United States District Court, D. Kansas
MEMORANDUM AND ORDER
L. TEETER UNITED STATES DISTRICT JUDGE
action arises from a contract between Plaintiff Panel
Specialists, Inc. (“PSI”) and Defendant Tenawa
Haven Processing, LLC (“Tenawa”). Tenawa, which
is in the business of midstream natural gas processing, made
the decision in 2013 to build a new gas processing facility
in Haven, Kansas. Pursuant to the Master Service Agreement
(“MSA”) executed between the parties, PSI, which
provides instrumentation and electrical
(“I&E”) services to the oil and gas industry,
agreed to provide such services to Tenawa on a cost-plus
basis in connection with the new construction. In this case,
each party asserts a breach of the MSA. PSI, which initiated
this action, contends Tenawa breached the MSA by failing to
provide full payment of its I&E invoices. In response,
Tenawa asserts a counterclaim alleging PSI breached the MSA
by failing to properly perform the I&E services and by
failing to properly bill for those services-specifically, by
allegedly applying an unreasonable markup on invoices to
Tenawa for materials, equipment, and supplies.
party has designated expert testimony to support its claims.
The parties now move to exclude certain of that testimony
specifically related to Tenawa's improper markup claim.
PSI moves to exclude the testimony of I&E contractor
Edward Whitfield, who Tenawa designates to testify regarding
the reasonableness of markups in the I&E industry. Doc.
148. Tenawa, in turn, seeks to exclude the testimony of
Thomas Aston Jr., an expert designated by PSI to provide
testimony rebutting that offered by Mr. Whitfield. Doc. 147.
After a detailed review, the Court denies PSI's motion to
exclude Mr. Whitfield's testimony. The Court grants in
part and denies in part Tenawa's motion to exclude Mr.
Aston's rebuttal testimony.
Rule of Evidence 702 governs the admissibility of expert
testimony and imposes upon the district court a
“gatekeeping obligation” to ensure that expert
testimony is both relevant and reliable. Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993);
Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137,
147 (1999). A court's gatekeeping function, however, does
not replace the traditional adversary system and the role of
the jury. Cohen v. Lockwood, 2004 WL 763961, at *2
(D. Kan. 2004). Where there are questions related to the
bases and sources of an expert's opinion, these issues go
to the weight to be assigned to that opinion-rather than
admissibility-and are for the trier of fact to determine.
Id. The burden is on the party offering the expert
testimony to prove its admissibility. United States v.
Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).
PSI's Motion to Exclude Edward Whitfield (Doc.
discussed above, in support of its improper markup claim,
Tenawa proffers the expert testimony of Edward Whitfield,
project manager for an I&E contractor located in
McPherson, Kansas. Tenawa designates Mr. Whitfield as an
expert to testify about the reasonableness of markups in the
I&E industry. Mr. Whitfield ultimately opines that the
highest reasonable markup on materials, supplies, and
equipment on an I&E project-including on a project such
as the Tenawa facility in Haven-is 20% of actual cost. Doc.
149-1. Mr. Whitfield further opines that any markup that
exceeds that percentage (including the markup charged by PSI
in this case) is excessive and unreasonable. Id. He
bases this opinion on the fact that he has never charged-nor
heard of any other I&E contractor charging-in excess of a
20% markup. Id.
asks the Court to exclude Mr. Whitfield's testimony on
the basis that his opinions: (1) are not reliable because
they are not based on any sound principles, theories,
reasoning, or methodologies; (2) are incomplete and based on
pure subjective conjecture because he did not review any
documents or information related to the project; (3) are not
helpful to a juror; and (4) constitute inadmissible legal
conclusions. Doc. 149. The Court disagrees with PSI that
exclusion of Mr. Whitfield's testimony is warranted.
the Court finds that Mr. Whitfield's testimony is
reliable. He offers testimony regarding industry standards
related to the reasonableness of markups, which is based on
his experience in the I&E industry. In such situations,
expert testimony is generally deemed reliable so long as it
is “‘based on actual knowledge, and not mere
subjective belief or unsupported speculation.'”
