Betz v. Trainer Wortham & Company, Inc. et al

Filing 157

ORDER GRANTING EX-PARTE APPLCIATION RE: EXPERT (tf, COURT STAFF) (Filed on 7/7/2011)

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Sara B. Brody (SBN 130222)
Cecilia Y. Chan (SBN 240971)
Elizabeth R. Toben (SBN 266844)
SIDLEY AUSTIN LLP
555 California Street, Suite 2000
San Francisco, CA 94104-1715
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]

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Attorneys for Defendants
Trainer Wortham & Co., Inc., First Republic Bank,
David P. Como, and Robert Vile

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION

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HEIDE BETZ,

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Plaintiff,
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v.
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TRAINER WORTHAM & COMPANY, INC., )
ET AL.,
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Defendants.
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No. C-03-03231 SI
DEFENDANTS’ EX PARTE APPLICATION
FOR ORDER TO SUBSTITUTE EXPERT
WITNESS
Pretrial Conference: July 5, 2011 @ 3:30 pm
Trial Date:

July 18, 2011

THE HONORABLE SUSAN ILLSTON

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EX PARTE APPLICATION FOR ORDER TO SUBSTITUTE EXPERT WITNESS; CASE NO. C-03-03231 SI
SF1 1701681v.2

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I.

INTRODUCTION
Defendants Trainer Wortham & Company, Inc., First Republic Bank, David Como, and

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Robert Vile ( “Defendants”) hereby apply ex parte for an Order allowing Defendants to substitute

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their expert witness. Defendants seek to substitute an expert for their previously designated expert

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John Peavy (“Peavy”), under Federal Rule of Civil Procedure 37(c)(1), because Peavy will be

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unavailable during the trial of this case, which is scheduled to begin on July 18, 2011. This Court

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denied Defendants’ request for a continuance due to Peavy’s unavailability, and thus, if Defendants

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are not allowed to substitute a new expert, Defendants will be significantly prejudiced by not having

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any expert who can testify on their behalf or to rebut Plaintiff’s expert. Not having a testifying

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expert would have a substantial effect on Defendants’ ability to defend their case at trial based on

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circumstances that are beyond their control. Defendants intend to substitute an expert to testify on

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the same issues designated by Defendants for their original expert and to be able to rebut the

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Plaintiff’s expert’s testimony. Plaintiff would not be prejudiced or surprised in any way by such a

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substitution. Moreover, Defendants’ substitute expert will be made available for deposition, if

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Plaintiff so wishes, before trial. Lastly, the substitution of Defendants’ expert will not disrupt the

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trial schedule in any way. Under these circumstances, Defendants respectfully submit that a

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substitution of expert is appropriate.

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II.

STATEMENT OF RELEVANT FACTS

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Peavy was designated to provide testimony on two critical elements of Plaintiff’s claim—the

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suitability of the stocks in which Defendants invested Plaintiff’s funds and damages—and produced

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an expert report discussing such issues. These issues go to the very heart of the case. Further, Peavy

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was also designated to act as a rebuttal expert to Plaintiff’s expert’s testimony regarding damages at

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trial. No other expert witness has been designated to testify on such matters.

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After learning of Peavy’s unavailability and after failing to find an alternative solution to

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allow him to testify, Defendants asked Plaintiff to stipulate to a brief continuance of the trial.

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Plaintiff declined to agree to such a continuance. Accordingly, on June 24, 2011, Defendants

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applied ex parte for a brief continuance of the trial. The Court declined Defendants’ request for a

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brief continuance. (Docket No. 152). The trial is scheduled to commence on July 18.
-1EX PARTE APPLICATION FOR ORDER TO SUBSTITUTE EXPERT WITNESS; CASE NO. C-03-03231 SI
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Because an expert’s testimony is critical to Defendants’ defense and to rebut Plaintiff’s

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expert, Defendants respectfully seeks permission to substitute Peavy with a new expert. Defendants

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intend to designate a substitute expert who will provide testimony on the exact same subjects as

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Peavy. Defendants do not seek to supplement, or expand upon, the issues on which their expert

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would opine and they do not seek to provide a supplemental expert report. Defendants only seek to

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designate a substitute expert who will opine on those portions of Peavy’s report which he chooses to

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adopt and to rebut Plaintiff’s expert’s testimony. Because Peavy is unavailable, if a substitute expert

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is not designated, Defendants will have to proceed at trial with no expert witness.

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III.

