VIRGINIA M. HERNANDEZ COVINGTON, District Judge.
This matter comes before the Court upon consideration of Defendants DGS Edu, LLC and Ampush Media, Inc.'s Joint Motion to Strike/Exclude the Report, Opinions, and Testimony of Plaintiff's Designated Expert Witness Brita D. Strandberg (Doc. # 109), filed on November 18, 2016; Defendants' Joint Motion to Strike/Exclude the Report, Opinions, and Testimony of Plaintiff's Designated Expert Witness Douglas Kidder (Doc. # 143), filed on December 19, 2016; and Plaintiff Connectus LLC's Motion to Strike the Expert Report of Thomas P. Moroney (Doc. # 147), filed on December 20, 2016. Connectus filed its responses in opposition to the Motions relating to Strandberg and Kidder on December 19, 2016, and January 19, 2017, respectively. (Doc. ## 145, 187). Defendants filed their response to Connectus's Motion regarding Moroney on January 19, 2017. (Doc. # 186). Defendants filed replies in support of their Motions relating to Strandberg and Kidder on January 3, 2017, and February 1, 2017, respectively. (Doc. ## 174, 203). Connectus filed its reply in support of its Motion relating to Moroney on January 26, 2017. (Doc. # 197). All three Motions are ripe for review.
Connectus provides an informational service that seeks to connect prospective students with post-high school educational institutions, such as universities. (Doc. # 200 at ¶ 12). To do so, Connectus engages in lead generation, a process which generates data on prospective students through the use of opt-in websites. (
Connectus has its own list of universities with which it directly does business; however, if a prospective student does not match with one of the universities that directly do business with Connectus, Connectus turns to an aggregator. (
To govern the sale of its leads to aggregators, Connectus enters into contracts with its aggregators. (
(Doc. # 200-1 at ¶¶ 1.1, 1.4, 2.1, 5.1, 6, 13).
On October 31, 2013, DGS Edu acquired Ampush's education business, including the agreement entered into by Connectus and Ampush. (Doc. # 200 at ¶ 21). After DGS Edu acquired Ampush's education business, Connectus began receiving complaints from its universities and other aggregators that the leads being sold to them had been called multiple times before the lead could be utilized by the purchaser. (
(
While Ampush and DGS Edu paid Connectus for "approximately 39,975" leads, they did not pay Connectus for any of the 838,853 leads alleged to have been misappropriated. (
Connectus instituted this action against Ampush on December 3, 2015, (Doc. # 1), and shortly thereafter amended its Complaint to include DGS Edu (Doc. # 9). With leave of Court, Connectus filed its Second Amended Complaint on November 11, 2016. (Doc. ## 105, 106). The Second Amended Complaint brought claims for conversion (Count I), misappropriation of trade secrets under Florida law (Count II), unfair competition (Count III), unjust enrichment (Count IV), breach of contract (Count V), and injunctive relief (Count VI) against both Ampush and DGS Edu. (Doc. # 106).
Then, on November 22, 2016, DGS Edu and Ampush filed Rule 12(c) motions. (Doc. ## 114, 115). Connectus shortly thereafter filed a conditional motion, seeking leave to amend its trade-secrets claim (switching it from one based on Florida law to one based on California law) in the event the Court determined that California law governed. (Doc. # 167). After extensive briefing, the Court granted the Rule 12(c) motions in part and granted Connectus leave to file a third amended complaint. (Doc. # 188). In particular, the Court held that, in light of the plain language of the choice-of-law provision in the parties' agreement, California law governed this action; that Connectus's common-law claims (Counts I, III, and IV) were preempted and therefore dismissed; that any damages awarded for breach of contract must be limited in accordance with the agreement's limitation-of-liability clause; and that Connectus's stand-alone claim for injunctive relief was dismissed, but Connectus could seek injunctive relief with respect to its breach-of-contract claim. (
Connectus filed its Third Amended Complaint on January 30, 2017. (Doc. # 200). The Third Amended Complaint asserts a claim under California's Uniform Trade Secrets Act, Cal Civ. Code § 3426.1(d), (CUTSA) (Count I), and breach of contract (Count II). (
Federal Rule of Evidence 702 allows "[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education [to] . . . testify in the form of an opinion or otherwise," if certain criteria are satisfied; namely,
Fed. R. Evid. 702. "Rule 702 compels the district courts to perform the critical `gatekeeping' function concerning the admissibility of expert" testimony.
