Harrison v. Aztec Well Servicing Co

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

ABILENE DIVISION

STACEY HARRISON, et al.,

Plaintiffs,

v. No. 1:20-CV-038-H

AZTEC WELL SERVICING CO., INC.,

et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

ON MOTIONS TO STRIKE THE EXPERT WITNESSES

Trial approaches. The parties designated experts to testify on damages. Each side

has moved to strike the other’s expert. Both motions are denied in part and granted in part.

The bulk of the damages the plaintiff seeks to recover seems to stem from the demise

of a planned well-development partnership with a group of investors, Tri-Capital. Harrison

alleges that various oilfield-services companies stopped working with him in the wake of the

publication of the allegedly defamatory advertisements by the defendants. That, in turn, led

to the failure of two wells that were to serve as proof-of-concept for Harrison’s new venture

with Tri-Capital. When those wells failed—and, perhaps, when it learned of the

advertisements—Tri-Capital pulled out. Or so Harrison says. A jury will make the final

call as to causation.

Which is why Jacob Adams—the plaintiff’s expert, a CPA—may not testify as to

causation or falsity. He may, however, testify as to the value of the Tri-Capital deal to

Harrison. Bradley Ewing—the defendants’ retained economist—may, in turn, critique

Adams’s methodology and conclusions. But Ewing’s unsupported conclusion that Harrison

suffered no “economic loss” to his “knowledge resource” is inadmissible.

1. Background

The Court’s opinion on summary judgment details the factual and procedural

background of this case. Dkt. No. 235 at 2–12. In short, the plaintiff alleges that the

defendants defamed him by placing a series of advertisements in the style of wanted posters

in local newspapers.1 The advertisements intimated that the plaintiff owes the defendants

millions of dollars. The main questions for the jury are whether the advertisements’ gist is

true or false and whether the defendants may be held liable under a joint-enterprise theory.

If necessary, the jury will also determine what damages are attributable to the defendants’

conduct.

The present disputes focus on that question. Specifically, what expert testimony the

jury will hear as to damages. After outlining the governing law, the Court addresses the

motions to strike, starting with the defendants’ motion to strike the plaintiff’s expert.

2. Legal Standards Governing Expert Testimony

The Federal Rules of Civil Procedure and Evidence—not the Texas Rules—govern

in federal diversity jurisdiction cases. See Grenada Steel Indus., Inc. v. Ala. Oxygen Co., Inc.,

695 F.2d 883, 885 (5th Cir. 1983) (holding that in a diversity action, federal courts apply

federal procedural law, including the Federal Rules of Evidence). Rule 26(a)(2)(B) requires

that an expert report contain: (i) a complete statement of all opinions the witness will

express and the basis and reasons for them; (ii) the data or other information considered by

the witness in forming them, (iii) any exhibits that will be used to summarize or support

them; (iv) the witness’s qualifications, including a list of all publications authored in the

1 The Court granted summary judgment on the plaintiff’s slander claim but did so after briefing on

the instant motions, so some portions of the expert reports are moot.

previous 10 years; (v) a list of all other cases in which, during the previous 4 years, the

witness testified as an expert at trial or by deposition; and (vi) a statement of the

compensation to be paid for the study and testimony in the case. Rule 26(a)(2) is designed

to impose a “duty to disclose information regarding expert testimony sufficiently in advance

of trial that opposing parties have a reasonable opportunity to prepare for effective cross

examination and perhaps arrange for expert testimony from other witnesses. Lofton v.

McNeil Consumer & Specialty Pharms., 3:05-CV-1531-L-BH, 2008 WL 4878066, at *10 (N.D.

Tex. July 25, 2008) (quoting Rule 26 advisory committee’s note to 1993 Amendments)

(Ramirez, M.J.).

The admissibility of evidence is a procedural issue governed by federal law. See Reed

v. General Motors Corp., 773 F.2d 660, 663 (5th Cir. 1985). Federal Rule of Evidence 702

determines the admissibility of expert testimony as evidence. Rule 702 permits opinion

testimony from a witness “‘qualified as an expert by knowledge, skill, experience, training,

or education’ if the expert’s knowledge will assist the trier of fact and (1) ‘the testimony is

based on sufficient facts or data,’ (2) ‘the testimony is the product of reliable principles and

methods,’ and (3) ‘the expert has reliably applied the principles and methods to the facts of

the case.’” Cedar Lodge Plantation, L.L.C. v. CSHV Fairway View I, L.L.C., 753 F. App’x 191,

195 (5th Cir. 2018) (quoting Rule 702).

The trial court acts as a “gatekeeper” to ensure that “any and all scientific evidence

admitted is not only relevant, but reliable.” Daubert v. Merrell Dow Pharms., Inc., 509 U.S.

579, 589 (1993). In performing its gatekeeping function, the Court must permit only expert

testimony that is reliable and relevant. Daubert, 509 U.S. at 589; Wilson v. Woods, 163 F.3d

935, 937 (5th Cir. 1999). The party offering the expert testimony bears the burden of

proving, by a preponderance of evidence, that the testimony is both relevant and reliable.

Mathis v. Exxon Corp., 302 F.3d 448, 459–60 (5th Cir. 2002)).

Expert testimony is relevant if it goes to assisting the trier of fact to understand the

evidence or to determine a fact in issue. Daubert, 509 U.S. at 591. Federal Rule of Evidence

401 further clarifies that evidence is relevant if it has “any tendency to make a fact more or

less probable than it would be without evidence” and if “the fact is of consequence in

determining the action.” See Mathis, 302 F.3d at 460 (applying Rule 401 to expert

testimony). “Relevance depends upon ‘whether [the expert’s] reasoning or methodology

properly can be applied to the facts in issue.’” Knight v. Kirby Inland Marine Inc., 482 F.3d

347, 352 (5th Cir. 2007) (quoting Daubert, 509 U.S. at 593); see also Fed. R. Evid. 702(d)

(requiring that an “expert has reliably applied the principles and methods to the facts of the

case”).

