---
title: "Accounting Expert Witness’ Testimony on Firing Personnel and Cutting Costs Post-Closing Admitted"
meta:
  "og:description": "The Court found no countervailing factors that would favor the exclusion of the testimony provided by the accounting expert witness"
  "og:title": "Accounting Expert Witness’ Testimony on Firing Personnel and Cutting Costs Post-Closing Admitted"
  author: "Expert Witness Profiler"
  description: "The Court found no countervailing factors that would favor the exclusion of the testimony provided by the accounting expert witness"
---

# Accounting Expert Witness’ Testimony on Firing Personnel and Cutting Costs Post-Closing Admitted

Posted on January 27, 2025 by Expert Witness Profiler

Plaintiffs Weston D. McArtor (“McArtor”) and BEI Services, Inc. (“BEI Services”) (collectively, “Plaintiffs”), brought this civil action against the Defendants Valsoft Corporation Inc. (“Valsoft”) and Aspire USA, LLC dba Aspire Software (“Aspire”) (collectively, “Buyers” or Defendants”).

This action involved the sale of Plaintiffs’ business, Nexera, to Defendants. Prior to the acquisition, Nexera was in the business of “developing and providing data analytics software for performance measurement and benchmarking of service operations including, but not limited to, the printing industry.” Defendants, on the other hand, “specialize in the acquisition and development of software companies in vertical markets.”

In 2022, McArtor “began an extensive search to find a buyer to purchase and continue [Nexera’s] operations.” Ultimately, he found Valsoft and “initiated discussions wherein Defendants would purchase [Nexera], retain the employees and continue its operations.” These negotiations culminated in the parties entering into an Asset Purchase Agreement (“APA”). Under the APA, Defendants purchased Nexera, and the majority of BEI’s assets for $3.5 million. The APA also contained a provision allowing “BEI to receive future contingent payments and earnout payments if Nexera met certain performance goals for Defendants after the acquisition.” Additionally, BEI and Aspire entered into a Consulting Agreement…by which McArtor would serve as a part-time consultant on business related matters for a six-month term with a renewal option thereafter.

In the instant suit, Plaintiffs claimed Defendants breached the APA by fraudulently conspiring and intentionally underperforming, thereby thwarting BEI’s ability to receive the contingent and earnout payments. Further, Plaintiffs alleged that Defendants breached the Consulting Agreement by terminating McArtor as a post-acquisition consultant, less than six months after entering the Consulting Agreement. In sum, Plaintiffs asserted nine causes of action in both contract and tort.

Defendants filed a motion to strike Plaintiffs’ expert  [Brian Lappen](https://expertwitnessprofiler.com/expert-witness/Brian-Lappen/1562359).

## **Accounting Expert Witness**

[Brian Lappen](https://expertwitnessprofiler.com/expert-witness/Brian-Lappen/1562359) holds a Master of Accountancy degree from the University of Wisconsin-Madison; he is a licensed CPA in Illinois and a Forensic & Valuation Principal with Plante Moran, an audit, tax, consulting, and wealth management firm. Lappen has 23 years of experience in public accounting, which includes “consulting with clients on a diverse array of forensic accounting engagements and litigation and dispute matters, including matters involving merger and acquisition disputes, damage calculations, and the application and interpretation of Generally Accepted Accounting Principles (“GAAP”) for the financial reporting of both private and publicly traded companies.”

[Get the full story on challenges to Brian Lappen’s expert opinions and testimony with an in-depth Challenge Study.](https://app.expertwitnessprofiler.com/login?eId=1562359)

## **Discussion by the Court**

Generally, Defendants argued that (1) Lappen’s opinions were not based on sufficient facts or data; (2) Lappen did not use reliable methodologies or reliably apply those methodologies; and (3) Lappen’s opinions would not assist the trier of fact.

#### **Lappen has met the requirements of Rule 26(a)(2)(B)**

The Court found that Lappen gave a satisfactory statement of all the opinions he will express, the bases/reasons for those opinions, the facts and data considered, and the exhibits that will be used to summarize or support his opinions.

Lappen has also satisfactorily set forth his qualifications. His curriculum vitae includes a list of all the publications he has authored in the past 10 years, and all the cases he has testified as an expert at trial or been deposed for in the last four years.

Finally, Lappen noted that he is being compensated “on an hourly basis at $525 per hour.” In reviewing Lappen’s expert report and attachments, the Court concluded that he has satisfied the requirements of [Rule 26(a)(2)(B)](https://www.law.cornell.edu/rules/frcp/rule_26).

#### **Lappen possesses the requisite “knowledge, skill, training, or education” required under Rule 702**

First of all, Defendants did not directly question Lappen’s qualifications. In reviewing Lappen’s background, the Court concluded that he is qualified by his years of training, education, and experience.

