Del Giudice et al v. Harlan et al

Filing 146

MEMORANDUM AND ORDER: granting in part and denying in part 133 Motion to Preclude. For the reasons discussed, plaintiffs' motion (Docket no. 133) is granted to the extent that the defendants are precluded from presenting the testimony of Pete r Van Raalte, C. Kenneth Clay, Tony Pucillo, Gerson Guzman, Adam Fitzner, Jason Ghoshhajira, or Jackson Yang; plaintiffs' application for an award of attorneys' fees and costs in connection with the motion is denied. SO ORDERED. (Signed by Magistrate Judge James C. Francis on 2/10/2017) Copies Faxed By Chambers. (ama)

Notice

of

Operating

Default,

accusing

Agreement

that

him

of

breaching

prohibits

members

participating in competing businesses.

of

a

term

of

Rockland

the
from

(Third Amended Complaint

(“TAC”), ¶ 32; Notice of Default dated Oct. 9, 2015 (“Notice of
Default”), attached as Exh. B to Declaration of Joshua B. Katz
dated Jan. 11, 2017 (“Katz Decl.”)).

Specifically, the Notice of

Default alleged that Mr. Del Giudice violated the non-compete
provision through his involvement with Carnegie Hudson Resources
and Corinthian Capital Group (“Corinthian Capital”).
Notice of Default).

(TAC, ¶ 32;

Accordingly, one of the causes of action in

the complaint seeks a declaratory judgment that Mr. Giudice did
not violate the Operating Agreement.

(TAC, ¶¶ 31-38).

On January 4, 2016, the parties exchanged initial disclosures
pursuant to Rule 26(a)(1) of the Federal Rules of Civil Procedure.
Both the plaintiffs and the defendants identified Steven J. Kumble,
Chairman of Corinthian Capital Group, LLC, as a witness likely to
have discoverable information about Corinthian Capital and Mr. Del
Giudice’s

relationship

to

that

entity.

([Plaintiffs’]

Rule

26(a)(1) Initial Disclosures, attached as Exh. F to Katz Decl., ¶
I; Initial Disclosures of Defendants W. Scott Harlan, James Maiz,
Shane Litts and Willie Zapalac, attached as Exh. G to Katz Decl.,
¶ 1(k)). On September 21, 2016, the defendants took the deposition
of

Mr.

Kumble,

both

as

an

individual

and

as

Corinthian Capital pursuant to Rule 30(b)(6).
2

a

designee

of

(Deposition of

Steven Kumble, attached as Exh. I to Katz Decl.; Katz Decl., ¶ 4;
Deposition Notice to Corinthian Capital Group, LLC, attached as
Exh. 3 to Plaintiffs’ Memorandum of Law in Support of Their Motion
to Preclude Defendants’ Addition of Witnesses and for Attorney’s
Fees and Costs (“Pl. Memo.”)).

Discovery closed two days later.

(Order dated Aug. 4, 2016).
So things remained until December 13, 2016, when counsel
exchanged proposed designations of exhibits and witnesses.

The

defendants’ list included the seven Disputed Witnesses, all of
whom are officers or employees of Corinthian.

(Email from Joshua

B. Katz dated Dec. 13, 2016 (“Katz 12/13/16 email”), attached as
part of Exh. K to Katz Decl.).

Defendants’ attorney suggested

that testimony of these new witnesses “could be obviated by some
simple factual stipulations,” which he would propose shortly.
(Katz 12/13/16 email).

The plaintiffs declined the defendants’

invitation to enter into a stipulation, objected to the Disputed
Witnesses, and filed the instant motion.

(Letter of Douglas A.

Kellner dated Dec. 23, 2016, attached as Exh. 4 to Pl. Memo.).
In the course of briefing the motion, the defendants shed
some additional light on the rationale for identifying the Disputed
Witnesses. According to defendants’ counsel, Mr. Kumble had turned
out to be an unsatisfactory witness:
While Mr. Kumble was able to answer some questions about
the four portfolio companies, he was unable to answer
many others, and sometimes testified that others at
3

Corinthian would know the answers.
Further, at some
points in his testimony it appeared that Mr. Kumble may
have been guessing or reading from a document rather
than testifying from personal knowledge.
(Katz Decl., ¶ 5).

Defendants’ counsel therefore turned to other

sources of information:
While preparing our list of trial witnesses in December
2016, I became concerned about Mr. Kumble’s ability to
give complete testimony about the Corinthian portfolio
companies at trial. Accordingly, I visited Corinthian’s
web site, www.corinthiancap.com, and clicked on the
“Team” link on its home page. The Team section listed
four members of the “Investment Committee” (including
Kumble) and four additional “Investment Professionals.”
(Katz Decl., ¶ 6) (citation omitted).

