EQT Production Company v. Magnum Hunter Production, Inc.
MEMORANDUM OPINION & ORDER: The Court DENIES 49 MOTION for Reconsideration and affirms the provisional ruling. Signed by Magistrate Judge Robert E. Wier on 05/25/2017.(LC)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
EQT PRODUCTION COMPANY,
MAGNUM HUNTER PRODUCTION,
MEMORANDUM OPINION AND
*** *** *** ***
Plaintiff EQT Production Company (EQT) filed a formal motion on a portion of
the subject matter at issue on the April 10, 2017, discovery dispute telephonic
conference.1 See DE ##49 (Motion for Reconsideration); 43 (Minute Entry Order).
Defendant Magnum Hunter Production, Inc. (MHP), responded in opposition. DE #53
(Response). EQT replied. DE ##54, 55 (Reply). The matter is ripe for consideration. For
the following reasons, the Court DENIES DE #49 and reconfirms the substance of the
In discovery, a party must disclose “a computation of each category of damages
claimed” as well as make available “the documents or other evidentiary material . . . on
which each computation is based, including materials bearing on the nature and extent of
injuries suffered[.]” Fed. R. Civ. P. 26(a)(1)(A)(iii). Further, a “party who has made a
To address the issue raised in DE #53, at 1 n.1, any non-challenged rulings in DE #43
“stand and resolve” those distinct disputes. The only portion of DE #43 at issue here is
the preclusive ruling in the fourth paragraph. All other aspects of DE #43 continue to
bind the parties unless and until a “formal motion surfaces” on those topics.
disclosure under Rule 26(a) . . . must supplement or correct its disclosure . . . in a timely
manner if the party learns that in some material respect the disclosure . . . 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[.]” Id. 26(e)(1)(A). “If a party
fails to provide information . . . as required by Rule 26(a) or (e), the party is not allowed
to use that information . . . to supply evidence on a motion, at a hearing, or at a trial,
unless the failure was substantially justified or is harmless.” Id. 37(c)(1). The Court may
order additional or substitute sanctions. Id. 37(c)(1)(A)-(C). The Rule 37(d) exclusion
basis, where applicable, likewise includes the potential for additional or substitute
sanctions. Id. 37(d)(3) (cross-referencing Rule 37(b)(2)(A)(i)-(vi)).
The test for Rule 37(c) exclusion “is very simple: the sanction is mandatory
unless there is a reasonable explanation of why Rule 26 was not complied with or the
mistake was harmless.” Bessemer & Lake Erie R.R. Co. v. Seaway Marine Transp., 596
F.3d 357, 370 (6th Cir. 2010);2 see also Acuity Brands Lighting, Inc. v. Bickley, No. 5:13CV-366-DLB-REW, 2015 WL 10551946 (E.D. Ky. Nov. 30, 2015), adopted by 2016
WL 1171541 (E.D. Ky. Mar. 24, 2016). “Rule 37(c)(1) authorizes the trial court to
exclude evidence that was withheld in violation of Rule 26(a) or (e). The party requesting
exclusion under Rule 37(c)(1) need not show prejudice, rather the non-moving party must
show that the exclusion was ‘harmless’ or ‘substantially justified.’” Saint Gobain Autover
USA, Inc. v. Xinyi Glass N. Am., Inc., 666 F. Supp. 2d 820, 826 (N.D. Ohio 2009). “The
Bessemer requires robust damage-related production. Rule 26 requires “what [it] says”;
it is insufficient to produce merely “enough evidence to put [Defendant] on notice” of a
class or category of damages. 596 F.3d at 369. These contours make sense, given one of
the Rule’s aims: “Rule 26(a) generally serves to allow both sides to prepare their cases
adequately and efficiently and to prevent the tactic of surprise from affecting the outcome
of the case.” Fielden v. CSX Transp., Inc., 482 F.3d 866, 871 (6th Cir. 2007).
exclusion of non-disclosed evidence is automatic and mandatory under Rule 37(c)(1)
unless non-disclosure was justified or harmless.” Dickenson v. Cardiac & Thoracic
Surgery of E. Tenn., 388 F.3d 976, 983 (6th Cir. 2004). Indeed, as the Circuit recently
emphasized, “exclusion of late or undisclosed evidence is the usual remedy for
noncompliance with Rule 26(a) or (e),” although the Court of course retains alternative
options. Howe v. City of Akron, 801 F.3d 718, 747 (6th Cir. 2015).3
What, then, does it mean for a mistake to be substantially justified or harmless?
