Musket Corporation v. Suncor Energy (U.S.A.) Marketing, Inc.
ORDER DENYING 74 Sealed motion to exclude expert testimony of Doug Lumry. (Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
SUNCOR ENERGY (U.S.A.)
October 18, 2016
David J. Bradley, Clerk
CIVIL ACTION H-15-100
Pending before the court is defendant Suncor Energy (U.S.A.) Marketing, Inc.’s (“Suncor”)
motion to exclude the expert testimony of Doug Lumry. Dkt. 74. Suncor argues that Lumry’s expert
testimony should be excluded because Lumry failed to both file an expert report and provide
sufficient basis for his testimony. Dkt. 74 at 2. After reviewing the motion, response, reply, and
applicable law, the court is of the opinion that Suncor’s motion to exclude should be DENIED.
This is a breach of contract case. Dkt. 74 at 1. Suncor and plaintiff Musket Corporation
(“Musket”) entered into an agreement under which Suncor would supply crude oil to Musket via
Musket’s Windsor Terminal. Id. Musket filed a breach of contract claim in January 2015 asserting
that Suncor failed to deliver the agreed upon quantities of crude oil. Dkt. 1 at 2–3. Suncor filed a
breach of contract counterclaim asserting that Suncor performed but that Musket was not capable
of receiving the agreed-upon quantities of crude oil volumes from Suncor. Dkt. 12 at 6–9.
The instant motion concerns whether to exclude the testimony of Musket’s expert witness,
Doug Lumry. Dkt. 74. Lumry is a Musket employee who serves as general manager of Musket’s
crude and rail operations. Lumry Dep. 8:12-14. In its expert witness disclosure, Musket designated
Lumry as a non-retained expert witness. Dkt. 85, Ex. A at 6. In this disclosure, Musket stated that
it expected Lumry to give expert testimony relating to:
(1) Musket’s efforts to lease, mobilize and manage the logistics of
providing rail cars to the Windsor Terminal;
(2) rail equipment leasing and logistics, including:
(2.1) the reasonableness of these efforts and
(2.2) how these efforts compare to those in other crude oil loading
(3) the track layout at the Windsor Terminal.
Suncor claims that Lumry’s expert testimony concerning “Musket’s performance at the
Windsor Terminal and how its performance compares to other crude oil facilities” is impermissible
because: (1) Lumry provided no expert report pursuant to the court’s scheduling order, and
(2) Lumry failed to provide a basis for his opinions in either Musket’s expert designation or his
deposition testimony and is therefore unqualified under Rule 702. Id.
In response, Musket argues first that Lumry is a non-retained expert witness and as a result
is exempt from the expert report requirement under Rule 26(a)(2)(C). Dkt. 85 at 2. Musket claims
that the court’s scheduling order “does not differ from Rule 26(a)(2)(C) and require a report for nonretained experts” where the rule does not. Id. Second, Musket contends that Lumry provided the
basis for his expert opinions through his deposition examination and that he is qualified to testify
as an expert based on his “vast experience, knowledge, training and education on matters relating
to the rail-road aspects of crude-loading terminals.” Id.
Suncor replies that Musket misapplies the law in claiming that the parties’ scheduling order
does not require a non-retained expert to submit an expert report. Dkt. 93 at 1 (citing Carr v.
Montgomery Cty. Tex., Civ. No. H-13-2795, 2015 WL 5838862 (S.D. Tex., Oct. 7, 2015)). Suncor
claims that the scheduling order required Lumry to explain the basis of his opinions at the time of
his designation as an expert witness rather than waiting for his deposition. Id. at 2. As a result,
Suncor reaffirms its argument that Lumry should be excluded as an expert witness because he
(1) failed to provide an expert report disclosing the bases for his opinions at the time of his
designation, and (2) under Rule 702, he is unqualified to testify as an expert on Musket’s Windsor
Terminal operation and capacity issues. Id. at 2-3.
II. FAILURE TO COMPLY WITH THE COURT’S SCHEDULING ORDER
A. Legal Standard
Federal Rule of Civil Procedure 26(a)(2) requires a party to disclose the identity of its expert
witnesses to the other parties. Fed. R. Civ. P. 26(a)(2)(A). This rule distinguishes between expert
witnesses required to submit a written report and those not required to submit a written report.
Fed. R. Civ. P. 26(a)(2)(B-C). Expert witnesses required to submit a written report are those
“retained or specially employed to provide expert testimony in the case or one whose duties as the
party’s employee regularly involve giving expert testimony.” Fed. R. Civ. P. 26(a)(2)(B). All other
expert witnesses are not required to provide a report. Fed R. Civ. P. 26(a)(2)(C).
