Meltzer/Austin Restaurant Corporation et al v. Benihana National Corp.
Filing
224
ORDER GRANTING IN PART AND DENYING IN PART 191 Motion to Exclude the Testimony and Report of George P. Roach. The Court STRIKES the portion of Roach's opinion discussed in this Order. Roach shall revise his report and testimony and inform Ben ihana of any changes before the end of business on Wednesday, April 2, 2014; DENYING 198 Motion to Exclude or Limit Proposed Expert Testimony of Clinton Sayers and Gary Durham; GRANTING IN PART AND DENYING IN PART 204 , 217 Motions in Limine; GRANTING 197 Motion to Exceed Page Limits; GRANTING 200 Motion to Exceed Page Limits; GRANTING 205 Motion for Leave to File 10-Page Reply in Support of its Motion to Exclude Testimony and Report of George P. Roach; GRANTING 199 Motion for Extension of Time to File (Nunc Pro Tunc) regarding Motion to Exclude Testimony of George Roach. Signed by Judge Andrew W. Austin. (kkc)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
MELTZER/AUSTIN RESTAURANT
CORPORATION, et al.
V.
BENIHANA NATIONAL CORP.
§
§
§
§
§
§
A-11-CV-542-AWA
ORDER
Before the Court are the following motions and their associated responses, replies, and
supplements:
(1)
Defendant’s Motion to Exclude the Testimony and Report of George P. Roach (Dkt.
No. 191); Plaintiffs’ Response in Opposition (Dkt. No. 201); Defendant’s Reply in
Support (Dkt. No. 206);
(2)
Plaintiffs’ Motion to Exclude or Limit Proposed Expert Testimony of Clinton Sayers
and Gary Durham (Dkt. No. 198); Plaintiffs’ Supplement to its Motion to Exclude
or Limit Proposed Expert Testimony of Clinton Sayers and Gary Durham (Dkt. No.
202); Defendant’s Response in Opposition (Dkt. No. 207); Plaintiffs’ Reply in
Support (Dkt. No. 216);
(3)
Plaintiffs’ Motion in Limine (Dkt. No. 204); Defendant’s Response to Plaintiffs’
Motion in Limine (Dkt. No. 208); and
(4)
Defendant’s Updated Motion in Limine (Dkt. No. 217).1
The Court held a hearing on the above-motions during the final pretrial conference in this case on
March 28, 2014. After reviewing the parties’ submissions, the parties’ arguments at the hearing, and
the relevant law, the Court issues the following Order.2
1
Defendant had filed its original Motion in Limine along with its pretrial submissions. See
Dkt. No. 205, Exhibit G. Following communications between the parties on potential areas of
agreement, Defendant then filed its Updated Motion in Limine. Dkt. No. 217.
2
There are also several pending miscellaneous motions that are related to the motions listed
above. After reviewing the following motions, and noting that they are unopposed or agreed, the
Court hereby GRANTS the following: Plaintiffs’ Unopposed Motion to Exceed Page Limits (Dkt.
I. DAUBERT MOTIONS
Both parties, pursuant to Federal Rule of Evidence 702, seek to exclude the testimony of the
others’ experts in this case. In particular, Plaintiffs Bradley C. Meltzer, Meltzer/Austin Restaurant
Corporation, Meltzer/Austin Restaurant II, LLC, and Meltzer San Antonio Restaurant, LP
(collectively “Meltzer”), seek to exclude Defendant Benihana National Corporation’s (“Benihana”)
experts Clinton Sayers and Gary Durham. Dkt. No. 198. Benihana wants to exclude Meltzer’s
expert George P. Roach. Dkt. No. 191.
Questions concerning the admissibility of expert evidence in federal court are governed by
the Federal Rules of Evidence, and more specifically Rule 702. See Mathis v. Exxon Corp., 302 F.3d
448, 459 (5th Cir. 2002).3 Under Rule 702 and Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579
(1993), Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999), and their progeny, the district
judge, acting as a gatekeeper to exclude unreliable expert testimony, has discretionary authority to
determine the reliability of an expert opinion in light of the particular facts and circumstances of each
No. 197); Plaintiffs’ Unopposed Motion to Exceed Page Limits (Dkt. No. 200); and Defendant’s
Agreed Motion for Leave to File 10-Page Reply in Support of its Motion to Exclude Testimony and
Report of George P. Roach (Dkt. No. 205). Additionally, the Court will also GRANT Defendant’s
Motion for Extension of Time to File (Nunc Pro Tunc) regarding Motion to Exclude Testimony of
George Roach (Dkt. No. 199).