And expert testimony is reliable if “the reasoning or methodology underlying the

testimony is scientifically valid.” Knight, 482 F.3d at 352 (citing Daubert, 509 U.S. at 592–

93); see also Fed. R. Evid. 702(c) (requiring that “testimony [be] the product of reliable

principles and methods”). “The reliability analysis applies to all aspects of an expert’s

testimony: the methodology, the facts underlying the expert’s opinion, the link between the

facts and the conclusion, et alia.” Knight, 482 F.3d at 355. Such testimony must be “more

than subjective belief or unsupported speculation.” Daubert, 509 U.S. at 590. In other

words, the Court need not admit testimony “that is connected to existing data only by the

ipse dixit of the expert.” General Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997). The Court also

need not admit testimony based on indisputably wrong facts. Guillory v. Domtar Indus. Inc.,

95 F.3d 1320, 1331 (5th Cir. 1996).

In conducting its reliability analysis, the Court focuses on the reasonableness of the

expert’s approach regarding the matter to which his testimony is relevant and not on the

conclusions generated by the expert’s methodology. Daubert, 509 U.S. at 595; Kumho Tire

Co. v. Carmichael, 526 U.S. 137, 153–54 (1999). Thus, “[t]he proponent need not prove to

the judge that the expert’s testimony is correct, but she must prove by a preponderance of

the evidence that the testimony is reliable.” Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th

Cir. 2012) (internal quotation marks omitted). If, however, “there is simply too great an

analytical gap between the [basis for the expert opinion] and the opinion proffered,” the

Court may exclude the testimony as unreliable. General Elec. Co., 522 U.S. at 146. The

Court normally analyzes questions of reliability using the five nonexclusive Daubert factors:

(1) whether the expert’s technique can be or has been tested; (2) whether the method has

been subjected to peer review and publication; (3) the known or potential rate of error of a

technique or theory when applied; (4) the existence and maintenance of standards and

controls; and (5) the degree to which the technique or theory has been generally accepted in

the scientific community. Daubert, 509 U.S. at 593–94. Regardless, “the rejection of expert

testimony is the exception rather than the rule.” Fed. R. Evid. 702, advisory committee’s

notes to 2000 Amendment.

The gatekeeping function under Daubert and its progeny applies only to the expert

testimony’s admissibility; it does not extend to its weight, which is properly left to the jury.

United States v. 14.38 Acres of Land, 80 F.3d 1074, 1077 (5th Cir. 1996). “Courts routinely

reject challenges to the admissibility of expert testimony based on arguments that the expert

failed to take into account certain data in forming his or her opinions.” Blottin v. Mary Kay

Inc., No. 3-10-CV-1905-M-BD, 2012 WL 13026814, at *3 (N.D. Tex. Aug. 22, 2012)

(Kaplan, M.J.); see Browning v. Southwest Research Inst., No. SA-05-CA-0245-FB, 2006 WL

6549921, at *2 (W.D. Tex. Aug. 17, 2006) (collecting cases). Indeed, “it is the role of the

adversarial system, not the court, to highlight weak evidence.” Primrose Operating Co. v. Nat’l

Am. Ins. Co., 382 F.3d 546, 563 (5th Cir. 2004). Daubert is therefore not a replacement for

the adversarial process embodied in a trial on the merits. Mathis, 302 F.3d at 461 (citing

Pipitone v. Biomatrix, Inc., 288 F.3d 239, 250 (5th Cir. 2002)). “Vigorous 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.” 14.38 Acres

of Land, 80 F.3d at 1078; accord Dearmond v. Wal-Mart La. LLC, 335 F. App’x 442, 444 (5th

Cir. 2009) (“Cross-examination at trial . . . is the proper forum for discrediting testimony,

and credibility determinations are, of course, the province of [the fact finder].”). Thus, “[a]s

a general rule, questions relating to the bases and sources of an expert’s opinion affect the

weight to be assigned that opinion rather than its admissibility and should be left for the

jury’s consideration.” Viterbo v. Dow Chem. Co., 826 F.2d 420, 422 (5th Cir. 1987).

3. Plaintiff’s Expert2

Harrison designated Jacob W. Adams as an expert as to the damages Harrison

incurred by virtue of the defendants’3 placement of the advertisements. Dkt. No. 90 at 1.

Adams is a CPA who “specializes in financial, economic, and accounting analyses related

to complex commercial litigation, investigations, and arbitration matters.” Id. The

defendants’ law firm has previously retained Adams as an expert, so they understandably do

2 Both sides attached Adams’s report to the motion, response, and reply, even though the report was

previously filed with the Court. Duplicative filings are unhelpful and unnecessary.

3 The defendants will undoubtedly balk at the Court’s use of the plural here. But the Court has

reached no conclusions as to joint-enterprise liability. Rather, it sacrifices precision for brevity.

not challenge Adams’s qualifications as an accountant. Dkt. No. 169 at 2. Instead, they

challenge Adams’s report as unreliable and likely to confuse the jury. Dkt. No. 140 at 9–10.

Adams’s report addresses several issues. First Adams writes that, “[f]rom an

accounting perspective, the Wanted Ads published by the Defendants contained incorrect

information about the Plaintiff.” Dkt. No 91 at 5, 10–17. Second, Adams concludes that,

“[b]ut-for the Defendants’ publication of the Wanted Ads and their communications with

the Plaintiff’s vendors, the Plaintiff’s deal with Tri-Capital would have resulted in a value to

the Plaintiff ranging from $13.1 million to $21.9 million.” Id. at 5, 18–39. Finally, Adams

opines that “[b]ut-for the Defendants’ actions, the Plaintiff would not have incurred long-

term reputational damage.” Id. at 5, 39–40.

The defendants4 object in toto to Adams’s report, arguing that his “opinions are not

based on sufficient facts and data and are not of the type reasonably relied upon by

economists.” Dkt. No. 140 at 4. More precisely, the defendants argue that Adams’s

conclusions do not follow from the evidence he considered and that his opinions are merely

legal conclusions by any other name. Id. The defendants note that Adams’s report proceeds

by a chain of inferences: First, Adams assumes that the advertisements caused certain

projects Harrison was working on to fail when contractors pulled their services in the wake

of the advertisements’ publication; Adams then concludes that the failure of those projects—

in conjunction with Tri-Capital’s learning of the advertisements—led Tri-Capital to end its

involvement with Harrison; then Adams analyzes the expected value of the Tri-Capital deal

to Harrison to arrive at his final figures. Id. at 5–7.

4 Roadrunner’s motion to join (Dkt. No. 141) Aztec’s motion to strike (Dkt. No. 140) is granted.

Having considered the motion, response, reply, and governing law, the Court will

not strike the entirety of Adams’s report. Adams’s report is admissible for its discounted–

cash flow analysis of the Tri-Capital deal. Adams’s financial analysis follows generally

accepted principles. The defendants may quibble with the assumptions Adams makes in

reaching his final figures; that is what cross-examination is for. If the jury concludes that

the advertisements were the cause of the Tri-Capital deal’s demise, the DCF figures will be

helpful.

