Expert Witness Blog
Plaintiff filed suit against defendant related to a claim for wages. Plaintiff hired a Business Valuation Expert Witness to provide testimony. Defendant filed a motion to exclude this expert from testifying. The court denied the motion to exclude.
Facts: This case (Kerek v. Crawford Electric Supply Company, Inc. – United States District Court – Middle District of Louisiana – July 16th, 2019) involves a claim for wages that the defendant allegedly owes the plaintiff under the defendant’s 2016 Bonus Plan. The plaintiff alleges that he was supposed to receive an annual bonus at the end of the year, but was told by the defendant that he didn’t meet his sales goals. The plaintiff hired Ralph Stephens, a Business Valuation Expert Witness to provide testimony. The defendant filed a motion to exclude this expert from testifying.
Discussion: The court notes that Mr. Stephens is a Certified Public Accountant who is accredited in business valuation, and certified in financial forensics. In addition, the court states that Mr. Stephens has practiced accounting for almost 38 years and has been qualified as an expert in numerous cases. The court thus opines that Mr. Stephens is qualified to opine as an expert in this case. The court states that the only dispute is whether Mr. Stephens’ expert witness testimony is reliable.
The court opines that Mr. Stephens “performed certain adjustments” to the financial statement for the plaintiff’s branch. He states that he made these adjustments “on the basis that the “parallel wire inventory equipment and servicing costs
significantly impacted the 2016 financial performance” of [the defendant]’s branch as “the parallel wire was not intended to industrial consumer applications.”
The defendant argues that Mr. Stephens improperly removed costs associated with parallel wire program, which included estimated labor costs for servicing, salaries for unloading, receiving, stocking and training, estimated rent expense, estimated real estate taxes, estimated indirect salary expenses, and estimated indirect salary expenses. The defendant argues that removing these categories makes Stephens’ expert testimony unreliable because they are based on speculation, false assumptions, and calculation errors.
The court opines that it finds no basis for excluding Mr. Stephens’ testimony on the basis that his methodology is unreliable. The court notes that Stephens has relied on financial statements and testimony by current and former employees of the defendant. The court opines that there is no basis for excluding Stephens’ expert testimony.
The court further opines that the defendant has not demonstrated that Mr. Stephens’ methodologies have significantly deviated from the standard accounting practices for obtaining costs and expenses.
Last, the court opines that any arguments go to the weight of the testimony, not the admissibility.
Conclusion: The motion to exclude the expert witness testimony of Ralph Stephens is denied.