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Philmar Dairy, LLC v. Armstrong Farms

United States District Court, D. New Mexico

July 12, 2019

PHILMAR DAIRY, LLC; ARCH DIAMOND, LLC; MOONSTONE DAIRY, LLC; and HENDRIKA DAIRY, LLC; Plaintiffs,
v.
ARMSTRONG FARMS and RANDY ARMSTRONG, Defendants, and RANDY ARMSTRONG, Counterclaimant,
v.
PHILMAR DAIRY, LLC; ARCH DIAMOND, LLC; MOONSTONE DAIRY, LLC; and HENDRIKA DAIRY, LLC; Counter-defendants.

          MEMORANDUM OPINION AND ORDER DENYING WITHOUT PREJUDICE PLAINTIFFS' MOTION TO EXCLUDE EXPERT OPINION TESTIMONY OF ROBERT CARPENTER, GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO EXCLUDE EXPERT OPINION TESTIMONY OF JOSEPH ROMIG, AND GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION TO EXCLUDE EXPERT OPINION TESTIMONY OF DR. ELIZABETH AUSTIN

          STEPHAN M. VIDMAR UNITED STATES MAGISTRATE JUDGE

         THIS MATTER is before the Court on Plaintiffs' three Motions to Exclude Expert Opinion Testimony. [Docs. 118, 119, 120]. Plaintiffs filed their Motion to Exclude Expert Opinion Testimony of Robert Carpenter [Doc. 118] on May 17, 2019. They filed their Motion to Exclude Expert Opinion Testimony of Joseph Romig [Doc. 119] and their Motion to Exclude Expert Opinion Testimony of Dr. Elizabeth Austin [Doc. 120] on May 20, 2019. Defendants responded to each Motion on May 30, 2019. [Docs. 125-27]. Plaintiffs replied to each Response on June 12, 2019. [Docs. 131, 133, 134]. The Court held oral argument on the Motions on July 8, 2019. [Doc. 153] (clerk's minutes). The Court has considered the briefing, the relevant portions of the record, the relevant law, and the oral argument. Being otherwise fully advised in the premises, Plaintiffs' Motion to Exclude Robert Carpenter is DENIED WITHOUT PREJUDICE, Plaintiffs' Motion to Exclude Joseph Romig is GRANTED IN PART and DENIED IN PART, and Plaintiffs' Motion to Exclude Dr. Elizabeth Austin is GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         Plaintiffs-New Mexico dairies-orally contracted to purchase alfalfa hay from Defendant Armstrong Farms (located in Dell City, Texas) and its owner, Defendant Randy Armstrong. [Doc. 1-1] at 13; [Doc. 43] at 4; [Doc. 43-1] at 1-2. Defendants failed to deliver 2, 647 tons of hay and failed to refund the money Plaintiffs paid for it. [Doc. 1-1] at 15-16. Defendants assert that their former farm manager, Alfred Vest, discovered that a lightning-caused fire had destroyed the hay. [Doc. 43-1] at 7-8. They maintain that Plaintiffs held the risk of loss for the hay when this fire occurred. [Doc. 55] at 4, 6-8. Plaintiffs contend that Defendants fabricated the existence of the fire to elude their contractual obligations. See, e.g., [Doc. 1-1] at 4; [Doc. 43] at 1-2. Plaintiffs filed suit, claiming that by failing to deliver the hay or refund its price, Defendants were unjustly enriched, breached their oral contract with Plaintiffs, committed fraud, and violated the New Mexico Unfair Practices Act. [Doc. 1-1] at 17-18.

         Plaintiffs moved for partial summary judgment, arguing that Defendants retained the risk of loss when the alleged fire destroyed the hay. [Doc. 43]. The Court denied Plaintiffs' Motion, finding that genuine issues of material fact existed over (1) whether the parties orally agreed to shift the risk of loss to Plaintiffs while Defendants stored the hay on their farm, and (2) whether the local custom in Dell City established that parties to hay contracts customarily shifted the risk of loss to the purchaser before delivery. [Doc. 73] at 6-10. The Court based its latter holding on the affidavit of Robert Carpenter, a former hay farmer who averred that hay farmers near Dell City customarily shift the risk of loss of hay to the purchaser before its delivery. See [Doc. 55-3] at 1.

