Howard v. Tanium, Inc.

Opinion

DANIEL HOWARD, Case No. 21-cv-09703-JSC

Plaintiff, ORDER RE: DAUBERT MOTIONS v. Re: Dkt. Nos. 104-107

Defendant.

Daniel Howard filed suit against his former employer, Tanium Inc., alleging Tanium fraudulently induced him to join Tanium as an employee. Jury trial is scheduled to commence July 15, 2025. Now pending before the Court are four motions to exclude expert testimony under Federal Rule of Evidence 702. Having carefully reviewed the parties’ submissions, and with the benefit of oral argument on June 25, 2025, the Court GRANTS Tanium’s motion to exclude Phillip Allman’s report and GRANTS in part Tanium’s motions to exclude Jennifer Cohen’s report and Marcia Wagner’s rebuttal report. In addition, the Court GRANTS in part Plaintiff’s motion to exclude Neil Beaton’s report and rebuttal report. The Court’s summary judgment order details the facts in this case. (Dkt. No. 48.) Briefly, relevant to the parties’ motions to exclude, Plaintiff worked at Fortinet, a publicly traded technology company, from 2014 to 2016. (Id. at 1.) In March 2016, Plaintiff applied for a technical writer position at Tanium, a private, closely held corporation. (Id. at 2.) James Evan, an Engineering Manager at Tanium, extended an offer to Plaintiff via telephone. Evans offered a $165,000 salary plus bonuses and “30,000 shares of stock vesting over four years.” (Id.) times five equals $150,000 current value subject to vesting.” (Id.) Evans does not remember the terms of his offer to Plaintiff. (Id. at 3.) Tanium subsequently sent Plaintiff an offer letter listing a $165,000 salary, a grant of 30,000 Restricted Stock Units (“RSUs”) vesting over four years, and a 25% bonus. (Id.) The letter did not include a valuation for the 30,000 RSUs. (Id.) Plaintiff signed Tanium’s offer letter and RSU agreement. (Id. at 5.) In 2020, shortly after his initial grant of 30,000 RSUs fully vested, Plaintiff quit Tanium. (Id.) In November 2021, Plaintiff sued Tanium for fraud, alleging Tanium misrepresented the value of its stock to induce him to leave Fortinet and work for Tanium. (Dkt. No. 1-2 at 4-5.) Tanium executives claim the $5 per share valuation was based on an August 2015 stock sale event. (Id.) There, private investors purchased Tanium shares for approximately $15 per share, after which Tanium split its shares on a 3-to-1 basis, which provided shareholders with 3 shares for every 1 share they held. (Id.) Plaintiff asserts the fair value of the RSUs at the time of the job offer was $2.01 per share based on an independent valuation conducted by Grant Thornton LLP entitled “Re: Valuation Services in Connection with IRC Section 409A and Fair Value Reporting.” (Id. at 4.) The Grant Thornton Report stated the “Common Stock” for Tanium was valued at $2.01 as of December 31, 2015. (Id.) Now pending before the Court are four motions to exclude under Federal Rule of Evidence 702. Tanium moves to exclude the reports of Jennifer Cohen and Phillip Alman and the rebuttal report of Marcia Wagner. (Dkt. Nos. 105-107.) Plaintiff moves to exclude Neil Beaton’s report and rebuttal report. (Dkt. No. 104.) Federal Rule of Evidence 702 permits admission of an expert’s testimony when:

(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’s opinion reflects a reliable application of the principles Fed. R. Evid. 702. Rule 702 imposes upon district courts a “‘gatekeeping’ obligation” to ensure that expert testimony “is not only relevant, but reliable.” United States v. Hankey, 203 F.3d 1160, 1167 (9th Cir. 2000) (quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993)). The burden of proving admissibility rests with the proponent of the expert testimony. Lust By & Through Lust v. Merrell Dow Pharms., Inc., 89 F.3d 594, 598 (9th Cir. 1996). In 2023, Rule 702 was amended to “clarify and emphasize that expert testimony may not be admitted unless the proponent demonstrates to the court that it is more likely than not that the proffered testimony meets the admissibility requirements set forth in the rule.” Fed. R. Evid. 702 (Advisory Committee Notes, 2023 Amendments). “[T]he trial court has substantial discretion in discharging its gatekeeping obligation.” Hankey, 203 F.3d at 1167. A. Report Jennifer Cohen, a Charter Financial Analyst (“CFA”), is a partner at Citrin Cooperman Advisors LLC, an accounting and consulting firm that “provides business, economic, financial, and valuation consulting services to clients in a variety of industries.” (Dkt. No. 101-3 at 5.) Her report expresses her opinions “regarding the use of 409A valuations in determining the value of certain classes of stock.” (Id. at 9.) The report’s Analysis section has two parts. Part A, titled “409A Valuations,” discusses the “distinct characteristics” of Tanium’s preferred and common stock according to Tanium’s certificate of incorporation. (Id. at 10-14.) Specifically, the report describes what holders of Tanium preferred and common stock are entitled to regarding dividends, liquidation preference and seniority, redeemability provisions (call and put rights), voting rights, and equity participation and convertibility. Part B, titled “Representations by Tanium,” states Tanium represented to Plaintiff the fair market value of Class B Common Stock was $5 per share; however, that $5 figure “represents the fair value of Preferred Stock.” (Id. at 107.) Because “the value of the Preferred Stock would be higher than the value of the Common Stock[,] . . . Tanium inappropriately and inaccurately represented the value of Plaintiff’s stock compensation.” (Id.) In the conclusion compensation received by Mr. Howard to be $2.01 per share.” (Id.) B. Analysis Tanium moves to exclude Ms. Cohen’s testimony on multiple grounds. Tanium asserts “Ms. Cohen giving a blind ‘thumbs up’ to the 409A Valuation will not help the jury understand the evidence or determine a fact at issue.” (Dkt. No. 101-4 at 12.) Relatedly, Tanium argues “Ms. Cohen did not rely on sufficient facts or data in coming to her conclusion” and “does not provide any method through which she came to her conclusion.” (Id.) The Court grants in part Tanium’s motion to exclude Ms. Cohen’s report. In Part A of the report—where Ms. Cohen describes terms of Tanium’s preferred and common stock—Ms. Cohen uses her skill, experience, and education to explain Tanium’s certificates of incorporation in a way that will likely help jurors. Tanium does not object to this testimony. So, Ms. Cohen may testify as to Part A of the report. She may also testify to her conclusion that Tanium’s preferred stock has “some favorable rights” in comparison to its common stock, so “the value of the Preferred Stock would be higher than the value of the Common Stock.” (Dkt. No. 101-3 at 14.) But Ms. Cohen may not testify that $5 per share represents the fair value of Tanium’s preferred stock, that $2.01 represents the value of the common stock Mr. Howard received, or that Tanium inappropriately and inaccurately represented the value of Plaintiff’s stock compensation because Plaintiff has not established these opinions are more likely than not the product of reliable principles and methods. Regarding Ms. Cohen’s determination that $5 per share represents Tanium’s preferred stock, Ms. Cohen cites only the declaration of Mike Curran at Docket No. 44- 14 for this point, in which Mr. Curran describes Tanium’s stock split. The declaration says nothing about common versus preferred stock. Regarding her conclusion “the value of stock compensation received by Mr. Howard [is] $2.01 per share,” (Dkt. No. 101-3 at 14), Ms. Cohen testified she did not do any independent analysis to arrive at the $2.01 value:

Q: Okay. What analysis did you do to determine the fair market value of the RSU grants – I’m sorry, the RSU on the date of the grant? A: I did not do an analysis of that. Q: But you did no independent analysis; is that correct? A: I did not have the complete report. I only had one page of the cover letter, which stated the conclusion. Q: So that’s not quite what I asked you. I asked you if you did any independent analysis beyond looking at the Grant Thornton report. A: I didn’t -- I did not.