But Harrison may not rely on Adams as an expert for causation—that is, Adams’s

opinions as to what caused the Tri-Capital deal to fall through are not admissible. Adams’s

opinions on the effect of phone calls on Harrison’s reputation or ability to secure other

opportunities are likewise inadmissible. So, too, is any testimony from Adams about the

falsity of the advertisements from an “accounting perspective”—the Court does not

understand that term and, in any event, Adams’s conclusions are (1) likely to confuse the

jury and (2) would be cumulative with the defendants’ admissions because no one contests

that Harrison owed the defendants nothing. See, generally, Fed. R. Evid. 403. The Court

will, however, allow testimony from Adams as to the GAAP effect of the e-mail from

Harrison to Aztec.

A. Permissible Testimony:

i. Adams’s opinion as to the Tri-Capital deal’s value

Adams’s report undertakes a DCF analysis to demonstrate the losses Harrison

suffered as a result of the Tri-Capital deal going sideways following the advertisements’

publication. Dkt. No. 91 at 32–33. A DCF analysis is a commonly used method of valuing

an enterprise as a going concern. Rather than looking to the value of a business’s assets, a

DCF approximates the present value of an enterprise’s future cash flows, the theory being

that the value of an enterprise is the profit it generates for its owners (thus, the “income

method”). Other methods of valuing enterprises exist. One could compare Company A to

similar firms that have known valuations (either from public markets or private transactions)

and then adjust for the differences by comparing metrics such as the comparators’ price-to-

earnings ratio to the subject firm’s (the “multiples method”). Or one could attempt to

approximate the cost of replicating the subject firm (the “cost method”). Adams

acknowledges the existence of these other methods and explains why a DCF analysis made

the most sense for approximating the value of the Tri-Capital deal to Harrison. Id. at 32–33.

The defendants write that Adams’s report is moral judgment masquerading as an

impartial economist’s opinion. Dkt. No. 140 at 5–6. But the defendants concede that the

valuation contained in Adams’s report is beyond the ken of the average person. Id. The

defendants instead focus their fusillade on Adam’s use of “unreliable base numbers” that

were “made up by the Plaintiff.” Id. But “[c]ross-examination at trial . . . is the proper

forum for discrediting testimony.” Dearmond v. Wal-Mart La. LLC, 335 F. App’x 442, 444

(5th Cir. 2009). And “questions relating to the bases and sources of an expert’s opinion

affect the weight to be assigned that opinion rather than its admissibility.” Viterbo, 826 F.2d

at 422. The defendants are free to test Adams’s assumptions on cross-examination.5 There

5 The defendants write, “Interestingly, Adams’ damage range for the Tri-Capital Deal alone is higher

than the damage range he gives for all of Harrison’s speculative damages. Compare Ex. A at 36

with 28.” Dkt. No. 140 at 7 n.2 (citing Dkt. No. 91 at 38, 30). Had the defendants’ read the rest of

page 36 of Adams’s report, they would understand there is nothing interesting about this fact. The

defendants’ observation is explained by subtraction: “In the event the Tri-Capital Deal had closed

as projected, Mr. Harrison would have sold his HLAD’s interest in Butler #3 and been employed

full time with Tri-Capital, thus unable to generate consulting/contractor income. . . . Therefore, it

would be appropriate to remove the actual income Mr. Harrison received [from his

consulting/contractor income] from the but-for-value he would have received from the Tri-Capital

Deal.” Dkt. No. 91 at 38.

may be reasons to question the choice of a DCF analysis for a firm which has no revenue—

the analysis turns on projections of free cash flows, which a nonexistent firm does not have.

But Adams has presented an opinion rooted in reality whose assumptions are testable. He

has not relied solely on figures provided to him by Harrison; he has incorporated market

conditions, standard discount rates, and the valuations provided by Tri-Capital’s

independent engineer into his analysis. Dkt. No. 91 at 32–37. Moreover, Adams relied on

the letter of intent between Harrison and Tri-Capital rather than Harrison’s proposals to Tri-

Capital. Id. at 9. Whether that letter was a final binding agreement is irrelevant for the

Court’s present purposes. In Texas, a letter of intent can be an enforceable agreement to

agree, or at least a commitment to negotiate in good faith. See Fischer v. CTMI, LLC, 479

S.W.3d 231, 237–38 (Tex. 2016); Karns v. Jalapeno Tree Holdings, LLC, 459 S.W.3d 683 (Tex.

App.—El Paso 2015, pet. denied).6 Because he showed his work and relied on much more

than Harrison’s “champagne dreams” (see Dkt. No. 177 at 3), Adams’s DCF analysis is

reliable.

And it is relevant. As defendants concede, the average juror would have no way of

determining the present value of the cashflows the Tri-Capital deal was expected to

generate. Adams’s valuation would therefore be helpful to a jury tasked with arriving at a

damages figure. Dkt. No. 140 at 5.

The defendants argue that “[a] mere letter of intent is entirely too speculative to

support a damage award. The Tri-Capital Deal never earned a profit. Parties cannot

6 The Court notes that Tri-Capital was based in Delaware. Dkt. No. 91 at 18. If the letter of intent

contemplated that any resulting agreement would be governed by Delaware law, then the letter

may well be an enforceable agreement-to-agree. See SIGA Techs., Inc. v. PharmAthene, Inc., 67 A.3d

330, 350–351 (Del. 2013).

recover anticipated profits when ‘there is no evidence from which they may be intelligently

estimated.’” Id. at 7 (quoting Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d

276, 279 (Tex. 1994)). Explaining why Adams’s analysis of the Tri-Capital deal is valuable

to the jury requires understanding why the defendants’ proposition is incorrect.

Texas law clearly says that, to be awarded as damages, lost profits must be capable of

reasonable calculation. Tex. Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276,

279 (Tex. 1994). But the best estimate for the number of piano tuners in Chicago is not

zero. Harrison and Tri-Capital entered into an agreement in the expectation that they

would at least break even. And, on average, a successful business owner recoups her

expenses; Harrison has demonstrated that he was previously successful in the oil-and-gas

industry. Dkt. No. 91 at 6. The best proxy for the expectation damages a new venture’s

backers suffer when it fails to come into existence is therefore not $0. And Harrison can

establish “with a reasonable degree of certainty” that he did not suffer zero damages.

