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United States ex rel. Landis v. Tailwind Sports Corp.

United States District Court, District of Columbia

November 28, 2017

UNITED STATES OF AMERICA ex rel. FLOYD LANDIS, Plaintiff,
v.
TAILWIND SPORTS CORP., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          CHRISTOPHER R COOPER, UNITED STATES DISTRICT JUDGE.

         Before the Court are several motions in limine from both parties. In this Memorandum Opinion and Order, the Court resolves the motions related to expert testimony: namely, Defendant Lance Armstrong's motion to exclude the testimony of the Government's three proposed experts (Larry Gerbrandt, Dr. Brian Till, and Dr. Jonathan Walker) (ECF No. 559) and the Government's motions to exclude the testimony of Armstrong's two experts, Douglas Kidder (ECF No. 557) and John Gleaves (ECF No. 558).[1]

         With respect to the Government's experts, the Court will mostly deny Armstrong's motion, but will grant it in two respects: (1) the experts cannot testify as to an impermissible theory of damages that has been previously rejected by the Court, namely that the fair market value of the promotional services that Armstrong's cycling team rendered to the U.S. Postal Service (“USPS”) is zero, and (2) Gerbrandt cannot offer his unsubstantiated opinion that the harm resulting to the USPS from the negative publicity it received from coverage of Armstrong's use of performance enhancing drugs (“PEDs”) necessarily outweighed the value of any benefits received from the sponsorship prior to revelations of Armstrong's PED use.

         With respect to Armstrong's experts, the Court will grant in part and deny in part both Government motions. The Court finds Mr. Kidder's testimony admissible except insofar as it discusses the value of USPS's cycling-themed Visa credit-card promotion. And the Court will permit Mr. Gleaves to testify as an expert witness with respect to the widespread nature of PED use in cycling, but will not permit him to testify to the other opinions laid out in his expert report.

         I. Background

         A. Government's Experts

         The Government intends to call three expert witnesses at trial to testify regarding its alleged damages: Larry Gerbrandt, Dr. Brian Till, and Dr. Jonathan Walker.

         1. Larry Gerbrandt

         Larry Gerbrandt is the principal of Media Valuation Partners, a firm that has been providing valuation, market research, and litigation support since 2007. Def. Armstrong's Mot. to Exclude Testimony of Gerbrandt, Till, & Walker (“Armstrong MIL”), Ex. 1 (“Gerbrandt Expert Report”), at 1. He also serves as the managing director of Janas Consulting, an investment banking, management consulting, and valuation firm; as an associate with the Analysis Group, a provider of economic, financial, and business strategy consulting; and as a board member of The Inspiration Network, a family-entertainment-oriented television network. Id. Prior to his current positions, Gerbrandt worked as an analyst and executive for several media research companies, including The Nielsen Company, and has spent his career collecting and analyzing data related to pricing, valuation, and consumption across consumer media. Id. He has served as an expert witness more than 90 times on topics involving the economics and value of network television series, the advertising and license fee revenue generated by broadcasts, and the value of publicity. Id. at 4. According to the Government and Gerbrandt's expert report, he intends to testify about the negative publicity USPS received from the media coverage of Lance Armstrong's PED use. Id. at 5-6; Pls.' Opp'n to Armstrong MIL (“Pls.' Opp'n”) at 1, 11.

         2. Dr. Brian Till

         Dr. Brian Till is the Dean of the College of Business and Administration and a Professor of Marketing at Marquette University. Armstrong MIL Ex. 4 (“Till Expert Report”) at 1. He has a bachelor's degree in advertising and an MBA from the University of Texas, and a Ph.D. from the University of South Carolina in marketing. Id. His academic research has focused on associative learning, brand equity, and celebrity endorsers, and he has published articles on these topics in several academic journals. Id. Prior to his academic career, he worked as a brand manager at Purina. Id. According to the Government and Dr. Till's expert report, he intends to testify that the USPS cycling sponsorship created an associative link between USPS and Lance Armstrong and that academic literature has shown that negative information about athletes, such as Armstrong's PED use, negatively impacts consumer perception of brands associated with the athlete. Id. at 1-2; Pls.' Opp'n at 1, 20.

