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excluding expert's damages calculation under Daubert , in part, for failing to perform any independent analysis to validate information provided by the plaintiff
Summary of this case from Pac. Life Ins. Co. v. The Bank of N.Y. MellonOpinion
98 Civ. 8272 (RPP)
September 15, 2003
Rickey Ivie, Ivie, McNeill Wyatt, Los Angeles, CA, Counsel for Plaintiffs
Gary, Williams, Parenti, Finney, Lewis, McManus, Watson Sperando, Stuart, FL, Counsel for Plaintiffs
Charles M. Miller, Helen Gavaris, Loeb Loeb LLP, New York, NY, Counsel for William Morris Agency, Inc.
Jeffrey Kessler, Jeffrey Klein, Weil Gotshal Manges, LLP, New York, NY, Counsel for Creative Artists Agency, Inc.
Steven M. Hayes, Parcher, Haues Snyder, P.C., New York, NY, Counsel for Renaissance Entertainment, Inc
Matthew F. Popp, Esq., James A. Cobb, Jr., Esq., Emmett, Cobb, Waits Kessenich, New Orleans, LA, Counsel for Beaver Productions, Inc.
George L. Grumley, Esq., James D. Roberts, Esq., Piper Rudnick LLP, Chicago, IL, Counsel for Jam Productions
Monica Petraglia McCabe, Esq., Piper Rudnick, LLP, New York, NY, Counsel for Jam Productions
OPINION AND ORDER
The motion, pursuant to the Federal Rules of Evidence 401, 402, 702 and 703, of Defendants Creative Artists Agency LLC ("CAA"), The William Morris Agency, Inc. ("WMA") and Renaissance Entertainment, Inc.'s ("Renaissance") (collectively, the "Booking Agency Defendants") to exclude the expert testimony of Dr. Gerald Jaynes that (1) Plaintiffs have been under-utilized by the Booking Agency Defendants creating an inference of racial discrimination; and (2) Plaintiffs have suffered damages of $29 million as a result, is granted, and the motion by the Booking Agency Defendants to strike the supplemental affidavit of Dr. Jaynes, pursuant to Federal Rules of Evidence 26(a) and 37(c), is denied as moot.
1. Dr. Jaynes's conclusion of underutilization of black promoters
A. The sampling used by Dr. Jaynes was not representative .
Dr. Jaynes's Report concludes that the four Plaintiffs, Rowe Entertainment, Inc. ("Rowe"), Lee King Productions ("King"), Summit Management Corporation ("Summit"), and Sung Song Productions ("Sung") have been underutilized as concert promoters due to racial discrimination. This determination, however, is unreliable because the evidence shows that the sample Dr. Jaynes utilized was not a random sample or other representative sample of Defendants' contracts as a whole.
Expert testimony involving a scientific technique must meet standards of reliability set forth in Daubert v. Merrill Dow Pharmaceuticals, Inc. 509 U.S. 579, 593 (1993). Daubert enunciates four key issues as relevant "in determining whether a theory or technique is scientific knowledge that will assist the trier of fact."Id. These considerations are: (1) "whether [the theory or technique] can be (and has been) tested," id., (2) "whether the theory or technique has been subjected to peer review and publication,"id., (3) "in the case of a particular scientific technique . . . the known or potential rate of error . . . and the existence and maintenance of standards controlling the technique's operation," id at 594, (4) whether the theory or technique has "general acceptance" in the scientific community. Id As discussed infra, Dr. Jaynes's Report fails to meet these standards.
According to the Reference Manual on Scientific Evidence, when using "sample data to characterize a population":
[T]he population is the whole class of units that are of interest; the sample is a set of units chosen for detailed study. Inferences from the part to the whole are justified only when the sample is representative. . . .
Federal Judicial Center, Reference Manual on Scientific Evidence 90 (2d ed. 2000). As the court in Guardians Ass'n of New York City Police Department, Inc. v. Civil Service Commission of City of New York stated, "[n]ecessity often dictates that the composition of a given population be estimated by projecting data gathered by less than optimal means from only a sample of that population." 633 F.2d 232, 240 (2d Cir. 1980). While use of such a sample is permissible, to be properly admitted into evidence, "the sample [must be] adequate, the data gathering techniques reliable, and the conclusions drawn demonstrated to be statistically significant."Id.
