Shore v. Brown, No. 1:2007cv01160 - Document 96 (E.D. Cal. 2009)
Court Description: MEMORANDUM DECISION re Defendant United States of America's Motion to Strike Expert Disclosure of Dennis Bean, signed by Judge Oliver W. Wanger on 10/9/09. (Verduzco, M)
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1 2 3 UNITED STATES DISTRICT COURT 4 EASTERN DISTRICT OF CALIFORNIA 5 6 7 WILMA SHORE, 8 1:07-CV-01160 OWW SMS Plaintiff, MEMORANDUM DECISION RE DEFENDANT UNITED STATES OF AMERICA S MOTION TO STRIKE EXPERT DISCLOSURE OF DENNIS BEAN (Doc. 48.) 9 v. 10 11 12 13 KEVIN M. BROWN, ACTING COMMISSIONER OF INTERNAL REVENUE SERVICE OF UNITED STATES OF AMERICA, and DOES 1 through 10 inclusive 14 Defendant. 15 16 UNITED STATES OF AMERICA, Counterclaimant, 17 v. 18 19 WILMA SHORE, Counterclaim Defendant. 20 21 22 AND GREGORY SHORE and BRENDA O. REYNOLDS 23 Additional Counterclaim Defendants. 24 25 26 /// 27 /// 28 /// 1 I. INTRODUCTION. 1 2 Before the court for decision is the United States Motion to 3 Strike the Expert Disclosure of Mr. Dennis Bean, filed on June 5, 4 2009. 5 which the United States has replied. (Doc. 48.) Plaintiff Wilma Shore has filed opposition, to (Docs. 68, 71.) 6 II. BACKGROUND. 7 8 9 Dennis Bean is an expert witness for Plaintiff. Mr. Bean is a Certified Public Accountant hired by Mrs. Shore to opine on her 10 culpability under 26 U.S.C. 6672. Mr. Bean also intends to offer 11 opinions concerning internal policies and procedures at the IRS. 12 On April 16, 2009, pursuant to a modified scheduling order, 13 the deadline for all expert disclosures was extended to May 6, 14 2009. (Doc. 47.) 15 rebuttal 16 deadline to June 29, 2009. 17 The order also extended the deadline for expert witnesses to June 8, 2009 and the expert discovery The trial date is November 3, 2009. On May 15, 2009, Plaintiff identified Dennis Bean as her 18 expert. However, Plaintiff s disclosure did not, as required by 19 Rule 26 of the Federal Rules of Civil Procedure, include Mr. Bean s 20 report nor did it include his proposed opinions. 21 On June 5, 2009, the United States moved to strike Plaintiff s 22 expert disclosure of Mr. Bean and to preclude Mr. Bean from 23 presenting trial testimony. The United States provides two grounds 24 to 25 Plaintiff s 26 disclosure did not include Mr. Bean s report or his opinions, i.e., 27 the necessary information under Rule 26(a)(2) of Federal Rules of 28 Civil Procedure. support its motion. disclosure First, was the untimely. government Second, argues the that untimely According to the government, because Mr. Bean s 2 1 designation was incomplete and untimely, it was not able to obtain 2 a rebuttal expert by the expert deadlines. 3 that Mr. Bean s designation was prejudicial. 4 The government asserts On August 10, 2009, counsel for Plaintiff served on the United 5 States an unsigned report of Dennis Bean. 6 email and labeled Draft. 7 The report was sent by On August 10, 2009, Plaintiff opposed the government s motion 8 to strike. 9 designation was a mere nine days late and, in any event, Mrs. Shore 10 stipulates to allowing the government to disclose an expert any 11 time up to trial and will make Mr. Bean available to the government 12 for deposition by phone, internet, or in person. 13 (Doc. 68.) Plaintiff claims that the Mr. Bean s (Id.) The United States filed its reply on August 13, 2009. (Doc. 14 71.) 15 concerning Plaintiff s incomplete and untimely expert designation: 16 17 18 19 20 21 22 23 24 25 26 27 28 In its reply, the government elaborated on its frustration [t]he report did not follow within days or even weeks after the Plaintiff identified the expert. The United States would not quibble over small or inconsequential variations from the scheduling order in this case. But Plaintiff has unfairly shortened the United States time to prepare for trial by a large margin. The Court s deadlines afforded the parties six months to prepare for expert testimony at trial. By first providing an unsigned draft report less