Wallace Sales & Consulting, LLC v. Tuopu North America, Limited

Filing 126

OPINION and ORDER denying 102 Motion to Exclude Defendant's Expert Witness. Signed by District Judge Gershwin A. Drain. (MLan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
WALLACE SALES & CONSULTING, LLC,
Case No. 15-cv-10748
Plaintiff/Counter Defendant,
UNITED STATES DISTRICT COURT JUDGE
GERSHWIN A. DRAIN

v.
TUOPU NORTH AMERICA, LIMITED,

UNITED STATES MAGISTRATE JUDGE
DAVID R. GRAND

Defendant/Counter Claimant.
/
OPINION AND ORDER DENYING PLAINTIFF’S MOTION TO EXCLUDE DEFENDANT’S
EXPERT WITNESS [102]
I. INTRODUCTION
On March 2, 2015, Wallace Sales & Consulting, LLC (“Plaintiff”) filed a
Complaint and Demand for Trial by Jury against Tuopu North America, Limited
(“Defendant”), alleging breach of contract and seeking a declaratory judgment. See
Dkt. No. 1. On August 7, 2015, Defendant asserted a counterclaim against Plaintiff
for Unjust Enrichment/Quantum Meruit. Dkt. No. 21, pp. 3–4 (Pg. ID No. 506–
07). Plaintiff amended its complaint on August 28, 2015. Dkt. No. 28.
Presently before the Court is Plaintiff’s Motion to Exclude Defendant’s
Expert Witness, filed on October 19, 2016. Dkt. No. 102. Defendant responded on
November 2, 2016, Dkt. No. 111, and Plaintiff replied on November 10, 2016, Dkt.
No. 116.

-1-

For the reasons discussed herein, the Court will DENY Plaintiff’s Motion to
Exclude Defendant’s Expert Witness [102].
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 37(c)(1), “[i]f 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). The Sixth Circuit has interpreted Rule 37(c)(1) to
“require[] 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.’ ” Roberts ex rel. Johnson v.
Galen of Virginia, Inc., 325 F.3d 776, 782 (6th Cir. 2003) (quoting Vance, by &
Through Hammons v. United States, 182 F.3d 920 (6th Cir. 1999)).
“Although exclusion of late or undisclosed evidence is the usual remedy for
noncompliance with Rule 26(a) or (e), Rule 37(c)(1) provides the district court
with the option to order alternative sanctions ‘instead of’ exclusion of the late or
undisclosed evidence ‘on motion and after giving an opportunity to be heard.’ ”
Howe v. City of Akron, 801 F.3d 718, 747 (6th Cir. 2015) (quoting FED. R. CIV. P.
37(c)(1)). “Harmless” has been interpreted to mean “an honest mistake on the part

-2-

of a party coupled with sufficient knowledge on the part of the other party.” Id.
(quoting Vance, 182 F.3d 920, at *5).
To assess whether a party’s omitted or late disclosure is “substantially
justified” or “harmless,” the Sixth Circuit has adopted a five-factor test: “(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 747–48 (citing
Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 396–97 (4th Cir. 2014)).
III. DISCUSSION
A. Challenge to Defendant’s Expert Witness Under Rule 37
In Plaintiff’s motion seeking to exclude Defendant’s expert, Plaintiff seeks
an order striking Defendant’s proposed expert witness, Mr. Thomas Frazee,
because Defendant’s disclosures regarding Mr. Frazee were untimely and
incomplete. Dkt. No. 102, p. 1 (Pg. ID No. 2669).
This case is scheduled to begin trial on the morning of Tuesday, December
13, 2016. Pursuant to Federal Rule of Civil Procedure 26, parties were to exchange
expert witness disclosures “at least 90 days before the date set for trial or for the
case to be ready for trial.” FED. R. CIV. P. 26(a)(2)(D)(i). In this case, that date was

-3-

September 14, 2016. Disclosures “intended solely to contradict or rebut evidence
on the same subject matter identified by another party under Rule 26(a)(2)(B) or
(C)” are due within 30 days after the other party’s disclosure. FED. R. CIV. P.
26(a)(2)(D)(ii). Accordingly, disclosures regarding any expert witness to be called
in rebuttal to Plaintiff’s expert witness were due by October 14, 2016.
Defendant initially disclosed its expert witness in a court filing on February
18, 2016. Dkt. No. 41, p. 3 (Pg. ID No. 661). Defendant also asserts that Mr.
Frazee attended the parties’ mediation session before mediator Gene Esshaki on
July 20, 2016. Dkt. No. 111, p. 3 (Pg. ID No. 2904). Nevertheless, Defendant did
not provide a copy of its proposed expert witness’s report to Plaintiff until
November 2, 2016, 49 days after the primary expert witness disclosure deadline
and only approximately 40 days before the trial date.
After weighing the five factors adopted in Howe, the Court finds that
preclusion ought not occur, although remedial measures at Defendant’s expense
are necessary.
First, the Court assesses the surprise to Plaintiff, against whom the evidence
is offered. The surprise in this case arises not from the identity of the expert
witness, which was disclosed in February 2016, but from the opinions offered by
Defendant’s expert, which were not shared until November 2, 2016. Plaintiff does

