Salt Lake City Corporation et al v. ERM WEST et al

Filing 568

MEMORANDUM DECISION and Order granting in part and denying in part #423 Motion to Exclude. Signed by Judge Ted Stewart on 2/9/16. (jlw)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
SALT LAKE CITY CORPORATION, a
Utah municipal corporation; BP
PRODUCTS NORTH AMERICA, INC., a
Maryland corporation; and CHEVRON
U.S.A. INC., a Pennsylvania corporation,

MEMORANDUM DECISION AND
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT
ERM’S MOTION TO EXCLUDE
PORTIONS OF THE TESTIMONY OF
RICHARD HOFFMAN

Plaintiffs,
v.
ERM-WEST, INC., a California
corporation; COMPASS
ENVIRONMENTAL, INC., a Delaware
corporation; and WRS
INFRASTRUCTURE AND
ENVIRONMENT, INC., a North Carolina
corporation, d/b/a WRSCOMPASS, INC.,

Case No. 2:11-CV-1174 TS
District Judge Ted Stewart

Defendants.

This matter is before the Court on Defendant ERM-West, Inc.’s (“ERM”) Motion to
Exclude Portions of the Testimony of Richard Hoffman. ERM seeks an order excluding portions
of the proposed expert testimony of Richard Hoffman. For the reasons discussed below, the
Court will grant the Motion in part and deny it in part.
I. BACKGROUND
Plaintiffs have retained Richard Hoffman as their damages expert. Relevant here is Mr.
Hoffman’s opinion on “saved costs,” those “costs ERM would have incurred during the removal
of the additional sediment.” 1 In his report, Mr. Hoffman determined this figure “by calculating

1

Docket No. 423 Ex. H, at 16.
1

ERM’s fees per cubic yard during the time period which Compass was removing sediment.” 2
Mr. Hoffman calculated that ERM billed approximately $9.54 per cubic yard of removed
sediment while Compass was performing work. Mr. Hoffman then applied this figure to the
amount of material that was later removed.
In his rebuttal report, Mr. Hoffman provided more information as to how this figure was
reached.
To make this calculation, I considered several options:
1) Use the historical average of ERM’s monthly charges during months in which
construction activities were ongoing when ERM was the Project Manager, and
apply that amount to the months in which construction activities were ongoing
after ERM ceased its role of Project Manager. This calculation yielded a
$270,962 Reduction for Saved ERM Costs.
2) Use the blended hourly rate of ERM employees that were designated by ERM
to work on “Task 4 – Construction Management” per the terms of ERM’s PSA.
In addition, I used the estimated working hours per day described in ERM’s Cost
Proposal. I multiplied the blended hourly rate by 1.5 FTE per working day during
the months of Construction. This calculation yielded a $363,081 Reduction for
Saved ERM Costs.
3) Use the cost per cubic yard method as described in my Original Report. This
calculation yielded a $547,761 Reduction for Saved ERM Costs. 3
II. DISCUSSION
Federal Rule of Evidence 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.

2

Id.

3

Docket No. 424 Ex. K, at 4–5 (footnotes and internal citations omitted).
2

In Daubert v. Merrell Dow Pharmaceuticals Inc. 4 and Kumho Tire Co., Ltd. v.
Carmichael, 5 the Supreme Court interpreted the requirements of Rule 702. Under these cases,
courts must “act as gatekeepers, admitting only expert testimony that is both reliable and
relevant.” 6 “Faced with a proffer of expert scientific testimony, then, the trial judge must
determine at the outset . . . whether the expert is proposing to testify to (1) scientific knowledge
that (2) will assist the trier of fact to understand or determine a fact in issue.” 7
ERM seeks exclusion of Mr. Hoffman’s opinions on saved costs, arguing that his
opinions are not reliable. In determining the reliability of expert testimony, there are several
nonexclusive factors that the Court may consider, including (1) whether the expert’s theory or
technique can be and 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 technique or theory,
and (4) the general acceptance of the theory or technique. 8
The Court agrees that Mr. Hoffman’s opinion as to saved cost in his original report is not
reliable. There is simply no basis for Mr. Hoffman’s calculation of saved costs based on the
amount of material removed. ERM’s payment was not based on the amount of sediment
removed. DOF is not being paid based on the amount of material removed. Plaintiffs have not
provided any basis to suggest that the amount of material removed would be a proper way to

4

509 U.S. 579 (1993).

5

526 U.S. 137 (1999).

6

Alfred v. Caterpillar, Inc., 262 F.3d 1083, 1086 (10th Cir. 2001).

7

Daubert, 509 U.S. at 592.

8

Id. at 592–94.
3

calculate the costs ERM would have incurred. Therefore, the Court will exclude evidence and
argument concerning this calculation method.
ERM also attacks the two other methods Mr. Hoffman considered in determining saved
costs. These methods do not suffer from the same deficiency as the method discussed above.
There is at least some basis for those calculations. ERM’s arguments go to the weight to be
given to those opinions, not their admissibility. 9 ERM can address the alleged flaws in Mr.
Hoffman’s reasoning through vigorous cross-examination and presentation of contrary
evidence. 10
ERM also argues that Mr. Hoffman’s opinions are not reliable because they fail to
account for pass-through costs. This argument too goes to the weight to be given to Mr.
Hoffman’s testimony, not its admissibility, and can be addressed at trial.
ERM further argues that Mr. Hoffman should not be permitted to testify as to “value.”
The Court has already addressed this issue. 11
Finally, ERM argues that Mr. Hoffman’s opinions would not be helpful to the jury. In
considering whether expert testimony will assist the trier of fact, the Court considers a number of
factors, including “(1) whether the testimony is relevant; (2) whether it is within the juror’s
common knowledge and experience; and (3) whether it will usurp the juror's role of evaluating a

9

Compton v. Subaru of Am., Inc., 82 F.3d 1513, 1518 (10th Cir. 1996) (quoting Jones v.
Otis Elevator Co., 861 F.2d 655, 663 (11th Cir. 1988)) (“Therefore, ‘as long as a logical basis
exists for an expert’s opinion . . . the weaknesses in the underpinnings of the opinion[] go to the
weight and not the admissibility of the testimony.’”).
10

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.”).
11

See Docket No. 541.
4

witness's credibility.” 12 Considering these factors, the Court finds that Mr. Hoffman’s opinions
will help the jury “understand the evidence or to determine a fact in issue.” 13 This is a complex
case with complex damages calculations. While the jurors will likely have the ability to perform
some of the same calculations that Mr. Hoffman has made, the Court nevertheless believes that
his testimony will be helpful.
III. CONCLUSION
It is therefore
ORDERED that Defendant ERM’s Motion to Exclude Portions of the Testimony of
Richard Hoffman (Docket No. 423) is GRANTED IN PART AND DENIED IN PART.
DATED this 9th day of February, 2016.
BY THE COURT:

Ted Stewart
United States District Judge

12

United States v. Rodriguez-Felix, 450 F.3d 1117, 1123 (10th Cir. 2006).

13

Fed. R. Evid. 702(a).
5