Opinion
Case No. 03-C-0026.
August 22, 2005
Geff Scott Olson, Attorney(s) for Plaintiff or Petitioner.
Charles BOHL, Attorney(s) for Defendant or Respondent.
DECISION AND ORDER
Between approximately December 2002 and August 2003, plaintiff operated a tavern in the Village of Grafton known as the Luxury Box. Plaintiff originally operated the tavern as a sports bar but found it unprofitable. Subsequently, plaintiff proposed to offer adult entertainment but could not do so because of Grafton's adult-oriented businesses ordinance. Plaintiff then commenced this § 1983 action, and I found the ordinance unconstitutional on its face. See MDK, Inc. v. Vill. of Grafton, 345 F. Supp. 2d 952 (E.D. Wis. 2004) ("MDK II"). In the meantime, however, plaintiff ceased operating the tavern and now seeks to recover the profits it lost because of the unconstitutional ordinance. Plaintiff offers the testimony of expert Robert Patrickus, who estimates that plaintiff was damaged in the approximate amount of $600,000. Defendant argues that I should exclude Patrickus's testimony because it does not satisfy the requirements of Fed.R.Evid. 702. Alternatively, plaintiff argues that I should instruct the jury that it may award "presumed damages." Defendant opposes such an instruction. I consider these matters below.
Prior to MDK II, I issued a decision denying plaintiff's motion for a preliminary injunction. See MDK, Inc. v. Vill. of Grafton, 277 F. Supp. 2d 943 (E.D. Wis. 2003) ("MDK I").
I. EXPERT TESTIMONY
Under Rule 702, expert testimony must be based on sufficient facts or data, it must be the product of reliable principles and methods, and the expert must have applied the principles and methods reliably to the facts of the case. As explained below, Patrickus's testimony must be excluded because it is not based on sufficient facts or data.In reaching his conclusions, Patrickus relied primarily on the responses of seven owners of burlesque clubs to a "confidential questionnaire" apparently prepared by plaintiff's counsel, who also represents the seven club owners. (Janaszek Aff. Ex. A.) The questionnaire asked for general information about the clubs and their monthly revenues and expenses, including information about how long it took for revenue to peak and whether it steadily increased or was subject to "noticeable plateaus and increases." (Id.) Patrickus "assumed" that the clubs were located in "the Southern part of Wisconsin." (Id. Ex. B at 44:6-8.)
I conclude that the information in the owners' responses does not constitute facts or data sufficient to enable an expert to reach a reliable conclusion concerning plaintiff's lost profits. This is so because none of the information in the responses is in any manner verified, and as a result, I cannot reasonably conclude that it is accurate. Although the information is financial in nature, it is entirely unsupported by any financial documents such as tax returns or financial statements. Thus, it is unclear where the information came from or how it was arrived at. It may or may not be accurate. Because it lacks any indicia of accuracy, the information is insufficient to serve as the basis for Patrickus's opinion testimony.
Plaintiff attempts to salvage the information by characterizing it as admissible "survey evidence." (Pl.'s Resp. to Def.'s Mot. to Exclude at 1-3.) However, for a response to a survey to be admissible, the survey must satisfy certain threshold requirements. See 4 Jack B. Weinstein Margaret A. Berger,Weinstein's Federal Evidence § 702.06[3] (Joseph M. McLaughlin ed., 2d ed. 2005); see also Federal Judicial Center, Reference Manual on Scientific Evidence 229-76 (2d ed. 2000) (chapter entitled "Reference Guide on Survey Research"). For example, the proponent must demonstrate that the survey is reliable and trustworthy and was conducted according to generally accepted survey principles. 4 Weinstein Berger, supra, § 702.06[3];see also Menasha Corp. v. News Am. Mktg. In-Store, 354 F.3d 661, 664 (7th Cir. 2004). Plaintiff has not made such a showing, and it seems unlikely that it could.
Plaintiff correctly notes that an expert may reach conclusions based on inadmissible evidence. See Fed.R.Evid. 703. However, experts may do so only if the evidence "is of a type reasonably relied upon by experts in the particular field." Id. As explained, the club owners' responses are not reliable sources of information, and therefore a reasonable accountant attempting to calculate lost profits would not rely on them. See Patrick A. Gaughan, Measuring Business Interruption Losses and Other Commercial Damages 109 (2004) (stating that, when calculating commercial damages, it is important for an expert "to research the specific data source and determine how the data was gathered and whether or not they are reliable"). Thus, the responses cannot serve as the basis for Patrickus's conclusions.
Accordingly, insofar as Patrickus's opinions are based on the responses to plaintiff's confidential questionnaire, they are inadmissible. Because it appears that all of his conclusions are based on such responses, his testimony will be excluded.
