MULTIPLE ENERGY TECHNOLOGIES, LLC v. UNDER ARMOUR, INC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

MULTIPLE ENERGY )

)

TECHNOLOGIES, LLC,

) 2:20-CV-664-NR

)

Plaintiff, )

)

v. )

)

)

UNDER ARMOUR, INC.,

)

)

)

Defendant.

)

MEMORANDUM OPINION

J. Nicholas Ranjan, United States District Judge

Plaintiff Multiple Energy Technologies, LLC brings various claims against

Defendant Under Armour, Inc. for violation of the Lanham Act; violation of the

Sherman Act; misappropriation of trade secrets; breach of non-disclosure agreement;

tortious interference with contract; tortious interference with prospective business

expectancies; unjust enrichment; unfair competition; conversion; a claim for an

accounting; and a claim for injunctive relief. Following discovery, Under Armour

moved to exclude the expert testimony of MET’s damages expert Peter Wrobel. ECF

252. No party requested an evidentiary hearing.

After careful consideration, the Court will deny the motion, with one

qualification. The Court has questions about Mr. Wrobel’s EBITDA calculation, and

finds that it is necessary to hold an hearing—either at the final pre-trial

conference or at trial, with Mr. Wrobel in appearance—pertaining solely to this

narrow issue.1 So, the Court will hold in abeyance this aspect of the motion, but will

deny the rest of the motion.

1 The Court otherwise finds that an evidentiary hearing is unnecessary, owing to the

well-developed record, including the experts’ reports, the deposition testimony, and

extensive briefing.

BACKGROUND2,3

MET retained Peter Wrobel to (1) calculate Under Armour’s marginal profits

earned on certain infringing product sales; (2) calculate amounts Under Armour owed

or potentially owed to MET under a reasonable royalty on non-MET products; (3)

calculate unpaid royalties Under Armour owes to MET on MET products; and (4)

compile accounting and financial data relevant to MET’s damage claims. ECF 254-

1, p. 2.

LEGAL STANDARD

The Court serves as the “gatekeeper” of expert testimony.

, 509 U.S. 579, 597 (1993); , 526

U.S. 137, 141 (1999). “As gatekeeper, a trial judge has three duties: (1) confirm the

witness is a qualified expert; (2) check the proposed testimony is reliable and relates

to matters requiring scientific, technical, or specialized knowledge; and (3) ensure the

expert’s testimony is sufficiently tied to the facts of the case, so that it fits the dispute

and will assist the trier of fact.” , 949

F.3d 825, 832 (3d Cir. 2020) (cleaned up).

“Qualification refers to the requirement that the witness possess specialized

expertise.” , 320 F.3d 396, 404 (3d Cir.

2003). “[A] broad range of knowledge, skills, and training qualify an expert.”

(citation omitted).

Reliability demands an expert’s conclusions be “based on the methods and

procedures of science, not on subjective belief and unsupported speculation.”

2 The Court writes for the benefit of the parties, who are familiar with the extensive

factual and procedural background, as well as the allegations in the third amended

complaint.

3 Unless otherwise noted, all citations to the record refer to the page number of the

ECF filing stamp on the top of each page (rather than the native page number).

, 849 F.3d 61, 80-81 (3d Cir. 2017) (citation omitted).

In assessing this requirement, “the court looks to whether the expert’s testimony is

supported by ‘good grounds.’” (citation omitted). And whether “good grounds”

exists generally entails consideration of several factors, including:

(1) whether a method consists of a testable hypothesis; (2) whether the

method has been subject to peer review; (3) the known or potential rate

of error; (4) the existence and maintenance of standards controlling the

technique’s operation; (5) whether the method is generally accepted; (6)

the relationship of the technique to methods which have been

established to be reliable; (7) the qualifications of the expert witness

testifying based on the methodology; and (8) the non-judicial uses to

which the method has been put.

