Hospitality Expert Witness Testimony Allowed

The Defendants filed a motion to exclude the testimony of Plaintiff’s hospitality expert witness based on the unreliability of his scientific methods.  The court denied this motion.

Facts: This case (Atmosphere Hospitality Management, LLC v. Shiba Investments, Inc. et al – United States District Court – Western District of South Dakota – January 29th, 2016) involves a franchise agreement between the parties.  The agreements allowed the Defendant’s to operate a hotel under the Plaintiff’s (Atmosphere) brand name (“Adoba”).  The management of the hotel was to be performed by the Plaintiff.  The Defendant’s terminated both agreements in 2013.  Atmosphere hired Kevin Hanley (hotel & hospitality expert witnesses)
to provide expert witness testimony on their behalf.  The Defendant’s filed a motion to exclude this testimony, stating that his methodology that led to his conclusions were unreliable.

Discussion: At his deposition, Hanley told the Defendant’s that he was hired to analyze for documents: A draft of the licensing agreement, the agreement that both parties signed, a draft of the property management agreement, and the agreement the parties ultimately signed.  In addition, he was hired to explain whether the terms and conditions in these documents were consistent with similar contracts in the hotel industry.  He concluded that the language in the “proffered” agreements were consistent with the industry and the language in the agreements that were eventually signed were not.

Hanley included in his report copies of a sampling of license agreements from six hotels which he stated included language that was perceived as consistent with industry standards.  He also used his analysis his 30 years of reading franchise and license agreements.  He also stated that he has been a party to some of the sample agreements.

The Defendant’s argue that Hanley only reviewed a small sampling of agreements from large national hotel chains and Adoba is not considered a large hotel.  In addition, they state that Hanley did not compare the sample of agreements to those that are central to this litigation.  Last, they argue that Hanley did not state that the parties’ relationship was indicative of a hotel franchise agreement.

The court concluded that Hanley’s expert opinions are relevant under Daubert.  Hanley was hired by the Plaintiff’s to review the proffered and executed agreements and state whether they conform to industry standards.  His opinions could assist the trier of fact in determining if the defendant breached the agreements.  In addition, his opinion will be helpful in defining any undefined terms or ambiguities in the contracts.

Also, the court found that Hanley is qualified to opine as an expert in this case.  He has worked in the hospitality industry for thirty-five years and has reviewed franchise and licensing agreements for a long time as well.  In addition, he was not hired by Atmosphere to compare the agreements to opine as to whether the agreements were analogous to a typical hotel franchise agreement.  The court also opined that any other arguments go to the weight of the argument, not its admissibility.

Last, the court stated that Hanley’s testimony is reliable enough to be indicative to assist the trier of fact.  Stated another way, he has the means and experience in order to determine whether the agreements conform to standards in the hotel and hospitality industry.

Held:  Kevin Hanley’s expert witness testimony on the hotel industry will be allowed.