Dr. Jaynes's expert report dated July 31, 2002 states that he based his study on a sample of 1,561 contracts. (Declaration of Maria Sperando, dated March 19, 2003, Ex. 2, expert report of Gerald Jaynes ("Jaynes Report") at 5.) However, Dr. Jaynes did not obtain his sample set in a manner that provided assurance that it was representative of the contracts entered into by the Booking Agency Defendants during the study period, 1994-2001. During argument on the motions on June 11, 2003, it developed that of the 1,561 contracts relied on in Dr. Jaynes's Report, 1,214 were contracts obtained and copied by Plaintiffs and Plaintiffs' counsel out of the tens of thousands of contracts, possibly over 100,000, produced by the Defendants' talent agencies. (Hrg. Tr. at 14-15; Jaynes Report at 9.) Dr. Jaynes testified at his deposition that Plaintiffs' counsel told him "they didn't have any method of determining what contracts they were selecting. Whoever was doing the selecting was choosing contracts that looked interesting to them." (Declaration of Pierre Armand, dated February 24, 2003, Ex. 2 ("Jaynes Dep.") at 288.) In support of his position that the sample was fair and representative, Dr. Jaynes reasoned that as Plaintiffs and Plaintiffs' counsel were unaware of how he would conduct his analysis when they selected the contracts, they would not know how to create a biased group of contracts. (Id at 289, 349.)
There were two sets of contracts turned over by Plaintiffs' counsel to Dr. Jaynes: 1,214 hard copies, and a computer disk ("WMA CD Rom") of contracts in the files of WMA (New York only) from which Dr. Jaynes selected one in every six contracts until he stopped at 342, due to both time constraints and because he felt that the CD Rom was over represented by black artists. (Jaynes Dep. at 358-59, 506-07.) It is unclear if "342" contracts referred to in the deposition is accurate or rather if "347" contracts were reviewed since "347" plus "1,214" equals the "1,561" contacts Jaynes states he relied upon.
In their responsive motion papers, Plaintiffs' counsel attempted to buttress this testimony by the inclusion of a declaration by Laura L. Mall, Esq., dated April 22, 2003 ("Mall Decl."), stating that she attended the inspections of WMA contracts and of two promoters, Jam Productions and Beaver Productions. (Pis.' Response Mem of Law in Opp. to Defs.' Motion to Exclude Pls.' Expert Witness, Dr. Gerald D. Jaynes's Affidavit ("Pls.' Response Mem.") at Ex. 7, ¶¶ 3, 7, 10.) Ms. Mall maintains that the several persons conducting the inspections of Defendants' documents were instructed to employ a broad selection process in determining what contracts to copy from the thousands presented by Defendants for their inspection. (Id. at ¶¶ 4-9.) This selection process was intended to obtain a broad sampling of contracts representative of major and lesser artists, black and white artists, non-Defendants and Defendant promoters, non-Plaintiff and Plaintiff promoters, and non-Defendant and Defendant agencies, as well as "specific artists named in the Amended Complaint." (Id. at ¶¶ 4-5.) Ms. Mall also states that she believes Plaintiffs, Rowe and King, and other attorneys and paralegals engaged in selecting contracts for copying followed the same selection procedure. (Id. at ¶¶ 4-8.)
These inspections were conducted long before Dr. Jaynes was retained, and included the contracts of booking agents and promoters who are no longer defendants in the case. Defendants assert, without contradiction, that Ms. Mall does not purport to have reviewed the thousands of contracts in the concert files of CAA and Renaissance or the CD Rom of the contract files of WMA in New York from which 342 (or 347) contracts were copied.
Ms. Mall's testimony, however, is inadequate to demonstrate the reliability or representative quality of Dr. Jaynes sample, for the following reasons: (1) Ms. Mall presents no description of the utilization of any control mechanism to show that the contracts selected by each document reviewer were balanced in the manner the alleged selection process intended; (2) Ms. Mall presents no description of how the contracts selected by each document reviewer were counter-balanced with the contracts selected by another document reviewer to achieve the balance intended; (3) finally, Ms. Mall does not show that the contracts copied from each Booking Agency Defendant were balanced by means of any control mechanism to show they were indeed representative of all the contracts entered into by the Booking Agency Defendants during the period studied.