, 949 F.3d at 834 (citation omitted). These factors are not, however,

“exhaustive nor applicable in every case.” , 520 F.3d 237,

248 (3d Cir. 2008). Rather, the Court’s “gatekeeping inquiry must be tied to the

particular facts” of the case. , 526 U.S. at 138; at 153 (whether

“specific factors are, or are not, reasonable measures of reliability in a particular case

is a matter that the law grants the trial judge broad latitude to determine”).

Finally, an expert’s conclusions “fit” the case if they “will help the trier of fact

to understand the evidence or to determine a fact in issue.” , 949 F.3d

at 835 (quoting Fed. R. Evid. 702(a)). “This condition goes primarily to relevance[,]”

, 849 F.3d at 81, though it is “higher than bare relevance.”

, 35 F.3d 717, 745 (3d Cir. 1994).

“[T]he burden of proof under FRE 702 is on the proponent of the expert

testimony, not the party moving to exclude that testimony, to establish the

admissibility of that testimony by a preponderance of the evidence.”

, No. 20-1977, 2024 WL 3691607, at *3 (W.D. Pa. Aug. 7, 2024)

(Hornak, C.J.).

DISCUSSION & ANALYSIS

Under Armour doesn’t challenge Mr. Wrobel’s qualifications.4 Instead, it

argues that (1) Mr. Wrobel’s calculation of Lanham Act damages is unsupported,

illogical, implausible, and speculative; (2) that Mr. Wrobel’s projection of future

royalties owed to MET is speculative and unreliable; (3) that his calculation of owed

royalties is unreliable and unsupported; and (4) that his calculation of EBITDA losses

is unreliable and irrelevant. ECF 254.

I. Mr. Wrobel’s calculation of Lanham Act damages is admissible.

Under Armour has two primary arguments against Mr. Wrobel’s Lanham Act

damages calculation. Neither argument is persuasive.

First, Under Armour argues that Mr. Wrobel’s calculation of Under Armour’s

revenue and his estimate of Under Armour’s marginal profits stemming from that

calculation, are “flawed and based on unreasonable and implausible assumptions.”

at p. 6. Those assumptions, Under Armour contends, are that his revenue figure

is based on the total revenues from sales of every Under Armour product containing

Hologenix’s Celliant product, even though: (1) around $53 million is attributable to

“yarn revenue,” or product where Celliant is woven into yarn rather than printed onto

textile, and MET’s Redwave powder isn’t woven; and (2) “yarn revenue” is exclusive

to an Under Armour product line that didn’t utilize any of the allegedly false

advertisements. at 6-7. In other words, Under Armour considers Mr. Wrobel’s

damages calculation to be inadmissible because he lacks support for his decision to

consider 100% of Celliant-containing Under Armour products from July 2017 through

May 2023 “infringing product sales[,]” or sales derived from the alleged false

advertising at 7-9.

4 And after review of the record, the Court concludes that he is qualified.

“To the extent that [an expert’s] opinions [are] predicated upon factual

assumptions . . . , those assumptions must find some support in the record.”

, 920 F.2d 1135, 1142 (3d Cir. 1990) (cleaned up). But these

facts go to liability; Mr. Wrobel is a damages expert, not a liability or causation

expert; and “all damages expert opinions are dependent on the assumption that

liability has been proven.” , No. 15-921,

2021 WL 2778562, at *30 (E.D. Pa. July 2, 2021) (cleaned up);

, 18-1546, 2024 WL 4415194, at *7 (W.D. Pa. Oct. 4, 2024)

(Cercone, J.) (expert was “entitled to base his damages report on the assumption that

[the plaintiff] is solely responsible for the delays because all damages expert opinions

are dependent on the assumption that liability has been proven” (cleaned up)).

Mr. Wrobel’s calculation might overestimate the amount of damages MET

would be entitled to recover. But MET might also establish at trial that damages

include all Celliant-containing products. So this isn’t a basis on which to exclude Mr.

