1

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

KIRBY DEVELOPMENTS LLC, :

:

Plaintiff, : Case No. 2:18-CV-500

:

v. :

: JUDGE SARAH D. MORRISON 

XPO GLOBAL FORWARDING, INC., : MAGISTRATE JUDGE KIMBERLY

: JOLSON

et al., :

:

Defendants. :

OPINION & ORDER

Plaintiff Kirby Developments, LLC, alleges it was a victim of a massive Ponzi 

scheme involving the sale of Off the Road (“OTR”) mining tires orchestrated by 

Defendants Jason Adkins, XPO Logistics, Inc. and XPO Global Forwarding, Inc.

(collectively “XPO”), Midwest Coal, LLC, Mid America Tire of Hillsboro, Inc. d/b/a 

Best-One Tire & Service of Hillsboro, Jason Adkins, Afif Baltagi, John Eckerd, Todd 

Wilkin, L.A.D. Impex Corporation, and Ahmet Neidik.1 XPO moves for summary 

judgment (ECF No. 177) and to strike certain testimony of Richard Armstrong, 

Kirby’s expert. (ECF No. 178). In turn, Kirby seeks an Order that Pennsylvania law 

applies to some, but not all, of its claims. (ECF No. 176.) Briefing on the three 

motions being complete, the Court GRANTS in part and DENIES in part the 

Motions for Summary Judgment (ECF No. 177) and to Partially Exclude (ECF No. 

178), and DENIES the Motion to Apply Pennsylvania Law (ECF No. 176). 

1 Defendant Fox, Byrd & Company was previously dismissed from the case. 

(ECF No. 155.)

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I. BACKGROUND

A. Parties and Participants

Given the multitude of players involved in this matter, the Court begins by 

summarizing the role of each.

Name Status Role Residency

Kirby Plaintiff Real estate holding 

company. OTR tire 

buyer.

West Virginia 

LLC.

Principal place of 

business in 

Pennsylvania.

Scott Kiger Non-party 50% owner of Kirby. 

(ECF No. 190-1, PageID 

6757.)

Pennsylvania 

resident.

Charlie

Riggs

Non-party 50% owner of Kirby. 

(ECF No. 190-1, PageID 

6757.)

Unclear

Jim Cunningham Non-party In-house counsel for 

Kirby.

N/A

John O’Connor Non-party Business consultant for, 

and advisor to, Kirby. 

(ECF No. 194-1, PageID 

9138.) Co-owner with 

Adkins of OTR Tires 

Direct, Inc. (ECF No. 

195-1, PageID 9537.)

N/A

OTR Tires Direct, 

Inc.

Non-party Pennsylvania 

corporation involved in 

OTR tire sales. (ECF No. 

195-57, PageID 9921.) 

Co-owned by O’Connor 

and Adkins. 

N/A

Jason Adkins Defendant Principal of Defendant 

Midwest Coal, LLC. 

(ECF No. 91, PageID 

1115.)

Ohio

Midwest Coal, 

LLC

Defendant Buyer and reseller of 

OTR tires. (ECF No. 82-

9, PageID 978.)

Ohio corporation. 

Principal Place of 

Business in Ohio.

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John Eckerd Defendant. 

Bankruptcy 

stay in 

effect.2

Friend of Adkins. Texas

Todd Wilkin Defendant. 

Bankruptcy 

stay in effect.

Principal of Mid America 

Tire of Hillsboro, Inc. 

d/b/a Best-One Tire & 

Service of Hillsboro.

Ohio

Mid America Tire 

of Hillsboro, Inc. 

d/b/a Best-One 

Tire & Service of 

Hillsboro

Defendant. 

Bankruptcy 

stay in effect.

Tire seller and 

distributor. 

Ohio corporation. 

Principal place of 

business in Ohio.

XPO Logistics, 

Inc.

Defendant Holding company. 

Parent of Defendant 

XPO Global Forwarding, 

Inc.

Delaware 

corporation. 

Principal place of 

business in 

Connecticut.

XPO Global 

Forwarding, Inc.3

Defendant Wholly owned subsidiary 

of XPO Logistics, Inc.

Storage facility for tires.

Delaware

corporation. 

Principal place of 

business in 

Illinois.

Afif Baltagi Defendant XPO employee. Branch 

manager at XPO’s 

Houston, Texas location. 

Texas

L.A.D. Impex 

Corporation

Defendant. 

Bankruptcy 

stay in effect.

Escrow agent and freight 

forwarder for deal. (ECF 

91, ¶ 41.)

New Jersey 

corporation. 

Principal place of 

business in New 

Jersey.

Ahmet Neidik Defendant. 

Bankruptcy 

stay in effect. 

Principal and owner of

L.A.D.

New Jersey 

2 XPO indicates Eckerd’s bankruptcy was terminated via discharge in 

December 2019. (ECF No. 177, PageID 2571.) No stay lift motion has been filed 

with the Court so his bankruptcy stay remains in place.

3 XPO Logistics argues it is not a proper party because it is merely the parent 

and holding company of XPO Global Forwarding. (ECF No. 177, PageID 2555.) XPO 

Logistics has not moved to be dismissed and therefore remains a party. 

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B. Deal Formation

Eckerd went to grade school with Kiger’s wife. (ECF No. 190-1, PageID 6744.) 

Many years later, Eckerd and Kiger connected to discuss a possible investment in 

an OTR tire deal. (ECF No. 190-1, PageID 6744-46.) Kiger asked O’Connor to 

conduct financial due diligence about the proposal. (ECF No. 190-1, PageID 6746-

6747; ECF No. 175-1, PageID 1814.) Neither Kirby nor O’Connor had any prior 

experience with OTR tires and the corresponding market.

O’Connor spoke with Eckerd via telephone at the end of September 2015. 

(ECF No. 195-2, PageID 9576.) Eckerd followed-up on that conversation by emailing O’Connor several documents on October 26, 2015 (“October Documents”). 

(ECF No. 195-3.) The October documents included: (1) Midwest Coal’s balance sheet 

as of September 1, 2015 (ECF No. 195-3, PageID 9578); (2) an accountant’s report 

for Midwest Coal showing a nearly $5 million profit for 2014 but stating “the owner 

has elected to omit substantially all of the disclosures ordinarily included in 

financial statements . . . .” (ECF No. 195-3, PageID 9581); (3) articles about the OTR 

industry (ECF No. 195-3, PageID 9584, 9617); (4) a description of typical OTR 

transactions (ECF No. 195-3, PageID 9618-9620); (5) a sample OTR procurement 

agreement (ECF No. 195-3, PageID 9621); and (6) a sample warehouse receipt, bill 

of sale, and warehouse release letter (ECF No. 195-3, PageID 9634-40). O’Connor 

reviewed the documents but did nothing to verify the information contained within 

them, other than to Google prices for OTR tires. (ECF No. 195-1, PageID 9497-99.) 

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Kiger alerted Riggs to the opportunity. Although Riggs did not review the 

October Documents, he was interested. (ECF No. 196-1, PageID 10511; ECF No. 

196-1, PageID 10512.) Kiger also asked Cunningham to learn more about the deal. 

So O’Connor, Cunningham, Riggs, Adkins, and Eckerd met at a Cracker Barrel 

restaurant (“first meeting”) in Pennsylvania on October 29, 2015 to discuss the 

potential deal. (ECF No. 194-1, PageID 9140, 9143; ECF No. 195-4, PageID 9641; 

ECF No. 175-1, PageID 1816.) This meeting enabled Eckerd to introduce Adkins to 

the Kirby representatives and allowed Adkins to explain the opportunity. (ECF No. 

175-1, PageID 1817; ECF No. 194-1, PageID 9149.) Adkins described the OTR 

industry and how Kirby could make money buying and re-selling OTR tires. (ECF 

No. 175-1, PageID 1817-1818.) Adkins pitched the deal as Kirby loaning Midwest 

Coal money so that Midwest Coal could buy OTR tires and quickly resell them to an 

Australian buyer within three to six months at a forty percent profit. (ECF No. 175-

1, PageID 1818; ECF No. 196-1, PageID 10518.) Eckerd and Adkins mentioned that 

XPO’s Houston location was where they preferred to store the tires. (ECF No. 195-1, 

PageID 9504; ECF No. 175-1, PageID 1820.)

The Kirby team left the meeting interested in the opportunity and 

determined to do more research about the offer. (ECF No. 175-1, PageID 1818; ECF 

No. 196-1, PageID 10514.) Kiger was “not in the business of loaning money,” so he 

and Riggs decided that if the deal was to proceed, Kirby would buy and own the 

tires. (ECF No. 175-1, PageID 1819; ECF No. 195-1, PageID 9504.) Additionally, the 

team was comfortable with using XPO as storage facility because it was a large 

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public company that Kiger had done business with in the past. (ECF No. 175-1, 

PageID 1820; ECF No. 190-1, PageID 6756.)

All of the original Kirby representatives but Riggs met with Adkins and 

Eckerd again on November 11, 2015 (the “second meeting”) at a Cracker Barrel.4

(ECF No. 175-6, PageID 1987.) The Kirby contingent proposed Kiger’s alternative 

structure for the deal. Eckerd and Adkins agreed to the change. The Kirby 

representatives left this meeting “more comfortable with the deal and how it was 

going to be structured.” (ECF No. 175-1, PageID 1820.)

Later that evening, O’Connor informed Adkins via e-mail that “everyone is on 

board” and that O’Connor would have Cunningham get started on a draft 

agreement. (ECF No. 195-1, PageID 9643.) O’Connor further asked Adkins to 

provide him with copies of: (1) Midwest Coal’s 2014 tax return; (2) a list of all tires, 

with serial numbers, that were to be involved in the transaction; (3) proof of 

purchase for the tires; (4) documents from L.A.D. (the freight forwarder); and (5) 

XPO’s contact information. (ECF No. 195-1, PageID 9643.)

On November 12, 2015, Adkins provided his personal 2014 tax returns and 

Midwest Coal’s financials to O’Connor. (ECF No. 195-5, PageID 9643.) The unsigned 

tax return showed that Adkins owed $2 million to the IRS. (ECF No. 195-5, PageID 

9647-9648.) The financials indicated that Midwest Coal had $2 million as of 

September 1, 2015. (ECF No. 195-5, PageID 9647-9648.) Adkins also sent O’Connor 

a list (“List”) of tire sizes, brands, models, and costs for the fifty-four OTR tires 

4 It is unclear whether this was the same Cracker Barrel where the first 

meeting took place or if it was a different location of the restaurant. 

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(“Initial Tires”) Midwest Coal would contribute to the deal and the 146 OTR tires 

Midwest Coal and Kirby would buy for the deal.5 (ECF No. 195-1, PageID 9508; 

ECF No. 195-10, PageID 9672; ECF No. 195-11, PageID 9675.) Serial numbers for 

the tires were not included.

That same day, O’Connor e-mailed Cunningham and Riggs detailing the 

source of funds for the proposed deal. (ECF No. 195-13, PageID 9678.) Specifically, 

Midwest Coal would contribute $600,000 cash plus the Initial Tires (valued at 

$2,784,000); O’Connor would contribute $1 million; Kiger, on behalf of Kirby, would 

contribute $2,845,500; and Riggs, on behalf of Kirby, would contribute $2,845,500. 

(ECF No. 196-1, PageID 10516; ECF No. 194-1, PageID 9165; ECF No. 196-12, 

PageID 10646-10657.) O’Connor included the List from Adkins in the e-mail. Id. No 

one from Kirby saw pictures of the Initial Tires or attempted to inspect them. (ECF 

No. 195-1, PageID 9509.)

