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United States v. 400 Acres of Land

United States District Court, D. Nevada

October 24, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
400 ACRES OF LAND, more or less, situate in Lincoln County, State of Nevada; and JESSIE J. COX, et al., Defendants.

          ORDER (PL.'S MOTIONS TO EXCLUDE - ECF NOS. 130, 133, 134, 135)

          MIRANDA M. DU, UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         In this eminent domain action, the Court has found that the United States' taking of property (“the Property”) for the purpose of operating the Nevada Test and Training Range (“NTTR”), a military test and training facility at Nellis Air Force Base, is for a congressionally authorized public use. (ECF No. 111 at 1.) Accordingly, the only issue that remains is just compensation. In response to the United States' request over Defendants Sheahan Landowners' (“Defendants” or “Landowners”) objection, the Court stayed discovery pending resolution of threshold evidentiary motions. (ECF No. 125 at 3.)

         The United States filed six motions to exclude evidence. (ECF Nos. 128, 129, 130, 133, 134, 135.) Defendants filed a motion asking the Court to “preserve the special purpose finding for the jury and allow the jury to consider any valuation methodology that is just and equitable.” (ECF No. 132 at 1.) The Court reviewed the parties' responses (ECF Nos. 142, 145, 146, 147, 148, 149) and replies (ECF Nos. 170, 171, 172, 173, 174, 175).[1]In addition, the court heard argument on three of the United States' motions (ECF Nos. 130, 134, and 135) on September 22, 2017. (ECF No. 237.) The Court then ruled on two of the United States' motions (ECF Nos. 128, 129) as well as Defendants' motion to preserve issues for the jury (ECF No. 241).

         This order resolves the United States' remaining motions to exclude evidence (ECF Nos. 130, 133, 134, 135).[2]

         II. RELEVANT BACKGROUND

         The Court incorporates the relevant background facts set forth in the Court's previous order. (ECF No. 241 at 2-3.)

         III. LEGAL STANDARD GOVERNING ADMISSIBILITY OF EXPERT TESTIMONY

         “A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.” Fed.R.Evid. 702.

         The Supreme Court provided additional guidance on Rule 702 and its application in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), and Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999). In Daubert, the Court held that scientific testimony must be reliable and relevant to be admissible. Daubert, 509 U.S. at 589. Kumho Tire clarified that Daubert's principles also apply to technical and specialized knowledge. See Kumho, 526 U.S. at 141. The trial court has “considerable leeway” in deciding how to determine the reliability of an expert's testimony and whether the testimony is in fact reliable. Id. at 152. The “test of reliability is ‘flexible, ' and Daubert's list of specific factors neither necessarily nor exclusively applies to all experts or in every case.” Id. at 141.

         The Ninth Circuit has emphasized that “Rule 702 is applied consistent with the liberal thrust of the Federal Rules and their general approach of relaxing the traditional barriers to opinion testimony.” Jinro Am. Inc. v. Secure Investments, Inc., 266 F.3d 993, 1004 (9th Cir.), opinion amended on denial of reh'g, 272 F.3d 1289 (9th Cir. 2001) (citations and internal quotation marks omitted). “An expert witness-unlike other witnesses-is permitted wide latitude to offer opinions, including those that are not based on firsthand knowledge or observation, so long as the expert's opinion has a reliable basis in the knowledge and experience of his discipline.” Id. (citations and internal quotation marks omitted). Shaky but admissible evidence should not be excluded but instead attacked by cross-examination, contrary evidence, and attention to the burden of proof. Primiano v. Cook, 598 F.3d 558, 564 (9th Cir.), as amended (Apr. 27, 2010).

         IV. UNITED STATES' MOTION TO EXCLUDE SAMPLE SURVEY DATA AND RELATED PORTIONS OF DEFENDANTS' EXPERT OPINIONS (ECF NO. 133)

         The United States argues that data from certain sample surveys are inadmissible (as are the portions of the five expert opinions that relied upon that data). (ECF No. 133 at 1-2.) The surveys at issue consist of two that were administered by a data collection company called Qualtrics and two that were administered by the staff of a retail tourist destination near the Property on the way to Area 51 called the Alien Research Center (“ARC”). (ECF No. 147 at 3-6.) Five of the expert reports Landowners seek to introduce relied on results from at least some of the surveys to predict how much revenue the Property would generate if it were transformed into a tourism destination. (ECF No. 133 at 3.) Two of the reports relied only on the Qualtrics surveys: the report submitted by Cameron Steinagel of the Innovation Group (“Steinagel report”) (ECF No. 133-2 at 4) and the report submitted by Richard Roddewig and Charles Brigden of Clarion Associates, Inc. (“Clarion report”) (ECF No. 133-5 at 27, 105-09). Three of the reports relied on both the Qualtrics and ARC surveys: the report submitted by Tio DiFederico of the DiFederico Group (“DiFederico report”) and two of the three reports submitted by Terrence Clauretie (“Clauretie I” and “Clauretie II”). (ECF No. 133-16 at 108-09 (DiFederico); ECF No. 133-17 at 3 (Clauretie I); ECF No. 133-18 at 3 (Clauretie II).)