Wrobel’s calculation at this juncture. And since his calculation was based on Under

Armour’s financial data, it has some basis in the record, and is thus based on “good

grounds.” Under Armour can otherwise attack any assumptions on cross.

, 295 F.3d 408, 414 (3d Cir. 2002) (“[T]he burden of

exploring the facts and assumptions underlying the testimony of an expert witness

[is] on opposing counsel during cross-examination.”).5

5 The cases cited by Under Armour in its reply brief don’t instruct otherwise. For

example, Under Armour discusses at length ,

No. 17-7394, 2022 WL 421135, at *15 (S.D.N.Y. Feb. 11, 2022), where the court

excluded a damages expert whose report was “plagued with assumptions” going to

causation. ECF 280, pp. 2-4. But in , there didn’t seem to be causation

evidence in that case to support the damages expert’s liability assumption.

, 2022 WL 421135, at *20 n.6 (“Because Gunderson’s opinions provide no

evidence of causation or injury, his disgorgement analysis will only be relevant to the

extent that ChromaDex can independently demonstrate those. As the Court holds in

an accompanying Opinion and Order, it cannot.”). Since MET concedes that it isn’t

Second, Under Armour criticizes Mr. Wrobel’s failure to consider several things

while calculating his damages figure, like reviewing the at-issue advertisements,

analyzing the effect of the advertisements on consumers, or accounting for the fact

that Under Armour ceased referencing the FDA in any promotions earlier than 2023.

at 7-8.

Given there are “good grounds” for his opinion, “whether [Mr. Wrobel] should

have considered more is an issue that goes to the weight, rather than the

admissibility of his testimony.” , 2024 WL 4415194, at *5 (cleaned up).

The Court thus declines to exclude Mr. Wrobel’s report and testimony

concerning his calculation of Lanham Act damages.

II. Mr. Wrobel’s calculation of future royalties is admissible.

Under Armour argues that Mr. Wrobel’s projection of royalties that Under

Armour would owe MET in the future, around $4.66 million, is speculative and

unreliable, due to three of Mr. Wrobel’s assumptions underlying that calculation: (1)

that MET would have entered into a royalty agreement like the one between Under

Armour and Hologenix; (2) that the agreement would have continued through the end

of 2031; and that (3) sales of Under Armour’s hypothetical products containing MET’s

Redwave would have been equivalent to 100% of the sales during that period of Under

Armour’s products containing Hologenix’s Celliant. ECF 254, pp. 9-10.

Mr. Wrobel’s assumptions are permissible. His assumptions that MET and

Under Armour would have entered into a royalty agreement comparable to the one

that did exist between Under Armour and Hologenix, and the length of that

attempting to establish liability through Mr. Wrobel, is inapposite.

, No. 21-302, 2024 WL 2160845, at *2 (W.D.N.C.

May 14, 2024) (distinguishing similar case relied upon by Under Armour,

, 848 F.3d 292 (4th Cir. 2017), because the expert there was

offered to opine on both causation and damages).

agreement, is supported by the former business relationship between MET and

Under Armour, and Mr. Wrobel’s conversations with MET’s CEO Dr. Shannon

Vissman. Those assumptions are thus “reasonably based on the evidence in the

record[.]” , 540 F. Supp. 2d 563, 570 (E.D. Pa. 2008);

, No. 18-5552, 2021 WL 5980048, at *9 (E.D.