than three months prior to trial, long after the close of expert discovery, after the filing of a motion for summary judgment by the United States that addressed the known issues in the case, and a mere week prior to the hearing on the motion to strike Mr. Bean, the Plaintiff has crossed the line from mere untimeliness into inexcusable neglect that prejudices the United States. The Plaintiff has not provided any compelling reason for this extreme untimeliness. Indeed, this case was filed in August 2007, and the Plaintiff has had more than ample time to procure an expert and have a report prepared. (Doc. 71, 5:10-5:19.) At oral argument, Plaintiff s counsel candidly admitted he had 3 1 no cause for the late report except that the date it was submitted 2 was the date he received it from Mr. Bean. 3 III. DISCUSSION. 4 5 Federal Rule of Civil Procedure 16 vests the district court 6 with early control 7 management that embraces the entire pretrial phase, especially 8 motions and discovery. 9 Cir. 2009) (quoting Fed. R. Civ. P. 16 advisory committee's note, 10 1983 Amendment). Rule 16 further recognizes the inherent power of 11 the 12 sanctions, Fed. R. Civ. P. 16(f), and the discretion of the [trial] 13 judge to apply an appropriate level of supervision as dictated by 14 the issues raised by each individual case. Id. (citing, e.g., Fed. 15 R. Civ. P. 16(c)(2)). Failure to comply with the scheduling order 16 exposes a party to any just orders, as determined by the [trial] 17 judge, including dismissal, entry of default or contempt of court. 18 Id. (citing Fed. R. Civ. P. 16(f), 37(b)(2)). district court over to cases toward a process of judicial In re Arizona, 528 F.3d 652, 657 (9th enforce its pretrial orders through 19 As authorized by Rule 26(a)(2)(C), the scheduling order set 20 the timing and dates for expert disclosures and incorporated what 21 Rule 26(a)(2)(B) requires to be disclosed. 22 party must make these disclosures at the times and in the sequence 23 that the court orders.... ). Rule 26(a)(2)(B) mandates that an 24 expert be 25 report-prepared and signed by the witness ... [and] must contain 26 (i) a complete statement of all opinions the witness will express 27 and the basis and reasons for them; (ii) the data or other 28 information considered by the witness in forming them; ... (v) a witness disclosure 4 Rule 26(a)(2) (C) ( A accompanied by a written 1 list of all other cases in which, during the previous four years, 2 the witness testified as an expert at trial or by deposition; and 3 (vi) a statement of the compensation to be paid for the study and 4 testimony in the case. 5 In these days of heavy caseloads, trial courts ... set 6 schedules and establish deadlines to foster the efficient treatment 7 and resolution of cases. 8 410 F.3d 1052, 1060 (9th Cir. 2005). 9 criminal cases unleashed in recent years has threatened to inundate 10 the federal courts, deliverance has been sought in the use of 11 calendar management techniques. 12 of those techniques. 13 F.2d 604, 611 (9th Cir. 1992). 14 the expert witness disclosure requirements in Rule 26(a)(2)(B), and 15 have 16 inadequate expert disclosure including the exclusion of expert 17 witness testimony. 18 564224, * 3 (D. Mont. 2009) (citing Yeti by Molly, Ltd. v. Deckers 19 Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001)). Exclusion of 20 expert testimony is an appropriate remedy for failing to fulfill 21 the required disclosure requirements of Rule 26(a). 22 the discretion Wong v. Regents of the Univ. of Cal., As the torrent of civil and Rule 16 is an important component Johnson v. Mammoth Recreations, Inc., 975 to [F]ederal courts strictly enforce impose sanctions for an untimely or Wilderness Development, LLC v. Hash, 2009 WL Id. Untimely expert disclosure implicates Federal Rule of Civil 23 Procedure 37(c)(1). This Rule provides [i]f a party fails to 24 provide information or identify a witness as required by Rule 26(a) 25 or (e), the party is not allowed to use that information or witness 26 to supply evidence on a motion, at a hearing, or at a trial, unless 27 the failure was substantially justified or is harmless.... Fed. R. 28 Civ. P. 37(c)(1). A party may still use that party's expert witness 5 1 evidence if the failure to timely disclose that evidence was either 2 substantially justified or harmless. 