Ramos v. Banner Health

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO EXCLUDE TESTIMONY OF THOMAS R. KMAK, AND SUA SPONTE REOPENING EXPERT DISCOVERY

          William J. Martínez United States District Judge.

         This case arises out of alleged mismanagement of Defendant Banner Health's (“Banner Health”) employee 401(k) plan (the “Plan”). Plaintiffs Lorraine M. Ramos and others (“Plaintiffs”) bring this class action against Banner Health, as well as current and former Banner Health employees (together, “Banner Defendants”)^[1] alleging, among other claims, that Banner Defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”) by causing the Plan to pay excessive recordkeeping fees. (ECF No. 118 ¶¶ 120-30.)

         Currently before the Court is Plaintiffs' “Motion to Exclude and Strike the Testimony of Thomas R. Kmak (“Kmak”)” (the “Motion”). (ECF No. 308.) For the reasons discussed below, the Motion is granted in part and denied in part, and the Court will sua sponte reopen expert discovery to the limited extent discussed below, order Banner Defendants to obtain a supplement from Kmak, and order Banner Defendants to produce certain materials on which Kmak relies.

         I. BACKGROUND

         On March 26, 2018, Banner Defendants submitted a rebuttal report by Kmak “to provide opinions related to the reasonableness of the administrative and recordkeeping fees paid by the [Plan] and to examine certain opinions” of Plaintiffs' expert, Martin A. Schmidt. (ECF No. 308 at 3 (internal quotation marks omitted; alterations incorporated).)^[2] To assess the reasonableness of the Plan's recordkeeping fees, Kmak first “applied [Fiduciary Benchmarks Insights, LLC's] benchmarking methodology to build a mathematically derived benchmark group for Banner Health.” (ECF No. 308-1 at 3.) Based on a group of benchmark plans for each year from 2009-2017, Kmak calculated the 25th and 50th percentile fees of the benchmark group and compared the Plan's fees to those markers. (ECF No. 308 at 3.)

         During his deposition, Kmak stated that: (a) the formula for developing the benchmark groups changed over time; (b) as did the constituent plans comprising those groups; and (c) that he had not identified the methodology or parameters used to develop the benchmark groups for each year from 2009-2017. (ECF No. 308-2 at 9.) He did, however, explain that benchmark groups are selected by a committee at his company, Fiduciary Benchmark Insights LLC each year and, once set, the composition of the individual benchmark groups does not change over time. (ECF No. 321 at 7.)

         He also explained how he selected the appropriate benchmark group for the Plan, specifically with Fidelity as the recordkeeper. (Id.; ECF No. 308-1 at 11-14.) At several instances during his deposition, Kmak indicated that he could or would supplement his report. (ECF No. 308-2 at 9, 13.)

         Banner Defendants did not provide a supplemental or revised report from Kmak, or any additional documents, through the date of Plaintiffs' reply in support of the Motion, and no party has suggested that Banner Defendants have provided any such report or discovery while the Motion has been pending.

         II. DISCUSSION

         At base, the dispute over the admissibility of Kmak's testimony turns on the alleged failure of Banner Defendants to disclose and provide the underlying data on which Kmak's expert opinion relies. Plaintiffs seek to exclude Kmak's report for failure to identify and produce certain materials on which he relied. (ECF No. 308 at 10-14.) They also contend that Kmak's report is “untestable, unverifiable, unreliable, and inadmissible” because Kmak failed “to disclose the data and formulas underlying his benchmark calculations.” (ECF No. 308 at 1.) The Court need only address Plaintiffs' first argument.

         A. Exclusion under Rules 26(a)(2) and 37(c)

         Rule 26(a)(2) generally requires an expert witness to provide a written report containing:

(i) a complete statement of all opinions the witness will express and the basis and reasons for them;

(ii) the facts or data considered by the witness in forming them;

(iii) any exhibits that will be used to summarize or support them;

(iv) the witness's qualifications, including a list of all publications authored in ...