Sioux Steel Company v. KC Engineering
Filing
48
ORDER denying 34 Motion to Exclude Expert Testimony Signed by U.S. District Judge Karen E. Schreier on 9/19/18. (DJP)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
SIOUX STEEL COMPANY, a South
Dakota corporation,
Plaintiff,
4:15-CV-04136-KES
ORDER DENYING MOTION TO
EXCLUDE EXPERT TESTIMONY
vs.
KC ENGINEERING, P.C., an Iowa
corporation,
Defendant.
Plaintiff, Sioux Steel Company, moves to exclude the testimony of
defendant’s expert witness, John W. Carson, or in the alternative, disqualify
Carson as an expert witness. Docket 34. Defendant, KC Engineering, P.C.,
opposes the motion. For the following reasons, the court denies the motion.
BACKGROUND
This is a negligence action arising out of a structure failure of an
agricultural grain storage bin designed and manufactured by Sioux Steel
Company. During the design process, Sioux Steel hired KC Engineering, P.C.,
to do the design review of the Hopper Bin. Sioux Steel alleges that KC
Engineering was negligent when it failed to identify a design defect made by
Sioux Steel’s engineer, Chad Kramer, in the formula of the vertical seams of the
Hopper Bin and when it approved the design plans with the defect. Because
neither Sioux Steel nor KC Engineering caught the error, Sioux Steel
manufactured and sold the Hopper Bin. One of the Hopper Bins was sold to a
company in Mexico, Agropecuaria El Avion, where it was filled with soybean
meal. The Hopper Bin suffered a structural failure that killed two Agropecuaria
employees. Sioux Steel filed suit again KC Engineering, alleging that KC
Engineering breached its duty to exercise reasonable skill and care by failing to
identify the defect in the design.
KC Engineering designated John W. Carson as an expert witness. Carson
has supplied two reports. In the first, dated November 21, 2016, Carson
discusses the cause of the Hopper Bin’s collapse and what role, if any, KC
Engineering’s review of the design played in causing or contributing to the
failure. Docket 36-1. Carson concluded that the Hopper Bin failed because a
dynamic load formed due to either collapsing of an arch or rathole or firing of
the air cannons. Id. at 15. Carson’s overall conclusion is based on thirteen
opinions. Id. at 7-15. Each of these opinions is listed in his report and contains
explanations on how he formed each one. Id. In reaching these opinions and
conclusions, Carson reviewed and relied on court documents from the current
litigation, photos and documents obtained during discovery, three expert
reports, Chad Kramer’s deposition, the American Engineering standards for
loads exerted by free-flowing grains on bins (ANSI/ASAE EP 433), the
Australian standards for loads on bulk solid containers (AS 3774), the
European standards for actions on structures (EN 1991-4, Eurocode 1), and
other publications referenced in his report. Id. at 6.
2
In his second report, dated December 1, 2016, Carson focused his
inquiry on the firing of the air cannons based on his review of Agropecuaria’s
surveillance video of the failure. Docket 36-14. He opined that the load that
caused the failure was much greater than those imposed by gravity alone. Id.
Thus, he concluded that KC Engineering’s lack of review of the Hopper Bin’s
seams had no bearing on the failure. Id. Carson noted that the initial failure
occurred almost directly below one of the air cannons. Id. at 4. He explained
the firing of the air cannons “likely resulted in greatly increased (compared to
gravity alone) pressure on the hopper wall.” Id. In reaching these conclusions,
Carson reviewed the surveillance video along with 200 pages of documents
(many of which he already reviewed for his initial report). Id. at 2.
Sioux Steel moves to exclude the testimony of Carson on the ground that
Carson’s testimony is not reliable. Alternatively, Sioux Steel moves to disqualify
Carson from testifying because he received confidential information from Sioux
Steel prior to the lawsuit.
I.
Sioux Steel’s Motion to Exclude Carson’s Testimony
In diversity cases, federal law controls whether expert testimony is
admissible. Unrein v. Timesavers, Inc., 394 F.3d 1008, 1011 (8th Cir. 2005).
Federal Rule of Evidence 702 governs the admissibility of expert testimony.
