Kerry Bodenhamer Farms, LLC v. Nature's Pearl Corp.

Kerry Bodenhamer Farms, LLC v. Nature’s Pearl Corp., 2018 NCBC 136.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE

SUPERIOR COURT DIVISION

DAVIE COUNTY 16 CVS 217

KERRY BODENHAMER FARMS,

LLC,

Plaintiff,

v. ORDER AND OPINION

ON MOTIONS IN LIMINE

NATURE’S PEARL CORPORATION,

Defendant.

1. This case is scheduled for trial on January 28, 2019. In this Order, the Court

must decide whether to exclude certain opinions offered by each party’s expert

witness.

Wyche, P.A., by Wade S. Kolb, III, Matthew T. Richardson, and Eric B.

Amstutz, and Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by

Kearns Davis, Eric M. David, and Jessica Thaller-Moran, for Plaintiff Kerry

Bodenhamer Farms, LLC.

Nelson Mullins Riley & Scarborough, LLP, by G. Gray Wilson and Lorin J.

Lapidus, for Defendant Nature’s Pearl Corporation.

Conrad, Judge.

I.

BACKGROUND

2. Earlier opinions describe in detail the nature of this case and its procedural

history. See Kerry Bodenhamer Farms, LLC v. Nature’s Pearl Corp., 2018 NCBC

LEXIS 84 (N.C. Super. Ct. Aug. 15, 2018); Kerry Bodenhamer Farms, LLC v. Nature’s

Pearl Corp., 2017 NCBC LEXIS 27 (N.C. Super. Ct. Mar. 27, 2017). Thus, the Court

provides only a short summary here in lieu of a detailed background.

3. This action arises out of a contract dispute. Defendant Nature’s Pearl

Corporation sells juices and related products that require muscadine grapes.

Plaintiff Kerry Bodenhamer Farms, LLC (“KB Farms”) is one of its grape suppliers.

In January 2012, Nature’s Pearl and KB Farms executed a written contract in which

Nature’s Pearl obtained the exclusive right to purchase all of KB Farms’s grapes on

an annual basis for twenty years. As it turns out, the contract lasted just three. The

flashpoint was a single load of grapes delivered in September 2014. After pressing

the grapes, Nature’s Pearl tested the alcohol content of the juice and determined that

it was too high. Nature’s Pearl refused to pay for the load and, several months later,

terminated the contract. KB Farms argues that there was nothing wrong with the

grapes and that, having accepted them, Nature’s Pearl’s termination was without

cause. Each party now accuses the other of breaching the contract.

4. One key issue in this case is whether the September 2014 shipment was

fermented at the time of delivery. Nature’s Pearl contends that it was and intends to

offer Dr. Reza Ghaedian as an expert witness in support of that position. Ghaedian

will opine that the likely cause of fermentation was a two-day delay between the time

that KB Farms picked the grapes and the time that it shipped them. (Br. in Supp. of

Pl.’s Mot. Lim. 2, ECF No. 92.1 [“Pl.’s Br. in Supp.”].) Ghaedian will also testify that

the Brix level, or sugar content, of the grapes was not the cause of the alcohol content

and that it would not have been feasible for Nature’s Pearl to test the alcohol content

of the grapes before pressing them into juice. (Pl.’s Br. in Supp. 2.)*

* In its notice designating Ghaedian as an expert witness, Nature’s Pearl listed five opinions

that he was expected to offer. After KB Farms filed its motion in limine, Nature’s Pearl

5. KB Farms contends that the grapes were not fermented at the time of

delivery. It has pointed to evidence intended to show that Nature’s Pearl combined

the juice from the September 2014 shipment with juice from other growers before

testing it, thus compromising the test results. KB Farms also expects to call Dr.

Barclay Poling as an expert witness to testify that any fermentation in the disputed

shipment likely occurred after delivery and during processing by Nature’s Pearl. (See

Br. in Supp. of Def.’s Mot. Lim. 5, ECF No. 91 [“Def.’s Br. in Supp.”].)

