Opinion
99 Civ. 9854 (CSH)
July 11, 2001
MEMORANDUM OPINION ORDER
This case is before the Court on a motion by plaintiff Virgin Enterprises, Ltd. ("VEL") to strike a number of reports and affidavits submitted by defendants (collectively referred to as "WLI") in support of their opposition to the plaintiff's pending motion for attorney's fees.
For the reasons that follow, the Court denies VEL's motion in its entirety.
BACKGROUND
The history of this case is found in the Court's prior Memorandum Opinion and Order, Virgin v. American Longevity, 99 Civ. 9854, 2001 U.S. Dist. Lexis 2046 (S.D.N.Y. Feb. 28, 2001), familiarity with which is assumed. Only the immediate procedural history relevant to deciding this motion will be discussed infra.
On March 23, 2001, a final judgment and permanent injunction order was entered in this case. VEL recovered a judgment on each of its claims. Shortly thereafter VEL filed a motion for attorney's fees. The Court ordered bifurcation of that motion on April 24, 2001, to consider first WLI's liability vel non for attorney's fees, and second (in case of need) the recoverable amount thereof. The first issue was fully submitted on May 14, 2001. Accompanying the plaintiff's reply papers in support of its motion for attorney's fees was the present motion to strike seven items submitted by the defendants on behalf of its papers in opposition to the plaintiff's motion for fees.
The plaintiff asks the Court to strike the following documents, basing its motion upon the Court's Pre-Trial Order dated December 22, 2000; Rule 37(c)(1), Fed.R.Civ.P.; and Rule 702, Fed.R.Evid.: (1) Defendants' Opposition to Plaintiff's Motion for Attorney's Fees ("Opposition"), Exhibit 5 "the 4/26/01 Schrauzer Report"; (2) Opposition, Exhibit 5 "the 12/8/00 Oldfield Draft Expert report"; (3) Opposition, Exhibit 10 "the 4/30/01 Blum and Fulford Expert"; (4) Opposition, Exhibit 19 "the 4/27/01 Schrauzer Report"; (5) Opposition, Exhibit 7 "the 4/20/00 Affidavit of George Dust"; (6) Opposition, Exhibit 8 "the 4/20/01 Affidavit of Steve Govorchin"; and (7) Opposition, Exhibit 9 "the 4/19/00 Declaration of Ted Laoudis."
VEL contends that WLI's submission of these items, on April 3, 2001, was untimely under the Court's December 22, 2000 Order and Rule 37. VEL additionally argues that Rule 702 precludes acceptance of the Blum Fulford expert report and the April 27, 2001 Schrauzer expert report. None of these arguments has substance. I discuss them seriatim.
First, VEL misunderstands the nature of the Court's December 22, 2000 Order. That Order was a final Pre-Trial Order, requiring the parties to file and serve Pre-Trial Statements setting forth the names of witnesses, fact and expert, and a list of all exhibits the parties intended to "call" or "offer in its case in chief" at the plenary trial on the merits. That Order was not intended to restrict a party's ability to submit additional information, by affidavit or otherwise, on any post-judgment motion that might arise. In fact, the Order itself states, "the requirements of the Pre-Trial Statements extend only to evidence the parties intend to offer in their cases in chief. . . ." Accordingly, the Court's December 22, 2000 Order is not a basis for striking the items submitted by WLI.
Second, VEL argues that the Federal Rules of Civil Procedure provide a basis for excluding these items. The Court looks first to Rule 54, under which VEL moves for attorney's fees. Rule 54(d)(2) provides that claims for attorney's fees "shall be made by motion" (unless provided for otherwise by statute not applicable here). Rule 54(d)(2)(C) provides that upon "request of a party or class member, the court shall afford an opportunity for adversary submissions with respect to the motion in accordance with Rule 43(e) or Rule 78." Rule 78 is not applicable here. Rule 43(e) provides as follows:
Rule 78 does not apply because this Court does not have a "motion day" and no oral argument has been scheduled for this matter.