By allowing the contracts to be selected on the basis of the "specific artists named in the Complaint," (i.e., those contracts in which white promoters were selected for concerts and the Plaintiffs were not selected), the "sample" received by Dr. Jaynes would be neither random nor representative. Instead, the sample would, perforce, be biased or weighted towards the concert contracts for those artists whose business Plaintiffs wanted but did not get. Indeed, Dr. Jaynes's results are proof that the contracts selected by Plaintiffs and Plaintiffs' counsel were not representative. Dr. Jaynes concluded, based on his study of the 1,561 contracts and information provided by Plaintiffs, that black-owned firms were awarded only seven of the 1,561 contracts during the study period 1994-2001 and promoted no music events featuring a white act or featuring a major black act during that period. (Jaynes Report at 5.) All seven of the contracts with black promoters came from the 342 WMA contracts copied by Dr. Jaynes. (Jaynes Dep. at 502.) Accordingly, the 1,214 contracts selected by Plaintiffs and used in Dr. Jaynes's sample of 1,561 contained no contracts by black promoters for white or black acts. In short, the only contracts selected by Ms. Mall and the other reviewers were contracts with white promoters.
Dr. Jaynes should have been aware of this discrepancy since he admitted one of the reasons he discontinued making a random examination of WMA's CD Rom was his determination the CD Rom was over represented with black artists. (Jaynes Dep. at 507.)
Since over three-quarters of the sample used by Dr. Jaynes was not representative of concert contracts entered into in the concert promotion industry, the entire sample would not be representative and appropriate for use in Dr. Jaynes's statistical study. When he made the decision to utilize the 1,214 contracts which Plaintiffs Rowe and King and Plaintiffs' legal team had selected for copying, Dr. Jaynes failed to observe a basic tenet of a statistical study: to maintain professional autonomy, i.e., the same objectivity as he would apply in his other studies. See Reference Manual supra, at 88 (stating that experts who conduct research in the context of litigation should proceed with the same objectivity that they would apply in other contexts);Kumho Tire Company, Ltd. v. Patrick Carmichael 526 U.S. 137, 152 (stating that the objective of Daubert's gatekeeping principles "is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field").
B. Dr. Jaynes's information about the race of the promoters in his sample was not based on independent or reliable study .
The sample of contracts used by Dr. Jaynes was further compromised by his reliance, not on his own independent study and analysis of the concert promotion industry, but on Plaintiffs' information about the black and white promoters considered as active in the 1994-2001 period in the 1,561 contracts he examined. Dr. Jaynes acknowledged that he was not an expert in the concert music business. (Jaynes Dep. at 6.) Regardless, any expert should be aware that a party and counsel in a litigation have an interest in the outcome and that an expert study should not be dependent on the information they supply. See Supply Building Co. v. Estee Lauder International Inc., 2001 WL 1602976, *4 (S.D.N.Y. 2001) (dismissing "[a]ssumptions based on conclusory statements of the expert's client, rather than on the expert's independent evaluation" as unreasonable) (citing to Argus, Inc. v. Eastman Kodak Co., 612 F. Supp. 904, 926 (S.D.N.Y. 1985)).
Dr. Jaynes's Report states that he based his findings on data from the 1,561 contracts which he had entered into a Microsoft Access database. (Jaynes Report at 9.) From this database, he concluded that black promoters represented nine out of the ninety promoters ready, willing, and able to promote concerts throughout the period 1994-2001. (Jaynes Dep. at 303, 345) As the ethnicity of the promoters or artists was not indicated in the contracts, Dr. Jaynes depended on Plaintiffs to provide this information. (Hrg. Tr. at 53.) At his deposition, Dr. Jaynes stated that he did not know what criteria had been used to select the nine black promoters. (Jaynes Dep. at 47-48, 64-66). He also disclosed that the original number of eleven was arrived at in consultation with counsel and Mr. Rowe. (Id. at 66.) Dr. Jaynes then later testified that eleven was a typographical error or mistake and that the number of black promoters should be reduced from eleven to nine, as in his Report he concluded that the four Plaintiffs constitute 44% of the nine black promoters. (Id. at 303.)
This database consisted of fifteen fields: (1) talent agency name, (2) artist name, (3) artist ethnicity, (4) promoter name, (5) promoter ethnicity, (6) city of show, (7) state of show, (8) show date, (9) #of shows, (10) artist guarantee, (11) artist bonus, (12) ticket price, (13) capacity, (14) gross potential, and (15) advance payment to artist. (Jaynes Report at 9.)
Dr. Jaynes's Report lists thirteen such black promoters (Jaynes Report at 10), but states that "[a]ctive black promoters number eleven." (Jaynes Report at 6.) During his deposition by the Booking Agency Defendants, Dr. Jaynes reduced this number first to eleven, and then, to nine. (Jaynes Dep. 303, 345-351, 469.)
