Source: https://docs.justia.com/cases/federal/district-courts/nevada/nvdce/2:2015cv02197/111677/132
Timestamp: 2018-07-23 00:35:27
Document Index: 532303181

Matched Legal Cases: ['art 88', 'art 88', 'art 95', 'art 96', 'arty 13', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 16', '§ 209', 'arty 26']

ORDER granting in part and denying in part 88 Motion in Limine for TDN Money Systems, Inc. v. Global Cash Access, Inc. :: Justia Dockets & Filings
Justia Dockets & Filings Ninth Circuit Nevada Nevada District Court TDN Money Systems, Inc. v. Global Cash Access, Inc. Filing 132
TDN Money Systems, Inc. v. Global Cash Access, Inc.
ORDER granting in part and denying in part 88 Motion in Limine.; denying 89 Motion in Limine.; denying 90 Motion in Limine.; denying 91 Motion in Limine.; denying 92 Motion in Limine.; denying 93 Motion in Limine.; denying 94 M otion in Limine.; granting in part and denying in part 95 Motion in Limine.; granting in part and denying in part 96 Motion in Limine.; granting 97 Motion in Limine.; denying 98 Motion in Limine. Signed by Judge James C. Mahan on 11/6/2017. (Copies have been distributed pursuant to the NEF - JM)
1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 *** 7 TDN MONEY SYSTEMS, INC., 8 Plaintiff(s), 9 10 Case No. 2:15-CV-2197 JCM (NJK) ORDER v. EVERI PAYMENTS, INC., 11 Defendant(s). 12 13 Presently before the court are six motions in limine filed by plaintiff TDN Money Systems, 14 Inc. (TDN). (ECF Nos. 88–93). Defendant Everi Payments, Inc., f/k/a Global Cash Access,1 Inc. 15 (Everi) responded. (ECF Nos. 106–11). 16 17 Also before the court are five motions in limine filed by Everi. (ECF Nos. 94–98). TDN responded. (ECF Nos. 101–05). 18 I. 19 This is a breach-of-contract dispute arising from a dealer-resale agreement. (ECF No. 17). 20 TDN sells ticket-redemption kiosks on behalf of manufacturers and retailers. (ECF No. 17). Everi 21 is a manufacturer of these kiosks. (ECF No. 17). Facts 22 TDN had a business relationship with Western Money Systems (WMS), a former Nevada 23 business that manufactured and sold ticket-redemption kiosks. (ECF No. 17 at 3). On August 4, 24 2009, prior to this litigation, Everi acquired WMS. (ECF No. 17 at 3). 25 WMS entered into a deal with TDN on January 1, 2006. (ECF No. 20). The deal appointed 26 TDN as an authorized non-exclusive reseller of WMS products. (ECF No. 20). TDN’s duties 27 28 James C. Mahan U.S. District Judge 1 This order refers to Global Cash Access, Inc. (GCA) and Everi Payments, Inc. together simply as “Everi,” for the purposes of clarity and uniformity, as they are one in the same company. 1 under the agreement were to make direct sales to end-users in its respective territory. (ECF No. 2 20). The agreement also allowed for WMS to retain its ability to sell directly to end-users. (ECF 3 No. 20). However, sales made by WMS to end-users in TDN’s territory entitle TDN to a 4 commission provided that TDN provided the end-user with certain follow-up services. (ECF No. 5 20). The commission would be “equal to the difference between the net sale amount and the 6 reseller price.” (ECF No. 20). 7 On April 21, 2010, Everi and TDN entered into a new contract, containing the same terms 8 as the previous contract. (ECF No. 17). On March 12, 2014, Everi sent a letter to TDN informing 9 TDN of its intent not to renew the agreement for a subsequent term. (ECF No. 37 at 5). In 10 response, on March 18, 2014, TDN sent a letter to Everi informing Everi of its intent to renew the 11 agreement for another year. (ECF No. 37 at 5). The terms of the contract allowed for automatic 12 renewal at the discretion of one party. (ECF No. 17). The contract stated that “if either party 13 delivers notice of its desire to renew the Agreement to the other party no less than 30 days prior to 14 the expiration of the current Term, the Agreement shall be automatically renewed for an additional 15 year.” (ECF No. 17). 16 On November 19, 2015, TDN filed the original complaint. (ECF No. 1). Later, on January 17 21, 2016, TDN filed an amended complaint alleging four causes of action: (1) intentional 18 interference with contractual relations; (2) intentional interference with prospective economic 19 advantage; (3) breach of contract; (4) breach of covenant of good faith and fair dealing; and (5) 20 special damages. (ECF No. 17). 21 On August 3, 2016, the court dismissed without prejudice TDN’s claims for (1) intentional 22 interference with contractual relations and (2) intentional interference with prospective economic 23 advantage. (ECF No. 53). 24 TDN moved for partial summary judgment, seeking a holding that § 16 of the parties’ 25 agreement allows one party to renew the agreement for an additional term over the other party’s 26 objection. (ECF No. 33). On January 3, 2017, the court granted TDN’s motion, holding the 27 following: 28 James C. Mahan U.S. District Judge [T]he contract clearly states that if either party gives notice of its desire to renew the agreement 30 days prior to the expiration of the current term, the agreement will -2- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 automatically renew for an additional term. . . . Therefore, the plain language of the contract states that the agreement is effectively perpetual. (ECF No. 70 at 6) (citing ECF No. 53 at 4). Everi argued in opposition to summary judgment that in any event, TDN waived its right to unilaterally renew the agreement, arguing that “TDN’s failure to send written notice in any year before 2014 means it forever lost any purported right . . . to ‘unilaterally renew’ the 2010 [a]greement over [Everi]’s termination.” (ECF No. 37 at 12). This