Opinion
Civil Action No. 01-5775.
September 30, 2004
MEMORANDUM/ORDER
In a letter dated September 13, 2004, Terrence O. Reed, Esq., of counsel for Radio Systems Corporation ("RSC"), asks this court to "instruct Plaintiff, hopefully for the last time, that Stephen J. Scherf cannot provide any testimony in this lawsuit." The predicate for this request, which will be treated as a motion, is Mr. Reed's understanding that each of three orders addressing proposed testimony by Mr. Scherf has directed that he be precluded from offering any testimony. (Mr. Reed characterizes: (1) the order of December 3, 2003 (Docket #82) as "the first Order from the Court excluding Mr. Scherf's testimony in its entirety;" (2) the order of July 9, 2004 (Docket #97) as "the second Order from the Court excluding Mr. Scherf's testimony in its entirety;" (3) the order of August 12, 2004 (Docket #104) as "the third Order from the Court reaffirming its decision to exclude Mr. Scherf's entire testimony.")
A review of the three orders and of the memoranda accompanying them confirms that this court has precluded certain proposed expert testimony of Mr. Scherf; such review does not, however, establish that this court has barred plaintiff from seeking to elicit testimony from Mr. Scherf on other matters:
(1) The memorandum accompanying the December 3, 2003 order noted that defendants had "challenge[d] the reliability of the underlying data used by Mr. Scherf in developing his damages estimates. Because OAS was essentially a start-up company with little historical revenue information, Mr. Scherf based his analysis primarily on OAS's own business plans for fiscal years 2002-2006. The business plans were themselves based on sales projections for OAS made by Rich Weinssen, a former Innotek dealer." The memorandum then explained that Mr. Weinssen's sales projections for OAS's first year-fiscal year 2002 — were significantly more soundly rooted than his projections for the next five years-fiscal years 2003 to 2006:
Considering the limited amount of data available to Mr. Weinssen to project OAS's future sales, I find the first-year sales projection to be sufficiently reasonable to support expert testimony.
In contrast, OAS has failed to provide sufficient evidence to establish the reasonableness of Mr. Weinssen's sales projections for fiscal years 2003 to 2006 specifically, the calculation that OAS would enjoy a 47 percent annual increase in sales.
In harmony with the distinction drawn in the memorandum, the December 3, 2003 order stated that the defendants' motions to exclude Mr. Scherf's testimony were "GRANTED IN PART and DENIED IN PART." The order then specified that "Mr. Scherf may not offer any expert testimony that relies upon Mr. Weinssen's sales projections for fiscal years 2003 to 2006."
(2) In the memorandum accompanying the July 9, 2004 order, I noted that the December 3, 2003 order had "grant[ed] in part the defendants' motions in limine. I found the sales projection for fiscal year 2002 to be sufficiently reliable to support expert testimony. In contrast, I found the sales projections for fiscal years 2003 to 2006 — each of which assumed that OAS would experience an annual sales growth of 47 percent — to be speculative and thus incapable of supporting Mr. Scherf's damages estimates." I then pointed out that following the December 3, 2003 order Mr. Scherf had prepared a "Supplemental Report" which undertook to bolster the 47% annual sales increases projected by Mr. Weinssen. I found the Supplemental Report unpersuasive and, in granting the defendants' motions (Docket #90 and Docket #91), "ORDERED that Mr. Scherf will not testify as proposed in his Supplemental Report."
(3) The August 12, 2004 memorandum and order addressed (a) OAS's motion for (1) clarification of the July 9, 2004 order, and (2) reconsideration of that order, and (3) further discovery (Docket #99), and (b) RSC's motion to "Exclude Any Testimony as to Plaintiff's Damages" (Docket #100). OAS's motion suggested that, given the court's conclusion that a 47% rate of increase in annual sales, from 2003 through 2006, was unsupported, OAS would be prepared to have Mr. Scherf testify as to nine lower growth rates — from 0% to 40% at 5% intervals. For reasons stated at some length in the memorandum, the OAS motion and the RSC motion were both denied.
The foregoing summary of this court's orders of December 3, 2003, July 9, 2004, and August 12, 2004, establishes that the proposed expert testimony of Mr. Scherf that has been expressly precluded is testimony that would undertake to build plaintiff's damages claim on projected sales figures for fiscal years 2003 to 2006, involving the 47% annual sales increase initially projected by Mr. Weinssen (Order of December 3, 2003) and further contended for in Mr. Scherf's Supplemental Report. Order of July 9, 2004. Further, the court was unpersuaded that Mr. Scherf's readiness to project a series of nine lower rates of annual sales increases for 2003 to 2006 would generate reasonably supportable expert testimony. Order of August 12, 2004.
Accordingly, the request — treated as a motion by RSC — contained in Mr. Reed's letter of September 13, 2004, that this court direct that Mr. Scherf "cannot provide any testimony in this lawsuit" is DENIED.
Denial of the request, treated as an RSC motion, contained in Mr. Reed's letter is not to be construed as either acquiescing in, or ruling against, the admissibility of the proposed testimony by Mr. Scherf outlined on pages 4 to 5 of plaintiff's September 7, 2004 pre-trial memorandum. No issue directed with particularity to that proposed testimony was tendered by Mr. Reed's letter, and no such issue has been addressed in this memorandum/order.