6. Poling is also the damages expert for KB Farms. He opines that KB Farms

suffered lost profits of roughly $150,000 to $200,000 when Nature’s Pearl refused to

accept the 2015 harvest after terminating the contract. (See Def.’s Br. in Supp. Ex. 1

at 14 [“Poling Report”].) He also concludes that KB Farms will suffer future lost

profits of more than $1.7 million through 2031, the end of the contract’s 20-year term.

(See Poling Report 14–15.) These opinions are set out in a sixteen-page report.

7. Each party has filed a motion in limine, seeking to exclude the testimony of

the other’s expert. (See ECF Nos. 90, 92.) The Court held a hearing on December 13,

2018, and the motions are ripe for disposition.

II.

LEGAL STANDARD

8. “A motion in limine seeks pretrial determination of the admissibility of

evidence to be introduced at trial.” State v. Britt, 217 N.C. App. 309, 313, 718 S.E.2d

withdrew two of the five. (See Def.’s Notice of Withdrawal Certain Exp. Op., ECF No. 95

(withdrawing Ghaedian’s testimony that (1) Nature’s Pearl had the right to and timely did

reject the grapes, and also had the right to cancel the contract; and (2) KB Farms’s grape

shipment had “excessive alcohol content”)).

725, 728 (2011). “The trial court has wide discretion in making this advance ruling

and will not be reversed absent an abuse of discretion.” Hamilton v. Thomasville

Med. Assocs., 187 N.C. App. 789, 792, 654 S.E.2d 708, 710 (2007) (quoting Heatherly

v. Indus. Health Council, 130 N.C. App. 616, 619, 504 S.E.2d 102, 105 (1998)).

Furthermore, “[t]he Court’s ruling on motions in limine is interlocutory and ‘subject

to modification during the course of the trial.’” Insight Health Corp. v. Marquis

Diagnostic Imaging of N.C., LLC, 2017 NCBC LEXIS 91, at *6 (N.C. Super. Ct. Oct.

3, 2017) (quoting Hamilton, 187 N.C. App. at 792, 654 S.E.2d at 710).

9. “Expert testimony is governed by North Carolina Rule of Evidence 702,

which is now virtually identical to its federal counterpart and follows the Daubert

standard for admitting expert testimony.” Insight Health Corp. v. Marquis

Diagnostic Imaging of N.C., LLC, 2017 NCBC LEXIS 14, at *39–40 (N.C. Super. Ct.

Feb. 24, 2017) (internal citations and quotation marks omitted). In other words,

North Carolina trial courts now perform the same “gatekeeping role” that federal

district courts have long performed. Daubert v. Merrell Dow Pharms., Inc., 509 U.S.

579, 597 (1993). In applying Rule 702, the Court may look to federal decisions as

persuasive authority. See Insight Health Corp., 2017 NCBC LEXIS 14, at *40.

10. Rule 702(a) sets out a three-part test. First, the “expert testimony must be

based on specialized knowledge that will assist the trier of fact.” Id. at *39. Second,

the expert must be qualified through some combination of appropriate education and

experience. See id. Third, the expert’s testimony must be reliable, meaning that it

is “based upon sufficient facts or data,” is “the product of reliable principles and

methods,” and applies these “principles and methods reliably to the facts of the case.”

Id. at *39–40 (quoting N.C. R. Evid. 702(a)(1)–(3)). “The precise nature of the

reliability inquiry will vary from case to case depending on the nature of the proposed

testimony,” and “the trial court has discretion in determining how to address the

three prongs of the reliability test.” State v. McGrady, 368 N.C. 880, 890, 787 S.E.2d

1, 9 (2016).

III.

PLAINTIFF’S MOTION

11. KB Farms asks the Court to disqualify Ghaedian on the grounds that he

lacks appropriate education and experience. (See Pl.’s Br. in Supp. 2, 3, 4.) It also

argues that his opinions are not based on sufficient facts and data and are therefore

unreliable. (See Pl.’s Br. in Supp. 4, 10.)

12. The requirement that an expert must be qualified has been “liberally

construed.” United States v. Velasquez, 64 F.3d 844, 849 (3d Cir. 1995). “Differences

in expertise bear chiefly on the weight to be assigned to the testimony by the trier of

fact, not its admissibility.” Huss v. Gayden, 571 F.3d 442, 452 (5th Cir. 2009); see also

Holbrook v. Lykes Bros. S.S. Co., Inc., 80 F.3d 777, 782 (3d Cir. 1996) (“[M]ost

arguments about an expert’s qualifications relate more to the weight to be given the

expert’s testimony, than to its admissibility.”). Such is the case here.