Pa. Dec. 17, 2021) (expert permitted to rely on discussion with executive of defendant

in assuming length of contract renewal);

, No. 04-2936, 2007 WL 624342, at *3 (D. Minn. Jan. 3, 2007) (damages expert

permitted to assume that plaintiff would win contract renewal and the length of that

renewal).6 To the extent other record evidence contradicts the assumptions—like

that MET “made excessive financial demands, [and] was a bad business partner[,]”

ECF 280, p. 6 n.2, or “different capabilities of Celliant and Redwave[,]” ECF 254,

p.10—it is fodder for cross examination.7 , 46 F. App’x 691, 695–96

6 Indeed, the very nature of a reasonable royalty analysis is hypothetical.

, No. 22-276, 2024 WL 4555870, at *2 (D. Del. Oct. 17,

2024) (“Under the reasonable royalty framework of damages permitted under the

[analogue federal Defend Trade Secrets Act (DTSA)], parties rely upon a hypothetical

negotiation analysis to ‘attempt to ascertain the royalty upon which the parties would

have agreed had they successfully negotiated an agreement just before

misappropriation began.’” (cleaned up) (quoting

, 774 F.3d 766, 770 (Fed. Cir. 2014)). So it makes sense for Mr. Wrobel to

assume the parties entered into an agreement like the one that existed between

Under Armour and a company selling an ostensibly similar product.

7 That Mr. Wrobel didn’t independently confirm that the 2031 end date was

reasonable doesn’t warrant excluding Mr. Wrobel’s opinion. Mr. Wrobel didn’t rely

on unverified financial projections; Dr. Vissman’s estimate was just the end date for

Mr. Wrobel’s calculation. , No. 11-0674,

2012 WL 3550040, at *4 (E.D. Pa. Aug. 17, 2012) (excluding expert where reliance on

profit and loss projections were the “linchpin” of that expert’s opinion);

, 311 F.R.D. 124, 138 (M.D. Pa. 2015) (“[T]he crux of the

[] decision and the authorities from which it draws is that experts who use data

in their reports without independently verifying the accuracy or reliability of those

figures fail to satisfy this Circuit’s reliability requirement.”). And, as explained, Mr.

Wrobel have a factual basis for this assumption. The strength of that factual

(3d Cir. 2002) (“An expert is . . . permitted to base his opinion on a particular version

of disputed facts and the weight to be accorded to that opinion is for the jury.”).

The same goes for Mr. Wrobel’s assumption that Under Armour’s hypothetical

sales of Redwave-containing product would have been equivalent to Under Armour’s

actual sales of Celliant-containing product. Under Armour can present facts it

believes undermine that assumption—such that MET allegedly had no employees

since 2018—on cross examination. , 295 F.3d at 414.

The Court therefore declines to exclude Mr. Wrobel’s report and testimony

concerning his calculation of future reasonable royalties.

III. Mr. Wrobel’s calculation of owed royalties is admissible.

Under Armour argues that Mr. Wrobel’s calculation of unpaid royalties that

Under Armour owes MET for sales of Redwave-containing products since January 1,

2018, is unreliable and unsupported, because: (1) he doesn’t refer to any evidence

demonstrating Under Armour failed to pay MET for Redwave deliveries (and

acknowledges his two royalty calculations are “hypothetical”); (2) he doesn’t refer to

any evidence demonstrating there was a “formal agreement” between Under Armour

and MET with respect to the 2017 royalty rate; (3) his assumptions are contrary to

the parties’ 2017 short-term agreement; and (4) in calculating his “blended royalty

rate[,]” he didn’t analyze whether his price-per-unit was realistic. ECF 254, pp.12-

13.

The Court starts with Under Armour’s argument that Mr. Wrobel’s

assumptions are contrary to the 2017 agreement, since Under Armour contends that

that discrepancy means Mr. Wrobel’s entire “premise is flawed[.]” ECF 254, p. 13;

ECF 280, p. 7. Specifically, Under Armour maintains that under the parties’ 2017

basis is for Under Armour to attack at trial.

, 321 F.R.D. 220, 235 (E.D. Pa. 2017) (excluding expert opinion assuming, without

factual basis, “but-for world,” in which plaintiff was first mover in market, contrary

to reality where plaintiff was subject to exclusivity bottleneck).

short-term agreement, “Under Armour paid MET when a unit was ordered, not on a

subsequent consumer sale[.]” ECF 254, p. 13. According to Under Armour, Under

Armour didn’t order additional Redwave units after December 2017, so any post-2017

sales of Redwave-containing products came from inventory, meaning Under Armour

didn’t owe MET anything on those sales.

