Free Motion to Strike - 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 MOTION TO STRIKE DEFENDANT'S SUPPLEMENTAL DESIGNATION OF EXPERT OPINION

Plaintiff Varco, L.P. ("Varco"), by its counsel, hereby moves pursuant to Fed. R. Civ. P. 26(a)(2)(B) and 37(c)(1) for an order (1) striking the supplemental report of Defendant's expert, J. Ford Brett, as well as those portions of Brett's rebuttal report that purport to resuscitate the deficient supplemental report; and (2) precluding Brett from testifying about the contents or subject matter of the supplemental report. As grounds therefor, Plaintiff states as follows: CERTIFICATION PURSUANT TO LOCAL RULE 7.1(A) Undersigned counsel certifies that she has conferred with Defendant's counsel, Mark Haynes, who has stated that Defendant opposes this Motion. INTRODUCTION Despite the clear and unambiguous language of Rule 26(a)(2)(B), which requires parties who wish to rely on the testimony of an expert witness to disclose a detailed and

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specific report, Defendant has designated an eleven-line cursory conclusion as a purported supplemental expert "report." (Ex.1) The "report" does not contain the basis and reasons for the expert's supplemental conclusions, which is in clear violation of the explicit requirements of Rule 26(a)(2)(B). Nor are the basis and reasons for the opinions in the supplemental report contained in the expert's original report, which addresses entirely different issues. (Ex. 2) Thus, the supplemental report does not provide enough information for Plaintiff to prepare its case for trial or cross-examine Defendant's expert at trial. Defendant's attempt to bolster the deficient supplemental report with a rebuttal report addressing the same subjects in more detail does not cure this prejudice, as the rebuttal report does not address all the issues raised in the supplemental report and, in any event, Plaintiff's experts did not have a chance to examine the rebuttal report before preparing their own rebuttal reports. Because Defendant's violation of Rule 26(a) is neither substantially justified nor harmless, the information contained in the supplemental report should be excluded, in accordance with Rule 37(c)(1). The Court should do so by striking the supplemental report and the offending portions of the rebuttal report, and precluding Defendant's expert from testifying about the contents or subject matter of the supplemental report. ARGUMENT I. DEFENDANT'S SUPPLEMENTAL REPORT DOES NOT COMPLY WITH RULE 26(a)(2) BECAUSE IT DOES NOT CONTAIN THE BASIS AND REASONS FOR THE EXPERT'S OPINIONS. Rule 26(a)(2) expert reports "are intended not only to identify the expert witness, but also `to set forth the substance of the direct examination.'" Jacobsen v. Deseret

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Book Co., 287 F.3d 936, 953 (10th Cir. 2002) (quoting Fed. R. Civ. P. 26(a)(2) advisory committee note (1993)). "Such disclosure is necessary to allow the opposing party a reasonable opportunity to prepare for effective cross examination and perhaps arrange for expert testimony from other witnesses." Id. (quotations omitted); see also Murray v. First Marine Ins. Co., 29 Fed. Appx. 503, 507 (10th Cir. 2002) ("[T]he idea behind [Rule 26(a)(2)(B)] is to give opposing counsel an opportunity to inquire about the basis of an expert's testimony."). Thus, Rule 26(a)(2) specifically requires "a written report . . . [that] shall contain a complete statement of all opinions to be expressed and the basis and reasons therefor." Fed. R. Civ. P. 26(a)(2)(B). To comply with Rule 26(a)(2), "[t]he written report should explain `how' and `why' the expert reached the opinions they intend to offer at trial." Harvey v. United States, 2005 WL 3164236 at *8 (D. Colo. Nov. 28, 2005). In this case, Defendant's supplemental report falls woefully short of the clear Rule 26(a)(2) standard. The report is 1/3 of a page, consists of three paragraphs totaling 11 lines, and offers bare conclusions, without stating the basis and reasons for those conclusions. (Ex. 1.) For example, the report states that two earlier patents "in various respects" teach or describe the invention disclosed by the Bowden patent ("the `142 Patent"). (Id.) However, the report fails to address in what "respects" the two earlier patents allegedly do so. (Id.) The report also states that prior art "contain[s] elements of the invention disclosed by the [Bowden] patent," but it makes no attempt to specify any of the "elements" in question. (Id.) Moreover, the report reveals no information about how the specific claims of the patent are considered to contain the

