SPENCER COUNTY REDEVELOPMENT COMMISSION v. AK STEEL CORPORATION

Filing 201

ORDER granting Commission's 167 Motion to Exclude Expert Witness Edward O. Delaney, Esq.,. Signed by Judge Richard L. Young on 10/3/2011. (TMD)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
EVANSVILLE DIVISION

SPENCER COUNTY REDEVELOPMENT )
)
COMMISSION,
)
Plaintiff,
)
)
vs.
)
)
AK STEEL CORPORATION,
)
Defendant.

3:09-cv-00066-RLY-WGH

ENTRY ON SPENCER COUNTY REDEVELOPMENT COMMISSION’S
MOTION TO EXCLUDE EXPERT WITNESS EDWARD O. DELANEY, ESQ.
In its Counterclaim, Defendant, AK Steel Corporation (“AK Steel”), claims that
Plaintiff, Spencer County Redevelopment Commission (the “Commission”), breached a
contract between the parties by charging AK Steel for professional fees, including
attorneys fees for which AK Steel is not responsible. Accordingly, if the Commission is
found to have breached the contract as AK Steel alleges, AK Steel seeks to recover those
professional fees as damages. On August 1, 2011, AK Steel submitted the expert witness
report of Edward O. Delaney (“Mr. Delaney”) as a response to the Commission’s expert,
Wayne Turner (“Mr. Turner”), regarding Mr. Turner’s analysis of the reasonableness of
the fees charged to AK Steel. The Commission moves to exclude Mr. Delaney as an
expert witness. For the reasons set forth below, the court GRANTS the Commission’s
motion.

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I.

Background
Following the Order Modifying Case Management Plan (Docket # 53, “July 2010

CMP”), the Commission submitted an expert report by Mr. Turner on August 2, 2010,
regarding the reasonableness of the attorneys’ fees charged by Ice Miller in connection
with the proceedings between the Commission and AK Steel before the Indiana Board of
Tax Review (“IBTR”), the Spencer Circuit Court, and this court. (The Commission’s
Attachment B, Report of Wayne C. Turner (the “2010 Turner Report”) at 2). The CMP
also required AK Steel to serve its expert reports within thirty (30) days after the
Commission served its expert witness disclosure. It is undisputed that AK Steel did not
file an expert report addressing the reasonableness of the attorneys’ fees charged by Ice
Miller within the thirty-day time period. (The Commission’s Brief at 3).
Also undisputed is that on March 28, 2011, Mr. Turner filed a supplemental expert
report over a month after discovery had closed and only two weeks before the trial date.
At the final pre-trial conference on March 30, 2011, the court took AK Steel’s motion to
exclude Mr. Turner’s suppplemental report under advisement, but indicated it was likely
to exclude it due to the impending trial date. On Friday, April 7, 2011, the last business
day before the trial was set to begin on April 11, 2011, AK Steel moved for a continuance
due to the death in the family of a key witness. (Order Granting AK Steel’s Agreed
Motion for Continuance (Docket # 138)). Contrary to AK Steel’s assertion that the court
never made a ruling on the supplemental report, the court did in fact deny AK Steel’s
motion to exclude Mr. Turner’s supplemental report, because AK Steel now had several
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months, rather than two weeks, to take action with regard to the supplemental report.
(Entry on Motion to Exclude Expert Testimony Based on Untimely Supplemental Expert
Report (Docket # 144)).
Under the modified CMP that was approved after the April 11, 2011, continuance,
the deadline for expert reports and supplemental expert reports was July 1, 2011. (Order
Granting Parties’ Joint Motion to Modify Case Management Plan (Docket # 148, “June
2011 CMP”)). Responsive expert reports were then due by August 1, 2011. (Id.). On
July 1, 2011, the Commission submitted a supplemental expert report by Mr. Turner.
(The Commission’s Attachment C, Report of Wayne C. Turner (the “2011 Turner
Report”)). On August 1, 2011, AK Steel submitted a responsive expert report by Mr.
Delaney. (The Commission’s Attachment A, Responsive Report of Edward O. Delaney,
Esq. (the “Delaney Report”)). Mr. Delaney’s report responds to both the 2010 Turner
Report and 2011 Turner Report.
II.

Discussion
The Commission moves for the exclusion of Mr. Delaney as an expert witness on

the reasonableness of the Commission’s attorneys’ fees, because his expert report (A) is
late and (B) fails to meet the requirements of Federal Rule of Evidence 702 (“FRE 702”)
and Federal Rule of Civil Procedure 26 (“FRCP 26”).
A.

