Summary
finding that failure to disclose documents and witness was not harmless because the opposing party was unable to prepare its defense in time for trial
Summary of this case from Nat'l R.R. Passenger Corp. v. Young's Commercial Transfer, Inc.Opinion
CASE NO. 08cv653 WQH (NLS).
August 12, 2010
ORDER
The matter before the Court is Defendants' Objections to Plaintiff's Witness and Exhibit List. (Doc. # 57).
BACKGROUND
Plaintiff Victor Manneh, a scientist, filed this action against his former employer Defendants Inverness Medical Innovations, Inc. and Innovations Research, LLC (collectively "Inverness"); David Scott, an employee of Inverness; and Does 1-50, in the Superior Court of the State of California for the County of San Diego. (Doc. # 1). Plaintiff alleged the following claims: (1) recision of his severance agreement; (2) declaratory relief that the severance agreement does not waive Plaintiff's claims; (3) breach of an agreement to transfer laboratory equipment to Plaintiff; (4) a common count for the reasonable value of Plaintiff's services; (5) intentional misrepresentation; (6) negligent misrepresentation; (7) breach of Plaintiff's employment contract; and (8) intentional interference with economic advantage. Id. Plaintiff sought to recover damages for the value of the laboratory equipment he did not receive, or alternatively, for the reasonable value of the services he performed in exchange for the equipment; for the lost profits caused by a delay in opening his own business when he did not receive the equipment; for the value of an option to purchase 7,500 shares of stock he did not receive; for not being named as an inventor on a patent for an assay device; and for a business opportunity he lost because he did not receive the equipment. Id. On April 10, 2008, Defendants filed a Notice of Removal removing the case to federal court. Id. On December 1, 2009, this Court granted summary judgment in favor of Defendants and against Plaintiff on Plaintiff's seventh claim for breach of the employment contract as to the patent for the assay device and Plaintiff's eighth claim for interference with prospective economic advantage. (Doc. # 43 at 21).
On May 21, 2010, the parties filed pretrial disclosures which list the witnesses and exhibits each party expects to introduce at trial. (Docs. # 55-56). On June 4, 2010, Defendants filed their objections to Plaintiff's pretrial disclosures. (Doc. # 57). Defendants contended that Plaintiff failed to timely disclose witnesses Sean McHugh, Brian Mitchell, Dulce Santos, Mike Donnelly, Ty Wilson, William E. Rogers, Steven Fait, Robert Dicheck, and Jack Wilkins and Exhibits 14, 15, 40, 49, and 108-143. Id. On June 11, 2010, the Court held a pretrial conference. See Doc. # 60. Following the pretrial conference, the Court set a briefing schedule and hearing date on Defendants' objections. (Doc. # 61). On June 29, 2010, Defendants withdrew their objections to witnesses Sean McHigh, Brian Mitchell, and Steven Fait. (Doc. # 62). On July 8, 2010, Plaintiff withdrew Ty Wilson and Robert Dicheck as witnesses. (Doc. # 63 at 1, n. 1). On July 30, 2010, Defendants withdrew their objections to Plaintiff's Exhibits 109-110 and 143 and as to part of Exhibit 108. (Doc. # 64 at 2, n. 1). The Court held oral argument on the objections on August 6, 2010. At oral argument, Plaintiff withdrew Dulce Santos and Mike Donnelly as witnesses and stated Jack Wilkins would only be used for impeachment. Plaintiff also withdrew Exhibit 49 and the portion of Exhibit 108 to which Defendant objected. Defendants withdrew their objection to Wilkins to the extent he is offered for impeachment purposes.
ANALYSIS
Pursuant to Federal Rule of Civil Procedure 37(c)(1),
If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless. In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard:
(A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure;
(B) may inform the jury of the party's failure; and
(C) may impose other appropriate sanctions. . . .
District courts have "wide latitude" to exercise discretion in applying 37(c)(1). See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). "Implicit in Rule 37(c)(1) is that the burden is on the party facing sanctions to prove harmlessness." Id. at 1107.
Among the factors that may properly guide a district court in determining whether a violation of a discovery deadline is justified or harmless are: (1) prejudice or surprise to the party against whom the evidence is offered; (2) the ability of that party to cure the prejudice; (3) the likelihood of disruption of the trial; and (4) bad faith or willfulness involved in not timely disclosing the evidence.Lanard Toys, Ltd. v. Novelty, Inc., 2010 U.S. App. LEXIS 7585, No. 08-55795, slip op. at 19-20 (9th Cir. Apr. 13, 2010). Reopening discovery or changing the trial date can constitute harm pursuant to Rule 37(c)(1). Hoffman v. Constr. Protective Servs., 541 F.3d 1175, 1180 (9th Cir. 2008). "Unfair surprise" or unnecessary expenditure can also constitute harm. Torres v. City of L.A., 548 F.3d 1197, 1213 (9th Cir. 2008).
