Zest IP Holdings, LLC et al v. Implant Direct MFG. LLC et al

Filing 320

ORDER Granting 201 Motion to Strike the Joint Expert Report of Scott D. Hampton And Bruce G. Silverman Pursuant To Rule 37(c). Signed by Magistrate Judge William V. Gallo on 12/17/2013. (srm)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ZEST IP HOLDINGS, LLC, et al., 12 Plaintiffs, 13 v. 14 IMPLANT DIRECT MFG., LLC, et al., 15 Defendants. 16 ) ) ) ) ) ) ) ) ) ) ) ) Civil No.10-0541-GPC(WVG) ORDER GRANTING MOTION TO STRIKE THE JOINT EXPERT REPORT OF SCOTT D. HAMPTON AND BRUCE G. SILVERMAN PURSUANT TO RULE 37(c) (Doc. No. 201) 17 18 Plaintiffs Zest IP Holdings (“Plaintiffs”) have made 19 a Motion To Strike The Joint Expert Report Of Scott D. 20 Hampton And Bruce G. Silverman Pursuant To Rule 37(c) 21 (“Motion”). Defendants Implant Direct Mfg. (“Defendants”) 22 have filed an Opposition to the Motion. Plaintiffs have 23 filed a Reply to Defendants’ Opposition. The Court, having 24 reviewed the moving, opposition, reply papers, the record 25 in this case, and GOOD CAUSE APPEARING, HEREBY GRANTS 26 Plaintiff’s Motion. 27 28 1 10cv0541 1 I 2 FACTUAL BACKGROUND On February 9, 2011, the Court issued a Case Manage- 3 4 ment 5 Pretrial Proceedings (“Feb. 9, 2011 Order”). The Feb. 9, 6 2011 Order states, inter alia: 7 8 9 10 Conference Order Regulating Discovery And Other On or before December 15, 2011, all parties shall exchange with all other parties a list of all expert witnesses expected to be called at trial... On or before December 29, 2011, any party may supplement its designation so long as that party has not previously retained an expert to testify on that subject. (Feb. 9, 2011 Order, at 7). 11 12 On December 15, 2011, Plaintiffs designated Susan 13 McDonald. Ph.D. (“McDonald”) to testify as an expert 14 witness regarding their claims of trademark infringement 15 in this case. 16 On December 29, 2011, Defendants designated Hal 17 Poret (“Poret”) to testify as an expert witness regarding 18 Plaintiffs’ claims of trademark infringement in this case. 19 On December 19, 2012, the Court issued a Sixth 20 Amended 21 Discovery And Other Pretrial Proceedings (“Sixth Amd. CMC 22 Order”), which states inter alia: 23 24 25 26 27 28 Case Management Conference Order Regulating Each expert witness designated by a party shall prepare a written report to be provided to all other parties no later than January 22, 2013, containing the information required by Fed. R. Civ. P. 26(a)(2)(A) and (B). ... Any party that fails to make these disclosures shall not, absent substantial justification, be permitted to use evidence or testimony not disclosed at any hearing or at the time of trial. In addition, the Court may impose sanctions as permitted by Fed. R. Civ. P. 37(c). 2 10cv0541 6 Any party... shall in accordance with Fed. R. Civ. P. 26(a)(2)(C) and Fed. R. Civ. P. 26(e), supplement any of its expert reports regarding evidence intended solely to contradict or rebut evidence on the same subject matter identified in an expert report submitted by another party. Any such supplemental reports are due on February 11, 2013. (Sixth Amended Case Management Conference Order Regulating Discovery And Other Pretrial Proceedings, at 2)(emphasis in original). 7 On February 7 and 13, 2013, Defendants requested 8 that Plaintiffs agree to extend the dates by which their 9 supplemental expert reports regarding Plaintiffs’ trade- 10 mark infringement claims were due. Plaintiffs agreed to 11 the requested extensions of the dates. Defendants did not 12 seek the Court’s approval of the extensions of dates about 13 which Plaintiffs agreed 1 2 3 4 5 14 On February 21, 2013, Defendants requested for a 15 third time that Plaintiffs agree to extend the date by 16 which their supplemental expert reports regarding Plain- 17 tiffs’ trademark infringement claims were due. At this 18 time, and for the first time, Defendants informed Plain- 19 tiffs that Defendants were designating two new expert 20 witnesses, 21 Silverman (“Silverman”). Defendants again did not seek the 22 Court’s approval for the requested extension of dates, nor 23 did they seek the Court’s approval to designate two new 24 expert witnesses. 