The Panda Express restaurant conglomerate is trying to construct a new outlet right next to a Chick-Fil-A in central Florida. But Chick-Fil-A owns a restrictive covenant, which bars the building of any “quick service restaurant deriving twenty-five percent (25%) or more of its gross sales from the sale of chicken,” and it has sued to permanently enjoin the Panda Express construction. Predictably, the parties have offered dueling experts and “dueling methodologies” to determine what portion of Panda Express’s gross sales are derived from chicken—and in Chick-Fil-A, Inc. v. CFT Development, LLC, 2009 WL 1754058 (June 18, 2009), they filed dueling Daubert motions, too, each claiming the other’s expert values are unreliable.
Watch the line between legal and valuation conclusions. Interestingly, the court barred both experts from testifying whether the parties are “direct competitors,” because their opinions are not relevant. (The restrictive covenant contains no express requirement that the restaurant be a competitor.) In addition, the court precluded Panda Express’s expert from testifying that the phrases “quick-service restaurant,” “25% of gross sales,” and “sale of chicken” are ambiguous. “While an expert may testify in the form of an opinion…that embraces an ultimate issue of fact, expert testimony that expresses a legal conclusion is inadmissible,” the court ruled, especially when—as in this case, the opinions do not help “explain, clarify, or elucidate” meaning.
Of course, the “meat” of the experts’ dispute was how to determine the percentage of chicken sales from Panda Express “combo meals.” The restaurant does not allocate sales between side and combo orders; and it has never used either proposed method (the defendant’s expert focused on volume and plaintiff’s used the restaurant’s “a la carte” pricing data). The court acknowledged that the former “raises some serious concerns,” but permitted both experts to testify at trial, because cross-examination and presentation of contrary evidence would better test the “certainty and correctness” of the opinions than a Daubert challenge. Look for a complete case abstract in the September 2009 Business Valuation Update™, and a copy of the court’s opinion at BVLaw™.
Watch the line between legal and valuation conclusions. Interestingly, the court barred both experts from testifying whether the parties are “direct competitors,” because their opinions are not relevant. (The restrictive covenant contains no express requirement that the restaurant be a competitor.) In addition, the court precluded Panda Express’s expert from testifying that the phrases “quick-service restaurant,” “25% of gross sales,” and “sale of chicken” are ambiguous. “While an expert may testify in the form of an opinion…that embraces an ultimate issue of fact, expert testimony that expresses a legal conclusion is inadmissible,” the court ruled, especially when—as in this case, the opinions do not help “explain, clarify, or elucidate” meaning.
Of course, the “meat” of the experts’ dispute was how to determine the percentage of chicken sales from Panda Express “combo meals.” The restaurant does not allocate sales between side and combo orders; and it has never used either proposed method (the defendant’s expert focused on volume and plaintiff’s used the restaurant’s “a la carte” pricing data). The court acknowledged that the former “raises some serious concerns,” but permitted both experts to testify at trial, because cross-examination and presentation of contrary evidence would better test the “certainty and correctness” of the opinions than a Daubert challenge. Look for a complete case abstract in the September 2009 Business Valuation Update™, and a copy of the court’s opinion at BVLaw™.
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