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noting under New York law "courts routinely hold that delays of days or even weeks in making required periodic payments may constitute non-material breaches . . . ."
Summary of this case from Ramos v. Dep't of Corr.Opinion
10 Civ. 0142 (MHD)
10-21-2013
KEVIN FITZPATRICK, et al., Plaintiffs, v. AMERICAN INTERNATIONAL GROUP, INC., et al., Defendants.
MEMORANDUM & ORDER :
Plaintiffs have applied, by letter dated October 14, 2013, for leave to submit a rebuttal expert report on October 25, 2013 that would respond to the opinions of defendants' expert, Mr. Marc B. Sherman, concerning industry practice. (Oct. 14, 2013 letter of Michael Petrella, Esq.; see also Oct. 16, 2013 letter of Michael Petrella, Esq.). Defendants of course oppose this application. (Oct. 15, 2013 letter of Jonathan Rosenberg, Esq.). For the reasons that follow, plaintiffs' application is denied.
Mr. Sherman provided his Rule 26(a)(2)(B) report, addressing both damages and industry practice, on September 3, 2013, in conformity with the court's July 23, 2013 scheduling order. Plaintiffs served a rebuttal report on the due date -- September 24, 2013 -- which discussed damages but did not address the industry-practice portion of the Sherman report.
The facts most pertinent to this controversy are discussed in detail in our October 11, 2013 Memorandum and Order (Dkt. No. 495 ("Oct. 11 Mem. & Order")), which denied a prior motion by plaintiffs to preclude Mr. Sherman from testifying concerning industry practice. See Fitzpatrick v. AIG, 2013 WL 5652629, at *5-7 (S.D.N.Y. Oct. 15, 2013). In brief, defendants' counsel represented in tentative terms in April 2013, and then definitively in July 2013, that Mr. Sherman, in preparing his forthcoming Rule 26(a)(2)(B) report, would address not only damages but also industry practice. Despite the fact that defendants' counsel made these representations at both the April 22, 2013 and the July 23, 2013 conferences, as well as in correspondence to the court that preceded the July conference, plaintiffs neither objected nor even addressed the matter at either conference or in correspondence. At the July 23 conference, after hearing from both sides, we set a schedule for the parties' expert reports. We required initial reports on September 3 and rebuttal reports on September 24, and also established deadlines for expert depositions (to end October 1), Daubert motions (which, at that time, were due October 15) and a joint pretrial order (due October 22), and we set the trial to begin November 4, 2013.
By recent orders we extended to deadline to complete expert depositions to October 11, 2013 and the due date for Daubert motions to October 18, 2013, with opposition papers due by October 24, 2013. (See Endorsed Order, dated Oct. 8, 2013 (Dkt. No. 488)).
On September 3, 2013, defendants provided Mr. Sherman's report, which, as promised, dealt with both damages and industry practice, while plaintiffs' expert addressed only damages. Plaintiffs then waited until September 20, 2013, four days before the due date for rebuttal reports, to move to preclude the proposed industry-practice testimony of Mr. Sherman. Although plaintiffs then provided a rebuttal report by their own expert on September 24, as scheduled, they did not proffer a rebuttal of Mr. Sherman's industry-practice opinions.
With briefing of plaintiffs' preclusion motion completed on or about October 2, we denied the motion on October 11, 2013. In doing so, we rejected the plaintiffs' arguments, which were principally (1) that defendants had waived any right to proffer industry-practice expert opinions by not including them in the interim damage reports that the experts had exchanged in the Spring of 2011, (2) that the court's July 23, 2013 scheduling order for initial and rebuttal reports had not authorized defendants to address the industry-practice issue, and (3) that to allow Mr. Sherman to opine on industry practice would cause plaintiffs "massive" prejudice by forcing them to deal with "broad new issues" as they prepared for the November 4 trial. (Pls.' Reply Mem. in Supp. of Preclusion (Dkt. No. 476) ("Pls.' Preclusion Reply") at 13). See Fitzpatrick, 2013 WL 5652629, at *5-7.
In the wake of our decision, plaintiffs made their current application, on October 14, 2013. In sum, while insisting that the trial start as scheduled on November 4, 2013, they ask leave to name a new expert witness and to provide an industry-practice report from him by October 25, 2013 -- only ten days before the trial starts -- with leave for defendants to submit a response by November 1, 2013 and to depose the plaintiff's new expert at some point before he testified. While mentioning these dates, plaintiffs' application did not suggest a time-frame for defendants to move to preclude under Daubert, although unavoidably that would have to occur during the trial.
