Free Reply to Response to Motion - District Court of Colorado - Colorado

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I N T HE U NITED S TATES D ISTRICT C OURT F OR T HE D ISTRICT O F C OLORADO Civil Action No. 03-CV-02579-RPM-BNB VARCO, L.P., Plaintiff, vs. PASON SYSTEMS USA CORP., Defendant. PLAINTIFF'S REPLY BRIEF IN SUPPORT OF ITS MOTION TO STRIKE DEFENDANT'S SUPPLEMENTAL DESIGNATION OF EXPERT OPINION

Plaintiff Varco, L.P. ("Varco"), by its counsel, respectfully submits this Reply Brief in support of its motion (1) to strike the July 21, 2006 report of Defendant's expert, J. Ford Brett, as well as those portions of Brett's September 5, 2006 "rebuttal" report that do not constitute proper rebuttal but rather seek to resuscitate the deficient July 21 report, and (2) to preclude Brett from testifying about the contents or subject matter of the July 21 report. INTRODUCTION To rule on Varco's motion, the Court must determine whether Varco was prejudiced by Pason's submission of a Rule 26(a)(2)(B) expert report that did not contain the basis and reasons for the conclusory opinions stated therein, even though Pason subsequently submitted a Rule 26(a)(2)(C) "rebuttal" report that attempts to address the same issues. Pason's submission of a deficient and conclusory Rule

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26(a)(2)(B) expert report prejudiced Varco because: (a) it did not provide Varco with a reasonable opportunity to submit a rebuttal opinion from additional expert witnesses; and (b) it did not allow Varco's previously retained expert witnesses to respond to the conclusory opinions of Pason's expert. Pason's subsequent so-called "rebuttal" report could not and did not cure any of these problems. Because Varco was prejudiced by Pason's cavalier insistence on making required disclosures only in the sequence it unilaterally determined, the Court should grant Varco's motion to strike the Rule 26(a)(2)(B) report as well as the improper portions of the Rule 26(a)(2)(C) report that purport to resuscitate Pason's expert's prior deficient opinion, and also preclude Pason's expert from testifying about the contents or subject matter of its non-complying Rule 26(a)(2)(B) report. ARGUMENT I. PASON FAILED TO TIMELY DISCLOSE THE BASIS AND REASONS FOR ITS EXPERT'S OPINIONS. This Court specifically ordered Pason to "designate all experts and provide opposing counsel . . . with all information specified in Fed. R. Civ. P. 26(a)(2)" on or before July 21, 2006. (Supplemental Scheduling Order, Doc. 85, at 3 (emphasis

added); Order Granting Defendant Pason's Unopposed Mot. to Amend the Supplemental Scheduling Order, Doc. 106.) Rule 26(a)(2) clearly requires the parties to produce expert reports containing "a complete statement of all opinions to be expressed and the basis and reasons therefor." Fed. R. Civ. P. 26(a)(2)(B) (emphasis added). Instead of providing Varco with a complete expert report by July 21, 2006, Pason submitted a cursory eleven-line statement consisting of bare conclusions. (Pl.'s Mot. to

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Strike, Doc. 109, Ex. 1.) Pason contends that the July 21 report simply added additional support for the opinions expressed by the same expert in a 2004 report. (Def. Pason's Br. in Opp'n to Mot. to Strike, Doc. 113, at 6.) This clearly is not the case. Rather, the July 21 report contained new opinions about the relationship between Varco's patent (the `142 patent) and two earlier patents. Specifically, the July 21 report states that the two earlier patents teach or describe the invention disclosed by the `142 patent. (Pl.'s Mot. to Strike, Doc. 109, Ex. 1.) The July 21 report also states that the two earlier patents, when combined with other alleged prior art referenced in the 2004 report, "contain elements of the invention disclosed by the `142 patent." (Id.) The July 21 report fails to provide the basis and reasons for these opinions. The report fails to describe how the two earlier patents teach or describe the invention disclosed by the `142 patent. (Id.) The July 21 report also does not describe how the two earlier patents should be "combined" with the other alleged prior art, why the specific claims of the `142 patent contain the "elements" taught by the two earlier patents and the other alleged prior art, or how the two patents and the other alleged prior art affect the validity of any specific claims of the `142 patent. (Id.) Thus, the report was deficient under Rule 26(a)(2). See Harvey v. United States, 2005 WL 3164236 at *8 (D. Colo. Nov. 28, 2005) ("The written report should explain `how' and `why' the expert reached the opinions they intend to offer at trial."). Pason contends that, because it had provided Varco with a previous report from the same expert in 2004, the July 21, 2006 report was merely a "supplemental" report governed by Rule 26(e) (Def. Pason's Br. in Opp'n to Mot. to Strike, Doc. 113, at 5-6.)

