Coralli et al v. JPMorgan Chase Bank NA
Filing
93
MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Defendant JPMorgan Chase Bank, N.A.'s Motion to Strike Expert Testimony of Christopher Kelly (Dkt. 48 ) is hereby GRANTED IN PART AND DENIED IN PART. Christopher Kellys expert report i s stricken as to the violation of the Regulation CC claim (Opinion 3).It is further ORDERED that Defendant JPMorgan Chase Bank, N.A.s Motion to Strike Expert Testimony of Barry Bell (Dkt. 49 ) is hereby DENIED. Signed by Judge Amos L. Mazzant, III on 8/2/2016. (baf, )
United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
STING SOCCER OPERATIONS GROUP LP; §
ET. AL.
§
§
v.
§
§
JP MORGAN CHASE BANK, N.A.
§
CASE NO. 4:15-CV-127
Judge Mazzant
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant JPMorgan Chase Bank, N.A.'s Motion to Strike
Expert Testimony of Christopher Kelly (Dkt. #48) and Defendant JPMorgan Chase Bank, N.A.’s
Motion to Strike Expert Testimony of Barry Bell (Dkt. #49). After reviewing the relevant
pleadings, the Court finds that Defendant’s motion to strike Christopher Kelly should be granted
in part and denied in part, and Defendant’s motion to strike Barry Bell should be denied.
BACKGROUND
The above-referenced case arises from Defendant JPMorgan Chase Bank, N.A.’s
(“Defendant” or “JPMC”) August 30, 2013 commencement of closure procedures on Plaintiffs’
deposit accounts. On January 15, 2016, Plaintiffs filed their Second Amended Complaint, in
which they alleged the following claims: (1) conversion; (2) tortious interference—banking; (3)
tortious interference—customers; (4) breach of contract—improper restriction; (5) breach of
contract—privacy policy; (6) wrongful dishonor; (7) violation of regulation CC; (8) business
disparagement; (9) defamation; and (10) negligence (Dkt. #41)1.
On February 2, 2016, Defendant filed its Motion to Strike Expert Testimony, in which it
sought to strike the report and testimony of Christopher Kelly (“Kelly”) (Dkt. #48). On February
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On July 20, 2016, the Court entered its Memorandum Opinion and Order regarding Defendant’s Motion for
Summary Judgment (Dkt. #64) and Plaintiffs’ Motion for Partial Summary Judgment (Dkt. #65). In its order, the
Court dismissed the following claims: (1) conversion; (2) tortious interference—banking; (3) violation of regulation
CC; (4) defamation; and (5) negligence (Dkt. #87).
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19, 2016, Plaintiffs filed their response (Dkt. #57). On February 22, 2016, Defendant filed its
reply (Dkt. #58). On March 10, 2016, Plaintiffs filed their sur-reply (Dkt. #62).
On February 2, 2016, Defendant filed its Motion to Strike Expert Testimony of Barry
Bell (Dkt. #49). The report contained Bell’s qualifications, experience, and opinions concerning
both the causation of financial damages, and amount of damages incurred (Dkt. #49, Exhibit A).
On February 19, 2016, Plaintiffs filed their response (Dkt. #57).
On February 22, 2016,
Defendant filed its reply (Dkt #58). On March 10, 2016, Plaintiffs filed their sur-reply (Dkt.
#62).
LEGAL STANDARD
Federal Rule of Evidence 702 provides for the admission of expert testimony that
assists the trier of fact to understand the evidence or to determine a fact in issue. FED. R. EVID.
702. In Daubert v. Merrell Dow Pharm., Inc., the Supreme Court instructed courts to function as
gatekeepers, and determine whether expert testimony should be presented to the jury. 509 U.S.
579, 590-93 (1993). Courts act as gatekeepers of expert testimony “to make certain that an
expert, whether basing testimony upon professional studies or personal experience, employs in
the courtroom the same level of intellectual rigor that characterizes the practice of an expert in
the relevant field.” Kuhmo Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152 (1999).
The party offering the expert’s testimony has the burden to prove that: (1) the expert is
qualified; (2) the testimony is relevant to an issue in the case; and (3) the testimony is reliable.
