District of Minnesota Orders Additional Expert Discovery and Sanctions Based on Information Not Produced During Discovery

The District of Minnesota, in Luminara Worldwide, LLC v. Liown Electronics Co. Ltd. et al., Case No. 14-3103 (Magistrate Judge Noel) (May 18, 2016), agreed that Plaintiff should have produced its manufacturing capacity data on which its damages expert relied for his lost profits analysis during discovery. The Court allowed Defendants to take further discovery and supplement their expert report. The Court declined to exclude the data because there was enough time before trial to complete the additional discovery. The Court denied Defendants' motion to strike the history of the technology at issue from the Plaintiff's report, leaving it for cross-examination.

In this case, Defendants moved to strike Plaintiff's expert report regarding damages because the damages expert presented theories based on evidence Plaintiff withheld during fact discovery.

For example, Defendants moved to strike sections from the damages report related to the history of flameless candle technology because the expert did not have knowledge or the technical background to provide such opinions. The Court rejected Defendants' argument noting that the history sections were clearly not the expert's opinion, but merely facts the expert learned. The Court noted:

Defendants are free to undercut Gorowsky's assumptions through their own damages expert and at trial. However, the fact that Gorowsky may lack the technical skills to opine on the development of flameless candle technology does not mean that he cannot rely on such information to render an opinion on damages. It is common for experts to rely on information outside of their field of expertise in rendering expert opinions.

(Slip op. at 3).

Defendants also took issue with the expert's reliance on a certain spreadsheet for his manufacturing capacity analysis as part of his lost profits evaluation. The expert analyzed the Panduit factors. For the third factor, manufacturing and marketing capacity, the expert "performed a comparative analysis of the combined manufacturing capacity of [Plaintiff's] contract manufacturers and [Plaintiff's] actual production demands but-for the alleged infringement of Defendants for the years 2012 through 2015. . . . [H]e "compared the maximum quantity of units that could be manufactured by [Plaintiff's] existing contract manufacturers to the combined quantity of units that were shipped by [Plaintiff] and [Defendants]." (Slip op. at 5). Plaintiff's expert reduced his analysis to a graph, relying on at least one spreadsheet with manufacturing capacity data. Defendants contended that (1) the spreadsheet should have been produced in response to written discovery, but was not produced until February 1, 2016; and (2) Plaintiff withheld the documents underlying the information in the capacity data spreadsheet. (Slip op. at 6).

The Court agreed stating:

After reviewing the record, the Court concludes that the capacity data that [Plaintiff] provided to Gorowsky should have been disclosed to Defendants during discovery. The information is directly relevant to damages, and Defendants' discovery requests were broad enough to cover this information. Although [Plaintiff] claims that no underlying data exists for the spreadsheet, the Court is unconvinced. The data must have originated somewhere, whether in concrete form or within the knowledge of a relevant witness. [Plaintiff] should therefore have informed Defendants of this information prior to February 1, 2016.

(Slip op. at 6).

The Court also agreed that sanctions were appropriate and awarded the following sanctions:

  1. Plaintiff must disclose all documents in its possession, custody, or control that support the data on manufacturing capacity in the spreadsheet, to the extent it exists;
  2. Plaintiff must produce a witness with knowledge of Plaintiff's manufacturing capacity for a 4-hour deposition;
  3. Defendants may file an amended expert report, if necessary; and
  4. Plaintiff must pay Defendants their reasonable expenses, including attorneys' fees expended in having to bring the motion.
(Slip op. at 7).

The Court rejected Defendants' request to exclude Plaintiff's reliance on the spreadsheet and the underlying information, and to strike that portion of the expert's lost profit analysis. The Court said such sanction was not warranted because the case had been consolidated with another case, which had not yet conducted expert discovery, served expert reports or taken expert depositions. Since "there [was] plenty of time before trial in the present action for Defendants to conduct the aforementioned discovery and supplement their expert report if necessary," the Court declined any further sanctions. (Slip op. at 7-8).