Chandler Gas and Store Incorporated, et al., v. Treasure Franchise Company LLC, et al.,
No. CV-23-00400-PHX-KML
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA
October 29, 2025
Honorable Krissa M. Lanham, United States District Judge
ORDER
The upcoming trial between plaintiffs (collectively “Chandler Gas“) and defendants (collectively “Marathon“) centers on alleged point-of-sale machine operating system malfunctions at Chandler Gas. Both sides filed expert-exclusion motions: Chandler Gas moves to exclude the opinions of John Umbeck and Marathon moves to exclude the opinions of Max McDevitt. (Docs. 186; 192.) The motion to exclude Umbeck‘s testimony is granted in part and denied in part. The motion to exclude McDevitt‘s testimony is denied.
I. Legal Standard
a. Daubert Motions
The
The reliability threshold is likewise broad. “Shaky but admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.” Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010). Courts must “screen the jury from unreliable nonsense opinions, but not exclude opinions merely because they are impeachable.” Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th Cir. 2013).
The court has broad discretion in assessing reliability and deciding how to evaluate it. United States v. Hankey, 203 F.3d 1160, 1168 (9th Cir. 2000). Considerations may include whether the theory or technique can be tested, whether it has been subject to peer review, its known or potential rate of error, and its general acceptance in the relevant field. Daubert, 509 U.S. at 593-94. These factors are not exhaustive, nor must they apply in every case. Hankey, 203 F.3d at 1168. When reliability depends primarily on an
II. Chandler Gas‘s Motion to Exclude Umbeck
a. Umbeck‘s Opinions
Umbeck is a professor of economics at Purdue University who has more than 40 years of experience researching the petroleum industry and the marketing of petroleum products. (Doc. 186-1 at 6.) Umbeck explains he was retained by Marathon to determine whether Chandler Gas was profitable and the amount of damages the business might have incurred due to the alleged point-of-sale problems. (Doc. 186-1 at 7.) Based on his review of “all of the available information” (Doc. 186-1 at 34), Umbeck drew eight “conclusions,” which the court will treat as the opinions Umbeck hopes to offer at trial:
- The Chandler station was profitable when operated by Prima Investments.
- The Chandler station was profitable when operated by the McCullochs.
- The financial data shows no evidence of any significant financial harm to the station during the time of the alleged failure of the operating system.
- The actual computer problems, using Verifone data, shows no evidence of any significant loss of gasoline sales.
- The customer reviews show no evidence of customers being upset about any inconvenience caused by the computer problems.
- Based on opinions 3-5, the alleged failure of the operating system would have no significant negative impact on the expected future revenues or the market value of the business when sold.
- The business experienced a significant decrease in the volume of fuel it sold, compared to the sales when operated by Prima. However, these lost fuel sales
were caused by the new retail pricing policy implemented by the McCullochs and not the alleged problems with the operating system. - Any loss in value the business might have incurred during this time period was caused by the plaintiffs.
(Doc. 186-1 at 9.) Chandler Gas appears to seek the exclusion of all of Umbeck‘s testimony because he “is not qualified, his opinions are not reliable, and they would not be helpful to the jury.” (Doc. 186 at 5.) But Chandler Gas focuses on excluding what it identifies as Umbeck‘s “causation opinions” involving what damage was caused by the operating system failures. (Doc. 186 at 5, 10-21.) Additionally, Chandler Gas seeks to fully exclude Umbeck‘s rebuttal report on the basis it merely rehashes his original expert report rather than contradicting or rebutting McDevitt‘s report. (Doc. 186 at 20.)
b. Analysis
Umbeck holds a doctorate in economics, has taught in that field for more than four decades, and has an extensive background in petroleum industry economics and marketing. (Doc. 186-1 at 6.) He has published scholarship in economics, consulted with industry participants, and previously testified as an expert in matters involving petroleum marketing and profitability. (Doc. 186-1 at 6.) These qualifications are sufficient to establish the “minimal foundation” required under
Opinions 1 and 2 Regarding Profitability
Chandler Gas argues Umbeck‘s first two opinions should be excluded because they are not relevant. (Doc. 186 at 8.) Those opinions address the profitability of the station under its prior owner (Prima) and then once Chandler Gas took over. Chandler Gas claims hundreds of thousands of dollars in damages based on alleged lost sales volume. (Doc. 205 at 10.) Umbeck‘s opinion that the station was profitable during the relevant period and that observed volume declines are more consistent with pricing decisions than computer outages bears directly on causation and damages.