Timeliness of Mr. Delaney’s Expert Report

First, to the extent that the Delaney Report responds to the 2010 Turner Report, the
Delaney Report is late. AK Steel had a thirty-day window of opportunity to submit an
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expert report in response to the 2010 Turner Report, which addressed the reasonableness
of the Commission’s attorneys’ fees. That window closed, and AK Steel failed to take
advantage of its opportunity to respond to the 2010 Turner Report regarding
reasonableness of attorneys’ fees.
AK Steel argues that nothing in the language of the June 2011 CMP limited Mr.
Delaney to a response to the 2011 Turner Report; rather, AK Steel believes that Mr.
Delaney was permitted to respond to all of Mr. Turner’s previously filed reports. The
June 2011 CMP provides that “[e]xpert reports and supplements thereto shall be served
on July 1, 2011, responsive expert reports shall be served by August 1, 2011.” (June
2011 CMP). AK Steel’s interpretation of the June 2011 CMP is unreasonable, given the
fact that the window of opportunity to respond to the 2010 Turner Report expired nearly a
year earlier. Nothing in the language of the June 2011 CMP states that the parties may
respond to expert reports filed before July 1, 2011. The only reasonable interpretation of
the June 2011 CMP is that a party has until August 1, 2011, to respond to an expert report
served on July 1, 2011.
Furthermore, since the continuance the court has made clear that neither the
continuance of the trial nor the order allowing the parties to supplement their claims
permitted the parties to reopen discovery on any issues other than the supplementations or
inject new issues into the case. In granting the Commission leave to amend its
Complaint, the court indicated its willingness only to reopen discovery relevant to the
added claims. (Entry on Plaintiff’s Motion for Leave to File First Amended Complaint
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(Docket # 142)). Additionally, the court struck four new affirmative defenses raised in
AK Steel’s Amended Answer in part because the new defenses were not specific to the
added claims, injected new legal issues into the case, and some were available long before
the filing of the First Amended Complaint. (Entry on Spencer County Redevelopment
Commission’s Motion to Strike New Affirmative Defenses Raised in AK Steel’s Answer
(Docket # 169) at 11). In contrast, the added claims by the Commission and added
Counterclaims by AK Steel were brought under the same legal theories as the original
claims and were brought in the interest of judicial economy, so as to avoid a separate
action for alleged breaches and additional damages that occurred since the filing of the
Complaint. (Id.). Here, AK Steel had an opportunity to respond to the 2010 Turner
Report, but failed to do so. The reopening of discovery relevant to the added claims and
counterclaims in no way gives AK Steel a second chance to respond to an expert report
filed almost a year earlier, just as the supplementation of the Commission’s Complaint in
no way permitted AK Steel a second chance to assert new affirmative defenses to the
Commission’s original claims.
A response to the 2010 Turner Report was due in September 2010, and nothing in
the June 2011 CMP changes that fact. Accordingly, Mr. Delaney’s August 2011 response
to the 2010 Turner Report is late, and that portion of the Delaney Report is excluded.
B.