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Pason ignores the fundamental differences between Rule 26(a)(2) disclosure requirements and a Rule 26(e) supplementation. Accordingly, Pason's argument is entirely without merit. The purpose of the Federal Rules would be eviscerated if parties were permitted to file "supplemental" reports containing new opinions from their retained experts without stating the basis and reasons for those new opinions. Indeed, parties would be incentivized to withhold the bulk of their experts' opinions from their Rule 26(a)(2) disclosures, and then merely "supplement" those initial reports with new opinions containing nothing more than bare-bones conclusions. Such a result would be at odds with both the clear wording of Rule 26(a)(2)(B) as well as the plain intent of the Advisory Committee. See Fed. R. Civ. P. 26 advisory committee note (1993) (referring to the "detailed and complete" report required from retained experts). Thus, Pason clearly violated Rule 26(a)(2) and this Court's Scheduling Order when it failed to disclose the basis and reasons for its expert's opinions in the July 21, 2006 report. II. PASON'S SUBMISSION OF A MORE COMPREHENSIVE "REBUTTAL" REPORT DOES NOT CURE ITS VIOLATION OF RULE 26(a)(2)(B). Pason argues that its September 5, 2006 submission of a "rebuttal" report, which attempts to address the deficiencies in its expert's July 21, 2006 report, somehow constitutes compliance with Rule 26(a)(2)(B) and the Court's Scheduling Order. (Def. Pason's Br. in Opp'n to Mot. to Strike, Doc. 113, at 4.) Pason's contention not only fails to comport with the legal standards, but also conveniently ignores the resultant prejudice to Varco.

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Because the July 21 report did not state the basis and reasons for Pason's expert's opinions, Varco did not have a reasonable opportunity to retain other expert witnesses to rebut those opinions. The Court ordered the parties to designate all rebuttal experts by September 5, 2006. (Supplemental Scheduling Order, Doc. 85, at 3; Order Granting Def. Pason's Unopposed Second Mot. to Amend the Supplemental Scheduling Order, Doc. 108.) However, Pason did not reveal the basis and reasons for the opinions expressed in its expert's July 21 report until September 5. Thus, Varco did not have an opportunity to consider whether to designate additional rebuttal experts until the deadline had already passed. Tenth Circuit case law clearly requires that a party be afforded a more meaningful opportunity for making such an evaluation. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 953 (10th Cir. 2002) (stating that Rule 26(a)(2)(B) reports "set[ting] forth the substance of the direct examination" are "necessary to allow the opposing part a reasonable opportunity to . . . perhaps arrange for expert testimony from other witnesses" (quotations omitted)). Further, because Pason's expert's July 21 report did not state the basis and reasons for the conclusory opinions expressed therein, the experts whom Varco previously had retained did not have a chance to provide a sufficient rebuttal response to those opinions. In fact, Varco's experts did not even see any additional information about Pason's expert's opinions until after the deadline had passed for submission of Varco's rebuttal expert reports. Pason's July 21 report was particularly inadequate, given that Pason is defending against Varco's claims of infringement by arguing that the `142 patent ­ Varco's patent

