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Steves and Sons, Inc. v. Jeld-Wen, Inc.

United States District Court, E.D. Virginia, Richmond Division

May 11, 2018

STEVES AND SONS, INC., Plaintiff,
v.
JELD-WEN, INC., Defendant.

          MEMORANDUM OPINION

          Robert E. Payne Senior United States District Judge

         This matter is before the Court on COUNTERCLAIM DEFENDANTS STEVES AND SONS, INC., EDWARD STEVES, AND SAM STEVES' MOTION IN LIMINE TO EXCLUDE TESTIMONY OF JELD-WEN DAMAGES EXPERT JOHN JAROSZ (ECF No. 1052) . For the reasons set forth below, the motion was denied. See ECF No. 1536.

         BACKGROUND

         JELD-WEN, Inc. ("JELD-WEN") has asserted two counterclaims against Steves and Sons, Inc. ("Steves")[1] based on Steves' alleged misappropriation of JELD-WEN's trade secrets related to two general categories: (1) the manufacturing process for molded doorskins, and (2) financial data concerning JELD-WEN's manufacturing procedures and doorskin sales. The factual background underlying those claims is described at length in the Court's recent opinion denying summary judgment on certain aspects of those claims. See Summary Judgment Op. (ECF No. 1424) at 2-7.

         To prevail on its misappropriation claims, JELD-WEN must establish, inter alia, that it suffered damages. Id. at 18. JELD-WEN seeks damages in the form of Steves' unjust enrichment from the misappropriation or, alternatively, a reasonable royalty. Damages Summary Judgment Op. (ECF No. 1581) at 6; see also 18 U.S.C. § 1836(b) (3) (B) (i)-(ii); Tex. Civ. Prac. & Rem. Code § l34A.OO4(a). Consequently, JELD-WEN retained a damages expert, John Jarosz ("Jarosz"), who analyzed JELD-WEN's damages under three different scenarios. The substance of those scenarios is discussed in more detail in the Court's opinion denying summary judgment on JELD-WEN's misappropriation damages claims. See Damages Summary Judgment Op. at 8-11. Briefly restated here, Jarosz's theories are as follows: (1) that Steves can use certain process-related trade secrets to achieve reduced costs for each doorskin that it produces in the event that it builds a doorskin manufacturing plant ("Scenario One"); (2) that Steves has used, and will continue to use, certain financial trade secrets in negotiations for lower doorskin prices with JELD-WEN or other doorskin suppliers ("Scenario Two"); and (3) that JELD-WEN is entitled to a reasonable royalty based on the combination of two quantitative methods, the incremental benefits approach and the licensing comparables approach ("Scenario Three") .

         Steves moves to exclude Jarosz's testimony on two general grounds. First, relying on Fed.R.Evid. 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), Steves argues that all three scenarios are unreliable because they conflict with the jury's finding in the antitrust case that Steves will not be able to continue its business past September 2021. Second, Steves contends that Jarosz should not be permitted to testify about several issues under Fed.R.Civ.P. 37(c)(1) because he failed to disclose certain opinions in his opening report.

         DISCUSSION

         I. Rule 702

         A. Legal Standard

         The admissibility of expert testimony is governed by Rule 702. Under that rule, "[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" all of the following conditions are met:

(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 ...

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