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Nw Pipe Company, An Oregon Corporation v. Dewolff

January 17, 2012

NW PIPE COMPANY, AN OREGON CORPORATION, PLAINTIFF,
v.
DEWOLFF, BOBERG AND ASSOCIATES, INC., A DELAWARE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: David T. Bristow United States Magistrate Judge

ORDER RE: DEFENDANT'S MOTION TO PRECLUDE PLAINTIFF'S EVIDENCE OF DAMAGES, OR IN THE ALTERNATIVE, TO REOPEN DISCOVERY ON LIMITED ISSUES AND FOR SANCTIONS (DKT NO. 62)

INTRODUCTION

On October 24, 2011, defendant filed a "Motion to Preclude Plaintiff's Evidence of Damages, or in the Alternative, to Reopen Discovery on Limited Issues and for Sanctions" ("Motion"). By way of this Motion, defendant seeks an order precluding plaintiff from introducing any evidence regarding any lack of savings for purposes of calculating its damages in this action, or any evidence of calculations of any corresponding damages. Defendant argues that preclusion of evidence regarding plaintiff's damages is appropriate because plaintiff failed to disclose its current damages computation methodology in its initial disclosures as required by Fed. R. Civ. P. 26, and did not provide defendant with this new damages computation methodology until after the fact discovery cut-off date. According to defendant, plaintiff's untimely disclosure of its damages computation methodology, along with the concomitant supporting documentation, has prejudiced defendant because it has been deprived of the opportunity to conduct discovery regarding plaintiff's new damages computation methodology.

In response, plaintiff filed its Opposition ("Opp.") to the Motion on November 1, 2011 wherein it objected to the Motion, arguing that it has not significantly altered its damages calculation, and to the extent its calculation methodology has changed, it is still based upon information which has previously been provided to defendant, and, therefore, defendant has not been prejudiced. Defendant filed its Reply ("Reply") to the Opposition on November 7, 2011. The Court conducted a hearing on the Motion on December 22, 2011. All interested parties were present and were provided an opportunity to address the Motion.

Thus, this matter is now ready for decision. For the reasons discussed below, defendant's Motion is granted in part and denied in part.

PROCEDURAL HISTORY

Plaintiff initiated this action on June 7, 2010 ("Complaint"). Plaintiff, a manufacturer of industrial pipe, hired defendant, a management consulting firm, to improve efficiency and productivity at plaintiff's Denver, Colorado and Adelanto, California manufacturing plants. (Complaint at 2-3.) Plaintiff alleges that defendant violated its contractual obligations and committed fraud by breaching its guarantee to achieve promised annual savings benefits. (See generally Complaint.) Plaintiff contends that it failed to meet certain savings targets following completion of defendant's work on-site. (Complaint at 9.)

After defendant answered the Complaint on October 1, 2010, plaintiff sought leave to amend its Complaint, which was granted on December 3, 2010 ("FAC").

Thereafter, the parties proceeded with discovery pursuant to the District Judge's December 13, 2010 scheduling order. The scheduling order was later amended after the parties filed a Joint Motion to Extend Pretrial Deadlines. Accordingly, pursuant to the April 15, 2011 Order on Joint Motion to Extend Pretrial Deadlines ("Order"), fact discovery was to be completed by July 12, 2011 and expert discovery was to be completed by September 12, 2011. The District Judge's Order expressly cautioned the parties that "[t]here will be NO further extensions."

Nevertheless, on or about June 15, 2011, plaintiff notified defendant that it had found "problems" with its damages computation methodology, known as the "AvsE" method. (Declaration of Michael Kao ["Kao Decl."] filed in support of Motion at ¶8.) Plaintiff later notified defendant that it did not have an estimate for when any corrected damages computation would be produced. (Id.) Meanwhile, the parties agreed, without seeking leave of the Court, to conduct fact and expert discovery after the respective cut-off dates, including taking the depositions of two fact witnesses regarding damages. On July 13, 2011, one day after the fact discovery cut-off, plaintiff produced a new damages computation, using a methodology known as the management report. (Kao Decl. at ¶14.) Plaintiff provided a revised management *fn1 report relating to damages calculation on September 21, 2011. (Kao Decl. at ¶21; Motion at 8; Declaration of Lori Irish Bauman ["Bauman Decl."] filed in support of Opp. at ¶24.) According to defendant, this new methodology of damages computation relies on a different set of data than the AvsE method. (Motion at 2.) Although the new damages computation relies on the same methodology used by defendant during the Adelanto project to calculate savings, defendant did not have the data to substantiate the new damages computation because some of the data was generated after it was no longer on the project. (Motion at 7, 17.) Documents supporting this new damages computation were provided to defendant on July 11, 2011 and September 7, 2011. (Kao Decl. at ¶20; Opp. at 4.)

At the hearing on the Motion, plaintiff's counsel indicated that plaintiff designed its expert and provided an expert report to defendant on November 10, 2011 pursuant to an agreement between the parties, without leave of the Court as required under Fed. R. Civ. P. 29. The Court-ordered cut-off for expert discovery was September 12, 2011. To date, it appears defendant has not designed an expert or provided an expert report. *fn2

DISCUSSION

I. Defendant's Motion to Preclude Evidence

Fed. R. Civ. P. 26(a)(1)(A)(iii) requires the following: [A] computation of each category of damages claimed by the disclosing party -- who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation ...


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