Array Technologies, Inc. v. Mitchell et al

Filing 524

MEMORANDUM OPINION AND ORDER granting in part and denying in part 472 MOTION to Exclude Testimony of Clarke B. Nelson by District Judge Judith C. Herrera. (baw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO

ARRAY TECHNOLOGIES, INC.,
Plaintiff,
vs.

Civ. No. 17-087 JCH/LF

COLIN MITCHELL, and individual,
NEXTRACKER, a Delaware corporation,
MARCO GARCIA, an individual,
DANIEL SHUGAR, an individual,
SCOTT GRAYBEAL, an individual,
FLEXTRONICS INTERANTIONAL U.S.A., INC.,
a California corporation,
Defendants.

MEMORANDUM OPINION AND ORDER
This matter comes before the Court on Defendants’ Motion to Exclude Testimony of
Clarke B. Nelson (ECF No. 472). The Court, having considered the motion, briefs, evidence,
applicable law, and otherwise being fully advised, concludes that a hearing is not necessary to
resolve the issues in this motion and that the motion should be granted in part and denied in part
as described herein.1
I.

STANDARD

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 Defendants have moved to exclude certain opinions by Clarke B. Nelson (“Nelson”) from

his supplemental report. See Defs.’ Motion to Exclude Unauthorized Supplemental Expert Reports
of Clarke B. Nelson and Robert E. Parkins (ECF No. 430). The Honorable Laura Fashing resolved
some of the issues in that motion but left for this Court to decide the admissibility of evidence in
the supplemental reports. See Order on Motion 2, 8 (ECF No. 522). The Court will resolve the
issues of admissibility regarding Nelson’s supplemental report in a separate Memorandum Opinion
and Order. 

Federal Rule of Evidence 702 governs the admissibility of expert testimony. Fed. R. Evid.
702. A witness, qualified by knowledge, skill, experience, training, or education, may offer an
opinion so long as the following conditions are met:
(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.
Id. Rule 702 incorporates the principles of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509
U.S. 579 (1993), and Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999), to ensure that
proffered expert testimony, even non-scientific and experience-based expert testimony, is both
relevant and reliable. See Fed. R. Evid. 702, 2000 Amendments. “The focus, of course, must be
solely on principles and methodology, not on the conclusions that they generate.” Daubert, 509
U.S. at 595.
To determine whether an expert opinion is admissible, the district court performs the
following two-step analysis: (1) the court must determine whether the expert is qualified by
knowledge, skill, experience, training, or education to render an opinion, and (2) if the expert is so
qualified, the court must determine whether the expert’s opinion is reliable under the principles set
forth in Daubert. 103 Investors I, L.P. v. Square D Co., 470 F.3d 985, 990 (10th Cir. 2006).
Daubert’s general holding setting forth the judge’s gate-keeping obligation applies not only to
testimony based on scientific knowledge, but also to testimony based on technical or other
specialized knowledge. Kumho Tire, 526 U.S. at 141. Where an expert witness’s testimony is based
on his experience, “the witness must explain how that experience leads to the conclusion reached,
why that experience is a sufficient basis for the opinion, and how that experience is reliably applied
to the facts.” United States v. Nacchio, 555 F.3d 1234, 1258 (10th Cir. 2009) (quoting Fed. R.

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Evid. 702 advisory committee’s note (2000)).
The proponent of the expert bears the burden by a preponderance of the evidence to
establish that the requirements for admissibility have been met. See id. at 1241, 1251. Trial courts
have equally broad discretion in both determining the reliability and admissibility of expert
testimony and in deciding how to assess an expert’s reliability, including what procedures to use
in making that assessment. United States v. Velarde, 214 F.3d 1204, 1208-09 (10th Cir. 2000). So
long as the district court has enough evidence to perform its duty in assessing the relevance and
reliability of an expert’s proposed testimony, a hearing is not required. See United States v. Call,
129 F.3d 1402, 1405 (10th Cir. 1997). Having reviewed the motion, briefs, evidence presented,
and applicable law, the Court determines the evidence in the record is sufficient to enable the Court
to perform its gatekeeping duty without a hearing in resolving the motion before it. 
II.

