Marketing Expert Not Allowed to Opine on Owed Duties

Plaintiff New York Packaging II LLC, doing business as RediBag USA, commenced the above-captioned action on March 26, 2021, against Defendants Mustang Marketing Group LLC ("Mustang") and John Maierhoffer, alleging claims for misappropriation of trade secrets.

Defendants sought to strike the entire report and proposed testimony of Plaintiff's experts, Christopher L. Picone and Glen Balzer.

Financial Analysis Expert Witness

Christopher L. Picone has nearly 40 years of experience in financial consulting, forensic accounting, litigation support, business restructuring, and expert damages analysis across industries. His professional background includes leadership roles in corporate advisory firms, real estate development companies, and legal practice, with experience dating back to the early 1990s.

He holds a Juris Doctor from the John Marshall Law School and an LL.M. in Taxation from DePaul University College of Law.

Get the full story on challenges to Christopher Picone’s expert opinions and testimony with an in-depth Challenge Study.

Marketing Expert Witness

Glen Balzer is a management and forensic consultant in marketing and sales. For 30 years, he has been involved with creating, upgrading, and managing marketing and sales organizations throughout America, Europe, and Asia.

Want to know more about the challenges Glen Balzer has faced? Get the full details with our Challenge Study report.

Discussion by the Court

i. The Court declines to strike Christopher L. Picone's report and preclude his testimony

Defendants argued that Picone's report should be stricken and his testimony should be precluded because: (1) he offers impermissible legal conclusions, as he "intends to testify that a long list of sales Mustang made from February [of] 2019 and March [of] 2023 were competitive," and the "question of whether certain sales are competitive is a legal conclusion," (2) he is not qualified to determine which products are competitive, as he is "not an industry expert" and "has no experience as a broker or manufacturer" in Mustang's industry; (3) his report and testimony are not based on sufficient facts or data, as his "proposed damage calculations are based on conjecture and speculation," as Plaintiff "collected Mustang's sales records," "identified all products it considers competitive," and "directed Picone to assume all such sales would have gone to [Plaintiff] but for Mustang's alleged breach of [the Non-Compete and Non-Solicitation] Agreement," and (4) he did not apply any principles or methods to his analysis, as he "does nothing more than add Mustang's sales data and speculate that all sales for allegedly competitive products would have gone to Plaintiff."

1. Impermissible Legal Conclusions

Defendants' argument that Picone offers impermissible legal conclusions is not supported by the evidence. First, Defendants do not provide any case law supporting their argument that a damages calculation assuming competitive sales is an impermissible legal conclusion, and Plaintiff persuasively argues that Picone does not offer impermissible legal conclusions because he was "not asked to determine whether any product was competitive." Plaintiff, instead, "asked Picone to quantify damages based on factual assumptions," which includes "the assumption that certain sales involved competitive products."

Because an expert may present a damages calculation on the basis of assumed facts, the Court found that Picone's opinions do not constitute impermissible legal conclusions.

In addition, Picone's assumption of competitive sales for the purposes of calculating damages is not an impermissible legal conclusion because an expert may presume causation when presenting damage calculation methods.

The Court therefore found that Picone's report and intended testimony regarding his damages calculation is not an impermissible legal conclusion.

2. Qualifications

Defendants' argument that Picone is not qualified to opine about Plaintiff's damages is not supported by the record. First, it is more appropriate for Defendants to challenge Picone's qualifications on cross-examination because his qualifications impact the credibility and weight of his testimony, not its admissibility.

Liberally construing the expert-qualification requirements, the Court found that Picone is sufficiently qualified to opine on Plaintiff's alleged damages. First, Picone is qualified as a damages expert because he has "nearly forty years of experience in financial consulting, litigation support, and damages analysis" and has served "as a consultant and expert in matters involving business losses, product recalls, non-compete disputes, and contract claims."

The Court found that Picone's extensive experience in "financial consulting, litigation support, and damages analysis" is sufficient to qualify him as an expert for the purposes of Plaintiff's damages calculations.

3. Sufficient Facts or Data and Reasonable Methodology

Defendants argued that Picone's report and testimony is "unreliable and/or speculative" because he did not consider alternative factual scenarios. However, this argument fails because the consideration of alternative factual scenarios impacts the weight and credibility of his report and testimony, not their admissibility.

Picone sufficiently demonstrates his methodology for obtaining and analyzing data. Picone concedes that he did not employ the "industry practice . . . to include only verified amounts for sales and other claims[-]related information" because Defendants failed to "produce[] most of the requested information." To overcome this, Picone "elected to extrapolate competitive sales from information deemed reasonably complete and accurate using reasonable and conservative assumptions." Picone testified at his deposition that his methodologies are "simple math" involving "detailed investigation and tracking down pieces of evidence from start to finish."

Defendants argued that Picone's methodology is based in bad faith because he "does nothing more than add Mustang's sales data and speculate that all sales for allegedly competitive products would have gone to [Plaintiff]." The Court found that Picone's methodology is not based on bad faith because experts can rely on a range of data to opine on damages.

The Court found that Picone's methodology for obtaining and analyzing data is sufficient for the purpose of calculating damages. Moreover, Defendants can cross-examine Picone regarding whether he ignored relevant evidence and that Picone incorrectly identified competitive products.

ii. The Court strikes Glen Balzer's report and precludes him from testifying as an expert

Defendants argued that Balzer's report should be stricken and his testimony should be precluded because: (1) he offers "impermissible legal conclusions," as "[Plaintiff] seeks to admit Balzer's proposed testimony that brokers owe a duty of loyalty to the seller" and that "the duty of loyalty prohibits disclosure of confidential information," (2) he is not qualified to opine on standard industry practices, as his experience "as a legal expert who drafts and negotiates contracts" "arises from the unauthorized practice of law" because "he is not an attorney and has no legal training," (3) his report and testimony are not based on sufficient facts or data, as "only a court or fact finder can decide whether a duty of loyalty exists and/or the circumstances under which the duty is breached," and (4) he did not apply any principles or methods to his analysis, as he "failed to apply any methodology" or "cite any authoritative sources, industry publications, or peer-reviewed materials to support his claims about 'industry standards."

1. Impermissible legal conclusions

Defendants persuasively argued that Balzer offered impermissible legal conclusions. The Court is not convinced by Balzer's argument that his conclusion regarding Maierhoffer's owed duties of loyalty and confidentiality does not constitute an interpretation of the Non-Compete and Non-Solicitation Agreement because his conclusion is based on "industry custom and practice." First, Balzer does not detail the industry customs or practices on which he relies; instead, he merely states that his conclusion is based on "industry custom and practice observed over [his] decades of work in many industries." Second, Balzer's conclusion is a recitation of the central issue in this action — whether Defendants owed Plaintiff a duty of loyalty and confidentiality — and Balzer's report opining on the existence of a contractual duty is a legal question to be decided by the Court.

Because the central issue in this action is whether Defendants owed Plaintiff duties of loyalty and confidentiality, Balzer's report and intended testimony opining on whether Maierhoffer owed Plaintiff these duties constitute an impermissible legal conclusion.

Held

The Court denied Defendants' motion to strike the report of and preclude testimony from Plaintiff's expert, Christopher Picone, and granted Defendants' motion to strike the report of and preclude testimony from Plaintiff's expert, Glen Balzer.

Key Takeaway

It is not the province of an expert witness to interpret the management agreement, nor to apply the legal standard set out in that contract to the facts. Whether there was a duty and what that duty consisted of is a matter of law. Therefore, no expert can testify as to the existence of a duty.

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