< PreviousFrom the start, the court questioned whether the Sales Rep Defendants’ objection was actually an FRE 702 reliability issue. The court noted that while couched in terms of the reliability standard, the arguments appear to focus more on how [the expert’s] conclusions will assist the jury rather than the scientific reliability of the methods she used in developing her testimony. Defendants claim that [the expert’s] calculation of a “total damages figure” provides “no way for the jury to discern what specific damages in specific amounts should be awarded against individual defendants.” They also argue that “[the expert] Report’s failure to perform its calculations at the surgeon level is a fundamental flaw and would not aid the trier of fact in assessing the effect of the alleged anticompetitive activity.” Defendants’ arguments are less concerned about [the expert’s] process in reaching her conclusions and are instead primarily focused on how those conclusions will aid the jury in apportioning damages between the several defendants, or how the data [the expert] used in her analysis impacts her ultimate conclusions. (“A jury could spend days on end reviewing the [expert] Report and its exhibits, and it would never be able to determine what damages are attributable to each specific defendant …”). 11 11 2024 U.S. Dist. LEXIS 203564 at *10 (internal citations to the record omitted). 12 The court found that the Sales Rep Defendants’ initial argument, related to Plaintiff not being a party to the NCNDAs, was a legal issue to be determined by the court as an issue of liability. Based on this, it was appropriate for the expert to ignore the issue as she was directed to assume that Plaintiff would establish liability. 13 2024 U.S. Dist. LEXIS 203564 at *17 (emphasis in original, internal citations to the record omitted). The court discussed the expert’s use of the “before and after” and “yardstick” methods to assess Plaintiff’s lost sales and acknowledged that both methods have been recognized by courts as appropriate for measuring lost revenues and, in turn, lost profits. Thus, according to the district court, the expert had met the FRE 702 demand for reliability. The question then was not one of reliability but rather one of relevance and usefulness to the fact finder. The court addressed each of the defendants’ theories in turn. 12 Failure to attribute damages to individual defendants. The defendants insisted that an expert opining on lost profits is required to allocate the alleged lost profits among the defendants. In support of this position, they cited several patent cases discussing the apportionment requirement. The court acknowledged that while patent litigation requirements do not control the instant case, the defendants’ argument could hold some value as the defendants could not be held jointly and severally liable on Plaintiff’s breach of contract claims. “However, this argument does not address the fact that Globus alleges that Defendants acted together to harm Globus’s business interests in Counts III and V of the Third Amended Complaint, which assert tort-based causes of action. The Third Amended Complaint is replete with descriptions of how sales representatives collaborated in their allegedly tortious activities.” 13 40The Value Examiner Legal InsightsWhile the expert’s testimony might not be helpful to the jury in assessing damages for each defendant for their breaches of their individual NCNDAs, it would certainly be useful to the jury in assessing damages for the joint tortious conduct, and should not be excluded on that ground. Calculation of damages at the facility level. The Sales Rep Defendants argued that by calculating damages at the facility level, the expert failed to consider provider-specific reasons for declines in sales. For example, one surgeon who had used Plaintiff’s products left the region to practice elsewhere during the period of the expert’s analysis. In another example, the defendants identified a doctor who had used Plaintiff’s products while the Sales Rep Defendant worked for Sky, but did not purchase a competitor’s products after the sales rep moved to the new distributor, despite his efforts to move the surgeon to the new manufacturer’s products. The standard for exclusion is whether the expert speculates in ways that are unsupported by the uncontroverted evidence in the case. “Perceived flaws in the factual basis of the expert’s report and testimony go to the weight, not the admissibility, of that testimony.” 