         3. Dr. Jonathan Walker

         Dr. Jonathan Walker is the President and Chief Executive Officer of the economic consulting firm Economists Incorporated. Armstrong MIL Ex. 6 (“Walker Expert Report”) at 2. He has a bachelor's degree from the University of California at Berkeley and a PhD from the Massachusetts Institute of Technology, both in economics. Id. In addition to his work with Economists Incorporated, he consults regarding damages and economics-related topics in sports cases and other types of litigation matters. Id. According to the Government and Dr. Walker's expert report, he intends to testify about the possible losses that USPS incurred from the negative publicity surrounding Armstrong's PED use using event studies performed on scandals involving similar celebrity athlete endorsers. Id. at 4; Pls.' Opp'n at 1, 26-27.

         B. Armstrong's Experts

         Armstrong intends to call two experts at trial: Douglas Kidder and Dr. John Gleaves.

         1. Douglas Kidder

         Douglas Kidder is a managing partner with OSKR, LLC, a consulting firm that provides expert services primarily in intellectual property and antitrust cases. Pl.'s Mot. Exclude Kidder Testimony (“Pls.' Kidder MIL”) Ex. 1 (“Kidder Expert Report”), at 1. He also teaches a course on damages at the Golden Gate University School of Accounting. Id. Kidder received a bachelor's degree in mathematics and English from Amherst College and a master's degree in naval architecture from the University of California at Berkeley. Id.; id. Ex. 3 (Kidder Depo.), at 10:12-18. He has over 25 years of professional experience valuing businesses, both as a consultant and as a business manager. Id. at 1-2. Kidder intends to testify about the benefits that USPS received from sponsoring the cycling team, and about the difference between the value of those benefits and what the government paid in sponsorship fees. Id. at 3-4. Kidder has also prepared a rebuttal report responding to Dr. Walker's conclusions. Id. Ex. 2 (Rebuttal Report).

         2. Dr. John Gleaves

         Dr. John Gleaves is an Associate Professor of Kinesiology at California State University, Fullerton. Pl.'s Mot. Exclude Gleaves Testimony (“Pl.'s. Gleaves MIL”) Ex. A (“Gleaves Expert Report”), at 1. He received a B.A. in philosophy and theology from Carroll College and a PhD in history and philosophy of sport from Pennsylvania State University. Id. at 3. His academic research has focused on the history of doping and performance enhancement in sports, and he has published several articles on this topic. Id. Additionally, he serves as the Co-Director of the International Network of Doping Research, a group that seeks to explore and understand the use of PEDs, and of the Center for Sociocultural Sport and Olympic Research, which promotes education on sport and the Olympic Games. Id. at 5. According to Armstrong and Dr. Gleaves' expert report, he intends to testify about the history of the use of PEDs in cycling and to USPS's awareness of Armstrong's PED use and any failure to investigate that use. Id. at 8-9; Armstrong's Opp'n Pls.' Mot. Exclude Gleaves Testimony (“Armstrong Gleaves Opp'n”) at 5-6.

         II. Legal Background

         Rule 702 of the Federal Rules of Evidence permits the testimony of a witness as an expert if (1) the witness “is qualified as an expert by knowledge skill, experience, training, or education, ” (2) the testimony “will help the trier of fact to understand the evidence or to determine a fact in issue, ” (3) the testimony is “based on sufficient facts or data, ” (4) the testimony “is the product of reliable principles and methods, ” and (5) the expert has “reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702.

         If a witness is deemed to be qualified to testify as an expert, the Court then applies the two-part test laid out in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), to determine if the remaining requirements for admissibility under Rule 702 are met. Under Daubert, the Court must determine “whether the expert is proposing to testify to (1) scientific knowledge that (2) will assist the trier of fact to understand or determine a fact in issue.” Id. at 592. In other words, the proffered expert testimony “must be both reliable and relevant.” United States v. Nwoye, 824 F.3d 1129, 1136 (D.C. Cir. 2016).

