Southern States Cooperative, Inc. v. Melick Aquafeeds, Inc.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APRIL 17, 2012
No. 11-12296
________________________ JOHN LEY
CLERK
D.C. Docket No. 7:08-cv-00013-HL
SOUTHERN STATES COOPERATIVE, INC.,
llllllllllllllllllllllllllllllllllllllll Plaintiff - Appellee,
versus
MELICK AQUAFEEDS, INC.,
MELICK AQUAFEED, LLC,
llllllllllllllllllllllllllllllllllllllll Defendants - Appellants.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
________________________
(April 17, 2012)
Before EDMONDSON and WILSON, Circuit Judges, and VINSON,* District
Judge.
*
Honorable C. Roger Vinson, United States District Judge for the Northern District of
Florida, sitting by designation.
PER CURIAM:
Southern States Cooperative, Inc. (“Southern States”) is a commercial
producer of tilapia with facilities in multiple states. In or around 2003, it began
buying feed from Melick Aquafeeds, Inc., and, a few years later in 2006, from
Melick Aquafeed, LLC (“Melick,” collectively). In October 2006, Southern States
noticed a decline in the growth of its tilapia and a decrease in feed consumption by
the fish. Southern States then began testing each shipment of feed to see if it
complied with Melick’s guarantees regarding fat and protein content. After
discovering that some samples of feed that were tested did not comply, Southern
States brought this suit for breach of warranty, negligent misrepresentation, and
fraud.
In preparation for trial, Southern States retained Dr. Steven Craig, a doctor
of fish nutrition, and Melick retained Dr. Donald Davis, a professor of fish
nutrition. Both parties filed motions to exclude the other’s expert testimony; both
motions were denied. During trial, Dr. Craig testified regarding the causal link
between fat and protein levels in feed and fish growth.
At the close of evidence, Melick moved for a directed verdict on Southern
States’s claim for lost profits, but the district court stated that it would defer its
ruling until after trial. The jury then found that Melick had breached its warranty
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and awarded Southern States $770,229.30 in lost profits. Because the district
court had not ruled on the motion it had previously deferred, Melick filed a
renewed motion for judgment as a matter of law pursuant to Federal Rule of Civil
Procedure 50(b) (or a new trial) regarding damages. The district court denied that
motion.
Melick now appeals on two grounds: (1) that the district court abused its
discretion in allowing Dr. Craig to testify regarding causation and (2) that
Southern States’s damages award is impermissible. After review and argument,
we affirm.
I.
Melick argues that the district court erred in permitting Dr. Craig to testify
because his theories were unscientific and unreliable. We review evidentiary
rulings for abuse of discretion and may only reverse if there was substantial
prejudice to the aggrieved party. Goldsmith v. Bagby Elevator Co., 513 F.3d
1261, 1276 (11th Cir. 2008). A district court may not admit an expert opinion if
the supporting methodology for the opinion is not “‘sufficiently reliable as
determined by the sort of inquiry mandated in Daubert.[1]’” United States v.
Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004) (en banc) (quoting City of
1
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 113 S. Ct. 2786, 2794 (1993).
3
Tuscaloosa v. Harcros Chems., Inc., 158 F.3d 548, 562 (11th Cir. 1998)). Under
Daubert, a court evaluates the reliability of methodology by considering “(1)
whether the expert’s theory can be and has been tested; (2) whether the theory has
been subjected to peer review and publication; (3) the known or potential rate of
error of the particular scientific technique; and (4) whether the technique is
generally accepted in the scientific community.” McCorvey v. Baxter Healthcare
Corp., 298 F.3d 1253, 1256 (11th Cir. 2002) (citing Daubert, 509 U.S. at 593–94,
113 S. Ct. at 2796–98).
Dr. Craig testified to the following: Fish feed contains a mix of protein and
fat. Fat, unlike protein, induces satiety in fish. Therefore, a high fat content in
feed limits the quantity a fish can eat. If a fish were to consume a smaller quantity
of feed, that would decrease its intake of growth-inducing protein, resulting in a
depression of growth. This effect would be exacerbated if protein levels were
lower than average in the feed. In Dr. Craig’s words, “the worst possible
combination is a really high fat diet combined with a low protein diet, cause, as I
mentioned earlier[,] the fish, he eats to satisfy his energy requirement, so if he’s
got a lot of fat in that diet, he’s going to stop eating before he gets enough protein
to grow.” On appeal, Melick does not challenge the validity of this theory of
causation or the scientific methodology that supports it.
