Summary
The United States District Court for the Eastern District of California grants Calamco’s motion to bar J.R. Simplot Company’s damages expert, Keith R. Ugone, from offering opinions at trial. The court concludes that Simplot failed to disclose the lost-profits theory and substantially higher damages computation ultimately presented by Ugone as required under Federal Rule of Civil Procedure 26(a)(1), and that the nondisclosure was neither substantially justified nor harmless. The order also denies Simplot’s request to file certain materials under seal without prejudice and holds that the motion to exclude is not moot.
Topics
Practice areas
Questions Presented
- Whether Simplot's initial disclosures and supplements satisfied Federal Rule of Civil Procedure 26(a)(1)(A)(iii) and Rule 26(e)(1)(A) when its expert later relied on a materially different lost-profits and price-erosion theory and a substantially larger damages computation.
- Whether Simplot's failure to disclose and supplement its damages theory was substantially justified or harmless under Federal Rule of Civil Procedure 37(c)(1).
- Whether Calamco's motion to exclude was moot after the court granted summary judgment in part.
- Whether Simplot showed compelling reasons or good cause to file the expert reports and related discovery materials under seal.
- Whether the notice of removal and attachments should be unsealed because Simplot failed to comply with the court's prior order requiring a redacted public filing.
Holdings
- The motion to exclude was not moot because Ugone's lost-profits opinions could support Simplot's remaining claim for breach of the implied covenant of good faith and fair dealing by tending to establish causation and damages.
- Federal Rule of Civil Procedure 26(a)(1)(A)(iii), together with Rule 26(e)(1)(A), required Simplot to disclose the computation and theory of each category of damages claimed and to timely supplement or correct the disclosure when it became materially incomplete or incorrect.
- Simplot could not use Ugone's undisclosed lost-profits and price-erosion opinions at trial because its failure to disclose and supplement the materially different damages theory was neither substantially justified nor harmless.
- Simplot's request to file the expert reports and related discovery materials under seal was denied without prejudice because Simplot established neither compelling reasons nor good cause for sealing them.
- The Clerk's Office was instructed to unseal the notice of removal and its attachments because Simplot failed to comply with the court's prior order requiring a redacted public filing.
Key quotations
“Simplot did not disclose the theory of damages its expert ultimately relied on to form his opinions, as required by the initial disclosure provisions in Federal Rule of Civil Procedure 26(a)(1), and Simplot has not demonstrated this nondisclosure was either substantially justified or harmless.” (at 1)
“When, as in this case, a party does not disclose the information it was required to disclose, or if it does not supplement or correct its disclosure when new facts or information come to light, then that party “is not allowed to use that information . . . at a trial, unless the failure was substantially justified or is harmless.”” (at 35)
“In sum, although the court cannot find Simplot acted willfully or in bad faith, Simplot has not demonstrated its actions were either harmless or substantially justified.” (at 43)
“The motion to exclude (ECF No. 158) is granted.” (at 44)
Factual background
Calamco and Simplot disputed whether a 2011 contract barred Calamco from competing with Simplot in selling UAN 32 fertilizer and whether Calamco breached the implied covenant of good faith and fair dealing by ending patronage dividends. Simplot initially disclosed a $2 million damages claim for loss of patronage dividends, but its retained expert, Keith R. Ugone, later calculated lost profits and price-erosion damages totaling as much as approximately $14.2 million. Simplot did not supplement or correct its initial disclosure before producing Ugone's report, and Calamco asserted that the late-disclosed theory prevented it from pursuing relevant fact discovery concerning customers, competitors, suppliers, and market conditions.
Procedural history
Calamco filed the action in California state court in 2021, and Simplot removed it to the Eastern District of California and asserted counterclaims. After the court denied Calamco's motion to dismiss the counterclaims, the parties exchanged initial disclosures and conducted discovery. The court later granted Calamco's summary-judgment motion in part, determined that the expert-exclusion motion was not moot because the opinions could bear on a remaining implied-covenant claim, granted the motion to exclude, denied the sealing request without prejudice, and directed the Clerk's Office to unseal the notice of removal and attachments.