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LOEFFEL STEEL PRODUCTS, INC. v. DELTA BRANDS

June 8, 2005.

LOEFFEL STEEL PRODUCTS, INC., Plaintiff,
v.
DELTA BRANDS, INC., d/b/a DBI; and SAMUEL F. SAVARIEGO, individually, Defendants.



The opinion of the court was delivered by: JEFFREY COLE, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Given the complexity of modern litigation, an informed assessment of the facts that courts are routinely called upon to consider is difficult, if not impossible, without the application of some scientific, technical, or other specialized knowledge. The most common source of this knowledge is the expert witness. See Advisory Committee Note to Rule 702, Federal Rule of Evidence.*fn1 The demand for expert testimony by litigants has become insatiable. In response, an astounding number of "expert" consultants and professional witnesses in virtually every field of human endeavor have arrived on the scene. Their proliferation, to borrow Justice Cardozo's felicitous phrase, "would make Malthus stand aghast." The Growth of the Law, 4 (1924).

While it may be a bit of an exaggeration to say that in modern trials the expert is as common as the lawyer, Faust Rossi, Modern Evidence and the Expert Witness, in Litigation Manual: A Primer For Trial Lawyers, 254 (2d ed. 1989),*fn2 the modern face of litigation does feature expert testimony in a significant percentage of trials. United States v. Brown, 32 F.3d 236, 239 (7th Cir. 1994). Accord, In re Aircrash Disaster, 795 F.2d 1230, 1234 (5th Cir. 1986). Unfortunately, all too often, the "experts" are "`the mere paid advocates or partisans of those who employ and pay them, as much so as the attorneys who conduct the suit. There is hardly anything, not palpably absurd on its face that cannot now be proved by some so-called experts.'" Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 797 F.2d 370, 382 (7th Cir. 1986) (Posner, J.).*fn3

  Thus, there is scarcely a case involving experts in which substantial pretrial challenges to the admissibility of their testimony are not raised. This case is no exception. The defendants ("DBI") have moved to bar the testimony of Loeffel Steel Product's ("Loeffel") retained liability expert, Rudolph Toczyl; Loeffel has filed its own motion to bar the testimony of DBI's damages expert. Each motion claims the other's expert is unqualified, his methodology flawed, and his testimony irrelevant to the task at hand. We deal here only with the challenges to Mr. Toczyl.

  I

  BACKGROUND

  This case concerns the claimed non-performance of a Rotary Shear Multi-blanking Line ("the Line"), a large, complex piece of industrial machinery, manufactured by DBI and sold to Loeffel. The daunting name describes what the machine does: large rolls or coils of steel are flattened by leveler rollers, cut into prescribed lengths (called "blanks") by rotary shears, and then cut into prescribed widths (called "mults"). The machine's stacker then sorts and stacks the finished product. All of this is done at a rapid rate, measured in hundreds of feet per minute and to exact tolerances, measured in thousandths of an inch. Or at least that is how the machine is supposed to work.*fn4

  Bitterly disappointed with the machine's performance and its claimed non-compliance with the specifications in the sales contract, Loeffel sued DBI, alleging breach of contract, breach of express warranty, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, and fraud. In late October 2003, Mr. Toczyl prepared his Rule 26 expert report ("the Report").

  A

  Mr. Toczyl's Report

  The seven page, single spaced, highly technical Report was based on Mr. Toczyl's having viewed, over an eight hour period, four actual production runs at the Loeffel plant.*fn5 In his Report, Mr. Toczyl identified six major areas of concern: (A) length tolerances for finished steel blanks did not conform to contract specifications when the Line ran at speeds in excess of 120 fpm; (B) the leveler could not correct defects across the steel thickness range specified in the contract; (C) the tooling exchange could not be completed in the 90 seconds required in the contract; (D) the Line could not process steel without repeated interruptions at speeds significantly slower than those the contract specified; (E) the Line was not capable of executing multi-blanking operations at speeds remotely close to those specified in the contract, and blanks produced were frequently of inferior quality; and (F) the Line caused defects in the surface of the steel it processed.

  The Report contained details of Mr. Toczyl's observations. Beginning with the machine's accuracy in cutting steel to desired length and width, Mr. Toczyl noted that the contract provided that the Line was to cut blanks less than or equal to 72" in length, at an accuracy of plus or minus .005," and blanks less than or equal to 144" in length at an accuracy of plus or minus .008". Mr. Toczyl reported that the Line failed to cut any blanks to length accuracies near .005 when the Lines ran at 120 fpm and that, in fact, accuracy was no better than .015 at that speed. He stated that he observed a considerable drop-off in length accuracy when Line speed accelerated past 100 fpm. (Report at 2-3).

