United States District Court, S.D. California
ORDER DENYING DEFENDANTS' EX PARTE APPLICATION FOR ADDITIONAL TIME FOR DEFENDANTS' PAINT EXPERT'S SUPPLEMENTAL WRITTEN REPORT; GRANTING DEFENDANTS' REQUEST FOR CLARIFICATION OF THE COURT'S ORDER [DOC. NO. 120]
WILLIAM V. GALLO, Magistrate Judge.
Plaintiff Sherwin-Williams ("Plaintiff") makes paints and coatings for cars. (Doc. No. 31 at 1.) Defendants JB Collision Services, Inc. ("Defendant JB Collision") and JJT, Inc. ("Defendant JJT") are auto body shops. Id . On or about September 10, 2008, Defendant JB Collision entered into a Supply Agreement with Plaintiff. (Doc. No. 1 at 2.) Pursuant to the Supply Agreement, Defendant JB Collision agreed to exclusively use Plaintiff's automotive paint and coating products from September 10, 2008, until the date upon which net sales, as defined by the Supply Agreement, totaled $1, 300, 000. Id . In consideration for Defendant JB Collision's agreement to exclusively purchase all of its requirements for automotive paints, coatings, and related products for the duration of the contract term, Plaintiff agreed to provide products to JB Collision at a discount. Id. at 3.
On or about May 29, 2011, Defendant JJT entered into a Supply Agreement with Plaintiff. (Doc. No. 17 at 2.) Pursuant to the Supply Agreement, Defendant JJT agreed to exclusively use Plaintiff's automotive paint and coating products from May 29, 2011, until the date upon which net sales, as defined by the Supply Agreement, totaled $250, 000. Id . In addition, Defendant John Tyczki ("Defendant Tyczki") signed a guaranty on May 10, 2011, personally guaranteeing Defendant JJT's performance under the Supply Agreement. Id.
From September of 2008 until January of 2013, Defendants purchased automotive paints, coatings, and related products pursuant to the Supply Agreements with Plaintiff. (Doc. No. 1 at 3; Doc. No. 17 at 2-3.) In January of 2013, Plaintiff alleges that Defendants breached the parties' Supply Agreements by discontinuing all of their requirements for automotive paints, coatings, and related products exclusively from Plaintiff. Id . By letter dated February 28, 2013, Plaintiff notified Defendants of their breach of contract. Id.
On August 20, 2013, Plaintiff filed two complaints asserting breach of contract claims against Defendants JB Collision, JJT, and Tyczki. On October 1, 2013, and October 4, 2013, Defendants filed counterclaims for breach of contract, breach of implied warranties of merchantability and fitness, concealment and fraud, intentional misrepresentation, negligent misrepresentation, breach of covenant of good faith and fair dealing, and unjust enrichment. The crux of Defendants' counterclaims is that Plaintiff's products were not satisfactory.
II. CLARIFICATION OF THE COURT'S SCHEDULING ORDER
A. DEFENDANTS' ARGUMENT
1. RULE 26(a)(2)(C) v. RULE 26(a)(2)(D)
In their instant Ex Parte Application, Defendants claim that this Court's Scheduling Order is unclear, as it appears to reference an incorrect subsection of Federal Rule of Civil Procedure 26 in paragraph 4, which discusses supplemental expert reports. (Doc. No. 120 at 2-3.) Paragraph 4 of the Court's Scheduling Order states,
Any party, through any expert designated, shall in accordance with Fed.R.Civ.P. 26(a)(2)(C) and Fed.R.Civ.P. 26(e), supplement any of its expert reports regarding evidence intended solely to contradict or rebut evidence on the same subject matter identified in an expert report submitted by another party. Any such supplemental reports are due on or before January 16, 2015.
(Doc. No. 29 at 2.)
Defendants note that Rule 26(a)(2)(C), although referenced in paragraph 4, refers to witnesses who do not provide a written report. (Doc. No. 120 at 2.) Thus, Defendants argue, it is unclear as to whether the Court intended for the parties' designated experts to file supplemental reports, given the fact that 26(a)(2)(C) does not apply to the parties' witnesses. Id.
2. RULE 26(e) - DUTY TO SUPPLEMENT
Defendants also assert that, although the Court included a reference to Rule 26(e) in paragraph 4 of its Scheduling Order, Defendants do not believe it was the Court's intention to extinguish the parties' obligations to supplement pursuant to Rule 26(e)(2). (Doc. No. 120 at 2-3). Defendants argue that Rule 26(e), and specifically sub-paragraph (2) relating to expert witnesses, provides that for an expert whose report must be disclosed under Rule 26(a)(2)(B), which is the situation in this particular matter, the party's duty to supplement extends both to information included in the report and to information given during the expert's deposition. Id. at 2. Defendants note that any additions or changes to this information must be disclosed by the deadline for the party's pre-trial disclosures under Rule 26(a)(3). Id.
B. PLAINTIFF'S ARGUMENT
1. RULE 26(a)(2)(C) v. RULE 26(a)(2)(D)
Plaintiff argues that the Court's Scheduling Order is clear and there is no room for confusion. (Doc. No. 121 at 6.) Plaintiff argues that the Scheduling Order clearly states that a parties' expert opinion is due by December 12, 2014, and by January 16, 2015, the expert may supplement its opinion based on information provided by any other expert, solely for the purpose of contradicting or rebutting that opinion. Id. at 7.
