RG Golf Warehouse, Inc. v. The Golf Warehouse, LLC

Decision Date02 September 2022
Docket Number19-cv-0585 (WMW/DTS)
PartiesRG Golf Warehouse, Inc., Plaintiff, v. The Golf Warehouse, LLC, Defendant.
CourtU.S. District Court — District of Minnesota

RG Golf Warehouse, Inc., Plaintiff,
The Golf Warehouse, LLC, Defendant.

No. 19-cv-0585 (WMW/DTS)

United States District Court, D. Minnesota

September 2, 2022


Wilhelmina M. Wright United States District Judge

This breach-of-contract matter is before the Court on cross motions for summary judgment and Defendant's motion to exclude expert testimony. (Dkts. 102, 107). For the reasons addressed below, Defendant's motions are granted and Plaintiff's motion is granted in part and denied in part.


Plaintiff RG Golf Warehouse, Inc. (RG), is a Florida corporation that operates the website “golfwarehouse.com.” Defendant The Golf Warehouse, LLC (TGW), is a retailer based in Kansas that sells golf merchandise through multiple websites, including “tgw.com.”

In January and February 2011, RG and TGW negotiated the terms of an affiliate arrangement whereby RG would refer online customers from its website to TGW's websites in exchange for referral fees and commissions. As a result of these negotiations, RG and TGW executed a letter of intent (LOI) dated February 21, 2011. The LOI “sets forth certain substantive terms and the basis of the proposed transaction . . . for the


ownership and operation of one or more websites to be owned by TGW.” The LOI also provides that it “will constitute an agreement in principle (and not a binding contract except as provided in Section 5 [of the LOI]).” The LOI describes “Proposed Transaction terms” that include varying commission tiers and methods for tracking RG's referred website traffic.

The parties subsequently executed a referral agreement (Agreement) on March 10, 2011. By its terms, the Agreement was effective for a five-year period beginning on March 10, 2011, subject to automatic renewal every year thereafter. But either party could terminate the Agreement “without cause and for convenience” with 30 days' written notice. The Agreement also contains a merger clause providing that the Agreement “supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter contained in this Agreement.”

In the Agreement, RG agreed to refer to TGW's websites the customers from RG's sales channels-namely, RG's website, a dedicated telephone line, and an email inbox. In exchange, TGW agreed to pay RG commissions for orders placed by customers who purchased merchandise from TGW after being referred by RG:

Section 1. Referral Services. RG Golf, Inc shall use the RG Golf, Inc. Sales Channels to direct customers exclusively to TGW's Websites. TGW shall pay RG Golf, Inc. for customer orders placed through the RG Golf Inc. Sales Channels as set forth below

The Agreement provides that RG's commission would correspond to a percentage of the “Net Sale” amount of each order, as follows:

(a) If the order is not subject to Promotional Discounts, TGW shall pay RG Golf, Inc.:
(i) For New Customers - 14% of Net Sales;
(ii) For Return Customers - 11% of Net Sales; and
(iii) For existing TGW Customers - 5.5% of Net Sales.
(b) If the order is subject to Promotional Discounts, TGW shall pay RG Golf, Inc. 5.5% of Net Sales.

Unlike the LOI, the Agreement does not specifically describe methods for tracking RG's referred website traffic. But the Agreement provides that “TGW will use its reasonable best efforts to have a customer self-identify as a New Customer or Return Customer based on the customer selecting its previous profile information” and that “TGW shall provide a periodic report of such numbers to RG Golf, Inc. every month, or as otherwise mutually agreed to.” The Agreement also provides that “TGW's calculations with respect to customer status are final and binding.”

After the parties' referral relationship began, TGW sent monthly reports to RG listing commissionable orders and the associated commission amounts and issued checks to RG for the corresponding amounts. In the months and years that followed, several disagreements arose as to the tracking and calculation of commission payments under the Agreement. These disagreements involved three primary disputes.

