Accounting Expert’s Testimony on Overhead Costs Excluded
Posted on October 8, 2025 by Expert Witness Profiler
This case arises from a contract between The Bama Companies, Inc., a manufacturer of baked goods, and Stahlbush Island Farms, Inc., a farmer and food processor, for the purchase of approximately 130,710 pounds of berries for a mixed berry and lemon cream pie Bama would supply for McDonald’s restaurants.
Bama claimed that it was forced to cancel the McDonald’s promotion because Bama identified a handful of physical contaminants in some finished pies.
Plaintiff’s expert, Steve Rutherford, a licensed CPA was retained to “review and verify as to the consistency and comprehensiveness of how the staff (for the Plaintiff) accounted for the standard costing and pricing comparison,” and to state whether overhead costs should be included in damages.
Rutherford opined that Bama incurred damages of Nine Hundred Eighty-Nine Thousand and Nine Hundred and Seventy-Seven Dollars ($989,977.00) due to actions of Stahlbush Island Farms, Inc.
Defendant filed a motion to exclude the opinions of Rutherford. Specifically, Defendant argued that Rutherford’s testimony should be excluded because (1) Plaintiff has failed to demonstrate that Rutherford is qualified to opine regarding the valuation of damages in a civil case, and (2) Rutherford’s opinions “consisted largely of bare conclusions that vouch for Plaintiff’s expertise as a supplier.”
Accounting Expert Witness
Steve M. Rutherford is a Certified Public Accountant and has served as the sole shareholder and president of his own accounting firm for nearly thirty-three (33) years.
Additionally, he has provided expert advice and testimony in multiple and a wide range of personal and business legal matters for approximately thirty-six (36) years and has been appointed as a bankruptcy trustee on eight (8) occasions.
Discussion by the Court
In Rutherford’s report, he initially concluded that the damages set forth by Plaintiff are “a reasonable estimate of the damages” and further noted that he has “no reasons to doubt the accuracy nor the comprehensiveness of methods and calculations” set forth by Plaintiff. Moreover, he observed that Plaintiff “has been doing business with McDonald’s for approximately three decades” and that “it seems to reason that from a discerning eye, someone in the business profession would have to think [they] know what they are doing (much experience) when it comes to pricing out the costs associated with making pies for McDonald’s.”
Building on this reasoning, Rutherford further asserted that “such a long-term mutually beneficial relationship would have been terminated, had [Plaintiff] been devoid in their costing amounts.” However, according to the Court, rather than applying methodologies and performing calculations himself, Rutherford simply assumed that the methodologies applied and calculations performed by Plaintiff must be right due to Plaintiff’s previous experience and existing business relationship with McDonald’s.
Consequently, for similar reasons, the Court found that Rutherford’s opinions regarding overhead costs are also not reliable or relevant. Once again, rather than applying methodologies and performing calculations, Rutherford opined that calculations prepared by Plaintiff are “very detailed, concise and organized” and further emphasized that due to Plaintiff’s previous experience and existing business relationship with McDonald’s, “any deficiencies or irregularities would have been exposed and corrected at the time the job in question had come to fruition.” Ultimately, while he seemed to offer general principles regarding overhead costs, such as rent, Rutherford’s opinions did not apply the specific facts of the case to a particular methodology and, therefore, did not provide sufficient support for the opinions he offered.
Held
The Court granted the Defendant’s Daubert motion to exclude the opinions of Bama Damages expert Steve Rutherford.
Key Takeaway:
Rutherford’s opinions are plainly not based in sound methodology, nor do his opinions demonstrate a connection of the opinions to the facts of the case. Rutherford’s opinions consisted mainly of assumptions with no evidentiary support. While an expert may apply assumptions, assumptions must have some reasonable evidentiary foundation.
Further, although Rutherford is entitled to some element of professional judgment in forming his opinion, he must still explain how he reached his opinion based in recognized methodology and by application of the facts. Because Rutherford’s opinions failed to do so, the Court agreed with Defendant and found that Rutherford’s opinions are not reliable and relevant.
Case Details:
| Case Caption: | Bama Companies, Inc., The V. Stahlbush Island Farms, Inc. |
| Docket Number: | 4:18cv45 |
| Court Name: | United States District Court, Oklahoma Northern |
| Order Date: | October 03, 2025 |