Pioneer Ctrs. Holding Co. Emp. Stock Ownership Plan &
Tr. v. Alerus Fin., N.A., 858 F.3d 1324, 1341-42 (10th
Cir. 2017) (quoting Mitchell v. Gencorp, Inc., 165
F.3d 778, 780 (10th Cir. 1999)). Here, Mr. Whitfield's
testimony is based on his 33 years of experience in the
I&E industry. Doc. 149-1. During this time, he
accumulated experience negotiating contracts, pricing work,
and billing for I&E work. Id. And his work
history includes experience particularly pertinent to the
circumstances in this case; specifically, his previous
I&E work on gas plants and his experience working on
projects in Kansas and the Midwest region. Id. This
experience-which is in a similar field in a similar
region-provides him with the requisite expertise to opine on
I&E industry standards and renders his opinions
sufficiently reliable. Id.; see Ji v. Bose
Corp., 538 F.Supp.2d 354, 358-59 (D. Mass. 2008)
(holding that years of experience in the industry qualified
expert to testify on industry customs).
the Court finds that Mr. Whitfield's opinions are neither
incomplete nor based on pure subjective conjecture. Mr.
Whitfield has personal involvement with the specific project
at issue in this case. Indeed, as discussed below, Tenawa has
designated Mr. Whitfield as a fact witness in this case due
to his personal involvement on, and knowledge of, the
project. His personal involvement significantly undercuts
PSI's argument that his failure to review various
project-related documents and invoices renders his testimony
unreliable. For all of these reasons, the Court therefore
finds that Mr. Whitfield's opinions are properly based on
his actual knowledge and experience, rather than any
subjective beliefs or unsupported speculation.
the Court finds that Mr. Whitfield's testimony will
assist the trier of fact in this case, as the subject of his
testimony is not likely within the common knowledge and
experience of the average juror. A significant issue in this
case is the reasonableness of the markup that PSI applied to
the invoices to Tenawa for materials, equipment, and
supplies. Most jurors will not have had any experience with
the I&E industry or, more specifically, the
reasonableness of markups in this industry. Thus, Mr.
Whitfield's testimony will assist the jury.
the Court disagrees that Mr. Whitfield's opinions
concerning the reasonableness of markups in the I&E
industry constitute inadmissible legal conclusions. Rather,
such testimony- i.e., testimony as to industry standards,
customs, and practices-is “common fare” in civil
litigation. Levin v. Dalva Bros., Inc., 459 F.3d 68,
79 (1st Cir. 2006). Although PSI is correct that expert
testimony consisting of legal conclusions or resolving
ultimate issues does not aid the jury and is generally
inadmissible, where the testimony is limited to explaining
industry standards it may assist the trier of fact and,
therefore, be appropriate. See, e.g., Zuchel v.
City & Cty. of Denver, Colo., 997 F.2d 730, 742-43
(10th Cir. 1993) (admitting expert testimony because the
expert did not give a legal opinion that a police
officer's conduct was unconstitutional, but rather stated
his belief that the officer's conduct was not in line
with generally accepted police custom and practice);
Levin, 459 F.3d at 79 (noting that
“[g]enerally, an expert may not offer an opinion
concerning a legal question” but that “[e]xpert
testimony on industry standards is common fare in civil
litigation”); U.S. S.E.C. v. Big Apple Consulting
USA, Inc., 2011 WL 3753581, at *5 (M.D. Fla. 2011)
(“[T]he second part of Lowry's opinion is not a
legal conclusion; it is Lowry's opinion of what is
reasonable based on his experience in the securities
industry.”). And, as discussed above, the Court finds
that Mr. Whitfield's testimony is limited to explaining
industry standards and would aid the jury in its
foregoing reasons, the Court therefore finds that Mr.
Whitfield may opine regarding industry standards related to
the reasonableness of markups within the I&E field. The
bulk of the arguments raised by PSI in its motion go to the
weight the trier of fact may decide to give Mr.
Whitfield's opinions, not to their admissibility in the
first instance-and whether he is a credible expert witness
with respect to the particular issues presented in this case
is a ...