Lone Star Chapter Paralyzed Veterans of America et al v. City of San Antonio et al

Filing 150

ORDER GRANTING 61 Motion to Strike ; GRANTING 103 Motion to Strike Testimony of Chris Canard filed under seal. Signed by Judge Nancy Stein Nowak. (tm)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

SKYEWARD BOUND RANCH,
Plaintiff,
v.
CITY OF SAN ANTONIO,
Defendant.

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CIVIL ACTION NO.
SA-10-CV-0316 XR

ORDER EXCLUDING EXPERT TESTIMONY
This order addresses the pending motions to exclude the plaintiff’s designated
experts — Nick Farley, Don Feichter, and Chris Canard.1 I have jurisdiction to resolve
the motions because they are nondispositive and because the district judge referred the
motions to me. Although some of the pleadings associated with the motions are sealed, I
did not seal this order because it does not specifically refer to confidential matters. After
considering all the pleadings and the applicable law, I grant the motions.
Nature of the case. This case alleges constitutional violations arising from the
enforcement of a municipal ordinance regulating the payment of taxes on coin-operated
machines. The plaintiff,2 Skyeward Bound Ranch (SBR), is a nonprofit organization that

1

2

Docket entry #s 61 & 103.

There were originally two plaintiffs in this case, but the claims brought by
plaintiff Lone Star Chapter of Paralyzed Veterans of America have been dismissed
without prejudice. See docket entry # 97.

solicits donations to support programs for children with life-threatening illnesses. SBR
purports to raise funds “using personal computers that are placed in businesses that are
using the same program to advertise alcoholic beverages and a sweepstakes in San
Antonio, Texas.”3 SBR leases computer equipment and software from World Touch
Gaming, Inc. (WTGI) and Hest Technologies, Inc. (Hest). According to SBR, defendant
City of San Antonio (the City) — through its police department — issued citations
relating to gambling violations and confiscated several of SBR’s leased computers. SBR
contends that applying city ordinances and the Texas Penal Code to SBR is
unconstitutional and in violation of the First and Fourteenth Amendments.4 SBR seeks
injunctive and declaratory relief.
SBR’s designation of experts. Under the original scheduling order, SBR’s
deadline for designating expert witnesses was November 11, 2010; the deadline for
completing discovery was December 9, 2010.5 On November 18, 2010, the district court
extended SBR’s deadline for designating witnesses until December 2, 2010, and the
discovery deadline until December 30, 2010. On December 2, 2010, SBR designated
Feichter, Canard, and Farley as expert witnesses.6

3

Docket entry # 29, p. 4, ¶ B.

4

Docket entry # 29.

5

Docket entry # 45.

6

Docket entry # 56.

2

Feichter is the president of WTGI and oversaw the development of WTGI’s
software.7 Canard founded Hest and designed Hest Sweepstakes Marketing System.8
SBR designated Feichter and Canard to testify about the security features associated with
their respective software and the manner of software operation, and to opine that their
software does not constitute gambling.9 Additionally, SBR designated Canard to testify
about its damages. SBR did not identify the purpose of Farley’s testimony. However,
Nick Farley & Associates, Inc. inspected the two software systems at issue in 2007 and
2008 for an unrelated case.10
The City’s motions. On December 23, 2010, the City moved to exclude the SBR’s
experts for failing to provide the type of expert report required by Rule 26(a)(2),11 and on
grounds of unreliability and irrelevancy. On December 29, 2010, one day prior to the
close of the extended discovery period, SBR forwarded supplemental documents on
Feichter and Canard.12 SBR also attached documents pertaining to Farley’s testimony to
the Second Amended Complaint. Following Canard’s deposition, the City moved to

7

Docket entry # 74, ex. A, p. 2.

8

Docket entry # 74, ex. A, p. 3.

9

Docket entry # 56, p. 3.

10

Docket entry # 61, ex. B & C.

11

Docket entry # 61.

12

Docket entry # 74, ex. A.

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strike Canard as an expert in the field of economic damages and/or financial losses.13
SBR’s response. Responding to the motions to exclude, SBR contended that
Feichter and Canard are exempted from submitting a Rule 26(a)(2)(B) report, because the
experts are not “retained or employed to provide expert testimony in this case, nor are
they persons employed by a party nor do their employment duties include giving expert
testimony.”14 About Farley, SBR asserted that the documents attached to the Second
Amended Complaint constitute a relevant and reliable expert report.
Applicable authorities. Expert testimony must be reliable and relevant, and
disclosures provided according to the Federal Rules of Civil Procedure. If a party fails to
provide information or identify witnesses in accordance with the rules, the party
offering the evidence may not use the information at trial and the testimony must be
excluded.15
Rule 26(a)(2)(A) states “a party shall disclose to other parties the identity of any
person who may be used at trial to present evidence under Rules 702, 703, or 705 of the

13

Docket entry # 103.

