Free Motion to Strike - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1062-ZLW-BNB THE QUIZNO'S MASTER LLC and THE QUIZNO'S FRANCHISE COMPANY LLC, Plaintiffs, v. R&B MANAGEMENT GROUP, LLC, an Alabama limited liability company, ROYCE GWIN, an individual, and REBECCA GWIN, an individual Defendants.

PLAINTIFFS' MOTION TO STRIKE THE EXPERT REPORT AND EXCLUDE THE EXPERT TESTIMONY OF DONALD BOROIAN

Plaintiffs, The Quizno's Master LLC and The Quizno's Franchise Company LLC ("Quizno's"), by and through their counsel, hereby move to strike the expert report and exclude the expert testimony of Donald Boroian. RULE 7.1 CERTIFICATE Counsel for Quizno's conferred with counsel for R&B Management regarding the relief requested herein. Counsel for R&B Management objects to this Motion. INTRODUCTION Defendants, R&B Management Group, LLC, Royce Gwin and Rebecca Gwin have designated Donald D. Boroian ("Mr. Boroian") as an expert witness under Federal Rule of Evidence 702 to opine on whether Plaintiffs ("Quizno's") met its obligations as a franchisor and

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complied with certain franchising industry standards and practices in its business dealings with Plaintiffs. Mr. Boroian's proffered opinion should be excluded. First, it does not comply with the standards for admitting expert testimony articulated in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999). It constitutes nothing more than his subjective, ipse dixit belief that Quizno's circumvented the standards and practices of the franchise industry. Indeed, Defendants fail to satisfy their burden of demonstrating that Mr. Boroian's opinion will assist the Court to determine any facts that are in issue. Instead, Mr. Boroian's proffered expert testimony consists largely of improper legal argument and conclusions and a subjective interpretation of the facts of the case that invade the province of the Court. His report and deposition testimony are missing any reliable or valid methodology to support his so-called opinion. Second, not only is Mr. Boroian's opinion not the proper subject of expert testimony, but Mr. Boroian is not the person to provide it either. Mr. Boroian lacks credibility as an expert witness because of his personal business failures, including pending criminal charges that the United States Attorney for the Northern District of Illinois brought against him in November, as well as because of Mr. Boroian's false statements about his professional credentials and company's financial well-being. For all of these reasons, the Court should act pursuant to its "gatekeeping" function under Federal Rule of Evidence 104(a) and bar Mr. Boroian from offering expert testimony. FACTUAL BACKGROUND In his report and deposition testimony, Mr. Boroian presents the Court with the opinion that Quizno's entered into its relationship with Defendants in bad faith by selling territory to the

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unqualified Gwins, by imposing unrealistic quotas, and by terminating them when the Gwins' best efforts proved insufficient. (See Expert Report on Franchising and Franchise Practices of The Quizno's Corporation (the "Boroian Report") at 5, 10 (attached hereto as Exhibit 1); Boroian Dep. at 116-17 (relevant excerpts of which are attached hereto as Exhibit 2).) As Mr. Boroian testified, these are not the practices of successful franchisors, who engage in fairness and "common sense" that can be determined by "fair-minded people." (Boroian Dep. at 84, 119.) The Boroian Report, together with his deposition testimony, make it clear that his opinions should be rejected. Mr. Boroian bases his opinion on the underlying false premise that "a franchise is more than a contractual relationship." (Boroian Report at 5.) According to Mr. Boroian, "major successful companies" never contract with a banker, such as Mr. Gwin, to be an area director, which he considers to be "unconscionable" and insists that "judges will want to hear." (Boroian Dep. at 96, 102, 104.) Mr. Boroian then elaborated, opining that having entered into a relationship with Defendants, Quizno's acted in bad faith in deciding to exercise its right to terminate them for failing to meet the agreed goal of selling 38 franchises. Though he admitted that he did not "have a problem with the setting of the number" and did not find the ratio of one store per 44,000 residents to be unreasonable, Mr. Boroian nevertheless opined that it was unfair to terminate Defendants for failing to meet it. (Boroian Dep. at 67, 71.) Specifically, Mr. Boroian testified that the arms-length agreement itself was unfair in that "good companies . . . look for ways to help them become successful" and "[t]here should have been perhaps a provision in the