Evidence of profitability is relevant because it provides economic context against which the jury can assess the plausibility and magnitude of Chandler Gas‘s claimed losses. A central issue to this case is whether any alleged operating system outages actually caused a measurable financial impact. Evidence showing the operations before Chandler Gas assumed control and that the business remained profitable during the relevant period will assist the jury in understanding the evidence or determining a fact in issue. Daubert, 509 U.S. at 591; see also Hangarter, 373 F.3d at 1017. And although profitability alone does not disprove damages, it is probative of whether the alleged operating system issues caused significant economic harm, and the weight to be given to that evidence is a matter for the jury, not a basis for exclusion. See Primiano, 598 F.3d at 564 (9th Cir. 2010) (holding issues of weight and credibility are for cross-examination and not exclusion). This testimony provides relevant background and probative evidence that may assist the jury in evaluating the scale of Chandler Gas‘s claimed damages.
Accordingly, Umbeck‘s Opinions 1 and 2 on profitability are relevant and admissible.
Opinions 3 and 4 Regarding Operating System Failures
Umbeck concludes the alleged failures of the operating system did not cause significant financial harm or loss of gasoline sales. (Doc. 186-1 at 9.) Chandler Gas argues Umbeck failed “to consider probative information regarding the frequency and severity of Operating System failure/outages, rendering his opinions unreliable.” (Doc. 186 at 10-11.) Chandler Gas also contends Umbeck‘s purported methodology is unreliable because the Verifone logs are incomplete, the fifteen-minute threshold Umbeck used is arbitrary, and Umbeck is not qualified to interpret technical outage data. (Doc. 186 at 12.)
To determine the impact the operating system had on sales, Umbeck looked exclusively to “a Verifone log” that included 75 problems each assigned a unique case number. (Doc. 186-1 at 16.) He does not explain why he only looked at Verifone logs and
Umbeck‘s opinions based on his “analysis of the actual computer problems” cannot be admitted. Umbeck admitted he has no expertise or specialized knowledge to understand computer system issues. (Doc. 186-3 at 11 (Umbeck stating he is “definitely not” an IT expert and would not hold himself out as qualified to interpret system outage logs or related technical evidence).) And Marathon‘s attempt to offer Umbeck as qualified on this front is inexplicable. Without some technical understanding of the “Verifone logs” and precisely what they were reflecting, Umbeck has no basis for his alleged “analysis” of those problems.
But even assuming Umbeck were qualified to analyze computer problems, he has not explained how he has any expertise in consumer behavior and provides no basis for his assumption that a delay of less than five minutes would have no impact. Similarly, the record reveals no proper basis for Umbeck‘s unexplained decision to impose an arbitrary fifteen-minute cutoff for identifying potentially impactful events. Even more, Umbeck fails to conduct any analysis to demonstrate a connection between his fifteen-minute-or-longer problem list and Chandler Gas‘s fuel sales or finances. The closest he comes to
Finally, Umbeck seems to expect the court and factfinders to draw meaningful conclusions from a chart containing gross fuel sales revenue, C-store revenue, and total sales revenue. (Doc. 186-1 at 14.) Umbeck presents a chart with these figures and blankly states “the table shows no significant decline in revenues from fuel sales or store sales.” (Doc. 186-1 at 15.) Yet there is zero explanation or analysis to show why differences the chart shows in revenue should be considered insignificant. Umbeck thus provides no reliable reasoning supporting his conclusion that no significant loss of revenues occurred over the relevant time period. Valencia-Lopez, 971 F.3d at 898. In sum, Umbeck inadequately described his methodology, failed to show how his methodology is supported in his field and reliable, did not establish the meaning of a “significant” loss or financial harm, did not explain why his fifteen-minute Verifone threshold is appropriate, and did not tie any of his (questionably-selected) computer issues to any finances whatsoever.
For these reasons, Umbeck‘s Opinions 3 and 4 are excluded.
Opinion 5 Regarding Customer Reviews
Umbeck obtained 36 customer reviews through Google Maps from the relevant period and concludes there is no evidence of customers being upset about the computer problems, and thus “no evidence of a significant loss of business... due to the alleged computer problems.” (Doc. 186-1 at 21-22.) Umbeck‘s discussion of the customer reviews is unusually scant and confusing. He says that clicking on the station on Google Maps “open[s] up a website with all kinds of information about the station, including the
This conclusion by Umbeck does not meet the Daubert standard. Even assuming the accuracy of the customer reviews themselves, Umbeck provides no reliable method for extrapolating economic harm from qualitative anecdotal feedback. His methodology appears to have consisted of reading through a relatively arbitrary collection of consumer reviews of Chandler Gas, and nothing more. There is no part of Umbeck‘s background that qualifies him to conduct a qualitative analysis of customer reviews retrieved through his own unexplained research on Google Maps. See Hankey, 203 F.3d 1160, 1168-69 (9th Cir. 2000); see also 11333 Inc., 261 F. Supp. 3d at 1027. Even if his background demonstrated expertise to conduct such a qualitative analysis, Umbeck does nothing to tie these consumer reviews to any impacts on the business of Chandler Gas. Umbeck also fails to consider other resources that could provide a fuller picture of customer sentiment (Doc. 186 at 14) and ultimately provides no reason why his methodology is sound or proper.
