United States District Court, E.D. Missouri, Eastern Division
JACOBSON WAREHOUSE COMPANY, INC., d/b/a XPO LOGISTICS SUPPLY CHAIN, Plaintiff/Counterclaim Defendant,
SCHNUCK MARKETS, INC., Defendant/Counterclaim Plaintiff.
MEMORANDUM AND ORDER
A. ROSS, UNITED STATES DISTRICT JUDGE
matter is before the Court on the following motions:
Schnuck's Motion to Exclude XPO's Damages Expert
Angela Morelock (Doc. No. 157); Schnuck's Motion to
Exclude XPO's Expert on Prevailing Industry Standards
Jerry Davis (Doc. No. 159); XPO's Motion to Strike
SMI's Supplemental Rebuttal Expert Disclosure and Related
Untimely Production and to Strike and Exclude SMI's
Proffered Rebuttal Expert's Testimony (Doc. No. 169);
XPO's Alternative Motion to Compel Continuation of
Deposition of SMI Rebuttal Expert Tom O'Brien (Doc. No.
167); and XPO's Motion to Limit or Exclude Testimony of
SMI's Expert Michael Powell (Doc. No. 171). The motions
are fully briefed and ready for disposition.
admission of expert testimony in federal court is governed by
Federal Rule of Evidence 702. A district court acts as a
“gatekeeper” when screening expert testimony for
relevance and reliability. Daubert v. Merrell Dow Pharm.,
Inc., 509 U.S. 579, 590-93 (1993); Russell v.
Whirlpool Corp., 702 F.3d 450, 456 (8th Cir. 2012). To
satisfy the reliability requirement, the party offering the
expert testimony “must show by a preponderance of the
evidence both that the expert is qualified to render the
opinion and that the methodology underlying his conclusions
is scientifically valid.” Barrett v. Rhodia,
Inc., 606 F.3d 975, 980 (8th Cir. 2010) (quoting
Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 757
(8th Cir. 2006)). To satisfy the relevance requirement, the
proponent must show that the expert's reasoning or
methodology was applied properly to the facts at issue.
Court in Daubert emphasized that the inquiry
required by FRE 702 is intended to be flexible. 509 U.S. at
594. The Daubert analysis was extended to all expert
testimony, as opposed to only “scientific”
testimony. Kumho Tire Co., Ltd. v. Carmichael, 526
U.S. 135, 147 (1999). Due to the liberalization of expert
testimony admission standards signaled by Daubert
and its progeny, and the codification of this trend by FRE
702, the Eighth Circuit has held that expert testimony should
be liberally admitted. Johnson v. Mead Johnson & Co.,
LLC, 754 F.3d 557, 562 (8th Cir. 2014) (citing
United States v. Finch, 630 F.3d 1057, 1062 (8th
Cir. 2011) (doubts about usefulness of expert testimony are
resolved in favor of admissibility)); Robinson v. GEICO
Gen. Ins. Co., 447 F.3d 1096, 1100 (8th Cir. 2006)
(expert testimony should be admitted if it advances the trier
of fact's understanding “to any degree”);
Lauzon v. Senco Prod., Inc., 270 F.3d 681, 686 (8th
Cir. 2001) (FRE 702 “clearly is one of admissibility
rather than exclusion”) (quotations omitted). As long
as the expert testimony rests upon “good grounds, based
on what is known, ” it should be tested by the
adversary process with competing expert testimony and
cross-examination, rather than excluded at the outset.
Id. (citing Daubert, 509 U.S. at 596).
Exclusion of an expert opinion is proper “only if it is
so fundamentally unsupported that it can offer no assistance
to the jury.” Wood v. Minnesota Mining & Mfg.
Co., 112 F.3d 306, 309 (8th Cir. 1997) (citation and
quotation marks omitted).
Morelock, CPA, CFE, CFF, ABV
Morelock is a CPA and forensic accountant retained by XPO to
evaluate the damage estimates prepared by Schnuck employees,
and in particular Alex Dye, Schnuck's designated fact
witness on the topic of damages. Ms. Morelock offers nine
opinions in her July 14, 2018 expert report. In opinions 1-8,
she opines on the following categories of damages claimed by
Schnuck: product lost; gross margin on product lost;
out-of-pocket costs - Bridgeton; out-of-pocket costs -
customer promotions; out-of-pocket costs - store labor;
damages from lost sales; expo and other expenses; and claw
backs. In opinion 9, Ms. Morelock concludes that Mr.
Dye's calculations have not “reliably, or with any
degree of reasonable certainty, calculated the damages that
[Schnuck] may have suffered as a result of XPO's alleged
argues that Ms. Morelock's opinions are unreliable and
thus inadmissible for three reasons. First, she bases her
opinions on the premise that Mr. Dye must testify
consistently with professional standards governing expert
testimony given by CPAs, when the law does not require a
party to prove damages through an expert or, by implication,
require a lay witness to comply with standards governing
professions in which they are not members. Second, Ms.
Morelock impermissibly opines on the interpretation and
application of the parties' Agreement and Mr. Dye's
purported failure to establish Schnuck's damages with
“reasonable certainty, ” both legal questions for
the Court. Lastly, Schnuck argues that Ms. Morelock violates
the standards of her profession by failing to maintain
objectivity and assuming the role of an advocate.
responds that Mr. Dye's damages calculations are a proper
subject for rebuttal expert testimony on questions relating
to whether the damages were calculated with reasonable
certainty or otherwise in accordance with proper
methodologies. XPO further responds that while federal courts
do allow lay witnesses to testify about damages, including
lost profits, without being designated as experts, in those
cases, the witnesses were officers and business owners.
