In litigation, the role of a testifying damages expert is to assist the trier of fact in determining a party’s financial loss. Experts perceived to be serving as advocates for one party risk losing credibility or even being precluded from testifying. This article summarizes a recent federal district court ruling to exclude portions of a damages expert’s testimony. Hutchins & Hutchins, Inc. v. Airboss Defense Group, LLC, No. 2:23-cv-76, E.D. Va., September 6, 2024.
In Hutchins & Hutchins, Inc. v. Airboss Defense Group, LLC, the U.S. District Court for the Eastern District of Virginia granted in part the defendant’s motion in limine to exclude portions of the plaintiff’s damages expert testimony. The excluded testimony included a theory that the expert had disavowed in deposition but had been advocated by the plaintiff’s counsel.
The case involved an alleged breach of a nondisclosure agreement (NDA) between the plaintiff and the defendant. The defendant was awarded a contract to supply nitrile gloves to the U.S. Department of Health and Human Services. The plaintiff represented several glove manufacturers and offered to help the defendant meet its contractual obligations.
The NDA contained a “noncircumvention provision,” prohibiting a party from entering into an agreement with a business the other party introduced, without written consent. Later, the defendant signed a supply contract with a company that the plaintiff had introduced, without consent. The plaintiff sued the defendant for breach of the NDA, seeking damages in the form of a reasonable finder’s fee or resale transaction.
The plaintiff’s damages expert offered several damages theories in his report. One theory was the so-called Lehman Formula. The expert described it as a standard method for calculating finder’s fees in mergers and acquisitions. He noted that “based on the representations of counsel, it is my understanding that it has been relied upon by courts from other jurisdictions in calculating finder’s fees paid to an injured party who brought companies together.” Applying the Lehman Formula, the expert opined that a $227,400 finder’s fee would be appropriate in this case.
However, during the expert’s deposition, he disavowed his opinion on the use of the Lehman Formula in this case. He admitted that he was unaware of any transaction that used the Lehman Formula in connection with the sale of goods. He also said that he wouldn’t have used the formula in this context, except that the plaintiff’s counsel had urged him to provide it as an alternative.
The defendant subsequently moved to exclude the expert’s testimony regarding what a reasonable finder’s fee would be under the Lehman Formula. The court granted that motion.
In applying the Lehman Formula, the court found the expert didn’t conduct his own independent analysis. Instead, he merely repeated counsel’s damages theory, which isn’t helpful to the trier of fact. The court explained, “When an expert repudiates or disavows an opinion at deposition that was expressed in his expert report, such an opinion should be excluded.”
As Hutchins illustrates, courts expect experts’ opinions to reflect independent, objective analysis, not legal strategy. Courts will likely exclude the testimony of so-called experts who merely parrot counsel’s theories.