JH Kelly, LLC v. Aecom Technical Servs., Inc.
| Decision Date | 02 June 2022 |
| Docket Number | Case No. 20-cv-05381-HSG |
| Citation | 605 F.Supp.3d 1295 |
| Parties | JH KELLY, LLC, Plaintiff, v. AECOM TECHNICAL SERVICES, INC., Defendant. |
| Court | U.S. District Court — Northern District of California |
605 F.Supp.3d 1295
JH KELLY, LLC, Plaintiff,
v.
AECOM TECHNICAL SERVICES, INC., Defendant.
Case No. 20-cv-05381-HSG
United States District Court, N.D. California.
Signed June 2, 2022
Edward Charles Duckers, Edward C. Duckers, Stoel Rives LLP, San Francisco, CA, Eric A. Grasberger, Mario R. Nicholas, Christopher Rifer, Pro Hac Vice, Stoel Rives LLP, Portland, OR, Colm Nelson, Pro Hac Vice, David B. LeVant, Stoel Rives LLP, Seattle, WA, William Christopher Pooser, Pro Hac Vice, Stoel Rives LLP, Boise, ID, for Plaintiff.
Christopher Orlando Rivas, Reed Smith LLP, Los Angeles, CA, Luke Nicholas Eaton, Marion Teresa Hack, Pepper Hamilton LLP, Los Angeles, CA, Marsha Ann Houston, Katten Muchin Zavis, Los Angeles, CA, Robert Zachary Torres-Fowler, Pro Hac Vice, Troutman Pepper Hamilton Sanders LLP, Philadelphia, PA, William McLean Taylor, Pro Hac Vice, Troutman Pepper Hamilton Sanders LLP, Boston, MA, for Defendant.
ORDER ON DAUBERT MOTIONS
Re: Dkt. Nos. 203, 204, 206, 207, 208, 209, 210
HAYWOOD S. GILLIAM, JR., United States District Judge
Before the Court are various motions to exclude expert opinions and testimony brought by both JH Kelly LLC ("JH Kelly") and Defendant and Counter-Claimant AECOM Technical Services, Inc. ("AECOM"). Considering the significant number of disputes both parties have raised in this case generally and in these motions specifically, the Court will endeavor to provide succinct rulings on these motions as
described below. The general theme is that the parties’ motions mostly function as previews of their cross-examinations, and are largely based on issues that go to the weight the jury should assign the expert testimony instead of whether it is admissible. Most of them are accordingly denied.
I. BACKGROUND
This construction dispute arises out of the Burney K2 Replacement Project ("Project"), which involved the replacement of a natural gas compressor unit and various upgrades at a compressor station near Burney, California. Dkt. No. 102 (JH Kelly's Second Amended Complaint or "SAC") ¶ 1. The Burney Compressor Station is part of Pacific Gas & Electric Company's ("PG&E") natural gas distribution system. Id. ¶ 11. That system supplies natural gas to the surrounding area and allows compressed gas to travel through pipelines from Oregon to consumers in California. Id. In all, PG&E's natural gas distribution system serves around 4.2 million customers from Bakersfield, California to the Oregon border. Id.
On February 11, 2016, AECOM entered into an agreement (the "EPC Agreement") with PG&E for the Project. Id. ¶ 19. Under the EPC Agreement, AECOM agreed to act as the design-builder and prime contractor for the Project. Id. On October 21, 2016, AECOM and JH Kelly entered into an agreement (the "Subcontract") for the construction portion of the work. Id. ¶¶ 25-27.
Various issues on the Project led to disputes between JH Kelly, AECOM and PG&E. Relevant here, JH Kelly contends that the Project was changed from what it bid and agreed to perform, and that these changes imposed significant additional work and more difficult working conditions. See Dkt. No. 162 ("Joint Pretrial Statement"). JH Kelly also asserts that AECOM repeatedly ignored the Subcontract's change-order requirements to pay JH Kelly for the changed work. Id. AECOM denies each of those claims and counterclaims that JH Kelly breached the Subcontract. Id.
JH Kelly filed the First Amended Complaint in January 2021. Dkt. No. 18. AECOM and PG&E reached a settlement in October 2021 and ultimately agreed to dismiss their claims against one another with prejudice. See Dkt. Nos. 93, 127. JH Kelly then filed the operative complaint, which AECOM moved to dismiss in part. Dkt. No. 102. AECOM's motion was granted in part and denied in part. Dkt. No. 179.
