Opinion
Case No.: SACV 18-00822-CJC(KESx)
2020-10-01
Erin TURNER, Plaintiff, v. THYSSENKRUPP MATERIALS, N.A., ThyssenKrupp Supply Chain Services, and Does 1 through 100, Defendants.
Robert B. Gibson, Gibson and Hughes, Santa Ana, CA, Charles M. Ray, CMR Law APC, Newport Beach, CA, for Plaintiff. Laura Reathaford, Lathrop GPM LLP, Los Angeles, CA, for Defendants.
Robert B. Gibson, Gibson and Hughes, Santa Ana, CA, Charles M. Ray, CMR Law APC, Newport Beach, CA, for Plaintiff.
Laura Reathaford, Lathrop GPM LLP, Los Angeles, CA, for Defendants.
ORDER DENYING DEFENDANTS' MOTION TO EXCLUDE THE OPINIONS AND TESTIMONY OF PLAINTIFF'S DAMAGES EXPERT JAIME C. HOLMES [Dkt. 72]
CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE I. INTRODUCTION & BACKGROUND
Plaintiff Erin Turner filed this employment action against Defendants ThyssenKrupp Materials, N.A., ThyssenKrupp Supply Chain Services, and unnamed Does. (See Dkt. 23 [Second Amended Complaint].) Plaintiff originally asserted claims for: (1) constructive discharge in violation of public policy; (2) retaliation under Labor Code § 1102.5 ; (3) failure to prevent retaliation; (4) failure to pay commission wages under Labor Code §§ 200 et seq. ; (5) failure to pay wages at the time of termination under Labor Code §§ 201 et seq. ; (6) unfair business practices under California Business & Professions Code § 17200 ; (7) breach of contract; (8) breach of the covenant of good faith and fair dealing; (9) conversion; and (10) intentional infliction of emotional distress. (Dkt. 15 [First Amended Complaint].) Many of those claims have since been dismissed either by the Court or by stipulation of the parties. (Dkts. 21, 45.) The only dispute remaining in this case centers around whether Plaintiff received all the commissions she was due while employed by Defendants. (See Dkt. 61 at 4.)
On May 22, 2020, the Court denied Defendants' motion for summary judgment without prejudice on the remaining claims. (Id. ) The parties were unprepared for summary judgment, and instead spent most of their briefs chronicling their discovery squabbles and accusing the other side of abusing the discovery process. (Id. at 4.) In denying summary judgment, the Court directed the parties to participate in a settlement conference. (Id. at 10.) The parties' settlement conference was unsuccessful, and the Court set a new briefing schedule with the hearing on any motions for summary judgment set for December 14, 2020. (Dkt. 75.)
Before the Court is Defendants' motion to exclude the opinions and testimony of Jaime C. Holmes, Plaintiff's damages expert. (Dkt. 72 [hereinafter "Mot."].) For the following reasons, the motion is DENIED .
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78 ; Local Rule 7-15. Accordingly, the hearing set for October 5, 2020 at 1:30 p.m. is hereby vacated and off calendar.
II. LEGAL STANDARD
The district court has a "special obligation" to serve as a gatekeeper for expert testimony. Kumho Tire Co. v. Carmichael , 526 U.S. 137, 147, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). This is because "[u]nlike an ordinary witness, an expert is permitted wide latitude to offer opinions, including those that are not based on firsthand knowledge or observation." Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 592, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) (internal citation omitted); see also Cree v. Flores , 157 F.3d 762, 773 (9th Cir. 1998) (noting that expert testimony is "not subject to the strictures of Federal Rules of Evidence 602 and 803"). Faced with a proffer of expert testimony, a district court must determine whether the expert is proposing to testify to (1) specialized knowledge that (2) will assist the trier of fact to understand or determine a fact in issue. Daubert , 509 U.S. at 592–93, 113 S.Ct. 2786. This entails a preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically, technically, or specially valid and of whether that reasoning or methodology properly can be applied to the facts at issue. Id. In other words, all admitted expert testimony must be both relevant and reliable. Kumho Tire , 526 U.S. at 152, 119 S.Ct. 1167 ; see Fed. R. Evid. 702(a)–(d) (requiring that expert testimony "help the trier of fact to understand the evidence or determine a fact in issue," be "based on sufficient facts or data," be "the product of reliable principles and methods," and be the result of the expert's reliable application of "the principles and methods to the facts or data").