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agreement that says in the event [Defendants] don't meet the criteria, . . . [Quizno's] will do this to help you." (Id. at 81, 117.) Mr. Boroian cites neither published authority nor any data, study, or other objectively measurable evidence of the so-called standards, relying instead upon his own personal view of what standards should apply. Indeed, when asked how the industry defines fairness, Mr. Boroian simply pointed to "common sense" as determined by fair-minded people. (Boroian Dep. at 119.) In doing so, he ignores the requirements of Federal Rule of Evidence 702 and those enunciated by the Supreme Court in Daubert and its progeny. ARGUMENT As the proponents of Mr. Boroian's opinion, Defendants bear the burden of proving that his testimony is admissible pursuant to Federal Rule of Evidence 702 and the standards set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) governing the admissibility of expert testimony. In re Breast Implant Litig., 11 F. Supp. 2d 1217, 1222 (D. Col. 1998) (Sparr, J.). In this instance, Defendants have failed to meet this burden. I. Mr. Boroian's Opinions Are Not The Proper Subject of Expert Testimony. The matters on which Mr. Boroian seeks to testify are not the proper subjects of expert testimony. At its core, Mr. Boroian seeks to offer opinions on legal matters, namely regarding the relationship between Quizno's and Defendants and the duties that arose as a result. Not only do the Federal Rules of Evidence prohibit Mr. Boroian from offering his legal opinions on such matters that are unnecessary, but Mr. Boroian's opinions themselves are wholly subjective

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conjecture, lacking any reliable methodology or testable basis. For these reasons alone, it should be excluded. A. Mr. Boroian May Not Offer Legal Opinions.

Donald Boroian's proffered expert testimony is littered with interpretations and applications of legal doctrine. Mr. Boroian is neither a lawyer nor a judge and has neither the training nor the experience to opine on issues of law. More importantly, Federal Rule of Evidence 702 prevents Mr. Boroian from testifying on points of law. Specht v. Jensen, 853 F.2d 805, 808 (10th Cir. 1988). Faced with the proffer of Mr. Boroian's expert testimony, the Court must initially determine whether Mr. Boroian is proposing to testify to (1) scientific, technical, or specialized knowledge that (2) will assist the trier of fact to understand or determine a fact in issue. In re Breast Implant Litig., 11 F. Supp. 2d at 1222 (citing Daubert, 509 U.S. at 592); Fed. R. Evid. 702. Courts uniformly exclude testimony about subjects that are too commonplace to benefit from expert insights or speculation that no specialized training, education, or professional experience can overcome. See, e.g., Scheib v. Williams-McWilliams Co., Inc., 628 F.2d 509, 511 (5th Cir. 1980) (upholding the exclusion of expert speculation that future wages would have increased greater than rate of inflation); Reiff v. Denver Publ'g Co., No. 98-Z-1658, 1999 WL 1442047, at *10 (D. Col. Dec. 23, 1999) (Schlatter, Mag. J.) Furthermore, expert testimony is inappropriate and unhelpful if it effectively usurps the court's traditional function to judge the credibility of witnesses or to apply good sense and common knowledge to evaluate the issues, see Lovato v. Burlington Northern & Santa Fe Ry. Co., No. CIV.A. 00-RB-2584CBS, 2002 WL 1424599, at *12 (D. Col. June 24, 2002) (Shaffer, Mag. J.)

