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Cunningham Charter Corporation v. Learjet

April 22, 2011

CUNNINGHAM CHARTER CORPORATION,
PLAINTIFF,
v.
LEARJET, INC.,
DEFENDANT.



The opinion of the court was delivered by: Herndon, Chief Judge:

MEMORANDUM AND ORDER

I. Introduction

Before the Court is defendant Learjet, Inc.'s motion to strike the opinions of Robert Ditchey (Doc. 110) and plaintiff Cunningham Charter Corporation's response (Doc. 115). Plaintiff's amended complaint brings claims of breach of warranty, product liability, breach of contract for failure of consideration, fraudulent concealment, breach of implied duty of good faith and fair dealing, and fraud by silence arising from its purchase of a Learjet Model 45 aircraft from defendant (Doc. 128). Plaintiff's expert witness, Robert Ditchey, believes defendant's warranty agreement is inconsistent with industry standards, and he calculates plaintiff's damages for breach of warranty at over $376,575. In the instant motion to strike, defendant argues that Ditchey's testimony is not based on sufficient facts and is not the product of reliable principles and methodology as required by FEDERAL RULE OF EVIDENCE 702. Defendant also alleges that Ditchey is not qualified. Plaintiff counters that Ditchey has nearly 50 years of experience in the airline industry, his methodology is sufficient, and his testimony will help the jury understand how defendant used language in the warranty to improperly deny coverage. The Court finds that Ditchey's testimony fails to satisfy the standard of reliability set out for expert witnesses in RULE 702 because the testimony is not based on sufficient facts and is supported only ipse dixit conclusions. Accordingly, the Court GRANTS defendant's motion to strike. Defendant's request to avoid the costs for deposing Ditchey is DENIED.

II. Background

Plaintiff Cunningham Charter Corporation purchased a Learjet Model 45 business jet from defendant Learjet, Inc., in 1999 (Doc. 128, p. 2). After encountering numerous problems with the aircraft, plaintiff brought this suit for breach of warranty and product liability (Doc. 3, Ex. A, p. 3) and later amended the complaint to add claims of breach of contract for failure of consideration, fraudulent concealment of the terms and interpretation of warranty, breach of implied duty of good faith and fair dealing, and fraud by silence (Doc. 128, pp. 6--10). In support of its claims, plaintiff offers a report by expert witness Robert Ditchey (Doc. 110, Ex.

A). Ditchey has over 50 years of experience in the aviation industry and is an aeronautical engineer and former pilot (Doc. 115, pp. 1--2). He negotiated and administered warranties while at National Airlines, which had "the largest package of outside repair work in the U.S." (Doc. 110, Ex. B, 47:4--22). Ditchey, although having extensive experience in the airline industry, has never worked for a general aviation manufacturer or for a private company that operates general aircraft (Id. 12:2--25). And despite his experience working with warranties, Ditchey had not seen an aircraft purchase agreement or warranty document for a corporate jet before this case (Id. 16:25--17:9).

In preparing his report for this case, Ditchey reviewed the warranty agreement, maintenance records, and invoices (Doc. 115, p. 2). He concludes that the warranty policy was not as defendant originally claimed and that it was "so poorly written and so poorly defined that it is not possible to determine exactly what it means" (Doc. 110, Ex. A, p. 19). He calls the warranty "deficiently written, unclear, and inconsistent with industry standards" (Id., p. 2). Because the warranty language is unclear, Ditchey says it allows defendant to "dictate whatever it wants to include or to exclude" (Id., p. 19). For example, Ditchey points out that the warranty purports to cover labor expenses, but invoices show that defendant only reimbursed expenses at a certain "warranty labor rate" below what plaintiff had been charged. Defendant's warranty labor rate was not in the purchase agreement or the warranty policy (Id., p. 2). Ditchey also faults the warranty for not defining "aircraft" or "component" and for not addressing repeated failures of the same component (Id.).