It developed at the hearing that Dr. Jaynes had also reduced the number of white promoters in his sample from a total of about 140 to 81. (Hrg. Tr. at 83.) Plaintiffs' counsel stated that Dr. Jaynes reached this figure by eliminating not-for-profit promoters, talent buyers, and corporate promoters. (Id. at 83-87.) Since these categories are not contained in the Microsoft database used by Dr. Jaynes, that information must have been supplied to Dr. Jaynes by Plaintiffs, the only source of information used by Dr. Jaynes other than the 1,561 sample contracts. (Id. at 53.)
In his supplemental affidavit dated March 19, 2003, Dr. Jaynes maintains he validated his results by use of the Pollstar data and cites to his deposition at pages 284, 289-291. (Declaration of Maria P. Sperando, dated March 19, 2003, Ex. 3 at 24 ("Jaynes Aff.")0 However, the Pollstar data is merely a list of artists' concerts at venues having a seating capacity of 3,000 seats or more from June 1998 to May 1999, contained in Exhibit A to the Amended Complaint for which Pollstar collected Box Office results. (Amended Complaint ¶ 65.) Plaintiffs then conducted their own study of the Pollstar concerts breaking down concert promoters and artists on racial lines. (Hrg. Tr. at 109-10, 114-16.) Given that Plaintiffs were the source of what Plaintiffs refer to as the "Pollstar data" on the race of the artists and promoters (id.), and Plaintiffs were the source of Dr. Jaynes's determinations in his Report of race of the artists and promoters, Dr. Jaynes's reliance on the Pollstar data in the amended complaint does not constitute an independent validation of his results.
As was admitted at the oral argument, Pollstar did not provide information on racial composition of promoters or artists. (Hrg. Tr. 113-14.) There was no suggestion that the Pollstar data identified the Booking Agent or the selector of the promoter of the concert.
As the amended complaint states, it was Plaintiffs who examined the Pollstar box office results for June 1998 to May 1999. (Amended Complaint ¶¶ 65.) Plaintiffs estimated that: (i) Promoter Defendants (then twenty-six) and uncharged promoter conspirators conducted 65 percent of the 2,460 major concerts in the one year period (id. at ¶¶ 66-67); (ii) of the concerts by white acts, black promoters promoted none (id. at ¶ 69); and (iii) of the concerts by black artists, black promoters promoted less than 3% for each. (Id. at ¶ 72).
Accordingly, the conclusion in Dr. Jaynes's Report that black promoters have been underutilized is not based on an independent study but is based solely on material provided by Plaintiffs. Although Plaintiffs may have some information about some promoters' ownership and availability throughout the 1994-2001 period, Dr. Jaynes should have verified this information with each of the promoters — not an overwhelming task given the small numbers — to comply with the standard in City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989), which Plaintiffs claim Dr. Jaynes was following. (Hearing at 120; see also Jaynes Aff. at 14-15.) Dr. Jaynes's failure to do so makes his opinions undependable. As theReference Manual on Statistics states, "[a]n analysis is only as good as the data upon which it rests[,]" and "it is important to verify the accuracy of the data collection." Reference Manual supra, at 90.
I. Dr. Jaynes's characterization of "active black promoters" is unreliable.
Dr. Jaynes not only failed to independently verify Plaintiffs' information as to the race of the artists and promoters in his 1,561 contract samples, he relied on Plaintiffs to advise him as to the degree to which other promoters in the sample were active throughout the 1994-2001 period. In his Report, Dr. Jaynes concluded that, based on his study of the 1,561 contracts and information provided by Plaintiffs, black-owned firms represented ten percent of the concert promoters active throughout the period 1994-2001. (Jaynes Report at 6.) Dr. Jaynes based this conclusion on the finding that in his sample, there was a weighted average number of nine black concert promotion businesses out of a total number of ninety concert promotion businesses active throughout the period. (Jaynes Dep. at 315-319). The activity of concert promotion businesses throughout the period necessarily involves obtaining information not contained in the microsoft database of the 1,561 contracts Dr. Jaynes studied. Nowhere in his Report, affidavit or testimony, however, does Dr. Jaynes provide a breakdown of how he arrived at his figures of nine and ninety. Nor did he provide such a breakdown for the Defendants in discovery. (Hrg. Tr. at 46-47, 94-96.)
Dr. Jaynes stated that to determine the 10% percentage his "calculation used methods [he] helped develop and have been used by other researchers for more than a decade." (Jaynes Aff. at 16.) For support he refers to his deposition (Jaynes Aff. at 16), which merely reiterates that "the procedures that [Dr. Jaynes] utilized for constructing these numbers is a standard procedure for constructing the market set of ready and able firms for a given set of buyers," but does not explain what that procedure actually is. (Jaynes Dep. at 349.)