13. Ghaedian holds a Ph.D. in food science and technology. (Def.’s Designation

of Exp. 4, ECF No. 60 [“Def.’s Designation”]; see also Br. in Opp’n to Pl.’s Mot. Lim. 3,

ECF No. 94 [“Def.’s Opp’n”].) His master’s thesis related to “muscadine grape juice

components and properties.” (Def.’s Designation 6.) And he served, for a short time,

as a quality assurance manager at a processing facility for muscadine grapes. (See

Def.’s Designation 6, 7.) This combination of education and practical experience,

however brief, is sufficient to qualify Ghaedian as an expert on factors that contribute

to fermentation in muscadine grapes.

14. KB Farms argues that Ghaedian’s experience is stale because his work with

muscadine grapes dates to the early 1990s. (See Pl.’s Br. in Supp. 3.) This is a fair

subject for cross-examination, but it is not disqualifying. KB Farms has not shown

that Ghaedian’s knowledge is too old to be useful to the jury, especially given that he

has remained active in related areas (including other fruits, such as cranberries).

See, e.g., Antioch Co. Litig. Trust v. McDermott Will & Emery, LLP, 2016 U.S. Dist.

LEXIS 114022, at *7 (S.D. Ohio Aug. 25, 2016) (holding that “the fact that [expert]

has not practiced in 23 years” was subject of cross-examination but not disqualifying);

see also Am. Auto. Ins. Co. v. First Mercury Ins. Co., 2017 U.S. Dist. LEXIS 163346,

at *15–16 (D.N.M. Sept. 30, 2017); Ryan v. Nat’l Union Fire Ins. Co., 2010 U.S. Dist.

LEXIS 53910, at *8–9 (D. Conn. June 2, 2010); Pension Comm. of the Univ. of

Montreal Pension Plan v. Banc of Am. Sec., LLC, 691 F. Supp. 2d 448, 479 (S.D.N.Y.

2010); Owens v. Amtrol, Inc., 94 F. Supp. 2d 952, 955 (N.D. Ind. 2000).

15. As to reliability, KB Farms argues that Ghaedian made only a cursory

investigation. (See Pl.’s Br. in Supp. 4, 5.) Ghaedian depended primarily on

information gathered from Achan Smith, a Nature’s Pearl employee who was present

at the time the grapes were received and processed. Ghaedian did not visit Nature’s

Pearl’s processing facility, and during his deposition, he was unfamiliar with some of

Nature’s Pearl’s processes, could not confirm that the sampled grapes all came from

the same grower, and did not review available production records. (See Pl.’s Br. in

Supp. 5, 11–12.)

16. By and large, though, Ghaedian’s anticipated testimony is rooted in

generally accepted scientific principles of fermentation, which do not require

investigation of Nature’s Pearl’s facility. Both parties’ experts agree that muscadine

grapes ripen and mature at different rates in the vineyard and that the Brix level

cannot be the sole cause of excessive alcohol in muscadine grapes. It is also agreed

that a delay between harvesting and delivering grapes enhances the natural

fermentation process. Ghaedian’s understanding of these general principles does not

turn on the particular facts of this case, and the Court sees no reason that his limited

investigation should prevent him from testifying about relevant general scientific

principles. See Strauss Farms, Inc. v. Combs Commodities, Inc., 2005 U.S. Dist.

LEXIS 6965, at *5–7 (D. Kan. Mar. 29, 2005) (allowing expert to testify as to general

principles not based on facts or data specifically related to the case).

17. This includes Ghaedian’s opinion that it would not have been feasible to test

the alcohol content of the grapes until after they were pressed into juice. Ghaedian

does not base this opinion on unique circumstances related to the disputed shipment.

Rather, he opines that it is generally true that grapes must be processed to obtain an

accurate sample. KB Farms disagrees with this view but has not pointed to any basis

to exclude it as unreliable.

