United States District Court, D. New Jersey
MEMORANDUM AND ORDER
G. SHERIDAN, U.S.D.J.
matter comes before the Court on five in limine motions filed
by both Plaintiff/Defendant Kars for Kids and
Plaintiff/Defendant America Can!. The Court incorporates
herein the facts of this case as set forth in the memorandum
on summary judgment, ECF No. 142.
Kars 4 Kids' motion to exclude the opinion of Bryce Cook,
America Can!'s expert on damages
Kids seeks to exclude the opinion of Bryce Cook, America
Can!'s expert on damages. "Under the Federal Rules
of Evidence, a trial judge acts as a 'gatekeeper' to
ensure that 'any and all expert testimony or evidence is
not only relevant, but also reliable.'" Pineda
v. Ford Motor Co., 520 F.3d 237, 243 (3d Cir. 2008)
(quoting Kannankeril v. Terminix Int'l Inc., 128
F.3d 802, 806 (3d Cir. 1997)). When faced with a proffer of
expert testimony under Federal Rule of Evidence 702,
"the trial judge must determine at the outset . . .
whether the expert is proposing to testify to (1) scientific
knowledge that (2) will assist the trier of fact to
understand or determine a fact in issue." Daubert v.
Merrell-Dow Pharms., Inc., 509 U.S. 579, 592 (1993).
"Rule 702 has three major requirements: (1) the
proffered witness must be an expert, i.e., must be qualified;
(2) the expert must testify about matters requiring
scientific, technical or specialized knowledge; and (3) the
expert's testimony must assist the trier of fact."
Pineda, 520 F.3d at 244. The parties have not raised
any dispute as to Mr. Cook's qualification to testify as
proffered testimony must be reliable; that is, "the
expert's opinion must be based on the 'methods and
procedures of science' rather than on 'subjective
belief or unsupported speculation'; the expert must have
'good grounds' for his or her belief."
Id. at 742 (quoting Daubert, 509 U.S. at
590). "[S]o long as the process or technique the expert
used in formulating the opinion is reliable," such
testimony will be deemed admissible. Id. The
reliability of an expert's testimony is assessed using an
eight-factor test set forth by the Third Circuit:
(1) whether a method consists of a testable hypothesis; (2)
whether the method has been subject to peer review; (3) the
known or potential rate of error; (4) the existence and
maintenance of standards controlling the technique's
operation; (5) whether the method is generally accepted; (6)
the relationship of the technique to methods which have been
established to be reliable; (7) the qualifications of the
expert witness testifying based on the methodology; and (8)
the non-judicial uses to which the method has been put.
United States v. Mitchell, 365 F.3d 215, 235 (3d
Rule 702 requires that the expert testimony must fit the
issues in the case"; that is, "the expert's
testimony must be relevant for the purposes of the case and
must assist the trier of fact." Schneider, 320 F.3d at
404. "In assessing whether an expert's proposed
testimony 'fits,' we are asking 'whether [the]
expert testimony proffered . . . is sufficiently tied to the
facts of the case that it will aid the jury in resolving a
factual dispute.'" United States v. Schiff,
602 F.3d 152, 173 (3d Cir. 2010) (citing Daubert,
509 U.S. at 591).
Kids seeks to bar America Can!'s damages expert from
testifying, claiming that he "offers nothing more than
his subjective belief that, absent Kars 4 Kids' use of
the KARS 4 KIDS marks, every single donation Kars 4 Kids
received over a nine-year period would have gone to America
Can." (Memo. of Law in Support of Pl. Motion In Limine
No. 1 to Exclude the Entirety of Bryce R. Cook's Opinions
("Memo in Support of Motion In Limine No. 1"), ECF
No. 150-1 at 1). Mr. Cook's report purports to set forth
three different types of claims for damages that total
America Can!'s claim for damages; they are: a claim for
Kars 4 Kids' profits; the royalty that Kars 4 Kids
"would have had to pay if [America Can!] had agreed to
license the [m]ark"; and the cost of corrective
advertising. (Cook Report at 8-10).
the Lanham Act, the non-infringing party may recover as
damages "(1) [the infringer's] profits, (2) any
damages sustained by the [non-infringer], and (3) the costs
of the action." 15 U.S.C. § 1117(a). “In
assessing profits the plaintiff shall be required to prove
defendant's sales only; defendant must prove all elements
of cost or deduction claimed.” 15 U.S.C. §
America Can! seeks to recover the profits of Kars 4 Kids.
