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Judge limits scope of expert testimony

The Eastern District of Virginia has limited the scope of expert testimony in advance of a trial between two companies litigating whether commercial lease conditions relating to the construction and operation of a fitness club were breached.

U.S. District Judge Rossie D. Alston Jr. excluded one the plaintiff’s experts whose testimony he found “hinges largely on a general reliability analysis rather than a scientific assessment typically prescribed by Daubert.”

The judge blocked the remaining experts from interpreting the parties’ legal obligations under the lease but allowed them to testify regarding the particulars of work required under the lease, as well as industry customs and usages.

Alston also deferred “to the strong presumption of public access at trial” and rejected the plaintiff’s requests for a protective order and to seal the underlying lease.

The opinion is Clarendon Regency IV LLC v. Equinox Clarendon Inc. (VLW 022-3-459).

Lease dispute

Clarendon Regency leased commercial premises to Equinox Clarendon for the construction and operation of a fitness club in Arlington. In November 2020, Clarendon Regency sued Equinox for breaching the lease.

In July 2021, Clarendon Regency and LTF Lease Company entered into a new lease which included more square footage and different rent than the Equinox lease.

Equinox countersued in October 2021, seeking a declaratory judgment that it hadn’t breached the lease or, alternatively, that Clarendon Regency breached the lease by subsequently re-letting the premises to a third party.

During discovery, Equinox requested the LTF lease for the purpose of calculating damages. Clarendon Regency produced a copy of the LTF lease marked with “CONFIDENTIAL” and “ATTORNEYS’ EYES ONLY” designations.

The court granted a protective order in January 2022 which allowed allegedly confidential documents to be filed under seal.

Clarendon Regency later produced a redacted LTF lease, advised Equinox to use that version at trial and moved for another protective order to seal the redacted lease. 

Equinox opposed that motion with a copy of the redacted LTF lease attached.

Expert witnesses

The parties also moved to exclude each other’s experts. 

Clarendon Regency sought to exclude Chris Sheridan and Rupa Patel on the basis that their opinions were based on their subjective interpretation of the lease terms. 

Equinox countered that their experts were responding to the opinion of plaintiff’s expert Benjamin Keeney that construction drawings attached to the lease were “final.” If Sheridan and Patel were excluded, the defendant argued that Keeney also should be excluded.

Alston noted the U.S. Supreme Court’s holding in Daubert that “[a]n admissible expert opinion generally must be ‘based on sufficient facts or data,’ be ‘the product of reliable principles and methods,’ and ‘the expert [must have] reliably applied the principles and methods to the facts of the case.’”

“For those seeking to testify on the basis of sheer experience rather than a scientific technique, such experts are not required to ‘rely on anything like a scientific method,’” Alston said. “Instead, their experiential testimony must be ‘reliably applied to the facts.’”

Given this, the judge found that Sheridan and Patel were qualified to testify as experts. Their report provided a side-by-side comparison of the scope of the lease terms and addressed whether the construction drawings satisfied those terms.

However, the report also included responses to Keeney’s report whether the drawings were final, and included several assertions related to what is to be considered final.

“Those opinions touch directly on interpreting ‘the legal obligations of parties under a contract’ and functionally tell the factfinder what decision to make,” Alston pointed out. “As such, the testimony of Sheridan and Patel will be limited at trial to assessments regarding which particulars … were satisfied in the drawings provided to Defendant.”

As such, testimony from Sheridan and Patel was limited to “assessments regarding which particulars of [the lease] were satisfied in the drawings provided to Defendant [and also] to industry and custom as it applies to the purpose of delivering plans and specifications for a landlord’s work as it relates to similar leasing arrangements.”

Similarly, Alston found that Keeney’s report was “replete with judgments as to whether Plaintiff satisfied the conditions of the contract, which will not be admissible at trial.” Instead, the judge limited Keeney’s testimony to the same issues about which Sheridan and Patel could testify.

Equinox also moved to exclude plaintiff’s expert Christine Gresham, a corporate real estate transactional attorney, arguing that she was unqualified and lacked personal knowledge of the lease.

But Clarendon Regency said that Gresham was necessary to rebut Sheridan and Patel.

“Unlike Sheridan, Patel, and Keeney, Gresham’s testimony relies solely on her experience observing similar commercial real estate lease transactions and admits that she has no engineering, architectural or construction experience,” Alston wrote. “As a result, Gresham’s proposed testimony hinges largely on a general reliability analysis rather than a scientific assessment typically prescribed by Daubert.”

Therefore, since the court would not allow Sheridan, Patel or Keeney “to opine on what constitutes final plans and specifications for purposes of fulfilling contractual requirements in the Lease, the Court concludes that Gresham’s testimony provides no additional probative value to this dispute.” 

Alston excluded Gresham from testifying as an expert, while allowing the expert testimony of Sheridan, Patel and Keeney on a limited basis.

Protective order/seal?

Clarendon Regency contended the commercial terms of the LTF lease must be redacted and the unredacted material sealed to protect LTF from competitors like Equinox, who would benefit from learning of LTF’s confidentially negotiated contractual arrangements. 

Equinox, however, said the current protective order didn’t extend confidentiality obligations to trial documents and Clarendon Regency hadn’t provided a basis for redactions.

   Alston agreed. 

“[T]he fact that plaintiff and LTF have included a confidentiality provision in their lease ‘do[es] not immunize th[at] agreement[] from discovery,’” he wrote. “Nor does the fact that a filing contains a ‘sensitive commercial document [] that may be accessed by competitors []’ necessitate sealing.”

In the end, the plaintiff failed to submit a copy of the unredacted LTF lease to the court for in camera inspection or indicate what categories of information were especially sensitive for its competitor to see at trial.

“Without the necessary information available for review, the Court must defer to the strong presumption of public access at trial,” Alston wrote. “Defendant has also conveyed to the Court that portions of the redacted material in the LTF Lease would reveal ‘which lease spaces’ LTF could apply its tenant improvement allowance toward. That determination would directly impact the calculation of profit or loss incurred by Plaintiff with respect to the space initially leased to Defendant with the same space subsequently leased to LTF.”

The judge declined to seal the redacted lease or bar the production of the unredacted lease at trial.