When a motion is based on facts not appearing of record the court may hear the matter on affidavits presented by the respective parties, but the court may direct that the matter be heard wholly or partly on oral testimony or deposition.
Rule 43(e) gives the Court discretion to determine the method by which it will decide a given motion. In this instance, the Court has ordered no oral arguments or depositions, but accepts affidavits. VEL cites 10 Moore's Federal Practice § 54.156 (3d ed. 2000) for the proposition that discovery is not typically allowed where the sole issue under consideration is the appropriateness of a fee. However Moore also states that "[t]here are exceptions" to such practice. Id. One such exception, relevant here, is that when "disputed issues of fact are presented by the initial evidentiary submissions, the court may allow discovery on the ground that further development of the facts can resolve those disputed issues." Id. Though the Court has not directed that full blown discovery should occur, there certainly exist "extensive contested issues of material fact" concerning this motion. Id.
As the Court's prior opinions make clear, a critical material fact in this case is whether or not WLI's various actions, for which judgment was entered against it, constitute an "exceptional case" under 15 U.S.C. § 1117 such that an award of attorney's fees would be appropriate. To decide that question, the Court must make judgments about the verity of statements made by WLI with respect to its products, statements which VEL alleges to be fraudulent. That involves a good measure of scientific, or pseudo-scientific in VEL's estimation, literature, all of which can potentially assist the Court in making its decision about attorney's fees. All of WLI's contested submissions ostensibly deal with these scientific questions, and each of them, whether persuasive or not, are relevant to the underlying issue. The question, in short, is one of weight, not admissibility.
VEL relies on Rule 37(c)(1) as a basis for precluding consideration of WLI's contested submissions. That Rule provides:
A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1), or to amend a prior response to discovery as required by Rule 26(e)(2), is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed.
The referenced provisions of Rule 26 require parties to make initial disclosures to one another, including the disclosure of all persons likely to have discoverable information "that the disclosing party may use to support its claims or defenses" and the disclosure of experts "who may be used at trial," and their reports, in a timely fashion. Rule 26(a)(1)(A) (a)(2)(A). VEL argues that because these seven contested items were not identified in a timely fashion pursuant to this Rule, they should not be accepted by the Court as evidence in a post-judgment motion for attorney's fees.
VEL cites no authority for the proposition that Rule 37(c)(1) applies in the context of a post-judgment motion for attorney's fees. Although district courts often award attorney's fees pursuant to Rule 37(c)(1) on the basis of a party's violation of Rule 26, see, e.g., Coleman v. Dydula, 190 F.R.D. 316, 319 (W.D.N.Y. 1999), VEL does not cite, and the Court's research fails to disclose, any case holding or suggesting that documents not produced during pre-trial discovery are consequently precluded on a post-judgment motion for attorney's fees.
The reason for this is obvious. As Moore instructs, "[a] preclusion sanction may not come into play unless there first has been a violation of a disclosure obligation imposed by Rule 26(a) or 26(e)(1)." 7 Moore's Federal Practice at § 37.60[1] (2000). "Exclusion under Rule 37(c)(1) is a form of a sanction, designed to encourage compliance with the disclosure requirements of the Rules and the Court." Schanzer v. United Technologies Corp., 120 F. Supp.2d 200, 206 (D.Conn. 2000). "This [i]s not a case of `sandbagging' an adversary at trial with newly disclosed evidence, nor d[oes] considering the supplementary information defeat the purposes of Rule 37." Id. at 206; 7 Moore's Federal Practice § 37.60[1] (2000) ("purpose of this sanction is to provide parties with an incentive to timely disclose all material evidence in support of their positions that they intend to use . . ."). Rule 37 exists principally to prevent parties from being surprised at trial by evidence not previously disclosed. Id. at 206. It is also "designed, among other things, to prevent delays in discovery." Cheng v. GAF Corp., 713 F.2d 886, 889 (2d Cir. 1983).