25 Also, Scott at that D. this Hampton time, (“Hampton”) and Bruce Defendants decided Defendants acknowledged retain two to 26 Plaintiffs 27 rebuttal experts regarding Plaintiffs’ trademark infringe- 28 ment claims in place of Poret, after they read Plaintiffs’ 3 to G. new 10cv0541 1 expert McDonald’s expert report on Plaintiffs’ trademark 2 infringement claims. Defendants explained that they would 3 not use Poret as an expert witness because: (1) McDonald’s 4 report 5 Plaintiffs’ trademark infringement claims; and, (2) Poret 6 could not opine on Plaintiffs’ trademark infringement 7 claims if the evidence upon which Plaintiffs rely to prove 8 their 9 surveys. 10 did not trademark rely on trademark infringement Plaintiffs refused to surveys claims grant is to not support trademark Defendants’ third 11 request for extension of the date for when Defendants’ 12 supplemental expert report regarding Plaintiffs’ trademark 13 infringement claims were due. Defendants did not seek the 14 Court’s assistance or intervention to resolve the dispute. 15 On 16 Plaintiffs 17 February 19 rebuttal 2013, Defendants expert report of submitted Hampton to Silverman. 18 the 25, and II APPLICABLE STATUTORY LAW 20 Fed. R. Civ. P. 16 provides that the Court must 21 issue a scheduling order. The scheduling order must limit 22 the time to amend pleadings, complete discovery and file 23 motions. Fed. R. Civ. P. 16(b)(1),(3)(A). The scheduling 24 order may modify the timing of disclosures under Rule 25 26(a) and 26(e)(1). Fed. R. Civ. P. 16(b)(3)(B)(i). A 26 scheduling order may be modified only for good cause and 27 with the judge’s consent. Fed. R. Civ. P. 16(b)(4). 28 4 10cv0541 1 Fed. R. Civ. P. 26 provides that a party must 2 disclose to other parties expert witnesses it may use at 3 trial. Fed. R. Civ. P. 26(a)(2)(A). A party must make its 4 expert 5 sequence 6 26(a)(2)(D) (emphasis added). Absent a court order, expert 7 witness disclosures must be made at least 90 days before 8 the date set for trial, or in the case of rebuttal expert 9 witnesses, within 30 days after the other party’s disclo- witness 10 sure. 11 that Fed. R. disclosures the Civ. Court P. “at the orders.” times Fed. 26(a)(2)(D)(i), and R. (ii) in Civ. the P. (emphasis added). Fed. R. Civ. P. 26(e) states in pertinent part: “For 12 13 an expert whose report must be disclosed under Rule 14 26(a)(2)(B), the party’s duty to supplement extends both 15 to information included in the report and to information 16 given during the expert’s deposition.” 17 Fed. R. Civ. P. 37(c)(1) states: 18 If a party fails to provide information or identify 19 a witness as required by Rule 26(a) or (e), the party is 20 not allowed to supply evidence in a motion, at a hearing, 21 or at trial, unless the failure was substantially justi- 22 fied or is harmless... District courts are given particularly wide latitude 23 24 in their discretion to issue 25 37(c)(1). Yeti By Molly, Ltd. v. Deckers Outdoor Corp., 26 259 F.3d 1101, 1106 (9th Cir. 2001). Rule 37(c)(1) is 27 recognized as broadening the court’s sanctioning power. 28 The rule is a “self-executing,” “automatic” sanction to 5 sanctions under Rule 10cv0541 1 “provide... a strong inducement for disclosure of mate- 2 rial...” Yeti By Molly, supra, at 1106, citing Fed. R. 3 Civ. P. 37 Advisory Committee Notes (1993). Exclusion of 4 an expert witness report is an appropriate remedy for 5 failing to fulfill the required disclosure requirements of 6 Rule 26(a). Yeti By Molly, supra, at 1106. 7 “Two express exceptions ameliorate the harshness of 8 Rule 37(c)(1): The information may be introduced if the 9 parties’ failure to disclose the required information is 10 substantially justified or harmless.” Yeti By Molly, 11 supra, at 1106. (emphasis added). 