Commercial Litigation and Arbitration

Daubert — Damages — Theft of Employees & Confidential Information

The plaintiff in TruGreen Cos. v. Scotts Lawn Serv., 2007 U.S. Dist. LEXIS 10916 (D. Utah Feb. 13, 2007), lost a branch manager and several employees to the defendant, a competitor. The plaintiff filed suit for breach of contract, intentional interference with contractual and economic relations, and unfair competition. District Judge Paul Cassell granted summary judgment on some, but not all, of the plaintiff's claims. The interesting part of the opinion for present purposes is his Daubert ruling excluding the plaintiff's expert testimony on damages.

The Court accepted the credentials of the expert. The problem was the reliability of the expert’s opinion, as required by Fed.R.Evid. 702 — specifically, "how [the expert] could reliably determine that profits earned by [defendant] Scotts were in fact stolen away from [plaintiff] TruGreen. So far as the court can determine from reviewing his report, [he] essentially assumed that the growth in Scotts' profits were as a result of the new employees who left TruGreen." The Court labeled a ‛guesstimate“ the expert's estimate that 30% of the defendant's customers were retained due to the presence of the ex-TruGreen employees. Judge Cassell concluded that: "While this guesstimate might be within the realm of reason, Rule 702 requires more." In rejecting the testimony, the Court also pointed to the expert's separate and independent failure to contend with an array of potentially confounding causes of revenue gains and losses.

Importantly, though, the plaintiff's case was not dismissed. The Court held that "the plaintiff might be able to prove nominal damages or perhaps some form of restitutionary damages in other ways."

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