The Sixth Circuit explored that question in Howe, “adopt[ing]” the Fourth Circuit’s fivefactor test to “assess whether a party’s omitted or late disclosure is ‘substantially
justified’ or ‘harmless[.]’” 801 F.3d at 747-48. The factors are: “(1) the surprise to the
party against whom the evidence would be offered; (2) the ability of that party to cure the
surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the
importance of the evidence; and (5) the nondisclosing party’s explanation for its failure to
disclose the evidence.” Id. at 748 (quoting Russell v. Absolute Collection Servs., Inc., 763
F.3d 385, 396-97 (4th Cir. 2014), and S. States Rack & Fixture, Inc. v. Sherwin-Williams
Co., 318 F.3d 592, 597 (4th Cir. 2003));4 see also, e.g., Baker Hughes Inc. v. S&S
Further, “[o]nce it is determined that a party violated Rule 26 by making several
untimely disclosures, a Court may strike those disclosures unless the party to be
sanctioned . . . can show that those disclosure[s] were either harmless or substantially
justified.” Matilla v. S. Ky. Rural Elec. Coop. Corp., No. 6:04-380-DCR, 2006 WL
7128675, at *4 (E.D. Ky. Jan. 20, 2006). “The burden to prove harmlessness or
substantial justification shifts to the party to be sanctioned once a violation of Rule 26 has
been shown.” Id. at *2.
The Circuit also instructs that an omission is harmless if it involves “an honest mistake
on the part of a party coupled with sufficient knowledge on the part of the other party.”
Vance, by and Through Hammons v. United States, 182 F.3d 920, No. 98-5488, 1999 WL
455435, at *5 (6th Cir. June 25, 1999) (table); see also, e.g., James T. Scatuorchio
Racing Stable, LLC v. Walmac Stud Mgmt., LLC, No. 5:11-374-DCR, 2014 WL 1664263,
Chemical, LLC, 836 F.3d 554, 568-69 (6th Cir. 2016); Smith v. State Farm Mut. Auto.
Ins. Co., No. 5:15-375-KKC, 2017 WL 107971, at *2 (E.D. Ky. Jan. 11, 2017) (applying
the factors); Bentley v. Highlands Hosp. Corp., No. 15-97-ART-EBA, 2016 WL
5867496, at *10 (E.D. Ky. Oct. 6, 2016) (characterizing the five factors as “flesh[ing]
out” Bessemer’s “simple test”). As Judge Thapar put it: “The factors simply lend
themselves to the task at the heart of Rule 37(c)(1): separating ‘honest,’ harmless
mistakes from the type of ‘underhanded gamesmanship’ that warrants the harsh remedy
of exclusion.” Id.
That said, though, Rule 37(c)(1) still “requires absolute compliance with Rule
26(a), that is, it mandates that a trial court punish a party for discovery violations in
connection with Rule 26 unless the violation was harmless or is substantially justified.”
Marais v. Chase Home Fin., LLC, 24 F. Supp. 3d 712, 730 (S.D. Ohio 2014). As EQT
emphasizes and the Court recognizes, Rule 37(c)(1) provides for “less draconian options”
than exclusion in appropriate circumstances. Id. The Rules and the unfolding discovery
process, though, give many opportunities to timely correct a prior inadequacy or
seasonably supply equivalent information. The later the disclosure, the smaller the
margin of error and greater the peril. The Sixth Circuit deferentially reviews district
courts’ decisions on these matters under an abuse of discretion standard. Howe, 801 F.3d
The Court previously excluded, “as a preclusive sanction under Rule 37(c) and
(d), from further proceedings in this case any evidence on which EQT relied to make a
at *10 (E.D. Ky. Apr. 25, 2014). Howe retained this formulation, though the factors now
primarily guide the inquiry. 801 F.3d at 747.
damages calculation that EQT did not produce to [MHP].” DE #43. The Court “h[e]ld
EQT to what EQT . . . produced,” including through exclusion of any “unproduced
backup documentation.” Id. In sum, the Court “fr[o]ze EQT’s damage proof at what it in
fact ha[d] provided to [MHP].” Id.
