follow rule twenty six there are other issues that i will address as time permits or as the court's questions direct me but i'd like to focus on that issue since it's the one that kept us from going to trial did the court properly exclude our damage testimony thereby resulting in a dismissal of the parties posit this issue somewhat differently loz posits that taking as a given that rule twenty six was violated and so they posit the issue is simply you did the court properly exercised discretion in selecting a sanction and imposing it we pose posed the question somewhat differently but we think that first there was it a no vote question of law as to whether rule twenty six was in fact violated that you would decide on a dyno those standard and the f and only if you decide that it was while i did then you would get to the discretionary standard of whether the sanction is appropriate i think it might be helpful for me to start with a timeline to put the events in sequence to show what we believe was compliance with rule twenty six the complaint in this action was filed in january of two thousand and fifteen by april of tw fifteen jerram had disclosed a summary of its damages model its opinions the facts that would be part of that much we had also disclosed that the person who would testify about that model and give opinion we simply said opinion but loads of course had the model they knew from reading it that it required opinions and we told them that the opinions would be disclosed by mr johnson didn't you say th as a business owner it would be les opinion so are you saying that they should have surmised it was expert because they had the model and could see it was complicated enough it would require expert well it's money we get ahead of ourselves just a little bit in the timeline judge we didn't actually talk or seven o two until two years later all we said in twenty fifteen was here's our damage calculation and the guy who's going to testify about it and we use the word opinion admittedly we didn't say expert we didn't say seven o indicating an operating on the assumption that he would be let that actually judge you wasn't us that said les it was the judge that said late the trial judge we kept saying he's going to give opinion testimony but the next time it actually came up the next time we describe was on april twelfth of twenty seventeen and at that point the judge said and by the way the judge it had a pending summary judgment motion he finally ruled on it and called us in for status so we could figure out what we were up until expert and we said to him no your honor peter johnson will be the witness he's the expert but that was the actual words that we didn't say seven o two expert we didn't say seven to one expert we didn't say way opinion we simply said he's the expert and the judge said and again his actual words all right with that done i will now order lowe's to do its own twenty six eight disclosures i'll set a deadline for the deposition of the expert will see if you want to do a rebuttal report will come in for later status we took from that exchange that the court excepted that we had made our twenty six a disclosures why else would you order loads to proceed to there so it never occurred to us that there was any gap shortly after that we filed a revised damage not in so close understandably so that we don't know what it is that we need to respond to and we need an extension of time for our expert to do whatever he's going to do so we know we'll respond to the judge entered a general continuance of the expert disclosures required of lows and we  when the judge ruled that we could not file the revised damage model and at that point for the first time the actually set some sort of discovery cutoff for expert disclosures he told lowe's that they had to make their disclosure september twenty ninth this is the significance of all of the sure honor is that there never really was a deadline for us to disclose not a post before that in june of two thousand and seventeen didn't you include in your brief that johnson was going to testify as a lay witness and not as an expert and although you said he may qualify as an expert you said that he was going to testify as a layman that's what we said and your honor if i had to do over again i would used different words but what we said was he might testify under seven a one or seven o two no i think it said he will testify he's going to opine it's a language in this on the subject he might qualify as it's a very good question it's a question i wish somebody had asked me back in june or back in april or back at some other time because if the question had been asked i would have said well you're right why not let's just go ahead and do it the simple answer is it just never occurred to us that given the exchange we had in april with the judge who said ok what have you done we told him he said all right now it slows turn now lowe's has to make its to slow zhorzh it did not occur to us that we had not satisfied rule twenty six it did not occur to us that lowe's was not on notice that peter johnson was going to be the witness certainly they were on notice that he was going to be the witness but it did not occur to us that it hadn't occurred to them that he would be giving expert testimony i think you would agree that just disclosing someone as a fact witness doesn't qualify under rule twenty six eighteen for an expert i'm painfully aware of the many cases this court has issued that say exactly that not so aware back then but i certainly aware now but but the the thing is that when the federal rules want disclosures or documents to be done in a certain form they know how to do it rule ten for example tells us what you have to do to have a pleading if you want to file a complaint it has