Salazar et al v. Driver Provider Phoenix LLC et al, No. 2:2019cv05760 - Document 754 (D. Ariz. 2024)
Court Description: ORDER denying Plaintiffs' Daubert 704 Motion to Exclude the Expert Reports and Testimony of Michael Haugen Pursuant to Fed. R. Evid. 702. Signed by Judge Susan M. Brnovich on 4/2/2024. (ESG)
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Kelli Salazar, et al., Plaintiffs, 10 11 v. 12 Driver Provider Phoenix LLC, et al., 13 No. CV-19-05760-PHX-SMB ORDER Defendants. 14 15 Pending before the Court is Plaintiffs’ Daubert Motion to Exclude the Expert 16 Reports and Testimony of Michael Haugen Pursuant to Fed. R. Evid. 702 (Doc. 704.) 17 Defendants filed a response (Doc. 733), to which Plaintiffs replied (Doc. 751). The Court 18 exercises its discretion to resolve this motion without oral argument. See LRCiv 7.2(f) 19 (“The Court may decide motions without oral argument.”). After considering the parties’ 20 arguments and relevant case law, the Court will deny Plaintiffs’ Motion. 21 I. BACKGROUND The factual background of this case has been covered extensively in prior Orders. 22 23 For the sake of brevity, the Court will not repeat it here. 24 II. LEGAL STANDARD 25 A party seeking to present an expert’s testimony carries the burden establishing that 26 testimony’s admissibility. Cooper v. Brown, 510 F.3d 870, 942 (9th Cir. 2007). Federal 27 Rule of Evidence 702 and Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) 28 govern the admissibility of such testimony. Rule 702 states: 1 2 3 4 5 6 A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case. Fed. R. Evid. 702. Daubert entrusts courts to act as gatekeepers tasked with excluding unreliable expert testimony. 509 U.S. at 597; see also Elosu v. Middlefork Ranch Inc., 26 7 F.4th 1017, 1024 (9th Cir. 2022) (“Rule 702 tasks a district court judge with ensuring that 8 an expert’s testimony both rests on a reliable foundation and is relevant to the task at 9 hand.”) (cleaned up). Daubert applies to an expert’s testimony based on “scientific” 10 knowledge, but also to testimony based on “technical” and “other specialized” knowledge. 11 12 Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999). Expert testimony is admissible only if it is relevant and reliable. Daubert, 509 U.S. 13 at 589. Expert testimony is “relevant” if it fits the facts of the case and logically advances 14 “a material aspect of the proposing party’s case.” Daubert v. Merrell Dow Pharms., Inc. 15 (Daubert II), 43 F.3d 1311, 1315 (9th Cir. 1995). Expert testimony is “reliable” if the 16 expert’s opinion is reliably based in the “knowledge and experience of the relevant 17 discipline.” Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th Cir. 18 2013) (quoting Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010)). To assess reliability, 19 courts may consider “(1) whether the theory can be and has been tested, (2) whether the 20 theory has been peer reviewed and published, (3) what the theory’s known or potential 21 22 23 24 25 26 27 28 error rate is, and (4) whether the theory enjoys general acceptance in the applicable scientific community.” Murray v. S. Route Mar. SA, 870 F.3d 915, 922 (9th Cir. 2017). Courts have great discretion in determining whether Daubert’s specific factors are “reasonable measures of reliability in a particular case.” McClure v. State Farm Life Ins. Co., 341 F.R.D. 242, 256 (D. Ariz. 2022) (citing Kuhmo Tire, 526 U.S. at 153). Unlike challenges to an expert opinion’s relevancy or reliability, challenges to the “correctness” of an opinion go to its weight, not its admissibility. Messick v. Novartis Pharm. Corp., 747 F.3d 1193, 1199 (9th Cir. 2014). -2- 1 III. DISCUSSION 2 A. Qualifications 3 Michael Haugen (“Haugen”) is a forensic accounting expert. (Doc. 733-1 at 3.) He 4 holds a bachelor’s degree and a master’s degree in accountancy. (Id.) He is a licensed 5 Certified Public Accountant (“CPA”) in Arizona, is certified in Financial Forensics by the 6 American Institute of Certified Public Accountants and is a Certified Fraud Examiner. (Id.) 7 He has significant experience in conducting financial investigations, measuring 8 commercial damages, and calculating lost earnings and wrongful death losses. (Id. at 3– 9 5.) Much of his work as an expert witness consists of consolidating and analyzing large 10 financial data sets. (Id. at 7.) His experience has extended to evaluating large sets of 11 payroll data when measuring lost profit claims and evaluating wage and hour data when 12 evaluating lost earnings claims. (Id.; see also Doc. 733 at 4–5.) 13 Plaintiffs contend that Haugen is not qualified to testify in this case because he has 14 no prior experience in Fair Labor Standards Act (“FLSA”) cases or any experience with 15 class or collective action litigation. (Doc. 704 at 6–7.) Defendants counter that Haugen is 16 not required to have experience testifying in FLSA cases to be qualified to testify here. 17 (Doc. 733 at 5.) Defendants also note that Haugen is not providing any opinions regarding 18 the FLSA’s requirements, but rather is providing calculations and analysis of potential 19 unpaid minimum and overtime wages—which he is qualified to provide. (Id.) 20 The Court agrees that Haugen is qualified to testify as an expert. First, there is no 21 requirement that Haugen have previously testified in FLSA cases to testify in the current 22 case. See Cebrynski v. Wells Fargo Bank NA, No. CV-21-01965-PHX-DJH, 2024 WL 23 939975, at *3 (D. Ariz. Mar. 5, 2024). Moreover, any argument that Haugen is not an 24 FLSA expert or lacks specialized experience with these types of calculations speaks to 25 weight, not admissibility. See Garcia v. Vitus Energy, LLC, 605 F. Supp. 3d 1179, 1186 26 (D. Alaska 2022). 