(Dkt. No. 101-4 at 138-139.) She later reiterated this testimony: Q: So, then this $2.01 per share is based solely on the Grant Thornton valuation? [Objection]: Asked and answered. THE WITNESS: Yes. (Id. at 145.) Because Ms. Cohen admits she did not do any independent analysis to arrive at the $2.01 figure, her opinion as to this valuation is unreliable. And because her conclusion Tanium “inappropriately and inaccurately represented the value of Mr. Howard’s stock” is based on her conclusion about the value per share, that conclusion is also unreliable. Moreover, whether Tanium accurately represented the value of its stock is for the jury to decide. Plaintiff argues “Tanium misrepresents Cohen’s opinion,” asserting Ms. Cohen never opined that the value of the stock was $2.01 but “merely accepted that number as consistent with what Tanium had reported in other circumstances.” (Dkt. No. 101-3 at 92.) Plaintiff’s argument overlooks the conclusion section, where Ms. Cohen states “I find the value of stock compensation received by Mr. Howard to be $2.01 per share.” (Dkt. No. 101-3 at 14.) Plaintiff also argues Tanium offers “no contrary opinion, not [sic] contrary evidence, and no reasonable basis” to contradict Ms. Cohen’s conclusion about the $2.01 fair market value. (Dkt. No. 101-3 at 92.) Relatedly, Plaintiff argues “Tanium did not produce, nor argued [sic] that the Grant Thornton valuation is mistaken, erroneous, incomplete, or otherwise improper.” (Id.) These arguments misunderstand Rule 702. Plaintiff, as the proponent of the evidence, has the burden of demonstrating it is more likely than not that the testimony is based on sufficient data and the product of reliable methods. See Fed. R. Evid. 702. In its motion to exclude, Tanium need not prove Ms. Cohen’s $2.01 valuation is incorrect. Instead, Tanium argues—and the Court agrees—Plaintiff has failed to meet his burden of establishing Ms. Cohen’s opinion on the $2.01 valuation is based on sufficient data and the product of reliable principles and methods. testify as to Part A of her report and her opinion that the value of Tanium’s preferred stock would be higher than the value of its common stock. Otherwise, Ms. Cohen’s report is inadmissible.1 A. Report Phillip Allman has a Ph.D. in economics. (Dkt. No. 107-1 ¶ 2.) His “primary fields of expertise are econometrics, finance, and labor economics.” (Id.) Dr. Allman was retained “to conduct an analysis of the current value of Daniel Howard’s foregone Restricted Stock Units (RSU’s) with Fortinet and foregone stock purchases from the Employee Stock Purchase Program (ESPP) with Fortinet as a result of ending his employment at Fortinet on April 14, 2016.” (Id. ¶ 3.) Dr. Allman’s report begins by calculating the value of the unvested RSUs Plaintiff earned while at Fortinet but forfeited upon leaving. Dr. Allman concludes if Plaintiff “remained with Fortinet through February 1, 2020, all of the unvested RSU’s would have vested and effectively converted to shares for Fortinet stock.” (Id. ¶ 5.) “The current value of those shares is $1,439,953.” (Id.) Second, Dr. Allman opines on Plaintiff’s damages resulting from the loss of annual RSU grants from Fortinet. Dr. Allman calculates damages according to three scenarios: (1) Plaintiff worked another five years at Fortinet; (2) Plaintiff worked at Fortinet through trial; and (3) Plaintiff worked at Fortinet for another ten years. (Id. ¶ 6.) Dr. Allman opines Plaintiff would earn $364,257 in additional RSU grants in the first scenario; $587,180 in the second scenario; and $611,967 in the third scenario. (Id.) Third, Dr. Allman calculates the “lost profits from the shares Mr. Howard would have had the opportunity to purchase” through Fortinet’s Employee Stock Purchase Program, in which employees could withhold up to 15% of their salary to “effectively purchase Fortinet stock at a discount to the market price, twice per year.” (Id. ¶ 7.) Dr. Allman tallied the ESPP damages figure at $1,139,081 based on an assumption Plaintiff would have withheld the maximum amount allowed (15%) through February 2019, when the program ended. (Id. at 8.) Finally, Dr. Allman adds the damages figures for the three time periods. Dr. Allman concludes that had Plaintiff remained at Fortinet five years after leaving, his damages would total $2,943,291; had he remained at Fortinet through a trial date of April 2025, his damages would total $3,166,213; and had Plaintiff remained at Fortinet for ten years after leaving, his damages would total $3,191,100. (Id. at 4.) B. Analysis 1. Stock Valuation For the unvested RSUs, RSU grants, and ESPP damages calculations, Dr. Allman uses $107.66 as Fortinet’s current share price. (Dkt. No. 100-3 at 22-26.) For example, to calculate damages for the loss of unvested RSUs, Dr. Allman multiplies the unvested shares by $107.66. (Id. at 22 (9,375 unvested shares x $107.66 per share = $1,009,313 total value of lost shares for 2014 RSU grant).) Dr. Allman’s report does not state what “current date” the $107.66 share price reflects. At oral argument, Plaintiff clarified $107.66 was Fortinet stock’s price when Mr. Allman drafted his report, dated February 10, 2025. (Id. at 19.) Dr. Allman’s selection of a February 10, 2025 date to set the value of Tanium stock is arbitrary, so damages calculated using the $107.66 date are arbitrary and unlikely to be helpful to the jury. At oral argument, Plaintiff argued at trial Dr. Allman could adjust his expert testimony to reflect the current price of the stock as of the date of trial, but he provided no legal support for the proposition that an expert can testify to something different than what is in their report. Nor did he provide a rationale for using the trial date to value the stock for damages purposes, which raises its own set of questions: is it the first day of trial, the day on which the damages