"[I]n determining the admissibility of expert testimony under Rule 702, [a court] engage[s] in a rigorous three-part inquiry."
As to the qualification inquiry, an expert can be qualified "by knowledge, skill, experience, training, or education." Fed. R. Evid. 702;
There are four recognized, yet non-exhaustive, considerations—
—a district court may use in evaluating reliability.
Expert testimony must also assist the trier of fact. Fed. R. Evid. 702. "By this requirement, expert testimony is admissible if it concerns matters that are beyond the understanding of the average lay person."
Moreover, "[p]roffered expert testimony generally will not help the trier of fact when it offers nothing more than what lawyers for the parties can argue in closing arguments."
In their response to Connectus's Motion, Defendants note that "[t]he Court has not yet stated whether this matter, if it goes to trial, will be a bench trial as set forth in the Parties' contract . . . or a jury trial as requested by Plaintiff. . . ." (Doc. # 186 at 2 n.1). The parties' agreement does contain a clause addressing demands for a jury trial (Doc. # 200-1 at ¶ 6), and, based on the Court's recollection (as neither party provided the transcript of the Case Management Hearing), the issue of this waiver provision did come up at the Case Management Hearing. The Court indicated at the hearing that it would address the issue if and when the Court was squarely faced with the issue by way of motion, as required under Local Rule 3.01(f). Because neither of the Defendants have moved to strike Connectus's jury demand, the Court declines to opine as to the enforceability of the agreement's jury-waiver provision without the benefit of a proper motion and sufficiently focused briefing.
In their reply in support of the Motion seeking to exclude Kidder's testimony, Defendants raise a new argument. In particular, Defendants argue the agreement's limitation-of-liability clause should cap any damages awarded under Connectus's CUTSA claim. (Doc. # 203 at 6). While the Court did rule in favor of Ampush with respect to the enforceability of the agreement's limitation-of-liability clause in its January 20, 2017, Order, that ruling was made in the context of Ampush's argument. Notably, Ampush's argument only addressed the applicability of the limitation-of-liability clause as to the the breach-of-contract claim. (Doc. ## 115 at 12; 188 at 23-25).
This Court ordinarily does not consider arguments asserted for the first time on reply,
Connectus argues that Defendants' Motion seeking the exclusion of Strandberg's testimony should be summarily denied for failure to comply with Local Rule 3.01(g). (Doc. # 145 at 24). In their reply, Defendants admit their opening brief does not comply with Local Rule 3.01(g). (Doc. # 174 at 8 n.8). But, Connectus also violated the Local Rules. Specifically, Connectus violated Local Rule 3.01(b), which limits a response in opposition to a motion to twenty pages. Connectus's response is twenty-six pages long. (Doc. # 145). The parties also dispute whether Connectus timely filed its response to Defendants' Motion seeking to exclude Kidder's testimony. (Doc. ## 203, 204). Faced with parties that have not complied with the Local Rules, but all of which have had an opportunity to be fully heard on the merits, the Court declines to summarily deny Defendants' Motion seeking to exclude Strandberg's testimony and declines to strike Connectus's response to the Motion seeking to exclude Kidder's testimony. M.D. Fla. L.R. 1.01(c).
The Court takes this opportunity to remind counsel they must comply with all Rules, including the Local Rules. Notably, the Local Rules require attorneys admitted to practice before this Court to have read and be familiar with the Local Rules. M.D. Fla. L.R. 2.01(b), 2.02(c).
