Company CEO is Accused of Bias for Serving as an Expert Witness

Company CEO is Accused of Bias for Serving as an Expert Witness
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Court: United States District Court for the Western District of Virginia, Harrisonburg Division
Jurisdiction: Federal
Case Name: Keystone Transp. Sols., LLC v. Northwest Hardwoods, Inc.
Citation: 2019 U.S. Dist. LEXIS 67103

Facts

After the plaintiff shipping and logistics company failed to sell its services to either the defendant company or another purchaser, it eventually ceased operations. In this lawsuit, the plaintiff alleged that the defendant company, along with the former president of shipping company who was now working for the defendant company, interfered with its business interests and improperly gained access to confidential trade secrets and proprietary Shippers Savings Model (SSM). The defendant challenged the testimony of the plaintiff’s logistics expert witness, who was a co-founder and CEO of the plaintiff shipping company.

The Logistics Expert Witness

The logistics experts co-founded the plaintiff shipping company and previously served as CEO. Along with his fellow founder, the expert had investigated transport inefficiencies in the market for forest products and developed the Shipper Savings Model (SSM). The expert explained that the high-level conclusions of SSM were not unique, but its specific savings findings were confidential, and, for this reason, the company took significant steps to ensure that the information, modeling, and data were kept secret.

There were six different opinions that the expert intended to present:

  1. Research, information, review, and results arising from the development of the SSM are considered valuable and confidential in the transport logistics industry;
  2. Use of non-disclosure agreements in these industries to protect information from unauthorized use and disclosure by a competitor;
  3. The plaintiff had made commercially reasonable efforts to maintain the confidentiality of its trade secrets;
  4. Data on the business model, strategies, and procedures of the plaintiff was confidential and not readily available from public information;
  5. The defendant company had committed to the opening of a new business location within 10 weeks of receiving access to the plaintiff’s confidential information;
  6. The current business operated by the defendant company was the same for all material aspects of the business proposal by the plaintiff.

The defendants filed this motion to exclude the expert’s testimony because he had a direct financial interest in the outcome of this lawsuit, had no experience or advanced technical knowledge in the subjects on which he wished to offer opinions, and his conclusions were inaccurate because they were based solely on informed speculation.

Discussion

The defendants argued the expert’s testimony was not reliable because he had a direct financial stake in the outcome of the litigation. The court noted that the particular circumstances of this case, including his clear, substantial, and direct financial contribution to this dispute and the fact that his testimony was mostly subjective rather than based on reproducible scientific or other technical methods, led the court to the conclusion that he should not testify as an expert.

The plaintiff conceded that the expert did not have sufficient experience to qualify as an expert in forest products logistics, but argued that he was an expert in the more general field of transport logistics. The court noted the essential question was whether he had sufficient expertise to deliver all the opinions he gave. Many of his opinions did not fall within either of these fields.

The court found that many of his opinions were simply the plaintiff’s account of the facts in the form of expert testimony. Certain aspects of his opinions were also found to not helpful to the jury and were excluded. The expert’s report did not sufficiently link his expertise through his experience to his opinions. His opinions on trade secrets were also excluded because they were legal conclusions.

Held

The defendants’ motion to exclude the testimony of the logistics expert witness was granted.