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Black Hills Truck & Trailer, Inc. v. Mac Trailer Manufacturing, Inc.

United States District Court, D. South Dakota, Southern Division

July 10, 2017

BLACK HILLS TRUCK & TRAILER, INC., Plaintiff,
v.
MAC TRAILER MANUFACTURING, INC., and SIOUXLAND TRAILER SALES, INC., Defendants.

          ORDER DENYING DEFENDANTS' JOINT MOTION TO EXCLUDE EXPERT TESTIMONY

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE.

         Defendant MAC Trailer Manufacturing, Inc. moves to exclude the expert testimony of Wayne R. Brown, A.S.A., M.B.A. Defendant Siouxland Trailer Sales, Inc. joins the motion of MAC. Plaintiff, Black Hills Truck & Trailer, a wholly-owned subsidiary of North American Truck & Trailer, Inc., opposes the motion. For the following reasons, Siouxland's motion for joinder is granted, and MAC and Siouxland's motion to exclude expert testimony is denied.

         FACTUAL BACKGROUND

         Black Hills filed a lawsuit against MAC and Siouxland alleging multiple causes of action, including breach of contract, breach of good faith and fair dealing, and tortious interference with a business relationship. Docket 46. MAC had entered into a written distributor agreement with Black Hills on September 26, 2012, granting Black Hills the right to franchise and distribute MAC product throughout western South Dakota and parts of Nebraska. Docket 67-6. A new contract term would renew yearly on January 1, unless either party modified or non-renewed the current agreement. Id.

         On or around June 3, 2013, MAC sent proposed distributor agreement modifications to Black Hills' Vice President, Mike Rush. Docket 67-10. On June 24, 2013, MAC sent Black Hills an email stating that MAC would not accept any orders placed by Black Hills until the new agreement was signed. Docket 67-11. On July 2, 2013, Black Hills sent its own proposed modifications to MAC, including the right to sell all MAC products instead of the two trailer types (dumps and flatbeds) authorized under the existing agreement. Docket 67-14 at 5 (emphasis added). This letter also stated Black Hills' intention to file a civil lawsuit in South Dakota against MAC if the new terms were not met. Id.

         Black Hills alleges that the June 24, 2013 email is a wrongful termination of the distributor agreement, and that Black Hills incurred damages it otherwise would not have but for MAC's non-renewal of the agreement. Docket 100 at 2. It is in dispute whether the agreement was terminated within the first nine-months of contract, or non-renewed after fifteen months on December 31, 2013. Id. Regardless, Black Hills states it only sold MAC trailers for nine months. Id. at 2 n.2. Black Hills retained Wayne R. Brown to provide expert testimony on his assessment of Black Hills' lost profits and provided MAC and Siouxland with Brown's supplemental expert report. Docket 86-3. In reaching his ultimate conclusion, Brown considered multiple sources of data and information, and included that which he assessed to be relevant. Docket 100 at 2.

         LEGAL STANDARD

         The admissibility of expert testimony is governed by Federal Rule of Evidence 702, which requires expert testimony to be “scientific, technical, or other specialized knowledge” that will clarify the trier of fact's understanding of the evidence or determination of a fact in issue. See, e.g., Tamara Star Comes Out v. Ahsan, No. Civ. 05-5075, 2008 WL 2675106, at *2 (D.S.D. Apr. 22, 2008). Under Rule 702, an expert may testify if (in relevant part): “the testimony is based on sufficient facts or data[, ] . . . the product of reliable principles and methods[, ]” and if “the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702.

         The decision to permit or exclude expert testimony lies within the discretion of the trial court, and is the standard set by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Under Daubert, trial judges are given the “responsibility of acting as gatekeepers to exclude unreliable expert testimony[.]” Fed.R.Evid. 702, Comment to 2000 Amendments. By acting in this “gatekeeper” role, the court must find that all submitted expert testimony be properly grounded, well-reasoned, and not mere speculation before it can be admitted to trial. See Daubert, 509 U.S. at 592 (finding that an expert's knowledge must be more than mere “subjective belief or unsupported speculation”). The Court stated that the party offering expert testimony must establish that the opinion is “supported by appropriate validation … based on what is known, ” but still acknowledged that it is “unreasonable” to require the opinion be “known to a certainty.” Id. at 590.

         Despite the court's wide discretion in determining an expert's admissibility under Daubert-in the case of factual ambiguity-the expert is less likely to be excluded if the question of reliability would be better challenged on cross-examination. See, e.g., id. at 595 (finding that “vigorous cross-examination [and] presentation of contrary evidence . . . are the traditional and appropriate means of attacking shaky but admissible evidence.”). In other words, a challenge under Daubert does not often result in the exclusion of experts because of factual flaws made in their opinion when their testimony would be probative to the jury and the issues in dispute can otherwise and expectedly be uncovered during trial. Id.

         For the following reasons, the court finds that Black Hills has fulfilled its burden to proffer evidence regarding the admissibility of Brown's expert testimony through evidence that is sufficient to meet the standard set by Rule 702 and Daubert, and that MAC and Siouxland's objections would be better addressed on cross-examination.

         DISCUSSION

         Before moving forward, it is important and efficient to broadly address a few points that MAC and Siouxland have made regarding Brown. First, neither defendant objects to Brown's credentials or qualifications as an Accredited Senior Appraiser. Docket 85 at 5. Second, MAC and Siouxland's main objections to Brown's reliability as an expert stem from the allegations that his opinions “drastically overstated” Black Hills' lost profits by using numerically inaccurate data. Id. at 12.

         While the defendants urge the court to exclude Brown's testimony due to the alleged inaccuracy of the numbers and data used in calculating damages, the correctness of these figures is a question of fact, not law. Further, Brown specifically stated reasons for his estimations, so defense can challenge these deliberate choices on cross-examination. See Docket 93-5 at 10 (where Brown explained his ‘overestimations' by stating that “[Black Hills'] historical sales of MAC trailers under represent the strong traction [Black Hills] had achieved with MAC customers.”) Most challenges made by MAC and Siouxland intertwine Brown's methodology with the data applied to his method, so this order will attempt, with all due diligence, to separate the two so as only to comment on the reliability of the formula and methodology used, and not the conclusions ...


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