The Court's January 20, 2017, Order dismissed Counts I, III, and IV of the Second Amended Complaint; dismissed Count II of the Second Amended Complaint, but granted Connectus leave to refile the trade-secrets claim under California law; and dismissed Count VI of the Second Amended Complaint insofar as Connectus sought to plead a stand-alone claim for injunctive relief. (Doc. # 188 at 31-32). As such, only two claims remain, a claim under CUTSA (Count I) and a claim for breach of contract (Count II). (Doc. # 200). Arguments made in the instant Motions addressing issues beyond the boundaries set by the Third Amended Complaint are consequently irrelevant and denied as moot.
Strandberg was retained by Connectus to opine on how the Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq., pertains to
(Doc. # 109-1 at 4). As stated in her report, Strandberg's "analysis and conclusions are based on [her] experience as a lawyer in private practice representing technology and communications companies before the Federal Communications Commission . . . and federal courts in the area of telecommunications regulation and policy." (
Furthermore, Strandberg received her law degree in 1995 and received her undergraduate degree, although she does not specify her major or any minors,
Rather than bringing a 12(b)(1) or 12(b)(6) motion, Defendants embed a jurisdictional challenge within their
The Court need not expound upon the requirements of Article III standing or the doctrine of prudential standing in order to dispose of Defendants' arguments for an elementary reason: Connectus's pleading neither asserts a TCPA claim, nor seeks damages arising from liability under the TCPA. Strandberg's proffered expert report does discuss the TCPA and the damages Connectus might incur from forecasted TCPA suits; however, as discussed below, such opinion testimony is irrelevant to this action. Had Connectus's pleading asserted a TCPA claim or a claim for indemnification, vicarious liability, or the like, for damages arising from a TCPA violation, then perhaps standing concerns would arise. As pled, though, no such damages are involved and therefore Defendants' standing arguments are inapposite.
In an abundance of caution, the Court addresses subject-matter jurisdiction. Indeed, a federal court is obligated to ensure jurisdiction exists at all stages of a proceeding.
Connectus relies on 28 U.S.C. § 1332 to establish subject-matter jurisdiction. (Doc. # 200 at ¶ 10). Section 1332 requires complete diversity of citizenship and the amount in controversy to exceed $75,000. 28 U.S.C. § 1332;
Connectus is a limited liability company. (Doc. # 200 at ¶ 2). Connectus's sole member is Digital Media Solutions, LLC. (
DGS Edu is also a limited liability company. (
9). DGS Edu is wholly owned by Digital Globe Services, Inc., which is a Delaware corporation with its principal place of business in California. (
For its part, Ampush is a Delaware corporation with its principal place of business in California. (Doc. # 200 at ¶
8). Thus, Ampush is a citizen of Delaware and California. 28 U.S.C. § 1332(c)(1).
As to the amount in controversy, Connectus alleges it has been damaged by Defendants' misappropriation of 838,853 leads and each lead is worth between $18 and $24. (
In summation, Connectus is completely diverse from Defendants and the amount in controversy exceeds $75,000. As such, the Court has subject-matter jurisdiction to hear the claims brought in this diversity action, which are a CUTSA claim (Count I) and a breach-of-contract claim (Count II). Defendants' arguments that the Court lacks jurisdiction on the theory that Connectus does not have standing with respect to a TCPA claim or TCPA damages lack merit because Connectus is not asserting a TCPA claim. (Doc. # 200).
