 at
PageID. 6418.)
With respect to the hours expended by employees, no such data exists. And
Dr. Paranjpe could reasonably rely on the salary figures provided by AFT
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Michigan’s controller without verifying that information elsewhere. The real issue
is whether the information provided by the AFT Michigan employees is reliable
where it concededly is an estimation of the time they expended.
Damages based on speculation or conjecture are not recoverable. Ensink v.
Mecosta Cnty. Gen. Hosp., 687 N.W.2d 143, 147 (Mich. Ct. App. 2004) (quoting
Theisen v. Knake, 599 N.W.2d 777, 782 (Mich. Ct. App. 1999)); see also Price v.
High Pointe Oil Co., 828 N.W.2d 660, 670 (Mich. 2013) (quoting Sutter v. Biggs,
139 N.W.2d 684, 686 (Mich. 1966)). However, “damages are not speculative
merely because they cannot be ascertained with mathematical precision.”
Hofmann v. Auto Club Ins. Ass’n, 535 N.W.2d 529, 554-55 (Mich. Ct. App. 1995)
(citing Goodwin v. Ace Iron & Metal Co., 137 N.W.2d 151, 156 (Mich. 1965)); see
also Anton v. SBC Global Servs., Inc., 350 F. App’x 39, 49 (6th Cir. 2009) (citing
Michigan law). “It is sufficient if a reasonable basis for computation exists,
although the result be only approximate.” Ensink, 687 N.W.2d at 148 (quoting
Hofmann, 535 N.W.2d at 555) (citing McCullagh v. Goodyear Tire & Rubber Co.,
69 N.W.2d 731, 737 (Mich. 1955)). “[W]hen the nature of a case permits only an
estimation of damages or a part of the damages with certainty, it is proper to place
before the jury all the facts and circumstances which have a tendency to show their
probable amount.” Health Call of Detroit v. Atrium Home & Health Care Servs.,
Inc., 706 N.W.2d 843, 852 (Mich. Ct. App. 2005) (citing Body Rustproofing, Inc. v.
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Mich. Bell Tel. Co., 385 N.W.2d 797, 800 (Mich. Ct. App. 1986)); see also Consol.
Rail Corp. v. Grand Trunk W. R.R. Co., 963 F. Supp. 2d 722, 734 n.1 (E.D. Mich.
2013) (citing Body Rustproofing, 385 N.W.2d at 800).
Accordingly, Dr. Paranjpe’s opinion is not rendered unreliable and
inadmissible because AFT Michigan’s employees estimated the hours they spent
with Jorge and responding to the effects of the infiltration. The proper method for
Defendants to challenge that opinion is to identify for the jury the facts and
circumstances that undermine their probable amount. “[T]he certainty requirement
is relaxed where the fact of damages has been established and the only question to
be decided is the amount of damages.” 4 Ensink, 687 N.W.2d at 148 (quoting
Hofmann, 535 N.W.2d at 555).
“Help” Requirement
Under Rule 702, expert testimony is admissible provided it “will help the
trier of fact to understand the evidence or to determine a fact in issue[.]” Fed. R
Evid. 702(a). “It is . . . well settled that ‘necessity’ is not a condition precedent for
the admissibility of opinion testimony under Federal Rule of Evidence 702; rather
the test is whether the opinion ‘will assist the trier of fact.’” United States v.
Brawner 173 F.3d 966, 969 (6th Cir. 1999). This requirement “goes primarily to
Defendants do challenge the “fact of damages,” but that challenge is
addressed later in this decision.
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relevance.” Daubert, 509 U.S. at 591. “The relevancy bar is low, demanding only
that the evidence ‘logically advances a material aspect of the proposing party’s
case.’” United States v. Victor, 848 F.3d 428, 442 (6th Cir. 2017) (quoting Messick
v. Novartis Pharm. Corp., 747 F.3d 1193, 1196-97 (9th Cir. 2014)). “The ‘rejection
of expert testimony is the exception, rather than the rule.’” Id. (quoting In re Scrap
Metal Antitrust Litig., 527 F.3d at 529-30).
Dr. Paranjpe did not simply perform mathematical computations which the
jury could do. He collected and analyzed data and organized the results in a
manner that will aid the jury in understanding the various forms of damages
claimed by AFT Michigan. The Court finds that this satisfies the low bar required
to believe his testimony will help the jury.
“Opportunity costs” Attributable to Jorge’s Internship
As already discussed, expert testimony is admissible only if it is relevant and
reliable and will “help the trier of fact to understand the evidence or to determine a
fact in issue.” Fed. R. Evid. 702; Daubert, 509 U.S. at 597. If “opportunity costs”
are not recoverable as damages here, Dr. Paranjpe’s opinions with respect to these
damages are not relevant and, therefore, should be excluded. See id.; see also Fed.