court disagreed, holding that defendant failed to point to any term in the agreement or any evidence in support of its contention that failure to provide notice of intent to renew terminates the parties’ ability to unilaterally renew the agreement under § 16. (ECF No. 70 at 6). The court held that “§ 16 of the agreement allows one party to renew the agreement,” and granted partial summary judgment for TDN. Id. at 6–7. Now, the parties have filed several motions in limine to exclude certain evidence. II. Legal Standard “The court must decide any preliminary question about whether . . . evidence is admissible.” Fed. R. Evid. 104. Motions in limine are procedural mechanisms by which the court can make evidentiary rulings in advance of trial, often to preclude the use of unfairly prejudicial evidence. United States v. Heller, 551 F.3d 1108, 1111–12 (9th Cir. 2009); Brodit v. Cambra, 350 F.3d 985, 1004–05 (9th Cir. 2003). 18 “Although the Federal Rules of Evidence do not explicitly authorize in limine rulings, the 19 practice has developed pursuant to the district court’s inherent authority to manage the course of 20 21 22 23 24 25 26 trials.” Luce v. United States, 469 U.S. 38, 41 n.4 (1980). Motions in limine may be used to exclude or admit evidence in advance of trial. See Fed. R. Evid. 103; United States v. Williams, 939 F.2d 721, 723 (9th Cir. 1991) (affirming district court’s ruling in limine that prosecution could admit impeachment evidence under Federal Rule of Evidence 609). Judges have broad discretion when ruling on motions in limine. See Jenkins v. Chrysler Motors Corp., 316 F.3d 663, 664 (7th Cir. 2002); see also Trevino v. Gates, 99 F.3d 911, 922 (9th Cir. 1999) (“The district court has considerable latitude in performing a Rule 403 balancing test 27 and we will uphold its decision absent clear abuse of discretion.”). “[I]n limine rulings are not 28 binding on the trial judge [who] may always change his mind during the course of a trial.” Ohler James C. Mahan U.S. District Judge -3- 1 v. United States, 529 U.S. 753, 758 n.3 (2000); accord Luce, 469 U.S. at 41 (noting that in limine 2 rulings are always subject to change, especially if the evidence unfolds in an unanticipated 3 manner). 4 “Denial of a motion in limine does not necessarily mean that all evidence contemplated by 5 the motion will be admitted at trial. Denial merely means that without the context of trial, the 6 court is unable to determine whether the evidence in question should be excluded.” Conboy v. 7 Wynn Las Vegas, LLC, No. 2:11-cv-1649-JCM-CWH, 2013 WL 1701069, at *1 (D. Nev. Apr. 18, 8 2013). 9 10 III. Discussion a. TDN’s motion in limine 1 11 TDN’s motion in limine 1 seeks to preclude evidence contradicting the court’s summary 12 judgment order on the meaning of § 16 of the parties’ agreement. (ECF No. 88). Everi responded. 13 (ECF No. 106). TDN replied. (ECF No. 113). This motion is granted in part to the following 14 extent: evidence offered for the purpose of contradicting a prior holding of this court—i.e. for the 15 purpose of showing that this court’s ruling on partial summary judgment was wrong—is not 16 admissible because it is not relevant to the issues that remain outstanding for trial. Fed. R. Evid. 17 402. Further, such evidence is not probative and risks misleading the jury and confusing the issues. 18 Fed. R. Evid. 403. Specifically, this means that Everi is not permitted to offer parol evidence for 19 the purpose of showing that Everi’s interpretation of § 16 of the contract is correct (see, e.g., ECF 20 No. 106 at 2 ln. 20–23) and this court’s order on summary judgment is incorrect. The issue of the 21 meaning of this provision of the contract has been conclusively decided by this court and is not an 22 open question for trial. 23 However, this court will not preclude evidence offered for another, legitimate purpose just 24 because it may have a tendency to contradict the court’s prior ruling—such an order would be too 25 broad and unnecessary. This court will remedy any potential prejudice from the admission of such 26 evidence through jury instructions. 27 Finally, neither party’s counsel is permitted to argue to the jury that § 16 of the contract 28 means something other than what this court’s order on partial summary judgment determined. (See James C. Mahan U.S. District Judge -4- 1 ECF No. 70). Everi had the opportunity to dispute this interpretation of the contract during the 2 motion for summary judgment proceedings, and failed to make a convincing case at that time. 3 Therefore, the court foreclosed the issue from trial. Therefore, this motion is granted, in part, in 4 accordance with the foregoing. b. TDN’s motion in limine 2 5 6 TDN’s motion in limine 2 seeks to preclude evidence that TDN did not send renewal 7 notices in 2011, 2012, and 2013. (ECF No. 89). Everi responded. (ECF No. 107). This court has 8 already ruled that Everi’s argument for summary judgment—that TDN waived its right to renew 9 the contract by failing to send a letter of removal in prior years—is unpersuasive and unsupported. 10 (ECF No. 70 at 6). Everi has not pointed this court to any provision of the contract or any evidence 11 that shows that the failure to provide notice of intent to renew one year would terminate the 12 contract and a party’s rights under § 16 in a later year. Id. 13 That said, this is not the question for trial: the question of whether TDN’s purported 2014 14 renewal of the contract under § 16 was effectual depends on whether § 16 was still in effect at the 15 time TDN attempted to execute it. There are many ways parties might renew a contract, and here, 16 exercising § 16 of the contract is one of them. Whether the parties had somehow agreed, explicitly 17 or implicitly, to continue operating under the contract through March of 2014 determines whether 18 TDN had the right under § 16 to unilaterally extend the contract for an additional year thereafter. 