American Home Assurance Company et al v. Greater Omaha Packing Company Inc.

Filing 431

ORDER denying 216 motion in limine to exclude proposed expert testimony and reports of Dr. Michael Thomsen. Ordered by Senior Judge Lyle E. Strom. (JDR)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
AMERICAN HOME ASSURANCE
COMPANY and CARGILL MEAT
SOLUTIONS CORPORATION,

)
)
)
)
Plaintiffs,
)
)
v.
)
)
GREATER OMAHA PACKING COMPANY,)
INC.,
)
)
Defendant.
)
______________________________)

8:11CV270

MEMORANDUM AND ORDER

This matter is before the Court on the Daubert motion
of plaintiff Cargill to exclude proposed expert testimony and
reports of Dr. Michael Thomsen (Filing No. 216).

Cargill filed a

supporting brief and index of evidence (Filing No. 217 and Filing
No. 218).

The defendant filed a responsive brief and indices of

evidence in opposition to the motion (Filing Nos. 319 and 320,
321 and 322).

Cargill filed a responsive brief (Filing No. 319)

and indices of evidence (Filing Nos. 320, 321, 322 and 323).

The

motion will be denied.
I.

BACKGROUND
An E. coli outbreak occurred in 2007 which gravely

injured several people.

An investigation traced the E. coli back

to a ground-beef patty manufacturer, Cargill Meat Solutions,
Corp. (“Cargill”), who is the plaintiff in this case along with

American Home Assurance Company (“Assurance”).

The plaintiffs

have brought various contract claims against the defendant,
Greater Omaha Packing, Co. (“GOPAC”).

Essentially, the

plaintiffs claim that GOPAC sold Cargill meat contaminated with
the E. coli strain in violation of a contract between GOPAC and
Cargill.

GOPAC denies all claims and asserts a counterclaim

against the plaintiffs for the tortious interference with
business relationships and expectancies (hereinafter “Tortious
Interference”).

Filing No. 40, at 8.

The impetus for GOPAC’s counterclaim is an article in
which an attorney retained by Cargill allegedly commented on
aspects of this case to a reporter before it was filed.

Cargill

had retained Shawn Stevens, attorney at Gass, Weber, & Mullins,
to defend Cargill from claims brought by those injured by the E.
coli outbreak (Filing No. 220, at ¶22).

In the course of Mr.

Stevens’s work with Cargill, Mr. Stevens discovered facts which
led Cargill to assert claims against GOPAC and file this current
claim against it.

In late March 2009, New York Times reporter,

Michael Moss, first spoke to Mr. Stevens on the phone.
men spoke five times.

The two

According to Mr. Stevens, the

conversations were initially innocuous and generalized regarding
how one performs traceback investigations in E. coli outbreaks;
however, Mr. Moss garnered additional facts underlying the 2007
-2-

Cargill recall and began to ask Mr. Stevens more pointed
questions.

At that point, Mr. Stevens refused to answer

additional questions and ended the conversations.
On October 3, 2009, Mr. Moss published a ten-page,
Pulitzer-prize winning story regarding the E. coli outbreak, “The
Burger That Shattered Her Life” (Filing No. 210-1, at 1-10).
salient part, the New York Times article (hereinafter “the
Article”) read as follows:
Shawn K. Stevens, a lawyer in
Milwaukee working for Cargill,
began investigating. Sifting
through state health department
records from around the nation, Mr.
Stevens found the case of young
girl in Hawaii stricken with the
same E. coli found in the Cargill
patties. But instead of a Cargill
burger, she had eaten raw minced
beef at a Japanese restaurant that
Mr. Stevens said he traced through
a distributor to Greater Omaha.
“Potentially, it could let Cargill
shift all the responsibility,” Mr.
Stevens said. In March, he sent
his findings to William Marler, a
lawyer in Seattle who specializes
in food-borne disease cases and is
handling the claims against
Cargill.
“Most of the time, in these
outbreaks, it’s not unusual when I
point the finger at somebody they
try to point the finger at somebody
else,” Mr. Marler said. But he
said Mr. Stevens’s finding “doesn’t
-3-

In

rise to the level of proof that I
need” to sue Greater Omaha.
It is unclear whether Cargill
presented the Hawaii findings to
Greater Omaha, since neither
company would comment on the
matter.
Filing No. 210-1, at 9.

