Court: United States District Court for the Middle District of Florida, Ocala DivisionJurisdiction: FederalCase Name: Chick-Fil-A, Inc. v. CFT Dev., LLCCitation: 2009 U.S. Dist. LEXIS 139186
In this case involving a restrictive covenant between two fast food chain restaurants, the plaintiff presented a certified public accountant as its expert witness. The court determined that even though the expert had limited experience in the restaurant industry, his extensive experience with cost accounting qualified him to testify competently about the matters identified in his expert report.
Facts
The operator of Chick-Fil-A, Inc., a chain of chicken sandwich fast food restaurants, filed a lawsuit against the operator of Panda Express, Inc., a chain of Chinese fast food restaurants, to enforce a restrictive covenant in a chain of title to real property. The parties owned adjacent properties in Florida. When Panda Express acquired a property adjacent to Chick-fil-A, it was aware of a restrictive covenant prohibiting the Panda Express property from being used as “a quick service restaurant deriving 25% or more of its gross sales from the sale of chicken.”
Panda Express resisted the covenant stating that it did not fall into the category of a “quick service” restaurant, as the term is used in the industry. Panda Express further claimed that the typical Panda Express restaurant does not derive 25% or more of its gross sales from the sale of chicken and that as such, Chick-fil-A had no basis to enforce the covenant.
The Expert
Chick-fil-A’s certified public accountant expert witness had 25+ years of experience as a consultant specializing in financial analysis and business valuations for businesses in a variety of industries. The expert was accredited in business valuation by the American Institute of Certified Public Accountants, held a bachelor’s degree in economics from Washington & Lee University, and held an MBA in finance from Georgia State University.
In his report, the expert opined that Panda Express would derive 34% of its gross sales from chicken (excluding non-chicken ingredients) and 46% percent, if not. In the plaintiff’s expert report, he opined that using cost or a la carte sales prices was the most appropriate method for the allocation of sales revenue from the Panda Express combo meals that contain an entree and a starch. He also opined that 100% of an entree item containing chicken should be deemed as having been derived from the sale of chicken. The expert further opined that if the covenant were interpreted to mean that non-chicken ingredients should be backed out of chicken entree sales, the relative cost of the ingredients in chicken entrees should be the basis for that allocation, not the relative weight of ingredients.
Despite these qualifications, Panda Express argued that the expert was not qualified to testify competently regarding the matters identified in his expert report because he was not an expert in the restaurant and/or food service industry, nor an expert in restaurant cost accounting. Panda Express moved to strike the testimony of the plaintiff’s expert.
Court’s Discussion
Under Federal Rule of Evidence 702, Daubert v. Merrell Dow Pharmaceuticals, Inc. and Kumho Tire Company Ltd., et al., v. Carmichael expert testimony was admissible if (1) the expert was qualified to testify competently, (2) the expert had used sufficiently reliable methodology in reaching a conclusion, and (3) the testimony will assist the trier of fact, through the application of scientific, technical, or specialized expertise, to understand the evidence or to determine a fact in issue. While Daubert dealt with scientific evidence, and Kumho dealt with technical knowledge, the Daubert analysis was equally applicable to expert testimony concerning cost accounting. In this motion, Panda Express challenged whether the expert certified public accountant was qualified to testify competently.
The court determined that although the expert had limited experience in the restaurant industry, he had extensive experience with cost accounting. The court made reference to the expert’s experience in the restaurant and food service industry, including serving as a court-appointed receiver for an Atlanta restaurant chain and testifying as an expert in two highway condemnation cases involving restaurant business loss claims, among other experiences.
Held
The expert applied cost accounting concepts and his extensive accounting experience to the undisputed data provided by Panda Express regarding a la carte pricing and food costs. The court held that the expert’s analysis was well within his accounting expertise. Moreover, the Panda Express expert, another accountant, testified that the a la carte pricing method the plaintiff’s expert employed was reasonable and appropriate. The plaintiff’s expert was deemed qualified to testify.
About the author
Zach Barreto
Zach Barreto is a distinguished professional in the legal industry, currently serving as the Senior Vice President of Research at the Expert Institute. With a deep understanding of a broad range of legal practice areas, Zach's expertise encompasses personal injury, medical malpractice, mass torts, defective products, and many other sectors. His skills are particularly evident in handling complex litigation matters, including high-profile cases like the Opioids litigation, NFL Concussion Litigation, California Wildfires, 3M earplugs, Elmiron, Transvaginal Mesh, NFL Concussion Litigation, Roundup, Camp Lejeune, Hernia Mesh, IVC filters, Paraquat, Paragard, Talcum Powder, Zantac, and many others.
Under his leadership, the Expert Institute’s research team has expanded impressively from a single member to a robust team of 100 professionals over the last decade. This growth reflects his ability to navigate the intricate and demanding landscape of legal research and expert recruitment effectively. Zach has been instrumental in working on nationally significant litigation matters, including cases involving pharmaceuticals, medical devices, toxic chemical exposure, and wrongful death, among others.
At the Expert Institute, Zach is responsible for managing all aspects of the research department and developing strategic institutional relationships. He plays a key role in equipping attorneys for success through expert consulting, case management, strategic research, and expert due diligence provided by the Institute’s cloud-based legal services platform, Expert iQ.
Educationally, Zach holds a Bachelor's degree in Political Science and European History from Vanderbilt University.