Cook determined that the revenues of Kars 4 Kids would be
determined by adding up the revenues reported on Kars 4
Kids' annual Form 990's. In order to confirm the
revenues on the Form 990 was correct, he compared those
revenues to the auction sales revenue from America Can!'s
database. Cook also examined auction sales revenue from Kars
4 Kids' database and its 2010 audited financial
statement. The 2010 statement indicated that
“substantially all” of Kars 4 Kids' revenue
are from donations. (Cook Report, ECF No. 150-2 at 8). Once
he was assured that the revenues on the Form 990s was
reasonable, he then calculated the total of Kars 4 Kids'
revenues as reported on Form 990 for the years 2008 through
2017. Relying on that sum, Cook concluded, "[America
Can!'s] claim for [Kars 4 Kids'] profits on sales
made using the infringing mark total $328, 175, 784."
(Id. at 9).
this calculation is a relatively simple use of addition, it
is Kars 4 Kids' burden to prove that the total revenues
should be discounted by expenses based on the statute. 15
U.S.C. § 1117(a). In short, the jury may be unaware that
the use of the revenues as reported on the Form 990 is an
acceptable method to determine damages. Cook's
presentation as to his method of finding the gross revenues
by adding revenues from the Form 990s is of assistance to the
Kars 4 Kids has an expert who will testify as to the expenses
that may be deducted from the total revenues to determine the
profit. Mr. Cook intends to discredit Kars 4 Kids' expert
by arguing certain costs should not be deducted. More
specifically, Cook's rebuttal report offers several
theories, but most notably, he asserts that the use of the
term “profit” is of a different nature when
applied to not-for-profit corporations as opposed to a
corporation's profit. As such, Cook concludes that
“any expenses that do not contribute to fundraising, or
revenue generation, should not be deducted from
revenue.” (Cook Rebuttal Report, ECF No. 150-2 at 6).
determining what revenues to discount, Cook examined a table,
which was derived from the Form 990s:
at 5). Cook provided a detailed analysis of this table and
how the expenses it presents should be discounted:
Per the Form 990 instructions, Column (B)-Program Services
“are mainly those activities that further the
organization's exempt purposes, ” which K4K
reported in Part III of Form 990 as: “educational,
developmental, and recreational programs for Jewish youth and
their families.” Based on this description, these
expenses did not contribute to K4K's generation of car
donation revenue and should therefore not be deducted.
Certainly, Domestic and Foreign Grants totaling $18.5 million
are wholly unrelated to K4K's vehicle-donation
fundraising function and should be excluded from deductions.
Mr. Hall acknowledged this very fact in his apportionment
calculation wherein he excluded grants from total expenses
“to determine what portion of Kars 4 Kids operational
expenditures represents advertising in a fundraising
capacity.” The same treatment should apply to the more
than $600, 000 in compensation/salary/payroll tax expenses
K4K spends in running and managing its charitable programs,
which is distinct from running and managing its
vehicle-donation arm, the expenses of which are shown in
Column (D) Fundraising. Likewise, the $2.8 million in
advertising expense relating to its charitable programs
(e.g., brochures for summer camps, ads for educational
programs, etc.) are irrelevant to and do not support
K4K's vehicle donation operations and should not be
deducted from revenues. Indeed, all Program Services expenses
in Column (B) are required by the IRS to be specifically
segregated into that category because they support K4K's
charitable programs and not its vehicle-donation fundraising
activities. Therefore, none of the Column (B) expenses should
be deducted from vehicle-donation fundraising revenues.
