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Brc Rubber & Plastics, Inc. v. Continental Carbon Co.

United States District Court, N.D. Indiana, Fort Wayne Division

February 11, 2014



ROGER B. COSBEY, Magistrate Judge.

I. Introduction

On September 8-9, 2013, this Court held a two-day bench trial on the amount of damages due to Plaintiff BRC Rubber & Plastics, Inc. ("BRC"), as a result of Defendant Continental Carbon Company's ("Continental") breach and repudiation of a Supply Agreement between the parties.[1] (Docket # 93-94.) Under the Agreement, Continental agreed to supply all of BRC's requirements for carbon black from January 1, 2010, to December 31, 2014.[2]

At the trial, Michael Cornwell, BRC's Vice President of Materials, testified to BRC's damages resulting from Continental's breach and repudiation of the Supply Agreement, including its "future damages"-that is, what BRC would pay for its carbon black requirements from July 1, 2013, to December 31, 2014, over what it would have paid to Continental under the Agreement. Continental objected to this portion of Cornwell's testimony, contending that future damages could only be proven by expert opinion testimony, and BRC never designated or qualified Cornwell as an expert under Federal Rule of Evidence 702.[3] BRC, however, contended that Cornwell was a lay witness entitled to offer opinion testimony under Federal Rule of Evidence 701. Alternatively, BRC claimed that even if Cornwell's testimony is considered expert testimony, it is still admissible because BRC's failure to identify him as an expert witness was harmless.

The Court heard argument on the matter and admitted Cornwell's testimony over Continental's objection, subject to Continental filing a post-trial motion to strike the testimony. Continental did so on November 1, 2013 (Docket # 99, 100), and the motion is now fully briefed (Docket # 104, 108).

Having considered the record and the parties' arguments, Continental's motion to strike will be GRANTED.

II. Cornwell's Testimony Is Not Admissible as a Lay Opinion

A. Applicable Law

Federal Rule of Evidence 701 allows opinion testimony from a lay witness if the opinions are "(a) rationally based on the witness's perception; (b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702." See King v. Hartford Packing Co., 189 F.Supp.2d 917, 924 (N.D. Ind. 2002). "The last requirement is intended "to eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in lay witness clothing." Von der Ruhr v. Immtech Int'l, Inc., 570 F.3d 858, 862 (7th Cir. 2009) (quoting Fed.R.Evid. 701 advisory committee's notes).

"The advisory committee notes to Rule 701 explain, however, that a business owner or officer is allowed to testify without being qualified as an expert only because that testimony is tied to his or her personal knowledge[.]" Compania Administradora De Recuperacion De Activos Administradora De Fondos De Inversion Sociedad Anonima v. Titan Int'l, Inc., 533 F.3d 555, 560 (7th Cir. 2008). More particularly, the advisory committee notes state:

[M]ost courts have permitted the owner or officer of a business to testify to the value or projected profits of the business, without the necessity of qualifying the witness as an accountant, appraiser, or similar expert. See, e.g., Lightning Lube, Inc. v. Whitco Corp., 4 F.3d 1153 (3d Cir. 1993) (no abuse of discretion in permitting the plaintiff's owner to give lay opinion testimony as to damages, as it was based on his knowledge and participation in the day-to-day affairs of the business). Such opinion testimony is admitted not because of experience, training or specialized knowledge within the realm of an expert, but because of the particularized knowledge that the witness has by virtue of his or her position in the business.

Id. (quoting Fed.R.Evid. 701 advisory committee's notes).

B. Cornwell's Position with BRC

Cornwell has more than twenty years of experience purchasing carbon black in the automotive industry, and has been serving as BRC's Vice President of Materials since 2000. (Tr. 18.) He negotiated the terms of the Supply Agreement for BRC (Tr. 21-22, 37), as well as BRC's purchase of carbon black from other suppliers after the Supply Agreement's termination (Tr. 43-50). Cornwell testified that the methodology he used to estimate BRC's future damages was based upon his work at BRC and his knowledge ...

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