expert testifies, or the day on which a verdict is entered? These questions underscore the speculation and uncertainty inherent in Dr. Allman’s damages opinion. See Biren v. Equal. Emergency Med. Grp., Inc., 102 Cal. App. 4th 125, 138 (2002) (“Damage awards may not be based upon the testimony of experts who rely on speculation.”). Dr. Allman’s selection of a February 10, 2025 date is also contrary to California case law. amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.” Cal. Civ. Code § 3333. Under section 3333, a plaintiff in a fraud case “may recover ‘out-of-pocket’ damages in addition to benefit-of-the-bargain damages.” Lazar v. Superior Ct., 12 Cal. 4th 631, 646 (1996). While “out of pocket” damages are usually calculated at the time of the transaction, ‘“benefit of the bargain’ damages may appropriately be calculated as of the date of discovery of the fraud.” Salahutdin v. Valley of California, Inc., 24 Cal. App. 4th 555, 568 (1994). So, in Salahutdin, when the defendant misrepresented the size of the property sold to the plaintiffs, the California Court of Appeal affirmed the trial court using the date the plaintiffs discovered the fraud to value the property for damages purposes. Id. at 569. Likewise, in Walsh v. Hooker & Fay, when the plaintiff was induced to buy stock by a stockbroker’s false representations, the Court of Appeal affirmed a damages award of the difference between the stock’s cost to the plaintiff and the stock’s value as of the date of the fraud was discovered. 212 Cal. App. 2d 450, 451 (1963); see also Munson v. Fishburn, 183 Cal. 206, 219 (1920) (“The measure of damages here would be the amounts paid in by the plaintiff, including the assessments, with interest thereon at the rate of seven per cent from the dates of such payments, less the value of the stock at the time of the discovery of the fraud.”). While Tanium’s motion to exclude did not argue Dr. Allman’s selection of an arbitrary date for valuing Fortinet stock as a basis to exclude, its memorandum on disputed jury instructions raises this issue. Tanium argues a defined date for purposes of valuing shares allows parties to “assess settlement value, the type of experts to hire, and the potential attorneys’ fees that may be awarded, if available.” (Dkt. No. 120 at 8.) Tanium seeks to instruct jurors “the value of the Fortinet stock that [Plaintiff] gave up must be determined as of the date of the transaction, i.e., the date he resigned from Fortinet.” (Dkt. No. 110 at 20.) The Court disagrees with Tanium’s selection of the transaction date: Plaintiff is entitled to benefit of the bargain damages in this fraud case, see Lazar, 12 Cal. 4th at 646, which “may appropriately be calculated as of the date of discovery of the fraud.” Salahutdin, 24 Cal. App. 4th at 568. But the Court agrees a cut-off date is appropriate to make damages sufficiently certain. See Mozzetti v. City of Brisbane, 67 Cal. App. contingent or merely possible cannot serve as a legal basis for recovery.”). It follows that an expert report valuing Fortinet stock according to a date unsupported by the record and contrary to California case law is unlikely to help a jury. So, Dr. Allman’s calculations using that arbitrary date are inadmissible under Rule 702. Following oral argument, Plaintiff filed a supplemental brief on damages. (Dkt. No. 128.) Plaintiff’s brief is procedurally improper.2 See N.D. Civ. Rule 7-3(d) (“Once a reply is filed, no additional memoranda, papers or letters may be filed without prior Court approval . . . .”). Regardless, Plaintiff’s supplemental brief does not alter the Court’s analysis. The cases Plaintiff cites are unpersuasive because the courts applied contract law principles to calculate damages, whereas the present case alleges fraud. See Brandon & Tibbs v. George Kevorkian Acct. Corp., 226 Cal. App. 3d 442, 454 (1990) (“The rules of law governing the recovery of damages for breach of contract are very flexible.”) (emphasis added); Ho v. Marathon Pat. Grp., Inc., No. 5:21-CV-00339-SSS-SPX, 2025 WL 1625351, at *5 (C.D. Cal. May 7, 2025) (“Under California law, the ‘general rule’ is to measure damages at the date of breach. . . . However, this rule is not absolute.”) (emphasis added); Shah v. Skillz Inc., 101 Cal. App. 5th 285, 304 (2024) (“Although damages in breach of contract actions, as a general rule, should be measured from the date of breach under California law, that rule does not apply where, as here, there is no readily available market for the stock at the time of the breach.”) (emphasis added). Shah is also distinguishable because there was no readily available market for the stock at the time of the breach, whereas here, Fortinet is a publicly traded company. See id. at 302 (when “there is no available market for the stock at the time of breach” then “the plaintiff cannot cover his damages by purchasing the lost shares immediately upon the breach”). Moreover, in Shah, the stock was not valued as of the date of trial; rather, the trial court used the price of the stock after the lock-up period preventing the plaintiff from selling his stock ended. Id. at 305. So, Shah does not stand for the proposition that