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"elements" allegedly taught by the prior art or how the prior art allegedly affects the validity of any specific claims of the patent. Defendant cannot plausibly argue that it is excused from filing a complete supplemental expert report because its original expert report contains the basis and reasons for the conclusions in the supplemental report. The two reports address entirely different issues. Defendant's original report addresses whether the Pason AutoDriller falls within the scope of Claims 11 or 14 of the `142 Patent. (Ex. 2, at 14.) By contrast, the supplemental report purports to address, without any explanation, whether prior art teaches or describes the entirety of the invention disclosed by the `142 Patent. (Ex. 1.) Thus, because it is impossible for Plaintiff to discern the basis and reasons for the opinions in Defendant's supplemental expert report, the report represents just the sort of incomplete disclosure that Rule 26(a)(2) was designed to eliminate. II. RULE 37(c)(1) MANDATES STRIKING THE SUPPLEMENTAL REPORT BECAUSE DEFENDANT'S VIOLATION OF RULE 26(a) IS NEITHER SUBSTANTIALLY JUSTIFIED NOR HARMLESS. Rule 37(c)(1) "was intended to put teeth into the mandatory initial disclosure requirements" of Rule 26(a)(2). 8A CHARLES A LAN W RIGHT , A RTHUR R. M ILLER , & R ICHARD L. M ARCUS , F EDERAL P RACTICE AND P ROCEDURE § 2289.1, at 704 (2d ed. 1994). Rule 37(c)(1) thus ensures that the requirements of Rule 26(a)(2) remain "mandatory and self-executing." Kern River Gas Trans. Co. v. 6.17 Acres of Land, More or Less, in Salt Lake County, Utah, 156 Fed. Appx. 96, 102 (10th Cir. 2005) (quotations omitted). Under Rule 37(c)(1),

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[a] party that without substantial justification fails to disclose information required by Rule 26(a) . . . is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed. Fed. R. Civ. P. 37(c)(1); see also Jacobsen, 287 F.3d at 953 ("[A] district court can allow evidence violating Rule 26(a) only if the violation was justified or harmless.") (emphasis added). "The burden of establishing either substantial justification or that the failure to provide the information is harmless is on [the party who failed to provide the report]." Palmer v. Rhodes Machinery, 187 F.R.D. 653, 657 (N.D. Okla. 1999). A. Defendant's Violation of Rule 26(a) Was Not Substantially Justified. Under the governing legal authority, the "substantial justification" standard requires: justification to a degree that could satisfy a reasonable person that parties could differ as to whether the party was required to comply with the disclosure request. The proponent's position must have a reasonable basis in law and fact. Nguyen v. IBP, Inc., 162 F.R.D. 675, 680 (D. Kan. 1995) (citing Pierce v. Underwood, 487 U.S. 552 (1988)). Defendant can offer no legitimate legal argument that Rule 26(a) does not require an expert report to contain the basis and reasons for the expert's opinions. Nor can Defendant offer any legitimate factual justification for its failure to comply with the Federal Rules of Civil Procedure and this Court's Orders. By Order dated April 6, 2006 (Docket #85), the Court required the parties to submit supplemental expert reports no later than July 15, 2006. On July 14, 2006, Defendant filed a motion requesting that the supplemental expert report deadline be

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extended, for both parties, to July 21, 2006. Defendant's unopposed motion (Docket #103) was granted by the Court (Docket #104). On July 21, 2006, in contrast to Defendant's cursory submission, Plaintiff Varco provided Defendant with an extensive 53-page report, including nineteen attached exhibits, setting forth the detailed basis and reasons for its liability expert's conclusions. Defendant has no justification for its failure to abide by the same rules and no legitimate excuse for ignoring the requirements of Rule 26(a)(2). B. Defendant's Violation of Rule 26(a) Was Not Harmless.