In the case at bar, there is no evidence that Rule 26(a) or 26(e)(1) was violated, nor any evidence upon which to question the veracity of WLI's claim that it had no intention of using these items in the litigation prior to VEL's motion for fees. See McNerney v. Archer Daniels Midland Co., 164 F.R.D. 584, 587 (W.D.N.Y. 1995) (preclusion of testimony from expert witness "is drastic sanction" only to be imposed when "the party's conduct represents flagrant bad faith and callous disregard of the federal rules"). VEL was given an opportunity to respond to these seven submissions in their reply brief, which is all that the Rules require. "There was no indication that the late disclosure here was the result of any bad faith or dilatory tactics, but was instead prompted by defendant's motion," in the case at bar, VEL's motion for attorney's fees. Schanzer, 120 F. Supp.2d, at 206. Without evidence that WLI violated Rule 26, the sanction provisions of Rule 37 are not triggered, and thus do not apply.
In fact, WLI claims "all new affidavits and supporting material appended to the Opposition not previously exchanged are the product of contacts, interviews, and research in preparation of the Opposition and, thus, were not in Defendants' possession prior to the Defendants' receipt of Plaintiff's Motion for Attorney's Fees." Opposition to Plaintiff's Motion to Strike, at 1.
For the reasons stated above, the Court denies plaintiff's motion to strike the seven above-listed submissions pursuant to either this Court's December 22, 2000 Order or Rule 37.
Third, VEL moves to strike the April 30, 2001 Blum Fulford expert report and the April 27, 2001 Schrauzer expert report on the basis of Rule 702 of the Fed.R.Evid.
Putting aside Rule 702's applicability to a post-judgment motion, a question the parties do not discuss in their briefs, the Rules of Evidence, including Rule 702, provide the district court with broad discretion in deciding whether to admit or preclude the admission of evidence. As Rule 104 itself states. "[p]reliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court, subject to the provisions of subdivision (b) [not relevant here]. In making its determination it is not bound by the rules of evidence except those with respect to privileges." Thus, "`the trial judge has broad discretion in the matter of admission or exclusion of expert evidence, and his action is to be sustained unless manifestly erroneous.'" F.H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1257 (2d Cir. 1987), quoting Salem v. United States Lines Co., 370 U.S. 31, 35(1962). The Supreme Court recently reaffirmed this discretion, holding "a court of appeals is to apply an abuse-of-discretion standard when it `review[s] a trial court's decision to admit or exclude expert testimony." Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152(1999), quoting General Electric Company v. Joiner, 522 U.S. 136, 138 (1997).
Without making any judgments with respect to the validity of the claims made in the April 27, 2001 Schrauzer Report or the April 30, 2001 Blum Fulford Report, both reports at least promise to be relevant to the Court's inquiry. The Schrauzer Report, written in part and compiled by Schrauzer, a Professor Emeritus in Chemistry who served for nearly 30 years on the faculty of the University of California at San Diego, addresses the possible role that minerals might play in determining the length of the human life span. This topic is highly relevant, considering that the plaintiff's motion refers to a claim made by Wallach concerning life spans as an example of defendants' fraudulent conduct. The Blum Fulford Report, written in part and compiled by Blum and Fulford, concerns the question of mineral deficiency. Blum is an epidemiologist claiming to have expertise in nutrition, minerals and their depletion in soil. Fulford, a "farm consultant," is a self-described agriculturalist by experience and education, and claims to have expertise in nutrient replacement in soil. The Court does not believe crossexamination of these witnesses' purported expertise and opinions, and the extended further litigation that such procedures would entail, are necessary or appropriate to resolve this postjudgment motion for attorney's fees. As to relevance, the Court cannot see how these documents could be judged irrelevant. Mineral deficiency is the leitmotif of Wallach's pronouncements in presentations and print, and the discussion of mineral deficiency is made relevant by the plaintiff's motion.
See, e.g., "Dead Doctors Don't Lie," a book in which Wallach asserts that "people do live to the age of 120-140." Id. at 153.
For those reasons, the Court denies the plaintiff's motion to strike on the basis of Rule 702.
Plaintiffs motion is denied in its entirety.
It is SO ORDERED.