United States Gypsum Co. v. Lafarge North America Inc.

Citations: 670 F. Supp. 2d 768; 2009 U.S. Dist. LEXIS 99773; 2009 WL 3598422Docket: No. 03 C 6027

Court: District Court, N.D. Illinois; October 27, 2009; Federal District Court

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In the ongoing lawsuit initiated by United States Gypsum Company (USG) against Lafarge North America, Inc., and associated parties, USG alleges patent infringement and theft of confidential information related to wallboard manufacturing. The court is currently addressing motions to exclude expert witness testimony under Federal Rule of Evidence 702 and the precedent set by Daubert v. Merrell Dow Pharmaceuticals, Inc. The defendants seek to exclude testimony from USG's computer forensics expert, Carl Florez, while USG seeks to preclude testimony from the defendants' expert, Andrew Reisman. Florez's testimony will focus on the adequacy of USG's data protection measures and the extent of document acquisition by Lafarge, whereas Reisman will critique the adequacy of Florez’s investigation.

The court grants and denies aspects of both motions, having previously established the factual background and legal standards applicable to these motions. Carl Florez's qualifications are scrutinized under Rule 702, which permits expert qualification based on knowledge, skill, experience, training, or education. Florez's extensive background includes his role as Director of Impact Forensics and prior leadership positions in electronic discovery, alongside twenty years with the FBI, culminating as Assistant Special Agent in Charge. He holds a graduate degree in criminal justice and possesses significant expertise in computer forensics, having conducted numerous investigations and provided expert testimony in multiple legal contexts. The court finds Florez's qualifications sufficient to support his designation as an expert in computer forensics and investigation.

Andrew Reisman is a qualified expert in computer forensics, serving as the President and Lead Forensic Examiner of Elijah Technologies, a company he founded in 2003. He has overseen over 100 forensic engagements and previously practiced litigation and technology law at Foley & Lardner LLP in Chicago. Reisman holds certifications as a fraud examiner and EnCase computer forensics examiner and has received formal training in computer forensics. He has served on the Board of Directors for the International Information Systems Forensics Association, delivered lectures, and published articles on computer forensics and electronic discovery. He is licensed as a private investigator in Michigan and Texas and is a member of the Illinois bar, with prior experience testifying as an expert in state and federal court. The court deems Reisman a competent expert in computer forensics.

The admissibility of expert testimony hinges on the expert's qualifications and the reliability of their opinions. The court evaluates whether the testimony is speculative and whether it aids the jury's understanding of relevant facts, referencing the Daubert standard. Carl Florez, another expert, provides a detailed report on reasonable measures companies can take to protect confidential information, specifically assessing USG's security efforts as thorough. Defendants challenge Florez's qualifications to assess USG's protective measures, arguing his expertise in investigating breaches does not extend to information protection. However, the court finds Florez's experience in electronic breach investigations relevant, concluding that he possesses the necessary knowledge to offer reliable opinions on protective measures.

Efforts to protect confidential information and access it are interconnected; an expert in accessing protected information is also knowledgeable about its safeguarding. For instance, an expert investigating counterfeiting would inherently understand prevention strategies, shaped by insights into counterfeiters' methods. This analogy applies to Florez, whose expertise in computer crime equips him with relevant knowledge of computer security measures, allowing him to opine on effective data protection strategies. The court finds Florez generally qualified despite defendants' claims that his opinion on USG's protection measures lacks reliability due to the absence of specific experimental analysis. The court emphasizes that reliability is context-dependent, and an expert's experience is crucial in assessing the reasonableness of protective measures. Florez has considerable experience in identifying breaches of confidential information, which supports his assessment of reasonable precautions. He outlines five accepted measures for protecting electronic information: 1) establishing protection policies; 2) need-to-know distribution of confidential information; 3) marking information as confidential; 4) maintaining confidentiality agreements; and 5) controlling access through security systems. Florez's methodology involved consulting authoritative sources and comparing USG's policies with those of other organizations, including the FBI. While defendants argue these comparisons are inadequate due to industry differences, the court concludes that confidentiality needs are similarly critical across sectors. Florez’s methods and experiential knowledge are deemed sufficiently reliable to allow his testimony.

Florez's testimony is deemed beneficial for the jury due to its foundation in his expertise and relevance to the factual issues at hand. Under Illinois law, trade secrets must be sufficiently secret to provide economic value and must be subject to reasonable efforts to maintain their confidentiality. Florez's testimony addresses the latter requirement, demonstrating that USG employed advanced security measures, including electronic password controls and secure storage for documents, which exceed the general knowledge of an average juror. 

