Mar Oil Co. v. Korpan
973 F. Supp. 2d 775
N.D. Ohio2013Background
- MAR Oil contracted Myron Korpan (2000, renewed 2002) to consult and obtained seismic data; the agreement limited Korpan from competing in the area and required confidentiality; the GORA expired in 2005.
- MAR invested millions producing seismic data it treats as a trade secret; Korpan retained some materials after termination.
- From 2008 Korpan worked with Ronald Brock and Solstice Energy Partners (SEP) to lease and explore in the same area; MAR discovered competing leases in 2010 and sued for trade-secret misappropriation under the Ohio Uniform Trade Secrets Act (TSA).
- MAR designated geologist Arthur Berman as an expert to testify about seismic data value, industry confidentiality practices, MAR’s protective measures, and damages (cost to acquire data: about $2.9M; alleged lost investments and future profits supported by Ryder Scott and Billman reports).
- Defendants moved under Daubert to exclude portions of Berman’s testimony; court conducted Rule 702 gatekeeping and resolved scope and limits of Berman’s admissible opinions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Berman as expert | Berman’s 34 yrs geology experience qualifies him to address seismic data value, industry practice, and damages-related matters | SEP/Brock: Berman is a geologist, not a damages expert or landman; cannot opine on legal duties, investment causation, or credibility | Qualified to testify on geology, seismic data use, industry customs, and how misuse can harm a company; limited on legal/damages-specific conclusions |
| Measure of damages: cost to acquire data | MAR: cost to create seismic data is an appropriate damage measure because defendant may have saved those costs | SEP: TSA permits lost profits only; cost-of-creation and lost investment are improper | Court: cost of acquisition can be an appropriate measure (like avoided costs/reasonable royalty) and admissible as a damage theory |
| Measure of damages: lost third‑party investment (Marksmen) | MAR/Berman: litigation caused Marksmen to withdraw $800,000 investment | SEP: no proof linking Marksmen’s decision to misappropriation; no evidence from Marksmen | Court: loss of investment is not an appropriate damage measure here; Berman excluded from opining that Marksmen would/would not have invested or quantifying resulting profits |
| Use of industry reports and expert foundation (Ryder Scott/Billman) | MAR: Berman may rely on industry reports supporting future profits estimate | SEP: Berman lacks foundation for Billman; Ryder Scott must be vetted | Court: Berman may lay foundation for Ryder Scott report and testify about its industry use; Billman report excluded (Berman unfamiliar; predates GORA) |
| Industry standards and confidentiality duty | MAR: Berman can explain industry ethics/codes and whether defendants’ conduct violated those norms | Brock: Berman is not a landman, lacks county-specific experience, and cannot opine on legal duties or confidentiality | Court: Berman qualified to testify on nationwide industry customs, ethical codes, and confidentiality obligations; may not give legal conclusions about duties beyond describing standards |
| Opinions on state of mind and credibility | MAR: Berman will testify about consistency of conduct with standards, not specific mental state or credibility | Brock: Berman impermissibly opines Brock’s knowledge, willful blindness, and credibility | Court: Berman may say conduct is inconsistent with standards and what a similarly situated person would know; he cannot testify to Brock’s actual state of mind or evaluate witness credibility (statements in his report must be revised) |
Key Cases Cited
- Daubert v. Merrell Dow Pharm., 509 U.S. 579 (1993) (trial court gatekeeping for expert testimony under Rule 702)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert gatekeeping applies to non‑scientific expert testimony and is flexible)
- Smelser v. Norfolk S. Ry. Co., 105 F.3d 299 (6th Cir. 1997) (qualifications assessed in relation to specific questions the expert will answer)
- In re Paoli R.R. Yard PCB Litig., 35 F.3d 717 (3d Cir. 1994) (opinion exclusion when underlying data lack probative force under Rule 703)
- Avery Dennison Corp. v. Four Pillars Enter., [citation="45 F. App'x 479"] (6th Cir. 2002) (avoided costs or value to defendant can be appropriate damage measures in trade‑secret cases)