Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Federal Trade Commission v. Innovative Designs, Inc.

United States District Court, W.D. Pennsylvania

July 27, 2018

FEDERAL TRADE COMMISSION, Plaintiff,
v.
INNOVATIVE DESIGNS, INC., Defendant.

          MEMORANDUM OPINION

          Nora Barry Fischer United States District Judge

I. INTRODUCTION

         Presently before the Court is the Motion for Leave to File a Sur-Rebuttal Expert Report (Docket No. 99) filed by Defendant Innovative Designs, Inc. (“IDI”), seeking thirty (30) days to complete additional testing and to submit a sur-rebuttal and/or supplemental expert report. In its Response (Docket No. 102), the Federal Trade Commission (the “FTC”) argues that IDI is seeking a “do-over” expert report and maintains that the expert rebuttal report prepared by Dr. Jonathan Malen (the “Malen Report”) is a proper rebuttal report that addresses and rebuts each of IDI's experts' primary opinions. As such, the FTC argues that IDI has not met its burden to show that it is entitled to submit a sur-rebuttal or supplemental report in this case. (Id. at 7-9). By rejecting IDI's motion, the FTC claims that the Court can prevent a wasteful cycle of additional rebuttals, depositions, and sur-rebuttals that would result from another expert report. (Id. at 9). The Court has now considered IDI's Motion for Leave to File a Sur-Rebuttal Expert Report (Docket No. 99), the FTC's brief in opposition (Docket No. 102), IDI's reply brief (Docket No. 105), and the relevant expert reports (Docket Nos. 75-2, 99-2, 102-2). The Court heard oral argument on the Motion and supplemental briefing on July 16, 2018. (Docket No. 106). For the reasons that follow, the Court will grant IDI's Motion.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         On November 3, 2016, the FTC filed a Complaint claiming that IDI violated several provisions of the Federal Trade Commission Act, 15 U.S.C. § 41 et seq., through the use of unfair and deceptive marketing and promotional activities. (Docket No. 1). Defendant IDI began to market Insultex House Wrap (“Insultex”) for use as a weather-resistant barrier on exterior walls around November 2011, (Docket Nos. 1 ¶ 9; 7 ¶ 9), claiming that Insultex had the added benefit of providing thermal insulation, (Docket Nos. 1 ¶ 11; 7 ¶ 11). Insultex was initially advertised as having an “R-3” insulative value and in 2015 a thicker version was marketed as having an “R-6” insulative value. (Docket Nos. 1 ¶¶ 13, 15 - 16; 7 ¶ 13, 15 - 16). According to 16 C.F.R. § 460.5, R-value measures resistance to heat flow and, when given in labels, fact sheets, ads, or other promotional materials, it must be based on tests done using the American Society of Testing and Materials (“ASTM”) methods listed in 16 C.F.R. § 460.5.

         Defendant contends that the R-values marketed for its Insultex wraps were derived from testing conducted in accordance with ASTM standards by accredited laboratories. (Docket Nos. 1 ¶ 20; 7 ¶ 20). The FTC believes that independent testing results obtained as part of an investigation indicate otherwise, and claims that Defendant's R-value assertions are therefore false or misleading due to a lack of valid, objective testing data in conformity with ASTM standards. (Docket No. 1 ¶¶ 28 - 36). The crux of the dispute in this case requiring expert testimony is the Modified ASTM C518 testing performed by BRC Laboratories on behalf of IDI, its R-value results, and the actual R-value of Insultex House Wrap.

         On August 11, 2017, the FTC submitted its case-in-chief expert report of its designated testifying expert, Dr. David Yarbrough. (See Docket No. 102, at 4). IDI submitted expert reports from Scott Baumann, [1] Dr. Anastassios Mavrokefalos, and Dr. Donald Garlotta on March 6, 2018. (Id.). On May 4, 2018, the FTC submitted its rebuttal expert reports of Dr. Yarbrough and Dr. Jonathan Malen.[2] (Docket No. 99). IDI now argues that, because Dr. Malen performs “new” calculations based upon known values and properties of Low Density Polyethylene, IDI should be granted leave for its expert, Dr. Mavrokefalos, to perform additional testing to rebut Dr. Malen's opinions concerning the thermal resistance of air gaps and thermal resistance of plastic foams in item numbers four and five of the Malen Report. (Id., at 1).

         III. ANALYSIS

         A. The Malen Report is a Proper Rebuttal Report

         IDI argues that the Malen Report is not a proper rebuttal report under Rule 26 of the Federal Rules of Civil Procedure because it goes beyond the permissible purpose of rebuttal evidence. It contends that the Malen Report “rehashes the issue of the R-value of the air gap using new calculations that should have been contained in the FTC's case-in-chief report” and “contains new theories and information not contained in any of the previous expert reports relating to the ‘Thermal resistance of plastic foams.'” (Docket No. 99, at 4).