Here, Harrison has offered a qualified expert who has analyzed the potential value of

the Tri-Capital deal to Harrison under four scenarios, modeling varying costs and levels of

success. Those scenarios are predicated largely on the parties to the Tri-Capital deal’s best

estimates of their success. They—like all entrepreneurs—likely overestimate their prospects

for success. But a jury can properly counterbalance any such overestimation in light of

cross-examination and adverse evidence. To the extent that cases that presume $0 damages

for a new venture might be recast as adopting an information-forcing rule—one that

incentivizes the plaintiff to offer evidence and analysis in support of a damages request—

Harrison offers plenty of information the jury could use to rebut the presumption of $0

damages. At a minimum, if the jury concludes that the advertisements did lead to the

demise of the Tri-Capital deal, the letter of intent took time and effort to negotiate. Separate

and apart from any lost future profits, Harrison incurred expenses—call them marketing

costs—to bring the letter into existence. Those are undoubtedly losses. What is more, the

defendants offer no evidence that the Tri-Capital deal would have caused Harrison to lose

money. Had they done so, their assertion of zero damages might be well-taken. As it

stands, the evidence is that Harrison was entitled to $1 million in guaranteed payments, plus

a salary, from the Tri-Capital deal, in addition to 10% equity in the new venture. Dkt. No.

91 at 9–10.

Were the Court to agree that the best estimate of the Tri-Capital deal’s value is $0,

the Court would commit a more fundamental error: the damages recoverable in a tort action

differ from those recoverable in a contract action. Many of the authorities cited by the

defendants in their argument as to the damages available where a new venture fails to

materialize come from the world of contract law. See, e.g., Tex. Instruments, 877 S.W.2d at

277; SW Battery Corp. v. Owen, 115 S.W.2d 1097, 1097–98 (Tex. 1938). But a contract is not

a tort. As every first-year law student learns, a tortfeasor takes his victims as he finds

them—the so-called “eggshell plaintiff rule.” And while the presumption of zero damages

might make sense for the victim of a breach in a Holmesian, contracts-as-option world, it is

inapposite in the context of tort law, which recognizes rights beyond perform-or-pay. Cf.

Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L. Rev. 457, 462 (1897).

Further, it would be odd to presume, as defendants would have the Court do, that

the innocent party in a tort suit will be unsuccessful in a foiled business venture. Such a rule

would underdeter tortfeasors. The existence of tortious interference as a cause of action

demonstrates as much: even if the underlying contract would have yielded a loss, a

procuring party has an action to deprive an intermeddling party of unjust gains. The

motivating logic behind the rule that a party is entitled to expectation damages is that it

forces the breaching party to internalize all of the counterparty’s costs. That is not the same

logic that drives tort damages, which aim to restore the plaintiff to her pre-tort condition.

And although Harrison has not pleaded a claim for tortious interference, the Court takes

guidance from Texas law on what a plaintiff must prove in order to recover lost profits in a

tortious-interference claim. That law is clear that a plaintiff seeking to recover lost profits

must prove a reasonable probability of a contractual relationship that is more than mere

negotiations. Milam v. Nat'l Ins. Crime Bureau, 989 S.W.2d 126, 132 (Tex. App.—San

Antonio 1999, no pet.). Although the letter of intent may not be a true contract, it is much

more than “mere negotiations” and is strong evidence of a reasonable probability of a

contractual relationship.

Cases like Grob notionally support the defendants’ argument that speculative profits

cannot support a damages award.7 See Burkhart Grob Luft und Raumfahrt GmbH & Co. v. E-

Systems, Inc., 257 F.3d 461 (5th Cir. 2001). But even a cursory reading reveals that there is

more to the story.

Grob was a manufacturer of excellent high-altitude propeller-driven planes, but it

had never made a jet plane before. ARPA—the Advanced Research Projects Agency of the

Department of Defense—was interested in procuring a jet-powered, high-altitude

reconnaissance plane. Grob had a longstanding relationship with E-Systems, a defense

contractor that specialized in what we now call C3ISR—command and control,

7 The defendants also cite Knight v. Sharif, but that is a diversity case applying Mississippi law.

875 F.2d 516, 523 (5th Cir. 1989).

communications, intelligence, surveillance, and reconnaissance. After some initial

trepidation, E-Systems decided it would team up with Grob to bid for the ARPA contract.

The parties entered into an exclusivity agreement and set to work on designs. But when

finalists were chosen, the pair’s design was not among them. To Grob’s dismay, the

ultimate winner was a design submitted by another division of E-Systems—one unrelated to

the Grob partnership. Grob sued for breach of contract, tortious interference, and fraud.

257 F.3d at 463–66.

Judge Reno refused to submit the issue of lost profits to the jury because they were

too speculative. Id. at 466. The Fifth Circuit, applying Texas law, affirmed: “Grob has

produced no evidence that would allow an award of lost profits in this case. If E-Systems

had not committed fraud in the Tier II+ competition, then presumably Grob would have

been able to work with E-Systems exclusively, would have submitted a bid on its own, or

would have teamed with another contractor to submit a bid. However, the fact remains that

ARPA wanted a jet aircraft for this project, which Grob had never built. . . . In sum, no

matter how badly E-Systems might have behaved, Grob produced no evidence that it was

likely to find success in the Tier II+ program.” Id. at 468.

Here, Harrison was not bidding for one contract; he and Tri-Capital had entered into

an agreement to work together in the open market. Contra Grob, 257 F.3d at 468. Harrison

had a history of profitability in the oil-and-gas industry. And it is for the jury to decide

whether the two wells that were to serve as proof-of-concept for Tri-Capital failed because of

the defendants’ actions. Unlike in Grob, where the alleged misconduct was wholly

disconnected from Grob’s lack of experience in jet-aircraft production, the failure of the two

wells in this case may have been caused by the defendants’ alleged misconduct. Restricting

Harrison’s losses to $0 on the supposition that the Tri-Capital venture had not earned any

money would ignore not only that Tri-Capital placed a dollar value on Harrison’s time and

efforts, but the basic aim of tort damages to put a plaintiff in his pre-tort condition.