19 Therefore, evidence of whether the contract was still in effect at the time that TDN 20 purported to unilaterally renew it will be admissible. This includes the evidence that TDN did not 21 send renewal letters under § 16 in 2011, 2012, and 2013 because—though not dispositive alone, 22 as there might be other ways that the parties agreed to renew the contract—this fact would tend to 23 eliminate one possible basis for claiming that it was still in effect. Thus, at this stage in the 24 proceedings, this evidence appears relevant to a material issue. Fed. R. Evid. 401. TDN’s motion 25 in limine 2 is denied. 26 ... 27 ... 28 ... James C. Mahan U.S. District Judge -5- c. TDN’s motion in limine 3 1 2 TDN’s motion in limine 3 seeks to preclude parol evidence that the contract allowed Everi 3 to compete with TDN. (ECF No. 90). Everi responded. (ECF No. 108). TDN replied. (ECF No. 4 113). 5 In a nutshell, TDN argues that Everi’s witnesses cannot testify regarding the meaning of 6 the contract because they were not witnesses to the writing and formation of the original written 7 agreement. This is not a valid basis, in itself, to deem their testimony inadmissible. 8 First, even if these witnesses did not observe or participate in the formation of the original 9 written contract, they may have been present and have first-hand knowledge of the intent of the 10 parties at the time of one of the several renewals of the contract. If any of the renewals of the 11 contract occurred as the result of a mutual agreement between the parties (as opposed to a unilateral 12 renewal under § 16), then the mutual understanding of the parties at the time of the renewal would 13 govern the meaning of the new, updated contract. 14 Second, under the circumstances in which a court may consider parol evidence, evidence 15 by witnesses present at the time of contract formation is not the only form of parol evidence a court 16 may consider: “[B]oth integrated and unintegrated agreements are to be read in the light of the 17 circumstances and may be explained or supplemented by operative usages of trade, by the course 18 of dealing between the parties, and by the course of performance of the agreement.” Restatement 19 (Second) of Contracts § 209 cmt. a. (1981). TDN has not argued that the court cannot consider 20 parol evidence here; indeed, TDN seeks to present parol evidence of the intent of the parties. (See 21 ECF No. 108 at 1). To the extent that Everi’s witnesses will testify to a valid form of parol 22 evidence, such as the course of dealings of the parties after entering the contract, the evidence is 23 relevant and thus admissible. Accordingly, TDN’s motion in limine 3 is denied. 24 d. TDN’s motion in limine 4 25 TDN’s motion in limine 4 seeks to preclude defendant’s rebuttal expert from offering an 26 alternative calculation of damages because the expert’s initial report does not provide any such 27 alternative calculation. (ECF No. 91). Everi responded. (ECF No. 109). 28 James C. Mahan U.S. District Judge -6- 1 TDN argues that Everi’s rebuttal expert intends to testify to a specific alternative damages 2 calculation (one substantially less than TDN’s damages calculation) that did not appear in the 3 rebuttal expert’s original report, but only in a later supplemental report. The original rebuttal report 4 contained only critiques of TDN’s expert report. Everi counters that the supplemental calculation 5 of damages provided by its rebuttal expert was necessitated by late-filed supplemental reports by 6 TDN’s expert. Everi asks the court to refrain from entering any pretrial order that limits the scope 7 of its rebuttal expert’s testimony. 8 A party seeking to introduce expert testimony at trial must disclose to the opposing party a 9 written report that includes “a complete statement of all opinions the witness will express and the 10 basis and reasons for them.” Fed. R. Civ. P. 26(a)(2)(B). Failure to comply with that rule may 11 preclude the party from, “us[ing] that witness or relevant expert information to supply evidence 12 on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless.” 13 Esposito v. Home Depot U.S.A., Inc., 590 F.3d 72, 77 (1st Cir.2009) (quoting Fed. R. Civ. P. 14 37(c)(1)) (internal quotation marks omitted). 15 Caselaw regarding the exact extent to which an expert report limits the scope of his or her 16 trial testimony may appear, on a superficial level, to conflict. Rule 26(a)(2)(B) requires the expert 17 report to contain a “complete statement of all opinions the witness will express.” And the Federal 18 Circuit has held that “[a]n expert witness may not testify to subject matter beyond the scope of the 19 witness's expert report unless the failure to include that information in the report was ‘substantially 20 justified or harmless.’” Rembrandt Vision Techs., L.P. v. Johnson & Johnson Vision Care, Inc., 21 725 F.3d 1377, 1381 (Fed. Cir. 2013) (citing Fed. R. Civ. P. 37(c)(1)). But taking this rule to the 22 extreme—concluding that an expert cannot testify to anything not stated in the expert report— 23 would produce an absurd result unintended by the drafters of the rule. 24 Instead, courts have explained that the rule “does not limit an expert’s testimony simply to 25 reading his report . . . . The rule contemplates that the expert will supplement, elaborate upon, 26 [and] explain . . . his report” in his