A September 3rd ruling out of a district court in the N.D. of Illinois serves as a reminder that although a party has a duty to supplement or correct an expert disclosure under FRCP 26, untimely supplements that espouse new theories of the case, sending it on a different course altogether, will not be tolerated, at least under these circumstances.
The ruling, made by District Court Judge James F. Holderman, came after the plaintiff in this case, Instant Technology, LLC (Instant Technology), requested that it be allowed to update an expert report submitted by its damages expert. The court allowed the update, but only for the purpose of providing the plaintiff an opportunity to account for additional information it had obtained during discovery.
For the judge deciding this request, however, Instant Technology’s expert report update went too far, resulting in the court striking paragraphs which purportedly included new damage theories in the case not included in the original expert report.
The Case of a Belated Expert Update Request?
The case, originally filed in 2012, involves a number of allegations – including breach of employment agreements, breach of fiduciary duty, violations of the Computer Fraud and Abuse Act, and tortious interference with business expectancies, to name a few – in a suit in which Instant Technology is requesting injunctive and other relief against several former employees and other parties.
Of particular interest in this case – and influential in the judge’s decision – was the timing. Plaintiff Instant Technology submitted an expert report from its damages expert on October 29, 2012. According to the opinion, the deadline for submission of expert reports was in October of 2012, but close of discovery was not until March 15, 2013.
On that day, March 15, Instant Technology filed a motion requesting that it be allowed to update its expert report. The court – noting that the motion to update was filed on the very last day of discovery and that expert reports had been due months earlier – granted the request, but limited the update to “additional or corrective information” only, pursuant to FRCP 26(e). The court stated that, because of the “untimeliness” of the motion, Instant Technology could add new information obtained during the discovery period, but would not be allowed to add new expert theories that were not part of the original expert report.
Thus, on June 20, 2013 Instant Technology submitted its updated expert report to the court. The defendants moved to strike certain portions of the updated report, claiming that the update contained new theories not contained in the original report.
Instant Technology replied to the motion to strike, but the court wasted no time, acting swiftly. Before defendants could file their reply, the court struck those portions of the update which purportedly went to the theories of the case and were not in the original expert report.
The Applicable Portions of FRCP 26
The ruling touched on two important aspects of FRCP 26.
First, FRCP 26 makes clear: The court controls discovery schedules. As the court noted, FRCP 26(a)(2)(D) states, “A party must make [expert] disclosures at the times and in the sequence that the court orders.”
Second, under FRCP 26(e) a party has an affirmative duty to supplement or correct an expert disclosure 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.”
Here, the court had to make a decision – perhaps balancing applicable parts of FRCP 26 which authorize the court to control discovery with the affirmative duty of a party to supplement or correct expert disclosures.
The tipping point for the court, however, seemed to be the timing. Here, the court found dispositive the fact that Instant Technology’s request to update was submitted on the last day for discovery and months after expert reports were due. Citing a 2006 case out of the N.D of Ill., the court quoted, “It is no surprise that supplemental expert opinions that threaten to belatedly send the case on a wholly different tack are excluded.”
The court, justifying its decision to allow only new data but striking what it referred to as novel theories, stated, “That resolution allow[s] Instant Technology to update its existing expert theories with new data and information since it submitted its original report, but prevented Instant Technology from inappropriately delaying the rest of the case by espousing new theories requiring additional discovery at the very end of the discovery period.”
The Expert Report – Additional Data or New Theories?
But what were the alleged new theories contained in the updated expert report?
According to the published opinion, the expert’s original report provided four theories in attempting to calculate Instant Technology’s damages, which largely focused on costs and profits of the plaintiff in its calculations. The updated expert report sought, according to the opinion, to calculate damages in a different way, by largely focusing on revenues earned by the corporate defendant named in the case. The court found that these new calculations were not addressed in the original expert report and relied on data that the expert, according to the court, had “disavowed” in deposition – which likely contributed to the court’s ruling. Regardless, the court found these paragraphs of the updated report constituted an improper attempt to present novel theories and struck them.
This leaves the question – when is the line crossed between an update which merely adds or corrects information and one that alters theories of the case, threatening to send it down a new path?
A final thought – is this ruling demonstrative of a trend in which courts are becoming increasingly less tolerant of so-called expert gamesmanship? At least one other high profile case reportedly has perhaps suggested as such. Interestingly, the judge ended his opinion with the following, “The parties are once again encouraged to discuss settlement.”
The citation to the case and this Memorandum Opinion and Order is Instant Technology, LLC v. DeFazio, Case No. 12 CV 491 (N.D. Ill., Sept. 3, 2013).