## Facts

- Richard C. Davis and his company, Trademark Properties, Inc. (plaintiffs), were involved in developing a reality-television program that became A&E’s series *Flip This House*.
- Plaintiffs claimed A&E Television Networks and related production entities (defendants) owed Davis compensation based on an alleged agreement entitling him to one-half of the show’s revenues or profits.
- To prove damages, plaintiffs planned to call Mark Halloran as a damages witness.
- Halloran intended to calculate damages by (1) identifying the show’s revenues, (2) subtracting the show’s expenses, and (3) dividing the remaining amount by two to reflect Davis’s claimed 50% share.
- Defendants filed a motion in limine seeking to exclude Halloran’s testimony, arguing it failed the reliability and “fit” requirements for expert testimony under Federal Rule of Evidence 702 and *Daubert* (and that it should be excluded as unfairly prejudicial or confusing under Rule 403).

## Issues

1. Whether a damages witness may testify under Rule 702/*Daubert* to a net-revenue (or net-profit) calculation—revenues minus expenses—followed by a 50/50 split, when that calculation matches plaintiffs’ theory that they were promised half of the show’s net revenues.

## Decision

- The court denied defendants’ motion in limine.
- The court allowed Halloran to testify regarding his damages calculation based on subtracting expenses from revenues and allocating one-half of the remainder to plaintiffs.
- The court concluded that defendants’ objections to assumptions, inputs, or accounting choices were matters for cross-examination and competing evidence rather than reasons to exclude the testimony before trial.

## Legal Principles

- Under Federal Rule of Evidence 702, a qualified witness may offer opinion testimony if it is based on sufficient facts or data, is the product of reliable methods, and is reliably applied to the facts of the case.
- Under *Daubert* (and related cases), the trial court serves as a gatekeeper to screen expert testimony for reliability and relevance (“fit”), but the gatekeeping function does not replace the jury’s role in resolving factual disputes.
- A damages methodology that directly corresponds to the plaintiff’s pleaded measure of recovery (here, an alleged 50% share of net revenues/profits) can satisfy Rule 702’s relevance requirement because it helps the jury quantify damages if liability is found.
- Disagreements about data sources, expense categories, and other accounting judgments generally go to the weight of the testimony, not its admissibility, and are addressed through cross-examination, contrary proof, and jury instructions.
- Rule 403 exclusion is not warranted merely because damages evidence is unfavorable to the opposing party; exclusion requires a showing of unfair prejudice, confusion, or other dangers that substantially outweigh probative value.

## Conclusion

The district court permitted plaintiffs’ damages witness to present a calculation that subtracted show expenses from revenues and then divided the result by two, reasoning that the approach aligned with plaintiffs’ claimed 50/50 net-revenue agreement and that defendants’ challenges were best handled at trial through cross-examination and competing evidence, not exclusion under Rule 702/*Daubert*.


Trademark Properties, Inc. v. A & E Television Networks, 2008 WL 4811461 (2008)