EQT does not dispute that there is a category of information (summarized as
“backup” or other information from the Enertia database to support its damages
calculation) that it did not timely produce (and did not so dispute in the informal
discovery dispute resolution setting). See, e.g., DE ##49, at 8 (stating that “EQT provided
MHP with a report from Enertia” only on April 25, 2017, well after the 3/23/17 Bergonzi
deposition and 3/1/17 discovery cutoff); 54, at 6 (“The crux of [MHP]’s argument is that
EQT did not provide Enertia data that supports its damages calculations to MHP until
after Mr. Bergonzi’s deposition. EQT has since provided that data to MHP.”
(emphasis added)); 54-1 (West Affidavit), at ¶ 24; 49-1, at 6 (Bergonzi Depo. p. 113)
(“[Y]ou used some Enertia records in-house to come up with those numbers?” “Yes.”
“And those documents have never been provided to us. The backup for that has never
been provided to us in this case, but you’re going to go back and look for that?” “I’m
sure we have backup for that.”); id. at 7 (Depo. p. 119) (“[W]e can substantiate how we
calculated those numbers.”).5
MHP specifically asked for damages-related (and much more) information in the
Requests for Production served in mid-November 2016. See DE #53-2; see also DE #53,
at 2. Further, and separate from the Rule 34 basis, EQT had an independent obligation,
per Rule 26, to make available “the documents or other evidentiary material . . . on which
each computation is based, including materials bearing on the nature and extent of
injuries suffered[.]” Fed. R. Civ. P. 26(a)(1)(A)(iii). EQT vaguely referenced some
“internal accounting completed by EQT” in its initial disclosures, see DE #53-1, at 7, but
EQT manifestly did not otherwise meet its obligations during discovery relative to the
Enertia data. See also DE #53, at 2 & 2 n.2.
Though EQT’s Complaint and Rule 26 initial disclosure provided some damage
figures, the disclosure did not in any way detail the computation. EQT most certainly did
not make available to MHP the underlying Enertia ESI or any spreadsheets generated as
back-up for the figures—Rule 26 plainly requires this as to “the documents or other
evidentiary material . . . on which each computation is based, including materials bearing
on the nature and extent of injuries suffered.” Fed. R. Civ. P. 26(a)(1)(A)(iii). Notably,
the initial disclosure, at DE #53-1, nowhere lists Enertia data or spreadsheets from
Enertia as documents or ESI in EQT’s possession that it may use “to support its claims,”
again counter to the Rule 26(a) dictates. Later, by detailed and overlapping document
requests, MHP sought, through many formulations, all evidence related to or supporting
the damage claims. None of those triggered production of Enertia records. Heading into
the Rule 30(b)(6) depositions, EQT knew it was to designate and prepare a witness to
discuss damages. Despite all of that history and the many instances of required disclosure
or response, EQT produced its designee and mouthpiece Bergonzi for deposition, having
not produced to MHP the Enertia records, substantiating spreadsheets, or the work papers
underlying the damage amounts. As Plaintiff, EQT had used the materials to formulate its
Complaint (and its pre-complaint POC in bankruptcy). Still, EQT simply ignored that
cache of records, as a matter of discovery, until Bergonzi testified, a point well after the
formal discovery close. When first before the Court, EQT insisted that the discovery
requests had not encompassed Enertia materials and that EQT had timely produced all the
REW_20170410_105000, at 15:30.
EQT seeks refuge in Rule 37’s “unless” clause: it endeavors to establish that the
discovery failure was “substantially justified” or “harmless,” so as to militate against the
remedy of exclusion. See, e.g., DE #49, at 6. Whether the failure was substantially
justified or harmless is a question on which EQT has the burden. Roberts ex rel. Johnson
v. Galen of Va., Inc., 325 F.3d 776, 782 (6th Cir. 2003); Blair v. GEICO Gen. Ins. Co.,
917 F. Supp. 2d 647, 656 (E.D. Ky. 2013). Because the Howe factors govern the analysis,
the Court examines each.
