United States District Court, N.D. Georgia, Atlanta Division
Zurich American Ins. Co., et al, Plaintiffs,
Henry C. Hardin III, et al., Defendants.
MICHAEL L. BROWN UNITED STATES DISTRICT JUDGE.
the Court are the parties' cross-motions to exclude
expert testimony (Dkts. 67, 69) and Plaintiff's Motion in
Limine No. 2 to Bar Defendants' Counsel from Repeating or
Espousing Certain Improper Expert Opinions (“Motion in
Limine No. 2”). (Dkt. 80). On February 15, 2018, the
Court held a hearing with Plaintiffs and Defendants to hear
argument on the pending motions. See Dkts. 96, 98.
The Court made certain rulings at that hearing, which are
repeated below for clarity in the record. In consideration of
the arguments made before the Court at that hearing and in
the parties' briefs, the Court rules as follows.
28, 2016, Zurich American Insurance Company, American Zurich
Insurance Company, and The Zurich Services Corporation
(collectively, “Plaintiffs”) filed suit against
Defendants Henry C. Hardin III (“Hardin”) and
Professional Management Services Group, Inc.
“Defendants”). Plaintiffs allege that Hardin
should be held liable for more than $16 million of judgments
obtained against PMSG because Hardin is the alter ego of
PMSG. Dkt. 8 at 2. According to the Amended Complaint, Hardin
“abused [PMSG's] corporate form for his own
personal benefit” such that the corporate veil should
be pierced, and Hardin should be held personally liable for
the judgments. Id. at 7. Plaintiffs intend to prove,
among other things, that Hardin commingled his corporate and
personal finances by transferring substantial cash to himself
from PMSG, siphoned-off PMSG's corporate funds to pay
personal expenses for his family, and issued unsecured,
interest-free loans from PMSG to himself. See Id. at
the discovery period, both Plaintiffs and Defendants
designated expert witnesses to testify on their behalf
pursuant to Fed.R.Civ.P. 26(a)(2). Plaintiffs' accounting
and finance expert, Robert J. Taylor, IV, intends to offer at
trial expert opinions regarding Defendants' corporate
structure and finances, including whether certain financial
transactions at issue are consistent with accepted business
practices, in support of Plaintiffs' contention that
Hardin acted as the alter ego of PMSG. Expert Report of
Robert J. Taylor (“Taylor Expert Report”), Dkt.
69-1 at 1. Defendants intend to call their expert, Jessica
Talley-Peterson, to rebut these claims. Expert Report of
Jessica Talley-Peterson (“Peterson Expert
Report”), Dkt. 67-2. Both Mr. Taylor and Ms. Peterson
submitted expert reports and were deposed by the opposing
parties. The opinions in those reports, as illuminated by
expert deposition testimony, are the subject of the two
cross-motions to exclude before the Court. (Dkts. 67, 69).
also filed Motion in Limine No. 2, which seeks to bar
Defendants' counsel from referencing at trial the same
opinions that Plaintiffs move to exclude as improper expert
testimony in their Daubert motion. (Dkt. 80). Though
Motion in Limine No. 2 was directed solely at Ms.
Peterson's expert testimony, Defendants responded that
the expert opinions Plaintiffs move to bar-particularly
opinions concerning trade custom and common business
practices- could otherwise be admitted through lay opinion
testimony given by Hardin and B. Anthony Foley
(“Foley”). Dkt. 87 at 1-2.
cross-motions to exclude bear on Motion in Limine No. 2, so
the Court will address each in turn.
Expert Testimony Under Rule 702
702 of the Federal Rules of Evidence governs the
admissibility of expert opinions. It provides:
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.
Evid. 702. The party seeking to introduce expert testimony
must establish, by a preponderance of the evidence, the
factors set out in Rule 702. United States v.
Frazier, 387 F.3d 1244, 1260 (11th Cir.2004). The
Supreme Court discussed the standard of admissibility of
expert testimony under this rule in Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S.
579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Under Daubert,
expert testimony may be admitted into evidence if: (1) the
expert is qualified to testify competently regarding the
matters he intends to address; (2) the methodology by which
the expert reaches his conclusions is sufficiently reliable
as determined by the sort of inquiry mandated in Daubert; and
(3) the testimony assists the trier of fact, through the
application of scientific, technical, or specialized
expertise, to understand the evidence or to determine a fact
City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d
548, 562-63 (11th Cir.1998) (footnote omitted) (citing
Fed.R.Evid. 702; Daubert, 509 U.S. at 589).
Daubert enumerated several factors which may be used
in assessing expert testimony, including (1) whether a theory
or technique applied by the expert can be or has been tested,
(2) whether the theory has been subjected to peer review and
publication, (3) in the case of a particular scientific
technique, the Court should consider the known or potential
rate of error, (4) and whether the theory or technique has
gained general acceptance in the relevant community.
Daubert, 509 U.S. at 593-94. The Supreme Court
emphasized that the Rule 702 inquiry is a flexible one.
Id. at 594.
focused on the admissibility of scientific expert testimony.
In Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119
S.Ct. 1167, 143 L.Ed.2d 238 (1999), the Supreme Court held
that Daubert's methodology applies equally to
experts who are not scientists. The Court held that a trial
court may consider one or more of the specific factors
mentioned in Daubert in assessing non-scientific
expert testimony, but that the trial court retains discretion
to decide if non-scientific testimony is reliable and
relevant to the case. Kumho Tire, 526 U.S. at 141.
may be qualified in various ways.” United States v.
Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004). An
expert's training or education can provide one means by
which an expert may qualify to give certain testimony.
Id. at 1260-61. And experience in a particular field
may also qualify an expert to offer an expert opinion.
Id. The district court, therefore, must focus its
inquiry on whether the expert has the requisite knowledge,
skill, experience, training, and education to offer the
testimony he intends to introduce. Fed.R.Evid. 702.
respect to reliability, trial courts must assess
“whether the reasoning or methodology underlying the
testimony is …valid and whether that reasoning or
methodology properly can be applied to the facts in
issue.” Daubert, 509 U.S. at 592-93. This
inquiry must focus “solely on the principles and
methodology [of the expert], not on the conclusions that they
generate.” Id. at 595.
conducting this inquiry for experts offering non-scientific
testimony, such as the business and accounting testimony
offered here, the advisory committee notes for Rule 702
suggest that courts consider factors such as:
(1) Whether the [expert is] proposing to testify about
matters growing naturally and directly out of research
conducted independent of the litigation, or whether [the
expert] has developed the opinion expressly for purposes of
(2) Whether the expert has unjustifiably extrapolated from an
accepted premise to an unfounded conclusion;
(3) Whether the expert has adequately accounted for obvious
(4) Whether the expert is being as careful as he would be in
his regular professional work outside his paid litigation
(5) Whether the field of expertise claimed by the expert is
known to reach reliable results for the type of opinion the
expert would give.
Fed. R. Evid. 702, advisory committee note (2000 amends.)
(citations and internal quotations omitted); see also