T.T. International Co., LTD v. BMP International, Inc.

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

T.T. INTERNATIONAL CO., LTD,

Plaintiff,

v. Case No: 8:19-cv-2044-CEH-AEP

BMP INTERNATIONAL, INC. and

BMP USA, INC.,

Defendants.

___________________________________/

ORDER

This matter comes before the Court on Plaintiff T.T. International’s Motion to

Exclude the Testimony of Defendants’ Expert, Mr. Dong “Daly” Hu (Doc. 101). In

the motion, Plaintiff seeks an order excluding the opinions and testimony of

Defendants’ expert witness on the basis that he is unqualified and his opinions

unsupported. Defendants filed a response in opposition (Doc. 112) and a supplemental

report (Doc. 112-1). Plaintiff subsequently filed a Motion to Strike the Supplemental

Report (Doc. 117). Defendants did not respond to the motion to strike, and thus the

motion is deemed unopposed. See M.D. Fla. 3.01(c). The Court, having considered

the motions and being fully advised in the premises, will deny Plaintiff T.T.

International’s Motion to Exclude the Testimony of Defendants’ Expert, Mr. Dong

“Daly” Hu and grant the motion to strike supplemental report.

I. BACKGROUND

In this commercial transactions dispute, Plaintiff T.T. International Co., Ltd.

(“Plaintiff”), sues Defendants, BMP International, Inc. and BMP USA (collectively

“Defendants”), to recover in excess of 70 million dollars for refrigerant gas and related

products exported by Plaintiff from China to Defendants in the United States, which

the Defendants retained but did not pay for. Plaintiff submits the Commercial Invoices

identified the products shipped and stated the terms of payment, including the unit

price, which is what Plaintiff contends Defendants owe Plaintiff. Defendants do not

dispute that they agreed to pay for the products and that they received the products

and kept or resold them. However, Defendants dispute the amount they owe Plaintiff

for the products. Plaintiff sues Defendants for breach of contract, unjust enrichment,

account stated, and open account. Doc. 1.

In opposition to Plaintiff’s unjust enrichment claims, Defendants submit the

expert report of Dong “Daly” Hu (“Mr. Hu”) to opine as to the value of the products

at issue in this litigation. Doc. 99-14. Mr. Hu is an attorney licensed in China and is

a senior partner and member of the management committee for the largest law firm in

Ningbo, China, Harnest & Garner. Id. at 4. He has consulted and provided legal advice

regarding broker rates for a variety of products and services in China with regularity.

Id. He has provided expert and consulting services for many large enterprises related

to the import market on a variety of platforms. Id. at 3. For 15 years, Mr. Hu has

worked as an attorney providing legal services related to commercial transactions for

companies in China and worldwide. Id.

Mr. Hu was retained as an expert by Defendants to opine as to the nature and

extent of the rates that the brokers in China received in the industry for products like

those being brokered by Plaintiff here. Id. In analyzing and determining what rate a

commodities broker in China, and specifically Dalian China, would charge for its

services, Mr. Hu considered his own experience negotiating and drafting brokerage

contracts, his experience providing legal counsel reviewing a substantial number of

international trade transactions for a variety of commodities, conversations with the

principals of BMP regarding the parties’ working relationship, and public information

about the broker market in China. Id. at 4–5.

In his report, Mr. Hu identifies three common forms of compensation for a

broker to charge for securing resources and being a middleman to factories and buyers:

(1) flat rate commission; (2) blind mark-up; and (3) factory commission. He states that

the most common method of compensation for brokers in China is the flat rate

commission. Based on his experience dealing with these types of transactions, he

opines that the general rate would be a 1% to 5% rate of commission or mark up over

the factory cost. Id. at 7. Citing to figures from the National Bureau of Statistics, Mr.

Hu opines that brokers in China in the same industry as Plaintiff during the 2015

through 2018 time frame charged rates between 3.93% to 5.66% over factory cost. Id.

Taking into consideration the exclusive broker arrangement that Defendants had with

Plaintiff, Mr. Hu states that a rate between 2% to 3% over factory cost would be

appropriate in the circumstances. Id. at 7–8. Mr. Hu attaches to his report his

curriculum vitae, documents and information he relied upon, and a statement of his

compensation. Id. at 9–19.

Plaintiff moves to exclude the opinions of Mr. Hu, arguing he is not experienced

in the highly regulated refrigerant industry, he has not adequately explained how he

reached his conclusions, and his testimony is unhelpful to the trier of fact. Doc. 101.