It is important to note that GOPAC’s

claims do not focus on whether the Article itself was the cause
of damages.

Rather, GOPAC asserts the statements Mr. Stevens

made to Mr. Moss were disseminated to GOPAC’s clientele during
Mr. Moss’s investigation of the Article and thereby caused
damages (See Filing No. 40, at ¶17-21).
In order to determine whether GOPAC experienced damages
related to the Article or the statements Mr. Stevens made to Mr.
Moss, GOPAC commissioned an event study.

An “event study”

determines whether a causal connection exists between correlated
events; for example:

whether the publication of an investigatory

news article caused a depreciation in sales prices.

The “event”

of Dr. Thomsen’s study was October 3, 2009, the publication date
of the Article.

The study’s “event window,” the period of time

Dr. Thomsen studied surrounding the “event,” was from August 14,

-4-

20091 until December 28, 2009.

In order to create a basis of

comparison for GOPAC’s sales prices and prices of the broader
beef market, Dr. Thomsen focused on “boxed-beef cutout values”
(Filing No. 217, 34).
When comparing the national average price for beef and
the price GOPAC sold beef during the event window, Dr. Thomsen
observed a lower sales price for GOPAC meat.

The decrease in

sales price for GOPAC’s meat began August 31, 2009, and ended on
December 14, 2009.

In other words, two weeks into the event

study, Dr. Thomsen’s study showed GOPAC was selling beef for a
lower price but GOPAC’s sales prices reached the national average
on December 14, 2011.

Dr. Thomsen assessed GOPAC’s losses from

August 31 to December 14 to be $16.3 million (Filing No. 319, at
13).
Dr. Thomsen’s expert disclosure contains the following
paraphrased opinions:
1. During the event window, the
average price GOPAC received for
its beef products fell beginning
with the week of August 31, 2009,
and remained lower through the week
of December 14, 2009. During the

1

Dr. Thomsen choose to place the beginning of the event
window at August 14, 2009, because the New York Times reporter
was actively researching the Article and received a Freedom of
Information Act disclosure from the U.S.D.A. on August 21, 2009.
Filing No. 321-12, at 35.
-5-

event window, GOPAC’s prices were
as much as 14.5% lower than would
have been predicted given the
behavior of the broader boxed-beef
market.
2. As a result of these lower
prices, GOPAC experienced economic
loss in excess of $16.3 million.
3. Greater Omaha's economic loss of
$16.3 million is a conservative
estimate.
4. The generally accepted
methodology used to measure the
decline in GOPAC’s beef prices is
designed to factor out broader
movements in the market for boxed
beef. Dr. Thomsen searched other
news stories during the event
window and there were no other
events that could have caused the
magnitude of the price declines
that GOPAC experienced.
(Filing No. 319, at 1).
II.

STANDARD OF REVIEW
This Court must determine whether Dr. Thomsen's

specialized knowledge will assist the trier of fact to understand
evidence or to determine a fact in issue.

Fed. R. Evid. 702.

Under Rule 702, the Court must consider whether (1) the testimony
is based upon sufficient facts or data, (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.
-6-

In determining the reliability of a scientist's
methodology, the Court should consider whether a theory or
technique can be and has been tested, whether it has been subject
to peer review or publication, whether it has known or potential
error rates or standards and controls, and whether it has gained
general acceptance in the scientific community.

Marmo v. IBP,

Inc., 360 F. Supp. 2d 1019, 1021 (D. Neb. 2005) (citing Daubert
v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 593-94
(1993); Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141
(1999).

The Advisory Committee Notes to the 2000 Amendments to

Rule 702, made in response to the Daubert decision, list other
factors courts often consider when determining whether expert
testimony is sufficiently reliable to be considered by the trier
of fact.