FACTUAL BACKGROUND
This case involves two competitors in the solar tracking equipment industry, Plaintiff Array

Technologies, Inc. (“Array” or “ATI”) and Defendant NEXTracker (“NEXTracker” or “NX”), a
wholly-owned subsidiary of Flex, Ltd. (“Flex”). See Am. Compl. ¶¶ 16, 33. This dispute arose
when Array’s Business Development Manager, Defendant Colin Mitchell (“Mitchell”), left
Array’s employment and allegedly began working for NEXTracker and Flex. See id. at ¶¶ 27, 4146. According to Array, Mitchell unlawfully disclosed Array’s trade secret and confidential
information to NEXTracker, resulting in Array’s loss of solar tracker projects to NEXTracker. See
id. at ¶¶ 74-99, 155-57.
Array asserts the following claims against all Defendants: misappropriation of trade secrets
under the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836, et seq. (Count One);
misappropriation of trade secrets under the New Mexico Uniform Trade Secrets Act, N.M. Stat.

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Ann. § 57-3A-1, et seq. (Count Two); breach of fiduciary duty (Count Five); conversion (Count
Seven); and fraud and constructive fraud (Count Nine). Array also asserts breach of contract
(Count Three) and breach of the covenant of good faith and fair dealing (Count Four) against
Defendant Mitchell.2 Array additionally alleges that Defendants NEXTracker, Marco Garcia,
Daniel S. Shugar, and Flex committed tortious interference with contract (Count Six). Following
this Court’s entry of a Memorandum Opinion and Order dismissing certain claims, Array has
claims against Defendants NEXTracker, Garcia, Shugar, Graybeal, and Flex for unjust
enrichment/restitution (Count Eight).
Array hired Robert E. Parkins (“Parkins”) to provide an opinion on whether Defendants’
alleged misconduct was a contributing factor to Array’s project losses and NEXTracker’s project
wins. Parkins’ Report 1, ECF No. 439-3. Parkins examined 79 projects on which Array and
NEXTracker were competing when Mitchell left Array. See id. at 50-52. Based on his industry
experience and review of the evidence in this case, Parkins concluded that “Defendants’ conduct
was a significant factor contributing to NX winning projects against ATI” on at least 23 of the
projects. Id. at 52-53. Parkins also opined:
Based on Defendants’ conduct and the information that they obtained about ATI as
well as Mr. Mitchell’s assistance in helping NX compete with ATI to win projects,
and based on the evidence demonstrating that Defendants utilized Mr. Mitchell to
help NX win the projects identified above, I believe that it is also reasonable to
infer that Mr. Mitchell’s work for the benefit of NX and/or the information about
ATI that he disclosed to NX contributed to assist NX in winning the following jobs
against ATI.
Id. at 93. Parkins then listed 48 projects, 23 of which he had previously determined that
Defendants’ alleged misconduct was a significant factor to NX winning them. See id. at 93-94.

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 The Honorable James A. Parker previously dismissed Array’s unjust enrichment/restitution claim against
Defendant Mitchell and Array’s New Mexico Unfair Practices Act claim against all Defendants. See Mem. Op. and
Order 32, ECF No. 90.  

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In addition to Parkins, Array retained Nelson to evaluate its damages claims. See Nelson
Report 4, ECF No. 472-1. Nelson is a Certified Public Accountant (“CPA”) and a Chartered Global
Management Accountant, and he is Accredited in Business Valuation and Certified in Financial
Forensics. Id. at 4-5. Nelson has not worked in the solar power industry or solar tracking industry.
See Nelson Dep. 11:17-23, ECF No. 472-2.
Nelson is not offering any opinions on liability. Id. at 206:6-8. Array asked him to assume
that its damages may be measured by its own lost profits or by disgorgement of Defendants’
profits, and he relied on the significant factor and contributing factor projects Parkins identified in
his report. Nelson Report 87, ECF No. 472-1. Nelson assumed liability for the projects Parkins
identified; he has no opinions as to whether any particular project(s) should be included. Nelson
Dep. 32:2-22, 93:5-9, ECF No. 472-2. Nelson calculates damages for the 48 projects. Id. at 32:2022.
III.

