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Millenium Expressions, Inc. v. Chauss Marketing

February 6, 2006


The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge


This case concerns breach of contract and related claims arising out of the relationship between the plaintiff, Millenium Expressions, Inc. ("Millenium"), a company that designs and manufactures fashion accessories, and the defendants, Chauss Marketing, Ltd. ("Chauss") and Prime Source Accessories, Ltd. ("Prime Source"), related entities that acted as sales agents for Millenium. Discovery has been completed and a summary judgment motion has been adjudicated. The parties have now filed motions in limine, seeking to preclude the introduction of certain evidence at trial. I will address each motion in turn.

Defendants' Motion in Limine

The defendants move for an order (1) precluding the testimony and all evidence to be offered through Millenium's damages expert, Mei Sheng Liu; (2) excluding all evidence relating to lost future profits --damages that Millenium is alleged to have suffered after the date of its termination of Prime Source as its independent sales representative; and (3) excluding all of the plaintiff's exhibits that contain writing or images that were not part of the original document.

A. Millenium's Damages Expert

Millenium initiated this action in September 2002. On December 23, 2002, it served the defendants with its initial disclosures pursuant to Rule 26(a)(1) of the Federal Rules of Civil Procedure. At that time, Millenium stated that it had not identified any expert witness who would testify at trial. (Affidavit of D. Clay Taylor dated Sept. 26, 2005 ("Taylor Aff."), Exh. E, ¶ 2(A)). Similarly, in the Rule 26 Report signed by counsel on January 21, 2003, counsel represented that "[t]he parties do not presently intend or contemplation [sic] offering expert testimony or the need for expert discovery." (Taylor Aff., Exh. F, ¶ 3(g)). In that same report, which was adopted by the Court as an order on February 26, 2003, counsel agreed that discovery would be completed by May 30, 2003. (Taylor Aff., Exh F, ¶ 3(b)). Thereafter, the Court entered an order at the parties' request extending discovery until July 31, 2003. (Taylor Aff., Exh. G). It was clear that this deadline was final: on August 18, 2003, I struck as untimely the plaintiff's requests for admission which had been served too late to allow the defendants time to respond within the discovery period. (Taylor Aff., Exh. H).

Nevertheless, on September 12, 2003, Millenium's counsel sent defendants' counsel a letter enclosing what he characterized as a "report" on damages from Mei Sheng Liu, an accountant, consisting of four pages of summary calculations. (Taylor Aff., Exh. J). Defendants' attorney responded on September 18, protesting that Mr. Liu had not been identified as an expert during the discovery period and that his "report" did not meet the expert disclosure requirements of Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure. (Taylor Aff., Exh. K). Millenium's counsel replied on October 8 that he would provide further disclosure and make Mr. Liu available for deposition if requested. (Taylor Aff., Exh. L). No supplemental report was every submitted. There matters stood until counsel filed a joint pretrial order in which plaintiff's counsel identified Mr. Liu as an expert who would testify at trial. (Taylor Aff., Exh. M at 15).

As a threshold matter, Millenium argues that its expert disclosure was not tardy because it was made at least 90 days prior to the trial date, and so complied with the requirements of Rule 26(a)(2)(C). However, that provision applies only "[i]n the absence of other directions from the court," and in this case the Court had ordered a discovery deadline of July 31, 2003, that Millenium failed to meet.

The issue, then, is whether preclusion of the expert evidence is the appropriate sanction. In making such a determination, a court considers a variety of factors, including: "(1) the party's explanation for the failure to comply with the discovery order; (2) the importance of the testimony of the precluded witness; (3) the prejudice suffered by the opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility of a continuance." Softel, Inc. v. Dragon Medical and Scientific Communications, Inc., 118 F.3d 955, 961 (2d Cir. 1997) (citing Outley v. City of New York, 837 F.2d 587, 590-91 (2d Cir. 1988)); see also Wolak v. Spucci, 217 F.3d 157, 161 (2d Cir. 2000).

Here, Millenium has provided no explanation whatever for its failure to identify Mr. Liu as an expert and supply proper expert disclosure in a timely fashion. Indeed, even now, the plaintiff has not provided "a complete statement of all opinions to be expressed and the basis and reasons therefor; the data or other information considered by the witness in forming the opinions; . . . the qualifications of the witness, including a list of all publications authored by the witness within the preceding ten years; the compensation to be paid for the study and testimony; and a listing of any other cases in which the witness has testified as an expert at trial or by deposition within the preceding four years." Fed. R. Civ. P. 26(a)(2)(B).

The importance of the testimony to be precluded is a more difficult factor to evaluate. On one hand, Millenium is capable of presenting a claim for compensatory damages without expert testimony. On the other hand, it will not be able to meet the exacting standard for proving lost future profits without evidence that such damages are reasonably certain and directly traceable to the alleged breach of contract. See Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261, 502 N.Y.S.2d 131, 132 (1986); see also Toltec Fabrics, Inc. v. August, Inc., 29 F.3d 778, 780-81 (2d Cir. 1994). Yet, since Millenium has not provided more than a cursory outline of Mr. Liu's opinion, it has failed to demonstrate that he would have supplied the evidence necessary to establish future profits. Therefore, his testimony cannot be characterized as sufficiently important to warrant excusing Millenium's failure to comply with the discovery order.

Furthermore, the defendants would suffer prejudice if Millenium were permitted to commence expert disclosure at this late date. Not only would they incur the trouble and expense of taking the deposition of Mr. Liu and potentially moving to exclude his testimony on the basis of Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), but they would also likely find it necessary to retain their own expert to rebut the plaintiff's evidence.

The only factor that favors Millenium is the possibility of a continuance. Since the case is not set for trial, it would theoretically be possible to reopen discovery to allow the development of expert evidence. However, since the other considerations militate strongly against such ...

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