to be call a complaint it has to have a title that says complaint it has to be a numbered paragraphs it has to has a caption it has to have the name of the court there are no analogs to back for rule twenty six no magic words are required of the rule twenty six there is no document required there's no form of the document what's required because to substantive disclosures and to procedural purpose the substantive disclosures are that the advantage of the witness be disclosed we submit that the agenda of it was never in doubt from day one and twenty fifteen they knew that we intended to have peter johnson be the witness the substance was never in doubt since april of twenty third to twenty fifteen they knew that the twenty fifteen model was what we planned to present as our damages and after the summary judgment decision half that still survive there were two components a portfolio component and a services component the judge decided that the services component could not stand in that separate issue in the subpoena but the portfolio component stood  and ask you this question lois said that had it realized that johnson was going to be an expert witness that it would need to get an expert witness of his own that the deposition would have gone differently and so that was part of the reason for judge lee's ruling right that it would require him it permit and then hire another round of discovery so could you respond to that well first of all that in terms of they would have gotten a witness they did get a witness they had an expert witness retained and when lo appeared in september of the day after the judge had ruled against the revised model which again is another issue in this appeal the next day when we appeared before him and lowe's stated to the court judge we have a witness still haven't been disclosed we didn't know who it was we have a witness who hasn't done a report yet he's been waiting to see what he should respond to and now that we know he's prepared to do it in three weeks  nope no problem there so what we do know is that lowe's didn't invest any time wreford going down a rabbit hole for the wrong purpose but that was on the basis that they thought johnson was going to get a lay opinion testimony on the model well wouldn't it to for if they're if he's coming in as an expert i guess the question i would ask back to answer your question judge say diva's how would it have been different they knew what the substance was their expert was retained to rebut the su e to has different requirements for qualifications gatekeeping requirements that they would want to explore with any kind of a rebuttal expert they have had the damages summary for two years if there was a problem with this methodology if there was a problem with its conclusions if there was a problem with the opinions those were a parent who could have been addressed at any time but isn't that part of the problem that you can't tell methodology necessarily just from the report itself that you need to depose the expert find out what his actual methodology was and without knowing who that expert was it could do that but they did do it your honor that as a fact witness not as an extra but as a fact the guys that prepared this was prepared under johnson's supervision he didn't do every input of data he didn't actually create the excel spreadsheets that actually manipulated the data but it was done under his supervision and lowes took forty pages of testimony from him on that damaged mockup of the extensively examined him about that model if they had a problem with the model that they could have raised it when you have had to have a about the model i'm sorry you wouldn't have had to have a daubert hearing if he was going to present this testimony as an expert anyway you would have had to have a daubert hearing if they thought they had a legitimate basis to exclude the substance of the report delbert doesn't usually go take great exception to it he had no problem coming up with fifty seven pages of critique the point is that they knew how to attack it and if they thought they had a dog or challenge they could have done it any time in the two years that they had that report but challenge whether or not the methodology of an opinion is wrong not that the person uttering it may not have the right it has to be expert testimony that's my point that albert is reserved for expert testimony not lay opinion right but the twenty fifteen model by lowe's own admission was something that was expert testimony they knew that maybe they thought somehow we were going to come in and sandbag them with a last minute disclosure of somebody but if it was their fear they could have said no matter who presents this here's the problem with the methodology if they thought they had a legitimate dr challenge they could have brought it why didn't you disclose johnson as an expert during his deposition again your honour's the same answer i gave you before god i wish i had thought to ask myself that question  we wouldn't be here we wouldn't be bothering you we wouldn't have bothered the trial judge with it and he just did not occur to us that we thought that we had done with the rule requires the rule requires that they know who the person is and they knew it they they didn't have the label but they knew what the rule requires that they know what the opinions they had they had it from the twenty fifteen model the rule has to procedural requirements but before you even get there doesn't the rule require you to disclose it rather than have not for us to say he does qualify it survive and before we eat too much and hear about all time i do want to ask you a question about the services agreement did your client zero a terminations fee regardless and was the district judge operating under a misunderstanding  