3 F.3d 4 latitude ... to issue sanctions under Rule 37(c)(1). Id. at 1106. 5 The Ninth Circuit has consistently demonstrated that Rule 16's 6 deadlines are firm, real and are to be taken seriously by the 7 parties and their counsel. 8 Hostnut.Com, Inc. v. Go Daddy Software, Inc., 2006 WL 2573201 * 3 9 (D. Ariz. 2006) (evidence not disclosed until more than two months 10 after the discovery deadline precluded at trial); Schwartz v. Home 11 Depot U.S.A., Inc., CV-06-2168-PHX-FJM (party's first request to 12 extend expert witness disclosure deadline denied; defense expert 13 precluded); U.S. ex rel. O'Connell v. Chapman University, 245 14 F.R.D. 652 (C.D.Cal. 2007) (sanction of an award of attorney's fees 15 in the amount of $5,805.00 imposed under Rule 37(c) for plaintiff's 16 untimely 17 26(a)(2)(B)). at 1106. District expert courts are Yeti By Molly, Ltd., 259 given particularly wide See, e.g., Janicki, 42 F.3d at 566; disclosure and noncompliance with Rule 18 If, however, a district court is inclined to strike a party's 19 expert witness as a sanction due to the untimely disclosure of the 20 expert 21 district courts consider the following factors: 1) the public's 22 interest in expeditious resolution of litigation; 2) the court's 23 need to manage its docket; 3) the risk of prejudice to the 24 defendants; 4) the public policy favoring disposition of cases on 25 their merits; 5) the availability of less drastic sanctions. 26 Lindner, 249 F.R.D. at 642 (quoting Wendt v. Host Int'l, Inc., 125 27 F.3d 806, 814 (9th Cir. 1997)). 28 In or expert's this case, report, the Plaintiff s 6 Ninth Circuit arguments for instructs the timing that and 1 completeness of her expert s disclosure and his report run afoul of 2 the purpose of the mandatory expert disclosure requirements of Rule 3 26(a)(2) and the plain, ordinary language of the April 16, 2009 4 modified scheduling order. 5 Plaintiff s disclosure of her expert ensured the United States 6 could not offer rebuttal opinions to Plaintiff s expert at trial. 7 Considering 8 designation deadline from April 15, 2009 to May 6, 2009, her 9 untimely disclosure violated the scheduling order by disclosing her that the Whether intentional strategy or not, parties stipulated to move the expert 10 expert on May 15, 2009, instead of May 6, 2009. Plaintiff has 11 failed to articulate good cause for this violation and Plaintiff s 12 errors are not harmless to the United States because, unless 13 remedied, the United States cannot offer rebuttal opinions to 14 Plaintiff s expert opinion testimony at trial.1 15 violation of the scheduling order, as well as a Rule 26(a)(2) 16 deficiency, the appropriate remedy is determined under the Wendt 17 factors. Having found a 18 Here, allowing Mr. Bean s untimely and incomplete report would 19 delay the case and prejudice the United States, as well as impose 20 on the management of the Court s docket. 21 1060 ("In these days of heavy caseloads, trial courts ... set 22 schedules and establish deadlines to foster the efficient treatment 23 and resolution of cases."); Mammoth Recreations, Inc., 975 F.2d at 24 610 ( Disregard[ing] the [scheduling] order would undermine the 25 court's ability to control its docket, disrupt the agreed-upon See Wong, 410 F.3d at 26 27 1 28 Plaintiff also did not move under Rule 60(b) to be relieved of this failure. 7 1 course 2 cavalier. ) 3 of the litigation, and reward the indolent and the The first three factors weigh in favor of exclusion. As to the fourth factor, it is neutral because exclusion in 4 this case would not be tantamount to dismissal. 