I. Document showing price of Inverness Stock (Exhibit 111)
Exhibit 111 is a document which shows the value of Inverness Medical Innovations' stock on various dates. (Doc. # 63-3 at 40-43). Defendants contend Exhibit 111 was produced for the first time on May 28, 2010. (Doc. # 57 at 2). Plaintiff contends that Exhibit 111 "is information available to the general public about the price of Inverness stock between December 2005 and January 2006," which Defendants knew was at issue based on Plaintiff's answer to Defendants' special interrogatories. (Doc. # 63 at 5). Plaintiff contends the information was "equally available to Inverness" and the failure to previously produce the document was harmless. Id. Plaintiff produced Plaintiff's answers to Defendants' special interrogatories dated June 12, 2009 which discuss Plaintiff's damages related to stock options. (Doc. # 63-2 at 2). In their reply, Defendants contend that the fact that this information was public does not render the failure to disclose harmless. (Doc. # 64 at 7).
At oral argument, the parties stated they will attempt to reach an agreement to stipulate to the stock price on the relevant dates. Therefore, the Court defers ruing on the objection.
II. Emails (Exhibits 14, 15, 40)
Exhibits 14, 15, and 40 are emails between Plaintiff and employees of Inverness. (Doc. # 63-3 at 10-18). Defendants contend that Exhibits 14, 15, and 40 were produced for the first time on May 28, 2010. (Doc. # 57 at 2). Plaintiff contends that these document were timely produced. (Doc. # 63 at 3). Plaintiff's counsel states he "personally made copies of these emails and they were produced to Inverness with Manneh's first document production." (Decl. of James C. Mitchell, Doc. # 63-1 at 3). Plaintiff contends that even if Plaintiff had failed to timely to produce these documents, the failure would be harmless because the emails were in Defendants' possession and relate to issues Defendant was previously aware of. (Doc. # 63 at 3).
Exhibits 14 and 15 are emails between Plaintiff and Katie Garrett, Assistant General Counsel for Inverness. (Doc. # 63 at 10-12). These emails discuss whether Plaintiff would take over Inverness's lease on the laboratory where Plaintiff then worked. Id. Exhibit 14, an email sent by Katie Garrett, appears to have been forwarded to Anne Warner, the General Counsel of Inverness, who will testify at trial. See id. at 10. At oral argument, Defendants conceded that they were aware that discussions about the lease were at issue in this case. Exhibit 40 is an email sent by Plaintiff to Defendant David Scott which includes a "Cc" to Jack Wilkins. (Doc. # 63-3 at 14-15). This email discusses possibilities for future collaboration between Plaintiff and Inverness. Id. At oral argument, Defendants conceded that Defendant Scott would testify about this topic. Even if Plaintiff failed to timely disclose these documents, the Court finds that any late disclosure is harmless. There is no element of unfair surprise because the emails deal with topics that Defendants knew were at issue. Defendants' objection is overruled as to Exhibits 14, 15, and 40.
III. Testimony of William E. Rogers and Financial Records (Exhibits 112-117, 122)
Defendants contend that William E. Rogers was not disclosed as a witness. (Doc. # 62 at 1). Plaintiff contends that "Rogers is an accountant who took over helping Manneh prepare the income and expense statements and balance sheets for a former employee of Manneh's new company, Xen BioFluidx, one Elizabeth Markiefka. Markiefka was identified as a witness" in prior disclosures. (Doc. # 63 at 2). Plaintiff states Markiefka moved to Germany in October 2009, ending her employment with Manneh's company. Id. Plaintiff contends his failure to disclose "Rogers as a substitute witness" was substantially justified because prior to 2010, Plaintiff believed Markiefka would testify. Id. Plaintiff states he offered to allow Defendants to depose Rogers. Id. In their reply, Defendants contend that Plaintiff failed to disclose Rogers immediately upon learning that Markiefka would be unavailable to testify. (Doc. # 64 at 5-6). Defendants contend that "the recent disclosure of Mr. Rogers would be used as an end-run around requirements for expert disclosures, particularly given the fact that Mr. Rogers is not an employee of Plaintiff's company, and was merely retained as an accountant." Id. at 6.
Rogers prepared Exhibits 112-117 and 122, which are "2006-20[0]9 income/expense statements" for Plaintiff's business. (Decl. of James C. Mitchell, Doc. # 63-1 at 3). Defendants contend Plaintiff failed to disclose Exhibits 112-116 until May 28, 2010 and Exhibits 117 and 122 until June 2, 2010. (Doc. # 57 at 2). Plaintiff contends that these exhibits were not available before April 2010 and that Defendants will have an opportunity to depose Rogers and Manneh about the records prior to trial. Id. at 5-6. Plaintiff contends that producing Exhibits 112-117 and 122 seven months before trial is sufficient time to allow Defendants to prepare to respond to them. Id. In their reply, Defendants contend that they "should not be punished for Plaintiff's failure to properly investigate his own case and provide timely disclosures." (Doc. # 64 at 9).
