Millennium Laboratories, Inc. v. Darwin Select Ins. Co., Slip Copy (2014)

WL 1921.755Only the Westlaw citation is currently available.

United States District Court,S.D. California.

M ILLENNIUM LABORATORIES, INC., Plaintiff,v.

DARWIN SELECT INSURANCE COMPANY,Defendant.

No. 1.2—CV-2742 H(KSC). S i g n e d May 14, 20114-

Attorneys and Law Firms

Marc D . Halpern, Anthony Joseph Matera, AbelsonHerron Halpern LLP, San Diego, CA, Vincent H. Herron,Abelson Herron Halpern LLP, Los Angeles, CA , f o rPlaintiff.

Frank Gooch, 111, Yen N. Hope, Jane Elizabeth Lippman,Gilchrist & Rut ter Professional Corporation, SantaMonica, CA, Phillip E. Wilson, Jr., Robert A . Wiygul,Ronald P. Schiller, Hangley Aronchick Segal Pudlin andSchiller, Philadelphia, PA, for Defendant.

Opinion

ORDER DENYING PLAINTIFF'S MOTION TOEXCLUDE TESTIMONY TY R. SAGALOW

MARILYN L. HUFF, District Judge.

*1 On March 27, 2014, Plaintiff Millennium Laboratories,Inc. ("Millennium Labs") filed under seal a motion toexclude the expert opinion testimony o f Ty R. Sagalow.(Doc. No. 68, filed under seal as Doc. No. 74.) On April18, 2014, Defendant Darwin Select Insurance Company("Darwin") filed a response in opposition to the motion toexclude. (Doc. No . 91, sealed.) O n Ap r i l 22, 2014,Millennium Labs filed its reply. (Doc. No. 98.) The Courtheld a hearing on Millennium Labs's motion to excludeon April 25, 2014. Marc D. Halpern, Vincent H e r r o n ,and Anthony J. Matera appeared for Millennium Labs.Ronald P. Schiller and Robert A . Wiygul appeared forDarwin. The Court denies Millennium Labs's motion toexclude expert testimony without prejudice.

This action i a v o l, ,e s a n i n s u r an c e c o v er a ge d i sp u te .

Plaintiff Millennium Labs is a diagnostics laboratory thatprovides specialty t .sting services at the request of healthcare providers!. ( D c. No. 73-1, Declaration o f RobertWiygul ( " V q y g u l D e c l . " ) , E x . 1 . ) Specifical ly,Millennium Labs offers urine drug testing to identify thepresence o r absence o f medications, il legal drugs, andother substances pr sent in a patient's system at the timeof the test. 1(Id.; see a lso Wiygu l Decl . , E x . 2 . )Millennium Labs oytained from Darwin a MiscellaneousMedical Facilities, Professional Employment Practicesand General Ipability Insurance Policy No. 0305-0307("the policy"), issu d for the policy period o f December1, 2011 to Decemt er 1, 2012. (Doc. No. 73-2, WiygulDecl., Ex. 6.) The policy covers "claims alleging Personalor Advertising Injury caused by an offense that takesplace during the pclicy period" and defines "Personal orAdvertising injury" in pertinent part as "injury, other thanbodily i n j u r yl a r i s i ng o ut of [ 0-al or w ri tt en

publication, inlany manner, that slanders or libels a personor organization or cisparages a person's or organization'sgoods, product or services." (1d. at 17, § 13.2; i d atCC.4 . ) The policy's coverage includes "the right andduty t o defeind a n y such C la im brought against"Millennium Lqbs. (Id. at 17, § I.B .2.)

The act ion Concans t w o underlying lawsuits t h a tMillennium alleges trigger Darwin's duty t o defend,Ameritox L t d . M i l l e n n i u m Laboratories, I n c .("Amer/tax" ) , Case No. 11—cv-775 (M.D.Fla.), andMillennium Laboratories, Inc. v. Calloway Laboratories,

("Calloway" ), Case No. 10-3496 (Mass.Super.Ct.).On May 13, 2p14, the Court granted Millennium Labs'smotion f o r s4mmary judgment, and denied Darwin'scross-motion f o r summary judgment, ru l ing that theunderlying actions triggered Darwin's duty t o defendunder the "potential fo r coverage" standard. (Doc. N o112.) The Court also denied Darwin's motion forsummary judginent on Millennium Labs's allegation o fbad faith. ( I d ) Millennium now moves the Court t oexclude the testimoly o f Darwin's expert Ty R. Sagalowunder Federal Rule o f Evidence 104, 402, 403, 702, and703. (Doc. No 74 at 2, sealed.) Specifically, MillenniumLabs moves to exc_ude Mr. Sagalow's testimony on thegrounds that his opinions make impermissible findings offact and conclusiors o f law, usurp the role o f the jury,depend on unreliable or inadmissible testimony, and areconfusing and prejudicial. (Doc. No. 74-1 a t 11-18.)Darwin's opposition argues that Mr. Sagalow's opinionsare relevant and permissible, and that Millennium Labs's

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Background

Millennium Laboratories, Inc. v. Darwin Select Ins. Co., Slip Copy (2014)

objections go to the weight of his testimony rather than itsadmissibility. (Doc. No. 91 at 10-17.)

