Numatics, Inc. v. Balluff, Inc.

• Decision Date: 16 December 2014
• Docket Number: Case No. 13–11049.
• Citation: 66 F.Supp.3d 934
• Parties: NUMATICS, INC., Plaintiff, v. BALLUFF, INC. and H.H. Barnum Company, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

66 F.Supp.3d 934

NUMATICS, INC., Plaintiff

v.BALLUFF, INC. and H.H. Barnum Company, Defendants.

Case No. 13–11049.

United States District Court, E.D. Michigan, Southern Division.

Signed Dec. 16, 2014.

Greg W. Meyer, Kara Renee Fussner, Rudolph A. Telscher, Jr., Steven E. Holtshouser, Harness, Dickey & Pierce, P.L.C., St. Louis, MO, Jennifer M. Woodside–Wojtala, Harness, Dickey & Pierce, PLC, Troy, MI, for Plaintiff.

Ann G. Schoen, Frost Brown Todd, LLC Cincinnati, OH, Kristopher K. Hulliberger, Howard & Howard, Royal Oak, MI, for Defendants.

OPINION AND ORDER ON PARTIES' MOTIONS TO EXCLUDE CERTAIN EXPERT WITNESS TESTIMONY

DAVID M. LAWSON, District Judge.

In this patent infringement case, the parties have filed motions for orders to preclude various liability and damage expert witnesses from testifying. The Court held a hearing on all of the motions on December 3, 2014. For the reasons that follow, the Court will deny the defendants' motion to exclude the testimony of Michael J. Lasinski and Phillip O'Keefe, and grant the plaintiff's motions to exclude certain portions of the testimony of Michael Justice and Daniel M. McGavock.

I.

Plaintiff Numatics, Inc. alleges that defendants Balluff, Inc. and H.H. Barnum Company infringed several claims in U.S. Patent No. 7,967,646 ('646 patent), which describes a modular electrical fieldbus system. The system is intended to control the opening and closing of hydraulic and pneumatic valves. The invention incorporates interchangeable input-output (I/O) modules that can be interconnected to maintain communications to the bus system and mounted close to the valve manifolds, and can be adjusted by and report information on an alphanumeric display.

The plaintiff hired accountant Michael Lasinski as a damages expert to testify about the plaintiff's lost profits and to provide an opinion on a reasonable royalty. The defendants retained accountant Daniel McGavock to minimize the plaintiff's damages evidence. The defendants also hired a liability expert, Michael Justice, to give expert testimony in support of the defendants' invalidity defenses, particularly the claim of obviousness. The plaintiff hired Phillip O'Keefe to rebut Justice's evidence.

Each side has raised objections to all or part of the testimony of the others' expert witnesses based on some violation of Federal Rule of Evidence 702 and the principles set out in Daubert v. Merrell Dow Pharmaceuticals., Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). They variously attack the witnesses' methodologies, contend that insufficient facts support their opinions, and maintain that flaws permeate their applications of the facts to the espoused theories. The Court will review the law that applies to its role as a gatekeeper who must screen expert testimony for reliability, and then discuss the specific objections that are directed to each of the witnesses.

II.

Any challenge to expert testimony must begin with Rule 702 of the Federal Rules of Evidence, which was modified in December 2000 to reflect the Supreme Court's emphasis in Daubert and Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999), on the trial court's gatekeeping obligation to conduct a preliminary assessment of relevance and reliability whenever a witness testifies to an opinion based on specialized knowledge. Federal Rule of Evidence 702 states:

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:

(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.

The language added by the amendment to Rule 702 —subparagraphs (b) through (c)—restates Daubert's insistence on the requirements that an expert's opinion be based on a foundation grounded in the actual facts of the case, that the opinion is valid according to the discipline that furnished the base of special knowledge, and that the expert appropriately “fits” the facts of the case into the theories and methods he or she espouses. See Daubert, 509 U.S. at 591–93, 113 S.Ct. 2786.

In addition, expert testimony is not admissible unless it will be helpful to the fact finder. Such testimony is unhelpful when it is unreliable or irrelevant, as the Court observed in Daubert, see id. at 591–92, 113 S.Ct. 2786, and also when it merely deals with a proposition that is not beyond the ken of common knowledge, see, e.g., Berry v. City of Detroit, 25 F.3d 1342, 1350 (6th Cir.1994) (“If everyone knows this, then we do not need an expert because the testimony will not ‘assist the trier of fact to understand the evidence or to determine a fact in issue.’ ”) (quoting Fed.R.Evid. 702 ). Finally, before an expert may give an opinion, the witness must be qualified to do so. See id. at 1348–50 ; Morales v. Am. Honda Motor Co., Inc., 151 F.3d 500, 516 (6th Cir.1998). The proponent of expert testimony must establish all the foundational elements of admissibility by a preponderance of proof. Nelson v. Tenn. Gas Pipeline Co., 243 F.3d 244, 251 (6th Cir.2001) (citing Daubert, 509 U.S. at 592 n. 10, 113 S.Ct. 2786 ).

