Campbell v. CGM, LLC

2016 DNH 212

• Court: District Court, D. New Hampshire
• Decided: November 29, 2016
• Docket: 15-cv-088-JD
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Christopher Campbell

v. Civil No. 15-cv-088-JD Opinion No. 2016 DNH 212 CGM, LLC

O R D E R

Christopher Campbell, brings this action against his former

employer, CGM, LLC, asserting claims for breach of contract;

fraud, deceit and misrepresentation; violation of the New

Hampshire Consumer Protection Statute RSA Chapter 358-A; and

unpaid wages. Both Campbell and CGM have filed motions for

summary judgment. Campbell now moves to strike the declaration

of Duane Szarek submitted by CGM in support of its objection to

Campbell’s motion for summary judgment. CGM objects to the

motion to strike.1

Background

Christopher Campbell is an electrical engineer who founded

a telecommunications company called Intellinet, Inc. In 2000,

Intellinet began doing contract work for CGM, a company in

Georgia in the business of telecommunications consulting that

1 CGM filed a “corrected” objection on November 23, 2016, which included the exhibits that were cited in but not provided with the original objection. was owned by Christopher Campbell’s twin brother, Charles

Campbell, and Kevin Murphy. Christopher and Charles began

negotiations for Christopher to work for CGM that culminated in

an offer made to Christopher by CGM. At that time, another

company, CCG Consulting, was considering acquiring CGM.

Christopher signed an employment agreement in May of 2001

and began working for CGM in June. Based on the terms of the

employment agreement, Christopher expected to receive annual

bonuses but no bonuses were paid. CGM disputes the existence of

an enforceable employment agreement and its terms.

When Christopher inquired about bonuses, he was told that

CGM had no earnings so that no bonuses could be paid. A few

years later, CGM reduced Christopher’s salary, again citing

financial issues. Christopher continued to ask for more money,

but his requests were denied. Beginning in 2009, CGM paid

Christopher commissions on revenue from certain customers, but

the amount of commissions to be paid generated issues between

Christopher and CGM.

Discussions about Christopher’s role in the company and his

pay structure continued until November of 2014 when Christopher

experienced a breakdown. Christopher did not return to work

during December of 2014 and January of 2015. CGM terminated his

2 employment effective January 15, 2015. Christopher then brought

this action against CGM.

Christopher disclosed Paul Hendrickson, CPA, as an expert

witness in this case, and provided Hendrickson’s report to CGM.

CGM had Hendrickson’s report reviewed by Duane Szarek, CPA, who

has served as CGM’s accountant since 2014. CGM did not disclose

Szarek, or anyone else, as an expert.

CGM did disclose Szarek as a possible witness who might

testify at trial under Federal Rule of Civil Procedure 26(a)(1).

As part of that disclosure, CGM stated that Szarek had knowledge

of the circumstances when Christopher Campbell was hired at CGM

in 2001, about CGM’s income in 2002 through 2004, and about

CGM’s profits since then and its revenue and earnings. CGM also

represented that Szarek could testify that CGM did not

manipulate its revenue or earnings or divert funds to CGM’s

owners, that he could give his opinion about the veracity of

CGM’s “current and historic financial data and condition,” and

about the “accuracy and veracity” of CGM’s books, records,

financial data, and reporting. When Szarek was deposed,

however, he explained that he was hired by CGM in the middle of

2014, that he had no knowledge about Christopher Campbell’s

contribution to the company in 2001, did not know whether CGM

had generated significant profits, and did not know whether

3 CGM’s owners had misrepresented, manipulated, or diverted the

company’s revenue and earnings. Szarek also denied knowledge of

CGM’s past data and financial circumstances.

Standard of Review

“[A] party must disclose to the other parties the identity

of any witness it may use at trial to present evidence under

Federal Rule of Evidence 702, 703, or 705.” Fed. R. Civ. P.

26(a)(2)(A). In addition, “this disclosure must be accompanied

by a written report—prepared and signed by the witness—if the

witness is one retained or specially employed to provide expert

testimony in the case or one whose duties as the party’s

employee regularly involve giving expert testimony.” Fed. R.

