Professional Documents
Culture Documents
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IN THE UNITED STATES DISTRICT COUR
FOR THE NORTHERN DISTRICT OF GEORG tr--....:~
ATLANTA DIVISION
ORDER
I. Background
of the country musical duo, Sugarland. Plaintiff Kristen Hall was a part of
the group from its inception until she stopped touring with the band in
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 2 of 35
On July 29, 2008, Plaintiff filed this action, alleging that Defendants
the partnership business, (2) breached the fiduciary duties they owed
addresses (1) the economic life cycle of the Sugarland Act; (2) the Sugarland
Act's forecasted revenues for purposes of assessing past profits; (3) the
(assumed date of trial, filing date of initial complaint, and date Plaintiff left
Act); and (4) the present values of Sugarland's service mark and trademark
1 The Court does not address the parties' dispute as to what decision Plaintiff
made with respect to her continued involvement with the group and Defendants'
understanding of that decision.
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 3 of 35
declaration. In his declaration, Perdue states that (1) he has the specific
his assumptions about the Act's lifecycle are based on documents produced
by Defendants in this litigation; (4) his use of post-valuation date data was
appropriate under the "book of wisdom" doctrine; (5) his choice of royalty
rates is reasonably close and valid for assessing a comparable rate for the
marks; (6) his decision to ignore the tax effects for the profits generated by
declaration [126].
On December 18, 2009, the Court held a hearing during which the
A. Legal Standard
disfavor of motions to strike. In the Eleventh Circuit, "the use of a rule 12(f)
McNair v. Monsanto, 279 F. Supp. 2d 1290, 1298 (M.D. Ga. 2003). Even
remedy. Stephens v. Trust for Public Land, 479 F. Supp. 2d 1341, 1346
B. Analysis
be stricken because it (1) violates the Court's scheduling order as it was not
disclosed prior to the end of the expert discovery period; (2) is a sham
Plaintiff responds that (1) Perdue's declaration does not violate the
supplement his report, and so the declaration does not inappropriately add
Given the case law treating motions to strike with disfavor, the Court
which to grant their motion. Consequently, the Court focuses its analysis
deposition testimony.
Intellectual Property
that he has been involved in fewer than five projects involving actual
valuation of trademarks.
larger circle of his experience. The Court agrees and find Defendants'
argument unpersuasive.
a specific area of the law in which Perdue has not been retained. However,
Plaintiff opines that Perdue never claimed he had testified on the value of a
particular trademark.
The Court finds that the declaration and deposition are not
inconsistent in this respect. Perdue stated both in his deposition and his
a particular trademark, Perdue said no. This is not inconsistent with the
declaration.
inconsistent with his deposition testimony that only one of the publications
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 8 of 35
authored more than one article that deals exclusively with trademark or
trademark or service mark valuation, but that he could not say for sure
allege.
property valuation.
or service marks and that Perdue's response that one presentation did was
5. Parties' Depositions
deposition testimony that he did not read any of the parties' depositions.
While the Court does not necessarily agree with Plaintiffs response,
parties' deposition when drafting his report does not explicitly state that he
C. Conclusion
A. Legal Standard
expert testimony, the Court must consider whether (1) the expert is
326 F.3d 1333, 1340-41 (nth Cir. 2003). Plaintiff, as the proponent of
Perdue's testimony, bears the burden of showing the above three criteria
are met. United States v. Frazier, 387 F.3d 1244, 1260 (2004).
The main issue before the Court is whether Perdue's expert report is
qualifications and the helpfulness of his report in light of the Court's critical
B. Qualifications
expert testimony. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
least eight presentations dealing with valuation topics and at least fourteen
and are not sufficient to prevent Perdue from testifying at trial. See
generally Quiet Tech., 326 F.3d at 1341 ("[AJ district court's gatekeeping
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 14 of 35
role under Daubert is not intended to supplant the adversary system or the
C. Reliability
value of the trademark and service mark at issue in this case. Daubert sets
testimony. The factors include (1) whether the expert's technique or theory
can be or has been tested, that is, whether the expert's theory can be
reliability; (2) whether the technique or theory has been subject to peer
review and publication; (3) the known or potential rate of error of the
standards and controls; and (5) whether the technique or theory has been
94. Even though Perdue is not proffered as a scientific expert, the Daubert
Kumho Tire, 526 U.S. at 149 (holding that the Daubert factors might also
federal court should consider any additional factors that may advance its
Rule 702 analysis." Quiet Tech., 326 F.3d at 1341. In applying the Daubert
criteria and others that may be relevant, the Court must determine if the
unfounded decision. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997).
That is, there must not be too "great an analytical gap between the data and
the opinion proffered." Id. The Court must be assured that the expert is
using the "same level of intellectual rigor that characterizes the practice of
reliable, but each stage must be evaluated practically and flexibly without
Inc., 167 F.3d 146, 155 (3d Cir. 1999). Thus, the Court must focus on the
Also guiding the Court's decision is the fact that "case law after
Daubert shows that the rejection of expert testimony is the exception rather
than the rule." FED. R. EVID. 702 advisory committee's note. "Vigorous
595·
royalty rates when choosing comparable royalty rates; and (4) Perdue
applied the wrong discount rates and did not include the appropriate tax
issues with Perdue's report and potential testimony are best addressed in
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 17 of 35
admissible under Daubert because his methods and data are reliable and
property valuation experts. Plaintiff further opines that the Court must
look at the underlying theories used by Perdue, not whether his testimony
and conclusions are correct, and that if Perdue's testimony is within the
range where experts might reasonably differ, the jury (not the Court)
1. Lifecycle Methodology
trial date (December 31, 2009), the date Plaintiff filed her complaint (July
29, 2008), and the date Plaintiff stopped performing with the Sugarland
commercial success.
