Expert Article Library

Accounting Expert Testimony Challenged

Case Name: Tharo Systems, Inc. v. cab Produkttechnik (unpublished) (Click here for the full text of the case)

Court: United States Court of Appeals for the 6th Circuit; on appeal from District Court for the Northern District of Ohio

Date: August 24, 2006

Expert: Accounting Expert. Mr. Brlas, C.P.A.

Issues: Did the trial court abuse its discretion in admitting Brlas’ expert testimony

Summary of case: The plaintiff, Tharo, developed software for printing barcode labels. The defendant, cab, was a German corporation that manufactured printers and label applicators. Tharo and cab entered into an arrangement which Tharo later terminated. Tharo brought a breach of contract claim, arguing that cab overcharged Tharo and failed to provide Tharo with information required under their agreement. Before trial cab sought to preclude Tharo’s accounting expert, Brlas, from testifying. The trial court admitted Brlas’ evidence. cab appealed.

Role of the expert: Brlas provided expert opinion on the amount of damages the plaintiff suffered as a result of the defendant’s breach. Specifically, Brlas provided an estimate of the amount that Tharo was overcharged and of the value of the technological information that cab failed to deliver to Tharo.

Challenges to the Expert's testimony: The defendant argued that Brlas was not qualified as an expert and that his testimony was both irrelevant and unreliable. The defendant contended that: Brlas was not familiar with German accounting principles; his methodology was unreliable; he mistranslated a word in cab’s financial statements; and he was not familiar with the type of technology being valued. The Court of Appeals held that Brlas was qualified and his testimony was relevant and reliable. The Court stated that Brlas was a C.P.A. and an auditor with an international accounting firm who had testified in almost 100 trials, and the valuation method he used (called “benchmarking”) was an accepted method. To the extent that Brlas lacked familiarity with aspects of German accounting, this went to the weight of his testimony and not its admissibility. The Court of Appeals affirmed the district court’s finding on the evidentiary issue.

Summary prepared by R. Zapparoni.