12 party facing sanctions to prove harmlessness. Yeti By 13 Molly, supra, at 1106-1107, Goodman v. Staples, 644 F.3d 14 817 (9th Cir. 2011). There is no requirement that a court 15 find that the failure to disclose (or delay in disclosing) 16 was willful or in bad faith. Yeti By Molly, supra, at 17 1107. The burden is on the 18 Numerous courts in the Ninth Circuit have followed 19 the above-noted precepts. See Strong v. Valdez Fine Foods, 20 2011 WL 455285 at *4 (S.D. Cal. 2011), rev’d on other 21 grounds 724 F.3d 1042 (2013)(exclusion of expert’s decla- 22 ration and rebuttal report as evidence to support motion 23 for summary judgment appropriate due to late designation 24 of expert), Corby v. American Express Co., 2011 WL 4625719 25 at *1, n.1 (C.D. Cal. 2011)(same), Wilson v. Tony M. 26 Sanchez & Co, Inc., 2009 WL 173249 at *3-4 (E.D. Cal. 27 2009)(same), Mendez v. Unum Life Ins. Co. Of America, 2005 28 WL 1865426 at *3 (N.D. Cal. 2005)(granting in part and 6 10cv0541 1 denying in part motion to exclude expert testimony due to 2 late disclosure of expert’s report). 3 III 4 ANALYSIS 6 A. Defendants Were Not Substantially Justified In Designating New Expert Witnesses and Providing Expert Reports By Those Expert Witnesses 7 Plaintiffs argue that Defendants were not substan- 5 8 tially justified 9 regarding in designating Plaintiffs’ new trademark expert infringement witnesses claims. 10 Plaintiffs assert that Defendants should have anticipated 11 that they would need a rebuttal trademark infringement 12 expert 13 claims in the absence of trademark surveys. Plaintiffs 14 contend that Defendants knew as early as April 2012, and 15 specifically in May 2012, that Plaintiffs had not con- 16 ducted any trademark surveys, that no such surveys were in 17 progress and that Plaintiffs were willing to produce a 18 witness for deposition to confirm these facts. Despite 19 Defendants’ knowledge that Plaintiffs had not, and would 20 not, conduct trademark surveys, Defendants did not attempt 21 to inform the Court that it had designated an expert 22 (Poret) who could not respond to Plaintiffs’ expert’s 23 report. Nor did Defendants attempt to seek leave of court 24 to amend the Feb. 9, 2011 Order or the Sixth Amd. CMC 25 Order so that new dates for Hampton’s and Silverman’s 26 designation and report deadlines could be established. 27 28 that could Defendants analyze argue the that trademark they were infringement substantially justified in designating new expert witnesses and provid7 10cv0541 1 ing their reports to Plaintiffs. Defendants assert that 2 after they read Plaintiffs’ expert’s (McDonald’s) report, 3 they realized that Poret was not the appropriate person to 4 rebut McDonald’s report because Poret was a survey expert 5 and McDonald’s report did not rely on survey evidence. 6 Defendants claim that at the time they designated Poret, 7 they could not have known that McDonald would not rely on 8 survey evidence. So, Defendants promptly retained Hampton 9 and Silverman and identified them to Plaintiffs on Febru- 10 ary 21, 2013 and provided their report to Plaintiffs on 11 February 25, 2013. Further, Defendants argue that they 12 were 13 26(a)(2)(D)(i), which allows them to disclose their expert 14 witnesses 90 days before the date set for trial or in the 15 case of rebuttal experts, within 30 days after the other 16 party’s disclosure. following the requirements of Fed. R. Civ. P. 17 Defendants arguments are not well taken. First, 18 since trademark infringement may be proven in many ways, 19 with or without trademark survey evidence, Defendants’ 20 selection 21 expert, was improvident. This is especially true since as 22 early as May 2012, Defendants knew that Plaintiffs were 23 not relying on trademark survey evidence to prove their 24 trademark infringement claims because Plaintiffs told them 25 so. While Poret was designated as an expert on December 26 29, 2011, Defendants did nothing after they learned that 27 Plaintiffs would not rely on trademark survey evidence, to 28 seek leave of court to designate a new trademark infringe- and retention of 8 Poret, a trademark survey 10cv0541 1 ment expert that would not rely on trademark survey 2 evidence. Instead, Defendants waited until February 21, 3 2013 to inform Plaintiffs (but not the Court) that Poret 4 was not a suitable expert and that they were designating 5 two new experts. Thereafter, they provided the new ex- 6 perts’ report to Plaintiffs. Defendants’ actions in this 7 regard clearly violated the Feb. 9, 2011 Order and the 8 Sixth Amd. CMC Order. 