The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
STATESVILLE DIVISION
CIVIL ACTION NO. 5:19-CV-00051-KDB-DCK
EARTHKIND, LLC,
Plaintiff/Counterclaim Defendant,
v.
THE LEBERMUTH COMPANY INC. and
ROBERT M. BROWN,
Defendants/Counterclaim/ ORDER
Third-Party Plaintiffs,
v.
KARI WARBERG BLOCK and JAMES
JOHN BLOCK, II,
Third-Party Defendants.
THIS MATTER is before the Court on Defendants’ and Third-Party Plaintiffs’ (The
Lebermuth Company (“Lebermuth”) and Robert Brown (collectively, “Defendants”)) Motion to
Strike (Doc. No. 84), Plaintiff/Counterclaim Defendant EarthKind, LLC’s (“EarthKind”) and
Third-Party Defendants’ (Kari Warberg Block and James Block (collectively, “the Blocks”))
Motion for Summary Judgment (Doc. No. 86), and Defendants/Counterclaim and Third-Party
Plaintiffs Lebermuth’s and Brown’s Motion for Summary Judgment (Doc. No. 88). Because there
are numerous genuine disputes of material fact that preclude summary judgment in favor of any
party, the Court will deny the motions for summary judgment. The Court will also deny
Defendants’ Motion to Strike and defer ruling on the admissibility of Dr. Tremblay’s expert
testimony.
I. SUMMARY JUDGMENT
Summary judgment may be granted “if the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56.
When ruling on a summary judgment motion, a court must view the evidence and any inferences
from the evidence in the light most favorable to the nonmoving party. Smith v. Collins, 964 F.3d
266, 274 (4th Cir. 2020). “Summary judgment cannot be granted merely because the court believes
that the movant will prevail if the action is tried on the merits.” Jacobs v. N.C. Admin. Office of
the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015) (quoting 10A Charles Alan Wright & Arthur R.
Miller et al., Federal Practice & Procedure § 2728 (3d ed.1998)). “The court therefore cannot
weigh the evidence or make credibility determinations.” Id. at 569 (citing Mercantile Peninsula
Bank v. French (In re French), 499 F.3d 345, 352 (4th Cir. 2007)).
In reviewing the parties’ nearly 150 pages of supporting, opposition, and reply briefs (together
with hundreds more pages of exhibits), one point is abundantly clear—there are multiple genuinely
disputed issues of material fact that make summary judgment for either party inappropriate. In
general, the parties do not dispute the well-established legal rules governing their claims. Rather,
they argue about the application of stridently disputed facts to those standards.
EarthKind and the Blocks move for summary judgment on Defendants’ trade secret
misappropriation, breach of contract, and unfair and deceptive trade practices claims, as well as
all personal claims against Mr. Block and partial summary judgment on the issue of damages for
Defendants’ breach of contract claim. In EarthKind’s and the Blocks’ summary of the facts,
Defendants’ CWO formula was public information and therefore EarthKind never disclosed
confidential information or misappropriated a trade secret. Defendants’ version of events is
markedly different. Defendants argue that EarthKind and the Blocks learned confidential
information through the course of the parties’ relationship, which EarthKind and the Blocks then
used—along with other publicly available information—to reproduce Lebermuth’s CWO. The
parties’ dispute over what evidence was or was not confidential is a question of fact that should be
resolved by a jury and not by the Court on summary judgment. As for the personal claims against
Jim Block, the Court agrees—at this time—that Defendants are entitled to seek damages from Mr.
Block personally in the event EarthKind and Ms. Block contend that Mr. Block’s activities were
outside his scope as an employee of EarthKind.
The Court does not reach (and need not reach at this time) EarthKind’s and the Blocks’
argument for partial summary judgment on damages. A party claiming breach of contract is
generally limited to recovering loss actually suffered, and damages are intended to put the party in
the same position it would have been if the contract had not been breached. See Indiana &
Michigan Elec. Co. v. Terre Haute, Industries, Inc., 507 N.E.2d 588, 602 (Ind. Ct. App. 1987);
Hassett v. Dixie Furniture Co., 425 S.E.2d 683, 685 (N.C. Ct. App. 1993). Royalties, unjust
enrichment/disgorgement, and lost profits may be appropriate alternative methods to prove
Defendants’ damages for their breach of contract claim. Evidence of how Defendants formulate
their loss can be argued at a later time.