3
Federal Rule of Evidence 702 provides:
If scientific, technical, or other specialized knowledge will assist the
trier of fact to understand the evidence or to determine a fact in issue,
a witness qualified as an expert by knowledge, skill, experience,
training, or education, may testify thereto in the form of an opinion
or otherwise, if (1) the testimony is based upon sufficient facts or
data, (2) the testimony is the product of reliable principles and
methods, and (3) the witness has applied the principles and methods
reliably to the facts of the case. Id.
2
case. See Kumho, 526 U.S. at 153. Under Daubert, trial courts act as gatekeepers overseeing the
admission of both scientific and non-scientific expert testimony. Id. at 147. The trial court must
make “a preliminary assessment of whether the reasoning or methodology underlying the testimony
is scientifically valid and of whether that reasoning or methodology properly can be applied to the
facts in issue.” Daubert, 509 U.S. at 592–93. In its role as gatekeeper, the trial court must determine
whether the expert testimony is both reliable and relevant. Id. at 589.
The Fifth Circuit has also warned that in evaluating expert testimony,
the trial court’s role as gatekeeper [under Daubert] is not intended to serve as a
replacement for the adversary system. Rather, as Daubert makes clear, 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. Thus, while exercising its role as a gate-keeper, a trial court
must take care not to transform [an analysis under] Daubert . . . into a trial on the
merits.
Pipitone v. Biomatrix, Inc., 288 F.3d 239, 250 (5th Cir. 2002) (internal quotations and citations
omitted). For example, “[a]s 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, More or Less Situated in Leflore
County, Miss., 80 F.3d 1074, 1077 (5th Cir. 1996) (emphasis added).
With these principles in mind, the Court will GRANT IN PART and DENY IN PART
Benihana’s Motion to Exclude the Testimony and Report of George P. Roach (Dkt. No. 191) and
DENY Meltzer’s Motion to Exclude or Limit Proposed Expert Testimony of Clinton Sayers and
Gary Durham (Dkt. No. 198).
In its written motion and at the hearing, Benihana sought to exclude the testimony of
Meltzer’s expert, George P. Roach, who opines on the measure of damages related to the Benihana
3
restaurants operated or to be operated by Meltzer. The primary arguments set forth by Benihana for
Roach’s exclusion include his speculation that the profits at each Benihana restaurant operated by
Meltzer would grow by four percent annually and that this growth would continue to occur for the
next fifteen years. At the hearing, Benihana reiterated its objection to Roach’s testimony, noting that
there are no objective facts or data that would support Roach’s calculations and that Roach’s
calculations are contrary to the actual historical data. In light of Benihana’s contentions, the
undersigned questioned Meltzer’s counsel about the issues raised by Benihana, particularly the
purported lack of any data to support Roach’s conclusion that the profits at Meltzer’s restaurants
would grow by four percent. Despite repeated requests from the Court, Meltzer’s counsel was
unable to point to any data that specifically supported Roach’s calculation of four percent growth.
The only factors articulated by Meltzer’s counsel were Austin’s general healthy economic climate
and that Austin was a healthy market for restaurant growth.