Fed. R. Evid. 702. Under Rule 702, the trial court acts as a “gatekeeper” by
screening a party’s proffered expert testimony for its reliability and relevance.
Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993); Kumho Tire Co.,
3
v. Carmichael, 526 U.S. 137, 152 (1999) (“The objective of [the gatekeeping]
requirement is to ensure the reliability and relevancy of expert testimony.”).
Rule 702 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. “Rule 702 reflects an attempt to liberalize the rules
governing the admission of expert testimony.” Lauzon v. Senco Prods., Inc., 270
F.3d 681, 686 (8th Cir. 2001) (quoting Weisgram v. Marley Co., 169 F.3d 514,
523 (8th Cir. 1999)). “The rule clearly ‘is one of admissibility rather than
exclusion.’ ” Id. (quoting Arcoren v. United States, 929 F.2d 1235, 1239 (8th
Cir. 1991)). Thus, “[t]he exclusion of an expert’s opinion is proper only if it is
‘so fundamentally unsupported that it can offer no assistance to the jury[.]’ ”
Wood v. Minn. Mining & Mfg. Co., 112 F.3d 306, 309 (8th Cir. 1997) (quoting
Hose v. Chicago Nw. Transp. Co., 70 F.3d 968, 974 (8th Cir. 1995)).
The Eighth Circuit has determined that a district court should apply a
three-part test when screening expert testimony under Rule 702.
4
First, evidence based on scientific, technical, or other specialized
knowledge must be useful to the finder of fact in deciding the
ultimate issue of fact. This is the basic rule of relevancy. Second, the
proposed witness must be qualified to assist the finder of fact. Third,
the proposed evidence must be reliable or trustworthy in an
evidentiary sense, so that, if the finder of fact accepts it as true, it
provides
the
assistance
the
finder
of
fact
requires.
Lauzon, 270 F.3d at 686 (internal citations and quotations omitted). With
respect to relevancy, expert testimony will be relevant and helpful to the jury if
it concerns matters beyond the general knowledge of average individuals. See
United States v. Shedlock, 62 F.3d 214, 219 (8th Cir. 1995). With respect to an
expert's qualifications, Rule 702 recognizes five bases for qualifying an expert,
which include “knowledge, skill, experience, training, or education.” Fed. R.
Evid. 702. Significantly, “[g]aps in an expert witness's qualifications or
knowledge generally go to the weight of the witness's testimony, not its
admissibility.” Robinson v. GEICO Gen. Ins. Co., 447 F.3d 1096, 1100 (8th Cir.
2006).
To satisfy the reliability requirement, the party offering the expert
testimony must show by a preponderance of the evidence “that the
methodology underlying [the expert's] conclusions is scientifically valid.”
Barrett v. Rhodia, Inc., 606 F.3d 975, 980 (8th Cir. 2010) (citations omitted). In
making the reliability determination, the court may consider: (1) whether the
theory or technique can be or has been tested; (2) whether the theory or
technique has been subjected to peer review or publication; (3) whether the
theory or technique has a known or potential error rate and standards
controlling the technique's operations; and (4) whether the theory or technique
5
is generally accepted in the scientific community. Russell v. Whirlpool Corp.,
702 F.3d 450, 456 (8th Cir. 2012). Additional factors to consider include:
“ ‘whether the expertise was developed for litigation or naturally flowed from
the expert's research; whether the proposed expert ruled out other alternative
explanations; and whether the proposed expert sufficiently connected the
proposed testimony with the facts of the case.’ ” Polski v. Quigley Corp., 538
F.3d 836, 839 (8th Cir. 2008) (quoting Sappington v. Skyjack, Inc., 512 F.3d
440, 449 (8th Cir. 2008)). “This evidentiary inquiry is meant to be flexible and
fact specific, and a court should use, adapt, or reject” these factors as the
particular case demands. Russell, 702 F.3d at 456 (citation omitted).
Also when making the reliability inquiry, the court should focus on
“principles and methodology, not on the conclusions that they generate.” Kuhn
v. Wyeth, Inc., 686 F.3d 618, 625 (8th Cir. 2012) (citing Daubert, 509 U.S. at
595). At times, conclusions and methodology are not entirely distinct from one
another, and the court “ ‘need not completely pretermit judicial consideration
of an expert's conclusions.’ ” Id. (quoting Milward v. Acuity Specialty Prods.
