Downey v. Adloox Inc. et al
MEMORANDUM OPINION AND ORDER: By waiting until two months after the close of fact discovery, Plaintiffs "essentially sandbagged" Defendants. Pal, 2008 WL 2627614, at *5. "This is precisely the type of conduct that Rule 37(c)(1) is meant to prevent." Id. Accordingly, the names of the thirteen witnesses at issue are stricken from Plaintiffs' amended disclosures, and those witnesses are precluded from offering any testimony or sworn statements in this matter. See id. at *6 (citing cases), and as further set forth herein. (Signed by Judge Jesse M. Furman on 2/8/2018) (ras)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
KEVIN P. DOWNEY, et al.,
ADLOOX INC., et al.,
JESSE M. FURMAN, United States District Judge:
Now pending in this action, familiarity with which is presumed, is Defendants’ motion,
pursuant to Rule 37(c)(1) of the Federal Rules of Civil Procedure, to preclude the testimony of
thirteen witnesses identified by one or both Plaintiffs in this matter. (Docket No. 81 (“Defs.’
Mot.”)). Significantly, there is no dispute that Plaintiffs violated their discovery obligations
under Rule 26(a)(1)(A) and (e)(1)(A) of the Federal Rules of Civil Procedure, as they failed to
identify the witnesses at issue as witnesses until January 16, 2018 — a full two months after the
deadline for completion of fact discovery. (Defs.’ Mot. 1).
In such situations, Rule 37 provides that the offending party “is not allowed to use” the
witness at issue at trial, “unless the failure was substantially justified or is harmless.” Fed. R.
Civ. P. 37(c)(1). Despite the seemingly mandatory language of the Rule, however, preclusion is
not in fact mandatory. See, e.g., Design Strategy, Inc. v. Davis, 469 F.3d 284, 297-98 (2d Cir.
2006). Instead, a district court has “wide discretion” in deciding whether to impose sanctions
and, if it does, what sanctions to impose. Id. at 294-98. In determining whether preclusion is
warranted, a court must consider four factors: “(1) the party’s explanation for the failure to
comply with the [disclosure requirement]; (2) the importance of the [new evidence]; (3) the
prejudice suffered by the opposing party as a result of having to prepare to meet the new
[evidence]; and (4) the possibility of a continuance.” Patterson v. Balsamico, 440 F.3d 104, 117
(2d Cir. 2006) (first alteration in original) (quoting Softel, Inc. v. Dragon Med. & Sci. Commc’ns,
Inc., 118 F.3d 955, 961 (2d. Cir. 1997); accord Design Strategy, 469 F.3d at 296.
Applying and weighing the Patterson factors here, the Court concludes that preclusion of
all the witnesses at issue is indeed the appropriate sanction for Plaintiffs’ egregious violations.
The first factor — the offending parties’ explanation for the failure to comply with the disclosure
requirement — “cuts heavily against” Plaintiffs, as they do “not even attempt to proffer a
legitimate explanation for” their thirteenth hour disclosure of the witnesses at issue, all of whom
they have known about (or at least should have known about) since even before they filed their
complaint in this action. In re Gen. Motors LLC Ignition Switch Litig., No. 14-MD-2543 (JMF),
2017 WL 2880882, at *2 (S.D.N.Y. July 5, 2017) (internal quotation marks omitted). Plaintiffs
try to distract from their lack of any legitimate explanation for their delay by noting that the
witnesses’ names were known to Defendants in one way or another. (Docket No. 86-1 (“Witness
Chart”)). But that “argument misses the crucial point. [Defendants’] knowledge of the existence
of a witness does not satisfy the Rule 26(a)(1)(A) disclosure obligation; that obligation is
fulfilled only if [Plaintiffs] informed [Defendants] that [they] might call the witness in support of
its claims or defenses.” Pal v. N.Y. Univ., No. 06-CV-5892 (PAC) (FM), 2008 WL 2627614, at
*4 (S.D.N.Y. June 30, 2008). The purpose of that requirement “is to alert an opposing party of
the need to take discovery of the named witness.” Id. Plaintiffs’ late disclosure here deprived
Defendants of the “fair warning” to which they were entitled. Id.
