Plastronics Socket Partners, Ltd. et al v Dong Weon Hwang et al

Filing 264

MEMORANDUM ORDER re 205 SEALED MOTION TO STRIKE EXPERT REPORTS OF JAMES WOODS, PHD AND PRECLUDE TESTIMONY filed by Plastronics Socket Partners, Ltd., Plastronics H-Pin, Ltd... Signed by Magistrate Judge Roy S. Payne on 5/20/2019. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
PLASTRONICS SOCKET PARTNERS, §
LTD. ET AL,
§
§
§
Plaintiffs,
§
§
v.
§
§
DONG WEON HWANG ET AL,
§
Defendants.
§

Case No. 2:18-CV-00014-JRG-RSP

MEMORANDUM ORDER
Plaintiffs Plastronics Socket Partners, Ltd. (“Plastronics Socket”) and Plastronics
H-Pin, Ltd. (“Plastronics H-Pin”) (collectively, “Plastronics”) filed an Opposed Motion to
Strike Expert Reports of James Woods, which is now before the Court. (Dkt. No. 205.)
This Motion seeks to strike portions of Woods’ reports and exclude testimony regarding:
(1) non-infringing substitutes and the relevant market under Panduit factor two; (2)
manufacturing and marketing capacity under Panduit factor three; (3) the economic impact
of the 2012 divisive merger between Plastronics Socket and Plastronics H-Pin; and (4)
assumptions used by Woods regarding disputed terms of the contracts in question to
structure his damages calculations. After consideration, the Court DENIES Plaintiffs’
Motion.
I.

APPLICABLE LAW
Rule 702 of the Federal Rules of Evidence governs the admissibility of expert

testimony and provides
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[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.
“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.” Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.
579, 596 (1993). Questions about the bases and sources of an expert’s opinion generally
relate to the weight that should be given to that opinion rather than the opinion’s
admissibility. Primrose Operating Co. v. Nat'l Am. Ins. Co., 382 F.3d 546, 562 (5th Cir.
2004).
Rule 703 of the Federal Rules of Evidence provides that
[a]n 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.
In determining whether a patentee is entitled to lost profits, “[o]ne useful, but nonexclusive method to establish the patentee’s entitlement to lost profits” is the Panduit test,
which is set forth in Panduit Corp. v. Stahlin Brothers Fibre Works, Inc., 575 F.2d 1152,
1156 (6th Cir. 1978)). Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1241
(Fed. Cir. 2017) (quoting Mentor Graphics Corp. v. EVE-USA, Inc., 851 F.3d 1275, 1284
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(Fed. Cir. 2017)). “The Panduit test requires the patentee to show: (1) ‘demand for the
patented product’; (2) ‘absence of acceptable noninfringing substitutes’; (3)
‘manufacturing and marketing capability to exploit the demand’; and (4) ‘the amount of
profit that . . . would have [been] made.’” Georgetown Rail, 867 F.3d at 1241 (quoting
Panduit, 575 F.2d at 1156).
II.

ANALYSIS
a. Woods’ opinions about non-infringing substitutes and the relevant
market under Panduit factor two
Woods’ opinions about the presence of non-infringing substitutes and the relevant

market under Panduit factor two should not be excluded. Chase Perry provided a report for
Plaintiffs opining that the H-Pin market is a two-player market. (See Dkt. No. 210-1 at 12–
13 (“[S]ales of Accused Devices and sockets with Accused Devices by Defendants are
sales lost by Plaintiffs.”).) Woods is attempting to rebut Perry’s opinions in Woods’
rebuttal report. (Dkt. No. 205-2 at 9–14.)
Plaintiffs assert that Woods “fails to base his opinion on reliable facts.” (Dkt. No.
205 at 4.) Plaintiffs assert that Woods did not conduct an independent investigation into
the products offered by other participants in the market or consult with other technical
experts on the issue of non-infringing substitutes. (Id.) Plaintiffs later assert that Woods
relied entirely upon conversations with others and that he did not perform any of his own
research, making his opinions on this issue unhelpful to the jury. (Dkt. No. 231 at 2.)
Woods’ testimony on these issues is sufficiently reliable. Defendants state that
Woods relied conversations with Defendant Hwang and Defendants’ Expert Paul
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Schubring, who have substantial experience in the relevant market, and Plaintiffs have not
challenged the experience of Hwang or Schubring. (Dkt. No. 220 at 5.) It was reasonable
for Woods to rely on these conversations in forming his opinions under Rule 703 of the
Federal Rules of Evidence. The Court concludes that Woods’ testimony will be helpful to
the jury—Defendants state that Woods relied upon his own research, reviewed of hundreds
of Plastronics’ documents, and sat through a deposition of Plastronics’ 30(b)(6)
representative in the discussion of the relevant market and non-infringing substitutes. (Dkt.
No. 220 at 6.) Further, Woods’ rebuttal report itself contains sufficient support for his
conclusions to permit him to testify. (Dkt. No. 205-2 at 9–14.) Consequently, Woods is
permitted to testify on non-infringing substitutes at trial, and Plaintiffs are free to challenge
Woods opinions through cross-examination.
b. Woods’ opinions about Plastronics H-Pin’s manufacturing and
marketing capacity under Panduit factors three
Woods’ opinions about Plastronics H-Pin’s manufacturing and marketing capacity
under Panduit factor three should not be excluded. Defendants earned substantial profits
on the accused product in 2015, and Plaintiffs’ Expert, Chase Perry, asserts that Plaintiffs’
are entitled to all of this money as lost profits. (Dkt. No. 210-1 at 12–13 (“[S]ales of
Accused Devices and sockets with Accused Devices by Defendants are sales lost by
Plaintiffs.”).) Woods contends that Plastronics H-Pin “did not have sufficient
manufacturing capacity to make all the sales Mr. Perry alleges it would have made.” (Dkt.
No. 205-2 at 15.) To support this contention, Woods highlights a statement in Perry’s report
that “Mr. Pfaff and Mr. Furman confirmed that Plastronics H-Pin has not had any
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constraints on its ability to manufacture and sell two to three times as many additional units
during the damages period.” 1 (Dkt. No. 205-2 at 15 (citing Dkt. No. 210-1 at App. 0014).)
Woods then attempts to show that even if Plaintiffs sold three times as many additional
units during the damages period as Pfaff stated that Plaintiffs could, then this figure would
still be less than the final lost profits value reached by Perry for 2015. (Dkt. No. 205-2 at
15–16.)
Plaintiffs argue that Woods has no background in engineering or product
manufacturing to render any opinion about manufacturing capabilities on his own and that
he is therefore unqualified to provide opinions regarding Plaintiffs manufacturing capacity.
(Dkt. No. 205 at 5.) Plaintiffs also argue that Woods did not undertake a meaningful
investigation into this matter and did not consult other witnesses with knowledge of
Plaintiffs’ factories, personnel, raw material inventory or other technical knowhow. (Id.)
In their Reply, Plaintiffs argue that by performing rote arithmetic, Woods calculation is not
helpful to the jury. (Dkt. No. 231 at 3.)
Woods, having a background in economics, is sufficiently qualified to conduct this
analysis. The Court also concludes that this calculation is helpful to the jury—Woods
identifies the appropriate data to be used in the calculations and then calculates resulting
damages using that data and deductive reasoning from Mr. Pfaff’s statements. “There is
not . . . an implicit requirement in Fed. R. Evid. 702 for the proffered expert to make
complicated mathematical calculations.” WWP, Inc. v. Wounded Warriors Family Support,

