Free Motion for Discovery - District Court of Federal Claims - federal

Case 1:98-cv-00419-LB

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS RESOURCE INVESTMENTS, INC., and LAND RECOVERY, INC., Plaintiffs, v. UNITED STATES OF AMERICA, Defendant. PLAINTIFFS' MOTION TO ALLOW COMMENCEMENT OF DAMAGES DISCOVERY AND MEMORANDUM IN SUPPORT No. 98-419L Judge Lawrence J. Block

Case 1:98-cv-00419-LB

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I.

MOTION AND STATEMENT OF RELIEF REQUESTED Plaintiffs respectfully move for an order modifying Judge Turner's December 4, 1998

bifurcation order (the "Bifurcation Order") to allow commencement of damages discovery. The Bifurcation Order provides: Pursuant to consensus of the parties and the court at the hearing this date, it is ORDERED that both the conduct of discovery and the trial shall be bifurcated with respect to liability and damages to the extent it is reasonable to do so. Bifurcation Order (Docket No. 22) (emphasis added). Because it is no longer "reasonable" to maintain the ban on damages discovery, Plaintiffs move that the Bifurcation Order be amended to provide that the parties may commence expert and lay damages discovery. Liability discovery has been concluded since 2001, and is closed.1 This motion addresses only lifting the ban on damages discovery. If any liability issues remain for trial after this Court rules on summary judgment, the decision whether there should be a unitary or bifurcated trial can best be addressed at that time. In the meantime, however, removal of the bar on damages discovery will allow the case to move forward while this Court is working on its decision with respect to the pending summary judgment motions on liability. II. ARGUMENT Judges of the Court of Federal Claims have discretion to order that individual issues be tried in a single trial or bifurcated for separate trial, and also have authority over the control and scheduling of discovery. RCFC 42(b) provides that "[t]he court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order the separate trial of any . . . issues." (Emphasis added.) RCFC 16(c)(6) allows the court to address "the control and scheduling of discovery." The norm is that all issues are tried together in one proceeding, but bifurcation may be appropriate if separate resolution of one or more issues

See Apr. 3, 2006 Order (Docket No. 162) (referring to Dec. 19, 2000 Order (Docket No. 92) as "ending discovery for liability issues").

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(e.g., liability) may make it unnecessary to try other issues in the case (such as damages). See generally 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2388 at 476 (2d ed. 1994) (collecting cases). The same holds true for bifurcation of discovery. See 8 Wright & Miller, Federal Practice and Procedure § 2040 at 523 (2d ed. 1994). In 1998, the parties and Judge Turner concluded that, consistent with RCFC 42(b) and 16(c)(6), bifurcation of discovery and trial into liability and damages phases was a reasonable means to achieve an early ultimate resolution of this case, either through dispositive motions on liability or through settlement. Because this case is entering its tenth year, even without any intervening appeals, that hope has obviously not been realized. As demonstrated below, circumstances have changed materially and further maintenance of the ban on damages discovery is no longer "conducive to expedition and economy." RCFC 42(b). Permitting the parties to conduct damages discovery will move the case forward more expeditiously. It is appropriate to revisit the bifurcation issue and revise the order2 for several reasons. First, contrary to its earlier position, Defendant no longer claims that the case can be disposed of on legal grounds without a trial. Although Defendant originally sought dismissal of the entire case in the summary judgment motion it filed in 2000, in the briefing on the renewed summary judgment motions last year, Defendant conceded that it is not entitled to summary judgment with respect to Plaintiffs' Penn Central claim.3 Thus, there is no longer a viable "shortcut" to a judgment for Defendant that will end the case. On the other hand, if Plaintiffs See 9 Wright & Miller, Federal Practice and Procedure § 2388 at 263 (Supp. 2007) (indicating that the court may reexamine whether bifurcation is justified based on later developments); id. § 2389 at 497 ("Rule 42(b) provides the district court with discretion to subdivide the case in whatever manner seems dictated by the circumstances."). As Justice Cardozo recognized, "[p]rocedure must have the capacity of flexible adjustment to a changing group of facts." 8 Wright & Miller, Federal Practice & Procedure § 2040 at 525 (quoting Sinclair Ref. Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 693 (1933)).
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See Def.'s Reply at 2 n.1 (Docket No. 148).

