Target Strike Inc v. Marston & Marston Inc

• Decision Date: 24 March 2011
• Docket Number: CIVIL ACTION NO. SA-10-CV-0188-OLG (NN)
• Court: U.S. District Court — Western District of Texas
• Parties: TARGET STRIKE, INC., Plaintiff, v. MARSTON & MARSTON, INC.; MARSTON ENVIRONMENTAL, INC.; CLIFFORD R. "KIP" WILLIAMS; WILLIAM J. HARTLEY; GOLD REEF INTERNATIONAL, INC.; GOLD REEF OF NEVADA, INC.; CRANDELL ADDINGTON; SADIK AL-BASSAM; RICHARD CRISSMAN CAPPS; LOU B. KOST, JR.; LOU KOST HOLDINGS, LTD.; WILLIAM SHAFFER; PAUL STROBEL; PANTHER RESOURCES, INC.; PANTHER RESOURCES PARTNERS LLLP; ADDKO, INC.; TEXAS RESEARCH, LLC; L.K. & C.A., INC.; MEXIVADA MINING CORPORATION; OTHER UNKNOWN DEFENDANTS ACTING IN CONCERT WITH THE ABOVE NAMED DEFENDANTS, Defendants. CLIFFORD R. "KIP" WILLIAMS; RICHARD CRISSMAN CAPPS; WILLIAM SHAFFER; and PAUL STROBEL; Counter-Plaintiffs, v. TARGET STRIKE, INC.; and GOLD RESOURCES OF NEVADA, LLC (GRN I). Counter-Defendants. WILLIAM J. HARTLEY, Counter-Plaintiff, v. TARGET STRIKE, INC. and GOLD RESOURCES OF NEVADA, LLC (GRN I). Counter-Defendants. CRANDALL ADDINGTON; SADIK AL-BASSAM; LOU B. KOST, JR.; LOU KOST HOLDINGS, LTD.; RESURRECTION CANYON, INC., f/k/a PANTHER RESOURCES, INC.; RESURRECTION CANYON, LLLP, f/k/a PANTHER RESOURCES PARTNERS, LLLP; ADDKO, INC.; TEXAS RESEARCH, LLC; and L.K. & C.A., INC., Counter-Plaintiffs, v. TARGET STRIKE, INC, and GOLD RESOURCES OF NEVADA, LLC (GRN I), Counter-Defendants. RESURRECTION CANYON, LLLP, f/k/a PANTHER RESOURCES PARTNERS, LLLP, Counter-Plaintiff, v. TARGET STRIKE, INC. and GOLD RESOURCES OF NEVADA, LLC (GRN I), Counter-Defendants. CLIFFORD R. "KIP" WILLIAMS, RICHARD CRISSMAN CAPPS, WILLIAM SHAFFER and PAUL STROBEL, Counter-Plaintiffs, v. TARGET STRIKE, INC. and GOLD RESOURCES OF NEVADA, LLC (GRN I), Counter-Defendants.

