Opinion ID: 200019
Heading Depth: 1
Heading Rank: 5

Heading: Expert Testimony of Heidie Calero

Text: 72 Sun Oil next argues that Seahorse's damages expert, Heidie Calero, proffered inherently unreliable evidence that should have been excluded by the district court under its Daubert/Kumho Tire gatekeeping function. See Kumho Tire, 526 U.S. at 141, 119 S.Ct. 1167; Daubert, 509 U.S. at 592-93, 113 S.Ct. 2786. 73 Rule 702 of the Federal Rules of Evidence provides the backdrop for any consideration of expert testimony. That rule provides: 74 If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. 75 Fed.R.Evid. 702. The Supreme Court's decisions in Kumho Tire and Daubert guide a district court in determining how to assess the admissibility of such expert testimony. Pursuant to Daubert, the district court must perform a gatekeeping function by preliminarily assessing whether the reasoning or methodology underlying the testimony is scientifically valid and [ ] whether that reasoning or methodology properly can be applied to the facts in issue. 509 U.S. at 592-93, 113 S.Ct. 2786. Several factors may assist the district court in making its determination: whether the theory/technique can be and has been tested; whether it has been subjected to peer review and publication; the known or potential rate of error; and the level of the theory/technique's acceptance within the relevant scientific community. Id. at 593-94, 113 S.Ct. 2786. Although the approach is flexible by its nature (after all, expert testimony and the peculiar facts of each case so demand), the overarching concern is on the evidentiary relevance and reliability of the proposed testimony. Id. at 595, 113 S.Ct. 2786. 76 In Kumho Tire, the Court extended its holding in Daubert and held that the gatekeeping function applies to technical and other specialized knowledge in addition to scientific testimony. Kumho Tire, 526 U.S. at 141, 119 S.Ct. 1167. The Court stressed that the district court must have considerable leeway in both how to determine reliability and its ultimate conclusion. Id. at 152-53, 119 S.Ct. 1167. The ultimate credibility determination and the testimony's accorded weight are in the jury's province. See Mitchell v. United States, 141 F.3d 8, 16-17 (1st Cir.1998). With these general principles in mind, we now consider whether the district court abused its discretion in admitting Calero's testimony. See Kumho Tire, 526 U.S. at 152, 119 S.Ct. 1167 (citing Gen. Elec. Co. v. Joiner, 522 U.S. 136, 138-39, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997)).
77 Sun Oil first contends that Calero's testimony should have been excluded because her damages calculation was flawed. According to Sun Oil, Calero neglected to take into account Seahorse's failure to pay various taxes. It argues that if Seahorse had properly accounted for its tax obligations, its profits (and thus, damages) would have been minimal at best. Sun Oil inexplicably neither pinpoints the disputed testimony nor discusses the actual figures that allegedly would have undercut Calero's testimony. Our review of Calero's testimony provides no support for Sun Oil's claim: Calero testified that she considered the provisions of Seahorse's tax exemption decree in conjunction with its historical sales. 10 From that analysis, Calero concluded that approximately fifty percent of the sales were for tax exempt vessels, 11 and that the remainder of the sales would require an assessment of forty-two percent, the normal tax rate. Calero used those figures to conclude that, even with its tax obligations, Seahorse would have carried a profit in each of fiscal years 1992 through 1996. 78 Given Calero's plain testimony and Sun Oil's failure to meaningfully point out any discrepancy in the record, we cannot conclude that the district court abused its discretion in allowing Calero's testimony. Moreover, to the extent that Sun Oil sought to prove that Calero's tax calculations were flawed, it followed the proper course of action by rebutting that testimony with its own expert. See Daubert, 509 U.S. at 596, 113 S.Ct. 2786 (Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.). The well known adage that reasonable people can disagree applies here full force. That the jury found in Seahorse's favor does not mean that the district court erred in admitting the testimony.
79 Calero's forecast of damages over a ten-year period, however, is more troublesome. Sun Oil contends that the ten-year period was overly speculative because the initial agreement was for only a one-year period, the longest renewal period was for four months, and the entire PMPA relationship lasted only two and one-half years. It further maintains that due to Seahorse's misconduct, there was no reasonable basis to believe that the agreement would extend so far into the future. See, e.g., Irvine v. Murad Skin Research Labs., 194 F.3d 313, 321 (1st Cir.1999) (Absent adequate factual data to support the expert's conclusions his testimony was unreliable.); Wallace Motor Sales, Inc. v. American Motors Sales, 780 F.2d 1049, 1062 (1st Cir.1985) ([T]here is a distinction between proof which allows the jury to make a `just and reasonable inference' of damages and proof which only provides a basis for `pure speculation or guesswork.') (quoting Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 264, 66 S.Ct. 574, 90 L.Ed. 652 (1946)); see also Boucher v. U.S. Suzuki Motor Corp., 73 F.3d 18, 22 (2d Cir.1996) (Admission of expert testimony based on speculative assumptions is an abuse of discretion.). 80 We need not decide whether this time period was unduly speculative. Given the jury's ultimate award, the district court's admission of Calero's testimony would have been harmless error at best. The jury evidently grasped the disparity between Calero's long-term forecast of $10.7 million and the reality of Seahorse's situation, and discounted Calero's forecast accordingly by awarding only $800,000 in lost profits and $2.2 million in going concern damages. 12 Indeed, the jury's award not only fell far short of the ten-year estimate, but of the five-year estimate and that of the four years following the close of Seahorse's operations as well. Therefore, although the district court may have erred by allowing Calero to forecast for ten years, it would have been only harmless error, and is therefore not a basis for granting a new trial. The district court did not err in admitting the balance of Calero's testimony because Calero took into account Seahorse's historical performance, in conjunction with the performance of others in the industry and the overall Puerto Rico economy, in calculating Seahorse's damages. 13