Under Rule 26(a)(2)(B) of the Federal Rules of Procedure, expert testimony must include a written report which "contain[s] acomplete statement of all opinions to be expressed and the basis and reasons thereof." Fed.R.Civ.P. 26(a)(2)(B) (emphasis added). Plaintiffs failed to provide a "complete statement of . . . the basis and reasons" as required by Rule 26(a)(2)(B) for Dr. Jaynes's opinion that there were nine black concert promotion businesses out of a total of ninety concert promotion businesses in his sample. Plaintiffs failed to remedy this deficiency during oral argument. Without such a breakdown, the validity of his conclusions cannot be checked.
In his March 19, 2003 affidavit, Dr. Jaynes stated that the relevant market for the Booking Agency Defendants is the entire United States (Jaynes Aff. at 18), and defined the concert music promoter as "a for-profit business that engages in the promotion of concerts of contemporary music by . . . buying talent and putting up risk capital" (id.), and additionally "arranges for the marketing of the concert, secures the venue and the concert production, transportation and housing of artists, etc." (Id. at 18 n. 2.) Dr. Jaynes then defined a black conceit promoter as "a concert promotion business that ismajority owned and controlled by African Americans" (id. (emphasis in original)), and a qualified promoter as "a concert music promoter that is `ready, willing, and able.'" (Id. at 18) According to Dr. Jaynes, "Ready refers to time. A firm that is ready is immediately available at the time the services are needed." (Id.) Dr. Jaynes applied a weighting procedure for those firms which were available only in some years. (Id.) "Willing refers to inclination. A willing firm is available in the sense that it is inclined to perform the services of a concert music promoter where and for whom they are required. . . . in at least a large multi-state region of the U.S." (Id. at 19 (emphasis in original).) "Able refers to capability and experience." (Id.)
At oral argument, this definition was limited to those producers "ready, willing, and able" to do concert promotions in at least three states.
During his deposition, Dr. Jaynes explained his number nine as follows:
[In] a nice, simple beautiful world where you could say there existed on January 1, 1994, a given set of promoters, black promoters, which you could take through a list of criteria and they'd all qualify, or if they didn't you can strike them. And on December 31, 2001, you had the same list. And so everything would be nice and simple to do. But, in fact, that is not the way business operates, as we all know.
As a consequence, you're going to have situations where individuals are in and out of the business. They may be in the business for the initial part of the period. They may not be in. They may not be there in the second part of the periods or the middle. There may be individuals who are not there at all in the beginning part of the period and are there towards the end of the period.
So what you're really trying to do is come up with a proportion throughout the period, of promoters who are black.
(Pls.' Response Memorandum of Law in Opposition, dated April 23, 2003, Ex. 4 at 315-316 (emphasis added).)
In response to questioning as to why one black promoter, Al Haymon, was not included, he partially explains the process he attempted to utilize:
What I said was that under the strict definition of what is a black promotion company that I was utilizing in determining my 9 as the representative number through that period, I would said (sic) that, strictly speaking, Al Haymon or Haymon Entertainment would be recognized as a black promoter up until the time it was acquired by SFX. . . . After that period, it wouldn't be.
Thus, Haymon Entertainment was apparently not considered a "black promoter" during the entire 1994-2001 period, while each of the Plaintiffs was counted as a "black promoter" throughout the entire period.
(Id. at 319.)
Dr. Jaynes did not provide a list, as required by Rule 26(a)(2)(B), of how he weighed the other active black promoters active during the period as to arrive at his proportion figure of nine.
Nor was such a list provided at oral argument. At his deposition, Dr. Jaynes stated that he had received a larger list of black promoters from Plaintiffs' counsel. (Jaynes Dep. at 303.) However, he was unable to explain what reasons had been used to eliminate a number of identified black promoters from the list. (Id. at 46-60; 64-66.)
Dr. Jaynes admitted that he did not do any independent analysis to check Mr. Rowe's information, such as going to speak to third parties or looking at books containing listings of concert promoters. (Jaynes Dep. at 62.) Thus, when Dr. Jaynes concluded that nine was a proportion or representation of the black concert promotion businesses as to the total of ninety concert promotion businesses in his sample active throughout the 1994-2001 period, Dr. Jaynes relied on Plaintiffs' information as to the degree and nature of activity of both black and white concert promoters contained in the 1,561 contracts studied.