Grp., Inc., 639 F.3d 11, 15 (1st Cir. 2011)). But “[a]s a general rule, the factual
basis of an expert opinion goes to the credibility of the testimony, not the
admissibility, and it is up to the opposing party to examine the factual basis for
the opinion in cross-examination.” Bonner v. ISP Techs., Inc., 259 F.3d 924,
929 (8th Cir. 2001) (internal quotations omitted).
District courts have discretion in determining whether to admit expert
witness testimony under Rule 702. See In re Air Crash at Little Rock Ark., on
6
June 1, 1999, 291 F.3d 503, 509 (8th Cir. 2002). “That standard applies as
much to the trial court’s decisions about how to determine reliability as to its
ultimate conclusion.” Kumho Tire Co., 526 U.S. at 152. Nonetheless, the
proponent of expert testimony must prove its admissibility by a preponderance
of the evidence. Daubert, 509 U.S. at 592 n.10.
A. Relevancy and Qualification Requirements
As to relevance, Carson’s testimony concerns matters beyond the general
knowledge of average individuals. Carson explained that he would testify about
the applicability of engineering codes, the loads exerted by free-flowing grains,
and the storage qualities of various grains. Docket 36-1. His testimony will lend
itself to the cause of the Hopper Bin’s failure. Thus, Carson’s testimony is
relevant.
As to Carson’s qualifications, he has extensive education, training, and
experience in engineering principles that are relevant to the inquiry at hand.
Docket 36-1 at 18 (listing Carson’s education, work experience, honors and
awards); Docket 36-1 at 21-30 (listing the 145 publications authored or coauthored by Carson). Additionally, Carson has demonstrated familiarity with
the forces exerted on bins and investigations of storage bin failures. Docket 38
¶¶ 14-15 (describing Carson’s five decades of experience in issues relating to
forces exerted on bins and his investigation of over 50 grain bin collapses).
Carson is qualified to assist the trier of fact in this case.
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B. Reliability of Carson’s EP 433 Testimony
Sioux Steel argues that Carson’s testimony should be excluded under
Federal Rule of Evidence 702 because it is not reliable. Docket 35 at 1. Sioux
Steel alleges that Carson’s opinion is contrary to the only recognized United
States engineering standard regarding agricultural steel bin loads and therefore
it is not reliable. Id. But the court will not preclude Carson’s testimony unless
his methodology is unreliable. Berg v. Johnson & Johnson, 940 F. Supp. 2d
983, 992 (D.S.D. 2013).
Carson’s methodology is the plain reading of EP 433. Docket 39-5 at 6.
Carson concluded that on its face EP 433 does not apply to non-free-flowing
grains. Id. at 4. EP 433’s title is “Loads Exerted by Free-Flowing Grain on
Bins.” Docket 36-11. The section’s purpose further limits its applicability to
“bins used to store free-flowing agricultural whole grain.” Id.
In considering the adequacy of the method used, the court finds that
Carson “is not relying for his opinions upon any new science.” Doblar v.
Unverferth Mfg. Co., 981 F. Supp. 1284, 1287 (D.S.D. 1997). Rather, the
evidence shows that Carson’s method consists of reading a United States
accepted code, analyzing the wording and parameters of the code, and using
his experience, education, skill, and knowledge of storage structures to apply it
to the facts at hand. In general, the court finds that Carson’s methodology is
reliable.
Sioux Steel has identified four specific concerns regarding Carson’s
findings. First, Sioux Steel contends that Carson’s testimony pertaining to EP
8
433 does not meet the reliability standard because his opinion is contrary to a
recognized United States engineering standard. Docket 35 at 1. Sioux Steel’s
argument is a mischaracterization of Carson’s opinion. Carson’s testimony will
likely be that EP 433 is not applicable to the specific design of the Hopper Bin
because soymeal is a non-free-flowing material and EP 433 does not
contemplate the storage of this material. Docket 38 ¶¶ 19-21. Carson is not
stating that EP 433 is never applicable, but that it is not applicable here based
on the specific material the user intended to store in the bin. Sioux Steel’s
argument is a criticism of Carson’s results, not his methodology.
