Free Order - District Court of Arizona - Arizona

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

BILTMORE ASSOCIATES, L.L.C., as ) Trustee for the Visitalk Creditors' ) Trust, ) ) Plaintiff, ) ) vs. ) ) PETER THIMMESCH, et al., ) ) Defendants. ) ____________________________________) O R D E R

No. 2:02-cv-2405-HRH

Motion to Exclude Testimony of Williams; ­ and ­ Motion to Strike Designation of Witnesses Defendant Snell & Wilmer moves to exclude the testimony of Michael Williams and to exclude documents sponsored by him.1

Defendant also moves to strike plaintiff's designation of seven additional witnesses: Mayo, Hoffman, York, Truesdell, Freed, Love, and Turley.2 Both motions are opposed. Plaintiff moves in the

alternative for leave to call Williams as a witness and offer the documents he would sponsor.3 Oral argument has been requested as

to these motions, but is deemed unnecessary due to the nature of the motions and the completeness of the parties' presentations.
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Docket No. 412. Docket No. 437. Docket No. 421. - 1 -

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The court has heretofore provided a summary disposition of the foregoing motions.4 The court now provides the parties with a full The summary disposition is

explanation of its foregoing rulings. vacated as to Freed only.

Motion to Exclude Testimony of Williams and Non-Disclosed Documents Relying upon Rules 26 and 37, Federal Rules of Civil

Procedure, defendant Snell & Wilmer (hereinafter "defendant") moves to exclude the testimony of Michael Williams and what is

represented to be 1,000 or more pages of documents which were Exhibits 6(d) and 6(e) to plaintiff's response to defendant's motion for partial summary judgment. Defendant contends that

Williams and the documents he would sponsor were never disclosed for purposes of trial. Plaintiff contends that defendant knew of

Williams' involvement and that defendant has had access to the exhibits in question since June of 2007. Plaintiff contends in the alternative that any failure of disclosure is harmless, and that in consideration of factors set out in Amarel v. Connell, 102 F.3d 1494, 1515-16 (9th Cir. 1997), the court should amend its

scheduling order to allow the addition of Williams as a witness. The initial disclosure requirements of Rule 26, Federal Rules of Civil Procedure,5 require that a plaintiff provide defendant with "the name and, if known, the address and telephone number of
4

Docket No. 446.

In this order, the court has reference to the pre-December 1, 2007, rules inasmuch as the matters discussed herein arose prior to the revision of the civil rules. - 2 -

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each

individual

likely

to

have

discoverable

information[.]" "a computation

Rule 26(a)(1)(A).

A plaintiff must also disclose:

of any category of damages claimed by the disclosing party, making available for inspection and copying as under Rule 34 the documents or other evidentiary material ... on which such computation is based...." Rule 26(a)(1)(C). Subsection (e) of Rule 26 imposes

upon parties "a duty to supplement or correct the disclosure or response to include information thereafter acquired" under certain circumstances. Here pertinent, subparagraph (e)(1) provides that

"a party is under a duty to supplement at appropriate intervals its disclosures under subdivision (a) if the party learns that in some material respect the information disclosed is incomplete or

incorrect and if the additional or corrected information has not otherwise been made known to the other parties during the discovery process or in writing." Rule 26(e)(1). Also relevant here are the provisions of Rule 37(c)(1), which provides: A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1) ... 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. Finally, and as an extension of the disclosure requirements of the Federal Rules of Civil Procedure, the court (as it routinely does) required in its scheduling and planning order entered

pursuant to Rule 16(b) and Rule 26(f), Federal Rules of Civil Procedure, that:

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(4) Preliminary trial witness lists shall be filed not later than 45 days before the close of fact discovery and not later than 45 days before the close of expert discovery. These witness lists must incorporate the names of all witnesses whom a party might elect to call at trial. A witness not disclosed at these times (such that he or she may be deposed) will not be permitted to testify at trial. Pursuant to this provision of the scheduling and planning order, plaintiff filed a preliminary list of trial witnesses on May 8, 2006.6 Plaintiff does not dispute its non-disclosure of Williams

as required by Rule 26; and Williams was not named in plaintiff's preliminary trial witness lists. Fact discovery was originally scheduled to close in this case by April 30, 2005, and expert discovery was to be concluded by November 15, 2005. For various good reasons, the date for

completion of discovery was from time to time extended.