14

Docket entry # 66, p. 1.

15

Fed. R. Civ. P. 37(c)(1) (“If a party fails to provide information or identify a
witness as required by Rule 26(a) or 26(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. ”).

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Federal Rules of Evidence.”16 Rule 26(a)(2)(B) further states that “this disclosure shall …
be accompanied by a written report prepared and signed by the witness.” 17 The due date
for submitting the expert reports must in any case be no later than 90 days before trial,
or, if stipulated to in the scheduling order, whichever date the court assigns to the
reports or to the completion of discovery.18
Under the 2010 amendment to Rule 26, expert witnesses not specially employed
or retained and who do not regularly give expert testimony must provide (1) the subject
matter of their testimony and (2) a summary of the facts and opinions to which they will
testify.19 The information required under the new rule — Rule 26(a)(2)(C) — is less
extensive than an expert report under 26(a)(2)(B), but the two forms of disclosure share
the goal of increasing efficiency and reducing unfair surprise.20 Courts require a party
seeking to avoid producing a full expert report to show the proposed expert is not
required to submit a report.21

16

Fed. R. Civ. P. 26.

17

Fed. R. Civ. P. 26.

18

Fed. R. Civ. P. 26(a)(2)(D).

19

Fed. R. Civ. P. 26(a)(2)(C)(i), (ii).

20

See Fed. R. Civ. P. 1 (securing the “just, speedy, and inexpensive determination
of every action”).
21

See Meredith v. Int’l Marine Underwriters, No. JKB–10–837, 2011 WL 1466436, at *
4 (D. Md. Apr. 18, 2011) (“A party seeking to avoid producing an expert report bears the

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Canard. A dispute exists about whether SBR was required to submit a Rule
26(a)(2)(B) expert report as to Canard. As the proponent of the witness, SBR was
required to show Canard is not required to submit an expert report and to show the
reliability and/or relevancy of Canard’s testimony. SBR did not show that Rule
26(a)(2)(C) applies to Canard’s testimony.
The advisory committee notes suggest Rule 26(a)(2)(C) applies to treating
physicians or other healthcare professionals and employees of a party who do not
regularly provide expert testimony. Requiring less of an expert who is not retained or
specially employed is logical because that type of witness usually has firsthand factual
knowledge about the case.22 Canard is neither a healthcare professional nor a SBR
employee. Moreover, SBR has not established that Canard has first-hand factual
knowledge of this case so as to escape the requirement that he submit a full expert
report. Although he may be knowledgeable about Hest Sweepstakes Marketing System,

burden of demonstrating that the witness is a hybrid.”); Morris v. Wells Fargo Bank, No.
09-CV-02160-CMA-KMT, 2010 WL 2501078, at * 3 (D. Colo. June 17, 2010) (requiring the
party offering the expert to set forth some evidence about why the expert is exempt from
submitting an expert report because that party is more likely to possess the information
necessary to establish the status of the witness).
22

See Young v. United States, 181 F.R.D. 344, 346 (W.D. Tex. 1997) (holding that
unless a treating physician has been specifically retained as an expert, his testimony is
based on the physician’s personal knowledge of the plaintiff’s treatment and cannot be
extended to issues not involved with the treatment, examination, or diagnosis of the
patient).

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nothing suggests Canard has any special knowledge about the issues or factual
allegations in this litigation.
Even assuming Rule 26(a)(2)(C) applies, SBR was nevertheless required to
disclose the subject matter of Canard’s testimony, and the facts and opinions to which he
will testify. Although SBR supplemented its expert designation of Canard on December
29, 2010 — by providing a brief summary of Canard’s resume and the subject matter of
his testimony — the supplemental document did not contain any recitations of facts or
opinions.23 The document identified the subject matter of Canard’s testimony as the
operation of the Hest Prepaid Planet Sweepstakes Management System and damages in
the case, but it did not list the facts or opinions to be presented through Canard’s
testimony. Instead, the document summarized Canard’s resume. Although the
supplemental document addressed the relevancy of Canard’s testimony — because
Canard is the designer of the software program leased by SBR — the document
contained no opinions, identified no facts forming the basis of Canard’s testimony, and
failed to provide the computation of damages.
Concerning the software’s operation and security features, the supplemental
document contained only conclusory statements that the Texas Alcoholic Beverage
Commission approved the use of Canard’s Sweepstakes system. Although the document

23

Docket entry # 74, ex. A.

