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United States v. McCarthy Improvement Co.

United States District Court, M.D. Florida, Jacksonville Division

February 1, 2017

United States of America, for the use and benefit of Southern Site & Underground, Inc., Plaintiff,
v.
McCarthy Improvement Company & Western Surety Company, Defendants.

          ORDER

          PATRICIA D. BARKSDALE UNITED STATES MAGISTRATE JUDGE.

This case involves a dispute about payment for work Southern Site & Underground, Inc. (“SSU”), performed for McCarthy Improvement Company (“McCarthy”). A statement of the case is in the parties' amended joint pretrial statement. Doc. 129 at 1-2.

         Before the Court are (1) the defendants' renewed motion for sanctions, Doc. 157, and SSU's response, Doc. 163; (2) SSU's motion to exclude Lonnie Rudy Carroll, Jr., as an expert witness, Doc. 93, and the defendants' response, Doc. 108; (3) SSU's motion to exclude evidence and argument on its compliance with grading tolerances, including testimony from Ryan Carstensen, Doc. 124, and the defendants' response, Doc. 137; (4) the defendants' motion to exclude expert testimony from Lisa and Leslie Mosley, Doc. 142, and SSU's response, Doc. 146; and (5) SSU's motion for an order to show cause why McCarthy should not be sanctioned for improperly paying a witness, Doc. 125, and McCarthy's response, Doc. 134.[1]

         1. Defendants' Motion for Sanctions

         The defendants seek sanctions against SSU and its counsel for “significant misconduct” and “repeated misrepresentations” to the defendants and the Court. Doc. 157. They describe the conduct they contend warrants sanctions, including withholding evidence during discovery and disobeying a Court order. Doc. 157. They contend the alleged misconduct has prejudiced them by “denying them access to key documents used by SSU to support its damages within a time frame to allow analysis prior to the filing of motions and taking of depositions” and causing them “to spend additional tens of thousands of dollars both in pursuit of these documents and in analysis of the wrong documents, particularly related to Wenick's calculations.” Doc. 157 at 21. They ask the Court to preclude SSU from using evidence or testimony on damages based on anything other than actual costs, strike SSU's expert witnesses, award attorney and expert-witness fees related to the misconduct, strike the complaint or dismiss the action with prejudice, and impose any other appropriate sanction. Doc. 157 at 23.

         SSU responds sanctions are unwarranted because it violated no discovery order, the defendants have suffered no prejudice, the defendants ultimately received all necessary documents, the continuance of the trial and opportunity for additional discovery cured any potential prejudice, and no sanction is necessary as punishment or to ensure compliance with future orders. Doc. 163 at 2.

         a. Background

         i. Financial Information and QuickBooks Files

         In March 2015, the defendants issued their first request for production seeking “[a]ll accounting records, cost reports, and budget reports which reference or relate to the Project.” Doc. 141-1 at 3. SSU's original counsel responded it would produce the requested documents as kept in the usual course of business. Doc. 141-3 at 2. It produced a purported job cost report as a PDF document. Doc. 141-4. After SSU's original counsel withdrew, its new counsel provided amended responses to the first request for production stating SSU would produce the requested documents to the extent it had them. Doc. 141-6 at 2. SSU produced the same report, but this time with Bates labels. Doc. 157 at 5; Doc. 141-4.

         The defendants' expert, William Gurry, contends, “A cost report is … typically used as a starting point in claims analysis, ” and the PDF document produced by SSU is a series of spreadsheets that would be “backup” for a true cost report. Doc. 95-9 at 18. He contends some of the data is incomplete and does not appear to have been created contemporaneously with the project. Doc. 95-9 at 18.

         In April 2015, the defendants issued a second request for production seeking financial information including tax returns, balance sheets, profit-and-loss statements, depreciation schedules, and equipment maintenance records. Doc. 50-1 at 4-7. At a hearing on a motion to compel responses to the second request for production, SSU's counsel represented his client had responded it had no tax returns for 2011 to 2013 and no depreciation schedules. Doc. 118 at 50-51. He stated, “[A]s far as I know, these people never took depreciation on their equipment. … [T]hey don't do end-of-year balance sheets. They don't do financial statements because they don't have loans. … There just hasn't been reason for them to create these documents.” Doc. 118 at 49. He repeated, “There are no depreciation schedules. … They're not aware of any. If there are any on any tax returns, it's something that they'd have forgotten about by now.” Doc. 118 at 51. The Court granted the defendants' motion to compel SSU to produce the requested financial information. Doc. 50 at 4, Doc. 57 at 2-3, Doc. 118 at 55.