In determining whether Defendant's violation of Rule 26(a) was harmless, the Court should consider (1) the prejudice or surprise to the party against whom the testimony is offered; (2) the ability to cure the prejudice; (3) the extent to which introducing such testimony would disrupt the trial; and (4) the non-complying party's bad faith or willfulness. See Jacobsen, 287 F.3d at 953 (citing Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999)). 1. Prejudice

Because the supplemental report fails to provide the substance of the testimony of Defendant's expert, and it "appears likely the expert['s] testimony at trial will contain substantially more information than was presented in the expert report[]," "prejudice results because the expert report[] [does] not reveal what the expert[] will testify to at trial." Id. at 953-54. Without knowing the substance of the testimony of Defendant's expert, Plaintiff Varco's own expert witnesses were hampered in the preparation of their rebuttal reports. Defendant's incomplete disclosure also left Varco

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unable to determine whether it needed to engage additional experts to rebut the testimony of Defendant's expert. See Jacobsen, 287 F.3d at 953. Moreover, Varco cannot prepare adequately to depose Defendant's expert. See Harvey, 2005 WL 3164236 at *10 ("Plaintiff should have fully disclosed the opinions of Drs. Bobolis and VanHoozen pursuant to Rule 26(a)(2)(B) prior to their depositions."). Further, Defendant's violation of Rule 26(a) impedes Varco's ability to cross-examine Defendant's expert effectively at trial. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 953 (10th Cir. 2002); Fed. R. Civ. P. 26(a)(2) advisory committee note (1993). In short, the prejudice to Plaintiff from Defendant's incomplete disclosure is substantial. The prejudice to Plaintiff was compounded by Defendant's submission of a rebuttal report from the same expert, J. Ford Brett, on September 5, 2006. (Ex. 3) The proper purpose of a rebuttal report is to respond to the opposing party's expert witness's opinions. However, Brett's "rebuttal report" goes beyond such legitimate purpose and purports to "further express the supplemental opinions of J. Ford Brett" that were barely articulated in his July 21, 2006 supplemental report. (Id. at 1.) In essence, Defendant has attempted to bootstrap Brett's inadequate and conclusory supplemental report by correcting or amplifying it, after-the-fact, in a "rebuttal report" to which Varco's experts have had no opportunity to respond. Defendant's abuse of this Court's deadlines and the Federal Rules of Civil Procedure not only violates the requirements of Rule 26(a)(2)(B), but also severely prejudices Varco. In particular, Varco's experts have been deprived of the opportunity to comment in writing in their own rebuttal reports on the substance and "opinions" that Defendant's expert has now

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advanced, belatedly, in the form of a "rebuttal" report. Moreover, Defendant's conclusory supplemental report provided no guidance to Varco as to whether Varco should retain additional experts to rebut the testimony of Defendant's expert. 2. Ability to cure

In cases in which the defendants have disclosed an incomplete expert report, the plaintiff cannot cure the prejudice after-the-fact because the plaintiff "still would not know what testimony the defendants' experts would give at trial." Jacobsen, 287 F.3d at 954. Thus, Defendant cannot argue convincingly that there are steps that Varco can take at this late date to cure the prejudice. The critical question is what should have been done by Defendant prior to the filing of Defendant's supplemental expert report. See Jacobsen, 287 F.3d at 954. The prejudice to Varco cannot be cured by a deposition of Defendant's expert because Varco's own expert witnesses have had no opportunity to submit opinions responsive to Brett's conclusory (or belatedly advanced) "opinions." The only way to cure the prejudice to Varco is to strike Brett's non-complying supplemental report of July 21, 2006 as well as those portions of Brett's September 5, 2006 rebuttal report that improperly and belatedly purport to resuscitate his deficient July 21, 2006 report. 1