ANALYSIS
Defendants move to exclude Sections III.J, IV, V, and VI.A.1 of Nelson’s expert report.

They argue that Nelson is not qualified to opine on the merits of Array’s claims or on its
manufacturing capacity.
1. Section III.J - Nature of Dispute and Section IV - Mr. Mitchell’s Alleged
Breach of the Mitchell 2013 Agreement
Defendants assert that in sections III.J and IV Nelson improperly makes observations on
issues of liability for which he has no expertise. Array contends that it is proper under Rule 26 for
an expert to disclose the facts upon which he relied in his report and that the facts helped him
determine the appropriate form of damages caused by Defendants’ alleged misconduct. Although
many of the 93 pages in his report contain background discussion of the case, Array notes that

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Defendants have not objected to Nelson’s 120 pages of schedules that include his calculations,
which are attached to his report.
The Court agrees with Array that the facts set forth in the background section of Nelson’s
report are permissible under Rule 26 to inform the opposing party upon what the expert bases his
opinions. Nonetheless, it is another matter entirely as to whether Nelson is permitted to testify to
those facts before a jury. Because Nelson’s opinions are limited to damages and he has assumed
liability for purposes of his opinions, Nelson will not be permitted to testify to background facts
that are relevant only to liability. Cf. Rowe v. DPI Specialty Foods, Inc., 727 F. App’x 488, 501
(10th Cir. Mar. 7, 2018) (unpublished opinion) (affirming district court’s exclusion of expert’s
opinions on weight to give facts and expert’s attempt to take a principal role in sifting, weighing,
and reciting facts for jury).
Based on the Court’s review of Nelson’s report, Nelson should not be allowed to testify to
the background information in the following sections, because he has no personal knowledge of
the facts therein and he does not explain how they are relevant to his damages assessment when
he assumed liability: III.J (describing nature of dispute based on allegations in amended
complaint), IV.A (primarily an excerpt from Parkins’ report), IV.B.1 (discussing evidence that NX
believed acquiring Mitchell would help it “crush” and “cripple” ATI), IV.B.2 (describing evidence
that Mitchell promoted himself as accounting for 95% or more of Array’s 2015-16 business),
IV.B.3 (setting out emails and deposition testimony showing NX expressed urgency in recruiting
Mitchell because of several large deals), IV.B.5 (setting out June 21, 2016 email from Dan Shugar
regarding anticipated financial benefit to NX in hiring Mitchell), IV.B.6 (setting out emails and
documents indicating Mitchell worked with or assisted various NX individuals in sales), IV.B.7
(setting out evidence suggesting Mitchell provided information and “intel” to NX personnel,

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including after entry of Consent Order), IV.B.8 (describing emails indicating Defendants intended
to keep Mitchell’s NX involvement hidden). See Nelson Report 47-64, ECF No. 472-1.
To the extent, however, that certain background facts are necessary to explain his damages
calculations, the Court may allow such testimony. For example, Nelson may testify that he
examined Parkins’ report, the amended complaint, and emails between NEXTracker executives
with or regarding Mitchell to explain his efforts to gain knowledge of the facts of the case without
setting forth the details therein. Moreover, he is permitted to testify that he examined certain
general categories of evidence to make sure there was a nexus between his calculations and the
various causes of action. See Nelson Dep. 207:20-23, ECF No. 207. He should not, however,
discuss the specific evidence regarding liability to explain his damages opinions.
2. Section V - Misappropriation of Trade Secrets
In Section V, Nelson sets forth Parkins’ discussion in his report of three categories of
Array’s asserted trade secrets and the importance of the alleged trade secrets. See Nelson Report
65-68, ECF No. 472-1. Nelson then discusses the email and deposition evidence regarding
Mitchell’s alleged disclosures of trade secret information, the ways in which NEXTracker used
the information, the importance of that information to Array, and Array’s efforts to protect its
confidential information with non-disclosure agreements. See id. at 69-86.
Like the information in Section IV, Nelson has no personal knowledge of the background
information in Section V, and he does not have qualifications in the solar industry to opine on what
is a trade secret or the importance of alleged trade secrets in that industry. See Nelson Dep. 19:1620:24, 223:19-224:7, ECF No. 472-2 (stating that he was not providing opinions on what is a trade
secret, on importance of alleged trade secrets, or on whether Defendants violated DTSA, because
they are industry-specific questions). Because he has assumed liability, he does not need to explain

