Oregon Potato Company v. Kerry Inc.

Filing 262

ORDER granting 177 Motion to Exclude Expert Testimony by Defendant Kerry Inc. Denying 235 Motion to Strike Expert Report by Defendant Kerry Inc. Plaintiff Oregon Potato Company may have until May 3, 2022, to submit a revised expert report that complies with this order. Kerry may have until May 31, 2022, to depose LoGiudice, challenge the admissibility of any opinion in the new report, and submit a supplemental rebuttal report. Signed by District Judge James D. Peterson on 4/19/2022. (voc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

OREGON POTATO COMPANY, doing business as
RADER FARMS,
Plaintiff,

OPINION and ORDER

v.

20-cv-92-jdp

KERRY INC.,
Defendant.

This case for breach of contract is scheduled for a jury trial on July 11. Plaintiff Oregon
Potato Company (which calls itself OPC) alleges that it suffered millions of dollars in damages
because defendant Kerry, Inc. failed to timely fulfill purchase orders that OPC submitted for
yogurt cubes to be used in OPC’s smoothie mixes.
Kerry moves to strike the testimony of Michael LoGiudice, OPC’s damages expert.
Dkt. 177 and Dkt. 235. LoGiudice submitted two reports, one dated October 22, 2021, and
the other dated January 7, 2022. Dkt. 174 and Dkt. 184. Kerry objects to testimony based on
the original report primarily because it is irrelevant and not helpful to the jury; Kerry challenges
testimony based on the supplemental report as untimely. The court concludes that the
challenged testimony isn’t admissible, but the court will give OPC an opportunity to submit a
revised report that complies with this order.

ANALYSIS
A. Original report
Kerry moves to strike LoGiudice’s testimony about the following topics in his original
report: (1) lost profits based on orders other than those that are at issue in this case; (2) lost

profits for smoothie flavors other than the five requested in the orders at issue; (3) the costs of
reformulating the product; (4) royalty payments; (5) prejudgment interest; (6) Kerry’s intent;
(7) foreseeability of OPC’s damages; and (8) Kerry Group, which is Kerry, Inc’s parent
company. In the summary judgment opinion, the court excluded evidence related to topics (2),
(3), and (4), see Dkt. 181, at 28–29, and later denied OPC’s motion for reconsideration on
those issues, see Dkt. 201, so the court will grant that part of Kerry’s motion to exclude
LoGiudice’s testimony. The court will also grant Kerry’s motion on the issues of foreseeability
and Kerry’s intent because OPC doesn’t respond to Kerry’s arguments on those issues. The
court addresses Kerry’s remaining objections below.
1. Scope of loss period for lost profits calculation
Kerry objects to LoGiudice’s lost profits calculations because it is based on an
assumption that OPC is entitled to damages for “hypothetical purchase orders that are not at
issue in this case.” Dkt. 178, at 14. And because LoGiudice’s lost profits calculation groups
together lost profits from the “hypothetical” orders with lost profits from the orders that are in
dispute, Kerry asks the court to exclude all of LoGiudice’s testimony about lost profits. The
court agrees with Kerry that LoGiudice’s lost profits analysis is based on a faulty assumption.
But the court will give OPC an opportunity to file an amended report that corrects the defect.
When calculating OPC’s lost profits, LoGiudice assumed that the relevant time period
begins when Kerry first began falling behind on fulfilling OPC’s orders in March 2019 and
“continues until the Plaintiff’s profitability returns to what it would have been but for the
actions of the Defendant,” which LoGiudice says was in January 2021. Dkt. 174, at 29
(emphasis in original). LoGiudice doesn’t clearly explain what he means by that, but when
discussing the sales of the flavor Razzmatazz, he acknowledges that the orders at issue in this