See e.g., Allied Sys., Ltd. v. Teamsters Local
604, 304 F.3d 785, 792 (8th Cir. 2002); Seubert v.
FFE Transp. Servs., Inc., No. 4:11CV01651 AGF, 2013 WL
328674, at *4 (E.D. Mo. Jan. 29, 2013). Mr. Dye was neither.
XPO also contends that Ms. Morelock does not opine on whether
either party breached the Agreement or which of two plausible
interpretations of the Agreement apply. Rather, her
references to the Agreement in her opinions merely point to
provisions that Mr. Dye either ignored or failed to address
in his calculations. Lastly, XPO argues there is no specific
evidence to support Schnuck's argument that Ms. Morelock
violated the standards of her profession.
regard to Mr. Dye's testimony generally,
“[p]ersonal knowledge or perception acquired through
review of records prepared in the ordinary course of
business, or perceptions based on industry experience, is a
sufficient foundation for lay opinion testimony.”
Lift Truck Lease & Serv., Inc. v. Nissan Forklift
Corp., N. Am., No. 4:12-CV-153 CAS, 2013 WL 3092115, at
*5 (E.D. Mo. June 18, 2013) (quoting Burlington N.
Railroad Co. v. State of Neb., 802 F.2d 994, 1004-05
(8th Cir. 1986)); Fed.R.Evid. 701. See also Gateway Foam
Insulators, Inc. v. Jokerst Paving & Contracting,
Inc., 279 S.W.3d 179, 183, 187 (Mo. 2009) (en banc)
(company's accountant could testify as to company's
lost profits based on review of plaintiff's business
records and its construction market). It is for the jury to
weigh the differing testimony offered by Mr. Dye and Ms.
addition, the Court has ruled in a separate order that with
the exception of replacement cost of inventory loss and
potential claw back damages, Schnuck's claimed damages
are indirect or consequential damages and barred under the
limitation of liability provisions of the parties'
Agreement. Thus, any fact or expert testimony about lost
profits, out of pocket expenses and lost sales is not
relevant to any issue at trial. Accordingly, Schnuck's
motion to exclude Ms. Morelock's testimony and opinions
on these categories of damages will be denied as moot in
light of the Court's rulings.
regard to the category of damages identified as
“product lost, ” Ms. Morelock opines that Mr.
Dye's calculations are not based on sufficiently reliable
data and not determined using an acceptable methodology. She
notes that Mr. Dye did not consider the 1% Loss/Damage
Allowance referenced in the parties' Agreement, such that
his calculations fail to consider relevant facts and
overstate Schnuck's asserted damages. She also notes Mr.
Dye did not consider product loss that might be attributable
to Schnuck under Section 6(b) of the Agreement, thereby
rendering his analysis of lost product incomplete and
unreliable. Referencing the Inventory Claim Procedure in
Section 6(h) of the Agreement, Ms. Morelock opines that Mr.
Dye ignored this contract process and instead used his own
method of assessing inventory loss to XPO based on
Schnuck's experience at the Bridgeton warehouse. As for
claw back damages, Ms. Morelock opines that Mr. Dye's
calculations “gross up” warehouse expenses by
including XPO's 7% management fee imposed under Section
4(a) of the Agreement before computing the claw back amount,
thereby overstating the claw back amounts. She further notes,
based on Mr. Dye's deposition, confusion as to whether an
operating budget for warehouse expenses and cost per case was
ever finalized and approved by Schnuck.
the functions of rebuttal testimony is to counteract evidence
of the adverse party. Marmo v. Tyson Fresh Meats,
Inc., 457 F.3d 748, 759 (8th Cir. 2006) (citation
omitted). As such, rebuttal evidence may be used to challenge
the evidence or theory of an opponent. Id. Ms.
Morelock is qualified to rebut Mr. Dye's damages
calculations on questions relating to whether the damages
were calculated in such a way as to enable a jury “to
make an intelligent estimate of damages as circumstance of
the case will admit, ” i.e., with reasonable certainty.
C.L. Maddox, Inc. v. Benham Group, Inc., 88 F.3d
592, 601 (8th Cir. 1996) (internal quotations omitted). To
that end, Ms. Morelock has referenced provisions of the
Agreement that were not addressed in Mr. Dye's
calculations. Upon careful review of her report, it appears
to the Court that she is not offering any legal conclusions
or interpreting how the Agreement should be applied. See
Pandora Jewelers 1995, Inc. v. Pandora Jewelry, LLC,
2011 WL 2295269, at *5 (S.D. Fla. June 8, 2011) (“[a]
rebuttal expert can testify as to the flaws that she believed
are inherent in another expert's report that implicitly
assumes or ignores certain facts.”). Moreover, to the
extent Schnuck is challenging Ms. Morelock's objectivity,
any questions regarding bias and credibility are to be
resolved by the jury and can be addressed on
cross-examination. American Modern Home Ins. Co. v.
Thomas, No. 4:16CV215CDP, 2018 WL 4404723, at *7 (E.D.
Mo. Sept. 17, 2018).
these reasons, Schnuck's motion to exclude Ms.
Morelock's report and testimony, as it relates to claims