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the specifics of the background information on liability to show the jury how he reached his
opinions on damages. See id. 31:9-32:22 (stating he created damages calculations for 48 projects
provided in Parkins Report); 82:22-83:22 (explaining that background information in his report is
part of context he relied upon, but that the information does not change any of the calculations he
made). The Court will therefore not permit Nelson to testify to the specifics of the background
information in Section V, although he may testify to the general assumptions that he made to the
extent they are relevant to his calculations on damages. See Wells v. Allergan, Inc., No. CIV-12973-C, 2013 WL 7208221, at *2 (W.D. Okla. Feb. 4, 2013) (“An expert must do more than simply
constructing a factual narrative based upon record evidence or ‘address[ ] ‘lay matters which a jury
is capable of understanding and deciding without the expert's help.’”) (Internal quotations and
citation omitted).
3. Section VI.A.1 - Indicia of ATI’s Capacity to Capture Incremental Sales
Turning to Section VI.A.1 of Nelson’s Report, he relied on Array’s historical shipment
data from December 2016 through December 2018 that ranged between 9 and 369 MW per month
and compared that information to the tracker deliveries/shipments for the projects identified by
Parkins. See Nelson Report 89, ECF No. 472-1. Nelson explained that the 48 projects “result in
potential incremental tracker deliveries/shipments of between 0 and 379 MW per month and total
potential required capacity of between 53 and 560 MW per month during this period….” Id. at 90.
Nelson acknowledged that the increase in certain months could involve doubling production, but
not always or consistently across the months. Nelson Dep. 191:5-21, ECF No. 472-2. Nelson also
examined Array’s quarterly capacity analysis, noting that it reached 1,659 MW in Q1 2016,
equating to an average monthly capacity of 553 MW. Nelson Report 90, ECF No. 472-1.

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Nelson additionally relied on conversations with Bob Bellemare (“Bellemare”), Array’s
chief operating officer, to conclude that Array had the ability to expand its operations by running
additional manufacturing shifts without incurring any material capital expenditures to do so. Id. In
his conversations with Bellemare, Nelson learned that additional incremental costs in doubling
capacity would be captured in the costs of goods sold, so there would not be an additional capital
expenditure, for example, to run the additional shift. Nelson Dep. 193:17-194:3, ECF No. 472-2.
Additional labor, additional materials, and additional overhead would be captured in the cost of
goods sold. Id. Accordingly, Nelson opined, “Based on ATI’s historical shipments, capacity, and
capability to meet periodic increases in demand, it appears ATI had the capacity to realize the
projects identified by Mr. Parkins.” Nelson Report 90, ECF No. 472-1.
Defendants argue that Nelson, as an accountant, is not qualified to opine on Array’s
manufacturing capacity, in particular that Array was capable of fulfilling all 48 projects identified
by Parkins. Defendants contend that Bellemare’s statements are Nelson’s only bases for the
following opinions: (1) Array could expand its manufacturing capacity to supply all of the projects
at issue, and (2) Array would not require any additional material capital expenditures nor additional
incremental costs. Defendants assert that Nelson should not be able to make opinions based on
statements of a witness Defendants were unable to depose and cross examine.
Array replies that Rule 703 permits Nelson to rely on his conversations with company
executives to determine facts about the company. Federal Rule of Evidence 703 provides:
An expert may base an opinion on facts or data in the case that the expert has been
made aware of or personally observed. If experts in the particular field would
reasonably rely on those kinds of facts or data in forming an opinion on the subject,
they need not be admissible for the opinion to be admitted.
Fed. R. Evid. 703 (italics added).

