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Hogan Logistics, Inc. v. Davis Transfer Company, Inc.

United States District Court, E.D. Missouri, Eastern Division

January 9, 2018




         This matter is before the Court on plaintiff Hogan Logistics, Inc.'s (“Hogan” or “plaintiff') motion to exclude the testimony of defendant's expert witness Henry E. Seaton pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Defendant Davis Transfer Company, Inc. (“Davis” or “defendant”) opposes the motion and it is fully briefed. Neither party has requested an evidentiary hearing or oral argument, and the parties have submitted an evidentiary record including exhibits and deposition testimony. The Court finds it can make a proper Daubert analysis without the need for a hearing or argument.

         For the following reasons, Hogan's motion to exclude defendant's expert witness will be granted in part and denied in part.

         I. Background

         Plaintiff Hogan is a freight broker and third-party logistics company that provides nationwide shipping services for its customers, which at one time included Imperial Sugar Company (“ISC”). Hogan contracts with freight carriers, such as defendant Davis, to complete the actual transport of its customers' goods. The parties entered into a Broker-Carrier Agreement (the “Agreement”) in October 2013, pursuant to which Davis agreed to ship freight for Hogan's customers, primarily from two ISC facilities in Georgia to destinations across the southeastern United States.

         Section 10 of the Agreement is titled “Traffic Solicitation” and is referred to by the parties as a “back-solicitation clause.” Hogan contends this clause prohibits Davis from soliciting or accepting any freight traffic from Hogan's customers directly. Hogan asserts that in May 2016, Davis wrongfully solicited freight traffic from ISC in violation of the Agreement's back-solicitation clause. As a result, Hogan lost the portion of ISC's freight traffic that Davis previously carried on Hogan's behalf, and Davis carried freight directly for ISC rather than as a contract carrier for Hogan.

         Section 10 of the Agreement provides:

During the term of this Agreement and for a period of 12 months after termination or expiration, Carrier shall not solicit or accept traffic from any Customer where (1) the availability of such traffic or such Customer first became known to Carrier as a result of Broker's efforts, or (2) where such traffic or such Customer was first tendered directly or indirectly, to the Carrier by Broker. Without limitation of the foregoing prohibition, if Carrier breaches this prohibition and obtains traffic from such customer, Broker then is entitled, for a period of 12 months after the involved traffic first begins to move, to a commission from the Carrier of twenty percent (20%) of the transportation revenue on the movement of the traffic. The provisions of this Section 10 shall survive any termination or expiration of this Agreement. The term “Customer” specifically includes, without limitation, Imperial Sugar. In the event Broker engages legal counsel to enforce this or any other provision of this Agreement, Carrier shall bear all fees and expenses of such counsel if Broker prevails in such claim.

(Doc. 10 at 4, § 10.)

         The parties offer competing interpretations of the back-solicitation clause that focus on the meaning of the term “traffic, ” as modified by “first became known” and “first tendered.”[1] In ruling on Davis's motion for judgment on the pleadings, the Court stated that the parties' arguments were based on two different meanings for the term “traffic, ” the Agreement does not define the term, and the parties did not cite any case law, regulation, or industry standard to supply a commonly understood meaning for it. The Court concluded as a matter of law that the term “traffic” as used in the Agreement was ambiguous because “[a]s a matter of plain language, both interpretations are plausible.” See Mem. and Order of April 27, 2017, at 5-6 (Doc. 32) (Judge Carol E. Jackson, presiding).

         Davis states it has disclosed Mr. Seaton as an expert witness to testify concerning transportation industry trade usage and custom of terms in connection with back-solicitation clauses in freight brokerage contracts. Mr. Seaton has more than forty years' experience as a freight broker, freight carrier, and transportation lawyer.

         II. Legal Standard

         The admission of expert testimony in federal court is governed by Federal Rule of Evidence 702. In Daubert, the United States Supreme Court interpreted Rule 702 to require district courts to be certain that expert evidence based on scientific, technical or other specialized knowledge is “not only relevant, but reliable.” Daubert, 509 U.S. at 589. The district court must make a ‚Äúpreliminary assessment of whether the reasoning or methodology underlying the testimony is ...

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