27 knowledge and experience to perform the calculations and data analysis at issue. The 28 analysis here falls within his prior experience and will be relevant and helpful to the jury. Second, Defendants have shown that Haugen has the requisite -3- 1 See Fed. R. Evid. 702. Accordingly, the Court finds that Haugen is qualified to testify as 2 an expert in this case. 3 B. Reliability/Prejudice 4 Next, Plaintiffs argue that Haugen’s testimony is unreliable and not grounded in 5 reliable principles or methods. (Doc. 704 at 7–8.) Specifically, Plaintiffs assert that three 6 areas of Haugen’s testimony are inadmissible: (1) time between trips, (2) post-trip work 7 time estimates, and (3) pre-trip work time estimates. (Id. at 7–16.) Defendants argue that 8 Haugen’s analysis and testimony are proper in each of these areas. (Doc. 733 at 7–12.) 9 The Court will discuss each in turn. 10 i. Time Between Trips 11 First, Plaintiffs argue that Haugen’s testimony regarding time between trips is based 12 on arbitrary thresholds that Defendants’ attorneys instructed him to apply and is overall not 13 grounded in reliable principles or methods. (Doc. 704 at 7–12.) Plaintiffs further argue 14 that his failure to consider other information renders his methodology unreliable and 15 speculative and shows that he developed his opinions expressly for purposes of testifying. 16 (Id. at 10–11.) Defendants counter that Haugen has provided detailed explanations for his 17 calculations and that the assumptions were proper given the focus of his testimony. (Doc. 18 733 at 7–8.) The Court agrees with Defendants. 19 To begin, Haugen’s report and subsequent declaration provide detailed explanations 20 as to which data he considered. (See Doc. 733-1.) Plaintiffs are correct that Haugen did 21 not complete an independent analysis to determine whether drivers were relieved of duty 22 between trips. However, Haugen is not an expert on what constitutes working time and 23 non-working time. Rather, he is an accounting expert testifying about his calculations of 24 potential overtime and minimum wages. These calculations naturally require reasonable 25 assumptions—as expert opinions often do. His two sets of calculations are built on separate 26 assumptions regarding trips exceed thirty and sixty minutes, respectively. (Doc. 733-1 at 27 35–36.) Given Haugen’s expertise and the nature of his testimony, these are reasonable 28 assumptions that square with Defendants’ theory of the case. -4- 1 Moreover, Plaintiffs will have the opportunity to attack these assumptions and the 2 resulting calculations on cross-examination and through their own expert testimony. See 3 Daubert, 509 U.S. at 596. Plaintiffs also raise concerns about the specific data Haugen 4 failed to consider. (Doc. 704 at 8–10.) However, as mentioned, Haugen provided specific 5 reasons for not including this data, which can also be addressed on cross-examination. 6 (Doc. 733-1.) And lastly, any issues that Plaintiffs have with the supplements to Haugen’s 7 report will surely be addressed in Plaintiffs’ Motion to Strike. (Doc. 712). Accordingly, 8 the Court will admit Haugen’s testimony on this topic. 9 ii. Post-Trip Work Time and Wage Calculations 10 Next, Plaintiffs argue that Haugen’s post-trip work time estimates are inadmissible 11 because his reduction of post-trip work time for trips that end at Sky Harbor is an example 12 of cherry-picking that benefits Defendants that is a violation of Rule 702. (Doc. 704 at 12– 13 13.) Defendants counter that the reduced post-work trip time estimate is consistent with 14 the average estimate between both experts and is consistently applied. (Doc. 733 at 9–10.) 15 The Court agrees. First, Haugen’s method is consistently explained and applied, and is 16 therefore not a violation of Rule 702. Further, Haugen’s approach is not unreliable simply 17 because it differs from Plaintiffs’ expert’s analysis. Any issues between the two experts 18 can be explored at trial and goes to weight, not admissibility. See Senne v. Kansas City 19 Royals Baseball Corp., 591 F. Supp. 3d 453, 482–84 (N.D. Cal. 2022). Plaintiffs also 20 argue that Haugen’s wage calculations are inadmissible for the same reason. (Doc. 704 at 21 15.) But again, this overlooks Haugen’s explanation and consistently applied method— 22 which of course can be explored on cross-examination. Accordingly, Haugen’s testimony 23 on these topics will be admitted. 