2 The Court is in receipt of Tanium’s motion to strike the supplemental brief, which argues Plaintiff does not provide authority for filing a supplemental brief and seeks leave to file a response. (Dkt. No. 131.) Because Plaintiff’s supplemental brief does not change the Court’s stock values should be left open-ended through trial. The only fraud case Plaintiff cites and relies on is Lazar. Plaintiff argues the Lazar plaintiff “was allowed to recover for the value of what he left behind due to reliance on false representations made before the employment relationship began.” (Dkt. No. 128 at 2.) In Lazar, the California Supreme Court held the plaintiff who was fraudulently induced to relinquish his secure job and relocate his family to another state based on his employer’s false representations could “seek damages for the costs of uprooting his family, expenses incurred in relocation, and the loss of security and income associated with his former employment in New York.” 12 Cal. 4th at 648–49. But Lazar says nothing about how and when to value stock options. And Plaintiff’s supplemental brief does not explain why the Court should apply Lazar to conclude the stock may be valued as of the trial date when the Salahutdin, Walsh, and Munson courts affirmed measuring damages as of the date of the discovery of the fraud. Indeed, Plaintiff’s supplemental reply does not discuss these cases. Even were the Court to conclude Dr. Allman’s decision to value Fortinet stock as of February 10, 2025 goes to weight and not admissibility, Dr. Allman’s report would remain inadmissible. As described below, Dr. Allman’s opinions on damages from unvested RSUs, RSU grants, and ESPP damages are not based on reliable methodologies. 2. Unvested RSUs Tanium moves to exclude Dr. Allman’s opinion on the ground he “is nothing more than a testifying calculator and that is not helpful to the jury in determining and of the facts at issue.” (Dkt. No. 100-4 at 10.) This argument is persuasive as to Dr. Allman’s calculations regarding the value of Plaintiff’s unvested RSUs. For Plaintiff’s 2015 RSU grant, for example, Dr. Allman determined Plaintiff received 2,000 shares after the 2022 “5 for 1 stock split” by multiplying the 400 RSUs Plaintiff received by five. Dr. Allman then determined 1,500 of those shares were unvested when Plaintiff left Fortinet by subtracting from 2,000 the 500 shares that had vested. Finally, he multiplied 1,500 shares by the $107.66 “current share price” to calculate the total value of lost shares from the 2015 RSU grant as $161,490. Plaintiff or his counsel can argue these technical, or other specialized knowledge as required by Rule 702. What’s more, Dr. Allman did not subtract income taxes from the total damages figure. At oral argument, Plaintiff agreed income taxes would have to be paid on the unvested RSUs. However, Plaintiff could not point to anything in Dr. Allman’s report indicating his damages calculations accounted for income taxes. So, Plaintiff fails to establish it is more likely than not that Dr. Allman’s damages opinion regarding unvested RSUs is the product of reliable principles and methods. See Fed. R. Evid. 702. 3. RSU Grants Tanium moves to exclude Dr. Allman’s opinion regarding Fortinet’s future RSU grants on the ground it is entirely speculative. Dr. Allman opines future RSU grants would equal 8.3% of Plaintiff’s future salary year to year and using that figure, calculates loss of RSU grants assuming continued employment for five years, ten years, and through trial. Dr. Allman got the 8.3% percentage by averaging the value of the Fortinet RSU grants Plaintiff received during the two years he worked at Fortinet: in 2015, the RSU grant equaled 8.74% of Plaintiff’s salary, and in 2016, the RSU grant equaled 7.71% of Plaintiff’s salary. (Dkt. No. 107-1 at 10.) Dr. Allman’s methodology for calculating future RSU grants is not tied to data about the RSUs Tanium granted to employees from 2017 onward. (Dkt. No. 107-1 at 35 (“[Question]: But you don’t have any data about the actual granting of RSUs during the subsequent years by Fortinet, do you? [Dr. Allman]: No. . . .”).) And Dr. Allman also admits he cannot determine what RSU grants would have been: Q: But you have no way of determining how many shares of RSUs that he would have been granted during those subsequent years, do you? . . . THE WITNESS: We don’t have any way of knowing what they would have been from year to year, but this projects an average that gives us our best expectation over the course of time as an average with ups and downs. (Dkt. No. 107-1 at 36.) The methodology Dr. Allman uses to overcome this gap in knowledge— averaging the previous two years of RSU grants—is not based on his specialized expertise. Dr. 1 Dr. Allman cannot and does not opine that RSU grants can be calculated as a percentage of an 2 employee’s salary and that such percentage is likely to remain consistent over five- and ten-year 3 periods. His opinion is also inconsistent with actual data on Fortinet’s RSU grants. Tanium’s 4 expert, Neil Beaton, provided a graph with annual Fortinet RSU grants by year: 5 Annual Fortinet RSU Grants by Year 6 4 rs) g porary 9 ores I 0 aaa Peron) Perc)

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16 (Dkt. No. 103-9 § 18.) Mr. Beaton observes “Fortinet decreased its RSU grants by 24.34 percent, 17 2.38 percent, 34.15 percent, and 29.63 percent in 2016, 2017, 2018, and 2019, respectively.” □□□□□ 18 So, Dr. Allman’s opinion that Plaintiffs RSU grant would remain a steady 8.3% of his salary in 19 2018 and 2019 while Fortinet was reducing its annual RSU grants by 29-34% during this period is 20 not “based on sufficient facts or data.” See Fed. R. Evid. 702. 21 In sum, there is no expertise, methodology, or reliable data behind Dr. Allman’s testimony 22 as to likely future Fortinet RSU grants. He is no more qualified to provide such testimony than 23 Mr. Howard himself or Plaintiff's counsel. So, Dr. Allman’s opinion regarding RSU grants does 24 not involve Dr. Allman’s specialized knowledge. 25 4. Employee Stock Purchase Program 26 Tanium also moves to exclude Dr. Allman’s ESPP damages calculations on the ground Dr. 27 Allman calculated the total appreciation of the stocks Plaintiff could have purchased, not the value 28 of the discount the ESPP plan provided. The Court agrees the methodology by which Dr. Allman