         After the Court's order, Lisa Mosley emailed her counsel explaining she had asked SSU's accountant “about any depreciation schedules or statements” and “[a]ll he had was a [depreciation] [s]chedule for 2014.” Doc. 163-2. She attached some responsive documents, including the depreciation schedule and some tax returns, and indicated no other responsive documents existed. Doc. 163-2.

         In January 2016, SSU produced the depreciation schedule and tax returns. Doc. 157 at 2, Doc. 157-1. Its counsel explained there had been a “miscommunication” between SSU and its accountant regarding the depreciation schedule, and “no records indicating current book value, service maintenance, internally or accountant prepared balance sheets (other than the financial information found as a part of the tax returns), or profit and loss statements” exist. Doc. 157-1.

         At Lisa Mosley's February 2016 deposition, she testified SSU uses QuickBooks accounting software. Doc. 67-1 at 34. She testified SSU did not maintain or run job cost reports in the ordinary course of business. Doc. 67-2 at 133, 135. She asserted she had created the document produced as a job cost report using data from QuickBooks for material costs and other costs but not for owned-equipment costs because she does not allocate those in QuickBooks. Doc. 67-2 at 133.

         The next day, the defendants issued a request for production of “Quickbooks accounting data file(s) and any other electronic data files in native electronic format covering the period from January 1, 2011[, ] through December 31, 2013.” Doc. 141-7 at 5. In March 2016, the parties agreed SSU would produce the data if it could segregate the unrelated data files. Doc. 122-4 at 2.

         Also in March 2016, the defendants subpoenaed SSU's accounting firm and bonding agent for balance sheets and profit-and-loss statements. Doc. 157-2, Doc. 157-4. Both produced responsive documents. Doc. 157-3; Doc. 157-5. The accountant represented in an email accompanying his production that SSU had provided those documents for tax returns for the past four years. Doc. 157-3 at 1. In an affidavit, he explained he either visits SSU's office or remotely logs in to its computer system to gather necessary information from QuickBooks. Doc. 132 ¶ 5. He represents the financial documents provided were printed in the ordinary course of preparing the tax returns, he adjusts them to create the balance sheets and income statements, and year-end adjustments may cause discrepancies between the financial documents produced and the final balance sheets attached to the tax returns. Doc. 132 ¶¶ 6, 7. In an undated email, [2] he sent Lisa Mosley balance sheets, income compilation letters, and income statements from 2012 and 2013. Doc. 163-6 at 1. The subject line reads, “Financial statements attached for review.” Doc. 163-6 at 1. Lisa Mosley testified she did not recall receiving the email. Doc. 154 at 108-09.

         In August 2016, less than a month before the previously scheduled trial date, SSU produced QuickBooks files that, according to a bookkeeper's declaration, show it maintained balance sheets and profit-and-loss statements in the ordinary course of business and had created “memorized reports” to allow printing of that data. Doc. 141-8 ¶¶ 15-16, Doc. 157 at 3, Doc. 157-6. Lisa Mosley confirmed her QuickBooks had memorized reports for profit-and-loss statements that could be run by clicking a button but said she did not run the reports regularly. Doc. 154 at 112-15. She stated the standard reports from QuickBooks would be inaccurate. Doc. 154 at 157-58.

         Lisa Mosley testified she entered invoices for job purchases into QuickBooks but did not accurately allocate them to individual projects. Doc. 154 at 19-20. She also entered all of SSU's income and payments but did not always accurately categorize or allocate them. Doc. 154 at 62-64. QuickBooks accurately tracks the gross wages and employment tax paid to each SSU employee. Doc. 154 at 27. It does not accurately track worker's compensation, markup, or vacation pay. Doc. 154 at 28- 29, 31-32. To prepare the document originally produced as a job cost report, Lisa Mosley used data on materials and other categories of expenses from QuickBooks, made adjustments based on invoices and receipts, and added other categories of expenses not tracked in QuickBooks. Doc. 154 at 78-92.

         The Court granted the defendants' motion to continue the trial to allow sufficient time to review the QuickBooks data and allowed discovery on it. Doc. 145. The Court observed, “Whether in response to the first request for production or follow- up communications, the plaintiff should have produced the QuickBooks data well before” it did. Doc. 145 at 2.