14 The defendants’ focus on specific contradictions within the evidentiary record are not sufficient to exclude the expert’s testimony but would go to the weight that the fact finder might give to the expert’s testimony. The expert’s exclusion of other factors. The defendants argued that other factors affected Plaintiff’s sales during the relevant period (including, among other things, alleged reputational harm related to issues raised by the U.S. Food and Drug Administration and changes in the market for its products). They claimed that these other causes of reduced sales rendered the expert’s analysis unreliable. 14 2024 U.S. Dist. LEXIS 203564 at *20. 15 2024 U.S. Dist. LEXIS 203564 at *27-28. In support of this proposition, the defendants cited several cases where an expert’s testimony was excluded or narrowed because it was based on (or failed to exclude) alternative factors. The court noted that in the cited cases, the proffered expert had failed to address the fact that some of the plaintiff’s claims had already been dismissed, and the experts had failed to distinguish between the damages caused by the dismissed claims and the remaining claims. The procedural posture of the instant litigation did not reflect that circumstance. While the fact finder might ultimately find in favor of some, but not all, of Plaintiff’s claims, it cannot be assumed at this stage what that outcome would be. “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.” Daubert, 509 U.S. at 596. Therefore, Defendants should challenge [the expert’s] testimony using these traditional methods at trial. 15 The district court denied the motion. The Takeaways The FRE 702 (and Daubert) reliability standard focuses on methodology, not usefulness. When an expert applies methods that have been accepted in multiple courts, exclusion based on reliability is inappropriate. Similarly, when a party challenges an expert’s analysis based on its interpretation of facts, rather than undisputed evidence, exclusion is inappropriate, although the opposing party may use that contrary interpretation to challenge the expert’s credibility. Finally, an expert is not required to allocate alleged damages among individual defendants where the plaintiff has asserted claims that reflect joint activity or result in joint and several liability. Michael J. Molder, JD, CPA, CFE, CVA, MAFF, is the owner of AILA Limited, providing forensic accounting and business valuation services primarily in litigation engagements. Mr. Molder applies over 35 years of experience as a certified public accountant and commercial litigator to analyze financial misconduct claims, value business interests, and investigate fraud. As an expert witness, Mr. Molder has worked with counsel on cases involving family law issues, estate administration/litigation, shareholder disputes, and commercial damages.. Email: molder@LawAndAccounting.com. The standard for exclusion is whether the expert speculates in ways that are unsupported by the uncontroverted evidence in the case. 41March | April 2025 A Professional Development Journal for the Consulting DisciplinesDesigned as a Pathway for new entry candidates to the business valuation and financial forensics profession for training development that if followed over a period of, say, three or four years, will take you, in racing slang, from zero to sixty. The Ultimate Training Path to Excellence is equivalent, in our opinion, to a collegiate master’s program but in business valuation/financial forensics. If you are truly serious about a career in business valuation and financial forensics, and you follow this Path, you will have the foundation for a long, successful, and lucrative career. While on this Path you will be exposed to many of NACVA’s most successful members and instructors, and learn dozens of ways to gain the confidence required to be extremely effective promoting and selling your services. The Ultimate Training Path to Excellence is outlined in the chart and will earn you two certifications—the Certified Valuation Analyst ® (CVA ® ) and the Master Analyst in Financial Forensics ® (MAFF ® ). CPE hours and retail non-member prices are also indicated. This program is available to all members and non-members for a discounted price if purchased with the Ultimate Training and Membership subscription. Parnell Black, MBA, CPA, CVA Chief Executive Officer, NACVACourse Description Non-Member Registration Fee Hours CPE 1) Business Valuation Certification and Training Center 1 $4,19545 2) Industry Standards and Ethics$3052 3) Report Writing: Review and Analysis 2 $82010 Annual retail non-member cost: $5,320 57 hours member cost: $5,207 4) Intermediate Business Valuation: Expanding Upon Your Foundation 3 $2,10024 