United States District Court, D. Colorado
EUGENE F. FERRARO, an individual, Plaintiff,
CONVERCENT, INC., a Delaware corporation, O'NEAL PATRICK QUINLAN, III, an individual, STEVE FOSTER, an individual, and NEBBIOLO VENTURES, LLC, a Colorado limited liability company, Defendants.
Brooke Jackson, United States District Judge
matter is before the Court on four motions: (1) defendant
Nebbiolo's motion for summary judgment, ECF No. 56; (2)
defendants Convercent, Quinlan, and Foster's motion for
summary judgment, ECF No. 57; (3) plaintiff's motion to
strike section one of Nebbiolo's reply brief, ECF No. 65;
and (4) defendants' joint motion to strike
plaintiff's expert designation of Michael Orlando, ECF
No. 68. For the reasons stated below, Nebbiolo's summary
judgment motion is DENIED, defendants Convercent, Quinlan,
and Foster's summary judgment motion is GRANTED in part
and DENIED in part, plaintiff's motion to strike is
DENIED as moot, and defendants' joint motion to strike
plaintiff's expert designation is DENIED.
Ferraro is an experienced corporate investigator specializing
in complex workplace investigations. Complaint, ECF No. 1, at
3. In 1994 he formed a company called Group Dynamics, LLC,
which offered clients a service for employees to report
ethical, safety, and regulatory infractions anonymously
without fear of retaliation. Id. at 4. Group
Dynamics later became Business Controls, Inc. and eventually
Convercent, Inc. (referred to as “Convercent” or
“the Company”). Id. In 2000 the Company
began offering so-called professional services such as
investigative, consulting, and training services to
complement its traditional web-based whistleblower service.
Id. In 2012 after Mr. Ferraro recognized the need
for additional capital to continue the Company's growth,
the Company's then-president, Steve Foster, introduced
Mr. Ferraro to a consulting firm called Nebbiolo, led by
O'Neal Patrick Quinlan, III. Id. at 5. Mr.
Quinlan assured Mr. Ferraro that Nebbiolo could quickly
increase the value of the Company, from $6-8 million in 2012
to $30-40 million by 2014. Id. at 5-6.
Ferraro tasked Mr. Foster with performing due diligence on
Nebbiolo, and at the completion of the due diligence, Mr.
Foster assured Mr. Ferraro that Nebbiolo was a reputable and
accredited investor. Id. at 6. But Mr. Foster failed
to disclose that Nebbiolo did not have any accomplishments or
accreditation as a company, likely because it was formed just
four months prior. Id. Perhaps even more telling is
that, according to the Complaint, Mr. Foster failed to
disclose that he personally invested (or loaned)
approximately $68, 000 to Nebbiolo in early 2012.
Id. at 7.
on Mr. Foster's representations, Mr. Ferraro entered into
a professional services agreement (“PSA”) with
Nebbiolo in March 2012. Id. at 8. The PSA required
Nebbiolo to provide financial and management consulting
services in exchange for a fee and equity in the Company.
Id. Nonetheless, Nebbiolo lacked the funds to
purchase the stock outright at the time of signing, so Mr.
Ferraro accepted a four-year note for $1.95 million from
Nebbiolo for the stock purchase. Id. at 9. A further
condition of the PSA required Mr. Ferraro to resign as CEO so
Mr. Quinlan could fill that role. Id. at 8. Mr.
Quinlan verbally assured Mr. Ferraro that he could remain
employed with the Company for as long as he wished, or until
the Company was sold. Id.
relinquished his role as CEO, Mr. Ferraro requested an
official job title to memorialize his position within the
Company. Id. at 11. In January 2013 he signed a
three-year employment agreement to serve as the Company's
chief ethics officer. Id. The agreement provided
that Mr. Ferraro would maintain his current salary (the same
salary he received as CEO). Id. It also contained a
provision that required the Company to pay him $5, 000 per
month for each month Mr. Ferraro remained a guarantor on the
corporate loans, if the loans were not satisfied by July
2013. Id. at 12. Although the agreement did not
contain a renewal provision, Mr. Ferraro claims that Mr.
Quinlan promised at the time of signing-and repeatedly during
the employment term-that he would renew Mr. Ferraro's
agreement if the Company had not been sold by the end of the
three-year term. Id. Despite Mr. Quinlan's
assurances, the Company decided not to renew his employment
agreement when his term expired. Id. at 15. The
Company did not offer him another position. Mr. Ferraro's
last day of employment was January 3, 2016. Id. at
18. He was 62 years old. Id. at 16. Mr. Ferraro
filed this lawsuit on March 28, 2017. He originally asserted
twelve claims, but after settlement discussions, ten claims
STANDARD OF REVIEW
Standards Governing Summary Judgment.
Court may grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A
material fact is genuine if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.” Anderson, 477 U.S. at 248. The Court
will examine the factual record and make reasonable
inferences therefrom in the light most favorable to the
nonmoving party. Concrete Works of Colorado, Inc. v. City
& Cty. of Denver, 36 F.3d 1513, 1517 (10th Cir.
Standards Governing Expert Testimony.
Rule 702 of the Federal Rules of Evidence, a qualified expert
may provide opinion testimony if his specialized knowledge
would assist the jury in doing its job (factfinding), and the
opinions are based on sufficient facts and reliable methods
properly applied to the facts. Put another way, the evidence
must be both relevant and reliable. Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579, 589 (1993).
Expert opinions are relevant if they would “help the
trier of fact to understand the evidence or to determine a
fact in issue.” Fed.R.Evid. 702; see also
Daubert, 509 U.S. at 591. They are reliable if, in
addition to the expert being qualified, his opinions are
“scientifically valid” and based on
“reasoning or methodology [that] properly can be
applied to the facts in issue.” Daubert, 509
U.S. at 593.
proponent of expert testimony has the burden to show that the
testimony is admissible. Nacchio, 555 F.3d at 1241.
The trial court plays a “gatekeeping” role that
involves an assessment of the “reasoning and
methodology underlying the expert's opinion” and a
determination of “whether it is scientifically valid
and applicable to a particular set of facts.”
Goebel v. Denver and Rio Grande Western R.R. Co.,
215 F.3d 1083, 1087 (10th Cir. 2000). However, the trial
court has discretion as to how to perform this gatekeeping
function. Id. It is not a role that emphasizes
exclusion of expert testimony. Judge Kane aptly summarized
the thrust of Daubert in interpreting and applying
A key but sometimes forgotten principle of Rule 702 and
Daubert is that Rule 702, both before and after
Daubert, was intended to relax traditional barriers
to admission of expert opinion testimony. Accordingly, courts
are in agreement that Rule 702 mandates a liberal standard
for the admissibility of expert testimony. As the Advisory
Committee to the 2000 amendments to Rule 702 noted with
apparent approval, “[a] review of the ...