GOLDENSON et al v. STEFFENS et al

Filing 158

MEMORANDUM DECISION AND ORDER granting in part and denying in part 141 Motion to Strike Expert Designation. By MAGISTRATE JUDGE JOHN H. RICH III. (jlg)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
DANIEL R. GOLDENSON, et al.,
Plaintiffs
v.
JOHN L. STEFFENS, et al.,
Defendants

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No. 2:10-cv-440-JAW

MEMORANDUM DECISION AND ORDER ON DEFENDANTS’ MOTION
TO STRIKE EXPERT DESIGNATION
The defendants seek to strike the supplemental designation of the plaintiffs’ fourth
proposed expert in this case, Patrick E. Conroy, Ph.D., on the basis that it was untimely filed, and
seek to preclude Dr. Conroy from offering evidence in support of, or in opposition to, a motion
for summary judgment or from testifying at trial. See Defendants’ Motion To Strike Plaintiffs’
Supplemental Expert Designation of Dr. Patrick E. Conroy as Untimely (“Motion”) (ECF No.
141) at 1. I agree that the designation was untimely filed. However, because I find the delay
substantially justified, I decline to impose the sanction of preclusion of Dr. Conroy as an expert
witness. I do impose a lesser sanction, in the form of the assessment against the plaintiffs of the
defendants’ costs of pressing the Motion, on the ground that the plaintiffs should have, and did
not, timely move for a deadline extension, necessitating the filing of the Motion and causing
additional delay in this already contentious case. I also grant the defendants’ alternative request
for relief in the form of the enlargement of the discovery deadline, nunc pro tunc, to permit them
to depose Dr. Conroy and to re-depose, at their expense, plaintiffs Daniel and Suzanne
Goldenson, with the limitations set forth below.

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I. Applicable Legal Standards
In this district, no written discovery motion may be filed without the prior approval of a
judicial officer. See Local Rule 26(b). By letter to me dated May 31, 2012, the defendants
sought leave to file the instant motion, which I granted. On filing the Motion, they also sought
expedited briefing and a hearing. See Motion at 1. I granted the motion to expedite briefing but
denied the request for a hearing, without prejudice to its renewal by either party at the time of the
filing of responsive or reply briefs. See ECF No. 146. Neither party made a new request for a
hearing. See Plaintiffs’ Opposition to Defendants’ Motion To Strike Plaintiffs’ Supplemental
Expert Designation of Dr. Patrick E. Conroy (“Opposition”) (ECF No. 150) at 1, 9-10;
Defendants’ Reply in Support of Motion To Strike Plaintiffs’ Supplemental Expert Designation
of Dr. Conroy as Untimely (“Reply”) (ECF No. 153) at 1, 7. In any event, the parties’ papers
provide a sufficient basis on which to render this ruling, and its expedited disposition also
counsels in favor of foregoing oral argument.
Federal Rule of Civil Procedure 26 provides, in relevant part, that “a party must disclose
to the other parties the identity of any [expert] witness it may use at trial to present evidence[.]”
Fed. R. Civ. P. 26(a)(2)(A). “A party must make these disclosures at the times and in the
sequence that the court orders.” Id. at (a)(2)(C). “Unless otherwise stipulated or ordered by the
court, this [initial] disclosure must be accompanied by a written report – prepared and signed by
the witness[,]” that includes, inter alia, “a complete statement of all opinions the witness will
express and the basis and reasons for them[.]” Id. at (a)(2)(B)(i). This language is reiterated in
this court’s standard scheduling orders, including the one issued in this case. See ECF No. 47 at
2.
The rule also states:

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For an expert whose report must be disclosed under Rule 26(a)(2)(B), the party’s
duty to supplement extends both to information included in the report and to
information given during the expert’s deposition. Any additions or changes to
this information must be disclosed by the time the party’s pretrial disclosures
under Rule 26(a)(3) are due.
Fed. R. Civ. P. 26(e)(2). “Unless the court orders otherwise, these [pretrial] disclosures must be
made at least 30 days before trial.” Id. at (a)(3)(B).
If a party’s expert disclosure is untimely, “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). The movant bears the burden of
demonstrating that a late expert designation is either substantially justified or harmless. See, e.g.,
United States Bank Nat’l Ass’n v. James, Civil No. 09-84-P-JHR, 2010 WL 1416126, at *6 (D.
Me. Apr. 5, 2010).
“The baseline rule is that the required sanction in the ordinary case is mandatory
preclusion.” Harriman v. Hancock County, 627 F.3d 22, 29 (1st Cir. 2010) (citations and
internal punctuation omitted). However, the court retains discretion to impose other sanctions in
lieu of, or in addition to, mandatory preclusion. See Fed. R. Civ. P. 37(c)(1); see also, e.g.,
Esposito v. Home Depot U.S.A., Inc., 590 F.3d 72, 77-78 (1st Cir. 2009) (“Preclusion . . . is not a
strictly mechanical exercise. And, in its discretion, the district court may choose a less severe
sanction. Where a district court does opt in favor of preclusion, we review that decision with
reference to a host of factors, including: (1) the history of the litigation; (2) the sanctioned
party’s need for the precluded evidence; (3) the sanctioned party’s justification (or lack of one)
for its late disclosure; (4) the opponent-party’s ability to overcome the late disclosure’s adverse
effects – e.g., the surprise and prejudice associated with the late disclosure; and (5) the late

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disclosure’s impact on the district court’s docket.”) (citations and some internal quotation marks
omitted).
II. Factual Background
Following two extensions, the plaintiffs’ deadline for designating experts expired on
February 29, 2012. See ECF No. 54 at 2; ECF No. 79 at 7. At the time of the grant of the
second motion to extend, by order dated February 6, 2012, I reset the deadline “without prejudice
to the filing of a further motion to extend that deadline for good, articulable reasons, if a routine
modification of any expert designation(s) is inadequate.” ECF No. 79 at 7. The plaintiffs filed
no further such motion.
On February 29, 2012, the plaintiffs served on the defendants their designations of four
expert witnesses, including Dr. Conroy. See generally Plaintiffs’ Expert Witness Designations
(ECF No. 142-1), Exh. A to Declaration of Max Nicholas in Support of Defendants’ Motion To
Strike Plaintiffs’ Supplemental Expert Designation of Patrick E. Conroy as Untimely (“Nicholas
Decl.”) (ECF No. 142). The plaintiffs disclosed that “Dr. Conroy is retained in this matter to
perform a forensic analysis of the Madoff-related losses suffered by Spring Mountain Capital
and reported to its limited partners and investors.” Id. at 11. They discussed the type of analysis
that they expected Dr. Conroy to undertake, but added:
Owing to the Defendants’ failure and/or refusal to provide the Plaintiffs with all
true and correct reports and account statements relevant to and necessary for the
completion of Dr. Conroy’s forensic services in this matter, no further
information concerning Dr. Conroy’s opinions can be provided at this time in the
context of this designation. Within a reasonable period of time following his
receipt of the discovery currently being sought by the Plaintiffs, Dr. Conroy’s
designation will be duly supplemented to specify any and all opinions he may
offer as an expert witness, including the disclosure of any schedules or data he
assembles relating to Spring Mountain’s actual and reported Madoff-related
losses.
Id. at 11-12.
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By order dated April 14, 2012, I enlarged the discovery deadline from May 7, 2012, to
May 21, 2012, solely for the purpose of taking expert depositions. See ECF No. 103 at 4.
On May 9-10, 2012, the defendants’ counsel exchanged emails with the plaintiffs’
counsel as to when the supplemental designation of Dr. Conroy would be produced. See Exhs. D
(ECF No. 143-4), E (ECF No. 143-5), F (ECF No. 143-6), G (ECF No. 143-7), H (ECF No. 1438), I (ECF No. 143-9), & J (ECF No. 143-10) to Nicholas Decl. In response to an initial inquiry
by the defendants’ counsel James Kilbreth, plaintiffs’ counsel Alfred Frawley stated: “Regarding
Dr. Conroy, we have been waiting for you to notice his deposition. We just got the documents
on April 24th, and [he] is in London this week, so we’ll supplement his designation as soon as we
can. Why don’t you send me some dates when you can depose him?” Exhs. D-E to Nicholas
Decl.
Attorney Kilbreth responded: “On Conroy, I think we need to be sure that we have had an
adequate chance to review his supplemental materials before deposing him, so let us know when
you think we’ll see the supplement and we’ll be able to work on dates.” Exh. F to Nicholas
Decl. Attorney Frawley replied, “Regarding Dr. Conroy, we’ll have something for you as soon
as we can. He also needs [an] adequate chance to review the discovery. You were a combined
four days late on your last two court-ordered productions, which cost him valuable time before
he left the country to review the materials. I’ll have a better idea at the beginning of next week
[May 14, 2012].”