9 Second, Defendants’ reliance on the requirements of 10 Fed. R. Civ. P. 26(a)(2)(D) is misplaced. Fed. R. Civ. P. 11 16(b)(3)(B)(i) clearly states that a scheduling order 12 issued by a court may modify the timing of disclosures 13 under 14 26(a)(2)(D) clearly states that a party must make its 15 expert witness disclosures at the times and in the se- 16 quence that the Court orders. Fed R. Civ. P. 26(a)(2)(D) 17 (i), (ii) clearly states that absent a court order, the 18 parties are required to follow Rule 26(a)(2)(D)(i). Here, 19 the Feb. 9, 2011 Order and the Sixth Amd. CMC Order are 20 court orders which trumped the parties from the alterna- 21 tive 22 26(a)(2)(D)(i). Further, the Feb. 9, 2011 Order clearly 23 states the date by which supplemental expert reports were 24 due. Additionally, the Sixth Amd. CMC Order clearly states 25 that any party shall supplement any of its expert reports 26 regarding evidence solely to contradict or rebut evidence 27 on the same subject matter identified in an expert report 28 submitted by another party. Moreover, the Sixth Amd. CMC Rules 26(a) disclosure and 26(e)(1). requirements 9 of Fed. Fed. R. R. Civ. Civ. P. P. 10cv0541 1 Order clearly 2 prepare a written report to be provided to all parties no 3 later than January 22, 2013. The Sixth Amd. CMC Order 4 clearly 5 expert’s report shall not, absent substantial justifica- 6 tion, 7 disclosed, at any hearing or at the time of trial. Fi- 8 nally, the Sixth Amd. CMC Order clearly notifies the 9 parties, that in addition to the exclusion of evidence 10 noted in the preceding sentence, the Court may impose the 11 sanctions permitted by Fed. R. Civ. P. 37(c). warns be states that permitted a to that each party’s use expert failure evidence witness to or shall provide testimony the not 12 The Court concludes that Defendants’ lack of dili- 13 gence in failing to timely inform Plaintiffs and the Court 14 that their designated trademark infringement expert was 15 not suitable to rebut Plaintiffs’ expert’s report, their 16 lack of diligence in seeking a remedy therefor, and their 17 misplaced reliance on Fed. R. Civ. P. 26(a)(2)(D)(i), do 18 not constitute substantial justification under Fed. R. 19 Civ. P. 37(c)(1). Since Defendants chose to designate a 20 trademark infringement expert that could only analyze 21 Plaintiffs’ trademark infringement claims using trademark 22 surveys, and chose to not seek relief from the Court when 23 their designated expert was determined to be unsuitable, 24 it did so at its own peril. Yeti By Molly, 259 F.3d at 25 1106-1107, Quevedo v. Trans-Pacific Shipping, Inc., 143 26 F.3d 1255, 1258 (9th Cir. 1998). Mendez v. Unum, 2005 WL 27 1865426 at *3. 28 10 10cv0541 B. Defendants’ Failure To Timely Identify Their New Experts Was Not Harmless Plaintiffs argue that Defendants’ untimely designa- 1 2 3 tion of their 4 harmless because it prejudices them. They assert that 5 allowing Defendants to untimely designate new trademark 6 infringement experts rewards Defendants’ recalcitrant and 7 improvident conduct. Specifically, Plaintiffs contend that 8 the fact that after Plaintiffs provided McDonald’s expert 9 report to Defendants, Defendants sought extensions of time 10 from them to provide their rebuttal expert report, while 11 concealing 12 intended to designate new experts and provide a report 13 from the new experts. Therefore, Plaintiffs assert that 14 Defendants’ conduct was calculated to seek an improper 15 tactical advantage over them. from trademark infringement Plaintiffs, and the experts Court, is that not they 16 Defendants argue that their late disclosure of the 17 new expert witnesses is harmless. They contend that the 18 depositions of expert witnesses have not commenced, all 19 future deadlines in the case have been stayed, and no 20 trial date has been set. Therefore, they assert that their 21 late disclosures did not harm Plaintiffs. 