Were one to test Dr. Jaynes's definition of whether a concert promotion business was "ready, willing and able" during the years 1994-2001, one would have to: (1) inquire of each conceit promoters doing business in those years in all fifty states as to their availability to do business in a large multi-state region (or three states) and their willingness and readiness to do business in each year; and (2) then determine whether such a business meets Dr. Jaynes's test for a concert promotion business, his regional test market test and his test for whether such promoter should be weighted as a whole promoter or less than one. In violation of Rule 26(a)(2)(B), Dr. Jaynes provides no documents indicating he did such an analysis; nor does his Report, his affidavit or his testimony suggest such an analysis was made in order to reach his conclusion that black promoters constituted 10% of the total concert promoters in the United States active throughout the study period. As a result, his technique for reaching such a conclusion cannot be tested. Since he has not divulged the methodology he used to reach the conclusion, it cannot be subjected to peer review, nor can it be tested for known or potential rate of error. Dr. Jaynes does not cite to any standards controlling his methodology nor does he show that there is general acceptance within the relevant scientific community for conclusions reached in this manner. Accordingly, Plaintiffs have not shown that any of the Daubert factors,Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993), are met by Dr. Jaynes's conclusion that a "representation" of nine black concert promoters and a "representation" of ninety total concert promoters were active throughout his study period.
Other than referring to the weighing apprisal for businesses not 51% black owned throughout the period, e.g. Haymon Entertainment
Despite numerous direct questions during oral argument, Plaintiffs' counsel could not detail how Dr. Jaynes reduced the number of white promoters, active throughout 1994-2001, to 140 and to 81. (Hrg. Tr. at 93-95.) Despite Rule 26(a)(2)(B), no discovery of this process was provided to Defendants. (Id. at 46-47.)
II. Dr. Jaynes's conclusion about the number of black promoters as a percentage of all active promoters is faulty.
Based on his study of the 1,561 contracts, Dr. Jaynes found that nine black concert promotion businesses (as defined and weighted for years of activity), to ninety total concert promotion businesses (as defined and weighted for years of activity), was a fair breakdown of the promoters in his sample, willing, ready and able to promote concerts during 1994-2001. Accordingly, he concluded that black concert promotion businesses constituted 10% of the total concert promotion businesses for all the concerts performed during the period.
These percentages of black and white promoters are utilized in his damages calculation, which states:
We therefore estimate that major concerts featuring artists represented by defendant booking and talent agencies accounted for $734.4 million (64% of $1.1 billion). We arrive at an estimate of black promoters' competitive share of this last total in the following manner. Active black promoters number eleven (11). This is approximately 10% of the organizations promoting concert events featuring artists represented by the defendant talent and booking agencies during 1994-2001. In the absence of discrimination, it is reasonable to assume that as a group black promoters would have earned net revenues proportional to their availability of 10%.
Dr. Jaynes testified that the number eleven actually should be nine. (Jaynes Dep. 303, 345-51, 469.). Contrary to the Report, nowhere in the amended complaint is it stated that 64% of the concerts were by artists represented by the "defendant booking and talent agencies". (See, e.g., Amended Complaint at ¶ 71.)
Dr. Jaynes's finding that discrimination caused the "underutilization" of black promoters does not attempt to take into consideration so called "confounding variables" such as lack of financing, or lack of sufficient organizational support with respect to each of the several promoters included in his "representative" number of nine. Reference Manual supra, at 92. However, lack of consideration of "confounding variables" might go more to the weight that should be given to Dr. Jaynes's testimony than to its admissibility, although Dr. Jaynes acknowledged that he was not an expert in the concert music business and thus does not have the background to make such an analysis. (Jaynes Dep. at 6.)
In his reply affidavit dated March 19, 2003, Dr. Jaynes makes clear that he was making a calculation of the proportion of black promoters to white promoters in his sample who were fully active during the period:
. . . The number 9 (and 90) are representations of the average numbers of black and total independent concert promoters existing throughout the period 1994-2001. . . .
I calculated that black independent promoters represent about 10% of all independent concert promoters during the period 1994-2001. . . . The proportions were calculated using a weighting procedure that produces an average proportion of ready, willing, and able black promoters active throughout the period. "Representative" numbers for this proportion are 9 and 90 respectively
Defendant is well aware that my definitions of a "black concert promoter" and a concert promoter generally are materially different from the one defendant uses to determine the number and proportion of promoters of concert music who are black. My definition of a black promoter for purposes of the case is based on what is a black concert promotion business and applies standard practices for making such a determination. . . .