Discussion

I. Legal Standards for Motions to Exclude ExpertTestimony*2 Federal Rule of Evidence 702 requires that a testifyingexpert be "qualified as an expert by knowledge, skil l ,experience, training, or education." Fed.R.Evid. 702. Rule702 "contemplates a b road conception o f expertqualifications." Thomas v. Newton I n t l Enters., 42 F.3d1266, 1269 (9th C i r. I 994). Moreover, " the advisorycommittee notes emphasize that Rule 702 i s broadlyphrased and intended to embrace more than a narrowdefinition o f qualified expert." Id. Rule 702 allows theCourt to admit as evidence the opinion o f a qualifiedexpert i f his "scientific, technical, o r other specializedknowledge w i l l help the trier o f fact to understand theevidence or to determine a fact in issue." Fed.R.Evid. 702.The Ninth Circuit has interpreted Rule 702 to require that"[e]xpert testimony must be both relevant and reliable."United States v. Vallejo, 2 3 7 F.3d 1008, 1019 (9thCir.2001). T h e " test o f reliability i s 'flexible, ' a n dDaubert's list o f specific factors neither necessarily norexclusively applies t o a l l experts o r i n every case."Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141, 119S.Ct. 1167, 143 L.Ecl id 238 (1999) (quoting Daubed v.Merrell Dow Pharms., Inc., 509 U.S. 579, 595, 113 S.Ct.2786, 125 L.Ed.2d 469 (1993)). The district court isaccorded broad latitude in determining the reliability o fexpert testimony. Id. at 142.

Rule 703 o f the Federal Rules o f Evidence pet t i tsexperts to render opinions even i f based on inadmissibleevidence so long as the inadmissible evidence is o f thetype reasonably rel ied o n b y experts i n that field.Daubed, 509 U.S. at 595. Such inadmissible facts or datamay be admissible as the basis for an expert's opinion i ftheir "probative value in assisting the jury to evaluate theexpert's opinion substantially outweighs their prejudicialeffect." Fed.R.Evid. 703.

Courts are charged w i th a "gatekeeping function" t oensure expert testimony i s both reliable and relevant.Daubed, 509 U.S. at 597. The district court has broaddiscretion i n assessing the relevance and reliability o fexpert testimony. United States v. Finley, 301 F.3d 1000,1007 (9th Cir.2002). The inquiry into admissibility o fexpert opinion is a "flexible one," where "[s]halcy butadmissible evidence i s t o b e attacked b y cross

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examination, contrcry evidence, and attention t o theburden o f pro f , not exclusion." Primiano v. Cook, 598F.3d 558, 564 (9th C ir.2010). "Under Daubed, the districtjudge is 'a gatekeeper, not a fact finder.' When an expertmeets the threshold established by Rule 702 as explainedin Daubert, t h l expert may testify and the jury decideshow much we•oht to give that testimony." Id. (quotingUnited States i . Sandoval—Mendoza, 472 E.3d 645, 654(9th Cir.2006)).

H. AnalysisDarwin retained Mr. Sagalow to provide expert testimonyconcerning the insurance industry's custom and practiceas it relates to the policy provisions at issue in this action.(See Doc. No. 91 at 8 (sealed)) Millennium Labs movesto exclude Mr. Sagalow's testimony on certain provisionsof the policy, inducing their typicality in the insuranceindustry and the possibility that they may be interpreted ina w a y t o deny Mi l lennium Labs coverage i n t h eunderlying lawsuits. (Doc. No. 74-1 a t 16-19.) Darwinopposes, arguing tha Mr. Sagalow's opinions on thesematters are rele ant End pen lissible. (Doc. No. 91.)

*3 Darwin's e pert, Ty R. Sagalow, is qualified as anexpert under RI l e 7 0 2 b y w ay of h is e x pe r ie n ce and

education. Mr. a g a b w has over 30 years' experience asan insurance e ecutive, and has served as both chiefunderwriting officer and general counsel at one o f theworld's largest ,n s u r , n c e c o m p an i e s, A IG. ( See D oc. No.

74-4, Report of Ty R. Sagalow, at 3 (sealed)) His diverseprofessional ex erierce at a variety o f companies in theinsurance industry demonstrates a breadth o f experiencedrafting and interpreting policies, making underwritingdecisions, and l a ims handling. (See id.) Mr. Sagalowgraduated wi th a bEchelor's degree from Long IslandUniversity, a J. . from the Georgetown University LawCenter, and an L.L.M. from New York University LawSchool. (Id.) In d d i t-o n , h e i s a n a u t h or o f s e v er a l w o rk s

in the field o f 1 abilky insurance policies. (See id.) Mr.Sagalow produc d a twentythree page expert report basedon his review of the policy and Darwin's underwritingfile, discussing i dus'ay custom and usage as well as thehistory and purpose o f key provisions o f the policy atissue. (Doc. No. 74—L, Ex. C (sealed); see also Doc. No.91 at 12-13 (sea ed).)

The Court concl des :hat Sagalow's experience, training,and education provided a sufficient foundation o freliability for his testimony. His specialized knowledge inthe insurance field may be helpful to the trier o f fact inunderstanding the eviience or determining facts in issue.See Fed.R.Evid. 702. After due consideration, the Courtdenies Millennium Labs's motion to exclude the expertU.S. Government Vvorks. 2

Millennium Laboratories, Inc. v. Darwin Select Ins. Co., Slip Copy (2014)

testimony of Mr. Sagalow without prejudice.

Conclusion

Darwin has shown that the expert testimony o f Mr.Sagalow is relevant and reliable. Vallejo, 237 F.3d at

1019. Accordingly,motion to exclude hi

IT IS SO ORDERE).

e Court denies Millennium Labs'stestimony at trial.

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