TARGET STRIKE, INC., Plaintiff,
v.
MARSTON & MARSTON, INC.;
MARSTON ENVIRONMENTAL, INC.;
CLIFFORD R. "KIP" WILLIAMS;
WILLIAM J. HARTLEY;
GOLD REEF INTERNATIONAL, INC.;
GOLD REEF OF NEVADA, INC.;
CRANDELL ADDINGTON;
SADIK AL-BASSAM;
RICHARD CRISSMAN CAPPS;
LOU B. KOST, JR.;
LOU KOST HOLDINGS, LTD.;
WILLIAM SHAFFER;
PAUL STROBEL;
PANTHER RESOURCES, INC.;
PANTHER RESOURCES
PARTNERS LLLP; ADDKO, INC.;
TEXAS RESEARCH, LLC; L.K. & C.A., INC.;
MEXIVADA MINING CORPORATION;
OTHER UNKNOWN DEFENDANTS ACTING IN CONCERT WITH THE
ABOVE NAMED DEFENDANTS, Defendants.
CLIFFORD R. "KIP" WILLIAMS; RICHARD CRISSMAN CAPPS;
WILLIAM SHAFFER; and PAUL STROBEL; Counter-Plaintiffs,
v.
TARGET STRIKE, INC.; and GOLD RESOURCES OF NEVADA, LLC (GRN I). Counter-Defendants.
WILLIAM J. HARTLEY, Counter-Plaintiff,
v.
TARGET STRIKE, INC. and
GOLD RESOURCES OF
NEVADA, LLC (GRN I). Counter-Defendants.
CRANDALL ADDINGTON; SADIK AL-BASSAM;
LOU B. KOST, JR.; LOU KOST HOLDINGS, LTD.;
RESURRECTION CANYON, INC., f/k/a PANTHER RESOURCES, INC.;
RESURRECTION CANYON,
LLLP, f/k/a PANTHER RESOURCES PARTNERS, LLLP; ADDKO, INC.;
TEXAS RESEARCH, LLC; and L.K. & C.A., INC., Counter-Plaintiffs,
v.
TARGET STRIKE, INC, and GOLD RESOURCES OF NEVADA, LLC (GRN I), Counter-Defendants.
RESURRECTION CANYON, LLLP, f/k/a PANTHER RESOURCES PARTNERS, LLLP, Counter-Plaintiff,
v.
TARGET STRIKE, INC. and
GOLD RESOURCES OF NEVADA, LLC (GRN I), Counter-Defendants.
CLIFFORD R. "KIP" WILLIAMS,
RICHARD CRISSMAN CAPPS,
WILLIAM SHAFFER and PAUL STROBEL, Counter-Plaintiffs,
v.
TARGET STRIKE, INC. and GOLD RESOURCES OF
NEVADA, LLC (GRN I), Counter-Defendants.

CIVIL ACTION NO. SA-10-CV-0188-OLG (NN)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

Dated: March 24, 2011

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SEVENTH REPORT AND RECOMMENDATION

TO: Honorable Orlando Garcia
United States District Judge

This report and recommendation addresses the pending motion to exclude the report and testimony of the plaintiff's designated expert — Behre Dolbear. I have jurisdiction to enter this report under 28 U.S.C. § 636(b) and the district court's order referring pretrial motions to me.¹Because the resolution of the motion may be dispositive of the plaintiff's case — as to injury and damages — I treated the motion as dispositive. After considering the motion, the response, and the reply, ² I recommend granting the motion.

This case is a lawsuit about alleged misappropriated trade secrets. According to plaintiff Target Strike, Inc. (Target Strike), ³ its technology — Target Forecasting (TF) — identified 72 areas of potentially minable precious minerals in Nevada. Purportedly, TF substantially reduces the time and cost to conduct regional reconnaissance and sampling

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programs by identifying specific target areas with a high correlation to known deposits.⁴ Target Strike once contracted with defendants Marston & Marston, Inc. and Marston Environmental, Inc. (together, Marston) to aid in the development of the areas of interest. Target Strike contends Marston, along with other defendants, stole the locations of the areas of potential interest for development for monetary gain. Target Strike pleaded nine causes of action, seeking damages and injunctive relief.⁵

Marston moved to strike Target Strike's expert witnesses. Target Strike designated three expert witnesses — all affiliated with Behre Dolbear & Company, Inc. — Bernard J. Guarnera, Michael Roy Fitzsimonds, and Joseph A. Kantor (collectively, Behre Dolbear).⁶Guarnera has over 40 years of experience in the international mining industry and is the president and chairman of the Behre Dolbear Group.⁷ Additionally, he has previously provided expert testimony on three occasions.⁸ Fitzsimonds is an associate of Behre Dolbear with over 25 years of mineral industry experience.⁹ Fitzsimonds has a diverse background in the mining industry, having worked in a number of capacities — including "database design, geostatistics" and the

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implementation of computer hardware and software.¹⁰ Kantor is an economic geologist with "over 30 years of experience in all phases of precious and base metal exploration."¹¹ Target Strike designated these experts to testify about its injury and damages.¹² The designation includes a report detailing the expert opinions.¹³

Marston moved to exclude the report and each expert's testimony on the grounds that: (1) the experts do not opine on a disputed fact issue, (2) the report is flawed by an analytical gap, and, (3) in the alternative, the testimony of witnesses Fitzsimonds and Kantor is needlessly cumulative.¹⁴ Although the applicable pleadings are sealed, I did not seal this report because it does not specifically refer to confidential matters.