4
However, Dr. Craig also testified that the fluctuations in the feed’s fat-to-
protein ratios were harmful to fish. He admitted that no scientific studies have
been conducted to support his comments that variations in feed composition can
inhibit the growth of fish. Melick, arguing that this testimony about fluctuation
created prejudice, asserts: “Because plaintiff presented no other evidence of
causation, the jury had to have accepted Craig’s causation theory that the
fluctuation in protein to fat levels caused the decrease in growth in plaintiff’s
fish,” (emphases added) and juries give great weight to expert testimony.
We cannot agree with Melick’s assertion of prejudice and its
characterization of Dr. Craig’s testimony. Mark Twain advised, “Do not tell fish
stories where the people know you; but particularly, don’t tell them where they
know the fish.”2 In this case, we know the fish—and the facts—and by no means
was the “fluctuation theory,” as Melick has dubbed it, Dr. Craig’s sole (or even
primary) theory of causation. Dr. Craig only mentioned the effect of fluctuating
nutrient levels a few times in his extensive testimony, and those remarks were
independent of his main causation theory that low levels of protein and high levels
2
See Mark Twain: Collected Tales, Sketches, Speeches, & Essays, 1891-1910, 942 (Louis
J. Budd ed., Literary Classics of the United States 1992).
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of fat can slow fish growth. Because we do not find that admission of Dr. Craig’s
testimony created substantial prejudice to Melick, we will not reverse that
evidentiary ruling.
Melick also contends that Dr. Craig’s differential etiology was deficient.
Differential etiology is a process of elimination in which (1) an expert compiles all
possible causes of an injury, see Hendrix ex rel. G.P. v. Evenflo Co., 609 F.3d
1183, 1195 (11th Cir. 2010), and (2) he rules out each of the potential causes
“until reaching one that cannot be ruled out or determining which of those that
cannot be excluded is the most likely,” Guinn v. AstraZeneca Pharm. LP, 602 F.3d
1245, 1253 (11th Cir. 2010) (per curiam) (citation and quotation marks omitted).3
When ruling out causes in the second step, an expert “must provide reasons for
rejecting alternative hypotheses using scientific methods and procedures and the
elimination of those hypotheses must be founded on more than subjective beliefs
or unsupported speculation.” Hendrix, 609 F.3d at 1197 (quoting Clausen v. M/V
NEW CARISSA, 339 F.3d 1049, 1058 (9th Cir. 2003)).
Melick argues that Dr. Craig failed to complete step two because he did not
scientifically rule out alternative causes for the slowing of fish growth, but instead
3
Guinn uses the term “differential diagnosis” rather than “differential etiology,” but
explains that it is simply following “the trend among federal courts . . . [to] use the term
differential diagnosis to refer to both concepts.” 602 F.3d at 1253 n.6.
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“assumed them away.” Melick contends that all of the following could have been
causes: poor water quality or temperature, changes in feed, disease, faulty
equipment, or overstocked tanks. Southern States correctly points out that Dr.
Craig addressed these factors, testifying to the following: Tilapia are hardy fish
capable of thriving in a variety of water conditions. Any problems with water
conditions are usually caused by feed—either pollution of the water because fish
have not consumed the standard amount of feed or increased ammonium levels
from improper protein content. Changes in feed only affect fish for one or two
days and then they will resume normal eating habits. Virulent bacterial strains are
the major disease affecting tilapia, but “everything will die” if bacteria afflicts a
tank. Given that the mortality rate in the tanks was low, a bacteria infection was
unlikely. Southern States employed daily monitoring procedures to examine water
quality and equipment.