For these reasons, Opinion 5 is excluded.
Opinion 6
Opinion 6 relies entirely on excluded Opinions 3 through 5, and therefore depends on unreliable and inadmissible testimony. Although inadmissible evidence may be
Opinion 7 Regarding the Causation of Lost Profits
Umbeck‘s Opinion 7 concludes that any decrease in fuel sales volume during the relevant period was caused by Chandler Gas‘s pricing decisions and not the alleged operating system failures. (Doc. 186-1 at 35.) Chandler Gas argues this opinion—which is based primarily on price differentials between Chandler Gas and the nearby Circle K station—should be excluded because it is “flawed and unreliable” and prejudicial. (Doc. 186 at 19.)
To provide support for Opinion 7, Umbeck uses data on the station‘s average monthly retail prices before, during, and after Chandler Gas‘s ownership. (Doc. 186-1 at 23.) Umbeck first compares Chandler Gas‘s prices with those of its eight closest competitors, which seems to show nearly identical pricing between 2018 and 2024. (Doc. 186-1 at 23.) But then Umbeck provides stronger support for his conclusions. He demonstrates a gradual decline in monthly average gasoline sales for Chandler Gas (Doc. 186-1 at 25) and a gradual increase in the differential between the retail price offered by Chandler Gas and the wholesale price at which it purchased the gasoline (Doc. 186-1 at 28). Finally, Umbeck compares the monthly price of Chandler Gas with a competitor Circle K station just under one mile away. (Doc. 186-1 at 30.) Umbeck‘s data shows that Chandler Gas‘s average monthly retail price was often a few cents below Circle K‘s price for the last half of 2021, but several cents higher than Circle K‘s in 2022 (and even up to more than fifteen cents higher in November 2022). (Doc. 186-1 at 30.) In the same chart, Umbeck also shows a mostly-gradual decline in the average monthly volume of gasoline sold by Chandler Gas. (Doc. 186-1 at 30.)
From this data, Umbeck concludes the retail prices set by Chandler Gas—and not the computer problems—caused the volume of gasoline sales to drop. (See Doc. 186-1 at 31, 35.) This testimony is relevant to causation and damages because it offers an alternative explanation for the decline in sales volume, which is a key contested issue in the case. Expert testimony that helps the jury evaluate competing causal explanations for damages claims is within the scope of
Accordingly, the motion to exclude Opinion 7 is denied.
Opinion 8 Regarding Plaintiffs Having Caused All Loss in Value
Umbeck‘s Opinion 8 states that “any loss in value the business might have incurred during this time period was caused by the plaintiffs.” (Doc. 186-1 at 9.) Unlike Umbeck‘s pricing analysis in Opinion 7, Umbeck does not identify a valuation methodology or provide an evidentiary basis for this opinion. Umbeck does not perform a discounted cash flow analysis, comparable sales analysis, or any other recognized valuation technique. Nor does he provide an economic model linking the alleged causes (e.g., pricing decisions) to any measurable diminution in business value. In fact, Umbeck‘s report includes essentially no discussion or reasoning to support this opinion: there is not a single sentence about the business value or how Chandler Gas may have caused any loss in value. This opinion is too unreliable to satisfy the necessary standard
Accordingly, Opinion 8 is excluded.
Rebuttal Report
Chandler Gas also objects to portions of Umbeck‘s rebuttal report, arguing Umbeck impermissibly exceeds the scope of proper rebuttal. (Doc. 186 at 20-21.) Rebuttal testimony must be “intended solely to contradict or rebut evidence on the same subject matter identified by another party‘s expert.”
c. Conclusion
Umbeck may offer Opinions 1, 2, and 7. Opinions 3, 4, 5, 6, and 8 are excluded. To be clear, Umbeck cannot offer testimony regarding the technical functioning of the operating system, the Verifone records, or the actual cause of any system outages. Additionally, Umbeck must not offer opinions based on personal feelings or unexplained assumptions rather than reliable principles and methods. (See, e.g., Doc. 186-1 at 16 (“Having experienced numerous computer problems myself, I‘m sure these problems were very annoying for the individuals operating the station. However, if it can be
III. Marathon‘s Motion to Exclude McDevitt
Unlike Umbeck‘s opinions, McDevitt‘s opinions will not be addressed individually. McDevitt‘s six opinions are not independent conclusions on distinct topics. Rather, they are different numerical outputs of an economic damages model estimating lost profits and business value over a defined period. His methodology, assumptions, and input materials are common to all six opinions. To avoid redundancy, McDevitt‘s opinions are analyzed at once, with a focus on whether his qualifications, methodology, and underlying assumptions satisfy the necessary Daubert standard.