Second, Sioux Steel identifies alleged inconsistencies in Carson’s opinion
(i.e., Carson concedes EP 433 is the only recognized United States load
standard for steel bins but insists that it is deficient for non-free flowing
commodities). Docket 35 at 15. Again, this is a criticism of Carson’s results,
not his methodology. See Berg, 940 F. Supp. 2d at 992 (rejecting an
inconsistency argument as criticism of results, not methodology). “[Sioux Steel]
will have the chance at trial during cross examination to attack [Carson’s]
results.” Id.
Third, Sioux Steel argues that Carson’s opinion is ipse dixit. Docket 35 at
16. But the court cannot find the analytical gap between the data and the
opinion that existed in Pro Service Automotive. See Pro Serv. Auto., L.L.C. v.
Lenan Corp., 469 F.3d 1210, 1216 (8th Cir. 2006). In Pro Service Automotive,
the court found that the expert offered only vague theorizing based upon
9
general principles. Id. at 1215. The expert made no calculations, and did no
mathematical analysis or testing. Id.
Sioux Steel argues that Carson’s statement that EP 433 is highly
simplistic provided the basis for his opinions and conclusions. Docket 35 at 16.
But based on the plain reading of the code, Carson concluded that EP 433
applies only to free-flowing, agricultural whole grain. Docket 38 ¶ 19. Then,
Carson provided two reasons why EP 433 was not applicable to this Hopper
Bin, thereby connecting his opinion and the data. Id. ¶ 20; Docket 36-1 at 6.
First, soymeal is not an agricultural whole grain. Docket 38 ¶ 20. Second,
soymeal is often non-free-flowing. Id. Carson noted the second reason is
“something that is well known and understood in the agricultural industry.” Id.
Also, Sioux Steel’s engineer, Kramer, acknowledged that soymeal is not a freeflowing grain in his deposition. Docket 36-1 at 10. Thus, Carson concluded
that EP 433 does not apply because soymeal does not fit within the parameters
of the code. Docket 38 ¶ 20. To support his conclusion, Carson pointed out
that EP 433 is silent about what happens when grains become non-freeflowing. Docket 39-5 at 5. The code’s silence on this issue shows that the
standard does not apply to such material. Docket 38 ¶ 21.
Fourth, Sioux Steel argues that Carson cannot cite to other authority
that states EP 433 is not applicable to non-free-flowing grains. Docket 35 at
17. “This is mostly an attack on the results and not the methodology, and as a
result goes to the weight to be given to the evidence and not its admissibility.”
Berg, 940 F. Supp. 2d at 992-93 (rejecting defendant’s argument that the
10
expert’s findings were unreliable because they had not been tested or peer
reviewed). Carson noted that he could not point to any peer reviews of his
methodology in determining that EP 433 was not applicable to non-free-flowing
grains. Docket 39-5 at 6. Carson’s reasoning for the lack of peer review is that
he is merely reading the code and applying it to the facts. Id. “It’s obvious to
anyone reading the English language by the title of EP 433 . . . that this only
applies to free-flowing grains . . . I don’t know that anyone has to state that any
more directly in any publication to make it obvious.” Id. And because the facts
do not fit within the definition of the code, he found that the code was not
applicable. Id. Carson's testimony should be admitted as long as his
methodology is reliable, even if his conclusions are novel. See Berg, 940 F.
Supp. 2d at 991. The court finds that Carson’s plain reading and application to
the facts is a reliable method.
After a careful review of the record, the court concludes that Carson’s
expert testimony is reliable. In making his ultimate conclusions, Carson relied
on his own expertise in the field of storage structures, the collective expertise of
other engineers at his firm, his past experiences of structure failures, and his
educational background. Docket 36-1 at 4-5, 14. Sioux Steel can certainly
attack his testimony at trial. See Kuhn, 686 F.3d at 625 (“Vigorous cross
examination, presentation of contrary evidence, and careful instruction on the
burden of proof are the traditional and appropriate means of attacking shaky
but admissible evidence.”). But his testimony will not be excluded based on the
arguments put forth by Sioux Steel.
