Sloan Valve Company v. Zurn Industries, Inc. et al

Filing 496

MEMORANDUM Opinion and Order Signed by the Honorable Amy J. St. Eve on 4/5/2013:Mailed notice(kef, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SLOAN VALVE COMPANY, a Delaware
corporation,
Plaintiff,
v.
ZURN INDUSTRIES, INC., a Delaware
corporation, and ZURN INDUSTRIES, LLC, a
Delaware limited liability company,
Defendants.

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No. 10-cv-204

MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Court Judge:
Zurn Industries, Inc. and Zurn Industries, LLC (collectively, “Zurn”) have moved the
Court to strike Sloan Valve Company’s (“Sloan”) Amended Rule 26 Disclosures, the Expert
Report of John Gregor, and Portions of the Expert Report of Julius Ballanco. For the reasons
discussed below, the motion is denied in part and denied in part without prejudice.
This case concerns U.S. Patent No. 7,607,635, entitled “Flush Valve Handle Assembly
Providing Dual Mode Operation” (the “‘635 Patent” or the “Wilson Patent”), and the
corresponding U.S. Patent Application Publication No. 2006/0151729 (the “Published Wilson
Patent Application”). On January 13, 2010, Sloan commenced this action against Zurn seeking
(a) damages and injunctive relief for Zurn’s alleged infringement of the ‘635 Patent; and (b)
provisional damages for Zurn’s alleged making, sale, and use of inventions that the Published
Wilson Patent Application covers. Expert discovery is scheduled to close on May 6, 2013.
Zurn now challenges two of Sloan’s expert submissions – Mr. John Gregor’s report and portions
of Mr. Julius Ballanco’s opinions.

I.

The Agreed Substitution of Mr. Bley for Mr. Gregor Was Appropriate
During the course of expert discovery, Sloan disclosed John Gregor, a technician with

Made to Measure (“M2M”), as an expert witnesses in the area of precision measurement
techniques, and provided Zurn with Mr. Gregor’s Expert Report, dated January 28, 2013 (the
“Gregor Report”). Sloan engaged M2M to provide precision measurements and modeling of
Zurn’s Dual Flush Handle Assembly, the accused product in this patent infringement litigation.
As part of its work, M2M created computer animations that reflect the travel of the plunger of
Zurn’s accused device. Mr. Gregor, under the direct supervision of M2M’s owner – Sven Bley –
conducted the measurements of the Zurn Handle. Mr. Gregor included these measurements in
the Gregor Report. (R. 484-6.)
Zurn scheduled Mr. Gregor’s deposition for February 26, 2013. Mr. Gregor suffers from
episodes of severe anxiety, and regularly takes Prozac to treat his anxiety. (R. 492-2 at ¶ 4.)
Several days before his deposition, he “became extremely stressed out and anxious” about his
deposition. (Id. at ¶ 6.) The day before his deposition, Mr. Gregor informed Mr. Bley that he
was not capable of testifying at his deposition because of the increased severity of his anxiety
and stress over the deposition. (Id. at ¶ 9; R. 492-3 at ¶ 6.) He also communicated his condition
to Sloan’s attorneys. (R. 492-2 at ¶6.) Sloan then informed Zurn’s counsel and offered Mr.
Bley as a substitute witness to testify about the measurements taken by Mr. Gregor. Sloan told
Zurn that Mr. Gregor “is experiencing grave health concerns that prevent him from testifying . . .
.” (R.. 484-4.) Zurn agreed and the deposition of Mr. Bley went forward.
Zurn now contends that Sloan “deliberately misrepresented Gregor’s health.” Zurn
complains that Mr. Gregor was at work on the day Mr. Bley’s deposition went forward and

