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Christensen v. Quinn

United States District Court, Eighth Circuit

May 17, 2013

DANIEL REED CHRISTENSEN, Plaintiff,
v.
ROSIE QUINN; SECOND CHANCE RESCUE CENTER; JAMES ADAMSON, individually and in his official capacity as a Turner County Commissioner; LUVERNE LANGEROCK, individually and in his official capacity as a Turner County Commissioner; JOHN OVERBY, individually and in his official capacity as a Turner County Commissioner; STEVE SCHMEICHEL, individually and in his official capacity as a Turner County Commissioner; LYLE VAN HOVE, individually and in his official capacity as a Turner County Commissioner; TIFFANI LANDEEN-HOEKE, individually and in her official capacity as Turner County State's Attorney; BYRON NOGELMEIER, individually and in his official capacity as Turner County Sheriff; JAY OSTREM, individually and in his official capacity as a Turner County Deputy; JIM SEVERSON, individually and in his official capacity as a Special Agent for the Division of Criminal Investigation; LARA CUNNINGHAM, individually and in her official capacity as a Revenue Agent for the South Dakota Department of Revenue and Regulations; THE HUMANE SOCIETY OF THE UNITED STATES a/k/a HSUS; WAYNE PACELLE; SCOTTLUND HAISLEY; DR. ADAM BAUKNECHT; EMERGENCY ANIMAL RESCUE SANCTUARY a/k/a EARS; DR. DAWN DALE; and TURNER COUNTY, SOUTH DAKOTA; Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO STRIKE SUPPLEMENTAL EXPERT REPORT

KAREN E. SCHREIER, District Judge.

Defendants move to strike an expert report that was prepared as a supplemental report by Lela Lawless, a damages expert designated by plaintiff Daniel Christensen.[1] Christensen resists the motion. For the following reasons, defendants' motion is granted in part and denied in part.

BACKGROUND

Christensen operated a dog breeding business at his residence. On September 2, 2009, Christensen's property was searched, and all of his breeding dogs and puppies were seized pursuant to a warrant. Because of the search and seizure, Christensen was no longer able to maintain his dog breeding business. Christensen brought this action against defendants on September 2, 2010, seeking damages that included lost profits from his dog breeding business.

During discovery, Christensen hired Lela Lawless, a forensic accountant from Eide Bailly, LLP, to calculate the amount of lost profits Christensen suffered as a result of defendants' actions. Lawless submitted her expert report on February 29, 2012, one day before Christensen's expert disclosure deadline of March 1, 2012.

Following disclosure of Lawless's report, defendants deposed several witnesses, including Christensen himself. Defendants disclosed Ginger Knutsen's expert report pertaining to the issue of lost profits on November 30, 2012, which was defendants' disclosure deadline. Then, defendants filed a Daubert motion on December 13, 2012, seeking to exclude the testimony of Lawless.

Before responding to defendants' Daubert motion, Christensen disclosed an additional expert report from Lawless (Lawless's Supplemental Report on February 14, 2013.[2] Christensen then responded to defendants' Daubert motion.

Defendants argue that the Lawless Supplemental Report should be excluded from trial because it was disclosed well after the court's expert disclosure deadline, and it goes well beyond the scope of a supplemental report.

DISCUSSION

Defendants move to strike Lawless's Supplemental Report in its entirety, arguing that the report is improper supplemental testimony under Rule 26(e) of the Federal Rules of Civil Procedure. Under Rule 26(a)(2), each party must disclose the identities of expert witnesses, along with a written report prepared by each witness, by the date ordered by the court. If the evidence is offered solely to rebut expert testimony offered by another party, disclosure may be made up to thirty days after the other party's disclosure. Fed.R.Civ.P. 26(a)(2)(C)(ii). Further, each party is obligated to supplement information included in an expert's report "if the party learns that in some material respect the disclosure or response is incomplete or incorrect." Fed.R.Civ.P. 26(e). Supplemental disclosures must be made at least thirty days before trial unless a court order directs otherwise. Fed.R.Civ.P. 26(a)(3)(B), 26(e).

