SIVOLELLA v. AXA EQUITABLE LIFE INSURANCE COMPANY et al

Filing 207

MEMORANDUM ORDER granting in part and denying in part Plaintiffs' application to Preclude Testimony of Newly Disclosed Witnesses, Admission of Newly Disclosed Documents and to Allow Issuance of a Subpoena. Signed by Magistrate Judge Douglas E. Arpert on 1/5/2016. (mmh)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MARY ANN SIVOLELLA,
Plaintiff,
v.
AXA EQUITABLE LIFE INS. CO, et al.,
Defendants.

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Civil Nos. 11-4194 (PGS)(DEA)
13-0312 (PGS)(DEA)
MEMORANDUM ORDER

This matter comes before the Court on Plaintiffs’ application “to Preclude Testimony of
Newly Disclosed Witnesses, Admission of Newly Disclosed Documents and to Allow Issuance
of a Subpoena.” ECF No. 180.1 These are consolidated actions brought on behalf of twelve
mutual funds (the “Funds”) against the investment advisor of those Funds alleging the advisor
extracted excessive compensation from the Funds. Trial has been set for January 6, 2016. The
present application has three parts: (1) Plaintiffs seek to preclude Defendants from calling at trial
two members of the Funds’ Boards of Trustees (the “Board”) that Defendants did not identify in
their pretrial disclosures; (2) Plaintiffs seek to preclude Defendants from admitting at trial
thousands of pages of documents that were produced after the close of discovery; and (3)
Plaintiffs seek to subpoena Defendants’ trial counsel as well as certain documents for a Rule 104
hearing. Defendants have opposed Plaintiffs’ application. ECF No. 187. Plaintiffs have
responded to Defendants’ opposition.2 ECF No. 188. The Court addresses each aspect of
Plaintiffs’ application in turn:

1

The docket entry numbers referred to herein are from Civil Action 11-4194.
To the extent that this may be considered a discovery application, this Court’s Local Civil Rules do not permit
reply briefs. Nevertheless, the Court has given Plaintiffs’ reply submission due consideration.

2

I. Plaintiff’s Request to Preclude Testimony
Plaintiffs maintain that, although fact discovery concluded in May 2014, Defendants did
not disclose the appointment of Caroline L. Williams and H. Thomas McMeekin as Independent
Trustees to the Funds’ Boards until the parties were preparing the Final Pretrial Order in
November 2015. Both Williams and McMeekin were appointed prior to the close of fact
discovery and prior to the dates on which Defendants served their second and third sets of Rule
26(a) disclosures. Defendants’ disclosures did identify other Board members who possessed
relevant knowledge and stated that all necessary information could be obtained by deposing a
“small number” of Board members. Plaintiffs maintain that permitting Williams and McMeekin
to testify will result in prejudice to Plaintiffs who relied on the testimony of the Board members
who were deposed, Plaintiffs’ expert presentation will be undermined, and Plaintiffs’ trial
preparation will be adversely impacted. Plaintiffs further argue that Defendants will suffer no
adverse consequences if the testimony of these witnesses is precluded. See generally ECF No.
180 at 3-9.
In response, Defendants have stated that they do not intend to call Ms. Williams as a trial
witness. As to Mr. McMeekin, Defendants argue that they were not required to include him in
their initial disclosures on December 14, 2012 because he was not elected to the Board until
January 2014. Defendants further argue that they were not required to supplement their
disclosures to include Mr. McMeekin after he was elected. They contend that Plaintiffs knew or
could have discovered that Mr. McMeekin had discoverable information based on the fact that
his name appeared in “various documents and Board materials provided to Plaintiffs throughout
discovery.” ECF No. 187 at 3. As such, Defendants maintain that Plaintiff will suffer no
prejudice if Mr. McMeekin is allowed to testify. The Court disagrees.