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ARGUMENT
Federal Rule of Civil Procedure 37(c)(1) contains an express provision under which a failure

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to timely disclose an expert may be excused where the failure was “substantially justified or

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harmless.” Lanard Toys, Ltd. v. Novelty, Inc., 375 Fed. Appx. 705, 713 (9th Cir. 2010) (finding that

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district court was within its discretion to allow expert testimony where party failed to timely disclose

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its expert’s report). “Among the factors that may properly guide a district court in determining

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whether a violation of a discovery deadline is justified or harmless are: (1) prejudice or surprise to

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the party against whom the evidence is offered; (2) the ability of that party to cure the prejudice; (3)

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the likelihood of disruption of the trial; and (4) bad faith or willfulness involved in not timely

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disclosing the evidence.” Id. (citation omitted).

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These factors are met here. First, Plaintiff will not be prejudiced or surprised because

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Defendants seek to substitute an expert witness who will only testify on those portions of Peavy’s

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report which he adopts and as a rebuttal expert to Plaintiff’s expert (the same as Peavy would if he

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were available at trial). Defendants’ substituted expert will not testify on supplemental subjects or

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provide new opinions in Defendants’ case in chief. Thus, Plaintiff will not be prejudiced by such

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testimony because the information about which the substituted expert seeks to testify was already

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known to her. See Belmont Corp. v. Shell Oil Co., 1998 WL 242686, at *2 (N.D. Cal. May 12,

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1998) (granting motion seeking substitution of expert where opposing party had expert’s report for

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over four months before the trial and, thus, was able to adequately prepare). Any purported

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prejudice or surprise caused by substitution of Defendants’ expert can be easily cured because
-2EX PARTE APPLICATION FOR ORDER TO SUBSTITUTE EXPERT WITNESS; CASE NO. C-03-03231 SI
SF1 1701681v.2

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Defendants will make the substituted expert available to Plaintiff for deposition before the trial.

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Additionally, Defendants would be willing to pay the expert fee for time spent by their new expert in

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deposition testimony.
Second, Defendants will be significantly prejudiced if they were precluded from having an

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expert witness at trial. The issues on which Peavy was designated to testify are critical and go to the

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very heart of the case. Moreover, Peavy was also going to act as a rebuttal expert to Plaintiff’s

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expert’s testimony regarding damages at trial. Because Peavy is not available, if a substitute expert

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is not designated, Defendants will have no witnesses available to testify on such matters.

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Accordingly, Defendants will be severely prejudiced and will be deprived of their rights to a fair trial

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if they are denied an expert witness at trial. Fenner v. Dependable Trucking Co., Inc., 716 F.2d 598,

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601 (9th Cir. 1983) (finding that defendant was denied a fair trial when defendant was denied the

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opportunity to have an expert testify on his behalf).
Third, substituting an expert to provide testimony on information already disclosed in

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Peavy’s report will not disrupt the trial in any way. The substitute expert will merely testify on the

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same topics as covered in Peavy’s report and will provide rebuttal testimony in response to

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Plaintiff’s expert, just as Peavy would have. The substitution would not affect the July 18 trial date;

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the substitution is necessitated by the July 18 trial date.

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Lastly, there was no bad faith or willfulness on the part of Defendants in failing to seek this

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substitution sooner. This Court denied Defendants’ request for a continuance two days ago. It is

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due to the trial date that Defendants’ counsel now seeks to substitute Defendants’ expert, and is in no

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way a reflection of any purported bad faith. Defendants immediately began the search for a

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substitute expert after learning of this Court’s denial of the request for a continuance and will

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disclose the identity to Plaintiff as soon as an engagement is confirmed. Under these circumstances,

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Defendants believe that a substitution is appropriate.

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-3EX PARTE APPLICATION FOR ORDER TO SUBSTITUTE EXPERT WITNESS; CASE NO. C-03-03231 SI
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IV.

CONCLUSION
For the foregoing reasons, Defendants respectfully request that this Court issue an order

allowing Defendants to substitute their expert witness.

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DATED: July 1, 2011

Respectfully submitted,
SIDLEY AUSTIN LLP

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/s/ Sara B. Brody
SARA B. BRODY
CECILIA Y. CHAN
ELIZABETH R. TOBEN

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Attorneys for Defendants
TRAINER WORTHAM & COMPANY, INC.,
DAVID P. COMO, FIRST REPUBLIC BANK,
AND ROBERT VILE

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-4EX PARTE APPLICATION FOR ORDER TO SUBSTITUTE EXPERT WITNESS; CASE NO. C-03-03231 SI
SF1 1701681v.2