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Exclaim Marketing, LLC v. Directv, LLC

United States District Court, E.D. North Carolina, Western Division

December 2, 2014

DIRECTV, LLC, Defendant.


LOUISE W. FLANAGAN, District Judge.

This matter, recently concluded at trial with jury verdicts returned, is before the court with reference to defendant's motion in limine to exclude plaintiff's expert witness on damages, Diane Lahti ("Lahti"). (DE 106). The court found that Lahti's trial testimony complied with both Federal Rule of Evidence 702 and prior orders in this case. Reasons grounding the court's oral order November 18, 2014, denying defendant's motion, are memorialized further below.


A. Overview

The parties' battle over the admissibility of Lahti's testimony has a lengthy history in this case. The court refers to and incorporates the case history provided in its March 31, 2014, order on the parties' cross-motions for summary judgment and defendant's motion to strike ("March 31 Order") (DE 95); its October 22, 2014, order granting in part defendant's motion to exclude plaintiff's expert witness ("October 22 Order") (DE 141), and its October 31, 2014, order denying in part defendant's motion to exclude plaintiff's expert witness ("October 31 Order") (DE 148).

Prior orders addressed one component of Lahti's damages calculation, concerning losses in number of sold calls. The fundamental problem with that testimony concerned the lack of evidence to support plaintiff's theory of causation regarding these losses. Plaintiff alleged that these losses resulted from defendant's communicating certain statements to independent satellite dealers. Lahti had originally employed a market share analysis to calculate these losses, which included the entire market of independent satellite dealers. Plaintiff's failure to provide sufficient evidence to show that these statements reached a substantial sector of the independent satellite dealer market, and its further failure to adequately explain how the market share analysis could remain reliable without this evidence, led the court to conclude prior to trial that the lost sold calls aspect of her damages calculation failed to comply with Rule 702.

In contrast, the testimony at issue in this instance related to a separate aspect of Lahti's damages calculation, concerning losses in plaintiff's revenue per sold call. Because sufficient evidence supported this theory, and because the court found Lahti's testimony otherwise complied with Rule 702, it allowed her to testify at trial.

B. Analysis

As noted in previous orders addressing plaintiff's expert, rejection of expert testimony is the exception rather than the rule. Fed.R.Evid. 702 advisory committee's note (2000). Rule 702 provides that expert testimony is appropriate when the expert's specialized knowledge "will help the trier of fact to understand the evidence or to determine a fact in issue." Fed.R.Evid. 702(a). Rule 702 further provides that a witness qualified as an expert may be permitted to testify where 1) "the testimony is based on sufficient facts or data, " 2) "the testimony is the product of reliable principles and methods, " and 3) "the witness has reliably applied the principles and methods to the facts of the case." Fed.R.Evid. 702(b)-(d).

In her original analysis, Lahti prepared a "but for" analysis of damages, which sought to quantify damages according to projections of what plaintiff's revenue and expenses would have been had defendant's alleged unfair and deceptive conduct not occurred. Lahti identified two areas where plaintiff's revenues were falling short of what they would be in the "but for" world: 1) a decrease in the number of calls sold; and 2) a decrease in revenue per call. To calculate declines in the number of calls sold, Lahti used a market share analysis, based on the decrease in plaintiff's shares of the total market of calls which were sold to independent satellite dealers following defendant's alleged conduct. These independent satellite dealers include dealers who sell only defendant's DIRECTV service, dealers who sell the service of defendant's rival, Dish Network, and dealers who sell both services ("Dual" dealers). Lahti's method of calculating a decrease in the second component of revenue decline, lost revenue per call, is explained further below.

The March 31 Order granted in part and denied in part defendant's motion to strike plaintiff's expert. It granted the motion to the extent that Lahti's testimony assumed a cause that extended to a market including Dish-only dealers. (March 31 Order, at 42). In reaching this decision, the court noted that Lahti's assumption was based on her understanding of the satellite dealer market as a place of fluid communications where "the potential buyers of [plaintiff]'s services interrelate, they talk, they meet, they get together at conferences, they chat, they - information such as a defamatory comment is prone to spread." (DE 47-6, p. 149). The court explained that plaintiff had

not established [Lahti's] qualifications or basis of knowledge to make these statements [regarding communications within the Dish-only dealer market]. Nor has plaintiff offered other evidence to support her assertion. Without more, the court limits Lahti's testimony only to the market of retailers that sold defendants' product.

(March 31 Order, at 42).

In September 2014, defendant filed the instant motion, asserting that plaintiff had presented it with a revised report ("First Revised Report") that failed to make the changes necessary to comply with the March 31 Order. Defendant specifically noted that plaintiff had continued to include sales to Dish-only dealers in calculating plaintiff's reduced market share. The October 22 Order held that 1) plaintiff's new evidence regarding lost sales to Dish-only dealers, which was offered to support testimony regarding damages, was insufficient and ...

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