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Here, Mr. Boroian seeks to tell the Court what verdict to reach by offering legal argument disguised as expert opinion. Specifically, he attempts to define a duty upon Quizno's that is "more than a contractual relationship," (Boroian Report at 5), and seeks to impose a requirement that Quizno's not simply meet the standards and practices of the franchise industry (as he defines them), but to meet the standards: as to what the good companies, the successful companies, the companies that are successful not only in operating as corporations themselves, but in building a good franchise network and building good relations in successful franchisees and that are relevant to the marketplace. (Boroian Dep. at 84.) Put another way, Mr. Boroian seeks to impose a duty to be what he subjectively considers "a successful company," then applies that duty to the limited subset of the facts of the case that Defendants or their counsel provided. (See Boroian Report at 3.) Mr. Boroian's proffered opinion invades the province of the Court by impermissibly intruding upon the Court's function of deciding the appropriate law and applying it to the facts. Specht, 853 F.2d at 808. In Marx & Co v. Diners' Club, Inc., 550 F.2d 505, 509-10 (2d Cir. 1977), which the Tenth Circuit cited with approval in Specht, the Second Circuit observed that "legal opinions as to the meaning of the contract terms at issue . . . was testimony concerning matters outside [the witness's] area of expertise." The Federal Rules of Evidence preclude this type of testimony because it is not helpful under Rule 702 and is misleading under Rule 403. Similarly, one court noted that "the trial judge ought to insist that a proffered expert bring . . . more than the lawyers can offer in argument" before admitting expert testimony. Salas v. Indeed, when Boroian was asked about the conclusion in his report that Quizno's acted in bad faith by entering into its arrangement with Defendants, counsel objected that the question called for a legal conclusion. (Boroian Dep. at 115-16.)
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Carpenter, 980 F.2d 299, 305 (5th Cir. 1992); see also United States v. Castillo, 924 F.2d 1227, 1232 (2d Cir. 1991) (holding that it is proper to exclude expert testimony about matters that a court is capable of understanding on its own). Thus, Mr. Boroian's testimony on legal standards and the state of the law is improper and should be excluded under Federal Rules of Evidence 702 and 403. Mr. Boroian presents nothing more than improper and incorrect statements of the law and legal argument in the guise of expert opinion. See Herbert v. Lisle Corporation, 99 F.3d 1109, 1117 (Fed. Cir. 1996) ("We encourage exercise of the trial court's gatekeeper authority when parties proffer, through purported experts, not only unproven science, but markedly incorrect law. Incorrect statements of law are no more admissible through `experts' than are falsifiable scientific theories."). Mr. Boroian's testimony will not assist the Court to understand the evidence or determine any facts in issue. Thus, it is neither relevant nor helpful within the meaning of both Rule 702 and Daubert/Kumho Tire and should be excluded. B. The Court Does Not Need Expert Testimony To Define the Relationship Between Quizno's and Defendants.

Mr. Boroian opines that the relationship between Quizno's and Defendants "is more than a contractual relationship" and that "once defined as a franchise, the business relationship acknowledges the basic and fundamental principles implied in a franchise relationship." (Boroian Report at 5.) According to Mr. Boroian, Quizno's breached the standards and practices of the franchise industry in the following manner: The Quiznos Corporation entered into this arrangement in bad faith, selling the territory at a very high price ($125,605.00), based on tainted demographics, to unqualified people, applying demographic criteria that was inapplicable for the designated market, provided minimal training, imposed unrealistic quotas and, in the process, fell far short of franchise industry standards.
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(Boroian Report at 10.) As he explained in his deposition: [T]his was a case of people who shouldn't have been sold a franchise because they weren't qualified for an area directorship. That they probably should have operated a unit. That they were given inadequate training. That they were given unfair quotas that they were not even advised on until they got it. The criteria for developing the quotas were not identified to them until they got into training. And they realized the standards were not attainable as they got into the sales process. And that the company terminated them unfairly. That they should have readjusted the quotas and given them more assistance in the probes. (Boroian Dep. at 45-46.) Mr. Boroian's notion of the relationship is little more than a smoke screen for an attempt to define a fiduciary relationship where none exists. As previously noted, the trial judge, acting as gatekeeper, has a duty to prevent incorrect statements of law from being admitted into evidence through expert testimony. See Herbert, 99 F.3d at 1117. Absent extraordinary circumstances, Colorado law follows the vast majority of jurisdictions in not recognizing a fiduciary relationship in franchise agreements. RHC, LLC v. Quizno's Franchising, LLC, Case No. 04CV985, 2005 WL 1799536, at *8 (Colo. Dist. Ct. July 19, 2005) (citing Mr. Steak, Inc. v. Belleview Steak, Inc., 38 Colo. App. 278, 282, 555 P.2d 179, 181 (1976)). Specifically in the context of Quizno's, the RHC court held that there is no fiduciary obligations in a relationship involving two separate business entities pursuing their own individual business interests, many of which may not coincide. RHC, 2005 WL 1799536, at *89. Here, a series of written agreements define the relationship between Quizno's and Defendants, as well as the obligations and duties associated with that relationship. The Court does not need an expert witness to usurp its responsibility to construe the plain and unambiguous language of these agreements. Even Mr. Boroian admitted in his deposition that a Virginia court

