Clark Capital Management Group, Inc. v. Riversource Life Insurance Company

REPLY to Response to Motion re MOTION to Exclude the Tesimony of Francis X. Burns and Daubert Motion to Strike His Expert Report

E.D. Pa.December 28, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA Clark Capital Management Group, Inc., Plaintiff, v. RiverSource Life Insurance Company, Defendant. Civil Action No.: 2:17-CV-02238 TJS Hon. Timothy J. Savage JURY TRIAL DEMANDED PLAINTIFF'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO STRIKE EXPERT REPORT OF FRANCIS X. BURNS AND EXCLUDE HIS TESTIMONY Plaintiff Clark Capital Management Group, Inc. ("Clark Capital") hereby submits this Reply Brief in Support of its Motion to Strike Expert Report of Francis X. Burns and Exclude His Testimony. I. INTRODUCTION In its Response in Opposition ("Response"), Defendant maintains that its purported expert is qualified to opine on the proper measure of damages in this Lanham Act case. However, in doing so, Defendant fails to cite to any relevant testimony by the purported expert that provides quantifiable or other justification for his opinions regarding his determination that the PORTFOLIO NAVIGATOR mark provides no value to Defendant. Because the Burns Rebuttal Report is clearly unreliable and risks prejudicing the jury, rather than offering relevant probative testimony, Clark Capital respectfully requests that this Court exclude his testimony as unreliable and irrelevant. See Floor graphics, Inc. v. News Am. Mktg. In-Store Servs., 546 F. Supp. 2d 155, 164 (D. N.J. 2008). Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 1 of 9 II. ARGUMENT While conceding that there is a trilogy of restrictions on expert testimony, namely, qualification, reliability and fit, Defendant fails to meet its burden to establish that the Burns Rebuttal Report is admissible. Schneider ex. Rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003); Padillas v. Stork-Gamco, Inc., 186 F.3d 412, 418 (3d Cir. 1999. A. Burns is Not Qualified to Render an Expert Opinion on Lanham Act Trademark Infringement/Unfair Competition Damages. Defendant erroneously clams that Clark Capital objects to Mr. Burns and his Rebuttal Report because such report is based on experience. Response at 4. However, Clark Capital is challenging whether Mr. Burn's experience alone is sufficient. Defendant states only that Mr. Burns has "extensive experience in cases involving valuation and financial services" and that Mr. Burns "has evaluated damages issues on patent and trademark infringement." Response at 4. However, Defendant failed to offer any citations to support these assertions. What is clear is that Mr. Burns himself stated that he has been an expert in one trademark case, Trovan v. Pfizer, which case occurred over 17 years ago. Nor could Mr. Burns articulate the measure of damages in Lanham Act cases: Q: Can you give me the names of the [federal trademark] litigations? Burns: Trovan v. Pfizer. Q: What is the date of that litigation, if you remember? Burns: It went back to -1 think the trial would have been in either late 1999 or early 2000. Q: What was the substance of your testimony. Sir? Burns: I testified about the economic damages as it related to the Trovan trademark. 1 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 2 of 9 Q: When you say economic damages, what do you mean by that? Burns: I mean if there is an impact on the plaintiff and liability is found, then the Court turns to whether there is economic harm that was caused. Q: Are you aware of what the standard is for a successful plaintiff to receive an accounting for profits? Burns: Not from a legal standpoint. Q: Any standpoint, from a financial standpoint. How would you go about calculating an accounting for profits if you were tasked to do so, sir? Burns: I think the standard would be to determine what the incremental revenues and incremental profits would be that were generated through use of the trademark. Burn Dep. at 16:19 - 17:12; 17:17 - 18:4. Nor did Burns have an accurate understanding of what goodwill is in the trademark context and how an expert would quantify goodwill: Q: How do you define goodwill in the trademark context? Burns: I think I would define it the way I was discussing it earlier which is that if a trademark connotes some type of quality to the buyer and leads the buyer to either buy the product where they otherwise would not or pay more for the product then they otherwise would, then that trademark is generating