Among these are (1) whether the research was conducted

independent of the litigation or the opinions were developed
expressly for purposes of the litigation, (2) whether the expert
has extrapolated from an accepted practice to an unfounded
conclusion, leaving an analytical gap, (3) whether the expert has
adequately accounted for alternative explanations, at a minimum
ruling out the most obvious alternative causes, (4) whether the
expert has employed the same level of care and intellectual rigor
in reaching the opinion as the expert would employ when working
outside the courtroom in the expert's field of expertise, and (5)
-7-

whether the field of expertise claimed by the expert is known to
reach reliable results for the type of opinion the expert is
offering.

Id.
The proponent of the expert testimony must prove its

admissibility by a preponderance of the evidence.
U.S. at 592-93, n.10.

Daubert, 509

“[T]estimony is inadmissible if it is

speculative, unsupported by sufficient facts, or contrary to the
facts of the case.”

Marmo v. Tyson Fresh Meats, Inc., 457 F.3d

748, 757 (8th Cir. 2006).

“When the analytical gap between the

data and proffered opinion is too great, the opinion must be
excluded.”

General Elec. Co. v. Joiner, 522 U.S. 136, 146

(1997).
III. DISCUSSION
Cargill proffers several points of opposition to Dr.
Thomsen’s expert opinions generally.

Though the Court has

considered all of Cargill’s arguments, it will address those
arguments which merit discussion.
First, Cargill asserts Dr. Thomsen’s expert opinion is
inadmissable because it is not an opinion of damages.
217, at 6.

Filing No.

Cargill cites the Tort’s Restatement on Damages for

Tortious Interference to conclude that, because GOPAC offered Dr.
Thomsen no evidence of contracts, his opinion lacks any
calculation of damages.

However, this analysis ignores the
-8-

remainder of the Restatement as well as Tortious Interference
case law.

See Restatement (Second) Torts, § 774A(b), (c) (1979);

Filing No. 319, at 20-23 (citing Hayes v. N. Hills Gen. Hosp.,
590 N.W.2d 243 (S.D. 1999)).
Next, Cargill complains that Dr. Thomsen’s analysis
does not sufficiently examine alternatives for causes for
economic loss.
matter.

Both parties have meritorious arguments in this

However, the Court finds that GOPAC has met its burdens.
The Court makes the following findings regarding the

Daubert elements.

First, Dr. Thomsen’s testimony is based upon

sufficient facts or data.

Dr. Thomsen only became aware of the

earliest possibilities of when the New York Times reporter might
have disseminated Mr. Stevens’s allegations after he rendered his
analysis; however, the information Dr. Thomsen possessed at the
time of his analysis was sufficient to determine causal relation.
See Filing No. 321-12, at 35-37.

Dr. Thomsen’s causal relation

analysis was based upon elimination of the “null hypothesis.”
Dr. Thomsen eliminated this hypothesis in part by conducting
dozens of event studies similar to the August 2009 - December
2009 event study.

Dr. Thomsen compared the abnormal prices

(difference between national and GOPAC boxed-beef prices) in
those event studies to the primary event study.

Dr. Thomsen

discovered that the primary event study ranked 14th out of the
-9-

189 event studies, which meant only 8.9% of the event studies had
greater disparity between national and GOPAC prices.

Filing No.

321.
Second, Dr. Thomsen’s testimony is the product of
reliable principles and methods.

The Court finds that Dr.

Thomsen’s studies R2 value and P-Value methodically and
procedurally sufficient.
Third, Dr. Thomsen applied the principles and methods
reliably to the facts of the case.
In accordance with the notes of Rule 702, the Court
finds (1) Dr. Thomsen developed his opinion expressly for
purposes of the litigation, (2) Dr. Thomsen has extrapolated
conclusions from an accepted practice, (3) Dr. Thomsen has, at
the minimum, accounted for the most obvious alternative cause,
chance, in his report, and (4) Dr. Thomsen employed the same
level of care and intellectual rigor in reaching the opinion as
the expert would employ when working outside the courtroom in the
expert's field of expertise, (5) regressive event studies have
reached reliable conclusions in economic studies, which is at
least relevant in this food-product contract case.

-10-

IT IS ORDERED that plaintiff Cargill’s motion to
exclude the testimony and report of Dr. Thomsen is denied.
DATED this 2nd day of April, 2014.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

-11-