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once excluded his proffered testimony on the basis that the case was one of pure contract law existing entirely within the four corners of the contract. (Boroian Dep. at 148.) The terms of the agreements between Quizno's and Defendants are unambiguous and, as such, Mr. Boroian's testimony on industry custom is unnecessary and irrelevant. See, e.g., Questar Pipeline Co. v. Grynberg, 201 F.3d 1277, 1288 (10th Cir. 2000) (holding that the trial court properly struck expert testimony to construe an unambiguous contract). Any testimony presented by Mr. Boroian through a purported expert opinion would only provide a second-hand recounting of Defendants' version of the facts surrounding the drafting and execution of the applicable franchise and development contracts and, thus, should be excluded. C. Mr. Boroian's Proffered Expert Testimony is Neither Valid Nor Reliable.

Mr. Boroian's opinions on whether Quizno's breached certain franchise industry standards and practices are inherently untestable. Indeed, he fails to employ any methodology beyond his subjective observations, speculation, and conjecture. He gathered and evaluated no independent evidence, nor did he perform any studies or analysis to arrive at his conclusions. Instead, Mr. Boroian bases his conclusions solely on his subjective assessment of the franchise industry, one telephone conversation with the Gwins, and select information provided by Defendants' counsel. Federal Rule of Evidence 702 requires federal courts to screen expert testimony based upon specialized knowledge to insure that it is both relevant and reliable before it may be presented. See Kumho Tire Co. v. Carmichael, 526 U.S. 137, 141 (1999) (extending the Daubert test to all aspects of expert testimony based on "technical and other specialized knowledge," and

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not merely "scientific" knowledge) ; Reiff v. Denver Publ'g Co., 1999 WL 1442047, at *1-2 (reviewing the Daubert standard for admitting expert testimony). In Daubert, the Supreme Court explained that the relevancy prong of the test requires a trial court to examine the fit between the expert testimony and the facts of the case and determine whether there is a "valid scientific connection to the pertinent inquiry." Daubert, 509 U.S. at 592. That connection is a precondition to admitting the testimony. Id. As for the second prong of the test, reliability, the trial court assesses whether the reasoning or methodology underlying the testimony is scientifically valid. Id. The Daubert Court identified a non-exclusive list of factors that trial courts should consider when determining if testimony is valid: (1) whether the theory or technique has been subjected to testing; (2) whether the theory or technique has been subjected to publication and peer review; (3) whether the theory or technique has a known or potential rate of error; and (4) whether the theory or techniques has gained general acceptance in the particular scientific or technical community. See Daubert, 509 U.S. at 593-94. In addition, lower courts have considered factors such as the method's novelty and its relationship to other methods of analysis. "One very significant fact to be considered is whether the experts are proposing to testify about matters growing naturally and directly out of research they have conducted independent of the litigation or whether they have developed their opinions expressly for purposes of testifying."

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Specifically, the Kumho Tire Court held that Daubert applied to the testimony of engineers and other "non-scientists," see Kumho Tire, 526 U.S. at 141, rejecting the reasoning that Daubert only applied when an expert relied upon "the application of scientific principles, rather than on skill- or experienced-based observation." Id. at 146.

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See Lovato v. Burlington Northern & Santa Fe Ry. Co., 2002 WL 1424599, at *11 (citing Daubert v. Merrell Dow Pharmaceuticals, 43 F.3d 1311, 1316 (9th Cir. 1995)). On this score, Mr. Boroian's testimony fails. 1. Mr. Boroian Uses No Methodology To Evaluate the Facts.