The economic-loss doctrine further militates against the defendants’ assertions that

$0 is the best estimate of damages in this case. That doctrine seeks to drive contracting

parties to channel disputes arising from contracts into contract law by foreclosing tort

remedies. So, for example, claims of fraud where a contracting party misrepresents her

intent to pay on a contract are not actionable in tort because the parties can adequately

protect their interests through the contracting process. See, e.g., Schreiber Foods, Inc. v. Lei

Wang, 651 F.3d. 678, 680–81 (7th Cir. 2011) (Posner, J.). All of the cases cited by the

defendants and the Grob court can be explained by the economic-loss doctrine: The plaintiff

and the defendant had some sort of contractual relationship and, although the plaintiff may

have brought tort claims, they were interwoven with—they sprung from—the contractual

relationship.8 Presuming zero damages for a new venture in such cases may make perfect

8 Meaux Surface Prot., Inc. v. Fogleman, 607 F.3d 161, 164 (5th Cir. 2010) (“In this diversity

jurisdiction case, we review a jury verdict and judgment in favor of Plaintiff Meaux Surface

Protection, Inc. (“Meaux”) on a claim for breach of fiduciary duty.”); Lovelace v. Sabine Consol.,

Inc., 733 S.W.2d 648, 655 (Tex. App.—Houston [14th Dist.] 1987, writ denied) (“Sabine

Consolidated, Inc., appellee, sued Jesse R. Lovelace, individually and d/b/a Jesse Lovelace

Construction Company, appellant, seeking an accounting and money damages for breach of

contract, breach of fiduciary duty, and fraud.”); Aboud v. Schlichtemeier, 6 S.W.3d 742, 744 (Tex.

App.—Corpus Christi 1999, no writ) (The case arose out of an attempt by the parties to form an

association for the purpose of conducting a cancer treatment center in El Paso.”); Ishin Speed Sport,

Inc. v. Rutherford, 933 S.W.2d 343, 346 (Tex. App.—Fort Worth 1996, no writ) (“Johnny

Rutherford individually and a corporation known as Johnny Rutherford, Inc. sued Ishin Speed

Sport, Inc. for breach of contract and resulting loss of profits.”); Dyll v. Adams, 167 F.3d 945, 946

(5th Cir. 1999) (“This appeal involves a complex business transaction in which the Appellants

agreed to market medical technology owned by the Plaintiff, Dr. Louis M. Dyll.”); DSC Comms.

Corp. v. Next Level Comms., 107 F.3d 322, 325 (5th Cir. 1997) (“After a three week trial, the jury

found Eames, Keeler and Next Level liable for breach of contract, diversion of corporate

opportunity, and misappropriation of trade secrets.”).

sense given that the parties are able to adequately gauge their interest in the venture and

contract accordingly to guard against tort-like contretemps. But here, nothing Tri-Capital

and Harrison could negotiate would adequately protect either side’s interests against an

intermeddler like the defendants. The defendants’ conduct is extraneous to, rather than

interwoven with, the letter of intent between Tri-Capital and Harrison. Leaning on

commercial law—the law of expectation damages—to provide an adequate remedy for such

extraneous torts would fail to place the full costs of a tort on the tortfeasor.

All of this is to say that the defendants’ assertion that Harrison lost nothing due to

the demise of the Tri-Capital deal is shaky at best. To be sure, the jury might conclude that

the defendants committed no tort, or the jury might conclude that the deal’s demise was not

caused by the defendants’ actions. But based on the evidence before the Court, the best

estimate of the value of the Tri-Capital deal to Harrison is not zero, contrary to the

defendants’ implications. See Dkt. No. 140 at 7.

ii. Whether Harrison incurred any liabilities to Aztec under GAAP

Adams offers an opinion as to the potential accounting consequences of Harrison’s

May 3, 2019 e-mail to Jason Sandel. Dkt. No. 91 at 14. He writes that, under the

Generally Accepted Accounting Principles, “Harrison would not have been required to

record any debt or liability related to the Aztec Well Family on his or HLAD’s balance

sheet.” Id. at 14 n.31. Adams’s testimony as to whether the e-mail from Harrison to Aztec

would constitute a liability under GAAP is admissible because that testimony may be useful

to the jury in evaluating either the falsity of the advertisements or the defendants’ state of

mind when the advertisements were placed. As explained below, however, Adams may not

testify as to the contents of the advertisements themselves.

B. Impermissible Testimony:

i. Causation

“Twenty-seven lawyers in the room, anybody know ‘Post Hoc, Ergo Propter Hoc?’

. . .

After it, therefore because of it. It means one thing follows the other, therefore it

was caused by the other, but it’s not always true. In fact, it’s hardly ever true.” 9

Adams’s report states that Harrison and Burkett “understand from the Tri-Capital

investors that the deal ultimately dissolved after the Wanted Ads were published. It is

reasonable to conclude that but-for the Defendants’ actions, the Tri-Capital Deal would not

have dissolved.” Dkt. No. 91 at 19 (emphasis added). As previously explained, that

conclusion requires a chain of inferences: that the defendants’ publication of the

advertisements caused other businesses to refuse to work with Harrison, which in turn

caused the failure of two well projects, which in turn caused Tri-Capital to doubt the

viability of its proposed deal with Harrison.

The defendants object to Adams’s conclusion that the advertisements caused the

deal’s demise, arguing that this is little more than ipse dixit. The Court agrees. Adams offers

no support for his conclusion that the advertisements caused the deal to fall through, nor is

he qualified as an expert in what led Tri-Capital and its investors to get cold feet—he is an

accountant, not a psychologist. To be sure, Adams offers testimony as to general market

conditions in the oil-and-gas industry at the time of the deal’s demise. While that might

show that something other than macroeconomic forces were responsible for Tri-Capital

pulling out, it does not prove that the advertisements—rather than the failure of the two trial

wells—were the proximate cause. Similarly, Adams has no expertise—or evidence—to

9 The West Wing: Post Hoc, Ergo Propter Hoc (NBC television broadcast Sept. 29, 1999).

support his contentions that others ceased doing business with Harrison, thus leading to the

trial wells’ failure, as a result of the advertisements. To the contrary, testimony from those

other individuals indicates that the advertisements played no role in their decisions to cease

working with Harrison. “A district court should refuse to allow an expert witness to testify

if it finds that the witness is not qualified to testify in a particular field or on a given subject.”

Wilson v. Woods, 163 F.3d 935, 937 (5th Cir. 1999) (citations omitted). Accordingly, the

Court must ensure that a particular expert possesses “‘sufficient specialized knowledge to

assist the jurors in deciding the particular issues.’” Tanner v. Westbrook, 174 F.3d 542, 548

(5th Cir. 1999) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 156 (1999)). As to

causation, Adams does not. Adams’s conclusions as to the cause of Harrison’s troubles

therefore amount to little more than post hoc, ergo propter hoc. As such, they are unreliable

and, thus, inadmissible. Hathaway v. Bazany, 507 F.3d 312, 318 (5th Cir. 2007) (“[W]ithout

more than credentials and a subjective opinion, an expert’s testimony that ‘it is so’ is not

admissible.”).

