AECOM Technical Services, Inc. v. Flatiron AECOM, LLC

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 19-cv-2811-WJM-KAS
AECOM TECHNICAL SERVICES, INC.,
Plaintiff-Counterclaim Defendant,
v.
FLATIRON | AECOM, LLC,
Defendant-Counterclaim Plaintiff.
ORDER DENYING AECOM’S FEDERAL RULE OF EVIDENCE 702 MOTIONS
Before the Court is Plaintiff AECOM Technical Services, Inc.’s (“AECOM” or
“ATS”) Motion to Exclude the Expert Testimony of Dr. Kenneth J. O’Connell Pursuant to
F.R.E. 702 (“O’Connell Motion). (ECF No. 292.) Defendant Flatiron | AECOM, LLC
filed a response (ECF No. 294), and AECOM filed a reply (ECF No. 299).
Also before the Court is AECOM’s Motion to Exclude the Expert Testimony of
James Melvin Torres Pursuant to F.R.E. 702 (“Torres Motion”). (ECF No. 293.) Flatiron
filed a response in opposition (ECF No. 295), and AECOM filed a reply (ECF No. 298).
Neither party requested an evidentiary hearing on either motion, and the Court
finds it does not need one to resolve them. For the following reasons, the O’Connell
Motion is denied, and the Torres Motion is denied.
I. LEGAL STANDARDS
A district court must act as a “gatekeeper” in admitting or excluding expert
testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2005).
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 1 of 11

2
Expert opinion testimony is admissible if it is relevant and reliable. See Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589, 594–95 (1993). The opinions are relevant
if they would “assist the trier of fact to understand the evidence or to determine a fact in
issue.” Fed. R. Evid. 702 (as amended on Dec. 1, 2023). They are reliable if (1)
the expert is qualified “by knowledge, skill, experience, training, or education,” (2) his
opinions are “based upon sufficient facts or data,” and (3) they are “the product of
reliable principles and methods.” Id. The proponent of expert testimony has the burden
to show that the testimony is admissible. United States v. Nacchio, 555 F.3d 1234,
1241 (10th Cir. 2009).
Federal Rule of Evidence 401 provides that evidence is relevant if: (a) it has any
tendency to make a fact more or less probable than it would be without the evidence;
and (b) the fact is of consequence in determining the action.
Federal Rule of Evidence 402 provides that relevant evidence is admissible
unless any of the following provides otherwise, including the United States Constitution;
a federal statute; these rules; or other rules prescribed by the Supreme Court. Further,
Rule 402 provides that irrelevant evidence is not admissible.
Federal Rule of Evidence 403 provides that “[t]he court may exclude relevant
evidence if its probative value is substantially outweighed by a danger of one or more of
the following: unfair prejudice, confusing the issues, misleading the jury, undue delay,
wasting time, or needlessly presenting cumulative evidence.”
II. ANALYSIS
A. 	Kenneth O’Connell
AECOM requests the exclusion of expert opinion testimony of Flatiron’s standard
of care expert, Dr. Kenneth O’Connell. AECOM asks the Court to exclude certain
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 2 of 11

3
opinions of O’Connell, who opines that AECOM’s performance of Pre-Award Design
services included 72 violations of the standard of care (“VSCs”), which he describes as
“significant deviations” between AECOM’s preliminary Pre-Award Design and the final
released for construction (“RFC”) Design that Flatiron constructed, resulting in
“significant scope growth, quantity increases, schedule impacts, and costs increases on
the Project.” (ECF No. 292 at 1.) Specifically, AECOM seeks to exclude Opinions 3–8
in O’Connell’s initial report because they will be unhelpful to the jury and are based on a
flawed methodology. (Id.)
1. 	Unhelpful to the Jury
AECOM argues that O’Connell offers only a bare list of 72 VSCs without
calculating or opining what (if any) scope growth, quantity increases, schedule impacts,
cost increases or damages were caused by any of these VSCs. (Id.) According to
AECOM, O’Connell deliberately did not determine damages on a VSC-by-VSC basis (or
at all, since he left that to Flatiron’s damages expert, James Melvin Torres, who
purportedly did not do so either), O’Connell’s opinion is irrelevant and will be of no help
to a jury in determining the damages caused by the VSCs. (Id. at 7.)
In response, Flatiron argues that in a case like this one, where the contracts at
issue required AECOM “to conform to all applicable professional engineering principles
generally accepted in Colorado for substantially similar projects (i.e., the standard of
care), expert testimony to establish that standard of care and ATS’s failure to comply
with it is essential to the jury’s understanding of the case.” (ECF No. 294 at 4 (citing
Raup v. Vail Summit Resorts, Inc., 233 F. Supp. 3d 934, 941 (D. Colo. 2017) (“[W]hen
the standard of care is outside the common knowledge and experience of ordinary
persons,” expert witness testimony is needed)).) Further, Flatiron disputes the
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 3 of 11

