Free Reply to Response to Motion - District Court of Colorado - Colorado

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I N T HE U NITED S TATES D ISTRICT C OURT F OR T HE D ISTRICT O F C OLORADO Civil Action No. 01-cv-0413-JLK M.D. MARK, INC. Plaintiff, vs. KERR-McGEE CORPORATION and ORYX ENERGY COMPANY, Defendants. DEFENDANTS' REPLY TO PLAINTIFF'S RESPONSE TO DEFENDANTS' MOTION TO EXCLUDE LEGAL CONCLUSIONS FROM THE TESTIMONY OF PLAINTIFF M.D. MARK'S EXPERT WITNESSES Defendants Kerr-McGee ("Kerr-McGee") and Oryx Energy Company 1 submit this Reply to Plaintiff's Response to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses. I. INTRODUCTION

Defendants' Motion requests that the Court prohibit M.D. Mark from offering any opinion testimony through its endorsed expert, John Moye, and one specifically identified opinion expressed by its other endorsed expert, Robert Gray, because these opinions constitute inadmissible legal conclusions. M.D. Mark suggests in its Response brief that these legal opinions are admissible simply because the case involves complex facts, but cites no law in support of this argument. Moreover, M.D. Mark unwittingly Oryx ceased to exist on February 26, 1999, at which time it became Kerr-McGee as a result of a statutory corporate merger.
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makes several admissions regarding the applicable legal standard and the nature of Moye's opinions that support exclusion. M.D. Mark also misapplies case law in its effort to argue for admission of Moye's and Gray's legal opinions. II. A. ARGUMENT

M.D. Mark's Legal and Factual Admissions Weigh Against Admission of Moye's Opinions.

As M. D. Mark concedes, the Court must define the law applicable to this case. (Plaintiff's Response to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses, p. 4); see also Specht v. Johnson, 853 F.2d 805, 808 (10th Cir. 1989). In Specht, the court held that an expert's opinion on a hypothetical set of facts was inadmissible under Rule 702 because such testimony permits the expert to state his belief about what law should govern the case. Specht, 853 F.2d at 808. M.D. Mark attempts to distinguish Specht, yet does not explain how the specific opinions expressed by Moye fall outside of the scope of Specht's ruling. Examination of Moye's opinions demonstrates why Specht applies to exclude them. For example, if allowed to testify, Moye intends to incorporate the following hypothetical facts: [I]f the data is licensed to Corporation A and Corporation A attempts to transfer the data to another corporation which it owns or controls through a merger or reorganization with another constituent corporation, the terms of the license would govern whether the data is allowed to be transferred or used by the successor entity ...

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(Report of John Moye, ¶ 1, p. 6, attached as Exhibit A to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses.) Based on this hypothetical, Moye then attempts to define the law applicable to this case by concluding: In the case of PGI's license agreements by Mark, each agreement restricted the transfer and use of the seismic data by any successor entity or related party. (Id.) In other instances, Moye relies on facts, as alleged by M.D. Mark, to support his legal conclusions. (Id. at ¶¶ 2-4, pp. 6-8.) This is exactly the type of testimony prohibited by Specht because it would allow Moye to opine on legal issues under the guise of commenting on facts. See Specht, 853 F.2d at 808. Further undermining the admissibility of any opinions expressed by Moye are M.D. Mark's numerous unwitting admissions that Moye intends to offer legal conclusions concerning the contracts at issue. Determination of the rights and obligations imposed by contracts is a legal issue for the court. Echo Acceptance Corp. v. Household Retail Serv., Inc., 267 F.3d 1068, 1080 (10th Cir. 2001). As such, an expert witness may not offer opinions as to the meaning of a contract's terms or obligations imposed by them. Marx & Co. v. Diner's Club, Inc., 550 F.2d 505, 509-10 (2d Cir. 1977)(relied on in Specht, 953 F.2d at 808). M.D. Mark denies that Moye's opinions violate Specht or Marx, arguing that, "Mr. Moye's testimony does not set forth any opinion of the law ...." (Plaintiffs' Response to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses, p. 5.) Yet M.D. Mark finishes this sentence by

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saying that Mr. Moye "explains the transfers permitted by the contract." (See id.) M.D. Mark, makes several other statements through which it admits that Moye is attempting to define legal rights and obligations impose by contracts, such as: · Mr. Moye merely explains the obligations of the parties pursuant to the contract and the entities to which the contracts permit the transfer of data following a corporate merger. Mr. Moye will explain the contracts and the rights and obligations of the parties to the contracts as it applies to the transfer of data.