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case would have provided enough yogurt cubes “to meet [OPC’s] production demands through
November 2019.” LoGiudice’s loss period extends beyond that because he believes that “it is
reasonable to expect that OPC would have placed additional orders for Razzmatazz yogurt
cubes to supply its yogurt-cube production for the months following November 2019.” Id. at
18.
LoGiudice clarified in his deposition that his lost profits calculation is based not just on
projected sales from the ten purchase orders at issue in this case, but also on sales from
additional orders that OPC would have continued placing with Kerry after that:
There are purchase orders that OPC issued that were not fulfilled.
And had they been fulfilled, it’s likely that the normal pattern
would have continued, in other words, put in an order, get a
shipment, put in an order, get a shipment. There is nothing that
I’ve seen in the record that would indicate that had Kerry been
meeting its delivery commitments, there is nothing to indicate
that it wouldn’t have just continued . . . . [T]he [lost profits]
calculation presupposes that in the but for world Kerry would
have made its deliveries and OPC would have ordered sufficient
quantities of product to continue production.
Dkt. 179, at 157:2–11 and 158:4–8.
The problem with LoGiudice’s analysis is that it assumes that Kerry was required to
continue doing business with OPC after fulfilling the ten purchase orders. But that’s incorrect.
OPC is entitled only to the benefit of the bargain that it struck, and that benefit was to be
supplied with yogurt cubes for particular purchase orders. OPC didn’t have a long-term supply
contract with Kerry, so Kerry had no obligation to continue supplying OPC with yogurt cubes
after fulfilling a particular order.
Under the UCC, a buyer is entitled to consequential damages “resulting from the seller’s
breach.” Wis. Stat. § 402.715 (emphasis added). So OPC can recover lost profits caused by each
breach that it proves at trial, but it isn’t entitled to base its damages on a scenario in which

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Kerry continued fulfilling new orders. Those additional lost sales might be a consequence of
OPC’s failure to find another yogurt supplier or the additional time it took for OPC to
reformulate its mixes without yogurt cubes. But neither of those things were caused by Kerry’s
alleged breaches.
OPC contends that it is entitled to recover for lost profits based on future purchase
orders because Kerry knew that OPC couldn’t get yogurt cubes from another supplier and that
OPC would have to reformulate the product, making it reasonably foreseeable that OPC would
continue suffering losses even beyond the ten purchase orders. But OPC needs to prove more
than just foreseeability; it must also prove causation. If Kerry had simply refused to accept
OPC’s ten purchase orders, it would have been just as foreseeable that OPC would have
difficulty finding an alternative. But in the absence of a long-term supply contract, Kerry could
not be held liable for failing to accept those orders. The same principle applies here. OPC must
connect its damages to a breach by Kerry, not simply to OPC’s preferred outcome.
Under OPC’s view, if Kerry had failed to fulfill even one accepted purchase order, and
OPC chose to stop submitting new purchase orders as a result, Kerry would be on the hook for
all the expenses OPC incurred while trying to reformulate the product, regardless how long that
took. But the nonbreaching party is entitled to only those consequential damages that are
contemplated by the parties’ agreement. Peterson v. Cornerstone Prop. Dev., LLC, 2006 WI App
132, ¶ 50, 294 Wis. 2d 800, 720 N.W.2d 716. It cannot be reasonably inferred from the
purchase orders in this case that Kerry was accepting responsibility for any damages other than
those caused by the breach of the purchase order at issue.
LoGiudice’s report doesn’t separate the lost profits caused by the alleged breaches from
the lost profits caused by an inability to fulfill additional orders. So OPC may not rely on