11
C. Reliability of Carson’s Air Cannons Testimony
Sioux Steel argues that Carson’s opinions and conclusions about air
cannons should be excluded because they are not reliable. Docket 35 at 19.
Sioux Steel’s position is that Carson’s testimony that air cannon firing could be
a potential cause of the Hopper Bin’s collapse is too speculative. Id.
Sioux Steel’s attack on Carson’s opinion is focused on his response
during his deposition. Sioux Steel’s counsel asked Carson, “So it’s not likely?”
(“It’s” refers to a failure caused by the firing of air cannons.) Docket 39-5 at 13.
Carson replied, “Yes.” Id. But this response is taken out of context and should
be read in conjunction with the other parts of Carson’s opinion. Carson stated
that the air cannon mechanism was “less probable than the second mechanism
[rathole] . . . It’s possible but not probable.” Id. When looking at the whole
exchange, the court interprets Carson’s statements to mean that the more
likely cause was the collapse of either an arch or a rathole, “the most probable
cause,” not that failure by air cannons was not possible. See id.
Again, the court considers Sioux Steel’s argument as an attack on
Carson’s conclusion and not his methodology. Sioux Steel argues that expert
testimony “must be stated as being at least ‘probable,’ in other words, more
likely than not.” Docket 35 at 19 (quoting Barrett, 606 F.3d at 984). This
quotation from Barrett relates to proving the causation element of a plaintiff’s
claim, not to the reliability and admissibility of an expert’s testimony. See
Barrett, 606 F.3d at 984. For purposes of a party’s motion to exclude an
expert’s testimony, “the court considers only whether the testimony is
12
admissible and does not consider whether it is sufficient to prove an element in
[the plaintiff’s] case.” O'Neal v. Remington Arms Co., L.L.C., No. 4:11-CV-04182KES, 2016 WL 1465351, at *4 (D.S.D. Apr. 14, 2016).
Instead, the proper standard for determining the reliability of an expert’s
testimony is focused “solely on principles and methodology, not on the
conclusions that they generate.” Daubert, 509 U.S. at 595. “Expert testimony is
inadmissible where . . . it is excessively speculative or unsupported by
sufficient facts.” Barrett, 606 F.3d at 981. But experts can express opinions “so
long as there are sufficient facts already in evidence or disclosed by the witness
as a result of his [or her] investigation to take such [expert opinion] testimony
out of the realm of guesswork and speculation.” Hurst v. United States, 882
F.2d 306, 311 (8th Cir. 1989) (alterations in original) (internal quotations
omitted).
An examination of Carson’s method is required to determine whether
Sioux Steel’s argument has merit. Carson analyzed the Hopper Bin’s failure.
His analysis indicated that the Hopper Bin’s upper portion was under-designed
to meet proper safety factors. Docket 38 ¶ 22. But “it was not under-designed
to the point that failure would be predicted when it was loaded.” Id. Nor did it
fail when it was filled or when it remained full for the next four days. Id. ¶ 23.
Carson opined that even if the upper portions were likely overstressed due to
the gravity-induced loads, “it was not stressed to a point of failure.” Id. Thus,
Carson determined that “loads greater than those imposed by gravity must
13
have been present” meaning a dynamic load caused the Hopper Bin to fail. Id. ¶
24.
Based on Carson’s education, skill, experience, and investigation, he
explained that a dynamic load can develop in a bin from two possible means:
by a collapse of an arch or rathole and by the firing of air cannons. Id. ¶¶ 2526. He opined that the increased pressure from the air cannons on the cylinder
wall could cause a failure. Docket 39-5 at 11.
To justify his inclusion of the air cannon causation possibility, he
reviewed the location of the air cannons and the sequencing of firing the air
cannons. Docket 36-1 at 8-9. The upper cannons fired before the lower ones.