2

Rule 26(a) clearly requires the disclosure of Mr. McMeekin. Defendants amended their
Rule 26 disclosures twice (as required by Rule 26(e)) after McMeekin joined the Board, but he
was not included in either of these disclosures. The amended disclosures identified four other
board members, but not McMeekin.
The Court also rejects Defendants argument that their disclosure requirement was
satisfied because McMeekin’s name and role as a board member appeared in various materials
produced during discovery. “[M]erely because the names of these witnesses appeared, among
hundreds of other names, somewhere in the thousands of pages of documents produced .... does
not mean that [Plaintiffs] should have anticipated that [Defendants] would call these individuals
as trial witnesses and deposed them accordingly.” Eli Lilly & Co. v. Actavis Elizabeth LLC, Civ.
No. 07-3770, 2010 WL 1849913, at *4 (D.N.J. May 7, 2010) (quoting Ty, Inc. v. Publications,
Int'l, Inc., No. 99–5565, 2004 WL 421984, at *4 (N.D. Ill. Feb.17, 2004.))
Rule 37 provides that “[i]f a party fails to provide information or identify a witness as
required by Rule 26(a) or (e), that party is not allowed to use that information or witness to
supply evidence … at trial, unless the failure was substantially justified or harmless.” A party
who has failed to disclose information bears the burden to show that the nondisclosure was
substantially justified or is harmless. D & D Assoc, Inc. v. Bd. of Ed. of N. Plainfield, 2006 WL
1644742, at *4 (D.N.J. June 8, 2006). “Substantial justification requires justification to a degree
that could satisfy a reasonable person that parties could differ as to whether the party was
required to comply with the disclosure request.” Fitz, Inc. v. Ralph Wilson Plastics Co., 174
F.R.D. 587, 591 (D.N.J. 1997). Additionally, “[a] failure to disclose is considered harmless
when there is no prejudice to the party entitled to disclosure.”' D &D Assoc, at * 4 (quoting Fitz,
174 F.R.D. at 591).

3

The Court does not find Defendants failure to be substantially justified or harmless.
Plaintiffs had no notice that Defendants intended to call Mr. McMeekin at trial and Plaintiffs will
be prejudiced if Defendants are allowed to call Mr. McMeekin. This prejudice cannot be cured,
as Defendants suggest, by permitting Plaintiffs to depose McMeekin during trial. This would
completely disrupt the trial, divert Plaintiffs from trying their case, and require substantial
preparation on the part of Plaintiffs. Even then, Plaintiff would not have the benefit of having
their expert opine on Mr. McMeekin’s testimony and would not have the opportunity to depose
Defendants’ expert regarding such testimony.
Accordingly, for the reasons above, Plaintiffs’ application is granted and Defendants
shall not be permitted to call Mr. McMeekin at trial.
II. Plaintiffs’ Request to Preclude Documents
Plaintiffs seek to preclude Defendants from introducing material from over 100,000
pages of documents that Defendants produced between September 8, 2015 and November 7,
2015. These documents were produced more than a year and a half after discovery closed in
May 2014, and, therefore, after all fact and expert depositions had concluded. Plaintiff contend
that these documents, with some exceptions, are not admissible under Rule 37 because
Defendants failed to produce them during the discovery period. Plaintiffs contend they will be
prejudiced if Defendants are permitted to use the information at trial because, given the short
time period between their production and trial, neither Plaintiffs nor their experts could
conceivably review the over 100,000 pages of documents and assess their impact on the issues to
be tried. Plaintiff further argues that this prejudice cannot be cured, as it is not feasible to require
Plaintiffs to thoroughly review all of the documents, present them to their experts and re-depose
Defendants’ experts, and also depose an “untold” number of fact witnesses regarding the
information.
4

