November 19, 2013
LES Insights
By John C. Paul; D. Brian Kacedon; Flora M. Amwayi
Authored by Flora Amwayi, D. Brian Kacedon, and John C. Paul
Courts frequently perform the "gatekeeping" function of determining the relevance and reliability of expert testimony before its admission at trial. These admissibility inquiries are sometimes complicated by changes in the expert's testimony based on new data or altered methodology, which might blur the lines between the questions of reliability and those of persuasiveness of the expert's opinion.
A recent case in the Northern District of Illinois illustrates a scenario where a change in the data and methodology in an expert's opinion raised questions of the reliability of his testimony. In Sloan Valve Co. v. Zurn Indus., Inc.,1 a patent-infringement suit, the defendant moved to exclude the plaintiff's expert testimony on various grounds, including the expert's decision to change his opinion based on criticisms by the defendant's experts and to update his expert report to include new data. The court held that the expert's decision to change his report based on valid criticism and new data was, by itself, insufficient to justify excluding his testimony as unreliable.
In 2010, Sloan Valve sued Zurn Industries, alleging infringement of one of its patents relating to flush valves for use with plumbing fixtures. During discovery, Sloan Valve's expert, Julius Ballanco, submitted an expert report in January 2013, in which he opined on infringement and also price erosion. In preparing this report, Ballanco relied on CAD animations and positional coordinate data in a report generated by a third party. That data turned out to be inaccurate, so the third party re-ran its analysis and generated a second set of data in a second report. Due to the inaccuracies in the first set of data, in April 2013, Ballanco submitted a second expert report, which relied on the second set of data. During his deposition in May 2013, he disavowed the data he had relied on for his opinions in his first expert report.
Leading up to trial, Zurn moved to exclude Ballanco's testimony on three grounds. First, Zurn sought to preclude Ballanco from offering certain opinions from his first expert report because he had relied on the inaccurate data as the basis for those opinions. Having no intention of eliciting testimony from him on those opinions, Sloan Valve did not object to this aspect of the motion. Second, Zurn sought to exclude Ballanco's infringement analysis from his second expert report, arguing that he relied on a claim construction inconsistent with the Court's earlier construction. And, finally, Zurn challenged Ballanco's opinions on price erosion, arguing that it was not based on sound economic proof or personal experience with price concessions to specific customers.
The court looked to Federal Rule of Evidence 702 and the Supreme Court's well-known Daubert opinion, which govern the admissibility of expert testimony. First, because Sloan Valve did not object, the court granted Zurn's motion to exclude the portions of Ballanco's testimony that relied on the inaccurate data. The court, however, did note that Zurn would be free to cross-examine Ballanco on his reliance on the inaccurate data because that information would be proper for a jury to consider in assessing the weight of his opinions, according to the court.
Second, the court addressed Zurn's request to exclude Ballanco's infringement analysis from his second expert report on the basis that the opinion relied on a claim construction that differed from the one the court provided. The court denied this request, reasoning that Ballanco's interpretation of the claim terms did not conflict with the court's claim construction. The court noted that Zurn's counsel had previously conceded to the claim construction that Ballanco relied on in performing his infringement analysis. Additionally, Zurn's proposed construction might have the effect of not only excluding the preferred embodiment disclosed in the patent, but also limiting the claims to a "physically inoperable" embodiment, the court noted.
Third, the court addressed Zurn's request to exclude Ballanco's testimony as unreliable because he changed his methodology and opinions when criticized by Zurn's expert. But the court disagreed, reasoning instead that Ballanco used "scientifically reliable methods" and did not "dismiss or ignore evidence undermining his underlying conclusion." Ballanco's decision to change his opinion in response to criticism by Zurn's expert was insufficient to exclude his testimony on reliability grounds, according to the court. Rather, the court explained, Ballanco altered his opinion in response to perceivably valid criticism by Zurn's expert and based his new opinion on a changed method and a new data set. Zurn's arguments went to the persuasiveness of Ballanco's testimony, not its admissibility, and Zurn could address issues with Ballanco's conclusions and his methodology through cross-examination at trial.
Finally, the court granted Zurn's motion to exclude Ballanco's price-erosion testimony. The court concluded that Ballanco did not have requisite experience to provide an economic analysis on pricing, reasoning that, while he had decades of experience in the flush-valve industry, he was not an economist and had no experience conducting economic analysis. And because he did not present any evidence or conduct or rely on any analysis regarding the effect of a higher price on the demand for Zurn's products, the court further explained that Ballanco's methodology was unreliable and lacked an adequate foundation.
The Sloan Valve case demonstrates that changes in an expert's methodology or underlying data based on criticisms or previous inaccuracies may be insufficient to exclude the expert's testimony as unreliable, especially where the expert does not simply rely on the same data to reach a different result, or simply change the opinion because his first opinion was proven wrong. These changes do, however, go to the weight and persuasiveness of the expert's testimony and can be used on cross-examination to question the care the expert used in rendering his opinions.
1 The Sloan Valve order can be found at http://www.finnegan.com/files/upload/LES_Insights_Column/2013/Sloan_Valve.pdf.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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