By order

of March 16, 2006,7 the date for completion of discovery was extended to July 31, 2006, except that additional subsequent dates for the exchange of expert reports were established. By revised

scheduling order of August 2, 2006,8 the court observed that discovery was closed except as regards six specific depositions that were to be completed pursuant to a stipulation of the parties

Plaintiff's first preliminary witness list was filed June 14, 2005, Docket No. 241. This list was updated by plaintiff on May 8, 2006; Plaintiff's Preliminary List of Trial Witnesses, Docket No. 303.
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Docket No. 297. Docket No. 319. - 4 -

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on or before August 31, 2006.

Again, the time for disclosure of

expert reports was put off; but here we deal with fact witness disclosure issues. Eventually expert discovery was completed. undertaken. A mediation was

Well after the close of fact discovery in June 2007, In opposing that

defendant moved for a partial summary judgment.

motion, a declaration of Williams and the documents that are the subject of defendant's motion to exclude testimony were served and filed with plaintiff's response to the summary judgment motion. Discussion All of the above-referenced rules, as well as the court's scheduling and planning orders and final pretrial orders are intended to facilitate timely disclosure of witnesses and records pertinent to a case. The goal is to achieve effective and A further goal is to render trials

efficient case development.

more efficient and economical by reason of the full exchange of knowledge and avoidance of surprise. Mr. Williams and the documents that he would sponsor with respect to plaintiff's claims of insolvency and damages were not included in plaintiff's They were Rule never 26(a)(1)(A) the subject or of a (C) initial 26(e)

disclosures.

Rule

supplementation of plaintiff's disclosures.

Indeed, Williams and

his documents were never made known to the defendant until after the close of discovery during dispositive motion practice. As plaintiff points out, a declaration of Mr. Williams and the voluminous records in question were made a part of plaintiff's - 5 -

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response to defendant's motion for partial summary judgment.

That

declaration and the documents received precious little attention during the summary judgment proceedings. Had the point been raised there, however, it is clear that the Williams declaration and documents would have been excluded pursuant to Rule 37(c)(1), which, as quoted at length above, precludes a party who has failed to disclose information from employing that information "at trial, at a hearing, or on a motion[.]" Plaintiff aptly points out that Rule 37(c)(1) qualifies the foregoing exclusion. The failure to disclose must be without

substantial justification, and the rule may not be invoked where the failure to disclose is harmless. The court perceives no

appropriate justification in plaintiff's response to the instant motion. The present plaintiff and its counsel have been directly

involved in the Visitalk bankruptcy proceedings at all times relevant to this litigation. The bankruptcy papers and Williams What Williams would

were surely always available to plaintiff. offer at trial is not rebuttal testimony.

In opposing the instant

motion, plaintiff states that the "documents provide support for the insolvency and damages calculation for the expert testimony of Renee Jenkins."9 If that be so, the materials in question should

have been made available to plaintiff's expert before her report was prepared.10
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Not only does plaintiff's failure to disclose the

Response to Motion to Exclude Testimony at 7, Docket No. 421. The court infers that the documents in question were not (continued...) - 6 -

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documents in question demonstrate a breach of Rule 26(a)(1)(C), but, in addition, the failure to make them known to all concerned (including plaintiff's expert) has potentially disrupted the

development of expert opinions for both sides.

Plainly it is not

conducive to economical, efficient trials for expert testimony to be a moving target. If plaintiff's expert were now to endeavor to

rely upon the Williams documents, plainly defendant's expert will be "caught short," for the development of his opinions was

necessarily formulated as a response to plaintiff's expert.