Id. at 9. Carson opined that this process is contrary to “good operating
practice” and cited peer publication. Id. He stated that lower cannons should
always be fired first to have the best chance of collapsing an arch. Id. Instead,
when the upper cannons were fired first, the soymeal became even more
compacted than if the lower cannons were fired first. Id. And this added even
more pressure to the silo’s walls. Id. In addition to his own expertise, Carson
points out that Sioux Steel’s engineer, Kramer, had concerns about the air
cannons on the silo structure. See Docket 39-7. Carson examined the emails
between Kramer and another Sioux Steel employee where Kramer noted that he
was concerned about the eccentric loads that non-free flowing material could
place on the Hopper Bin. See id.; Docket 36-1 at 9. Kramer further voiced his
uncertainty about the “kind of loads the cannons would place on the hopper
structure.” See Docket 39-7; Docket 36-1 at 9. Also, Carson relied on several
14
published articles as well as his own experience in storage bin structures to
form his conclusions.
In Neuharth v. NACCO Materials Handling Group., Inc., this court
excluded part of an expert’s testimony because his testimony and conclusions
were guesswork and speculative. No. CIV. 01-4034-KES, 2002 WL 34700600,
at *4 (D.S.D. Dec. 16, 2002). The expert, Thomas Goodney, did not rely on facts
in evidence nor did he disclose a reliable investigation to support his testimony.
Id. Goodney did not keep written records, did not compile a report, and could
not prove when or where he made his observations. Id. at *3. His statements
were never tested nor subject to peer review or publication, no one knew the
potential rate of error, he did not establish standards to control his
determination, and there was no evidence that his theory was generally
accepted within the relevant community. Id.
Here, Carson’s opinions are in direct contrast to Goodney’s. Carson relied
on facts in evidence and disclosed a reliable investigation to support his
testimony. In Carson’s report, he laid out the numerous materials he reviewed,
all of which are in discovery. Docket 36-1 at 5. He reviewed the documents
produced in discovery (photographs, emails, etc.), a video of the Hopper Bin’s
failure, three different expert reports (Rodney Nohr, Francisco J. Godoy, Mark
R. Duckett), Kramer’s deposition, EP 433, the Australian standards for loads
on bulk solids containers, the European standards pertaining to actions on
structures, and various other published material cited throughout his report.
Docket 36-1 at 6; Docket 36-14.
15
Additionally, Carson’s report disclosed his reliable investigation that
included a viewing and analysis of Agropecuaria’s surveillance video of the
failure and review of Nohr’s initial report of the failure. Docket 36-14. Also,
Carson kept written records and compiled a report. Docket 36-1; Docket 36-14.
His two reports provide evidence of when and where he made his observations
and conclusions. Docket 36-1; Docket 36-14. Carson’s conclusions are natural
extensions of Nohr’s findings, his review of the video, photographs, and other
material, along with his extensive experience of investigating other silo failures.
Though his opinions have not been tested nor subject to peer review, his
opinions are based on his review of other peer reviewed material and his own
publications. See Docket 36-1 at 9-11. Carson cites several publications that
discuss the use of air cannons and the pressures exerted on the structure
when fired. Id. at 9-13. The court does not consider the potential rate of error
because it is not relevant to this inquiry. Doblar, 981 F. Supp. at 1287. Carson
has laid out three standards he used – the European, Australian, and
American engineering codes for loads on containers. Docket 36-1 at 6. Finally,
failure caused by air cannons is generally known and accepted within the
community. Rodney Nohr noted this possible failure in his report. Docket 36-9.
Overall, in Carson’s report, he states, “To a reasonable degree of
engineering certainty, I am of the opinion that failure of the soybean meal silo
was caused by. . .” and then lists the firing of air cannons. Docket 36-1 at 1314. Carson’s conclusions as to air cannons do not amount to guesswork or
speculation. He relied on facts in evidence and disclosed a reliable investigation
16
to support his testimony. As a result, a jury should hear such evidence
because it does meet the Daubert standards.
II.
Sioux Steel’s Motion to Disqualify Carson
An expert does not advocate during litigation but acts as a source of
information and opinion. English Feedlot, Inc. v. Norden Labs., Inc., 833
F. Supp. 1498, 1501 (D. Colo. 1993). “Courts have the inherent power to
disqualify expert testimony, if necessary, to protect privileges, which would be
breached if an expert were to switch sides, and to preserve public confidence in
the fairness and integrity of judicial proceedings.” Chamberlain Group, Inc. v.