calculated ESPP damages is not reliable, so his ESPP damages opinion is inadmissible. Through ESPP, employees could use up to 15% of their Fortinet salary to buy stock at 85% of the price the stock was then trading. (Dkt. No. 107-1 at 3, 9.) On August 15, 2016, for example, Plaintiff could have spent $11,875 (15% of his $79,164 salary) to purchase stock at $4.32 per share (85% of the $5.08 share price). (Id. at 9.) Dr. Allman thus determined Plaintiff could have purchased 2,748 shares ($11,875/$4.32 = 2,748 shares). To calculate damages, Dr. Allman multiplied the 2,748 shares Plaintiff could have purchased by $103.34, which represents the share’s appreciation (calculated by subtracting from the $107.66 current share price the discounted purchase price of $4.32). So, according to Dr. Allman’s damages model, Plaintiff incurred $283,961 in damages from his inability to participate in the August 2016 ESPP program. Dr. Allman’s methodology calculates ESPP damages as the appreciation of the shares Plaintiff could have purchased through Fortinet’s program. This fails to account for the fact that after leaving Fortinet, Plaintiff could have purchased Fortinet stock on the public market. And in fact, he did:

Q: Okay. So how many shares did you retain when you left Fortinet? A: I didn’t have any when I quit. Q. But you have them now; right? A. I have them now. Q. Do you have any shares of Fortinet today? A. I have shares of Fortinet that I’ve purchased. (Dkt. No. 100-5 at 167-68.) As Tanium observes, ESPP is “effectively a 15% coupon on Fortinet stock” whose value, “like any coupon, is the value of the discount.” (Dkt. No. 100-4 at 14.) In August 2016, Plaintiff could have purchased Fortinet shares by paying the $5.08 per share rather than the $4.32 ESPP price. Accordingly, damages from his inability to participate in ESPP should reflect the 76-cent discount Plaintiff did not receive, not the $103.34 the stock has appreciated since August 2016. The former figure is $2,088.48 ($0.76 x 2,748). The latter figure, in Dr. Allman’s report, is $283,961 ($103.34 x 2,748). Plaintiff argues “ESPP is not simply a vehicle to acquire discounted stock” but a “structured, tax-advantaged, payroll-integrated opportunity with characteristics unavailable in general market participation.” (Dkt. No. 100-4 at 94.) But this does not support the reliability of Dr. Allman’s report—there is no indication Dr. Allman considered these benefits. And while it may be true that, accounting for tax and other advantages, Plaintiff’s losing access to ESPP resulted in damages greater than $2,088.48, it remains true that Dr. Allman’s opinion results in a significant overstatement of Plaintiff’s damages due to its flawed methodology. Plaintiff has not shown that a damages calculation that overestimates damages by hundreds of thousands of dollars is more likely than not helpful to the jury and more likely than not the product of reliable methods. See Fed. R. Evid. 702. So, Dr. Allman’s ESPP damages opinion is inadmissible. So, the Court GRANTS the motion to exclude Dr. Allman’s report. A. Report Neil Beaton is a Managing Director at Alvarez & Marsal Valuation Services, LLC who “specialize[s] in business valuations, mergers, and acquisition support, litigation consulting, and economic analysis.” (Dkt. No. 103-9 ¶ 1.) He is a Certified Public Accountant, among other accreditations. (Id. ¶ 2.) His report “provide[s] rebuttal to” Plaintiff’s claim that had he remained Fortinet, he would have “earned over $1 million more than he did at Tanium.” (Id. ¶¶ 3, 13.) To do so, Mr. Beaton compares Plaintiff’s “overall compensation at Fortinet . . . to his offer at Tanium,” including the salaries, bonuses, and RSU grants at each. (Id. ¶¶ 13-15.) Then Mr. Beaton describes the significance of 409A valuations, in part by comparing Tanium’s 409A valuations with tenders offers it made to employees and prices it offered investors. (Id. ¶¶ 19-26.) B. Analysis 1. Plaintiff’s Employment Trajectory First, Plaintiff seeks to exclude Mr. Beaton’s opinion that Plaintiff “would not have remained employed at Fortinet even if Tanium had not misrepresented the stock valuation” on the ground such opinion is outside Mr. Beaton’s expertise. (Dkt. No. 103-2 at 18-19.) Mr. Beaton offers this opinion in his rebuttal report, too, stating “it is more probable than not that Mr. Howard would not have remained employed at Fortinet for five years let alone ten years.” (Dkt. No. 103-6 ¶ 10.) The Court agrees this testimony falls outside the scope of Mr. Beaton’s expertise. An decline in stock price and RSU grants at Fortinet would compel Plaintiff to seek other employment. Mr. Beaton is not that expert. (Id. ¶ 1 (Mr. Beaton “specialize[s] in business valuations, mergers, and acquisition support, litigation consulting, and economic analysis.”).) Tanium’s arguments to the contrary are not persuasive. First, Tanium asserts Mr. Beaton “has even been qualified as an expert before in employment matters.” (Dkt. No. 103-3 at 14.) But Tanium refers to Mr. Beaton’s work as a vocational expert “testify[ing] as to the employability of an individual claiming that he or she cannot work or could not find a job.” (Dkt. No. 103-16 at 4.) That Mr. Beaton was qualified to determine whether an individual was able to perform the essential functions of a job does not qualify him to opine on how long Plaintiff would have stayed at Fortinet. See Avila v. Willits Env’t Remediation Tr., 633 F.3d 828, 839 (9th Cir. 2011) (stating an expert must “stay[] within the reasonable confines of his subject area”). Tanium also cites a district court case for the proposition that a witness need not have formal education to be qualified as an expert. In re Countrywide Fin. Corp. Mortg.