oral testimony. Muldrow ex rel. Estate of Muldrow v. ReDirect, 27 Inc., 493 F.3d 160, 167 (D.C. Cir. 2007) (citing Thompson v. Doance Pet Care Co., 470 F.3d 1201, 28 1203 (6th Cir. 2006)). “The expert report, then, is not the end of the road, but a means of providing James C. Mahan U.S. District Judge -7- 1 adequate notice to the other side to enable it to challenge the expert’s opinions and prepare to put 2 on expert testimony of its own.” Heller v. D.C., 952 F. Supp. 2d 133, 139 (D.D.C. 2013). Indeed, 3 one court has observed that “[t]estimony of an expert on matters within the expert’s expertise but 4 outside of the expert’s report is not only permissible at trial, but the exclusion of such testimony 5 may be reversible error . . . . An expert may testify beyond the scope of his report absent surprise 6 or bad faith.” Bowersfield v. Suzuki Motor Corp., 151 F. Supp. 2d 625, 631 (E.D. Pa. 2001) 7 (quoting Fritz v. Consolidated Rail Corp., 1992 WL 96285, *3 (E.D. Pa. Apr.23, 1992) (Hutton, 8 J.); citing DeMarines v. KLM Royal Dutch Airlines, 580 F.2d 1193 (3d Cir. 1978)). 9 Further, underlying the Federal Rules of Civil Procedure is a “strong policy” favoring 10 resolving cases on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). Excluding 11 expert testimony as a sanction for not including this exact information in the original expert report 12 furthers the policy of resolving cases on the merits only if the new information genuinely surprised 13 the opposing party and has deprived the opposing party of an opportunity to examine this new 14 information and prepare a defense, if any, to its validity. 15 Here, this is not a situation of new expert testimony being heard for the first time at trial, 16 to everyone’s surprise. Rather, TDN has had notice of the rebuttal witness’s alternative calculation 17 of damages for months—it appeared in a supplemental expert report—and has had a more than 18 adequate opportunity to prepare a trial defense to it. Any issue created by the timing of the rebuttal 19 expert’s disclosure of this calculation is therefore harmless. Further, the timing of the disclosure 20 of the rebuttal witness’s computation of damages is substantially justified: it was produced in 21 response to numerous supplemental expert reports. Indeed, TDN filed another supplemental report 22 after the alternative calculation of damages arose, so it has had a chance to grapple with the new 23 information and prepare for trial. 24 Additionally, the rules regarding the timing and contents of supplemental reports do not 25 preclude this testimony from trial. After submitting a complete, initial expert report, a party 26 maintains a duty to supplement the report that “extends to both information included in the report 27 and to information given during the expert’s deposition.” Fed. R. Civ. P. 26(e)(2); Colony Ins. Co. 28 v. Colorado Cas. Ins. Co., No. 2:12-cv-01727-APG-NJK, 2014 WL 12646048, at *1 (D. Nev. May James C. Mahan U.S. District Judge -8- 1 28, 2014). Still, “supplementation is not appropriate simply ‘because the expert did an inadequate 2 or incomplete preparation.’” Allstate Ins. Co. v. Balle, No. 2:10-CV-02205-APG, 2013 WL 3 5797848, at *3 (D. Nev. Oct. 28, 2013) (quoting Rojas v. Marko Zaninovich, Inc., No. 1:09-cv- 4 00705-AWI-JLT, 2011 WL 4375297, at *6 (E.D. Cal. Sept. 19, 2011)). 5 7 A party may not use a supplemental report to disclose information that should have been disclosed in the initial expert report, thereby circumventing the requirement for a timely and complete expert witness report. Rather, supplemental under the Rule means correcting inaccuracies, or filling the interstices of an incomplete report based on information that was not available at the time of the initial disclosure. 8 Colony Ins. Co., 2014 WL 12646048, at *1 (quoting Allstate Insurance, 2013 WL 5797848, at *2). 9 The supplemental report here filled the interstices of an incomplete report based on information 10 that was not available at the time of the initial disclosure—namely, it responded to TDN’s 11 supplemental reports. 6 12 Regarding the timing of the supplemental reports, Rule 26(e)(2) requires supplementation 13 of expert reports to occur “by the time the party’s pretrial disclosures under Rule 26(a)(3) are due,” 14 which is 30 days before trial unless otherwise ordered by the Court. Id. at *2. “Generally speaking, 15 supplementation of an expert report is proper where it is based on new information obtained after 16 the expert disclosure deadline and the supplemental report was served before the time for pretrial 17 disclosures.” Id. 18 This court entered a scheduling order on January 21, 2016. (ECF No. 19). It never altered 19 this order or entered a new one. This order set the following deadlines: expert disclosures were 20 due by May 2, 2016; rebuttal expert disclosures were due by June 1, 2016; and the discovery cut- 21 off was set for July 1, 2016. 22 There have been numerous supplemental reports submitted by both parties. As noted, 23 although the original expert reports were due by May 2, 2016 (and rebuttal report by June 1, 2016), 24 the supplemental reports were proper as new information arose or inaccuracies were discovered 25 with the prior reports, as long as the supplemental reports were submitted more than a month before 26 trial. See Colony Ins. Co., 2014 WL 12646048, at *1. The trial date in this case has moved 27 numerous times, but trial is now set for December 4, 2017. (ECF No. 131). 