In plaintiffs' most recent submission they report having retained a professor at the University of Chicago as their expert witness on industry practice. (Petrella Oct. 16, 2013 letter at 3).
Defendants have opposed the application. They note that plaintiffs have been on notice since April, and at the latest since mid-July, that the defendants' expert would opine on industry practice. They further point out that the schedule set by the court in July 2013 gave full notice when a rebuttal report would be due, and that plaintiffs deliberately chose not to address the industry-practice portion of Mr. Sherman's report. They note as well that the preclusion motion by plaintiffs was meritless, and they argue that its filing could not substitute for a rebuttal report. In opposing plaintiffs' proposed last-minute delivery of a new report by a new expert, they further observe that such a procedure would severely prejudice them, since they would be faced with the necessity of deposing this individual in the midst of last-minute trial preparation, and that plaintiffs' proposed schedule would even deprive them of the ability to make a Daubert motion until some time in the midst of trial.
In plaintiffs' reply, the only explanation they offer for their failure to comply with the court's schedule for expert reports is the assertion that they believed "in good faith" that their preclusion motion was merited. (Petrella Oct. 16, 2013 letter at 1). As for defendants' observation that the proposed schedule would leave no time for a Daubert motion until after trial had started, plaintiffs suggest that defendants could so move anytime after they received the new expert's report.
ANALYSIS
Under Rule 26(a)(2)(D), the time frame for submission of expert reports in this case was defined by our July 23, 2013 scheduling order. There is no dispute that, with regard to industry practice, plaintiffs neither complied with that order nor timely sought its modification. Instead, they simply chose to file a preclusion motion and, in effect, hope for the best.
For reasons stated in our October 11 decision, plaintiffs' preclusion motion was plainly meritless. As we noted there, given defendants' repeated and unambiguous representations that they intended their expert to address industry practice, the silence of plaintiffs conveyed the absence of any dispute as to defendants' entitlement to do so, and hence the court had absolutely no reason, in setting the schedule for the expert reports, to preclude either side from addressing any relevant issue in those reports. By the same token, then, it would have been manifestly unreasonable to read our order in any other way. In short, although plaintiffs' counsel may have had a good-faith belief in the merits of their preclusion motion, that belief was certainly not reasonable.
We note as well that by keeping silent until September 20, 2013 on their theory that the 2011 interim-report schedule precluded any subsequent expansion of the experts' subject matter, plaintiffs contrived to give themselves an argument that they would not have had in July 2013 -- that the approach of the trial in less than two months meant that they would be burdened (and hence prejudiced) by having to find a new expert to address purportedly new subject matter. (See Pls.' Preclusion Reply 13). Although this prejudice argument was entirely groundless, the timing of plaintiffs' actions raises at least the suspicion of deliberate game-playing. See Fitzpatrick, 2013 WL 5652629, at *6-7 (suggesting that it was defendants, not plaintiffs, who were being ambushed).
There remains for consideration what effect plaintiffs' non-compliance with the schedule for expert reports should have on their request for the nunc pro tunc modification of that schedule. The governing standards are found in Rule 37(c)(1), which states:
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,
As noted, by not addressing industry practice in either of their expert reports, plaintiffs failed to comply with Rule 26(a), thus triggering the coverage of Rule 37(c)(1). For reasons noted, that failing was not "substantially justified" by plaintiffs' intention to file the fundamentally flawed preclusion motion. Their failing is also obviously not harmless, since it deprived defendants of timely access to the expert analysis that plaintiffs now seek to utilize at trial.(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, including any of the orders listed in Rule 37(b)(2)(A)(i)-(vi).
The remaining question is whether there are sufficient countervailing factors that would justify the court exercising its discretion to excuse plaintiffs' non-compliance with our scheduling directive. See, e.g., Design Strategy, Inc. v. Davis, 469 F.3d 284, 296-98 (2d Cir. 2006) (citing cases). The pertinent considerations include "(1) the party's explanation for the failure to comply with the [disclosure requirement]; (2) the importance of the testimony of the precluded witness; (3) the prejudice suffered by the opposing party as a result of having to meet the new testimony; and (4) the possibility of a continuance." Id. at 296 (quoting Patterson v. Balsamico, 440 F.3d 104, 117 (2d Cir. 2006)) (second and third brackets added).
In this case these considerations do not support plaintiffs' application. As noted, plaintiffs' explanation for their default is manifestly unpersuasive. Knowing at the very latest by mid-July 2013 that defendants intended to address industry practice in their September 3 expert's report, plaintiffs had the option either to pursue the subject in their own initial report if they thought the issue significant, or, alternatively, to address it in a rebuttal report on September 24. They did neither, and instead chose to rely on a theory, embodied in their preclusion motion, that was plainly untenable. Morever, they have offered no justification for delaying their objection on this point, a delay that may well have been designed to give them a tactical advantage.
