A witness who has a “direct financial interest” in the outcome of the case has a “clear bias” that precludes him from testifying as an expert witness.
David Steffens, along with Williams Ellis, founded Keystone Transportation Solutions LLC, and Steffens served as its CEO. Prior to forming the company, the two men researched transportation inefficiencies in the forest products market. In response to what they learned, Steffens developed the “Shipper Savings Model.” According to Steffens, SSM’s “high level conclusions” were not unique, but its specific findings on savings were confidential, and Keystone took significant steps to secure and keep confidential the information, modeling and data underlying SSM.
After failing in its attempts to sell Keystone to either Northwest Hardwoods Inc. (NWH) or another buyer, Keystone eventually ceased operations. In this lawsuit, Keystone alleges that NWH and Thomas Mereen, who was previously Keystone’s president and now works for NWH, interfered with its business interests and improperly gained access to the confidential trade secrets underlying the SSM model.
Pending before the court is defendants’ motion to exclude Steffens from offering expert testimony. Defendants’ claim of Steffens’s bias stems primarily from the fact that, although Keystone is now a non-operating entity, its interests in this litigation have been sold to another business entity, Clarendon. Under the terms of the original operating agreement with Clarendon, as Steffens explained it, that entity will receive 10 percent of any recovery by Keystone in the lawsuit; Steffens and Ellis will equally split the rest. If there is a recovery by Keystone in this case, then, Steffens believes he will personally recover 45 percent of those proceeds.
According to his expert report, Steffens is qualified to offer his opinions because he has “in excess of thirty years of a broad background in identifying, modeling and executing business opportunities that optimize or solve market inefficiencies in supply chain and logistics.” As Steffens candidly admits, he is “obviously” “an interested party,” and he has “a direct financial interest in this case.”
The court concludes that Steffens should not be permitted to testify as an expert because of the clear bias he has as a result of his direct financial incentives in the outcome of this case. While his testimony as a fact witness is obviously appropriate despite that bias, allowing him to offer “expert” opinions under these circumstances would be confusing and potentially misleading to the jury.
Even if the court did not exclude him on that ground, however, the court also finds that he is not qualified as an expert to offer the opinions in his report, and that the opinions themselves are generally unsupported, unreliable or unhelpful to the jury.
Steffens will be permitted to testify as to a fact witness, however, and much of what Steffens offered as expert testimony may be appropriate subject matters for his testimony as a fact witness.
Defendants’ motion to exclude granted.
Keystone Transp. Solutions LLC v. Northwest Hardwoods Inc., Case No. 18-cv-00039, April 19, 2019. WDVA at Harrisonburg (Dillon). VLW 019-3-194. 15 pp.