Opinion
Case No.: CV 06-06213-AB (JCx)
April 7, 2016, Decided. April 7, 2016, Filed
For Gary Grabek, Mark A Geuder, Dwite Russell, Julie Spicer, individually and on behalf of all those similarly situated, Plaintiffs: Daniel L Keller, LEAD ATTORNEY, Keller Fishback and Jackson LLP, Tarzana, CA; G Cresswell Templeton, III, William A White, LEAD ATTORNEYS, Hill Farrer and Burrill LLP, Los Angeles, CA; Michael A Wolff, Nelson G Wolff, Sean E Soyars, Troy A Doles, LEAD ATTORNEYS, PRO HAC VICE, Schlichter Bogard and Denton LLP, St Louis, MO; Ethan D Hatch, Heather Lea, Kurt C Struckhoff, Stephen M Hoeplinger, PRO HAC VICE, Schlichter Bogard and Denton LLP, St Louis, MO; Mark G Boyko, PRO HAC VICE, Schlichter Bogard and Don LLPent, St Louis, MO; Mary Ellen Signorille, PRO HAC VICE, AARP Foundation Litigation, Washington, DC.
For Richard Black, Andrew Heidecker, Plaintiffs: Daniel L Keller, Keller Fishback and Jackson LLP, Tarzana, CA; Ethan D Hatch, Kurt C Struckhoff, Nelson G Wolff, Stephen M Hoeplinger, PRO HAC VICE, Schlichter Bogard and Denton LLP, St Louis, MO; Mark G Boyko, PRO HAC VICE, Schlichter Bogard and Don LLPent, St Louis, MO; William A White, Hill Farrer and Burrill LLP, Los Angeles, CA.
For Thomas E. Perez, Secretary of Labor, U.S. Department of Labor, Movant: Boris Orlov, LEAD ATTORNEY, US Dept of Labor, Office of the Solicitor, Los Angeles, CA.
For Northrop Grumman Corporation Savings Plan Administrative Committee, Northrop Grumman Corporation Savings Plan Investment Committee, J Michael Hateley, as Corporate Vice President and former Chief Human Resources and Administrative Officer, Ian Ziskin, as Chair of the Administrative Committee and Corporate Vice President and Chief Human Resources and Administrative Officer, Dennis Wootan, as Secretary of the Administrative Committee, Ryan Hamlin, as Corporate Director of Investments and as member of Investment Committee, Rose Mary Abelson, as Member of the Investment Committee, Defendants: Nancy G Ross, LEAD ATTORNEY, PRO HAC VICE, Mayer Brown LLP, Chicago, IL; Brian D Netter, PRO HAC VICE, Mayer Brown LLP, Washington, DC; Dale J Giali, Mayer Brown LLP, Los Angeles, CA; Laura R Hammargren, Samuel P Myler, Sarah E Reynolds, Vincent J Connelly, PRO HAC VICE, Mayer Brown LLP, Chicago, IL.
For Ronald G Dean, Mediator (ADR Panel): Ronald Dean, Ronald G Dean Law Offices, Pacific Palisades, CA.
For Margaret A Levy, Mediator (ADR Panel): Margaret Levy, Manatt Phelps and Phillips LLP, Los Angeles, CA.
CIVIL MINUTES - GENERAL
Proceedings: [In Chambers] Order GRANTING Plaintiffs' Motion for Leave to Substitute Expert Witness (Dkt. No. 617)
Before the Court is Plaintiffs' Motion for Leave to Substitute Expert Witness ("Motion"), filed January 20, 2016. Dkt. No. 617. Defendants timely filed their Opposition to the Motion on February 1, 2016, and Plaintiffs timely filed their Reply on February 8, 2016. Dkt. Nos. 626-29. The Court heard oral argument on February 22, 2016 and took the matter under submission. Dkt. No. 637. For the following reasons, the Court GRANTS Plaintiffs' Motion.
I. BACKGROUND
Plaintiffs seek leave to call David J. Witz ("Witz") as their rebuttal expert witness at trial in place of Paul I. Kampner ("Kampner"), who died on September 25, 2011 after Plaintiffs timely disclosed him as their rebuttal expert on January 5, 2011. See Mot. at 1. Plaintiffs did not disclose Witz as their replacement for Kampner until December 24, 2015 but argue that the Court should allow the substitution nonetheless because, based on the timing of the summary judgment briefing and rulings, Plaintiffs have acted diligently in seeking this substitution and their four-year delay has not prejudiced Defendants. Mot. at 3-5.
The Parties do not dispute that, after several continuances, the deadline for the parties to disclose rebuttal experts was January 5, 2011 and Plaintiffs timely disclosed Kampner as a rebuttal expert witness on January 5, 2011. See Mot. at 1; Opp. at 2; see also Dkt. Nos. 166, 334, 345.
