United States Court of Appeals For the Seventh Circuit
Evidence — expert testimony
In a claim for business interruption, the district court improperly excluded expert evidence from an accountant.
“In this case, we conclude that the concerns that prompted the district court to exclude Sullivan’s opinion implicated not the reliability of Sullivan’s methodology but the conclusions that it generated. Sullivan ‘utilize[d] the methods of the relevant discipline.’ Bielskis, 663 F.3d at 894. The district court recognized this several times. Sullivan consulted the policy to ascertain the methodology for calculating the business interruption loss, and the district court expressly concluded that his equation was consistent with the policy’s mandate. And in selecting the first variable—Right’s projected revenue if the collapse had not occurred—Sullivan utilized growth-rate extrapolation, which the district court determined was sound. Indeed, the district court sought out a scholarly treatise and cited its endorsement of this methodology. Having drawn those conclusions, the district court’s assessment of the reliability of the methodology ought to have ceased (or proceeded to the second variable in the business-loss equation). Instead, the district court drilled down to a third level in order to assess the quality of the data inputs Sullivan selected in employing the growth rate extrapolation methodology. What the district court took issue with was not Sullivan’s Growth-rate extrapolation methodology, but rather his selection of certain data from which to extrapolate. Indeed, the district court effectively acknowledged that its problem was not with Sullivan’s methodology but with his data selection when it stated that ‘had Sullivan not chosen such a short base period for calculating lost revenues, I might have found his analysis reliable.’ R.132 at 7. The district court thought Sullivan should have selected different data, covering a longer period, as the base for his projection, but the selection of data inputs to employ in a model is a question separate from the reliability of the methodology reflected in the model itself.”
Affirmed in part, and Vacated in part.
Appeal from the United States District Court for the Eastern District of Wisconsin, Adelman, J., Tharp, J.