Loggerhead Tools, LLC v. Sears Holdings Corporation

Filing 359

MEMORANDUM Opinion and Order Signed by the Honorable John W. Darrah on 9/20/2016. (bg, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
LOGGERHEAD TOOLS, LLC,
Plaintiff,
v.
SEARS HOLDINGS CORPORATION
and APEX TOOL GROUP, LLC,
Defendants.

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Case No. 12-cv-9033
Judge John W. Darrah

MEMORANDUM OPINION AND ORDER
Plaintiff LoggerHead Tools, LLC filed a Motion to Exclude Sears Holdings
Corporation’s Untimely Document Production [249] on May 28, 2016. The motion requests an
order excluding certain documents produced by Sears Holdings Corporation (“Sears”) from use
in summary judgment or at trial and striking all references to and reliance on those documents in
the Rebuttal Expert Report of Louis G. Dudney. For the reasons set forth below, Plaintiff’s
Motion [249] is granted.
BACKGROUND
On April 15, 2016, LoggerHead filed its opening expert report on damages by
Christopher J. Bokhart. On May 11, 2016, Defendants served their rebuttal expert report on
damages by Louis G. Dudney. Along with the rebuttal, Defendants produced the documents that
Dudney relied on in creating the rebuttal report. The documents consisted of financial records
reflecting Sears’ expenses in advertising the accused product on Direct Response TV (“DRTV”).
Expert discovery closed on May 20, 2016.

LEGAL STANDARD
Under the Federal Rules of Civil Procedure ,a party must disclose, among other things “a
copy ̶ or a description by category and location ̶ of all documents, electronically stored
information, and tangible things that the disclosing party has in its possession, custody, or
control and may use to support its claims or defenses, unless the use would be solely for
impeachment.” Fed. R. Civ. P. 26(a)(1)(A)(ii). The parties also have a continuing duty to
supplement disclosures “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). “If a party fails to provide 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(c)(1). “[T]he exclusion of nondisclosed evidence is automatic and mandatory . . . unless non-disclosure was justified or
harmless.” Musser v. Gentiva Health Servs., 356 F.3d 751, 758 (7th Cir. 2004).
ANALYSIS
Plaintiff alleges that Sears produced over 1,000 pages 1 of previously undisclosed
documents that Sears’ expert relied on when making his rebuttal report. Plaintiff argues that
these documents should be excluded, and the portions of the rebuttal report which rely on the
documents struck, because the allegedly untimely production is unduly prejudicial and Sears has
no justification for the delay.

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The actual number of pages is disputed but does not affect the analysis.
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Duty to Disclose
Sears’ first argument is that it did not have a duty to disclose the material prior to the
rebuttal report, or that the non-disclosure was justified. In its Second Set of Requests for
Production, Plaintiff sought production of “all documents and things that discuss, refer, or relate
to allocation of costs . . . to the purchasing, importation, manufacture, production, distribution,
and/or sale of Accused Products.” (Dkt. 249-7, p. 3.) In its First Set of Requests for Production,
Plaintiff sought all documents “relating to the marketing, advertising, or promotion of the
Accused Product.” (Dkt. 249-5, p. 9.) The documents produced by Sears, specifically the
DRTV advertising expenses, clearly fall under the requests. 2
Sears argues that the spreadsheets containing DRTV advertising expenses are in e-mails
or attachments, and they are excused because the documents did not come up under the agreed
search terms. Under the Patent Local Rules for Electronically Stored Information, e-mail
production requests are generally limited to five custodians per producing party and five search
terms per custodian. LPR ESI 2.6(d), (e). However, that rule specifically addresses requests to
produce “email or other forms of electronic correspondence (collectively “email”).” LPR ESI
2.6(a). The rule does not state that those limitations are applicable to any document contained
within e-mail. That the spreadsheets may have been included in e-mails does not relieve Sears of
their duty to produce responsive discovery under Rule 26. 3
Sears also argues that the spreadsheets were not required to be disclosed because the
calculation used by Bokhart is based off of Plaintiff’s theory of damages. Sears argues that,
2

Sears’ argument that none of the requests specifically ask for the accused product TV
data is unpersuasive.
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Furthermore, the implicit argument that the spreadsheets only existed in e-mails is
dubious.
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under Rule 26, they are only required to disclose materials that it “may use to support its claims
or defenses.”

Fed. R. Civ. P. 26(a). The materials for Sears’ calculation of damages may be

used to support its claims or defenses on the issue of damages. Furthermore, under Rule 26(e),
“a party who has made a disclosure under Rule 26(a) ̶ or who has responded to an interrogatory,
request for production, or request for admission ̶ must supplement or correct its disclosure or
response . . . in a timely manner if the party learns that in some material respect the disclosure or
response is incomplete or incorrect.” Fed. R. Civ. P. 26(e)(1)(A) (emphasis added). Sears
clearly knew that their response to Plaintiff’s requests for production was incomplete at the time
they received Bokhart’s expert report on damages. Further, on September 15, 2015, Plaintiff told
Sears that it considered the document production to be insufficient due to a lack of information
on certain costs, such as selling expenses, and asked for pertinent documents. See (Dkt. 352-8.)
Sears’ argument that Plaintiff should have asked for these documents specifically is unavailing,
as Plaintiff did ask for them. It is not disputed that Sears had the information before Bokhart’s
report was prepared.
Sears then argues that Bokhart’s calculation of DRTV costs was a new argument that the
DRTV data responds to. Sears argues that the DRTV data was properly disclosed after
Bokhart’s report as a response to the assumptions that he made. But the case that Sears cites,
Premium Plus Partners, L.P. v. Davis, 653 F. Supp. 2d 855, 873 (N.D. Ill. 2009), discusses a
new argument in a rebuttal report that was in direct response to the expert witness report. Here,
there is no new argument by an expert, the DRTV data already existed and should have been
disclosed. The documents should have been disclosed pursuant to Rule 26, and Sears has not
shown that the failure to disclose the documents was justified.

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Prejudice
Sears also argues that there was no prejudice to Plaintiff. Plaintiff claims that it no longer
has the opportunity to propound additional discovery requests, depose witnesses, and address the
data in an expert report. Whether non-compliance with Rule 26 is harmless is determined by
looking at several factors:
(1) the prejudice or surprise to the party against whom the evidence is offered;
(2) the ability of the party to cure the prejudice; (3) the likelihood of disruption to
the trial; and (4) the bad faith or willfulness involved in not disclosing the
evidence at an earlier date.
Tribble v. Evangelides, 670 F.3d 753, 760 (7th Cir. 2012) (citing David v. Caterpillar, Inc., 324
F.3d 851, 857 (7th Cir. 2003)). As an initial matter, “[a]ltering the financial information on
which [Plaintiff’s] expert’s opinions rest at this late stage in the litigation would undoubtedly
prejudice [Plaintiff].” Sys. Dev. Integration, LLC v. Computer Scis. Corp., No. 09-CV-4008,
2012 WL 2953063, at *3 (N.D. Ill. July 19, 2012). The ability to cure the prejudice is limited
since expert discovery closed on May 20, 2016, and the trial is scheduled for October 24, 2016.
Willfulness is evident by the fact that these documents were not produced despite several
requests by Plaintiff. Sears has not shown that its failure to disclose the documents was
harmless.
CONCLUSION
For the reasons discussed above, Plaintiff’s Motion to Exclude Sears Holdings
Corporation’s Untimely Document Production [249] is granted.

Date:

September 20, 2016

/s/
John W. Darrah
U.S. District Court Judge
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