256 memoinsupportinliminetoexcludetestimonyroberthalexander kmart by Milton Sandy

Case: 1:11-cv-00103-GHD-DAS Doc #: 256 Filed: 10/08/13 1 of 12 PageID #: 2578

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF MISSISSIPPI ABERDEEN DIVISION KMART CORPORATION, Plaintiff CIV. ACT. NO. 1:11-CV-103-GHD-DAS versus THE KROGER CO., et al. Defendants _____________________________________________________________________________________________

MEMORANDUM IN SUPPORT OF MOTION IN LIMINE TO EXCLUDE OR LIMIT THE ANTICIPATED TRIAL TESTIMONY OF ROBERT H. ALEXANDER May It Please the Court: Plaintiff, Kmart Corporation, submits this Memorandum in Support of its Motion in Limine to Exclude or Limit the Anticipated Trial Testimony of Robert H. Alexander, a certified professional accountant. Kmart seeks to exclude or limit any anticipated trial testimony by Mr. Alexander as to the reasonableness of the period of restoration by Kmart in reopening its store following the flood damage caused by the acts or omissions of Defendants, The Kroger Co., Kansas City Southern Railway Co., E&A Southeast Partnership Limited, and Fulton Improvements, LLC. The reasonableness of any period of restoration is an impermissible legal conclusion that is to be made by the trier of fact, not Mr. Alexander.

Additionally, Mr.

Alexander, who is an accountant, is not qualified to testify regarding the reasonableness of the period of restoration because he is not a contractor or flood specialist, and has no direct training, knowledge or experience in opening or reopening a department store.

Consequently, any

testimony by Mr. Alexander as to the reasonableness of any period of restoration would be wholly unreliable.

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Background On May 2, 2010, Kmart Store #4833 in Corinth, Mississippi was heavily damaged by

over two feet of high velocity flood water. As part of its negligence claims, Kmart alleges that actions and/or omissions of Kroger, Kansas City Southern Railway, E&A Southeast Limited Partnership, and Fulton Improvements caused or contributed to its damages. 1 Kmart also alleges contractual claims against Fulton Improvements by failing to keep the leased premises in a safe, dry, and tenantable condition as required under the lease. 2 In total, Kmart seeks over $3.6 million in damages from the Defendants.

Kmart’s

damages include: (a) $929,303 in merchandise damage; (b) $1,621,901.00 in lost profits; (c) $619,948 in furniture, fixtures, and equipment; (d) $26,433 in building repair; (e) $55,115 in extra expense; and (f) $109,834 in other or miscellaneous property damage. In support of its lost profits claims, Kmart retained Robert Azimoz, who projected Kmart’s lost profit claim in the amount of $1,621,901.00. Mr. Azimov used a restoration period of ten months, which is the actual period from when Kmart’s Corinth store was damaged on May 2, 2011 to when it reopened in February 2011. In response to Mr. Azimov’s report, Defendants retained Mr. Robert H. Alexander to prepare an “alternative estimate” of Kmart’s alleged lost profits. 3 Mr. Alexander is a certified

See Kmart’s original Complaint ¶¶ 23-62.

See id. ¶¶ 59-62.

See Expert Witness Report of Robert H. Alexander (Jun. 28, 2013), attached as Exhibit 1 to Motion in Limine to Exclude or Limit the Anticipated Trial Testimony of Robert H. Alexander .

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public accountant employed by HORNE, LLP in Jackson, Mississippi.4 Mr. Alexander is not a general contractor or engineer, 5 and has no direct knowledge or experience in opening or reopening a large department store, like Kmart. 6 Mr. Alexander did not interview or speak to any witnesses or contractors as to scope of work done to restore and reopen Kmart’s Corinth store following the May 2010 flood. 7 In his expert report, Mr. Alexander estimated the lost profits of Kmart Store No. 4833 as a result of the May 2010 flood to be $328,986.00. 8 While Kmart’s expert, Mr. Azimov, used the actual period of restoration as to the reopening of Kmart’s store, Mr. Alexander used a much more abbreviated period of restoration of approximately five months. 9 Mr. Alexander noted in his report that “it would be reasonable to assume that Kmart could restock and reopen the Store by the end of September, and consequently this should be the end of the damage period.” 10 At his deposition, Mr. Alexander testified that he made that conclusion without relying on the knowledge or expertise of any other person. 11 4

See id. at Appendix B, Curriculum Vitae of Expert.

