## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

____________ N o. 07

- 2758 J OHN W A S S ON, Plai nt i f f

-Appe l l ant, v. P EAB O D Y C OAL C OMPAN Y, D efend a nt-A pp ellee.

____________ Appeal from the United States District Court fo r the S outhernDi stricto f Indian a, N ew Alb any D ivisi on. No . 4:02- CV-0090

— Sarah EvansBarker, Judge
.

____________ A RG UE D M AY 16, 2008

— D ECI DE D S EP TE MBE R 8, 2008

____________
Befo re B AUER, P OSNER, an d W OO D , C ircu it Judges. W OO D , C ircu it Judge. J ohn W ass on sued Peab od y C oal C om p an y for b re ac h of co n tr ac t, cla im in g t h at it u n d er p aid the r oya l ti es to w hi ch he was ent i tl ed f orco alm i ned fr om h i s p r o p e r ty . Aft e r a b i fu r c a t e d j u r y t r i a l r e s u l t i ng i n a $350 , 0 0 0 v erd ict i n W asson ’s f avor, the d istri ct cou rt granted Peabo dy’s re new ed m oti on f or j ud gm ent as a ma t t e r o fl a w. Wa s s o n a p p e a l s , a n d w e a ffi r m.2 N o. 07

- 2758 I W as so n l ea se d c o al

- m i ni ngr i g ht s to Pe ab o dy ( o r o ne ofi ts p re d eces sor s- i n-inter est ) i n exchange f orr oya l ty paym ents cal cul ate d i n acco rdance w i th a l eas e a gr eem en t. Be l i ev i ngtha t Pe ab o dy ha d u nd er pai d the royalties du e for c o a l m ined from 1996 th roug h Jan ua ry 2 0 0 0 , Was s o n fi l e d sui ti n fe de r a l c o ur ta g a i ns tP e ab o dy an d I ndi an ap ol i s Po wera nd Li g ht( “I P&L”) , a l l eg i ng an ti trus t vi o l at i o ns . In a m o r e di r ec t eff o r t to c o l l ec t th e ad d iti ona l royalties he clai m ed , he also raised a breac h-ofco nt r ac t cl ai m a g ains t Pe ab o dy. I n Aug us t 20 06 , the dist ri ct c ourtgr anted sum m ar y j ud gm ent in f avo r of Peabo dy and I P& L on the anti tr ust cl ai m s, causing I P& L to be di sm i sse d fr om the sui t. A t the sa m e t i m e, i t deni ed Peabo dy’s m oti on f or sum m ar y j ud gm ent on the bre ach o f c o n t r a c t c l a i m. T h e c o u r t d e c i d e d t o b i fu r c at e th e l i abi l i ty and dam age s st ages o fthe tr i al, and so i t fi rs t subm i tte d to the j ury the quest i on wh etherPeabo dy had bre ached the agr eem ent. T he j ury answered yes, and then w ent o n i n the seco nd phase to aw ar d W ass on d am age s o f $3 50 ,00 0. W h ile th i s w as a su b st an tia l su m , i t p ale d in c o mpa r i s o n t o the n e a r l y $ 1 0 mi l l i o n he h a d r e qu e s t e d. Pe abod y, in the m ean tim e, ha d asked the cou rt at every avai l abl e o pp or tuni ty f orj ud gm ent a s a m att erof l aw . S ee F ED
. R. C IV
. P. 5 0

. OnP e ab o dy ’ s f o ur th t r y, the di s t ri ct cou rt grante d th e m otion an d redu ced the j ury’s aw ard to $ 96 5. 62, the a m o untPe ab o dy ac k no wl edg ed o wi ng base d on i ts own exper t’ s r evi ew o fthe data. D i s t r e s s e d t o s e e h i s v i c t o r y s n a t c h e d a wa y fr o m h i m, W asson has ap p ealed

. H e argu es th at th e d istri ct cou rt er re d i n denyi ng hi s m oti on for a conti nuance j ust pri orN o. 07

- 2758 3
to tria l (an d d en yin g h is m ot ion to rec on sid er th at ru li ng) , b e c a us e , he s a i d, he ne e de d a ddi t i o na l t i m e t o re vi ew r ecent l y p ro d uced disc ove rym ate ri al s. H e a l so ass er ts that the c ourter re d i n bar ringhi s e xpert w i tness fro m te st ifyin g. Fin ally , h e c on te n d s th at t h e c ou rtsh ou ld not have setas id e th e j ury’ s a w ar d ofdam age s, bec ause ther e was suffi ci ent e vi dence f ora re aso nabl e j ury to fi nd i n h i s f av o r . W e addr es s ea cha r g um en t i n tur n.

