Opinion
21-cv-311
01-30-2024
Re CFTC v. Centurion Capital Management, Inc.
CLINE WILLIAMS WRIGHT JOHNSON 8 OLDFATHER, L.L.P.
ATTORNEYS AT LAW ESTABLISHED 1857
Michael Nelson, Magistrate Judge
Centurion Capital Management, Inc. and Terry Svejda (“Svejda”) respectfully submit the following position statement in advance of the discovery conference requested by the CFTC.
The CFTC untimely disclosed three witnesses well after the close of discovery. Svejda has properly sought to exclude these witnesses from trial. See Crabar/GBF, Inc. v. Wright, 644 F.Supp.3d 513, 543 (D. Neb. 2022) (Gerrard, J.); Bailey v. City of Bellevue, Nebraska, No. 4:18CV3132, 2021 WL 2291940, at *3 (D. Neb. June 3, 2021) (Nelson, M.J.). Svejda's motion in limine is fully submitted and pending before Judge Gerrard. See Dkt. No. 151. The CFTC now seeks to undermine Judge Gerrard's consideration of that motion by asking to reopen discovery for purposes of deposing the three untimely disclosed witnesses. The CFTC's request should be denied.
The CFTC's request is one to amend the scheduling order. Amending the scheduling order requires good cause. See Fed.R.Civ.P. 16(b)(4). Amendments “will not be considered absent a showing of due diligence in the timely progression of this case and the recent development of circumstances, unanticipated prior to the filing of the motion, which require that additional time be allowed.” See Dkt. No. 25. At issue on the motion in limine is whether these witnesses were disclosed timely and, if not, whether the failure to disclose was substantially justified or harmless. See Dkt. No. 152, p. 16. In other words, the CFTC is asking Your Honor to rule on substantively similar questions to those pending before Judge Gerrard. This is wholly inappropriate. Moreover, as Svejda has explained in his motion in limine, there is no good cause or substantial justification as it relates to these three witnesses. See Dkt. No. 152, pp. 16-17; Dkt. No. 180, pp. 13-16.
Additionally, amending the scheduling order would unfairly prejudice Svejda. An inordinate number of depositions have already been taken in this case. Each deposition comes at a significant cost to prepare for, attend, and obtain transcripts. Reopening discovery would cost Svejda many thousands of dollars. As this Court has previously recognized, it “will not thrust the additional burden upon Defendant to take a last-minute, substantial discovery deposition in the middle of trial preparation to remedy to Plaintiff's failure to timely and properly disclose McCarty as a witness.” Bailey, 2021 WL 2291940, at *3 (citing Hallmark Indus., Inc. v. Hallmark Licensing, LLC, No. 4:18-CV-0236-DGK, 2019 WL 302514, at *5 (W.D. Mo. Jan. 23, 2019) (rejecting the plaintiff's argument that failure to timely disclose witness was harmless because the witness could be deposed)).
Further, reopening discovery for purposes of deposing these witnesses would threaten further delay of the trial. Trial begins in two months. Prior to depositions, Svejda would want written discovery related to these witnesses. Two months is insufficient time to draft and serve those discovery requests, wait for responses, address any objections or insufficiencies in responses, review and consider the documents and information produced, schedule and take the depositions, address any potential rebuttal or impeachment witnesses that Svejda may need to call, and ultimately schedule depositions of those rebuttal witnesses. See Hallmark Indus., 2019 WL 302514, at *5 (“reopening discovery to depose Mr. Devack will likely result in one or both parties seeking to additionally extend discovery, further undermining the scheduling order and the speedy and efficient administration of justice. Mr. Devack has already indicated that other relevant documents exist; Plaintiff will likely want to extend discovery to locate these documents and include them in the record. If the Court permits his late-disclosed testimony, why not the late-disclosed documents identified by his late-disclosed testimony? Finally, depending on what Mr. Devack testifies to in his deposition, Defendant may need additional discovery to impeach his testimony or place it in context. Given Plaintiff's late disclosure, this would be a reasonable request.”).