28 James C. Mahan U.S. District Judge -9- 1 Regardless of the earlier trial dates, all of the supplemental expert reports have been served 2 much more than 30 days before the currently-set trial date, including Everi’s expert report 3 containing the alternative calculation of damages. Thus, this court finds that there is no significant 4 issue of surprise or prejudice caused to the other parties by the timing of these supplemental reports 5 (or any issue that might have existed has been made harmless by the extensions of the trial date). 6 Accordingly, the court will not strike any testimony based on the purpose or timing of the 7 supplemental reports. 8 9 This motion is denied. e. TDN’s motion in limine 5 10 TDN’s motion in limine 5 seeks to preclude “evidence that TDN breached the agreement.” 11 (ECF No. 92). Everi responded. (ECF No. 110). This motion is too broad to grant—it does not 12 specify exactly which evidence it wants excluded, and seeks an overbroad order from the court. 13 See Leonard v. Stemtech Health Sciences, Inc. 981 F. Supp. 2d 273 (D. Del. 2013) (“the court may 14 deny a motion in limine when it lacks the necessary specificity with respect to the evidence to be 15 excluded.”). Therefore, this motion cannot be granted now. If Everi attempts to introduce 16 evidence at trial that it has failed to disclose during discovery, the issue can be readdressed then. 17 TDN also argues that Everi failed to plead material breach as an affirmative defense in its 18 answer to the complaint, and therefore cannot pursue that theory of defense at trial. (ECF No. 92). 19 But Everi alleged the following affirmative defense: “13. TDN failed to perform all duties and 20 obligations on its part of any agreement, oral or written, and such acts or omissions bar TDN’s 21 recovery herein.” Though broadly worded, this is sufficient to put TDN on notice that Everi 22 pleaded a material breach affirmative defense. 23 Therefore, this motion is denied. 24 f. TDN’s motion in limine 6 25 TDN’s motion in limine 6 seeks an order “permitting TDN to introduce the court’s ruling 26 that the agreement was perpetual.” (ECF No. 93). Everi responded. (ECF No. 111). This motion 27 is denied. Instead, the court will provide the jury with the necessary information about the court’s 28 prior rulings controlling this case in the form of jury instructions. James C. Mahan U.S. District Judge - 10 - g. Everi’s motion in limine 1 1 2 Everi’s motion in limine 1 seeks to exclude any evidence or arguments of punitive 3 damages. (ECF No. 94). TDN responded. (ECF No. 101). This motion is denied—until further 4 information about this case is revealed at trial, the court is unable to rule on punitive damages. 5 The court already ruled that a genuine issue of material fact on this issue remains for trial. (See 6 ECF No. 70). Therefore, the motion is denied. 7 h. Everi’s motion in limine 2 Everi’s motion in limine 2 seeks to exclude TDN’s proposed trial exhibits numbers 76A– 8 9 GG. (ECF No. 95). TDN responded. (ECF No. 102). 10 The documents at issue are documents TDN supplied to its expert witness for him to use 11 in preparing his expert report. (ECF No. 95 at 4). The documents were produced for the first time 12 over a month after the close of discovery while the parties were preparing their pretrial order. Id. 13 Also, the documents contained handwritten annotations, which Everi alleges are annotations by 14 TDN’s CEO meant for TDN’s expert. Id. Discovery deadline 15 The close of discovery in this case was July 1, 2016. (ECF No. 19). TDN disclosed these 16 17 documents for the first time on August 12, 2016. (ECF No. 95-8). 18 “The sanction to preclude the party that failed to disclose potential witnesses or evidence 19 is meant to prevent unfair play between parties, i.e. litigation by surprise.” Igbinovia v. Catholic 20 Healthcare W., No. 2:07-CV-01170-GMN, 2010 WL 5070881, at *5 (D. Nev. Dec. 7, 2010), on 21 reconsideration in part, No. 2:07-CV-01170-GMN, 2011 WL 3424591 (D. Nev. Aug. 4, 2011). 22 However, “Rule 37(c) allows an untimely disclosure if the disclosure is harmless.” Id. 23 Here, the late disclosure was harmless. It is now over a year since the late disclosure and 24 Everi has therefore had sufficient notice of the late-disclosed trial exhibits. The documents will 25 not be excluded based on Rule 37. See Fed. R. Civ. P. 37(c)(1) (“. . . unless the failure was 26 substantially justified or is hamrless.”). 27 ... 28 ... James C. Mahan U.S. District Judge - 11 - Handwritten annotations and other hearsay 1 2 Many of the proposed exhibits contain handwritten annotations and typed documents 3 apparently created for the purpose of litigation. Everi argues that these documents thus contain 4 inadmissible hearsay. (ECF No. 95 at 5) (citing Fed. R. Evid. 802). TDN responded in opposition 5 that it has already accommodated Everi’s concern during the parties’ meet and confer, agreeing to 6 redact the handwritten annotations or use clean copies of the exhibits. (ECF No. 102 at 2). TDN 7 states, “Accordingly, this motion should be moot as to every exhibit except 76A, I, K, and M. For 8 those few remaining, [Everi] specifically demanded that TDN produce them.” Id. 9 Thus, it appears that the parties have already reached a resolution of the admissibility of 10 most of the documents challenged by this motion, except for the few noted by TDN above. TDN 11 has agreed to redact the handwritten portions of the exhibits or use clean copies. This court agrees 12 that TDN must do this: TDN has provided no argument as to how these handwritten notes are 13 admissible, and thus, they appear to be inadmissible hearsay and must be redacted from the 14 exhibits. 