Thus,

what has transpired here is, in the court's view, not only without justification but potentially disruptive of trial and harmful to the defense. It is the very kind of surprise that the discovery

rules and the court's orders are aimed at preventing. The court's various orders for pretrial proceedings and final pretrial conference,11 like the rules discussed above, are aimed at facilitating trial. These orders required the parties to file As already observed, it was not until

final trial witness lists.12

December 20, 2007, when the parties jointly filed their lists of

(...continued) available to Ms. Jenkins. If they were, and if she relied upon them, then she may testify about her use of those documents. The court infers, however, that the documents that Williams would sponsor were not available to plaintiff's expert.
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Docket Nos. 367, 375, and 413.

Second Amended Order for Pretrial Proceedings and Final Pretrial Conference at 2 (Dec. 3, 2007), Docket No. 413. - 7 -

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trial witnesses,13 that plaintiff for the first time disclosed Mr. Williams as a trial witness. Had the question of Mr. Williams' testimony and his exhibits been raised earlier by the plaintiff, the outcome here might have been different. Plainly, plaintiff was aware of the potential usefulness of Williams and his documents by mid-2007 when plaintiff was opposing defendant's motion for partial summary judgment. Had plaintiff sought leave to rely upon

Williams' declaration and/or trial testimony at that time, there might have been time for everyone to recover -- that is, for the prejudice and harm which the court now perceives to be avoided. As of mid-2007, there would have been six months or more before trial within which the parties might have made adjustments to accommodate Williams' testimony. 2007. that Plaintiff did not raise the matter in midAt

The problem was not manifest until December 20, 2007. point, as reflected by the voluminous document

which

incorporated plaintiff's final trial witness list, the parties were deeply involved in their final trial preparation. This is not the

time for discovery to be reopened, much less is it a time to embark upon an evidentiary excursion that threatens to undercut the work of both plaintiffs' and defendant's experts. Applying the factors set forth in Amarel, the court concludes that calling Williams as a witness and introducing the records that he would sponsor would result in prejudice and surprise to the defense.
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It is too late to cure the possible prejudice.

Joint Statement of Issues, Joint Statement of Undisputed Facts, and Lists of Witnesses at 29, Docket No. 422. - 8 -

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For these reasons, the motion to exclude Williams and the documents that he would sponsor is granted. For the same foregoing reasons, plaintiff's alternative motion to allow Mr. Williams to testify and offer exhibits is denied. Motion to Strike Designation of Witnesses Defendant also seeks to preclude plaintiff from calling as trial witnesses: Turley. planning Mayo, Hoffman, York, Truesdell, Freed, Love, and

Pursuant to paragraph (4) of the court's scheduling and order (quoted above), plaintiff filed its list of

potential trial witnesses,14 which initial list was updated (adding seven names) by plaintiff on May 8, 2006.15 Mayo Will Be Excluded Witness Mayo was not listed as a potential trial witness in the plaintiff's updated, preliminary witness list.16 The court's

scheduling and planning order expressly provided that witnesses not disclosed in such trial witness lists would not be permitted to testify at trial. This requirement is in furtherance of the spirit of full disclosure contained in Rule 26(a) and enforced by

Rule 37(c). Plaintiff argues that Mayo should not be excluded because he was included in plaintiff's Rule 26 initial disclosures. In this

regard, the court's scheduling and planning order (quoted above) is

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Docket No. 241. Docket No. 303. Id. - 9 -

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very specific. By that order, the court required the disclosure of "all witnesses whom a party might elect to call at trial."17 The

latter requirement is quite different from the Rule 26 requirement that requires the disclosure of witnesses who may have information about the case. As discussed above in connection with the Williams motion, the parties are now in final trial preparation. The court perceives no substantial justification for omitting Mayo from plaintiff's

preliminary trial witness list.