Exh. G to Nicholas Decl.

Attorney Frawley elaborated, “We receive

documents the next business day after the night you mail them. Therefore, we received the
production that was due on Friday, April 20th on Monday, April 23rd, and we received the
production that was due on Monday, April 23rd on Tuesday, April 24th. As I said, we lost four
days.” Exh. H to Nicholas Decl.

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On May 10, 2012, Attorney Kilbreth stated: “[W]e need to have the designation materials
no later than Wednesday [May 16, 2012] if we’re going to be able to fit this in before the
discovery cutoff.” Exh. I to Nicholas Decl. That day, Attorney Frawley responded, “Dr. Conroy
has been out of the country for at least the last week, so he has not had a chance to look at the
extensive financial materials that were produced to us on April 23rd and April 24th. As you
know, there were thousands of pages that we needed to cull through. I can give you copies of the
materials we have sent him, but other than that I can’t give you a timetable other than that we’ll
get them to you as soon as we can.” Exh. J to Nicholas Decl.
On May 25, 2012, the plaintiffs served Dr. Conroy’s supplemental designation on the
defendants. See Letter dated May 25, 2012, from Alfred C. Frawley IV to James T. Kilbreth,
Esquire, contained in Exh. B (ECF No. 143-2) to Nicholas Decl.

In their supplemental

designation, the plaintiffs stated that Dr. Conroy had partially reviewed certain financial records,
provided to him by attorneys for the plaintiffs, including documents received by the plaintiffs at
various points from March 16, 2012, to April 24, 2012. See Plaintiffs’ Supplementation to the
Expert Witness Designation of Patrick E. Conroy, Ph.D., contained in Exh. B to Nicholas Decl.,
at 1-2 & nn. 1-8. These documents included 460 pages of “Preliminary Performance Estimates”
and “Flash Reports” received on April 24, 2012, and 718 pages of Forms K-1 received on April
24, 2012. See id. at 1 n.1 & 2 n.5.

The plaintiffs went on to describe Dr. Conroy’s expected

testimony, appending five charts to the supplemental designation. See generally id.
In response to the defendants’ May 31, 2012, letter to me requesting permission to file a
motion to strike the supplemental Conroy designation, the plaintiffs sent a letter to me of the
same date, noting, inter alia, that Dr. Conroy had traveled to Miami, Florida, and London,
England, between May 3 and May 13 for other work-related matters and that my order of

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February 6, 2012 (mistakenly referred to as an order of February 26, 2012) contemplated routine
modifications of any expert designation. See Exh. C (ECF No. 142-3) to Nicholas Decl.1
In connection with their Opposition, the plaintiffs submit:
1.

An affidavit of Attorney Frawley stating, inter alia, that (i) on or about April 23,

2012, the plaintiffs received approximately 4,500 pages of documents from the defendants
pursuant to their first request for production of documents, among them 62 pages relating
directly to management and performance fees paid to the defendants, (ii) on or about April 24,
2012, the plaintiffs received approximately 36,000 pages of documents from the defendants
pursuant to their second request for production of documents that included missing Preliminary
Performance Estimates and Flash Reports, communications concerning transfers of investments
in late 2008, federal tax returns and supporting documents, and thousands of pages of
communications concerning Bernard Madoff, (iii) once Attorney Frawley completed his analysis
and review of those and other documents, he sent the relevant portion of those documents to Dr.
Conroy on or about April 26, 2012, and (iv) during a May 2, 2012, deposition of J. Ezra Merkin,
Mr. Merkin confirmed the accuracy of a certain exhibit, which Attorney Frawley then sent to Dr.
Conroy on or about May 4, 2012. See Declaration of Alfred C. Frawley IV in Support of
Plaintiffs’ Opposition to Defendants’ Motion To Strike Plaintiffs’ Supplemental Expert
Designation of Dr. Patrick E. Conroy (ECF No. 150-2), Exh. B to Opposition, ¶¶ 11-14.
2.