Civ. P. 26(a)(2)(B). “If a party fails to provide information

or identify a witness as required by Rule 26(a) or (e), the

party is not allowed to use that information or witness to

supply evidence on a motion, at a hearing, or at trial, unless

the failure was substantially justified or is harmless.” Fed.

R. Civ. P. 37(c)(1). The court may order other sanctions

instead of or in addition to excluding the evidence. Id.

Discussion

Christopher Campbell moved for partial summary judgment on

his breach of contract claim and CGM’s counterclaims for breach

4 of contract, conversion, violation of the Computer Fraud and

Abuse Act, tortious interference, punitive damages, and an

injunction. In support of its objection to Campbell’s motion

for summary judgment, CGM submitted Szarek’s declaration with

his curriculum vitae and three attached exhibits. Campbell

moves to strike Szarek’s declaration because CGM did not

disclose Szarek as an expert in this case.

CGM objects to the motion to strike. In support, CGM first

argues that motions to strike under Federal Rule of Civil

Procedure 12(f) are not favored. Campbell’s motion is not

brought under Rule 12(f). Therefore, CGM’s objection based on

Rule 12(f) is inapposite to the motion filed.

CGM asserts that Szarek is not offered as an expert so that

no disclosure was required. CGM asserts that Szarek offers lay

opinion under Federal Rule of Evidence 701 and that Szarek is a

fact witness who is providing information based on his personal

knowledge and perceptions. In addition, CGM argues that

Campbell “opened the door to Szarek’s testimony on damages” when

Campbell’s attorney asked Szarek about the expert’s opinion

during Szarek’s deposition, and that Campbell’s objection about

the substance of the declaration does not support his motion.

As a fall-back position, CGM contends that even if some of the

declaration is excluded as expert opinion, other parts, that are

5 not identified, should not be excluded and the exhibits attached

to the declaration should be considered.

A. Lay Opinion and Fact Witness

“If a witness is not testifying as an expert, testimony in

the form of an opinion is limited to one that is: (a)

rationally based on the witness’s perception; (b) helpful to

clearly understanding the witness’s testimony or to determining

a fact in issue; and (c) not based on scientific, technical or

other specialized knowledge within the scope of Rule 702.” Fed.

R. Evid. 701. Lay opinion must be based on reasoning that is

familiar in everyday life and on things personally observed by

the witness rather than on specialized knowledge or training.

United States v. Vega, 813 F.3d 386, 394-95 (1st Cir. 2016);

Providence Piers, LLC v. SMM New England, Inc., 2015 WL 9699936,

at *8-*9 (D.R.I. Oct. 1, 2015); United States v. Tanguay, 895 F.

Supp. 2d 284, 289 (D.N.H. 2012).

In the area of a business’s financial information, a lay

witness may be allowed to testify under Rule 701 “based on the

witness’s own perceptions and knowledge and participation in the

day-to-day affairs of the business.” A.J. Amer Agency, Inc. v.

Astonish Results, LLC., 2014 WL 3496964 at *22 (D.R.I. July 11,

2014) (internal quotation marks omitted); see also Hand v. N.J.

St. Ath. Control Bd., 2016 WL 5886877, at *3-*4 (D.N.J. Oct. 7,

6 2016). For that reason, a company’s accountant with personal

knowledge of the company’s books may testify about the specific

factual information with which he is familiar from his work,

that is, the accountant’s personal knowledge based on his

ordinary duties. See United States v. Rigas, 490 F.3d 208, 225

(2d Cir. 2007); Teen-Ed, Inc. v. Kimball Int’l, Inc., 620 F.2d

399, 403-04 (3d Cir. 1980); Ga. Operaters Self-Insurers Fund v.

PMA Mgmt. Corp., 143 F. Supp. 3d 1317, 1337 (N.D. Ga. 2015). On

the other hand, a witness, even the owner or officer of a

business, cannot give opinions that require specialized

accounting information or rely on a report or other input from

third parties. James River Ins. Co. v. Rapid Funding, LLC, 658

F.3d 1207, 1214-16 (10th Cir. 2011).

