Johnson et al v. Rush Enterprises, Inc. et al

Filing 294

ORDER RE EXCLUSION OF MOMENTUM'S RETRIEVAL DAMAGES, signed by Magistrate Judge Stanley A. Boone on 01/28/2025. It is HEREBY ORDERED that evidence related to the costs associated with Momentum's retrieval of Cobham's tanks is EXCLUDED. (Deputy Clerk JN)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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WILLIAM LEE JOHNSON, et al.,

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Case No. 1:19-cv-00105-SAB
ORDER RE EXCLUSION OF MOMENTUM’S
RETRIEVAL DAMAGES

Plaintiffs,

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v.
(ECF Nos. 280, 285)

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NATURAL GAS FUEL SYSTEMS, INC.
D.B.A. MOMENTUM FUEL
TECHNOLOGY, et al.,

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Defendants.

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I.

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INTRODUCTION

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Currently before the Court is Defendant Carleton Technologies, Inc.’s (“Cobham”) request

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that the Court preclude evidence of damages incurred by Natural Gas Fuel Systems, Inc. d.b.a.

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Momentum Fuel Technology (“Momentum”) relating to Momentum’s recall of Cobham cylinders

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due to Momentum’s failure to disclose such damages in its Rule 26 disclosures. Based upon the

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briefs submitted by the parties, as well as the Court’s record, for the reasons explained herein, the

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Court finds Momentum’s violation of Rule 26 warrants the sanction of precluding evidence at trial

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regarding the damages associated with Momentum’s retrieval of Cobham’s cylinders (“retrieval

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damages”).1

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This Court’s ruling on Cobham’s motion in limine number seven otherwise stands: A party may be able to introduce
underlying facts of Momentum’s retrieval of tanks only to the extent it is relevant to a claim or crossclaim in this action
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Momentum brings crossclaims against Cobham for (1) express indemnity relating to the

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Supply Agreement between Momentum and Cobham, the terms of which provide that Cobham

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would indemnify and defend Momentum for Plaintiffs’ claims; (2) breach of contract relating to

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the Supply Agreement between Momentum and Cobham for Cobham’s failure to defend,

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indemnify and hold Momentum harmless for the claims brought by Plaintiffs; (3) total equitable

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indemnity against Cobham in the event Momentum is found liable to Plaintiffs, (4) contribution

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against Cobham in the event Momentum is found liable to Plaintiffs, and (5) declaratory relief

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regarding Cobham’s alleged duty to indemnify and defend Momentum relating to Plaintiffs’

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lawsuit. (ECF No. 28.)

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Momentum’s Rule 26 disclosure, as it relates to damages, states “Momentum has filed a

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cross-claim against Carleton Technologies, Inc. alleging causes of action for express contractual

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indemnity, breach of contract . . . . Momentum has not yet calculated its damages, but they are

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based on Carleton Technologies, Inc.’s indemnification of any losses that Momentum sustains as a

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result of Plaintiff’s First Amended Complaint against Momentum, including attorney’s fees and

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costs.” (ECF No. 285 at 3.) Cobham avers Momentum’s initial disclosure focuses only on damages

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stemming from Plaintiffs’ first amended complaint, not from damages related to any costs incurred

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from the recall of any cylinders not involved in Plaintiffs’ complaint. Cobham argues Momentum

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failed to disclose such damages in conformance with Rule 26 and requests that any evidence related

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to Momentum’s purported retrieval damages be excluded.

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Momentum does not dispute that it failed to disclose a computation of damages related to

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the retrieval of Cobham tanks. (ECF No. 280.) Momentum concedes it did not supplement its Rule

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26 disclosure. Momentum avers, however, its nondisclosure was harmless because Cobham had

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sufficient notice of damages associated with the retrieval of the Cobham tanks. Alternatively,

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Momentum requests that if the Court declines to allow Momentum to present evidence of the

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specific amount of retrieval expenses as damages at trial, the jury should be allowed to determine

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whether Momentum is entitled to recover reimbursement for retrieval expenses.

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and subject to other evidentiary objections. (ECF No. 206 at 8.)

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II.

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DISCUSSION

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Rule 26(a) of the Federal Rules of Civil Procedure requires, in pertinent part, that parties

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provide to the other parties “a computation of each category of damages claimed by the disclosing

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party….” Fed. R. Civ. P. 26(a)(1)(A)(iii). This rule “requires parties to make a reasonable forecast

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of their damages so the opposing party may ‘prepare for trial or make an informed decision about

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settlement.’ ” Montilla v. Walmart Stores, Inc., No. 2:13-CV-2348-GMN-VCF, 2015 WL 5458781,

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at *2 (D. Nev. Sept. 16, 2015) (citing Fed. R. Civ. P. 26(a), Advisory Comm. Notes (1993)).

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Litigants are required to supplement initial disclosures “in a timely manner if the party” making the

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disclosure learns “that some material respect” of the disclosure changed.

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26(e)(1)(A). Rule 37(c) provides that “if a party fails to provide information…as required by Rule

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26(a) or (e), the party is not allowed to use that information…to supply evidence…at a trial, unless

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the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c). The burden to prove

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substantial justification or harmlessness lies with the party facing sanctions. Yeti by Molly, Ltd. v.