The surprise to MHP. The Court, in these circumstances, sees plain surprise to
MHP. MHP directly asserted its surprise. DE #53, at 10. In MHP’s view, “Bergonzi
could not explain how he came up with even the place-holding numbers except by vague
references to Enertia reports he ran in February 2016 and yet had not produced by the
time he was deposed more than a year later, in March 2017.” Id. The Court recognizes
MHP’s surprise concerns as valid in this scenario.
The Court has reviewed every tendered page of the Bergonzi deposition (indeed,
of every exhibit tendered) and agrees with MHP on the issue. Apparently, little (if
anything) Enertia-related had been exchanged in discovery prior to the Bergonzi
deposition, despite the database’s apparent empirical centrality (per Bergonzi, EQT’s
speaker) to EQT’s damages calculation.6 Bergonzi had to explain the basics of Enertia,
see DE #49-1, at 3-4, and “[w]hen” Bergonzi “mentioned Enertia . . ., a bell went off in
[EQT counsel’s] head that maybe we can . . . go back and look there” for responsive
information. Id. at 3 (Depo. p. 88). Ms. Chesnut agreed that the topic of damages was
MHP had notified EQT that the “amount of damages” and the “calculation of same”
would be matters of examination during the 30(b)(6) deposition. See DE ##29, 32, at ¶ 2;
see also id. at ¶¶ 11-13.
“hard to talk about without something in front of us to understand what the Enertia
system was.” Id. at 4 (Depo. p. 92). Enertia seemed largely unexplored to both sides at
the deposition. If a bell was sounding for EQT, imagine the clear surprise to MHP’s
Bergonzi directly said that EQT “used some Enertia records in-house to come up
with th[e damages] numbers.” DE #49-1, at 6 (Depo. p. 113). Although, per MHP
counsel, “those documents [were] never provided,” Bergonzi was “sure we have backup
for that.” Id. EQT “came up with” the $2,368,349 figure by “going back through [the]
Enertia documents.” Id. It similarly “came up with” the $831,909 figure “through [the]
Enertia records.” Id. (Depo. pp. 113-14). EQT forced MHP to conduct the 30(b)(6)
without access to the substantiating records. Adding to the surprise, these were damage
claims first raised only in this lawsuit: “EQT had never made a claim on Magnum Hunter
for any of those two amounts.” Id. (Depo. p. 114).
Bergonzi made clear that EQT independently supplemented the Mercadante audit
with “a query to the Enertia system” to calculate damages. DE #49-1, at 9 (Depo. p. 175).
Although “Mercadante did its work, . . . [Bergonzi] and EQT internally came up with the
rest of what comprises the claims that are spelled out in the complaint.” Id. In fact, “to
prepare the proof of claim, EQT (in a comment reflecting the contribution of the largely
unknown Enertia) “quer[ied] the system to empty the buckets for revenues and gathering
and compression by month,” resulting in “a worksheet that supports these numbers.” Id.
at 12 (Depo. p. 185). Only with that worksheet, not provided to MHP, “could [EQT]
understand how we had built up the claim.” Id. (Depo. p. 186). Ms. Chesnut was explicit:
“Well, I don’t want to purport to understand here today how you did it. . . . [W]e don’t
have the backup is what I’m saying.” Id. These comments, consistent throughout the
deposition, plainly show that the topic of Enertia records was new to and would surprise
The raw data inputted into Enertia may well have (and apparently did) originally
come from MHP, as EQT argues at length, see, e.g., DE #49, at 9-11, but MHP was not
aware of how EQT had processed the information, how Enertia treated, computed, or
utilized it, how EQT used it to calculate damages, and the like. See DE #49-1, at 4, 6, 7,
9, 12 (Depo. pp. 92, 113-14, 119-20, 175, 185-86). For that matter, neither was Bergonzi,
at the deposition. See id. at 6, 7 (Depo. pp. 113-14, 119, 120) (referencing, e.g., “numbers
. . . generated off Enertia reports”). A court abuses its discretion if it excludes evidence
when the receiving party “had all the information relevant to the computation of damages
in its possession and had a full opportunity during [the] deposition to question [the
deponent] about damages.” Howe, 801 F.3d at 748 (internal quotation marks removed).