about whether you actually were going to suffer damages or not yes your honor the judge did not focus and perhaps we should have focused to better ourselves but the services agreement does have a penalty clause in it a calculation based on the number of months relates remaining under the contract and the average of the services were for the period so the district judge thought that you just didn't know any money because your subsidiary was not performing any of the se said that we were not going to have a retained expert and that because mr johnson is the expert but that's not what he said and what he what he actually said his approval difference when i have that right here it's on it's in the is consistent with the idea that throughout the entirety of this case the judge and lowes believed that mr johnson was going to be a lay opinion can i ask you a question about that so was there at some point did it become clear that this just was not going to be something that was susceptible of lay opinion testimony and you needed an expert well what caused all the sudden this prompting i mean it was everybody thinking this he can get lay opinion testimony on this and then suddenly everybody realized now this they need an expert for these does damages need expert testimony so we follow the motion eliminate saying well he said three things basically one is this this testimony need an expert to present this damag it's a whole series of projections and assumptions you know it's specialized knowledge under several too they only have a lead of several one at witness and that this is not rationally based on his perception so there's a mismatch they had made a mistake and it was a mistake that you could capitalize on by making a motion to exclude it close to trial when did you realize all along past they've they've made a mistake this discovery should be an extra i think we were shocked and i think george hearings he was very surprised that they were not to present expert testimony on this issue i want to we will we want lying in wait we took this deposition you know when you get close to trial you start thinking how is the trial going to go what are the whip with the witnesses what are they going to lot of johnson's testimony about his sort of you know about what he knew about the model and there are a couple of provisions here where johnson basically just of now the model he was asked at deposition who prepared the mo myself and then he said well let me be specific russell had staff that working for us financial analyst modelers who were actually doing the work but was all she had and russell had a primary role and i had a secondary role in directing the work so  he also said that he also referred in this in page three seventy seven of his transcript that it's a mom he was talking about russell was it being a c p c f a and michael johnson being a c f a and they said so this is a model built by experts and that was balanced against actual performance and they said russell is she to supervise the building of the model he had per pupil working his in his team and then he mentioned some people that built the model but he meaning russell supervised it made sure it had integrity from a financial perspective so we would never of us understood that johnson was a an expert witness and i think judge we found this was it was easy he said th beat consistently and this is i think page eighty one of the transcript consistently stated that he would be a lay opinion witness so you know i understand mr obama's argument because this is really you is about if you scratch and fight have been the harm in extending expert discovery and moving the trial well you know i think that that could have been done and i think in one of your cases i think it's the kalak case i believe you actually did that in one of your cases but that but you made clear that that was within your discretion the district court here using uses discretion a different way he said that it was that it would disrupt the trial and i think that's clear it would have disrupted the trial and that would have prejudiced laws because we prepared for the trial and you bet that's how he chose to exercise his discretion which is totally in line with this court's case law the muser case is right on point wit courts control their dockets they control the timing of the cases they control when the trials are and for a party to come in and say well we violated the rule but it really doesn't matter because judge you could change your schedule just to accommodate us is not the way the rules are designed to work and i think joy i think judge alito had the same the same impression here he wanted this court he wanted the case to go to trial it what he was not able to go to trial presented and he use discretion properly counsel can you answer my question about the services agreement and the temptation to generally misunderstand whether or not there is a penalty jim i don't think you know i misunderstood your honor what i think he was holding was that that contract in the penalty and all that that is between that's between casey s and p i coom l a the focus of damage and what the damages need to be or what does zero to k c s if anything that consequential damages whatever we owe to k c s could have been damaged maybe it was lost profits maybe it was something else but that wasn't the damages model their damages model was somehow that we owed we we owe it as a pass model they sought damages from wasn't based on that pass through information that pass through payment was based on a whole series of assumptions as well because along with the portfolio component so i think the judge probably found that those  obviously that we didn't breach the contract so because and i think what the judge said is look the room would