Labor & Employment Law Daily Extending deadline for disclosure of expert reports was abuse of discretion; no good cause shown
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Tuesday, October 15, 2019

Extending deadline for disclosure of expert reports was abuse of discretion; no good cause shown

By Ronald Miller, J.D.

Although framed as a revised expert report, the plaintiffs’ expert was “materially altering, not merely clarifying his original report,” and there was no evidence the plaintiffs subsequently learned of information that was not previously unknown or unavailable.

A federal district court abused its discretion by granting a request by employees to extend the Rule 16(b) deadline for the disclosure of expert reports, despite finding that good cause for the extension had not been shown, ruled a divided Eighth Circuit. The appeals court concluded that the error was not harmless, as the jury clearly relied on the expert’s opinion in reaching its damages award. Accordingly, the judgment of the district court was vacated and the matter was remanded for further proceedings. Judge Colloton filed a separate dissenting opinion (Petrone v. Werner Enterprises, Inc. dba Werner Trucking, October 10. 2019, Shepherd, B.).

Off-duty time. The employees filed a class action arising out of an eight-week student driver training program operated by the employer and intended for new truck drivers. They alleged violations of the FLSA and Nebraska law, and sought compensation for unpaid wages allegedly earned during off-duty time spent on short breaks and while resting in their trucks’ sleeper berths.

Before trial, the district court granted the employees’ motion to modify the court’s previously entered Rule 16(b) progression order and extended the deadline for disclosure of expert reports after the court-imposed deadline had expired.

Damages award. Following a three-day trial, the jury awarded the employees $779,127 in damages for their short-rest-break claims and found the employer not liable on their sleeper-berth claims. After trial, the district court awarded the employees a reduced amount of liquidated damages under the FLSA and a reduced amount of attorneys’ fees, nontaxable costs, and expenses, refused to award the employees certain taxable costs due to their failure to comply with a local rule, and awarded costs to the employer on the sleeper berth claims.

The employees appealed the district court’s post-trial rulings, while the employer cross-appealed the district court’s pre-trial ruling. On appeal, the Eighth Circuit agreed with the employer that the district court abused its discretion by granting the employees’ request to extend the Rule 16(b) disclosure deadline, despite finding that good cause for the extension had not been shown, based on an erroneous application of Rule 37(c)(1).

Progression order. By a “progression order” entered in July 2013, the district court set January 15, 2014, as the deadline for the parties to disclose expert witness reports. The employees timely disclosed their expert reports. However, the employer’s expert revealed considerable flaws in the methodology for computing the allegedly uncompensated break and sleeper-berth time. Some times were double counted and some periods were artificially split into two separate breaks. After the deadline for the filing of expert reports had passed, the employees moved, pursuant to Rule 16(b), to modify the progression order to permit them to file a supplemental expert report, which corrected the flaws.

However, the district court declined to characterize the belated expert report as a “supplement” because a supplement is meant to correct inaccuracies or fill in an incomplete report based on information that was not available at the time of the initial disclosure. Here, the district court determined that nothing “precluded the plaintiffs’ expert from recognizing the flaws in his original report; he simply failed to do so.”

Good cause standard. Although the district court found no good cause to extend the disclosure deadline, it determined that, while the delay was neither “substantially justified” nor “harmless” under Rule 37(c), Rule 1 counsels against complete exclusion of new information because it provides “that rules should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding” and “indicates a preference for determination of cases on the merits.” Accordingly, the district court extended the disclosure deadline.

On appeal, the employer argued that the district court erred in granting the employees’ motion to extend the deadline for disclosing expert reports, despite finding no good cause had been shown for the extension. The appeals court agreed with the district court that the employees did not show good cause to extend the Rule 16(b) deadline. Substantial revisions to the original report came only after the employer revealed significant flaws in the original report. Although framed as a revised expert report, the expert was “materially altering, not merely clarifying his original report,” and there was no evidence that the employees subsequently learned of information that was not previously unknown or unavailable.

Nevertheless, relying on Rules 1 and 37(c)(1), the district court extended the deadline to disclose expert reports. The appeals court concluded that this was error. It determined that nothing in the text of either rule allowed the district court to bypass the mandatory good cause standard under Rule 16(b)(4).

Rule 37(c)(1). Additionally, Rule 37(c)(1) was unavailable to the district court. The disclosure mandates in Rule 26 are given teeth by the threat of sanctions in Rule 37. By its terms, Rule 37(c)(1) applies only when a party failed to comply with Rule 26(a) then seeks to use the information “on a motion, at a hearing, or at a trial.” Rule 37(c)(1) says nothing about its applicability when a court considers a motion, pursuant to Rule 16(b), to amend a progression order or extend the deadline for Rule 26 disclosures. The order appealed in this case did not involve an attempt by the employees to “use that information or witness to supply evidence on a motion, at a hearing, or at a trial.”

Accordingly, the district court abused its discretion in granting the employees’ motion to allow disclosure of the new expert report after the court-imposed deadline.

Error not harmless. Moreover, the appeals court granted the employer’s motion to exclude the employees’ expert’s damages calculation and testimony. The jury awarded the employees $779,127 in damages, an amount identical to the expert’s testimony at trial, and they offered no other expert testimony on damages for their short-rest-break claims. Thus, the jury clearly relied on the expert’s opinion in reaching the damages award. Because it was not clear that the award would have been the same without the new information, the district court’s error was not harmless.

Dissent. In a dissenting opinion, Judge Colloton argued that because the district court did not find good cause to modify the schedule, the employees should be sanctioned for their late submission. However, rather than exclude the late report entirely, the dissent observed that the district court exercised its discretion to impose a lesser sanction. The employees were permitted to file the untimely expert report, but they were required to pay the employer’s costs that were incurred as a result of the tardy submission. Thus, the dissent argued that the district court did not abuse its discretion in selecting a lesser sanction, and its determination was consistent with a reasonable exercise of the district court’s discretion in managing the litigation.

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