4
proposition that its expert must quantify the damage caused by each individual VSC,
particularly where, as here, the VSCs were “intertwined and overlapping.” (Id. at 4–5.)
Having considered the parties’ arguments, the Court concludes that AECOM’s
objections to O’Connell’s testimony go to their weight and not their admissibility. As
Flatiron argues, O’Connell is a standard of care expert, not a damages expert, and
therefore, his opinions will help the jury understand the issue of liability. Under
Colorado law, “the plaintiff in a breach of contract action . . . must . . . provide the
factfinder with a reasonable basis for calculating actual damages in accordance with the
relevant measure. . . . However, proof of damages with mathematical certainty is not
required.” City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 477 (Colo.
App. 2003) (internal citations omitted). Accordingly, the Court denies this portion of the
O’Connell Motion.
2. 	Methodology
Next, AECOM argues that O’Connell employs a flawed methodology that treats
every change between the Pre-Award Design and RFC Design as a VSC, while
completely failing to consider other factors. (ECF No. 292 at 1.) AECOM objects to
O’Connell’s failure to consider what it calls other “confounding factors,” such as “how,
during the pursuit phase, Flatiron directed [AECOM] not to update its preliminary
drainage designs to match a complete road remodel,” “Flatiron executives’ last-minute
decision to make aggressive reductions to Flatiron’s bid to keep it below CDOT’s ‘upset
limit’ (the maximum amount CDOT would accept) and to underbid Flatiron’s
competitors,” or “Flatiron’s own April 2020 hindsight assessment of its own errors in its
bid that led to millions of dollars in increased costs.” (Id. at 8–10.) According to
AECOM, “O’Connell acknowledged the existence and potential impact of these and
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 4 of 11

5
other confounding factors in his deposition testimony, but he made no effort in his
causation analysis to determine whether such confounding factors caused some or all
of the observed scope growth and quantity increases, unless the scope growth or
quantity increases were documented in an executed change order.” (Id. at 10.) Thus,
AECOM argues that O’Connell’s methodology is unreliable and will not assist the jury.
Flatiron responds that O’Connell did not automatically assume that all VSCs
were attributable to AECOM’s breaches. Specifically, Flatiron points to O’Connell’s
deposition testimony stating that he “did not, in fact, automatically assume that all
design changes were due to ATS’s VSCs.” (ECF No. 294 at 7 (citing ECF No. 292-4 at
166:20–24 (“It is not the fact that there’s a difference that gives rise to the VSC. What
gives rise to the VSC is the reason for why there are differences and specific things that
occurred in the design.”). Further, Flatiron disputes that O’Connell did not consider
other confounding factors and argues that several of the issues AECOM identifies are in
fact disputed issues of material fact or are irrelevant. (Id. at 8.) Importantly, Flatiron
emphasizes that its expert is “not obligated to adopt ATS’s assumptions or its subjective
theory of the case in formulating his opinions.” (Id.)
The Court agrees with Flatiron. While O’Connell’s opinions may lack accuracy in
AECOM’s view, such purported weaknesses in his opinions are for AECOM to attack on
cross examination. As Flatiron argues, and the Court concludes, “the bulk of ATS’s
criticisms are directed toward Dr. O’Connell’s data and assumptions—not his
methodology.” (ECF No. 294 at 9.) Therefore, “they go to the weight of his opinions,
rather than their admissibility.” (Id. (citing Straughen v. BHS, Inc., 2023 U.S. Dist.
LEXIS 84049, at *38–39 (D. Colo. May 12, 2023) (“Plaintiffs’ criticisms suggest
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 5 of 11