The Court finds Meltzer’s reliance upon these general economic factors to be insufficient for
establishing the reliability of Roach’s calculations. See, e.g., Guile v. United States, 422 F.3d 221,
227 (5th Cir. 2005) (criticizing an expert opinion unsupported by any data); see also Viterbo v. Dow
Chem. Co., 826 F.2d 420, 422 (5th Cir. 1987) (“If an opinion is fundamentally unsupported, then it
offers no expert assistance to the jury.”). Meltzer has failed to articulate any information relied upon
by Roach that would suggest that Roach’s usage of four percent profit growth for Meltzer’s
restaurants would be reliable. It does not appear, and Meltzer’s counsel has not argued, that he used
any data based on Meltzer’s Benihana restaurants, and at no time did either of the Meltzer Benihana
franchise restaurants achieve a four percent profit growth from one year to the next. Accordingly,
to the extent Roach’s report or testimony relies upon a profit growth of four percent annually for the
4
restaurants at issue in this case, the Court GRANTS Benihana’s Motion to Exclude and STRIKES
Roach’s opinion for the reasons stated above. However, as noted by the Court during the parties’
telephone conference on March 5, 2014, Benihana’s Motion to Exclude Roach’s testimony was
untimely filed.4 Therefore, the Court will provide Roach an opportunity to amend his report and
testimony. Roach shall revise his report and testimony and inform Benihana of any changes before
the end of business on Wednesday, April 2, 2014. Benihana shall have an opportunity to question
Roach concerning his revisions, either by deposition or written statement. Meltzer shall make Roach
available in Austin, Texas, for the deposition, if that is the method chosen by Benihana.
In all other respects, Benihana’s Motion to Exclude is DENIED. Benihana’s contention
pertaining to Roach’s calculation of damages for fifteen years appears to focus primarily on whether
the parties had committed themselves to the contract for the new Benihana franchise and
consequently, whether Meltzer is able to obtain “benefit of the bargain” damages. As such,
Benihana’s challenge to Roach’s calculation of damages for fifteen years of restaurant operation will
be addressed by this Court through the jury charge or under Rule 50.
Additionally, after reviewing Meltzer’s objections to the testimony of Benihana’s experts
Clinton Sayers and Gary Durham, the Court concludes that Meltzer’s contentions focus on the
weight of the evidence presented, not its admissibility. For example, Meltzer argues that Sayers used
an incorrect definition for net operating income in his calculations. Dkt. No. 198 at 4. Meltzer also
criticizes Sayers for violating the Uniform Standards of Professional Appraisal Practice (“USPAP”).
4
Benihana represented during the telephone conference that it believed all deadlines had been
canceled by the Court’s Status Conference Order dated December 3, 2013 (Dkt. No. 184). However,
that Order only canceled all deadlines related to the parties’ filing of their pretrial materials.
Objections to the reliability of an expert’s proposed testimony are not included in a parties’ pretrial
materials. See Local Rule CV-16(e).
5
Id. at 5. Yet these are issues that can be addressed during Meltzer’s cross examination of Sayers
during trial. In particular, the Fifth Circuit has specifically held that a tax court had acted within its
discretion in “considering USPAP compliance as relevant to the weight [of the expert’s] report . . . ,
instead of whether it should be admitted.” Whitehouse Hotel Ltd. P’ship v. C.I.R., 612 F.3d 321, 332
(5th Cir. 2010).
As for Gary Durham, Meltzer challenges Durham’s opinion mostly on the basis of his
reliance on Sayers’s report. Meltzer contends that Durham’s testimony should be excluded because
(1) Durham picked the parts of Sayers’s report that were advantageous to his calculations for
Benihana; (2) a violation of USPAP occurred; (3) Durham applies Sayers’s appraisal beyond its
intended scope or applicability; and (4) Durham made improper inferences in performing his
calculations. Dkt. No. 198 at 7–10. After review, the Court again finds that these are issues that
address the weight of Durham’s opinion, not its admissibility. It may be that Durham improperly
used only parts of Sayers’s report in order to arrive at lower damages amount. It may also be the
case that Durham incorrectly applied Sayers’s appraisal or that he made improper inferences.
However, the flaws of Durham’s analysis highlighted by Meltzer may be brought out through
vigorous cross examination and the presentation of contrary evidence. The Court need not exclude
an expert’s testimony simply because another party disagrees with its conclusions. See, e.g., KB
Partners I, L.P. v. Barbier, No. 11–1034, 2013 WL 2443217 at *4–10 (W.D. Tex. June 4, 2013).
As a result, the Court DENIES Meltzer’s Motion to Exclude or Limit Proposed Expert Testimony
of Clinton Sayers and Gary Durham (Dkt. No. 198).
6
II. MOTIONS IN LIMINE
At the final pretrial conference, the Court also addressed Meltzer’s Motion in Limine (Dkt.
