St. Louis Record

Saturday, November 16, 2019

Court determines which experts can testify in ongoing contract suit between Schnuck Markets, XPO Logistics

Federal Court

By Charmaine Little | Aug 9, 2019


ST. LOUIS – On June 25, Judge John A. Ross of the U.S. District Court for the Eastern District of Missouri’s Eastern Division ruled on a breach of contract case in which both sides hoped to exclude expert testimony.

Defendant Schnuck Markets Inc. filed a motion to exclude plaintiff Jacobson Warehouse Co.’s expert on damages Angela Morelock and expert on prevailing industry standards Jerry Davis. The plaintiff does business as XPO Logistics Supply Chain.

XPO also filed a motion to strike SMI’s supplemental rebuttal expert disclosure and related untimely production as well as a motion to strike and exclude SMI’s proffered rebuttal expert’s testimony. XPO also filed an alternative motion to compel continuation of deposition of SMI rebuttal expert Tom O’Brien and a motion to limit or exclude testimony of SMI’s expert Michael Powell.

Ross first denied Schnuck’s motion to exclude Morelocks’ report and testimony concerning damages. Morelock is a certified public account and forensic accountant that XPO hired to assess damages detailed by Schnuck employees, specifically fact witness Alex Dye, a Schnuck financial analyst who was assigned to tracking losses experienced because of changes in XPO’s NorthPark operation. He was not described as an accountant or an expert on the matter. 

Morelock distributed nine opinions in her expert report. In opinion nine, she said Dye’s calculations don’t “reliably, or with any degree of reasonable certainty, calculate the damages that [Schnuck] may have suffered as a result of XPO’s alleged actions,” according to the ruling.

Ross determined this expert opinion was fitting as it’s up to the jury to decide which testimony carries more weight – Morelock’s or Dye’s. The ruling states Morelock also noted discrepancies in Dye’s testimony, such as his failure to take into account the 1 percent loss/damage allowance mentioned in the parties’ agreement.

Ross then addressed XPO’s motion concerning Powell, an independent consultant in the retail and supply chain industries. Schnuck hired Powell to evaluate XPO’s work performance and determine if XPO did what was needed for NorthPark facility to operate correctly. Powell ruled that XPO did not, and XPO wants to exclude his testimony, stating that it’s unreliable. 

"Mr. Powell’s testimony is both relevant and admissible,” Ross wrote, but added that Powell failed to evaluate evidence on how impact of Schnuck’s “union avoidance strategy” when determining his thoughts. The court denied the motion to exclude his testimony in part.

Next, Ross excluded Davis’ opinion concerning union avoidance, stating that it was irrelevant. Davis, a warehouse management industry consultant, was hired by XPO and opined that Schnuck did not properly comply with industry standards. Most notably, Davis also stated intent behind Schnuck’s actions. 

“It is not appropriate for an expert witness to opine on the question of corporate motive, intent, knowledge or state of mind,” Ross wrote. 

Ross added that a state of mind or an intention for a breach of contract dispute is not relevant. Instead, the only thing to consider is one’s actions, not what they were intending to do behind it.

As for XPO’s motion concerning controller O’Brien, Ross ruled to allow O’Brien bring his testimony, and granted XPO’s alternative motion to continue O’Brien’s deposition. In his report, O'Brien recalculated Dye’s evaluations and determine there wasn’t enough backup. 

“Given the limited nature of the damages issues now before the court, namely, replacement cost of inventory loss and potential claw back damages, the court will allow Mr. O’Brien to proffer his testimony…,” Ross wrote.

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