Daubert, 509 U.S. at 590-91. A proffered expert witness is qualified to testify by virtue of his or
her “knowledge, skill, experience, training, or education.” FED. R. EVID. 702. Moreover, in
order to be admissible, expert testimony must be “not only relevant but reliable.” Daubert, 509
U.S. at 589. “This gate-keeping obligation applies to all types of expert testimony, not just
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scientific testimony.” Pipitone v. Biomatrix, Inc., 288 F.3d 239, 244 (5th Cir. 2002) (citing
Kuhmo, 526 U.S. at 147).
In deciding whether to admit or exclude expert testimony, the court should consider
numerous factors. See Daubert, 509 U.S. at 594. In Daubert, the Supreme Court offered the
following, non-exclusive list of factors that courts may use when evaluating the reliability of
expert testimony: (1) whether the expert’s theory or technique can be or has been tested; (2)
whether the theory or technique has been subjected to peer review and publication; (3) the
known or potential rate of error of the challenged method; and (4) whether the theory or
technique is generally accepted in the relevant scientific community. Id. at 593-94; Pipitone,
288 F.3d at 244. When evaluating Daubert challenges, courts focus “on [the experts’] principles
and methodology, not on the conclusions that [the experts] generate.” Daubert, 509 U.S. at 595.
The Daubert factors are not “a definitive checklist or test.” Daubert, 509 U.S. at 593. As
the Court has emphasized, the Daubert framework is “a flexible one.” Id. at 594. The test for
determining reliability can adapt to the particular circumstances underlying the testimony at
issue. See Kuhmo, 526 U.S. at 152. Accordingly, the decision to allow or exclude experts from
testifying under Daubert is committed to the sound discretion of the district court. St. Martin v.
Mobil Exploration & Producing U.S., Inc., 224 F.3d 402, 405 (5th Cir. 2000) (citations omitted).
ANALYSIS
Motion to Strike Christopher Kelly (Dkt. #48)
Defendant moves to strike Kelly's report in its entirety and his expert testimony at trial
(Dkt. #48 at p. 1). Defendant argues that Kelly's opinions are improper for the following
reasons: (1) his opinions constitute impermissible legal conclusion; (2) his conclusions are not
sufficiently reliable; and (3) he lacks the necessary qualifications (Dkt. #48 at p. 1).
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Rule 702 requires that an expert witness be qualified. “A district court should refuse to
allow an expert witness to testify if it finds that the witness is not qualified to testify in a
particular field or on a given subject.” United States v. Cooks, 589 F.3d 173, 179 (5th Cir.
2009); see Wilson v. Woods, 163 F.3d 935, 937 (5th Cir. 1999)). However, Rule 702 does not
demand that an expert be highly qualified in order to testify, and “[d]ifferences in expertise bear
chiefly on the weight to be assigned to the testimony by the trier of fact[.]” Huss v. Gayden, 571
F.3d 442, 452 (5th Cir. 2009).
Rule 702 also requires that expert testimony be relevant. “Relevance depends upon
‘whether [the expert’s] reasoning or methodology properly can be applied to the facts in issue.’”
Knight v. Kirby Inland Marine Inc., 482 F.3d 347, 352 (5th Cir. 2007) (quoting Daubert, 509
U.S. at 593). The Fifth Circuit has stated that testimony is relevant when it “assist[s] the trier of
fact to understand the evidence or to determine a fact in issue.” Pipitone, 288 F.3d at 245
(quoting Daubert, 509 U.S. at 591).
Finally, Rule 702 requires that expert testimony be reliable. “Reliability is determined by
assessing ‘whether the reasoning or methodology underlying the testimony is scientifically
valid.’” Knight, 482 F.3d at 352 (quoting Daubert, 509 U.S. at 592-93). When determining
reliability, “[t]he court focuses on the expert’s methodology, not the conclusions generated by
it.” Orthoflex, Inc. v. ThermoTek, Inc., 986 F. Supp. 2d 776, 783 (N.D. Tex. 2013) (citing Nunn
v. State Farm Mut. Auto Ins. Co., No. 3:08-CV-1486-D, 2010 WL 2540754, at *4 (N.D. Tex.
June 22, 2010)). “If, however, ‘there is simply too great an analytical gap between the [basis for
the expert opinion] and the opinion proffered,’ the court may exclude the testimony as
unreliable.” Orthoflex, 986 F. Supp. 2d at 783 (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136,
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146 (1997)); see also Johnson v. Arkema, Inc., 685 F.3d 452, 460-61 (5th Cir. 2012); Moore v.
Ashland Chem. Inc., 151 F.3d 269, 278-79 (5th Cir. 1998).