Here, the court ordered Christensen to disclose his expert reports by March 1, 2012, and defendants to disclose their expert reports by November 30, 2012. Christensen's deadline to produce Lawless's rebuttal report to defendants' expert Knutson was February 8, 2013. Supplemental reports are due twenty days before trial; the trial has not been scheduled at the time of this order.

Christensen disclosed Lawless's Supplemental Report on February 14, 2013. Therefore, unless Lawless's Supplemental Report qualifies as a supplemental report under Rule 26(e), it is untimely.

As a starting point, "the district court maintains broad control over Rule 26(e) issues regarding the disclosure of the substance of an expert's testimony." Farmland Indus., Inc. v. Morrison-Quirk Grain Corp., 54 F.3d 478, 482 (8th Cir. 1995). The purpose of a supplemental report is to "inform the opposing party of any changes or alterations, " Tenbarge v. Ames Taping Tool Sys., Inc., 190 F.3d 862, 865 (8th Cir. 1999), not "to provide an extension of the deadline by which a party must deliver the lion's share of its expert information." Sierra Club, Lone Star Chapter v. Cedar Point Oil Co., 73 F.3d 546, 571 (5th Cir. 1996). Rule 26(e) "permits supplemental reports only for the narrow purpose of correcting inaccuracies or adding information that was not available at the time of the initial report." Minebea Co. v. Papst, 231 F.R.D. 3, 6 (D.D.C. 2005).

If an expert opinion is untimely, Rule 37(c)(1) sanctions are triggered, including the exclusion at trial of testimony on undisclosed opinions. Fed.R.Civ.P. 37(c)(1). Exclusion of the evidence is not appropriate if the failure to disclose "was substantially justified or is harmless." Id. The court weighs four factors in determining whether exclusion is the proper sanction for untimely expert testimony: (1) the importance of the excluded expert testimony; (2) the party's explanation for failure to disclose; (3) the potential prejudice created by permitting use of the expert testimony at trial or on a pending motion; and (4) the ability to cure any prejudice by granting a continuance. Transclean Corp. v. Bridgewood Servs., Inc., 77 F.Supp.2d 1045, 1064 (D. Minn. 1999); see also Citizens Bank of Batesville, Ark. v. Ford Motor Co., 16 F.3d 965, 966 (8th Cir. 1994) (using similar factors to determine whether to exclude witnesses not made known in compliance with a pretrial order).

Lawless's Supplemental Report included nine sections and additional tables and exhibits. The nine sections are as follows: (A) Labor Costs; (B) Building Renovation Costs; (C) Saved Costs or Cost Not Incurred; (D) Industry Trends, Economic Trends, and Puppy Pricing; (E) Puppy Demand and Markets; (F) Puppy Capacity; (G) Revenue and Profitability; (H) Mitigating Earnings Update; and (I) Estimated Value of Seized Breeding Stock and Puppies.

A. Labor Costs

In Lawless's Supplemental Report, Lawless revised her previous projections of damages to include labor costs at $8.84 per hour for 40 hours a week. The initial report did not include any labor costs. This revision added $18, 387 in fixed costs to her damages analysis beginning in 2010. This change was made after Lawless reviewed the transcripts of the depositions of Christensen that occurred after Lawless filed her initial expert report.[3]

Defendants argue that this information regarding labor costs is untimely because it is not supplemental information. Defendants contend the information was available to Lawless prior to making her initial report because she only needed to ask Christensen to provide this information. The court disagrees. Although the labor costs associated with doing business are common considerations when assessing a business's expenses, Christensen did not have any labor costs for the years that he operated his business because any help he needed came free of charge from family members. It was not until Christensen was deposed-after Lawless submitted her initial report-that he first articulated the need to hire additional help to run his puppy business. Therefore, the information required to generate labor costs associated with Christensen's business was unavailable at the time Lawless made her initial report and at the time of ...


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