O’Connor and Cunningham spoke with Baltagi on November 13, 2015. (ECF 

No. 195-1, PageID 9510-11; ECF No. 175-1, PageID 1832.) Baltagi identified himself 

as XPO Houston’s branch manager. (ECF No. 195-1, PageID 9510-11; ECF No. 175-

1, PageID 1832.) He gave an overview of the documents XPO would complete for the 

transaction. (ECF No. 195-1, PageID 9510-11; ECF No. 175-1, PageID 1832.) He 

said XPO would check the tires upon arrival. (ECF No. 195-1, PageID 9510-11; ECF 

No. 175-1, PageID 1832.) After that, XPO would provide Kirby with a completed 

warehouse receipt. (ECF No. 195-1, PageID 9510-11.) He told O’Connor and 

5 The tax returns, financials, and List from November 2015 will be referred to 

as the “November Documents.”

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Cunningham that he had done a lot of tire business with Adkins over the years. 

(ECF No. 195-1, PageID 9510-11.) He said XPO would not do anything with the 

tires absent direction from Kirby. (ECF No. 175-1, PageID 1832.) He said Kirby 

must complete a Client Shipping Agreement to enable XPO to store the tires. (ECF 

No. 175-1, PageID 1833.) The Client Shipping Agreement was “designed to 

document the inception of a business relationship and d[id] not obligate [Kirby] to 

transact business with XPO Global Logistics.” (ECF No. 175-22, PageID 2210.) He 

subsequently sent Kirby the Client Services Agreement, which named 

“XPOGlobalLogistics” at the top of each page. (ECF No. 175-22, PageID 2209-2215; 

bold in original.) However, the form provided an incorrect e-mail address for XPO. 

(ECF No. 175-22, PageID 2212.) Kirby completed and returned the form to XPO. 

(ECF No. 175-1, PageID 1833.)

O’Connor reviewed Baltagi’s LinkedIn profile that showed Baltagi’s 

employment at XPO Houston. (ECF No. 195-1, PageID 9513.) O’Connor also called 

XPO Houston and confirmed that Baltagi was the branch manager. (ECF No. 195-1, 

PageID 9513.)

Based upon the parties’ communications, Cunningham drafted the OTR Tire 

Purchase and Resale Agreement (“Agreement”). (ECF No. 175-1, PageID 1834.) 

Adkins made no changes to the Agreement before signing. (ECF No. 195-1, PageID 

9515.) Kiger, but not Riggs, signed the Agreement on November 17, 2015. (ECF No. 

194-6, PageID 9321-9330.) Riggs was “silent partner” for the deal. (ECF No. 196-1, 

PageID 10519.) Key terms included:

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● Kirby contributed $5.6 million, O’Connor contributed $1 million, 

Adkins contributed $600,000, and Midwest Coal contributed the Initial 

Tires. (ECF No. 194-6, PageID 9329; ECF No. 194-1, PageID 9164.) 

The Initial Tires would be titled in Kirby’s name. Id.

● Midwest Coal and Kirby would use the cash to purchase an additional 

146 OTR tires from Mid America Tire. (ECF No. 194-1, PageID 9164.) 

All tires would be shipped to XPO Houston and would be owned by 

Kirby. (ECF No. 194-6.)

● When the tires arrived in Houston, XPO would send Kirby 

confirmation of receipt. Mid America Tire would then give Kirby a Bill 

of Sale and a Warehouse Release Letter. Next, XPO would provide 

Kirby with a Warehouse Receipt stating that XPO possessed the tires 

and recognizing Kirby as the tires’ owner. (ECF No. 175-1, PageID 

1838; ECF No. 194, PageID 9169.) 

● Upon receipt of those documents, Kirby would wire funds to L.A.D. and 

authorize L.A.D. to distribute the sales price to Mid America Tire.

● Midwest Coal would re-sell the tires, hopefully quickly and at a profit. 

(ECF No. 194-6.)

● Sale proceeds would be distributed on an agreed-upon pro-rata basis. 

(ECF No. 194-6.)

C. Tire Transactions/Post-Agreement Activities 

The parties wasted no time getting business done under the Agreement. One 

day after the Agreement was signed, Mid America Tire, via Wilkin, provided Kirby 

with two Bills of Sale establishing Kirby as the owner of the Initial Tires. (ECF Nos. 

82-12, 82-13.) Each bill of sale included serial numbers for the tires. Id. Mid 

America Tire also gave Kirby two Warehouse Release Letters instructing XPO that 

Kirby owned the Initial Tires and directing XPO to take further orders with respect 

to those tires only from Kirby. (ECF No. 82-13.) 

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Kirby then purchased forty-eight more tires from Mid-America. On November 

19, 2015, Mid America Tire provided Bills of Sale and Warehouse Release Letters to 

Kirby regarding those tires. (ECF Nos. 82-16, 82-17.) Again, the tires’ serial 

numbers were included in the paperwork. (ECF No. 82-16.) At this point, Kirby 

“owned” 102 tires.

Central to the instant motions are Baltagi’s communications with Kirby’s 

representatives. His November 19, 2015 e-mail to O’Connor confirmed XPO’s receipt 

of the 102 tires. (ECF No. 175-34.) His November 20, 2015 e-mail to O’Connor 

included pictures of the Initial Tires stacked on top of each other in an outdoor lot 

as well as two Warehouse Receipts. (ECF No. 175-1, PageID 1847; ECF No. 175-39.) 

The Receipts appeared as follows:

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(ECF No. 175-39.)

After Kirby received the Warehouse Receipts from Baltagi, Kirby wired $2.1 

million to L.A.D. on November 20, 2015, to buy forty-eight tires from Mid America

Tire. (ECF No. 82-14.) 

O’Connor’s inventory. Three days later, O’Connor visited XPO Houston to 

inventory Kirby’s tires. (ECF No. 195-1, PageID 9525.) He testified:

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BY MS. MOTLEY:

Q. Handing you what we’re marking as Exhibit 44. Exhibit 44, the bottom 

email is from you to Mr. Riggs dated November 24th. You say, Charlie, I saw 

the tires in Houston yesterday and matched about 20 percent of the serial 

numbers. The tires are stacked and you cannot get to most of the serial 

numbers. Do you see that?

A. Yeah.

Q. What was the purpose of you going to Houston if you couldn’t see the serial 

numbers?

A. To -- I believe it might have been Charlie and/or Scott wanted at least a 

site visit to make sure that, you know, we could -- the tires were there and we 

could meet Afif, and it was just a prudent thing to do.

Q. But you wouldn’t have had any expertise to know whether the tires were 

used or in good condition, right?

A. Anybody could tell if they were in good condition just looking at them.

Q. What did you do to determine that?

A. Checked all the -- went through and checked all the serial numbers we 

could see --

Q. Which --

A. -- that weren’t stacked.

Q. Which was 20 percent of t hem?

A. Yeah, because they're stacked very high and they weigh about 8,000 

pounds each.

Q. Okay. And you did not retain a fork lift to do a full inspection, right? You 

didn’t move the tires?

A. They were concerned about damage. But there was 20 percent of the ones 

that I could physically see, and the numbers were written on the outside of 

the other ones, and I checked the size and added up and talked with Afif, and 

I was comfortable.

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Q. When you say the numbers were written on the outside, do you mean –

A. Serial numbers.

Q. In paint or something?

A. It was some type of paint or chalk that rain would ruin.

Q. Do you know who put those numbers on the side of the tires?

A. No.

Q. And you didn't confirm that the numbers painted on the side were the 

same as the serial numbers of those tires, right?

A. I couldn’t.

Q. And you don’t know when those serial numbers were painted on the side of 

the tires, right?

A. No.

Q. And you don’t know what type of tires those were because you couldn’t see 

the sidewalls when they were stacked, right?

A. But they were the same width, so they couldn’t have been much different 

at all.

Q. But you didn’t know that? You didn’t know what manufacturer those tires 

were?

A. Right. You couldn’t check each single one.

(ECF No. 195-1, PageID 9529-30.)

O’Connor met with Baltagi during this visit to Houston. They discussed the 

necessity of XPO checking Kirby’s tires upon arrival and the importance of 

Warehouse Receipts. (ECF No. 195-1, PageID 9526.) O’Connor told Baltagi that 

XPO could not release Kirby’s tires without Cunningham, Riggs, or Kiger signing a 

warehouse release form. (ECF No. 195-1, PageID 9525.)

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Subsequent transactions. Kirby bought more OTR tires under the Agreement 

between November 30, 2015 and January 12, 2016. For each transaction, Baltagi 

provided Kirby with confirmation that XPO Houston received the tires and with 

additional Warehouse Receipts. Only after receiving Baltagi’s confirmations did 

Kirby authorize L.A.D. to wire money to Mid America Tire. (ECF No. 175, PageID 

1848.) In total, Kirby purchased 200 OTR tires for $6.7 million. (ECF Nos. 82-14, 

82-15, 82-21, 82-22, 82-23.)

D. Claims

The tires were never re-sold. By mid-December 2017, Kirby learned that its

tires were no longer at XPO Houston. (ECF No. 194-1, PageID 9182.) Kiger, Riggs, 

and O’Connor lost all the money they invested in the Agreement. 

Adkins is currently awaiting sentencing for wire fraud, money laundering, 

and tax evasion for his role in this and other similar deals gone bad. Midwest Coal 

is defunct. Eckerd is in federal prison for money laundering. U.S.A. v. Eckerd, No. 

1:19-cr-332 (D. N.J. May 6, 2019). Neidik, L.A.D., and Mid America Tire are in 

bankruptcy. XPO and Baltagi are the only active defendants at this time.

Kirby’s First Amended Complaint asserts six counts against XPO premised 

upon Baltagi’s conduct. XPO denies all claims. (ECF No. 109.) Due to bankruptcy 

stays and pursuant to the Court’s November 20, 2018 Opinion and Order (ECF No. 

47), Kirby’s only active claims against XPO are for fraud, breach of contract, 

negligence, civil conspiracy, and the Racketeer Influenced and Corrupt 

Organizations Act (“RICO”), 18 U.S.C. § 1962(c). (ECF No. 91.) XPO moves for 

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judgment on each. Kirby’s claims against XPO for negligent bailment and 

conversion remain stayed as does the discrete allegation in Kirby’s breach of 

contract claim about the ownership of the tires under the November 20, 2018 

Opinion and Order (ECF No. 47) and are therefore not at issue. 

The Court will first examine XPO’s Motion to Partially Exclude Expert 

Testimony of Evan Armstrong (ECF No. 178) before addressing Kirby’s Motion for 

Partial Summary Judgment (ECF No. 176) and then to XPO’s Motion for Summary 

Judgment (ECF No. 177).

II. XPO’S MOTION TO PARTIALLY EXCLUDE

This motion relates to Kirby’s fraud claim. (ECF No. 178.) Kirby argues that 

it reasonably relied upon the Warehouse Receipts Baltagi signed when authorizing 

wire transfers to Midwest Coal via L.A.D. Kirby’s proposed expert on this topic, 

Evan Armstrong, opines that Baltagi had authority to sign the Warehouse Receipts.

(ECF No. 178-1, PageID 3739.) Armstrong further posits that the documents 

comport with industry custom and that Kirby’s reliance on them was reasonable. 