At this point, there is no

opportunity to avoid the prejudice of surprise that flows from springing an undisclosed trial witness on an opposing party. The

court is unpersuaded that allowing Mayo to testify would be harmless, for plaintiff's first advice that Mayo would be a witness18 discloses that he was a former president and CEO and sole board member of Visitalk, the original plaintiff here. Hoffman, et al. The other six witnesses whom the defendant would have the court preclude from testifying -- Hoffman, York, Truesdell, Freed, Love, and Turley -- were duly disclosed by plaintiff before the close of discovery as potential trial witnesses. However, as the

moving papers and correspondence between counsel reflect, the whereabouts of these witnesses was unknown. During at least mid-

17

Scheduling and Planning Order at 3, Docket No. 186.

Joint Statement of Issues, Joint Statement of Undisputed Facts, and Lists of Witnesses at 24-25 (Dec. 20, 2007), Docket No. 422. - 10 -

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2006, counsel appear to have engaged in extensive efforts to locate the other six witnesses. Laying aside Mr. Freed, those efforts

were unsuccessful; and the most recent correspondence between counsel indicates that plaintiff still does not know the

whereabouts of Hoffman, York, Truesdell, Love, and Turley.19 Inasmuch as neither party was able to locate Hoffman, York, Truesdell, Love, and Turley during the time for fact discovery, and inasmuch as plaintiff's counsel has represented as recently as January 23, 2008, that plaintiff still does not know where these persons are, they will not be permitted to testify even if they should be located between now and trial, which on December 3, 2007,20 was set for March 3, 2008. likely nearing completion. Final trial preparation is

Surely plaintiff has already, of

necessity, planned its case around these witnesses not being available inasmuch as their whereabouts are still unknown.

Excluding these witnesses therefore does plaintiff no unanticipated harm; whereas calling in these witnesses at the very last moment would plainly deprive defendant of the opportunity to prepare its defense in the orderly way the court's scheduling and planning order contemplated.

Christopher R. Kaup letter of January 23, 2008, to Charles S. Price, attached as Exhibit H to Memorandum in Support of Motion to Strike Designation of Witnesses, Docket No. 438-3. Counsel for defendant states in his letter that, "[w]e continue our efforts to locate these witnesses...."
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Docket No. 413. - 11 -

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In entering a summary order granting defendant's motion to exclude Hoffman, et al., the court overlooked the fact that witness Freed is in a different position from all of the other proposed witnesses. Not only was Freed disclosed such that he might be

deposed by defendant, but, in addition, plaintiff timely provided defendant with information from which defendant could surely have located Freed for purposes of a deposition. In its reply

memorandum, defendant argues that Freed should nonetheless be excluded. Defendant argues that it located and arranged

depositions of all of its witnesses, and expected plaintiff to do the same. The court does not doubt defendant's expectation, but

that expectation was not realistic, for it does not appear that plaintiff ever agreed that the onus for making Freed available for a deposition should be upon plaintiff. permitted to testify. Accordingly, Freed will be

The court's order of February 5, 2008,21 is

vacated as to Freed only. In its reply memorandum, defendant requests an opportunity to depose Freed in the event the court permits him to testify. While

the court declines the latter suggestion, it has no objection to defendant seeking an informal interview with Freed. If such an

interview is to take place, defendant shall afford counsel for plaintiff an opportunity to attend the interview.

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Docket No. 446. - 12 -

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Conclusion Defendant's motion to exclude the testimony and documents sponsored by Williams22 is granted. Plaintiff's motion to allow the testimony of Williams and the admission of documents sponsored by him23 is denied. Defendant's motion to strike the designations of

witnesses Mayo, Hoffman, York, Truesdell, Love, and Turley24 is granted. That motion is denied as to witness Freed. Requests for

oral argument on these motions are denied. DATED at Anchorage, Alaska, this 8th day of February, 2008.

/s/ H. Russel Holland United States District Judge

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Docket No. 412. Docket No. 421. Docket No. 437. - 13 -

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