Melick labels Dr. Craig’s rationale as unscientific, but it fails to adequately
explain what deficiencies it finds in his methodology or procedures. It appears
that Melick really just disagrees with Dr. Craig’s statements; in substance, Melick
asks the court to reverse on the ground that Dr. Craig has not provided persuasive
or sufficient explanations for ruling out causes. However, the court’s role as a
gatekeeper “is not intended to supplant the adversary system or the role of the
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jury: ‘[v]igorous cross-examination, presentation of contrary evidence, and careful
instruction on the burden of proof are the traditional and appropriate means of
attacking shaky but admissible evidence.’” Allison v. McGhan Medical Corp.,
184 F.3d 1300, 1311 (11th Cir. 1999) (citing Daubert, 509 U.S. at 596, 113 S. Ct.
at 2786). Melick’s contentions speak to the weight to be afforded Dr. Craig’s
testimony, not its admissibility, and are thus not within our province to evaluate.4
II.
Melick also challenges Southern States’s damages award. We review de
novo the district court’s denial of Melick’s motion for judgment as a matter of law
under Rule 50. Optimum Techs., Inc. v. Henkel Consumer Adhesives, Inc., 496
F.3d 1231, 1251 (11th Cir. 2007). In our review, we draw all inferences in favor
of the non-moving party. Russell v. N. Broward Hosp., 346 F.3d 1335, 1343 (11th
Cir. 2003). We “affirm the jury verdict unless there is no legal basis upon which
the jury could have found for [the plaintiff].” Telecom Technical Servs. Inc. v.
Rolm Co., 388 F.3d 820, 830 (11th Cir. 2004).
Melick argued before the district court that Southern States had not
4
Melick makes much of the fact that the district court appeared to suggest in a post-trial
order that its Daubert ruling with regards to Dr. Craig may have been incorrect. While there may
arguably have been some deficiencies in Dr. Craig’s assumptions and testimony (e.g., his failure
to independently test the water quality in the tanks), those issues were subject to rigorous cross-
examination, were satisfactorily explained, and were properly left to the jury to consider. Any
error was harmless.
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submitted sufficient evidence to prove its lost profits to a reasonable degree of
certainty. On appeal, Melick contends that a lost profits measure of damages is
inappropriate and that Southern States should only recover for its delay in
receiving profits. Because this delay argument was not raised below, we decline
to consider it. See BUC Int’l Corp. v. Int’l Yacht Council Ltd., 489 F.3d 1129,
1140 (11th Cir. 2007) (“As a general rule, we do not consider issues not presented
in the first instance to the trial court.”).
Melick argues in the alternative that if a lost profits measure of damages is
correct, Southern States failed to properly prove its anticipated expenses. Under
Georgia law, a plaintiff seeking recovery of lost profits must typically prove both
anticipated revenues and expenses with reasonable certainty in order to recover.
Bennett v. Smith, 267 S.E.2d 19, 20 (Ga. 1980). If a plaintiff can show that
expenses remained essentially the same during the period at issue, the jury is
authorized to award the plaintiff its lost revenues during that period as lost profit
damages. See id. (allowing jury’s award of lost revenues as a lost profits measure
where plaintiff egg farm operators showed that farm expenses remained stable
during the period of decreased production resulting from defendant’s
contaminated feed).
The jury here awarded Southern States lost profits of $770,229.30—an
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amount equal to its alleged lost revenues. Lisa Della Monica of Southern States
testified that Southern States’s expenses remained stable during the time period at
issue in this case. Melick argues (without pointing to any evidence in support)
that her testimony must be incorrect because there are a number of variable costs
associated with raising fish. Because the jury was entitled to credit Della
Monica’s testimony as true, and therefore was permitted to conclude that lost
revenues equaled lost profits, Bennett, 267 S.E.2d at 20, we affirm.
AFFIRMED.
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