Kendall Holdings, Ltd. v. Eden Cryogenics LLC
| Decision Date | 24 September 2013 |
| Docket Number | Case No. 2:08-cv-390 |
| Parties | KENDALL HOLDINGS, LTD., d/b/a PHPK TECHNOLOGIES Plaintiff, v. EDEN CRYOGENICS LLC, et al, Defendants. |
| Court | U.S. District Court — Southern District of Ohio |
OPINION AND ORDER
This matter is before the Court for consideration of two motions in limine: Defendants' Motion to Exclude the Expert Testimony of Kenneth Kreinbrink, doc. 133, and Defendants' Motion to Exclude the Expert Testimony of Robert Sturges, doc. 135. For the reasons below, the Court DENIES Defendants' motion as to Mr. Kreinbrink, and GRANTS in part and DENIES in part their motion as to Mr. Sturges.
The Court has previously recited the facts of this case at length. See Kendall Holdings, Ltd v. Eden Cryogenics LLC, 846 F. Supp. 2d 805, 810-12 (S.D. Ohio 2012). For the purposes of the motions sub judice the following suffices. Plaintiff Kendall Holdings, Ltd., d/b/a PHPK Technologies ("Plaintiff" or "PHPK") brought this suit against Defendants Eden Cryogenics LLC and several of its employees (collectively "Defendants" or "Eden"). Both companies deal in the cryogenics industry. Cryogenics companies manufacture and supply items such as valves, bayonets,1 and vacuum-insulated piping. The industry refers to the valves and bayonets as "standard products." See doc. 133-3 at 211. In order to construct these product lines, companies in the industry utilize professionally drafted design and engineering drawings, known as "shopdrawings." PHPK's remaining claim is one for misappropriation of trade secrets—it maintains that Eden misappropriated its trade secrets by impermissibly retaining shop drawings for lines of its standard products.
PHPK lists Mr. Kreinbrink and Mr. Sturges as experts to be called as witnesses at trial. Doc. 194 at 1-2. It offers the testimony of Mr. Kreinbrink regarding the costs associated with developing cryogenic valves and bayonets. Doc. 144 at 1. It offers Robert Sturges to testify regarding, among other things, whether he thinks Eden copied the shop drawings at issue, and the amount of Eden's alleged unjust enrichment in the event that it did copy the drawings. Doc. 143 at 3-4. Eden challenges these experts according to the standards laid out in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
Federal Rule of Evidence 702 requires the trial judge to perform a "gatekeeping role" when considering the admissibility of expert testimony. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 597 (1993); see Pluck v. BP Oil Pipeline Co., 640 F.3d 671, 677 (6th Cir. 2011). In accordance with Rule 702, this Circuit has held that the gate-keeping role progresses in three steps.
First, the witness must be qualified according to his or her "knowledge, skill, experience, training, or education." In re Scrap Metal Antitrust Litig., 527 F.3d 517, 529 (6th Cir. 2008) (quoting Fed. R. Evid. 702). Second, the expert's testimony must be relevant, in that it will help "the trier of fact to understand the evidence or to determine a fact in issue." Id. (same). On this point, the Court's inquiry focuses on whether the expert's reasoning or methodology can be properly applied to the facts at issue. See Daubert, 509 U.S. at 591-93. Third, the testimony must be reliable, see In re Scrap Metal Antitrust Litig., 527 F.3d at 529, which the proponent hasthe burden of proving by a preponderance of the evidence, Wellman v. Norfolk & Western Railway Co., 98 F. Supp. 2d 919, 923 (S.D. Ohio 2000). Reliability depends on a set of factors laid out in more detail in the analysis below.
Finally, this Court's "gatekeeper role . . . is not intended to supplant the adversary system or the role of the jury." Wellman, 98 F. Supp.2d at 924 (citing Daubert, 509 U.S. at 596). Instead, it is "to keep unreliable and irrelevant information from the jury because of its inability to assist in factual determinations, its potential to create confusion, and its lack of probative value." Id. Accordingly, "vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence." Id.
Defendants challenge Mr. Kreinbrink's testimony on the grounds that he is not qualified to offer expert testimony on the process and costs of developing standard products, and that his opinions are the products of unreliable methodologies. See doc. 133 at 1. Defendants also argue that Mr. Sturges's testimony comes from unreliable methodology. See doc. 135 at 4-16.