That is not the case here, where MHP (and even Bergonzi) did not have the Enertia
records—which EQT affirmed was the basis for much of its damages calculation, DE
#49-1, at 6, 7, 9, 12 (Depo pp. 113-14, 118, 120, 175, 185-86)—in its possession and
where MHP did not have a full (or really any) opportunity during Bergonzi’s deposition
to question him about the Enertia-based damages calculation. See, e.g., id. at 6, 7 (Depo.
pp. 113, 119) (“I’m sure we have backup for that.”; “[W]e can substantiate how we
calculated those numbers.”).7 Nearly eight months into the case, and after discovery
closed, Bergonzi, EQT’s representative, swore to a damage basis previously undisclosed
to MHP, could provide no concrete details, and merely promised future substantiation of
Bergonzi’s testimony is strikingly similar (though not, of course, identical) to
Sheffield’s in Acuity. See 2015 WL 10551946, at *3-*4 (excluding evidence).
claims that should have been provided months earlier. The Enertia dynamic easily
constitutes much more than using “simple math.” Howe, 801 F.3d at 748; see, e.g., DE
#49-1, at 12 (Depo. p. 185-86) (Bergonzi describing “query[ing] the system to empty the
buckets for revenues and gathering and compression by month,” requiring review of a
“huge Excel spreadsheet” for adequate comprehension).
The Civil Rules, simply put, “do not require parties to read minds.” Bentley, 2016
WL 5867496, at *10. Bergonzi testified that the Enertia documents were central to and
the basis of much of EQT’s damages calculation, yet EQT did not timely produce those
records, and MHP could not question Bergonzi on the contents. For all the reasons
discussed, the Court plainly sees surprise in EQT’s late production of the Enertia records.
Ability to cure the surprise and the extent to which allowing the evidence
would disrupt the trial. EQT apparently attempted to mitigate the surprise by producing,
post-deposition and post-discovery-close, the at-issue Enertia records. The Court finds
that action, considering all the circumstances, inadequate to “cure” the surprise and to
As in Bentley, the information here “came only after [the] scheduled deposition.”
2016 WL 5867496, at *10 (emphasis in original). Just as the defaulting party did in
Bentley, EQT responds that “the Court could reopen discovery.” Id. at *11. Apart from
the potential future discovery disputes and delay that step could prompt (important
considerations themselves), such a solution “would also reward [EQT] for [its]
untimeliness and suggest that deadlines bend to a party’s will.” Id. EQT’s meager
offering of more discovery and scheduling uncertainty here “does nothing to explain [the
prior] delay or account for either the deadlines that have passed or those that draw nearer
each day.” Id. Indeed, here, discovery has been closed for months. Dispositive motions
are due within days; numerous pretrial deadlines loom, and trial is a mere 3 months away.
Instead, EQT’s proposal “would invite dilatory tactics and discovery abuse” and “do
nothing to ‘secure the just, speedy, and inexpensive determination’ of this case.” Id.
(quoting Fed. R. Civ. P. 1). MHP perceives this and quite reasonably expresses a
reluctance to expend “enormous time and expense in deposing Mr. Bergonzi again on
documents produced after discovery closed.” DE #53, at 11 (emphasis in original). The
Court agrees with this District’s conceptualization in Bentley and MHP’s argument here
that EQT’s proposal, in the circumstances, “surely fails the Howe idea of ‘cure[.]’” Id.
Harm should be assessed based on the realities of the situation, the case status,
and the schedule. Thus, in almost every situation of nondisclosure, a court willing to
move mountains could fashion a remedy to mitigate harm. That might mean re-writing
the schedule, reopening discovery, and shifting all resultant costs to the offending party.
The Court does not view theoretical mitigation, only by major surgery on case posture, as
fairly contemplated by the harm assessment. In other words, if the nondisclosure would
require significant compromise in the status and schedule of a case, or would require
consequential management in terms of discovery costs, burdens, and sequence, then the
failure to disclose has indeed caused harm beyond the unilateral curative powers of any
party. See, e.g., Dayton Valley Investors, LLC v. Union Pacific R. Co., No. 2:08-CV-127ECR-RJJ, 2010 WL 3829219, at *6 (D. Nev. Sept. 24, 2010) (“Multiple courts within the
Ninth Circuit have found that the failure to provide a computation of damages or identify
the witness who will testify regarding damages within the discovery period is not
harmless for purposes of Rule 37(c) precisely because it results in the need to reopen
discovery.”); Ketab Corp. v. Mesriani Law Grp., No. 14-07241-RSWL-MRW, 2016 WL
5921767, at *3 (C.D. Cal. Mar. 18, 2016) (“Plaintiff’s failure to provide a computation of
damages is not harmless precisely because it results in the need to reopen discovery.”).