(ECF No. 178-1, PageID 3754.) He submits that XPO acted unreasonably when 

responding to a non-party’s complaint about an incident that happened after the 

Midwest Coal deal. (ECF No. 178-1, PageID 3750-53.) Armstrong lastly concludes 

that Kirby’s due diligence for the deal was reasonable. (ECF No. 178-1, PageID 

3753-54.) XPO moves to exclude those opinions under Fed. R. Evid. 702 for lack of 

expertise. (ECF No. 178.) XPO’s motion is partially GRANTED and partially 

DENIED.

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A. Rule 702

Federal R. Evid. 702 states:

A witness who is qualified as an expert by knowledge, 

skill, experience, training, or education may testify in the 

form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized 

knowledge will help the trier of fact to understand the 

evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and 

methods; and

(d) the expert has reliably applied the principles and 

methods to the facts of the case.

The rule “imposes a special obligation upon a trial judge to ensure that scientific 

testimony is not only relevant, but reliable.” Kumho Tire Co. v. Carmichael, 526 

U.S. 137, 137 (1999) (citing Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993)). 

This basic gatekeeping obligation applies to all expert testimony. Kumho Tire Co., 

526 U.S. at 147.

“[U]nder Daubert and its progeny, a party proffering expert testimony must 

show by a ‘preponderance of proof’ that the expert whose testimony is being offered 

is qualified and will testify to scientific knowledge that will assist the trier of fact in 

understanding and disposing of relevant issues.” Decker v. GE Healthcare Inc., 770 

F.3d 378, 391 (6th Cir. 2014) (citations omitted). “[T]he issue with regard to expert 

testimony is not the qualifications of a witness in the abstract, but whether those 

qualifications provide a foundation for a witness to answer a specific question.”

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Berry v. City of Detroit, 25 F.3d 1342, 1351 (6th Cir. 1994). Exclusion is proper when 

“the subject of the testimony lies outside the witness’ area of expertise.”

4 Weinstein’s Fed. Evid. § 702.06[1], at 702-52 (2000). “In other words, a party 

cannot qualify as an expert generally by showing that the expert has specialized 

knowledge or training which would qualify him or her to opine on some other issue.” 

CDA of Am. Inc. v. Midland Life Ins. Co., No. 01-CV-837, 2006 U.S. Dist. LEXIS 

97327, at *8 (S.D. Ohio Mar. 27, 2006) (Marbley, J.) (citation omitted). 

B. Armstrong’s Qualifications

The basis for XPO’s motion is Armstrong’s alleged lack of knowledge about 

the OTR tire market and the freight forwarding industry. So, the Court begins by 

reviewing Armstrong’s professional background.

Armstrong’s knowledge about XPO predates the company’s existence. 

Armstrong worked for Brad Jacobs before Jacobs purchased Express-1 Expedited 

Solutions, which became XPO Logistics. Armstrong assisted Jacobs with the 

Express-1 acquisition and initial strategy for the company. (Abington Emerson 

Capital, LLC v. Jason Adkins, et. al., Case No. 17cv-143, ECF No. 349 at 18-20.) 

Armstrong reasons that role gave him insights into “what [XPO] was going to look 

like” and “what [XPO’s] capabilities were going to be.” Id. Armstrong characterizes 

himself as a “general industry analyst” who profiles XPO Logistics each year. Id.

Armstrong has more than twenty-five years of supply chain management 

experience. (ECF No. 178-1, PageID 3756.) As a customer satisfaction analyst at 

Roadway Package System, Inc., he analyzed pricing programs and oversaw thirtyCase: 2:18-cv-00500-SDM-KAJ Doc #: 208 Filed: 09/09/21 Page: 18 of 58 PAGEID #: 13511
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six drivers. Id. When he worked for Carolina Freight Carriers Corporation as a 

special projects manager, he managed sales departments. Id. In 1995, he joined 

Innovative Logistics, Inc. as a customer service analyst. Id. at PageID 3756. Next, 

he spent five months as a logistics project manager at C.H. Robinson Company. Id. 

He then worked for Roadrunner Freight Systems, Inc. as a vice president of pricing 

and traffic services. Id. In that capacity, he was responsible for pricing, claims, 

billing, rating and the auditing departments. Id. He supervised thirty-two 

employees, none of whom were branch managers. (Abington, ECF No. 349, PageID 

23076-77.) He did not conduct due diligence in any of the above positions. (ECF No. 

193-1, PageID 8983-86.)

He joined Armstrong & Associates, Inc., his father’s company, in 2000 as vice 

president. (Abington, ECF No. 349, PageID 23269.) Since about 2006, he has served

as President of Armstrong & Associates, Inc. Id. In that role, he provides consulting 

services to supply chain participants in the areas of “business planning, logistics 

outsourcing, mergers and acquisitions, operations benchmarking, market analysis 

and benchmarking, transportation management, and supply chain systems 

evaluation and selection.” (ECF No. 178-1, PageID 3756.) Consulting accounts for 

70% of the company’s revenue; marketing, 30%. (Abington, ECF No. 349, PageID 

23265, 23267.) His company concentrates on market research in, and consulting for, 

third-party logistics companies. (ECF No. 178-1, PageID 3733.) A “3PL” is a thirdparty logistics provider who manages the transportation of goods between the seller 

and buyer. Armstrong characterizes XPO as a 3PL. 

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Armstrong & Associates, Inc. has a “strong niche in providing research 

around the third-party logistics market and performing consulting work that’s 

third-party logistics related.” (Abington, ECF No. 349, PageID 23262.) The research 

includes surveys and reviewing annual reports and yields market estimates for 

logistics costs and revenues. Id. at PageID 23146. The company tracks more than 

650 3PLs globally; many of those have freight forwarding services. Id. The company 

has been publishing reports on contract warehousing in North America since 2004. 

(Abington, ECF No. 349-4, PageID 23378.) Armstrong & Associates also reviews 

warehousing operations and helps its clients find 3PLs. Id. at PageID 23127, 23266. 

The company works with vendors for 3PLs. Id. at PageID 23266. 

Armstrong’s review of XPO’s website helped form the basis of his opinion as 

to what business activities XPO engages in. Id. at PageID 23068-69. But his review 

took place in 2020, not 2015, the year the Midwest Coal deal occurred. Id. at PageID 

23254-55. Armstrong reviewed Concert’s operations manual from 2011 (the year 

XPO acquired Concert) to formulate his opinion as to XPO’s Houston’s operations in 

2015. Id. at PageID 23073, 23152-54. He “do[esn’]t think” that XPO modified 

Concert’s manual because XPO provides services similar to those of Concert. Id. at 

23153-54.

He has no experience in the OTR tire industry. (ECF No. 193-1, PageID 

9009.) Thus, he has not previously: (1) consulted on deals involving OTR tire sales; 

(2) valued OTR tires; (3) seen a bill of sale: (4) seen tire work orders; or (5) seen a 

seller’s warehouse release letter. (ECF No. 193-1, PageID 8997-98, 9008.) 

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He does not know what the standard process is for buying OTR tires. (ECF No. 193-

1, PageID 9008.)

He has never been to XPO’s Houston location but he has seen pictures of it, 

and he has been to “a lot” of 3PL warehouses. (Abington, ECF No. 349, PageID at 

23320, 23074-76.) He has no experience managing a freight forwarder location. Id. 

at PageID 23075.

C. Analysis

XPO moves to preclude Armstrong from testifying about whether: (1) 

Abington acted reasonably in relying on the Warehouse Receipts; (2) the Warehouse 

Receipts comport with industry custom and practice; (3) Baltagi violated XPO’s 

signatory policy in executing the Warehouse Receipts; (4) XPO acted reasonably in 

responding to an unsatisfied customer in 2016; and (5) Kirby’s due diligence was 

reasonable. (ECF No. 178, PageID 3713.) XPO argues that preclusion is necessary 

because Armstrong lacks the requisite expertise to make his opinions reliable. Kirby 

counters Armstrong has sufficient experience; that exclusion of his noted opinions 

would serve only to usurp the jury’s function; and that Rule 702 permits the 

opinions to be admitted because they would assist the jury to understand the 

evidence or to determine a fact in issue.

Warehouse Documents, Industry Custom and Practice and Baltagi’s Signing 

the Warehouse Documents. Kirby asserts that it relied upon the Warehouse 

Receipts, each of which Baltagi signed, when deciding to wire money to Midwest 

Coal via L.A.D. after a tire purchase made pursuant to the Agreement. XPO 

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contends that reliance was unjustified because the Warehouse Receipts were 

“obvious fakes.” (ECF No. 177, PageID 2587.) Specifically, XPO points out that they 

contained different iterations of XPO’s name. (ECF No. 177, PageID 2587-88.) The 

columns for weight, storage rate, and handling rate were left blank. (ECF No. 177, 

PageID 2587-88.) And the receipts lacked XPO’s logo. (ECF No. 177, PageID 2587-

88.) XPO also argues that Baltagi did not have authority to execute them. (ECF No. 

177, PageID 2597.)

In his report, Armstrong opines that “it is standard industry practice for 

warehouse branch managers to have the authority to sign warehouse receipts, 

inspection reports, and other documents confirming the receipt, existence, and 

control of inventory in the management of warehouse operations.” (ECF No. 178-1, 

PageID 3736.) This opinion requires familiarly with paperwork similar to the 

Warehouse Receipts. But Armstrong lacks that familiarity. To be clear, Armstrong 

testified that he has “probably been in 100 warehouses” and “sometimes they’ll have 

standard documents on a blackboard, as well. I’ve looked at a lot of boards.”

(Abington, ECF No. 349, PageID at 23289.) He testified warehouse receipts are 

“usually scattered out on some desk in a receiving area.” (Abington, ECF No. 349 at 

23288.) He “might have glanced at warehouse receipts as part [of] the receiving 

process.” (Abington, ECF No. 349 at 23289.) He googled “warehouse receipts” in 

connection with this case. (Abington, ECF No. 349 at 23288.) 

Seeing something and understanding what is seen are different things. To 

illustrate, Armstrong could not answer whether a warehousing company would 

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have a template for those documents or when they should or would be issued. 

(Abington, ECF No. 349 at 23284-87.) As such, he lacks sufficient knowledge as to 

the content and form of the Warehouse Receipts. Because Armstrong lacks adequate 

familiarity with the Warehouse Receipts, it follows that he also lacks sufficient 

understanding of whether said documents comport with industry custom and 

practice and whether Baltagi had authority to sign them. Kirby has thus failed to 

establish by a preponderance of the evidence that Armstrong has the requisite 

knowledge to render an opinion that Kirby’s reliance on the Warehouse Receipts

was reasonable, that those documents were in-line with industry custom and 

practice, and that Baltagi had the authority to execute the papers. XPO’s Motion to 

Partially Exclude Armstrong’s testimony as to those three topics is GRANTED. 

(ECF No. 178, PageID 3718.) 

2016 Customer Complaint. Star Funding was a client of XPO. Star Funding 

engaged in a similar deal with Adkins a year after Kirby’s deal failed. Adkins failed 

to repay Star Funding’s loan. Star Funding’s OTR tires were also stored at XPO’s 

Houston location according to documents Baltagi executed, which documents were 

identical in all key respects to the Warehouse Receipts in this case. In May 2016, 

five months after the final purchase was made under the Agreement in this case, 

Star Funding complained to XPO that Baltagi had released its tires to Adkins 

without its consent. Upon receiving the complaint, XPO did not respond that 

Baltagi lacked authority to authorize the storage of the tires or to execute 

documents about the tires’ location and condition. XPO did not audit Houston’s tire 

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inventory. Rather, one month after receiving the complaint, Baltagi resigned as 

branch manager. (Abington, ECF Nos. 316-3, 316-12.) In July 2016, he became an 

independent contractor for XPO. (Abington, ECF Nos. 316-3, 316-12.)