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received telephone calls from Mr. Bley during breaks in Mr. Bley’s deposition testimony. Zurn
further challenges Mr. Bley’s testimony, claiming that he was not able to address several
assumptions utilized in the testing that formed the basis of Mr. Gregor’s report. As a result,
Zurn claims “unfair surprise and undue prejudice.1” The Court disagrees.
In support of its argument, Zurn heavily relies on Local Patent Rule 5.3. Its reliance on
this Rule is misplaced. Local Patent Rule 5.3 requires a party seeking to supplement an expert
report after the disclosure deadlines provided for in the Local Patent Rules to obtain prior leave
of court, show good cause that it could not have made the supplement earlier, and establish that
the opposing party will not suffer undue prejudice from the supplementation. Here, Sloan did
not supplement the expert report of Mr. Gregor. Indeed, Mr. Gregor’s report stands. Instead,
Sloan substituted its expert witness from Mr. Gregor to Mr. Bley, Mr. Gregor’s direct supervisor
who supervised his work on the report. Zurn agreed to the substitution in advance. Even if Zurn
had not agreed, the Court would have approved the substitution if Sloan had properly moved for
it for the reasons set forth below. See Randall v. Rolls-Royce Corp., No. 06-CV-860-SEB-JMS,
2010 WL 987484, at *3 (S.D. Ind. Mar. 12, 2010), aff'd, 637 F.3d 818 (7th Cir. 2011) (“Because
we would not have required Defendants to continue to use Dr. Harnett, given his daughter was
suffering from melanoma, even if they had requested a substitution back in March or April of
2009, we will not punish them now for having made that substitution sua sponte.”)
Federal Rules of Civil Procedure 26(a)(2) and 37 govern the dispute. See Assaf v.
Cottrell, Inc., No. 10 CV 0085, 2012 WL 245196, at *2 (N.D. Ill. Jan. 26, 2012) (“The Federal
Rules of Civil Procedure provide judges with broad discretion to resolve discovery disputes.
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Zurn’s attempts to reargue issues previously decided by the Court fail. The Court need
not readdress the substance of its prior rulings here.
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Although the Rules do not expressly address substitution of expert witnesses, Rules 26 and 37
guide our inquiry to the extent that the requested substitution is a request to modify the discovery
schedule ....”); see also Via v. Lagrand, No. 03 C 3278, 2007 WL 495287, at *3 (N.D. Ill. Feb.
12, 2007) (applying Rule 37(c)(1) to plaintiff’s failure to disclose nontreating physician as an
expert rather than a lay witness who had reviewed medical records of child that plaintiff was
accused of abusing). Rule 26(a)(2) governs the disclosure of expert witnesses. See Fed. R. Civ.
P. 26(a)(2). Rule 37 provides that “[i]f a party fails to disclose information or identify a witness
as required by Rule 26(a) or (e), 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.
The substitution of Mr. Bley for Mr. Gregor was appropriate in this case. Mr. Gregor has
submitted an affidavit explaining that he suffers from episodes of severe anxiety and that he
currently treats his condition with Prozac. (R. 492-2.) Zurn challenges the severity of Mr.
Gregor’s health issue. It complains that despite his anxiety Mr. Gregor was able to answer
telephone calls from Mr. Bley during Mr. Bley’s deposition. Zurn argues that these actions
demonstrate that Sloan misrepresented Mr. Gregor’s health and give the “clear implication that
he was unwilling to answer questions under oath.” As Mr. Gregor’s affidavit makes clear,
however, it was the fear of giving the deposition that caused the severity of his anxiety and
stress. Mr. Bley’s affidavit corroborates Mr. Gregor’s. Zurn’s conclusion is simply unsupported
and insensitive under the circumstances. Mr. Gregor has sufficiently explained the impact the
anticipated deposition had on his anxiety and mental state. The Court will not compel a witness
with severe anxiety to testify as suggested by Zurn.

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Furthermore, Zurn has not provided any evidence refuting the facts in Mr. Gregor’s or
Mr. Bley’s affidavit. It also has not submitted any evidence of bad faith on Sloan’s part in
substituting, by agreement, Mr. Bley for Mr. Gregor in advance of his deposition. Mr. Bley is
adopting the same report that Mr. Gregor submitted, Mr. Bley owns the company at which Mr.
Gregor works, Mr. Bley supervised Mr. Gregor’s work on this matter, and Mr. Bley was able to
answer the majority of the questions at the deposition on very short notice. (R. 492-3.) In
addition, Sloan has also offered to make Mr. Bley available for another deposition to answer the
questions he was unable to answer at his first deposition. The Court agrees that Sloan’s proposal
will cure any potential prejudice Zurn may have faced2.
II.

Mr. Ballanco
Sloan also disclosed Julius Ballanco as an expert witness regarding infringement. Mr.