18. The quality of Ghaedian’s investigation appears to be relevant only to his

opinion that the most likely cause of the excessive alcohol content was a two-day delay

between the time that KB Farms picked the grapes and the time that it shipped them.

In forming that opinion, Ghaedian relied almost exclusively on information from

Achan Smith, who reported that the Nature’s Pearl employees present at the time of

delivery had (1) collectively sensed that the grapes were fermented, based on a

sufficient sampling procedure, and (2) run their operations normally. Taking the

facts given to him as true, Ghaedian concludes that the fermentation occurred before

delivery, likely as a result of the shipping delay.

19. Although KB Farms argues that Ghaedian should have performed a more

thorough and independent investigation, our Court of Appeals has held that “experts

may rely on data and other information supplied by third parties even if the data

were prepared for litigation by an interested party.” Pope v. Bridge Broom, Inc., 240

N.C. App. 365, 374, 770 S.E.2d 702, 710 (2015) (internal citation, alteration, and

quotation marks omitted). It is also reasonable for an expert to make “assumptions

so long as those assumptions are sufficiently grounded in available facts.” Edison

Wetlands Ass’n v. Akzo Nobel Chems., Inc., 2009 U.S. Dist. LEXIS 119281, at *13

(D.N.J. Dec. 22, 2009). Arguments that the expert’s assumptions are unfounded

typically “go to the weight, not the admissibility, of the testimony.” In re Air Cargo

Shipping Servs. Antitrust Litig., 2014 U.S. Dist. LEXIS 180914, at *117 (E.D.N.Y.

Oct. 15, 2014) (quoting Grand River Enters. Six Nations, Ltd. v. King, 783 F. Supp.

2d 516, 526 (S.D.N.Y. 2011)).

20. Here, it appears to be undisputed that KB Farms shipped the disputed

grapes two days after picking them, and Achan Smith’s testimony supports

Ghaedian’s assumption that there were no unusual processing delays at Nature’s

Pearl’s facility after delivery. Ghaedian’s assumptions are therefore sufficiently

grounded in available facts. Whether the assumptions are correct is not a question

the Court can or should resolve. To the extent KB Farms disagrees with Ghaedian’s

assumptions, it is free to cross-examine him about them and also the scope and

substance of his investigation. “A party confronted with an adverse expert witness

who has sufficient, though perhaps not overwhelming, facts and assumptions as the

basis for his opinion can highlight those weaknesses through effective cross-

examination.” Stecyk v. Bell Helicopter Textron, Inc., 295 F.3d 408, 414 (3d Cir. 2002).

21. Accordingly, the Court concludes that Ghaedian is qualified to testify as an

expert in this area and that his testimony is sufficiently reliable to satisfy Rule 702.

The Court denies Plaintiff’s motion to exclude his testimony.

IV.

DEFENDANT’S MOTION

22. Nature’s Pearl seeks to exclude Poling’s testimony as to the likely cause of

fermentation in the September 2014 shipment and as to the lost profits incurred by

KB Farms after the termination of the parties’ contract. The Court considers each in

turn.

A. Causation

23. Nature’s Pearl argues that Poling is not qualified to testify in the area of

fermentation and that, even if he is, his opinion on the likely cause of fermentation is

unreliable. (See Def.’s Br. 1–2, 5, 6.) The Court disagrees on both counts, more or

less for the same reasons that support denying KB Farms’s motion to exclude

Ghaedian.

24. Poling’s education and experience are sufficient to qualify him as an expert

in this area. Poling is a professor at North Carolina State University, with

substantial experience in agricultural economics. (Poling Report 2; see also Br. in

Opp’n to Def.’s Mot. Lim. 2, ECF No. 100 [“Pl.’s Opp’n”].) He holds a Ph.D. in

pomology and viticulture—the science of growing fruit and the study of grape

cultivation, respectively. (Poling Report 2.) Moreover, much of his experience is

specific to muscadine grapes. (See Poling Report 2.)

25. Nature’s Pearl contends that Poling is not an expert in fermentation because

he testified in his deposition that he is “not an expert in that area.” (Def.’s Br. in

Supp. Ex. 2 at 62:17–18.) Viewing Poling’s testimony in context, though, the Court

does not construe his statement as an admission that he is unqualified. Rather,

Poling made clear that he is knowledgeable about fermentation because of his

experience with muscadine grapes. (Def.’s Br. in Supp. Ex. 2 at 62:14–64:12, 74:15–

75:1.) The Court is satisfied that Poling’s experience will allow him to educate a lay

jury about the general principles at issue (which, as noted, are largely undisputed).