In Rawlins v. Colorado Springs Transit, this court observed that "[t]he focus of the court's inquiry must be `solely on principles and methodology, not on the conclusions that they generate.'" No. Civ.A. 01-M-540, 2002 WL 32815244, at *3 (D. Colo. Feb. 25, 2002) (Schlatter, Mag. J.) (quoting Daubert). Without any account of an expert's intermediate reasoning or methodology, the validity of that reasoning cannot be tested by any objective means and is therefore incapable of meeting the Daubert criteria of validity. Brown v. Miska, No. CIV. A. V-94-067, 1995 WL 723156, at *4 (S.D. Tex. Jul. 19, 1995). As this court noted in a similar instance, "[a] statement does not become scientific knowledge because it was uttered by a doctor" and when an expert brings little other than his credentials and a subjective opinion, this is not evidence that offers assistance to the court. In re Breast Implant Litig., 11 F. Supp. at 1234 (citing Viterbo v. Dow Chem. Co., 826 F.2d 420, 424 (5th Cir. 1987)). In his report, Mr. Boroian describes (1) his understanding of the events surrounding the creation and development of the relationship between Quizno's and Defendants; (2) the nature of his "expert" credentials; and (3) his subjective opinion on whether Quizno's breached certain franchise standards and practices. At no time does Mr. Boroian explain the chain of reasoning that he used to link the underlying facts to his ultimate conclusions. That is because he had no chain of reasoning -- he reached his conclusions by way of the following method: In order to render an opinion on these matters, I have examined The Quizno's Corporation's franchise offering and business conduct under its franchise
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contracts and compared these to the franchise offerings and business conduct of other franchisors. I have also examined The Quizno's Corporation's Franchise Agreement and its business conduct under its franchise contracts in light of franchise industry standards, as set forth and discussed in a variety of industry materials, and in light of my 48 years of experience in the franchise industry. From this, I have made certain determinations and reached certain conclusions with respect to items (a) through (c) listed above. In addition to discussions with 3 counsel, defendants, and others, I reviewed the following: · · · · · · · · · · · · · Affidavit of Royce Gwin, dated September 30, 2004 Ad Training Agenda 11/30/98 ­ 12/4/98 Quiznos "How To Build A Market" Manual
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Site Selection Criteria from Quiznos Area Director Manual Site Requirements from Quiznos Area Director Manual County/City/State Demographic Statistics for 1990 vs. 1980 Quiznos Letter dated 2/2/00 Quiznos Default Letter dated 8/27/01 Quiznos Default Letter dated 7/22/02 Quiznos Default Letter dated 11/13/02 Piper Rudnick Default Notice dated 9/23/03 Gwin Sales & Openings Cumulative Total Exhibit G, Market Status for Birmingham, Columbus, Aniston

In his deposition, Mr. Boroian clarified that the "others" with which he spoke were "[j]ust people in my office that were handling ­ support staff, organizing my documents and things, but nothing substantive." (Boroian Dep. at 40-41.) Mr. Boroian conceded that he did not know whether he examined complete copies of this manual or other documents. (E.g., Boroian Dep. at 42.)
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·

Area Director Marketing Agreement, dated 9/30/98

(Boroian Report at 3.) Mr. Boroian's assertions and conclusions are nothing more than his subjective belief and speculation. See In re Air Crash Disaster at New Orleans, Louisiana, 795 F.2d 1230, 1235 (5th Cir. 1986) (holding that the trial court's decision to admit expert testimony by an economist was not proper when the only evidence to support it was speculative and purely conjectural); Lovato, 2002 WL 1424599, at *11-12 (excluding expert testimony that simply contains the ipse dixit of the witness drawn from second-hand information). Mr. Boroian's report contains no citations to written peer support nor, indeed, any suggestion that others share his way of thinking. At no point, either in his report or in his deposition, has Mr. Boroian detailed the "variety of industry materials" that set forth and discuss the franchise industry standards, (Boroian Report at 3), despite being asked to do so on several occasions. (Boroian Dep. at 83-86.) Moreover, Mr. Boroian claims to have compared Quizno's operation to that of "the successful companies," yet neither his report nor his deposition testimony identifies these companies or the process that he used to compare their practices to Quizno's. (See id. at 114-15.) 2. Mr. Boroian Does Not Base His Opinion On Adequate Information Nor The Type Upon Which Similar Experts Rely.

