Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_05-cv-01593/USCOURTS-caed-1_05-cv-01593-17/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 42:7604 Clear Air Act (Emission Standards)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

ASSOCIATION OF IRRITATED

RESIDENTS, an unincorporated

association

Plaintiff,

v.

C&R VANDERHAM DAIRY, a

California Proprietorship, and

RICK VANDERHAM and CORRIE

VANDERHAM, owners and

operators, CORRIE VANDERHAM

DAIRY, INC., a California

corporation, AG RESOURCES,

LLC, a California limited

liability company,

Defendants.

1:05-CV-01593 OWW SMS

MEMORANDUM DECISION AND ORDER

GRANTING PLAINTIFFS’ MOTION TO

PRECLUDE DEFENSE EXPERT GENSKE

1. INTRODUCTION

Plaintiffs move to preclude the testimony of Gary B. Genske

(“Genske”), an expert witness for Defendants C&R Vanderham Dairy,

et. al (“Defendants” or “Vanderham”). Plaintiffs move to

preclude Genske’s testimony on two grounds: 

1. Genske’s expert opinion lacks any basis grounded 

in the facts of the case or in the principles of 

his discipline as required by Fed. R. Ev. 702

2. Genske failed to timely state in an expert report 

all of his expert opinions to be expressed and the

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 Defendants do not provide a curriculum vitae (“CV”), 1

resume, or any other document that explains Genske’s educational

or professional background. 

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expert qualifications for asserting those opinions

as required by the Court’s Scheduling Conference 

Order and Fed. R. Civ. P. 26(a)(2)(A-B) 

2. PROCEDURAL BACKGROUND

Plaintiffs filed their motion to preclude Defendants’ expert

testimony on June 1, 2007. (Doc. 116.) Defendants filed an

opposition on July 9, 2007. (Doc. 137.) Plaintiffs replied on

July 23, 2007. (Doc. 143.)

3. FACTUAL BACKGROUND

According to Defendants, Genske is a certified public

accountant with twenty-six years of experience in accounting for

dairies including preparation of their financial statements and

tax returns. Defendants claim that since 1981 Genske has been

performing accounting tasks, including preparation of financial

statements and tax returns. Defendants claim that Genske’s firm 1

performs accounting tasks for clients who produce approximately

twenty percent of the milk in California, which comprises

approximately four hundred dairy operations. Defendants retained

him as an economic expert in this case. 

On May 14, 2007, Genske issued a letter to Defendants

opining on whether Defendants experienced any economic benefit by

relocating their dairy operations from Southern California to

Kern County. According to the letter, Genske opines that

Vanderham did not achieve any economic benefit from its dairy

operations during 2006 and the first quarter of 2007 and that

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dairies that relocate lose money following the move.

However, in his letter, Genske states that he has not seen

Vanderham’s financial statements for 2006 and the first quarter

of 2007, and that his “evaluation has not been completed.” In

spite of this he states that he “doubt[s] very seriously that C&R

Vanderham Dairy achieved any economic gain in 2006.” He based

his opinion on three premises: 

1. He states that the firm’s California dairy clients averaged

a loss of $315,433 in 2006, supported by a chart labeled

“Preliminary Draft, For Discussion Purposes Only.”

2. He asserts that there are no costs associated with moving

dairy operations, and states that Vanderham moved a dairy

operation in 2006.

3. He speculates on the financial future of the dairy industry

as a whole based on changes in the market for corn. 

There is no specific factual support for any of his

assertions found in the record. Genske concludes by stating that

he “will await receipt of the final 2006 and possibly the first

quarter of 2007 financial information before he finalizes his

report.” 

4. DISCUSSION

A. Motion to Preclude Pursuant to Fed. R. Ev. 702 Is Denied

Under Fed. R. Ev. 702 “admission of scientific, technical,

or other specialized knowledge by a qualified expert is permitted

if it will assist the trier of fact to understand the evidence or

to determine a fact at issue.” Mukhtar v. Cal State Univ.,

Hayward, 299 F.3d 1053, 1063 (9th Cir. 2002). Fed. R. Ev. 702

requires that scientific, technical, and other specialized

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testimony, in order to be admitted, (1) must be based on

sufficient facts or data, (2) must be the product of reliable

principles and methods, and (3) the witness must have applied the

principles and methods reliably to the facts of the case. FED. R.