Even if Adams’s report were well supported, the Court would exclude such

testimony under Rule 403. While an expert’s report may encompass an ultimate issue, see

Rule 704(a), the Court would conclude that Adams’s testimony as to causation is likely to

confuse the issues and mislead the jury. The jury’s first task in this case is to determine

whether the advertisements were defamatory. Allowing Adams to testify—under the label

“expert”—as to the advertisements’ effects would muddle the jury’s separate inquiries into

fault and damages.

ii. Falsity

Adams’s report states that the advertisements contained “information about the

Plaintiff that was incorrect from an accounting perspective.” Dkt. No. 91 at 10; see id. at 10–

16. The defendants argue that this testimony should be excluded because it amounts to a

legal conclusion. Dkt. Nos. 140 at 6; 177 at 2–3.

The advertisements’ truth or falsity is a core question for the jury; Adams’s

conclusory testimony that the advertisements are false from an accounting perspective

would muddy the jury’s understanding of its task. Moreover, the conclusions Adams draws

beg the question. That is, Adams assumes that the advertisements claim that Harrison owes

the defendants millions of dollars, and Adams then proceeds to explain why that is not true.

But the question the jury will answer is whether the advertisements claim that Harrison

owes the defendants millions. No one disputes that Harrison did not owe the defendants

anything, as evidenced by the deposition excerpts Adams reproduces in his report. See Dkt.

No. 91 at 11–12 (citing defendants’ multiple admissions that neither Harrison nor HLA&D

owe the defendants any money). Allowing Adams to testify as to the truth or falsity of the

advertisements would thus not only confuse the jury, but would be needlessly duplicative of

the admissions the defendants have already made. Cf. Fed. R. Evid. 403. The assistance of

an expert is not necessary for a jury to accept the defendants’ statements that Harrison owed

Aztec nothing, either personally or from HLA&D. And to the extent that the defendants

argue otherwise—that Harrison somehow assumed liability for Copper Ridge’s debts—

Adams may, as explained above, testify as to the GAAP effects of Harrison’s e-mail to

AWS. Because they are wholly irrelevant to the subjects on which Adams can qualify as an

expert and because they are rooted in nothing more than Adams’s unsupported conclusions,

Adams’s opinions on the accuracy of the advertisements are inadmissible.10

iii. Hearsay regarding phone calls and text messages

The defendants object to the portions of Adams’s report in which he offers opinions

predicated on the defendants’ alleged phone calls to others in the oil and gas industry. Dkt.

No. 140 at 4 (citing Dkt. No. 91 at 16).

The hearsay objection to Adams’s report reveals that not all hearsay is created equal.

Rule 703 does allow an expert to consider hearsay. But that exception is not intended to

sweep so broadly as to allow an expert to shoehorn inadmissible facts into court under the

guise of his expert opinion. Instead, the exception is designed to permit an expert to rely on

sources normally considered by experts in her field when reaching an expert opinion. See

Fed. R. Evid. 703 advisory committee’s note. What a vendor said to Harrison, however, is

not an accounting source. The effects of what a vendor said may be an input into an

accounting analysis, but Adams may not present conclusions as an “expert” on the text

messages, for example, that Harrison allegedly received—his skills as an expert are limited

to the financial impacts of what happened. And Adams does not purport to apply any

expertise to the hearsay evidence; he merely takes it as given. Nor does he explain why

causation is relevant to his DCF valuation. The value of the Tri-Capital deal—the area

where Adams applies his skills and training to data—is unaffected by any communications

to Harrison purportedly induced by Aztec.

10 As previously explained, Paragraphs 32–34 of the report, relating to Harrison’s e-mails with Aztec

over the repayment schedule, may be admitted to show that, under GAAP, that e-mail did not give

rise to a “debt” owed by Harrison. The remainder of Section VI.A of Adams’s report is, however,

inadmissible.

District courts “must serve a gate-keeping function with respect to Rule 703 opinions

to ensure ‘the expert isn't being used as a vehicle for circumventing the rules of evidence.’”

Factory Mut. Ins. Co. v. Alon USA L.P., 705 F.3d 518, 524 (5th Cir. 2013) (quoting In re James

Wilson Assocs., 965 F.2d 160, 173 (7th Cir. 1992) (Posner, J.)). Indeed, “Rule 703 ‘was not

intended to abolish the hearsay rule and to allow a witness, under the guise of giving expert

testimony, to in effect become the mouthpiece of the witnesses on whose statements or

opinions the expert purports to base his opinion.’” Id. (quoting Loeffel Steel Prods., Inc. v.

Delta Brands, Inc., 387 F. Supp. 2d 794, 808 (N.D. Ill. 2005). That is what Adams’s

testimony as to the phone calls and text messages amounts to. The Court will not allow

Harrison to use Rule 703 to launder inadmissible hearsay.

iv. “Additional Observations”

Adams notes “additional key takeaways regarding the Wanted Ads.” Dkt. No. 91 at

17. First, Adams notes—as the Court has, see, e.g., Dkt. No. 235 at 36, 38—that the ads

were placed after the lien was filed. Id. Second, Adams notes the ads’ omission of a named

defendant in the Gaines County action that precipitated the ads’ placement. Id. Finally,

Adams notes that the cost of placing the advertisements far exceeds the cost of a process

server. Id.

None of these additional observations is admissible. Adams offers no scientific basis

for his conclusions; they are not testable. They are conclusory and unsupported. Nor are

they the within the province of an accountant. Allowing Adams to testify to these

observations under the mantle of an “expert” witness would render the term meaningless.

Accordingly, they are inadmissible.

4. Defendant’s Expert

The defendants retained Dr. Bradley Ewing, an economist, to testify “regarding

Plaintiffs’ claimed damages and financial losses resulting from the alleged defamation of

Plaintiff and in response to the expert opinions of Plaintiff’s retained economist, Jacob

Adams, CPA.” Dkt. No. 97 at 1.11 Ewing’s report and addendum offer many critiques of

Adams’s methodology but offers little in the way of conclusions about Harrison’s damages.

What conclusion is offered comes in the form of contradictions: “any economic loss

associated with the events/activities in question that is attributable to Aztec is nonexistent

or negligible to no more than possible delay and transactions costs up to but not beyond the

present day, including any relevant and pertinent ‘breakup fee’, for the relevant past

period.” Dkt. No. 98 at 7. In his addendum, Ewing provides actual numbers: the “delay

time and associated transaction costs” range from $75,704 to $219,038 depending on the

time period a jury deems relevant. Dkt. No. 139 at 6.

Harrison does not challenge Ewing’s qualifications. Instead, he argues that Ewing’s

opinions are neither relevant nor reliable. Dkt. No. 138 at 5.