22 23 24 25 26 27 28 In Wong v. Regents of the University of California, 410 F.3d 1052, 1060 (9th Cir. 2005), the court stated: In these days of heavy caseloads, trial courts... routinely set schedules and establish deadlines to foster the efficient treatment and resolution of cases. Those efforts will be successful only if the deadlines are taken seriously by the parties, and the best way to encourage that is to enforce the deadlines. Parties must understand that they will pay a price for failure to comply strictly with scheduling and other orders, and that 11 10cv0541 failure to do so may properly support severe sanctions and exclusion of evidence. 1 2 3 In Wong, the Ninth Circuit upheld a district court’s 4 ruling that the testimony of expert witnesses designated 5 after the expert witness disclosure deadline had passed, 6 was properly excluded from use in a motion for summary 7 judgment. The court affirmed the district court’s ruling 8 that the late expert designation was not harmless, even 9 though the trial date in the case was several months away. 10 In doing so, the court stated: If (Plaintiff) had been permitted to disregard the deadline for identifying expert witnesses, the rest of the schedule laid out by the court months in advance, and understood by the parties, would have to have been altered as well. Disruption to the schedule of the court and other parties is not harmless. Courts set such schedules to permit the court and the parties to deal with cases in a thorough and orderly manner, and they must be allowed to enforce them, unless there are good reasons not to. Wong, supra, at 1062 (emphasis added). 11 12 13 14 15 16 17 18 See 19 Systems,Inc., 20 2006)(exclusion of expert’s report due to lack of dili- 21 gence and lack of harmlessness in timely disclosure of 22 expert’s report), Paramount Pictures Corp. v. Interna- 23 tional Media Films, Inc., 2013 WL 3215189 at *9 (C.D. Cal. 24 2013)(exclusion of expert’s report due to lack of dili- 25 gence and lack of harmlessness in timely disclosure of 26 expert’s testimony in motion for summary judgment), Nehara 27 v. 28 2013)(exclusion of expert’s report due to lack of dili- also 02 Micro California, 467 2013 Intern F.3d WL Ltd. 1355, 1281618 12 v. Monolithic Power (9th Cir. 1368-1369 at *6-7 (E.D. Cal. 10cv0541 1 gence and lack of harmlessness in timely disclosure of 2 expert’s report and willful disregard of court’s schedul- 3 ing order), Tamburri v. Sun Trust Mortgage, Inc., 2013 WL 4 3152921 5 report due to late disclosure of expert’s report and non- 6 compliance with previous order of the court). at *2 (N.D. Cal. 2013)(exclusion of expert’s 7 Here, had Defendants timely sought relief to desig- 8 nate new trademark infringement experts in, or shortly 9 after, May 2012, it is possible that the Court’s estab- 10 lished schedule would not have been disrupted. However, 11 Defendants fail to show that their late designation of 12 trademark infringement experts and provision of those 13 experts’ reports to Plaintiffs were harmless. Defendants 14 did not seek relief to designate new experts, and after 15 reading Plaintiffs’ expert’s report, unilaterally, and 16 without court approval, designated new trademark infringe- 17 ment experts approximately one year and two months after 18 their expert designation was due. The late designation of 19 experts and the provision of those experts’ reports to 20 Plaintiffs was done approximately ten months after Defen- 21 dants 22 expert would not rely on trademark survey evidence and 23 that 24 surveys. Such non-compliance with the deadlines set by the 25 Court and Defendants’ recalcitrance supports the finding 26 that Defendants’ late designation of new experts and late 27 provision of the new experts’ report was not harmless. learned their own that Plaintiffs’ expert could trademark only opine infringement on trademark 28 13 10cv0541 1 In 1993, Rule 37(c)(1), in its present form, was 2 added to Rule 37. Rule 37(c)(1) is written using the 3 