Ballanco’s expert report references the Gregor Report and the measurements taken by M2M.
In addition, Zurn contends that it has suffered undue prejudice from Mr. Ballanco’srReport
because his report indicated that the accused products caused price erosion of $20 to $30 for
every Sloan dual flush handle sold. Mr. Ballanco, according to Zurn, would not identify the
contractors who agreed with his price erosion opinions. As such, Zurn asks the Court to strike
the Gregor Report and portions of Mr. Ballanco’s report.
In his expert report, Mr. Ballanco opines as follows:
In addition, in light of the fact that manual dual mode flush valves are the
quickest route to water savings, in my opinion it is reasonable that Sloan could
have charged higher prices for its dual mode flush valves and handles without
experiencing an impact on sales volume if Zurn did not offer a less expensive,
competing product. It is my opinion that, if Zurn had not been able to offer well
performing, acceptable manual dual flush handles and manual dual flush valves
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The Court expects the parties to work out the issue regarding the raw data.
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from 2006 to the present, Sloan would have been able to increase the price of its
Uppercut flush valves and handles by $20-$30 each without any diminishing
sales. A price increase of $20-$30 per water closet is not significant in the
context of anew building construction or retrofitting projects, and it would not
stop a building owner from going “green.”
(R. 484-5 at 45.) During his deposition, when asked whether he had conducted any studies to
support his opinion on this issue, Mr. Ballanco testified: “Have I done any studies? No, only
anecdotal in my discussions with people.” (R. 484-1 at 215.) He then explained that these
“anecdotal” discussions took place with contractors and engineers. (Id.) When asked to identify
the contractors, he said that he would “rather not.” (Id.) Mr. Ballanco added “I think when I
have conversations with contractors on green issues, I maintain the confidentiality because I’m
not publishing any reports. They’re giving me information. If I start giving their name out, I’m
not going to get their information anymore.” (Id.) The following exchange subsequently took
place in the deposition:
COUNSEL:

Mr. Ballanco, other than the anecdotal evidence that you
mentioned with respect to the 20 or $30 that you believe Sloan
could increase the price for its UPPERCUT, do you have any other
basis for that statement?

MR. BALLANCO:

My years of experience in the profession. I’ve worked in this
profession a long time. You know what pricing is and what you
can get away with and what you can’t get away with. Water
conservation is a major concern.
So when you can show a savings and a price, that was my thought.
I was asked what I thought you could get more and that’s the price
I – the differential I came up with.

(Id. at 218.)
Based on this testimony, Zurn asks the Court to strike Mr. Ballanco’s opinions regarding
price erosion, or, alternatively, to order Mr. Ballanco to identify certain contractors whom he
mentioned during his deposition. According to Sloan, Mr. Ballanco disclosed the sole basis for
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this opinion – his experience. Sloan represents that Mr. Ballanco did not speak with the
contractors he mentioned until after he had written his report, and thus he did not rely on their
informal comments in reaching his opinion.
It is clear that an expert may render opinions based on his or her experience alone. “In
certain fields, experience is the predominant, if not the sole basis for a great deal of reliable
expert testimony.” Fed. R. Evid. advisory committee note. The Seventh Circuit has repeatedly
stated that “genuine expertise may be based on experience or training.” United States v. Conn,
297 F.3d 548, 556 (7th Cir. 2002), quoting Tyus v. Urban Search Mgmt., 102 F.3d 256, 263 (7th
Cir. 1996); see also Metavante Corp. V. Emigrant Sav. Bank, 619 F.3d 748, 761 (7th Cir. 2010).
It is unclear from Mr. Ballanco’s deposition transcript, however, whether his opinion regarding
price erosion was based solely on his experience or whether his conversations with the
contractors formed part of the basis for it. Although Sloan claims that these conversations took
place after Mr. Ballanco wrote his report, the deposition testimony is not clear. Accordingly, the
Court grants Zurn the opportunity to re-depose Mr. Ballanco on this sole issue. Specifically,
Zurn may question Mr. Ballanco about the basis of his opinion that Sloan could have charged
$20 to $30 more for its dual mode flush valves and handles without experiencing an impact on
its sales volume if Zurn had not offered a less expensive, competing product. Mr. Ballanco must
directly answer when his conversations with the noted contractors and engineers took place, and
whether these conversations provided the basis for any aspect of his opinion. If they did form
the basis, Mr. Ballanco must disclose their identities and the substance of each conversation. If
he fails to do so, Zurn can renew this aspect of the motion. If the conversations took place after
he wrote his report and he did not rely on them in reaching his opinions, Mr. Ballanco need not
disclose their identities and may not testify about these conversations during trial.
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CONCLUSION
Zurn’s motion to Strike Sloan’s Amended Rule 26 Disclosures, the Expert Report of John
Gregor, and Portions of the Expert Report of Julius Ballanco is denied as to the Amended Rule
26 Disclosures and the Expert Report of John Gregor, and denied without prejudice as to the
Expert Report of Julius Ballanco. The limited depositions of Mr. Bley and Mr. Ballanco as set
forth in this Opinion must take place on or before April 29, 2013. Each deposition is limited to
one hour. The request for fees is denied.
DATED: April 5, 2013

ENTERED:

___________________________________
AMY J. ST. EVE
United States District Court Judge

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