Likewise, Defendants’ Motion for Summary Judgment on EarthKind’s claims is based on
various genuinely disputed material facts that preclude summary judgment. For instance,
Defendants argue that the statute of limitations bars EarthKind’s claims, but it is clear from the
parties’ briefs that there are multiple factual disputes that must be decided before the statute of
limitations can be properly applied. EarthKind’s breach of contract and breach of warranty claims
also turn on a number of genuinely disputed facts, as does whether EarthKind justifiably relied on
Defendants’ representations. These factual questions are reserved for the jury and should not be
resolved by the Court on summary judgment.
In sum, the Court finds there are numerous issues of material fact that preclude summary
judgment for either party. The answers to these factual disputes must be found at trial, where the
jury will have a full opportunity to weigh the evidence and assess the credibility of the witnesses.
Accordingly, the Court will deny both motions for summary judgment.
II. MOTION TO STRIKE
Defendants seek to strike EarthKind’s rebuttal expert report by Mario Tremblay, PhD, pursuant
to Federal Rules of Evidence 702 and 403. (Doc. No. 84). Dr. Tremblay issued a written expert
report rebutting the conclusions reached by Defendants’ expert Jim Fuchs. Dr. Tremblay’s report
proffered two conclusions. (Doc. No. 85-1). First, Dr. Tremblay opined that Mr. Fuchs’s report is
incomplete, but even his limited information shows that the products are not duplicates. Second,
Dr. Tremblay opined that Mr. Fuchs’s conclusion that EarthKind reverse engineered CWO (with
assistance from IFF) was incorrect, and that EarthKind had used a trial-and-error process to create
a new formula.
Defendants’ original motion mainly challenged Dr. Tremblay’s second conclusion—that
EarthKind did not reverse-engineer CWO. Defendants argued Dr. Tremblay’s opinion was
contrary to established evidence in the record, specifically the Second Affidavit of David
Ballingall, an IFF employee,1 and the report of Defendants’ independent expert witness, David
Pappas. In addition, Defendants asserted that Dr. Tremblay’s opinion should be excluded for
failure to apply any principles of methodology because Dr. Tremblay did not perform a chemical
1 David Ballingall’s Second Affidavit was issued after Dr. Tremblay’s report, and Dr.
Tremblay did not have Ballingall’s Second Affidavit at the time of his report or deposition.
analysis or even smell the products. Lastly, because of the difficulty in evaluating expert testimony,
Defendants contended that Dr. Tremblay’s report would mislead the jury and should be excluded
by Rule 403.
After Defendants filed their Motion to Strike, EarthKind served Defendants with two
supplements to Dr. Tremblay’s opinion. The first supplement gave Defendants notice that Dr.
Tremblay would rebut the expert report of David Pappas. (Doc. No. 102-1). Like Mr. Fuchs’s
expert report, Mr. Pappas opines that EarthKind’s oil is a duplicate of CWO. Mr. Pappas’s report
was issued on March 12, 2021, months after Dr. Tremblay’s report and deposition. Dr. Tremblay
issued his supplement informing Defendants that he intended to rebut Mr. Pappas’s opinion on
April 12, 2021. However, the supplement to Dr. Tremblay’s report does not explain what parts of
Mr. Pappas’s report he will rebut or how he will rebut Mr. Pappas’s conclusions. It merely states:
This supplemental disclosure provides formal notice that I will also offer rebuttal
testimony to the opinions and testimony of Mr. Pappas. Specifically, I disagree with
Mr. Pappas’s opinion in his report dated March 12, 2021, that the oils he analyzed
are duplicates. I have formed the opinion that the oils Mr. Pappas analyzed are not
duplicates. My opinion is based on the analysis and information in Mr. Pappas’
[sic] lab report, which demonstrates the oils are not duplicates, and my experience
and analysis, as set forth in my expert report.
(Doc. No. 102-1).
The second supplement to Dr. Tremblay’s report withdrew his opinion that IFF did not reverse-
engineer CWO. (Doc. No. 93-1). EarthKind opposes Defendants’ Motion to the extent it seeks to
strike Dr. Tremblay’s two other opinions, namely that he disagrees with Mr. Fuchs’s opinion and
Mr. Pappas’s opinion that the oils are duplicates. EarthKind argues Dr. Tremblay’s report and
testimony are appropriate rebuttal evidence to Defendants’ experts Mr. Fuchs and Mr. Pappas.