II W as so n faces l o ngo dds o n h i s fi r stpo i nt, g i ve n the f act th a twe r e v i e w a t r i a lc o ur t ’ s de ni a l o fa mo t i o n f or c on tin u an c e fo r an ab u se of d isc re tio n . Res e ar ch Sys

. C o rp. v. IPSO S P ubli cit e, 2 76 F

. 3d 91 4, 9 19 ( 7th Ci r . 2 00 2)

. The parti es in thi s r el ati vel y s tr ai ghtf or w ar d case have been batt l i ng o verdi sco ver y f orye ar s. The super vi si ng m agi str ate j ud ge actual l y g ra nted parto fW ass on’ s m ot ion to co m pel ; unabl e to r es i stthe o bv i o us meta pho r s, the j ud ge obs er ved that“e ach si de h as t h ro w n a l i ttl e co al slu d ge int o th e d isc ov er y d isp u t e p ro c es sin g h op p er .” W as so n co m pl ains ne ve r th el es s th at when m ak i ng b ox es filled w ith p ap er s av aila b le to h im in w h ich h e c ou ld f i nd the da t a h e n e e de d, P e ab o dy di d n o tfurni s h e nough detai l abo ut the preci se l oca ti on o fthe re quested r eco rds. W ass on was part l y t o bl am e forthi s, how eve r, bec ause his interr ogatories w ere very broad i n sc op e. I n an effort to hom e in on the ce ntra l is sues, the m agi str ate j ud ge ask ed W ass on w hat he w as re al l y l oo ki ng for ; W ass on re sp on d ed th at h e w as tr yin g to su b st an tia te th e “ M an c il Robi nson Repor t, ” a s u m m ar y o fr oya l ti es that he had4 N o. 07

- 2758

re cei ved fro m Peabo dy ye ars e ar l i erwh en he fi rs t di spu ted i ts paym ents. Consequentl y, the m agi str at e j ud ge ord ered Peab o d y to “fi le sup p lem en tal answ ers to I nt erro gat or y Nos. 8 and 28 ba sed upon The M an cel

- Robi nson [ si c ] R ep or t a n d all u n d er lyin g d oc u m en ta tio n u se d in p ro d u c in g t h at rep or t.” A s Peabody points o ut, thi s o rderm ay have expand ed th e ori ginal i nt errogatories. For exa m p le, I nt errogatory N o. 28 r e qu e s t e d p r o du c t i o n o f“ a l l da t a a nd i nfo r mat i on us ed to c al cul at e an y a nd a l l r o y al typaym en ts
. ” The questi on d i d not m enti on or al l ud e to the M anci l Robi nson Rep orta t al l

. In f ac t, Pe ab o dy as se r ts , i t di d no t us e th e M anci l Robi nson Repor t t o cal cul ate r oya l ty paym ents. T h us , wh i l e th e r e w a s s u b s t a n t i a l ( p e r h a p s o v e r wh e l mi ng ) o ve r l ap amongthe do cument s r es p ons i ve t o the i nt er r o g at o r y a s o r i g i na l l y fr amed and as r ec as t i n the m ag ist ra te j u d ge ’s o r d e r, it w as fore se ea b le

— i n f act, like ly

— th atthe do cument s th atwer e r es po nsi ve t o the two que st i o ns woul d no t be i den ti ca l

. Thi s ex pl ains the p resen ce of “new ” d ocu m en ts p r o d u ced shortly before tr ial in response to the m oti on t o com pel

. ( A l though Peabo dy did notcr oss - appeal bas ed on the m agi str ate j ud ge’ s a rguabl e e xpansio n o fthe sco pe ofthe i nter ro gato r y, the di ffer en ce b etwee n the orig i na l de m an d a nd the or der i s r el evantto the questi on wh etherPea b od y was pla yi ng f oul w i th W ass on by produci ng ne w d ocum ents sh or tly be for e t ria l.) Inan y e ve n t, W a s s on h ad am p le ti m e to re vi ew the docum ents i n the or i gi nal p ro du cti on to d eterm ine w he th er a d d iti ona l d iscovery w as ne cess ary be f o r e th e ex pi r at i o n o fthe d is co ve r y de adl i ne , b uthe ch ose to sit on the m atter.N o. 07

