BlackRock Engineers, Inc. v. Duke Energy Progress, LLC et al

Filing 108

ORDER denying 73 Motion for Discovery. The court extends the discovery perioduntil October 12, 2018, to permit Duke Energy to depose witnesses concerning BlackRock's damages. Dispositive motions are due no later than November 13, 2018. Signed by Chief Judge James C. Dever III on 9/18/2018. (Sellers, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
No. 7:15-CV-250-D

BLACKROCK ENGINEERS, INC.,

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Plaintiff,

v.

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ORDER

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DUKE ENERGY PROGRESS, LLC, and
AMEC FOSTER WHEELER ENVIRONMENT )
AND INFRASTRUCTURE, INC.,
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Defendants. )
On December 10, 2017, Duke Energy Progress, LLC ("Duke Energy" or "defendant") moved
under Federal Ru1e ofCivil Procedure 37(c)(1) to preclude BlackRock Engineers, Inc. ("BlackRock"
or "plaintiff') from seeking monetary damages at trial [D.E. 73] and filed a memorandum in support
[D.E. 74]. On December 26, 2017, BlackRock responded in opposition [D.E. 76]. As explained
below, the court denies Duke Energy's motion.

I.
On August 5, 2016, BlackRock served its initial disclosures on Duke Energy and provided
the following information concerning damages:
Defendant has not completed its computation of its claimed damages under each
remaining count of the Complaint, but such analysis is in progress. These Initial
Disclosures will be supplemented when Plaintiffs damages analysis is completed by
furnishing Defendants with relevant non-privileged data upon which this analysis is
based. Plaintiff requires certain disclosures from DefendantS to complete it[s]
analysis.
[D.E. 73-1] 6. On March 14, 2017, Duke Energy served BlackRock with interrogatories and a
request for production of documents. Interrogatory number 10 asked BlackRock to describe all
damages and relief and the basis for such requested relief. See [D.E. 73-3] 8-9. On May 19, 2017,
BlackRock responded by stating that its "damages and relief analysis is presently being conducted,

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and will be finalized once BlackRock has completed its review of all documents furnished by Duke
Energy to BlackRockthroughBlackRock' s discovery, and BlackRock determines the extent ofDuke
'

Energy's unlawful copying ofBlackRock's copyrighted materials ...." Id. at 9. On May 22, 2017,
BlackRock provided similar information in response to Duke Energy's request for the production
of documents. See [D.E. 73-5] 10. Specifically, in response to production request number 27 that
sought "[a]ll documents reflecting or relating to BlackRock's contention ... that Duke Energy has
obtained gains, profits, and advantages as a result of Duke Energy's allegedly wrongful actions,"
BlackRock stated:
BlackRock understands this request as seeking documents related to BlackRock' s
damages analysis, which analysis is still ongoing and has not been completed.
Neither Duke Energy nor Amec have completed their responses to BlackRock's
document requests, which has prevented BlackRock from determining the full
amount of the alleged unlawful copying . . . . Notwithstanding this understanding,
BlackRock will produce documents evidencing the gains, profits and advantages
inuring to Duke Energy as a result of Duke Energy's allegedly wrongful actions.

On September 6, 2017, after reviewing over 28,000 pages of documents, BlackRock
informed Duke Energy that it had not received any financial-documents that would enable it to
calculate damages, requested additional documents, and suggested that the parties meet and confer
to discuss the requests. See [D.E. 76-7] 3-6. On September 29, 2017, the discovery period closed.
See [D.E. 60]. On the same day, Duke Energy objected to BlackRock's request for additional
documents and told BlackRock that it had "ample opportunity to challenge Duke Energy's written
responses, objections, and document production." [D.E. 76-8] 2-4. Duke Energy also produced
approximately 8,000 additional documents. See [D.E. 76-9]. On November 22, 2017, BlackRock
served Duke Energy with a supplemental response to interrogatory number 10, which provided a
computation of damages. See [D.E. 73-7].
In its motion to exclude, Duke Energy argues that BlackRock did not disclose any damages
calculations and supporting documentation as required under Federal Rule of Civil Procedure

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26(a)(1)(A)(iii) until two months after discovery closed. See [D.E. 74] 2. Duke Energy contends
that BlackRock only provided it with vague discovery responses concerning damages in an attempt
to hide the ball and surprise Duke Energy. See id. In opposition, BlackR.ock argues that Duke
Energy caused its late disclosure because Duke Energy failed to produce requested documents and
produced approximately 8,000 documents on the last day of the discovery period. See [D.E. 76] 2.