III. DISCUSSION
Defendants challenge Holmes' qualifications as an expert as well as the reliability and relevancy of his expert testimony.
A. Holmes' Qualifications to Provide Expert Testimony
"The issue of qualifications is governed by Federal Rule of Evidence 702 which contemplates a broad conception of expert qualifications. As the terms of the rule state, an expert may be qualified either by ‘knowledge, skill, experience, training, or education.’ Moreover, the advisory committee notes emphasize that Rule 702 is broadly phrased and intended to embrace more than a narrow definition of qualified expert." Thomas v. Newton Int'l Enters. , 42 F.3d 1266, 1269 (9th Cir. 1994).
Defendants argue that Holmes is unqualified because he has "never given expert testimony in cases involving the underpayment of commissions," "ha[s] only consulted on 10 or 20 commissions cases but could not recall any of them," and "has no experience related to the payments or calculations of commissions in the ordinary course of business." (Mot. at 15.) Defendants' conception of relevant expertise is too narrow. Holmes is a Certified Public Accountant, Certified Valuation Analyst, and has been practicing "for over 30 years, in public accounting as an auditor, in private industry, and as a ‘forensic accountant.’ " (Dkt. 76-9 [Expert Report of Jaime C. Holmes, hereinafter "Holmes Rep."] at 9.) He has testified in or consulted on numerous litigation matters on topics such as business valuation, loss of earnings, and wage and hour claims. (Id. ) Notably, Holmes has testified regarding commissions owed in a wrongful termination case at least once. (Dkt. 76-4 [Plaintiff's Excerpt of the Deposition of Jaime C. Holmes, hereinafter "P. Holmes Dep."] at 77:22–24.) This experience is sufficient to qualify Holmes as an expert able to valuate any damages resulting from the alleged under-payment of commissions.
B. Reliability of Holmes' Expert Testimony
Defendants further argue that the Court should exclude Holmes' testimony because it is unreliable, as Holmes relied on an unsupported assumption that Defendants' job cost data was unreliable which led to inaccurate calculations of sales and gross margin commissions. For expert testimony to be reliable, it must be "based on sufficient facts or data" and be "the product of reliable principles and methods." Fed. R. Evid. 702(b)–(c). An expert's opinions are not reliable where the expert bases her conclusions on "mere subjective beliefs or unsupported speculation." Claar v. Burlington N.R.R. Co. , 29 F.3d 499, 502 (9th Cir. 1994). "An opinion based on ... unsubstantiated and undocumented information is the antithesis of the scientifically reliable expert opinion admissible under Daubert and Rule 702." Cabrera v. Cordis Corp. , 134 F.3d 1418, 1423 (9th Cir. 1998). In determining the reliability of proffered expert testimony, the district court's task "is to analyze not what the experts say, but what basis they have for saying it." Daubert v. Merrell Dow Pharm., Inc. ("Daubert II "), 43 F.3d 1311, 1316 (9th Cir. 1995). "[N]othing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered." Gen. Elec. Co. v. Joiner , 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). To avoid this disconnect, the proponent of expert testimony must "explain the methodology the experts followed to reach their conclusions [and] point to any external source to validate that methodology." Daubert II , 43 F.3d at 1319.
Here, Holmes applied reliable principles and methods to calculate Plaintiff's owed compensation. Holmes disregarded the job cost data not only because Plaintiff asserted that it was inaccurate, but because he did not receive the "supporting documents for [him] to test and verify the information on the job cost reports." (P. Holmes Dep. at 48:9–11.) Instead, his analysis relied on the documents available to him. Holmes thoroughly explains his methodology for calculating commissions Plaintiff earned in both his expert report and his deposition.
