Opinion
96 Civ. 4332 (RPP)
April 9, 2002
Richard Crisona, Esq., Jeffrey Schwab, Esq., Abelman, Frayne Schwab, New York, NY, for Plaintiff.
Howard J. Schwartz, Esq., Jason B. Lattimore, Esq., Porzio, Bromberg Newman, P.C., Morristown, NJ, for Defendant.
OPINION AND ORDER
Defendant Olivia Goldsmith ("Goldsmith") moves in limine (1) to preclude the proposed testimony of Stanley Corwin that plaintiff's damages should include a proportionate share of 70% of Goldsmith's credits, participation and income from books authored by Goldsmith subsequent to The First Wives Club ("FWC"), which stated on the book's cover the words, "by the author of the FIRST WIVES CLUB" (Expert Report by Stanley J. Corwin, dated April 20, 2000 (the "Report") at 3.); and (2) to preclude plaintiff from offering any evidence as to defendant's profits from endeavors not directly involving First Wives Club. The first motion is granted; the second motion is denied.
BACKGROUND
In the body of the Report it is stated that, in the publishing industry, authors' subsequent books are franchised "by constantly promoting the fact that he or she is the Author of a wellknown and recognizable best seller" (id.); that this marketing practice has proliferated in recent years because it is very effective and generates sales and revenues (id.); and that it is Corwin's opinion that the marketing strategy of publication and brand name promotion of the book and film, First Wives Club, has increased sales and earnings for all future literary properties of author Goldsmith advertised as "by the author of First Wives Club" by approximately 70% (id. at 3-4). The Report states this conclusion is "Based on empirical data in my involvement in over 1000 book publications, my extensive publishing experience, and on reliable industry sources and guidelines regarding `The First Wive's Franchise'" (id. at 4).
The Report then states that, "There is a probable sales and net earnings pattern of published books by `the author of FIRST WIVES CLUB'" (id.); that each subsequent franchise hardcover book advanced a distribution of approximately 70% more copies "as a result of it being a new book written `by the author of . . .'" (id.); and that "Each initial paperback edition of that hardcover had a `put out' of about 300,000 to 400,000 copies (based on it being a new book `by the author of FIRST WIVES CLUB') with an average net sale of 200,000 to 250,000 copies." (Id.)
The Report also asserts that "EVERY TIME a new mass market novel `by the author of FIRST WIVES CLUB' was purchased, the entire backlist of FIRST WIVES series titles was reissued with a new solicitation distribution of 40,000 copies + and a 60% net sale," creating a new bump in sales of approximately 40,000 for each book in the franchise. (id. at 4-5.) The Report states these conclusions are based on "a paperback and publishing industry formula and pattern — featuring the new publication as a lead book, and reissuing, reselling, restocking the rest of that author franchise." (Id. at 5.)
The Report then reiterates Mr. Corwin's conclusion that of the cumulative author earnings from all media on all subsequent publications by the author of FIRST WIVES CLUB, "70% can be directly attributed to the publication and sales success of the initial publication — FIRST WIVES CLUB," and supports this conclusion by the statement, "This has been borne out time and again in the publishing industry by sales patterns for known authors whose future books feature the blurb — Author of a `Previous Bestselling' book. This data is based on recent and accurate industry sources and knowledge of this `bestseller' franchise formula." (Id. at 5.)
The Report lists Mr. Corwin's credentials, showing he was Vice President for Marketing at Prentice Hall, Inc. (1965-70); Vice President International and Domestic Licensing at Grosset Dunlap (1970-76); Founder of Corwin Books (1976); President and CEO of Pinnacle Books (1977-81); President of Stan Corwin Productions Ltd. (1981 to present); and President and CEO of Tudor Communications (1987-90). The Report also lists seven cases in which he has been deposed or testified as an expert witness (without identifying the courts in which the cases were brought), as well as titles of books and articles he has authored and seminars and lectures he has given, none of which appear to relate to the damages opinion offered in this case.
Defense Counsel's Notice of Non-Compliance
On May 16, 2000, defendant's counsel notified plaintiff's counsel of Mr. Corwin's failure to comply with Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure, and, particularly, to the requirements that all "data and other information considered by the [expert] witness in forming [his] opinion must be included in the report." Affidavit of Howard J. Schwartz dated March 1, 2002 ("Schwartz Aff.") at Ex. D.