To be sure, the summary judgment phase in this litigation lasted an abnormally long time. After several continuances of the briefing schedule, Plaintiffs first presented Kampner's opinions in support of their April 11, 2011 Opposition to Defendants' Motion for Summary Judgment. Dkt. No. 423; see also Dkt. No. 391. The Court heard oral argument on the Motion for Summary Judgment and related motions to strike experts on May 16, 2011 and took the matters under submission. Dkt. No. 485. No pretrial or trial dates were set at the time — the Court had vacated the previous dates and ordered that they would be set after the Court ruled on the Motion for Summary Judgment. See Dkt. No. 369. As a result, between May 16, 2011 and February 14, 2014, the case lingered in stasis, except for a few supplemental briefs filed by the parties. Dkt. Nos. 490-521, 523-29. On February 14, 2014, the Court issued an Order indicating it would postpone its ruling on the Motion for Summary Judgment until the Supreme Court issued its ruling in Tibble v. Edison International. Dkt. No. 534. The parties filed a joint notice of the Supreme Court's ruling in Tibble on May 20, 2015. Dkt. No. 597. The case then remained dormant for another six months. On November 24, 2015, the Court issued its Order granting in part and denying in part Defendants' Motion for Summary Judgment and setting the pretrial conference for February 29, 2016 and trial for March 29, 2016. Dkt. No. 606. Two weeks later, the parties filed cross-motions for reconsideration. Dkt. Nos. 607, 611.
A month after the Court issued its Order on the Motion for Summary Judgment, Plaintiffs disclosed Witz as Kampner's replacement and produced Witz's report. Ex. 1 in support of Mot., Dkt. No. 617-1. The case was transferred to this Court on December 28, 2015, and the Court again vacated the pretrial conference and trial dates until it could rule on the parties' motions for reconsideration. Dkt. No. 614-15. Plaintiffs then filed the present Motion on January 20, 2016, seeking the Court's leave to substitute Witz at trial for Kampner. Dkt. No. 617.
II. LEGAL STANDARD
District courts in the Ninth Circuit generally have approached motions to substitute experts after the deadline in one of two ways. Either they construe the motion as a motion to amend the court's scheduling order under Rule 16(b) of the Federal Rules of Civil Procedure or they construe the motion as an untimely designation under Rule 26(a) of the Federal Rules of Civil Procedure and determine whether to sanction the untimely disclosure under Rule 37(c) of the Federal Rules of Civil Procedure. Compare Fidelity Nat'l Finc., Inc. v. Nat'l Union Fire Ins. Co., 308 F.R.D 649, 652 (S.D. Cal. 2015) and Park v. CAS Enterprises, Inc., No. 08-cv-00385, 2009 U.S. Dist. LEXIS 108160, 2009 WL 4057888, at *2-3 (S.D. Cal. Nov. 18, 2009) with Nijjar v. Gen. Star Indem. Co., No. 12-cv-08148, 2014 U.S. Dist. LEXIS 8722, 2014 WL 271630, at *2 (C.D. Cal. Jan. 2014).
In this case, Rule 16(b) provides the appropriate framework. Plaintiffs' Motion effectively asks the Court to modify the prior expert disclosure deadline of January 5, 2011 and allow them to name a new rebuttal expert, and by offering Witz for deposition, Plaintiffs' Motion also acts a request for a limited re-opening of expert discovery. See Mot. at 3-4. Rule 26(a)(2)(D) requires that a party must disclose its experts "at the times and in the sequence that the court orders." Thus, if the Court decides to modify its scheduling order, Plaintiffs' substitution will comply with the requirements of Rule 26(a) and will not trigger the sanctions in Rule 37(c)(1), which apply only "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e) . . . ."
Contrary to Defendants' suggestion, the court's reasoning in Zone Sports Ctr., LLC v. Rodriguez, No. 1:11-CV-00622-SKO, 2016 U.S. Dist. LEXIS 6186, 2016 WL 224093, at *2 (E.D. Cal. Jan. 19, 2016) is not persuasive. There, the court held that, under Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992), a motion to substitute an expert after the deadline requires analysis under both Rule 16 and Rule 37 — first looking to whether the moving party has shown good cause to amend the scheduling order under Rule 16(b) and then looking to whether the moving party has shown reason for relief from the "self-executing" sanctions imposed for late disclosure in Rule 37(c). Zone Sports Ctr., LLC, 2016 U.S. Dist. LEXIS 6186, 2016 WL 224093, at *2-3. The Ninth Circuit's holding in Johnson does not require this construction, however. Rather, in Johnson, the court held only that before obtaining leave to amend under Rule 15(a), the plaintiff first needed to show good cause to amend the scheduling order under Rule 16(b). 975 F.2d at 608. Unlike Rule 15(a), which imposes additional requirements for leave to amend, Rule 37(c) concerns only noncompliance with Rule 26(a) and (e), which is irrelevant once the Court decides to modify its scheduling order to make a disclosure timely under Rule 26(a).