Plaintiff agrees with Defendants that the Court's Scheduling Order incorrectly references Rule 26(a)(2)(C), and should instead reference Rule 26(a)(2)(D) in its paragraph discussing supplemental expert reports. (Doc. No. 121 at 7-8.) However, Plaintiff argues that despite the Court's typographical error, the intent of the Scheduling Order is clear. Id . Plaintiff argues that any testing that Defendants now claim they wished to perform should have been completed and included in their expert's initial report, which was due by January 16, 2015. Id . Further, Plaintiff contends that testing of unidentified wet paint samples owned by some other party is not intended to contradict or rebut Plaintiff's expert, but rather to support Defendants' own counter-claims. Id. at 8. Plaintiff claims that the Court should not extend the February 13, 2015, supplemental report deadline to allow Defendants to submit a report that was due on January 16, 2015. Id.
2. RULE 26(e) - DUTY TO SUPPLEMENT
Plaintiff argues that the provisions of Rule 26(e) are not license to ignore the Court's Scheduling Order. (Doc. No. 121 at 7.) It asserts that Rule 26(e)(3) provides the default deadlines for pretrial disclosures, unless the Court orders otherwise, and here, the Court set deadlines for initial and supplemental expert reports. Id.
II. REMOVAL OF WET PAINT SAMPLES
A. DEFENDANTS' ARGUMENT
Defendants claim that, during a deposition of third-party witness, Kenneth Ybarra, owner of a former distributor of Plaintiff's paint products, it came to light that a third-party auto body shop, Qualtech Auto Collision, possessed samples of Plaintiff's AWX automotive paint products that were manufactured during the relevant time period. (Doc. No. 120 at 5.) During the November 7, 2014 deposition, Defense counsel requested that Plaintiff not remove the wet paint samples from that shop. Id . Defendants now claim that Plaintiff removed the wet paint samples without any prior notice to Defendants, and as a result, Defendants have had difficulty obtaining other samples of Plaintiff's AWX paint products for Defendants' paint expert to test. Id.
Defendants argue that they could not subpoena these samples from the third-party shop because Mr. Ybarra's deposition on the fact discovery cutoff date. (Doc. No. 120 at 6.) Defendants state that they have now been able to obtain some paint samples, but due to Plaintiff's removal of the wet paint samples from the third-party shop, they have been deprived of the opportunity to test the very products causing the same subject defects by one of Plaintiff's other customers. Id.
Defendants seek an extension of the supplemental paint expert report deadline so that their expert's testing and results may be included in the supplemental report. (Doc. No. 120 at 6.) During the Discovery Hearing, Defendants argued that their expert wants to test wet paint samples to "augment" the initial report, not to provide new theories. They also claim that Plaintiff's actions are tantamount to spoliation of evidence, and state that they intend to make an appropriate discovery motion. Id. at 5, n. 2. During the Discovery Hearing, Defense counsel noted that Defendants were not sure if they should bring the motion for spoliation before this Court or before the Honorable Larry A. Burns, the District Judge assigned to these cases.
B. PLAINTIFF'S OPPOSITION
Plaintiff argues that Defendants now raise the issue of testing of wet paint samples three months after Plaintiff allegedly removed the paint samples, more than two months after Defendants retained their expert witness, and after Defendants produced their initial expert report. (Doc. No. 121 at 9.) Plaintiff contends that, despite having the burden of proving their defect counterclaims, Defendants' expert did not perform any testing on paint samples that were taken by both parties by scraping off chips of allegedly defective paint with a razor blade. Id. at 3-4. Plaintiff also claims that Defendants' expert failed to mention the samples in his January 16, 2015, expert report. Id. at 4. Further, Plaintiff claims that Defendants' expert said nothing in his report about wanting to test wet paint samples that were never actually used by Defendants. Id.
Plaintiff also notes that in Defendants' prior Ex Parte Motion for Extension of Time to Prepare Expert Report (Doc. No. 109), filed on December 8, 2014, Defendants did not cite any difficulty with respect to any paint sample testing that they wished to perform. (Doc. No. 121 at 5.) With respect to Defendants' difficulty obtaining other wet paint samples to test, Plaintiff argues that Defendants had mixing rooms full of toner for four years, purchased more than $1, 000, 000 in paint products from Plaintiff, and could walk into any Sherwin-Williams paint store to obtain samples. Id. at 9-10. Plaintiff also contends that Defendants met multiple times with Mr. Ybarra and could have asked him for paint samples before fact discovery closed, but did not. Further, Plaintiff argues that the toners in dispute are not relevant to the issue at hand, as Defendants seek to test outdated toners from another body shop that experienced different shop conditions.
C. PRIOR RELEVANT COURT ORDER
On December 11, 2014, the Court granted Defendants' request for an extension of time to complete expert reports relating to quality testing of paint products. (Doc. No. 112.) The deadline for initial expert reports was extended from December 12, 2014, to January 16, 2015, and the deadline for supplemental ...