         In determining reliability, the Court's purpose is to conduct a “preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and of whether that reasoning or methodology properly can be applied to the facts in issue, ” an analysis focused “solely on principles and methodology, not on the conclusions that they generate.” Daubert, 509 U.S. at 592-93, 595. The Supreme Court in Daubert identified four factors to consider in this analysis: “(1) whether the theory or technique can be and has been tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) the method's known or potential rate of error; and (4) whether the theory or technique finds general acceptance in the relevant scientific community.” Ambrosini v. Labarraque, 101 F.3d 129, 134 (D.C. Cir. 1996) (citing Daubert, 509 U.S. at 593-94). Ultimately, this inquiry is a “flexible one” and “none of the factors discussed is necessarily applicable in every case or dispositive; nor are the four factors exhaustive.” Id. (quoting Daubert, 509 U.S. at 594).

         In addition to reliability, the proposed testimony must also meet the second prong of Daubert: relevance. This requires the Court to determine “whether the proffered expert testimony ‘is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute.'” Id. (quoting Daubert, 509 U.S. at 591). The proponent of the expert testimony bears the burden of showing, by a preponderance of the evidence, that these requirements for admittance are met. See Daubert, 509 U.S. at 592 n.10.

         III. Analysis

         A. Armstrong's Motion (Government's Experts)

         Armstrong broadly challenges all three of the Government's expert witness on the ground that their testimony is not relevant. He also raises specific challenges to the qualifications or reliability of the experts individually. The Court will address each issue in turn.

         1. Relevance

         Armstrong challenges all three of the Government's experts' proposed testimony on the ground that it will not help the trier of fact to understand the evidence or determine a fact in issue. First, he argues the testimony is not relevant insofar as the experts are attempting to prove an impermissible theory of damages. Second, he argues the testimony is irrelevant because it will lead the jury to improperly speculate as to the amount of damages. The Court concludes that Armstrong is correct that the Government is seeking to prove damages under an impermissible theory and will prohibit the expert testimony insofar as it relates to that theory; however, the Government's proffered expert testimony is still relevant to a permissible, non-speculative theory of damages and thus, aside from any other ground for exclusion, is admissible.

         a. Impermissible Theory of Damages

         Armstrong first challenges certain aspects of the testimony of the Government's experts as irrelevant because it relates to an impermissible theory of damages. Specifically, he argues that testimony from Gerbrandt and Dr. Walker that the cycling-team sponsorship had no fair market value is inadmissible because it attempts to prove damages via a theory that the Court prohibited at summary judgment. Armstrong MIL at 18, 35. The Government responds that the Court's summary judgment ruling did not “foreclos[e] the jury from considering the market value of the tainted services, and ultimately concluding that market value is ascertainable.” Pls.' Opp'n at 4.

         As discussed in more detail in the Court's opinion on summary judgment, the relevant standard for damages in this case is that laid out by the D.C. Circuit's decision in United States v. Science Applications International Corp. (“SAIC”), 626 F.3d 1257 (D.C. Cir. 2010). The Court at summary judgment explained that “[t]he market value of the cycling team's ‘PED- tainted' promotional services is just as ‘impossible to determine'” as the services rendered in SAIC. United States ex rel. Landis v. Tailwind Sports Corp., 234 F.Supp.3d 180, 200 (D.D.C. 2017). However, the Court held, the Government “may attempt to prove that the positive benefits of the sponsorship were reduced-or even eliminated altogether-by the negative publicity that accompanied the subsequent investigation and disclosure of Armstrong's doping.” Id. at 201.

         The Court's decision on summary judgment has foreclosed the Government from arguing, as it seeks to do now, that the fair market value of the services rendered-promotional services from an undisclosed tainted team-was zero. This is so because, as the Court held, the fair market value of that service is not readily ascertainable. See id. at 200-01; cf. SAIC, 626 F.3d at 1279 (concluding that services by entity with undisclosed conflicts was not readily ascertainable). To the extent that the Government's proffered experts intend to testify to that theory of damages, their testimony is irrelevant and inadmissible. But to the extent that the Government seeks to prove that the negative impact of the publicity surrounding the disclosure of Armstrong's doping and concealment thereof outweighed any positive benefits received prior, the testimony of the experts is relevant and, if all other conditions are met, admissible. Cf. Landis, 234 F.Supp.3d at 204 (indicating the expert testimony at issue here is relevant to a proper theory of damages).

         b. Speculative ...


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