Opinion ID: 222490
Heading Depth: 2
Heading Rank: 1

Heading: Exclusion of Draiman Declaration

Text: As part of their response to Dynegy's summary judgment motion, Multiut and Draiman submitted a seventeen-page declaration by Draiman. They submitted the declaration many months after discovery closed, but relied on it to prove the damages they allegedly suffered at Dynegy's hand. The district court declined to consider the declaration because Multiut failed to make timely disclosures [of its computation of damages] during discovery. It reasoned, Multiut has not provided any explanation for its failure to make earlier disclosures, and to allow it to make late disclosures now, after a lengthy discovery process, would prejudice Dynegy. Multiut and Draiman disagree with this reasoning. They contend that their failure to produce the Draiman declaration more expediently was harmless because the information it contained was otherwise made available to Dynegy. Rule 26(a)(1)(A)(iii) of the Federal Rules of Civil Procedure requires litigants to disclose to one another a computation of each category of damages claimed by the disclosing partywho must also make available . . . the documents or other evidentiary material . . . on which each computation is based, including materials bearing on the nature and extent of injuries suffered. Rule 26(e)(1) requires parties to supplement their initial disclosures as more information becomes available to them. If a party does not follow these rules, the party is not allowed to use that information . . . to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or was harmless. Fed.R.Civ.P. 37(c)(1). Whether a failure to comply with Rule 26(a) or (e) is substantially justified, harmless, or warrants sanctions is left to the broad discretion of the district court. David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir.2003); cf. Fed.R.Civ.P. 37(c)(1)(A)-(C) (listing sanctions courts may impose). [W]e review all discovery sanctions for abuse of discretion and will uphold a district court's decision so long as it could be considered reasonable. Collins v. Illinois, 554 F.3d 693, 696 (7th Cir.2009). Multiut and Draiman do not challenge the district court's conclusion that they violated Rule 26, nor do they contend that they were justified in doing so. They argue only that their violation should be excused because it was harmless: they assert that information relating to damages contained in the declaration was made available to Dynegy in light of the exhaustive documentation produced by Multiut during discovery and the extensive deposition testimony of Draiman and [expert] James Alerding on the subject of damages. This argument cannot carry the day logically (if the information contained in the declaration is already in the record, then there should be no problem with the district court's decision to exclude the declaration) or legally. Multiut and Draiman started off discovery on the right foot by providing Dynegy with rough estimates of the damages associated with their counterclaims in their original disclosures. At that time, they averred, As a result of Dynegy's breach of an agreement to supply gas at a fixed price, Multiut has sustained damages in an amount that Multiut believes exceeds $6 million. Multiut will supplement with a computation of these damages when they are ascertained through the course of continuing discovery. They made a similar statement with respect to their breach of confidentiality agreement counterclaim, for which they estimated at least $1 million in damages. But even after Dynegy filed several motions to compel and repeatedly sought (and occasionally obtained) sanctions, Multiut and Draiman failed to disclose how they arrived at those numbers. Even if we fully credit the defendants' contention that the numerical information in Draiman's declaration was duplicative of that already disclosed in spreadsheet form, nothing in the recordnot even Draiman's declarationshines light into the black box of their damages calculation process. A reasonable district court could and did conclude that exclusion of the declaration, which contained the only ballpark estimates of Multiut's lost profits and alleged credits due, was an appropriate sanction for the defendants' continued dilatory and opaque behavior. Without an idea of where the defendants' numbers were coming from, Dynegy was unable to investigate and raise arguments against the claimed damages; the district court did not err in concluding the omissions were not harmless.