6
challenges to [the expert’s] data and/or assumptions, but do not address his
methodology, and thus go the weight, rather than the admissibility, of [his] opinions.”)).)
Therefore, the Court denies this portion of the O’Connell Motion.
B. 	James Melvin Torres
Torres is Flatiron’s damages expert. (ECF No. 293 at 1.) AECOM seeks to
exclude Torres’s Opinions 1 and 2, which address AECOM’s alleged VSCs, and
Opinion 6, which calculates damages based on what AECOM describes as the Total
Cost Method. (Id.)
Torres states that Flatiron expended approximately $502.5 million on the
Project by January 2021—a Project Flatiron told CDOT it could build for $204 million
($237.5 million with change orders). (Id. at 6.) Flatiron’s cost overrun (the difference
between the $237.5 million contract value and Flatiron’s claimed $502.5 million total
expenditure) is $265 million. (Id.) Flatiron’s $263,512,812 damages claim against
AECOM is 99.4% of its $265 million cost overrun. (Id.) Torres’s $263.5 million damage
calculation in Opinion 6 attributes nearly 100% of Flatiron’s $265 million in claimed cost
overruns to AECOM’s alleged design errors. (Id.)
AECOM argues that the Court should exclude Torres’s testimony because he
uses the Total Cost Method to calculate damages, which AECOM argues violates
Colorado law. (Id. at 6.) AECOM explains that under the Total Cost Method, damages
are “assumed to be the difference between the total costs incurred by the contractor to
complete a project, and its bid amount.” (Id. (citing Amelco Elec. v. City of Thousand
Oaks, 27 Cal. 4th 228, 243 (2002)).) However, according to AECOM the Total Cost
Method is “highly disfavored because it ignores causation and instead assumes ‘that
every penny of the plaintiff’s costs are prima facie reasonable, that the bid was
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 6 of 11

7
accurately and reasonably computed, and that the plaintiff is not responsible for any
increases in cost.’” (Id. at 6–7 (citing Neal & Co. v. U.S., 36 Fed. Cl. 600, 638 (1996)).)
For support, AECOM relies on City of Westminster v. Centric-Jones Constructors, 100
P.3d 472, 479 (Colo. App. 2003), which AECOM argues stands for the proposition that
Colorado has “flatly reject[ed]” the Total Cost Method in favor of requiring proof of
causation. (ECF No. 293 at 7.)
AECOM acknowledges that Torres claims to have used a slightly different
method, namely the Modified Total Cost Method, which AECOM asserts “is a version of
the Total Cost Method which similarly assumes the defendant is generally responsible
for all cost overruns, but modifies them by ‘subtracting such things as bid errors,
unreasonable costs, and costs’ that are not the responsibility of the [plaintiff].” (Id. at 7
(citation omitted).) Regardless of Torres’s chosen nomenclature, AECOM argues that
the Modified Total Cost Method “also violates Colorado law because it similarly
dispenses with causation and presumes that the designer is responsible for all cost
overruns—save for the amount the expert attributes to the contractor.” (Id. at 3.) And in
any event, AECOM argues that Torres really employs a Total Cost Method, which is
simply “disguised as a Modified Total Cost Claim methodology.” (ECF No. 298 at 1; see
also (ECF No. 293 at 4 (arguing that Torres’s Modified Total Cost Claim Methodology is
“really an unmodified Total Cost Method claim”).) AECOM also argues that Torres’s
methodology is unreliable. (Id. at 9.)
Flatiron responds that as an initial matter, Torres did not use the Total Cost
Method, and AECOM only thinks that he did because Flatiron contends that AECOM
relies on faulty calculations. (ECF No. 295 at 4.) Flatiron emphasizes that AECOM
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 7 of 11

8
“ignores that Flatiron did not attribute to ATS over $120 million in costs it incurred on the
C-470 Project.” (Id. at 5.) Moreover, Flatiron disputes AECOM’s assertion that
Colorado courts have rejected the Total Cost Method, pointing out that City of
Westminster “stands for the proposition that there should be a basis for differentiating
between costs attributable to the defendant, and costs for which the defendant was not
legally or contractually liable.” (Id. at 6 (citing City of Westminster, 100 P.3d at 478).)
Further, Flatiron explains the reasons for which Torres’s opinions are reliable.
Upon due consideration, the Court will permit Torres to offer his damages
opinions based on the Modified Total Cost Method at trial. First, the Court concludes
that by moving to exclude these damages opinions, AECOM has come as close as
possible to running afoul of WJM Revised Practice Standard III.H.1, which provides, in
part:
In my experience, many Rule 702 motions are veiled
dispositive motions, in the sense that the moving party seeks
to exclude expert evidence and thereby leave the opposing
party without evidence necessary to prove an element of its
claim or defense. In most circumstances, such a tactic
contradicts the strong preference for deciding cases on their
merits. Moreover, the vast majority of purported Rule 702
arguments go to weight and not admissibility.
Such is the case here. Were the Court to exclude Torres’s opinions, Flatiron would be
unable to prove up the damages element of its breach of contract claim at trial. Despite
these circumstances, the Court has determined that it will allow Torres’s testimony and
need not order additional expert discovery so that Flatiron might supplement Torres’s
opinions.
Second, the Court disagrees with AECOM’s reading of City of Westminster and
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 8 of 11