No. 204) and Benihana’s Updated Motions in Limine (Dkt. No. 217). Consistent with the rulings
made during the hearing, the Court issues the following orders on the motions in limine:
A.
Meltzer’s Motion in Limine (Dkt. No. 204)
1.
GRANTED.
2.
GRANTED.
3.
GRANTED.
4.
GRANTED.
5.
DENIED.
6.
See infra.
7.
GRANTED.
8.
GRANTED.
9.
DENIED. The Court determines that the history of the parties’ relationship during
the relevant time period is relevant for the purposes of the issues in this case.
10.
GRANTED IN PART and DENIED IN PART. The Court GRANTS Meltzer’s
Motion in Limine No. 10 to the extent it seeks to bar any argument or mention at trial
of the “additional non-compliance issues” listed in the Failure to Cure/Right to
Terminate letters of January 11, 2011. However, the Court DENIES Meltzer’s
Motion in Limine No. 10 to the extent it seeks to redact any portion of the
aforementioned letters when the letters are submitted as Exhibits.
11.
See infra.
7
12.
See infra.
Meltzer’s Motion in Limine Nos. 6, 11, 12
The subject matter of Meltzer’s Motion in Limine Nos. 6, 11, and 12 all pertain to customer
complaints submitted to Benihana regarding its restaurants, including Meltzer’s Benihana franchises.
At the final pretrial conference, Meltzer objected to the introduction of all customer complaints,
especially to the extent those complaints are used as a comparison between Meltzer’s Benihana
franchises and other Benihana restaurants, because such evidence would be unfairly prejudicial and
the complaints were not produced during discovery. Meltzer claimed that he had asked for these
customer complaints but that Benihana had refused to produce these documents. Benihana asserted
that Meltzer had never requested these complaints. When Meltzer was unable at the hearing to
identify where he had requested these customer complaints from Benihana during discovery, he
requested the opportunity to provide that information to the Court and Benihana subsequent to the
hearing.
In an email to the Court’s law clerk on Monday, March 31, 2014, Meltzer stated that he had
been mistaken and that he had not requested customer complaints regarding other Benihana
franchises. However, as was stated at the final pretrial conference, Meltzer contends in the email
that customer complaints were never mentioned in any of the franchise correction reports or default
letters as an area of concern. Given that customer complaints occur at every restaurant, Meltzer
reiterates that the introduction of this evidence at trial would be inflammatory and unfairly
prejudicial. Benihana’s response email also restates its argument during the final pretrial conference.
Benihana argues that Meltzer could have, but did not, request these customer complaints. Benihana
also notes that it has not identified customer complaints for other restaurants in its trial exhibit list.
8
Benihana then directs the Court’s attention to its Response to Meltzer’s Motion in Limine (Dkt. No.
208) for its remaining arguments. In summary, Benihana seeks to introduce testimony that Meltzer’s
Benihana franchises received a higher level of customer complaints than other Benihana restaurants.
Benihana contends that this comparison will demonstrate that it terminated Meltzer’s Benihana
franchises in good faith. Benihana further submits that this testimony will establish that it exercised
its discretion in good faith. Dkt. No. 208 at 9.
After reviewing the parties’ arguments, the Court will DENY Meltzer’s Motion in Limine
No. 6 and GRANT Meltzer’s Motion in Limine No. 11. Consistent with the Court’s rulings on
Meltzer’s Motion in Limine Nos. 5 and 9, the Court will permit Benihana to present evidence
concerning the historical relationship between the parties, which may include evidence of customer
complaints pertaining to Meltzer’s Benihana franchises. On the other hand, comparisons between
the level of customer complaints at Meltzer’s Benihana franchises and other Benihana restaurants
goes beyond providing “context” of the parties’ relationship leading up to the decision to terminate
Meltzer’s franchises, and was never mentioned as the basis for that decision. Further, Benihana has
never provided the data underlying any such comparison to Meltzer, and initially objected in
discovery to providing any information about non-Meltzer franchises. See, e.g., Order of January
4, 2013 (Dkt. No. 108) at 8–10. Testimony making complaint comparisons is potentially highly
inflammatory and prejudicial, and that prejudice would outweigh any probative value the evidence
might have (which would be minimal).