n.
Federal Ru1e of Civil Procedure 26(a)(1)(A)(iii) requires a party to disclose to its opposing
party "a computation of each category of damages claimed by the disclosing party-who must also
make available ... the documents or other evidentiary material ... on which each computation is
based, including materials bearing on the nature and extent of injuries suffered." Fed. R. Civ. P.
(

26(a)(1)(A)(iii). A party cannot fulfill this requirement by providing ''undifferentiated financial
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statements; it requires a 'computation,' supported by documents." Design Strategy. Inc. v. Davis,
469 F.3d284, 295 (2d Cir. 2006); see Bu1lard v. Roadway Express, 3 F. App'x 418,420-21 (6th Cir.
2001) (per curiam) (unpublished); Frontline Med. Assocs .. Inc. v. Covently Heal!h. Care, 263 F .R.D.
567,569 (C.D. Cal. 2009); Shock v. Aerospace Integration Corp., No. 3:08cv304/RVIEMT, 2009
WL 595923, at *4--5 (N.D. Fla. Mar. 6, 2009) (unpublished). A party's Ru1e 26(a)(1)(A)(iii)
disclosure must state the types of damages that the party seeks, must contain a specific computation
of each category, and must include documents to support the computations.

See,~'

Design

Strategy. Inc., 469 F.3d at 295.
Ru1e 26(e) requires a party to "supplement or correct its [Ru1e 26(a)] disclosure or response
,·

... in a timely manner if the party learns that in some material respect the disclosure or response is
incomplete or incorrect." Fed. R. Civ. P. 26(e)(l)(A). When a party receives additional documents
that it intends to use to prove its damages, or when its previous damages computation becomes
otherwise inadequate, a party must supplement its Ru1e 26(a)(l)(A)(iii) computation. See Bresler
v. Wilmington Tr. Co., 855 F.3d 178, 189-93 (4th Cir. 2017); Morrison Knudsen Corp. v. Fireman's

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Fund Ins. Co., 175 F.3d 1221, 1229 n.2 (lOth Cir. 1999); Hertz v. Luzenac Am.. Inc., No.·
CIVA04CV1961LTBCBS, 2006 WL 994431, at *10 (D. Colo. Apr. 13, 2006) (unpublished).
When 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 ... at a trial,
unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). Rule 37(c)(l)
provides trial courts wide discretion to remedy violations of Rule 26(a) or Rule 26(e). In exercising
its "broad discretion," a trial court determines whether a party's failure to comply with Rule 26(a)
or Rule 26(e) was "substantially justified or is harmless" by considering
(1) the surprise to the party against whom the evidence ~ould be offered; (2) the
ability ofthat party to cure the surprise; (3) the extent to which allowing the evidence
would disrupt the trial; (4) the importance ofthe evidence; and (5) the nondisclosing
party's explanation for its failure to disclose the evidence.
S. States Rack & Fixture. Inc. v. Sherwin-Williams Co., 318 F.3d 592, 597 (4th Cir. 2003); see
Russell v. Absolute Collection Servs.. Inc., 763 F.3d 385, 396--97 (4th Cir. 2014). The first four
.factors relate to harmlessness, and the final factor relates to substantial justification. See Hill v.
Coggins, 867 F.3d 499, 507--08 (4th Cir. 2017); MCI Commc'ns Servs .. Inc. v. Am. Infrastructure. MD. Inc., No. GLR-11-3767, 2013 WL 4086401, at *8 (D. Md. Aug. 12, 2013) (unpublished). The
nondisclosing party bears the burden of showing that the failure to disclose was substantially
justified or harmless. SeeS. States, 318 F.3d at 596.

A.
Rule 26(e) required BlackRock to supplement its Rule 26(a)(l )(A)(iii) disclosure concerning
damages "in a timely manner." BlackRock did not provide Duke Energy with its computation of
damages and supporting documentation until November 22, 2017, nearly two months after discovery
closed.

Thus, the court must examine the Southern States factors and determine whether

BlackRock' s untimely disclosure was substantially justified or harmless.
As for the first factor, Duke Energy argues that it is surprised and prejudiced because it was
''under the impression that this wa.s not a damages case." [D.E. 74] 2. The court rejects the

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argument. BlackRock included a claim for damages in its complaint. See Compl. [D.E. 1] ~~ 136,
146, 161, 171, 177-78. BlackRock also repeatedly notified Duke Energy that it was calculating its
damages and that it needed additional information from Duke Energy to complete the calculation.
See,~,

[D.E. 73-5] 10; [D.E. 76-6] 9; [D.E. 76-7]. Moreover,DukeEnergyknewthatBlackRock

had not yet provided a computation of damages but did not move to compel this disclosure. See,
~.

