Opinion
CIVIL ACTION NO. 94-3090 SECTION "L" (4)
March 10, 2004
ORDER REASONS
Before the Court is Defendant Orkin Exterminating Co.'s motion in limine to exclude evidence of lost future profits. For the following reasons that motion is DENIED.
I. BACKGROUND
Defendant Orkin Exterminating Co. moves the Court for an order to exclude any and all evidence of future profits and damages based on the differential between the projected cost for purchasing a new termite contract and the projected cost of maintaining the Plaintiffs termite contract with the Defendant. The Defendant claims that such evidence is too speculative to be used to determine lost profits. The Defendant urges that claims to lost profits must be supported by evidence demonstrating that the profits were reasonably certain. In addition, Orkin criticizes the assumptions used by the Plaintiffs economist to calculate the projected differential. The Defendant asserts that the methodology used by the Plaintiffs expert fails to meet the reliability and relevancy standards set forth in Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993).
The Plaintiff responds that its claim to damages is based on a loss sustained and is not calculated based on lost profits. The Plaintiff contends that the extermination contract's renewal guarantee was a valuable asset and that it is entitled to be compensated for the value of the loss of that right. Berk-Cohen submits that its economist estimated the value of that right by measuring the difference between the value of lifetime renewal contract with Orkin and the market price of comparable cover. The Plaintiff states that the testimony offered by its economist is the product of reliable principles and methodology.
II. ANALYSIS
Rule 702 governs the use of scientific or other expert testimony in the federal courts. The rule provides:
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.
Once the proponent of the evidence proves that the offered testimony is based on sufficient facts or data, he or she must then "demonstrate that the expert's findings and conclusions are based on the scientific method, and, therefore, are reliable." Moore v. Ashland Chemical, Inc., 151 F.3d 269, 276 (5th Cir. 1998) (en banc). The proponent must establish reliability by a preponderance of the evidence. Id. Daubert and its progeny instruct the district courts to serve a gate keeping role to evaluate the relevance and reliability of the methodology of proffered expert testimony based on a nonexclusive list of factors. Those factors are: (1) whether the expert's theory "can be (and has been) tested"; (2) whether the theory "has been subject to peer review and publication"; (3) "the known or potential rate of error"; (4) the "existence and maintenance of standards controlling the technique's operation"; and (5) the "general acceptance" of the methodology in the scientific community. Daubert, 509 U.S. at 593-94.
Mr. Boudreaux, an economist employed by the Plaintiffs, estimates the Plaintiff's loss sustained based on the present value differences between two streams of contractual payments over a thirty-year-long time period. Defendant Orkin does not challenge Mr. Boudreaux's credentials as an economist or the methodology he used to calculate his estimate. The Defendant does not suggest that Mr. Boudreaux employed an incorrect formula or that his calculation is faulty under any Daubert factor. Defendant Orkin instead challenges the underlying assumptions (e.g. that the contract would remain in force for 30 years) that Mr. Bourdreaux uses in his model.
The Defendant's challenge to Mr. Boudreaux opinion testimony is without merit. The Defendant's challenge goes to the credibility of Mr. Boudreaux's testimony, not the admissibility of his testimony. Mr. Boudreaux's calculation employs assumptions, and it is the Plaintiffs burden to show that those assumptions have a basis in fact and are themselves relevant. Those assumptions do not render Mr. Boudreaux's methodology, based on a well established valuation formula, inadmissable under Rule 702.
III. CONCLUSION
For the foregoing reasons, the Defendant's Motion in limine is DENIED.