Szarek states in his declaration that he reviewed

Hendrickson’s report and provides his opinions of Hendrickson’s

calculations of CGM’s annual earnings. He then provides his own

opinions about Hendrickson’s calculations and the reasons

supporting his opinions, including reference to an exhibit

titled “Robust Salary and Cost of Living Data at Your

Fingertips” from the “Economic Research Institute.” As is clear

from Szarek’s deposition testimony, the information in his

declaration is not based on Szarek’s personal knowledge or his

7 every-day perceptions of business at CGM from his accounting

work there.

In his calculations, Szarek reviews CGM’s tax returns from

2001 through 2008, and 2010 through 2014. Szarek, however, did

not begin to provide accounting services to CGM until 2014. CGM

does not explain how Szarek had personal knowledge of the

specific information he references from tax returns filed long

before he began providing services to CGM, and Szarek’s

deposition testimony contradicts that basis for the declaration.

Therefore, CGM has not shown that information taken from those

tax returns, other than possibly 2014, are part of Szarek’s

personal knowledge and work experience at CGM.

As a result, Szarek’s declaration does not provide lay

opinion within the meaning of Rule 701 nor is Szarek providing

facts based on his personal knowledge. CGM’s argument that

Szarek merely did simple arithmetic ignores the sources of his

information and his specialized knowledge of accounting

practices necessary to address CGM’s income, deductions, profit

and loss, and compensation. Further, Szarek’s opinions about

Hendrickson’s calculations are not matters within his personal

knowledge based on his day-to-day work for CGM.

8 B. Invited Testimony

CGM asserts that Campbell “opened the door” to Szarek’s

testimony on damages when Campbell’s counsel asked Szarek at his

deposition if he agreed with Hendrickson’s calculations. CGM

provides no authority to support an invited testimony theory in

the context of summary judgment or to allow an undisclosed

expert based on that theory.

CGM further argues, relying on United States v. Candelaria-

Silva, 162 F.3d 698, 707 (1st Cir. 1998) that Szarek’s

declaration is “curative” of otherwise inadmissible evidence.

In Candelaria-Silva, the court allowed the government to

question a witness about the defendant’s drug activities to

correct a misimpression from defense counsel’s questioning that

the defendant had not been involved. Id. Even if “curative

admissibility” would apply in the context of summary judgment,

CGM does not identify any inadmissible evidence submitted for

purposes of the summary judgment motions that Szarek’s

declaration would correct.

C. Partial Exclusion

CGM states in a conclusory manner that not all of Szarek’s

declaration and supporting exhibits should be struck as expert

opinion. CGM, however, does not explain what portions or

exhibits might be allowed. The court declines to make that

9 determination in the absence of a specific request by CGM

supported by appropriate argument and authority.

D. Result

CGM has not shown that Szarek’s declaration is lay opinion

under Rule 701 or that Szarek merely provides facts and simple

arithmetic. Instead, Szarek’s declaration provides expert

opinion about the validity of Hendrickson’s expert report and

about calculating CGM’s annual income during periods that

predate Szarek’s work as an accountant for CGM. Szarek’s

opinions are offered to oppose Christopher Campbell’s claims in

this case.

It is undisputed that CGM did not disclose Szarek as an

expert witness and did not provide the information required by

Rule 26(a)(2). CGM has made no argument that its failure to

make the required disclosures was substantially justified or

harmless. Therefore, Szarek’s declaration cannot be considered

for purposes of summary judgment and is struck. Civ. P.

37(c)(1).

Conclusion

For the foregoing reasons, the plaintiff’s motion to strike

(document no. 51) is granted. The declaration of Duane Szarek

10 is struck and will not be considered for purposes of summary

judgment.

SO ORDERED.

__________________________ Joseph DiClerico, Jr. United States District Judge

November 29, 2016

cc: Matthew T. Gomes, Esq. Timothy John McLaughlin, Esq. P. Shane O’Neill, Esq. David P. Slawsky, Esq.