have to k c s would have to make those payments regardless whether it was breached contract so there were of the damages the didn't have they didn't have money coming in necessarily but but there's no there was don't terminations that at least that i'm aware of right i mean they didn't have to terminate and accept the penal they might have owed them money that that's also a possibility but as the judge found the damages that you have to focus on are the damages between karun between cape lows and k c s and even if those even if those are taken into account how you calculate maybe k c s is lost profits for example because they might also money those aren't the damages and really what they're trying to do again and i think the judge saw this is you know right at the outset of the case the judge the judge dismissed the claim for breach of the services agreement because those was at a party and i think he saw it as a back door way of trying to get get to claim a breach of the services agreement fact i think they were obviously right so the only question really before this court on that issue is was will is did he abuse discretion and finally it was prejudiced and clearly we would have taken a very different deposition if we knew that m johnson was a was supposed to be an expert witness we would have taken him through every one of those cells and that excel spreadsheet we would of really honed in on it we would just accept it as oh i didn't do it someone else did it because even though an expert can obviously rely on other people experts have to own their mother their their testimony right they can say well i don't know anything about it but i'm just going to assume it's right because somebody else did it and that's what that's what mr johnson basically said he didn't do it so so why in that so we would figure the death different position and then what we would have done is we would have moved under doubt and i would call  your attention to eighty five which is also from the november transcript in on that page of his opinion the judge said the judge cites johnson's deposition and says look you know it seems pretty clear that even if they even if they had disclosed john said johnson is not really an expert here so i say i'm going to have to let lows file a doubt motion and all of that is going to end it's going to disrupt the trial and therefore i you know did then they move for reconsideration we haven't even we haven't talked about that and they proposed all these alternative sanctions and what judge what judge we did was he went through all of those alternative proposals and x and i explain liability and damages which the judge thought was fundamentally unfair and had a couple of others you know one was to serves certified in throughout your tory appeal to this court and the judge found all you know the other was to extend the you know just ignore the deadlines pretend they didn't exist and just go back in to discover it and judge and judge we found that on it well those were unfair and that was with it is well within his discretion and again i point to the  battle your honor first of all i'd like to give you the cite to the penalty provision in the services agreement which is that e c f fifty hyphen three like it's clause eight point three and it essentially says if k c s to current l a the allegation in the complaint and the to complaint your honor was that with the terminations of the relationship with the funding agreement and the program agreement having been breached with k c s being damages was made at the end of the evidence when judge we threw that out so was there evidence in the record to support that your client code crew l a this penalty if it actually wasn't at the conclusion of the evidence it was on summary judgment a partial summary judgment motion but yes there's evidence either way was there evidence to support were not at the complaint stage anymore the services agreement was one of the documents that was part of the summary you're a one point i think counsel said that at no time did johnson ever own the model that at no time was there ever any link between johnson and the model and i want to correct that again this is something that we could have made more clearer but it was there right in the record in one of the summary judgment briefs mr johnson submitted an affidavit that you'd support of our opposition to summary judgment and among the things  swore to and this is at the c f ninety six i found one he told the court what the damages carom was seeking work gave the numbers he said we're seeking something in the range of four and a half to nine million dollars the exact numbers that were in the model of this was in a sign and sworn affidavit and when he does it he doesn't just say carom is seeking these numbers what he says in the affidavit is i estimate based upon my review of all of the to the services agreement judge lee dismissed at the complaint stage your claim for damages under the services agreement but he did so without prejudice and you did not repleat why didn't you try to replace mainly your honor because there were several different ways to get at the same end and we decided rather than try to convince judge lee of something that he already had formed an opinion on we took a different path at the damages were the same whether they belong to carom l a whether they belong to k c s whether they were measured as services or measured as costs so we had four different ways that we could have sought that same pot of money we decided to try a different way rather than convince the judge she was wrong again in retrospect maybe there was a better way we might have done it but there was legitimate thinking at least to that question that was a question re asked ourselves time your honour's i see i have only