a. McDevitt‘s Opinions
Max McDevitt is an economist at the consulting firm, The Fontana Group, Inc., and has “assisted with” over two dozen cases related to franchisee issues, generally in the automotive industry. (Doc. 192-1 at 5.) Chandler Gas hired Fontana and McDevitt to provide relevant economic analysis for this case. (Doc. 192-1 at 6.) Specifically, McDevitt has been retained to produce an expert report estimating the lost profits for Chandler Gas between June 2021 and July 2024 and the loss of value on the sale of business assets for Chandler Gas due to the alleged point-of-sale operating system malfunctions. (Doc. 192-1 at 6-7.) McDevitt intends to introduce the following opinions at trial:
- Chandler Gas lost an estimated 907,708 gallons of fuel sales between June 2021 and July 2024
- Chandler Gas lost an estimated $1,731,972 in C-Store sales between June 2021 and July 2024
- Chandler Gas lost an estimated $333,040 in fuel profits between June 2021 and July 2024
- Chandler Gas lost an estimated $388,532 in C-Store profits between June 2021 and July 2024
- Chandler Gas lost an estimated $721,572 in total profits (combined fuel and C-Store) between June 2021 and July 2024
- Chandler Gas‘s estimated loss of value on the sale of business assets was $784,604 (Doc. 192-1 at 7.)
b. Analysis
McDevitt is an economist with a doctorate in economics from Boston University. (Doc. 192-1 at 5.) He has experience with applied economics and statistics, especially within the retail automotive industry. (Doc. 192-1 at 20-22.) He consults and performs analyses on topics like applied econometrics, economic harm, franchise economics, and spatial sales distribution and market behavior. (Doc. 192-1 at 20-21.) As part of his work with Fontana, McDevitt has worked on cases regarding lost profits and lost sales, among other related economic topics. (Doc. 192-1 at 5.) Marathon challenges McDevitt‘s qualifications on the basis he lacks specialized experience in retail gasoline markets and the petroleum industry. (Doc. 192 at 1.)
McDevitt‘s educational background and professional experiences provide the minimal foundation required under
Marathon also takes issue with McDevitt‘s methodology. Marathon argues McDevitt‘s damages opinions rest on biased assumptions—particularly that all lost sales were attributable to operating system glitches rather than price increases or competition. (Doc. 192 at 10.) But McDevitt‘s assumptions, which he makes very clear, do not stray into terrain that would preclude his testimony. He reviewed historical data, incorporated alternative pricing scenarios, and grounded his damage calculations in the station‘s actual financial records. Nuveen Quality Income Municipal Fund, Inc. v. Prudential Equity Group, LLC, 262 F. App‘x 822, 824 (9th Cir. 2008) (“[a]n expert opinion is properly excluded where it relies on an assumption that is unsupported by evidence in the record and is not sufficiently founded on facts“); cf. Guidroz-Brault v. Missouri Pac. R. Co., 254 F.3d 825, 830 (9th Cir. 2001) (excluding expert opinion based on insufficiently-supported assumption). And experts are allowed to rely on records created by others if they disclose their assumptions and use those records to apply their own specialized expertise. See
Marathon further asserts McDevitt ignored basic principles of economics like the law of demand. (Doc. 192 at 11.) In making this argument, Marathon relies on cases featuring experts whose analyses rested on assumptions contrary to basic economic
Lastly, Marathon argues McDevitt‘s opinions should be excluded because the opinions would mislead the jury and cause unfair prejudice. (Doc. 192 at 8.) Under
c. Conclusion
In all, McDevitt‘s economic damages opinions are supported by relevant expertise, employ a methodology that is sufficiently reliable under
Accordingly, Marathon‘s motion to exclude the testimony of McDevitt is denied.
Accordingly,
IT IS ORDERED the Motion to Exclude the Testimony of Umbeck (Doc. 186) is GRANTED IN PART and DENIED IN PART. The motion to exclude Umbeck‘s Opinions 3, 4, 5, 6, and 8 is GRANTED. The motion to exclude Umbeck‘s Opinions 1, 2, and 7 is DENIED.
IT IS FURTHER ORDERED the Motion to Exclude the Testimony of McDevitt (Doc. 192) is DENIED.
Dated this 29th day of October, 2025.
Honorable Krissa M. Lanham
United States District Judge