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LoGiudice’s report to prove lost profits. But the court will give LoGiudice an opportunity to
submit a revised report that complies with this order. Specifically, LoGiudice’s lost profits
analysis must be limited to the profits that OPC would have made had Kerry fulfilled the
purchase orders at issue in this case, without relying on other orders that OPC never placed.
The court will also give Kerry an opportunity to depose LoGiudice on his new report, to
challenge its admissibility, and to submit a new rebuttal report.
2. Prejudgment interest
LoGiudice included a short section in his report about the calculation of prejudgment
interest. Dkt. 174, at 35–36. The parties agree that the determination of whether a prevailing
party is entitled to prejudgment interest is a question of law for the court to decide, not the
jury. See Murray v. Holiday Rambler, Inc., 83 Wis.2d 406, 438, 265 N.W.2d 513, 529 (1978).
If OPC prevails at trial and the jury awards damages, OPC will have an opportunity to argue
that it should be awarded prejudgment interest and what the rate should be. The court will
grant this aspect of Kerry’s motion to strike.
3. Evidence about Kerry Group
Kerry Group is Kerry, Inc’s parent company. Kerry moves to exclude any reference by
LoGiudice to Kerry Group and specifically LoGiudice’s discussion about Kerry Group’s tax rate
and its size relative to OPC. OPC doesn’t oppose excluding testimony about Kerry Group’s
taxes, but OPC says that testimony about Kerry Group’s size is relevant “to knowledge of
industry, resources available to the wholly-owned subsidiary Kerry Inc., and Kerry’s undisputed
knowledge of the licensing agreement between OPC and Focus Brands.” Dkt. 191, at 22. But
OPC doesn’t explain why any of those issues are relevant to any claim or defense in this case.

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And even if any of those issues were relevant, they wouldn’t be a proper subject for a damages
expert. The court will grant this aspect of Kerry’s motion.
B. Supplemental report
LoGiudice’s supplemental report purports to do two things: (1) account for the ruling
in the summary judgment decision that OPC is limited to damages for the five smoothie flavors
that it requested in the purchase orders at issue in this case; and (2) rebut the opinion of Kerry’s
damages expert. Kerry objects to both parts of the report on procedural grounds.
1. Opinions in response to the summary judgment decision
The purchase orders at issue in this case included five smoothie flavors, but LoGiudice’s
lost profits analysis in his original report included seven other flavors on the theory that the
other flavors suffered “reputational harm.” Dkt. 174, at 19. In the summary judgment decision,
the court limited OPC to the five flavors requested in the purchase orders. LoGiudice’s
supplemental report is limited to those five flavors. But Kerry objects to the new report on the
ground that it does much more than simply account for the court’s summary judgment ruling.
Kerry’s primary objection is that LoGiudice’s supplemental report includes a regression
analysis, taking variables into account that weren’t included in the original report. As a result,
Kerry contends that the supplement includes new opinions that aren’t permitted under Federal
Rule of Civil Procedure 26.
Kerry’s objections are largely moot in light of the court’s decision to allow OPC to file
another expert report. Because the court is allowing Kerry to depose LoGiudice again and to
challenge the admissibility of the new report, the court can discern no harm in allowing
LoGiudice to include a regression analysis in the report. The court will deny this aspect of
Kerry’s motion.

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2. Rebuttal to Kerry’s expert
LoGiudice’s supplemental report also includes a section criticizing the opinions of
Robert Brlas, who is Kerry’s damages expert. Dkt. 188, at 25–34. Kerry objects on the ground
that the scheduling order doesn’t provide for a third round of expert reports, so OPC should
have sought leave to file a rebuttal report.
Kerry is correct that OPC should have requested leave of court before submitting a
rebuttal report. The preliminary pretrial conference order states that the disclosure of experts
is “to be determined by the parties.” Dkt. 13, at 2. The parties agreed to two rounds of expert
reports, not three, so OPC needed leave of court.
But, again, the court can discern no unfair prejudice to Kerry by allowing the rebuttal
and Kerry doesn’t identify any. After all, Kerry’s expert had an opportunity to criticize OPC’s
expert, so LoGiudice should have the same opportunity. LoGiudice may incorporate his
rebuttal opinions into his new report.

ORDER
IT IS ORDERED that:
1. Defendant Kerry, Inc’s motion to exclude expert testimony based on Michael
LoGuidice’s original expert report, Dkt. 177, is GRANTED.
2. Kerry’s motion to exclude expert testimony based on LoGiudice’s supplemental
report, Dkt. 235, is DENIED as moot.
3. Plaintiff Oregon Potato Company may have until May 3, 2022, to submit a revised
expert report that complies with this order. Kerry may have until May 31, 2022, to

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depose LoGiudice, challenge the admissibility of any opinion in the new report, and
submit a supplemental rebuttal report.
Entered April 19, 2022.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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