Suncor argues that Lumry’s expert testimony should be struck because he failed to file an
expert report pursuant to this court’s scheduling order and Rule 26. Dkt. 74 (citing Dkt. 56; Fed. R.
Civ. P. 26). It contends that when an expert fails to comply with court orders his testimony should
be excluded. Id. at 2 (citing Wright v. Nelson, No. CivA399CV2522D, 2001 WL 804529, *2 (N.D.
Tex. July 10, 2011)). Specifically, Suncor argues that when a court orders an expert report and none
is provided, then that expert’s testimony should be struck. Id. (citing Anderson v. Sharp, 192 F.3d
127, 127 (5th Cir. 1999)). Suncor also contends that a failure to provide a basis for an expert’s
opinion when ordered by the court serves as another ground for excluding an expert witness’s
testimony. Id. at 2-3 (citing Sierra Club v. Cedar Point Oil Co., 73 F. 3d 546, 579 n.46 (5th Cir.
1996)). Suncor concludes that because Lumry failed to file an expert report and because he failed
to include any basis for his expert opinions, Musket violated the court’s scheduling order and as a
result Lumry’s testimony should be struck. Id. at 3.
In its response, Musket argues that Lumry was not required to produce an expert report
because he was a fact witness and a non-retained expert witness. Dkt. 85 at 4. It notes that
Rule 26(a)(2)(C) specifically exempts non-retained experts from the expert report requirement. Id.
(citing Fed. R. Civ. P. 26(a)(2)(C)). Musket contends that Suncor is really claiming that the court’s
scheduling order displaces the Federal Rules of Civil Procedure, requiring an expert report for nonretained experts when the Federal Rules do not. Id. Musket cites two cases from this court that
differentiated between reporting requirements for retained and non-retained expert witnesses and had
similar scheduling orders. Id. at 4 & n.6 (citing Carr, 2015 WL 5838862, at *2; Velasquez v. Danny
Herman Trucking, Inc., Civ. No. H-14-2791, 2015 WL 8764271 (S.D. Tex., Dec. 15, 2015)).
Musket argues that Lumry has been an employee of Musket for eleven years and does not regularly
give testimony in legal proceedings. Dkt. 85 at 5. It notes that Lumry did not receive compensation
for his role as expert witness and that this is his first occasion serving as an expert witness. Id. As
a result, Musket contends that Lumry is clearly excused from producing an expert report under
Rule 26 and the court’s scheduling order. Id.
In their reply, Suncor claims that Musket misapplies Carr and that it does not serve as a
precedent for the division of expert witnesses in the Federal Rules overriding this court’s scheduling
order. Dkt. 93 at 2 (citing 2015 WL 5838862, at *3). It also claims that Musket disregards the
language of the scheduling order requiring all experts to provide the basis for their opinions in their
designations. Dkt. 93 at 2. Suncor reaffirms its argument that because Lumry failed to file an expert
report and to provide a basis for his opinions in accordance with the court’s scheduling order, his
expert testimony should be struck. Id.
The court’s scheduling order is entered pursuant to Federal Rule of Civil Procedure 16(b),
which permits courts to enter a scheduling order that modifies the timing of disclosures under
Rule 26(a) and 26(c)(1). Fed. R. Civ. P. 16(b)(3)(B). The court’s scheduling order requires the
plaintiff and counter-plaintiff to identify their expert witnesses by “a report listing the qualifications
of each expert, each opinion the expert will present, and the basis for each opinion” by April 5, 2016.
Dkt. 56. In identical language, the scheduling order also requires the defendant and counterdefendant to identify their expert witnesses by May 3, 2016. Dkt. 56.
Rule 26(a)(2)(B) requires an expert witness to submit a written report if he or she is “one
retained or specially employee to provide expert testimony in the case or one whose duties as the
party’s employee regularly involve giving expert testimony.”
Fed. R. Civ. P. 26(a)(2)(B).
Rule 26(a)(2)(C) exempts all expert witnesses not meeting the above characteristics listed in
Rule 26(a)(2)(B) from the written report requirement. Fed. R. Civ. P. 26(a)(2)(C). Rule 26(a)(2)(D)
requires that “absent a stipulation or a court order, the disclosures must be made . . . at least 90 days
before the date set for trial or for the case to be ready for trial.” Fed. R. Civ. Pro. 26(a)(2)(D). The
court’s scheduling order in accordance with Rule 16(b) is intended solely for scheduling reports of
experts who are required to file reports under Rule 26(a). Fed. R. Civ. P. 16(b) (listing permissible
extent of a Rule 16(b) scheduling order).
