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govinfo:USCOURTS-njd-1_12-cv-02999-6
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NEWBORN BROS. CO., INC.,
Plaintiff,
v.
ALBION ENGINEERING COMPANY,
Defendant.
1:12-cv-02999-NLH-AMD
OPINION
APPEARANCES:
JOHN-PAUL MADDEN
TIMOTHY R. BIEG
MADDEN & MADDEN
108 KINGS HIGHWAY EAST, SUITE 200
P.O. BOX 210
HADDONFIELD, N.J. 08033
Attorneys Plaintiff Newborn Bros. Co., Inc.
JEFFREY M. SCOTT
ARCHER & GREINER, PC
ONE CENTENNIAL SQUARE
P.O. BOX 3000
HADDONFIELD, N.J. 08033
KERRI E. CHEWNING
ARCHER & GREINER
1025 LAUREL OAK ROAD
VOORHEES, N.J. 08043
Attorneys for Defendant Albion Engineering Company.
HILLMAN, District Judge
Pending before the Court is Plaintiff Newborn Bros. Co.,
Inc.’s (“Newborn”) motion in limine to exclude Defendant Albion
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Engineering Company’s (“Albion”) expert Samuel J. Kursh, D.B.A.,
replacement expert Brett A. Margolin, Ph.D., and related
documents. (ECF 546). For the reasons expressed below, the
motion will be denied.1
I. Background
The Court presumes the parties’ familiarity with the facts
of this case and the relevant reports and portions of the
record.
On February 22, 2016, Kursh issued an expert report
responding to Newborn’s expert as to potential profit
disgorgement and itself calculating purportedly appropriate
disgorgement, if necessary. (ECF 246-4). Newborn moved to
preclude Kursh’s testimony and introduction or use of materials
not produced during discovery, asserting that Kursh relied on
data and information not provided to Newborn and that Kursh’s
proposed testimony was not reliable or relevant as required by
Federal Rule of Evidence 702. (ECF 210; ECF 211). In a June 6,
2017 order, the Court deferred its decision on the motion, if
necessary, to the remedy stage of trial. (ECF 258 at 2).
1 After orally advising the parties of its decision during the
December 11, 2023 motion hearing, the Court heard testimony from
Margolin on December 14, 2023, prior to the issuance of this
opinion. The Court’s perception of that testimony only served
to confirm the conclusions of this opinion that Margolin’s
testimony satisfied the Daubert admissibility standard.
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The Court has since issued an opinion and order on
liability that concluded “that equity weighs in favor of
disgorging Albion’s profits,” (ECF 363 at 107-08; ECF 364), and
an opinion and order granting in part Albion’s Federal Rule of
Civil Procedure 52(c) motion pertaining to its unclean-hands
defense, (ECF 410; ECF 411). The parties convened for a status
hearing on August 21, 2023, during which Albion’s counsel
informed the Court that Kursh has retired and is no longer
available to testify for health reasons. (Aug. 21, 2023 Hearing
Tr. 3:25-4:6). The Court permitted “Margolin to act as a
substitute expert and issue a supplemental report that
reflect[ed its] decision on unclean hands and any other relevant
rulings.” (Id. at 7:21-23).
2
Margolin issued his report on October 27, 2023. (ECF 426-1
at 4-51). Newborn filed its pending motion in limine on
November 24, 2023, (ECF 426), to which Albion filed an
opposition, (ECF 431).
2 The Court further stated its intention to deny a motion to
exclude Kursh as moot due to his unavailability. (Aug. 21, 2023
Hearing Tr. 7:19-20). The Court therefore denies Newborn’s
since-filed motion as moot to the extent that it seeks to
preclude the opinion or testimony of Kursh. As set forth below,
to the extent that the parties dispute whether full disclosure
of the data underlying each of the competing expert opinions was
available to the other, the Court is satisfied that the
proffered experts in the disgorgement phase have had equal
access to relevant data both for purposes of their affirmative
opinions and effective cross-examination.
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II. Discussion
A. Jurisdiction
The Court exercises original jurisdiction over this matter
pursuant to the Lanham Act, see 15 U.S.C. § 1121(a), and 28
U.S.C. 1331. It exercises supplemental jurisdiction over
Newborn’s common-law claim. See 28 U.S.C. § 1367(a).