(Jaynes Aff. at 16 (citations omitted) (emphasis added).)
Nowhere in his Report, his affidavit or his testimony does Dr. Jaynes provide the basis or calculations by which he reaches his opinions that black concert promotion businesses represented "10% of the organizations promoting concert events featuring artists represented by the defendant talent and booking agencies during 1994-2001." (Jaynes Report at 6.) At oral argument, when Plaintiffs' counsel was pressed for this information, she came up with evasions and unresponsive answers even after a recess to confer with Dr. Jaynes. (Hrg. Tr. 111-116.) During his deposition, Dr. Jaynes admitted he did not consult directories of concert promoters. (Jaynes Dep. at 62.) Since Dr. Jaynes admitted that he arrived at his figure of eleven based on information supplied by Plaintiffs and Plaintiffs' counsel (id. at 39, 66), one can only conclude that Dr. Jaynes also made his estimates of the proportion of black to total concert promotion businesses active in the period based on information from Plaintiffs' counsel. (Hrg. Tr. 109-110.) This does not constitute an independent study.
Furthermore, one cannot simply use a sample of 1,561 contracts to calculate the number of active promoters in a given period. Nonetheless, in his affidavit of March 21, 2003, Dr. Jaynes states he did just that, that he "used a sample size of more than 1,500 contracts to calculate the number of active promoters." (Jaynes Aff. at 21.) Using such a sample to calculate the total number of black and white concert promotion businesses "ready, willing and able" to engage in the concert promotions, without making any further calculations, is not a proper statistical method to arrive at the total of such businesses active during the period. A sample can properly be used to show the characteristics of the overall group. A sample, however, cannot determine the total number within the group. Nowhere in his Report or deposition does Dr. Jaynes make a calculation of the total number of concert promotion business active during 1994-2001 nor does he ascertain what percentage the sampled 1,561 contracts is of all concert contracts for 1994-2001 Calculation of the total number of concert promotion businesses active in the period cannot be determined based on his sample, unless other calculations are made; Dr. Jaynes does not provide any such calculations.
II. Dr. Jaynes's calculation of damages is illogical and fallacious.
Based on his conclusion that black concert promotion businesses represented 10% of the concert promotion businesses "ready, willing and able" to promote concerts in a tri-state area throughout the 1994-2001 period, Dr. Jaynes's Report also makes a determination of the lost net profits which black concert promotion businesses, including Plaintiffs, sustained. His calculations of gross concert revenues during the 1994-2001 period rely on a Moss Adams, LLP's (certified public accountants) study of gross revenues of major concert tours based on the Pollstar data for the years 1994-1997 of concerts performed at venues with at least 3,000 seats. (Moss Adams Report dated July 15, 1998 ("Moss Adams Report") at 9.) In his Report, Dr. Jaynes makes reference to the gross concert revenues published by Pollstar on July 28, 2000, but he does not use these figures in his calculations of damages. (Jaynes Report at 5-6.) Instead, Dr. Jaynes accepts the Moss Adams Report gross concert revenues for the years 1994-1997 and assumes that gross ticket sales for 1995 were representative of the four years from 1998 through 2001. (Id.) In this manner, he calculates the total concert revenues for the 1994-2001 study period. To obtain annual net revenues for the total concert promotion business, his Report uses a 32.5% figure for promoter expenses based on Moss Adams' calculation of 30-35% for those expenses. Dr. Jaynes concludes that total net revenues for 1994 through 2001 for all promoters from major concerts were $1.1 billion. (Id. at 6.) Dr. Jaynes then reduces total net revenues to 64% to reflect the market share of revenues from concerts by artists represented by the Booking Agency Defendants. (Jaynes Report at 6.) The resulting figure was $734.4 million. (Jaynes Report at 6.) Next, however, Dr. Jaynes moves to his separate conclusion, based on his 1,561 contract sample, that black promoters represented 10% of the ninety concert promotion businesses active throughout 1994-2001. (Id.) He then states that, but for discrimination, "nine" black promoters should have earned $73.4 million, 10% of his calculations of net revenues of all promoters contained in the Moss Adams Report. (Id.) His reasoning overlooks the fact that the number nine is not an actual number, as Dr. Jaynes's affidavit of March 19, 2002 makes clear, but is a proportionate number based on the 1,561 sample. (Jaynes Aff. at 16.) It does not represent the total number of black concert promotion businesses active throughout the period, but only those in the sample active throughout the period. The Report concludes that, since the Plaintiffs constitute four black concert promotion businesses, they comprise 44% of the black promoters (four of nine), and that their fair share of profits for the years 1994-2001 was $32.3 million or 44% of $73.4 million, and, whereas their total net revenues in that period had been only $3.2 million, they are entitled to total damages of $29.1 million. (Jaynes Report at 6-7.) He then calculated each individual Plaintiffs damages by deducting each Plaintiffs net revenues during the period from one quarter of the $32.3 million. (Id.)