Keeping in mind that Connectus bears the burden of persuasion by a preponderance of the evidence, the Court summarizes Connectus's arguments for why Strandberg should be allowed to opine as an expert. And, those two reasons
With respect to the first reason—i.e., that noncompliance with the TCPA can be used to show Defendants should have known the scrapped data was confidential— Defendants argue Strandberg is not qualified to opine on the educational lead-generation industry's customs or practices and that her proffered testimony is unreliable, unhelpful, and irrelevant. Moreover, Defendants correctly point out that the agreement governing the parties' relationship was signed in May of 2013, whereas the current version of the TCPA was not in force until October 16, 2013. (Doc. # 174 at 6-7);
The Court agrees with Defendants that Strandberg satisfies neither Rule 702, nor
That vague statement, however, does not explain the extent of her experience. Furthermore, Connectus failed to respond with additional evidence showing Strandberg is qualified by experience, e.g., the number of clients she has advised, whether those clients were in the educational lead-generation industry, and the extent to which she assisted those clients. In addition, the reliability of her opinions on the industry's customs and practices has not been adequately established because Strandberg does not explain why her experience is a sufficient basis for her opinion and how her experience is reliably applied to the facts of this case. Rather, Strandberg's opinion on whether Defendants should have known the scrapped data was confidential consists of single paragraph totaling two conclusory sentences in length. (Doc. # 109-1 at 12) ("Based on my experience working with call center providers and other entities engaged in telemarketing and customer resource management, it is important to maintain the confidentiality of leads in order to maintain their value, and lead information is not shared in the absence of compensation for that information. Similarly, in my experience entities in this industry understand information derived from leads and potential leads to be proprietary information that should be accorded confidential treatment.").
Moreover, the Court agrees with Defendants that Strandberg's proffered testimony regarding Defendants' supposed noncompliance with the TCPA would not be helpful to the trier of fact. In particular, Conntecus failed to demonstrate by a preponderance of the evidence that showing a violation of the TCPA would help the trier of fact determine whether scrapped lead data is confidential. In addition, the Court agrees that whether Defendants violated the TCPA or failed to implement a compliance program for the TCPA is irrelevant to whether Defendants violated CUTSA or breached the parties' agreement.
The elements for a CUTSA claim are "(1) the plaintiff owned a trade secret, (2) the defendant acquired, disclosed, or used the plaintiff's trade secret through improper means, and (3) the defendant's actions damaged the plaintiff."
As can be seen, none of the elements for the causes of action at issue in this suit are advanced by showing a violation of the TCPA. The putative misconduct in this case is not calling third parties, it is allegedly taking proprietary information—the lead data—without paying for it. Thus, when answering the questions of whether scrapped lead data is confidential and whether CUTSA was violated, what happened with the information after it was supposedly misappropriated is inconsequential.
Furthermore, Strandberg's report does not just tangentially touch upon the TCPA, it is centered entirely on the TCPA. Introducing evidence of whether Defendants violated the TCPA, which would require an in-depth discussion of the TCPA's requirements, is substantially likely to confuse the issues in this case. The TCPA regulates when a telemarketer or other entity may contact a person and there is nothing in Strandberg's report explaining how those regulations affect what information the parties agreed by private contract to keep confidential.
As for Connectus's argument that Strandberg's opinions on Defendants' alleged noncompliance with the TCPA are relevant to show the damages to which Connectus is entitled, the Court disagrees. To begin, the Court is cognizant that a plaintiff only needs to place a defendant on notice of the claim being brought against it. Fed. R. Civ. P. 8. To be sure, "[a] complaint need not specify in detail the precise theory giving rise to recovery, . . . all that is required is that the defendant be on notice as to the claim . . . and the grounds on which it rests."
Here, not a single iteration of Connectus's pleadings (and there have been four at this point) contain even the most oblique reference to the TCPA. (Doc. # 1, 9, 106, 200). Rather, a fair reading of each complaint is that Connectus alleges Defendants did not pay for 838,853 leads and breached the parties' agreement by selling scrap data generated when Connectus searched Defendants' portal. Further, to the extent Connectus could have used its claim for unfair competition to seek damages resulting from costs incurred in defending against TCPA suits caused by Defendants' alleged actions, that avenue has been foreclosed by the Court's January 20, 2017, Order, which dismissed the unfair competition claim as preempted. In short, Connectus's pleadings have never once even implied that damages rested on yet-to-have-occurred TCPA suits caused by Defendants' alleged actions.
On the basis of the foregoing, Strandberg's proffered testimony as to damages Connectus might incur from defending against TCPA suits caused by Defendants' alleged misconduct would not help the trier of fact in determining if liability has been established and, if so, what amount should be awarded in damages. There is simply no fit between Strandberg's TCPA-damages theory and the issues in this case. Furthermore, allowing Strandberg to testify on such irrelevant and unripe damages would confuse the issues.