(Id. (footnotes omitted)).
Cook initially opined that profits should be calculated on
all revenues generated, in his rebuttal report he discounted
total fundraising costs because those “expenses
directly relate to the generation of vehicle-donation
revenue” which decreased Cook's total to $213, 374,
316. (Cook Rebuttal Report, ECF No. 150-2 at 8). He also
states that as an “alternative measure, ” the
factfinder could use “the grant funds [Kars 4 Kids]
provides to charitable organizations, as this amount is an
indication of the funds it has available to donate after
paying all its operating expenses required to generate those
funds.” (Id.). That reduction amounted to
total profits of $161, 294, 383; leading Cook to conclude
that these No. constituted the range of Kars 4 Kids'
profits. (Id. at 9).
findings regarding profits, which derived from his
mathematical calculations, were supported by a reliable
methodology. Cook explained the standards which governed his
use of the Form 990 revenues. His technique was consistent
with the Banjo Buddies court's analysis of damages.
Accordingly, Cook's calculations sufficiently satisfy the
multifactor test set forth in Mitchell, 365 F.3d at 235, and
his analysis was tied to the facts of the case and will be of
assistance to the jury, in accordance with the mandate of
Daubert, 509 U.S. at 591. As such, Kars 4 Kids' motion to
bar Cook's testimony on damages as disgorgement of
profits is denied.
his second theory concerning the amount of royalties that
Kars 4 Kids would have had to pay to license the mark, Cook
was also unable to render a conclusion. He did not discuss
this methodology in his rebuttal report. Cook is therefore
barred from testifying as to damages based on hypothetical
with regard to the third methodology - corrective advertising
- Cook was unable to conclude what amount of corrective
advertising would be necessary to correct confusion but
stated "the trier of fact may find the total advertising
[spent] useful as a starting point for addressing this
method." (Id. at 10). Whereas, “his
rebuttal report concluded that the total was $86.3 million.
Although the new figure was more precise, there is no
methodology supporting how Cook arrived at this opinion. He
merely concluded the amount of corrective advertising should
be the total advertising spent by Kars 4 Kids. It is
speculative to argue, without citation to authority, that the
corrective advertising for America Can! should equal the
total advertising expenditures by Kars 4 Kids. Further, it is
at best unclear how that figure would assist the trier of
fact in rendering a decision.
finding as to the third methodology was wholly conclusory.
The use of total advertising cost does not meet the
eight-factor test under Mitchell. It is unclear what method
Cook used, if any, or whether it would be subject to peer
review. The known or potential rate of error is very high in
light of this extremely off-hand imprecise contention. For
example, Mr. Cook states that $86.3 million is a good
starting point. The use of the words “starting
point” infers that there are factors that may add or
subtract from that amount. Mr. Cook does not set forth any
such factors within his report. As such, his imprecise
statement is not reliable. His testimony regarding corrective
advertising is barred.
Cook's use of the Form 990s as a means to determine
revenue may be valuable for assisting the jury in resolving
the issues of damages. However, he reached no conclusion as
to the hypothetical royalty, rendering him unable to assist
the trier of fact on that calculation. Finally, his
corrective advertising figure ($86.3 million) was based
solely on an imprecise remark, especially when he gives no
guidance as to the factors a jury would be required to assess
if they worked from the “starting point.”
Kars 4 Kids' Motion in Limine No. 2: Attorneys General
Kids seeks to exclude evidence of three investigations
conducted by state attorneys general in Minnesota, Oregon,
and Pennsylvania because they are irrelevant and prejudicial.
(Memo. in Support of Motion In Limine No. 2, ECF No. 152).
