Opinion
CIVIL ACTION NO. 99-CV-6552.
November 29, 2001
MEMORANDUM
Now before the Court is the motion in limine of defendants to exclude the expert testimony proffered by plaintiff SmithKline Beecham Corporation ("SmithKline"). For the reasons set forth below, the motion of defendants will be denied.
Background
Plaintiff SmithKline has filed this action asserting claims of violations by the defendants of the Sherman Antitrust Act, as well as supplemental state law claims of misrepresentation, civil conspiracy and breach of contract. The cause of action arises out of the bidding process for a roofing project in a building owned by SmithKline. Plaintiff alleges that the defendants engaged in a bid rigging conspiracy by submitting collusive bids to make the lowest bid submitted by Defendant Eastern Applicators, Inc. ("Eastern") appear competitive and reasonable.
In support of its claims, SmithKline has proffered Robert P. Piccione and John DiNenna as expert witnesses pursuant to Federal Rule of Evidence 702. Mr. Piccione is the president of Hygrade Insulators ("Hygrade"), and Mr. DiNenna is the president of JJD Urethane ("JJD"); both Hygrade and JJD are roofing companies in the same geographic area as the roofing project at issue. Both companies have licenses to apply General Electric roof coating materials, as required by the job specifications in the SmithKline project. SmithKline requested Mr. Piccione and Mr. DiNenna to calculate a competitive bid, including a normal profit, for the roofing project at issue based on the plans and specification, job site inspection, and the costs in effect during 1997. Plaintiff proffer the testimony to show what would have been the 1997 free market bid for the SmithKline project. Defendants have moved to exclude the proffered testimony.
Legal Standard
Federal Rule of Evidence 702, as amended December 1, 2000, states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
Under Rule 702, when "[f]aced with a proffer of expert scientific testimony . . . the trial judge must determine at the outset, pursuant to Rule 104(a) whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue." Daubert v. Merrell Dow Pharms. 509 U.S. 579, 592, 113 S.Ct. 2786, 2796, 125 L.Ed.2d 469 (1993) (footnotes omitted). This gatekeeping function extends beyond scientific testimony to "testimony based on . . . `technical' and `other specialized' knowledge."Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119 S.Ct. 1167, 1171, 143 L.Ed.2d 238 (1999).
The Court of Appeals for the Third Circuit has established that Federal Rule of Evidence 702 as interpreted by Daubert and its progeny embodies "`three distinct substantive restrictions on the admission of expert testimony: qualifications, reliability, and fit.'" United States v. Mathis, 264 F.3d 321, 335 (3d Cir. Aug. 30, 2001) (quoting Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000)). The proponent of the expert testimony bears the burden of establishing its admissibility by a preponderance of the evidence. See Oddi v. Ford Motor Co., 234 F.3d 136, 144 (3d Cir. 2000), cert. denied, 121 S.Ct. 1537 (2001).
Qualifications
The Third Circuit Court of Appeals has set the following standard to qualify as an expert:
Rule 702 requires the witness to have "specialized knowledge" regarding the area of testimony. The basis of this specialized knowledge "can be practical experience as well as academic training and credentials." We have interpreted the specialized knowledge requirement liberally, and have stated that this policy of liberal admissibility of expert testimony "extends to the substantive as well as the formal qualification of experts." However, "at a minimum, a proffered expert witness . . . must possess skill or knowledge greater than the average layman . . . ."Elcock, 233 F.3d at 740 (quoting Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir. 1998)).
Thus, under this standard, the specialized knowledge of the expert may be derived from practical experience. Mr. Piccione testified that he has been president of High Grade, a low slope industrial and commercial roofing company, for roughly seven or eight years, and has estimated projects for High Grade since 1977. (October 10, 2001, Daubert Hearing at 24.) He further testified that in the past ten years High Grade has submitted on average 300 bids per year to customers, and has conducted roughly 35 to 40 roofing projects per year. (Id. at 26.) Mr. DiNenna testified that for the past 30 years he has been the president of, and has estimated projects for, JJD, a company that installs polyurethane foam insulation and roofing. (Id. at 78.) Mr. DiNenna also testified that in the past ten years JJD has submitted on average 100 to 200 bids to customers and performed between 35 and 50 projects per year. (Id. at 79.) Both experts testified that they have been involved in the preparation of bids and cost estimates for roofing projects similar in scope and size to the SmithKline project. (Id. at 27, 79.) Their practical experience and background have clearly provided them with specialized knowledge beyond the ken of the average layman in the area of bids for commercial roofing projects. I therefore conclude that Mr. Piccione and Mr. DiNenna are qualified to testify as expert witnesses on this subject.
Reliability
The factors which govern reliability are as follows:
(1) whether a method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique's operation; (5) whether the method is generally accepted; (6) the relationship of the technique to methods which have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses to which the method has been put.Elcock, 233 F.3d at 745-46 (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 742 n. 8 (3d Cir. 1994)). It has been noted that Daubert:
makes certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field. . . . The trial judge must have considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable. That is to say, a trial court should consider the specific factors identified in Daubert where they are reasonable measures of the reliability of expert testimony.Elcock, 233 F.3d at 745-46 (quoting Kumho Tire, 526 U.S. at 152, 119 S.Ct. at 1176). Thus, the factors outlined above are not exhaustive and the inquiry remains flexible. See Elcock, 233 F.3d at 746. Where the testimony is not scientific in nature, "relevant reliability concerns may focus upon personal knowledge or experience," as opposed to "scientific foundations." Kumho Tire, 526 U.S. at 150, 119 S.Ct. at 1175.