B. Expert Testimony
Pursuant to the Federal Rules of Evidence, “[a] witness who
is qualified as an expert by knowledge, skill, experience,
training, or education may testify” if it is shown that it is
more likely than not that their “scientific, technical, or other
specialized knowledge will help the trier of fact to understand
the evidence or to determine a fact in issue”; their testimony
is based on sufficient facts or data and reliable principles and
methods; and their opinion represents a reliable application of
those principles and methods to the facts of the case. Fed. R.
Evid. 702. Rule 702 refers to a trier of fact as opposed to a
jury and therefore “applies whether the trier of fact is a judge
or a jury.” UGI Sunbury LLC v. A Permanent Easement for 1.7575
Acres, 949 F.3d 825, 832-33 (3d Cir. 2020). An expert’s opinion
may be based on facts or data that the expert personally
observed or was made aware of, and such facts and data need not
be admissible in order to be relied upon. Fed. R. Evid. 703.
The Third Circuit Court of Appeals has imposed a “trilogy
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of restrictions on expert testimony: qualification, reliability
and fit.” Langbord v. U.S. Dep’t of Treasury, 832 F.3d 170, 194
(3d Cir. 2016) (quoting Schneider ex rel. Estate of Schneider v.
Fried, 320 F.3d 396, 404 (3d Cir. 2003)). Qualification
requires that the witness possess specialized knowledge, skills,
training, or expertise. Krys v. Aaron, 112 F. Supp. 3d 181, 189
(D.N.J. June 12, 2015) (citing Schneider, 320 F.3d at 404).
Reliability demands “that the testimony be based upon ‘the
“methods and procedures of science” rather than on “subjective
belief or unsupported speculation”’ and that the expert have
‘“good grounds” for his or her belief.’” Id. (quoting Calhoun
v. Yamaha Motor Corp., U.S.A., 350 F.3d 316, 321 (3d Cir.
2003)). Finally, fit is a “‘helpfulness’ standard” that refers
to the testimony’s relevance and ability to assist the
factfinder. Id. at 190 (quotations omitted) (quoting Schneider,
320 F.3d at 404).
The proponent of the expert testimony bears the burden of
establishing each requirement by a preponderance of the
evidence. Ford v. Ford Motor Co., 311 F. Supp. 3d 667, 673
(D.N.J. Oct. 27, 2017). District courts exercise considerable
discretion in admitting or excluding expert opinion and
testimony. See Pineda v. Ford Motor Co., 520 F.3d 237, 243 (3d
Cir. 2008) (noting that district courts’ decisions to admit or
exclude expert testimony are reviewed for abuse of discretion).
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Finally, when – as here – a party seeks to present a
substitute expert, courts within the Third Circuit have
generally sought to prevent prejudice to the opposing party by
“ensuring that the testimony is ‘substantively similar to the
original expert’s opinions and limited to the same matters.’”
See, e.g., Sikkelee v. Precision Airmotive Corp., No. 4:07-CV-
00886, 2021 WL 392101, at *5 (M.D. Pa. Feb. 4, 2021) (quoting
Lefta Assocs., Inc. v. Hurley, No. 1:09-CV-2487, 2013 WL
12239510, at *2 (M.D. Pa. Feb. 13, 2013)). That is because the
purpose of permitting substitution is to place the proponent in
the same position that they would have been but for the need to
substitute their original expert, not place them at an advantage
with the benefit of a new or more beneficial opinion. Id.
(citing Shipp v. Arnold, No. 4:18-CV-4017, 2019 WL 4040597, at
*2 (W.D. Ark. Aug. 27, 2019)).
III. Analysis
Newborn’s motion raises three primary arguments: the data
on which Kursh and Margolin relied was not provided in
discovery, Margolin’s report steps beyond merely supplementing
Kursh’s original report, and Margolin’s opinions otherwise fail
to meet the standard of Federal Rule of Evidence 702. The Court
addresses these arguments in turn.
a. The Underlying Data
Newborn submits that Kursh and Margolin both rely on two
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summary spreadsheets – DTX-173 and KURSH 1A. (ECF 426-2 at 36).