Additionally, Florez concludes that various Defendants misappropriated information from USG based on his forensic investigation. Despite Defendants’ objections to the term "misappropriate," the court clarifies that Florez's use of the term is fact-based rather than legal, as misappropriation is a commonly understood term. The court acknowledges that expert testimony should not offer legal conclusions but allows Florez's testimony since it pertains to the factual dispute of whether the Defendants wrongfully accessed private files. 

To mitigate potential confusion, the court instructs Plaintiffs' witnesses to avoid the term "misappropriate" and similar expressions that could imply legal conclusions. Defendants also sought to exclude Florez's testimony on the grounds that it merely rehashes facts better suited for lay witnesses; however, the court finds that Florez's reliance on factual context enhances the understanding of the technical aspects of the case, affirming the reliability of his methods and the relevance of his testimony to the jury.

Defendants argue that Florez improperly assesses their mental states based on his investigative findings, particularly in reference to testimony from their computer forensics expert Andrew Reisman. Florez suggests that Spear's actions, such as forwarding presentations to his Lafarge email, indicate intentionality. However, the court finds that Florez lacks qualifications to evaluate others' mental attitudes and that his inferences on intent merely replace conclusions the jury could independently draw. Consequently, the court rules that while Florez can present findings from his investigation, he is barred from opining on the Defendants' intent or mental states.

Regarding document spoliation, Florez claims various Defendants intentionally destroyed evidence to conceal the misappropriation of USG documents. The court previously ruled that evidence of any alleged spoliation by Defendants is inadmissible at trial. The court allowed a stipulation acknowledging the absence of certain original disks but prohibited any inference of intentional destruction without non-speculative evidence. Plaintiff seeks to use Florez’s testimony to explain the deletion of documents and its implications for USG's case. However, the court notes that Florez's technical insights cannot address intent without speculative assumptions. Thus, Florez's opinions on spoliation, as outlined in his January 29, 2008 report, will also be excluded.

Defendants' computer expert Andrew Reisman did not conduct an independent investigation but instead reviewed the reports and data used by Plaintiff's expert Florez. The Plaintiff argues that Reisman's failure to perform a broader investigation undermines the reliability of his conclusions, as it suggests he cherry-picked data. Defendants counter that Reisman will provide testimony regarding the standard practices of forensic analysts, asserting his insights are based on his experience. Reisman critiques Florez's methods and conclusions, and the court deems his methodological criticisms reliable and beneficial for the jury, given his substantial experience in computer forensics. However, the court limits Reisman’s testimony to these methodological issues, allowing him to highlight flaws in Florez's analysis while barring him from offering speculative opinions on the use or dissemination of USG information, as he did not perform an independent review or establish a reliable methodology for those conclusions.

Reisman also addresses Defendant Sidney Spear's actions of forwarding USG board presentations to his Lafarge email, suggesting it was inadvertent based on Spear's testimony and emails. However, the court finds that Reisman's insights on intent do not provide assistance to the jury, as a computer forensics expert is not well-suited to determine mental states, and Reisman’s conclusions rely on inferences from other evidence rather than direct analysis.

The trier of fact will determine any inferences of intent or willfulness, and expert testimony cannot replace this jury determination. Reisman is allowed to present factual evidence about email transfers but cannot speculate on the intent behind those actions. Reisman’s opinions regarding spoliation and document destruction, which contradict Florez’s findings, are irrelevant since Florez’s speculative testimony on these topics has been excluded. 

The court grants in part and denies in part Defendant's motion to exclude Florez's testimony, allowing him to testify as an expert in computer forensics regarding his investigation and the reasonableness of USG's data protection measures, as well as whether Defendants wrongfully obtained Plaintiffs' trade secrets. However, Florez is restricted from using the term "misappropriate" and cannot comment on the Defendants' intent or spoliation issues before trial.

Similarly, Plaintiffs' motion to limit Reisman's testimony is granted in part and denied in part; he may critique Florez's methodology but cannot speculate on the use or dissemination of USG information, the Defendants' intent, or document spoliation. The court references the Daubert standards for assessing expert testimony reliability and acknowledges that Florez consulted industry sources, although his memory of specific references was uncertain. The ruling does not address new discoveries related to a compact disk of USG documents found with a Lafarge employee, pending further investigation, and is based solely on the existing record.