Lumry is an employee of Musket who has never served as an expert witness before. Lumry
Dep. 15:15-16:22. As such, he is exempt from the expert report requirement under Rule 26(a)(2)(C).
Fed. R. Civ. Pro. 26(a)(2)(C). Musket complied with the court’s scheduling order by identifying
Lumry in its expert designation report. Dkt. 85. Ex. A, at 6. In its expert designation, Musket also
presented the bases for Lumry’s expert opinions as his “over 30 years of transportation experience,”
as required by Rule 26(a)(2)(C). Id. Accordingly, Suncor’s motion to exclude for failure to provide
an expert report is DENIED.
III. IMPERMISSIBLE UNDER RULE 702
A. Legal Standard
The Supreme Court of the United States acknowledged in Daubert v. Merrell Dow
Pharmaceuticals that Federal Rule of Evidence 702 serves as the proper standard for determining
the admissibility of expert testimony. Daubert v. Merrell Dow Pharms., 509 U.S. 579, 597–98,
113 S. Ct. 2786 (1993). Rule 702 provides:
A witness who is qualified as an expert by knowledge, experience,
training, or education may testify in the form of an opinion or
(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;
(d) the expert has reliably applied the principles and methods to the
facts of the case.
Fed. R. Evid. 702. Under Daubert, a trial court acts as a “gatekeeper,” making a “preliminary
assessment of whether the reasoning or methodology properly can be applied to the facts in issue.”
Daubert, 509 U.S. at 592–93; see also Kumho Tire v. Carmichael, 526 U.S. 137, 147, 119 S. Ct.
1167 (1999); Pipitone v. Biomatrix, Inc., 288 F.3d 239, 243–44 (5th Cir. 2002). Daubert and its
principles apply to both scientific and non-scientific expert testimony. Kumho Tire, 526 U.S. at 147.
Experts need not be highly qualified to testify, and differences in expertise go to the weight of the
testimony, rather than admissibility.
Huss v. Gayden, 571 F.3d 442, 452 (5th Cir. 2009).
Nonetheless, courts need not admit testimony that is based purely on the ipse dixit of the expert.
Gen. Elec. Co. v. Joinder, 522 U.S. 136, 146, 118 S. Ct. 512 (1997); Moore v. Ashland Chem. Inc.,
151 F.3d 269, 276 (5th Cir. 1998).
In addition to being qualified, an expert’s methodology for developing the basis of his or her
opinion must be reliable. Daubert, 509 U.S. at 592–93; Moore, 151 F.3d at 276. “The expert’s
assurances that he has utilized generally accepted scientific methodology is insufficient.” Moore,
151 F.3d at 276. Even if the expert is qualified and the basis of her opinion is reliable, the
underlying methodology must have also been correctly applied to the case’s particular facts in order
for her testimony to be relevant. Daubert, 509 U.S. at 593; Knight v. Kirby Inland Marine Inc.,
482 F.3d 347, 352 (5th Cir. 2007). The party proffering expert testimony has the burden of
establishing by a preponderance of the evidence that the challenged expert testimony is admissible.
See Fed. R. Evid. 104(a); Moore, 151 F.3d at 276. The proponent does not have to demonstrate that
the testimony is correct, only that the expert is qualified and that the testimony is relevant and
reliable. Moore, 151 F.3d at 276.
Suncor argues that Lumry is unqualified to testify to the reasonableness of Musket’s
performance regarding other crude oil loading terminals. Dkt. 74 at 3. It contends that Lumry’s
testimony is not the “product of reliable principles and methods” and that he has not “reliably applied
[these] principles and methods to the facts of the case.” Id. (citing Fed. R. Evid. 702). Suncor points
to the court’s role as a gatekeeper between the expert and the jury and the court’s responsibility for
determining the admissibility of an expert’s testimony. Id. (quoting Kumho Tire Co., 526 U.S.
at 152 (“The key function of the court in assessing admissibility is ‘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”)). Suncor claims that Lumry bases his testimony only on his experience with Musket
and “some general education courses unrelated to direct experience with other crude-by-rail
facilities.” Dkt. 74 at 4. Suncor argues that non-direct experience and education alone are
insufficient bases because they are unreliable and without “objective, independent validation.” Id.
(quoting Texokan Operating, Inc. v. Hess Corp., 89 F. Supp. 3d 903, 908 (S.D. Tex. 2015)). In
addition, Suncor contends that Lumry simply assures the accuracy of his expert testimony without
providing a reliable basis beyond his experience, education, and industry association involvement.