Federal Rule of Evidence 703 requires the Court "to examine the reliability of [Mr. Boroian's] sources to determine whether they satisfy the threshold established by [Rule 703]." Slaughter v. Southern Talc Co., 919 F.2d 304, 306-07 (5th Cir. 1990). A court may properly exclude the testimony of an expert if that testimony lacks an adequate foundation or is not based on data reasonably relied upon by experts in the particular field." U.S. v. Sparks, 8 F. App'x 906, 912 (10th Cir. 2004); In re Breast Implant Litig., 11 F. Supp. 2d at 1223.
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Mr. Boroian's testimony consists solely of bare conclusions and subjective opinion without an adequate or reliable basis. In particular, Mr. Boroian failed to conduct an independent analysis of the Quizno's franchise business. Mr. Boroian did not visit any franchises in Defendants' territory, nor did he speak with any other area developers. (Boroian Dep. at 39-40, 115.) The only Quizno's personnel that Mr. Boroian spoke with were the Gwins themselves, and even then in a one-hour telephone call. (Id. at 38-39.) He did not review any depositions or any testimony in this case other than Mr. Gwin's September 30, 2004 affidavit. (See id. at 41.) Mr. Boroian did not review the Quizno's franchisee manual. (Id. at 43.) When he concluded that the agreed goal of 38 franchises was unattainable because the population was rural and spread too far, Mr. Boroian did not map out the territory, determine how many towns it contained, consider its square miles, nor determine how density of the population, and admitted that the territory contained the city of Birmingham, Alabama. (Id. at 51-56.) Furthermore, Mr. Boroian testified that to determine what goal was attainable, it requires a market study and competitive analysis, examined demographics, geographics, market share issues, and the growth of the industry, yet performed none of these. (Id. at 74-76.) For that matter, when concluding that Mr. Gwin was unqualified for his position simply because of his banking experience, (id. at 97), Mr. Boroian did not consult or perform any studies on the relationship between sales experience and success as an area developer. (Id. at 112.) Although he is quick to point to "minimal training" as a source of
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Mr. Boroian testified that, as a blanket rule, "I'd say never sell a franchise to somebody who likes to fish either." (Boroian Dep. at 97.)

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Defendants' problems, (Boroian Report at 10), Mr. Boroian was unaware whether the Gwins had attended any seminars or conventions during the time they were area developers, and did not investigate what training Quizno's offered to the Gwins. (Boroian Dep. at 114, 131.) Similarly, when Mr. Boroian opines that Quizno's sold the territory "at a very high price," (Boroian Report at 10), he did no analysis to determine what the proper price should have been. (Boroian Dep. at 123-25.) In short, rather than performing an independent, objective investigation of the facts, Mr. Boroian simply regurgitated the facts provided to him by the Gwins and their counsel. More is required of an expert witness than merely developing a theory of liability based solely upon his client's version of the facts. See Brown, 919 F.2d at 312. It should not be particularly surprising that Mr. Boroian produced the final draft of his report merely six days after Defendants retained him. (Boroian Dep. at 36-37.) Mr. Boroian was not provided with and thus failed to review highly relevant materials produced by Quizno's during the course of this litigation, depositions taken of witnesses supporting Quizno's position, exhibits used at those depositions, or even the pleadings that have been filed in this case. No expert witness would reasonably rely on only one side's recitation of the facts to render an opinion. Mr. Boroian's failure to review any materials that present Quizno's version of the facts and counsel's failure to provide him with such materials render any opinion based upon the facts unreliable and, therefore, inadmissible. II. Mr. Boroian's Business Practices, Pending Criminal Charges, and Numerous Misrepresentations About His Credentials Make His Testimony Unreliable. The keystone for admitting expert testimony is that such testimony be reliable. One of the factors that may be considered in a Rule 702 gatekeeping analysis is whether the expert "is
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being as careful as he would be in his regular professional work outside his paid litigation consulting." Sheehan v. Daily Racing Form, Inc., 104 F.3d 940, 942 (7th Cir. 1997). See also Kumho Tire Co., 526 U.S. 137, 152 (1999) (noting that Daubert requires the trial court to assure itself that the expert "employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.") In this case, Mr. Boroian holds himself out as an expert in franchising, and indeed, his company Francorp is a franchisor. There is an aphorism that "those who can't do, teach," which is precisely what Mr. Boroian appears to do. His first experience as a franchisor was with a company known as Music Educational Service, which he eventually sold when business fell. (Boroian Dep. at 5.) He then became the director of franchising and later the executive vice president of a fast food chain known as Chicken Unlimited, which went out of business because of a bankruptcy filing made under Mr. Boroian's stewardship. (Id. at 6-8.) Mr. Boroian then formed a company called Franchise Concepts, which not only was a franchisor itself, but later acquired a company called Resell It Shops. (Id. at 12.) Mr. Boroian was the chairman and president of the company and claims to have been very active in its day-to-day management. (Id. at 13.) Under Mr. Boroian's direction, Franchise Concepts proceeded to franchise Resell It Shops, but the business encountered multiple problems within two years of operation and eventually led to the bankruptcy of Franchise Concepts and to Mr. Boroian's personal bankruptcy. (Id. at 12-14.) Out of the ashes of Franchise Concepts, Mr. Boroian formed his current organization, Francorp. This company has accumulated hundreds of thousands of dollars in tax liens during its existence. Though Mr. Boroian testified that Francorp has obtained releases on the various

