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ABS Global Inc. v. Inguran, LLC

United States District Court, W.D. Wisconsin

August 9, 2016

ABS GLOBAL, INC., Plaintiff/Counterclaim Defendant,
INGURAN, LLC, Defendant/Counterclaimant/Third-Party Plaintiff, and XY, LLC, Intervening Defendant/Counterclaimant/Third-Party Plaintiff, and CYTONOME/ST., LLC, Intervening Defendant,
GENUS PLC, Third-Party Defendant.


          William M. Conley District Judge.

         In this opinion and order, the court takes up the parties’ remaining challenges to expert testimony on damages issues. (Dkt. ##429, 432, 471, 473, 474, 475.)

         I. Standard

         The admissibility of expert testimony in federal courts is governed principally by Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.

         A district court functions as a “gatekeeper, ” determining whether proffered expert testimony is relevant and reliable. Daubert, 509 U.S. at 589; see also United States v. Johnsted, 30 F.Supp.3d 814, 816 (W.D. Wis. 2013) (expert testimony must be “not only relevant, but reliable”). Although expert testimony is “liberally admissible under the Federal Rules of Evidence, ” Lyman v. St. Jude Med. S.C., Inc., 580 F.Supp.2d 719, 723 (E.D. Wis. 2008), the Seventh Circuit has held that expert testimony must satisfy the following three-part test under Rule 702 as informed by Daubert:

(1) the witness must be qualified “as an expert by knowledge, skill, experience, training, or education, ” Fed.R.Evid. 702;
(2) the expert’s reasoning or methodology underlying the testimony must be scientifically reliable, Daubert, 509 U.S. at 592-93; and
(3) the testimony must assist the trier of fact to understand the evidence or to determine a fact in issue. Fed.R.Evid. 702.

Ervin v. Johnson & Johnson, Inc., 492 F.3d 901, 904 (7th Cir. 2007). “Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596.

         II. Daubert Damages Motions

         A. ABS’s Motion to Exclude Certain Testimony of W. Todd Schoettelkotte (dkt. #429).

         According to ABS, ST will seek to call W. Todd Schoettelkotte during the damages phase of trial to rebut ABS’s position on damages related to its antitrust claim. ABS explains that if ST had not committed an antitrust violation, it would have begun the commercialization of sexed semen in June of 2014, permitting it to sell sexed semen rather than relying on ST sexed semen processing. As a result, ABS argues that it would have enjoyed substantial cost savings, equal to the difference between the ST contract price and the ABS processing costs. That cost savings is what ABS seeks as antitrust damages before trebling.

         Apparently, Schoettelkotte will opine that the fertility rate of ABS’s own sexed semen is unsalable, or at least it was in June of 2014, and thus ABS would have experienced no cost savings. Specifically, Shoettelkotte will testify that ABS’s product would have to compete with ST and other bull studs’ product still using ST’s sexed processing technology, and ST’s fertility rate was superior.

         ABS rightly points out that as a CPA, Schoettelkotte has no expertise regarding bull semen, has certainly never run a study to test bovine sperm fertility and does not know how scientists who perform such studies confirm pregnancy in a cow or heifer. ABS also argues that Schoettelkotte did not properly rely on the opinion of any other expert in offering an opinion on the relative fertility rates using the two processing technologies.

         Although ABS acknowledged that Schoettelkotte did talk to Jack Hippen and Dr. Nolan about the subject of bovine sperm fertility, it further asserts that Hippen’s expertise in the area has not been established and that Dr. Nolan expressed no opinion about what constitutes an acceptable, much less marketable, fertility rate. Similarly, ABS takes issue with Dr. Nolan’s opinion that ST’s product has a fertility rate equal or near that of conventional semen, arguing that his opinion was based on only one paper written by an ST employee, which was ultimately found to be defective by a peer reviewer.

         ABS finally argues that the other evidence Schoettelkotte cites fails to support his opinion that ST’s product has a fertility rate equal to or near that of conventional semen. Schoettelkotte cites the testimony of Richard Neis, but Schoettelkotte did not know whether Neis, an ST lab manager and previous ABS lab technician, was an expert in the area of bovine sperm fertility. ABS asserts that Schoettelkotte did not even understand the meaning of the citated Neis testimony, which included fertility estimates for both ST’s product and conventional semen.

         In response, ST acknowledges that Schoettelkotte is not an expert in the field of bovine fertility, but asserts that he properly used his experience as an accountant to assess whether ABS’s alleged June 2014 launch date for the GSS technology made economic sense. ST argues that Schoettelkotte’s fertility-related testimony need not be factually correct to be admissible. Rather, the accuracy of the bases for his opinions is a question of credibility that the jury must weigh. Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th Cir. 2000) (“The soundness of the factual underpinnings of [an] expert’s analysis and the correctness of the expert’s conclusions based on that analysis are factual matters to be determined by the trier of fact.”). Further, ST contends that Schoettelkotte’s fertility-related statements are supported by substantial evidence, including ABS-produced documents, deposition testimony of several ABS and Genus employees as well as the statements of the President and CEO of Select Sires, who stated that his company demanded the quality of ABS’s product to be comparable or superior to ST.

         While ABS certainly points out assumptions of fact on which Schoettelkotte’s opinions rest -- including both the relative fertility of the two products, as well as the impact of fertility rates on the products’ marketability in June of 2014 -- ST has already admitted evidence, as well as pointed to other evidence not yet admitted, that a reasonable jury might find supports those assumptions. As such, the court agrees with ST that the issue is best ...

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