The Disputed Witnesses are

the seven additional persons identified from the web site.
Discussion
A. Preclusion
Pursuant to Rule 26(a)(1), each party must, “without awaiting
a discovery request,” identify “each individual likely to have
discoverable

information

--

along

with

the

subjects

of

that

information -- that the disclosing party may use to support its
claims or defenses.”

Fed. R. Civ. P. 26(a)(1)(A).

Furthermore,

the rules create an obligation to supplement initial disclosures.
A party must supplement its disclosures under Rule 26(a) “if the
party

learns

that

in

some

material

respect

the

information

disclosed 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 or in writing.”
4

Fed.

R. Civ. P. Fed. 26(e)(1).
The defendants have not met these obligations.
identify

the

seven

Disputed

Witnesses

in

They did not

their

initial

disclosures. Nor, when they purportedly determined that Mr. Kumble
lacked complete information, did they supplement their disclosure
in a timely fashion.

Nor did they complain at the time of Mr.

Kumble’s deposition that he was not a properly prepared witness
under Rule 30(b)(6).

Instead, they waited until after the close

of discovery, after summary judgment motions had been filed, and
after

the

parties

had

begun

preparing

the

pretrial

order

to

identify the Disputed Witnesses.
Pursuant to Rule 37(c)(1),
If 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); see Lujan v. Cabana Management, Inc.,
284 F.R.D. 50, 72-73 (E.D.N.Y. 2012); Fetisov v. AY Builders, Inc.,
No. 10 CV 3683, 2012 WL 213770, at *1-2 (E.D.N.Y. Jan. 24, 2012);
Serin v. Northern Leasing Systems, Inc., No. 06 Civ. 1625, 2010 WL
6501661, at *1-2 (S.D.N.Y. Oct. 26, 2010); Kullman v. New York,
No. 07-CV-716, 2009 WL 1562840, at *5 (N.D.N.Y. May 20, 2009);
Schiller v. City of New York, Nos. 04 Civ. 7922, 04 Civ. 7921,
2007 WL 735010, at *2-3 (S.D.N.Y. March 12, 2007).

In determining

whether it should exercise its discretion and preclude evidence,
5

a court must consider:
(1) the party’s explanation for the failure to comply
with the [disclosure requirement]; (2) the importance of
the testimony of the precluded witness[es]; (3) the
prejudice suffered by the opposing party as a result of
having to prepare to meet the new testimony; and (4) the
possibility of a continuance.
Patterson

v.

Balsamico,

440

F.3d

104,

117

(2d

Cir.

2006)

(alterations in original) (quoting Softel, Inc. v. Dragon Medical
& Scientific Communications, Inc., 118 F.3d 955, 961 (2d Cir.
1997)).

The imposition of an order of preclusion does not require

a showing of bad faith on the part of the offending party.

Design

Strategy, Inc. v. Davis, 469 F.3d 284, 296 (2d Cir. 2006).
Here, the first Patterson factor clearly favors preclusion.
The

defendants’

witnesses

in

a

“explanation”
timely

for

manner

is

failing
that

the

to

identify

witness

they

the
had

identified from the outset, Mr. Kumble, turned out to be less
favorable than they had hoped.

(Katz Decl., ¶¶ 5-6).

But

accepting such an excuse would undermine Rule 26(a)(1); there would
be no limit on parties pointing to some shortcoming in their
disclosed evidence as a justification for substituting better
witnesses on the eve of trial.
The lack of importance of the proposed testimony likewise
argues for precluding the Disputed Witnesses.

The defendants

themselves downplay the significance of their testimony: “[W]e
believed at the time (and still believe today) that it is unlikely

6

we

will

need

to

call

any

of

these

witnesses,

because

their

testimony would consist solely of basic background information
about four Corinthian portfolio companies, none of which has ever
remotely been in dispute.”

(Katz Decl., ¶ 7).

Thus, a preclusion

order would not adversely impact the ultimate fairness of the factfinding process.
On the other hand, the plaintiffs would be prejudiced if these
witnesses were not precluded.

They would be faced with the

unpalatable alternatives of expending additional resources to take
multiple depositions or going to trial with little inkling of what
these witnesses might say or how it might differ from what Mr.
Kumble has already testified to.
Finally, while a continuance could be granted, it would be
disruptive.

Though no trial date has been set, discovery has

closed, summary judgment motions are under consideration, and a
final pretrial conference has been scheduled.

See Wu v. Metro-

North Commuter Railroad Co., No. 14 Civ. 7015, 2016 WL 5793971, at
*9 (S.D.N.Y. Aug. 4, 2016) (“The close of discovery counsels
strongly against the granting of a continuance.” (citing Design
Strategy, 469 F.3d at 297)).
On

balance,

then,

the

relevant

considerations

support

precluding the testimony of the Disputed Witnesses, who were not
properly identified either in the defendants’ initial disclosures
or in any timely supplemental disclosures.
7