More precisely America Can! seeks to admit into evidence a
“Compliance Review of the Charitable Solicitation
Activities and Financial Reporting of Kars 4 Kids and its
Relationship to Oorah, Inc., ” dated 2017 by Attorney
General Lori Swanson of Minnesota (Compliance Review), plus
two single-page press releases from Pennsylvania and Oregon.
America Can! seeks to admit these documents because they are
relevant on three grounds.
Can! argues the Compliance Review and the two press releases
are relevant to the validity of the assignment of trademark
rights, to damages calculations (15 U.S.C. § 1117(a)),
and to its injury in the context of its trademark dilution
claim. Although America Can! claims the Compliance Review and
the two press releases should be admitted, each will be
addressed separately with the press releases being addressed
under the Public Records exception to the hearsay rule (Fed.
R. Evid. 803(8)), a public record will be admitted if it is a
"record or statement of a public office" if it sets
out, "in a civil case . . . factual findings from a
legally authorized investigation" and "neither the
source of information nor other circumstances indicate a lack
of trustworthiness." Fed.R.Evid. 803(8)(A)(iii), (8)(B).
The trial court has discretion concerning admissibility of
such evidence. Wilson v. Attaway, 757 F.2d 1227,
1245 (11th Cir. 1985). Here, the press releases do not set
forth “findings from a legally authorized
investigation” in that both press releases discuss a
settlement without support or substance behind the content.
As such, the motion In Limine to bar admission of the
Pennsylvania and Oregon press releases is granted.
to the Compliance Review, a different analysis applies. The
Compliance review is a twenty-seven page report. It
describes: (1) Kars 4 Kids and its affiliates; (2) how it
failed to disclose the revenue spent on fundraising and
overhead costs; (3) it failed to monitor the charities to
which it contributed; and (4) it failed to disclose that the
charity program was substantially more limited in focus than
represented in its advertisements. In another section, it
noted a misstatement on the Kars 4 Kids federal tax reporting
averring that Kars 4 Kids reported “net, not gross,
revenues on its IRS Form 990." (Doc, 161-1, p. 10). Most
of those topics may impact the value of the mark.
Can! sets forth three grounds for admitting the evidence as
relevant to: "(1) K4K's purported date of initial
use of its claimed marks; (2) damages; and (3) the injury
caused America Can! By Kars 4 Kid's trademark
infringement." (Def.'s Br. in Opp. to Pl.'s
Motion In Limine No. 2 to Exclude Evidence, Testimony, and
Argument Regarding Attorneys General Investigations
("Def.'s Opp. to Pl.'s Motion in Limine No.
2"), ECF No. 160 at 5).
Compliance Review is relevant to damages. Specifically, the
Compliance Review found that Kars 4 Kids misled the
government and the public about the amount of revenue that
was spent on advertising v. charitable purposes, and it made
findings about Kars 4 Kids' actual amount of advertising
addition, the Compliance Review has a tendency to support
America Can!'s trademark dilution claim. Assuming America
Can! can establish the other elements of the dilution claim,
the report has a tendency to show that Kars 4 Kids'
“use causes dilution by lessening the capacity of
[America Can!'s] mark to identify and distinguish goods
or services.” 800-JR Cigar, 437 F.Supp.2d at 293.
Court finds that the probative value of the Compliance Review
is relevant and substantially outweighed by the risk of
unfair prejudice, confusing the issues, or misleading the
jury. As such, the motion in limine to bar admission of the
Compliance Review is denied.
the Court tentatively finds the Compliance Review to be
admissible under the public records exception to the hearsay
rule and declines to exclude the evidence under Rule 403.
Additionally, Kars 4 Kids may propose reasonable redactions
to the report, which the Court shall consider.
course of conducting the investigation that resulted in the
Compliance Review, the Minnesota Attorney General issued
discovery requests to Kars 4 Kids. One such request was for
copies of “all documents that memorialize or describe
any agreement, affiliation, or relationship, or other
arrangement, whether formal or informal, between [Kars 4
Kids] and Oorah.” (Confoy Decl., Ex. 7, ECF No. 161-5).