EVID. 702. The current version of the Rule implements the

principles set forth in Daubert v. Merrell Dow Pharmaceuticals,

Inc., 509 U.S. 579 (1993) and Kumho Tire v. Carmichael, 526 U.S.

137 (1999). FED. R. EVID. 702 Advisory Committee Notes: 2000

Amendments. 

Daubert set forth a non exclusive checklist for trial courts

to use in assessing the reliability of expert testimony. The

specific factors explicated by Daubert are: 

1. whether the experts’ theory can be tested;

2. whether the theory has been subject to peer

review;

3. the known or potential rate of error of the theory

when applied;

4. the existence of standards and controls;

5. whether the theory has been generally accepted by

the scientific community; 

6. Whether experts are “proposing to testify about

matters growing naturally and directly out of

research they have conducted independent of the

litigation, or whether they have developed their

own opinions expressly for purposes of

testifying.”

Daubert, 509 U.S. at 594 (1993); See also, Daubert v. Merrell Dow

Pharmaceuticals, Inc. 43 F.3d 1311, 1317 (9th Cir. 1995). These

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factors also apply in assessing the reliability of non-scientific

expert testimony. Kumho, 119 S. Ct. at 1175. Under Daubert, the

Court is required to function as a gatekeeper, excluding any

expert testimony that is not “based on sound science.” Daubert v.

Merrell Dow Pharmaceuticals, Inc., 43 F.3d 1311, 1316 (9th Cir.)

(opinion after remand), cert. denied, 516 U.S. 869 (1995). In

this regard, the Court’s task “is to analyze not what the experts

say, but what basis they have for saying it.” Id. The Court must

also fulfill this gate-keeping task with regard to non-scientific

testimony, such as economic testimony. Kumho Tire, 526 U.S. at

148. 

i. Genske’s Opinion is Not Based On Sufficient Facts or 

Data and Is Not the Product of Reliable Principles and 

Methods of Accounting

Plaintiffs argue that the court should exclude Genske’s

testimony because it does not satisfy any of the three

requirements of Rule 702. Plaintiffs first argue that the

opinion is not based on sufficient facts or data. Plaintiffs

argue that Genske provides a table of net income data for an

unspecified number of dairies but does not explain how or why

that data applies to or is representative of Vanderham’s economic

benefit from moving its dairy. He opines that moving a dairy

operation generally results in losses without providing

evidentiary support for this conclusion. He asserts without any

support that increased demand for corn from ethanol production

will raise future feed costs for dairies, but does not indicate

how this is related to whether Vandherham gained an economic

benefit from moving its dairy in 2006. Plaintiffs argue that this

is insufficient data.

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Plaintiffs also argue that the Genske’s testimony is not

admissible because it is not the product of an application of

reliable principles and methods of accounting as required under

Fed. R. Ev. 702. Plaintiffs argue that Genske’s opinion of the

exact economic benefits of money is derived from an example of

moving a specific business, based only on survey data of the net

income of his clients and a pair of unsubstantiated examples. 

Relying on generalized data despite the fact that he has five

years of specific financial data from the dairy operation that

Vanderham is moving. Genske does not explain how this

generalized data that was utilized applies or how it is

representative of Vanderham’s operations. Plaintiffs argue that

Genske’s letter provides no foundation based on reliable

principles and methods of accounting for using such generalized

data to measure Vanderham’s economic benefit. 

Defendants do not address these assertions with any contrary

evidence. Instead Defendants contend that Plaintiffs are arguing

that Defendants moved from Southern California in order to gain

an economic advantage. Defendants also assert that the

attachment Genske provided with his letter shows a compilation of

financial performance for their dairy clients, and should be

extremely helpful to the court. Defendants argue this

establishes that Genske is “not simply pulling numbers out of a

hat, but relying on actual data of actual clients in the specific

industry where the Vanderhams operate.” 

This, effectuation does not provide a sufficiently reliable

basis to gauge whether Defendants earned a profit in 2006 and the

first quarter of 2007. Defendants further argue that Genske has

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 Plaintiffs also argue that the report did not meet the 2

admissibility standards of federal rule of evidence 702 because

it is not reliable or relevant. The more germane inquiry is as

to the correct measure of damages, the cost of compliance or, the

converse of that, what the effect of non compliance with

applicable air standards is on the profitability of the

operations. Based on his report Genske claims to have over 30

years of experience in performing accounting services for the

dairy industry. He represents clients who make up twenty percent

of the California Dairy Industry. The opinion he specifically

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not amplified his report and gave no indication when the actual

historical performance of 2006 and the first quarter of 2007

financial results will be available. 