Nature’s Pearl may question Poling about his qualifications on cross-examination,

just as KB Farms may do so with Ghaedian. See, e.g., Holbrook, 80 F.3d at 782.

26. The Court also concludes that Poling’s causation opinion is sufficiently

reliable. Poling’s report clearly states the assumptions upon which he bases his

opinion, including, for example, that KB Farms shipped the grapes under

refrigeration. (See Poling Report at 8.) As discussed, the Daubert standard “does not

preclude testimony merely because it may be based upon an assumption.” In re TMI

Litig., 193 F.3d 613, 677 (3d Cir. 1999). Nature’s Pearl contends that Poling failed to

take into account the two-day delay between harvesting and shipping, but arguments

that Poling should have relied on better or different assumptions go to the weight of

his testimony, not its admissibility. See In re Air Cargo, 2014 U.S. Dist. LEXIS

180914, at *117, 118; see also Synergetics, Inc. v. Hurst, 477 F.3d 949, 955 (8th Cir.

2007) (“As a general rule, the factual basis of an expert opinion goes to the credibility

of the testimony, not the admissibility, and it is up to the opposing party to examine

the factual basis for the opinion in cross-examination.” (quoting Bonner v. ISP Techs.,

Inc., 259 F.3d 924, 929 (8th Cir. 2001))).

27. The Court denies Nature’s Pearl’s motion to the extent it seeks to exclude

Poling’s causation opinion.

B. Damages

28. Poling divides his damages opinions into two parts. In section 8 of his

report, Poling calculates the lost profits that KB Farms incurred when Nature’s Pearl

refused to accept its 2015 harvest. (See Poling Report 8–14.) In section 9, Poling

calculates future lost profits that KB Farms expects to incur through 2031. (See

Poling Report 14–15.)

29. Nature’s Pearl asks the Court to exclude both. It argues that Poling’s

calculations are speculative and methodologically flawed, and therefore unreliable

under Rule 702.

1. Lost Profits for 2015

30. After Nature’s Pearl terminated the parties’ contract, KB Farms tried,

without success, to sell its 2015 harvest to others. As the grapes ripened, they were

left on the vine and lost. Employees of KB Farms surveyed the vineyard at that time

in an effort to estimate the crop’s yield potential. Poling cites this yield study in his

report and relies on its data as one factor in estimating lost profits for the 2015

harvest.

31. Nature’s Pearl argues that Poling’s use of this 2015 yield study renders his

opinion unreliable. It points, first, to Poling’s deposition testimony in which he

characterized the study as “biased.” (See Def.’s Br. in Supp. 7.) As Poling explained,

the employees who carried out the study attempted to choose representative vines

but did not employ sampling techniques throughout the vineyard. (See Def.’s Br. in

Supp. 7; Pl.’s Opp’n 5–6.) Although Poling attempted to account for that issue by

making adjustments, Nature’s Pearl contends that those adjustments were arbitrary.

(See Def.’s Br. in Supp. 8–10.)

32. The Court disagrees. Although Poling acknowledged in his deposition that

the 2015 yield study was not sophisticated, he stressed that it produced good, useful

data. (See Def.’s Br. in Supp. Ex. 2 at 82:12–19; see also Pl.’s Opp’n 6.) His report

provides ample support for that conclusion and demonstrates a thorough

understanding of both the methods that were used and the nature of the data it

produced. (See Poling Report 8–14.) Poling described the study as “biased” only in

the sense that it had been conducted by laypersons, not that KB Farms manipulated

the results.

33. Furthermore, Poling did not accept the 2015 yield study at face value. He

determined, based on his experience and other historical data, that the yield

estimates were too high, even for an excellent growing season. (See Poling Report

11.) He then adjusted the yield figures to provide a more accurate estimate of the

2015 crop yield. (See Poling Report 11; see Pl.’s Opp’n 7, 8.)