#### **Lappen’s opinions are sufficiently reliable**

#### _**Lappen ignored certain facts and data when arriving at the conclusion that price increases post-acquisition had a material adverse effect**_

Defendants first argued that Lappen ignored certain facts and data when arriving at the conclusion that price increases post-acquisition had a material adverse effect. Defendants further argued that Lappen did not provide _definitive proof_ that numerous customers left due to the purported rushed price changes.

However, Defendants conflate the appropriate standard; as noted, an expert does not need “definitive proof” to reach their conclusions. To the contrary, even if the Court thinks an expert’s conclusion is incorrect, it will be admissible so long as the expert’s opinions are based on reliable reasoning or methodology.

As Plaintiffs pointed out, Lappen based his opinion, at least in part, upon a spreadsheet that identified the reasons customers left. Moreover, Lappen and Defendants’ expert agreed that _at least_ four customers left Nexera because of the rushed price increases.

#### _**Lappen’s opinions regarding firing Nexera personnel and cutting costs post-closing are unreliable**_

Defendants took issue with Lappen’s conclusion that Defendants’ decisions to fire certain Nexera personnel and cut costs post-closing was materially adverse to the operations of Nexera.

Once again, the Court found that Lappen’s opinions are supported by the record evidence—e.g., sworn testimony from Defendants’ employees, Bethany Sondeno and Nicola De Blasi.

Defendants argued that there were other explanations that could account for a decrease in business post-closing, and Lappen did not consider those potentialities.

However, as Plaintiffs correctly pointed out, “Lappen can evaluate the record evidence and accept or reject [it] in accord[ance] with what he deems credible based on his experience. Defendants cannot wish away record evidence damaging to their case any more than [they] can prevent Lappen from relying on the same as a basis for his opinions.”

The Court agreed and found that Lappen’s opinions regarding firing Nexera personnel and cutting costs post-closing are rooted in sufficient reasoning and methodology to meet the reliability threshold under [Rule 702](https://www.law.cornell.edu/rules/fre/rule_702#:~:text=Rule%20702%20sets%20forth%20the,is%20a%20relatively%20narrow%20inquiry.).

#### _**Defendants’ concerns with respect to the methodology, evidence, and data relied upon and not relied upon, go to the weight of the evidence, not admissibility**_

Finally, Defendants argued that Lappen’s opinion that “Defendants’ failure to cross-sell Nexera with another company…negatively affected Plaintiffs’ ability to meet the earnout and contingent payments” is methodologically flawed and fails to account for a software conflict that prevented cross-selling.

Once again, Defendants’ argument concerned the weight of the evidence, not its reliability. As far as the Court can surmise, in reaching his conclusions on cross-selling, Lappen relied upon the record evidence and his own experience. While Defendants clearly disagreed with his conclusion, the Court found Lappen’s opinion was sufficiently reliable under Rule 702.

Ultimately, the Court found that Lappen adequately set forth his opinions and the corresponding bases for those opinions based upon the inspection, review, and interpretation of facts and data; subsequently, he utilized his own personal knowledge, experience, and understanding of the industry to reach his opinions. 

#### **Lappen’s opinions will assist the trier of fact**

In [Cook v. Rockwell Intern. Corp., 580 F. Supp. 2d 1071 (D. Colo. 2006)](https://casetext.com/case/cook-v-rockwell-intern-corp-8/), it was held that “doubts about whether an expert’s testimony will be useful should generally be resolved in favor of admissibility unless there are strong factors such as time or surprise favoring exclusions.”

The Court must determine whether Lappen’s opinions will assist the trier of fact. In this case, the Court _is_ the trier of fact. As such, the Court is afforded far greater leeway in determining whether expert testimony will assist the fact finder, i.e., itself. In this case, the Court found no such countervailing factors, and as such, the Court found that Lappen’s testimony and report will assist the fact finder.

#### **Concerns about reliability are diminished in a bench trial**

In a bench trial setting, it is appropriate for the Court to allow the expert to testify, and later make determinations about the admissibility, weight, and credibility of the expert’s testimony.

The fact that the Court will sit as the finder or fact alone is not dispositive of the inquiry of expert qualification; however, given that Lappen met the requirements of Rule 26 and Rule 702—and concerns about presenting unreliable or irrelevant testimony to the jury are effectively neutralized—the Court saw no reason why Lappen should be barred from testifying, nor why his expert report should be stricken. Further, the trial court’s role as gatekeeper is not intended to serve as a replacement for the adversary system. Vigorous cross-examination, and presentation of contrary evidence are the traditional and appropriate means of attacking shaky but admissible evidence.

## **Held**

The Court denied the Defendants’ motion to strike Plaintiffs’ expert Brian Lappen.

## **Key Takeaway:**

In reaching most of his conclusions, Lappen relied upon the record evidence and his own experience. The Court found that Lappen adequately set forth his opinions and the corresponding bases for those opinions based upon the inspection, review, and interpretation of facts and data; subsequently, he utilized his own personal knowledge, experience, and understanding of the industry to reach his opinions. The absence of strong factors such as time or surprise favoring exclusions was noted.

## **Case Details:**

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