As one court remarked, in response to the argument that reopening discovery would solve
any harm: “But, if that is so, no failure to disclose would ever be harm[ful] because there
will always be a way to reschedule something to accommodate the failure to disclose. . . .
If the court were to accept such an argument it would all but forfeit the ability to
effectively manage litigation.” In re Rybolt, 550 B.R. 422, 427 (Bankr. N.D. Ind. 2016).
Simply put, there is harm in case disruption, paired with the attendant negative effects on
the non-defaulting and innocent party.
As to trial disruption, unlike in Howe, the issue here has not “brought the parties
closer to agreement.” 801 F.3d at 748. Cross-examination at trial would likewise not
sufficiently cure the patent surprise or portend a smooth trial; Howe addressed a quite
unique, retrial issue, wholly distinct from the status of this case. Id. The time for MHP to
be able to query EQT regarding damages was—armed with discoverable documents—at
the Bergonzi 30(b)(6) deposition; EQT’s proposed cross-examination alternative, DE
##49, at 12; 54, at 10, would improperly force MHP to wait until trial to get answers to
and explanations of critical questions to which it was entitled during discovery.
Additionally, given the approaching September 2017 trial date, along with the cascading
pretrial deadlines, MHP is right that EQT improperly seeks to force MHP to “spend the
next few months reviewing EQT’s ‘backup’ documentation or re-deposing Mr. Bergonzi”
“instead of preparing for trial” while EQT “actually gets to prepare for trial.” DE #53, at
11. Case deadlines exist for many reasons, one of which is guiding the just, efficient, and
methodical resolution of the case by providing the parties a level playing field for hashing
out the case questions. EQT would upset that balance here. The Court finds EQT’s
proposal to be disruptive to the trial and to fair and orderly trial preparation.
The importance of the evidence. EQT asserts, DE #49, at 12, and the Court
perceives Enertia data importance here, as did the Howe and Bentley courts regarding the
evidence at issue in those cases. MHP does not argue against proof importance (and to
the contrary, seeks the proof’s exclusion, stating that the “importance to the defense” of
this evidence “cannot be over-stated”). DE #53, at 11. The at-issue Enertia records are
This, in a sense, cuts both ways. The more important the proof, the greater the
effect of preclusion, but also the greater the harm in tardy disclosure. Compare, e.g.,
Bentley, 2016 WL 5867496, at *11 (perceiving this factor as “cut[ting] in the
[nondisclosing party]’s favor” when the at-issue records were “important” and
“significant”), and Redmond v. United States, 194 F. Supp. 3d 606, 614 (E.D. Mich.
2016) (same), with, e.g., In re Cox Motor Express of Greensboro, Inc., No. 14-10468,
2016 WL 6661318, at *5 (M.D.N.C. Nov. 4, 2016) (“[T]he [vital] importance of the
evidence weighs in favor of finding that Defendant’s failure to disclose was not
substantially justified or harmless.”); Etheridge v. E.I. DuPont De Nemours & Co., Inc.,
No. 14-CV-2443-SHL-cgc, 2015 WL 12516227, at *3 (W.D. Tenn. Oct. 14, 2015)
(“[B]ecause this evidence is so important to Plaintiff, her explanation for her failure to
abide by . . . the Federal Rules of Civil Procedure becomes even less satisfactory.”); see
also, e.g., Exclaim Mktg., LLC v. Directv, LLC, No. 5:11-CV-684-FL, 2014 WL
12626359, at *3 (E.D.N.C. Nov. 18, 2014) (“The fourth factor, concerning the
importance of the evidence, must be viewed from the perspective of both parties, and the
fact that certain evidence is helpful to a party’s case in the eyes of the jury also shows
why it should have been disclosed in a timely manner.” (internal quotation marks
removed)). Regardless, importance “cannot, by itself, save improperly disclosed evidence
from being found unjustified or non-harmless.” Samsung Elecs. Co., Ltd. v. Nvidia Corp.,
314 F.R.D. 190, 197 n.6 (E.D. Va. 2016).
EQT’s explanation for its failure to disclose the evidence. This factor is the
“one that speaks directly to whether [EQT]’s untimely disclosures were ‘substantially
justified.’” Bentley, 2016 WL 5867496, at *11. EQT has not here offered a persuasive,
substantial justification for its delay, so the Court “cannot say that” EQT’s discovery
failure here was merely an honest mistake. Bentley, 2016 WL 5867496, at *11 (citing
Sommer v. Davis, 317 F.3d 686, 692 (6th Cir. 2003)).
