Opinion ID: 3194421
Heading Depth: 2
Heading Rank: 2

Heading: Exclusion of Expert Opinion Evidence

Text: Reviewing for an abuse of discretion, see Lust ex rel. Lust v. Merrell Dow Pharm., Inc., 89 F.3d 594, 596-97 (9th Cir. 1996), we hold the district court 4 improperly excluded Dr. Sox’s and Berger’s opinion evidence but properly excluded Hornbuckle’s and Epperson’s opinion evidence. A. The district court erred in excluding Dr. Sox’s opinion on the safety of GNI’s products. Each of the district court’s rationales essentially faulted Dr. Sox for not opining on whether GNI’s products were, in fact, safe. But that reasoning “applied too high a relevancy bar.” Messick v. Novartis Pharm. Corp., 747 F.3d 1193, 1197 (9th Cir. 2014). Dr. Sox’s opinion needed only to “logically advance[]” the issue, id. at 1196 (quoting Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1315 (9th Cir. 1995)), which it did by opining the dietary supplement industry would not have deemed GNI’s products “safe.” Contrary to the district court’s conclusions, moreover, Dr. Sox did provide a standard for determining what is “safe” – i.e., the industry standard – and his presumption that GNI’s ingredients were not safe was sufficiently valid in light of the industry’s strict reliance on establishing safety through certain procedures GNI had not used. B. The district court also erred in excluding Berger’s survey evidence on materiality. “[S]urvey evidence should be admitted ‘as long as [it is] conducted according to accepted principles and [is] relevant.” Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt., Inc., 618 F.3d 1025, 1037 (9th Cir. 2010) (second and third alterations in original) (quoting Wendt v. Host Int’l, Inc., 125 5 F.3d 806, 814 (9th Cir. 1997)). By asking consumers of testosterone boosters whether they would have continued using GNI’s products (or switched to another testosterone booster) after learning GNI’s advertisements were false, Berger’s survey was “probative on whether the advertisements influenced consumers’ purchasing decisions.” Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1143 (9th Cir. 1997). Although the district court faulted the survey’s biased questions and unrepresentative sample, neither defect was so serious as to preclude the survey’s admissibility. See Fortune Dynamic, 618 F.3d at 1037-38 (holding that a survey with “highly suggestive” questions was admissible); Southland Sod Farms, 108 F.3d at 1143 (holding that objections as to “leading questions” and an unrepresentative sample “go only to the weight, and not the admissibility, of the survey”). Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477 (5th Cir. 2004), is distinguishable. Berger’s survey sample did not “severely limit[] the probative value of the survey’s results” by omitting a “large proportion” of the class of potential consumers, but included both consumers of GNI’s products and consumers of other testosterone boosters. Id. at 487-88. Nor was the survey unreliable simply because it was not validated. Berger reasonably explained why the survey could not be validated and concluded it was nevertheless a “good 6 survey” based on respondents’ “consistent, across-the-board answers.” GNI also asserts Berger’s conclusions were not based on sufficient facts or data, but none of his conclusions involved “too great an analytical gap between the data and the opinion proffered.” Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). We therefore conclude the district court improperly excluded Berger’s opinion and survey evidence. C. The district court did not abuse its discretion in excluding Hornbuckle’s opinion on injury as too subjective to be reliable. A trial court has broad discretion to decide “how to determine reliability.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999). Although the reliability of a non-expert opinion can “depend[] heavily on the knowledge and experience of the expert,” United States v. Hankey, 203 F.3d 1160, 1169 (9th Cir. 2000), the district court was not required to base Hornbuckle’s reliability on his knowledge and experience. Because Hornbuckle used a novel and wholly subjective methodology, the district court could exercise its discretion to exclude his opinion evidence. D. The district court did not err in excluding Epperson’s opinion on damages. Epperson’s model for calculating actual damages relied on Hornbuckle’s report to establish the market share ThermoLife could have captured absent GNI’s allegedly false advertising. Given the exclusion of that report, Epperson’s model 7 required a substitute estimate of ThermoLife’s market share. Yet ThermoLife points to no evidence in the record from which a reasonable jury could conclude a specific percentage of customers would have purchased ThermoLife’s testosterone boosters. Because a jury would be unable to supply this essential input, Epperson’s model of actual damages was not “based on sufficient facts or data” and would not have been helpful to the jury. Fed. R. Evid. 702. Epperson’s disgorgement calculations likewise were unreliable because they included sales revenue for five years before the first allegedly false statement. Although Epperson could assume the issue of causation, his assumption still had to be “based on sufficient facts or data,” id., and there is no evidence that GNI profited from 2000 to 2004 from false advertising that commenced in 2005. Epperson’s assumption, which was never explained, relied on “simply too great an analytical gap between the data and the opinion proffered” for the disgorgement calculations to be reliable. Joiner, 522 U.S. at 146. III. Falsity, materiality and injury elements of the Lanham Act claims We review de novo the district court’s grant of summary judgment on the Lanham Act claims – including the determination that ThermoLife failed to establish injury, see Southland Sod Farms, 108 F.3d at 1145-46 – and ask whether the evidence, when viewed in the light most favorable to ThermoLife, establishes a 8 triable issue of material fact. See id. at 1138. We hold there is a triable issue of falsity, materiality and injury on all six Lanham Act claims. A. The district court erroneously concluded there is no triable issue of falsity for each type of GNI’s advertisements. 