24 iii. Unfair Prejudice 25 Plaintiffs also contend that Haugen’s testimony is unfairly prejudicial because if the 26 jury heard it, “they would be presented with apparently precise estimates of work time 27 based on a forensic accountant’s purportedly careful analysis of certain start and end 28 markers in a database.” (Doc. 704 at 15.) Therefore, Plaintiffs contend that the jury “could -5- 1 believe that the evidence was useful solely on learning of Haugen’s expertise and claimed 2 experience.” (Id.) Defendants counter that the probative value of Haugen’s testimony is 3 not substantially outweighed by unfair prejudice and that any fears of undue weight can be 4 addressed in cross-examination. Again, the Court agrees. 5 Here, Haugen’s testimony is highly probative, as it goes directly to the 6 determination of Defendants’ potential liability. Plaintiffs’ fear that the jury will assign 7 undue weight to Haugen’s testimony is well-taken, but is no more true of Haugen than of 8 any expert that takes the stand. The proper method to undercut weight is effective cross- 9 examination, not exclusion. Plaintiffs will have every opportunity to undermine Haugen’s 10 testimony at cross-examination. Accordingly, Haugen’s testimony will be admitted. 11 C. Mt. Clemens 12 Finally, Plaintiffs argue that Haugen’s testimony is not permitted under Anderson 13 v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). (Doc. 704 at 16–18.) In cases where an 14 employer has not kept accurate records of employees’ time, Mt. Clemens allows a party to 15 prove an FLSA violation by showing that employees performed work for which they were 16 improperly compensated and producing some evidence to show the amount and extent of 17 that work “as a matter of just and reasonable inference.” 328 U.S. at 687. If the moving 18 party carries that burden, the burden then shifts to the employer “to come forward with 19 evidence of the precise amount of work performed or with evidence to negative the 20 reasonableness of the inference to be drawn from the employee’s evidence.” Id. at 687–88 21 (emphasis added). Put another way, Mt. Clemens “presupposes that the employer will be 22 in the best position to keep accurate records of an employee’s work and should bear the 23 risk that records will be inadequate.” Grimes v. Kinney Shoe Corp., 902 F. Supp. 1070, 24 1074 (D. Alaska 1995) (citing McLaughlin v. Ho Fat Seto, 850 F.2d 586 (9th Cir. 1988)). 25 Plaintiffs assert that Defendants cannot present the “precise amount of work 26 performed” and are therefore limited to presenting evidence that negates “the 27 reasonableness of the inference to be drawn from the employee’s evidence.” Id. at 688. 28 This misreads Mt. Clemens’s holding. As explained there, Defendants still have the -6- 1 opportunity to come forward with this evidence to provide the Court with a precise measure 2 of damages. See id. And crucially, nothing in the case bars Defendants from presenting 3 their own evidence—including expert testimony—regarding the damages estimate. See id. 4 In short, Mt. Clemens does not preclude Haugen’s testimony. Additionally, Plaintiffs’ other cited cases only support this conclusion. 5 In 6 Villalpando v. Exel Direct Incorporated, the court stated that the employer had “not 7 demonstrated that it maintained adequate records” and allowed the employee plaintiffs to 8 use their expert to establish their reasonable inference under Mt. Clemens. No. 12-CV- 9 04137-JCS, 2016 WL 1598663, at *12 (N.D. Cal. Apr. 21, 2016). However, the court did 10 not hold that the employer could not provide evidence regarding the damage amount. Id. 11 This point is made more clearly in Scalia v. Paragon Contractors Corporation, 957 12 F.3d 1156 (10th Cir. 2020). In Paragon, the defendant challenged the plaintiffs’ prima 13 facie case, which was based on representative evidence from a sample of employees and 14 therefore proper under Mt. Clemens. Id. at 1161–63. The employer disagreed with the 15 expert’s method of estimates of hours worked and methods of calculation, which included 16 using the mode instead of the mean. Id. at 1163–64. The employer put forth its own 17 estimates more favorable to its position, but the court remained unconvinced that these 18 estimates were sufficient to overcome the burden shifting. Id. at 1163. However, the court 19 stated that the employer “could have presented testimony from statistical or subject matter 20 experts” to argue against the use of a mode instead of a mean in the statistical analysis. 21 Here, Defendants are using an expert to dispute the method of calculation of potential 22 overtime and minimum wages. This is permissible under Mt. Clemens. Moreover, other 23 courts in this district have come to a similar conclusion. See Collinge v. IntelliQuick 24 Delivery, Inc., 2:12-cv-00824 JWS, 2018 WL 1088811, at *2–10 (D. Ariz. Jan. 9, 2018) 25 (allowing competing experts that utilized differing methodologies and assumptions in an 26 FLSA case). Accordingly, Haugen’s testimony will be admitted. 27 IV. 28 CONCLUSION For the above reasons, -7- 1 IT IS HEREBY ORDERED denying Plaintiffs’ Daubert Motion to Exclude the 2 Expert Reports and Testimony of Michael Haugen Pursuant to Fed. R. Evid. 702 (Doc. 3 704). 4 Dated this 2nd day of April, 2024. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8-
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