5) Business Valuation Report Peer Review: Case Analysis 4 $3052 6) Business Valuation: A Practical Approach to Advanced Issues and Applications$2,10024 Annual retail non-member cost: $4,505 50 hours member cost: $4,054 7) Foundations of Financial Forensics Training Center 5 $3,91545 8) Litigation Report Writing Workshop 6 $7208 Annual retail non-member cost: $4,635 53 hours member cost: $4,171 9) Financial Litigation Expert Boot Camp$1,89024 10) Business Valuation in Litigation 7 $1,16015 11) Current Update in Valuations 8 $7208 12) Industry Standards and Ethics 9 $3052 Annual retail non-member cost: $4,075 49 hours member cost: $3,856 If one wishes to follow the Ultimate Training Path to Excellence, the best option for discounted pricing is to subscribe to NACVA’s Ultimate Training and Membership (UTM), which is $4,275 (single-user 10 ) if paid in advance annually, and $375 per month if paid monthly. A UTM subscription includes membership and recertification fees, and it includes any other NACVA sponsored training you wish to attend. However, it does not include either the CVA or MAFF certification exam fees, which are an additional $625 each. If one signs up for a UTM subscription agreeing to pay for two or more years, the certification exam fees are waived 11 . 1 NACVA training to prepare candidates for our CVA exam. 2 Business valuation report writing. 3 This program is yet to be developed but will be in 2025. 4 In this course, members review and critique a valuation report written by another member and is an excellent way to develop and build one’s report writing skills. We recommend this program to be taken repeatedly because each time, one will gain exposure to a different type of report. 5 NACVA training to prepare candidates for our MAFF exam. 6 Learn how to write certain types of reports used in, and required in, some litigation and by the judiciary. 7 Because the Ultimate Training Path starts with business valuation, we recommend as a first step, designees learn more about the litigation experience as it centers around business valuation. NACVA also offers Financial Forensics clinics on the following topics: Bankruptcy, Insolvency, and Restructuring; Business and Intellectual Property Damages; Business Interruptions and Lost Profits; Commercial Damages and Lost Profits; Conducting Fraud Investigations; Cybersecurity: Analysis, Risks, and Actions; Forecasting and Modeling; Matrimonial Litigation; Personal Injury; Wrongful Death. 8 Current Update in Valuations is a highly recommended course for staying abreast of developments in the industry. Another timelier option is Around the Valuation World ® (AVW), which is a monthly webcast addressing industry developments in real time. We recommend AVW as a way to stay on top of industry developments in lieu of or in addition to Current Update in Valuations. 9 This course was recommended in Year 1, but because there are changes to the standards landscape every year, it should be taken every few years. Plus, in the context of litigation, designees must be on top of the standards landscape, otherwise, they will compromise their authority if called to the carpet, so to speak, in a litigation setting. 10 Multi-user pricing is available. 11 Three and four-year commitments receive a 5% and 10% discount, respectively, off both the initial fee and the monthly fees thereafter. YEAR 1 YEAR 2 YEAR 3 YEAR 4 For details and to sign up, visit www.NACVA.com/Ultimate or contact Member/Client Services at (800) 677-2009.NEW! Annual The Value Examiner CPE Exam Package Earn up to 30 hours of continuing professional education (CPE) annually with The Value Examiner CPE Exam Package subscription for only $350. Earn five hours of NACVA CPE for each exam completed. The last six issues of The Value Examiner are available. Log in to My Account on NACVA.com, click "Subscriptions, State Chapters, Committees & Boards" to subscribe and access CPE Exams. Visit www.NACVA.com/ValueExaminer and log in to access an exam. Online exams are available for The Value Examiner issues from 2014 to current. You will be able to purchase, complete, and earn five hours of NACVA CPE* for each exam. You will instantly receive a certificate of completion for each exam you pass. Earn CPE Online by Reading The Value Examiner ® ! * This exam does not qualify for NASBA QAS CPE credit. Individuals should contact their state board or accrediting organization to determine requirements for acceptance of CPE credit. To learn more, please visit www.NACVA.com/ValueExaminer or call Member/Client Services at (800) 677-2009. The Value Examiner CPE exam can now be taken online! Next >