United States District Court, D. Delaware
G. Connolly III, Ryan P. Newell, and Kyle Evans Gay, CONNOLLY
GALLAGHER LLP, Wilmington, DE; Jeffrey S. Standley, James Lee
Kwak, and F. Michael Speed, Jr., STANDLEY LAW GROUP LLP,
Dublin, OH, attorneys for Plaintiff.
W. Shaw, Karen E. Keller, David M. Fry, and Nathan R.
Hoeschen, SHAW KELLER LLP, Wilmington, DE; Douglas J. Kline,
Srikanth K. Reddy, and Molly R. Grammel, GOODWIN PROCTER LLP,
Boston, MA; Naomi L. Birbach, GOODWIN PROCTER LLP, New York,
NY; Yuval H. Marcus, Cameron S. Reuber, Matthew L. Kaufman,
and Lori L. Cooper, LEASON ELLIS LLP, White Plains, NY,
attorneys for Defendants.
ANDREWS, U.S. DISTRICT JUDGE
Memorandum Opinion and Order issued September 4, 2019, 1
struck Plaintiff MRI's damages expert, Melissa Bennis,
opinions relating to lost profits and reasonable royalty.
(D.I. 290, D.I. 291). MRI moves to permit Ms. Bennis to
supplement her expert opinions on those subjects.
MRI requests that Ms. Bennis be permitted: (1) to supplement
her opinion relating to the calculation of lost profits
without using information obtained during settlement
discussions, (2) to supplement her report to address the
Court's other concerns relating to lost profits,
including the Court's concern about the price MRI would
have charged in the "but for world, " and (3) to
address the Court's concerns about apportionment in her
reasonable royalty analysis. (D.I. 302 at 1).
Rule of Civil Procedure 37(c)(1) provides that "[i]f a
party fails to provide information as required by Rule 26(a)
or (e), the party is not allowed to use that information ...
to supply evidence on a motion, at a hearing, or at trial,
unless the failure was substantially justified or is
harmless." To determine whether a failure to disclose
information was harmless, courts in the Third Circuit
consider the Pennypack factors: (1) the prejudice or
surprise to the party against whom the evidence is offered,
(2) the possibility of curing the prejudice, (3) the
potential disruption of an orderly and efficient trial, (4)
the presence of bad faith or willfulness in failing to
disclose the evidence, and (5) the importance of the
information withheld. Konstantopoulos v. Westvaco
Corp., 112 F.3d 710, 719 (3d Cir. 1997). "[T]he
exclusion of critical evidence is an 'extreme'
sanction, not normally to be imposed absent a showing of
willful deception or 'flagrant disregard' of a court
order by the proponent of the evidence." Id,
The determination of whether to exclude evidence is within
the discretion of the district court. Id.
first and second Pennypack factors weigh against
exclusion of Ms. Bennis' amended supplemental damages
report. Defendants will not be unduly prejudiced or surprised
by the report. Defendants argue that permitting MRI to add
new damages theories through its supplemental expert
disclosure would unduly prejudice Defendants due to the short
period of time that originally stood between the disclosure
date and the start of trial. (D.I. 307 at 6). Defendants
received Ms. Bennis' initial supplemental report on
September 6, 2019. (D.I. 314). Defendants received Ms.
Bennis' amended supplemental report on September 7, 2019.
(D.I. 317). The trial has been postponed for unrelated
reasons. Thus, any prejudice that Defendants may have
initially faced can be cured. There is sufficient time for
Defendants to provide any relevant supplemental reports
and/or conduct additional depositions. See In re
Mercedes-Benz Antitrust Litig., 225 F.R.D. 498, 506-07
also are not prejudiced by Ms. Bennis' supplemental
damages report because the information she provides in the
report was previously disclosed. In her original damages
report, Ms. Bennis relied upon calculations made by
Plaintiffs CEO, Mr. Stoeffler. (D.I. 290 at 8). Mr.
Stoeffler's calculations impermissibly used information
received from Defendants through settlement negotiations.
(D.I. 209 Ex. 25-26). Upon my request, Plaintiff filed a
letter explaining how the appropriate numbers could be
reached from sources that were not products of the settlement
negotiations. (Hr'g Tr. At 68:17-22, D.I. 278). Rather
than disclosing new damages theories, Ms. Bennis'
supplemental damages report provides a lost profits analysis
without reliance on confidential settlement discussions or
information improperly obtained therefrom. (D.I. 278). Thus,
the first and second Pennypack factors weigh against
exclusion of the report.
third Pennypack factor weighs against exclusion of
the report. Given the postponement of the trial date to
mid-November or thereafter, I am not concerned that the
submission of a supplemental report at this stage will
disrupt the schedule.
fourth Pennypack factor also weighs against
exclusion. The timing of service of the supplemental damages
report is not a result of "bad faith" or
"willful deception." See Myers v. Pennypack
Woods Home Ownership Ass'n, 559 F.2d 894, 904-05 (3d
Cir. 1977). Defendants argue, "MRI has been aware of the
defects in its lost profits and reasonable royalty
analyses" for at least four months prior to the
submission of the supplemental report. (D.I. 307 at 4).
Defendants argue that since MRI waited until after I struck
Ms. Bennis' initial expert opinions to submit a
supplemental report, the submission suggests bad faith and
the opinions should be excluded. Id. In fact,
Plaintiff submitted the report in response to my having
struck the initial damages report and my suggestion that a
supplemental report be submitted. (D.I. 291, D.I. 290 at 9,
D.I. 327 at 1).
days after my Memorandum Opinion (D.I. 290) issued on
September 4, 2019, Ms. Bennis submitted her first
supplemental report. (D.I. 314). One day later, Ms. Bennis
submitted an amended supplemental report. (D.I. 317). The
amendments made in this subsequent report are minor and
intended to confirm that Ms. Bennis' report is based on
information made available directly through the discovery
process, as opposed to confidential information related to
settlement negotiations. (Id.; compare D.I. 314 at 1
(first supplemental damages report) with D.I. 317 at
1 (amended supplemental damages report)). Given the factual
circumstances, I do not find that Plaintiffs submission of
the supplemental damages report was in bad faith. Thus, the
fourth Pennypack factor weighs against exclusion.
the fifth Pennypack factor weighs against exclusion.
The opinions offered in Ms. Bennis' supplemental damages
are important evidence in support of Plaintiff s infringement
case. The opinions offered are directly responsive to
assertions of ...