See Excerpts of the Deposition Transcript of Robert H. Alexander (Sept. 4, 2013) at 68:24-69:3, attached as Exhibit 2 to Motion in Limine to Exclude or Limit the Anticipated Trial Testimony of Robert H. Alexander . 6

See id at 70:10-21.

See id. at 70:22-13.

See Exhibit 1, Expert Witness Report of Robert H. Alexander at 2, ¶ 4.

See id. at 1.

Id.

See Excerpts of the Deposition Transcript of Robert H. Alexander (Sept. 4, 2013), attached as Exhibit 2 to Motion in Limine to Exclude or Limit the Anticipated Trial Testimony of Robert H. Alexander at 58:22-10.

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Kmart now moves to exclude or limit Mr. Alexander’s anticipated trial testimony as to the reasonableness of the period of restoration on the grounds that such an opinion is an impermissible legal conclusion. Additionally, Mr. Alexander, who is a certified professional accountant, is not qualified to testify as to the reasonableness of the period of restoration by Kmart (or the reasonableness of Defendants’ proposed period of restoration) to reopen its store following the May 2010 flood event. II.

Law and Argument Kmart does not dispute that an expert may generally give an opinion based on an

assumption expressly stated by him. But Mr. Alexander goes far beyond that general legal premise by purporting to offer expert testimony as to the reasonableness of his assumption as to the period of restoration by Kmart, which is a legal conclusion ultimately to be decided by the jury or trier of fact. Consequently, to the extent that Mr. Alexander seeks to testify at trial as to the reasonableness of that assumption, he is not qualified to make that assumption and his methodology is faulty. A.

Legal standard as to admissibility of expert testimony

Rule 702 of the Federal Rules of Evidence governs the admissibility of expert testimony. Rule 702 provides that an expert witness “qualified . . . by knowledge, skill, experience, training, or education,” may testify when scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue. 12 For the testimony to be admissible, Rule 702 requires that: (1) the testimony be based on sufficient facts or data; (2)

See FED. R. EVID. 702. 4

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the testimony be the product of reliable principles and methods; and (3) the witness apply the principles and methods reliably to the facts of the case. 13 In Daubert v. Merrell Dow Pharmaceuticals, 14 the United States Supreme Court held that Rule 702 requires the district court to acts as a gatekeeper to ensure that “any and all scientific testimony or evidence admitted is not only relevant, but reliable.” 15 In Kuhmo Tire Co. v. Carmichael, 16 the Supreme Court found that a court’s “gatekeeping” function under Daubert applies to all forms of expert testimony, not just scientific testimony. 17 The court’s “gatekeeping” function generally involves a three-part inquiry. First, the expert witness must be qualified to give testimony by virtue of his knowledge, skill, experience, training, or education. 18 Next, the court must determine whether the proffered expert testimony is reliable. 19 The party offering the testimony bears the burden of establishing its reliability by a preponderance of the evidence. 20 The reliability inquiry requires the court to assess whether the reasoning or methodology underlying the expert’s testimony is valid. 21 The aim is to exclude

Id.

See 509 U.S. 579 (1993).

Id. at 589.

See 526 U.S. 137 (1999).

See id. at 147.

See Daubert, 509 U.S. at 589.

See id.

See Moore v. Ashland Chemical, Inc., 151 F.3d 269, 276 (5th Cir. 1998).

See Daubert, 509 U.S. at 593. 5

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expert testimony based merely on subjective belief or unsupported speculation. 22 Finally, the court must determine whether the expert’s reasoning or methodology “fits” the facts of the case and whether it will thereby assist the trier of fact to understand the evidence, in other words, whether it is relevant. 23 B.

Mr. Alexander’s anticipated testimony invades the province of the jury or trier of fact.

In his expert report, Mr. Alexander offers opinions as to Kmart’s lost profits claim of $1,621,901.00, in addition to other elements of Kmart’s damage claim. 24 While Kmart’s expert used the actual period of restoration to calculate its lost profit claim, Mr. Alexander used an abbreviated time period of five months for his period of restoration. 25 As part of the first opinion contained in his report, 26 Mr. Alexander opines:

See id. at 590.