Defendants claim that Genske’s opinion is reliable and

helpful to determine whether Defendants profited by leaving

Southern California. This determination cannot be made because

Genske provided no factual or industry based information to

support his opinion. Defendants have not shown any reliable

support for Genske’s opinion. Genske does not explain how the

data in the table submitted applies to Vanderham Dairy or how the

table numbers relate to Vanderham’s dairy operations. Genske

provides no support for his assertion that moving the location of

a dairy necessarily causes losses for the dairy. Genske has been

unwilling to do so or to provide supplemental information. 

Moreover, Defendants have violated Fed. R. Civ. P. 26(a). 

These failures are unexplained and unexcused. Genske admits that

his report was not complete. 

Plaintiffs’ motion to preclude the “report” and opinions of

Genske is GRANTED for failure to comply with the requirements of

Fed. R. Civ. P. 26(a)(2) and for failure to state a final opinion

supported by clearly identified admissible evidence. 

2

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offered in the letter report on herd profitability is not

applicable to the effect of the cost of compliance measure of

damages. No relevance objection was made under Fed. R. Ev. 401. 

The 702 objection is denied.

Plaintiffs did not raise any Daubert arguments at the

hearing. It bears noting that Genske offered no testimony about

applicable financial rules governing dairy operations, what

factors bear on and what the costs of compliance are with clean

air standards. Nor did he offer any information about the costs

of operating a dairy and how income is generated. 

8

B. Genske’s Report Fails to meet the Discovery Requirements for

an Expert Report under Fed. R. Civ. P. 26

The Scheduling Conference Order dated May 5, 2006, directs

both parties to submit expert reports “pursuant to F.R.Civ.P.

Rule 26(a)(2), (A) and (B).” Scheduling Conference Order 7. Rule

26(a)(2)(B) states, in relevant part:

Except as otherwise stipulated or directed by the

court, this disclosure shall, with respect to a witness

who is retained or specially employed to provide expert

testimony in the case..., be accompanied by a written

report prepared and signed by the witness. The report

shall contain a complete statement of all opinions to

be expressed and the basis and reasons therefore; the

data or other information considered by the witness in

forming the opinions; any exhibits to be used as a

summary of or support for the opinions; the

qualifications of the witness, including a list of all

publications authored by the witness within the

preceding ten years; the compensation to be paid for

the study and the testimony; and a listing of any other

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 The Court set a deadline of March 16, 2007 for the 3

submission of expert reports, Conference Scheduling

Order (Doc. 33.) ¶ 7(E), but subsequently issued an order

approving a stipulated extension of the deadline to May

15, 2007. Stipulation and Order RE: Extension of Time to Disclose

Expert Reports. (Doc. 80.)

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cases in which the witness has testified as an expert

at trial or by deposition within the preceding four

years. FED. R. CIV. P. 26(a)(2)(B).3

Genske’s letter fails to comply with Fed. R. Civ. P.

26(a)(2)(B) for three reasons: 

1. If it is considered a “report” at all, it does not

“contain a complete statement of all opinions to 

be expressed and the basis and reasons therefor.” 

FED. R. CIV. P. 26(a)(2)(B). Genske states in the

letter that he has not finalized his report or 

opinion; to the extent that he supplements his 

opinion in the future, his letter does not 

satisfy Rule 26(a)(2)(B) with regard to his new 

opinions.

2. The letter does not include a statement of “the 

qualifications of the witness, including a list of

all publications authored by the witness within 

the preceding ten years.” FED. R. CIV. P. 

26(a)(2)(B). Genske does not describe his 

education, training, and qualifications as an 

accountant or his professional experience, nor 

does he include a list of all publications he has

authored. He merely states that his “expertise in

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the dairy industry is rather extensive,” and

asserts that his firm’s dairy clients produce

about 20% of California’s milk.

3. The letter ostensibly provides the required 

information regarding compensation and prior 

testimony if documentation is complete. Genske’s

letter does not indicate “the compensation to be 

paid for the study and the testimony;” nor does it

list “any other cases in which the witness has 

testified as an expert at trial or by deposition 

within the preceding four years.” FED. R. CIV. P.

Rule 26(a)(2)(B).

