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Business Law and Legal Ethics Expert Witness’s Testimony Allowed. Business Valuation Expert Witness Testimony Not Allowed

Plaintiff sued defendant based on a contract dispute.  The defendant hires three experts to assist in their case and the plaintiff filed motions to exclude these witnesses.  The court granted one motion and denied two.

Facts: This case (Metro Sales, Inc v. Core Consulting Group – United States District Court – District of Minnesota – July 26th, 2017) involves a consulting agreement between the plaintiff (MSI) and the defendant (Core) for the former to possibly pursue an Employee Stock Ownership Plan (ESOP).  There was a dispute regarding the consulting contracts resulting in MSI filing suit asserting breach of contract and a declaratory judgment.  Core has hired three experts to testify at trial: Leonard Sliwoski (business valuation expert witness), Steven Greenapple (business law expert witness), and Duane Lillehaug (legal ethics expert witness). MSI has filed a motion to exclude these experts from testifying.

Discussion: Sliwoski’s part of this case is to offer an opinion on Core’s damages.  MSI alleges that 1) Sliwoski’s opinions regarding future lost profit damages are not reliable and 2) Sliwoski’s opinions are irrelevant.  MSI argues that Sliowiski’s opinions are based on speculation and not any substantive facts.  The court rules that Sliwoski’s testimony is unreliable and not relevant, and should be excluded.  The court states that his opinions on lost profit damages depends upon unfounded assumptions on post-ESOP formation services from Core to MSI.  Thus, Sliwoski’s opinion will not help the factfinder.

Steven Greenapple will testify on whether MSI was an appropriate candidate for an ESOP, whether or not Core’s consulting agreements and fees were appropriate, and whether MSI intended to proceed with an ESOP in the early part of 2015.  MSI alleges that Greenapple used a methodology that was not reliable for evaluating the reasonableness of Core’s fees.  Core argues that Greenapple is qualified to provide an opinion on the matter of fees and suggests that Greenapple’s methodology can be discussed further at trial.  The court concludes that Greenable should be permitted to testify as an expert witness in this case and that his opinions are sufficiently reliable and relevant and would assist a jury in resolving the issues in this case.  The court also states that MSI may raise its criticisms about Greenapple’s implementation of a fair market value standard during the trial.

Duane Lillehaug was hired to rebut the testimony of Eric Cooperstein, MSI’s expert and will provide an opinion on the applicability regarding the North Dakota Rules of Professional Conduct of Core’s relationship with MSI.  MSI alleges that Lillehaug’s testimony should not be allowed because he is not qualified to offer an opinion in this case and that his opinions are not reliable.  MSI first argues that Lillehaug does not have any specialized knowledge, experience, skill, or training in attorney professional responsibility or ethics.  Second, MSI argues that Lillehaug’s opinion on whether Core provided legal services to MSI is based in incorrect and flawed assumptions.  The court opines that Lillehaug is qualified to provide expert witness testimony in this case and that his methodology is reliable.

Conclusion:  The motion to exclude the expert witness testimony of  Steven Greenapple and Duane Lillehaug are denied.  The motion to exclude the expert witness testimony of Leonard Sliwoski is granted.

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