Kirby argues that XPO should have audited the Houston location and fired 

Baltagi. (ECF No. 182, PageID 3915-17.) Its failure to do so, according to Kirby, 

equates to XPO’s ratification of Baltagi’s actions and subjects XPO to vicarious 

liability, especially because Baltagi continued to execute warehouse receipts for 

other OTR tires stored at the Houston location after the Star Funding complaint. 

(ECF No. 183, PageID 4120.) In support, Kirby offers Armstrong’s opinion that 

XPO’s “executive management team failed to adhere to standard industry practice 

by ignoring indicators of poor performance, collections issues, and other operational 

warnings at its Houston station and refraining from performing a full investigation 

or audit of the Houston station.” (ECF No. 178-1, PageID 3736.) Armstrong testified 

that XPO should have fired Baltagi after Star Funding’s complaint. That conclusion 

is ostensibly meant to imply that by not firing Baltagi and by not conducting an 

audit of the Houston location, XPO was admitting that Baltagi did have the 

authority to execute the Warehouse Receipts.

Addressing the audit component, Armstrong was not charged with 

determining whether a fraud audit should be instigated in response to a customer 

complaint. (Abington, ECF No. 349 at PageID 23126-23129.) Rather, he was asked 

to opine how an audit should be completed. But Armstrong’s deposition reveals 

limited knowledge as to what should, and should not be, included in a fraud audit. 

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For example, while he attached a sample warehouse audit checklist to his report, he 

said the checklist was designed for an operations audit, not a fraud audit. 

(Abington, ECF No. 349 at PageID 23229-23232; ECF No. 349-4.) The admittedly 

incomplete checklist, which does not pertain to freight forwarding operations like 

XPO Houston, matches that description. (Abington, ECF No. 349 at PageID 23299-

23232.) While there are a few checkboxes for things like instructions for inbound 

goods, recording of items received, and product quantity, the majority of the list 

focuses on operational issues like eyewash stations, non-smoking signs, fire alarms, 

handicapped access, pest control, and safe forklift speeds. (ECF No. 178-1, PageID 

3764-3777.) Armstrong testified that a more appropriate checklist would be found at 

one of the large 3PLs like XPO; this, of course, begs the question of why he, himself, 

did not procure one prior to his testimony. (Abington, ECF No. 349, PageID 23230-

31.) His deposition transcript indicates no familiarity with what should be included 

on a checklist for a fraud audit at a freight forwarding operation, which is what is at 

issue here. (Abington, ECF No. 349, PageID 23226-23239.) He could not confirm 

that he had ever seen a such a checklist. Id.

Armstrong’s experience with fraud audits is limited. He participated in a 

general, non-fraud transportation audit for a freight forwarding client more than 

five years ago. (Abington, ECF No. 349, PageID 23155-23161.) That audit involved 

reviewing freight bills to determine whether the client was being properly charged. 

(Abington, ECF No. 349, PageID 23155-23161.) He testified that he participated in 

an internal audit when working for Roadway Package System. (Abington, ECF No. 

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349, PageID 23126.) Yet, his participation was limited to telling auditors where 

documents were. (Abington, ECF No. 349, PageID 23126.) Neither he nor 

Armstrong & Associates have performed a fraud audit. (Abington, ECF No. 349, 

PageID 23156.)

Taking the totality of Armstrong’s experience into consideration, the Court 

holds that Kirby has failed to prove by a preponderance of the evidence that 

Armstrong has the requisite knowledge of audits to satisfy the reliability 

requirement. He shows limited to no familiarity with what a fraud audit should 

entail. This lack of knowledge prevents him from determining when and how a 

fraud audit should occur. Indeed, he instigated a fraud audit and he has not 

participated in a fraud audit. For these reasons, XPO’s Motion to Preclude 

Armstrong’s testimony as to whether XPO should have conducted a fraud audit at 

the Houston location upon receipt of Star Funding’s Complaint is GRANTED.

A different result is reached with respect to Armstrong’s opinion that XPO 

should have fired Baltagi after the Star Funding complaint. Armstrong’s opinion is 

based on his thirty years’ of experience in the industry. (Abington, ECF No. 349, 

PageID 23201.) He has managerial experience and he has terminated employees 

for “performance issues.” (Abington, ECF No. 349, PageID 23201-2.) He has a 

substantial work history for, and familiarity with, 3PLs. Kirby additionally points 

to Armstrong’s work for Roadway as a customer satisfaction analyst to show that he 

has been involved in addressing customer complaints. (ECF No. 182, PageID 3920.)

In contrast, XPO highlights the fact that Armstrong has no experience in human 

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resources and no experience in overseeing branch managers. (Abington, ECF No. 

349, PageID 23074-23077; 23199-23201.) 

The Court holds that Kirby has satisfied its burden to show by a 

preponderance of the proof that Armstrong’s extensive industry experience, coupled 

with his prior management positions, is sufficient to allow this testimony to be 

presented to the jury on this issue. The amount of his experience in human 

resources and with overseeing branch managers goes to credibility, which is an 

issue for the jury. XPO’s Motion to Preclude Armstrong’s testimony to the effect 

that XPO should have fired Baltagi upon the receipt of Star Funding’s complaint is 

DENIED.

Due Diligence. As noted, O’Connor completed financial due diligence for the 

Agreement. Before the Agreement, O’Connor had no tire-related transaction 

experience or knowledge of OTR tires. (ECF No. 194-1, PageID 9137; ECF No. 195-

1, PageID 9495.) So, he began by learning more about the people involved in the 

deal. O’Connor did not research Eckerd because Eckerd was not going to sign the 

Agreement. (ECF No. 194-1, PageID 9166.) O’Connor spoke with Neidik and Baltagi 

about Adkins, as Neidik and Baltagi both claimed to have done business with 

Adkins in the past. (ECF No. 194-1, PageID 9166; ECF No. 195-1, PageID 9510-11; 

ECF No. 175-1, PageID 1832.)

O’Connor also focused on materials Adkins provided. He reviewed the 

October Documents. (ECF No. 195-1, PageID 9496-9500.) Specifically, he googled 

the listed OTR tire cost information to see if the October Documents’ cost figures 

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were reasonable. (ECF No. 195-1, PageID 9499.) He “did a lot of research” and read 

unnamed online articles about OTR tire market demand. (ECF No. 195-1, PageID 

9501.) He could not confirm whether he spoke with any tire brokers to confirm 

reasonable prices and costs for tires. (ECF No. 195-1, PageID 9501.) He looked-up 

what “bonded freight forwarder” meant. (ECF No. 195-1, PageID 9502.) He did not 

compile a written report of his findings; rather, he orally informed Kirby’s 

representatives of what he learned. (ECF No. 195-1, PageID 9501.) He also 

considered the November Documents. (ECF No. 195-1, PageID 9505.) O’Connor was 

not concerned with Adkins’ $2 million tax liability evinced therein. (ECF No. 195-1, 

PageID 9506.) 

As to entities involved in the deal, O’Connor “focused” his efforts on XPO 

because it was “going to be holding our tires and giving us title to them.” (ECF No. 

194-1, PageID 9162.) Those efforts included “a lot of internet research” about the 

company, like looking at XPO’s website and reading XPO’s financial statements. 

(ECF No. 195-1, PageID 9506.) He also reviewed XPO’s profile on CNBC and 

MarketWatch. (ECF No. 195-1, PageID 9506.) He could not recall whether his 

research focused on XPO Global or XPO Logistics. (ECF No. 195-1, PageID 9507.)

Kiger assigned Cunningham legal due diligence for the deal. (ECF No. 190-1, 

PageID 6750-51.) This consisted of drafting the Agreement. (ECF No. 175-1, PageID 

1823.) 

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Armstrong opines that the due diligence efforts of O’Connor and Cunningham

were reasonable. XPO asserts that Armstrong lacks the requisite expertise to 

render an opinion on the topic.

XPO is correct. Armstrong’s professional focus is on “operational due 

diligence” for “transportation logistics.” (ECF No. 193-1, PageID 8983, 8994, 8998.)

Hence, has no experience with OTR tires or deals involving same and does not know 

what typical documents would be relative to those deals. (ECF No. 193-1, PageID 

8996-98, 9008.) He does not know whether an independent valuation of the OTR 

tires is typically performed before OTR tire deals are inked. (ECF No. 193-1, PageID 

8998.) He does not know how gray market tires would be valued. (ECF No. 193-1, 

PageID 9005.)

Additionally, Kirby relied on Warehouse Receipts when determining whether 

to wire money to Mid America Tire for the sales. (ECF No. 175-1, PageID 1848.) 

Yet, Armstrong had never seen a Warehouse Receipt prior to being shown one in 

this case. (ECF No. 193-1, PageID 8997.) Importantly, but unsurprisingly, he 

admits that he has no experience with OTR tire deal due diligence such that he 

lacks the expertise necessary to perform due diligence in OTR tire transactions. 

(ECF No. 193-1, PageID 8993, 9003.) He further concedes he has no general 

expertise in the OTR tire industry. (ECF No. 193-1, PageID 9009.) Under these 

circumstances, the Court concludes that Kirby has failed to prove by a 

preponderance of the evidence that Armstrong has the requisite knowledge to 

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satisfy the reliability requirement. XPO’s Motion to Exclude Armstrong’s Testimony 

as to due diligence is GRANTED. (ECF No. 178.) 

Management System. Lastly, Armstrong’s report states that “XPO 

Logistics/XPO Global failed to adhere to typical industry standards by refraining 

from fully implementing a warehouse management system in connection with the 

Houston station’s operations.” (ECF No. 178-1, PageID 3736.) XPO moves to 

preclude the admission of this opinion at trial but fails to articulate a basis for its 

exclusion. (ECF No. 178, PageID 3716, n.3.) The Court will not fill that void. Hence, 

XPO’s Motion to Preclude Armstrong’s testimony on this topic is DENIED.

In sum, XPO’s Motion to Partially Exclude Expert Testimony of Evan 

Armstrong is GRANTED in part and DENIED in part. (ECF Nos. 178, 198.) 

III. KIRBY’S MOTION TO APPLY PENNSYLVANIA LAW 

Because the Agreement specifies that Pennsylvania law applies, Kirby seeks 

a ruling that Pennsylvania law governs its fraud claims against all defendants. 

(ECF No. 176.) Kirby also asks the Court to apply Pennsylvania law to any

respondeat superior or vicarious liability analysis. (ECF No. 176; ECF No. 199, 

PageID 11267.) XPO argues that Kirby fails to identify its threshold burden to 

warrant a choice of law analysis. (ECF No. 361.) Alternatively, XPO asserts that 

Ohio law governs both issues. Id. Kirby replies a conflict discussion is necessary and 

that Pennsylvania law should apply. (ECF No. 199.) 

Preliminarily, the Court notes that there is no motion pending against 

Midwest Coal, Mid America Tire, Adkins, Eckerd, Wilkin, L.A.D., and Neidik. 

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Because the Court does not issue advisory opinions, the Court’s present 

determination on the choice of law question is limited in applicability to Kirby’s 

fraud claims versus XPO and Baltagi. After due review, the Court decides that Ohio 

law is properly applied to the fraud count and respondeat superior analysis.