Unfortunately for the defendants, while Ewing’s report and addendum spend many

words assailing the methodology of the Adams Report, it offers little in the way of support

for his own conclusions regarding damages. So little, in fact, that the conclusions can only

be described as ipse dixit. Unsupported by any evidence and with an undisclosed

methodology—if any at all—Ewing’s conclusion that Harrison suffered “no to negligible

11 Harrison never identified Adams as an “economist,” and Adams never claims to be one, so the

defendants and their expert tilt at windmills when they critique Adams’s work as not that of

“upstanding, respectable economist” (Dkt. No. 207 at 52)—as “unethical,” even (id. at 50). See,

e.g., Dkt. No. 140 at 1, 4.

damages” bears the all the hallmarks of the “sketchy and vague” opinions the Rules

Committee sought to eliminate. Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d

546, 571 (5th Cir. 1996) (citing Rule 26 advisory committee’s note to 1993 Amendments).12

Since it “is fundamentally unsupported . . . it offers no expert assistance to the jury,” and

must be excluded accordingly. Viterbo, 826 F.2d at 422.

A. Critiques of Adams’s Report

The defendants designated Ewing as a responsive expert to rebut Adams’s

calculations. Ewing admits that he has “not gone through and come up with an analysis of

all of these different risks,” referring to the risks he faults Adams for not accounting for.

Dkt. No. 207 at 48. Nor has he calculated the correct factors that one should use in valuing

the Tri-Capital deal. Id. at 49. He criticizes Adams’s use of a ten-percent discount rate for

the Tri-Capital deal while admitting that he has not analyzed what an appropriate rate

would be. Id. at 50.

Harrison does not challenge Ewing’s qualifications as an economist. Nor does he

mount a serious assault on Ewing’s ability to critique Adams’s methodology or conclusions.

Excluding expert testimony is the exception, not the rule, and it will be for counsel and the

jury to decide how much weight to assign Adams’s DCF analysis. Ewing’s criticisms of

Adams’s report are admissible.

12 “The purpose of a ‘detailed and complete’ expert report as contemplated by Rule 26(a) . . . [is to]

prevent an ambush at trial.” In re Enron Corp. Secs., Derivative & ERISA Litig., MDL No. 1446, 2007

WL 5023541, at *1 (S.D. Tex. Feb. 1, 2007) (quoting Ortiz-Lopez v. Sociedad Española de Auxilio

Mutuo y Beneficiena de Puerto Rico, 248 F.3d 29, 35 (1st Cir. 2001)) (cleaned up). Because the Court

concludes that Ewing’s conclusions are unreliable, it need not address whether they satisfy the

requirements of Rule 26—there will be no ambush.

B. Ewing’s Conclusions

Ewing may not, however, offer his own testimony on damages. Two fundamental

flaws characterize Ewing’s opinion and render it inadmissible.

i. Ewing’s opinion is unreliable.

Rule 702 allows an expert to offer his opinions if the expert’s scientific, technical, or

other specialized knowledge will help the trier of fact to understand the evidence or

determine a fact in issue. Nothing about Ewing’s opinion that Harrison suffered zero

damages is rooted in his expertise as an economist. Likewise, it is not the product of

reliable methods. Ewing’s “methodology” cannot be tested because it is unexplained. For

similar reasons and to similar effect, his conclusions cannot be attacked for failing to

incorporate one factor or another—the potential error rate of Ewing’s methods or his

adherence to standards and controls are unknowable. Ewing’s conclusion is entirely rooted

on the supposition that Harrison could go out and deploy his skills in partnership with

another investor—that the marketability of Harrison’s knowledge was unaffected. Putting

aside that such a supposition is both unsupported and irrational, Ewing iterates time and

again in his deposition that the economic analysis he performed was simple. E.g., Dkt. No.

207 at 18, 24, 26, 48, 50. Providing authorities and exhibits in support of that analysis

should have been an easy task, then. And yet no evidence or exhibits are offered to support

his conclusions. Because Ewing’s opinion is fundamentally unsupported, it is unreliable

and inadmissible.

Ewing’s opinion is also contradictory. Ewing writes that the maximum loss

Harrison could have suffered as a result of the defendants’ actions is from “delay time.”

Delay time is essentially opportunity cost. Ewing takes Harrison’s average salary over the

past five years and multiplies it by the amount of time that passed between the Tri-Capital

deal being inked and its demise to arrive at a figure of roughly seventy-five thousand dollars

in losses. Dkt. No. 139 at 6. Or, if the jury wants, more than $200,000, depending on what

time period the jury deems relevant. Id. But Ewing previously concluded that nothing was

recoverable because Harrison’s knowledge of horizontal drilling suffered no “economic

loss” due to the deal’s demise. Dkt. No. 98-1 at 7. Offering alternative scenarios is perfectly

acceptable; that is what Adams did. But Ewing does not explain what changes he makes to

reach his conflicting figures; to explain different outputs, an expert must explain which

variables have been changed. The only explanation that is offered is that a jury might

conclude that Harrison suffered delay-time costs as a result of the defendants’ actions, and

that the jury might vary the amount of time for which Harrison is entitled to such costs.

The implication of that statement is that, in the scenarios Ewing posits where Harrison has

no or negligible “economic losses,” he assumes that the jury holds the defendants harmless.

That is not a permissible basis on which to rest his opinion on damages: Ewing cannot offer

a calculation of damages that is entirely dependent upon a finding of either nonliability or

noncausation. Given that Ewing arrives at two—or four—different figures as to what

Harrison’s damages are, all of which equally unsupported and untestable, the Court

concludes that all of his damages opinions are unreliable.

More fundamentally, Ewing’s conclusion that Harrison suffered no losses (again,

“economic losses,” “damages,” choose your preferred noun) because he could simply find

another investor to team up with is, to use Ewing’s favorite language, nonsensical.13 A bird

in the hand is worth two in the bush. Of course Harrison could have gone out and found

13 Dkt. No. 207 at 21, 24, 31, 32, 34, 36, 45, 46.

another partner. That is not the question, though. The question is what losses Harrison

suffered because the Tri-Capital deal fell apart. Ewing’s opinion sounds in the same register

as a contracting party’s “duty” to mitigate damages. But, as explained above, this is not a

contract case. The defendants, if found liable, are liable for all of the damages proximately

caused by their tortious conduct. And Ewing admits that he took no account of any

reputational damage Harrison suffered, nor did he undertake a valuation of the Tri-Capital

deal. Dkt. No. 207 at 27, 48.

ii. Ewing’s opinion offers the jury no help.