-4-

not contend that Defendant’s expert witness report was deficient in form or failed
to supply all of the information required by Rule 26(a)(2)(B).
Second, the Court considers the ability to cure the surprise. Defendant’s
expert’s report has been recently shared and there are still several weeks in which
Plaintiff can depose Defendant’s expert, in order to cure the surprise resulting from
the expert’s newly disclosed opinions. Thus, although the time from disclosure to
deposition before trial is short, it affords Plaintiff an opportunity, albeit a short one,
to examine Mr. Frazee on the content of his report at a deposition.
Third, the Court evaluates the extent to which allowing the evidence would
disrupt the trial. No disruption of trial has resulted, or will result, from the late
disclosure in this case. If Plaintiff needs to take additional steps to remedy any
lingering uncertainty it may have in addressing Mr. Frazee’s testimony at trial,
there is still time to take those steps before the scheduled trial date.
Fourth, the Court reviews the importance of the evidence. Defendant argues
that “[i]t is extremely important that Defendant be given an opportunity to present
its own evidence to counter Plaintiff’s claims for damages.” Plaintiff counters that
the “vast majority of Tuopu NA’s proposed expert witness’ report is addressed to
damages claims that Wallace Sales has no intention of raising.” Dkt. No. 116, p. 6
(Pg. ID No. 3110). Because the amount of damages is an essential element to the

-5-

case, omitting evidence as to damages could compromise the balance of the trial
presentations.
And fifth, the Court examines Defendant’s explanation for its failure to
timely disclose the evidence. Defendant asserts two arguments for why its late
disclosure was justified and/or harmless. First, Defendant claims that Plaintiff did
not provide adequate information regarding its claim for damages to which
Defendant’s expert could respond. Dkt. No. 111, p. 3 (Pg. ID No. 2904). This first
claim lacks merit because Defendant acknowledged receipt of damages
information from Plaintiff in March 2016, and it was that same information upon
which Defendant’s expert relied in his expert witness report. See Dkt. No. 111-2, p.
3 (Pg. ID No. 2917) (“This report contains my opinions regarding the unpaid
commission damages claimed by plaintiff Wallace Sales & Consulting, LLC
(“Wallace”) in the referenced matter, as described in the spreadsheet document
produced on or around March 4, 2016 (“Plaintiff’s Damage Claim”).”); Dkt. No.
116, p. 3 (Pg. ID No. 3107). There are only two documents listed in the expert’s
report of “Documents Relied On” that may have caused difficulty in timely
submission of the expert report—a Plaintiff’s interrogatory response dated
September 14, 2016 and “[s]ales data produced by Tuopu to Wallace with sales
volumes through September 30, 2016”—and Defendant has not argued that these
documents caused it to miss the deadline. See Dkt. No. 111-2, p. 16 (Pg. ID No.

-6-

2930). Defendant goes on to argue that the report was delayed because Defendant
could not depose Plaintiff’s expert, Terrence Barr, until October 28, 2016. Dkt. No.
111, p. 8 (Pg. ID No. 2909). Defendant’s expert did not list Mr. Barr’s deposition
as a document that he relied on, and as such, it provides no basis for the delayed
production of the expert report. See Dkt. No. 111-2, p. 16 (Pg. ID No. 2930).
Defendant has provided no information that supports that Plaintiff is to blame for
Defendant’s failure to submit its expert witness report on time. Accordingly,
Defendant was not justified for the tardy submission of its expert report.
Next, Defendant argues that the failure to disclose its expert report was
harmless because it was an “honest mistake resulting from a computer error in
defense counsel’s docketing system.” Dkt. No. 111, p. 8 (Pg. ID No. 2909). It is
peculiar that Defendant waited until November 2, 2016 to rectify this “honest
mistake” by providing a copy of its proposed expert witness’s report to Plaintiff,
who filed this motion addressing the error two weeks prior.
Considering all of the relevant factors, the late disclosure of Defendant’s
expert report was somewhat harmless. Mr. Frazee’s testimony will not be excluded
on that basis. Any potential harm can be ameliorated by Defendant making Mr.
Frazee available to Plaintiff before trial for a deposition at a time and place that is
mutually agreeable to the parties. Defendant must bear the expenses of that
deposition, including the professional fees of Mr. Frazee and any travel expenses

-7-

for Plaintiff’s counsel. The Court will also impose a sanction of $1,000 in attorney
fees, to be paid by Defendant to Plaintiff, for Defendant’s failure to comply with
Rule 26.
IV. CONCLUSION
For the reasons stated herein, the Court will DENY Plaintiff’s Motion to
Exclude Defendant’s Expert Witness [102].
IT IS SO ORDERED.
Dated:

November 21, 2016
s/Gershwin A. Drain
HON. GERSHWIN A. DRAIN
United States District Court Judge

-8-