EQT offers nothing convincing concerning its management of the Enertia
evidence.8 EQT, as the Plaintiff, the master of its claim, and the party making its own
damages calculation, should have been well aware, early in the case, of the basis for that
calculation. Bergonzi (EQT’s speaker) said the basis was largely Enertia reports—they
were literally what EQT had previously “used . . . to come up with those numbers,” DE
#49-1, at 6 (Depo. p. 113)—but, for reasons not clear on this record, EQT, despite
EQT’s motion says that it “first addresses . . . why it did not produce the information at
issue.” DE #49, at 6. The Court sees no such explanation, however. Rather, EQT merely
explains the background and states that it “has now created reports from Enertia that it
produced to MHP.” Id. at 7 (emphasis added). The Court finds it odd that EQT tries to
distinguish Enertia data / product from “documents” in its possession. Surely the Rules
equate paper and ESI in terms of disclosure and discovery response obligations. EQT had
and used the Enertia materials to formulate its claim and then shelved the reference
materials throughout the discovery process. This is not explicable through torture of the
multiple triggering rules or events, had simply not gathered or produced those documents
during discovery or in advance of the deposition. Indeed, the damage basis even seemed
to be news (a “bell went off in my head”) to EQT’s counsel.9
EQT also makes a suggestion that it thought there was no dispute on Enertiarelated discussion. See, e.g., DE #49, at 8. This rings hollow, to the Court. A cursory
review of the Bergonzi deposition transcript reveals MHP’s repeated statements of need
for the Enertia information and of confusion concerning the damages calculation without
it. EQT’s counsel, and indeed EQT’s representative himself, made repeated promises to
go back and find the referenced Enertia data post-deposition. A dispute plainly persisted
at and after the Bergonzi deposition. Indeed, the parties jointly began the discovery
dispute resolution process a mere 4 days after the deposition, see DE #41 (Order),
seemingly prompted by a 3/27/17 email from MHP’s counsel that explicitly included
broad concern over “the corporate deposition we took last week.” DE #54-22. EQT had
not supplemented as of the call. On that call, EQT claimed it had produced all required
records. Not until two weeks after the provisional ruling did EQT supplement.
Additionally, as to some of EQT’s arguments, “faith—good or bad—is not relevant [to]
the substantial justification component or the harmless component of a Southern States
To the extent EQT claims a broad work-product protection justification, DE #49, at 8,
the Court finds the reason unpersuasive. First, of course, the parties never raised a workproduct dispute with the Court and have never briefed the contours of the doctrine’s
applicability here. Just as importantly, though, EQT dropped the potential work-product
shield defense post-deposition, eventually turning Enertia records over to MHP. A reason
(never briefed or adjudicated) EQT hurriedly abandoned post-deposition does not strike
the Court as a substantial justification for pre-deposition nondisclosure. See also DE #491, at 10-11 (Depo. pp. 180-81). The Court reviewed the audio of the April 10 telephone
conference; EQT never mentioned work product as a factor in managing Enertia
[i.e., Howe] analysis.” Samsung, 314 F.R.D. at 199 (citing cases).10 “Instead,
‘explanation’ looks to the objective circumstances surrounding the nondisclosure. In that
sense, ‘explanation’ looks more at the feasibility of full and timely disclosure than it does
at parties’ intent.” Id. at 199-200 (internal citations removed).
All told, “[u]nder Rule 37(c)(1), forgiveness must be earned,” and it “neither
comes automatically nor easily.” Bentley, 2016 WL 5867496, at *11. For the reasons
discussed, EQT earns no relief here. Unlike Howe, this discovery period was no “rushed,
confusing nightmare” in which counsel’s honest mistake explained the failure to produce.
