Free Motion to Strike - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS STERLING SAVINGS ASSOCIATION, a state chartered savings association, STERLING FINANCIAL CORPORATION, a Washington corporation, Plaintiffs, v. UNITED STATES OF AMERICA, Defendant. ) ) ) ) ) ) ) ) ) ) ) )

No. 95-829C (Judge Wheeler)

DEFENDANT'S MOTION TO STRIKE THE DECLARATION OF DR. PAUL M. HORVITZ Defendant, the United States, respectfully files this motion to strike the March 28, 2007 declaration of expert witness Dr. Paul M. Horvitz attached to plaintiffs Sterling Savings Association and Sterling Financial Corporation's ("Sterling" or "plaintiffs") response to our motion for summary judgment. The Court should strike this declaration because it is untimely and contains new opinions by Dr. Horvitz. In the alternative, we respectfully request the opportunity to depose Dr. Horvitz regarding these new opinions. BACKGROUND In its September 27, 2006 Order, the Court reopened discovery and set a trial date of June 25, 2007. The order directed plaintiffs to submit revised expert reports on damages by December 11, 2006, and required completion of depositions of those experts by February 10, 2007. Ex. A. The order allowed the Government to submit responsive expert reports by February 17, 2007, and required completion of depositions of our experts by March 17, 2007. Id. The Court also noted that any party could file a motion for partial summary judgment but that pending motions would not delay the start of trial. Id.

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On December 11, 2006, Dr. Paul Horvitz, Sterling's lost profits expert, issued a new expert report "updating" his February 2004 report. Ex. B. On January 25, 2007, Dr. Horvitz was deposed regarding this report. Defendant's expert, W. Barefoot Bankhead, an accounting expert, issued a responsive expert report on February 15, 2007, addressing the new core capital ratio and damages calculations included in Dr. Horvitz's 2006 report. Ex. C. Plaintiffs have not yet deposed Mr. Bankhead. On February 26, 2007, we filed a revised motion for summary judgment regarding damages. On March 29, 2007, plaintiffs filed an opposition to our motion and a cross-motion for summary judgment as to damages. In support of its motion, plaintiffs filed a memorandum of points and authorities, an appendix, and a motion to strike the expert report of W. Barefoot Bankhead. In plaintiffs' appendix, it included a new declaration of Dr. Horvitz. Ex. D; see also Pls.' MSJ App. 5-51. Dr. Horvitz's new declaration states: "The purpose of this Declaration is not to supplant my Reports but to expand on them and to comment on the opinions and statements of the government's expert witnesses proffered in conjunction with the government's Motion for Summary Judgment Regarding Damages." Id. at ¶ 10. Indeed, Dr. Horvitz's declaration contains new opinions including new criticisms of Mr. Bankhead's expert report, new justifications of his own prior expert opinions, and other new responses to the reports of our experts. Id. at ¶¶ 36-39, 42-45, 52, 54, 57, 71-87. ARGUMENT I. Dr. Horvitz's Declaration Is Untimely and Improper Because RCFC 26(a)(2)(C) provides that the disclosure of expert testimony "shall be made at the times and in the sequence directed by the court," the Court should strike Dr. 2

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Horvitz's new declaration as untimely under the Court's order. On September 27, 2006, the Court issued a scheduling order requiring plaintiffs to disclose their expert opinions in revised reports by December 11, 2006. Pursuant to this order, we deposed Dr. Horvitz concerning his revised expert report in preparation for trial, and produced reports from our experts that specifically addressed the model and theory of damages disclosed. Now, over 100 days after the deadline set by the Court, and well after the close of expert discovery, plaintiffs present new and modified opinions by way of Dr. Horvitz's March 28, 2007 declaration. Dr. Horvitz admits that the purpose of the declaration was not to replace his previous expert reports but "to expand on them." Ex. D at ¶ 10. In other words, he offers new, previously undisclosed, opinions after the close of expert discovery. These new opinions include new justifications of the conclusions in his previous expert reports and new criticisms of our experts. The Court should not allow plaintiffs to disclose new expert opinions in contravention of the Court's orders in order to attempt to survive the Government's motion for summary judgment. Instead, plaintiffs must rely on the opinions in their expert reports. Therefore, the Court should strike the declaration and not consider it in ruling on the pending motions for summary judgment.1 Although neither Dr. Horvitz nor Sterling refer to the new declaration as a rebuttal expert