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prevail on summary judgment, a trial limited to damages issues will still be necessary, but that trial cannot occur until damages discovery is complete. Both parties can begin that process now. Second, maintenance of the ban on damages discovery threatens the preservation and presentation of relevant damages evidence. This concern is all the more significant in light of the fact that the underlying events in this case began nearly twenty years ago. In the intervening decade since the case was filed, at least four important witnesses with knowledge about damages issues have died. These witnesses include Dr. Mitchell, Defendant's expert, on whose testimony Plaintiffs have relied, and the President of LRI and the two remaining members of the LRI Board of Directors during the period of the taking. And, of course, evidence is lost as memories fade over such expanses of time. A. In 1998 the Parties and Judge Turner Reasonably Concluded That Bifurcation Could Save Time and Promote Early Resolution of the Case.

Plaintiffs filed this action on May 4, 1998 (Docket No. 1), and Defendant filed its answer on August 6, 1998 (Docket No. 13). In a joint status report filed on October 7, 1998, both parties indicated that bifurcation of liability and damages was likely appropriate with respect to both trial and discovery (Docket No. 15), and on December 4, 1998, Judge Turner ordered that the conduct of discovery and the trial be so bifurcated (Docket No. 22). Judge Turner observed at the telephone hearing on that day that he regarded bifurcation "as a means of making litigation more efficient and saving--and less costly." (See Tr. at 18:11-22 (Docket No. 23).) Pursuant to the Bifurcation Order, fact and expert discovery on liability commenced, was ultimately concluded on January 31, 2001, and has been closed since that time. (See Docket Nos. 92, 98, & 162.) At the time the Bifurcation Order was entered, circumstances were very different than now. Discovery had barely commenced, and it was not even clear if the case would involve a permanent or a temporary taking. (The Ninth Circuit had not yet ruled on the government's Petition for Rehearing, and the Court's mandate, formally terminating the Corps' exercise of jurisdiction, did not issue until February 10, 1999.) 3

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Importantly, in this early stage, Defendant claimed it could defeat liability entirely on dispositive legal grounds, which would have avoided the need for any liability or damages trial. It filed a Motion for Summary Judgment on January 27, 2000 asking for total dismissal of the case. (Docket No. 37.) Plaintiffs also believed liability could be resolved on legal grounds on summary judgment, and without addressing any economic impact issues, based on Agins v. City of Tiburon, 447 U.S. 255 (1980). (See Docket No. 41.) In Agins, the Supreme Court had adopted a stand-alone takings test that imposed per se liability if the government regulation or action "does not substantially advance legitimate state interests." 447 U.S. at 260. Plaintiffs concluded they satisfied that test based on the Ninth Circuit's ruling and so argued in their summary judgment motion and briefing. Subsequently, the Supreme Court reversed the Agins stand-alone categorical test in Lingle v. Chevron USA, 544 U.S. 528 (2005), and Plaintiffs dropped their Agins claim. In this time frame the parties also attempted settlement. On April 11, 2002, the parties filed a joint motion to refer the case to a settlement judge to explore Alternative Dispute Resolution (Docket No. 116), but more than three years later that process was terminated by order of Judge Hewitt (Docket No. 122). Thus, at the outset of the case both the parties and the Court thought that bifurcation of discovery and trial into liability and damages phases would be an efficient and cost-effective way to resolve the case either on summary judgment or by settlement. That is no longer true. B. Continued Maintenance of the Ban on Damages Discovery Is No Longer Conducive to Expedition of the Case or Judicial Economy.