In addition to evaluating the warranty's language, Ditchey reviewed invoices and maintenance records to determine which claims defendant had improperly rejected. Ditchey computes the total damages for breach of warranty at $319,804 for replacement parts and at least $56,771 for labor costs (Doc. 110, Ex. A, pp. 20--21). As to his method, he first removed invoices relating to inspections, servicing, and routine maintenance (Doc. 110, Ex. B, 91:16--92:11). Then Ditchey added up the total remaining invoices, without checking the repairs made against the warranty or checking whether the repair involved a defect (Id., 130:15--135:15). He did not talk to the organizations that performed the maintenance (Id. 41:2--18). Ultimately he was unable to cite an instance when defendant had denied a properly submitted warranty claim: "I only looked at the invoices. I was not privy to what happened in the stream of events afterward." (Id., 86:7--87:3). Ditchey agrees with defendant that there was a 90-day deadline for plaintiff to submit warranty claims to defendant; "prompt notification" was required (Id., 57:23--58:3). His report observes the warranty lasted 60 months for components and 24 months for interior furnishings and exterior finishing (Doc. 110, Ex. A, pp. 8--9). Finally, the report cites the absence of records as among the reasons making it "virtually impossible" to establish a complete listing of defendant's warranty failures (Id., p. 21). He therefore estimated warranty failures based on an industry standard (Id.).

Ditchey describes his methodology as "just like how do you value a baby's life," and "it's how many angels can dance on the head of a pin? How do you do that?" (Doc. 110, Ex. B,135:16--136:3). Although he attested to using the same methodology before in his career, he could not provide an example (Id., 136:4--16). Ditchey considers it "almost a ridiculous question" to ask whether his methodology has been written about in articles or publications; "There's no such thing," he says (Id., 136:20--25). When asked about the error rate in his methodology, Ditchey replied, "How many angels can dance on the head of a pin?" (Id. 137:24--138:3). Ditchey concedes that he would not expect someone else reviewing the same invoices and performing the same analysis to come up with the same numbers he did, unless they agreed on the methodology first (Id., 137:1--138:9). Otherwise two or three different people would come up with two or three different answers (Id.).

III. Discussion

FEDERAL RULE OF EVIDENCE 702 provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

It is the obligation of the district court to function as a gatekeeper, ensuring that expert testimony is not only relevant but reliable. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993); Bradley v. Brown, 42 F.3d 434, 436 (7th Cir. 1994). Courts in the Seventh Circuit conduct a two-step analysis. Chapman v. Maytag Corp., 297 F.3d 682, 686 (7th Cir. 2002). First, they must determine whether the expert's testimony is reliable. See Mihailovich v. Laatsch, 359 F.3d 892, 918 (7th Cir. 2004) (citing Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147 (1999)). Specifically, the testimony must have a reliable basis in the knowledge and experience of the relevant discipline, Kumho Tire Co., 526 U.S. at 149 (internal quotations removed), consisting in more than subjective belief or unsupported speculation, Chapman, 297 F.3d at 687; Daubert, 509 U.S. at 590. The particular focus should remain on the principles and methodology of the testimony, not the expert's conclusions. Chapman, 297 F.3d at 687. Further, an expert must explain the methodologies and principles that support his opinion. Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 761 (7th Cir. 2010). He cannot simply assert a "bottom line" or ipse dixit conclusion. Id. (quoting Minix v. Canarecci, 597 F.3d 824, 835 (7th Cir. 2010)).

Daubert sets out a nonexclusive list of factors that courts may consider when assessing reliability, including whether the theory or technique (1) can be and has been tested; (2) has been subjected to peer review and publication; (3) has a high or known rate of error; and (4) is generally accepted in the relevant scientific community. Kumho Tire Co., 526 U.S. at 149--50 (citing Daubert, 509 U.S. at 592--94). But there is no requirement that courts use each of the factors, because the gatekeeping inquiry is flexible and must be "tied to the facts" of the particular case. Id. at 150 (quoting Daubert, 509 U.S. at 591); see also Chapman, 297 F.3d at 687. Further, a district court enjoys "the same broad latitude when it decides how to determine reliability as it enjoys in respect to its ...


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