The Court has the discretion to exclude expert reports and opinions that are not timely disclosed. See e.g., Trilogy Communications, Inc. v. Time Fiber Communications, Inc., 109 F.3d 739, 745 (Fed. Cir. 1997) (no abuse of discretion in striking expert report submitted after the due date); Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 509 (5th Cir. 1999) (upholding trial court's exclusion of expert not identified in accordance with pre-trial order); Cooper Distributing Co., Inc. v. Amana Refrigeration, Inc., 180 F.3d 542, 549 n.1 (3rd Cir. 1999) (finding "no defect" with district court's refusal to allow party to amend an expert report). The Court should exercise that discretion here. 3

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report, it can be construed as such. Nonetheless, it is an untimely and improper disclosure of expert opinion. The Court did not provide either side with the opportunity to file rebuttal expert reports and plaintiffs did not specifically seek leave of the Court to provide new responses to our experts after the close of discovery. Consequently, the declaration violates not only the Court's orders but the Winstar procedural orders governing expert opinions. Absent agreement of the parties otherwise, we are entitled to a written report containing a "complete statement of all opinions to be expressed by the witness." See Procedural Order No. 2: Discovery Plan at § V(A)(2) (Ex. E). Because we never agreed otherwise, Dr. Horvitz's responses should have been filed as an expert report and not a declaration.2 This violation of Procedural Order No. 2 also requires that the Court strike the declaration. See Procedural Order No. 2: Discovery Plan at § V(A)(4) (Ex. E). If the Court does not grant our motion to strike, we request, in the alternative, that it grant our request to depose Dr. Horvitz regarding the new opinions disclosed in his declaration in preparation for the upcoming trial. We have already contacted Sterling's counsel regarding a deposition of Dr. Horvitz regarding his declaration, but they do not consent to the deposition. Because plaintiffs were required to include their newly disclosed expert opinions in a report issued prior to the Court's deadline or at a minimum, seek leave of the Court to file a rebuttal expert report, we are entitled to depose Dr. Horvitz with respect to the new opinions disclosed in his declaration. See Procedural Order No. 2: Discovery Plan at § V(A)(3) (Ex. E). See also
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Pursuant to Rule 26(a)(2)(B), "[e]xcept as otherwise stipulated or directed by the court, this disclosure shall, with respect to a witness who is retained or specially employed to provide expert testimony in the case . . .be accompanied by a written report prepared and signed by the witness." This Rule is consistent with the parties' agreement under the Procedural Order and also requires Sterling to have filed a written report instead of a declaration. 4

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RCFC 26(a)(4)(A) ("A party may depose any person who has been identified as an expert whose opinions may be presented at trial. If a report from the expert is required under subdivision (a)(2)(B), the deposition shall not be conducted until after the report is provided."). The Court should not permit plaintiffs to render new opinions without the opportunity for discovery upon those opinions simply because the opinions were untimely and disclosed as part of a "declaration" after the close of expert discovery. CONCLUSION For the reasons set forth above, we respectfully request that the Court grant our motion to strike the declaration of Dr. Horvitz, or in the alternative, allow us to depose Dr. Horvitz regarding the expert opinions included in his declaration.

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Respectfully submitted, MICHAEL F. HERTZ Deputy Assistant Attorney General

JEANNE E. DAVIDSON Director

s/ Kenneth M. Dintzer KENNETH M. DINTZER Assistant Director

s/ Elizabeth M. Hosford Of counsel: TAREK SAWI Senior Trial Counsel MELINDA HART DELISA SANCHEZ TIMOTHY J. ABRAHAM WILLIAM G. KANELLIS ELIZABETH A. HOLT April 16, 2007 ELIZABETH M. HOSFORD Trial Attorney Commercial Litigation Branch Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 616-0332 Attorneys for Defendant

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CERTIFICATE OF FILING I hereby certify that on April 16, 2007, a copy of foregoing "DEFENDANT'S MOTION TO STRIKE THE DECLARATION OF DR. PAUL M. HORVITZ AND FOR EXPEDITED BRIEFING AND CONSIDERATION" was filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system.

s/ Elizabeth M. Hosford