See id. at 591.

See Exhibit 1, Expert Witness Report of Robert H. Alexander.

Id. at 1.

See id. 6

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“It is well established in the Fifth Circuit that Federal Rule of Evidence 704 does not permit an expert to render a conclusion of law.” 27 Simply put, expert testimony that offers a legal opinion is inadmissible. 28 In United States v. Milton, 29 the United States Fifth Circuit Court of Appeals found that “courts must remain vigilant against the admission of legal conclusions and expert witnesses may not substitute for the court in charging the jury regarding the applicable law.” In Owen v. Kerr-McGee Corp., 30 the Fifth Circuit addressed the types of expert opinions that are prohibited. In Owen, the defendant’s attorney asked its expert whether he had any opinion regarding the cause of the accident having considered all the evidence in the case. The plaintiff objected, and the trial court sustained the objection. On appeal, the defendant argued that the question was admissible under Rule 704, but the Fifth Circuit disagreed. 31 Considering the 1972 Advisory Committee Notes to Rule 704, the Owen court found that the question at issue sought a legal conclusion and “would supply the jury with no information other than the expert’s view of how its verdict should read.” 32 In other words, as the United States District Court for the Southern District of Mississippi recognized in Trinity Yachts, LLC v. Thomas Rutherford, Inc.,33 27

See Musmeci v. Schwegmann Giant Super Markets, 2001 WL 406267 (E.D. La. Apr. 18, 2001) (Barbier, J.)

See Estate of Sowell v. United States, 198 F.3d 169 (5th Cir. 1999); see also Askanase v. Fatjo, 130 F.3d 657, 669 (5th Cir. 1997).

See United States v. Milton, 555 F.2d 1198 (5th Cir. 1977).

698 F.2d 236 (5th Cir. 1983).

Id. at 239-40.

Id. at 240.

See 2013 WL 2406552 (S.D. Miss. May 31, 2013) (Guirola, J.). 7

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“Opinions that provide legal conclusions are not helpful to the trier of fact and are therefore inadmissible.” Here, the reasonableness of Kmart’s period of restoration in reopening its Corinth store following the May 2010 flooding event is ultimately an issue to be decided by the jury. Alternatively, if the jury finds that Kmart’s period of restoration is not reasonable after listening to and reviewing all the testimony and evidence, then it may make a finding as to an alternative period of restoration. Regardless, Mr. Alexander’s opinion that “[i]t would be reasonable to assume that Kmart could restock and reopen the store by the end of September, and consequently this should be the end of the damage period” 34 is a impermissible legal conclusion that is ultimately to be decided by the jury, not Mr. Alexander. At his deposition, Mr. Alexander seemingly agreed that any conclusion by him as what is a reasonable period of restoration is an impermissible legal conclusion:

You’re not testifying as to the reasonableness of that five-month period of restoration, correct? * * *

Well, I’m not sure how to answer that. I believe that from the information that I’ve looked at that construction was complete and that that was a reasonable time for the store to reopen. If there is some other proof that I have not seen as to when actual the opening would have—the construction wasn’t done as I’ve seen documents for, then I would have to adjust my report. But I have not seen that.

So is it fair to say that at trial you will be offering an opinion as to the reasonableness of the period of restoration?

No, I don’t think that directly that I would offer that opinion. But it certainly impacts may opinion because it goes to the damage period. And if—that is my assumption based on a lot of information that I’ve looked at.

See Exhibit 1, Expert Witness Report of Robert H. Alexander at 1, ¶ 1. 8

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* Q.

Okay. You agree that that period of restoration is something that’s going to ultimately be decided by the court, correct? *

I would think it would be, yes. 35

While Mr. Alexander seemingly agrees that an opinion by him as to the reasonableness of Kmart’s period of restoration is an impermissible legal opinion (or that he would not be offering such an opinion at trial), Kmart moves to exclude or limit any such trial testimony in an abundance of caution. C.

Mr. Alexander is not qualified to give an opinion as to the reasonableness of a period of restoration nor is his methodology reliable.