Netlumper Software LLC v. Google. Inc., No. 04-70366, 2014 WL 12660542, at *6 (E.D.

Mich. Feb. 25, 2014) (unpublished); Susilo v. Wells Fargo Bank. N.A., No. CV 11-1814 CAS
(PJWx), 2012 WL 12894745, at *2 (C.D. Cal. Nov. 26, 2012) (unpublished). Accordingly, this
factor weighs in favor of BlackRock.
As for the second and third factors, any surprise to Duke Energy can be cured ''without
derailing the court's effort to achieve a just and timely resolution of this case." Pennington Partners.
'

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LLC v. Midwest Steel Holding Co., 271 F.R.D. 462, 464 (D. Md. 2010); see SAS Inst. Inc. v. Akin
Gump Strauss Hauer & Feld. LLP, No. 5:10-CV-101-H, 2012 WL 12914641, at *4 (E.D.N.C. Dec.
11, 2012) (unpublished); cf. Silicon Knights. Inc. v. Epic Games. Inc., No. 5:07-CV-275-D, 2012
WL 1596722, at *6-10 (E.D.N.C. May 7, 2012) (unpublished) (precluding evidence concerning
damages w:hen evidence was first produced one week before trial). Dispositive motions are not due
until September 21, 2018, and a trial date has not yet been set. Thus, the court can extend discovery
for a briefperiod for the limited purpose ofallowing Duke Energy to conduct depositions concerning
BlackRock's damages computation.

See,~.

Prusin v. Canton's Pearls. LLC, No. JK.B-16-605,

2017 WL 3492163, at *5 (D. Md. Aug. 15, 2017) (unpublished), report and recommendation
adopted.l1INo. JK.B-16-0605, 2018 WL 620473 (D. Md. Jan. 30, 2018) (unpublished); cf. Carotek.
Inc. v. Textron Fastening Sys.. Inc., No. 3:05-CV-395-MKR-DCK, 2008 WL 1777829, at *4
(W.D.N.C. Apr. 16, 2008) (unpublished). Accordingly, the second and third factors weigh in favor
of BlackRock.

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As for the fourth factor, proving damages is important to Black:Rock' s case. See, ~'United
States v. Cochr@, No. 4:12-CV-220-FL, 2014 WL 347426, at *8 (E.D.N.C. Jan. 30, 2014)
(unpublished); Silicon Knights, 2012 WL 1596722, at *8. Moreover, precluding Black:Rock from
presenting any evidence concerning damages is an excessive sanction because any harm to Duke
Energycanberemedied. See,e.g., Wisemanv. WalmartStores.Inc.,No.1:16-cv-04030-SAG,2017
WL 2865013, at *3 (D. Md. July 5, 2017) (unpublished). Accordingly, the fourth factor weighs in
favor ofBlackR.ock.
As for the fifth factor, "[a] circumstance out of the nondisclosing party's control can be an
adequate explanation for nondisclosure." Vir2us. Inc. v. Invincea. Inc., 235 F. Supp. 3d 766, 778
(E.D. Va.2017);seeSamsungElecs. Co. v.NvidiaCorp.,314F.R.D.190, 199-200(E.D. Va.2016).
Black:Rock contends that this factor weighs in its favor because "Black:Rock could not determine
during the discovery period how many drawings Duke Energy copied, or the profits Duke Energy
gained as a result of its copying" because Duke Energy served on Black:Rock an additional 8,000
pages of documents on the last day of discovery. [D.E. 76] 10. In opposition, Duke Energy argues
that Black:Rock' s supplemental damages computation relied on information that Bla.Ck:Rock had
before filing its complaint. See [D.E. 74] 9. Although some evidence justifies Black:Rock's late
disclosure, this factor tilts in favor of Duke Energy. Black:Rock knew that it was waiting on
additional discovery documents from Duke Energy but did not move to modify the scheduling order
or to compel Duke Energy to produce the documents. See,~' Doe v. AE Outfitters Retail Co., No.
WDQ-14-0508, 2015 WL 132609, at *4 (D. Md. Jan. 8, 2015) (unpublished).

ill.
In sum, the court DENIES Duke Energy's motion to preclude Black:Rock from introducing
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evidence concerning monetary damages at trial [D.E. 73]. The court extends the discovery period
until October 12, 2018, to permit Duke Energy to depose witnesses concerning Black:Rock's
damages. Dispositive motions are due no later than November 13, 2018.

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SO ORDERED. This 18 day of September 2018.

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