Under Rule 16(b)(4), "[a] schedule may be modified only for good cause and with the judge's consent." Thus, "the focus of the inquiry is upon the moving party's reasons for seeking modification." Johnson, 975 F.2d at 608. Secondarily, "the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion." Id. But ultimately, if the moving party was not diligent, "the inquiry should end." Id.
III. DISCUSSION
A. Application of Rule 16(b)
"Death of an expert witness falls squarely within the category of circumstances that require a late disclosure; the only question regarding justification is whether the party waited too long to notify the Court of the need for a new expert." Morel v. Daimler-Chrysler Corp., 259 F.R.D. 17, 20 (D.P.R. 2009); see also Brooks v. Cty. of San Joaquin, No. 2:09-CV-03343, 2012 U.S. Dist. LEXIS 167435, 2012 WL 5928416, at *1 (E.D. Cal. Nov. 26, 2012) ("Courts have approved supplemental disclosures where a critical expert witness has died after the deadlines have passed for expert discovery disclosure."). Here, it is undisputed that Plaintiffs could not have named Witz as their expert by the January 5, 2011 deadline because Kampner did not die until September 2011. See Mot. at 3. But this is not question under Rule 16(b) — rather, under Rule 16(b)'s "good cause" standard, the Court must consider whether, after Kampner died, Plaintiffs acted diligently disclosing Witz and bringing the present Motion. See Johnson, 975 F.2d at 609.
Plaintiffs argue they have displayed sufficient diligence because "it was reasonable for Plaintiffs to wait until the Court decided summary judgment to determine whether a substitute would even be necessary for trial, and on what issues." Reply at 5. The Court agrees. Relying extensively on Fidelity National, 308 F.R.D. at 650, Defendants argue that Plaintiffs have not been diligent because they waited over four years to disclose Witz after Kampner died based purely on a tactical decision to wait until after the Court issued its summary judgment ruling. Opp. at 4-5. The holding in Fidelity National is largely distinguishable, however. In that case, the Court denied the defendant's request to substitute an expert after defendant waited nine months to notify the court and the opposing party that the defendant's original bad faith expert had suffered an incapacitating heart attack. 308 F.R.D. at 650-52. The defendant argued that it had acted diligently because its original expert reported his incapacity after the Court's ruling on the parties' Daubert motions and while the parties' summary judgment motions were pending and it was waiting on the outcome of the parties' motions for summary judgment to see if it still needed to present bad faith expert testimony at trial. Id. The court concluded, however, that the defendant's delay was more tactical than pragmatic. The court noted that the defendant delayed an additional five months after the court had ruled on the motions for summary judgment and indicated that bad faith testimony was still relevant at trial. Id. It also noted that, because the parties and the court had relied on the original expert's testimony during summary judgment, the defendant appeared to be seeking a tactical advantage by substituting an expert whose opinion could respond to the Court's rulings. Id. at 652, 654. Finally, it recognized that the defendant had engaged in several conferences with the opposing party and even attended a scheduling conference with the magistrate judge without ever disclosing that its original expert would need to be replaced and expert discovery re-opened, thus further showing the defendant's strategic intent. Id. at 654.
Here, in contrast, Plaintiffs' delay appears to be more pragmatic than tactical. Unlike the defendant in Fidelity National, Plaintiffs disclosed their replacement expert within one month of receiving the Court's Order on the Motion for Summary Judgment, and until receiving that Order, the case had been almost entirely dormant since May 2011, with no significant conferences reported by the parties and with no pretrial or trial dates pushing the parties to act. See Opp. at 2 (acknowledging lack of activity in the case between 2011 and 2015). And unlike the summary judgment decision in Fidelity National, the Court in this case expressly declined to rely on any expert opinions and denied the parties' motions to strike as moot, giving Plaintiffs no real strategic advantage in waiting until after the Court issued its summary judgment order to expend resources on a new expert. See Order re Motion for Summary Judgment at 65 n.182.
At most, Plaintiffs' delay in this case is similar to the defendant's delay in Fidelity National in that, upon learning of Kampner's death, Plaintiffs never warned the Court or Defendants that substitution might be necessary depending on the outcome of the Motion for Summary Judgment. On this point, the court in Fidelity National observed that "[d]iligent counsel would have recognized that substituting a new expert and reopening discovery nearly three years after the discovery deadline would be a major setback to the parties' trial preparations and the Court's pretrial case management." 308 F.R.D. at 653. This case, however, does not present the same concerns. The case has remained in a state of suspended animation for nearly four years. As a result, the Court has not yet engaged in significant pretrial case management, and reopening discovery to allow for the single deposition of a replacement expert will not likely upend the parties' trial preparations, particularly where the Court can tailor the new trial date to avoid this result. Plaintiffs' decision to delay in substituting Witz appears appropriate given the unique four-year hiatus in this case and given their prompt disclosure of Witz after the Court issued its summary judgment order. The Court thus finds Plaintiffs have shown good cause for the Court to modify its scheduling order under Rule 16(b) and GRANTS Plaintiffs leave to substitute Witz in Kampner's place.