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federal tax liens that have been imposed against it, (Boroian Dep. at 33), public records indicate that Mr. Boroian's business has several sizeable tax and required contribution liens that have not been addressed and released by the federal and state government. The federal and state tax liens total more than $1.1 million. According to the Recorder of Deeds, Cook County, Illinois, as of January 4, 2006, unreleased federal tax liens appears on the record that were filed on August 14, 1992 in the amount of $119,477.09; on September 29, 1992 in the amount of $189,934.05; on February 26, 1993 in the amount of $175,787.59; on October 14, 1993 in the amount of $123,947.14; on February 26, 2001 in the amount of $446,150.49; and on November 27, 2001 in the amount of $52,9136.66. These liens are for unpaid taxes for various tax periods beginning in 1991 and continuing through 2001. See Notices of Federal Tax Lien, Recording No. 92603364 (Aug. 14, 1992), No. 92719255 (Sept. 29, 1992), No. 93149327 (Feb. 26, 1993), No. 938232441 (Oct. 14, 1993), No. 0010151011 (Feb. 26, 2001), and No. 0011111708 (Feb. 14, 2001) (collectively attached hereto as Exhibit 3). In addition to the federal tax liens, Illinois State tax and required contribution liens totaling $46,854.58 have been filed against Francorp and remain unreleased as of January 4, 2006. See Illinois Notices of Lien, Recording No. 00106162 (Feb. 10, 2000), No. 00238981 (Apr. 5, 2000), and No. 00422721 (June 9, 2001) (collectively attached hereto as Exhibit 4). Significantly, in his deposition, Mr. Boroian testified that to his knowledge, all federal tax liens had been released and he was not aware of any Illinois state tax liens that had been filed. (Boroian Dep. at 33.) In short, Mr. Boroian's inability to run his own company and franchise precludes him from being able to testify as an expert who purports to be capable of telling others how to run a franchise effectively. Under his direction, Francorp or its predecessor has been driven into

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bankruptcy, accumulated hundreds of thousands of dollars in unpaid taxes, failed to make required contributions, driven companies like Resell It into the ground, and been subject to suit for failure to satisfy financial obligations. Those failures of Mr. Boroian demonstrate a lack of skill and "successful" experience in running his own franchise company. Certainly, this Court would not want to rely upon Mr. Boroian if he were being as careful with his testimony as he is in his regular professional work, and if the basis of his qualification as an expert is his experience, Mr. Boroian has demonstrated beyond doubt that his experience has been less than is necessary to qualify. See Sheehan, 104 F.3d at 942. The story does not end there, however. Throughout these proceedings, he has misrepresented his academic and professional credentials as well. The only formal education Mr. Boroian has completed was in 1956, when he earned a bachelors degree in the field of music education from DePaul University. (Boroian Dep. at 30.) Mr. Boroian claims to have pursued postgraduate studies at DePaul, which consisted of "a few courses," but did not complete a degree and did not study franchising. (Id. at 30-31.) Likewise, he also claims to have pursued postgraduate work in business at the University of Chicago. (See Resume of Donald D. Boroian, attached as Exhibit 5.) In fact, the records of the University of Chicago Registrar indicate that Mr. Boroian withdrew his registration and did not complete a single course. Consequently, Mr. Boroian is not qualified by education to offer expert testimony in the field of franchising. The list of Mr. Boroian's qualifications contained in his report represents that Mr. Boroian served as co-chair of the Fair Franchising Standards Committee of the American Association of Franchisees and Dealers. (Boroian Report at 2.) Mr. Boroian "elected" not to pay his dues, however, and was ousted from the role. (Boroian Dep. at 29.) In fact, on