Ohio requires the presence of conflict before engaging in any choice of law 

discussion. Akro-Plastics v. Drake Indus., 685 N.E.2d 246, 248 (11th Dist. 1996). “If 

the two states would use the same rule of law or would otherwise reach the same 

result, it is unnecessary to make a choice of law determination because there is no 

conflict of law.” Mecanique C.N.C., Inc. v. Durr Envtl., Inc., 304 F. Supp. 2d 971, 975 

(S.D. Ohio 2004) (Marbley, J.). Here, Kirby, as the party seeking application of the 

law of a foreign jurisdiction, bears the burden of establishing conflict. Id. Should it 

fail to sustain its burden, Ohio law applies. Gouge v. BAX Global, Inc., 252 F. Supp. 

2d 509, 521 (N.D. Ohio 2003)(citation omitted).

A. Respondeat Superior & Vicarious Liability

Kirby fails to delineate any differences between Ohio and Pennsylvania law 

for the respondeat superior and vicarious liability analyses. Accordingly, Kirby 

failed to satisfy its burden and the Court will apply Ohio law to those issues. 

Mecanique C.N.C., Inc., 304 F. Supp. 2d at 975.

B. Fraud

Kirby argues that material distinctions exist between the two states’ fraud 

laws in the form of liability—Ohio requires a fraud plaintiff to investigate before 

reliance will be reasonable while Pennsylvania does not; and damages—Ohio has a 

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punitive damages cap, Pennsylvania does not. (ECF No. 176, PageID 2544-46.) XPO 

contends Ohio has no strict investigation requirement. (ECF No. 181, PageID 3880-

82.) In a footnote, XPO concedes the distinction in damages but argues any damage 

discussion is premature in the absence of a liability finding. (ECF No. 181, PageID 

3883, n.5.)

Turning first to justifiable reliance, the “penultimate” element of fraud, Kirby 

selectively quotes from Toy v. Metro. Life Ins. Co., 593 Pa. 20, 54, 928 A.2d 186, 207 

(2007) to assert that Pennsylvania law never requires an investigation for reliance 

to be reasonable. Euclid Bus. Park, LLC v. Peters, Cuyahoga Co. Ct. Cmn. Pleas No. 

CV 06 589304, 2013 Ohio Misc. LEXIS 71, at *26; ECF No. 199, PageID 11262. 

Specifically, Kirby quotes Toy that the “recipient of an allegedly fraudulent 

misrepresentation is under no duty to investigate its falsity in order to justifiably 

rely[.]” (ECF No. 199, PageID 1262.) But the remainder of that quote qualifies the

statement by clarifying that the recipient of an allegedly fraudulent 

misrepresentation is “not justified in relying upon the truth of an allegedly 

fraudulent misrepresentation if he knows it to be false or if its falsity is obvious.”

Toy, 928 A.2d at 207. In Pennsylvania, “justifiable reliance is typically a question of 

fact for the fact-finder to decide, and requires a consideration of the parties, their 

relationship, and the circumstances surrounding their transaction.” Toy, 928 A.2d 

at 208 (citing Scaife Co. v. Rockwell-Standard Corp., 446 Pa. 280, 285 A.2d 451, 455 

(Pa. 1971)).

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Ohio law is no different. “Ohio law requires a person to exercise proper 

vigilance in dealing with others and, at times, to reasonably investigate before 

relying on statements or representations.” Harrel v. Solt, 4th Dist. Pickaway No. 

00CA27, 2000-Ohio-1964, *26 (emphasis added). A situation invoking the duty to 

investigate arises when there is a reason to doubt the veracity of the purported 

fraudulent misrepresentation. Medpace, Inc. v. Biothera, Inc., No. 1:12-cv-179, 2015 

U.S. Dist. LEXIS 41937, at *57-58 (S.D. Ohio Mar. 31, 2015) (Rice, J.). “Reliance is 

justifiable if the representation does not appear unreasonable on its face and if 

there is no apparent reason to doubt the veracity of the representation under the 

circumstances.” Mulch Mfg. Inc. v. Advanced Polymer Solutions, LLC, 947 F. Supp. 

2d 841, 862 (S.D. Ohio May 23, 2013). Like Pennsylvania law, “[t]he question of 

justifiable reliance is one of fact,” Mulch Mfg. Inc. v. Advanced Polymer Solutions, 

LLC, 947 F. Supp. 2d 841, 862 (S.D. Ohio May 23, 2013), and requires an inquiry 

into “the nature of the transaction, the form and materiality of the representation, 

the relationship of the parties, the respective intelligence, experience, age, and 

mental and physical condition of the parties, and their respective knowledge and 

means of knowledge.” Andrew v. Power Mktg. Direct, Inc., 2012-Ohio-4371, 978 

N.E.2d 974, 992 (10th Dist.).

In sum, both states impute a duty to investigate upon the recipient when 

there is reason to doubt the purportedly fraudulent statement’s veracity. Both 

jurisdictions treat justifiable reliance as an issue of fact involving similar 

considerations. Kirby thus fails to establish an actual conflict between Pennsylvania 

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and Ohio law for its fraud claim. Kirby’s Motion for Partial Summary Judgment to 

Apply Pennsylvania law to the fraud analysis is DENIED (ECF No. 181) and Ohio 

law will be applied. 

C. Punitive Damages

Kirby argues that the availability of unlimited punitive damages in 

Pennsylvania contrasted with Ohio’s punitive damages cap for torts triggers a 

conflict analysis. (ECF Nos. 176, PageID 2525.) XPO concedes the difference but 

responds that any decision on punitive damages would be advisory until liability is 

established. (ECF No. 181, PageID 3883, n.5.) Neither side’s argument proves 

dispositive of the issue.

Preliminarily, the Court determines that the choice of law question as to 

punitive damages is ripe. Several courts have engaged in such an inquiry prior to 

liability being established. See In re Educ. Testing Serv. Praxis Principles of 

Learning & Teaching: Grades 7-12 Litig., 517 F. Supp. 2d at 852 (applying Ohio 

law); Salazar v. Ford Motor Company, Case No. CIV 04-0477, 2004 WL 7337542 at 

*1 (D. N.M. Oct. 18, 2004); Minebea Co. v. Papst, 377 F. Supp. 2d 34, 40 (D.D.C. 

2005); and Talley v. Novartis Pharmaceuticals Corp., No. 3:08-cv-361, 2011 WL 

2559974 at *1 (W.D. N.C. June 28, 2011)). This Court will follow their lead.

XPO does not argue that the noted monetary difference fails to necessitate a 

conflict analysis. Assuming, arguendo, that the conflict is enough to do so, this is a 

diversity case. Consequently, “the law of the forum state, including the forum 

state’s choice-of-law rules, apply.” Burns v. Taurus Int’l Mfg., 826 F. App’x 496, 499 

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(6th Cir. 2020). Ohio adheres to the Restatement (Second) of Conflicts for choice of 

law questions. Morgan v. Biro Mfg. Co., 15 Ohio St. 3d 339, 342 (1984). To that end, 

“the court must apply the Restatement analysis.” Charash v. Oberlin Coll., 14 F.3d 

291, 296 (6th Cir. 1994). 

Restatement (Second) of Conflict of Laws § 171 establishes “[t]he law selected 

by application of the rule of § 145 determines the measure of” punitive damages. 

Restatement (Second) of Conflict of Laws § 171 cmt. d (1971). Section 145(2) applies 

here and contains contacts to be considered in regard to “which state has the most 

significant relationship to the occurrence and the parties.” In re Nat’l Century Fin. 

Enters., 846 F. Supp. 2d 828, 851 (S.D. Ohio 2012) (Graham, J.).

“Punitive damages, as a general matter, are intended to fulfill different policy 

objectives than other tort rights and remedies. Punitive damages are typically 

permitted in order to punish and deter wrongful conduct, rather than to compensate 

victims for their losses.” In re Educ. Testing Serv. Praxis Principles of Learning & 

Teaching: Grades 7-12 Litig., 517 F. Supp. 2d 832, 852 (E.D. La. 2007) (applying 

Ohio law) (citing Digital & Analog Design Corp. v. N. Supply Co., 63 Ohio St.3d 657, 

660, 590 N.E.2d 737 (1992), overruled on other grounds by Zoppo v. Homestead Ins. 

Co., 71 Ohio St.3d 552, 1994 Ohio 461, 644 N.E.2d 397 (1994)). Thus, “punitive 

damages claims require an independent analysis focused on the location of the 

defendants’ conduct.” In re Commercial Money Ctr., Inc., 603 F. Supp. 2d 1095, 1127 

(N.D. Ohio 2009) (emphasis added); see also Minebea Co. v. Papst, 377 F. Supp. 2d 

34, 40 (D.D.C. 2005) (citation omitted) (“The issue of punitive damages is distinct 

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from that of liability for the underlying claims, however, and choice of law for that 

issue must be analyzed separately.”)

But Kirby does not partake in any such analysis. (ECF Nos. 176, 199.) Its 

failure to do so is fatal to its motion. Ohio, not Pennsylvania, law will apply to 

punitive damage issues if necessary. Kirby’s Motion for Partial Summary 

Judgment to apply Pennsylvania law to any punitive damage consideration is 

DENIED (ECF No. 181). 

To conclude, Kirby’s Motion for Partial Summary Judgment is DENIED in 

full. (ECF No. 178.)

IV. XPO’S MOTION FOR SUMMARY JUDGMENT

A. Standard Of Review

Under Federal Rule of Civil Procedure 56, summary judgment is proper if the 

evidentiary materials in the record show that there is “no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 

Civ. P. 56(a); see Longaberger Co. v. Kolt, 586 F.3d 459, 465 (6th Cir. 2009). The 

moving party bears the burden of proving the absence of genuine issues of material 

fact and its entitlement to judgment as a matter of law, which may be accomplished 

by demonstrating that the nonmoving party lacks evidence to support an essential 

element of its case on which it would bear the burden of proof at trial. See Celotex 

Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Walton v. Ford Motor Co., 424 F.3d 

481, 485 (6th Cir. 2005).

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The “mere existence of some alleged factual dispute between the parties will 

not defeat an otherwise properly supported motion for summary judgment; the 

requirement is that there be no genuine issue of material fact.” Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original); see also 

Longaberger, 586 F.3d at 465. “Only disputed material facts, those ‘that might affect 

the outcome of the suit under the governing law,’ will preclude summary judgment.”

Daugherty v. Sajar Plastics, Inc., 544 F.3d 696, 702 (6th Cir. 2008) (quoting 

Anderson, 477 U.S. at 248). Accordingly, the nonmoving party must present 

“significant probative evidence” to demonstrate that “there is [more than] some 

metaphysical doubt as to the material facts.” Moore v. Philip Morris Cos., Inc., 8 

F.3d 335, 340 (6th Cir. 1993).

A district court considering a motion for summary judgment may not weigh 

evidence or make credibility determinations. Daugherty, 544 F.3d at 702; Adams v. 

Metiva, 31 F.3d 375, 379 (6th Cir. 1994). Rather, in reviewing a motion for 

summary judgment, a court must determine whether “the evidence presents a 

sufficient disagreement to require submission to a jury or whether it is so one-sided 

that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251-52. The 

evidence, all facts, and any inferences that may permissibly be drawn from the facts 

must be viewed in the light most favorable to the nonmoving party. Matsushita 

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Eastman Kodak 

Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456 (1992). However, “[t]he mere 

existence of a scintilla of evidence in support of the plaintiff’s position will be 

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insufficient; there must be evidence on which the jury could reasonably find for the 

plaintiff.” Anderson, 477 U.S. at 252; see Dominguez v. Corr. Med. Servs., 555 F.3d 

543, 549 (6th Cir. 2009).