         After the Court continued the trial, SSU produced additional QuickBooks backup files dated October 9, 2014, including a report titled “Flat Lot-Actual Cost DETAIL (ALL).” Doc. 157 at 6-7; Doc. 157-6; Doc. 157-8. Lisa Mosley testified she might have created the report when responding to discovery requests. Doc. 154 at 121-24. She said she did not produce the report in discovery because it was “incomplete” and “would not include all costs.” Doc. 154 at 123-24. She testified the memorized QuickBooks reports would not respond to a request for all accounting records, cost reports, and budget reports because they do not “hold all the costs and they would have been inaccurate and incomplete.” Doc. 154 at 130. SSU's accountant stated in an affidavit that SSU's “method of accounting does not require a job cost schedule.” Doc. 132 ¶ 8.

         ii. Wenick's Spreadsheets

         In February 2014, Wenick met with SSU and reviewed project data. Doc. 95-6 at 2. He continued reviewing, cost reports and other project data through May 2014, when he prepared a damage calculation. Doc. 95-6 at 2-8. SSU provided Wenick a spreadsheet prepared by Lisa Mosley containing details of various costs allocated to the project. Doc. 67-2 at 49-50; Doc. 95-1 at 83-87; Doc. 95-2 at 12, 17-19, 82-84, 192; Doc. 95-8; Doc. 154 at 104. She testified she put “everything that [she] had that had to do with the project” into binders and prepared a spreadsheet regarding the equipment and “how it applied to the claim, whether it was extra downtime or so on and so forth.” Doc. 67-1 at 134-35. Wenick reviewed the spreadsheet and made modifications and calculations in another spreadsheet. Doc. 95-2 at 12, 19, 24-25; Doc. 95-6 at 7-8; Doc. 154 at 104.

         SSU's expert disclosures were originally due in April 2015, Doc. 16, but the deadline was extended into May 2015 after the parties agreed to extend discovery, Doc. 19 (unopposed motion to extend deadlines), Doc. 21 (amended case-management and scheduling order). SSU did not disclose an expert by the deadline and, in June 2015, the Court granted a joint motion to stay all remaining deadlines for 45 days. Doc. 25 (joint motion) Doc. 26 (order staying case). In August 2015, the Court lifted the stay and, over the defendants' objection, gave SSU a new expert-disclosure deadline in November 2015. Doc. 39. On the deadline, SSU disclosed Wenick as its expert and produced his report. Doc. 95-3; Doc. 95-4. Three days later, the defendants issued a request for production seeking all documents “referenced in SSU's expert report authored by Louis M. Wenick … and/or reviewed or relied upon by the author in preparing the report referenced above.” Doc. 163-9 at 4. A few weeks later, the defendants wrote to SSU's counsel to explain it was unclear whether all documents on which Wenick had relied were produced, including “SSU financial data to include accounting data related to the Project, adjustments to financial data, and other financial reports.” Doc. 95-7 at 2-3. They asked SSU to provide “any withheld documentation immediately.” Doc. 95-7 at 3. SSU responded the proper procedure for seeking information was through interrogatories and requests for production. Doc. 95-7 at 4. It represented Wenick had referenced the cost report and a summary of daily reports provided by SSU, those documents were work product before the expert disclosure, he referenced no other “financial reports, ” and no responsive documents had been withheld. Doc. 95-7 at 4. The defendants asked SSU to produce the daily report summary and clarify if any other document had not been produced. Doc. 95-7 at 6-7. SSU responded earlier discovery issues made it impossible to determine if specific documents had already been produced but agreed to provide a “duplicate copy” of all of Wenick's documents. Doc. 95-7 at 10.

         The following week, SSU sent the defendants a thumb drive that allegedly contained all documents on which Wenick had relied, except for 70 files of documents that could not be duplicated and assertedly had already been produced. Doc. 95-7 at 11, 25. The defendants allege the thumb drive contained Lisa Mosley's spreadsheet but not Wenick's version.[3] Doc. 157 at 12. SSU does not contend otherwise. See generally Doc. 163.