Mr. Kreinbrink graduated with a degree in agricultural engineering from Ohio State in 1973. Doc. 130-1 at 31. He has been licensed as a professional engineer since 1979. Id. at 36. He has course work in drafting from his time as an undergraduate, id. at 43; and experience with drafting technical drawings of crane parts from a job prior to his work in the cryogenics industry, id. at 43. From 1975 to 1984, Mr. Kreinbrink worked as an engineer for CVI Incorporated. Id. at 45. At CVI, he worked as a project engineer supervising and managing projects in twodivisions, including "14 or 15" years in the cryogenics arena. Id. During that time, Mr. Kreinbrink gained general experience with standard products in that he "requested them for use in [CVI's] systems," id. at 47, though he did not design or draw any standard products, id. at 48. From 1995 to 1998, he worked as an engineer at a company called PDM. Id. at 55. There he gained further experience in the cryogenics industry on some of PDM's contracted projects, and in "the PDM offices pricing a large project they did for Hughes Aerospace." Id. Mr. Kreinbrink also purchased standard products for projects he worked on while at PDM. Id. at 56.
He then moved to PHPK in 1998. Id. at 51. He serves as "vice-president of engineered products and systems, which means that [he is] in charge of procuring and building systems that are basically one-of-a-kind systems that are uniquely specified by a customer." Id. at 63. At the time of his deposition, he had worked with PHPK's standard products group "five or six times." Id. at 65. Specifically, he "designed some of [his] own modifications to their existing equipment to use on systems jobs." Id. at 64. Part of this process involved working with draftsmen who would design and draw modifications to the standard products. Id. at 65. He has also redesigned a valve plug that was not performing well. Id. at 103; see also 323-24.
The other part of Mr. Kreinbrink's role at PHPK entails preparing proposals for jobs related to cryogenic products and systems. PHPK then uses his proposals to bid on these jobs. Doc. 144-3 2. In his affidavit, Mr. Kreinbrink described how he prepares the proposals:
When preparing Proposals, I am responsible for accurately determining the labor and material costs that will be needed to design and develop the product or system, including the number and types of employees that will be needed for the job, the number of hours each employee will need to expend on the job, the cost of labor for the job (i.e. number of hours for each employee multiplied by the employee's hourly rate), the types of materials that will be needed for the job, and the cost of the materials needed for the job.
Id. ¶ 3. Mr. Kreinbrink also avers that he has twenty-nine years of experience preparing cryogenics products and systems price proposals, id. ¶ 4; and that he has prepared estimates for over 240 proposals, of which 215 have been during his employment for PHPK, id. He stated that he based his report, and the process of estimating the cost of the product lines at issue, on his years of experience in the industry. See doc. 130-2 at 296-98.
Mr. Kreinbrink is not responsible for pricing PHPK's standard products. Id. at 106. He stated in his deposition that he did "not know exactly" how the company determined the price of a single standard product piece, but did know generally that "they base it on the actual cost of product." Id. He confirmed that has personally never developed a valve or a bayonet. See id. at 48; doc 130-2 at 264-66. He also confirmed that he has never undertaken the process spelled out in his report to determine the cost of a bayonet or a valve. See doc. 130-2 at 264-66.
The inquiry of whether a witness qualifies as an expert depends on her "knowledge, skill, experience, training, or education." Fed. R. Evid. 702. After review of the expert's qualifications, the district court makes this determination as a preliminary fact. Kingsley Associates, Inc. v. Del-Met, Inc., 918 F.2d 1277, 1286 (6th Cir. 1990). In doing so, the district court "has broad discretion in the matter of the admission or exclusion of expert evidence." United States v. Kalymon, 541 F.3d 624, 636 (6th Cir. 2008) (quoting United States v. Demjanjuk, 367 F.3d 623, 633 (6th Cir. 2004)). As a guiding principle, the decision of whether to allow expert testimony depends on whether "it will assist the trier of fact." Id.
The dispute over Mr. Kreinbrink requires the Court to drill down further beyond these general guiding principles: "The issue with regard to expert testimony is not the qualifications of a witness in the abstract, but whether those qualifications provide a foundation for a witness toanswer a specific question." Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994). In this case, the parties contest whether Defendants misappropriated trade secrets and, if so, the value of that misappropriation. Plaintiff offers Mr. Kreinbrink to weigh in as an expert on the value of that misappropriation. The relevant question is thus: does he have the kind of knowledge, skill, experience, training, or education that will assist the trier of fact regarding the costs associated with developing cryogenic valves and bayonets?
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