To prepare his bid pursuant to plaintiff's request, Mr. Piccione visited the site and took into consideration the job specifications and logistics of the project, including the height, cleanliness and prep work associated with the roof. (October 10, 2001, Daubert Hearing at 24, 36.) He incorporated these measurements into an electronic spreadsheet, using the same product costs, labor costs, benefits, base rates, overhead and profit figures that High Grade used in 1997. (Id. at 36-37.) Similarly, Mr. DiNenna testified that to prepare his bid, he reviewed the plans and specifications for the SmithKline project, and visited the site, taking photographs and interviewing the maintenance person regarding any complications or restrictions that occurred on the project. (Id. at 86.) Mr. DiNenna utilized the same costs and figures that JJD used for projects in 1997, and incorporated these figures into an Excel program that he had created. (Id. at 86, 90.) Both experts testified that they used the same process as that used in every project for which their companies submitted a bid. (Id. at 33, 86-7.) Furthermore, both testified that this estimation process is constantly refined by comparing the estimated costs to the actual costs after the completion of each project. (Id. at 37-8, 89.) Therefore, the methods used by Mr. Piccione and Mr. DiNenna are strongly rooted in their practical experiences.
Because the proffered testimony is not scientific in nature, the methodology need not be subjected to rigorous testing for scientific foundation or peer review. Nevertheless, Mr. DiNenna testified that from his methods are similar to those of the contractors that he knows in the industry. (Id. at 88.) Moreover, both experts testified that different companies use different methods and figures to prepare their estimates and bids. (Id. at 41, 46-8, 106). Consequently, there is no single standard formula for bid estimations, and the fact that both experts have maintained successful roofing businesses for many years lead to the conclusion that their estimation processes are within the realm of reasonable and acceptable methods.
Defendants have attacked the reliability of the proffered testimony by criticizing the hypothetical nature of the bids that were calculated after the project was already completed and by setting forth various ways in which the bid did not conform to the job specifications or had used incorrect cost values. (Def. Supp. Br. at 5-7, 10-13.) I conclude that these criticisms of the proffered bids are directed towards their probative weight rather than their admissibility, and are more properly the subject of "vigorous cross examination, presentation of contrary evidence, and careful instruction on the burden of proof . . . ."Protocomm Corp. v. Novell Advances Serv. Inc, No. 98-3819, 2001 U.S. Dist. LEXIS 15811, at **9-10 (E.D.Pa. Sept. 26, 2001) (citing Daubert, 509 U.S. at 596, 113 S.Ct. at 2798). Under Federal Rule of Evidence 702, plaintiff need not prove the correctness of the proffered opinion, only that the preponderance of the evidence shows that the opinions are reliable. See Oddi, 234 F.3d at 145. Moreover, this Court observes that qualified experts are fully permitted to answer hypothetical questions.See Asplundh Mfg. Div. v. Benton Harbor Eng'g, 57 F.3d 1190, 1202 n. 16 (3d Cir. 1995) (ability to answer hypothetical questions is primary difference between lay testimony under F.R.E. 701 and expert testimony under F.R.E. 702). Upon review of the opinions and testimony of the experts, I conclude that the opinions are not so riddled with inconsistencies as to render them unreliable.
Fit
The fit requirement stems from the textual provision that "scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue." Mathis, 264 F.3d at 335 (quoting F.R.E. 702). Admissibility under this factor turns on "the proffered connection between the scientific research or test result to be presented and particular disputed factual issues in the case. Oddi, 234 F.3d at 145. This measure is "not intended to be a high one." Id. Its standard is not dissimilar to the general liberal standard of relevance under the Rules. See Mathis, 264 F.3d at 335.
Under this standard, the proffered testimony fits the case at hand. Collusion may be proven by circumstantial evidence. See In re Baby Food Antitrust Litig., 166 F.3d 112, 121-22 (3d Cir. 1999) (circumstantial evidence of conscious parallelism can support claim of collusion). Plaintiff alleges that Eastern conspired with plaintiff's roofing consultant to exclude local roofing contractors from bidding on the SmithKline project, and inviting out-of-state roofing contractors to submit collusive bids designed to make Eastern's bid appear to be the lowest competitive bid. Mr. Piccione and Mr. DiNenna are principals of two local roofing companies that were located near the job site and that were qualified to apply the materials required by the job specifications. Furthermore, both testify that their companies would have been willing and able to submit a competitive bid for the project had they been informed of the project at the time in question. (October 10, 2001 Daubert Hearing at 30-31, 129.) Neither company was invited to submit a bid for the SmithKline project, but the bids proffered by Mr. Piccione and Mr. DiNenna are both lower than the bid submitted by Eastern. These facts may support an inference of collusion. To the extent the bids calculated by Mr. Piccione and Mr. DiNenna would assist the jury in resolving the factual issue of whether the bids submitted by defendants were truly competitive, they clearly fit the purpose for their being offered.
Conclusion
For the foregoing reasons, I conclude that the testimony of Mr. Piccione and Mr. DiNenna is admissible under Federal Rule of Evidence 702, and the motion in limine of defendants to exclude their testimony will be denied.
An appropriate Order follows.
ORDER AND NOW, this 29th day of November, 2001, upon consideration of the motion in limine of defendants (Doc. No. 35) to exclude the expert testimony and bids of John DiNenna and Robert Piccione, the response of plaintiff thereto (Document No. 36), and the supplemental memoranda and materials attached to each, and for the reasons set forth in the foregoing memorandum, IT IS HEREBY ORDERED that the motion in limine of defendants is DENIED.