Finally, reopening discovery is ultimately a self-serving proposition for the CFTC. Each witness that the CFTC failed to timely disclose is located outside the subpoena power of this Court. If the Court amends the scheduling order to allow discovery depositions of these witnesses, the CFTC could cross-examine the witnesses and then submit their testimony at trial. In other words, these “discovery depositions” are likely to turn into trial depositions and the “remedy” that the CFTC is offering to provide to Svejda-advanced understanding of testimony-is likely no remedy at all. The court in Hallmark Industries noted that while reopening discovery would “re-level the playing field, it would not punish Plaintiff for its inexplicable violation.” 2019 WL 302514, at *5. Here, not only would the CFTC not be punished for its violation of Rule 26 if discovery is reopened, but the CFTC would also be rewarded by the ability to use the depositions at trial.
Svejda respectfully requests that the Court deny the CFTC's request to amend the scheduling order and reopen discovery.
Respectfully submitted, Adam W. Barpey, For the Firm
PLAINTIFF'S SUMMARY OF DISCOVERY DISPUTE REGARDING REOPENING DISCOVERY TO PERMIT DEPOSITIONS OF TWO TRIAL WITNESSES
Plaintiff, the Commodity Futures Trading Commission (“CFTC”), respectfully submits this summary of a dispute concerning Plaintiff's proposal to reopen discovery for 28 days, until February 29, 2024, to provide Defendants the opportunity to depose two trial witnesses. The requested relief is well within the discretion of the Court, routinely granted in these circumstances, and resolves Defendants' sole argument about why these witnesses should be excluded from trial.
A. Background
1. Defendants Seek to Exclude Plaintiff's Timely Disclosed Trial Witnesses
Pursuant to the Court's pretrial conference order [ECF #150], the parties filed motions in limine on Nov. 13, 2023. In one such motion, Defendants seek to exclude three individuals as trial witnesses: Amy Meyer, Tanya Deininger, and Kathleen Clapper. Defs.' MIL [ECF #152]. Defendants contend that the CFTC failed to disclose these trial witnesses in a timely manner. Id. at 16-17. Defendants' primary argument in their motion in limine is that they did not have the opportunity to depose these witnesses. Id. at 17.
Plaintiff disagrees that Ms. Meyer and Ms. Deininger were not timely disclosed. See Pl.'s Opp'n to MIL, at 18-21 [ECF #168]. In fact, as this Court noted at the November 6, 2023 pretrial conference, Plaintiff appropriately disclosed Ms. Deininger and Ms. Meyer in supplemental Rule 26(a) disclosures dated September 12, 2023. Id. at 18.
Moreover, Defendants were aware of these witnesses throughout the discovery period. For example, during depositions Mr. Svejda was shown communications that he had with these witnesses, and was questioned about these interactions. Id. at 19-20. In addition, Defendants produced more than 250 documents involving Ms. Deininger, including numerous communications with Mr. Svejda.
On December 8, 2023, the Court rescheduled the trial date for April 1, 2024. [ECF #174]. One week later, on December 15, 2023, Plaintiff served a supplemental Rule 26(a) disclosure, identifying Ms. Clapper as a potential trial witness. Id. at 22 (noting Ms. Clapper previously worked at RJ O'Brien, and would be testifying in lieu of Ms. Meyer, a current RJ O'Brien employee). Defendants did not object to this disclosure.
2. Defendants Have Not Responded to Plaintiff's Proposal that Discovery be Reopened to Permit Depositions of These Witnesses
As the new April 2024 trial date provided the parties with an additional 3.5 months to prepare for trial, Plaintiff proposed to Defendants in early January 2024 that the parties reopen discovery for the limited purpose of permitting Defendants to depose these witnesses. Plaintiff proposed that these depositions could be scheduled at a time, and in a format (including by remote video), that is convenient for Defendants. The parties met and conferred to discuss this proposal on January 12, 2024. Defense counsel stated that they needed to confer with their client. Plaintiff asked that Defendants respond by January 17, 2024. Defendants did not respond by the deadline. Plaintiff followed up to inquire and defense counsel responded that he was still waiting to hear from his client. As of the time of this submission, Defendants still have not responded to Plaintiff's proposal, or stated their position on the issue of reopening discovery.
Defendants would only need to depose two of the witnesses; As noted supra and infra, Plaintiff intends to call Ms. Meyer as a trial witness only if the Court does not permit Ms. Clapper to testify.
