Arbitration > Empiricism

The plaintiff in Diggs v. Citigroup, Inc. sought to resist arbitration of an employment dispute, relying upon a study by Cornell professor Alex Colvin that concluded: “there is a large gap in outcomes between the employment arbitration and litigation forums, with employees obtaining significantly less favorable outcomes in arbitration.”  No. 13-10138 (Jan. 8, 2014, unpublished).  The Fifth Circuit affirmed the district court’s decision to exclude the study under Daubert, noting that the study was not connected to this dispute and examined data from 5 years before its initiation.  The Court also questioned — without resolving — the validity of comparing arbitration statistics from 2003-07 with litigation statistics from the late 1990s.

Laws of nature and summary judgment

A barge moored at a facility operated by Lafarge came loose during Hurricane Katrina and caused extensive damage.  The district court granted summary judgment to Lafarge, finding that the plaintiff’s damage theory was not scientifically credible in light of the observed weather conditions at the time.  St. Bernard Parish v. Lafarge North America, Inc., No. 13-30030 (Dec. 19, 2013, unpublished).  The Fifth Circuit agreed that “[t]here is a great deal of testimony supporting Lafarge’s position, to be sure, and little to support the Parish’s, but we are mindful of the summary judgment standard.”  It reversed, however, noting eyewitness testimony that was not consistent with the defendant’s expert analysis. The Court distinguished and limited Ralston Purina v. Hobson, 554 F.2d 725 (5th Cir. 1977), which involved an unusual theory about the behavior of starving chickens, on the ground that its plaintiff could not prove the facts that his theory required.

Expert: Know thy facts.

“The Daubert reliability analysis applies to, among other things, ‘the facts underlying the expert’s opinion.'”  Moore v. International Paint LLC, No. 13-30281 (Nov. 15, 2013, unpublished).  In this case, the Fifth Circuit affirmed the exclusion of expert testimony about a plaintiff’s cumulative benzene exposure, citing these problems with his assumed facts: (1) assuming an hourly rate of $6,00, when his rates were in fact $6.99, $7.44, and $8.00; (2) assuming, contrary to the plaintiff’s deposition testimony, that he always worked with paint indoors, that his respirator always failed within an hour, and he never received a replacement; (3) assuming, contrary to other deposition testimony, that the indoor spaces where the plaintiff worked were always unventilated; and (4) assigning an arbitrary number, with no record support, to the amount of time the plaintiff worked as a sandblaster rather than a painter.  “To be sure, reliable expert testimony often involves estimation and reasonable inferences from a sometimes incomplete record. . . . Here, however, the universe of facts assumed by the expert differs frequently and substantially from the undisputed record evidence.”

Gross negligence of bankruptcy trustee

An unsecured creditor contended that the gross negligence of a bankruptcy trustee allowed a key asset to escape the estate.  The court agreed and ordered payment from Liberty Mutual’s bond for the trustee.  The Fifth Circuit affirmed, finding: (1) the relevant limitations period was set by a 4-year federal statute rather than a 2-year state one, (2) the finding of gross negligence was not clearly erroneous, and (3) expert testimony was not necessary to establish gross negligence in this situation: “While the precise course of action the Trustee should have taken may be subject to reasonable debate, it requires no technical or expert knowledge to recognize that she affirmatively should have undertaken some form of action to acquire for the bankruptcy estate the assets to which it was entitled.”   Liberty Mutual v. United States, No. 12-10677 (revised August 20, 2013).

Tortious interference damages affirmed

In Homoki v. Conversion Services, a check processing company sued its sales agent and a competitor.  No. 11-20371 (May 28, 2013).  It won judgment for $700,000 against the competitor for tortious interference with the sales agent’s contract with the company, and $2.15 million against the agent for past and future lost profits.  The company and competitor appealed.  First, the Fifth Circuit — assuming without deciding that the plaintiff had to show the competitor’s awareness of an exclusivity provision in the agent’s contract — found sufficient evidence of such knowledge in testimony and the parties’ course of dealing, and affirmed liability for tortious interference.  Second, the Court found that the plaintiff’s “experience in managing his business for sixteen years” supported his damages testimony, and that “[w]hile [plaintiff]’s presentation of its damages evidence was far from ideal,” also found sufficient evidence of causation on the interference claim.  Finally, the Court found that the plaintiff had given adequate notice of its claim of conspiracy to breach fiduciary duties (the joint pretrial order was not signed by the judge), but the plaintiff waived jury trial on that issue by not requesting a damages question — particularly given the significant dispute about causation in the evidence presented.

$40+ million trade secret judgment affirmed.