-Backed Sec. Litig., 984 F. Supp. 2d 1021 (C.D. Cal. 2013). In Countrywide, the court concluded the expert’s statistical analysis was admissible because even though he did “not claim to be a statistician,” he “studied statistics during his education in economics, use[d] statistical analysis in his published articles, and [taught] courses that discuss statistical issues.” Id. at 1028. Here, Mr. Beaton does not claim to be a labor market expert, nor does he have relevant experience or studies in that field to render an expert opinion on this subject. Finally, Tanium asserts “it is obvious that Plaintiff was looking to leave Fortinet considering his response to a recruiter via LinkedIn for the Tanium position.” (Dkt. No. 103-3 at 14.) But if it is “obvious,” then Mr. Beaton’s expert testimony on this topic is improper. United States v. Vallejo, 237 F.3d 1008, 1019 (9th Cir.) (“To be admissible, expert testimony must . . . address an issue beyond the common knowledge of the average layman.”). So, while Mr. Beaton may opine about the value of Fortinet’s stock and its annual RSU grants, he may not testify whether either led Plaintiff to seek new employment. 2. Other Opinions The Court is unpersuaded by Plaintiff’s arguments to exclude the remainder of Mr. valuation of Tanium’s common stock as of March 2016.” (Dkt. No. 103-2 at 14.) This is not grounds for exclusion because Mr. Beaton does not purport to opine on to the value of Tanium’s stock in March 2016. Second and relatedly, Plaintiff argues Mr. Beaton improperly dismissed Grant Thornton’s 409A valuation, contending Mr. Beaton “asserts, without analysis, that the 409A appraisal was ‘performed for tax purposes’ and therefore irrelevant to determining [fair market value].” (Dkt. No. 103-2 at 15.) Mr. Beaton’s report does not conclude the 409A valuation is irrelevant. Instead, his report states 409A valuations “are utilized by boards of directors as guidance to assist them in determining a price for equity transactions.” (Dkt. No. 103-9 ¶ 23.) To support this conclusion, Mr. Beaton refers to the company’s audited financial statements, which state: The fair value of the common stock underlying the stock option awards was determined by the Board of Directors. Given the absence of a public trading market, the Board of Directors considered numerous objective and subjective factors to determine the fair value of our common stock at each meeting at which awards were approved. These factors included, but were not limited to (i) contemporaneous third-party valuations of common stock; (ii) the rights, preferences and privileges of convertible preferred stock relative to common stock; (iii) the lack of marketability of common stock; (iv) stage and development of the Company’s business; (v) general economic conditions and (vi) the likelihood of achieving a liquidity event, such as an IPO or sale of the Company, given prevailing market conditions. (Dkt. No. 103-9 ¶ 23 (citing Tanium, Inc._000168 and Tanium, Inc._000349-350) (emphasis in original).) So, contrary to Plaintiff’s assertion, Mr. Beaton does not conclude 409A valuations are irrelevant but instead that such valuations are one of several factors used to determine fair value. Third and relatedly, Plaintiff moves to exclude on the ground Mr. Beaton ignored contemporaneous financial data, including Deloitte’s Consolidated Financial Statements which “report grant-date fair values for RSUs.” (Id. at 17.) According to Plaintiff, “this failure to engage with the best available contemporaneous data disqualifies his valuation opinion under Rule 702.” (Id. (emphasis added).) But Mr. Beaton did not render a valuation opinion. He opines that a 409A valuation by itself does not determine fair market value of RSUs. So, his failure to account for valuations set forth in consolidated financial statements does not render this opinion Fourth, Plaintiff argues Mr. Beaton’s report is unreliable because it “relies on tender offers from 2018 to 2020 and stock prices at the time of the RSU vesting—years after the alleged misrepresentation” while “provid[ing] no methodology or economic rationale to bridge that temporal gap.” (Dkt. No. 103-2 at 13.) Plaintiff’s motion later raises the same argument a second time, asserting Mr. Beaton “cites tender offers occurring in 2018-2020, as well as RSU vesting values, to argue that Tanium’s $5/share representation to Howard in March 2016 was reasonable” without providing “economic rational to link the later tender offers back to March 2016.” (Id. at 18.) But Mr. Beaton does not use the subsequent tender offers to establish the fair market value of Plaintiff’s RSU grant. Instead, Mr. Beaton discusses the 2018 through 2020 tender offers to support his conclusion that 409A valuations are not the sole measure for determining fair market value. After recounting various sales and tender offers made from 2015 to 2018, Mr. Beaton observes “[a]ll of these sales and purchases of the Company’s securities were above the common stock values set forth in the Company’s 409A valuations.” (Dkt. No. 103-9 ¶ 25.) Mr. Beaton makes the same observation in recounting subsequent tender offers. (Id. ¶ 26.) Mr. Beaton does not opine on the fair market value of Mr. Howard’s RSUs. So, Plaintiff’s concern that he relies on subsequent events for “a valuation of the relevant period” is unfounded. (Dkt. No. 103-2 at 18.) Fifth, Plaintiff moves to exclude on the ground Mr. Beaton failed to analyze the difference between preferred and common stock. In his deposition and rebuttal report, Mr. Beaton stated this factor does not change his opinion. (Dkt. No. 103-6 ¶ 15 (“Many secondary sales include both preferred and common stock being sold at the same price in spite of the contractual benefits bestowed on the preferred stock.”); Dkt. No. 103-16 at 6 (“Q: Is it your understanding . . . that preferred stock and common stock have the same value? A: Many times, they do, yes, especially in the later-stage companies when the optionality of the value of the company exceeds the economic value of all the provisions of the preferred stock.”).) Plaintiff, while noting his expert’s determination that preferred