The Supplement
In a July 6, 2000 supplement to his Report (the "Supplement"), Mr. Corwin listed as sources for his expert report of April 20, 2000:
1. Knowledge of, and experience in publishing industry for over 30 years.
2. Discussions with publishing executives regarding "Franchise" and bestselling author sales patterns, royalties generated.
David Abramowitz — Publishing Consultant, former sales VP Manager of Warner Book Distribution, Hearst Book Distribution, Kable News — 110 Murray Drive, Chester, N Y 10918
Michael Dougherty — Director of Marketing, Renaissance Media, 5858 Wilshire Blvd., L.A., CA 90036
Will Glennon — Chairman, Conari Press, 2550 Ninth St., Berkeley, CA 94710
John McMell — Chairman, AndrewsMcMeel Publishing, 4520 Main St., Kansas City, MO 64111
George Fisher — VP, Sales — Ballantine Books/Random House, 201 East 50th St., NY, N Y 10022
3. Discussions with bestselling authors —
Al Secunda — author of THE 15 SECOND PRINCIPLE, Laurel Ave., West Hollywood, CA 90046
Stephen Smoke — author of PACIFIC EDGE, PACIFIC COAST HIGHWAY 6 other novels, 6 Sail View Ave., Palos Verdes, CA 90275
4. Discussions with Book Store Chain managers —
Patrick at Borders, Beverly Center, LA, CA
Amy at Brentanos, Century City, LA, CA
Ellen at Book Star, Beverly Hills, CA
5. Publications reviewed read by Expert:
Publishers Weekly (52 issues per year, read by Corwin every single issue over last 30 years)
American Booksellers Association bulletin read periodically, no specific issues to cite
Magazine Bookseller (wholesalers magazine) published bimonthly, read periodically, no specific issues to cite
ID wholesaler bulletins reports (send to me by friends periodically)
6. General newspaper magazine articles on industry
appearing sporadically in New York Times, Los Angeles Times, Wall St. Journal, Newsweek, Time, Business Week, Vanity Fair, The New Yorker — no specific issues to cite
7. Depositions read in Maurizio v. Goldsmith case source information available regarding monies earned to date.
8. Extrapolation analysis of industry data statistics regarding "bestselling author, or franchise author" sales patterns history as provided by above sources, assimilated explained by Expert.
Supplement at 2-4.
The Supplement also relisted the book publications and articles Corwin has written, and six of the seven previously listed cases, only one of which appears to have involved valuation of a literary property, but does not indicate that it involved the "franchise" valuation contained in this Report.
DISCUSSION
Fed.R.Civ.P. 26(a)(2)(B) requires that expert witnesses who may present evidence under Fed.R.Civ.P. 702 provide a written report prepared and signed by the witness. Rule 26(a)(2)(B) states in pertinent part:
The report shall contain a complete statement of all opinions to be expressed and the basis and reasons therefor; the data or other information considered by the witness in forming the opinions: any exhibits to be used as a summary of or support for the opinions. . . .
Fed.R.Civ.P. 26(a)(2)(B) (emphasis added).
Mr. Corwin's Report and Supplement do not comply with the requirements of Rule 26(a)(2)(B). Neither the Report nor the Supplement states what information in the depositions in Maurizio v. Goldsmith or in the source information available regarding monies earned to date were relied upon by the expert (Supplement Item 7). Nor do the Report and Supplement indicate the manner of "extrapolation and analysis of industry data and statistics" or the "bestselling author or franchise author sales patterns and history as provided by the above sources" which the expert "assimilated and explained" (Supplement Item 8). Furthermore, the Report and Supplement do not indicate, in any way, on what information the Report relied upon from the expert's discussions with the five publishing executives, the two "bestselling authors" or the book store chain managers.
In addition, the Report and Supplement do not identify what subsequent books of Goldsmith were used in reaching the opinions expressed in the Report; what comparisons were made with sales of books by other authors to support the Report's conclusion; or any "data or other information" on which the expert formed the opinion expressed in the Report that a 70% sales increase for each subsequent book was attributable to the blurb on its cover "by the author of the First Wives Club." Mr. Corwin listed other authors who alluded to previous best-selling works on their subsequent book covers, but this in no way leads to a conclusion about what percentage increase in sales were made due to the blurb on the cover.
An expert must demonstrate (1) that his or her testimony is based on sufficient facts or data and is the product of reliable principles and methods and (2) that he or she will apply these principles and facts reliably to the facts of the case.
Rule 702 of the Federal Rules of Evidence reads as follows:
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.
(Emphasis added.)
In Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993), the Supreme Court listed five non-exclusive factors as guidelines that a trial judge should consider in making his or her assessment that an expert's proposed testimony involving scientific or other specialized knowledge will conform to Rule 702:
1. whether the theory or technique can be or has been tested;
2. whether the theory has been subjected to peer review and publication;
3. the known or potential rate of error;
4. the existence and maintenance of standards controlling the theory's operation; and
5. general acceptance within the relevant scientific community.
In Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999), the court stated that in cases involving non-scientific testimony by experts, these factors should be considered as reasonable measures of the reliability of the expert testimony. 526 U.S. at 150.
As to the first Daubert factor, the Report and Supplement present no methodology for its conclusion. Since it does not set forth the data or information upon which the expert bases his opinion, it cannot be tested.
As to the second Daubert factor, the Report and Supplement identify no publication or article that supports the expert's opinion. Accordingly, there is no evidence of that opinion being subjected to peer review.
As to the third factor, the Report and Supplement do not address any known or potential rate of error for the expert's conclusion.
As for the fourth factor, the Report does not state that any standards controlling the expert's theory's operation exist or are maintained.
As for the fifth factor, the Report does state that the expert's conclusion is based on "a paperback and publishing industry formula and pattern," "on sales patterns for known authors whose future books feature the blurb — "Author of a `Previous Best Selling' book" (id. at 5-6), and "recent and accurate industry sources and knowledge of this "bestseller' franchise formula" (id. at 6). These statements, however, are conclusions insufficient to demonstrate general acceptance within the relevant community.
At oral argument, counsel for plaintiff did not seek to show that the Report complied with Rule 26(a)(2)(B) or that Mr. Corwin's testimony would comply with Rule 702. Nor did he seek time in which to supply the facts and data upon which the expert's opinion may be based. Instead, counsel sought to support Mr. Corwin's proposed testimony solely on the grounds that he is an expert in publishing with sufficient experience to testify to the following effect: "I participate in these marketplace negotiations regularly and this is my opinion of the value which can be attributed to First Wives Club of sales of subsequent books by the defendant bearing the blurb, `by the author of First Wives Club.'" Such a test, particularly where, as here, no supporting facts or data are provided, would make a mockery of Rule 26(a)(2)(B) and, more particularly, Rule 702. The expert offers no facts or data supporting his proposed testimony and cites no authorities or publications to show that the methods and principles upon which he relies are in fact reliable. Under these circumstances, the only conclusion to be drawn is that Mr. Corwin is relying solely on his familiarity with the field of publishing for an acceptance of his conclusion and is avoiding presenting any data or information upon which opposing counsel and the jury can utilize to test the correctness of his conclusion that plaintiff is entitled to her proportionate share of the receipts of defendant from 70% of the sales of defendant's books carrying the blurb "by the bestselling author of FIRST WIVES CLUB."
In short, the Report and Supplement are an inadequate response to defendant's request for a Report complying with the mandate of Rule 26 (a)(2)(B). A firm trial date has been scheduled for April 29, 2002 for well over a month. Accordingly, since plaintiff has failed to comply with Rule 26(a)(2)(B) and because plaintiff has not demonstrated that the expert's testimony would comply with Rule 702, the expert testimony of Mr. Corwin that plaintiff's damages include defendant's enhanced good will or market recognition amounting to 70% increase of sales for subsequent books by defendant bearing the blurb, "by the author of FIRST WIVES CLUB" is precluded. Defendant's first motion is granted.
Defendant's second motion seeks to preclude plaintiff from offering any evidence as to defendant's profits from endeavors not directly involving First Wives Club and that plaintiff be precluded from recovering such profits. This aspect of defendant's motion is denied. In Business Trends Analysts v. Fredonia Group, Inc., 887 F.2d 399, 407 (2d Cir. 1989), the Second Circuit held that under Section 504(b) profits might include enhanced good will or market recognition. Here, the subsequent book covers are evidence of enhanced good will or market recognition. However, as the Second Circuit pointed out, "Where there is no evidence at all allowing an assessment of the value of such an enhancement, establishment of the fact of enhancement will not support an award. (Id. at 407.) On the record before it, the Court will not rule that plaintiff may not offer any evidence allowing an assessment of the value of such an enhancement. Similarly, with respect to plaintiff's claim under the Lanham Act, defendant's motion to preclude is denied, since that claim is based on profits obtained by defendant's alleged false designations of origin. This opinion does not attempt to make a determination of the validity of the Lanham Act claim as that was not raised in the motion papers.
IT IS SO ORDERED.