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As an accountant, Nelson was not qualified by knowledge and experience regarding the
company’s ability to expand operations by running additional shifts without incurring additional
capital expenditures. For this reason, it would be typical and reasonable in the field of accounting
to rely on a company’s employees to provide the accountant with that information. Consequently,
those facts and data need not be admissible for Nelson’s opinions to be admissible under Rule 703.
Defendants, however, object to Nelson’s reliance on Bellemare because Array did not
disclose him as an individual likely to have discoverable information. See Pl.’s Initial Disclosures,
ECF No. 474-1. On March 8, 2019, Array subsequently disclosed Bellemare as an individual likely
with discoverable information, including information about “ATI’s financials, sales, and
capacity,” in its First Amended Initial Disclosures (ECF No. 474-2 at 4 of 5). Defendants then
requested that counsel for Array provide a date for Bellemare’s deposition or confirm that it would
not be relying upon his testimony, including trial testimony, declaration, or other discussions that
may be relied upon by their experts. Mar. 14, 2019 email, ECF No. 474-3. Instead, on March 28,
2019, Array provided its Second Amended Initial Disclosures (ECF No. 474-4) in which it no
longer listed Bellemare. Consequently, Defendants never deposed him. See Defs.’ Mot. 10, ECF
No. 472. Defendants argue that Nelson’s only source for his opinion that Array can nearly double
its production capacity without incurring additional incremental cost is Bellemare, but Array
should not be allowed to backdoor in the information from Bellemare because of its discovery
violations.
Array argues that under Rule 26(e) it had no obligation to supplement its disclosures
because Bellemare had been disclosed in depositions of other Array employees. See Fed. R. Civ.
P. 26(e), Advisory Committee Notes, 1993 Amendments (“There is, however, no obligation to
provide supplemental or corrective information that has been otherwise made known to the parties

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in writing or during the discovery process….”). For example, Ron Corio, Array’s founder and
former CEO, disclosed in his deposition that he spoke to Bellemare, among others, in preparation
for his deposition. Corio Dep. 8:11-11:11, ECF No. 485-4. Defendants were aware that Bellemare
may have information pertinent to the case, given that they listed Bellemare in their Amended
Initial Disclosures (ECF No. 485-5), submitted on October 26, 2018.
Nevertheless, the problem with Array’s argument is that Defendants took multiple steps to
set up a deposition of Bellemare, and in response, Array removed him from its second amended
initial disclosures. It was reasonable therefore for Defendants to believe that Array was not going
to use Bellemare to support any of its claims and thus to cease further attempts to depose him. The
Court finds that Array should not be permitted to rely on Nelson’s opinion that is based on
Bellemare’s statements without the opportunity to depose him. The sanction of striking Nelson’s
opinion at this point, however, seems too harsh. Instead, if Array wishes Nelson to testify to
Array’s ability to expand its manufacturing operations without incurring additional material capital
expenditures, Array must produce Bellemare for a deposition, at Array’s expense, within 60 days
of entry of this Memorandum Opinion and Order. Failure to do so may result in striking Nelson’s
opinions that are based solely on information provided by Bellemare.3
IT IS THEREFORE ORDERED that Defendants’ Motion to Exclude Testimony of
Clarke B. Nelson (ECF No. 472) is GRANTED IN PART AND DENIED IN PART as follows:
1. Defendants’ request to exclude Clarke B. Nelson from testifying regarding facts related
to liability set forth in Sections III.J, IV, and V is GRANTED to the extent described
herein.

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 The parties should make efforts to meet this 60-day deadline. Given the uncertainty surrounding how long
the various States’ stay-at-home orders related to the coronavirus may last, should the parties need additional time to
arrange for the deposition of Bellemare, they should file a motion with the Court.   

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2. Defendants’ request to exclude Clarke B. Nelson from testifying to the opinions set
forth in IV.A.1 is DENIED at this time.
3. Plaintiff must produce Bob Bellemare for a deposition, at Plaintiff’s expense, within
60 days of entry of this Memorandum Opinion and Order. Failure to do so may result
in striking Mr. Nelson’s opinions that are based solely on information provided by Mr.
Bellemare.

_________________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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