shares carry enhanced rights, does not offer legal support for his argument that failure to discuss common and preferred stock renders the report so unreliable as to warrant exclusion. This goes to weight, not admissibility. See Kennedy v. Collagen Corp., 161 . . . which may increase or lessen the value of the expert’s testimony. But their presence should not preclude the admission of the expert’s testimony—they go to the weight, not the admissibility.”). C. Rebuttal In his rebuttal report, Mr. Beaton challenges conclusions in Dr. Allman’s and Ms. Cohen’s reports. Plaintiff moves to exclude these rebuttal opinions. Having excluded Dr. Allman’s report, Plaintiff’s motion is moot as to Mr. Beaton’s rebuttal to that report. Regarding Mr. Beaton’s rebuttal to Ms. Cohen’s report, Plaintiff moves to exclude on the ground Mr. Beaton’s critiques “consist[] of little more than disagreement with her conclusions— without modeling, without analysis, and without foundation.” (Dkt. No. 103-2 at 23.) Plaintiff’s motion is moot as to paragraphs 13, 14, and 16 of Mr. Beaton’s rebuttal since the Court excluded the opinions these paragraphs seek to rebut. In paragraph 15 of his rebuttal report, Mr. Beaton describes his understanding of common stock and preferred stock, responding to Ms. Cohen’s conclusion the value of Tanium’s preferred stock would be higher than the value of its common stock. This falls within Mr. Beaton’s expertise in business valuations and will be helpful to jurors assessing the credibility of Mr. Cohen’s report, so this part of the rebuttal is admissible. So, the Court GRANTS in part Plaintiff’s motion to exclude. Mr. Beaton cannot testify about when and whether Plaintiff would have left Fortinet; otherwise, his report is admissible. Regarding his rebuttal report, Mr. Beaton may testify as to paragraph 15 regarding common versus preferred stock. The remainder of Plaintiff’s arguments to exclude are moot because the Court excluded the opinions of Dr. Allman and Ms. Cohen that Mr. Beaton intended to rebut. A. Report Ms. Wagner is the principal of The Wagner Law Group and “an attorney working exclusively in the areas of employee benefits law and executive compensation.” (Dkt. No. 102-5 ¶ 2.) She “ha[s] been recognized as a national expert on a variety of executive compensation issues, including tax, accounting, securities, stock exchange, corporate governance, and litigation risks concerning a discrepancy between” Tanium’s determination of $5 per share as the fair value of the RSUs and Grant Thornton’s $2.01 per share valuation of the same. (Id. ¶ 1.) It is offered as a rebuttal to Mr. Beaton’s report. (Id. ¶ 17.) In the report, Ms. Wagner reviews the four standards the Grant Thornton report analyzed to reach the $2.01 figure, including the applicable IRS revenue rulings and treasury regulations informing those standards. (Dkt. No. 102-5 ¶¶ 23-32.) Ms. Wagner states “none of the Four Standards applied in the Grant Thornton report suggests that its fair market value determinations are so nuanced or arcane as to warrant considering them to be disconnected from providing a fair value estimate for the shares of privately-held companies.” (Id. ¶ 33.) Then, she discusses the tax implications and consequences of Tanium “us[ing] $2.01 per share as fair market value for tax and financial statement purposes and $5 per share for recruiting or other purposes,” including “under- reported income and inadequate federal tax withholding for vested restricted stock and RSU awards.” (Id. ¶¶ 35-36.) She states “consistency in valuation decisions is generally considered critical in order to withstand IRS scrutiny in the event of audit or other challenges.” (Id. ¶ 37.) B. Analysis 1. Timeliness First, Tanium argues Ms. Wagner’s opinion should be excluded as an “untimely disclosed expert opinion” or else “limited to rebutting the opinions presented in paragraph 22 of the Beaton report.” (Dkt. No. 102-4 at 12.) Rebuttal expert disclosures must “contradict or rebut evidence on the same subject matter identified by another party.” Fed. R. Civ. P. 26(a)(2)(D)(ii). “Rebuttal testimony cannot be used to advance new arguments or new evidence” or to “set forth an alternate theory.” Matthew Enter., Inc. v. Chrysler Grp. LLC, No. 13-CV-04236-BLF, 2016 WL 4272430, at *2 (N.D. Cal. Aug. 15, 2016). Rebuttal testimony is proper when it “addresses the same subject matter that the initial experts address and does not introduce new arguments.” Perez v. State Farm Mut. Auto. Ins. Co., No. C 06-01962 JW, 2011 WL 8601203, at *8 (N.D. Cal. Dec. 7, 2011). Ms. Wagner’s report states she reviewed Mr. Beaton’s report and “fundamentally disagree with his discussion in paragraph 22.” (Dkt. No. 102-5 ¶ 17.) In full, paragraph 22 of Mr. Beaton’s One basis of Mr. Howard’s claim is that the fair market value of Tanium’s common stock was fraudulently represented to him in that it was actually $2.01 per share rather than $5.00 per share as was alleged to have been told to him. However, the $2.01 valuation was derived from a 409A valuation report prepared by Grant Thornton, LLP, as of December 31, 2015. As previously stated, 409A valuations are performed by independent valuation firms for tax purposes under Internal Revenue Code §409A. They do not represent the fair market value of similar securities in the open market. Mike Curran, Tanium’s Vice President of Global Talent, indicated that “the 409a valuation is what the auditing firm places on the company for tax purposes. We [Tanium] like to focus on what the market is paying for a common stock in Tanium. Once again, the last transacted value.” Merissa Villalobos, a former recruiter and talent acquisition manager at Tanium, reiterated a number of times that the Tanium share price quoted to potential employees was based on the latest buyback or sale price of the Company’s securities.

