Lost profits expert witness overcomes Daubert challenge in avionics theft case

Entourage Custom Jets, LLC v. Air One MRO, LLC (S.D. Fla. Feb. 20, 2020).  Burglars removed avionics equipment from an MD-87 in the possession of an MRO performing maintenance and upgrade work on the aircraft.  The aircraft’s owner and its subrogated insurer sued the MRO and its landlord, alleging breach of bailment, negligence and other causes of action.

The MRO moved to dismiss on the grounds that the liability limitations and waivers in its agreement with the aircraft owner precluded the owner’s claims, but the court denied the motion, ruling that the terms at issue did not apply to claims based on theft.  The MRO counterclaimed for breach of contract, alleging that the owner had breached the agreement by not procuring insurance that included the MRO as an additional insured.

To support its lost profits claim, the aircraft owner retained an expert with substantial experience in managing aircraft fleets in Europe and Africa, and the expert issued a report quantifying the profits that the aircraft should have been able to generate during the period of theft-related inactivity.  The defendants moved pursuant to Daubert and its progeny to exclude the expert on the grounds that (i) he was unqualified, as he had no experience in the U.S., in the operation of a charter aircraft or in the operation of an MD-87, and (ii) his methodology was unreliable, as it did not take into account the aircraft’s airworthiness, logbooks or lengthy period of inactivity prior to the theft.

The court disagreed with the defendants’ arguments.  It ruled that the expert met the “relatively low threshold” for qualification due to his impressive educational credentials and substantial experience in aircraft asset management and that specific experience with MD-87 aircraft was unnecessary for an economic use expert.  The court also ruled that the expert’s methodology, which was premised on profits, costs, flight hours and revenue loss, was reliable because it was based on the expert’s 19 years of experience in managing aircraft fleets and collecting data on operational costs.  The court noted that the expert’s reliance on aircraft brokers for data was proper, as the record contained sufficient evidence that, because private aircraft owners do not publish their rates and hours, an expert must obtain such data from brokers.  Accordingly, the court denied the motion to exclude.

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