         Trial is scheduled to begin on August 26, 2019. [Doc. 70] at 1. Plaintiffs move in the instant Motions to exclude the testimony of three defense experts. First, they move under Federal Rule of Evidence 702 to prevent Robert Carpenter from testifying about the aforementioned Dell City custom. [Doc. 118]. Second, they move under Rules 702 and 403 to exclude the testimony of Dr. Elizabeth Austin, who will purportedly testify that, from August 22, 2017, through August 25, 2017, lightning struck within certain “confidence ellipses”[1] that on or near the site where Defendants stored the hay at issue and the surrounding area. [Doc. 120-1] at 12-13, 16. Finally, they move under Rule 702 to exclude the testimony of Dr. Joseph Romig, who will purportedly testify, among other things, that lightning in fact caused the alleged fire and destroyed the hay at issue. [Doc. 119].

         ANALYSIS

         Federal Rule of Evidence 702 governs the admissibility of expert testimony. It provides:

         A witness who is qualified as an expert by knowledge, skill, experience, training or education may testify in the form of an opinion or otherwise if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. The Supreme Court clarified this standard in Daubert v. Merrell Dow Pharm., Inc., holding that, for a court to admit expert testimony, the expert must propose to testify to scientific knowledge[2] and the expert's proposed testimony must reliably assist the trier of fact to understand or determine a fact in issue. 509 U.S. 579, 589-91 (1993). The proponent of the expert testimony bears the burden to establish by a preponderance of the evidence that the testimony is admissible. Walker v. Spina, 359 F.Supp.3d 1054, 1068 (D.N.M. 2019). Based on the above standards, to admit any of their expert testimony, Defendants must establish by a preponderance of the evidence the following elements: (1) the expert is qualified, (2) she proposes to testify regarding scientific or specialized knowledge, [3] (3) her methodology is reliable, and (4) her testimony will assist the jury in determining a fact in issue.

         An expert is qualified if she “possess[es] ‘such skill, experience[, ] or knowledge in that particular field as to make it appear that [her] opinion would rest on substantial foundation and would tend to aid the trier of fact in [its] search for truth.'” LifeWise Master Funding v. Telebank, 374 F.3d 917, 928 (10th Cir. 2004) (quoting Graham v. Wyeth Labs., 906 F.2d 1399, 1408 (10th Cir. 1990)). An expert may testify if the proposed testimony lies within the “reasonable confines of [her] subject area.” Ralston v. Smith & Nephew Richards, Inc., 275 F.3d 965, 970 (10th Cir. 2001) (quoting Compton v. Subaru of Am., Inc., 82 F.3d 1513, 1520 (10th Cir. 1996)). If the expert stays within the reasonable confines of her subject area, then “a lack of specialization does not affect the admissibility of [her] opinion, but only its weight.” Id. (alteration in original) (quoting Compton, 82 F.3d at 1520). Courts must liberally construe an expert's qualifications and resolve any doubts in favor of admissibility. See Walker, 359 F.Supp.3d at 1068-69 (stating that an expert “should not be required to satisfy an overly narrow test of [her] own qualifications” (quoting Gardner v. Gen. Motors Corp., 507 F.2d 525, 528 (10th Cir. 1974)); Hartzler v. Wiley, 277 F.Supp.2d 1114, 1116 (D. Kan. 2003).

         The Supreme Court in Daubert addressed the standard for determining the reliability of an expert's methodology. It “[did] not presume to set out a definitive checklist or test. But some general observations are appropriate.” 509 U.S. at 593. It identified four factors that help a court determine the reliability of an expert's methodology: (1) whether the theory, technique, or methodology could be or has been tested; (2) whether peer review and/or publication has confirmed the theory; (3) the known or potential error rate of the theory; and (4) the level of support for the theory in the community. Id. at 593-94. “The inquiry envisioned by Rule 702 is, we emphasize, a flexible one.” Id. To that end, a court need not apply each Daubert factor if the court deems one or more of them irrelevant to the situation at hand, Kumho, 526 U.S. at 152-53, and other courts have analyzed additional factors not mentioned by the Supreme Court in Daubert, see Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1317 (9th Cir. 1995) (analyzing whether experts established their opinions independent of the litigation).