An affidavit of Dr. Conroy stating, inter alia, that (i) the Preliminary Performance

Estimates and Flash Reports were of particular importance to his opinions and data presentations,
(ii) his office received three packages of documents from Attorney Frawley, the third of which

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In their opposition, the plaintiffs explain that they mistakenly stated that Dr. Conroy was away on business until
May 13, 2012. See Opposition at 6 & n.4. He returned on May 11, but did not go to his office until May 14,
because May 12-13 was a weekend. See id.

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was received on April 27, 2012, and included, among other things, Asset Under Management
Reports, unredacted versions of Preliminary Performance Estimates and Flash Reports that he
had previously received, and previously missing months of those reports, (iii) it was only on Dr.
Conroy’s receipt of this third installment of documents that he possessed the information
necessary to undertake the analysis described in his initial expert witness designation, and
(iv) between May 3, 2012, and May 11, 2012, he traveled to Miami, Florida, and London,
England, in connection with various professional and business obligations and was unable,
because he was engaged on other business, to review and analyze the third installment of
documents during that period. See Affidavit of Patrick E. Conroy, Ph.D. (ECF No. 150-1), Exh.
A to Opposition, ¶¶ 2-6.
III. Discussion
A. Missing of Deadline; Burden of Moving for Extension
I first address threshold arguments made by both sides. The defendants contend that the
plaintiffs’ failure to request an extension of the May 21 discovery deadline is dispositive of the
instant request, warranting the grant of the Motion without further analysis. See Motion at 3.
The plaintiffs argue that no deadline was missed. See Opposition at 4-5. They reason that they
merely supplemented the designation of Dr. Conroy pursuant to Rule 26(e)(2), and did so well
before the applicable deadline, which, by their reckoning, was August 5, 2012, 30 days before
the expected trial date of September 4, 2012. See id. They add that the obligation to file a
motion to extend the May 21 discovery deadline was that of the defendants, who wished to take
Dr. Conroy’s deposition. See id.
None of these threshold arguments wins the day. To begin, I note that the plaintiffs do
argue, in the alternative, that, if the court finds the supplemental designation untimely, it should

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deny the Motion on the grounds that the belated designation was both substantially justified and
harmless. See id. at 5-9. The defendants brief that point in both their Motion and Reply. See
Motion at 3-9; Reply at 3-7. Therefore that issue, discussed in more detail below, has been
squarely raised and joined.
Second, as the defendants correctly point out, see Reply at 3, Rule 26(e)(2) is
inapposite. That rule contemplates “additions or changes” to the information contained in the
expert report required to be disclosed initially pursuant to Rule 26(a)(2)(B). See Fed. R. Civ. P.
26(e)(2). Although the plaintiffs designated Dr. Conroy by the February 29, 2012, deadline, the
designation effectively was nothing more than a placeholder without sufficient substance. It
lacked the required “complete statement of all opinions the witness will express and the basis
and reasons for them[.]” Id. at (a)(2)(B)(i). Indeed, there was no statement of any opinion that
Dr. Conroy would express. Rather, the plaintiffs described the methodology that he would use in
expressing opinions when he had sufficient data to formulate them. The plaintiffs’ reliance on
Rule 26(e)(2), hence, is misplaced because that rule of course contemplates a compliant initial
disclosure.
Moreover, even if the plaintiffs had correctly invoked Rule 26(e)(2), they miscalculated
the deadline thereunder. The rule provides a default deadline of 30 days before trial, but only
“[u]nless the court orders otherwise[.]” Id. at (a)(3)(B) & (e)(2). The court did order otherwise
in setting a discovery deadline, which expired, following extensions, on May 7, 2012, except for
the purpose of taking expert depositions. Obviously, a supplemental expert designation qualifies
as “discovery,” particularly when it provides the expert’s opinion for the first time.
plaintiffs failed to supplement the Conroy designation by the applicable deadline.