Id. Because “mere assurances by an expert witness as to the accuracy of his own methods or results,
in the absences of other credible supporting evidence, is [sic] insufficient,” Suncor concludes that
Lumry’s expert testimony is impermissible. Id. (quoting Castello v. Chevron USA, 97 F. Supp. 2d
780, 792 (S.D. Tex. 2000)).
Musket responds by arguing that Lumry provides sufficient bases for his opinions in his
deposition testimony. Dkt. 85 at 9. Musket argues that Lumry has over thirty years of transportation
experience, involving both carriers and shippers, and relating to rail, truck, and barge logistics.
Dkt. 85 at 9. Musket notes that in his testimony, Lumry stated he was involved with the “design and
layout of diesel and ethanol terminals” and discussed the similarities between these types of
terminals and crude-by-rail terminals. Id. at 9-8. Musket argues that Suncor “intentionally narrows
Lumry’s testimony” and ignores the extent of the deposition testimony. Id. at 10-11. It notes that
Lumry provided other bases for his testimony beyond his experience at Musket. Id. at 11 (citing
Lumry Dep. 140:17–141:13). Musket contends that Lumry’s deposition testimony makes it clear
that he relies on the full breadth of his experience to reach his opinions rather than just his time at
Musket. Id. at 12.
In addition, Musket contends that Suncor’s arguments relate to the weight the jury should
give Lumry’s testimony rather than its admissibility. Id. As a gatekeeper, Musket claims, the district
court’s duty is “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 on the relevant field.” Id. (citing Pipitone, 288 F.3d at 244).
According to Musket, the advisory committee’s notes for Rule 702 contemplate that experience may
be a sufficient basis for an expert witness testimony. Id. It also cites the U.S. Supreme Court’s
holding in Kumho Tire that “an expert might draw a conclusion from a set of observations based on
extensive and specialized experience.” Id. (citing Kuhmo Tire Co., 526 U.S. at 156). Regardless,
Musket argues that the factual basis of an expert’s opinion generally relates to the weight the jury
should give it and not its admissibility. Id. at 13. Musket contends the court’s role as gatekeeper
does not replace the adversarial system. Id. Instead, Suncor has the option of “vigorous crossexamination, presentation of contrary evidence, and careful instruction of the burden of proof [to the
jury]” as methods of attacking expert testimony. Id. (quoting Daubert, 509 U.S. at 596). Musket
concludes that Lumry is qualified to present his expert testimony on the bases he described in his
deposition. Id. Regardless, Musket contends that questions concerning an expert witness’s basis
for his opinions affect the weight a jury should give to that expert’s testimony and not its
admissibility. Id. (citing Elliot v. Amadas Indus., Inc., 796 F. Supp. 2d 796, 806 (S.D. Miss. 2011)).
In its reply, Suncor reasserts that Lumry has failed to supply a basis for his expert opinion
other than “his biased experience with Musket’s terminals.” Dkt. 93 at 3. Suncor also claims that
Lumry’s experience with the design and layout of diesel terminals is irrelevant because it does not
relate to the crude-by-rail terminal at issue in this case. Id. at 3-4. Suncor concludes that Lumry is
unqualified to testify as an expert regarding “Musket’s inability to ratably operate [Windsor
Terminal] due to capacity and operational issues,” and that, as a result, his testimony should be
excluded. Id. at 4.
Rule 702 assigns the trial judge “the task of ensuring that an expert’s testimony both rests
on a reliable foundation and is relevant to the task at hand.” See Daubert, 509 U.S. at 597. Under
Rule 702, a witness qualifies as an expert by “knowledge, skill, experience, training or education.”
Fed. R. Evid. 702. Lumry meets these basic qualifications through his thirty-years of transportation
experience with carriers and shippers and his education. Dkt. 85 Ex. A at 6. His experience also
provides a reliable principle by which to consider the reasonableness of Musket’s performance
through comparison with other terminals. As a result, Lumry’s testimony as a non-retained expert
witness both rests on a “reliable foundation” and is “relevant to the task at hand.” See Daubert, 509
U.S. at 597. Suncor retains the power to attack any defects in Lumry’s testimony through
“[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the
burden of proof.” Id. at 596. Accordingly, Suncor’s motion to exclude Lumry’s expert testimony
based on his failure to meet the requirements of Rule 702 is DENIED.
Suncor’s motion to exclude the expert testimony of Lumry is DENIED.
Signed at Houston, Texas on October 18, 2016.
Gray H. Miller
United States District Judge
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