Defendants respond in opposition arguing that Plaintiff’s arguments go to the weight,

not the admissibility, of Mr. Hu’s opinions. Doc. 112. Defendants further argue that

Mr. Hu’s report satisfies the requirements of Rule 26, and if Plaintiff wanted to learn

more, it had the opportunity to depose Mr. Hu, but it chose not to. Defendants proffer

a supplemental report which provides additional information regarding Mr. Hu’s

experience and the analysis he undertook. See Doc. 112-1. Plaintiff moves to strike the

supplemental report as untimely. Doc. 117. On September 17, 2021, Defendant sought

a seven-day extension of time to respond to the motion to strike, which the Court

permitted. Docs. 121, 123. Thus, Defendants’ response to the motion was due by

September 24, 2021. To date, Defendants have not filed a response to the motion to

strike.

II. LEGAL STANDARD

A. Daubert Standard

The admissibility of expert testimony is governed by Federal Rule of Evidence

702, which provides:

A witness who is qualified as an expert by knowledge, skill, experience,

training, or education may testify in the form of an opinion or otherwise

if:

(a) the expert’s scientific, technical, or other specialized knowledge will

help the trier of fact to understand the evidence or to determine a fact in

issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts

of the case.

Fed. R. Evid. 702. Rule 702 is a codification of the United States Supreme Court’s

decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). In Daubert,

the Supreme Court described the gatekeeping function of the district court to “ensure

that any and all scientific testimony or evidence is not only relevant, but reliable.” Id.

at 589; see also United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004) (en banc).

The Supreme Court extended its reasoning in Daubert to non-scientist experts in Kumho

Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999).

In performing its gatekeeping function, the Court must consider whether:

(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 in issue.

Frazier, 387 F.3d at 1260 (quoting City of Tuscaloosa v. Harcros Chems., Inc., 158 F.3d

548, 562 (11th Cir. 1998)). Thus, the three discrete inquiries to determine the

admissibility of expert testimony are qualifications, relevance, and reliability. Quiet

Tech. DC-8, Inc. v. Hurel-Dubois UK Ltd., 326 F.3d 1341 (11th Cir. 2003). Although there

is some overlap among these inquiries, they are distinct concepts that the Court and

litigants must not conflate. Id.

“The burden of laying the proper foundation for the admission of expert

testimony is on the party offering the expert, and the admissibility must be shown by

a preponderance of the evidence.” Hall v. United Ins. Co. of Am., 367 F.3d 1255, 1261

(11th Cir. 2004) (citation omitted). “Presenting a summary of a proffered expert’s

testimony in the form of conclusory statements devoid of factual or analytical support

is simply not enough.” Cook ex rel. Est. of Tessier v. Sheriff of Monroe Cty., 402 F.3d 1092,

1113 (11th Cir. 2005). The admission of expert testimony is a matter within the

discretion of the district court, which is afforded considerable leeway in making its

determination. Frazier, 387 F.3d at 1258.

“The gatekeeper role, however, is not intended to supplant the adversary system

or the role of the jury: ‘[v]igorous cross-examination, presentation of contrary

evidence, and careful instruction on the burden of proof are the traditional and

appropriate means of attacking shaky but admissible evidence.’ Daubert, 509 U.S. at

596, 113 S. Ct. 2786. The judge’s role is to keep unreliable and irrelevant information

from the jury because of its inability to assist in factual determinations, its potential to

create confusion, and its lack of probative value.” Allison v. McGhan Med. Corp., 184

F.3d 1300, 1311–12 (11th Cir. 1999).

B. Late-Disclosed Expert Report

Federal Rule of Civil Procedure 26 governs the disclosure of expert witnesses

and requires a party to provide “a complete statement of all opinions” offered by an

expert witness and “the basis and reasons for them” “at the times and in the sequence

that the court orders.” Fed. R. Civ. P. 26(a)(2)(B) & (D). Rule 37 provides that if a

party fails to conform to the disclosure requirements of Rule 26(a), the proffered

information must be excluded “unless the failure [to disclose] was substantially

justified or is harmless.” Fed. R. Civ. P. 37(c)(1). In other words, if an expert opinion

is not disclosed in accordance with the scheduling order, it may be excluded under

Rule 37. See Corwin v. Walt Disney Co., 475 F.3d 1239, 1252 (11th Cir. 2007).