In response, Kars 4 Kids stated, “Subsequent to 2009,
Oorah and Kars [4 Kids] ceased to have a formal grant
application process. Rather, Kars [4 Kids] made grants to
Oorah on a discretionary basis. We do not have any other
documents pertaining to agreements between Kars [4 Kids] and
Oorah.” (Id.) (hereinafter “Response).
Can! seeks to admit this Response as a statement of opposing
party exception to the hearsay rule. Fed.R.Evid. 801(d)(2).
This Response, however, is not relevant evidence of an
absence of an assignment for several reasons. First, the
Response references agreements subsequent to 2009. Second,
the statement discusses agreements between Oorah and Kars 4
Kids. And third, the statement references documents
pertaining to agreements. The alleged assignment occurred in
2000, was made from OKR to Joy for Our Youth, Inc. (which
later became Kars 4 Kids),  and was undisputedly an oral
assignment. (ECF No. 184, T62:3-8).
Kids' Response is not probative of the date of any
alleged assignment. To introduce such evidence to refute Kars
4 Kids' claim of an assignment would do nothing but
confuse the issues, mislead the jury, and pose a risk of
unfair prejudice. The Response is inadmissible under Federal
Rule of Evidence 403.
Kars 4 Kids' Motion in Limine No. 3: Business
Kids seeks to exclude evidence of America Can!'s business
registrations from being introduced at trial, arguing that
"[t]he jury is not likely to appreciate the legal
distinction between registering to do business under a
designation and public use of a designation in advertising
sufficient to acquire trademark rights." (Memo. of Law
in Support of Pl.'s Motion In Limine No. 3 to Exclude
Evidence, Testimony, and Argument Regarding America Can's
Business Registrations ("Memo. in Support of Motion In
Limine No. 3"), ECF No. 153 at 4). Kars 4 Kids cites
Three Rivers Confections, LLC v. Warman, 660
Fed.Appx. 103, 105 (3d Cir. 2016), which held that "a
copy of the Pennsylvania Department of State listing"
for a mark, alone, was insufficient, stating, "[a]bsent
further evidence of ownership, such as market penetration,
from which a reasonable jury could conclude that [defendant]
owned the [mark] as a senior user, summary judgment for
[plaintiff] was warranted." However, in Three Rivers,
the court did not hold that business registration evidence is
not admissible, merely that business registration evidence,
alone, is insufficient to establish a claim for infringement.
The business registration is certainly admissible as
probative of priority of use.
does not appear to be any risk of prejudice or of confusing
or misleading the jury. Kars 4 Kids is free to argue to the
jury that the business registration alone is not sufficient,
but America Can! is also permitted to present the evidence to
the jury. Kars 4 Kids' motion to exclude evidence of
America Can!'s business registrations is denied.
Cars for Kids' Motion in Limine: Opinion of Alex
Can! seeks to exclude a survey conducted by Kars 4 Kids'
expert, and corresponding opinion testimony that purports to
show secondary meaning. The objective of the survey was to
assess the secondary meaning of the term “Kars 4
Kids.” Kars 4 Kids counters that the survey is reliable
under Evidence Rule 702. The survey at issue, created by Dr.
Alex Simonson,  was conducted online and aurally (without
any text appearing) on a nationwide group of United States
consumers who are over eighteen years of age. (Confoy Decl.,
Ex. 1, Simonson Report at 2). Participants were divided into
a test cell and a control cell. (Id.).
to commencing, participants read the following:
In this survey, there are no right or wrong answers, but
there are questions that ask for your beliefs and
understanding. Please do your best to answer each question to
the best of your beliefs and understanding. If there's
any question that you cannot answer, please don't guess.
Just indicate “Don't Know/Not Sure, ” and
proceed to the next question.
(Id. at 10). Simonson then describes in detail how