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Ashland Hospital Corporation v. Affiliated Fm Insurance Co.

United States District Court, Sixth Circuit

June 24, 2013

ASHLAND HOSPITAL CORPORATION d/b/a KING'S DAUGHTER'S MEDICAL CENTER Plaintiff,
v.
AFFILIATED FM INSURANCE COMPANY, Defendant.

MEMORANDUM OPINION AND ORDER

DAVID L. BUNNING, District Judge.

This matter is before the Court on Plaintiff Ashland Hospital Corporation's Motion In Limine To Exclude The Opinions Of Frank R. Lombardo And Motion For A Hearing (Doc. #69) and on the Daubert Hearing conducted by the Court on May 23, 2013. The instant motion is fully briefed and thus ripe for review. (See Docs. #90 & 99). For the reasons set forth below, the Court will grant the instant motion.

I. FACTUAL BACKGROUND

A. The Hospital purchases a data storage network

In 2007, Plaintiff Ashland Hospital Corporation, d/b/a King's Daughter's Medical Center ("the Hospital"), contracted with technology company and manufacturer, EMC Corporation, to sell, install and support a computer data storage network known as the DMX4. The DMX4 is the Hospital's "primary computer data repository, which runs a number of essential hospital functions and is critical to patient health and safety." (Doc. # 70-1, at 6). The Hospital used the DMX4 to store all of its electronic records, including medical records, schedules, and lab reports. EMC "markets the unit as having the highest degree of availability-99.999%, " (Doc. #69-1, at 5), and thus the unit's guarantee of information availability is its key feature. EMC installed the DMX4 within one of the Hospital's data centers and monitored it in real-time from a remote location.

B. The Hospital's data center overheats

On March 24, 2010, the air conditioning equipment in the data center failed, causing elevated temperatures (hereinafter "the Overheat Event"). Alarms within the DMX4 alerted EMC that various component parts of the unit had been exposed to increased temperatures. According to EMC, the high temperatures caused several disk drives in the unit to go offline, rendering them unavailable for a period of several hours. During this period, Hospital personnel could not access important information including physician orders, patient schedules, and historical medical records. Certain data was "completely corrupted and had to be restored from a backup." (Doc. #70-2, at 25).

C. The Manufacturer assesses the potential damage to the data storage network

The Hospital contacted EMC to assess the DMX4's condition. EMC prepared an Event Report which concluded that the unit had been "severely compromised" from exposure to above normal temperatures. (Doc. #70-3, at 5). Accordingly, EMC advised the Hospital that it could "no longer confirm the long term reliability" of the exposed equipment. (Id.). It further advised that the Overheat Event took the unit outside the scope of EMC's standard warranty and maintenance coverage. (Id. at 6). It recommended that the Hospital replace the unit "due to the long term reliability and data integrity issues" flowing from the Overheat Event. (Id.).

Following EMC's recommendation, in October of 2010 the Hospital replaced the DMX4 with a new system known as "VMAX" at a cost of $1, 973, 946.40.

D. The Insurer investigates the alleged loss

Promptly following the Overheat Event, the Hospital notified its insurer, Defendant Affiliated FM Insurance Company, of what had occurred. Affiliated FM hired Amir Rubin of LWG Consulting, an electrical engineer, to evaluate the potential damage suffered by the DMX4. Rubin conducted a two-year investigation, which included "(1) visiting the site and meeting with [the Hospital] on three occasions, (2) performing dozens of hours of technical research, (3) reviewing thousands of pages of technical documents and discovery, and (4) attending the deposition of [EMC's Frederick Sproule]...." (Doc. #69-1, at 7). Two years into his investigation, Rubin concluded that he could not form an expert opinion regarding the DMX4 without further information, including physical testing of the unit. Accordingly, he engaged a third-party firm, Emergent SX, to develop a protocol for testing the DMX4.

E. The Insurer denies coverage

For reasons unexplained, Affiliated FM did not permit Rubin to complete his investigation. Instead, it retained Frank Lombardo, another electrical engineer and a co-employee of Rubin's from LWG Consulting. In less than one month, Lombardo completed an expert report concluding that the DMX4 had not sustained any damage or loss of reliability. Based on Lombardo's report, Affiliated FM denied coverage for the DMX4's alleged loss, and the Hospital thereafter filed the instant declaratory judgment action.