Vanderham has offered no Fed. R. Civ. P. or any other

substantial justification for its failure to comply with Rule

26(a)(2)(B)’s requirements. Plaintiffs argue these failures

cause prejudice because Plaintiffs do not know what Genske’s

testimony will be or on what facts and data he will rely on to

express his opinions. This prevents Plaintiff from effectively

conducting expert discovery and from being prepared to address

Genske’s opinions and underlying data at trial. Vanderham’ noncompliance subjects Plaintiffs to unfair surprise: Defendants

have denied AIR the opportunity to adequately prepare for or

adequately take the deposition of Genske who was unwilling to

meaningfully provide responsive answers about his expert

opinions. AIR will be unable to prepare rebuttal reports, due on

June 15, 2007. See Scheduling Conference Order (Doc. 33.), ¶

7(E); FED. R. CIV. P. 26(a)(2)(C). The Genske letter expressly

states that he will be altering his report in the future. 

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 A request by Defendants to designate a new expert would 4

entail re-opening discovery. An oral request in open court to

re-open discovery cannot serve as a motion. Any such request

must be made by a properly noticed motion. 

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Vanderham’s failure to submit a final expert report denies AIR

the opportunity to depose Genske on any new information or to

closely examine his final opinions. 

At the August 13, 2007 hearing on this motion, Defendants

requested the opportunity to designate a new expert. Plaintiffs 4

argue that even if Vanderham submits another expert report that

satisfies the requirements of Rule 26(a)(2)(B), the testimony

should be excluded because the report has not been submitted by

the Court-imposed deadline of May 15, 2007. The Scheduling

Conference Order, specifies: 

“Failure to designate experts in compliance with this

Order may result in the court excluding the testimony

or other evidence offered through such experts that are

not disclosed pursuant to this Order.” Scheduling

Conference Order ¶ (7)(E). 

Such an exclusion is within the discretion of the Court. See,

e.g., Pickern v. Pier 1 Imports (U.S.), Inc, 457 F.3d 963, 969

(9th Cir. 2006) (holding that it is “not an abuse of discretion

to exclude a party’s expert testimony when that party failed to

disclose the expert report by the scheduling deadline and the

party reasonably could have anticipated the necessity of the

witness at the time of the deadline.”); Coles v. Perry, 217

F.R.D. 1, 4 (D.D.C. 2003) (noting that “the very purpose of the

rule is nullified” when an expert “supplements his report by

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 Plaintiffs argue that Vanderham did not provide the 5

underlying data for the table attached to Genske’s letter. 

Plaintiffs also claim that at his deposition, Genske refused to

produce any documents responding to a subpoena duces tecum

requesting production of any and all documents listing all of his

firm’s dairy clients. Further, when asked when he would be

producing the underlying data for the table attached to his

opinion, he indicated that he would not provide that information

because it was proprietary. Lastly, Plaintiffs claim that when

AIR’s counsel specifically tried to determine if Genske used data

from dairies of similar location, size, structure, or emissions

to the Dairy, Genseke refused to even disclose if the comparable

dairies were his clients. 

12

addressing a new matter after discovery has ended); North

American Watch Corp. v. Princess Ermine Jewels, 786 F.2d 1447

(9th Cir. 1986) (belated compliance with discovery orders does

not preclude imposition of sanctions).

Defendants rejoin that Genske’s opinion is reliable based on

his expertise and financial experience with the Dairy industry. 

Plaintiffs argue that they have attempted to elicit the missing

and incomplete information from Genske during his deposition and

he was unwilling to do so. Vanderham has failed to provide the

required expert disclosure despite extensive deposition

questioning and a subpoena duces tecum requesting it. 

5

Vanderham’s failure to comply with the requirements of Rule

26(a)(2)(B) threatens Plaintiffs with unfair surprise at a later

stage in this case and prevents them from adequately preparing

for depositions and trial. 

Plaintiffs’ motion to preclude Genske’s testimony for

failure to comply with Fed. R. Civ. P. 26(a)(2)(B) is GRANTED. 

//

//

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5. CONCLUSION

For all the reasons stated above, the testimony of Gary B.

Genske is excluded for failure to comply with Fed. R. Ev. 702 and

Fed. R. Civ. P. 26(a)(2)(B). 

IT IS SO ORDERED.

Dated: August 27, 2007 /s/ Oliver W. Wanger 

474bb4 UNITED STATES DISTRICT JUDGE

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