disjunctive “or,” not the conjunctive “and,” in outlining 4 two circumstances where failure to disclose may be ex- 5 cused. Therefore, it would seem that one or the other 6 bases may let the offending party off the hook. The 7 language of the Advisory Committee Notes, when the amend- 8 ment was added, bear this interpretation out: “Limiting 9 the substantial automatic sanction ‘without 11 exception for violations that are ‘harmless,’ is needed to 12 avoid 13 tions...” Fed. R. Civ. P. 37 Advisory Committee Notes 14 (1993)(emphasis added). harsh penalties in a coupled violations 10 unduly justification’ to variety with of the situa- 15 In other words, a party that is unable to demon- 16 strate substantial justification for its delay or failure 17 to disclose or supplement may avoid sanctions if the 18 opposing party is not harmed or prejudiced by the delay or 19 failure. None of the examples justifying excusal contained 20 in the 1993 Advisory Committee Notes are present here. 21 Tellingly, the Advisory Committee Notes indicate that 22 exclusion of a witness or evidence is appropriate when a 23 pro se litigant is informed by the court of the require- 24 ment for disclosure and does not make the disclosure 25 despite being so informed. 26 In this case, counsel for Defendants are highly 27 experienced attorneys, not naive and inexperienced pro se 28 litigants. Moreover, Defendants were well aware of the 14 10cv0541 1 requirements to disclose experts and experts’ reports, and 2 the timing of those disclosures. Defendants’ 3 failure to demonstrate substantial 4 justification for the delay in disclosing Hampton and 5 Silverman, by itself would have been sufficient to grant 6 Plaintiffs’ Motion. However, as noted above, Defendants 7 also failed to show that Plaintiffs were not harmed by the 8 substantial delay. Accordingly, given that both exceptions 9 to Rule 37(c)(1) and the Yeti By Molly analysis have not 10 been met, ample reason exists to grant Plaintiff’s Motion. 11 C. Conclusion 12 As a result of the foregoing, the Court finds that 13 the application of Fed. R. Civ. P. 37(c)(1) to Defendants’ 14 conduct is particularly apt. Since Defendants failed to 15 timely disclose Hampton and Silverman as expert witnesses 16 in rebuttal to Plaintiffs’ trademark infringement expert 17 and failed to seek permission from the Court to designate 18 new trademark infringement experts, Defendants are disal- 19 lowed from supplying evidence in the form of Hampton’s and 20 Silverman’s report and/or testimony at any hearing or at 21 trial.1/ 22 1/ 23 24 25 26 27 28 The Court recognizes that the dispute discussed in this Order arose on February 25, 2013, when Hampton and Silverman’s report was provided to Plaintiffs. Plaintiff filed their Motion on April 8, 2013. The time period between February 25, 2013 and April 8, 2013 is 41 days, which is 11 days past the date Plaintiffs should have filed their Motion, pursuant to the Court’s Case Management Conference Orders issued in this case. The Court also recognizes that Plaintiffs have urged the Court to enforce the terms of its Case Management Conference Orders when Defendants have filed untimely motions. However, due to the seriousness of Defendants’ conduct as discussed in this Order, and Defendants’ repeated recalcitrant conduct exhibited throughout the proceedings in this case, the Court has chosen to relieve Plaintiffs of the requirements for filing papers for discovery disputes for the 11-day late filing of their Motion. Such leniency may not be extended again to Plaintiffs should they file untimely motions in the future. Plaintiffs are hereby given adequate notice that the adage “live by the sword, die by the sword,” advocated by Defendants, is not entirely without merit. 15 10cv0541 1 Plaintiffs’ Motion To Strike The Joint Expert Report 2 of Scott D. Hampton and Bruce G. Silverman Pursuant to 3 Rule 37(c) is GRANTED. 4 5 6 DATED: December 17, 2013 7 8 Hon. William V. Gallo U.S. Magistrate Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 10cv0541

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