Defendants, in response, contend that they have not violated any of their discovery
obligations with respect to the challenged documents. They contend that the “majority of” the
documents were created after the close of fact discovery and “of those that existed during fact
discovery, the majority were publicly-available.” ECF No. 187 at 11. Thus, Defendants admit
that a number of documents that were produced existed prior to the close of discovery and, in
fact, provide an 18-page chart listing such documents. See Hood Decl., Ex. 14. Nevertheless,
Defendants state that even if they had failed to comply with their discovery obligations, the
standard under Rule 37 for excluding evidence has not been met. The Court disagrees, and once
again finds Defendants failure to be neither substantially justified nor harmless. There is no
dispute that despite a request by Plaintiffs in December 2014 for Defendants to update their
production, Defendants waited until Fall of 2015 to produce additional documents that had been
available to them for many months, if not longer. For the reasons argued by Plaintiffs, the Court
finds that Plaintiffs have been prejudiced by the untimely production, and the prejudice cannot
be cured on the eve of trial. Consequently, the Court grants Plaintiffs’ application and precludes
Defendants from using the recently-produced3 documents at trial.
III. Plaintiffs’ Request for Subpoenas
Plaintiffs seek to subpoena documents and testimony with respect to a number of “sideby-side” charts that Defendants allege summarize the work they performed, as well as the work
performed by the Funds’ sub-advisors and sub-administrators (these are referred to herein as the
“Charts”). Defendants have indicated that they will seek to admit the Charts into evidence under
the business record hearsay exception. Plaintiffs, however, will seek to establish that these

3

Only the documents objected to by Plaintiffs are the subject of this ruling. The Hood Declaration divides the
recently-produced documents into two exhibits: Exhibit 13 and 14. Plaintiffs do not object to the documents in
Exhibit 13 with two exceptions. First, they object to any document that has an “N/A” as its creation date. Second,
they object to documents that have been redacted, as no redaction log has been provided. Exhibit 14 is an 18-page
chart that identifies documents created before the close of discovery. Plaintiffs object to these materials. See ECF
No. 188 at 5-6.

5

Charts are inadmissible as a business record based upon the involvement of counsel in preparing
the Charts.4 Having learned in discovery that trial counsel allegedly played a role in the
preparation of the Charts, Plaintiffs want to subpoena documents relevant to the preparation of
the Charts as well as the testimony of Defendants’ trial counsel in order to establish the extent of
counsel’s role in the preparation.
Defendants oppose Plaintiffs’ motion on three grounds. First, Defendants note that in
September 2015, this Court denied Plaintiffs’ request to reopen discovery in order to obtain the
very same information they now seek. Second, they contend that no new facts warrant the
issuance of a subpoena after the close of discovery. Third, Defendants claim the information
sought is protected by attorney-client privilege.
Plaintiffs make the instant application in anticipation of a Rule 104 hearing before Judge
Sheridan to determine the admissibility of the Charts as business records. The ultimate question
with respect to the admissibility of the Charts is for the District Judge to decide, as is any
determination with respect to the parameters of the Rule 104 hearing. As such, the Court is
inclined to permit Plaintiffs to issue the subpoenas to afford Judge Sheridan the opportunity to
have this information before him should he find it necessary and helpful. This decision,
however, should not be construed as a determination that Plaintiffs are entitled to the information
that they seek. Should Judge Sheridan determine that a Rule 104 hearing is unnecessary or the
information sought by the subpoenas not relevant, he may quash all or part of the subpoenas.
Therefore, the Court will grant Plaintiffs’ application with respect to this third request and not
preclude Plaintiffs from issuing the trial subpoenas. Accordingly,
IT IS on this 5th day of January 2016,

4

Although denying Plaintiffs’ motion in limine to exclude the Charts, Judge Sheridan deferred until trial the
ultimate ruling on the Charts’ admissibility.

6

ORDERED that Plaintiffs’ application is granted in part and denied in part; and it is
further
ORDERED that Defendants shall not be permitted to call Mr. McMeekin at trial; and it
is further
ORDERED that Defendants are precluded from admitting the aforementioned recentlyproduced documents at trial; and it is further
ORDERED that the Court shall not preclude Plaintiffs from issuing the trial subpoenas
attached as Exhibit L to the Lakind Declaration.
/s/ Douglas E. Arpert
DOUGLAS E. ARPERT
United States Magistrate Judge

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