In Wellogix, Inc. v. Accenture, LLP, LLP the district court entered judgment for the plaintiff — $26.2 million in compensatory damages and $18.2 million in punitives, after a remittitur —  in a trade secrets case about software to make oil exploration more efficient.  No. 11-20816 (May 15, 2013, revised Jan. 15, 2014).  Affirming, the Court: (1) reminded, in the opening paragraph, of the deference due to a jury verdict; (2) detailed the sufficient evidence before the jury of a trade secret, of its inappropriate use by the defendant, of damages, and malice; (3) rejected Daubert arguments about the scope of the plaintiff’s computer science expert’s testimony  and the material considered by its damages expert; and (4) affirmed the punitive damages award because it was less than the compensatory damages and the issue of “reprehensibility” was neutral.  The Court also analyzed aspects of the relationship between trade secret claims and the patent process.  Footnote 4 of the opinion provides a useful guide to the federal courts’ treatment of a “Casteel problem” in Texas jury submissions.

Exclusion of safety expert affirmed

An expert opined that a railroad crossing was unsafe and required active warning devices.  Brown v. Illinois Central Railroad, No. 11-60654 (Jan. 28, 2013).  He contended that the crossing had “‘narrow’ pavement, ‘skewed’ angle, ‘rough’ surface and ‘steep’ incline” but did not tie those conclusions to a guideline or publications, relying instead on “education and experience.”  He also admitted that visibility at the crossing was adequate under the Transportation Department’s standards.  Id. at 7.  Accordingly, the Fifth Circuit affirmed the district court’s exclusion of his testimony under Daubert, calling it “transparently subjective.”  Id. at 8.

Damages for “irreplaceable” waste treatment plant

The defendant in Factory Mutual Insurance v. Alon USA stipulated to liability after an explosion at a waste treatment plant.  The remaining issue was whether fair market value of the plant was the cost to replace it (roughly $6 million) or the cost of the plant’s component parts (roughly $900,000).  No. 11-11080 (Jan. 23, 2013).  Under deferential clear error and abuse-of-discretion standards of review, the Fifth Circuit affirmed the district court’s conclusions that: (1) the plant system was unique and the cost of its components did not fairly estimate its value (distinguishing Hartford Ins. Co. v. Jiminez, 814 S.W.2d 551 (Tex. App.–Houston [1st Dist.] 1991, no pet.)); (2) the plaintiff’s expert “educated and interviewed . . . employees” about a key depreciation issue, and thus “did more than just repeat information gleaned from external sources” (distinguishing U.S. v. Mejia, 545 F.3d 179 (2d Cir. 2008)); and (3) the multiplier used to reflect installation expenses was “entirely reasonable[,]” “[g]iven the lack of useful records and resources pertaining to this particular . . . plant.”

Tort Causation 101

Smith v. Christus St. Michaels presented a wrongful death claim about an elderly man, who suffered from recurrent cancer, who died from a fall in the hospital while being treated for a blood disorder.  No. 12-40057 (Nov. 13, 2012) (unpublished).  The trial court granted summary judgment under the “lost chance” doctrine, finding a lack of evidence that the man would have been likely to survive his cancer.  The Fifth Circuit reversed because it found his death was caused by a fall unrelated to his cancer or other treatment protocol.  Id. at 8. The Court also reversed a ruling that the plaintiffs’ expert testimony on causation was conclusory, finding that it “sufficiently explained how and why” as to the allegedly inadequate monitoring of the patient’s bedside at night.  Id. at 10.  The opinion provides a general nuts-and-bolts summary of Texas tort causation law.

Injury verdict affirmed over Daubert challenges

Roman v. Western Manufacturing examined a $1mm-plus verdict about severe injuries from a pump malfunction.  No. 10-31271 (Aug. 17, 2012).  After review of the standards, id. at 5 (“It is not our charge to decide which side has the more persuasive case.”), the Court found that two qualified mechanical engineers met Daubert even though they lacked extensive experience with “stucco pumps,” declining to “make expert certification decisions a battle of labels.”  Id. at 7.  The Court also rejected technical challenges to the type of pump reviewed by the experts and the plausibility of their factual assumptions about its operation, id. at 13 (“There was certainly contrary evidence, but that was for jurors to weigh.”), as well as sufficiency challenges about the inferences made by the jury.  Id. at 16-17.  Additional challenges were found waived under Fed. R. Civ. P. 50.  This opinion is the latest in a series of thoughtful cases about Daubert after the 2009 decision in Huss v. Gayden.

Daubert rulings in toxic tort case

The Court reviewed several Daubert rulings in the toxic tort case of Johnson v. Arkema, Inc., No. 11-50193 (June 20, 2012).  Under an abuse-of-discretion standard, it affirmed the exclusion of experts based on weaknesses in reliance upon (1) analysis of whether the materials at issue belonged to a “class of chemicals” known to cause disease; (2) state and federal exposure guidelines; (3) animal studies; and (4) the “temporal connection” between exposure and illness.  Op. at at 8-20.  The Court then affirmed the exclusion of an opinion based on a “differential diagnosis,” concluding that it was based on an unreliable presumption about general causation.  Id. at 22.  The Court concluded by reversing on a causation issue that did not require expert testimony, finding that the temporal connection between exposure and certain chronic injuries was close enough to allow trial — while also finding that the connection was to attenuated as to related chronic injuries.  Id. at 26.  A dissent took issue with the majority’s reasoning as to one well-credentialed toxicology expert.  Id. at 29.