- 2758 5 W as so n ca n n otm ee t t h e st an d ar d for re ve rs al on th is gr ound because he ca nnot show that he suffer ed “change d ci rcum sta nces to w hi ch a part y c an not re aso nabl y b e expected to adj ust without a n exte nsi on o fti m e. ” N
. Ind. P ub. Se r v. Co. v. Car b on County Coal Co. , 7 9 9 F

. 2 d 2 6 5, 26 9 (7th C ir. 1 986). M oreover, w e a gree w ith th e d istri ct cou rt’s des cr i pti o n o fW as so n’ s st r ategy i n di spu tinga nd re disputi ng thi s di sco ver y i ssue: W e fi nd i t t el l i n g th at i n W ass on’ s r esponsi ve bri ef to Pe ab o dy ’ s po s t
- t r i a l mot i o n [ f o r j ud g men t as a m at ter o fl aw ] he doe s no t i denti fy a ny speci fi c eviden ce i nt rod uc ed a t tr i alwhi chwoul d s uppo r t th e j ury’ s v er dict s. Rather, hi s l ar gel y no n-r esponsi ve r e h a s h o fl o n g - a g o - r e s o l v e d d i s c o v e r y di s p u t e s d e monst ra tes W ass on’s c onti nued pre occupati on with fi ndi ng a “s m o k i ng g un” i n ho pes o fs ubs ta nt i at i ng hi s theor i es abo u t the al l ege d but unproven w ro ngs P e ab o d y v i s i t e d u p o n h i m. This cour t has em phasi zed that“di st ric t j ud ges m ust be al l o wed c o ns i der ab l e l ee way i n s ch edu l i ngc i vi l c as es , a nd the re f or e i n de ny i ngc o nt i nu a nc e s tha two ul d d i s r up t thei r schedule s . . . . ” R es earch Sys. C orp. v. IPSO S P ubli cit e, 276 F. 3d at 920. I n thi s ca se, wh i ch w as fi l ed ove r fi ve yea rs ag o, the denia l o fa continuance w as not an abuse o fdi sc r et i o n.

III W e a l so re vi ew the dist ri ct c ourt ’ s e vi denti ar y r ulings onl y for a b u se ofdi scr eti on, and w e “ w i l l notr eve rs e unl es s th e r ec o r d c o nt ains no e vi den ce upo n w hich the6 N o. 07

- 2758
tr ial jud ge rat ion ally co u ld h av e b as ed h is d ec isio n .” U ni t e d St at e s v. Sa vage, 50 5 F

. 3d 75 4, 7 60 ( 7th Ci r . 2 00 7)

. To supp or t hi s br ea ch ofco ntra ct c l ai m , W ass on a tte m pted to int ro d u c e t h e e x p er t t es tim on y of R ob e r t S w an , his acc ou nt an t, althou gh the theory u nd erlyi ng Sw an ’s exp ert w i tness repor t w as actual l y W ass on’ s. The r epor t a sse rt ed that the c oalpri ce Pe abody w as usi ng to cal cul ate W ass on’ s r oya l ti es w as too l ow. This concl usi on was base d on the d iffer ence between the “ave ra ge gr oss i nv o i ce s al es pr i ce ” us ed byPe ab o dy when ca l cul at i ng ro yal ti es f orA ugust 1 999 a n d the fuel co st data r epor ted f orthatsa m e m onth byI P& L, one ofPeabo dy’s custo m er s, to the Fed eral En ergy Re gu latory Com m issi on (“FE R C ”). T h e d ist ric t c ou rtba se d its d ec isio n to ex c lu d e t h is te st i m o ny o n s ev er alc r i ti ca l s ho r tc o m i ng s. F i rst, the anal ysi s incl ud ed onl y a singl e Peab ody cust om er . ( Even i fi t had i ncl ud ed al l t h e FER C repor ts fi l ed, non- uti l i ty cus to m er s ar e no t r equi r ed to fi l e F ERC r epo r ts , a nd s o the dat a woul d stil l ha ve b ee n inc o m pl et e. ) M o r eo ve r, the fi gure s fora m onth fro m thi s one custo m erwere extr apol at ed t o a r r i ve a t a numbers uppo se dl y r epr es en ting tw enty yea rs of al leged un d erp aym en t. (Ev en before se ndi ngthe c as e to the j ur y, the di st r i ctc o ur t r edu ce d the c laim per i od to fi ve yea rs , i n kee ping w i th the st atute o f l i m i tat i ons. ) Peabo dy’s exper t witness, an e conom i st, te st ified th atS w an ’s e x tr ap ola tio n d id “n otm ee t s c ien tific sta nd ar ds f oruse ofm athem ati calstati sti cs. ” F i nal l y, S w an adm i tte d that he had neve r p re vi ousl y s een o r w or ked wi th a F E R C r e p o r t, d i d n o t k n o w wh a t i t e ms we r e i ncl ud ed orexcl ud ed i n the fuel co st data fou nd i n such re port s, and was unaw ar e of any occa si on w here so m e-N o. 07