R. Evid. 402 (“Irrelevant evidence is not admissible.”).
Defendants assert that “opportunity costs” like those claimed here for the
hours incurred by AFT Michigan employees during Jorge’s internship are not
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recoverable. AFT Michigan claims they are, as damages sustained by the
interference in its business. But Defendants argue that there was no interference,
as AFT Michigan’s employees indicated Jorge did not prevent them from doing
their job and there is no other obvious manifestation of Jorge’s interference (e.g.,
lost membership).
AFT Michigan does not counter Defendants’ argument; and as AFT
Michigan acknowledges, compensatory damages are designed “to make the injured
party whole for losses actually suffered.” (ECF No. 218 at PageID. 6815 (citing
McAuley v. Gen. Motors Corp., 578 N.W.2d 282, 285 (Mich. 1998); Hayes-Albion
v. Kuberski, 364 N.W.2d 609, 617 (Mich. 1984)) (emphasis added).) On the other
hand, as AFT Michigan points out, “judicial power includes the ability to fashion
remedies . . . ‘so as to grant the necessary relief.’” (Id. at PageID. 6816 (quoting
Mays v. Governor of Mich., 954 N.W.2d 139, 174 (Mich. 2020) (McCormack, C.J.,
concurring) (quoting Bell v. Hood, 327 U.S. 678, 684 (1946))).) The critical
question, therefore, is whether the time AFT Michigan employees spent engaging
with an intern who was working under false pretenses and for purposes contrary to
AFT Michigan’s interests qualifies as a suffered loss justifying some remedy, even
if no other harm is identified.
“Whether a particular kind of damages is recoverable for a given cause of
action is a question of law[.]” Daher v. Prime Healthcare Servs.-Garden City,
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LLC, 1 N.W.3d 405, 407 (Mich. Ct. App. 2022) (citing Price, 828 N.W.2d at 663);
see also Hendricks v. DSW Shoe Warehouse, Inc., 444 F. Supp. 2d 775, 779 (W.D.
Mich. 2006) (citing Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946
F.2d 1003, 1009 (2d Cir. 1991); Cold Metal Process Co. v. E.W. Bliss Co., 285 F.2d
231, 242 (6th Cir. 1960); Neyer v. United States, 845 F.2d 641, 644 (6th Cir. 1988))
(“[A]lthough the amount of recoverable damages is a question of fact, the measure
of damages upon which the factual computation is based is a question of law.”).
Neither party provides persuasive argument or caselaw to enable the Court to
resolve this legal issue, however. AFT Michigan analogizes Jorge’s interference to
property condemnation, citing specifically Department of Transportation v.
McNabb, 516 N.W.2d 83 (Mich. Ct. App. 1994) (citing Detroit v. Hamtramck
Cmty. Fed. Credit Union, 379 N.W.2d 405 (Mich. Ct. App. 1985)). (ECF No. 218
at PageID. 6817.) Yet, AFT Michigan fails to explain how either of those cases is
applicable here and the analogy escapes the Court.
The property owner in McNabb identified a specific interference with its
business, with discernible costs, arising from the State’s condemnation of a portion
of its land (i.e., acquiring duplicate machinery and equipment and paying increased
labor costs because any expansion of its business would now require two separate
buildings). The property owner in Hamtramck Community Federal Credit Union,
offered evidence that the city’s condemnation disrupted activities that were part of
12
its marketing plan and forced it to move locations several times, including at one
point to a double-wide trailer, which disrupted its ability to attract customers and
operate. 379 N.W.2d at 407.
The Court, therefore, reserves judgment on whether to preclude Dr.
Paranjpe’s opinion and testimony regarding “opportunity cost” damages arising
during Jorge’s internship until there is further briefing on this legal issue.
Hours Expended Responding to the Infiltration
The Court is inclined to conclude that the value of the time spent by AFT
Michigan employees to uncover the extent of the infiltration, including identifying
the documents and information affected, is a recoverable damage. This includes
the cost of the forensic investigation, even if AFT covered that cost. These are
foreseeable and direct harms flowing from Defendants’ actions.
While this litigation may also be a foreseeable and direct harm, the Court is
less certain that the law allows the inclusion of any time spent by AFT employees
in connection with the lawsuit in the calculation of any damage award. Notably,
recoverability must be evaluated based on the pending claims. While AFT
Michigan and Defendants take varying positions on this issue, they offer no useful
caselaw in support of their respective positions. The Court found no case,
however, supporting Defendants’ assertion that these costs are not recoverable
because AFT Michigan could have avoided them by not filing this lawsuit—in
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other words, that AFT Michigan failed to mitigate its costs by enforcing its legal
rights. Decisions indicating, as a general matter, that a plaintiff has a duty to
mitigate its damages (see ECF No. 211 at PageID. 6426-27), are not instructive.
