The opinion of the court was delivered by: Judge Amy J. St. Eve
BP AMOCO CHEMICAL COMPANY'S RENEWED MOTION TO EXCLUDE THE OPINIONS OF JEFFREY BALIBAN
BP Amoco previously moved to exclude the opinions of FHR's damages expert, Jeffrey Baliban, for various reasons. (Dkt. Nos. 378, 383) The Court denied BP Amoco's motion (Dkt. No. 561), but noted in doing so that the Advisory Committee Notes to the Federal Rules of Evidence "suggest additional criteria for gauging expert reliability, including whether: . 'the expert has unjustifiably extrapolated from an accepted premise to an unfounded conclusion';  'the expert has adequately accounted for obvious alternative explanations'; . and 'the field of expertise claimed by the expert is known to reach reliable results for the type of opinion the expert would give.'" (Dkt. No. 561 at 2; citing Fuesting v. Zimmer, Inc., 421 F.3d 528, 535 (7th Cir. 2005), vacated in part on other grounds, 448 F.3d 936 (7th Cir. 2006))
Mr. Baliban has now testified at trial, and his testimony -- far from providing the jury with a basis to credit his opinion -- only reinforces that his opinions violate FRE 702 and should be excluded. Therefore, BP Amoco incorporates its prior briefing regarding Mr. Baliban (Dkt. Nos. 378, 383, 498) and renews its motion to exclude Mr. Baliban's opinions for the reasons stated in that briefing and for the following additional reasons demonstrated by his trial testimony -- and as outlined in open court yesterday.
First, Mr. Baliban's damages model (which is not in evidence) incorporates cash flows relating to speculative "upside opportunities." While he had difficulty even recalling what these opportunities were, more problematically he inexplicably concluded that all of these "upside opportunities" -- none of which was incorporated into any of the cases that Flint Hills' financial model analyzed and that were presented to its Board when it approved the deal -- were best represented in the aggregate by assigning a 50% probability to a prospective deal with Eastman Chemical Company for the supply of 38 kmt of PIA per year. (9/23/09 Tr. at 2279:2-2280:10, 2315:24-2316:7; copy attached as Ex. 1) Incorporating this Eastman opportunity had the effect of increasing the internal rate of return that Mr. Baliban (wrongly) employed to discount to net present value the projected cashflows of the PCBU with its allegedly as-sold capacities, and thus increased the damages calculated by Mr. Baliban. (Id. at 2334:21-2335:1, 2306:14-2307:4)
During trial, however, Mr. Baliban admitted the truth of the 50% probability he assigned to the Eastman cash flows. He picked 50% because it was an indeterminate probability -- the mid-point between 0% and 100%, the same as flipping a coin:
Q: Other than your judgment, which allowed you, according to you, to rely upon what Flint Hills told you, is there any treatise or methodology you can point us to where some other expert could replicate your 50 percent probability assessment?
A: Well, again, the specific factor of 50 percent?
A: Is -- is nothing more than a mean between zero percent and 100 percent, and the selection of that is based on the fact that that would be the most probable number, given that it could be less, it could be higher, but without being able to measure any more closely how much less or how much higher, the mean is the central tendency point, and so that was to me the most reasonable approach.
One had to apply a value, and that was the most reasonable approach.
Q: It could have been 100 percent, it could have been zero, equal probabilities, right, and so you chose 50?
A: If 100 percent and zero are equal probabilities, there are any number of statistics books that will tell you that in that case, you have to ...