Defendant first argues that the Court should strike Opinion 1, “[JPMC] failed to comply
with the term of the Deposit Account Agreement (“DAA”) that served as the contract between
[JPMC] and Plaintiffs[,]” because it contains an impermissible legal conclusion (Dkt. #48 at p.
2). Defendant argues that Kelly’s opinion constitute a legal conclusion because it argues that
JPMC breached the DAA (See Dkt. #48 at p. 2). Plaintiffs contend that Kelly is not testifying
that Defendant breached the contract between JPMC and Plaintiffs, rather he testifying as to
disputed factual issues surrounding Defendants alleged breach (Dkt. #57 at p. 9). Plaintiffs argue
that although the ultimate conclusion of breach may be legal question for the Court, what
occurred factually is a question for the jury (Dkt. #57 at p. 9). Plaintiffs assert that this testimony
will assist the jury in understanding business language and normal terms of operation; and is
therefore, critical to determining disputed facts and assessing discrepancies in this case (Dkt. #57
at p. 11).
The Federal Rules of Evidence allow an expert to assert opinions that “embrace an
ultimate issue to be decided by the trier of fact.” FED. R. EVID. 704(a). However, an expert
witness may not offer opinions that amount to legal conclusions. C.P. Interests, Inc. v. Cal.
Pools, Inc., 238 F.3d 690, 697 (5th Cir. 2001); see also Calderon v. Bank of America, N.A., 941
F. Supp. 2d 753, 759-60 (W.D. Tex. 2013) (noting that the law is not a proper subject of expert
opinion testimony). The Fifth Circuit has held that while experts may give their opinions on
ultimate issues, our legal system reserves to the trial judge the role of deciding the law for the
benefit of the jury. Askanase v. Fatjo, 130 F.3d 657, 673 (5th Cir. 1997) (quoting Specht v.
Jensen, 853 F.2d 805, 808-09 (10th Cir. 1988)).
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The Court finds that Opinion 1 does not contain impermissible legal conclusions.
Although the ultimate determination of breach of contract is a question for the court, disputed
facts, surrounding breach of contract, are submitted to the jury. The Court finds that Kelly’s
opinion is admissible because as it pertains to his interpretation of the disputed facts surrounding
JPMC's alleged breach. Therefore, Defendant’s motion to strike should be denied, as to Opinion
1.
Defendant next argues that the Court should strike Opinion 2, “[JPMC] failed to act in a
commercially reasonable manner under the circumstances by restricting the Plaintiffs’
accounts[,]” because it is conclusory (Dkt. #48 at p. 3). Defendant asserts that Kelly does not
cite an industry standard or interviews with other banks in forming his opinions (Dkt. #48 at pp.
3-4). Plaintiffs contend that Kelly has provided an explanation supporting his opinion that
Defendant acted unreasonably based on the timeline of events and actions taken (Dkt. #57 at p.
11). Additionally, Plaintiffs assert that Kelly's commercial reasonableness opinion is based on
his extensive experience and analysis of the facts at issue (Dkt. #57 at p. 12).
A witness’ experience, studies, and education, combined with a review of the relevant
materials can provide a reliable basis for expert testimony. Perez v. City of Austin, No. A-07CA-044 AWA, 2008 WL 1990670, at *10 (W.D. Tex. May 5, 2008); see also Pipitone, 288 F.3d
at 247 (citing Kumho, 526 U.S. at 137 (“no one denies that an expert might draw a conclusion
from a set of observations based on extensive and specialized experience.”)). The Court finds
that this testimony is reliable; and therefore, admissible. Kelly has sufficient experience in the
banking industry relevant to the present case to draw conclusions as to commercial
reasonableness based on his analysis of the facts. "As a general rule, questions relating to the
bases and sources of an expert's opinion affect the weight to be assigned that opinion rather than
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its admissibility and should be left for the jury's consideration." United States v. 14.38 Acres of
Land Situated in Leflore Cty., Miss., 80 F.3d 1074, 1077 (5th. Cir. 1996). The Court further
finds that the Defendant's arguments regarding Kelly's failure to cite industry standard or
interview other banks goes to the weight, rather than to the admissibility of the testimony.
Therefore, the Court finds that Defendant’s motion to strike Opinion 2 should be denied.