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The

Third, in these circumstances, the plaintiffs, rather than the defendants, bore the burden
of moving for a deadline extension. In their May 31, 2012, letter, the plaintiffs misconstrued a
statement in my order dated February 6, 2012, as supporting their supplemental designation of
Dr. Conroy pursuant to Rule 26(e)(2). See Exh. C to Nicholas Decl. In that order, I made clear
that the plaintiffs were free to file “a further motion to extend that [expert designation] deadline
for good, articulable reasons, if a routine modification of any expert designation(s) is
inadequate.” ECF No. 79 at 7 (emphasis added). The supplemental designation of Dr. Conroy
hardly was a “routine modification.”
Prior to the defendants’ filing of the instant Motion on June 4, 2012, the plaintiffs never
moved to extend the discovery deadline or, in the alternative, their expert designation deadline.
They should have done so.
B. Substantial Justification or Harmlessness
I turn to the crux of the instant dispute: whether the plaintiffs, who did not timely file the
supplemental designation of Dr. Conroy, succeed in demonstrating that their tardiness was either
substantially justified or harmless.
The late designation was not harmless. It prevented the defendants from deposing Dr.
Conroy prior to the applicable discovery deadline of May 21, 2012. In addition, the defendants
state that they would need to re-depose the Goldensons with respect to certain of Dr. Conroy’s
opinions. See Motion at 8-9 & n.6. Finally, as the defendants note, they have been unable to
factor any deposition of Dr. Conroy into their preparation to discuss the filing of summary
judgment motions during a Rule 56(h) conference that is scheduled for Friday, July 6, 2012,
before Chief Judge Woodcock. See id. at 7-8; ECF No. 144. The tardy designation therefore
impacts not only the discovery deadline but also the court’s and the parties’ planning for

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summary judgment motions. Consequences such as this undermine a showing of harmlessness.
See, e.g., Poulis-Minott v. Smith, 388 F.3d 354, 358 (1st Cir. 2004) (“The purpose of the expert
disclosure rules is to facilitate a fair contest with the basic issues and facts disclosed to the fullest
practical extent. Thus Rules 26(a) and 37(c)(1) seek to prevent the unfair tactical advantage that
can be gained by failing to unveil an expert in a timely fashion, and thereby potentially deprive a
plaintiff of the opportunity to depose the proposed expert, challenge his credentials, solicit expert
opinions of his own, or conduct expert-related discovery.”) (citations and internal quotation
marks omitted).
Nonetheless, the plaintiffs do demonstrate that the tardy designation was substantially
justified. As a result of a number of contentious discovery disputes, they did not receive certain
document productions from the defendants until April 23 and 24, 2012. Attorney Frawley
expeditiously reviewed this significant production, transmitting relevant documents to Dr.
Conroy on April 26, 2012. Dr. Conroy received that package on Friday, April 27, 2012. He
avers, and I accept on this record, that this production was critical to his ability to conduct his
analysis. April 28-29, 2012, was a weekend, and Dr. Conroy was away on other business from
May 3-11, 2012. He indicates that, due to the press of this other business, he was unable to turn
to the critical, freshly transmitted documents until after his return on May 11, 2012, which
happened to be a Friday. The plaintiffs produced his supplemental (and, for the first time,
substantive) designation within two weeks of that time.
Moreover, in this case, unlike in the case of the defendants’ motion to designate expert
James Fanto out of time, see ECF No. 135 at 3-10, the plaintiffs put the defendants on notice by
February 29, 2012, their deadline for designating experts, that they had located Dr. Conroy as an
expert, that he intended to undertake a certain analysis, and that his ability to do so was

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contingent on the production of documents that had been requested from, but were being
withheld by, the defendants. The defendants had a right to litigate their obligation to produce the
documents at issue; however, their decision to do so resulted in a significant delay in the
plaintiffs’ ability to complete their designation. The defendants anticipated, and did not raise an
earlier objection to, the expected supplemental designation, attempting to ascertain its status in a
series of emails on May 9 and 10 and to schedule the deposition of Dr. Conroy prior to the
applicable May 21, 2012, deadline. Only when the designation was not forthcoming in time to
meet that deadline did they complain.