goodwill. Q: How would you go about quantifying those two parameters that you've defined [as] goodwill which is the increased quality to the buyer and that the buyer [is] going to be willing to pay more money on a stronger mark? I've never heard that before in my life. Burns: Well, that's just a fundamental aspect of valuation for trademarks; and we, again, follow simply the economics of how does something create value. Q: So, when you say it's a valuation of trademark, what components would you look at to value a trademark? Burns: You would look at how the trademark is used in the sale of goods and services and then from that what is it providing by way of incremental value over not using the trademark. 2 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 3 of 9 Id. at 20:2 - 21:2. Moreover, despite Defendant's effort to bolster Mr. Burn's qualifications, he repeatedly testified that his opinion that PORTFOLIO NAVIGATOR designation provides no value to Defendant was based on his "experience in dealing with issues around mutual funds, insurance, personal experiences of buying insurance products." See, e.g., id. at 97:22 - 98:4. Here, Burns' opinion rests entirely on his personal experience, which is limited to the average consumer who buys securities. Moreover, despite repeated requests, Burns was unable to explain how his experience leads to the conclusion reached, that is, why that experience is a sufficient basis for an opinion, and how that experience is reliably applied to the facts. Because Mr. Burns provides no relevant or probative expertise, the Burns Rebuttal Report, and any trial testimony by Mr. Burns must be stricken. B. Because Mr. Burns Cannot Provide the Basis of his Opinions, his Unreliable Testimony must be Entirely Stricken and Excluded from Trial. Again, Defendant fails to provide any citation to its claim that "Mr. Burns based his opinion on the facts and data made available to him, applied basic economic and accounting principles, and derived his analysis." Response at 8. In fact, although Mr. Burns testified that the PORTFOLIO NAVIGATOR designation was used as a source identifier, he failed to incorporate such reasoning into his purported "analysis" because such a statement is directly contrary to Defendant's position in this litigation: Q: Is it your understanding that the way that Ameriprise and RiverSource used the Portfolio Navigator designation with regard to its fund of funds since 2012 is as a source identifier for those funds? Burns: I think that's my understanding, yes. Q: So those funds would be associated with the term Portfolio Navigator, is that correct? A. Yes. 3 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 4 of 9 See Burns Depo. at 38:16-23. Moreover, Mr. Burns' Rebuttal Report will not aid the trier of fact as it is supposed to do, but rather will confuse a very simple accounting for profits, applying Mr. Burns' own personal standards, rather than those of this Court. His testimony is confusing, inarticulate and erroneous as the following excerpt reflects: Q: What I'm telling you is in typical trademark cases, revenue is reflected. That is how you quantify the value of a trademark is how much revenues are accrued on the basis of a product. You've given me what I perceive to be a very revolutionary alternative; and I am asking again, how do you quantify the value, your purported value if you are not going to use revenues? Burns: Well, again, I'm looking at this from an economic value perspective. The Courts may look at it from a different perspective. But my perspective looking at value of a trademark is what does it generate in the way of value. And the profits that may be associated with the product is just one aspect of it. It's a starting point only, and you have to then determine whether that trademark actually improves the profitability or improves the revenues of that product. Q: Have you ever gone about in any case in which you've been involved determining how to prove profitability other than using revenue? Burns: Well, in the Trovan case, the plaintiffs expert sought to provide revenues; and one of the things I testified to was all of the expenses that went into the product. Q: Absolutely. Okay. I understand that. So, if you start with revenues; and if you are a plaintiff, you start with the revenues, and then it's the defendant's burden to come up with the deductions from revenues in order to glean profit; is that correct? Burns: Yes. Q: Okay. Burns: And all of that is under the