An opinion is “reliable” from an evidentiary standpoint if it is “valid” according to the discipline upon which it is based. See Daubert, 509 U.S. at 590, 113 S.Ct. 2786. In determining validity, the Court's focus is on principles and methodology, not results. There is no precise formula by which a court might deem a methodology “acceptable” or “unacceptable.” Daubert and its progeny therefore have not created a “straitjacket,” Gross v. Comm'r, 272 F.3d 333, 339 (6th Cir.2001), but rather counsel a flexible approach, reconciling the “liberal thrust” of Rule 702, which “relax[es] the traditional barriers to opinion testimony,” with the responsibility to “screen [ ] such evidence” in order to keep unreliable or invalid opinions from the jury. Daubert, 509 U.S. at 588–89, 113 S.Ct. 2786 ; see also Jahn v. Equine Servs., PSC, 233 F.3d 382, 388 (6th Cir.2000). “Although there is no ‘definitive checklist or test’ to strike th[e] balance [‘between a liberal admissibility standard for relevant evidence ... and the need to exclude misleading junk science’], the Daubert Court set forth factors relevant to the inquiry: (1) whether the theory or technique can be or has been tested; (2) whether it ‘has been subjected to peer review and publication’; (3) whether there is a ‘known or potential rate of error’; and (4) whether the theory or technique enjoys general acceptance in the relevant scientific community.” Pluck v. BP Oil Pipeline Co., 640 F.3d 671, 677 (6th Cir.2011) ; see also Newell Rubbermaid, Inc. v. Raymond Corp., 676 F.3d 521, 527 (6th Cir.2012). Other factors may play a role as well. See Zuzula v. ABB Power T & D Co., 267 F.Supp.2d 703, 712–13 (E.D.Mich.2003).

“[R]ejection of expert testimony is the exception, rather than the rule, and [the court] will generally permit testimony based on allegedly erroneous facts when there is some support for those facts in the record.” In re Scrap Metal Antitrust Litigation, 527 F.3d 517, 530 (6th Cir.2008) (internal quotations and citations omitted).

A. Michael Justice

The most problematic of the witnesses is Michael Justice, a defense liability expert. The problems with Justice's testimony stem from the fact that he did not draft his own report; defense counsel drafted it for him. The Court finds that practice to be a remarkable breach of ethics and protocol, which defense counsel brazenly attempted to justify at oral argument. Expert witnesses generally do not provide factual accounts of the contested issues, and their testimony need not be based on personal knowledge. See Fed.R.Evid. 602. Instead, they are permitted to comment on the evidence that others supply. Fed.R.Evid. 703. Expert witnesses are allowed to testify based on information furnished by others because they have technical expertise in a given field that “will help the trier of fact to understand the evidence.” Fed.R.Evid. 702(a). An expert witness who is merely a party's lawyer's avatar contributes nothing useful to the decisional process.

The plaintiff argues that Justice's opinions relating to invalidity and the attributes of one of ordinary skill in the art should be excluded because his report does not recite the legal principles that he applied and because he was unaware of the elements necessary to establish invalidity. More seriously, as noted above, the plaintiff asserts that Balluff's counsel wrote Justice's report; then Justice reviewed the draft of the 64–page report for only a couple of hours before signing it. That fact does not appear to be contested. Justice's report simply mimics the summary of the prior art found in Balluff's invalidity contentions, provides no basis for concluding that prior art references would be combined, assumes that the prior art should be combined, and reaches a conclusion without knowing the relevant factors. The plaintiff also argues that Justice does not furnish a basis for his invalidity analysis, does not tether his factual experience to his opinions, and relies on Balluff's counsel for his analysis. According to the plaintiff, the majority of the 25 to 30 hours Justice spent working on the case was consumed by traveling to meet with Balluff executives. The plaintiff says that Justice represented that he spent less than eight hours reviewing technical literature, prior art references, and the patent; and he implausibly says that he reviewed nearly 2,600 pages of deposition transcripts in two to three hours.

Michael Justice is an entrepreneur, industrial networking expert, and the founder and president of Grid Connect Inc., a manufacturer and distributor...