Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-01944/USCOURTS-azd-2_08-cv-01944-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Other Contract

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Universal Engraving, Inc., a Kansas

corporation, 

Plaintiff, 

vs.

Metal Magic, Inc., an Arizona corporation,

and Charles R. Brown, an individual, 

Defendants. 

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No. CV-08-01944-PHX-GMS

ORDER

Pending before the Court is Plaintiff’s Motion To Permit Supplementation of Expert

Report (Dkt. # 52). For the reasons set forth below the Court treats the motion as one to

modify the Court’s previous Scheduling Order in this case, and denies the motion. 

Plaintiff seeks to reopen and extend their expert disclosure deadline so that they may

supplement their expert’s report with an analysis of the information contained on the

electronic components of Metal Magic. The expert report that was filed by Universal

Engraving in accordance with the scheduling order apparently contained only an analysis of

Universal Engraving’s Computer files. 

Plaintiff claims justification for a modification of the Scheduling Order because, it

asserts, Defendants’ non-compliance with their discovery obligations made it impossible for

Plaintiff’s expert to have access to the electronic components necessary to include such an

analysis in his report. 

Case 2:08-cv-01944-GMS Document 77 Filed 10/01/09 Page 1 of 5
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At the initiation of discovery in this case, Plaintiff requested electronic discovery from

Metal Magic. Similarly Metal Magic requested access to Plaintiff’s electronic components

including its “hard drive, external hard drive, flash drive, CD’s or any type of storage

device.” Plaintiff initially declined to provide Metal Magic with any such materials.

Similarly, Metal Magic declined to provide Plaintiff with its equivalent electronic

components. Defendants claim to have proposed a mutual exchange of such components as

early as June 2. But, whether or not they did, as late as June 29 Plaintiff declined to provide

their electronic components to Defendants based on their continuing objections. This

resulted in Defendants’ continued refusal to provide their electronic components to Plaintiffs.

Although Plaintiff’s complete expert reports were due on July 17, and this date was

established after the parties had obtained an earlier extension of the expert report deadline,

Plaintiff neither sought to compel the production of Defendants’ electronic components as

necessary to its expert reports, nor did it seek an additional extension of the deadline. On

July 30, Plaintiff shipped the requested electronic components to Defendants, and Defendants

promptly reciprocated. Still Plaintiff made no attempt to modify the Scheduling Order.

More than a month after the deadline for the Plaintiff’s expert disclosure had passed, on

August 28, the Court held a discovery conference with the parties at the request of the

Defendants. The Defendants raised with the Court what they viewed as Plaintiff’s continued

inappropriate refusal to adequately respond to Defendants’ interrogatory requesting that

Plaintiff identify the trade secrets that it alleged Defendants had misappropriated. In the

course of that conference Plaintiff indicated that it intended to provide such information by

conducting an expert analysis of Defendants’ electronic components and provide a

supplement to its experts report with such information. Defendants objected and the Court

authorized Plaintiff to file this pending motion.

In considering Plaintiff’s motion, the appropriate inquiry is whether, in light of the

circumstances of this case, Plaintiff diligently sought to amend the Scheduling Order.

Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 608 (9th Cir. 1992). It did not do so.

Plaintiff contends that Defendants’ discovery positions have been unreasonable. After a

Case 2:08-cv-01944-GMS Document 77 Filed 10/01/09 Page 2 of 5
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review of the discovery chronology, however, the Court is unable to conclude that

Defendants’ behavior in discovery has been any worse than Plaintiff’s. Further, Plaintiff has

the burden of proof. Thus, Plaintiff had the burden of first providing its complete expert

reports, with the opportunity to submit an additional rebuttal report addressing any aspect of

Defendants’ expert report.

If, in fact, Plaintiff had initially contemplated expert reports that included an analysis

of the contents of Metal Magic’s computer components, it was its obligation to raise Metal

Magic’s non-compliance prior to the expiration of its deadline so that it could obtain the

necessary components. The Court understands why it would be difficult for Universal

Engraving to raise such matters to the Court when at that time it, too, was refusing to

provide Metal Magic with its own electronic components. At any rate, its failure to timely

work out an accommodation with Metal Magic or, failing that, its failure to raise the matter

with this Court or seek an extension based on good cause prior to the expiration of the expert

disclosure deadline, establishes the lack of diligence on the part of Plaintiff. It is, therefore,

not entitled to a modification of the Court’s Scheduling Order. 