III. DISCUSSION

A. Daubert Motion

“[E]xperts may be qualified in various ways.” Architects Collective v. Pucciano &

English, Inc., 247 F. Supp. 3d 1322, 1333 (N.D. Ga. 2017). Although scientific training

or education is one way of becoming a qualified expert, a person may obtain expert

status through experience in a field. Id. (citing Frazier, 387 F.3d at 1260-31). “Thus,

‘there is no mechanical checklist for measuring whether an expert is qualified to offer

opinion evidence in a particular field.’” Id. (quoting Santos v. Posadas de Puerto Rico

Assocs. Inc., 452 F.3d 59, 63 (1st Cir. 2006)).

Plaintiff argues that Mr. Hu is unqualified to opine on brokering rates in China

for the refrigerant industry. Mr. Hu is a Chinese-qualified attorney who is an expert in

the brokerage and import market in China both domestically and internationally. For

over 15 years, he has provided legal consultation and services related to commercial

transactions, including for many large enterprises related to the import market on a

variety of platforms. See Doc. 99-14. Although his curriculum vitae does not

specifically reference clients in the refrigerant industry, according to Defendants’

response, Mr. Hu’s experience “involves extensive refrigerant work in various aspects

of its manufacturing, sale, and distribution, which is identified as something that he

considered as part of his overall opinion in his expert report.” Doc. 112 at 8. As noted

by Defendants, Plaintiff would have been able to explore Mr. Hu’s qualifications and

experience in greater depth had Plaintiff chosen to depose the expert.

As courts have noted, “[t]he qualification standard for expert testimony is ‘not

stringent’ and ‘so long as the expert is minimally qualified, objections to the level of

the expert’s expertise [go] to credibility and weight, not admissibility.” Vision I

Homeowners Ass’n, Inc. v. Aspen Specialty Ins. Co., 674 F. Supp. 2d 1321, 1325 (S.D. Fla.

2009). See also Hewitt v. Liberty Mut. Group, Inc., 268 F.R.D. 681, 686 (M.D. Fla. 2010).

The Court finds Mr. Hu minimally qualified based on his experience and training to

opine as to the nature and extent of the rates charged by brokers in the relevant

industry. The opinions he offers here are of the type he renders in the ordinary course

of his profession. Further, while his opinions may not be conclusive on the ultimate

issues, it appears, as a prima facie matter, that his testimony is likely to be of some

assistance to the finder of fact.

The inquiry into a proffered expert’s reliability is “flexible;” the Court must

focus on the expert’s principles and methodology, not on his conclusion. Chapman v.

Procter & Gamble Distributing, LLC, 766 F.3d 1296, 1305 (11th Cir. 2014). The Court

has the “task of ensuring that an expert’s testimony both rests on a reliable foundation

and is relevant to the task at hand.” Id. at 1306. As the gatekeeper, the Court must

assess whether the “reasoning or methodology underlying the testimony is

scientifically [or technically] valid” and can be properly applied to the facts. Id. at 1306.

As Defendants point out, Mr. Hu’s “methodology” is not a technical one as in Daubert.

Mr. Hu’s report reflects that, in conducting his analysis, he consulted numerous

resources, including national publications and industry reports, as well as discussions

with industry executives. Doc. 99-14 at 18. Rule 703, and case law, clarify that an

expert may rely on facts and data amassed by other experts and use that information

to evaluate the facts and form opinions. See Sanchez-Knutson v. Ford Motor Co., 181 F.

Supp. 3d 988, 992 (S.D. Fla. 2016). (“[T]o the extent that expert opinions are derived

from literature review, witness interviews and data analysis, they are not automatically

rendered unreliable by their non-susceptibility to empirical verification.”); Taylor, Bean

& Whitaker Mortgage Corp. v. GMAC Mort. Corp., 2008 WL 3819752 at *2 (M.D. Fla.,

Aug. 12, 2008). Plaintiff criticizes Mr. Hu’s opinions as being rife with generalizations.

The Court agrees that the facts referenced in the report are somewhat minimal as to

the details of the interviews conducted. However, as the Court will be the fact finder

at trial, Mr. Hu’s reliance on industry reports and national industry statistics is not

speculative and otherwise sufficient to satisfy the reliability prong in these

circumstances.

The fact that Mr. Hu may not have dealt with this exact factual scenario before

is not an automatic counterweight that necessitates the exclusion of his testimony.

