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OUT-A-SIGHT PET CONTAINMENT v. RADIO SYSTEMS CORPORATION

August 12, 2004.

OUT-A-SIGHT PET CONTAINMENT, INC., Plaintiff
v.
RADIO SYSTEMS CORPORATION, RADIO FENCE DISTRIBUTORS, INC., and LORI VOLWILER, Defendants.



The opinion of the court was delivered by: LOUIS POLLAK, Senior District Judge

OPINION

On December 3, 2003, I granted in part the motion in limine filed by defendants Radio Systems Corporation ("RSC"), Radio Fence Distributors, Inc. ("RFD"), and RFD president Lori Volwiler (collectively, "defendants") to preclude the testimony of Stephen J. Scherf, the damages expert for plaintiff Out-A-Sight Pet Containment, Inc. ("OAS"). I ruled that Mr. Scherf could offer expert testimony based on OAS's sales projection for fiscal year 2002, but not based on OAS's sales projections for fiscal years 2003 to 2006. I determined that the latter projections, which incorporated a 47 percent annual sales increase, lacked a sufficient factual foundation.

Mr. Scherf subsequently prepared a supplemental expert report ("Supplemental Report"). The damages estimates in the Supplemental Report continued to rely on the 47 percent growth rate, and endeavored to provide new information that supported such a figure. In a memorandum and order dated July 9, 2004, I found that the 47 percent figure, and thus Mr. Scherf's damages estimates, still lacked an adequate factual basis, and granted the defendants' second motion in limine to preclude Mr. Scherf's testimony.

  Apparently, my two orders have done little to resolve the issue of OAS's proposed damages testimony, as OAS and RSC have each filed an additional motion regarding damages testimony in this case. With this opinion, I hope to resolve the issue so that this case may proceed.

  OAS's motion

  In its motion, Out-a-Sight requests three forms of relief: (1) clarification of my order of July 9, 2004; (2) reconsideration of the same order; and (3) an order compelling RFD to disclose the amount of its annual sales since 2000 in the northeast United States.

  1. Motion for clarification

  OAS asks the court to "clarify" the order of July 9, 2004, to allow Mr. Scherf to testify "as stated in his Supplemental Report, that OAS had a value of $478,000 as of May 20, 2001 based upon its first year sales projections." On the record before the court, there is no basis for concluding that Mr. Scherf should or should not be permitted to offer that opinion as expert testimony. I would note, however, that this is not what Mr. Scherf stated in his Supplemental Report. What was stated in a footnote, without any further explanation, was as follows: "It should be noted that the discounted cash flows for year one approximate $478,000." If factual support exists for either statement, it is not adequately presented in the Supplemental Report. Accordingly, the order of July 9, 2004, stands as issued, and Mr. Scherf may not testify as proposed in his Supplemental Report.

  2. Motion for reconsideration

  OAS also seeks reconsideration of the decision not to consider to the Supplemental Report's collection of damages estimates based on a range of projected sales growth rates. OAS asks this court to rule on the reasonableness of each of nine growth rates, indicating that Mr. Scherf is prepared to testify to any of nine growth rates between 0 percent and 40 percent, calculated in 5 percent intervals. In its reply brief, OAS suggests that
[i]f the Court is equipped to conclude that Mr. Scherf lacks `good grounds' to testify as to the value of OAS based on a 47 percent growth rate, then the Court should be equally equipped to determine whether or not Mr. Scherf has `good grounds' to testify based upon any lower growth rate. . . .
Reply Memorandum of Plaintiff at 3. In essence, OAS is asking the court to choose the figure that it finds to be most reasonable.

  OAS's request is based on a misconception of the relationship between the expert, the proponent of the expert, and the court. It is the obligation of the expert to formulate an opinion based on reliable data and his own expertise. The burden then rests upon the party putting forward the expert opinion to establish its reliability. In re Paoli R.R. Yard PCB Litigation, 35 F.3d 717, 744 (3d Cir. 1994). The court's responsibility is merely to "act[] as gatekeeper, preventing opinion testimony that does not meet the requirements of qualification, reliability and fit from reaching the jury." Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003). For this court to accept OAS's invitation, giving its opinion as to the most reasonable projection, would be to overstep the bounds of both its authority and its expertise.

  Even if Mr. Scherf were to advance a damages estimate based on any one of the nine proposed growth rates, I would be compelled to exclude the testimony as not supported by a sufficient factual foundation. As my orders have made clear, the flaw in Mr. Scherf's adoption of a 47 percent growth rate was not that the rate was inherently unreasonable, but that Mr. Scherf failed to provide an adequate factual basis to support its adoption. Whereas the factual support for the 47 percent rate was deemed to be insufficient, support in the Supplemental Report for any one of the alternative growth rates contained therein is nonexistent. Therefore, I will not disturb my July 9 order precluding Mr. Scherf from testifying as proposed in his Supplemental Report — including any testimony based on the alternative damages estimates contained therein.

  3. Motion to compel discovery

  Finally, OAS asks the court to compel RFD to disclose the amount of its annual sales since 2000 in the northeast United States. While it may be that such information is of use to OAS, OAS has not identified any extenuating circumstances that warrant reopening ...


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