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­ is invalid. Pason has the burden of proving its affirmative defense of invalidity. It is well-established that "in most cases the party with the burden of proof on an issue should disclose its expert testimony on that issue before other parties are required to make their disclosures with respect to that issue." Fed. R. Civ. P. 26 advisory committee note (1993). However, the July 21 report of Pason's expert, while purporting to address the patent's alleged invalidity, provides no substantive support for such an opinion. Pason cannot justify its failure to timely provide a proper expert report on its invalidity defense by arguing that a subsequent rebuttal report satisfied its obligations. Pason's rebuttal report was provided only after Varco's experts had disclosed their own opinions (due on July 21) and prepared their rebuttal reports (due on September 5). Moreover, Pason's invalidity defense is a constantly moving target. In fact, Pason's October 11, 2006 response to Varco's request for production lists yet another patent, U.S. Patent 3,550,697 ­ which is not disclosed or discussed in any of the reports of Pason's expert ­ in support of Pason's alleged invalidity defense. 1 (Ex. 1, Pason's Responses to Plaintiff's Requests for Production.) Pason's reliance on Tucker v. Ohtsu Tire & Rubber Co., 49 F. Supp. 2d 456 (D. Md. 1999), is misplaced. In Tucker, the plaintiffs' expert belatedly disclosed two additional opinions during his deposition that had not been identified in his Rule 26(a)(2)(B) report. See id. at 458. The court permitted the plaintiffs to submit a
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Although the issue is not currently before the Court, it is worth noting that Pason's expert has never offered an opinion on U.S. Patent 3,550,697 and is therefore precluded from testifying about it.

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supplemental report supporting those opinions approximately six months later. See id. at 459. The key difference between Tucker and the case at bar, however, is that the expert's supplemental opinions in Tucker were sufficiently detailed to provide the defendants with a reasonable opportunity to prepare their own expert disclosures, which were not due until approximately four months later. See id. at 458. In striking contrast, the bare-bones opinions that Pason disclosed in the July 21, 2006 report did not provide Varco or its experts with sufficient guidance to allow them to prepare a sufficient response within the deadline imposed by the Court. Pason contends that Varco was obligated to supplement its own experts' rebuttal opinions after receiving Pason's "rebuttal" report. (Def. Pason's Br. in Opp'n to Mot. to Strike, Doc. 113, at 10.) Thus, Pason attempts to impose an additional burden, and additional costs, on Varco as a result of Pason's own failure to comply with the clear terms of Rule 26(a)(2)(B) and this Court's Scheduling Order. Pason's attempt to ignore existing discovery requirements and to unilaterally impose new ones should not be countenanced by this Court. III. VARCO SEEKS NARROWLY TAILORED, CLEARLY DEFINED RELIEF. Pason argues that Varco is asking the Court to strike a "sizeable but unspecified" portion of Pason's September 5 report. (Def. Pason's Br. in Opp'n to Mot. to Strike, Doc. 113, at 4.) That contention is incorrect. Indeed, Varco's Motion to Strike specifies the narrow portions of the September 5 report that should be stricken, namely: (1) the discussion of Claim 11 on pages 11-12 of the September 5 report; and (2) Tables 1-4, which follow page 13 of the September 5 report. (Pl.'s Mot. to Strike, Doc. 109, at

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8 n.1.) As a result of their indisputable failure to comply with the requirements of Rule 26(a)2(2)(B) and this Court's Order, the foregoing portions of the September 5 report should be stricken, along with the entirety of the July 21, 2006 report. Moreover, Pason's expert should be precluded from testifying about the contents of the stricken portions of the reports.

Dated this 25th day of October, 2006.

Respectfully submitted,

s/Jane Michaels Jane Michaels Joseph T. Jaros Ryan T. Bergsieker H OLLAND & H ART LLP 555 Seventeenth Street, Suite 3200 Post Office Box 8749 Denver, Colorado 80201-8749 Tel. (303) 295-8000 Fax (303) 295-8261 [email protected] [email protected] [email protected] Guy E. Matthews Robert M. Bowick M ATTHEWS , L AWSON , B OWICK & A L -A ZEM , PLLC 2000 Bering Drive, Suite 700 Houston, Texas 77057

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Tel. (713) 355-4200 Fax (713) 355-9689 [email protected] [email protected] ATTORNEYS FOR PLAINTIFF VARCO, L.P.

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C ERTIFICATE O F S ERVICE I hereby certify that on October 25, 2006, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following: [email protected] [email protected]

s/Jane Michaels _________________________

3619405_4.DOC

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