15 The fact that Everi demanded certain documents be produced in discovery does not deem 16 them admissible at trial because the standard for discoverable evidence is broader than the standard 17 for admissible evidence. A document is discoverable if it is relevant, nonprivileged, and the 18 information sought is “proportional to the needs of the case . . . .” Fed. R. Civ. P. 26(b)(1). 19 “Information within this scope of discovery need not be admissible in evidence to be 20 discoverable.” Id. Therefore, documents that constitute inadmissible hearsay will not be admitted 21 just because Everi “specifically demanded that TDN produce them.” (ECF No. 102). They must 22 have basis for admissibility independent of Everi’s discovery demands. 23 Finally, this court does not have enough information from the motion and response to rule 24 definitively on the remaining issues raised in this motion. Of course, documents produced solely 25 for the purpose of litigation are inadmissible because they are hearsay and do not constitute 26 regularly kept business records. See Fed. R. Evid. 803(6). If this issue arises with any evidence a 27 party attempts to introduce at trial, the court will rule on the issue then when it has more 28 information. James C. Mahan U.S. District Judge - 12 - 1 The motion is granted in part and denied in part in accordance with the foregoing. i. Everi’s motion in limine 3 2 3 Everi’s motion in limine 3 seeks to exclude the court’s prior motion to dismiss order and 4 summary judgment orders. (ECF No. 96). TDN responded. (ECF No. 103). This motion is 5 granted in part and denied in part as follows: the court will not admit to the jury copies of its prior 6 orders. Rather, the court will instruct the jury on this issues that have been already resolved in its 7 prior orders in the form of jury instructions. j. Everi’s motion in limine 4 8 9 Everi’s motion in limine 4 seeks to exclude TDN’s purported attorneys’ fees and costs at 10 the time of trial. (ECF No. 97). TDN responded. (ECF No. 104). This motion is granted to the 11 following extent: evidence regarding attorneys’ fees and costs is an issue to be handled post-trial, 12 after a determination of liability. Fed. R. Civ. P. 54(d)(2). 13 Whether TDN would have been entitled to prove attorney fees as an element of special 14 damages for its breach of covenant of good faith and fair dealing claim, see Fed. R. Civ. P. 54(d)(2) 15 (allowing evidence of attorney fees and costs at trial if “the substantive law requires those fees to 16 be proved at trial as an element of damages”), it has waived the right to do so here because it failed 17 to disclose the evidence during the discovery period.2 Fed. R. Civ. P. 37. 18 Therefore, any attorney fees it seeks must be proven through the regular course of a post- 19 trial motion, with the relevant evidence in support attached then. Evidence of fees and costs will 20 not be admitted at trial. The motion is granted. 21 k. Everi’s motion in limine 5 22 Everi’s motion in limine 5 seeks to exclude testimony of Charles Lunden, TDN’s expert 23 witness, or exclude his purportedly improper supplemental reports and any testimony based upon 24 them at the time of trial. (ECF No. 98). TDN responded. (ECF No. 105). 25 This motion in limine raises two primary issues: whether Lunden’s expert opinion meets 26 the standard for expert testimony under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 583 27 2 28 James C. Mahan U.S. District Judge TDN argues, among other things, that it did not need to disclose this evidence during discovery because it is confidential. Regardless, it does not follow that TDN is entitled to surprise Everi with this information for the first time at trial after withholding it during discovery. - 13 - 1 (1993), and whether the timing of Lunden’s supplemental reports violated the rules of civil 2 procedure. This order addresses each, but in the reverse order. 3 Supplemental expert reports 4 After submitting a complete, initial expert report, a party maintains a duty to supplement 5 the report that “extends to both information included in the report and to information given during 6 the expert’s deposition.” Fed. R. Civ. P. 26(e)(2); Colony Ins. Co. v. Colorado Cas. Ins. Co., No. 7 2:12-cv-01727-APG-NJK, 2014 WL 12646048, at *1 (D. Nev. May 28, 2014). 8 “supplementation is not appropriate simply ‘because the expert did an inadequate or incomplete 9 preparation.’” Allstate Ins. Co. v. Balle, No. 2:10-CV-02205-APG, 2013 WL 5797848, at *3 (D. 10 Nev. Oct. 28, 2013) (quoting Rojas v. Marko Zaninovich, Inc., No. 1:09-cv-00705-AWI-JLT, 2011 11 WL 4375297, at *6 (E.D. Cal. Sept. 19, 2011)). 12 Still, 14 A party may not use a supplemental report to disclose information that should have been disclosed in the initial expert report, thereby circumventing the requirement for a timely and complete expert witness report. Rather, supplemental under the Rule means correcting inaccuracies, or filling the interstices of an incomplete report based on information that was not available at the time of the initial disclosure. 15 Colony Ins. Co., 2014 WL 12646048, at *1 (quoting Allstate Insurance, 2013 WL 5797848, at *2). 16 The supplemental reports here primarily corrected inaccuracies or filled the interstices of an 17 incomplete report based on information that was not available at the time of the initial disclosure, 18 rather than simply disclosing information that should have been disclosed in the first disclosure. 