Mr. Alexander’s anticipated testimony as to the reasonableness of Kmart’s period of restoration, or what he believes would be a more reasonable restoration period, can be excluded on the basis that it is an impermissible legal conclusion alone. Nonetheless, to the extent any further inquiry is needed, Mr. Alexander’s anticipated trial testimony as to the reasonableness of any restoration period should be limited or excluded on the basis that he is not qualified to give such testimony. As demonstrated by Mr. Alexander’s curriculum vitae, he does not have the requisite knowledge, skill, expertise, or training to given any testimony as to the reasonableness of Kmart’s period of restoration or to suggest a more reasonable period. Mr. Alexander is a certified public accountant. Mr. Alexander is not a general contractor. 36 He testified that he 35

See Exhibit 2, Excerpts of the Deposition Transcript of Robert H. Alexander at 55:16-56:25 (emphasis added). 36

See id. at 69:4-6. 9

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does not consider himself as an expert in construction. 37 Additionally, Mr. Alexander is not a licensed engineer. 38 Further, Mr. Alexander admittedly has “no expert knowledge” as to what it takes to repair a large commercial department store that has been damaged by a flood and the steps required to open it. 39 Without being properly qualified to testify as to the reasonableness of any period of restoration (whether the actual period of ten months or the abbreviated period suggested), any such testimony by Mr. Alexander would be unreliable.

In order to be reliable, an expert’s

opinion must be “grounded in the methods and procedures of science and ... be more than unsupported speculation or subjective belief.” 40 In O’Hara v. Travelers, 41 the court excluded the deposition testimony of plaintiff’s residential construction and repair expert because his testimony was both unreliable and irrelevant. In finding his testimony was unreliable, the court held that his opinion was “based upon insufficient facts, data, information and/or observations.” 42 There, the plaintiff’s expert, in determining the value of the loss at issue, viewed only the exterior of the house several years after it was damaged and only after demolition had begun. His opinion was based only on three photographs of the property provided by the plaintiff, his limited viewing of the house, and whatever other information to what the plaintiff 37

See id. at 69:21-70:1.

See id. at 70:3-2.

See id. at 70:4-21.

Accident Ins. Co. v. Classic Bldg. Design, LLC, 2012 WL 3913090 (S.D. Miss. Sept. 7, 2012) aff'd sub nom. Accident Ins. Co. v. Classic Bldg. Design, L.L.C., 2013 WL 4564846 (5th Cir. Aug. 29, 2013) (citing Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir.2012)).

2012 WL 3062300 (S.D. Miss. July 26, 2012).

Id. at *9. 10

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had told him. 43 The O’Hara court noted, “Where an expert’s opinion is based on insufficient information, the analysis is unreliable.” 44 The expert in O’Hara did not consider the reports of the fire department or the engineer’s report, among other documents, in forming his opinion. Further, in excluding the expert’s testimony, the court held, “No one could form a reliable opinion regarding the cost to repair and/or construction a house on that meager basis.” 45 Like the expert in O’Hara, Mr. Alexander’s anticipated testimony as to reasonableness of any period of restoration would be unreliable because he is not qualified to give any such testimony. III.

Conclusion Based on the foregoing reasons, Kmart seeks to exclude or limit the anticipated expert

testimony of Mr. Alexander as to the alleged reasonableness of Kmart’s period of restoration (or an alternative period of restoration suggested by Defendants) on the grounds that it constitutes an impermissible legal opinion or because he is not qualified to make that opinion and, as such, it would be unreliable.

See id.

Id. (citing Seaman v. Seacor Marine LLC, 326 Fed. App’x 721, 725 (5th 2009)).

Id. at *9. 11

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Respectfully submitted, /s/ Ryan O. Luminais ____________________________________ JAMES M. GARNER (La. Bar. No. 19589) JOHN T. BALHOFF, II (La. Bar. No. 24288) RYAN O. LUMINAIS (Miss. Bar. No. 101871) SHER GARNER CAHILL RICHTER KLEIN & HILBERT, L.L.C. 909 Poydras Street, Twenty-eighth Floor New Orleans, Louisiana 70112 Telephone: (504) 299-2100 Facsimile: (504) 299-2300 ATTORNEYS FOR KMART CORPORATION

CERTIFICATE OF SERVICE I hereby certify that a copy of the above and foregoing has been served on all known counsel of record with the Clerk of Court using the CM/ECF system which will automatically send-email notification to all known counsel of record, this 8th day of October, 2013.

/s/ Ryan O. Luminais _________________________________________ RYAN O. LUMINAIS