First, RG alleged that TGW had incorrectly tracked “repeat orders” placed directly on TGW's website (but not through RG “Sales Channels”) by customers that previously had placed orders through RG “Sales Channels.” TGW initially agreed with RG that it should be paying RG commissions for such orders and adjusted its commission payments accordingly. Subsequently, however, TGW concluded that the Agreement did not require


TGW to pay commissions for orders that were not placed through RG “Sales Channels.” Consequently, in March 2014, TGW notified RG that TGW had overpaid commissions.

Second, TGW notified RG in September 2011 that TGW had conducted an investigation and determined that it had not been tracking phone sales correctly. At that time, TGW represented to RG that it would remedy this error, explaining that the error “[s]eems like an oversight” that TGW would “fix,” and that “the report is being modified, and [TGW will] generate a back report to see what [RG is] owed and will pay [RG], of course.”

Third, in January 2013, RG notified TGW that the two-week “cookie” tracking of website traffic had been shut off, and RG represented to TGW that the Agreement required such tracking. In response, TGW acknowledged that it had failed to use cookie tracking from July 1, 2012, through January 24, 2013, and agreed to pay RG additional commissions from that period. Subsequently, however, TGW concluded that the Agreement did not require TGW to use “cookies” to track customer orders.

On December 10, 2014, TGW terminated the Agreement after providing 30 days' written notice to RG. In March 2019, RG commenced this breach-of-contract action against TGW, alleging that TGW breached the Agreement by, among other actions, failing to pay amounts due under the Agreement.[1] In July 2020, TGW amended its


answer to assert two counterclaims against RG, alleging breach of contract and unjust enrichment based on RG's retention of allegedly overpaid commissions.

The parties now cross-move for summary judgment. RG moves for summary judgment as to its breach-of-contract claim and TGW's two counterclaims. TGW moves for summary judgment as to RG's breach-of-contract claim and moves to exclude the opinions and testimony of RG's damages expert.


I. TGW's Motion to Exclude Expert Testimony

As a threshold matter, TGW moves to exclude the opinions and testimony of RG's damages expert, Fernando Torres. RG retained Torres to opine about RG's damages attributable to TGW's alleged breach of the parties' Agreement.

The admissibility of expert testimony is an issue of law for the district court to decide and is governed by Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Rule 702 provides:

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.

Fed. R. Evid. 702. “An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed.” Fed.R.Evid. 703. “If experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need not be admissible for the opinion to be admitted.” Id.

The proponent of expert testimony must prove its admissibility by a preponderance of the evidence. Lauzon v. Senco Prods., Inc., 270 F.3d 681, 686 (8th Cir. 2001). “Rule 702 reflects an attempt to liberalize the rules governing the admission of expert testimony” and favors admissibility over exclusion. Id. (internal quotation marks omitted). Determinations as to the admissibility of expert testimony are within a district court's discretion. See Arkwright Mut. Ins. Co. v. Gwinner Oil, Inc., 125 F.3d 1176, 1182 (8th Cir. 1997).

A district court must ensure that testimony admitted under Rule 702 “is not only relevant, but reliable.” Daubert, 509 U.S. at 589. When making this reliability determination, a court may evaluate whether the expert's method has been tested or subjected to peer review and publication, the method's known or potential rate of error, and the method's general acceptance. Presley v. Lakewood Eng'g & Mfg. Co., 553 F.3d 638, 643 (8th Cir. 2009) (citing Daubert, 509 U.S. at 593-94). These factors are not exhaustive, and a court must evaluate the reliability of expert testimony based on the facts of the case. Id. A court also may consider “whether the expertise was developed for litigation or naturally flowed from the expert's research; whether the proposed expert


ruled out other alternative explanations; and whether the proposed expert sufficiently connected the proposed testimony with the facts of the case.” Sappington v. Skyjack, Inc., 512 F.3d 440, 449 (8th Cir. 2008) (internal quotation marks omitted). When weighing these factors, a district court must function as a gatekeeper to separate “expert opinion evidence based on ‘good grounds' from subjective speculation that masquerades as scientific knowledge.” Glastetter v. Novartis Pharm. Corp., 252 F.3d 986, 989 (8th Cir. 2001).

Expert testimony is not admissible if it is “speculative, unsupported by sufficient facts, or contrary to the facts of the case,” Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 757 (8th Cir. 2006), such that it is “so fundamentally unsupported that it can offer no...

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