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Project Boat Holdings, LLC v. Bass Pro Group, LLC

Court of Chancery of Delaware

August 10, 2018

Project Boat Holdings, LLC
Bass Pro Group, LLC

          Submitted: July 30, 2018

          John A. Sensing, Esquire Potter Anderson & Corroon LLP

          S. Mark Hurd, Esquire Richard Li, Esquire Morris, Nichols, Arsht & Tunnell LLP

         Dear Counsel:

         This letter opinion resolves Plaintiff's Motion to Strike Certain Trial Testimony of two expert witnesses, Robert Taylor and Terry Orr (the "Motion").

         The parties' dispute arises out of Project Boat Holdings, LLC's ("Project Boat") sale of boat manufacturer PBH Marine Holdings, LLC to Bass Pro Group, LLC ("Bass Pro") in late 2014. Project Boat initiated this action on July 29, 2016, seeking a declaration that Bass Pro is not entitled to indemnification for certain alleged breaches of the operative transaction document, the Membership Interest Purchase Agreement (the "MIPA"), and an order requiring Bass Pro to issue joint instructions to an escrow agent to release certain indemnification escrow funds as required under the MIPA. On October 5, 2016, Bass Pro filed an answer and counterclaim, seeking a declaration that Project Boat breached the MIPA, breached the covenant of good faith and fair dealing and committed fraud in connection with its representations regarding a line of boats that Project Boat sold to Bass Pro-the 2014 Triton 21 TrX bass boats.[1]

         The Court held a four-day trial in June of this year. At trial, Bass Pro presented expert testimony from Robert Taylor and Terry Orr. Project Boat objected to certain aspects of both experts' testimony at trial, and the Court directed that the parties address the objections more thoroughly in a post-trial motion to strike.

         In its Motion, Project Boat seeks an order striking designated portions of both experts' trial testimony because: (1) Taylor presented certain opinions at trial that were not previously disclosed to Project Boat in Taylor's expert report or otherwise; and (2) Orr relied completely on Taylor's newly minted opinions in forming his own opinion. Specifically, Project Boat posits that Taylor did not-prior to trial- disclose his opinions regarding (1) the adequacy of testing for the 2014 Triton 21 TrX that was completed prior to Project Boat's decision to manufacture the boat with a different lamination schedule; and (2) Project Boat's knowledge as of June 2014 that attempted repairs of the hull failures would not fix the delamination problem.[2]

         In response, Bass Pro maintains that Taylor's opinions were not new. Specifically, it points to its Expert Disclosure, dated October 20, 2017, in which it stated that Taylor's testimony, among other matters, would address (1) "[w]hether any repair(s) short of replacing the hulls . . . would have prevented the hulls from cracking and/or delaminating, the nature of such repair(s), and the impacts such repair(s) would have had on the boats"; (2) "[w]hat information would support a conclusion that extensive repairs or replacement was going to be necessary to prevent the hulls from cracking and/or delaminating due to the hull mismatch"; and (3) "[t]he results of all testing performed on or related to the Triton 21 TrX boats at issue in this litigation . . . ."[3] Bass Pro further contends, "Mr. Taylor disclosed in his report his opinion on when information became available that the defective hulls likely would need to be replaced; referenced and attached his notes on the . . . testing as part of his analysis in his expert report; testified in his deposition that the . . . testing did not change his opinion; and was responding to Mr. Hopper's criticism of [Taylor's] opinion when [Taylor] testified at trial regarding the distinctions between different types of testing."[4]

         Under Rule 26(b)(4)(A)(i), "[a] party may . . . require any other party to identify each person whom the other party expects to call as an expert witness at trial, to state the subject matter on which the expert is expected to testify, and to state the substance of the facts and opinions to which the expert is expected to testify and a summary of the grounds for each opinion." Rule 26(e)(1)(B) provides that once a response to expert discovery is given, the responding party must thereafter "seasonably supplement [its] response with respect to any question directly addressed to . . . the identity of each person expected to be called as an expert witness at trial, the subject matter on which the person is expected to testify, and the substance of the person's testimony." "The purpose of identifying and providing expert reports is to provide the opposing side with notice of the basis for the opinion, and to allow them to respond in kind."[5]

         "[T]he requirement of a party to comply with discovery directed to identification of expert witnesses and disclosure of the substance of their expected opinion is a pre-condition to the admissibility of expert testimony at trial."[6]Accordingly, when a proffering party has failed to provide adequate disclosure of his expert's opinions to his opponent prior to trial, the court may exclude the testimony at trial, or receive it subject to objection and a later motion to strike the testimony from the trial record.[7]

         With regard to Taylor's testimony that Project Boat should have known by June 2014 that repairs would be inadequate, I find that Bass Pro's disclosures gave adequate pre-trial notice of that opinion to Project Boat and, therefore, there is no basis to strike that opinion. Under Rule 26, "[a] party is only required to 'state the substance of the facts and opinion to which the expert is expected to testify and a summary of the grounds for each opinion.'"[8] He need not provide every nuance or detail of the expert's opinion in a pretrial disclosure (whether by report or interrogatory response), particularly given that our rules of procedure (and the Court's case management order in this case) allow for expert depositions.[9]

         In his initial report, Taylor explained that Project Boat learned in June 2014 that the 2014 Triton 21 TrX was missing a lamination layer and that "[t]he obviousness of the result of this mismatch would lead any reasonably competent boat designer to realize that these boats . . . likely would have to be replaced."[10]Taylor further stated, "[a]s the entire hull was missing one to two layers of woven roving, and it was impossible to access the entirety of the interior surface of the hull, it was evident that hull replacement was the only option on the table."[11] In his rebuttal report, Taylor opined, "[o]nce [Project Boat] identified that [the 2014] Triton 21 TrX boats were missing a laminate layer, it had enough information to know that the hulls of those boats likely would fail through reasonably foreseeable use, would likely need to be replaced, and likely could not be repaired through patching or other means short of replacing the hulls. A hull replacement program would have been the correct decision with available information in the June/July 2014 timeframe."[12]

         These disclosures identify the substance of Taylor's opinions and summarize the grounds for his conclusion. Project Boat then explored the contours of Taylor's opinion during his deposition in January 2018.[13] After reviewing these pre-trial disclosures of this aspect of Taylor's opinion, I am ...

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