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Auraria Student Housing at Regency, LLC v. Campus Village Apartments, LLC

United States District Court, D. Colorado

September 18, 2014

AURARIA STUDENT HOUSING AT THE REGENCY, LLC, a Colorado limited liability company, Plaintiff,
v.
CAMPUS VILLAGE APARTMENTS, LLC, a Delaware limited liability company, Defendant.

ORDER GRANTING IN PART DEFENDANT'S MOTIONS TO EXCLUDE EXPERT REPORTS AND DEFENDANT'S MOTION TO STRIKE

WILLIAM J. MARTINEZ, District Judge.

Plaintiff Auraria Student Housing at the Regency, LLC ("Plaintiff") brings this action against Campus Village Apartments, LLC ("Defendant"). This matter is before the Court on the following motions: Defendant's Motion to Strike the "Rebuttal" Report on Damages by Dr. Owen R. Phillips and Exclude the Opinions Expressed in that Report ("Phillips Damages Motion") (ECF No. 129), Defendant's Motion to Exclude the Expert Report and Testimony of Gregory B. Taylor Pursuant to Federal Rule of Evidence 702 ("Taylor Motion") (ECF No. 132), and Defendant's Motion to Exclude the "Economic Report of Owen R. Phillips, Ph.D." and the "Supplemental Economic Report of Owen R. Phillips, Ph.D." Pursuant to Federal Rules of Evidence 702 and 703 ("Phillips Economic Reports Motion") (ECF No. 134). For the reasons set forth below, Defendant's Motions are granted in part and denied in part.

I. LEGAL STANDARD

A district court must act as a "gatekeeper" in admitting or excluding expert testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004). Admission of expert testimony is governed by Rule 702, which provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

Fed. R. Evid. 702.

The proponent of the expert testimony bears the burden of proving the foundational requirements of Rule 702 by a preponderance of the evidence. United States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).

II. ANALYSIS

Defendant moves to exclude portions of the expert testimony and the expert reports of Mr. Taylor and Dr. Phillips. Both Mr. Taylor and Dr. Phillips have been offered as experts regarding Plaintiff's damages, and have each prepared a report on that issue (the "Damages Reports"). ( See ECF Nos. 133-2; 130-2.) Dr. Phillips is also being offered as an economics expert. ( See ECF Nos. 135-2; 135-3.) The Court will discuss the Damages Reports and Dr. Phillips's economic reports in turn below.

A. Damages Reports

Defendant moves to strike the Report on Damages with Different Discount Rates by Dr. Phillips (the "Phillips Damages Report") pursuant to Federal Rule of Civil Procedure 37(c)(1) on the basis that it was untimely disclosed under Rule 26(a)(2). (ECF No. 130 at 3.) Defendant also moves to exclude Mr. Taylor and Dr. Phillips's testimony regarding the present value of Plaintiff's damages, arguing that the alleged damages are actually prejudgment interest, which is not available under 15 U.S.C. ยง 2. (ECF Nos. 133 at 8-9; 130 at 4-9.) Finally, Defendant contends that the expert opinion of Mr. Taylor is not based on sufficient facts, data, or methodology, and is outside the scope of his expertise. (ECF No. 133 at 4-7.) The Court will address each of Defendant's arguments in turn.

1. Timeliness of the Phillips Damages Report

The parties were required to designate their affirmative experts and disclose expert reports before September 27, 2013. (ECF Nos. 70; 108.) Defendant did not designate an affirmative expert on damages. (ECF No. 130 at 2.) On November 1, 2013, the day rebuttal designations were due, Plaintiff disclosed Dr. Phillips as an expert, and served Defendant with the Phillips Damages Report. (ECF Nos. 108; 130-4.) Defendant now moves to strike the Phillips Damages Report pursuant to Rule 37(c)(1) on the basis that it was untimely disclosed pursuant to Rule 26(a)(2). (ECF No. 130 at 3.)

