United States District Court, D. Alaska
ORDER RE DEFENDANTS' MOTION TO STRIKE NEW CLAIMS
IN EXPERT REPORT
Sharon
L. Gleason UNITED STATES DISTRICT JUDGE.
Before
the Court are Defendants' Motion to Strike New Claims in
Expert Report at Docket 403 and Third-Party Defendant
Terracon's Joinder in that motion at Docket 404. The
motion is fully briefed.[1] Oral argument was not requested and was
not necessary to the Court's decision.
In its
expert report disclosed on July 21, 2016, the Municipality of
Anchorage (“MOA”) asserted that the sheet piles
should have been galvanized using a hot-dipped coating, but
instead a metalized spray coating was used.[2] Defendants argue
that this disclosure constitutes a new legal theory that
comes too late that substantially prejudices them. They seek
an order precluding Plaintiff from present evidence on or
otherwise pursuing any new galvanization-related claims
pursuant to Federal Rule of Civil Procedure 37. Plaintiff, on
the other hand, contends that it did provide sufficient
notice of its galvanization theory earlier in the
proceedings, and that in any event any delay was harmless or
substantially justified.
Federal
Rule of Civil Procedure 26(e) imposes an affirmative
obligation on a litigant to supplement or correct its
responses to interrogatories “in a timely manner if the
party learns that in some material respect the disclosure or
response is incomplete or incorrect, and if the additional or
corrective information has not otherwise been made known to
the other parties during the discovery process or in
writing.”[3] The civil discovery rules are designed to
make litigation “less a game of blind man's bluff
and more a fair contest with the basic issues and facts
disclosed to the fullest practicable
extent.”[4] The Court must first decide whether
Plaintiff breached its duty to supplement, and, if it has,
what the appropriate remedy should be.
Here, a
claim that the sheet piles were not properly galvanized would
have been responsive to several interrogatories that had been
posed to MOA. MOA argues that it did not disclose a
galvanization theory in these responses because it “was
simply not in a position to identify the galvanization issue
at that time.”[5] The rules do not require MOA to have
disclosed an issue that it was unaware of, but they do
require supplementation when the information becomes known.
In July
2014, MOA served its answers to CH2M Hill Alaska, Inc.'s
First Interrogatories.[6] Among the requests CH2M made was for MOA
to “[d]escribe with particularity every way in which
MOA contends that VECO's work on the Project fell below
the applicable standard of care.”[7] In its response,
MOA did not identify galvanization or spray-on coating as an
issue.
In
August 2014, MOA served its answers to PND's First
Interrogatories.[8] Among the requests PND made was for MOA to
describe and identify MOA's “reasoning, including
but not limited to all facts in support, ” behind its
contention that PND's services were
defective.[9] In its response, MOA did not identify
galvanization or spray-on coating as an issue. Instead, the
response referenced the findings in both the CH2M Hill
Suitability Study and the August 2013 SGH
report.[10]
In
December 2015, MOA served its responses to Terracon's
First Set of Interrogatories.[11] Terracon asked MOA to
“identify all alleged breaches of the standard of care
and all facts supporting each breach.”[12] MOA again
made no reference to galvanization or spray-on coating.
Perhaps foreshadowing this issue, however, MOA's response
noted that it “anticipates that the response to this
Interrogatory will be supplemented and/or amended as the
result of expert analyses and opinions which are not yet
subject to disclosure.”[13]
MOA
does not assert that it supplemented its interrogatory
responses, but it does maintain that the galvanization claim
was otherwise made known to Defendants. MOA contends that it
disclosed the expert report by the deadline set by the Court,
and that the notice in the report “complies with
Federal Rule 26.”[14] The Court acknowledges that MOA
complied with the expert report disclosure deadline. But the
federal rules also require timely supplementation of
interrogatory responses. The disclosure of the galvanization
theory on July 21, 2016 was not timely-it came three years
into this case, just six weeks before the close of fact
discovery and apparently at least several months after MOA
began pursuing this new theory.[15]
MOA
asserts that it was not obligated to inform the other parties
of its galvanization theory prior to the expert disclosure
deadline because the issue had not been fully analyzed by its
experts. But MOA should have disclosed the theory to
Defendants even if had not yet been fully analyzed by its
experts.[16] Earlier disclosure would have permitted
Defendants to obtain their own experts on galvanization and
conduct their own testing of the materials before expert
reports were due. The Court finds that MOA failed to timely
supplement its discovery responses or otherwise inform
Defendants of its new galvanization theory when MOA learned
that in some material respect that its prior responses were
incomplete or incorrect, as required by Rule 26(e).