13 19 Regarding the timing of the supplemental reports, Rule 26(e)(2) requires supplementation 20 of expert reports to occur “by the time the party’s pretrial disclosures under Rule 26(a)(3) are due,” 21 which is 30 days before trial unless otherwise ordered by the Court. Id. at *2. “Generally speaking, 22 supplementation of an expert report is proper where it is based on new information obtained after 23 the expert disclosure deadline and the supplemental report was served before the time for pretrial 24 disclosures.” Id. 25 This court entered a scheduling order on January 21, 2016. (ECF No. 19). It never altered 26 this order or entered a new one. This order set the following deadlines: expert disclosures were 27 due by May 2, 2016; rebuttal expert disclosures were due by June 1, 2016; and the discovery cut- 28 James C. Mahan U.S. District Judge - 14 - 1 off was set for July 1, 2016. The trial date in this case has moved numerous times, but trial is now 2 set for December 4, 2017. (ECF No. 131). 3 There have been numerous supplemental reports submitted by both parties. As noted, 4 although the original expert reports were due by May 2, 2016 (and rebuttal report by June 1, 2016), 5 the supplemental reports were proper as new information arose or inaccuracies were discovered 6 with the prior reports, as long as the supplemental reports were submitted more than a month before 7 trial. See Colony Ins. Co., 2014 WL 12646048, at *1. 8 All of the expert reports were served much more than 30 days before the currently-set trial 9 date. Thus, this court finds that there is no significant issue of surprise or prejudice caused to the 10 other parties by the timing of these reports. Accordingly, the court will not strike any testimony 11 based on the purpose or timing of the supplemental reports.3 Daubert expert-witness standard 12 13 In considering whether TDN’s expert testimony will meet the standards of Daubert, the 14 court will consider the supplemental expert reports as well. Federal Rule of Evidence 702 controls 15 the court’s determination of whether to strike plaintiff’s expert witness testimony: 16 17 A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; 18 19 (b) the testimony is based on sufficient facts or data; 20 (c) the testimony is the product of reliable principles and methods; and 21 22 (d) the expert has reliably applied the principles and methods to the facts of the case. 23 The central case interpreting FRE 702 is Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 24 579 (1993). “Daubert’s general holding—setting forth the trial judge’s general ‘gatekeeping’ 25 obligation—applies not only to testimony based on ‘scientific’ knowledge, but also to testimony 26 3 27 28 James C. Mahan U.S. District Judge Everi does not explicitly request the court to strike the expert testimony based on the lack of proper service of the original expert report, though it mentions that it was not properly served. In any event, the court notes that by Everi’s own admission, it has actual notice and possession of the original expert report and has been aware of it and has relied upon it for over a year now. Therefore, this court would not exclude this testimony based on lack of service. - 15 - 1 based on ‘technical’ and ‘other specialized’ knowledge.” Kumho Tire Co. v. Carmichael, 526 U.S. 2 137, 141 (1999). This “gatekeeping obligation” requires “that all admitted expert testimony is 3 both relevant and reliable.” 4 2017). Expert testimony must be relevant and reliable, and it must “relate to scientific, technical, 5 or other specialized knowledge, which does not include unsupported speculation and subjective 6 beliefs.” Guidroz–Brault v. Missouri Pac. R.R. Co., 254 F.3d 825, 829 (9th Cir. 2001). Wendell v. GlaxoSmithKline LLC, 858 F.3d 1227, 1232 (9th Cir. 7 Exclusion of expert testimony is proper only when such testimony is irrelevant or 8 unreliable because “[v]igorous cross-examination, presentation of contrary evidence, and careful 9 instruction on the burden of proof are the traditional and appropriate means of attacking shaky but 10 admissible evidence.” Daubert, 509 U.S. at 596 (citing Rock v. Arkansas, 483 U.S. 44, 61 (1987)). 11 Expert testimony must be relevant to, and fit the facts of, the instant case. See Daubert, 12 509 U.S. at 591. Expert testimony relying on hypothetical, unrealistic business success is often 13 ruled inadmissible, because “their hypothetical but for calculations usually rely on unrealistic ex 14 ante assumptions about the business environment.” Rossi v. Standard Roofing, Inc., 156 F.3d 452, 15 485 (3d Cir. 1998). 16 The Eighth Circuit ruled that expert testimony should not have been admitted that “did not 17 incorporate all aspects of the economic reality of the stern drive engine market.” Concord Boat 18 Corp. v. Brunswick Corp., 207 F.3d 1039, 1057 (8th Cir. 2000). The court held that the 19 deficiencies in the testimony formed the foundation of the expert opinion, and thus rendered the 20 expert’s conclusion “mere speculation.” Id. (citing Virgin Atlantic Airways Ltd. v. British Airways 21 PLC, 69 F. Supp. 2d 571, 580 (S.D.N.Y. 1999). 22 “Expert testimony is useful as a guide to interpreting market facts, but it is not a substitute 23 for them.” Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 242 (1993); 24 see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 594 n.19 (1986) (“[I]n 25 our view, the expert opinion evidence of [hypothetical] below-cost pricing has little probative 26 value in comparison with the economic factors . . . that suggest that such conduct is irrational.”). 27 Here, the parties do not dispute whether this expert is qualified or whether under “the 28 expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand James C. Mahan U.S. District Judge - 16 - 1 the evidence or to determine a fact in issue.” Fed. R. Evid. 702(a). Rather, they dispute his 2 methodology, the assumptions he applied in drawing his conclusions, and the general reliability 3 and relevance of his conclusions. See Fed. R. Evid. 702(b)–(d). 