Plaintiffs assert that granting the motion would not prejudice Defendants because

discovery is still open in this matter and trial is not set. Further, they assert, Defendants

already presumably know what’s in their computer files and thus cannot be unfairly surprised

by what they contain. Thus, Plaintiff argues, Defendants would not need additional time to

conduct additional discovery. This is not accurate. The Defendants at this point will be

obliged to evaluate the supplemental report, obtain new expert opinions with respect to it, redepose Plaintiff’s expert and pay other additional legal fees resulting from the necessary

extension of other deadlines in this matter necessitated by permitting the supplementation of

the expert report. Plaintiff asserts that they will be highly prejudiced by the loss of their

proposed supplemental expert testimony. But, it is not clear to the Court that expert

testimony is the only way that Plaintiff can establish the Defendants use of Plaintiff’s trade

secrets if such use exists. As Plaintiff has pointed out, discovery in this matter is still open.

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Further, this Court has no intention of preventing Plaintiff from using expert testimony that

was prepared and submitted in the time limits of the Court’s Scheduling Order. 

At any rate, as Johnson makes clear, prejudice is not the principal inquiry. While “the

existence or degree of prejudice to the party opposing the modification might supply

additional reasons to deny a motion, the focus of the inquiry is upon the moving party’s

reasons for seeking modification . . . . If that party was not diligent, the inquiry should end.”

Id. at 609. The focus of that inquiry, as Johnson demonstrates, is the diligence of the

Plaintiffs in timely seeking a modification to the scheduling order. That diligence is lacking.

Therefore, Plaintiff has provided no sufficient basis on which the existing Scheduling Order

entered pursuant to Fed. R. Civ. P. 16 should be modified. 

Plaintiff suggests that failing to allow its expert to supplement his report amounts to

a sanction under Fed. R. Civ. P. 37, and thus requires this Court to go through the five factors

analysis suggested by AZ Holding, LLC v. Frederick, 2009 WL 2432745, *5 (D. Ariz. Aug.

10, 2009). The Court disagrees. This is not an instance in which the Court has imposed any

kind of sanction on the Plaintiff. This is an instance in which Plaintiff, after having filed an

expert report in compliance with this Court’s Rule 16 Scheduling Order, seeks to supplement

its report well after the deadline has expired. The Court, in determining that Plaintiff has not

met the diligence standard required to modify the Rule 16 Scheduling Order, has declined

to modify the Scheduling Order. The analysis then is driven by Johnson and Fed. R. Civ. P.

16, not by Fed. R. Civ. P. 37 and the cases interpreting it. 

Nevertheless, application of the five factor test suggested in AZ Holding does not lead

to a different result here. Those factors are: (1) The public’s interest in expeditious

resolution of litigation; (2) the court’s need to manage its docket; (3) the risk of prejudice to

the defendants; (4) the public policy favoring disposition of cases on their merits; and (5) the

availability of less drastic sanctions.

/ / /

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In this case the first three factors all weigh in favor of not permitting supplementation.

The fourth factor is neutral because, as previously stated, it is not clear to the Court that

failing to permit the expert report will prevent the Plaintiff from presenting its case on the

merits. It may prove somewhat more burdensome to the Plaintiff, but it is the judgment of

the Court that, under the circumstances, such burden is appropriately placed on the Plaintiff.

As to the fifth factor, Plaintiff does not indicate what lesser sanction would be

appropriate to impose in this case. The only alternative and appropriate “sanction” of which

the Court can conceive is requiring Plaintiff to reimburse Defendant for undertaking the

necessary review of Plaintiff’s supplemental report, retaking the Plaintiff’s expert deposition,

paying for a subsequent expert report by the Defendants’ expert to address the Plaintiff’s

supplemental report, and paying whatever other additional expenses might occur due to the

necessary prolongation of the trial schedule to accommodate permitting the supplemental

report. In the Court’s judgment such a sanction might not well be “lesser”, it would be

overly intrusive, difficult to administer, and administratively cumbersome on both the Court

and the parties. Therefore, 

IT IS HEREBY ORDERED denying Plaintiff’s Motion To Permit Supplementation

of Expert Report (Dkt. # 52).

DATED this 1st day of October, 2009.

Case 2:08-cv-01944-GMS Document 77 Filed 10/01/09 Page 5 of 5