As for Meltzer’s Motion in Limine No. 12, the Court remains unclear about what testimony
Meltzer is attempting to exclude from trial aside from the customer complaints already discussed
above.
No clarification was provided by the parties during the final pretrial conference.
9
Additionally, the Court has already stated what Benihana may and may not discuss in front of the
jury at trial in the previous paragraph. Therefore, to the extent Benihana seeks to present testimony
comparing Meltzer’s Benihana franchises with other restaurants with regard to restaurant customer
complaints or comparisons with ratings on other restaurants, Meltzer’s Motion in Limine No. 12 is
GRANTED. In all other respects, Meltzer’s Motion in Limine No. 12 is DENIED.
B.
Benihana’s Updated Motion in Limine (Dkt. No. 217)
1.
DENIED.
2.
GRANTED.
3.
DENIED.
4.
GRANTED IN PART and DENIED IN PART. The Court GRANTS Benihana’s
Motion in Limine No. 4 to the extent the term “misconduct” is defined to mean any
criminal behavior, sexual misconduct, or improper conduct related to the proxy
dispute described by the parties during the hearing. In all other respects, Benihana’s
Motion in Limine No. 4 is DENIED.
5.
GRANTED.
6.
GRANTED.
7.
GRANTED.
8.
GRANTED.
9.
GRANTED.
10.
GRANTED.
11.
GRANTED IN PART and DENIED IN PART. The Court GRANTS Benihana’s
Motion in Limine No. 11 to the extent it applies to any witnesses who are not
10
currently Benihana employees. The Court DENIES Benihana’s Motion in Limine
No. 11 to the extent it applies to any current Benihana employees.
12.
GRANTED.
13.
GRANTED.
14.
GRANTED.
15.
GRANTED.
16.
DENIED.
17.
DENIED.
18.
DENIED.
19.
GRANTED. The Court’s order on Benihana’s Motion in Limine No. 19 includes any
post-lawsuit settlement discussions or mediations of any kind.
20.
GRANTED. Benihana represented at the hearing that the discussions contemplated
by its Motion in Limine No. 20 included discussion from late 2010 through July 2011
that concerned a complete settlement of all of Meltzer’s claims, termination of
Meltzer’s franchises, and a buyout of Meltzer’s restaurants.
21.
DENIED AS MOOT. Meltzer represented during the hearing that he had dropped
his negligence claim.
22.
GRANTED.
23.
GRANTED.
24.
GRANTED IN PART and DENIED IN PART. The Court GRANTS Benihana’s
Motion in Limine No. 24 to the extent Meltzer seeks to argue that Benihana sought
to take advantage of Meltzer’s physical condition and stroke in late 2010. The Court
11
DENIES Benihana’s Motion in Limine No. 24 to the extent Meltzer seeks to
introduce the fact that Meltzer suffered a stroke and when it occurred.
25.
GRANTED.
26.
GRANTED.
27.
GRANTED.
28.
GRANTED.
29.
GRANTED.
As made clear on the record, these are not evidentiary rulings, but rather only an order that,
prior to raising any of these matters in the presence of the jury, counsel approach the bench and seek
permission to do so.
III. CONCLUSION
In accordance with the preceding discussion, it is HEREBY ORDERED that Benihana’s
Motion to Exclude the Testimony and Report of George P. Roach (Dkt. No. 191) is GRANTED IN
PART and DENIED IN PART. The Court STRIKES the portion of Roach’s opinion discussed
above. Roach shall revise his report and testimony and inform Benihana of any changes before the
end of business on Wednesday, April 2, 2014. Benihana shall have an opportunity to question
Roach concerning his revisions, either by deposition or written statement. Meltzer shall make Roach
available in Austin, Texas, for the deposition, if that is the method chosen by Benihana.
It is FURTHER ORDERED that Meltzer’s Motion to Exclude or Limit Proposed Expert
Testimony of Clinton Sayers and Gary Durham (Dkt. No. 198) is DENIED.
12
It is FINALLY ORDERED that Meltzer’s Motion in Limine (Dkt. No. 204) and Benihana’s
Updated Motion in Limine (Dkt. No. 217) are GRANTED IN PART and DENIED IN PART as
set forth above.
SIGNED this 1st day of April, 2014.
_____________________________________
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE
13
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?