UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
February 6, 2006
MILLENIUM EXPRESSIONS, INC., PLAINTIFF,
CHAUSS MARKETING, LTD. AND PRIME SOURCE ACCESSORIES, LTD., DEFENDANTS.
The opinion of the court was delivered by: James C. Francis IV United States Magistrate Judge
MEMORANDUM AND ORDER
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 a course, Millenium is precluded from tendering Mr. Liu as an expert.*fn1
B. Lost Future Profits
Next, the defendants seek to bar any evidence of Millenium's alleged lost future profits on the ground that any such damages are attributable to the plaintiff's own conduct in terminating its contract with Prime Source. This is not an evidentiary question; it is a dispositive issue requiring an analysis of the record to determine causation. As such, it is not appropriately adjudicated on a motion in limine and should have been raised on summary judgment. See Medallic Art Co. v. Novus Marketing, Inc., No. 99 Civ. 502, 2004 WL 396046, at *1 (S.D.N.Y. March 2, 2004); Sun Co. v. Carboline Co., Civ. A. No. 89-7255, 1992 WL 252265, at *1 (E.D. Pa. Sept. 28, 1992). Accordingly, the requested relief is denied.
C. Altered Exhibits
Finally, the defendants move for the exclusion of exhibits that include commentary or graphic images that were not part of the original document. These exhibits were apparently altered by plaintiff's counsel in an effort to link them to legal conventions. Legal argument, however, is not evidence, see Tankleff v. Senkowski, 135 F.3d 235, 253 (2d Cir. 1998); Marcoux v. Farm Service and Supplies, Inc., 290 F. Supp. 2d 457, 481 (S.D.N.Y. 2003), and is therefore not properly incorporated into an exhibit.
Millenium nevertheless contends that if this case proceeds to a bench trial, the Court is capable of filtering out counsels' argument from the underlying exhibits. This is a curious assertion in two respects. First, the causes of action presented are largely conventional contract claims that are legal in nature, and the defendants demanded a jury trial; consequently, the case will in all likelihood be tried to a jury with the Court ruling on any accompanying equitable claims. See Robinson v. Metro-North Commuter Railroad Co., 267 F.3d 147, 170 (2d Cir. 2001). Second, the Rules of Evidence do not generally vary based on whether a case is tried to the court or to a jury. Regardless of the identity of the trier of fact, the documents here cannot be properly authenticated because of the alterations and are not admissible as duplicates under Rule 1004 of the Federal Rules of Evidence. Accordingly, they are excluded unless offered in their unaltered form.
Millenium's Motion in Limine
Millenium has moved for an order (1) dismissing the counterclaims of defendant Chauss; (2) precluding Prime Source from introducing evidence of a written contract with Millenium; (3) precluding Prime Source from introducing evidence of an oral contract with Millenium; and (4) removing the "Attorneys'-Eyes-Only" designation from the transcript of the defendants' deposition. The first three requests can be dealt with collectively.
A. Dispositive Issues
The application for dismissal of Chauss' purported counterclaims explicitly requests a dispositive determination by the Court and, as discussed above, is therefore not properly raised on a motion in limine.*fn2 The same is true of Millenium's applications to exclude evidence of any written or oral contract with Prime Source. These requests are not based on any purported evidentiary shortcomings, but on Millenium's view of the merits of Prime Source's claims and defenses. Each of these applications is therefore denied.
At the time that the defendants were deposed, they designated the deposition "Attorneys'-Eyes-Only" under the confidentiality order entered in this case. (Affirmation of Sidney A. Weisberg dated Sept. 23, 2005, Exh. 9). Millenium now requests that this designation be removed so that the plaintiff's principal can review the transcript and confer with counsel in preparation for trial. The defendants indicated in October 2005 that they would analyze the deposition to determine if they would oppose lifting the "Attorneys'-Eyes-Only" designation. To date, they have not voiced any objection, and Millenium's application is therefore granted. The transcript may be disclosed to Milleunium's principal but shall otherwise continue to be treated as confidential.
For the reasons set forth above, the defendants' motion in limine is granted to the extent that Mei Sheng Liu is precluded from testifying as an expert and Millenium's exhibits containing commentary and graphic images are excluded; the defendants' application to preclude any evidence of Millenium's alleged lost future profits is denied. Millenium's motion in limine is granted to the extent that the transcript of the defendants' deposition shall be treated as confidential but may be disclosed to Millenium's principal; otherwise, Millenium's motion is denied.
JAMES C. FRANCIS IV UNITED STATES MAGISTRATE JUDGE