Even with the withdrawal of Dr. Tremblay’s opinion that IFF did not reverse-engineer CWO,
Defendants argue in their reply brief that Dr. Tremblay’s opinion should still be stricken because
he “failed to employ any principles or methods to support his opinions, rendering his opinions
untrustworthy and into the realm of ipse dixit.” (Doc. No. 102, at 1).
Under Federal Rule of Evidence 702, “[a] district court considering the admissibility of expert
testimony exercises a gate-keeping function to assess whether the proffered evidence is sufficiently
reliable and relevant.” Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir. 1999).
“Relevant evidence, of course, is evidence that helps ‘the trier of fact to understand the evidence
or to determine a fact in issue.’” Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir. 2017)
(quoting Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 591 (1993)). “Rule 702 was intended
to liberalize the introduction of relevant expert evidence.” Westberry, 178 F.3d at 261
(citing Cavallo v. Star Enter., 100 F.3d 1150, 1158-59 (4th Cir. 1996)). Therefore, the court “need
not determine that the expert testimony . . . is irrefutable or certainly correct . . . . As with all other
admissible evidence, expert testimony is subject to being tested by ‘[v]igorous cross-examination,
presentation of contrary evidence, and careful instruction on the burden of proof.’” Id. (citation
omitted) (quoting Daubert, 509 U.S. at 596).
Federal Rule of Civil Procedure 26 permits parties to submit expert testimony that is “intended
solely to contradict or rebut evidence on the same subject matter identified by another party.” Fed.
R. Civ. P. 26(a)(2)(D)(ii). “Rebuttal evidence is properly admissible when it will explain, repel,
counteract or disprove the evidence of the adverse party.” Crowley v. Chait, 322 F. Supp. 2d 530,
551 (D.N.J. 2004). When offering rebuttal expert testimony, the expert has “no burden to produce
models or methods of their own; they need only attack those of the [opposing party’s] experts. At
a minimum, however, rebuttal experts must meet Daubert’s threshold standards regarding the
qualifications of the expert, sufficiency of the data, reliability of the methodology, and relevance
of the testimony.” Scott v. Chipotle Mexican Grill, 315 F.R.D. 33, 44 (S.D.N.Y. 2016).
Because Dr. Tremblay is a rebuttal expert, he is not required to produce models or methods of
his own; he need only attack the opposing party’s expert opinions. In his written opinion, Dr.
Tremblay criticizes Mr. Fuchs’s lack of chromatograms in his expert report, his conclusion that
EarthKind’s product is a duplication of CWO based on a chart showing the ingredient percentages
of the two oils, and his percentage calculations. Dr. Tremblay bases his opinion off of his
experience as a PhD chemist with over 30 years of experience in the perfume and scent industry.
As a rebuttal witness, Dr. Tremblay’s role is to undermine the soundness of EarthKind’s experts’
conclusions. His report does so, and many of Defendants’ complaints about Dr. Tremblay’s report
can be handled on a rigorous cross-examination. While Dr. Tremblay does not detail his rebuttal
opinion with regards to Mr. Pappas’s report to the same extent as he does Mr. Fuchs’s, his
supplement suggests he will similarly attempt to undermine Mr. Pappas’s report. Based on the
limited briefing before the Court and in light of Dr. Tremblay’s partial withdrawal of his opinion
(which was the main basis of Defendants’ initial Motion), the Court will deny Defendants’ Motion
to Strike at this time. The parties may discuss how to make further challenges to the admissibility
of Dr. Tremblay’s opinion at the status conference and hearing on June 10, 2021.
TI. ORDER
IT IS THEREFORE ORDERED that:
1. EarthKind’s and the Block’s Motion for Summary Judgment, (Doc. No. 86), is
DENIED;
2. Defendants’ Motion for Summary Judgment, (Doc. No. 88), is DENIED;
3. Defendants’ Motion to Strike, (Doc. No. 84), is DENIED;
4. This case shall proceed to trial on the merits in the absence of a voluntary resolution
of the dispute among the parties.
SO ORDERED.
Signed: June 1, 2021
Kenneth D. Bell Cy,
United States District Judge i f