This number is based on Plaintiffs' estimate of the Booking Agency Defendants' market share during Plaintiffs' test period (June 1998-May 1999). (Amended Complaint ¶ 65.) Only three of the Booking Agency Defendants included in the 64% market share are defendants going to trial. (Hrg. Tr. at 129.) Dr. Jaynes has concluded that no adjustment need be made to the damages he finds in his Report due to this substantial miscalculation because the damages cited in his Report is a conservative number based on his review of defendant's expert report. (Jaynes Dep. at 216.)
This calculation mixes oranges and apples. Dr. Jaynes used a sample of 1,561 contacts and had a family of ninety active concert promotion businesses within his sample. He made no calculations of the total number of African-American concert promotion business active in the period or the total number of concert promotion businesses, but only calculated the proportion of black promoters to total promoters in his sample. As number nine is only a proportionate number based on the sample — not an actual number based on a study of the racial makeup and activity of all concert promotion business during the period — Dr. Jaynes has provided no basis for his conclusion that nine is the total number of black concert promotion businesses who were active throughout the 1994-2001 period. Nor does he provide any basis for his conclusion that the four Plaintiffs constitute 44% of the black concert promotion businesses which Dr. Jaynes finds should have earned 10% of the net revenues. Dr. Jaynes also errs in concluding that the total number of promoters in Dr. Jaynes's sample active throughout the period earned the concert revenues included in the Moss Adams Report. The Moss Adams and Pollstar concert revenues included revenues from concerts by promoters who were not active throughout the period; there was no reduction made for those promoters who would not qualify as a whole concert promotion business under Dr. Jaynes's test. Additionally, there is no limitation of Dr. Jaynes's revenue calculations for revenues attributable to those regional areas in which the Plaintiffs' black concert promotion businesses were not "ready, willing, and able" to promote concerts.
As stated in Boucher v. U.S. Suzuki Motor Corp., "expert testimony should be excluded if it is speculative or conjectural, or if it is based on assumptions that are `so unrealistic and contradictory as to suggest bad faith' or to be in essence an `apples and oranges comparison.' " 73 F.3d 18, 21 (2d Cir. 1996) (citations omitted). Dr. Jaynes's Report falls within this standard.
Conclusion
The Jaynes Report and proposed testimony does not meet theDaubert/Kumho standards. Dr. Jaynes has failed to provide a complete statement of the basis and reasons for his opinions as required by Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure. He has also failed to maintain the professional autonomy required by theReference Manual on Scientific Evidence. supra: 1) by relying on Plaintiffs' preselected contracts; 2) by relying on Plaintiffs' oral information about black and white concert promotion businesses active in a three state region during the period 1994-2001 to arrive at his calculation of a total of ninety concert promoters and nine black promoters active in the 1994-2001 period; and 3) by relying on Plaintiffs' amended complaint for the estimated percentage of market share of 64% attributed to the Booking Agency Defendants. (Jaynes Dep. at 130.) Moreover, in each of these three determinations critical to both his underutilization analysis and his damage analysis, Dr. Jaynes took no steps to verify the accuracy of the data Plaintiffs provided to him. (Id. at 90, 98.) Furthermore, in his damage analysis, he improperly uses a proportionate number, nine, as the real number of black concert promotion businesses active throughout the 1994-2001 period, thereby vastly increasing his calculation of the four Plaintiffs' potential share of revenues to which in his opinion the black concert promotion businesses in the period should have been entitled. For all these reasons, Dr. Jaynes's underutilization analysis and his damage analysis are found unreliable and his testimony based on his Report is excluded.
The Court only notes that Dr. Jaynes made no attempt to show that any of the "ready, willing and able" "nine" black promoters were ready, willing and able to promote the concerts included in the Moss Adams Report.
Defendants' motion regarding Dr. Jaynes's testimony is granted. Defendants' motion to strike Dr. Jaynes's affidavit of March 19, 2003 is denied as moot.
IT IS SO ORDERED.