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Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). Rule 37(c)(1) sanctions are “a self-

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executing, automatic sanction to provide a strong inducement for disclosure of material.” Id.

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(internal quotations and citation omitted). However, district courts have discretion in determining

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whether to issue sanctions under Rule 37(c)(1). Id.

Fed. R. Civ. P.

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It is undisputed that Momentum failed to comply with Rule 26(a) or (e)’s disclosure

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requirements as it failed to provide a computation of its retrieval damages. Cobham argues

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Momentum’s nondisclosure warrants the automatic sanction of exclusion as it is neither

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substantially justified nor harmless.

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justification for why it failed to comply with Rule 26. Momentum only argues its nondisclosure of

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retrieval damages is harmless because Cobham has been on notice of the potential for damages

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related to the retrieval of tanks. (ECF No. 280.) Momentum cites to three points of time whereby

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Cobham was purportedly on notice of such damages. First, Momentum contends that Cobham

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knew at the time Cobham and Momentum entered the Supply Agreement on July 20, 2017 that if

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Cobham provided Momentum a defective product, it could be recalled and liable for associated

The Court agrees.

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Momentum offers no reasonable

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damages. Momentum further argues Cobham was aware after the subject incident on December

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21, 2018 that the tanks in the field were a safety risk and therefore required retrieval and

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replacement. Momentum also contends that Cobham was put on notice of its purported retrieval

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damages when Momentum filed its crossclaim against Cobham for breach of contract.

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The Court is unpersuaded that Cobham’s purported pre-litigation knowledge of the

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potential for retrieval damages renders Momentum’s failure to disclose “a computation of each

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category of damages claimed by the disclosing party” harmless. Fed. R. Civ. P. 26(a)(1)(A)(iii)

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(emphasis added). Holding such would allow parties to routinely circumvent disclosure under Rule

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26. Further, Momentum’s prayer for damages in its cross-complaint requests, in pertinent part, “[a]

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judicial determination that Cobham breached the Supply Agreement entered into by and between

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failing to provide Momentum with a defense and indemnity, and for all damages flowing

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therefrom.” (ECF No. 28 at 29.) The Court agrees with Cobham that neither the facts alleged in

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Momentum’s crossclaims nor its prayer for damages places Cobham on sufficient notice that “all

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damages flowing” from failing to provide Momentum with a defense and indemnity to Plaintiffs’

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claims included costs associated with Momentum’s retrieval of all Cobham tanks in the field

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following the subject incident on December 21, 2018.

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computation of retrieval damages or otherwise provide notice of such costs did not provide Cobham

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sufficient notice that such damages were being sought.

Momentum’s failure to disclose a

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Momentum’s nondisclosure of retrieval damages is not harmless, particularly given the

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procedural posture of this action. Cobham contends it was not afforded the opportunity over the

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past six years of litigation to conduct discovery on any claim for Momentum’s additional costs

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related to retrieving Cobham cylinders. Cobham avers it only learned of Momentum’s claim while

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the parties were drafting a proposed verdict form on the eve of trial. (ECF No. 285.) Indeed,

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Cobham’s instant request to exclude evidence comes mid-trial following Momentum’s attempt to

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elicit testimony regarding retrieval damages. Momentum’s nondisclosure until trial therefore

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prevented Cobham from being able to make an informed decision about settlement or adequately

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prepare a proportional defense for trial. See Boswell v. Costco Wholesale Corp., No. SA-CV-

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1600278-DOC-DFMX, 2017 WL 2727769, at *1 (C.D. Cal. Jan. 19, 2017) (noting that the purpose
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of Rule 26 is to accelerate the exchange of basic information necessary to prepare for trial or make

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an informed decision about settlement.). The Court finds Momentum’s untimely claim of an

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unspecified amount of retrieval damages would prejudice Cobham by, in effect, adding a new

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breach of contract theory during trial. See Lanard Toys Ltd. v. Novelty, Inc., 375 F. App'x 705,

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713 (9th Cir. 2010) (noting factors courts use to determine justification or harmlessness include

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prejudice or surprise to the party against whom the evidence is offered and the likelihood of

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disruption of the trial). Such theory would disrupt and prolong the ongoing trial. The Court finds

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Momentum has failed to meet its burden to show its failure to comply with Rule 26 is neither

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substantially justified nor harmless.

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Here, the harm from Momentum’s disclosure cannot be easily remedied. Discovery has

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long closed, and trial is ongoing. The Court will not reopen discovery through witnesses providing

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live testimony. The Court determines no less drastic sanction than exclusion of evidence related to

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retrieval damages at trial will remedy the prejudice to Cobham caused by Momentum’s failure to

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comply with its disclosure requirements. See Fed. R. Civ. P. 37(c)(1).

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III.

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CONCLUSION AND ORDER

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Accordingly, it is HEREBY ORDERED that evidence related to the costs associated with
Momentum’s retrieval of Cobham’s tanks is EXCLUDED.

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IT IS SO ORDERED.
Dated:

January 28, 2025
STANLEY A. BOONE
United States Magistrate Judge

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