The Hospital now moves to exclude Lombardo's opinions, which are as follows: (1) that the subject DMX4 did not sustain any direct physical loss or direct physical damage as a result of the Overheat Event; (2) that the DMX4 was not exposed to extreme temperatures for an extended period of time; (3) the DMX4 was not compromised; (4) the DMX4 is no less reliable after the incident than it was before the incident; and (5) the replacement VMAX storage array system purchased by KDMC is not of like kind and quality as the DMX4.

On May 23, 2013, the Court held a Daubert Hearing on the instant motion at which Lombardo testified and counsel for both parties offered argument.

II. ANALYSIS

Under Federal Rule of Evidence 702, a proposed expert's opinion is admissible if (1) the witness is qualified by knowledge, skill, experience, training or education; (2) the testimony of that expert witness is relevant, meaning that it will assist the trier of fact to understand the evidence or to determine a fact in issue; and (3) the testimony of that expert witness is reliable. In re Scrap Metal Antitrust Litig., 527 F.3d 517, 529 (6th Cir. 2008). Since relevance is not disputed here, the Court will only examine Lombardo's qualifications and the reliability of his testimony.

A. Lombardo is qualified

The Hospital accuses Lombardo of being a "generalist" lacking specific experience evaluating the effect of heat on computer components such as the disk drives housed within the DMX4. However, to be qualified as an expert witness under Rule 702, an expert need not be a "blue-ribbon practitioner[ ] with optimal qualifications" or have "an intimate level of familiarity with every component of a [product] as a prerequisite to offering expert testimony." Bartlett v. Mutual Pharmaceutical Company, Inc., 760 F.Supp.2d 220, 222 (D.N.H. 2011). Experts need not even have direct experience with the precise subject matter or product at issue. Planned Parenthood Cincinnati Region v. Taft, 444 F.3d 502 (6th Cir. 2006) (observing that doctor was qualified to testify on abortions without having performed one); see also, Berry v. City of Detroit, 25 F.3d 1342, 1350 (6th Cir. 1994) (noting that an aeronautical engineer would be qualified to testify about a bumblebee's flight path based on general flight principles even if he had never seen a bumblebee); DaSilva v. American Brands, Inc., 845 F.2d 356, 361 (1st Cir. 1988) (affirming trial court's decision to permit mechanical engineer to opine on the safety of the design of an industrial mixing machine despite the witness's lack of design experience with that type of machine). For instance, in Burke v. U-Haul International, Inc., the United States District Court for the Western District of Kentucky noted that "federal courts in a number of product liability cases involving engineering experts have permitted an expert witness with general knowledge to give expert testimony where the subject of that testimony related to such general knowledge but the expert had no specialized knowledge of the particular product." No. 3:03CV-32-H, 2006 WL 3043421, at *4 (W.D. KY. Oct. 20, 2006). Experts need only be "qualified as an expert by knowledge, skill, experience, training, or education." Fed.R.Evid. 702.

Lombardo certainly measures up to this standard. He has a bachelor of science degree in electrical engineering, has spent thirty-seven years analyzing losses in electrical equipment as a consultant for the insurance industry both nationally and internationally, and founded a successful engineering firm. He has extensive experience in electronic component reliability testing and failure analysis, including failure analysis of computer systems, and he has participated in over 500 losses involving computer equipment. Furthermore, he has some specific experience evaluating the effects of overheating on storage arrays, including some with DMX4 components, such as Seagate disk drives. For instance, he recently evaluated EMC-manufactured storage arrays that were exposed to elevated temperatures for approximately 36 hours.

The Hospital correctly notes that this is the first DMX4 overheat event Lombardo has ever encountered; that Lombardo has never analyzed the impact of overheating on the annualized failure rate or relative reliability of disk drives; and that he lacks expereince designing heat specifications or designing data storage units like the DMX4. These points do not affect his qualifications, however, because as already noted, one does not need specialized knowledge of the particular product to be qualified as an expert. See, e.g., ...


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