II. LEGAL STANDARDS
A. Rules 26 and 37
Federal Rule of Civil Procedure 26 provides that a party must, without awaiting a discovery request, provide to the other parties:
(i) the name and, if known, the address and telephone number of each individual likely to have discoverable information—along with the subjects of that information—that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment;
(ii) a copy—or a description by category and location—of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment.
Fed. R. Civ. P. 26(a).
Rule 26(e), in turn, provides the framework under which a party may supplement those initial disclosures. Specifically, it states that a party who has made an initial
disclosure, or who has responded to an interrogatory, request for production, or request for admission, "must supplement or correct its disclosure or response in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed. R. Civ. P. 26(e).
And finally, Rule 37(c)(1) provides: "If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." In addition, or instead, the court may also impose other appropriate sanctions provided for in Rule 37. See Fed. R. Civ. P. 37(c)(1)(A)-(C). "The party facing sanctions bears the burden of proving that its failure to disclose the required information was substantially justified or is harmless." R & R Sails, Inc. v. Ins. Co. of Pa. , 673 F.3d 1240, 1246 (9th Cir. 2012).
B. Rules 402 and 403
The Court has broad discretion to manage the conduct of a trial and the evidence presented by the parties. Navellier v. Sletten , 262 F.3d 923, 941-42 (9th Cir. 2001). "To be admissible, evidence must be relevant under Fed. R. Evid. 402 and its probative value must not be substantially outweighed by the danger of unfair prejudice under Fed. R. Evid. 403." Hangarter v. Provident Life & Acc. Ins. Co. , 373 F.3d 998, 1019 (9th Cir. 2004).
Under Federal Rule of Evidence 401, evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action. Fed. R. Evid. 401. And under Federal Rule of Evidence 403, and as is true with all evidence, the Court must consider whether the probative value of proffered evidence "is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403. The Federal Rules of Evidence confer "broad discretion on the trial judge to exclude evidence on any of the grounds specified in Rule 403." United States v. Hearst , 563 F.2d 1331, 1349 (9th Cir. 1977) ; see also United States v. Olano , 62 F.3d 1180, 1204 (9th Cir. 1995) ("trial courts have very broad discretion in applying Rule 403") (citations omitted).
C. Rule 702
Federal Rule of Evidence 702 allows a qualified expert to testify "in the form of an opinion or otherwise" where: (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. Fed. R. Evid. 702. Expert testimony is admissible under Rule 702 if the expert is qualified and if the testimony is both relevant and reliable. See Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ; see also Hangarter , 373 F.3d 998, 1015 (9th Cir. 2004). Rule 702 contemplates a "broad conception of expert qualifications." Hangarter , 373 F.3d at 1018 (emphasis in original).
Courts consider a purported expert's knowledge, skill, experience, training, and education in the subject matter of his asserted expertise.
United States v. Hankey , 203 F.3d 1160, 1168 (9th Cir. 2000) ; see also Fed. R. Evid. 702. Relevance, in turn "means that the evidence will assist the trier of fact to understand or determine a fact in issue." Cooper v. Brown , 510 F.3d 870, 942 (9th Cir. 2007) ; see also Primiano v. Cook , 598 F.3d 558, 564 (9th Cir. 2010) ("The requirement that the opinion testimony assist the trier of fact goes primarily to relevance.") (quotation omitted). Under the reliability requirement, the expert testimony must have a "reliable basis in the knowledge and experience of the relevant discipline." Primiano , 598 F.3d at 565. To ensure reliability, the Court "assess[es] the [expert's] reasoning or methodology, using as appropriate such criteria as testability, publication in peer reviewed literature, and general acceptance." Id. at 564.
III. DISCUSSION
A. AECOM's Daubert Motions
i. AECOM's Motion to Exclude Testimony of Greg McKinnon (Dkt. No. 203)
JH Kelly retained a forensic accountant, Mr. Greg A. McKinnon, to opine on the "Project budgets and costs of AECOM and PG&E and progress billings and payments between AECOM and PG&E and Kelly and AECOM." See Dkt. No. 203, Declaration of Luke Eaton ISO AECOM's Motion to Exclude Testimony of Greg McKinnon, Ex. 1 ("McKinnon Report") ¶ 5. Mr. McKinnon's assignment was "limited to review and analysis of the billing and payment record in order to calculate that part of the Subcontract balance" that AECOM owed JH Kelly, based on payments received from PG&E. Id. ¶ 14. Mr. McKinnon opined that this amount is $6,265, 276. Id. He was also asked "to...
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