B. Analysis

1. Fraud

In Count Three, Kirby alleges that XPO, via Baltagi, knowingly made 

materially fraudulent misrepresentations with the intent to have Kirby rely upon 

those false statements when authorizing the wires to L.A.D. and when authorizing 

L.A.D. to release those funds to Midwest Coal/Adkins. (ECF No. 91, ¶ ¶ 98-104.) 

Kirby seeks compensatory and punitive damages. 

XPO argues judgment in its favor is proper on this Count because: (1) Kirby’s 

reliance was unjustified; and (2) XPO cannot be vicariously liable for Baltagi’s 

actions as a matter of law. (ECF No. 177, PageID 2599-2614.) XPO further contends 

punitive damages for the fraud count are improper. (ECF No. 177, PageID 2613-

14.) Kirby counters that its reliance was justified and that XPO can be found liable 

for Baltagi’s actions under principles of respondeat superior, vicarious liability, 

apparent authority, and/or ratification. (ECF No. 183, PageID 4106-4124.) After due 

review, the Court finds XPO’s arguments more persuasive.

a. General Overview

Under Ohio law, the elements for the tort of fraudulent inducement are: 1) a 

representation made, 2) material to the transaction, 3) which is false, with 

knowledge or with utter disregard and recklessness as its falsity, 4) with intent to 

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mislead, 5) justifiably relied upon, and 6) a resulting injury. Countrymark Coop. v. 

Smith, 124 Ohio App. 3d 159, 171-72 (3rd Dist. 1997) (citing Burr v. Board of 

County Comm’rs., 23 Ohio St. 3d 69, 491 N.E.2d 1101 (1986)).

b. Justifiable Reliance 

XPO’s first basis for judgment focuses on justifiable reliance, the 

“penultimate element” of Kirby’s fraud claim. Euclid Bus. Park, LLC v. Peters, 

Cuyahoga Co. Ct. Cmn. Pleas No. CV 06 589304, 2013 Ohio Misc. LEXIS 71, *26

(Dec. 30, 2013). “Reliance is that degree of care which would be exercised in an 

average transaction between persons under similar circumstances. . . .” Freedom 

Foods, Inc. v. Rose Valley Land Group, Ltd., No. 1:04cv-690, 2006 U.S. Dist. LEXIS 

49591, *14-15 (S.D. Ohio July 20, 2006) (Weber, J.) (quotation and citation omitted). 

“Justifiable reliance is a standard that falls somewhere between actual reliance and 

reasonable reliance.” Peters, 2013 Ohio Misc. LEXIS 71, at *26. “Reliance is 

justifiable if the representation does not appear unreasonable on its face and if, 

under the circumstances, there is no apparent reason to doubt the veracity of the 

representation.” Ownerland Realty, Inc. v. Zhang, 12th Dist. Warren Nos. CA2013-

09-77 and CA2013-10-97, 2014-Ohio-2585, ¶ 19 (citation omitted). 

“Ohio law requires a person to exercise proper vigilance in dealing with 

others and, at times, to reasonably investigate before relying on statements or 

representations.” Harrel v. Solt, 4th Dist. Pickaway No. 00CA27, 2000-Ohio-1964, 

*26. XPO asserts that Abington did not reasonably investigate Baltagi’s 

representations such that its reliance on them was unjustified. (ECF No. 177,

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PageID 2601.) In particular, XPO highlights Kirby’s failure to: (1) obtain a 

valuation of the tires; (2) inspect the tires; (3) investigate Adkins’ reputation; (4) 

consult industry experts; (5) address Adkins’ misrepresentation regarding where 

the tires would be coming from; and (6) investigate the warehouse receipts. (ECF 

No. 177, PageID 2601-2606.) Jeffrey Cramer, XPO’s due diligence expert, opined 

that Kirby’s efforts in that regard were insufficient. (ECF No. 177-6, PageID 3402.) 

And Tom Stephenson, XPO’s OTR mining tire industry expert, similarly opined. 

(ECF No. 177-7, PageID 3420, 3425-3424.) In contrast, Armstrong, Kirby’s expert, 

determined that Kirby’s investigation was sufficient. (ECF No. 183-19.) But the 

Court excluded his opinion on this topic above. 

The Court recognizes that whether reliance is justified is a question of fact. 

Loan v. Fifth Third Bank, No. 1:09-cv-930, 2011 U.S. Dist. LEXIS 170537, at *23 

(S.D. Ohio Apr. 14, 2011) (Barrett, J.). Yet, that query requires expert input, as the 

OTR tire market is inherently specialized and complex. Both sides recognize this 

necessity, as each engaged experts on the topic. XPO has sustained its burden of 

demonstrating that Kirby lacks evidence to support an essential element of its case, 

justifiable reliance. In response, Kirby failed to present evidence that establishes a 

question of fact as to its justifiable reliance burden. For this reason, XPO’s Motion 

for Summary Judgment on Count Three is GRANTED. (ECF No. 177.) 

c. Respondeat Superior, Vicarious Liability, and 

Punitive Damages

Justifiable reliance is a prima facie element of fraud. Kamnikar v. Fiorita, 

10th Dist. Franklin No. 16AP-736, 2017-Ohio-5605, ¶ 31. Kirby’s failure to sustain 

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its summary judgment burden as to that element renders discussion of XPO’s 

arguments regarding the respondeat superior, vicarious liability, and punitive 

damages aspects of the fraud count unnecessary.

2. RICO

Kirby’s Fourteenth Count alleges that XPO, via Baltagi, violated 18 U.S.C. § 

1962(c), the federal RICO statute, by acting as the storage facility and escrow agent 

for the tires. (ECF No. 91, PageID 1146, ¶ ¶ 175-192.) XPO argues it cannot be held 

vicariously liable for Baltagi’s actions as a matter of law. (ECF No. 177, PageID 

2593.) Kirby opposes, asserting that application of traditional respondeat superior 

principles renders XPO liable in this instance, or at least establishes genuine 

disputes of fact. (ECF No. 183, PageID 4094.) Kirby’s arguments prevail.

Kirby describes the alleged RICO conspiracy as follows: Adkins, his business 

entities, and Eckerd solicited purchasers and lenders to provide financing for 

fraudulent tire transactions while maintaining and using their tire inventory as 

“bait” for the loans. (ECF No. 91, PageID 1146, ¶ 177.) Wilkin and Mid America 

Tire acted like the “supplier” of the tires. Id. ¶ 178. XPO and Baltagi acted as the 

storage facility. Id. at ¶ 179. Because purchasers or lenders would not disburse the 

loan until the tires were shipped to a warehouse facility, XPO, via Baltagi, “acted as 

an escrow agent for the tires . . . .” Id. Thus, XPO, through Baltagi, served as an 

association in fact enterprise with the other defendants to conduct the enterprise’s 

affairs via “providing false warehouse receipts and confirmations that [XPO] held 

Kirby’s OTR tires” at XPO’s Houston location. (ECF No. 91, PageID 1148, ¶ 187.) 

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Kirby asserts Baltagi’s actions amount to wire fraud and money laundering. (ECF 

No. 91, PageID 1148 ¶ 189.) 

Section 1962(c) makes it unlawful for “any person employed by or associated 

with any enterprise engaged in, or the activities of which affect, interstate or foreign 

commerce, to conduct or participate, directly or indirectly, in the conduct of such 

enterprise’s affairs through a pattern of racketeering activity or collection of 

unlawful debt.”6 The elements of a RICO claim are not in play here. Rather, the 

issue as framed by the parties is whether XPO can be held vicariously liable for 

Baltagi’s actions under RICO. 

XPO makes four arguments: First, that liability under such a circumstance is 

not available as a matter of law. (ECF No. 177, PageID 2593.) Second, it did not 

receive a benefit from Baltagi’s purported misconduct. (ECF No. 177, PageID 2594-

96.) Third, it took no part in Baltagi’s actions. (ECF No. 177, PageID 2596-97.) 

Fourth, Baltagi’s alleged RICO violations were not within the course and scope of 

his employment. (ECF No. 177, PageID at 2597-2599.) The Court addresses each 

argument.

a. RICO Allows Liability Here

Relying on case law from New York, XPO argues that the idea of a 

corporation being vicariously liable for an employee’s “‘independent fraudulent 

acts’” is “‘startling’” because the intent of RICO “‘was to protect corporations from 

criminal infiltration,’” not to “‘make them the responsible parties.’” (ECF No. 177,

6 18 U.S.C. § 1984 provides a private right of action for “[a]ny person injured 

in his business or property by reason of a violation of” § 1962.

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PageID 2593) (quoting Banque Worms v. Luis A. Duque Pena E Hijos, Ltda., 652 F. 

Supp. 770, 772 (S.D.N.Y. 1986)). Asserting that courts are therefore “hostile” to 

imposing vicarious liability under RICO, XPO states that “there is no question that 

a mere employment relationship alone falls well short of imposing vicarious RICO 

liability on a company.” (ECF No. 177 PageID 2594.) 

The Sixth Circuit does not share the New York’s district courts’ hesitancy in 

applying vicarious RICO liability under § 1962(c). The Sixth Circuit found that 

“[s]uch a prohibition, if it existed, would prevent corporate persons from ever being 

found liable under RICO, since corporate principals may act only through their 

agents. Such a rule would be manifestly contrary to the intent of Congress, and we 

decline to adopt it.” Davis v. Mut. Life Ins. Co., 6 F.3d 367, 379 (6th Cir. 1993). 

Accordingly, liability may be imposed upon “corporate ‘persons’ on account of the 

acts of their agents, particularly where the corporation benefitted by those acts” and 

the corporation is separate from the enterprise.7 Id. at 379. Thus, vicarious liability 

is available here.

When does that liability attach? When the employees’ criminal acts are done 

within the scope of their employment with the intent to benefit the corporation. 

Trollinger v. Tyson Foods, Inc., No. 4:02-CV-23, 2007 WL 1091217, at *4 (E.D. Tenn. 

Apr. 10, 2007) (citing Davis, 6 F.3d at 379). 

7 XPO makes no argument regarding distinctness.

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b. Vicarious Liability & Respondeat Superior

“It is a fundamental maxim of law that a person cannot be held liable, other 

than derivatively, for another’s negligence. In an employment setting such as is 

before this court today, the most common form of derivative or vicarious liability is 

that imposed by the law of agency, through the doctrine of respondeat superior.”

Albain v. Flower Hosp., 50 Ohio St. 3d 251, 254-55 (1990). Under this doctrine 

“[g]enerally, an employer or principal is vicariously liable for the torts of its 

employees or agents . . . .” Nat’l Union Fire Ins. Co. v. Wuerth, 122 Ohio St. 3d 594, 

599 (2009). The application of respondeat superior “depends on the existence of 

control by a principal (or master) over an agent (or servant), terms that we have 

used interchangeably.” Id. (citation omitted.) 

XPO may be found vicariously liable for Baltagi’s actions in three alternative 

situations. First, if he was acting within the course and scope of his employment 

when making the alleged misrepresentations. Groob v. KeyBank, 108 Ohio St. 3d 

348, 355 (2005). Second, if XPO took some action indicating Baltagi had apparent 

authority for the misconduct. Id. at 358. Third, if XPO ratified his conduct. Smith v. 