         In February 2016, a few weeks before Wenick's deposition, the defendants subpoenaed him for documents not already produced, including documents SSU had provided to him, all materials he had relied on in forming his opinions, all notes or work papers he had prepared in connection with the case, all calculations he had performed or used to reach his conclusions, and his “entire file associated with this matter.” Doc. 95-7 at 20. At Wenick's March 2016 deposition, the defendants learned they still did not have Wenick's adjusted spreadsheet.[4] Doc. 95-2 at 24-27; Doc. 95-7 at 23, 25. They asked for it. Doc. 95-7 at 23, 25. SSU's counsel responded Wenick had not understood he needed to provide native files for spreadsheets published in his report and stated it would send missing native files and other documents “in the next few days.” Doc. 95-7 at 22. In April 2016, SSU produced Wenick's version, titled “Cost Reports - For Report Adj Dollars.” Doc. 95-7 at 31; Doc. 157 at 10, 13.[5]

         Gurry and his colleague spent many hours manually keying in data, trying to “correlate the equipment usage from the different documents versus the claim, ” revising the equipment analysis, and checking and revising the as-built data. Doc. 95-10 ¶¶ 10-13. They did not bill for all of that time. Doc. 95-10 ¶¶ 10, 12. They would not have spent that time had the spreadsheets been produced earlier. Doc. 95-10 ¶¶ 10, 12.[6]

         b. Law and Analysis

         Under Federal Rule of Civil Procedure 26(a), a party must provide an expert witness report for an expert witness who is retained or specially employed to give expert testimony and who the party may use at trial. Fed.R.Civ.P. 26(a)(2). The report must contain:

(i) a complete statement of all opinions the witness will express and the basis and reasons for them;
(ii) the facts or data considered by the witness in forming them;
(iii) any exhibits that will be used to summarize or support them;
(iv) the witness's qualifications, including a list of all publications authored in the previous 10 years;
(v) a list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and
(vi) a statement of the compensation to be paid for the study and testimony in the case.

Fed. R. Civ. P. 26(a)(2)(B)(i)-(vi). The disclosures must be made “at the time and in the sequence that the court orders.” Fed.R.Civ.P. 26(a)(2)(D). The disclosure requirements are “intended to provide opposing parties reasonable opportunity to prepare for effective cross examination and perhaps arrange for expert testimony of other witnesses.” Reese v. Herbert, 527 F.3d 1253, 1265 (11th Cir. 2008) (internal quotation marks omitted).

         Under Rule 26(e), a party must supplement its Rule 26(a) disclosures and other discovery responses as ordered or “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.” Fed.R.Civ.P. 26(e)(1). A party must disclose any additions or changes to an expert witness's report or deposition testimony by the time pretrial disclosures are due. Fed.R.Civ.P. 26(e)(2).

         Under Rule 37(c), if a party fails to make or supplement required disclosures or discovery responses, “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.” Fed.R.Civ.P. 37(c)(1). A court may also or instead, on motion and after giving an opportunity to be heard, “order payment of the reasonable expenses, including attorney's fees, caused by the failure, ” “inform the jury of the party's failure, ” and “impose other appropriate sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)-(vi).” Fed.R.Civ.P. 37(c)(1).

         Under Rule 37(b), if a party does not obey an order to provide or permit discovery, the court “may issue further just orders, ” including:

(i) directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims;
(ii) prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence;
(iii) striking pleadings in whole or in part;
(iv) staying further proceedings until the order is obeyed;
(v) dismissing the action or proceeding in whole or in part;
(vi) rendering a default judgment against the disobedient party; or
(vii) treating as contempt of court the failure to obey any order except an order to submit to a physical or mental examination.

Fed. R. Civ. P. 37(b)(2)(A)(i)-(vii). Besides or instead of those sanctions, “the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed.R.Civ.P. 37(b)(2)(C).

         Rule 37 gives courts “broad discretion to fashion appropriate sanctions for the violation of discovery orders.” Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1542 (11th Cir. 1993). But dismissal or default judgment should be sanctions of “last resort, ” imposed only if noncompliance is willful or done in bad faith and lesser sanctions would not suffice. Id. Noncompliance due to “simple negligence, misunderstanding, or inability to comply” does not suffice. Id. Dismissal is not an abuse of discretion “[w]hen a party demonstrates a flagrant disregard for the court and the discovery process.”Aztec Steel Co. v. Fla. Steel Corp., 691 F.2d 480, 481 (11th Cir. 1982).