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September 14, 1999, the organization sent Mr. Boroian a notice to advise him that another individual was the sole Chair of the Committee and that Mr. Boroian should no longer list himself as the chair or co-chair. Furthermore, Mr. Boroian states in the summary section of his report that he "served as an advisor to the Franchise Regulation Committee of the Midwest Securities Commissioner's Association, to the North American Securities Administrator's Association, and to the Federal Trade Commission." (Boroian Report at 2; see also Boroian Dep. at 22-28.) That credential, however, is overstated, and its potential prejudicial value is quite high. In fact, Mr. Boroian was never appointed by the FTC to any committee. (Boroian Dep. at 26.) At his deposition, he explained that his true role was as a member of a committee advising the North American Association of Securities Dealers on recommendations to the FTC. (Id. at 24-26.) Even if true, such service falls far short of being "the Industry Advisor to the FTC." Mr. Boroian also claims that he "advised" the FTC between 1975 and 1978, (id. at 26-28), but the Commission closed the public record to all interested parties wishing to submit suggestions, criticisms, objections, and other pertinent information for its consideration on November 20, 1974. See Federal Register, 39 FR 30360 (Aug. 22, 1974). Most recently, Mr. Boroian's nefarious dealings have also subjected him to criminal charges pending against him by the United States Attorney's Office for the Northern District of Illinois. On November 3, 2005, the U.S. Attorney filed information charging Mr. Boroian with diverting hundreds of thousands of dollars of Francorp funds to finance his personal mortgage payments, personal legal expenses, housekeeping and security services, having false entries made in Francorp's books and records, and ultimately failing to declare such amounts. (See

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Information of 11/3/05) (attached hereto as Exhibit 6). Mr. Boroian is only out of custody due to posting a $4,500 bond and pursuant to the terms of the court's order setting forth the conditions of his release. (See Order Setting Conditions of Release) (attached hereto as Exhibit 7). Ordinarily, Mr. Boroian's resume puffing, misrepresentations under oath about Francorp's tax liens, and criminal charges might be considered to be issues going to the weight of his testimony. They would certainly be fair game for cross-examination. But here, the fabrications are so direct and repeated that this Court should find that the testimony is so unreliable as to be inadmissible. Because Mr. Boroian has neither the educational background nor successful business experience to qualify as an expert in the field of franchising, his opinions in this case should be excluded. CONCLUSION Mr. Boroian fails to recognize that a franchise agreement creates a contractual relationship between the parties without the imposition of additional legal obligations or relationships outside the four corners of the contract. Given that any legal opinions offered by Mr. Boroian are properly excludable, the remaining testimony centers around factual issues that can be accurately and intelligibly described to the trier of fact by lay fact witnesses who can testify directly to the subject matter of the present dispute. Mr. Boroian's expert testimony on factual issues, moreover, will not "assist the trier of fact to better understand the evidence or to determine a fact in issue," and therefore, does not meet the standard of admissibility of Federal Rule of Evidence 702.

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For the reasons stated herein, The Quizno's Master LLC and The Quizno's Franchise Company LLC respectfully request that the Court grant its Motion to Strike the Expert Report and Exclude the Expert Testimony of Donald Boroian. Dated this 4th day of January 2005 Respectfully submitted, s/ Leonard H. MacPhee _________________ Leonard H. MacPhee Attorney for Plaintiffs Perkins Coie LLP 1899 Wynkoop Street, Suite 700 Denver, CO 80202 Telephone: (303) 291-2300 Facsimile: (303) 291-2400 Email: [email protected] and Fredric A. Cohen DLA Piper Rudnick Gray Cary 203 North LaSalle Street, Suite 1800 Chicago, IL 60601 (312) 368-4000

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CERTIFICATE OF SERVICE I hereby certify that on January 4, 2006 I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses:
·

Gilbert R. Engle [email protected] [email protected] Eldon E. Silverman [email protected] [email protected]

· ·

and hereby certify that I have mailed the foregoing to the following non EM/ECF participant via U.S. Mail, postage prepaid: J.E. Sawyer, Jr. Attorney at Law 203 South Edwards Street Enterprise, AL 36330

s/ Leonard H. MacPhee Leonard H. MacPhee Attorney for Plaintiffs Perkins Coie LLP 1899 Wynkoop Street, Suite 700 Denver, CO 80202 Telephone: (303) 291-2300 Facsimile: (303) 291-2400 Email: [email protected]

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