Court Denies Motion to Exclude Finance Expert Who Defendants Misapprehend as a Damages Expert

Court: United States District Court for the Western District of WashingtonJurisdiction: FederalCase Name: Top Notch Sols., Inc. v. Crouse & Assocs. Ins. BrokersCitation: 2019 U.S. Dist. LEXIS 165085

Facts

The defendants filed a motion to exclude the testimony of the plaintiffs’ finance expert witness in this defamation and intentional interference with business expectancy where the plaintiff and his plaintiff company claimed economic damages.

The Finance Expert Witness

The finance expert witness’s cross-disciplinary work spanned the fields of hospitality management and economic development. The expert witness held a Ph.D. and served as a professor emeritus at the Seattle University School of Business and Economics. After working for several years as an economic advisor delivering market estimates for utilities and spent a year as Vice President of Operations for an internet company. He was published in the Cornell HRA Newsletter, Tourism Analysis, and Economic Development Journal. His experience also included advising local lawyers on economic and statistical matters and offering economic and statistical consulting services for local businesses.

The expert limited his assessment to economic values. He defined the plaintiff’s economic loss as a loss of compensation and benefits that would have been expected to accrue in the course of his working life if his business had not been damaged and his compensation had been less mitigated.

The defendants challenged the expert’s testimony on the grounds that (1) his estimate of the economic loss assumed was based on information provided solely by the counsel of the plaintiffs, without independently reaching his own conclusions; (2) the expert could not attribute the loss of the plaintiffs to the defendants; (3) the expert’s report was speculative and did not constitute a business assessment; (4) the expert did not consider that the plaintiffs’ insurance producer licenses had been revoked in the calculation of damages; (5) the expert failed to incorporate an appropriate discount rate; and (6) his calculation was suspect because he admitted during deposition that the financial records provided to him by the plaintiffs were still incomplete.

Discussion

The court concluded that the expert’s opinions were valid and reasonably accurate to be presented to the jury on the grounds that he relied on information from the plaintiff’s past earnings with the plaintiff business to estimate his future earnings, which is a generally accepted practice, citing Manpower, Inc. v. Ins. Co. of Penn. The court noted that the expert did not need to perform a business valuation because his report examined the earnings of the claimant, not the value of his company.

The court was of the opinion that the first two objections of the defendants to the expert report misapprehended him as a damages expert, not a causal expert. The court noted that although any causal link between the alleged wrongdoing of the defendants and the failure of the plaintiffs to comply with the insurance policy may have been small, it was a matter of fact reserved for the jury and not for the court on the Daubert motion.

The court was of the opinion that what data the expert should have relied on to arrive at a net discount rate was subject to cross-examination, not to exclude his testimony. The defendants’ sixth argument was rejected because they did not explain how the data gaps had a negative impact on the expert’s methodology, as he based his estimate of plaintiffs’ future earnings losses on his 2013-14 revenue.

Held

The defendants’ motion to exclude the finance expert witness’s testimony was denied.