As for the importance of the industry-practice evidence, we infer from plaintiffs' failure to address the issue in either of their September expert reports that they viewed it as not significant, a point reinforced by the deposition testimony of their expert, who suggested that it was irrelevant. (Decl. of Daniel S. Shamah, Esq., dated Oct. 15, 2013 Ex. A -- Chandler Dep. at 337). Moreover, in seeking to preclude the industry-practice testimony of Mr. Sherman, defendants argued that it was of minor significance and indeed "irrelevant". (See Pls.' Preclusion Reply 13).
The remaining considerations point in the same direction. As noted, the prejudice to defendants of plaintiffs' proposed new arrangement would be significant. Plaintiffs have had Mr. Sherman's report in hand now for more than six weeks, and propose to give themselves nearly another week before proffering a responding report. Apart from more than doubling the time that they would have had to do a rebuttal had they complied with the scheduling order, they would effectively deprive defendants of the weeks allotted to them under the governing schedule to digest and prepare to respond to the plaintiffs' expert's report and deposition testimony prior to trial. Moreover, the relief that plaintiffs seek would require defendants' counsel and expert (1) to devote significant time in the immediate run-up to the trial to an assessment, analysis, critique and response to the eve-of-trial report of plaintiffs' new expert, (2) to invest substantial time in that same critical period to preparing for, conducting and assessing the deposition of plaintiffs' new expert, and (3) to take time at some point later on -- undoubtedly after trial starts -- to prepare a Daubert motion. Apart from these disruptions, the plaintiffs' proposal would have the further practical disadvantage for defendants that they could not know by the start of trial whether the plaintiffs' new expert's testimony would be allowed in (depending on mid-trial resolution of a Daubert motion) and hence they could not meaningfully address it either in opening or in shaping trial testimony before resolution of the delayed Daubert motion.
We note in passing, and by way of contrast, that as early as July 2013 plaintiffs were insisting that defendants should not be permitted to add a new expert to the case, at least in part it seems, because that would be not only untimely but unduly burdensome for plaintiffs to respond to. (July 17, 2013 letter of Michael Petrella, Esq. at 4 n.4). As we have earlier observed, defendants' attorneys eschewed any such intention, reiterating that their previously designated expert would opine about industry practice, a representation that drew no objection from plaintiffs. See Fitzpatrick, 2013 WL 5652629, at *3-4 (referring to July 17 and July 22, 2013 Petrella letters, July 19, 2013 letter from Jonathan Rosenberg, Esq., and July 23, 2013 conference).
On the subject of a possible adjournment, we note that plaintiffs have long been insistent on pushing this case to trial by November 4 (e.g., July 23, 2013 Tr. at 16, 28, 34), and in their current motion they continue to insist on that schedule. We have agreed with them on this point, and in any event see no reason to disrupt current trial preparations to save plaintiffs from the consequences of their own choices.
Finally, although we have recognized the governing policy of promoting merits-based disposition of cases and have applied it to justify adjustments in court-ordered deadlines, see, e.g., Harkabi v. Sandisk Corp., 2012 WL 2574717, at *4 (S.D.N.Y. June 20, 2012) (quoting Wechsler v. Hunt Health Sys., Inc., 381 F. Supp.2d 135, 155 (S.D.N.Y. 2003)), application of that principle is not without limits. Indeed, to grant plaintiffs the relief that they now seek would have most perverse consequences. Rather than comply with the court's scheduling order, they instead pursued a tactic of silence on what they later claimed was impermissible conduct by defendants and then pressed a last-minute groundless preclusion motion premised, in no small part, on their contention of irremediable prejudice. Having engaged in these tactics, plaintiffs would have themselves rewarded not only with excusal from the normal consequence of ignoring the court's schedule, but with the added benefit of imposing substantial additional burdens on defendants, all the while setting at naught the court's ability to control the process and timing of this litigation. We decline to endorse this mode of proceeding.
CONCLUSION
For the reasons stated, plaintiffs' application for authorization to designate a new expert and proffer a report by October 25, 2013 is denied. Dated: New York, New York
Given this outcome, we see no need for the alternative measures made available by Rule 37(c)(1)(A)-(C). --------
October 21, 2013
/s/_________
MICHAEL H. DOLINGER
UNITED STATES MAGISTRATE JUDGE Copies of the foregoing Order have been sent today to: Michael Petrella, Esq.
Fax: (212)682-4437 Jonathan Rosenberg, Esq.
Fax: (212) 326-2061