         In response, FTC argues that the Malen Report is a proper rebuttal report in compliance with the Federal Rules of Civil Procedure because it “directly addresses and rebuts each of IDI's experts' three primary opinions: 1) that the R-value of air is negligible; 2) that [Insultex's] properties as a low-density polyethylene foam with ‘evacuated cells' (“LDPE”) imbue it with an R-value a magnitude higher than other insulation; and 3) that compression of the Insultex during ASTM C518 testing returned artificially lowers R-values.” (Docket No. 102, at 2).

         This Court has wide discretion in determining what evidence may be presented on rebuttal. See United States v. Chrzanowski, 502 F.2d 573, 576 (3d Cir. 1974). Fed.R.Civ.P. 26(a)(2)(D)(ii) defines rebuttal experts as presenting “evidence [that] is intended solely to contradict or rebut evidence on the same subject matter identified by another party . . .” See also Withrow v. Spears, 967 F.Supp.2d 982, 1002 (D. Del. Aug. 22, 2013) (“expert reports that simply address the same general subject matter as a previously-submitted report, but do not directly contradict or rebut the actual contents of that prior report, do not qualify as proper rebuttal or reply reports.”). While the scope of a rebuttal report is limited to the same subject matter encompassed in the opposing party's expert reports, district courts have been reluctant to narrowly construe the phrase “same subject matter” beyond its plain language. See, e.g., Pritchard v. Dow Agro Scis., 263 F.R.D. 277, 284 (W.D. Pa. 2009) (finding declaration did not include any new opinions but rather served to further elaborate upon the initial opinions expressed in the report and rebut the defense experts' opinions); Safe Auto Ins. Co. v. State Auto. Mut. Ins. Co., No. 2:07-CV-01121, 2009 WL 10679570, at *2 (S.D. Ohio Mar. 4, 2009); TC Sys., Inc. v. Town of Colonie, New York, 213 F.Supp.2d 171, 180 (N.D.N.Y. 2002) (stating that the court “is reluctant to narrowly construe the phrase ‘same subject matter' beyond its plain language” because doing so would “impose an additional restriction on parties that is not included in the Rules”).

         The term “same subject matter” is not defined in the Advisory Committee Notes to Rule 26 and there is little case authority on the issue. See Safe Auto Ins. Co., 2009 WL 10679570, at *2; TC Sys., Inc., 213 F.Supp.2d at 180. However, the courts that have interpreted the term “same subject matter” in this regard have done so broadly, requiring that a rebuttal report simply address the same topic as the affirmative report, as opposed to the same topic and methodology the affirmative expert relied on. See, e.g., TCL Commc'ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson, 2016 WL 7042085, at *4 (C.D. Cal. Aug. 17, 2016) (“However, nothing about Rule 26 or the nature of rebuttal prohibits offering independent opinions or utilizing other methodologies. In fact, offering a different, purportedly better methodology is a proper way to rebut the methodology of someone else.”); Associated Elec. Gas Ins. Servs. v. Babcock & Wilcox Power Generation Grp., Inc., No. 3:11-CV-715-JCH, 2013 WL 5771166, at *3 (D. Conn. Oct. 24, 2013) (“Although [the rebuttal report] does offer new analysis and calculations, the Court finds that such were undertaken in an effort to rebut and/or contradict the theory posted by [the affirmative expert], and are therefore proper.”) (citing Allen v. Dairy Farmers of America, Inc., 2013 WL 211303, at *5 (D. Vt. Jan. 18, 2013) (“It is also acceptable for an expert to use new methodologies in a rebuttal for the purpose of rebutting or critiquing the opinions of Defendants' expert witness.”)); Safe Auto Ins. Co., 2009 WL 10679570, at *2 (citing TC Sys., Inc., 213 F.Supp.2d at 180).

         In its motion, IDI contends that Dr. Malen's report is not a proper rebuttal report because it introduces new theories and calculations as to the R-value and air gap that were not previously raised in the FTC's case-in-chief report. (Docket No. 99, at 6). However, to the extent Dr. Malen's report offers new analysis and calculations, the Court finds that it is proper for Dr. Malen to utilize new calculations or methods in an effort to rebut and/or contradict the theories posited by IDI's experts. (Docket No. 102, at 2). As this Court has noted, rebuttal evidence is properly admissible when it will explain, repel, counteract or disprove the evidence of the adverse party. Wonderland Nurserygoods Co. v. Thorley Indus., LLC, 2014 U.S. Dist. LEXIS 8185, *6 (W. D. Pa. January 23, 2014) ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.