Interlogix, Inc., No. 01 C 6157, 2002 WL 653893, at *2 (N.D. Ill. Apr. 19,
2002); see also Sells v. Wamser, 158 F.R.D. 390, 393 (S.D. Ohio 1994) (court
has “inherent power to disqualify an expert witness when a conflict of interest
exists.”); Paul v. Rawlings Sporting Goods Co., 123 F.R.D. 271, 277-78 (S.D.
Ohio 1988) (court can disqualify an expert “under any set of circumstances, or
based upon the application of any particular legal theory” to protect privileges
or the public confidence). Nevertheless, “[d]isqualification is a drastic measure
which courts should hesitate to impose except when absolutely
necessary.” Owen v. Wangerin, 985 F.2d 312, 317 (7th Cir. 1993) (internal
quotation omitted).
A two-part test governs the disqualification determination. United States
v. Salamanca, 244 F. Supp. 2d 1023, 1025 (D.S.D. 2003). First, did the party
have an objectively reasonable belief that a confidential relationship existed?
Id. Second, did that party disclose any confidential information to the expert?
17
Id. The expert need not actually have disclosed any confidential information so
long as “the expert's contact with the opposing party has created a risk of
improper disclosure of such communications.” Sells, 158 F.R.D. at 394. The
party seeking the disqualification bears the burden of proving confidentiality
and its non-waiver. English Feedlot, 833 F. Supp. at 1501-02.
To satisfy the first part of the test, Sioux Steel must prove it had an
objectively reasonable belief that a confidential relationship existed between it
and Carson. Salamanca, 244 F. Supp. 2d at 1025. “Courts have found such a
relationship to exist when the record supports a long-standing series of
interactions, which have more likely than not coalesced to create a basic
understanding of the retaining party's modus operandi, pattern of operations,
decision-making process, and the like.” Larson v. Rourick, 284 F. Supp. 2d
1155, 1156-57 (N.D. Iowa 2003) (citing Koch Ref. Co. v. Jennifer L. Boudreau
M/V, 85 F.3d 1178, 1182 (5th Cir. 1996)). Factors courts look at include: the
number of meetings between the expert and the moving party, formal retention,
a request to prepare an opinion, a request to sign a confidentiality agreement,
or the supplying of specific data relevant to the case. Northbrook Digital LLC v.
Vendio Servs., Inc., No. CIV.07-2250PJS/JJG, 2009 WL 5908005, at *2 (D.
Minn. Aug. 26, 2009); Larson, 284 F. Supp. 2d at 1157. But in circumstances
where the expert only performs an initial consultation, the party generally
cannot claim a reasonable expectation of a confidential relationship. Northbrook
Digital LLC, No. CIV.07-2250PJS/JJG, 2009 WL 5908005, at *2.
18
Sioux Steel requests the court to use its inherent authority to disqualify
Carson. Docket 35 at 1-2. Sioux Steel argues that Carson should be barred
from testifying because Carson’s engineering firm, Jenike & Johanson, Inc. (J
& J), received confidential information from Sioux Steel regarding the issues of
this case prior to the lawsuit being filed. Id. at 1. Sioux Steel alleges that
Carson has misused its confidential information to the detriment of Sioux
Steel. Id.
Sioux Steel relies heavily on this court’s holding in Salamanca. Id. at 21.
But its reliance is misplaced. Salamanca is factually distinguishable from the
present case. As noted by this court in Salamanca, “this case differs from other
cases because it does not involve one party’s discussion with an expert whom
the opposing party later retains.” Salamanca, 244 F. Supp. 2d at 1025. The
present case differs from Salamanca because it involves one party’s discussion,
Sioux Steel, with an expert, Carson, whom the opposing party, KC Engineering,
later retained.
Here, Deadwood Canyon Ranch, LLP v. Fidelity Exploration & Production
Co. provides more guidance. No. 4:10-CV-081, 2013 WL 11971254, at *4
(D.N.D. July 15, 2013). The court did not disqualify the witness. Id. The record
lacked any reasonable basis for the moving party to reasonably believe a
confidential relationship existed between it and the expert. Id. Deadwood
Canyon did not retain the expert to perform any services, did not pay the
expert, and there was no confidentiality agreement. Id.; see also, e.g., Mays v.
