United States District Court, W.D. Virginia, Harrisonburg Division
ELIZABETH K. DILLON, UNITED STATES DISTRICT JUDGE
before the court are defendants' motions to exclude
plaintiff's proffered expert, Brian Burns, and to strike
Burns's rebuttal report. (Dkt. Nos. 66, 70.) For the
reasons set forth below, the court will deny the motion to
exclude Burns as an expert witness and deny the motion to
exclude Burns's rebuttal expert report.
was a logistics company that specialized in the export of
forest products and operated from the Inland Port of Virginia
(VIP). Leading up to its creation, Keystone's founders
conducted research about transportation inefficiencies in the
forest products market. Specifically, they found that the
industry's reliance on trucking, with greater weight
restrictions and increased fumigation costs, was inefficient.
This research, and the experience gained over the first few
years of Keystone's existence, led Steffens to develop
the “Shipper Savings Model” (SSM). Steffens
considered the SSM to be Keystone's most valuable trade
secret. SSM's “high level conclusions” were
not unique, but its specific findings on savings were
confidential. Keystone's model could only be conducted at
this specific site at the VIP-any attempted replication
elsewhere would suffer from the same inefficiencies
originally identified by Keystone.
began negotiations regarding a business relationship with
Northwest Hardwoods (NWH), a supplier and manufacturer of
hardwood, in February 2016. In the months that followed, NWH
conducted a “test run” through Keystone's
site at the VIP and the parties exchanged information,
including the SSM, following the signing of an NDA.
Eventually, Keystone presented an offer for its purchase to
NWH. NWH rejected that offer, but shortly after, Thomas
Mereen, Keystone's president at the time, resigned and
went to work at NWH. Unbeknownst to Keystone, NWH was
investigating taking over the VIP site itself.
then turned its focus to its ongoing negotiations with
another party, World Distribution Services (WDS). After the
parties entered into a letter of intent for WDS to purchase
Keystone's business, WDS rescinded the letter because it
had been informed that a notice of default had been sent to
Keystone and an unnamed party (NWH) would assume
Keystone's license at the VIP. After WDS rescinded the
letter of intent, Keystone ceased its operations on March 2,
2017, and on the next day, March 3, 2017, NWH executed a
license agreement for Keystone's former premises. Since
entering into this license agreement, NWH has performed the
log loading services at the VIP.
alleges claims against defendants NWH and Mereen that arise
from their business dealings and subsequent events.
Defendants contend that Keystone was a failing business, the
VIP first approached NWH, Keystone had no trade secrets, and
defendants did not appropriate or use Keystone's trade
secrets or violate the NDA. Keystone retained Brian Burns,
director of Dixon Hughes Goodman LLP, to conduct valuation
services and quantify economic damages to Keystone allegedly
caused by NWH's conduct. Keystone has offered two reports
from Burns containing his opinions on the calculation of
damages: his November 18, 2018 report and his January 10,
2019 rebuttal report. (Dkt. Nos. 99-2, 99-3.)
seek to exclude Burns's testimony, contending that his
calculations of three measures of damages (disgorgement of
NWH's profits and cost-savings from using trade secrets,
reasonable royalty for trade secret use, and loss of business
value) are misleading and unreliable because of flawed
methodology. Defendants also ask that the court strike
Burns's rebuttal report and testimony, contending that it
exceeds the scope of rebuttal and presents new opinions to
buttress initial opinions after flaws regarding those
opinions were mentioned to him.
702 of the Federal Rules of Evidence governs admissibility of
expert testimony. The testimony of a witness “who is
qualified as an expert by knowledge, skill, experience,
training, or education” is admissible if: “(1)
the expert's scientific, technical, or other specialized
knowledge will help the trier of fact to understand the
evidence or to determine a fact at issue; (2) the testimony
is based upon sufficient facts or data; (3) the testimony is
the product of reliable principles and methods; and (4) the
expert has reliably applied the principles and methods to the
facts of the case.” Fed.R.Evid. 702.
an individual qualifies as an expert, this court has an
obligation under Daubert to act as a gatekeeper and
ensure that any testimony concerning scientific, technical,
or other specialized knowledge offered in support of a
party's claim is “not only relevant, but
reliable.” Daubert v. Merrell Dow Pharm.,
Inc., 509 U.S. 579, 589 (1993); Kuhmo Tire Co. v.
Carmichael, 526 U.S. 137, 147 (1999) (quoting same).
When testimony is based upon “technical” or
“other specialized knowledge, ” it is admissible
if: (1) the expert is qualified to testify competently
regarding the matters he intends to address; (2) his
methodology is sufficiently reliable; and (3) the testimony
will assist the trier of fact by bringing the expert's
knowledge to bear upon a fact in issue. See Daubert,
509 U.S. at 589-91. Thus, the court must determine whether
the expert's reasoning and methodology underlying his
testimony is valid, and whether that reasoning or methodology
was applied reliably to the facts, so as to be relevant and
helpful to the jury. See Id. at 591-92; Kumho
Tire Co., 526 U.S. at 147.
proponent of the testimony must establish its admissibility,
although it need not prove its expert's theory is
correct. Cooper v. Smith & Nephew, Inc., 259
F.3d 194, 199 (4th Cir. 2001); Maryland Cas. Co. v.
Therm-O-Disc, Inc., 137 F.3d 780, 783 (4th Cir.
1998). Indeed, “[v]igorous cross examination,
presentation of contrary evidence and careful instruction on
the burden of proof are traditional and appropriate means of
attacking shaky but admissible evidence.”
Daubert, 509 U.S. at 596. Nonetheless, “[t]he
main purpose of Daubert exclusion is to protect
juries from being swayed by dubious scientific
testimony.” Nease v. Ford Motor Co., 848 F.3d
219, 2131 (4th Cir. 2017) (citation omitted).
Fourth Circuit has explained the Daubert standard as
a “two-step gatekeeping function” required of
trial courts. First, the trial court must ask whether
proffered scientific evidence is valid and reliable.
United States v. Barnette, 211 F.3d 803, 815 (4th
Cir. 2000). Second, the court asks whether the evidence will
help the trier of fact, which is generally a question of
relevance, or “fit”: assuming the evidence is
reliable, will it “assist the trier of fact to
understand or determine a fact in issue.” Maryland
Cas. Co., 137 F.3d at 784 (quoting Daubert, 509
U.S. at 592). The court's role in limiting expert
testimony is ...