Bridal, 11th Dist. Trumbull No. 2009-T-14, 2009-Ohio-6520, ¶ 20.

i. Scope of Employment and Benefit to XPO

“While an intentional tort is generally outside the scope of employment, an 

employer is held liable under respondeat superior if the conduct giving rise to the 

tort is calculated to facilitate or promote the business for which the servant is 

employed.” Callen v. Int’l Bhd. of Teamsters, Local 100, 144 Ohio App. 3d 575, 580, 

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761 N.E.2d 51, 55 (2001) (quotation and citation omitted). But “an employer is not 

liable for independent self-serving acts of his employees which in no way facilitate or 

promote his business.” Byrd v. Faber, 57 Ohio St. 3d 56, 59 (1991). Typically, scope 

of employment is a question of fact. Osborne v. Lyles, 63 Ohio St.3d 326, 330 (1992). 

However, the “‘scope of employment becomes a question of law’” when “‘reasonable 

minds can come to but one conclusion . . . regarding scope of employment.’” Carter v. 

Gerbec, 9th Dist. Summit No. 27712, 2016-Ohio-4666, ¶ 25 (quoting Osborne, 63 

Ohio St. 3d at 330).

The Court turns to the Restatement (Second) of Agency § 228 (1957) for the 

factors to determine whether Baltagi’s actions were within the course and scope of 

his employment. See Hale v. Spitzer Dodge, Inc., 10th Dist. Franklin No. 04AP-1379, 

2006-Ohio-3309, ¶ 20. Pursuant to that section: 

(1) Conduct of a servant is within the scope of employment if, but only if:

(a) it is of the kind he is employed to perform;

(b) it occurs substantially within the authorized time and space limits;

(c) it is actuated, at least in part, by a purpose to serve the master, 

and

(d) if force is intentionally used by the servant against another, the 

use of force is not unexpectable by the master.

(2) Conduct of a servant is not within the scope of employment if it is 

different in kind from that authorized, far beyond the authorized time or 

space limits, or too little actuated by a purpose to serve the master.

XPO only addresses Sections 228(1)(a), (1)(c), and (2). (ECF No. 177, PageID 2599 n. 

43, 2608-2613.) The Court therefore does the same.

Section 228(1)(a) concentrates on whether the conduct is of a kind the 

employee is employed to perform. In this regard, Kirby alleges that Baltagi’s tortious 

acts included fraudulently confirming inventory and executing and transmitting the 

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Warehouse Receipts. (ECF No. 183, PageID 4101-4103.) XPO argues that Baltagi 

took those alleged actions outside the course and scope of employment. In support, 

XPO asserts that its Houston location was not a warehouse, so it would never 

authorize Baltagi to confirm inventory or complete the Warehouse Receipts. (ECF 

No. 177, PageID 2609-2610.) In response, Kirby points to conflicting testimony 

indicating that Baltagi did have authority to do those things. (ECF No. 183, at 4102, 

4105-4106.) Thus, genuine disputes of material fact exist as to whether Baltagi’s 

conduct was of a kind he was authorized to perform. 

As to § 228(1)(c), the Court asks whether Baltagi’s conduct was “actuated, at 

least in part, by a purpose to serve” XPO because for vicarious RICO liability to 

attach, XPO must have benefitted from the alleged RICO violations. Davis v. Mut. 

Life Ins. Co., 6 F.3d 367, 379 (6th Cir. 1993). XPO argues the answer to that query is 

negative because Baltagi’s conduct in no way benefitted XPO. (ECF No. 177, PageID 

2594.) But a jury could find differently, as XPO collected almost $170,000 in storage 

fees from Adkins. (ECF No. 183, PageID 4086-4087.) XPO may not have had that 

business were it not for Baltagi’s dealings with Adkins and Kirby. Moreover, intent 

is typically a jury question. Brulport v. Coopervision, Inc., No. 92-3165, 1992 U.S. 

App. LEXIS 30496, at *9, 979 F.2d 850 (6th Cir. Nov. 10, 1992) (table). The Court 

concludes that genuine disputes of material fact exist as to whether Baltagi’s actions 

benefitted XPO. 

Despite that holding, XPO argues judgment in its favor remains proper 

because Baltagi violated several of XPO’s policies when engaging in the acts at issue. 

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First, XPO’s Signatory Policy prevented Baltagi from making the representations 

and completing and sending the Warehouse Receipts. (ECF No. 177, PageID 2598.) 

Second, XPO’s Contracts Policy required him to obtain management approval before 

signing the Warehouse Receipts and sending the related e-mails to Kirby. (ECF No. 

177, PageID 2598-2599.) XPO states that Baltagi did not secure the requisite 

approval before sending the e-mails and documents in violation of that policy. (ECF 

No. 177, PageID 2598.) Third, XPO had a policy prohibiting dishonesty (“Dishonesty 

Policy”). XPO argues that Baltagi acted in a dishonest manner in violation of that 

policy by not alerting XPO of his actions with respect to Kirby. Fourth, XPO had a 

policy prohibiting employees from engaging in fraudulent conduct (“Fraud Policy”). 

XPO asserts that Baltagi violated that policy through the Warehouse Receipts and 

his interactions with Kirby and the other individual defendants. Those polices and 

violations, XPO argues, insulate it from liability for Baltagi’s actions.

The problem with those contentions is that XPO offers no proof that Baltagi

received, or was actually aware of, the stated policies. XPO further fails to address 

the steps it took, if any, to enforce those policies. United States v. Beusch, 596 F.2d 

871, 878 (9th Cir. 1979) (“Merely stating or publishing such instructions and policies 

without diligently enforcing them is not enough to place the acts of an employee who 

violates them outside the scope of his employment.”). Thus, XPO’s scope of 

employment argument as to XPO’s policies fails to support summary judgment on 

the RICO count.

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To summarize, genuine disputes of material fact are present, but not limited 

to, the scope of employment and benefit analyses. Judgment on these grounds is 

DENIED.

ii. Apparent Authority

 Next, XPO argues that Abington cannot establish liability on the basis of 

apparent authority. (ECF No. 177 PageID 2611.) “For the principal to be liable, the 

principal’s acts must be found to have clothed the agent with apparent authority.”

Groob, 2006-Ohio-1189, ¶ 56 (citation omitted). An apparent-authority analysis 

focuses on the acts of the principal, not the agent. Master Consol. Corp. v. BancOhio 

Natl. Bank, 61 Ohio St. 3d 570, 576-577, 575 N.E.2d 817 (1991). For apparent 

authority liability to attach, the Supreme Court of Ohio directs that the evidence 

must affirmatively show that the: “(1) principal held the agent out to the public as 

possessing sufficient authority to embrace the particular act in question, or 

knowingly permitted him to act as having such authority, and (2) person dealing 

with the agent knew of those facts and acting in good faith had reason to believe 

and did believe that the agent possessed the necessary authority.” Id. at syllabus

(emphasis added).

Beginning with the former, XPO argues that it did nothing to hold Baltagi 

out as a warehouse manager or to indicate that Baltagi had authority to sign the 

Warehouse Receipts. (ECF No. 177, PageID 2611-2612.) Kirby responds that XPO 

made Baltagi the branch manager at the Houston location. (ECF No. 183, PageID 

4120.) “By giving an agent a title suggestive of certain authority, the principal holds 

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an agent out as having authority in the nature of the responsibilities commensurate 

with that title.” Delorean Cadillac v. Weaver, No. 8th Dist. Cuyahoga No. 71827, 

1997 Ohio App. LEXIS 4533, *10 (Oct. 2, 1997) (citation omitted). Kirby also asserts 

that XPO gave Baltagi authority to: (1) execute agreements “relative to the 

operations” of XPO’s Houston location; (2) confirm receipt of goods; (3) accept 

clients’ instructions for the handling of goods; (4) release goods; (5) negotiate 

customer contracts, and (6) manage all activities in Houston. (ECF No. 183, PageID 

4056-4057, 4120) (citing supportive deposition testimony). Kirby thus argues that 

XPO, via the title and authority it gave to Baltagi, held Baltagi out to the public as 

possessing sufficient authority to confirm receipt of the tires and to execute the 

Warehouse Receipts. (ECF No. 183, PageID 4120.) Further, XPO received income 

from storage fees. Under these circumstances, the Court determines that summary 

judgment is inappropriate as to the first factor. This conclusion renders discussion 

of the second factor unnecessary. 

XPO’s Motion for Summary Judgment on Count Three based on apparent 

authority is DENIED. (ECF No. 177.) 

iii. Ratification

XPO next argues that it did not ratify Baltagi’s behavior because it did not 

know about his actions. (ECF No. 177, PageID 2599 n.43; ECF No. 177 PageID 

26012-2613.) Kirby counters that XPO (1) should have known what Baltagi had 

been doing because of Star Funding, and (2) impliedly ratified Baltagi’s actions by 

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retaining the storage fees such that XPO cannot escape liability by ratification. 

(ECF No. 183, PageID 4122.) 

“A principal ratifies the unauthorized act of his agent if the ‘principal, with 

full knowledge of the facts, conducts himself in a way which manifests his intention 

to approve an earlier act performed by his agent which did not bind him.’” Bailey v. 

Midwestern Ent., Inc., 103 Ohio App.3d 181, 185 (10th Dist. 1995) (quoting Karat 

Gold Imports, Inc. v. United Parcel Serv., Inc., 62 Ohio App.3d 604, 611 (8th Dist.

1989)). Knowledge need not be actual; rather, the knowledge component of 

ratification also includes what the principal should have known. Clear Creek Pshp. 

v. LeBeau, 10th Dist. Nos. 97APE04-568 and 97APE04-569, 1998 Ohio App. LEXIS 

1890, *15-16 (Apr. 28, 1998). In addition, “[r]atification by the principal can be 

demonstrated by the retention of the benefits of the transaction.” Chevrolet v. 

Calhoun, 10th Dist. No. 03AP-816, 2004-Ohio-1006, ¶ 19. With retention of the 

benefit comes retention of liability. Rambacher v. Staton, 4th Dist. Lawrence No. 

1335, 1979 Ohio App. LEXIS 11157, at *5 (Oct. 12, 1979) (citation omitted). 

Whether ratification occurred is usually a question of fact. See Bailey, 103 

Ohio App. 3d at 185. The record here underscores the reason for that general rule. 

XPO argues Houston was not a warehouse facility. Yet, that location was openly 

storing tires. Furthermore, XPO retained nearly $170,000 in storage fees. And, 

Baltagi continued to perform work for XPO after Star Funding. These factors 

combine to create genuine disputes of material fact that are not limited to whether 

XPO should have known what Baltagi was doing and to whether XPO ratified 

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Baltagi’s actions. Summary judgment on this portion of XPO’s argument is 

DENIED. 

c. Lack of Involvement

XPO next argues that its lack of involvement in Baltagi’s alleged fraud 

insulates it from RICO liability. (ECF No. 177 PageID 2596-97.) Put differently, 

XPO attempts to insert a third requirement for vicarious RICO liability to attach; 

that it must have been an active participant in the fraud. Id. In support, XPO 

references cases from foreign districts and circuits holding that a corporation must 

actively take part in a RICO violation for liability to attach for the unlawful acts of 

its employees. (ECF No. 177 Page ID 2596-97) (citing cases). Its citations are 

misplaced.

XPO first cites to Holmes v. City of Racine, No. 14-CV-208-JPS, 2014 U.S. 

Dist. LEXIS 154906 (E.D. Wis. October 31, 2014), wherein the court held “[t]o find a 

corporation liable [under RICO], the Court must find that the [corporation], itself, 

took some action.” Holmes, 2014 U.S. Dist. LEXIS 154906 *44 (emphasis in 

original). But Holmes did not involve allegations of an employee acting as a 

corporation’s agent like the case sub judice does. 