         A. Robert Carpenter

         As noted above, Robert Carpenter is a former alfalfa-hay farmer who worked near Dell City, Texas, for 35 years. [Doc. 118-2] at 1. He plans to testify that, because the dry climate in the area protects hay from moisture damage, hay farmers near Dell City customarily stored hay outdoors on their farms. Id. at 1-2. Because that practice could open the hay to other risks, however, Carpenter will testify that “it was the custom and practice of the farmers to require the [purchasers] to assume the risk of loss [for the hay] during the time the hay was stacked on the farmers' property.” Id. at 2. “That agreement was sometimes put in writing, but not always.” Id.; see Id. (“That [risk-of-loss] term was typical of hay contracts, whether oral or written.”).

         Plaintiffs attack Carpenter's testimony in two ways. First, they argue that he lacks the qualifications necessary to opine about the local custom. [Doc. 118] at 11. They believe that he based his report not on the actions of other Dell City farmers but solely on his own experience. Id. According to Plaintiffs, therefore, he lacks qualifications to testify about the custom in Dell City. Id. Second, they argue that Carpenter's methodology-relying on his personal observations during his farming career-lacks reliability. Id. at 13. The Court rejects each argument, but will allow Plaintiffs to renew their Motion if Carpenter testifies at trial that he based his report solely on how he ran his business.

         1. Carpenter is qualified to testify about the local custom of alfalfa-hay farmers near Dell City, Texas.

         At this stage of the proceedings, the Court finds that Carpenter possesses sufficient qualifications to opine on the alleged custom near Dell City. Carpenter grew alfalfa hay near Dell City for over 35 years. [Doc. 118-2] at 1. He “was the largest producer of alfalfa hay in the Dell Valley.” Id. He “wrote quite a few” contracts. [Doc. 118-1] at 3. Carpenter “personally made many such agreements [shifting the risk of loss] with buyers of [his] alfalfa hay and regularly used written contracts to confirm such custom and practice.” [Doc. 118-2] at 2. Given his extensive experience in farming alfalfa hay and drafting contracts, coupled with his status as the (formerly) largest producer of alfalfa hay in the area, his testimony about shifting the risk of loss falls within the reasonable confines of his subject area-namely, hay farming and contract negotiating in Dell City.

         Plaintiffs nonetheless argue that because he largely bases his testimony on his own experiences using written contracts, Carpenter lacks the qualifications necessary to opine on the custom generally near Dell City, especially the custom regarding oral contracts like the contract here. [Doc. 118] at 2, 11-12. At this stage of the proceedings, the Court disagrees. It is true that generalized experience does not automatically qualify a person to testify about a specialized subject. Cf. Ralston, 275 F.3d at 970 (“[M]erely possessing a medical degree is not sufficient to permit a physician to testify concerning any medical-related issue.”). However, Carpenter does not purport to have knowledge simply about the hay industry or Dell City in general. His testimony establishes that he farmed the type of hay at issue-alfalfa hay-and that he routinely included provisions in his contracts about risk of loss. Plaintiffs remain free on cross-examination to attack Carpenter's qualifications on the grounds that his practice differed from Armstrong's. See, e.g., [Doc. 118-1] at 2-5. Yet, as his testimony liberally falls within the reasonable confines-even if not the exact confines-of his subject area, these complaints go not to the admissibility of his testimony, but to its weight. See Ralston, 275 F.3d at 970.

         Moreover, Plaintiffs oversell Carpenter's testimony. He did not testify that he had no idea how other farmers in the area shifted the risk of loss. On the contrary, he testified that, because farmers in the area stored hay outside, “it was common” for them to shift the risk of loss to the buyer upon storage of the hay. [Doc. 125-1] at 10. Again, to the extent there were inconsistencies in Carpenter's testimony, those alleged inconsistencies affect the weight of his testimony, not its admissibility.

         2. By relying on his personal observations of the Dell City hay market, Carpenter utilized a reliable methodology to conclude that the local farmers customarily shifted the risk of loss before delivery of the hay.