Rule 702 and Rule 26

The Commission also argues that Mr. Delaney should be excluded as an expert
witness, because his testimony is not admissible under FRE 702 and does not meet the
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requirements of FRCP 26.
Even if the court were to disregard the tardiness of the Delaney Report, his
testimony would still be excluded under FRCP 26 and FRE 702. Under FRCP 26, any
expert witness is required to submit a written expert report containing “a complete
statement of all opinions the witness will express and the basis and reasons for them . . . .”
FED. R. CIV. P. 26(a)(2)(B). Also, under FRE 702, an expert witness may testify as to his
opinion on a fact in issue if, among other things, the expert’s specialized knowledge “will
assist the trier of fact to understand the evidence or to determine a fact in issue.” FED. R.
EVID. 702. A district court’s determination as to “whether that testimony would assist the
trier of fact with a fact at issue” is a threshold matter. Smith v. Ford Motor Co., 215 F.3d
713, 718 (7th Cir. 2000) (internal quotations omitted). Here, the court agrees with the
Commission’s contentions that the Delaney Report is not a complete statement of Mr.
Delaney’s opinions, and that testimony regarding the reasonableness of attorneys’ fees
would only serve to confuse the jurors.
First, the Delaney Report fails to provide a complete and final statement of his
opinions on the reasonableness of the Commission’s attorneys’ fees. In his report, Mr.
Delaney himself calls his report an “interim opinion.” (Delaney Report 3). He goes on to
state that he and Mr. Turner are “not in a position to properly render a firm opinion, let
alone a final one, as to whether the substantial fees being sought” are reasonable. (Id.).
Later, in a section labeled “Next Steps,” he confesses that he needs “important questions
answered before [he] can render any firm, final opinion.” (Id. at 7). Finally, he states in
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his conclusion that “[t]his matter is not ripe for a firm opinion as to fees . . . .” (Id. at 8).
In his own words, Mr. Delaney admits that his opinion is not complete.
AK Steel attempts to refute such a conclusion by asserting that those statements
are being taken out of context. Instead, the crux of Mr. Delaney’s opinion is that due to
the posture of this litigation, no expert, neither himself nor Mr. Turner, is in a position to
properly render an opinion regarding the reasonableness of attorneys’ fees prior to a
decision on the merits in either the litigation before this court or before the tax court. On
this point, AK Steel contends that the Delaney Report is complete and thus satisfies the
requirements of FRCP 26. However, the court cannot ignore Mr. Delaney’s persistent
references to his “interim opinion” and insistence that he needs answers to questions
before he “can render any firm, final opinion.” Furthermore, the answers to the questions
raised in the Delaney Report should be readily available to AK Steel, such as the extent to
which fees for legislative lobbying are being sought, considering AK Steel has already
paid the fees at issue. Ultimately, the Delaney Report is vague and indicates that his
opinion is preliminary and will change in the future, and vague or preliminary reports do
not meet the requirements of FRCP 26. See Salgado by Salgado v. Gen. Motors Corp.,
150 F.3d 735, 741 n.6 (7th Cir. 1998) (“Expert reports must not be sketchy, vague, or
preliminary in nature.”) (citing FED. R. CIV. P. 26 advisory committee’s note; Sierra
Club, Lone Star Chap. v. Cedar Point Oil Co., Inc., 73 F.3d 546, 571 (Fifth Cir. 1996)).
Second, if the jury is charged with determining whether the Commission’s
attorneys’ fees are reasonable, the Delaney Report in no way would assist the jury in its
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determination of that issue. The issues of liability and damages are being tried together
pursuant to the court’s March 3, 2011, entry, a decision supported by AK Steel. (Entry on
Plaintiff’s Motion to Bifurcate Trial as to Defendant’s Liability on the Complaint). If Mr.
Delaney concludes that not even an expert is able to make a determination regarding the
reasonableness of attorneys’ fees until after a decision on the merits, how would his
testimony assist the jurors, considering their verdict must address both liability and
damages? Also, contrary to AK Steel’s assertions, the issue at hand is the reasonableness
of attorneys’ fees, not whether a determination on reasonableness can be made. While the
court recognizes that the Delaney Report is a response to Mr. Turner’s reports in which
his goal is to discredit Mr. Turner’s opinion, the Delaney Report is not relevant to the
pertinent issue and would only serve to confuse, rather than assist, the jury. Accordingly,
his testimony fails to meet the requirements of FRE 702; therefore, he is excluded as an
expert witness.
Because the Delaney Report is untimely and fails to meet the requirements of
FRCP 26 and FRE 702, Mr. Delaney is excluded as an expert witness.

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III.

Conclusion
For the foregoing reasons, the court GRANTS the Commission’s Motion to

Exclude (Docket # 167).

SO ORDERED this 3rd day of October 2011.

__________________________________

RICHARD L. YOUNG, CHIEF JUDGE
RICHARD L. YOUNG, CHIEF JUDGE
United States District Court
District Court
United States
Southern District of Indiana
Southern District of Indiana

Electronic copies to:

Abigail B. Cella
ICE MILLER LLP
[e-mail]
Erik Christopher Johnson
ICE MILLER LLP
[e-mail]
Richard A. Kempf
TAFT STETTINIUS & HOLLISTER LLP
[e-mail]
Todd C. Lady
TAFT STETTINIUS & HOLLISTER LLP
[e-mail]

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Francis H. Lueken Jr.
LUEKEN LAW OFFICE
[e-mail]
Thomas Eugene Mixdorf
ICE MILLER LLP
[e-mail]
Fred Anthony Paganelli
TAFT STETTINIUS & HOLLISTER LLP
[e-mail]
Gayle A. Reindl
TAFT STETTINIUS & HOLLISTER LLP
[e-mail]
Mark James Richards
ICE MILLER LLP
[e-mail]
Shawn M. Sullivan
TERRELL BAUGH SALMON & BORN
[e-mail]
Philip A. Whistler
ICE MILLER LLP
[e-mail]

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