801 F.3d at 749. Unlike Howe, the district court did not here “cause some of the
confusion,” such as by “set[ting] short deadlines for discovery.” Id. at 750. This case did
not have a “hurried” discovery period and has not been marked by “rancor between the
parties.” Id. The attorneys have not played “childish withholding game[s.]” Id. It was this
confluence of factors, none of which are present in this case, that led the Howe court to
determine that the district court “overreact[ed]” and abused its discretion in ordering
exclusion. Id. This case is dissimilar to Howe.
Rather, the issue here is straightforward: EQT untimely produced a category of
Enertia documents / information, central to its damages calculation. The question is: what
should the consequence of that be? The Court has considered all Howe factors and
“Bad faith is explicitly not one of the Southern States [i.e., Howe]
factors. E.g., Southern States, 318 F.3d at 596 (‘excluding evidence only when the
nondisclosing party acted in bad faith would undermine the basic purpose of Rule
37(c)(1): preventing surprise and prejudice to the opposing party’); Rambus, Inc. v.
Infineon Technologies, AG, 145 F. Supp. 2d 721, 725-27 (E.D. Va. 2001).” Samsung, 314
F.R.D. at 197 n.7 (emphasis in original). Indeed, Rambus, the case on which the Fourth
Circuit ultimately relied for the 5-factor formulation, stated that “the plain language” of
Rule 37(c) “contains no requirement for bad faith or callous disregard of the discovery
rules.” 145 F. Supp. 2d at 727.
concludes, for all the reasons discussed, that EQT’s failure neither was substantially
justified nor harmless. Accordingly, the consequence should be and is the “usual” Rule
37 remedy: exclusion of the tardily-produced proof.11
Again, the Court simply freezes EQT where it happily stood at the time of the
Bergonzi deposition. EQT had elected not to identify Enertia records as discoverable or
produce Enertia materials through the entire discovery period. As EQT’s spokesman
explained damages, he acknowledge the role of Enertia as the information “repository”
used to “substantiate” any royalty issue. DE #49-1, at 3 (Depo. p. 86). He agreed Enertia
spreadsheets backed up the damage claims and Enertia records “support these
numbers.” Id. at 12 (Depo. p. 185). Despite a Rule 26(a) duty, a Rule 26(e) duty, multiple
Rule 34 duties, and the obligations of Rule 30(b)(6), EQT ignored all and required MHP
to depose its corporate spokesman on damages without the substantiating information.
Then, to the Court in April, EQT claimed the requests for production did not cover
Enertia and that EQT had produced all the Rules required of it. EQT may have rethought
that weeks later, in a late salvo of supplementation, but the Court views it as right to
make EQT walk the trail it volitionally chose. Discovery is closed. EQT has not justified
nor proven as harmless its failures to disclose. As such, EQT should not be permitted to
use in any proceeding damages proof it had not supplied as of the Bergonzi deposition.
The Court considered the totality and concludes that a sanction less than exclusion is
not adequate. In these circumstances, a mere fee award or jury advisement would
insufficiently account for the Rule 26 and 37 values, and no other (b)(2)(A) sanction fits
these facts. The Sixth Circuit has described exclusion here as “mandatory” and “usual.”
EQT risked an exacting sanction when it failed to seasonably comply with its discovery
obligations regarding central damages-related evidence, waiting until post-30(b)(6)
deposition and post-discovery-close to produce proof its speaker described as the basis
for much of its significant damages claim.
For these reasons, the Court DENIES DE #49 and affirms the provisional ruling.
* * * * *
The Court issues this Order resolving a non-dispositive12 pretrial matter under 28
U.S.C. § 636(b)(1)(A). Any party objecting should consult the statute and Federal Rule of
Civil Procedure 72(a) concerning its right of and the mechanics for reconsideration
before the District Court. Failure to object waives a party’s right to review.
This the 25th day of May, 2017.
The Court treats (and treated) the matter as non-dispositive because, unlike in Acuity,
there is no suggestion here that the exclusion DE #43 countenanced was dispositive as to
any specific claim. See 2015 WL 10551946 (stating, “The preclusion of Rule 37(c)(1)
generally aims at barring evidence, not at whole claims,” but, on the facts, recommending
a harsher (b)(2)(A) sanction prohibiting “supporting . . . designated claims”). The Court
here excludes a mere subset of evidence, not a claim.
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