With respect to KURSH 1A, it is unclear who created the summary
and the underlying data was not produced in discovery, according
to Newborn. (Id. at 36-37). Albion counters that DTX-173 was
produced in discovery and KURSH 1A was produced on August 9,
2017 and – like DTX-173 – contains 2000-2015 sales data kept in
the ordinary course of business, the type on which professionals
like Margolin regularly rely. (ECF 431 at 5-7). Albion adds
that, though KURSH 1A was excluded as substantive evidence, it
was not precluded for use in expert testimony and Newborn is not
prejudiced by use of the data sets as it has had both in its
possession for six years and may probe any reliability issues
via cross-examination. (Id. at 6 n.2, 7 n.3).
The Court agrees with Albion. It is reminded that “[i]f
experts in the particular field would reasonably rely on those
kinds of facts or data in forming an opinion on the subject,
they need not be admissible for the opinion to be admitted.”
Fed. R. Evid. 703; see also Viking Yacht Co. v. Composites One
LLC, 613 F. Supp. 2d 637, 645 n.11 (D.N.J. May 14, 2009)
(rejecting an argument that scholarly articles and testimony
relied upon by the expert were inadmissible hearsay and thus an
impermissible basis for the opinion, finding that such evidence
was reasonably relied upon among those in the expert’s field and
thus appropriate for the expert to have used).
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Faced with a somewhat analogous situation in which the
plaintiff sought to exclude documents not disclosed in discovery
or disclosed after the discovery deadline, a court in the
Central District of California declined to preclude experts from
relying on unproduced documents provided that they were
disclosed in the experts’ reports because “nothing in Rule 703
of the Federal Rules of Evidence bars reliance on appropriate
documents as the basis for an opinion.” Gray v. Mazda Motor of
Am., Inc., No. SACV 08–279, 2009 WL 10673335, at *1-2 (C.D. Cal.
Feb. 6, 2009). Here, Margolin’s report specifically identifies
the documents relied upon, including DTX-173 and KURSH 1A. (ECF
426-1 at 36). Furthermore, the Court’s conclusion here is
consistent with its statement during the 2017 trial in which it
excluded KURSH 1A as substantive evidence but expressly reserved
its potential use in forming the basis of expert opinion.
(Trial Tr. 4014:15-25). The Court will therefore deny Newborn’s
motion on this basis.
b. Margolin’s Report as Compared to Kursh’s
Next, Newborn argues that Margolin’s report exceeds the
Court’s invitation to supplement and update Kursh’s original
report. (ECF 426-2 at 22). Rather than update Kursh’s opinions
to account for the Court’s subsequent rulings, Margolin eschewed
the opinions, methods, and assumptions of Kursh’s report on the
way to developing an entirely new one, according to Newborn.
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(Id. at 22-24). Albion counters that each party was provided an
opportunity to revise their expert reports and there is no basis
for exclusion due to Margolin’s failure to adopt Kursh’s
conclusions. (ECF 431 at 19). Circumstances have changed since
Kursh’s report, according to Albion, particularly with the
Court’s opinions on liability and Albion’s unclean-hands
defense. (Id. at 9-10).
The Court acknowledges that while it permitted Margolin “to
act as a substitute expert and issue a supplemental report that
reflect[ed its] decision on unclean hands and any other relevant
rulings,” (Aug. 21, 2023 Hearing Tr. 7:21-23), it did so
“assuming [Albion’s] view of the case [wa]s likely to be
similar, just updated,” (id. at 7:14-15). Kursh’s report
contained an overview section including background information
on the parties, their sales, and the caulking-gun market absent
from Margolin’s report; limited its calculation to new customers
as “the only group that could have been affected by the alleged
false advertising and product marking”; and attributed to Albion
an existing brand recognition of quality and value, (ECF 246-4
at 5-11, 17-18). Margolin, meanwhile, concluded that consumers
who valued country of origin were only willing to pay a premium
of fifteen percent – eliminating Albion guns beyond that cap
from economic competition – and that repeat B-Line customers
were aware of the guns’ Taiwanese manufacture and thus made
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subsequent purchases for reasons unrelated to country of origin.