Reassure Am. Life Ins. Co., 293 F. Supp. 2d 954, 957 (E.D. Ark. 2003) (finding
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no confidential relationship existed when the moving party did not provide the
expert with any specific facts about the case, did not provide confidential
documents for review, and did not discuss any critical litigation strategies
during the single meeting where they only discussed possible representation).
There is nothing in the record that demonstrates that Sioux Steel had an
objectively reasonable belief that a confidential relationship existed between it
and Carson. Though Sioux Steel may have subjectively believed such a
relationship existed, that is not enough to disqualify Carson. Docket 45-1 ¶ 4.
See Northbrook Digital LLC, No. CIV.07-2250PJS/JJG, 2009 WL 5908005, at *3
(allowing the expert to testify because aside from the subjective beliefs of the
moving party, the record offers no support for the existence of a confidential
relationship).
Here, there was no meeting between Sioux Steel and Carson. Docket 361 at 13. Instead, Sioux Steel had a brief (a total of three) email exchange with a
J & J consultant and a phone conversation with a J & J engineer. Id. The court
considers these communications equivalent to an initial consultation between
Carson’s firm and Sioux Steel. Additionally, there was no payment for any
services nor was a confidentiality agreement discussed or signed. Docket 36-10
at 13. J & J did not draft or send a proposal to Sioux Steel. Docket 38-1. Plus,
Sioux Steel did not retain J & J to review its design. Id.
A total of four interactions occurred. Id. ¶ 7. None of which personally
involved Carson. Id. ¶ 3. Carson only became aware of Sioux Steel and his
firm’s brief encounter after he was contacted by KC Engineering to be retained
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as an expert and ran a conflicts check. Id. ¶¶ 4, 11. Carson has no personal
knowledge of the documents, plan, and/or designs sent by Kramer to J & J. Id.
¶ 8. The only information retained by J & J are entries in the phone log that
summarize what each encounter was about. Docket 38-1. There was no other
communication between J & J and Sioux Steel after these four interactions. Id.
¶ 10.
Sioux Steel’s allegation that a confidential relationship existed between it
and J & J would go against the very rationale this rule promotes. Kramer
stated that he reached out to more than one firm to see if there was any
interest in doing a design review. Docket 45-1 ¶ 3. Kramer stated in his
affidavit, “[A]nytime I contact an outside firm with respect to work on a new
design, I understand that the information communicated is proprietary, and
expect that it will remain confidential.” Id. ¶ 4. If this court would disqualify
Carson because of Sioux Steel’s reaching out to J & J for a potential job, the
court would likely have to disqualify every engineering expert from all firms
Sioux Steel contacted in its search for a firm to review its design based on
Kramer’s subjective belief that his inquiry was considered confidential. Such a
belief is not reasonable, especially in the context of contacting several firms in
the search for a firm to do a design review.
The interactions between Sioux Steel and J & J cannot be considered a
confidential relationship. There was no personal meeting between the parties,
the communications were limited in time, the discussions were limited to the
topic of retention, and confidentiality was never mentioned. It would not have
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been objectively reasonable for Sioux Steel to believe that a confidential
relationship formed during these initial consultations. Thus, Sioux Steel has
failed to meet its burden under the first prong of the test.
Because Sioux Steel has failed to satisfy the first prong of the test, the
court does not need to analyze the second prong. See Northbrook Digital LLC,
No. CIV.07-2250PJS/JJG, 2009 WL 5908005, at *3. Sioux Steel’s motion to
disqualify Carson is denied.
CONCLUSION
The court concludes that Carson’s proffered testimony is reliable.
Therefore, his testimony will not be excluded. The court also finds that Sioux
Steel did not have an objectively reasonable belief that a confidential
relationship existed between it and Carson. Thus, Carson will not be
disqualified as an expert under to the court’s inherent authority.
Thus, it is
ORDERED that Sioux Steel’s motion to exclude and disqualify KC
Engineering’s expert witness (Docket 34) is denied.
Dated September 19, 2018.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE
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