Rather than opine as to the damages Harrison allegedly suffered as a result of the

defendants’ actions—the very thing he was designated as an expert on, see Dkt. Nos. 97 and

98 at 1—Ewing offers an opinion on the economic loss Harrison’s “knowledge resource”

suffered as a result of the defendants’ actions. See Dkt. No. 207 at 33 (“Damages have to

damage the actual asset in this particular case or the knowledge resource that Mr. Harrison

claims to have. To my knowledge, he still has that resource available to him.”).

Throughout his deposition, Ewing waffles and evades the question of whether he actually

offered an opinion on damages—as the law understands the term—by throwing around

words like “economic loss” and by using inapposite classroom examples. Id. at 20, 26, 27,

31, 49. But this is not a classroom exercise; this is federal court, and an expert who has been

designated to testify on “damages” may not hide behind protestations to the effect of “I am

not a lawyer, so I don’t know what you mean by ‘damages.’”

In any event, Ewing’s own classroom example demonstrates why his opinion is

untethered to the issue of damages in this case. He uses an example of a project with a true

value of $1,000 that has been inaccurately valued at $10,000, then concludes that

“[w]hatever the correct value was, if you still have it under your possession, then it’s still

that. There’s no loss.” Id. at 49. Applying this to Harrison’s situation, Ewing says

Harrison suffered no loss due to the Tri-Capital deal’s demise because he still possessed the

“knowledge resource” of how to manage horizontal-drilling projects. Dkt. No. 98-1 at 6–7.

As counsel for Harrison alluded to when deposing Ewing, there is value in having an

agreement with a partner. Dkt. No. 207 at 37. Ewing evaded that point by saying that the

Tri-Capital deal, like all deals, was not guaranteed to succeed. Id. True, but so what?

Simply because Harrison could theoretically find another partner does not mean his

preexisting partnership with Tri-Capital was worthless. The uncontroverted evidence in this

case is that Harrison would have received definite payments and a salary from Tri-Capital

had the deal proceeded. Dkt. No. 91 at 18–19. Those future income streams have an

option value. Yet Ewing’s analysis ignores them entirely. Ewing claims that whatever

benefits the Tri-Capital deal offered, “whether it came in the form of salary, ownership, debt

obligations, however itwould be structured, those benefits are still available to Mr.

Harrison.” Dkt. No. 20 7 at 39. The disconnect between the evidence in this case and

Ewing’s conclusions cannot be chalked up to disagreements about sources or methods.

The gulf between Ewing’s version of damages—“economic loss” to a “knowledge

resource”—and what the jury is asked to evaluate in a defamation case is simply too great

for the Court to admit Ewing’s conclusions. While an expert need not offer an opinion that

is all-encompassing, an expert must offer an opinion that helps the jury. A jury gets no

value from Ewing’s expert opinion that Harrison still has the knowledge that he had before

the Tri-Capital deal fell through. A layperson could testify to the same effect as Ewing

because his opinion “results from a process of reasoning familiar in everyday life” rather

than from “a process of reasoning which can be mastered only by specialists in the field.”

United States v. Yanez Sosa, 513 F.3d 194, 200 (5th Cir. 2008) (cleaned up). It does not take a

doctorate in economics to reach Ewing’s conclusions—just common sense and arithmetic.

Accordingly, Ewing’s opinion as an “expert” offers the jury no help and is inadmissible as a

result.

* * *

The Court notes that Harrison erroneously quoted from a motion to exclude Ewing’s

testimony in a 2014 Western District of Oklahoma case. Dkt. No. 138 at 7–8 (quoting

Defendant’s Motion to Exclude the Testimony of Plaintiff’s Experts Lacy, Wintroath, and

Ewing and Brief in Support at 12, Bernal v. TK Stanley, Inc., No. 5:12-CV-392-R (W.D. Okla.

May 27, 2014) (ECF 92)). Harrison represented that the quoted language was from an

order, not a motion. Id. The defendants correctly point out the error. Dkt. No. 172 at 7.

Judge Russell never said what Harrison says he said. Ewing’s testimony was stricken

anyway: the party who offered Ewing’s testimony failed to respond to the motion to strike,

so Judge Russell granted the motion by default. See Bernal v. TK Stanley, Inc., No. 5:12-CV-

392-R (W.D. Okla. July 1, 2014) (ECF 102). Still, the Court recognizes that no court has

ever said that, because “Dr. Ewing did not show his work, his report is unreliable and thus

inadmissible.” Dkt. No. 138 at 8.

At least, until now: Because Ewing did not show his work, his conclusions are

unreliable and therefore inadmissible. The Court’s task in evaluating the admissibility of

Ewing’s testimony would have been easier had Ewing responded to questions from

Harrison’s counsel. Perhaps that was the point—much heat, little light. Regardless, the

Court has no trouble concluding that Ewing’s conclusions as to the economic loss to

Harrison’s “knowledge resource” are unsupported, irrelevant, and, to the extent they are

relevant, are likely to confuse the issues and mislead the jury. Harrison’s knowledge of

horizontal drilling techniques and his reputation are two different things. The jury’s task is

to determine the harm to the latter, not the former alone. Because Ewing’s testimony only

addresses the former, it is inadmissible.

5. Conclusion

To sum up: Adams’s testimony is admissible for the issues on which he is an

expert—the valuation of the Tri-Capital deal and whether the e-mail from Harrison to

Sandel could give rise to a GAAP-reportable liability. Adams may not testify, however, as

to the cause of the Tri-Capital deal’s demise, whether the advertisements are true or false,

on any of the “additional observations,” or on the defendants’ alleged republication of the

advertisements or their content.

Meanwhile, Ewing’s opinion and testimony as to the alleged flaws in Adams’s

methodology and conclusions are admissible. But his conclusions as to the “economic loss”

to Harrison’s “knowledge resource” are inadmissible because they are wholly unsupported

and of no value to the jury.“

So ordered on January 13, 2022.

Lows WU. Hedy

AMES WESLEY HENDRIX

UNITED STATES DISTRICT JUDGE

“ Ewing testified that he is unaware whether his testimony has ever been stricken or excluded. Dkt.

No. 207 at 14. His testimony has been stricken by a judge of this Court on at least one prior

occasion. PJ Day, LLC v. State Auto. Mutual, No. 5:17-CV-233-C, 2019 WL 10784420 (N.D. Tex.

Feb. 26, 2019) (Cummings, J.). To avoid future confusion as to the Court’s evaluation of their

reports and testimony in this case, counsel for each side is directed to transmit a copy of this order

to their respective expert.

—