Under Plaintiff's compensation agreement, Plaintiff would begin earning commissions on sales and gross profit once "she demonstrated she was on trend in the first 12 and 18 months of her employment to reach $2 million in sales as a new employee." (Holmes Rep. at 3.) The gross sales documents provided by Defendants "reflect[ed] numerous jobs that did not have commissions earned on sales even though [Plaintiff had met the sales minimum]" and also included jobs which "reported negative sales and had negative commission amounts." (Id. ) To calculate commissions earned on gross sales, Holmes applied Plaintiff's ".04% commission rate per the Compensation Plan on positive sales and applied zero commissions on sales that were negative." (Id. )
When calculating commissions earned on gross profit, Holmes notes that "numerous jobs ... did not have commissions earned on gross profit," "some jobs reported negative gross profit and had negative commission amounts," and certain sales had gross profit of zero. (Id. at 4.) Holmes replaced these zero numbers with an estimated gross profit per job from sales data based on Plaintiff's belief "that there were no jobs that didn't have a gross profit." (Dkt. 72-2 [Defendants' Excerpt of the Deposition of Jaime C. Holmes] at 189:5–16.) He then applied an average gross profit commission percentage to all sales where the gross profit was listed as zero or positive. (Holmes Rep. at 4.) Where gross profit was negative, he applied a commission of zero. (Id. )
Holmes' testimony is sufficiently supported by the facts and data and is the product of reliable principles and methods. The assumptions he made were not pulled out of thin air, but based on calculations from the data he was given. Holmes sufficiently explains his methodology in his expert report and deposition testimony to pass Rule 702 scrutiny. While Defendants' arguments are colorable for impeachment purposes, none go to admissibility. See Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc. , 738 F.3d 960, 969 (9th Cir. 2013) (finding expert's market comparisons valid where he "gave reasons for his use of all [his] comparisons"). C. Relevancy of Holmes' Expert Testimony
Defendants argue that Holmes' testimony is not relevant. (Mot. at 19–23.) Rule 702 requires that expert testimony assist the trier of fact in understanding the evidence or determining a fact in issue. Fed. R. Evid. 702(a). "Expert testimony which does not relate to any issue in the case is not relevant and, ergo, non-helpful." Daubert , 509 U.S. at 591, 113 S.Ct. 2786 (quotation omitted). Although "[t]he relevancy bar is low," expert testimony must have "a valid connection to the pertinent inquiry." Messick v. Novartis Pharm. Corp. , 747 F.3d 1193, 1196–97 (9th Cir. 2014). Fundamentally, "[t]he first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event. " Federal Judicial Center, Reference Manual on Scientific Evidence 432 (3d ed. 2011) (emphasis added).
Plaintiff retained Holmes to calculate "the amount of damages for [Plaintiff's] alleged under-compensation during her employment [with Defendants] and pre-judgment interest." (Holmes Rep. at 1.) Here, the alleged harmful event is Defendants failure to pay Plaintiff all the compensation she was owed, particularly commissions. (See, e.g. , Dkt. 23 [Second Amended Complaint] ¶ 62 ["Defendants, and each of them, have knowingly, intentionally and willfully failed and refused to pay to Plaintiff the full and complete amount of the commissions she properly earned during her employment with Defendants."].) Holmes' analysis is directly relevant to Plaintiff's alleged harm. Defendants' arguments do little to challenge the relevancy of Holmes' testimony, but instead attack its substance. Accordingly, the Court finds Holmes' testimony admissible under Rule 702.
D. Defendants' Other Arguments
Defendants also argue that previous discovery disputes should not excuse purported errors in Holmes' testimony and that Plaintiff's expert witness disclosures are untimely. (Mot. at 23–26.) As discussed above, Holmes' testimony is not rendered unreliable where he applied a reasoned methodology to the evidence available to him. The fact that the parties were unable to cooperate during discovery, which may have hindered production, has no bearing on the determination of admissibility under Rule 702. See Cholakyan v. Mercedes-Benz, USA, LLC , 281 F.R.D. 534, 549 (C.D. Cal. 2012) ("[T]he court cannot find that large portions of [an expert declaration] should be excluded on the basis of a discovery dispute."). Furthermore, the Court has already resolved the second issue when it found Plaintiff's expert witness disclosure was timely and denied Defendants' ex parte application to continue a deadline to designate a rebuttal expert. (See Dkt. 73.) Defendants continue to assert that Plaintiff has failed to produce "a binder with 11 tabs which contained all of the documents Mr. Holmes relied upon in forming his opinions." (Mot. at 25.) Plaintiff has shown that during Holmes' deposition, Defendants' counsel reviewed the documents in each of the eleven tabs and confirmed that they possessed each one. (Dkt. 76 [Plaintiff's Opposition to Mot.] at 16–17.) Nevertheless, Defendants still find it productive to raise this argument even though the Court has previously rejected it.
IV. CONCLUSION
For the foregoing reasons, Defendants' motion to exclude the opinions and testimony of Jaime C. Holmes is DENIED .