XPO also relies on O’Brien v. Dean Witter Reynolds, Inc., No. CIV 82-1605 

PHX CLH, 1984 U.S. Dist. LEXIS 18239 (D. Ariz. Mar. 26, 1984) for its holding that 

“[c]ivil liability under RICO requires knowing or intentional participation and not 

mere negligence or recklessness.” O’Brien, 1984 U.S. Dist. LEXIS 18239, at *11 

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(quotation and citation omitted). But O’Brien did not address the issue of vicarious 

liability. Holmes and O’Brien are therefore of no import.

In Arvest Bank v. Rill, No. CIV-07-417-FHS, 2008 U.S. Dist. LEXIS 30943, at 

*8 (E.D. Okla. Apr. 14, 2008), the district court declined to impose vicarious RICO 

liability on a corporate employer in part because that liability “is at odds with the 

intent and purpose of RICO.” Rill, 2008 U.S. Dist. LEXIS 30943, at *9. Relying 

upon D & S Auto Parts, Inc. v. Schwartz, 838 F.2d 964, 967 (7th Cir. 1988), Rill

stated that “[a]n employer who is not an active participant in the scheme to defraud 

cannot be held accountable for its employees’ racketeering activities because ‘the 

statute [section 1962(c)] is designed to impose liability upon a corporation which is a 

perpetrator of illegal activity . . . not upon an unwitting conduit of its employees’

RICO violations.’” Rill, 2008 U.S. Dist. LEXIS 30943, at *10 (quoting Schwartz, 838 

F.2d at 967). But Rill “involved a corporation indistinguishable from the alleged 

RICO enterprise that neither benefited from nor participated in the criminal 

scheme.” Davis, 6 F.3d at 379. Here, there is no distinctness issue and XPO may 

have benefitted from the scheme—at a minimum through the collection of storage 

fees. And, the Sixth Circuit held in Davis that the statute does allow for vicarious 

RICO liability. Davis, 6 F.3d at 379-80. Hence, Rill does not aid XPO’s argument.

Davis discounts XPO’s mention of SK Hand Tool Corporation v. Dresser 

Industries, Inc., 852 F.2d 936, 941 (7th Cir. 1988), cert. denied, 492 U.S. 918, 106 L. 

Ed. 2d 589, 109 S. Ct. 3241 (1989). Relying upon Schwartz, Dresser held that a 

corporate defendant, as an “unwilling conduit,” “cannot be held vicariously liable 

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under RICO for the independent acts of its employees.” Dresser, 852 F.2d at 941 

(citing Schwartz, 838 F.2d at 968). But the Sixth Circuit addressed and disposed of 

both Dresser and Schwartz in Davis while holding that vicarious RICO liability was 

available. Dresser thus fails to support XPO’s argument. The noted cases are either 

distinguishable from or overlook controlling Sixth Circuit case law. XPO’s Motion 

for Summary Judgment on the RICO claim based upon active involvement is 

DENIED. (ECF No. 177.)

In sum, XPO’s Motion for Summary Judgment on Kirby’s RICO claim is 

DENIED in full. (ECF No. 177.)

3. Breach of Contract

Count Eight alleges that the Client Shipping Agreement and the Warehouse 

Receipts equated to contracts between Kirby and XPO that XPO, via Baltagi, 

breached by failing to “receive and/or store Kirby’s 200 OTR tires” and by allowing 

“third parties to wrongfully remove” some of those tires from XPO Houston. (ECF 

No. 91, PageID 1140-41, ¶ ¶ 130-37.) 

XPO seeks judgment on the Client Shipping Agreement aspect of the count. 

(ECF No. 177, PageID 2614-15.) Kirby fails to address this portion of its breach 

claim in its Opposition. (ECF No. 183.) “‘When a plaintiff asserts a claim in a 

complaint but then fails to delineate that claim in her brief in opposition to 

summary judgment, that claim is deemed abandoned.’” Chic Promotions, Inc. v. 

Jewelers Mut. Ins. Co., No. 1:07cv417, 2009 U.S. Dist. LEXIS 87930, at *5 (S.D. 

Ohio Sep. 24, 2009) (Barrett, J.) (quoting E.E.O.C. v. Home Depot U.S.A., Inc., No. 

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4:07CV0143, 2009 WL 395835, *17 (N.D. Ohio Feb. 17, 2009) (slip op.)). Summary 

judgment is therefore GRANTED to XPO on Kirby’s Client Shipping Agreement 

breach of contract claim. (ECF No. 177.) 

Regarding the Warehouse Receipts, XPO asserts two grounds for judgment. 

First, XPO states that Baltagi lacked actual or apparent authority to execute them 

such that XPO is not bound by them. (ECF No. 177, PageID 2615.) But the Court 

finds genuine disputes of material fact present on that topic above, so this basis for 

judgment fails. Second, XPO maintains that it could not breach the Warehouse 

Receipts because Kirby cannot establish that the tires were ever at Houston,

therefore making it impossible for Baltagi to release them in violation of the

Warehouse Receipts. (ECF No. 177, PageID 2615.) However, O’Connor visited 

Houston and allegedly confirmed that at least 20% of Kirby’s tires were there. (ECF 

No. 195-1, PageID 9525.) Genuine disputes of material fact thus exist and summary 

judgment on Kirby’s Warehouse Receipt breach of contract claim is improper. This 

aspect of XPO’s Motion for Summary Judgment is DENIED. (ECF No. 177.)

4. Negligence

Count Eleven focuses on Kirby’s negligence claims which take three forms: 

negligent misrepresentation, negligent execution, and negligent hiring/supervision. 

Specifically, Kirby alleges that Baltagi negligently misrepresented to Kirby that: (1)

“he would store and release Kirby’s OTR Tires on behalf of Kirby with knowledge 

that OTR Tires to be purchased were on site and owned by parties other than the 

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purported seller, Mid America [Tire]”; (2) Kirby would own most of the 300 to 400 

OTR tires at XPO Houston; and (3) “Adkins, Neidik, Midwest Coal, and L.A.D. were

trustworthy and that XPO had previously conducted business with both individuals 

and both companies.” (ECF No. 91, PageID 1143-1144 ¶ ¶ 153-155.) Kirby further 

alleges that Baltagi negligently executed the Warehouse Receipts. Finally, Kirby 

asserts that XPO negligently hired, retained, and supervised Baltagi. (ECF No. 91,

PageID 1144, ¶ ¶ 156, 161; ECF No. 183, PageID 4125 n.41.) XPO seeks judgment 

on all negligence counts.

XPO makes broad arguments urging dismissal—scope of employment and 

lack of duty—without delineating which negligence claims those contentions pertain 

to. The former was found to be a question of fact supra. Thus, XPO’s basis for 

judgment relies upon a lack of a duty on the part of XPO/Baltagi. “The existence of a 

duty in a negligence action is a question of law for the court to determine.”

Mussivand v. David, 45 Ohio St. 3d 314, 318, 544 N.E.2d 265, 270 (1989) (citation 

omitted).

“A defendant is liable for negligent misrepresentation if he (1) supplies false 

information (2) for the guidance of others in their business transactions (3) causing 

pecuniary loss to the plaintiff (4) while the plaintiff justifiably relied upon the 

information (5) and the defendant failed to exercise reasonable care or competence 

in obtaining or communicating the information.” Doe v. SexSearch.com, 551 F.3d 

412, 418 (6th Cir. 2008) (citing Delman v. City of Cleveland Heights, 41 Ohio St. 3d 

1, 534 N.E.2d 835, 838 (Ohio 1989)). A negligent misrepresentation claim requires 

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“a special relationship under which the defendant supplied information to the 

plaintiff for the latter’s guidance in its business transaction.” Ziegler v. Findlay 

Indus., Inc., 464 F. Supp. 2d 733, 738 (N.D. Ohio 2006). 

The Court finds supra in Section IV(B)(1)(b) that XPO sustained its burden of 

demonstrating that Kirby lacks evidence to support a finding of justifiable reliance

and further holds that Kirby failed to present evidence that establishes a question 

of fact as to its justifiable reliance burden. And, Kirby fails to allege or argue the 

existence of any “special relationship” between itself and XPO/Baltagi, so XPO did 

not owe Kirby any duty. Consequently, the Court GRANTS XPO’s Motion for 

Summary Judgment on Kirby’s negligent misrepresentation/execution claim. (ECF 

No. 177.) See SexSearch.com, 551 F.3d at 418 (holding similarly).

The elements of negligent hiring, retention, and supervision are: “‘(1) the 

existence of an employment relationship; (2) the employee’s incompetence; (3) the 

employer’s actual or constructive knowledge of such incompetence; (4) the 

employer’s act or omission causing plaintiff's injuries; and (5) the employer’s 

negligence in hiring or retaining the employee as the proximate cause of plaintiff’s 

injuries.’” Morway v. Ohio Bureau of Workers’ Comp., Ct. of Cl. No. 2003-10198, 

2011-Ohio-7027, ¶ 23 (quoting Peterson v. Buckeye Steel Casings, 133 Ohio App.3d 

715, 729, 729 N.E.2d 813 (1999)). “It is axiomatic that a claim of negligent hiring, 

supervision, and retention against an employer is not viable without an underlying 

act of negligence by an employee that causes injury or loss.” Morway, 2011-Ohio7027, ¶ 23 (citing Lehrner v. Safeco Ins./Am. State Ins. Co., 171 Ohio App.3d 570, 

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2007 Ohio 795, ¶ 42, 872 N.E.2d 295 (2nd Dist. 2007)). Because the Court grants 

judgment in XPO’s favor on the negligent misrepresentation/execution claim, 

Kirby’s negligent hiring, supervision, and retention claim fails as a matter of law 

pursuant to Morway and Lehrner. XPO’s Motion for Summary Judgment on the 

negligent hiring, supervision, and retention claim is GRANTED. (ECF No. 177.) 

5. Civil Conspiracy

Count Thirteen is for civil conspiracy. (ECF No. 91, ¶ ¶169-174, PageID 1145-

1146.) “A civil conspiracy claim requires an underlying tortious act that causes an 

injury. Thus, if there is no underlying tortious act, there is no actionable civil 

conspiracy claim.” Doane v. Givaudan Flavors Corp., 184 Ohio App. 3d 26, 2009-

Ohio-4989, ¶ 32 (1st Dist.). For XPO to achieve summary judgment on this count, 

its motion for summary judgment on the fraud count had to be successful. It was. 

Hence, XPO’s Motion for Summary Judgment on Kirby’s civil conspiracy count is

GRANTED. (ECF No. 177.)

V. CONCLUSION

XPO’s Motion to Partially Exclude Expert Testimony of Evan Armstrong is 

GRANTED in part and DENIED in part. (ECF Nos. 178, 198.) 

Kirby’s Motion for Partial Summary Judgment to Apply Pennsylvania law to 

the fraud and any respondeat superior analysis is DENIED. (ECF No. 181.) 

XPO’s Motion for Summary Judgment (ECF No. 177) is GRANTED as to 

Kirby’s fraud, breach of contract (Client Services Agreement), negligence, and civil 

conspiracy claims. XPO’s Motion for Summary Judgment (ECF No. 177) is 

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DENIED as to Kirby’s RICO and breach of contract (Warehouse Security Letter) 

counts. 

Plaintiff shall file a status report detailing the bankruptcy status of the 

remaining defendants and Plaintiff’s intention regarding its claims against each 

within ten (10) days of this Opinion and Order. 

IT IS SO ORDERED.

/s/Sarah D. Morrison

SARAH D. MORRISON

UNITED STATES DISTRICT JUDGE

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