MOA
maintains that even if the Court finds the disclosure was
untimely, no sanctions should be imposed because its belated
disclosure was “substantially justified” or
“harmless.”[17] The parties agree that the four
factors set out in Lanard Toys Ltd. V. Novelty,
Inc.[18] should guide the Court in determining
whether a violation of a discovery deadline is justified or
harmless.[19] These four factors 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.”[20] MOA advances two
additional factors derived from the Fourth Circuit: (5) the
importance of the evidence; and (6) the nondisclosing
party's explanation for its failure to disclose the
evidence. “[21]
Some of
MOA's arguments are in tension with one another. For
example, it argues that Defendants cannot claim surprise
because MOA adequately flagged the issue in its interrogatory
responses, but it also argues that it was substantially
justified in withholding the information because it did not
know earlier that galvanization was an issue. It argues that
Defendants will not be prejudiced because they were notified
of the theory with six weeks of fact discovery remaining, but
also asserts that the issue is so technically complex that it
required MOA several years and expert witnesses to discover
it.
Turning
to the Lanard Toys factors, MOA argues that
Defendants were not surprised because its interrogatory
answers discussed interlocking mechanisms and incorporated by
reference various external documents, most notably the 2013
CH2M Hill Suitability Study.[22] MOA argues that the study
provided adequate notice that galvanization would be at
issue. But that study does not suggest that galvanization was
at issue;[23] nor, as explained above, do the
interrogatory responses themselves. MOA points to a brief
line of deposition questioning by Terracon's counsel in
November 2015, but those questions-limited as they are-appear
to be focused on budgetary and design problems associated
with galvanization, not design deviation or interlock
strength.[24] And MOA points to its own questioning in
an April 2016 deposition. But those limited questions were
not enough to alert Defendants that Plaintiff would be
asserting that there was a variance from the design
specification by the use of a spray-on coating instead of hot
dip galvanization.[25]
MOA
also suggests that its Complaint provided Defendants with
notice that the interlocking mechanisms would be at issue,
and that this was sufficient notice that galvanization might
be at issue. MOA's Amended Complaint alleges that
“the interlock integrity of the sheet piles in numerous
instances were severely compromised” and that ICRC and
PND had failed to “develop[] during the Project the
necessary inspection protocol to verify interlock
integrity.”[26] It also alleges that some of the
sections “have dramatic defects including . . .
unzipped interlocks.”[27] But each of these allegations
is clarified and limited by MOA's responses to various
Defendants' interrogatories, which focus on design work
and over-driving the piles, not on galvanization. To the
extent that these allegations in the Amended Complaint might
suggest that a failure to use hot-dip galvanization was being
alleged, MOA did not advance such a theory when directly
asked in interrogatories what theories it was advancing. In
sum, the Court finds that the prejudice and surprise to
Defendants is considerable.
MOA
asserts that Defendants can cure any prejudice through
rebuttal expert reports. But, as MOA points out,
galvanization “is a highly technical issue requiring
expert testimony, ”[28] and not all experts are
experts in either galvanization or its effects on interlock
integrity. Because Defendants were not timely apprised that
galvanization would be at issue, they evidently did not
retain experts to opine on it. And it is likely that further
fact discovery would be needed, as the subject was not
meaningfully explored during the extensive fact depositions
that have now concluded. For additional fact discovery to
occur, for Defendants to find and retain new experts, for
those experts to conduct the appropriate tests, and for those
experts to write up their reports could take months, but
rebuttal reports are now due on September 16, 2016.
Defendants do not have a meaningful ability to cure the
prejudice.
The
Court also finds there to be a high likelihood of disruption
of the trial if the claim were to be permitted, as any cure
would likely require an extension of discovery deadlines to
allow Defendants to adequately address this issue. Moreover,
Defendants have plausibly contended that the new claims could
well require the joinder of new parties that were directly
involved with the galvanization, [ ...