5 that weighs against exclusion is the availability of less drastic 6 sanctions. However, Plaintiff did not suggest an alternative, less 7 drastic sanction in her opposition brief or at oral argument. 8 After reviewing each of the five Wendt factors, the majority of the 9 factors weigh in favor of excluding Mr. Bean s incomplete and 10 untimely report. The only factor The United States motion to strike is GRANTED. 11 The United States motion to strike is granted for another 12 independent reason, namely that Plaintiff s expert offers only 13 legal conclusions. 14 government s summary judgment motion, Mr. Bean, a purported IRS and 15 accounting expert, questions whether IRS Agents followed internal 16 procedures and concludes that Mrs. Shore is neither a responsible 17 person nor acted willfully under § 6672. 18 states that I have also reviewed the record to determine if Wilma 19 Shore meets the requirements of 26 U.S.C. section § 6672 as a 20 person responsible for the collection and payment of withholding 21 taxes and secondly whether or not she was willful in non-compliance 22 with the payroll tax collection and reporting requirements. If 23 either of these elements are not present, she is not liable for the 24 penalty assessed. 25 26 27 28 For example, in his declaration opposing the (Doc. 75.) Bean (Doc. 75, ¶ 13.) Mr. Bean offers two legal conclusions concerning 26 U.S.C. § 6672: As to responsibility, I note that there must be evidence of the ability to exercise independent judgment with respect to the financial affairs of the 8 1 company. The record in this matter is devoid of any such knowledge or involvement on the part of Mrs. Shore during the period of time 1996 through 1999 when she resigned. The evidence shows that her involvement was limited to working on a part time basis wherein she balanced the company checking account and as needed signed checks. There is no evidence of significant control over company finances. 2 3 4 5 As to the willfulness on the part of Mrs. Shore, I find nothing in the record to demonstrate that she was knowledgeable of the fact that the company was behind in the payment of employment taxes for the second, third and fourth quarters of 1997 and for the four (4) quarters of 1998 and 1999 during the time period that she was an officer of the corporation. Further, all of the information in the record shows that the decision making power over the payment of creditors rested with Greg Shore and not Wilma Shore. As such, it is my opinion she was not willful within the meaning of Internal Revenue Code section 6672 for the assessment of the penalty for the taxpayer trust fund recovery. 6 7 8 9 10 11 12 13 (Doc. 75, ¶ 16, 17.) 14 Mr. Bean did not limit his opinions to accounting procedures 15 or bookkeeping issues at CMS and INCON during the relevant tax 16 periods; rather, Bean opined as to the legal standards to hold Mrs. 17 Shore liable for CMS and INCON s tax delinquencies. 18 legal opinions concerning whether Mrs. Shore was a responsible 19 party or acted willfully under § 6672. 20 legal conclusions is inappropriate matter for expert testimony. 21 See U.S. v. Scholl, 166 F.3d 964, 973 (9th Cir. 1999) (excluding 22 expert 23 International Longshoremen's Union, 966 F.2d 443, 447 (9th Cir. 24 1992) (noting matters of law are for the court s determination, not 25 that of an expert witness); see also Snap-Drape, Inc. v. C.I.R., 98 26 F.3d 194, 198 (5th Cir. 1996) (expert testimony consisting of legal 27 conclusions inadmissible). 28 testimony offering a legal Bean offered Such testimony offering conclusion); Aguilar v. Bean inappropriately expressed legal conclusions on the issue 9 1 of responsibility and willfulness under 26 U.S.C. 6672. 2 His legal opinions are inadmissible. 3 4 IV. 5 6 CONCLUSION. For the reasons set forth above, the United States Motion to Strike the Expert Disclosure of Dennis Bean is GRANTED. 7 8 IT IS SO ORDERED. 9 Dated: aa70i8 October 9, 2009 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10
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