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stated that Canard would testify about SBR’s damages, it did not identify SBR’s damages
or specify the basis for calculating damages. When questioned about his calculation of
SBR’s damages, Canard testified that his calculations were preliminary and he could not
identify revenue losses attributable to the City’s conduct.24 At a minimum, SBR’s
designation of Canard was required to give the City notice of the facts and the opinions
Canard would present. SBR did not meet this requirement.25 For that reason, Canard is
not permitted to testify.
Feichter. A dispute also exists about whether SBR was required to submit an
expert report as to Feichter. As the proponent of the witness, SBR was required to show
Rule 26(a)(2)(C) applies to Feichter such that Feichter is not required to submit a Rule
26(a)(2)(B) expert report. SBR did not show that Rule 26(a)(2)(C) applies to Feichter’s
testimony.
Feichter is neither a healthcare professional nor a SBR employee. Feichter also
lacks first-hand factual knowledge of this case. SBR’s designation of Feichter as an expert

24

Docket entry # 103, ex. B.

25

See Hardin v. Wal-Mart Stores, No. 1:08-CV-00617 AWI GSA, 2010 WL 3341897, at
*4 (E.D. Cal. Aug. 25, 2010) (“It is not a party’s label assigned to a witness, e.g.,
non-retained, that controls. Rather, the testimony to be offered controls the retention
designation. Plaintiff’s designation of these witnesses as non-retained does not provide
Defendant with a reasonable opportunity for cross examination. Here,…Plaintiff has
failed to identify the witnesses with specificity, nor has he adequately supported his
contention that these witnesses are non-retained experts….”).

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witness stated he would testify about the security features associated with WTGI
software, the manner in which the software operated, and how the software complies
with Texas law on sweepstakes.26 This indicates Feichter may be knowledgeable about
WTGI gaming software, but it does not indicate Feichter has first-hand factual
knowledge of this case.
Assuming Rule 26(a)(2)(C) applies to Feichter, SBR provided no facts or opinions
about Feichter’s proposed testimony. SBR’s supplemental document presented no
information to prove Feichter’s reliability as an expert witness. Instead, the document
stated that the software operated in a manner that meets Texas statutory requirements
without identifying the applicable statutes or listing the statutory requirements the
software satisfies. In addition, SBR did not show Feichter is qualified to opine about
whether his software complies with Texas sweepstakes law. SBR has not met its burden.
For this reason, Feichter is excluded from testifying.
Farley. SBR also failed to meet its burden as to Farley because it failed to provide
the information required under Rule 26(a)(2)(B). The documents provided to the City do
not constitute an expert report. Under Rule 26(a)(2)(B), an expert report must provide an
exhaustive list of the witnesses opinions, and the bases and reasons behind those
opinions; any information the witness relied upon to form those opinions; any exhibits

26

See docket entry # 56, p. 3 & # 74, ex. A.

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the witness will use to support the opinions; a listing of the witness’s qualifications and
previous expert testimony; and the compensation the witness will receive.27 Farley’s
purported “report” did not demonstrate Farley’s qualifications, his compensation, his
opinions, or the data he relied upon.28 The submitted documents are irrelevant in this
case because they were prepared for an unrelated case in state court in North Carolina in
2008. Moreover, Farley relied on a disclaimer noting that he has not conducted a review
of the systems used by SBR since 2008, and must conduct an analysis before stating the
software does not constitute gambling.
In addition, Farley’s testimony and report would not help the fact-finder. Federal
Rule of Evidence 702 permits a qualified expert to testify to any specialized information
or knowledge if that testimony will aid the fact-finder in understanding a fact in issue.
Farley’s report does not meet Rule 702’s helpfulness requirement because it addressed
gambling as defined under North Carolina state laws. A report about gambling under
North Carolina law is unhelpful to determining the software’s legality under Texas state
law. In addition, Farley stated that he has not inspected the equipment used by SBR, and
that if any changes have been made to the software, he must evaluate the equipment

27

Fed. R. Civ. P. 26(a)(2)(B).

28

See docket entry # 29, ex. 11 & 12.

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before offering an opinion.29
Finally, Farley’s report included documents prepared for other lawsuits. The
opinions disclosed in the documents include a disclaimer from Farley’s company, stating
that the opinions relayed in no way stipulate as to the legality of using those systems in
any state. Farley’s report falls short of Rule 702’s requirements. For these reasons,
Feichter is excluded from testifying.
Conclusion and court’s order. “Mutual knowledge of all the relevant facts
gathered by both parties is essential to proper litigation.” 30 Mutual knowledge does not
exist in regard to Farley, Feichter and Canard. SBR did not show that Feichter and
Canard are not required to submit an expert report. Even if Rule 26(a)(2)(C) applies to
Feichter and Canard, the information supplied to the City does not satisfy the
requirements for witnesses who are not required to submit an expert report. The
documents constituting Farley’s expert report fail to satisfy the criteria for expert reports.
Farley, Feichter, and Canard are excluded from testifying as expert witnesses. I GRANT
the motions to strike SBR’s experts (docket entry #s 61 & 103).
SIGNED on June 1, 2011.
_____________________________________

29

See docket entry # 100, attach. 1.

30

Hickman v. Taylor, 329 U.S. 495, 507 (1947).

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NANCY STEIN NOWAK
UNITED STATES MAGISTRATE JUDGE

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