Expert testimony must be reliable and relevant to be admissible.¹⁵ The party offering expert testimony must prove its admissibility by a preponderance of the evidence.¹⁶ Thus, Target Strike must show the testimony and accompanying report are relevant, reliable, and the product

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of a sufficiently qualified expert. For a witness to be qualified, the expert must have sufficient knowledge, skill, training, education, or experience to assist the trier of fact.¹⁷ To be relevant, the testimony must be helpful in determining an issue in question, something beyond the knowledge of the average juror.¹⁸ Irrelevant evidence is inadmissible, while relevant evidence is generally admissible.¹⁹ Evidence that has "too great an analytical gap" with the underlying data is unhelpful to a juror and thus irrelevant.²⁰ Reliability has no specific test; instead, a set of criteria serves as a guideline for reliability determinations.²¹ Even when a party has shown the qualified testimony and accompanying report is reliable and relevant, the evidence can still be excluded as needlessly cumulative.²² Marston has the burden of showing that the testimony of Kantor and

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Fitzsimonds is needlessly cumulative.²³

Behre Dolbear's report is not relevant to a fact in issue. Marston maintained Behre Dolbear's report is not relevant because it does not address a fact in issue; namely, because the report does not analyze the costs avoided using TF.²⁴ Marston complained that the report analyzes the costs of sampling and developing a target area after the initial identification of a site, although the costs to develop a target area following identification are the same under the TF approach or the conventional approach to mining.²⁵ Marston claimed the relevant question is the "cost to generate the prospect area from scratch."²⁶ Marston argued Behre Dolbear's report does not address any disputed issue because it calculates the costs of conventional exploration.

The key to determining relevancy is knowing the purpose of the offered evidence.²⁷Evidence is relevant when it has any tendency to make the existence of any material fact more or less probable.²⁸ The purpose of Target Strike's expert report and testimony is to prove Target Strike's injury and damages. Thus, Behre Dolbear's report must make Target Strike's injury and damages more or less probable.

Target Strike's injury and damages flowed from the defendants' alleged misappropriation

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of the location of Target Strike's areas of interest — areas of interest identified using TF. According to Target Strike, its TF technology reduces the time and cost of identifying areas with a potential for discovering minerals; relevant here, for discovering gold. Target Strike's damages are measured by the costs a company exploring for gold in Nevada would avoid using TF technology as opposed to the costs of using conventional exploration methods to preliminarily identify promising prospects for discovering gold.²⁹ Behre Dolbear's report and testimony are not required to prove Target Strike's case by itself, but they must make Target Strike's damages estimate more or less probable.³⁰

To prove relevancy, Target Strike relied on avoided costs as first identified by defendant Clifford R. "Kip" Williams.³¹ At some point during Target Strike's business relationship with Marston, Williams purportedly estimated avoided costs for 16 of Target Strike's 72 areas of interest. In Williams's estimate, using TF to identify target areas for mineral exploration saved $42,000 to $70,000 per area of interest.³² Behre Dolbear used the estimate to calculate avoided

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costs for the remaining areas of interest and to arrive at Target Strike's damages.³³

Target Strike characterized Williams's estimate as a party admission and offered no other explanation about why the estimate is reliable. An admission, however, does not make a damage estimate reliable. Williams's estimate does not explain the basis for the stated savings. Unsupported, Williams's estimate of avoided costs is unreliable.

Although Behre Dolbear's report purports to opine about "costs a company exploring for gold in Nevada would avoid by utilizing the technology developed by Target Strike, "³⁴ Behre Dolbear's experts contradicted the opinion, first by testifying that the costs calculated would be incurred under the conventional method of exploration as well as the TF method, and then by stating that they did not calculate the cost of identifying a target area.³⁵ Instead, Behre Dolbear assumed targets were already identified.³⁶ This assumption shows that the resulting damage calculation does not address a disputed issue, because the report and testimony do not address the costs of...