The relief afforded herein addresses the prejudice

suffered.2
C. Sanctions in Form of Costs of Litigating Motion
Although I find the plaintiffs’ late supplemental designation of Dr. Conroy substantially
justified, I impose sanctions in the form of the assessment of the defendants’ reasonable costs of
pursuing the Motion.
The plaintiffs’ deadline to designate experts, and to provide a complete statement of their
opinions and the bases therefor, was February 29, 2012. As discussed above, even if the
supplemental designation of Dr. Conroy qualified as a supplement pursuant to Rule 26(e)(2), it
was due by May 7, 2012.

At the very least, as the defendants argue, the supplemental

designation was due sufficiently in advance of the May 21, 2012, deadline for deposing experts
to permit the defendants to take Dr. Conroy’s deposition by that date.
At no point prior to May 21, 2012, did the plaintiffs raise this issue with the court,
evidently relying on their mistaken beliefs that (i) Rule 26(e)(2) applied, (ii) their deadline

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To the extent that the defendants complain that the tardy supplemental designation has impacted planning for
summary judgment motions, they are free to raise this point with Chief Judge Woodcock, and call this order to his
attention, at the Rule 56(h) conference scheduled for July 6, 2012.

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pursuant to that rule was August 5, 2012, and (iii) the defendants, not they, bore the burden of
seeking a deadline extension. The plaintiffs’ lack of concern about whether the designation was
made before or after the May 21, 2012, deadline is evident in their counsel’s email exchanges
with the defendants’ counsel on May 9-10, 2012.
The plaintiffs, who knew that vital documents had not been transmitted to Dr. Conroy
until April 26, 2012, and that he would be traveling on other business shortly thereafter, neither
complied with the court’s scheduling order deadlines nor moved for a deadline extension.
Instead, this motion practice ensued. Its costs properly are taxed to the plaintiffs. See Fed. R.
Civ. P. 37(b)(2)(C).
D. Grant of Alternative Requested Relief
I grant, without objection, the defendants’ alternative request to enlarge the discovery
period to permit them to depose Dr. Conroy out of time and, over objection, their additional
request to enlarge the discovery period to permit them to re-depose the Goldensons on issues
relating to certain of the assertions made in Dr. Conroy’s supplemental designation. See Motion
at 9 n.7; Opposition at 8-9.
The plaintiffs protest that the defendants should not be permitted to re-depose the
Goldensons in these circumstances, in which the defendants chose to depose the Goldensons
more than six months ago and delayed producing the documents underpinning the Conroy
supplemental designation, and the court has already recently permitted the defendants to redepose the Goldensons once. See Opposition at 8-9; ECF No. 135 at 13-14. Nonetheless, the
defendants show good cause to re-depose the Goldensons on issues relating to certain of the
assertions made in Dr. Conroy’s supplemental designation; for example, the Goldensons’
perceptions of and reliance on the monthly differentials between the Preliminary Performance

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Estimates and the Flash Reports. See Motion at 8-9 & n.6. Notably, the plaintiffs do not argue
that this line of questioning is irrelevant. See Reply at 8-9.
For these reasons, the discovery deadline is enlarged nunc pro tunc to July 20, 2012,
solely for the purpose of permitting the defendants to depose Dr. Conroy and to re-depose the
Goldensons. The Goldenson depositions (i) shall be confined to the subject matter of assertions
made in Dr. Conroy’s supplemental designation and (ii) may not exceed a total of two hours in
length, excluding time consumed by objections and interruptions, said time to be divided
between Daniel and Suzanne Goldenson in whatever manner the defendants see fit.
IV. Conclusion
For the foregoing reasons, the Motion is GRANTED in part, insofar as (i) the discovery
deadline is ENLARGED nunc pro tunc to July 20, 2012, to permit the defendants to depose Dr.
Conroy and to re-depose the Goldensons, with the conditions described above, and (ii) sanctions
are imposed against the plaintiffs in the form of the assessment of the defendants’ reasonable
expenses of litigating the instant motion. The defendants shall submit their applicable fees and
costs within 30 days of the date of this order. The Motion is otherwise DENIED.
NOTICE
In accordance with Federal Rule of Civil Procedure 72(a), a party may serve and file
an objection to this order within fourteen (14) days after being served with a copy thereof.
Failure to file a timely objection shall constitute a waiver of the right to review by the
district court and to appeal the district court’s order.
Dated this 5th day of July, 2012.
/s/ John H. Rich III
John H. Rich III
United States Magistrate Judge

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