         Carpenter's methodology-relying on his experiences as a hay farmer near Dell City-is sufficiently reliable to merit admission. “If a[n expert] witness is relying solely or primarily on experience, then the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.” Fed.R.Evid. 702 advisory committee's notes to the 2000 amendments. Carpenter explained why, due to Dell City's dry climate, hay farmers could successfully store hay outside with little fear of moisture damage. [Doc. 118-2] at 1-2. But he was not willing to accept the risk of loss while the hay was stored. So his contracts included clauses shifting the risk of loss to the buyer upon storage to protect himself from risks while the hay was stored on his property. Id. It is for this reason that, based on his experience, other farmers “practice[d] the same” as he. [Doc. 118-1] at 5. His experience-including the regularity with which he included risk-of-loss clauses in his contracts, Id. at 2, and his observation that other farmers followed the same practice-is evidence that the local custom was to shift the risk of loss to the buyer upon storage of the hay.

         Plaintiffs' qualms about Carpenter's methodology mirror those about his qualifications. Namely, Plaintiffs argue that he relied solely on his own personal experiences when formulating his report, which they believe do not establish any “custom.” [Doc. 118] at 13. Similarly, they argue his experiences are inapposite because they included, unlike the instant case, language shifting the risk of loss in a written contract. Id. Again, these concerns, at this time, do not make his testimony inadmissible. Carpenter testified that “[y]ou can have an agreement [to shift the risk of loss] that's not in writing.” [Doc. 125-1] at 8. He testified that during his “long experience as a hay farmer near Dell City, [he] became very familiar with the different practices of hay farmers in the area.” [Doc. 118-2] at 1 (emphasis added). When asked whether other farmers adhered to this practice, Carpenter replied that they “practice[d] the same” as him because, due to the protections from moisture offered by the dry climate, “it was beneficial to the dairymen” to store the hay outdoors. [Doc. 118-1] at 5. He explained that this practice proved beneficial to the dairymen because most of the farmers' customers “worked and lived in wetter climates where covered storage is necessary” to protect the hay from moisture damage. [Doc. 118-2] at 2. Therefore, it does not appear that Carpenter based his opinion solely on his practice; he relied, at least in part, on his general knowledge of the local industry.

         Plaintiffs next argue that Carpenter's failure to identify any independent study of Dell City custom, or any other person corroborating his opinion, weighs against admissibility, [Doc. 118] at 13-14, but such arguments ignore Daubert's flexible standard. Though peer review, independent testing, and community support for a theory often determine expert testimony's admissibility, the applicability of each Daubert factor changes depending on the exact testimony at issue. Daubert, 509 U.S. at 593-94. The Court is unsurprised that Carpenter has not produced independent studies or peer reviewed articles about Dell City alfalfa-hay customs because such niche studies would have little applicability outside the instant litigation.[4] Similarly, Plaintiffs' disappointment that Carpenter has never before testified as an expert about Dell City's local trade usage, [Doc. 118] at 2, matters little when litigation over such issues is presumably rare. For the above reasons, Plaintiffs' attempts to undercut his methodology's reliability do not change the outcome.

         Yet, the Court has misgivings about Carpenter's testimony. Though he testified that other farmers in the area “practice[d] the same” as him, [Doc. 118-1] at 5, he arguably did not fully explain his basis for that observation. For example, Carpenter identifies no contracts or conversations that indicate how he would know that other farmers shifted the risk of loss as he did. The Court understands why the dry climate may theoretically allow Dell City farmers to store crops outside, but both Carpenter's report and testimony lack detail on how he actually-not theoretically-knows that other farmers practiced the same as him. Because Carpenter testified that other farmers practiced the same as him, his testimony survives this Daubert challenge. However, if at trial he bases his testimony solely on his own personal practices, the Court may revisit this ruling.

         The Court therefore finds that at this stage of the proceedings, Carpenter's reliance on his own experience in and observations of the Dell City alfalfa-hay market represents a reliable methodology. Nevertheless, the Court will allow Plaintiffs to voir dire Carpenter outside the presence of the jury to ask him just how his personal experience translates to knowledge about the custom of other farmers in the Dell City ...


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