9
its contention that the Court must follow it.1 It is true that the state court acknowledged
that recovery under a total cost theory is “disfavored” and has “generally been rejected
unless a basis appears for even an educated guess as to the increased costs suffered
by plaintiffs due to that particular breach or breaches by the defendant as distinguished
from those causes from which defendant is contractually exempt from responding in
damages.” City of Westminster, 100 P.3d at 478 (internal quotation marks and
alterations omitted). The court explained that “[s]ome jurisdictions employ a four-part
test under which the trial court must initially determine whether total cost is an
appropriate measure of damages: (1) proving actual losses directly is impractical; (2)
the bid is reasonable; (3) actual costs are reasonable; and (4) the injured party was not
responsible for the added costs.” Id. Further, the court stated that it “found no Colorado
case discussing this total cost theory,” and ultimately, the court stated that in its view,
“the fourth element—that the injured party is not responsible for added costs—is
consistent with the general rule that uncertainty in the amount of damages does not
preclude recovery, but ‘[u]ncertainty as to the cause from which they proceed’ supports
rejection of a damage claim as “too remote, or conjectural or speculative.” Id.
Given the foregoing, the Court agrees that a total cost method approach for
1 AECOM states that City of Westminster provides “controlling state law in this Erie
context.” (ECF No. 293 at 8 (citing Koch v. Koch Indus., Inc., 203 F.3d 1202, 1230 (10th Cir.
2000) (“[T]his court must follow any intermediate state court decision unless other authority
convinces us that the state supreme court would decide otherwise.”)).) However, the Tenth
Circuit has also stated: “Although we are not bound by a lower state court decision, ‘decisions of
a state’s intermediate appellate courts are some evidence of how the state supreme court would
decide the issue, and we can consider them as such, even if they are not binding precedent
under state law.’” Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1240 (10th Cir. 2003)
(citation omitted).
Notwithstanding Koch and Clark, the Court finds City of Westminster does not stand for
the bright-line proposition that the total cost method has been definitively rejected in Colorado,
and therefore concludes that it is not compelled to follow that case.
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 9 of 11

10
calculating breach of contract damages is disfavored, and it is certainly possible that the
Colorado Supreme Court might in the future reject it. However, this legal dispute is
arguably much ado about nothing, as the Court agrees that Torres did not in fact
employ a total cost method, but instead used a modified total cost method damages
calculation approach.
As to the reliability of Torres’s Modified Total Cost Method, the Court notes that
Flatiron cited several cases in which courts have allowed such a method to be used to
compute damages. (See ECF No. 295 at 6 (citing cases).) Additionally, Torres testified
that:
[W]e did a detailed review of cost overruns on this project to
determine where the losses occurred by cost category, and
then within a cost category, cost code by cost code. And
then as we identified those cost overruns, then we
determined what were the potential causes of those cost
overruns.
And we reviewed project records, contemporaneous records,
other job cost accounting information, invoices,
subcontractor pay-ups, time and equipment reports,
everything that we could get our hands on at the discrete
level, to understand what that cost growth was attributable
to.
Then we took that information to the project team and then
had them assist us to understand what the cost growth in
their perspective was attributable to. And . . . then I was
able to determine what I felt was a conservative approach
to—to calculating the damages by cost category and by cost
code.
(Id. at 7 (citing ECF No. 295-1, Torres Dep. at 133:14-134:11).) Torres also stated in
his expert report:
Modified Total Cost Method – Given the Project-wide
impacts and disruption, in some instances it was most
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 10 of 11

11
reasonable to calculate the impact of ATS’s VSCs by
aggregating total recorded costs for impacted work activities
and/or categories, comparing these costs to F|A’s
anticipated costs at bid to quantify cost growth, and then
modifying this cost growth to account for any costs that are
the responsibility of parties other than ATS (e.g., CDOT or
F|A itself).
(ECF No. 293-1 at 116.) Accordingly, it appears as though Torres did not wholesale
attribute damages to AECOM but factored in costs that were other parties’
responsibility.
The Court finds that AECOM’s challenges to Torres’s anticipated testimony are
best suited to cross examination. Accordingly, the Court denies the Torres Motion.
III. CONCLUSION
For the foregoing reasons, the Court ORDERS that:
1. 	The O’Connell Motion (ECF No. 292) is DENIED; and
2. 	The Torres Motion (ECF No. 293) is DENIED.
Dated this 2 nd day of January, 2024.
BY THE COURT:
______________________
William J. Martínez
Senior United States District Judge
Case No. 1:19-cv-02811-WJM-KAS Document 343 filed 01/02/24 USDC Colorado
pg 11 of 11