(ECF 426-1 at 16-19).
Admittedly, Margolin’s opinions depart from Kursh’s more
significantly than the Court anticipated during its August 21,
2023 hearing, but that does not render his opinions wholly
surprising. Nearly eight years have passed since Kursh’s
original report and the Court has issued opinions on both
liability and unclean hands in the interim. It would have been
unhelpful to the Court for Margolin to not have considered these
decisions and the record from which they arose. It is not that
Albion has shifted its proffered expert opinions to ambush
Newborn. It has simply reacted – understandably - in response
to the Court’s sequential opinions.
The Court further finds that it would be unfair to Albion
to prevent its expert from opining on decisions, testimony, and
other evidence that may be beneficial to its position.
Substitution of an expert ought not result in a windfall for the
proponent, but it also should not unfairly disadvantage it. See
Lefta Assocs., Inc., 2013 WL 12239510, at *4 (excluding a
paragraph from the defendants’ substitute expert’s report but
permitting a response to the plaintiffs’ potential related
testimony). A substitute expert opinion is generally admissible
when it does not prejudice the opposing party, a standard that
considers the time available to depose the substitute expert and
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prepare for cross-examination. Id. at *2 (citing Ferrara &
DiMerucio v. St. Paul Mercury Insurance Co., 240 F.3d 1 (1st
Cir. 2001) in which substitution three months prior to trial was
not deemed prejudicial).
Though Margolin issued his opinion just a month-and-a-half
ago, Newborn has already deposed him as provided by the Court
and has had adequate opportunity to prepare for cross-
examination as evidenced by its thoughtful briefing in support
of its motion, the contents of which – as will be restated below
– the Court finds to be most appropriate for cross-examination.
The Court will therefore deny Newborn’s motion on this basis.
c. Margolin’s Report Under the Rule 702 Standard
Finally, and most substantially, Newborn argues that
Margolin does not have the requisite expertise to render
industry-specific opinions, has not calculated profit
disgorgements for Lanham Act violations, lacks familiarity with
the caulking-gun industry and related competition, and opines on
a fifteen-percent premium cap above which purchasers are
attributed as possessing a “revealed preference” for Albion that
did not account for factors such as distributors’ complete
refusal to buy from Newborn based on American-made preferences.
(ECF 426-2 at 24-28). Margolin’s report suffers from additional
defects including unreliable methods and assumptions, failure to
“fit” the facts as presented during the liability stage, and
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findings that purportedly seek to unravel the Court’s holdings
at the liability stage. (Id. at 28-35).
Albion responds that Margolin’s methods fit this case
because purchasers consider multiple factors – including country
of origin, price, and quality – and Margolin’s opinion includes
the parties’ understanding of competition and competition-
related testimony elicited at trial. (ECF 431 at 11).
Margolin’s fifteen-percent cap is supported by trial testimony –
cited in the Court’s liability opinion – on the premium at which
witnesses believed American manufacture was valued while trial
testimony further supports Margolin’s conclusion that repeat
purchasers of B-Line guns would understand that they were
imported. (Id. at 12-14, 16-18). Newborn’s argument against
Margolin’s use of weighted averages in comparing sales goes to
weight as opposed to admissibility, according to Albion. (Id.
at 15-16).
The Court premises its decision on the principle that “Rule
702 prescribes
‘a liberal policy of admissibility’” and is
therefore a rule of inclusion rather than exclusion. See Krys,
112 F. Supp. 3d at 190 (quotations omitted) (quoting Pineda, 520
F.3d at 243). The Third Circuit has applied a liberal
interpretation to Rule 702’s qualification requirement. See
Pineda, 520 F.3d at 244. In that same vein, the standard for
reliability is “not that high” and “lower than the merits
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standard of correctness,” Karlo v. Pittsburgh Glass Works, LLC,
849 F.3d 61, 81 (3d Cir. 2017) (quoting In re TMI Litig., 193
F.3d 613, 665 (3d Cir. 1999)), while a similar standard applies
for fit, see McGarrigle v. Mercury Marine, 838 F. Supp. 2d 282,
293 (D.N.J. Dec. 20, 2011) (noting that the standard for fit is
“not that high” but “higher than bare relevance” (quoting In re
Paoli R.R. Yard PCB Litig., 35 F.3d 717, 745 (3d Cir. 1994))).