For these reasons, the Court also will reserve judgment on whether to
preclude Dr. Paranjpe’s opinion and testimony regarding “time spent/lost” damages
arising after Jorge’s internship until there is further briefing on this legal issue.
Summary
In short, the Court finds Dr. Paranjpe’s opinion to be admissible under Rule
702 to the extent it addresses damages ultimately found recoverable under the law.
Therefore, at this juncture, the Court is denying Defendants’ motion to disqualify
Dr. Paranjpe and to exclude his opinion and testimony at trial. The Court is
requiring additional briefing consistent with the discussion above. The breadth of
Dr. Paranjpe’s opinion and testimony will be decided after the briefing is complete.
AFT Michigan’s Motion to Strike Robert J. Winiarski’s Report
Summary of Mr. Winiarski’s Report
The purpose of Mr. Winiarksi’s report is to rebut Dr. Paranjpe’s opinions.
Mr. Winiarksi opines that AFT Michigan suffered no damages based on the “time
spent/lost” by its employees during and after Jorge’s internship because their
earnings are fixed and were unaffected by the infiltration, AFT Michigan did not
pay any salary or benefits to Jorge, and there is no evidence of a single opportunity
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lost by AFT Michigan or its employees or any loss in revenue or membership as a
result of Defendants’ conduct. Mr. Winiarksi opines that the claimed costs related
to the forensic evaluation by Atlantic Data Forensics are not AFT Michigan’s
damages, as it did not pay the invoice, and, in any event, constitute litigation costs.
AFT Michigan’s Challenges to Mr. Winiarski’s Report
AFT Michigan argues that Mr. Winiarksi’s opinions are essentially
impermissible legal conclusions concerning whether the damages included in Dr.
Paranjpe’s report are recoverable. According to AFT Michigan, Mr. Winiarski
merely restates the arguments for why the damages are not recoverable that
Defendants raise in their motion seeking to exclude Dr. Paranjpe’s opinion. This
includes: (i) the lack of evidence that there is any actual value to AFT Michigan for
the time spent or lost by its employees interacting with Jorge during her internship
or responding to the infiltration; (ii) that time and costs spent in connection with
litigation are not recoverable; and (iii) that costs not incurred by AFT Michigan,
but by AFT, are not recoverable.
Analysis
AFT Michigan does not claim that its employees were unable to complete
their work because of the time spent with Jorge or responding to the infiltration.
Nor does AFT Michigan claim increased payroll costs or decreased revenue or
membership attributable to Defendants’ infiltration. There is no dispute that some
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of the hours included in Dr. Paranjpe’s calculations consist of time spent in this
litigation. There also is no dispute that AFT paid the cost for the forensic
investigation. Whether there is otherwise recoverable “value” to AFT Michigan
for this time, and whether costs paid by a third-party or incurred during litigation
are recoverable, are questions of law, which this Court must resolve.
To the extent the Court concludes that any time or cost is recoverable despite
the reasons argued by Defendants and expressed by Mr. Winiarski, Mr. Winiarski’s
opinions based upon the same reasons would be improper. Although presented as
criticisms of Dr. Paranjpe’s methods, Mr. Winiarski is essentially offering that the
time and cost are not properly—i.e., as a matter of law—recognized damages. “An
expert opinion on a question of law is inadmissible.” Chavez v. Carranza, 559
F.3d 486, 498 (6th Cir. 2009) (citing Berry, 25 F.3d at 1353-54). To the extent the
Court concludes these “damages” are not recoverable, Mr. Winiarski’s challenges
to them are not relevant.
Mr. Winiarski may properly opine, however, on the accuracy of the data on
which Dr. Paranjpe’s calculations are based. For example, Mr. Winiarski may
explain that Dr. Paranjpe’s reliance on the time estimations without further inquiry
is not consistent with professional standards. He also could opine on whether time
included in Dr. Paranjpe’s calculations was in fact not specifically devoted to Jorge
(e.g., attendance at an event where Jorge simply was present) or reflects time
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preceding or unrelated to the infiltration. Mr. Winiarksi may properly opine, as
well, on relevant considerations not factored into Dr. Paranjpe’s analysis, such as
any contributions Jorge may have provided to AFT Michigan.
Summary
For these reasons, the Court is denying AFT Michigan’s motion to strike Mr.
Winiarski’s report. However, the breadth of Mr. Winiarski’s testimony concerning
his opinions will be determined after the Court decides whether the damages
discussed in Dr. Paranjpe’s report are recoverable.
Briefing on Issues of Law
Within thirty (30) days of this Opinion and Order, AFT Michigan shall file a
motion in support of its claim for the damages included in Dr. Paranjpe’s report.
Defendants shall respond within twenty-one (21) days of its filing. AFT Michigan
may file a reply brief within seven (7) days thereafter.
SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: March 29, 2024
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