Defendant argues that the Court should strike Opinion 3, “[t]he restrictions placed on the
Plaintiffs’ accounts by [JPMC] were not commercially reasonable because they failed to comply
with Fed Regulation CC regarding funds availability and [JPMC’s] own Funds Availability
Policy[,]” because it is an impermissible legal conclusion (Dkt. #48 at p. 5).
In its
Memorandum Opinion and Order on July 20, 2016, the Court dismissed Plaintiffs’ Regulation
CC claim (Dkt. #87). Therefore, Kelly’s opinion as to the Regulation CC claim should be
stricken, as that claim is no longer part of the case. Therefore, Defendant’s motion to strike is
granted, as to Kelly’s opinion regarding the Regulation CC claim.
Defendant next asserts that the Court should strike Opinion 4, “[JPMC] should have been
aware that if the authorities considered Plaintiffs’ accounts to be involved in money laundering
or other illegal activity they would have acted to seize such funds before August 30, 2013[,]” for
the following reasons: (1) Kelly is not qualified to give an opinion as to what "the authorities"
did or would have done; and (2) his opinion is not sufficiently reliable because it is unsupported
by factual analysis (Dkt. #48 at p. 6). Plaintiffs contend that Kelly has sufficient experience
“with respect to bank fraud investigations” to justify his opinions (Dkt. #57 at p. 14). Plaintiffs
assert that Kelly's opinions are supported by a factual analysis based upon his prior experience
(Dkt. #57 at p. 14).
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The Fifth Circuit has held that “[t]o qualify as an expert, the witness must have such
knowledge or experience in [his] field or calling to make it appear that his opinion or inference
will probably aid the trier in his search for truth.” Metzler v. XPO Logistics, Inc., No. 4:13-CV278, 2014 WL 7146108, at *3 (E.D. Tex. Dec. 15, 2014). Where there are reasonable indications
of an expert’s qualifications, the question is no longer one of gatekeeping, but one of fact for the
trier of fact. Boral v. Odyssey Pictures Corp., No. 4:14-CV-00044, 2015 WL 993241, at *2
(E.D. Tex. Mar. 4, 2015). “A lack of personal experience [] should not ordinarily disqualify an
expert, so long as the expert is qualified based on some other factor provided in Rule 702.”
United States v. Wen Chyu Liu, 716 F.3d 159, 168 (5th Cir. 2013). “A lack of specialization
should generally go to the weight of the evidence rather than its admissibility and ‘[v]igorous
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.” Id.
(quoting Daubert, 509 U.S.at 596). The Court finds that Kelly possesses sufficient experience
regarding law enforcement interaction with banks to justify his opinions. Defendant’s arguments
go to the weight to be given Kelly’s testimony, rather than his qualifications.
These are
considerations that should be determined by the trier of fact.
Additionally, the Court finds that Kelly’s opinion is reliable. Kelly’s opinion relates to
disputed facts regarding the justifications of the restrictions on Plaintiffs accounts. The Court
finds that Kelly’s testimony would “assist[s] the trier of fact to understand the evidence or to
determine a fact in issue[,]” and is obtained from his experience within banking industry.
Pipitone, 288 F.3d at 245 (quoting Daubert, 509 U.S. at 591). Therefore, the Court finds that
Kelly’s opinion is reliable; and Defendant’s motion to strike Opinion 4 should be denied.
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After reviewing the relevant pleadings, the Court finds that Defendant’s motion to strike
should be granted in part and denied in part. Kelly’s expert opinion should be stricken only to
the extent that the Court dismissed Plaintiff’s Regulation CC claim.
Defendant’s Motion to Strike Barry Bell (Dkt. #49)
Defendant moves to strike Bell’s testimony as to his opinion regarding causation (Dkt.
#49 at p. 1). Defendant argues that Bell’s opinions are improper because Bell (1) failed to
consider alternate causes of Plaintiffs’ alleged damages; (2) asserted conclusory causation
opinions, which were not supported by any analysis; and (3) did not demonstrate his own
qualifications sufficiently to opine on the causation issue (See Dkt. #49 at p. 1). Plaintiffs assert
that Bell considered other possible causes of the alleged damages, performed a thorough
causation analysis, and he is fully qualified to opine on the issue of causation (Dkt #57 at pp. 27).
