United States District Court, E.D. Michigan, Southern Division
CORRECTED OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART MOTIONS TO STRIKE TESTIMONY OF PROPOSED
HONORABLE DAVID M. LAWSON UNITED STATES DISTRICT JUDGE.
action by a manufacturer's representative for contract
damages, including post-termination commissions, each side
has filed motions challenging the admissibility of the other
side's expert witnesses. Each side's expert intends
to offer opinions (which, predictably, vary) on the custom
and practice in the automotive industry for paying
commissions to the representative for the life of the part
sold to original equipment manufacturers. Two of the experts
(one for each side) also intend to offer an opinion on who
should prevail in this case. The respective reports
(including a supplemental report from the plaintiff's
expert) and deposition testimony show that the expert
witnesses satisfy Evidence Rule 702 on their explanations of
industry custom and practice. However, neither side has
furnished a sufficient basis to allow the witnesses to tell
the jury whom they think should win. Therefore, the Court
will grant the respective motions in part and deny them in
Jesa Enterprises Ltd. acted as a sales representative for
defendant Thermoflex Corporation by soliciting new customers
to purchase the products Thermoflex manufactured - floor
mats, bed liners, and the like - for use in cars and trucks.
The parties agree that an oral agreement governed their
relationship, but differ as to its terms. The central issue
in this case is whether the plaintiff is entitled to
post-termination commissions for the life of the parts on
sales Jesa procured for Thermoflex before the parties
terminated their relationship. Jesa listed Terrence A. Barr
as a proposed expert witness to testify on the practices and
customs in the automotive parts industry related to
life-of-the-part agreements. Thermoflex disclosed two
rebuttal expert witnesses, Donald E. Rose and Roger E.
plaintiff's proposed expert submitted a supplemental
report in February 2017. The defendant filed a motion
challenging the statements in that supplemental report,
raising the same arguments put forth in the earlier motion.
The Court heard oral argument on the first round of motions
on May 16, 2017. But because the defendant's second
motion raises similar arguments, and because the motion
papers adequately set forth the relevant facts and law, oral
argument will not aid in the disposition of that later
motion. Therefore, it is ORDERED that the
motion be decided on the papers submitted. See E.D.
Mich. LR 7.1(f)(2).
currently runs the family manufacturer's representative
business, which was started several years ago by his father.
The business specializes in the automotive market, selling
its clients' components, assemblies, and systems to
automakers (OEMs) and their Tier I, II, and III suppliers.
Barr has a bachelors degree in finance and a law degree. He
practiced law with a firm in Detroit for five years, then
went into his father's business as the director of
marketing and administration in 1998, and has served as its
president since 2000.
submitted a report under Federal Rule of Civil Procedure
26(a)(2)(B) in which he gave a thorough explanation of
life-of-the-part agreements in the automotive parts market.
He wrote that parts manufacturers seeking business have the
option to use an in-house sales force or contract with a
third-party representative, like Jesa (or his company),
depending on their tolerance for cost and risk. According to
Barr, there is a long selling cycle inherent in the
automotive parts market. He says it is not uncommon for sales
representatives to work for one to three years before
procuring a business award. And it may be another one to
three years before a manufacturer starts production and
delivery of the part, at which time the part producer gets
paid and commissions become due. Sales representatives bear
the risk of no business awards (and therefore no
compensation) in exchange for commissions paid over the life
of the part once production of the part commences years down
the road. Manufacturers can avoid incurring the up-front
costs of an in-house sales force by using an outside
review of the facts of the case was limited to the first
amended complaint and the defendant's answer. Drawing on
these documents and his experience, he proposes to testify to
In the present case, I have assumed an oral agreement for a
commission between the parties and assumed no oral or written
agreement specifically limiting commissions in a termination.
I have also assumed that the Plaintiff's sales activity
is within the automotive industry.
It is well known and understood in the automotive industry as
a practical matter that unless otherwise specifically agreed,
“life of the part” is included in sales
representative agreements, oral or otherwise.
Based on the assumptions above, my experience and knowledge
in the industry, and my review of the documents listed above,
it is my opinion that Plaintiff is entitled to pre and
post-termination commission for the life of the part on the
business that he procured for Thermoflex prior to the date
the agreement was terminated.
Def.'s Mot. [dkt. #61], Ex. A, Expert Report of Terrence
A. Barr dated Oct. 31, 2016 at 5.
furnished a supplemental report on February 27, 2017, which
the defendant attacked in a later-filed motion, raising
substantially the same arguments. In that supplemental
report, Barr wrote:
Post-termination engineering changes and post-termination
activities performed by the principal do not alter the
responsibility of the principal to pay life of the part
commissions to the sales representative.
[I]t is typically the expectation of the automotive supplier
and the automotive customer that the part/product will be
supplied for the requirements of the customer through the end
of the life of any project(s)/program(s) that utilize such
Def.'s Mot. [dkt. #95], Ex. E, Supplemental Report of
Terrence A. Barr dated Feb. 27, 2017 at 1.
did not quarrel with Barr's qualifications on the subject
of industry custom and practice, at least not in its motion.
It did challenge his qualifications in its reply brief. But
arguments raised for the first time in a reply brief are not
favored. Balsley v. LFP, Inc., 691 F.3d 747, 773
(6th Cir. 2012) (“Issues raised for the first time in a
reply brief are not properly before this court”
(quoting United States v. Perkins, 994 F.2d 1184,
1191 (6th Cir. 1993))). Moreover, an expert witness may be
“qualified . . . [by] experience . . . [to] testify in
the form of an opinion or otherwise, ” Fed.R.Evid. 702,
and Barr is well qualified on that basis to offer testimony
on the custom and practice of formulating and executing sales
representative agreements in the automotive industry. He has
worked in that industry in a manufacturer's
representative agency for almost two decades and has
negotiated and reviewed dozens of agreements.
defendant's main argument is that Barr's opinions are
neither relevant nor reliable, because he relied only on the
pleadings in this case and conversations with an unknown
number of sales representatives and family friends at unknown
times; he did not draft, review, or rely upon any industry
surveys, statistics, or industry data to support his opinion;
he does not know how many suppliers he has spoken with
regarding life-of-the-part agreements; and he does not know
how many times in his career that post-termination
commissions were imposed on a manufacturer in the absence of
an oral or written agreement.
testimony is governed by Evidence Rule 702, which was
modified in December 2000 to reflect the Supreme Court's
emphasis in Daubert v. Merrell Dow Pharmaceuticals.,
Inc., 509 U.S. 579 (1993), and Kumho Tire Co. v.
Carmichael, 526 U.S. 137 (1999), on the trial
court's gate-keeping obligation to conduct a preliminary
assessment of relevance and reliability whenever a witness
testifies to an opinion based on specialized knowledge. Rule
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of