The second Patterson factor — the importance of the evidence at issue — also cuts in
favor of preclusion. As the Witness Chart submitted by the parties makes clear, the witnesses at
issue generally fall in three categories: (1) people who worked for Defendants, as employees or,
in at least one case, as an independent contractor; (2) contacts of Plaintiffs who were potential
clients of Defendants; and (3) Plaintiffs’ intimate partners. The first category of witnesses is the
most important of the three, but that importance is limited because none of the witnesses at issue
appears to have overlapped with Plaintiffs when working for Defendants. (See Witness Chart).
The second category has only limited relevance because there is no suggestion that the witnesses
shared opinions they may have held of Plaintiffs’ work with Defendants. (See id.). Moreover,
with respect to various issues (for example, to the extent that Plaintiffs propose to call the
witnesses in the second category to establish that Defendants made it difficult to seal a deal with
new clients), Plaintiffs “can indisputably introduce other evidence — including [their] own
testimony and the testimony of other percipient witnesses.” In re Gen. Motors LLC Ignition
Switch Litig., 2017 WL 2880882, at *3. And that is true of the third category of witnesses as
well — a category, moreover, that has relevance only to the issue of damages.
Finally, the last two factors — the prejudice suffered by the opposing party and the
possibility of a continuance — also weigh in favor of preclusion. Discovery in this matter is
closed and Defendants’ summary judgment motion — “the preparation of which is well under
way” (Defs.’ Mot. 3) — is due in a matter of weeks. (Docket No. 78). If Plaintiffs were
permitted to use testimony from any of the witnesses at issue, “discovery would have to be
reopened . . . . This would not only further delay this almost-two-year-old case, but would
impose further litigation costs on [Defendants].” Pal, 2008 WL 2627614, at *5. To be sure, “a
continuance is always a possibility.” Id. at *6. But Plaintiffs “should not be permitted to upset a
discovery schedule which was extremely liberal and to which [their] adversar[ies] adhered.” Id.
Moreover, many of the events at issue in this case are over two years old, the case has been
pending for over twenty-three months, the parties were granted three extensions of the discovery
deadline and had ample time to do whatever they needed to do, and fact discovery has been
closed for almost three months at this point. (See Docket Nos. 1, 51, 56, 78). “All of those facts
counsel against the granting of a potentially lengthy continuance.” Simon v. City of N.Y., No. 14CV-8391 (JMF), 2017 WL 57860, at *6 (S.D.N.Y. Jan. 5, 2017).
In sum, all four Patterson factors weigh in favor of preclusion here. Thus, although
preclusion is admittedly a harsh sanction, see, e.g., Design Strategy, 469 F.3d at 297, and a court
“must consider less drastic responses” before ordering preclusion, Outley v. City of N.Y., 837
F.2d 587, 591 (2d Cir. 1988), the Court concludes that it is warranted here. See, e.g., Estate of
Jaquez v. Flores, No. 10-CV-2881 (KBF), 2016 WL 1060841, at *8 (S.D.N.Y. Mar. 17, 2016)
(precluding evidence that was first disclosed after the close of discovery because, among other
things, the plaintiffs had been “clearly aware that [the relevant] issues would be hotly contested
and central to the case, and merely sought to sandbag the defendants at this late hour,” noting
that the plaintiffs had “proceeded at their peril when they decided not to furnish the required
information to defendants during discovery” and “now must live with that tactical choice”);
Quiles v. City of N.Y., No. 11-CV-5613 (FM), 2014 WL 1918635, at *5-6 (S.D.N.Y. May 8,
2014) (precluding documents disclosed for the first time shortly before trial where “the records
in question relate[d] directly to [a known] issue,” witnesses were available to give testimony to
“establish those [same] facts,” and the opposing party “would be prejudiced by the . . . eleventhhour disclosure”). Notably, Plaintiffs have no one but themselves to blame for this result. By
waiting until two months after the close of fact discovery, Plaintiffs “essentially sandbagged”
Defendants. Pal, 2008 WL 2627614, at *5. “This is precisely the type of conduct that Rule
37(c)(1) is meant to prevent.” Id.
Accordingly, the names of the thirteen witnesses at issue are stricken from Plaintiffs’
amended disclosures, and those witnesses are precluded from offering any testimony or sworn
statements in this matter. See id. at *6 (citing cases).
Dated: February 8, 2018
New York, New York
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