         A. THE SURVEYS

         1. Qualtrics I

         The first Qualtrics survey (“Qualtrics I”) attempted to gauge “demand and pricing to visit the Landowners' Property.” (ECF No. 147 at 3.) The survey questions were designed by Steinagel, DiFederico, and Landowners' counsel. (Id.) Steinagel's staff transcribed the survey questions into the Qualtrics survey interface program, made sure it flowed properly, and submitted the survey to Qualtrics. (Id. at 4.) Then a Qualtrics employee “ran this survey and provided the necessary format to assure the survey was reliable.” (Id.) Qualtrics sent the survey to randomly selected individuals in a database provided by an entity called Tap Research (“TAP”). (Id.) “Qualtrics regularly does surveys with TAP and considers it a top provider in the market.” (Id. (citing ECF No. 147-1 at 1 (“In the industry they . . . are considered reliable.”))) The TAP database contains “participants 18 years and over.” (ECF No. 134-2 at 2.) Steinagel provided links to TAP's and SSI's websites in a supplement to his initial report. (Id. at 3.) Steinagel also provided links to several news articles about Qualtrics to demonstrate its reliability. (Id.)

         Qualtrics I contained three screening questions. (ECF No. 147 at 3-4.) Respondents could only continue to the full survey if they answered yes to at least one of the screening questions. (Id.) The screening questions were:

1. Do you travel to Las Vegas or plan to travel to Las Vegas within the next several years?
2. Are you interested in extraterrestrials and/or government conspiracies?
3. Have you heard of Area 51?

(Id. at 4 (citing ECF No. 133-20 at 2).) The next seven questions purportedly tested respondents' “interest in participating in an Area 51 excursion:” 4. In which North America region do you live? (West, Midwest, Southwest, Southeast, Northeast, Canada, Mexico, outside America)

5. How often do you visit Las Vegas in a one year period? (less than one time per year, one to three times per year, four to seven times per year, eight to eleven times per year, twelve or more times per year)
6. During your stay in Las Vegas, how many excursions/sightseeing opportunities do you typically participate in? (zero, one, two, three, four or more)
7. Please rank your likelihood to participate in the following excursions based on your interest (1 indicates you are most likely). (Grand Canyon; Hoover Dam; Area 51, including a visit where you have an unobstructed view of the Area [5]1 base; Zion National Park/Bryce Canyon; Red Rock Canyon; Death Valley; Valley of Fire; Lake Mead; other)
8. Would you be interested in visiting a location where you have an unobstructed view of Area 51? (yes, no)
9. When traveling to Las Vegas, would you be interested in visiting a location where you have an unobstructed view of Area 51? (yes, no)
10. What intrigues you about Area 51? (interested in government/historic landmarks; interested in extraterrestrials/government conspiracies; interested in Area 51 specifically)

(ECF No. 147 at 4; ECF No. 133-20 at 2-3.)

         2. Qualtrics II

         The second Qualtrics survey (“Qualtrics II”) apparently attempted to gauge respondents' willingness to pay for an excursion to the Property. (See ECF No. 147 at 5.) The survey was designed and carried out in a similar manner as Qualtrics I (see id.), though the database of participants came from SSI instead of TAP. (ECF No. 134-2 at 2.) Qualtrics II contained three screening questions. (ECF No. 147 at 5.) Respondents could only proceed to the full survey if they answered yes to all three questions. (Id.) The screening questions were:

Q1.1 Have you heard of the secret military base located in Nevada known as “Area 51?” Q1.2 Would you be interested in purchasing a one day's entry past military guard gates and onto the only private property in the world with an exclusive and unobstructed view of the secret military base known as “Area 51”?
Q1.3 Would you be willing to submit to a security background check in order to obtain a one day's entry past the military guard gates onto the only private property in the world with an exclusive and unobstructed view of the secret military base known as “Area 51”?

(Id. (citing ECF No. 133-22 at 2)) Individuals who responded yes to all three of the screening questions were then asked how much they would be willing to pay to enter the Property:

Q2.1 Would you be willing to pay $1, 000 (one thousand dollars) to be one of the limited persons that could get a one day's entry past military guard gates onto the only private property in the world with an exclusive and unobstructed view of the secret military base known as “Area 51”?

         If the answer is yes, the survey skips to the next section of demographic questions. (Id.) Respondents who answered no would be presented with the same question but a different dollar amount: first $750, then $500, and finally $250. (Id.) Respondents then answered certain demographic questions. (Id.)

         3. ARC I

         The first survey administered by the Alien Research Center (“ARC I”) also apparently sought to gauge demand and willingness to pay to visit the Landowners' Property.[3] (See ECF No. 147 at 6.) The questions in ARC I “were prepared with the assistance of the Landowners' experts.” (Id. at 5.) The survey was administered by the owner of the ARC between April and June 2016. (Id. at 5-6.) The owner's staff asked customers to fill out the paper survey in exchange for a magnet. (Id.) ARC I contained five questions:

1. In what Country and City do you live?
2. Have you heard of Area 51?
3. Are you interested in extraterrestrials and/or government conspiracies?
4. Would you be interested in visiting a location where you have an unobstructed view of the Area 51 facility?
5. How much would you pay to visit a location where you have an unobstructed view of the Area 51 facility? ($250 - $350; $350 - $450; $450 - $550; $550 - $1, 000; $1, 000 or more)

(ECF No. 147 at 6; ECF No. 133-10 at 2.)

         4. ARC II

         The second survey administered by the Alien Research Center (“ARC II”) similarly attempted to gauge demand and willingness to pay. The survey was designed and carried out in the same way as ARC I but was administered between June and November 2016. (ECF No. 147 at 6.) ARC II contained four questions:

1. In what Country and City do you live? ...

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