Moreover, any potential issues with Mr. Hu’s testimony may be brought out upon

“vigorous cross-examination” and “presentation of contrary evidence.” Daubert, 509

U.S. at 596.

Generally, in a bench trial, “[t]here is less need for the gatekeeper to keep the

gate when the gatekeeper is keeping the gate only for h[er]self.” U.S. v. Brown, 415 F.3d

1257, 1269 (11th Cir. 2005); see also Gibbs v. Gibbs, 210 F.3d 491, 500 (5th Cir. 2000)

(“Most of the safeguards provided for in Daubert are not as essential in a case such as

this where a district judge sits as the trier of fact in place of a jury.”); Ass Armor, LLC v.

Under Armour, Inc., No. 15-cv-20853-CIV-Cooke/Torres, 2016 WL 7156092, at *4

(S.D. Fla. Dec. 8, 2016) (“As this is a bench trial without a jury, however, the need for

an advance ruling to exclude [expert’s] testimony is superfluous and unnecessary.”).

That is because the Court as the fact finder is “presumably competent to disregard

what [s]he thinks [s]he should not have heard, or to discount it for practical and

sensible reasons.” Ass Armor, 2016 WL 7156092, at *4 (internal quotation marks and

citations omitted). At trial, the Court, as fact finder, is free to later decide to disregard

testimony in whole or in part and/or to decide how much weight to give it. See Brown,

415 F.3d at 1270; N.W.B. Imports and Exports, Inc. v. Eiras, No. 3:03-cv-1071-TJC-

MMH, 2005 WL 5960920, at *1 (M.D. Fla. Mar. 22, 2005) (finding in non-jury trial

that gatekeeping purpose of Daubert was not implicated). Accordingly, for this reason

and those stated above, the Court will deny Plaintiff’s motion to exclude Mr. Hu’s

testimony.

B. Motion to Strike

Plaintiff moves to strike (Doc. 117) the supplemental report of Mr. Hu (Doc.

112-1) that Defendants attach to their response to the Daubert motion. In support of its

motion to strike, Plaintiff argues the supplemental report offers new opinions, which

are untimely under the Court’s Scheduling Order. Doc. 117. On August 18, 2020, the

Court entered an amended Case Management and Scheduling Order that set a

deadline for the disclosure of defense expert reports by June 1, 2020. Doc. 63 at 1.

Defendants provided the initial report of Mr. Hu (Doc. 99-14) to Plaintiff on June 1,

2020. They submitted his supplemental report on August 27, 2021 (Doc. 112-1). In the

supplemental report, Mr. Hu reiterates his opinion from the first report that brokers in

China in the same industry as Plaintiff charged a rate of 3.93% to 5.66% over factory

cost. Compare Doc. 112-1 at 5, with Doc. 99-14 at 7.

Plaintiff submits that the supplemental report contains two new opinions that

were not included in the initial report. Specifically, Plaintiff directs the Court to the

following two opinions in the supplemental report, which Plaintiff submits are new

and should be stricken:

[T]here is no identifiable and specific difference between the

broker rate of refrigerant related production and other

chemical products.

[T]he market price for the products at issue during the

relevant time would be the factory cost plus the broker rate,

which would be the price that purchasers like the BMP

entities would have paid in the open market.

Doc. 117 at 5 (quoting Doc. 112-1 at 5).

Defendants have failed to respond to the motion despite being given an

extension of time to do so. See Doc. 123. Thus, the motion is deemed unopposed. See

M.D. Fla. Local Rule 3.01(c). Defendants do not demonstrate that their failure to

timely disclose the two new opinions in the supplemental report was substantially

justified or was harmless. Pursuant to Rule 37, the untimely supplemental report is

due to be stricken to the extent it contains new opinions. Accordingly, it is hereby

ORDERED:

1. Plaintiff T.T. International’s Motion to Exclude the Testimony of

Defendants’ Expert, Mr. Dong “Daly” Hu (Doc. 101) is DENIED.

2. Plaintiff T.T. International’s Motion to Strike Supplemental Report of

Defendants’ proposed Expert, Mr. Dong Hu (Doc. 117) is GRANTED, as to the two

new opinions.

DONE AND ORDERED in Tampa, Florida on March 22, 2022.

Chaken etd GAd_a Mn TDA pl el

Charlene Edwards Honeywell

United States District Judge

Copies to:

Counsel of Record and Unrepresented Parties, if any

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