         Excluding otherwise admissible evidence probative of a core issue is inappropriate if it permits a party “to construct, to maintain, and to proffer to the jury a ‘fiction.'” United States v. CMC II LLC, No. 8:11-cv-1303-T-23TBM, 2016 WL 7665764, at * 1 (M.D. Fla. Dec. 1, 2016) (unpublished). Such a sanction “is warranted, if ever, only in an instance of the most egregious, purposeful, calculated, and otherwise irremediable enormity by a litigant or by counsel or by both and, even then, only if the evidence establishing the enormity and the malevolence that created the enormity is nothing less than distinct and unmistakable.” Id. Other sanctions, including a “steep fine against counsel or against the party or against both and disciplinary action against counsel, ” are preferable. Id.[7]

         Excluding expert testimony is a “drastic” sanction requiring careful consideration. See Brooks v. United States, 837 F.2d 958, 961 (11th Cir. 1988) (court abused discretion by refusing to admit expert testimony because that sanction was too drastic, neither party cited authority in motions, judge gave no reason, and there was no indication court considered less severe sanction); In re Complaint of Fantome, S.A., No. 99-0961-CIV, 2004 WL 5642418, at *1 (S.D. Fla. Dec. 7, 2004) (unpublished) (refusing to impose “extreme remedy” of excluding untimely expert report because movants had report for more than two months before expert's deposition). The non-disclosing party must establish the failure to disclose was substantially justified or harmless. Mitchell v. Ford Motor Co., 318 F. App'x 821, 825 (11th Cir. 2009).

         Whether failure to make sufficient expert disclosures is substantially justified or harmless depends on many factors: “(1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the nondisclosing party's explanation for its failure to disclose the evidence.” Mobile Shelter Sys. USA, Inc. v. Grate Pallet Sols., LLC, 845 F.Supp.2d 1241, 1250-51 (M.D. Fla. 2012). Sanctions may be warranted if a delayed disclosure deprives a party of the ability to disclose a rebuttal expert, impairs its ability to effectively cross examine the expert at his deposition, changes the scope of the claims, or is part of a pattern of “last minute filings and disclosures” that “have greatly affected the orderly handling of th[e] case.” See id. at 1251-52.

         A failure to timely make required disclosures might be harmless if substantially similar evidence has already been produced, see Miele v. Certain Underwriters at Lloyd's of London, 559 F. App'x 858, 861-62 (11th Cir. 2014) (affirming denial of motion to strike expert's untimely declaration because expert's report was “materially similar” to declaration and contained same conclusions); Taylor v. TECO Barge Line, Inc., 517 F.3d 372, 380 (6th Cir. 2008) (failure to disclose photographs harmless because similar photographs had been disclosed), or if the expert has already been questioned by the opposing party about the information untimely disclosed, see Jackson v. Allstate Ins. Co., 785 F.3d 1193, 1204 (8th Cir. 2015) (inclusion of new information in supplemental expert report harmless because expert was questioned extensively about information at deposition); Muldrow ex rel. Estate of Muldrow v. Re-Direct, Inc., 493 F.3d 160, 167-68 (D.C. Cir. 2007) (alleged failure to disclose expert testimony harmless because subject arose during deposition and testimony was elaboration on expert report); Smith v. Tenet Healthsystem SL, Inc., 436 F.3d 879, 889 (8th Cir. 2006) (expert's reliance on x-rays not included in report harmless because expert discussed them at deposition).

         SSU insists it produced all responsive financial documents it had after ordered to and did not deliberately conceal any. Doc. 163 at 3-6. It contends its accountant had provided no other document and it was unaware any existed. Doc. 163 at 3-6. Giving SSU the benefit of the doubt, [8] sanctions are unwarranted for its response to the defendants' second request for production. If it was unaware the documents existed despite seeking the information from its accountant, it could not be expected to produce them. The defendants obtained the documents in March 2016, well before the trial date. And they have had extra time to analyze them due to the trial continuance.