·

(Plaintiffs' Response to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses, pp. 4-5.) These statements opine directly on the rights and obligations of M.D. Mark, its predecessor PGI, Kerr-McGee and Oryx under the contracts at issue in this case and are, therefore, inadmissible legal conclusions. See Marx & Co., 550 F.2d at 509-10. B. M.D. Mark Misapplies Cases Law in Arguing for Admission of Moye's and Gray's Legal Conclusions.

Contrary to M.D. Mark's assertions, United States v. Blizerian, 926 F.2d 1285, 1294-95 (2d Cir. 1991), does not support admission of Moye's legal opinions. Rather, the Second Circuit distinguished between admissible opinions relating to issues of fact, to which the plaintiff's expert opined, and inadmissible legal conclusions based on those facts, to which the defendant's expert was not permitted to opine. Id. (citing Marx & Co., 550 F.2d at 509). The court issued a limiting instruction to the jury making clear that the plaintiff's expert was not opining as to what the law required. Id. at 1295. As discussed above, however, Moye's opinions do nothing more than apply

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facts to support conclusions of law in the same manner as the proffered (but excluded) testimony of the defendant's expert in Blizerian. See id. Accordingly, Blizerian supports the outright exclusion of Moye's legal opinions, thereby rendering moot M.D. Mark's suggestion that the Court should admit his legal opinions with a limiting instruction. M.D. Mark next attempts to argue that Moye's legal opinions are akin to an expert witness testifying that a defendant's conduct constitutes negligence. (Plaintiffs' Response to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses, p. 6.) The case M.D. Mark cites in support, however, addressed expert testimony concerning the applicable standard of care, and does not even touch issue of whether the expert crossed the boundary of offering inadmissible legal opinions. See Hines v. The Denver and Rio Grande R.R. Co., 929 P.2d 419, 422-23 (Colo. 1991). M.D. Mark has not endorsed Moye as an expert regarding standard of care, 2 so the Hines opinion does not apply. M.D. Mark cites one last, equally distinguishable case, this time arguing that a legal conclusion expressed in Gray's export report is admissible. In First Nat'l State Bank of New Jersey v. Reliance Elec. Co., 668 F.2d 725, 731 (3d Cir. 1981), the Third Circuit upheld the trial court's decision to admit expert testimony that the defendant bank "transcended the established custom and practice in the banking industry" by "accepting a lease that contained a certificate of acceptance before goods were

M.D. Mark never endorsed a standard of care expert even before the Court dismissed its negligence and other tort claims.

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delivered." This testimony addressed common industry practices only, and does not expand into conclusions about what is permitted under a contract, the latter being prohibited by Marx. See Marx & Co., 550 F.2d 509-11. By contrast, Gray opines on the legal duties under corporate merger law and contracts by concluding that the transfer of seismic data to the surviving company of a merger is prohibited unless the applicable license agreements specifically permit the transfer. (Report of Robert C. Gray, p. 3, attached as Exhibit B to Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses.) Therefore, Marx & Co. applies, rather than the Third Circuit case M.D. Mark cites, and Gray's legal opinion should be excluded. III. CONCLUSION

For the reasons stated above, and those stated in Defendants' Motion to Exclude Legal Conclusions From the Testimony of Plaintiff M.D. Mark's Expert Witnesses, the Court should prohibit M.D. Mark from introducing any expert testimony from Moye. The Court should also prohibit expert testimony from Gray regarding the effects of a corporate merger on the seismic license agreements at issue in this case.

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Dated this 14th of February, 2007.

Respectfully submitted,

s/M. Antonio Gallegos____________ Scott S. Barker Gregory E. Goldberg M. Antonio Gallegos H OLLAND & H ART LLP 555 Seventeenth Street, Suite 3200 Post Office Box 8749 Denver, Colorado 80201-8749 Phone: (303) 295-8513 Fax: (303) 975-5416 [email protected] [email protected] [email protected] A TTORNEYS F OR D EFENDANTS

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C ERTIFICATE O F S ERVICE
I hereby certify that, on February 14, 2007, I electronically filed the foregoing with the Clerk of Court using CM/ECF system which will serve such filing by e-mail to: Harlan P. Pelz Daniele W. Bonifazi Pelz, Bonifazi & Inderwish [email protected] [email protected]

s/Sally A. Walter ________________

3665680_2.DOC

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