construct of the trademark itself and what it is generating. Q: But those are quantifiable numbers, right, revenues, overhead, all of the other deductions from revenues culminating in profits. What I'm saying is what you seem to be speaking of is some 4 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 5 of 9 intangible, what value does the mark provide; and again I don't know how you are going to - How do you quantify that? Burns: It's not easy. That is why there are trademark valuation experts. But what you need to do is to look at the underlying trademark and how it generates value. Id. at 41:6 — 43:5 (emphasis added). Accordingly, the entirety of the Burns Rebuttal Report, and Mr. Burns' testimony concerning same, is unreliable and should be stricken. C. There is No Connection between the Burns Report and the Facts of This Case. An expert's testimony must be accompanied by a sufficient factual foundation before it can be submitted to the jury.'" Sterling v. Redevelopment Auth. of the City of Philadelphia, 836 F.Supp.2d 251, 272 (E.D. Pa. 2011). Again, Mr. Burns was unaware of significant factual predicates regarding both Clark Capital and Defendant's use of PORTFOLIO NAVIGATOR which should have been considered in his analysis: Q: Do you have an understanding as to what Clark Capital's business is? Burns: Just generically. Q: Why don't you give me that generic understanding? Burns: It's a financial firm that's involved with mutual funds. Q: Only mutual funds? Burns: There may be other aspects, yes. Q: What research did you do into Clark Capital and its use of the NAVIGATOR trademark at issue? Burns: I believe I looked at how Clark Capital referenced NAVIGATOR in its website materials. Q: That's it? Burns: I think that's it. 5 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 6 of 9 Q: How did Clark Capital reference NAVIGATOR in its website materials? Burns: I don't recall. Q: Are you aware that the PORTFOLIO NAVIGATOR designation was used prior to the inception of RiverSource? Burns: By whom. Q: I can't answer that, sir. Just answer the question. Are you aware? Burns: I don't think I'm aware. See Burns Depo. at 27:3 -- 28:4. This is just one of the excerpts from Mr. Burns' testimony that reveal his total unfamiliarity with essential facts. What is clear is that Mr. Burns was told what to say by counsel for Defendant during purportedly privileged phone calls and undertook no independent analysis. Mr. Burns conceded that counsel had input in the preparation of the Burns' Rebuttal Report, there were several iterations of the report which were not produced, he obtained his information after several teleconferences with counsel, specifically Mr. Partridge, Mr. Partridge had input into the changes to the draft report but Mr. Burns could not identify what specific changes were made. Id. at 8:17 - 11:24. Here, it is plain that neither Clark Capital nor this Court can assess the reliability of Mr. Burns's opinion and, accordingly, Mr. Burns's Rebuttal Report, as well as any testimony concerning same, must be excluded in its entirety. 6 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 7 of 9 III. CONCLUSION For the foregoing reasons, and those espoused in its initial brief in support, Clark Capital respectfully requests that this honorable Court strike the Burns Rebuttal Report in its entirety and prohibit Mr. Burns from testifying at trial. 'JLu. KA ^ Camille M. Miller Melanie A. Miller J. Trevor Cloak COZEN O'CONNOR One Liberty Place 1650 Market Street. Suite 2800 Philadelphia, PA 19103 (215) 665-2000 (215) 665-2273 Attorneys for Plaintiff, Dated: December 28, 2017 Clark Capital Management Group, Inc. 1 Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 8 of 9 CERTIFICATE OF SERVICE I, the undersigned, hereby certify that a true and correct copy of the forgoing was filed electronically through this Court's ECF System and is available for viewing and downloading from this Court's ECF System. I further certify that an electronic copy of the foregoing was served upon counsel of record through this Court's ECF System at the e-mail address listed in the Court's database as follows: REBECCA SANTORO MELLEY rmellev@hanulev.com. ecflllinizs@hanglev.com JORDAN ARNOT LEAHEY iordan@partridgepartnersnc.com. docket@nartridgepartnersnc.com MARK V.B. PARTRIDGE mark@partridgepartnerspc.com, docket@partridgepartnerspc.com Dated: December 28, 2017 /s/ Camille M. Miller Camille M. Miller Case 2:17-cv-02238-TJS Document 46 Filed 12/28/17 Page 9 of 9