Although Rule 26(a)(2)(D) governs the timing of expert report disclosures, Rule 37(c)(1) specifies the Court's authority to strike expert testimony based on an untimely disclosure. See e.g., Jacobsen v. Deseret Book Co., 287 F.3d 936, 952 (10th Cir. 2002) (holding that "Rule 37(c) permits a district court to refuse to strike expert reports and allow expert testimony even when the expert report violates Rule 26(a) if the violation is justified or harmless."). Rule 37(c)(1) provides that a failure to comply with Rule 26(a) precludes the use of the expert information at issue "to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." "The determination of whether a Rule 26(a) violation is justified or harmless is entrusted to the broad discretion of the district court." Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993 (10th Cir. 1999). The Court must consider four factors in determining whether the failure to timely disclose is substantially justified or harmless: (1) the prejudice or surprise to the impacted party; (2) the ability to cure the prejudice; (3) the potential for trial disruption; and (4) the erring party's bad faith or willfulness. Id. "The burden of establishing substantial justification and harmlessness is upon the party who is claimed to have failed to make the required disclosures.'" See Contour PAK, Inc. v. Expedice, Inc., 2009 WL 2490138, at *1 (D. Colo. Aug.14, 2009) (quoting Nguyen v. IBP, Inc., 162 F.R.D. 675, 680 (D. Kan.1995)).

The parties agree that the Phillips Damages Report is not a true rebuttal report because Defendant did not designate an affirmative expert on damages. (ECF Nos. 130 at 2-3; 142 at 6.) Plaintiff, however, argues that the November 1, 2013 deadline was not solely limited to disclosure of experts designated in rebuttal, because the Scheduling Order notes that a rebuttal designation "is not intended to and does not preclude the use of such expert[] or information during the sponsoring party's case-in-chief at trial." (ECF No. 142 at 6 (modification in original) (quoting ECF No. 70 at 12-13).) Plaintiff reads the Scheduling Order to mean that the parties were required to "provide opposing counsel with all information specified in [Rule] 26(a)(2)" by November 1, 2013, and thus could timely disclose affirmative expert reports on that date. (ECF No. 142 at 6 (quoting ECF No. 70 at 12) (emphasis added).)

This is an illogical interpretation of the Scheduling Order. Language in such Order which allows a party to use a rebuttal expert or rebuttal report in its case-in-chief does not come close to meaning that, in addition, a party may also disclose an affirmative expert on the day that rebuttal designations are due. This makes irrelevant the affirmative expert disclosure deadline, circumvents the Scheduling Order, and prohibits the other party from offering their own rebuttal expert.

Accordingly, the Court finds that the Phillips Damages Report was untimely disclosed and violates Rule 26(a). Such a finding does not, however, conclude the relevant analysis. The Court may nonetheless decline to strike the rebuttal report if the timeliness violation was substantially justified or harmless. Applying the four Woodworker's Supply factors here, the Court finds that Plaintiff's failure to timely disclose Dr. Phillips as an expert was harmless. See 170 F.3d at 993. Regarding the first factor, prejudice to the impacted party, the Court finds minimal prejudice to Defendant as a result of the late disclosures. When the Phillips Damages Report was disclosed, a trial date had not been set and discovery was ongoing. (ECF Nos. 163; 118.) Defendant had ample time after the disclosure to request modifications of other case deadlines that were affected by the late disclosure, yet Defendant did not seek additional time to designate a rebuttal expert. For these reasons, the Court finds that the late disclosure of the Phillips Damages Report has resulted in minimal prejudice to Defendant.

Regarding the second factor, the Court finds that the minimal prejudice caused by the late disclosure does not need to be cured. Because discovery did not close for more than two and a half months after the Phillips Damages Report was disclosed, [1] Defendant had more than sufficient time to depose Mr. Phillips. Defendant, however, chose not to do so.[2]

With respect to the third factor, there appears to be very little potential for trial disruption as a result of the untimely disclosures. Trial has been set for January of 2015, over a year after the Phillips Damages Report was ...


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