A court abuses its discretion when it excludes an expert
simply because the expert is not deemed to be the best qualified
or specialized in the area considered most appropriate, see
Pineda, 520 F.3d at 244, and “admissibility is not based on
whether an expert’s ‘opinion has the best foundation, or even
whether the opinion is supported by the best methodology or
unassailable research,’” UGI Sunbury LLC, 949 F.3d at 834
(quoting Karlo, 849 F.3d at 81).
Here, Margolin holds a Ph.D. in economics and focuses his
practice on providing economic analyses for litigation,
including disgorgement calculations. (ECF 426-1 at 6-7). In
conducting a two-step analysis by which he sought to identify
sales subject to disgorgement and then estimate the profits to
be disgorged therefrom, (id. at 10-11), Margolin arrived at a
number of conclusions including that consumers who placed
determinative weight on country of origin were willing to pay a
premium of no more than fifteen percent for American-
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manufactured products – excluding products above the fifteen-
percent cap from the disgorgement calculation – and repeat
purchasers of B-Line guns were aware of their Taiwanese
manufacture by way of sticker, stamp, or hangtag and thus their
subsequent purchases were unrelated to any actionable
misrepresentation made by Albion, (id. at 16-19). The Court
cannot say at this juncture that these conclusions are
unreliable or unsupported. For instance, Margolin’s fifteen-
percent cap is directly derived from trial testimony –
recognized though not adopted as fact in the Court’s liability
opinion – of Lance Florian, part owner of Tiger Enterprises,
that “some customers are willing to pay up to fifteen percent
more for a product labeled as ‘Made in USA.’” (ECF 363 at 39).
3
Further, the court in Diamond Resorts U.S. Collection
Development, LLC v. Newton Group Transfers, LLC, was recently
faced with challenges – similar to those presented here – to the
plaintiffs’ economist retained to provide expert testimony as to
the damages incurred due to violations of the Lanham Act and
3 If Margolin errs at all it is the apparent assumption that the
Court’s reference to a fifteen-percent premium constituted a
finding that the record supported a conclusive and final
decision that “Made in America” translated neatly into a certain
defined premium. That is not the case, as there is also
evidence in the record that supports a higher, even much higher,
premium. What the Court intended to convey, and reiterates
here, is that certain end consumers are willing to pay a
meaningful premium for products made in the United States.
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other causes of action. See No. 9:18-CV-80311, 2022 WL 1642865,
at *21 (S.D. Fla. Mar. 31, 2022). The defendants sought to
exclude the expert based on his reliance on information
apparently authored by the plaintiffs’ counsel and failure to
independently verify the data received by the plaintiffs. Id.
The court rejected these challenges, finding that Rule 703
permitted reliance on the work of others so long as the data was
the type reasonably relied upon in the expert’s field, and
concluded that the defendants’ challenges were more applicable
to the weight placed on the expert testimony than its
admissibility. Id. at *23-24. The Court holds that a similar
conclusion is warranted in response to Newborn’s challenges
here.
The disgorgement stage of trial tasks the Court with
comparing the parties’ competing products, considering the roles
of other participants in the caulking-gun market, and weighing a
product’s country of origin against a list of other factors that
influence purchase decisions all without clear, direct apples-
to-apples evidence. Absent such evidence, the Court holds that
the general framework offered by Margolin, who possesses
expertise in a recognized field, may be helpful to the Court in
understanding the competition between participants in the
caulking-gun market and crafting an appropriate remedy.
The Court may ultimately reject Margolin’s opinions or
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place greater weight in factual evidence or competing expert
testimony presented. To that end, Newborn has had the
opportunity to voir dire Margolin on his expertise and
qualifications and cross-examine him on his methodology and
related conclusions. It is through these safeguards – not
wholesale exclusion – that the Court believes Newborn’s concerns
are best addressed.
IV. Conclusion
For the reasons stated above, Newborn’s motion in limine,
(ECF 546), will be denied.
An order consistent with this opinion will be entered.
Date: December 18, 2023 s/ Noel L. Hillman
At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.
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