Cooks et al v. The Hertz Corporation

Filing 184

ORDER GRANTING 159 MOTION for Leave to File filed by Emma Bradley. Signed by Magistrate Judge Reona J. Daly on 3/29/2019. (nmf)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
EMMA BRADLEY, on behalf of herself and )
all others similarly situated,
)
)
Plaintiff,
)
)
v.
)
)
THE HERTZ CORPORATION,
)
)
Defendant.
)

Case No. 3:15-cv-652-NJR-RJD

ORDER
DALY, Magistrate Judge:
This is a proposed consumer class action in which Plaintiff Emma Bradley alleges that
Defendant, The Hertz Corporation (hereinafter “Defendant” or “Hertz”), engaged in fraudulent
business practices related to the assessment of certain fees for its automobile rental transactions.
This matter is now before the Court on Plaintiff’s Motion for Leave to Submit
Supplemental Expert Reports (Doc. 159).

For the reasons set forth below, the Motion is

GRANTED.
RELEVANT BACKGROUND
On February 2, 2018, Plaintiff disclosed two experts for trial, Justin Regus and Bobby
Calder, Ph. D., and produced their expert reports. Said disclosure was timely pursuant to the
operative Scheduling and Discovery Order (Doc. 96). Following Plaintiff’s expert disclosure,
the Court granted Plaintiff’s motion for leave to file a third amended complaint (Doc. 144).
Plaintiff’s Third Amended Complaint was filed on June 27, 2018 (Doc. 148). Plaintiff’s Motion
for Class Certification is pending (Doc. 171), as is Defendant’s Motion for Summary Judgment
(Doc. 175).
Page 1 of 7

In the motion now before the Court, Plaintiff seeks leave to supplement her expert reports
to address new allegations included in her Third Amended Complaint. Plaintiff contends these
new allegations were based on recently disclosed information by Defendant regarding the
calculation of the Energy Surcharge and Vehicle Licensing Cost Recovery (“VLCR”) fee.
Defendant contends that Plaintiff’s motion is untimely as it was filed well after the expert
disclosure deadline and the May 18, 2018 discovery deadline. Defendant further contends that
almost all of the “new allegations” referenced by Plaintiff are based on documents and information
that were in the record for many months before Regus and Calder served their expert reports.
In support of its argument, Defendant asserts that Plaintiff first complained about
Defendant’s discovery responses on February 9, 2018, one week after serving her expert reports
(see Doc. 163-26), despite having said responses in 2016. In Plaintiff’s counsel’s February 9,
2018 letter, counsel sought the formula and specific means by which Defendant calculated the
amount of the Energy Surcharge and VLCR fees (id.). Counsel for Defendant responded on
February 16, 2018, explaining that Defendant had produced documents in September 2016
showing its Energy Surcharge and VLCR calculations, referencing documents labeled HERTZCO-00000049-00000055.
On February 13, 2018, Plaintiff served a Rule 30(b)(6) deposition notice that contained
various document requests (Doc. 163-28). Included in Defendant’s response to these additional
document requests was a reproduction of the Energy Surcharge spreadsheet and the seven VLCR
spreadsheets in an unprotected format (Doc. 163-31). Defendant had previously produced these
spreadsheets on September 12, 2016, but in a protected format. Plaintiff had not objected to said
production until February 19, 2018. The Court also notes that it appears Defendant completed
its document production in 2017 (although there is some discrepancy as to when in fact it was
Page 2 of 7

completed as Defendant contends it completed document production in June 2017 and Plaintiff
contends it was completed in October 2017).
In light of what Plaintiff characterizes as the disclosure of recently produced discovery,
Plaintiff represents its experts must supplement the following allegations contained in the Third
Amended Complaint, which was filed on June 27, 2018 (Doc. 148).
1. Justin Regus
a. Use of Inaccurate Estimates. Plaintiff asserts that in calculating the amount of
the Energy Surcharge in 2008, Hertz used projections for 2008 rather than actual
costs, never revisited the estimates to see whether the projections had come true
and, if it had done so, would have found that they had greatly overstated the actual
2008 costs.
b. Ignored estimates of price decline in 2009. Plaintiff asserts that Hertz ignored
estimates, set forth in its own SEC filings, that projected a fall in fuel prices of
42.5% in 2009; instead, it kept the Energy Surcharge at $1.03 based on the
inaccurate 2008 projections, and then kept that level in place another four years
without re-examining it.
c. Used non-energy related expenses. Plaintiff asserts that a substantial portion of
the costs that Hertz used in determining the surcharge were non-energy related
expenses for tires on its rental cars, representing the second largest contribution to
the supposed cost increase.
d. Mathematical mistake in 2013. Plaintiff asserts that when Hertz increased the
Energy Surcharge in 2013 it made a mathematical miscalculation in determining its
gasoline costs.
e. Used costs in 2013 that were not in the 2008 analysis. Plaintiff asserts that when
Hertz increased the Energy Surcharge in 2013, it purported to compare its 2013
costs to its 2007-08 costs, but it threw in 2013 expenses for items that were not part
of the earlier calculation, such as waste disposal and something called “liberty tire.”
f. Non-energy costs in 2013. Plaintiff asserts that Hertz included non-energy
expenses, such as tire costs, that made up $14 million of the supposed 2013 cost
increases.
g. Inclusion of non-licensing expenses. Plaintiff asserts that the vast majority of the
VLCR fee was attributed to non-licensing expenses such as county property taxes.
h. Overcharges. Plaintiff asserts that even if non-licensing expenses could
somehow be considered part of a “licensing cost recovery,” Hertz consistently
overcharged its customers.
i. Improperly reduced fees to customers who had not paid the overcharges.
Plaintiff asserts that Hertz purported to remedy its overcharges by reducing the fee
in subsequent years by corresponding amounts, but those later fees were paid by
different customers from the ones who made the overpayments and, in any event,
Page 3 of 7