34. These adjustments were not unreliable, as Nature’s Pearl contends. As an

example, Poling compared the 2015 data with yield data from KB Farms’s previous

harvests. In doing so, Poling excluded the 2013 harvest, which was largely lost due

to adverse weather conditions. (See Poling Report 10.) Nature’s Pearl characterizes

this decision as arbitrary, designed to artificially inflate the expected crop yield. Not

so. Poling explained that 2015 was an excellent year for growing conditions. (See

Poling Report 9.) By contrast, 2013 was an abnormally poor year, which KB Farms

does not dispute. Had Poling used data from 2013 to assess the accuracy of the 2015

yield study, it would not have been an apples-to-apples comparison. Poling’s

exclusion of the 2013 data is therefore reasonable and does not render his opinion

unreliable. The Court has considered Nature’s Pearl’s arguments about Poling’s

other adjustments and finds them equally unpersuasive.

35. There is one final matter, though, that could affect the admissibility of

Poling’s opinion. Nature’s Pearl argues that Poling improperly inflated his

calculation by using a contract price of $700 per ton, which reflects a $500 market

price plus a $200 premium. Nature’s Pearl argues that the contract’s price term does

not include a $200 premium over and above the market rate. KB Farms, by contrast,

argues that it does. Whether it was reasonable for Poling to add a premium depends

on the outcome of this interpretive dispute. In a separate Order, the Court has

directed the parties to brief the issue and, as a result, defers a final decision as to the

reliability of Poling’s calculation of lost profits for the 2015 harvest.

2. Future Lost Profits

36. Finally, in section 9 of his report, Poling calculates future lost profits for the

years 2017 through 2031—in other words, the profits KB Farms would have received

through the end of the contract’s 20-year term had Nature’s Pearl not terminated it.

Nature’s Pearl seeks to exclude this opinion for a variety of reasons.

37. “Damages for breach of contract may include loss of prospective profits

where the loss is the natural and proximate result of the breach.” Mosley & Mosley

Builders v. Landin, Ltd., 87 N.C. App. 438, 446, 361 S.E.2d 608, 613 (1987). “Absolute

certainty is not required but evidence of damages must be sufficiently specific and

complete to permit the jury to arrive at a reasonable conclusion.” Weyerhaeuser Co.

v. Godwin Bldg. Supply Co., 292 N.C. 557, 561, 234 S.E.2d 605, 607 (1977) (citation

and quotation marks omitted). The injured party must prove its lost profits with

“reasonable certainty,” not “hypothetical or speculative forecasts of losses.” Iron

Steamer, Ltd. v. Trinity Rest., Inc., 110 N.C. App. 843, 847, 431 S.E.2d 767, 770 (1993)

(internal citation and quotation marks omitted).

38. Nature’s Pearl argues that Poling’s calculation of future lost profits is

speculative. It notes, among other things, that Poling assumed “that all variable

expenses such as harvesting and trucking costs will remain constant over the 20-year

contract duration.” (Def.’s Br. in Supp. 12.) This assumption, Nature’s Pearl

contends, is unfounded because “[c]ommodities such as oil prices change over time,

as do labor costs.” (Def.’s Br. in Supp. 12.)

39. In response, KB Farms does not predict that variable costs will, in fact,

remain stable from now until 2031. Rather, KB Farms argues that Poling was not

required to project future changes to variable costs. According to KB Farms, if Poling

had adjusted costs for inflation, “he would have needed to similarly inflation-adjust

the projected revenue numbers. Instead, he reached the same result by adjusting

neither the revenue figures nor the cost figures for inflation.” (Pl.’s Opp’n 12.)

40. This approach is deeply flawed. For one thing, Poling provides no reasoned

basis for it. His report cites no economic principle that would support holding costs

and revenues steady in today’s dollars in lieu of projecting future costs and revenues

and then discounting them to present value. Nor does he cite any basis to support an

assumption that costs and revenues will increase over time at exactly the same rate.