In sum, the Court finds that it should exercise its gatekeeper function and exclude Strandberg's proffered testimony. Connectus has not demonstrated by a preponderance of the evidence that Strandberg is qualified to opine on the educational lead-generation industry's customs and practices. Connectus also failed to demonstrate that Strandberg's opinions are reliable because Strandberg failed to explain why her experience is a sufficient basis for her opinion and how her experience is reliably applied to the facts of this case. Additionally, Connectus failed to sufficiently establish that Strandberg's testimony would be helpful and failed to show that her testimony would not confuse the trier of fact.
Defendants seek to exclude the testimony of Kidder, Connectus's designated damages expert. (Doc. # 143). Kidder was retained by Connectus to "quantify damages arising from" Defendants' "alleged misappropriation of leads. . . ." (Doc. # 201-1 at 4). In particular, Kidder's report indicates he exclusively calculated damages in the form of unjust enrichment. (
Of course, Connectus's stand-alone claim for unjust enrichment was dismissed as preempted by the Court's January 20, 2017, Order. (Doc. # 188). That then leaves only the possibility of using unjust enrichment as a theory of liability attached to some viable cause of action. Under California law, a party may recover damages in the form of unjust enrichment under CUTSA. Cal. Civ. Code § 3426.3(a);
In its January 20, 2017, Order, the Court found the agreement's limitation-of-liability clause enforceable with respect to the breach-of-contract claim. (Doc. # 188). In reaching that decision, the Court was only faced with the argument of enforceability of the limitation-of-liability clause vis-à-vis the breach-of-contract claim, ostensibly because Defendants were focused on having the trade-secrets claim dismissed for being improperly brought under Florida law. Now, in the context of a
While the Court will not entertain arguments raised for the first time in a reply brief, Defendants are free to argue the applicability of the limitation-of-liability clause to the CUTSA claim at summary judgment. Accordingly, addressing the Motion seeking exclusion of Kidder's testimony would be premature at this juncture. The Motion seeking to exclude Kidder's testimony is therefore denied without prejudice. If it becomes necessary, after the disposition of Defendants' motions for summary judgment, to hear arguments as to why Kidder's testimony should be excluded, the Court will entertain those arguments at the appropriate juncture.
Defendants proffer the testimony of Moroney as an expert in the call center industry to opine on the customs and practices applicable to this case. (Doc. # 186). Accordingly, it is Defendants that bear the burden of persuasion by a preponderance of the evidence. In sum, Defendants argue Moroney is qualified to offer his opinion on the customs and practices of the educational lead-generation industry based on his experience and his opinions are not impermissible legal conclusions. (
As to qualifications, Moroney has twenty-five years' experience in the "Contact Center industry," with the first twelve years focused on operations management and the following thirteen years focused on business development activities. (Doc. # 147-3 at 4). Furthermore, Moroney attended Christian Brothers College, Co. in Dublin, Ireland. (
Connectus's argument for why Moroney is not qualified to provide expert testimony boils down to its assertion that a sufficiently large difference exists between the educational lead-generation industry and the "Contact Center" or call center industry such that opinions as to one industry are inapplicable to the other industry.
Moroney's report notes that "the subject matter of this contract involves the generation of leads, which is, in and of itself, a unique industry," and as such he "review[ed] several articles related specifically to the Lead Generation Industry, to determine" if his opinions based on experience in the call center industry "should substantively be modified by the particularity of the industry." (
Citing to the parties' agreement, Defendants point out that the agreement explicitly states in the first paragraph that it "governs the rights and responsibilities of the foregoing parties with respect to the
When viewed against the agreement's terms, Moroney's statement that the engagement models with which he is familiar, "i.e., a vendor provid[ing] call center services on behalf of a client to offer services or products to existing or potential consumer/customers," (Doc. # 147-3 at 5), is, to be sure, a match. In light of the agreement's terms and Moroney's experience, the Court finds exclusion under
Connectus also argues that Moroney should not be allowed to opine as to matters relating to contract interpretation. The Court agrees.
Accordingly, it is