It is no longer expedient or fair to postpone damages discovery. Defendant has abandoned its claim that the entire case should be dismissed on summary judgment. In the briefing on the renewed motion last year, Defendant withdrew its motion for summary judgment with respect to Plaintiffs' Penn Central claim. (Def.'s Reply at 2 n.1 ("Defendant does not move for summary judgment on Plaintiffs' third [Penn Central] claim at this time.").) Thus, Defendant no longer asserts that the entire case can be resolved in its favor without a trial. If 4

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Plaintiffs prevail on their summary judgment motion, the case can be resolved with a trial limited to damages issues, and the sooner damages discovery is complete, the sooner that can occur. But, at present, there is no prospect that the case will be resolved entirely without further proceedings and a trial. (No settlement discussions have occurred since the ADR process failed.) Also, the parties are prepared to begin damages discovery. In the summary judgment briefing the parties have already developed positions regarding damages, and their appropriate measure. (See, e.g., Def.'s Resp. to Pls.' 2d Supp. Mem. at 23-27 (Docket No. 184); Pls.' Reply in Resp. to Oral Arg. at 13-15 (Docket No. 186).) Moreover, in the ADR process, under Judge Hewitt's guidance, the parties mediated both liability and damages, and exchanged considerable information about damages methodology and calculation. Finally, of course, Defendant has developed its position on the appropriate measure of damages in other temporary regulatory takings cases. In short, the parties have already focused on damages methodology and evidence, and should be able to begin fact and expert discovery on damages in short order. C. Continued Delay of Damages Discovery Will Further Erode the Parties' Ability to Develop and Present Damages Testimony.

Plaintiffs are very concerned that the passage of time is eroding their ability to present their full case. As this Court is aware, Dr. Mitchell, one of Defendant's experts, on whose testimony Plaintiffs have relied, has died. Harold LeMay, who was president and part owner of LRI and RII during the period that the Corps asserted jurisdiction, died in November 2000, less than a year after the landfill opened. (See Declaration of Daniel D. Syrdal in Support of Motion to Allow Commencement of Damages Discovery ¶¶ 3-4.) Both of the other members of the Board of Directors of LRI during the period the Corps exercised jurisdiction, Ed Long and Dave Murrey, have also died. (Id.) All three had knowledge about damages-related issues. (Id.) Further, almost nine years have elapsed since Judge Turner entered the Bifurcation Order, and not only have key witnesses died, but memories fade over intervals much shorter than that. In the meantime, no damages testimony has been perpetuated in discovery. Commencement of damages discovery is thus necessary to preserve vital evidence. 5

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Finally, Plaintiffs are disproportionately prejudiced by further delay. Plaintiffs bear the brunt of the impact of lost evidence through death of witnesses or impaired memory on damages issues. Inability to present witness testimony because of unavailability or lost memory unfairly favors Defendant as does further delay in the award of relief for the economic injuries Plaintiffs suffered in the 1990s. III. CONCLUSION Plaintiffs respectfully request that this Court amend Judge Turner's 1998 Bifurcation Order to allow damages discovery immediately to commence. The axiom that "justice delayed is justice denied" applies with particular force in this case. Although originally a reasonable basis existed to believe that bifurcation might expedite the litigation, that did not occur. Instead, the bar on damages discovery has now become an active constraint on moving forward, rather than a "reasonable" case management device. Moreover, delay of damages discovery is no longer a neutral factor, but rather, because delay fosters loss of evidence, prejudices Plaintiffs' ability to present their damages case. This motion should be granted because it will allow the case to move forward, and permit necessary evidence to be gathered and preserved, without interfering with the Court's work on the summary judgment liability issues. Dated: June 7, 2007 Respectfully submitted,

s/ Daniel D. Syrdal Daniel D. Syrdal Heller Ehrman LLP 701 Fifth Avenue, Suite 6100 Seattle, WA 98104-7098 Telephone: (206) 447-0900 Facsimile: (206) 447-0849 Attorneys for Plaintiffs Resource Investments, Inc. and Land Recovery, Inc. Steven S. Anderson, of counsel Malaika M. Eaton, of counsel

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