B. Argument
The CFTC respectfully requests that the Court reopen discovery to permit Defendants to depose Ms. Clapper and Ms. Deininger. Alternatively, if the Court denies the CFTC's request with respect to Ms. Clapper, the CFTC asks that the Court reopen discovery to permit Defendants to depose Ms. Meyer instead. Reopening discovery for two limited depositions would address the concerns raised by Defendants in their motion in limine pertaining to these witnesses.
Defendants' motion in limine seeking to exclude these witnesses, on the grounds that Defendants had insufficient time to depose and/or otherwise prepare for their trial testimony would likely be moot if the Court grants the requested relief.
In cases involving similar facts, courts have routinely reopened discovery to allow depositions prior to trial. See, e.g., Paris v. Union Pac. R. Co., 450 F.Supp.2d 913, 916 (E.D. Ark. 2006) (reopening discovery before trial to provide defendant the opportunity to depose five witnesses disclosed by plaintiff after the discovery cutoff); Bradley v. Denver Health & Hosp. Auth., No. 08-CV-02587-PAB-KMT, 2010 WL 11553419, at *7 (D. Colo. Mar. 23, 2010) (reopening discovery months before trial to allow plaintiff to depose two witnesses whom defendant failed to disclose pursuant to Rule 26(a); finding prejudice from failure to disclose was harmless because it could be cured by reopening discovery); Guzik Tech. Enter., Inc. v. W. Dig. Corp., 2013 WL 6070414, at *6-7 (N.D. Cal. Nov. 18, 2013) (denying motion to strike three late-disclosed witnesses and allowing defendant to take their depositions two weeks before trial because witnesses were “important” and supported “key evidence” regarding plaintiff's claims).
Additionally, in the Eighth Circuit, such discovery decisions fall squarely within this Court's discretion. “A district court has very wide discretion in handling pretrial discovery and [the Court of Appeals is] most unlikely to fault its judgment unless, in the totality of the circumstances, its rulings are seen to be a gross abuse of discretion resulting in fundamental unfairness in the trial of the case.” U.S. ex rel. Kraxberger v. Kansas City Power & Light Co., 756 F.3d 1075, 1082 (8th Cir. 2014). “Once discovery has closed in a case, it is [at] the district court's discretion whether or not to allow it to be reopened.” Bradshaw v. FFE Transp. Servs., Inc., 715 F.3d 1104, 1108 (8th Cir. 2013) (internal quotation omitted).
In this case, reopening discovery for such a narrow purpose addresses the key concern that Defendants raised in their motion in limine - that Defendants lacked time to depose or otherwise prepare for these trial witnesses. The trial in this matter is two months away, and the parties have already completed many pretrial tasks, including completing the Pretrial Conference Order and Trial Exhibit List [ECF #150], and fully briefing all motions in limine [ECF #151-181]. Accordingly, Defendants have ample time to depose two witnesses in February 2024, and prepare for their eventual testimony at the April 2024 trial.
Additionally, these two depositions are likely to be limited in scope and duration. For example, the deposition of the RJ O'Brien witness (either Ms. Clapper or Ms. Meyer) will focus on a doctored RJ O'Brien trading statement that Defendants posted on the Decadian website. This trading statement gave the false impression that Decadian had a trading account at RJ O'Brien. Ms. Clapper and/or Ms. Meyer are copied on between 10 and 18 documents that discuss this statement, and are identified as Trial Exhibits. Similarly, Ms. Deininger's name is on less than 20 documents included on the Trial Exhibit List.
Lastly, in an effort to address Defendants' concerns about time and cost, Plaintiffs have agreed to help arrange the depositions at a time and in a format most convenient to Defendants.
Accordingly, Plaintiff requests that the Court reopen discovery for 28 days, until February 29, 2024, to allow Defendants to depose these two witnesses.
Aimee Latimer-Zayets, DC Bar No. 476693
Glenn I. Chernigoff, DC Bar No. 488500
Brendan M. Forbes, DC Bar No. 1027275
Cara A. Gardner, DC Bar No. 1003793
Sean P. Hennessy, DC Bar No. 1011564
COMMODITY FUTURES TRADING COMMISSION