First, Defendant argues that Bell’s testimony should be stricken because Bell failed to
consider alternate causes of the Plaintiffs’ alleged financial damages, specifically Plaintiff Brent
Coralli’s (“Coralli”) felony conviction in 2013 (Dkt. #49 at p. 2). Plaintiffs assert that the
timeline of events eliminates the felony conviction as a possible cause of damages (Dkt. #57 at
pp. 4-5). Plaintiffs argue that Coralli’s guilty plea was accepted in January and February of
2013, and his legal issues were well known within the soccer community by May 2013, due to a
news coverage (Dkt. #57 at p. 5). Plaintiffs further contend that their membership issues did not
occur until a year later in July of 2014 (Dkt. #57 at p. 5). Defendant’s argument is similar toa
that in Chisesi Brothers Meat Packing Co., Inc. v. Westchester Surplus Lines Insurance Co., No.
09-6523, 2010 WL 3720465, at *4 (E.D. La. Sept. 9, 2010). In Chiesi Brothers, the district court
found that an expert’s opinion that a hurricane was the cause of damage done to a roof was
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admissible, even though it assumed the hurricane was the cause of the damage. The district court
reasoned that, “[e]limination of alternative possibilities is one method of arriving at a result
reliably, but it is not the only method.” Id. at 4.
The Court finds that Bell’s failure to consider Plaintiff’s criminal conviction does not
render his opinion as to causation inadmissible under the circumstances. "As a general rule,
questions relating to the bases and sources of an expert's opinion affect the weight to be assigned
that opinion rather than its admissibility and should be left for the jury's consideration." United
States v. 14.38 Acres of Land Situated in Leflore Cty., Miss., 80 F.3d 1074, 1077 (5th. Cir. 1996).
Defendant’s argument goes to the weight to be given Bell’s testimony, which should be left to
the trier of fact. Therefore, the Court finds that Bell’s testimony should not be stricken.
Defendant further argues that Bell’s causation testimony should be stricken because it
does not include sufficient analysis (Dkt. #49 at p. 3). Plaintiffs contend that Bell’s causation
finding is grounded in the evaluation of the factual testimony of persons within Plaintiffs’ youth
soccer organization, as well as the analysis of the organizations financial records (Dkt. #57 at p.
6). Upon reviewing Bell’s report, the court finds that the financial analysis provided, coupled
with facts gathered via his interview of organization personnel, is sufficiently reliable to admit
his testimony as to causation pursuant to the Federal Rule of Evidence 702. FED. R. EVID 702.
Therefore, the Court finds that Bell’s testimony should not be stricken on these grounds.
Finally, Defendant argues that Bell’s opinion should be stricken because Bell is not
qualified to render an opinion about the cause of the alleged damages (Dkt. #49 at p. 2).
Specifically, Defendant points out that Bell does not have experience in either the youth soccer
business or financial services industry (Dkt. #49 at p. 2). However, the Court finds that Bell is
sufficiently qualified to render an opinion regarding damages. Bell holds a Master’s degree in
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Business Administration (“MBA”) from Southern Methodist University, has over twenty years
of experience analyzing damages in commercial litigation matters, and has given several
presentations on the subject of financial damages (Dkt. #49, Exhibit A at pp. 29-34). The Court
finds that Bell has demonstrated adequate experience, education, training, skill, and knowledge,
to be considered qualified to testify pursuant to Rule 702. FED. R. EVID. 702. The Court’s gatekeeping function under Daubert is not intended to replace the adversarial system and the jury’s
responsibility to evaluate and weigh the evidence presented by each party’s experts.
See
Daubert, 509 U.S. at 596 (“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.”); see also 14.38 Acres of Land Situated in Leflore Cty., Miss.,
80 F.3d at 1078 (The trial court must act “with proper deference to the jury’s role as the arbiter
of disputes between conflicting opinions. As a general rule, questions relating to the bases and
sources of an expert’s opinion affect the weight to be assigned that opinion rather than its
admissibility and should be left for the jury’s consideration.”). Therefore, the Court finds that
Defendant’s motion to strike Barry Bell is denied.
CONCLUSION
It is therefore ORDERED that Defendant JPMorgan Chase Bank, N.A.'s Motion to
Strike Expert Testimony of Christopher Kelly (Dkt. #48) is hereby GRANTED IN PART AND
DENIED IN PART. Christopher Kelly’s expert report is stricken as to the violation of the
Regulation CC claim (Opinion 3).
It is further ORDERED that Defendant JPMorgan Chase Bank, N.A.’s Motion to Strike
Expert Testimony of Barry Bell (Dkt. #49) is hereby DENIED.
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SIGNED this 2nd day of August, 2016.
___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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