predicting the lifecycle of a musical act. Specifically, they contend that his
determine the lifecycle was "really just an observation of fact ... [and]
further contends that case law also allows Perdue to make projections
approach based most notably on the band's recording agreement ... [and]
then explains that he chose three valuation dates because the parties
on Perdue's lifecycle conclusion (March 31, 2015), his bare statements that
which states that district courts are not required "to admit opinion evidence
that is connected to existing data only by the ipse dixit of the expert."
more than a singular statement that the lifecycle date is the result of him
applying accepted methods. In his report, Perdue identifies the data and
the way of a reliable foundation or basis for his opinion); Dukes v. Georgia,
in part because he offered no support for his statements, basis for his
analysis, but his process for reaching his conclusion is provided. See
supportive of reliability the fact that the questioned expert identified the
unreliable because he never explained how his own experience or the texts
evidence.").
relies on and how he used that information eliminates the Court having "to
take a leap of faith and rely on [Perdue's] ipse dixit and assurance that his
2d at 1315. The ipse dixit situation the Joiner court addressed simply does
not exist here. There is not "too great an analytical gap between the data
and opinion proffered," Joiner, 522 U.S. at 146, and the Court does not
have to rely "on naked assurances of the purported expert." Dukes, 428 F.
Supp. 2d at 1315.
financial data for 2006 through 2008. They aver that use of actual data
any of the risk. Defendants also contend that Perdue admits in his
sound valuation principles. Thus, they assert that Perdue should have used
only information known or knowable as of December 20, 2005, and not the
opine that Perdue compounded his error by then ignoring the actual
Perdue's use of actual financial data is acceptable under the book of wisdom
Jenkins Petroleum Process Co., 289 U.S. 689, 698 (1933). Perdue also
claims that his models can be adjusted once the Court determines the
Perdue does not admit in his deposition that his use of actual financial
valuation, he would likely not use actual financial information. He does not
in his report how he valued Plaintiffs ownership interest and provides the
what Perdue did, can insert their own numbers, and consequently are able
the Court should find Perdue's use of post-valuation data unreliable are not
binding precedent. The Court also finds the cases unpersuasive and easily
Defendants."
As for the Sinclair case that Plaintiff cites for the book of wisdom
principle, the court there addressed the value of a patented device. 289
U.S. at 698. In determining the value of the patent, the Court said that
determines the value of a patent many years later. Id. at 699. However, the
out and expos[ing] of light the elements of value that were there from the
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 26 of 35
nonexistent at the time of his offense." Id. As this case involves valuation
on this case for support of Perdue using actual financial data is not entirely
under Daubert.
Perdue uses the relief from royalty method to value the intellectual
property of the Sugarland Act. In his report, Perdue opines that this
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 27 of 35
excluded as unreliable because Perdue lacks a sound basis for his choice of
comparable royalty rates and for his decision to use a weighted average
rate. They claim that his choices lack a basis because he fails to cite any
authority supporting his decision, explain how his experience guided his
this case.
weight of Perdue's testimony, but not the reliability of the method he used.
Perdue. They only challenge the data Perdue used when applying this
by-step what method he used, how he selected information, and how that
merchandise. "
Anson's book, THE INTANGIBLE AsSET HANDBOOK, which states that "there is
premise." Id. at 72. Finally, Perdue notes that all of the rates he developed
were within the rate range that Anson cites as applicable to entertainment
Consequently, the Court finds that the relief from royalty method
in Sugarland. When using this method, Perdue selected a discount rate that
discounted cash flow analysis is flawed because he does not include the
App. 453, 540 S.E.2d 667 (2000), and the alleged Georgia public policy set
shares under the Georgia Revised Model Corporation Act. Plaintiff avers
that the case evinces a Georgia public policy disfavoring minority discounts
Minority Discounts," by Phillip Saunders, Jr. in which the author states that
cash flow method used by Perdue, but rather, his application of that
method to the facts of this case. Their disagreement with his application
goes to the credibility and weight of his testimony. In his report, Perdue
b. Tax Considerations
because he did not perform his analysis on an after-tax basis. Plaintiff and
Perdue respond that Perdue did not tax-affect the earnings being calculated
distributed to the owners for tax purposes and no taxes are paid at the
entity level. In support of his position, Perdue cites several articles showing
Case 1:08-cv-02437-TCB Document 140 Filed 01/07/2010 Page 31 of 35
income streams should be taxed at the entity level. Given this debate, the
performer with Sugarland after December 20, 2005 and for Defendants
musicians and singers Defendants fell within and his various increases to
his selected base salary. It appears that Defendants' main issue with
Plaintiff responds that Perdue relied upon objective data from the
owners/performers.
deduction but not his decision to apply such a deduction. As stated above,
applied the wrong law. For purposes of this motion, the Court evaluates
testimony.
interest; (2) he did not apply the appropriate valuation date for Plaintiffs
Plaintiff asserts that Perdue does use the appropriate law and that
Defendants' arguments are merely their position on the disputed facts that
The Court finds that Defendants' arguments are their position on the
disputed facts, and the Court will not resolve the factual disputes within the
context of this motion. The factual controversy in this case revolves around
the effect of the decision that Plaintiff would not tour with the band in 2006
only their version of the facts is permissible. However, "[w]hen facts are in
versions of the facts," and Rule 702 is "not intended to authorize a trial
court to exclude an expert's testimony on the ground that the court believes
one version of the facts and not the other." FED. R. EVID. 702 advisory
beyond the understanding of the average lay person." Frazier, 387 F.3d at
1263. The Court finds that valuation of the Sugarland business and
IV. Conclusion
DENIED.
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