  Mr. Toczyl also noted that the contract specified that width accuracies would be plus or minus .002". He observed that the Line did not have a "packed arbor" and/or "dedicated" or "ultra-precision tooling" which, in his opinion, precluded width accuracies of better than .010." Id. at 3. At his deposition, he testified that he had never seen an "open arbor" — the type on the Line — accomplish the tolerance the contract specified. Indeed, at his deposition, he testified that, on the day of his visit, the operators measuring widths during the production runs generally found the blanks to be 1/16" off. Id. at 77-80. According to Mr. Toczyl, during his 8-hour observation of the Line's production runs, the Line failed to approach any of the contract's benchmarks for production speed either during single or multiple blanking runs. During single blanking runs, the Line could not run at speeds in excess of 140 fpm without major mechanical difficulties necessitating the cessation of operations. For example, during the run that required blanking .023 gauge steel into lengths of 19.875" and trimming it from 42 3/8" in width to 38-3/16", Mr. Toczyl observed a noticeable drop-off in accuracy at 120 fpm. During the run that called for multi-blanking of .044 gauge sheets into lengths of 216", with two "mults" or "blanks" each 10" in width. For instance, Mr. Toczyl reported that the Line's operators began at a speed of 70 fpm and then attempted to increase it to 200 fpm. At that point, the shear began catching on the sheets, halting the run. In conclusion, Mr. Toczyl found the Line could not operate at the speed specified in the contract — 300 fpm — while maintaining length tolerances. (Report at 4-5).

  Mr. Toczyl also evaluated the performance of the leveler. He found that the type of roller in the machine could not correct flaws in steel ranging in thickness from .009" through .125".*fn6 Mr. Toczyl opined that the DBI leveler could not correct defects in the .009 to .023 range because the diameters of its rollers are too large. The result, Mr. Toczyl reported, is that flaws such as "edge waves" and "center buckle" will not be corrected. (Report at 3-4).

  Addressing the Line's tooling system, Mr. Toczyl's report related that although the contract provided for a ninety second tooling change time, it took three Loeffel employees, whom he felt were adept with the system, 9½ minutes to change the tooling. As Mr. Toczyl described the process:
these men had to remove a number of bearings and supports before precisely locking in the new tooling system. It took them at least three (3) minutes to unlock the locking apparatus and, of all the different locks, only one (1) locking pin was hydraulically driven.
(Report at 4). Based on his extensive familiarity with the type of equipment involved, Mr. Toczyl opined that the exchange could not be completed in period much shorter than the 9½ minutes he observed. Id.

  Mr. Toczyl also reported problems with the stacker during single-blanking at speeds of 120 fpm, which required the operators to stop the Line for as long as 5 to 10 minutes so that they could adjust the tension and pressure on the stacker, remove any blanks damaged by collision, and realign the stack. Mr. Toczyl also noted that the employees had to scrap a number of unacceptable blanks. (Report at 5).

  During multi-blanking, Mr. Toczyl reported that it was even more difficult to maintain a consistent Line speed, and the interruptions were more frequent. He witnessed stacker problems occurring at 140 fpm. Even at 90 fpm, he reported that the stacker failed to drop sheets in a timely manner, forcing the operators to reduce speed to 70 fpm. There were similar problems with the stacker during the other runs as well. (Report at 5-6).

  Mr. Toczyl concluded that the Line could not produce multi-blanks accurately or at specified production rates due to an incongruity between the slitter and the stacker. Specifically, he reported that the stacker required "blank separators" which act to segregate incoming blanks so that they do not interweave or cross over when the magnets release them for stacking. Even when the Line was retrofitted with separators, it could stack no more than two or three mults. In addition, he explained that, because of the space the separators consume, the Line could not handle 72" wide coils as specified. Mr. Toczyl stated that the stacker could not consistently stack more than two blanks during any given run, falling far short of the contract specification of six mults. Based on his observations of regular stacking, and after viewing a videotape of Loeffel employees attempting "alternate" stacking, Mr. Toczyl was convinced the Line could not perform that function as specified either. (Report at 6-7).

  Finally, Mr. Toczyl noted that the contract specified that the Line must be able to process galvanized and pre-coated cold rolled steel. He indicated that the leveler rollers did not incorporate the protective elements necessary to perform surface-sensitive jobs on these types of products. Mr. Toczyl found similar problems with the rollers on the stacker. According to Mr. Toczyl, the Line was the first one he had seen in 49 years that was supposed to be designed to process surface-sensitive material but allowed metal-to-metal contact, resulting in scratched blanks. Id. at 8.

  The Report concluded that the "DBI Line will never meet the production specifications set forth in the contract . . . because many of the impediments to Loeffel's achievement of speedier production runs (while maintaining blank accuracies) are not correctable." (Report at 8) (parenthesis in original.).

  B

  The Defendants' Motion to Bar Mr. Toczyl's Testimony

  DBI's motion, which challenges Mr. Toczyl's competency to testify to anything in his Report, insists that his methodology is "completely unscientific" and constitutes "junk science" and thus will not assist the trier of fact. Although the sales contract between Loeffel and DBI is highly technical, and although an informed assessment of the Line's performance requires specialized and technical knowledge far beyond that possessed by the ordinary layman, DBI says Mr. Toczyl's testimony should be barred because it was based in part on information obtained from Loeffel's employees, who are characterized as biased bunglers, and because it will merely reprise their testimony.

  The latter argument, in addition to being more of a Rule 403 than a 702 argument, is inconsistent with the simultaneously advanced claims about the incredibility and competency of the testifying Loeffel employees. If DBI's assessment is accurate, it would seem that there is a greater rather than a lesser need for Mr. Toczyl's testimony. Also, if Mr. Toczyl testifies first, his testimony will not, by definition, be a "rehash" of the Loeffel employees' testimony. The argument then to be made would be that their testimony was "needlessly cumulative." But these are more trial arguments than the stuff of pretrial motions to bar expert testimony.

  II

  THE ANALYTICAL FRAMEWORK FOR ...


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