The Court concludes that Plaintiff was not "substantially justified" in failing to inform Defendants that it intended to substitute Rogers for Markiefka and in failing to timely disclose the financial records. Plaintiff has conceded that Markiefka stopped working for Plaintiff's company and left the country in October of 2009, eight months before Plaintiff informed Defendants that he intended to change witnesses. As for the financial records, although they were not completed until 2010, there is no extrinsic reason why financial records from 2006 through mid-2009 could not have been prepared before the deadline to turn them over to Defendants. When these documents were prepared was entirely within Plaintiff's control. Plaintiff's failure to timely prepare financial records which Plaintiff knew were central to his pending lawsuit prevented Defendants from knowing the extent of Plaintiff's damages and from hiring an expert to review these records. The Court finds that reopening discovery and forcing Defendants to scramble to find an expert at this late date would be prejudicial. Defendants' objection to the financial records contained in Exhibits 112-117 is sustained. Because the records cannot come into evidence, Rogers cannot testify about the contents of the records. It is not clear whether Plaintiff intended to use Rogers for any other purpose, however, it is Plaintiff's burden to establish that allowing the introduction of any other testimony from Rogers would be harmless. The Court finds that Plaintiff has failed to establish that allowing Rogers to testify would be harmless. Defendants' objection to Rogers' testimony is sustained.
IV. Marketing Materials for Plaintiff's Business (Exhibits 118-121)
Defendants contend Exhibits 118-121 were first produced on May 28, 2010. (Doc. # 57 at 2). Exhibits 118-121 are business documents. (Doc. 63-3 at 76-95). Two of the Exhibits include dates in 2010. ( See Exs. 119-120, Doc. # 63-3 at 89-92). Plaintiff concedes that the documents were "not formally produced until the pretrial disclosures." (Doc. # 63-1 at 3).
Exhibit 118 is entitled "List of Commercial/Grant Opportunities" and appears to be marketing materials for Plaintiff's business. (Doc. # 63 at 76-87). Exhibit 119 is a "Proposed Letter of Intent" addressed to Plaintiff dated "18 February 2010." (Doc. # 63-3 at 89-90). Exhibit 120 is entitled "Novel Time Resolved Fluorescence Platform for Near Patient Diagnostics" and appears to be a summary of a paper presented at a conference which took place in April, 2010. (Doc. # 63-3 at 92). Plaintiff is listed as an author on the paper. Id. Exhibit 120 includes numerous graphs and charts shrunk to fit onto a single page which are difficult to read or illegible. See id. Exhibit 121 is entitled "Time Resolved Fluorescence: A route to high sensitivity, low cost, rapid diagnostic testing." (Doc. # 63-3 at 94). This document was created by and promotes a business called Cambridge Consultants which is located in Cambridge, England. Id.
Although some of the documents appear to have been created in 2010, which might "substantially justify" Plaintiff's failure to produce them before the deadline, Plaintiff did not immediately disclose the documents once they were created. Plaintiff has not explained what these documents are, how or by whom they were created, how they were used by Plaintiff's business, or why they are relevant to the issues at hand. The Court finds that these documents have low probative value and that Plaintiff has failed to carry his burden of establishing that his failure to produce the documents earlier is harmless. The Court finds that without redeposing Plaintiff and possibly consulting an expert, Defendants would be unable to prepare to address these documents at trial because the documents contain technical information. Defendants' objection to Exhibits 118-121 is sustained.
V. Photographs of Plaintiff's Laboratory (Exhibits 123-142)
Exhibits 123-142 are photographs of Plaintiff's laboratory facilities for his business which were taken in April of 2010 and produced to Defendants' attorney on April 15, 2010. See Doc. # 63-3 at 100-103.
Plaintiff did not produce all of the photographs. Instead he provided Exhibit 125 "as an example." See Decl. of James C. Mitchell, Doc. # 63-1 at 4.
Although these photographs were not taken until April of 2010, the Court finds that Plaintiff's failure to take photographs of his own laboratory earlier does not "substantially justify" their late disclosure. When the photographs were taken was entirely within Plaintiff's control. Furthermore, based on the representations of counsel at the oral argument and the sample photograph Plaintiff provided to this Court, it appears that some of the unlabeled photographs depict laboratory equipment which a lay person would be unable to identify. The Court finds that without re-deposing Plaintiff and possibly consulting an expert, Defendants would be unable to prepare to address these photographs at trial. The Court finds that Plaintiff's failure to timely disclose these documents was not harmless. Defendants' objections to Exhibits 123-142 is sustained.
CONCLUSION
IT IS HEREBY ORDERED that Defendants' Objections (Doc. # 57) are SUSTAINED as to Exhibits 112-142 and as to witness William E. Rogers. Defendants Objections are OVERRULED as to Exhibits 14, 15, and 40. The Court declines to rule on Defendants Objection to Exhibit 111 at this time due to the parties' representation that they would likely stipulate to the relevant information contained in that exhibit.