(Dkt. No. 103-9 ¶ 22 (footnotes omitted).) While not always explicit, Ms. Wagner’s report responds to Mr. Beaton’s opinion expressed in this paragraph and throughout the report that 409A valuations do not represent the fair market value of a security. That is, Mr. Beaton opines a company can determine a fair market value for RSUs that differs from their 409A valuation, which is primarily used for tax purposes. Ms. Wagner rebuts this opinion by asserting a company should be consistent in how it represents fair market value. And Mr. Beaton opines a company can use recent transactions to set fair market value. Ms. Wagner rebuts this opinion by asserting the Grant Thornton valuation incorporates an analysis of recent transactions. In this way, except in the instance described below, her report “addresses the same subject matter that [Mr. Beaton] address[es] and does not introduce new arguments.” See Perez, 2011 WL 8601203, at *8. 2. Testimony re: Shareworks Statement Tanium also argues for exclusion on the ground Ms. Wagner’s opinion is not based on “sufficient facts or data” as required by Rule 702 because her opinion “is premised in part on a misunderstanding of the tax withholdings when Plaintiff’s RSUs vested.” (Dkt. No. 102-4 at 13.) Tanium focuses on Ms. Wagner’s analysis of an account statement from Shareworks by Morgan Stanley Tanium provided to Plaintiff (“the Shareworks Statement”), which describes options for paying taxes on the vested RSU grants. Regarding this statement, Ms. Wagner’s report states: Tables in the Shareworks Statement identify “release dates” in 2018 on June 15, September 15, and December 15 for purposes of applying federal withholding tax rules applicable to Plaintiff’s RSU awards vesting on each of the three vesting dates. Those tables indicate that Tanium relied upon valuation reports by Grant Thornton or others not only for communicating the value of common stock awarded to Plaintiff, but also for making tax withholding determinations when vesting occurred for the awards released on September 15 and December 15 (with Plaintiff choosing to pay those taxes in cash for the June 15, 2018 release date). (Dkt. No. 102-5 ¶ 19.) Tanium argues Ms. Wagner was wrong when she stated “the 409A valuation of $2.01 was used by Tanium ‘for making tax withholding determinations when vesting occurred.’” (Dkt. No. 102-4 at 13 (quoting Dkt. No. 102-5 ¶ 19).) Having reviewed the Shareworks Statement and Ms. Wagner’s deposition testimony on this point, the Court agrees. In the Shareworks Statement for the June 2015 release date, Plaintiff was offered the option to pay taxes and receive all RSUs, with a “gross release value” of $81,900. (Dkt. No. 44-9 at 4.) Ms. Wagner testified $81,900 is the amount Plaintiff should have been taxed as regular income for releasing the shares on this date. (Dkt. No. 102-3 at 59.) For the December 2018 release date, the Shareworks Statement offered Plaintiff the option to withhold shares to cover taxes, the withheld shares being valued at $4,720.42. (Dkt. No. 44-9 at 4.) In her deposition, Ms. Wagner agreed these figures reflecting Plaintiff’s tax obligations ($81,900 and $4,720.42) were based on the share’s release price, not on its market price at the time of grant:

Q: Okay. Would you agree with me, then, based upon the Shareworks statement produced by Mr. Howard, that the withholding done, at least on 17 December, was not based on a 2.01 valuation but rather a 6.58 release price? A: Yes, I would. (Dkt. No. 102-3 at 60.) Specifically, she testified that the $81,900 figure was the product of multiplying the $5.46 release price by 15,000 shares disbursed. Likewise, she testified the $4,270.42 withholding figure was the product of multiplying the $6.58 release price by 649 restricted shares withheld. (Id. at 59-60.) So, while the Shareworks Statement lists the “market price at the time of grant” as $2.01, Ms. Wagner confirmed that figure was not used to calculate Plaintiff’s tax withholding obligations. Because Ms. Wagner’s deposition testimony amounts to that this Statement shows Tanium used the $2.01 valuation “for maxing tax withholding determinations when vesting occurred.” (Dkt. No. 102-5 ¶ 19.) In arguing against this conclusion, Plaintiff insists “Wagner acknowledges that the 409A valuations were used to report taxes for Howard’s vesting values.” (Dkt. No. 106-2 at 40.) Plaintiff thus reasserts Ms. Wagner’s misinterpretation of the Shareworks Statement. While the $2.01 valuation is listed on the Shareworks Statement, Ms. Wagner acknowledged it was not used to calculate Plaintiff’s tax obligations. Even were the Court to conclude Ms. Wagner’s testimony about the Shareworks Statement is reliable under Rule 702, that opinion is unrelated to Mr. Beaton’s report. Mr. Beaton’s report does not discuss the Shareworks Statement or the taxes Plaintiff withheld or how Tanium calculated tax withholding obligations. Because Ms. Wager’s opinion regarding the Shareworks Statement “advance[s] new arguments” rather than responding to criticisms of Mr. Beaton’s methodologies, this portion of the report exceeds the permissible scope for rebuttal testimony. See Perez, 2011 WL 8601203, at *8. 3. Relevance Tanium also argues Ms. Wagner’s opinion will not help the trier of fact because her “proposed testimony is not relevant in this matter.” (Dkt. No. 102-4 at 12.) Tanium asserts the tax consequences Ms. Wagner describes result when an employer or employee relies on a valuation different from the 409A valuation at the time of vesting, whereas the 409A valuation at issue in this case was performed shortly before the RSUs were granted. So, Tanium argues, her opinions about the “parade of horribles” that results if an employer relies on a valuation different from a 409A valuation are not material. Relatedly, Tanium argues Ms. Wagner’s opinion should be excluded under Rule 403 because “it is unfairly prejudicial in that it appears to the jury as though Tanium is not in compliance with the tax law and regulations when such is not supported by the record.” (Dkt. No. 102-4 at 15.) See Fed. R. Evid. 403 (“The court may exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, 1 The Court agrees Ms. Wagner’s opinions regarding tax consequences are inadmissible. 2 This case is not about whether Tanium complied with tax law. In any event, Plaintiff identifies no 3 evidence in the record showing Tanium has not. As such, Ms. Wagner may not testify about 4 criminal and civil penalties that “could result” from underreporting income and improper tax 5 withholding because such hypothetical scenarios are irrelevant, unsupported by the record, and 6 likely to mislead a jury. (Dkt. No. 102-5 9 13.) Specifically, Ms. Wagner may not testify to 7 paragraphs 34, 35, 36, 37(c), and 40 of her report. Paragraph 39 is also inadmissible—Ms. 8 Wagner is unable to testify as to what “Plaintiff believed he was receiving”—except for the last 9 sentence regarding the Grant Thornton Report. 10 So, the Court GRANTS in part the motion to exclude Ms. Wagner’s testimony. Ms. 11 Wagner may not testify that according to the Shareworks Statement, Tanium used the $2.01 12 valuation “for maxing tax withholding determinations when vesting occurred.” (Dkt. No. 102-5 4] 13 19.) And Ms. Wagner may not opine that Tanium violated tax law and the corresponding 14 penalties. Otherwise, Ms. Wagner may testify to the opinions in her report to rebut Mr. Beaton’s 15 testimony. a 16 CONCLUSION 17 For the reasons above, the Court GRANTS Tanium’s motion to exclude the expert report 18 and testimony of Dr. Allman. The Court GRANTS in part Tanium’s motions to exclude the 19 expert report and testimony of Ms. Cohen and Ms. Wagner. And the Court GRANTS in part 20 Plaintiff's motion to exclude the expert report of Neil Beaton. The experts’ testimony must be 21 consistent with this order. 22 This Order disposes of Docket Nos. 104, 105, 106, and 107. 24 Dated: June 27, 2025 25 26 ne JAGQUELINE SCOTT CORL 27 United States District Judge 28