B. Defendant's Objections to the Witz Report
Defendants further argue in their Opposition that even if Plaintiffs have been diligent in identifying Witz, his proffered testimony is improper because it exceeds the scope of Kampner's original report and, in doing so, exceeds the proper scope of rebuttal. Opp. at 7-9. As an initial matter, such objections are more properly the subject of a motion in limine, which would allow the Court to evaluate the scope of Witz's proposed testimony with complete briefing from the parties and with the benefit of Witz's deposition testimony.
Even so, the Court agrees that "[t]he purpose of allowing substitution of an expert is to put the movant in the same position it would have been in but for the need to change experts; it is not an opportunity to designate a better expert." U.S. ex rel. Agate Steel, Inc. v. Jaynes Corp., No. 2:13-CV-01907, 2015 U.S. Dist. LEXIS 45379, 2015 WL 1546717, at *2 (D. Nev. Apr. 6, 2015). Thus, to minimize the risk of prejudice to Defendants, the Court will limit Witz's testimony to the subject matter covered in Kampner's report, and Witz "may not testify in any manner that is contrary to or inconsistent" with Kampner's report. Fujifilm Corp. v. Motorola Mobility LLC, 2014 U.S. Dist. LEXIS 162733, 2014 WL 8094582, at *2 (N.D. Cal. Nov. 19, 2014). In other words, Witz's opinions must be "substantial similar" to Kampner's opinions for the Court to allow his testimony. See id.; see also, e.g., Jaynes Corp., 2015 U.S. Dist. LEXIS 45379, 2015 WL 1546717, at *2 ("The Court agrees with American Steel that it is not appropriate in this case to mandate that the new expert 'rubber-stamp' the expert report previously provided. Nonetheless, the new expert report may not provide an opinion that is contrary to or inconsistent with Mr. Hafeez's opinion. While the opinions need not be identical, it is reasonable to limit the new expert to findings that are substantially similar to those presented by Mr. Hafeez. By limiting the new opinion in this manner, any prejudice to Jaynes should be minimized.") (citations omitted).
Defendants' objections are directed only towards paragraphs 14 through 23 in Witz's report, which purportedly contain Witz's rebuttal to the opinions offered by Defendants' expert Michael Hager ("Hager"). See Opp. at 7-9. With the exception of paragraphs 18 through 20, Witz's rebuttal to Hager is substantially similar to Kampner's rebuttal to Hager, keeping in mind that "the substitute is not normally required to simply adopt the prior expert's conclusions verbatim . . . . Rather, the substitute expert 'should have the opportunity to express his opinions in his own language after reviewing the evidence and performing whatever tests prior experts on both sides were allowed to perform.'" Lincoln Nat. Life Ins. Co. v. Transamerica Fin. Life Ins. Co., No. 1:04-CV-396, 2010 U.S. Dist. LEXIS 103744, 2010 WL 3892860, at *3 (N.D. Ind. Sept. 30, 2010) (quoting Morel, 259 F.R.D. at 22); see Exhibit 2 in support of Opp. to Mot. at ¶¶ 14-23, Dkt. No. 634-2. Paragraphs 18 through 20 in Witz's report, however, appear to go far beyond the scope of Kampner's report and offer new opinions concerning Northrup's failure to meet requirements to avoid a prohibited transaction. Id. at ¶¶ 18-20. Kampner offers no such opinions in his rebuttal to Hager. See Exhibit 1 in support of Opp. to Mot. at ¶¶ 13-16, Dkt. No. 634-1. Accordingly, the Court tentatively EXCLUDES the opinions offered in paragraphs 18 through 20 in Witz's report as exceeding the scope of Plaintiffs' substitution.
IV. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs' Motion. The Court MODIFIES the deadline for disclosure of rebuttal experts to allow Plaintiffs to substitute David J. Witz as a rebuttal expert in place of Paul Kampner and RE-OPENS expert discovery for the sole purpose of allowing Defendants an opportunity to depose Witz in advance of his testimony at trial. The Court tentatively EXCLUDES the opinions offered in paragraphs 18 through 20 in Witz's report, without prejudice to an offer of proof from Plaintiffs as to why such opinions should be admitted at trial. The Court will set a deadline for Defendants' deposition of Mr. Witz in its separate order resetting the pretrial and trial dates in this action.
IT IS SO ORDERED.