1

David Pfaff is Plastronics Socket’s CEO, and Larry Furman is the Managing Director of Plastronics Socket. (Dkt.
No. 205-2 at 2.)

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Inc., 628 F.3d 1032, 1040 (8th Cir. 2011) (citing In re Prempro Prod. Liab. Litig., 514 F.3d
825, 831 (8th Cir. 2008) (concluding that an admission of an expert opinion was not an
abuse of discretion where the expert performed calculations utilizing “basic math” and
“simple deductive reasoning”)). Plaintiffs are free to challenge Woods analysis during
cross-examination, but Woods is permitted to provide testimony regarding these opinions
at trial as the opinions are sufficiently reliable.
c. Woods’ opinions regarding the economic impact of the 2012 divisive
merger between Plastronics Socket and Plastronics H-Pin
Plaintiffs seek to strike Section VII of Woods’ opening report, contending that it
improperly opines on the purpose of the 2012 divisive merger. (Dkt. No. 205 at 6–7.) This
section of Woods’ opening report provides an economic analysis of the divisive merger
royalty obligations owed to Hwang. (Dkt. No. 205-1 at 10–14.) Hwang states that “Dr.
Woods will not offer any testimony on [Plastronics Socket’s] intent or purpose.” (Dkt. No.
237 at 3 n.4 (citing Dkt. No. 220 at 9 (“Dr. Woods is not attempting to make a conclusion
regarding Plastronics Socket’s purpose in pursuing the divisive merger.”)).)
Woods is qualified to testify on the economic impact of the divisive merger, and his
report provides sufficient support to make his testimony reliable. Woods should not offer
testimony on Plastronics Socket’s intent or purpose for the divisive merger, but Woods is
permitted to discuss the impact of the divisive merger on royalty obligations owed to
Hwang. The jury is then free to make any inferences that it wishes about the intent or
purpose for the divisive merger from Woods’ testimony. Consequently, the Court will not
strike any portion of his report with respect to this argument.
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d. Woods’ assumptions regarding disputed terms of the contracts in
question that are used to structure his damages calculations
Hwang states that Woods’ report “merely explains the framework he bases his
damages opinion on and then calculates the appropriate damages award under that
framework.” Hwang argues that this explanation is appropriate. (Dkt. No. 220 at 10 (citing
Feld Motor Sports, Inc. v. Traxxas, LP, No. 4:14-CV-463-ALM, 2015 WL 4722144, at *4
(E.D. Tex. Aug. 7, 2015) (“The Court also finds that Edwards' Audit Report does not
contain impermissible legal conclusions. Instead, it states what he believes the damages
would be if Feld's interpretation of the License Agreement prevails at trial.”)).) Plaintiffs
argue that certain sections of Woods’ report improperly attempt to construe disputed
contractual language and that these sections should be excluded. (Dkt. No. 205 at 7–8.)
Woods is not permitted to testify at trial about how the jury should resolve any
disputed contractual interpretation issues, since these issues are questions of law that
should be resolved by the Court. Kona Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595,
604 (5th Cir. 2000). However, Woods is permitted to testify about assumptions that he has
made in calculating damages, even if those assumptions involve his understanding of
relevant contract provisions. Feld Motor Sports, 2015 WL 4722144, at *4. These
assumptions are necessary here to appropriately tie the damages model to the language of
the contract. With this understanding in mind, the Court DENIES Plaintiffs’ Motion with
respect to this argument because Woods’ report is appropriately limited to providing
assumptions for the damages model.

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I.

CONCLUSION
The Court therefore DENIES Plaintiffs’ Motion.
SIGNED this 3rd day of January, 2012.

SIGNED this 20th day of May, 2019.

____________________________________
ROY S. PAYNE
UNITED STATES MAGISTRATE JUDGE

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