That alone is a sufficient reason to exclude his opinion as unreliable. See Praxair,

Inc. v. Airgas, Inc., 2000 NCBC LEXIS 5, at *26 (N.C. Super. Ct. Aug. 14, 2000)

(excluding expert opinion based on “an undisclosed methodology”); see also TK-7 Corp.

v. Estate of Barbouti, 993 F.2d 722, 733 (10th Cir. 1993) (“In order to establish future

lost profit damages with reasonable certainty, the plaintiffs at a minimum were

required to present testimony fully explaining how the projection of future sales was

calculated and the factors upon which it was based.”); Foraker v. Schauer, 2005 U.S.

Dist. LEXIS 46071, at *23 (D. Colo. Sept. 8, 2005) (excluding expert who “failed to

provide any competent evidence of either the discount or the inflation rate” and “used

a legally improper methodology for calculating plaintiffs’ future losses”).

41. There is also good reason to conclude that Poling’s approach is contrary to

sound economic principles. It is highly likely that KB Farms’s revenues would be

subject to different market pressures than its production costs (e.g., labor and fuel)

would be. As costs go up, a producer such as KB Farms may seek to increase its price,

but whether the market would support that increase is a question of consumer

demand. How consumers respond to price increases changes from industry to

industry, and it could be that the demand for muscadine grapes is not overly sensitive

to price. But Poling says nothing about the demand side of the equation, and it would

be unreasonable to assume, as he apparently does, that price increases have no effect

on demand at all. See JMJ Enters., Inc. v. Via Veneto Italian Ice, Inc., 1998 U.S. Dist.

LEXIS 5098, at *22–25 (E.D. Pa. Apr. 15, 1998) (excluding expert’s testimony as to

lost profits because his failure to project increased costs was unreliable).

42. Poling’s approach also guarantees an inflated profit total. As part of his

calculation, Poling assumes that the contract’s price term includes a $200 premium

above market rates. As time goes by, inflationary pressures are sure to reduce the

value of that premium. A $200 premium in 2031 could be worth $150 or less in today’s

dollars, depending on the rate of inflation. By holding the contract price steady in

today’s dollars through 2031, Poling negates the impact of inflation and effectively

increases the premium over time. Because the premium accounts for most of KB

Farms’s expected profits, this error artificially inflates its damages demand by a

substantial margin.

43. In light of these unsupported and speculative assumptions, the Court

concludes that Poling’s calculation of future lost profits is unreliable and not the

product of sound methodology. His opinion is therefore not admissible and should

not be heard by the jury. As the Fourth Circuit has persuasively observed, “[s]crutiny

of expert testimony is especially proper where it consists of an array of figures

conveying a delusive impression of exactness in an area where a jury’s common sense

is less available than usual to protect it.” E. Auto Distribs., Inc., v. Peugeot Motors of

Am., Inc., 795 F.2d 329, 338 (4th Cir. 1986) (internal citation and quotation marks

omitted); see also Henkle v. Cumberland Farms, Inc., 2017 U.S. Dist. LEXIS 217367,

at *5–6 (S.D. Fla. June 20, 2017) (excluding damages opinion not based on sound

economic principles); Chesapeake Corp. v. Sainz, 2002 U.S. Dist. LEXIS 28702, at

*56–61 (E.D. Va. Mar. 19, 2002) (same); KW Plastics v. United States Can Co., 131 F.

Supp. 2d 1289, 1293–94 (M.D. Ala. 2001) (same).

44. The Court therefore grants Nature’s Pearl’s motion to exclude Poling’s

calculation of future lost profits, including the opinions stated in section 9 and Exhibit

3 of his report. Having reached this conclusion, the Court does not address Nature’s

Pearl’s other bases for excluding Poling’s calculation of future lost profits.

V.

CONCLUSION

45. For the reasons set forth above, the Court, in the exercise of its discretion,

ORDERS as follows:

46. The Court DENIES Plaintiff’s motion to exclude Ghaedian’s testimony.

47. The Court GRANTS Defendant’s motion to exclude Poling’s testimony as to

future lost profits but DEFERS its ruling as to Poling’s calculation of lost profits for

the 2015 harvest, pending resolution of the parties’ dispute about the proper

interpretation of their contract’s price term. In all other respects, the Court DENIES

Defendant’s motion.

SO ORDERED, this the 27th day of December, 2018.

/s/ Adam M. Conrad

Adam M. Conrad

Special Superior Court Judge

for Complex Business Cases