If Mr. Wrobel’s calculation was contrary to the parties’ agreement, then that

could be a basis to exclude Mr. Wrobel’s testimony for failing to “fit” the facts of the

case. , , 714 F. App’x 35, 39 (2d Cir. 2017) (not

abuse of discretion to exclude expert testimony where expert assumed parties would

have renewed contract but contract gave other party unilateral right to decide

whether to renew it); , No. 06-848, 2008 WL 113842, at *4 (D. Colo.

Jan. 8, 2008) (expert’s testimony could “fit” the case if party could demonstrate

interpretation of ambiguous provision in contract correct).

But there are a few problems with Under Armour’s attempt to exclude Mr.

Wrobel’s opinion on that ground. Neither Under Armour nor MET cites the at-issue

agreement nor includes it as an exhibit.8 Moreover, the Court hasn’t ruled on the

interpretation of that agreement, so excluding Mr. Wrobel’s opinion based on the

meaning of the agreement would be premature. And in any event, as MET states,

there is a factual component to Under Armour’s argument independent of the

agreement’s language; that is, that Under Armour didn’t order any additional

Redwave units after 2017. ECF 273, p. 17. So the Court declines to exclude Mr.

Wrobel’s opinion as to owed royalties for an apparent conflict with the terms of the

parties’ agreement.

As for Under Armour’s remaining arguments, Mr. Wrobel tied his assumptions

to documents in the record. Under Armour can press him on those assumptions at

8 The Court couldn’t find it in the parties’ summary judgment appendices, either.

trial. , 295 F.3d at 414.

The Court therefore won’t exclude Mr. Wrobel’s report and testimony

concerning his calculation of owed royalties.

IV. The Court will hold in abeyance its decision as to Mr. Wrobel’s

calculation of EBITDA losses.

Lastly, Under Armour argues that Mr. Wrobel’s calculation of MET’s earnings

before interest, taxes, depreciation, and amortization (EBITDA) losses between 2014

and 2021 are unreliable and irrelevant because: (1) Mr. Wrobel testified his EBITDA

calculation was not a “damages calculation”; and (2) Mr. Wrobel didn’t attribute the

losses in his calculation “to any particular cause.” ECF 254, p. 13.

The Court agrees that the relevance of Mr. Wrobel’s EBITDA calculation is

unknown. 9 At his deposition, Mr. Wrobel explained that he had no opinion as to its

relevance. ECF 254-2, p. 61:8-25. And MET’s response as to why it’s relevant—

summarily offering “that these damages are relevant and do in fact apply to its

claims[,]” and directing the Court to its discussion about the reasonable royalty

calculation—isn’t helpful. ECF 273, pp. 17-18.

Accordingly, for now, the Court declines to rule on whether Mr. Wrobel’s

EBITDA calculation should be excluded. The Court intends to hold an

hearing—either at the final pre-trial conference or at trial, with Mr. Wrobel in

appearance—as to the calculation and its relevance. , 234

F.3d 136, 152-53 (3d Cir. 2000) (suggesting hearing when the reasons and

foundations for an expert’s opinion are inadequately or confusingly explicated, such

that the district court has no way of determining how the expert arrived at his

9 Under Armour doesn’t specify whether it is attacking relevance under the Federal

Rules of Evidence 401-403, or ’s “fit” requirement. It is of no consequence, as

the Court can’t discern whether it is relevant “fits.”

conclusions).

CONCLUSION

For the reasons discussed above, the Court will leave open the issue of whether

Mr. Wrobel’s calculation of EBITDA losses is admissible. In all other respects, the

Court will deny Under Armour’s motion. ECF 252. An appropriate order follows.

DATED: January 13, 2025 BY THE COURT:

/s/

United States District Judge