4 Everi’s primary complaint about TDN’s expert’s methodology is that his calculations 5 apparently rely on a hypothetical alternative universe—a “but for world,” in his words—in which 6 the expert assumed that TDN would have and would continue to enjoy unprecedented profits, as 7 opposed to looking at actual profit and sales figures during the relevant time period. Everi argues 8 that the expert’s opinion does not rely upon any evidence or data to support his assumptions, but, 9 instead, his assumptions are based solely upon the self-interested opinions of TDN’s CEO that 10 “but for” Everi’s purported “wrongful conduct,” TDN would have been successful in selling kiosks 11 and services agreements to nearly every casino in the Northeast United States every three years 12 without any competition in perpetuity. (ECF No. 98 at 13). 13 Everi points out, among other problems, that TDN’s expert opines that TDN would have 14 enjoyed profits in excess of $800,000 every year moving forward, when historically TDN’s profits 15 were only one or two hundred thousand a year, yet the expert offers no evidentiary basis for this 16 assumed leap in success other than the say-so of the CEO. Id. at 13–14. Therefore, Everi argues, 17 “[t]here is simply ‘too great an analytical gap between the data and the opinion proffered’ by 18 [TDN’s expert] to be admissible.” Id. at 13 (quoting General Elec. v. Joinder, 522 U.S. 136, 146 19 (1997)). 20 TDN replies that the difference between its calculations and Everi’s calculations is that 21 TDN’s projected profits were based on gross profits, minus saved costs caused by the breach, 22 which is the relevant figure for the purposes of calculating damages in Nevada. (ECF No. 105) 23 (citing Covington Bros. v. Valley Plastering, 566 P.2d 814 (Nev. 1977)). 24 25 TDN’s expert testimony is divisible into two basic categories: the expert’s calculation of past damages and his calculation of future damages. 26 For the past damages calculation, rather than rely on actual sales figures and calculate lost 27 commission based on the formula for commission found in the parties’ contract, TDN calculated 28 hypothetical sales it would have made but for Everi’s alleged wrongful interference in its market— James C. Mahan U.S. District Judge - 17 - 1 assuming TDN was able to sell in the contractual territory without competition from Everi. The 2 parties’ dispute whether Everi’s direct sales to TDN’s purported clients constituted a breach of the 3 covenant of good faith and fair dealing. As this remains a disputed fact, so does the amount of 4 sales that TDN might have enjoyed had Everi not done so. And predicting what sales TDN might 5 have enjoyed had Everi not directly competed with TDN will inevitably involve some degree of 6 reliance on assumptions and hypotheticals, though these assumptions and hypotheticals must be 7 founded upon a reliable methodology and evidentiary basis to be sufficient for submission to the 8 jury. Further, TDN’s expert reports—especially the supplemental reports—show that the expert 9 relied on more evidence than simply the word of interested parties to make his calculations. 10 For TDN’s expert’s future-damages calculation, the parties’ core of disagreement seems to 11 primarily rest on whether the proper calculation of damages is based on gross or net profits, and 12 whether to account for Everi’s purported wrongful interference with TDN’s business, rather than 13 there being a problem with the expert’s professional opinion and methodology itself. Further, it 14 remains an issue for trial whether Everi breached the implied covenant of good faith and fair 15 dealing in targeting TDN’s clients, and if so, how much future lost profit resulted from this breach. 16 In this case, the court is confident that any issues with the expert testimony’s reliability and 17 relevance, if any, will be adequately debunked by “[v]igorous cross-examination, presentation of 18 contrary evidence, and careful instruction on the burden of proof,” as these are the “traditional and 19 appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596 (citing 20 Rock v. Arkansas, 483 U.S. 44, 61 (1987)). Accordingly, this testimony will be admitted, subject 21 to changed circumstances at trial. 22 The motion to exclude this expert’s testimony is denied. 23 IV. 24 Accordingly, 25 IT IS HEREBY ORDERED that TDN’s motion in limine 1 (ECF No. 88) is GRANTED 26 Conclusion in part, in accordance with the foregoing. 27 IT IS FURTHER ORDERED that TDN’s motion in limine 2 (ECF No. 89) is DENIED. 28 IT IS FURTHER ORDERED that TDN’s motion in limine 3 (ECF No. 90) is DENIED. James C. Mahan U.S. District Judge - 18 - 1 IT IS FURTHER ORDERED that TDN’s motion in limine 4 (ECF No. 91) is DENIED. 2 IT IS FURTHER ORDERED that TDN’s motion in limine 5 (ECF No. 92) is DENIED. 3 IT IS FURTHER ORDERED that TDN’s motion in limine 6 (ECF No. 93) is DENIED. 4 IT IS FURTHER ORDERED that Everi’s motion in limine 1 (ECF No. 94) is DENIED. 5 IT IS FURTHER ORDERED that Everi’s motion in limine 2 (ECF No. 95) is GRANTED 6 7 8 9 in part and DENIED in part in accordance with the foregoing. IT IS FURTHER ORDERED that Everi’s motion in limine 3 (ECF No. 96) is GRANTED in part and DENIED in part in accordance with the foregoing. IT IS FURTHER ORDERED that Everi’s motion in limine 4 (ECF No. 97) is GRANTED. 10 IT IS FURTHER ORDERED that Everi’s motion in limine 5 (ECF No. 98) is DENIED. 11 DATED November 6, 2017. 12 13 __________________________________________ UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 James C. Mahan U.S. District Judge - 19 -