1. Counts 1, 2 and 5 involve advertisements that GNI’s products were “legal” or “DSHEA-compliant.” The district court was correct that such statements are generally inactionable opinion because they “purport to interpret the meaning of a statute or regulation.” Coastal Abstract Serv., Inc. v. First Am. Title Ins. Co., 173 F.3d 725, 731 (9th Cir. 1999). But there is a “well-established exception” that an opinion “by a speaker who lacks a good faith belief in the truth of the statement” is actionable. PhotoMedex, 601 F.3d at 931. Because every opinion “explicitly affirms . . . that the speaker actually holds the stated belief,” a CEO’s statement about legal compliance “would falsely describe her own state of mind if she thought her company was breaking the law.” Omnicare, Inc. v. Laborers Dist. Council Const. Indus., 135 S. Ct. 1318, 1326 (2015). Here, ThermoLife points to numerous emails indicating GNI was aware its products were not DSHEA-compliant. Therefore there is a triable issue of falsity on Counts 1, 2 and 5. 9 2. There is also a triable issue of falsity on Counts 4 and 6, concerning GNI’s statements that its products were “safe.” Because those statements do not “purport to interpret the meaning of a statute or regulation,” they are statements of fact, not opinion. Coastal Abstract Serv., 173 F.3d at 731. GNI asserts its products were presumed safe until the FDA proved otherwise. But the statutory provision on which GNI relies, 21 U.S.C. § 342(f), neither mentions a presumption of safety nor establishes whether a dietary supplement is safe, but defines when a supplement is safe enough that it is not an “adulterated food.” On the merits, a reasonable jury could find GNI’s products were not safe based on the recall evidence and Dr. Sox’s report.2 3. Finally, there is a triable issue of falsity on Count 3, concerning GNI’s statements that Novedex is “natural” and its ingredients are “naturally occurring and are found in natural foodstuffs.” These statements were not inactionable opinion. Because the statements were “capable of . . . being reasonably interpreted as a statement of objective fact” – namely, that the ingredients were taken from or 2 We reject GNI’s contention that the recall evidence is inadmissible. Unlike in Toole v. McClintock, 999 F.2d 1430, 1434-35 (11th Cir. 1993), the FDA’s finding on the safety of aromatase inhibitors was neither “proposed” nor based on outside research. And unlike in Werner v. Upjohn Co., 628 F.2d 848, 853 (4th Cir. 1980), ThermoLife seeks to introduce the recall evidence to prove the falsity of GNI’s statements, not GNI’s negligence. 10 could be found in nature – they were statements of fact, not opinion. Coastal Abstract Serv., 173 F.3d at 731. Based on Dr. Sox’s opinion evidence, a reasonable jury could conclude that the dietary ingredients in GNI’s products were not natural or naturally occurring and hence GNI’s statements in Count 3 were false. B. The district court erred with respect to materiality, as well. A statement is material if it is “likely to influence the purchasing decision.” Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 244 (9th Cir. 1990). ThermoLife pointed to GNI’s survey results, Berger’s survey results and Internet message board posts, all of which indicated that the safety, legality and natural ingredients of GNI’s products were – to varying degrees – important factors in consumer purchasing decisions. This evidence establishes a triable issue of materiality.3 C. There is a triable issue on injury. “We have generally presumed commercial injury when defendant and plaintiff are direct competitors and defendant’s misrepresentation has a tendency to mislead consumers.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 826 (9th Cir. 2011). This 3 Because we conclude there is a triable issue on materiality, we do not reach ThermoLife’s argument that GNI’s statements were material as a matter of law. 11 presumption is warranted even in false advertising cases because, when competitors vie for the same customers, “a misleading ad can upset their relative competitive positions” and thereby cause injury. Id. at 827. GNI contends this presumption is inconsistent with our observation that “actual evidence of some injury resulting from the deception is an essential element of the plaintiff’s case.” Harper House Inc. v. Thomas Nelson, Inc., 889 F.2d 197, 210 (9th Cir. 1989). But Harper House held only that a court cannot assume injury without any evidence of causality and consumer deception. See id. at 209-10. Consistent with that observation, TrafficSchool.com permits a jury to infer injury based on evidence of direct competition (which provides a causal link) and a likelihood of consumer deception. See 653 F.3d at 826. GNI argues the presumption applies only in the context of standing, but the two standards – which are derived from the same statutory language – are one and the same. See id. (“The Lanham Act permits ‘any person’ to sue if he ‘believes that he . . . is likely to be damaged.’” (alterations in original) (quoting 15 U.S.C. § 1125(a))); Southland Sod Farms, 108 F.3d at 1139 (“The elements of a Lanham Act § 43(a) false advertising claim are: . . . the plaintiff has been or is likely to be injured as a result of the false statement. . . .” (footnote omitted)). 12 A reasonable jury could infer ThermoLife has established a presumption of commercial injury. GNI does not dispute it directly competed with ThermoLife in the market for testosterone booster products; and GNI’s literally false statements necessarily misled consumers. Because GNI has not attempted to rebut the presumption, ThermoLife has established a triable issue on injury. See TrafficSchool.com, 653 F.3d at 827. D. The district court decided only the issue of injury (“actual harm”), but not damages (“amount of harm”). Thus we decline to decide whether ThermoLife has presented sufficient evidence to establish entitlement to damages.