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one else had used FE R C d a t a to test th e accu racy of a ro yal ty paym ent. W e h av e n o t ro u b le e n d or sin g t h e d ist ric t c ou rt ’s d ec isi o n t o e xc l ude S wan’ s te st i m ony

— ind eed , had the cou rt ad m itt ed it, w e w ou ld p ro b ab ly h av e re ve rs ed t h at d ec isi on f ora n a buse o fdi scr eti on. S w an’ s o pini on was not “b as ed upo n s uffi ci en t f ac ts o r da ta, ” norwas i t “the product o fr el i abl e pr i nci ple s a nd m et h od s, ” a s r equi re d by F ED
. R. E V ID
. 70 2.

IV Fin ally, we gi ve deno vo review to a district court ’s gr an t of j u d gm en t a s a m at te r of law

. C a stella no v. Wa l-M a rt Store s, Inc. , 37 3 F

. 3d 817, 81 9 ( 7th Ci r. 20 04 ). W e agr ee w ith th e d istri ct cou r t that the j ury’s d am ages aw ard m us t be s eta si de be ca us e i t was b as ed o n n othi ngb ut sp ec u lat ion . W as so n sa ys th at th is is n otso , bec au se h is tr i alexhibi t 1 00 thor oughl y su m m ar i zed hi s e vi dence on d am ag es . B u t a rev iew of th is e x h ibit on ly re ve als all th e pr o bl ems tha t so c o nc erne d the distri ctc o ur t. The exhibi t i s no thi ng m or e than W ass on’ s scra tch- paper work

up o fhi s g ue ss a t det er m i ni nghi s d am ag es . F o r e xam ple , wh en W ass on co uld notfi nd the num berof “bar ge” tons m i ned du ring the r el evantper i ods, he s i m plyco pie d the num bero f“r ai l ” t ons m i ned into hi s “ bar ge” ta l l y. A bsolu tely noth ing su ggests that the tw o nu m bers w ere necess ar i l y the sa m e. I t s eem s that there w er e no bar ge tons acc ounted f or i n the M an ci l Ro bins o n Re po r t be ca us e th e ba r g e to ns and the r ai l to ns were er ro neousl y l um ped toge th erto8 N o. 07

- 2758 produce the num bersho w n for rai l to ns. The di ffer ence m att er s: r oya l ti es f orbar ge tons ar e s l i ghtl y hi gher than tho se for r ai l to ns. Thi s l um ping ofbo th kind s o f shi pm ent into the r ai l cat ego ryr esul ted i n the $965

. 62 und er paym en t that Peabody’ s e xpert w i tness di sco ver ed an d th at Pe ab o dy th er ea fte r co nc ede d o wi ng . I n a ddi ti o n, W as so n als o u se d an ab su r d l y h igh co al p ric e fo r all h is ca l cul at i o ns , $ 10 7. 26 per to n, s i m pl y b ec au se he f o und o ne entr y foro ne m onth a m ong Peabod y’s docum ents s ho wi ngtha tp r i c e . T he p r e v a i l i ngp r i c e f o r a l l the p e r i o ds in qu estion w as alm ost an order of m agn itu d e low er, hover i ng ar ound $18 o r $19 per ton. Th e $ 107 per ton pr i ce tur ne d o utt o b e ana cc o unt ing ar ti f ac t ar i sing fro m a “ qua l i tya dj us tment ” f o r a pa r ti cul arb uy ero n a par ti cul aro cc as i o n. The di st r i ctc o ur t he l d tha t i t co ul d “ i den ti fy no r ea so nabl e ba si s in the evi dence f orthe j ury’ s $ 350, 00 0 dam age awar d t o M r . W as so n. ” N either ca n we. The j udg m en t ofthe dist ri ct c ourti s A FFI RMED
.

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