II. PRESUMED DAMAGES
Presumed damages may be awarded when an injury "is likely to have occurred but difficult to establish." Memphis Cmty. Sch. Dist. v. Stachura, 477 U.S. 299, 310-11 (1986); see also Hessel v. O'Hearn, 977 F.2d 299, 301 (7th Cir. 1992) (defining presumed damages as "compensatory damages awarded without proof of injury"). The rationale for presumed damages is that some wrongful conduct is so likely to produce injury that the plaintiff may be awarded damages even though she has not shown that she actually suffered injury. If, for example, a contractor is libeled by a report that he uses shoddy materials, he may lose business without being able to prove it. Nonetheless, a court may allow a jury to infer that the contractor suffered a pecuniary loss as a result of the libel. See 2 Dan B. Dobbs, Dobbs Law of Remedies 261 (2d ed. 1993). In other words, the jury is allowed presume that the plaintiff suffered injury from the mere fact that the wrong occurred. See Comment, Presumed Damages for Fourth Amendment Violations, 129 Pa. L. Rev. 192, 196 (1980).
Presumed damages are also referred to as "general" damages.See Hessel, 977 F.2d at 301.
The Supreme Court and the Seventh Circuit have suggested that, under certain circumstances, a § 1983 plaintiff who proves a violation of her constitutional rights may recover presumed damages. See Stachura, 477 U.S. at 310-11; Hessel, 977 F.2d at 301-02. However, neither court has explained precisely when presumed damages may be awarded. Nonetheless, based on Stachura and the rationale for presumed damages discussed above, I conclude that in order to be awarded presumed damages, a plaintiff must show that: (1) the unconstitutional conduct in question likely caused her to suffer a compensable injury, whether economic or intangible; and (2) the nature of the injury is such that she will be unable to prove that she actually suffered it. The denial of the right to free speech is an example of conduct that could satisfy the above requirements. When the government prohibits someone from expressing a particular message, the person presumably suffers an intangible injury, namely, the deprivation of the emotional satisfaction associated with self expression. Because the harm is intangible, however, the plaintiff will have difficulty proving that she suffered it.
In several older decisions, the Seventh Circuit stated that presumed or general damages are unavailable in § 1983 cases.See Turner v. Chicago Hous. Auth., 969 F.2d 461, 463 (7th Cir. 1992) (stating "[i]njury must be proved; `presumed' damages are not available in litigation under § 1983"); Taliferro v. Augle, 757 F.2d 157, 162 (7th Cir. 1985) (stating that "[g]eneral damages are not available in civil-rights tort cases"). However, Taliferro was decided before the Supreme Court decided Strachura and recognized the possibility of awarding presumed damages under appropriate circumstances. Further, in at least two cases decided since Turner, the Seventh Circuit has recognized that presumed damages may be awarded in constitutional tort cases, see Siebert v. Severino, 256 F.3d 648, 655 (7th Cir. 2001); Hessel, 977 F.2d at 301-02.
The Supreme Court has held that a plaintiff cannot recover compensatory damages based on the "abstract value" or "importance" of a constitutional right. See Stachura, 477 U.S. at 305-10. However, awarding damages to compensate a plaintiff for the intangible harm caused by the denial of certain constitutional rights, such as the right to free speech, does not constitute awarding damages based on the abstract value or importance of such right. See Hessel, 977 F.2d at 302 (stating that plaintiff can seek substantial compensatory damages without proving an injury provided that plaintiff does not "ask for heavy damages on the ground that the constitutional right invaded was `important'").
In the present case, defendant's unconstitutional ordinance deprived plaintiff of a right protected by the First Amendment, i.e., the right to present adult entertainment. However, for two reasons, I conclude that plaintiff is not entitled to a jury instruction regarding presumed damages. First, the jury could not award presumed damages based on economic harm, such as lost profits, because such harm is not a likely consequence of every denial of the ability to present adult entertainment. Like any business, an adult entertainment establishment may be unprofitable. Thus, even if there had been no unconstitutional ordinance, plaintiff might not have made a profit. Second, the jury could not award presumed damages based on intangible harm because, as a corporation, plaintiff is incapable of suffering the type of intangible injury that presumably follows from the denial of an opportunity to speak, i.e., the deprivation of the emotional satisfaction associated with self expression. While corporations may be considered "persons" for many purposes, they do not experience emotional harm. See Brown Williamson Tobacco Corp. v. Jacobson, 827 F.2d 1119, 1139 n. 10 (7th Cir. 1987) (stating that "a corporation is not capable of mental suffering"); see also Hershell Gill Consulting Eng'rs v. Miami-Dade County, 333 F.S upp. 2d 1305, 1341 (S.D. Fla. 2004) (doubting that corporations can recover presumed damages in § 1983 cases). Accordingly, I will not instruct the jury that it may award plaintiff presumed damages.
Although the ordinance may have caused plaintiff's only shareholder to suffer intangible harm by depriving him of his right to offer adult entertainment, he is not a plaintiff in this action. Further, even if he were, defendant would be entitled to rebut any presumption that plaintiff suffered intangible harm by showing that he did not seek to offer adult entertainment in order to convey an expressive message but rather to make a profit.
III. CONCLUSION
For the reasons stated,
IT IS ORDERED that defendant's motion to exclude the testimony of Robert Patrickus is GRANTED.