         Failing to disclose spreadsheets on which Wenick relied is more concerning, though not egregious enough to warrant the harshest sanctions. The defendants ultimately received the last spreadsheet in April 2016-five months after the expert-disclosure deadline but five months before the original trial date. Doc. 56; Doc. 61; Doc. 157 at 10. They could adequately prepare for Wenick's and Lisa Mosley's depositions because they received Lisa Mosley's spreadsheet two months before her deposition and two-and-a-half months before Wenick's deposition. The defendants deposed them about the spreadsheet. Doc. 67-2 at 132-38 (Lisa Mosley deposition); Doc. 95-1 at 84-88, 94-95 (Wenick deposition). Wenick also discussed the information he had relied on and the calculations he had made.[9] Though the defendants do not provide copies of the reports for comparison, see generally Docs. 157-1-157-8, based on their earlier argument that Wenick's spreadsheet is so similar to Lisa Mosley's as to render Wenick's calculations unreliable for lack of verification, Doc. 152, it appears they were sufficiently similar as to render the additional delay in producing Wenick's report harmless for deposition and trial-preparation purposes. The defendants contend they were prejudiced because their expert would have spent less time analyzing Wenick's report had SSU disclosed both spreadsheets, Doc. 157 at 12-13, but it does not appear this affected the outcome or their ability to adequately prepare for Wenick's deposition and trial.

         The defendants have the spreadsheets, their expert has analyzed them, and by trial they will have had at least 10 months to prepare to challenge them through cross examination. Accepting SSU's representations, failing to produce the spreadsheets sooner resulted from disorganization at the beginning of the case, though SSU compounded the error by resisting the defendants' attempts to ensure all responsive documents had been produced. Prohibiting SSU from using Wenick's report and testimony is unwarranted. But the delay caused the defendants' experts to spend more time (for which the defendants have had to pay more money) than they would have had the spreadsheets been timely disclosed. Under the principle that one side should not pay for the other side's delay, an award of the expenses (including attorney and expert fees) the defendants would not have incurred but for the delay is warranted.

         Failing to produce QuickBooks files, particularly the post-trial-continuance production, is most concerning. Though the defendants have now received the documents they sought for nearly two years and have been given extra time to review them, SSU's delays and incomplete productions warrant sanctions (though, again, not the harshest ones).

         SSU's QuickBooks files contain financial and other accounting information relating to its costs on the project. See, e.g., Doc. 67-2 at 133 (Lisa Mosley's testimony she relied on data from QuickBooks to compile parts of the document produced as a job cost report). Yet it did not produce them in response to the defendants' first request for production, which asked for “[a]ll accounting records, cost reports, and budget reports which reference or relate to the Project.” Doc. 141-1 at 3. And, after the defendants learned of their existence and specifically requested them, it took six months to produce them. Still later, after the court had continued the trial, it produced another responsive document purporting to show actual costs. See Docs. 157-6, 157-8.

         SSU contends it did not maintain the data for a true job cost report in the ordinary course of business, and points out the “cost report” in the QuickBooks files is titled “cost detail” and does not contain all relevant data. Doc. 163 at 6-9. Regardless of whether the document is complete or incomplete, it should have been disclosed sooner as, at a minimum, accounting information.

         SSU argues not all of the alleged misconduct involved a discovery order, so Rule 37 does not apply. Doc. 163 at 16. That argument disregards that Rule 37(c)(1) allows sanctions for failure to supplement discovery responses, even without a discovery order.

         SSU contends the defendants “repeatedly took no action to cure what they now claim were discovery transgressions, ” and instead “allowed SSU to believe the steps taken by SSU to comply with their requests resolved their concerns.” Doc. 163 at 16. To the contrary, the record shows that, when the defendants discovered additional documents might exist, they promptly requested them. See, e.g., Doc. 141-7 at 5.

         SSU complains the defendants “waited until the deadline for pretrial motions to raise any of these issues to the Court, with the exception of the lone motion to compel.” Doc. 163 at 16. To the contrary, the defendants raised the issue of the missing spreadsheets in their original motion to exclude testimony from Wenick, Doc. 95. The financial information was the subject of a motion to compel, Doc. 44. And, after failing to disclose the QuickBooks data despite having opportunities to do so, the parties agreed regarding their production in March 2016. Any delay on the defendants' part is outweighed by the delay on SSU's part.

         The drastic sanctions of striking the pleadings, dismissing the action, entering default judgment, and excluding evidence are unwarranted, particularly given the extra time the defendants have had to examine the newly produced data and analyze its effect on their defenses. But an award of expenses the defendants have incurred due to delayed production is warranted.

         The Court directs the parties to confer on the amount of but-for expenses. If they cannot agree on an amount without Court intervention, any party may file a motion asking the Court to determine an appropriate amount at any time before the case is closed. The defendants may also cross examine Lisa Mosley about her discovery delays and failings. The ...


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