These portions of the September 5 rebuttal report include, at a minimum, the discussion of Claim 11 on pages 11-12, as well as Tables 1- 4, which follow page 13. (Ex. 3) . Prior to the analysis of Claim 11 on pages 11-12, Brett concedes that he would not be making any comments rebutting the construction of Claim 11 by Varco's expert Gregg Perkin. (Id. at 10.) However, Brett then states how a Canadian patent constitutes prior art anticipating the `142 patent ­ the very argument he failed to advance in his supplemental expert report. (Id. at 11-12.) Similarly, in Tables 1- 4, Brett states, with no reference to Perkin, how prior art anticipates individual claims in 8

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3.

Disruption

Allowing Defendant to introduce the supplemental report into evidence or solicit testimony as to the contents of the report would disserve the interests of justice at the trial. The bare conclusions of the supplemental report could not assist a trier of fact in understanding the evidence or determining a fact in issue. Cf. Fed. R. Evid. 702. If Defendant's expert were allowed to testify in a manner that expands upon the contents or subject matter of the supplemental report, Defendant would be conducting a "trial by ambush," for which Plaintiff had no adequate chance to prepare prior to trial. Defendant already has had two chances to submit an expert report, once in 2004 and again in 2006. This case was filed in December, 2003. The discovery cut-off is October 1, 2006. It is anticipated that trial will be scheduled in early 2007. Defendant has had ample time to submit a supplemental expert report that complies with the Federal Rules of Civil Procedure within the deadlines specified by the Court. It failed to do so. Plaintiff Varco will be severely prejudiced if Defendant's supplemental expert report, which clearly violates the requirements of Rule 26(a)(2), is not stricken. 4. Bad faith

Even assuming, arguendo, that Defendant acted in good faith in disclosing its patently inadequate report, "good faith alone would not be enough to overcome the other factors." Jacobsen, 287 F.3d at 954. A party's insistence that it did not intend to

(cont'd.).. the `142 patent. (Id. at Tables 1- 4.) This is yet another argument that Brett failed to advance in his supplemental report, yet then attempts to inject, belatedly and improperly, in his so-called "rebuttal" report. Defendant should not be permitted to profit from its expert's blatant "sandbagging."

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conduct a "trial by ambush" is an inadequate justification for allowing such a trial to occur. Because Defendant's violation of Rule 26(a)(2) was neither substantially justified nor harmless, Rule 37(c)(1) mandates exclusion of the information contained in the supplemental expert report. CONCLUSION In submitting a conclusory, cursory supplemental expert report, Defendant failed to comply with the clear mandates of Rule 26(a)(2)(B). Rule 37(c)(1) requires exclusion of the information contained in the report. In this case, such exclusion should be accomplished by striking the report and precluding Defendant's expert from testifying about the contents or subject matter of the report.

WHEREFORE, Plaintiff respectfully requests that the Court: 1. Strike Defendant's Supplemental Designation of Expert Opinion (Exhibit 1) and the portions of Defendant's Responsive and Supplemental Expert Report (Exhibit 3) that purport to resuscitate the deficient Supplemental Designation of Expert Opinion; 2. Preclude Defendant's expert, J. Ford Brett, from testifying about the contents or subject matter of the stricken supplemental expert report; 3. Grant Plaintiff its reasonable expenses, including attorney's fees, as allowed by Rule 37(c)(1) as a result of the violation; and 4. Order any other relief the Court deems proper.

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Dated this 19th day of September, 2006.

Respectfully submitted,

s/Jane Michaels Jane Michaels Joseph T. Jaros 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] 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 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 September 19, 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 _________________________

3599549_5.DOC

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