later customers were still overcharged.
2. Bobby Calder
a. Omissions regarding the Energy Surcharge. Plaintiff asserts that Bobby
Calder’s supplemental report will support their allegations that Hertz failed to tell
consumers about the deficiencies cited above in regard to its Energy Surcharge,
including Hertz basing this charge in substantial part on projected 2008 costs
without a subsequent review to determine their accuracy.
b. Omissions regarding the VLCR. Again, Plaintiff reiterates the deficiencies cited
above that will also be supported by Bobby Calder, including Hertz’s failure to tell
consumers that only 12% of the VLCR actually recovered licensing costs and it
generally resulted in an overcharge.
In its response to Plaintiff’s motion, Defendant explains that each of the allegations
identified above were not “new” and could have been included in Plaintiff’s initial expert reports
based on documents already in the record or with some minimal investigation by Plaintiff.
Defendant also contends that the new opinions appear to be regurgitations of allegations made by
Plaintiff’s counsel.
In her reply, Plaintiff remarks that from March 2018 to May 2018 Defendant produced 33
Excel spreadsheets containing a total of 132 worksheets, as well as supplemental interrogatory
answers with nine pages of explanations of how the fees were calculated. Plaintiff posits that
these additional documents and responses revealed information that is the basis for the additional
opinions and allegations mentioned above.
DISCUSSION
Federal Rule of Civil Procedure 26(a)(2) governs the disclosure of expert testimony and
provides that a party must provide expert reports “at the times and in the sequence that the court
orders.” A party who has made a disclosure under Rule 26(a) 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, and if the additional or corrective information
Page 4 of 7

has not otherwise been made known to the other parties during the discovery process or in writing.
FED. R. CIV. P. 26(e). The court in Talbert v. City of Chi., 236 F.R.D. 415, 421 (July 10, 2006
N.D. Ill.) considered the supplementation mandate and remarked that:
By mandating supplementation, Rule 26(e) seeks to prevent surprise at trial.
Allowing, as a discretionary matter, the filing of a supplemental report that fully
informs the recipient of the anticipated testimony of the expert accomplishes that
very purpose. So long as that decision does not entail some greater harm to the
opponent of the report, sound discretion would seem to counsel allowing the
supplemental report to be filed.
Defendant submits that exclusion of Plaintiff’s supplemental expert reports is necessary in
this case given Plaintiff’s lack of diligence in pursuing discovery and seeking to timely amend her
reports. Defendant relies on Sadler v. Int’l Paper Co., Civil Action No. 09-1254, 2014 WL
346119, (Jan. 30, 2014 W.D. La.), where the court refused to allow the plaintiff’s experts to submit
supplemental reports, positing that like the plaintiff in Sadler, Plaintiff here failed to move for an
extension of the expert disclosure deadline and failed to raise timely objections to any perceived
discovery deficiencies. Although the Court notes Defendant’s concerns about the timeliness of
Plaintiff’s objections to its discovery responses that ultimately lead to document and discovery
supplementation, there appears to be good cause for any delay by Plaintiff. Indeed, it appears that
document production was not completed until June or October 2017, and Plaintiff notified
Defendant of her objections in February 2018, prior to the close of discovery in May 2018.
Plaintiff was not able to seek leave to supplement her reports prior to the close of discovery as the
additional materials were not provided until about May 2018. Insofar as Defendant contends the
additional documents and discovery responses had already been produced, the Court disagrees.
In particular, the relevant spreadsheets were produced in an unprotected format, which, for the first
time, provided the formula Defendant used for its fee calculations. There is no indication in the
Page 5 of 7

record that these formulas had previously been produced. In any event, even if some of the
materials had already been produced, such circumstance does not necessarily mean that
supplementation is inappropriate. See Talbert, 236 F.R.D. at 421 (“It is not always necessary,
then, that the supplement be based on information acquired after the initial report was disclosed;
it is enough that a party learn the expert report was incomplete or incorrect in some material
aspect.”).
Moreover, there is good cause to allow Plaintiff to supplement her expert reports in this
case in light of the filing of the Third Amended Complaint, which was also allowed after the close
of discovery. The Court also finds that Defendant will not be prejudiced as Defendant’s expert
will also be provided an opportunity to supplement. Because the Court finds Plaintiff’s request
to supplement to be appropriate in this instance, it declines to require Plaintiff to pay Defendant’s
fees and costs. Insofar as Defendant contends that Mr. Calder’s supplemental opinions are
inadmissible, such arguments are better suited for consideration in a properly filed Daubert
motion.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Leave to Submit Supplemental Expert
Reports (Doc. 159) is GRANTED. Plaintiff shall serve her supplemental reports by April 19,
2019. Depositions of Plaintiff’s experts, limited to their new opinions, must be taken by May 17,
2019. The parties are ORDERED to meet and confer concerning a proposed schedule for
Defendant’s expert, Sonya Kwon, to provide a supplemental report and sit for a deposition. The
parties shall submit a proposed schedule by April 19, 2019 to [e-mail]. If the
parties are unable to agree on a proposed schedule, they must notify the chambers of the
undersigned.
Page 6 of 7

IT IS SO ORDERED.
DATED: March 29, 2019
s/ Reona J. Daly
Hon. Reona J. Daly
United States Magistrate Judge

Page 7 of 7