Philip Petrone and other named plaintiffs brought a class action lawsuit against Werner Enterprises and Drivers Management. The class consisted of student truck drivers who alleged violations of state and federal wage laws. Specifically, the student drivers argued that they were entitled to unpaid wages for time that they spent on short rest breaks and while resting in a truck’s sleeper berth.
After a trial, the jury disagreed that the student drivers were entitled to compensation for time spent in the sleeper berth but agreed that they were denied compensation for brief rest breaks. The Fair Labor Standards Act generally requires employers to count a short rest period as part of the hours worked by an employee.
The jury awarded the student drivers almost $800,000 in damages. Werner and Drivers Management appealed. The dispositive issue on appeal was whether the district court erred by extending the deadline to disclose expert reports in the absence of a showing of good cause.
Expert Report Disclosure
The Federal Rules of Civil Procedure require the disclosure of expert reports in most cases. Rule 16 requires the district court to set a scheduling order which may (and usually does) alter the deadline for disclosing expert reports that appears in Rule 26.
The student drivers disclosed an expert report within the deadline set by the scheduling order. The defendants took the expert’s deposition. The district court characterized the deposition as revealing “considerable flaws in the methodology” for computing the unpaid compensation owed to class members.
The student drivers moved to modify the scheduling order so that a supplemental report could be filed. The supplemental report was intended to correct the errors that appeared in the original report.
The district court noted that Rule 26(e) requires experts to “supplement or correct” a report if the party employing the expert “learns that in some material respect the disclosure or response is incomplete or incorrect.” That duty extends to the report itself and to “information given during the expert’s deposition.”
Motion to Extend Disclosure Deadline Denied
The district court concluded that the request to supplement the report was not based on new information that the expert learned after preparing the report. Rather, the request was intended to correct flaws in the expert’s methodology that were exposed during his deposition. In the district court’s opinion, those flaws should have been known to the expert before the report was submitted.
While the rule allows an expert to amend a report if the expert “learns” that the report is incorrect, some courts have concluded that the expert can only amend the report if what the expert “learns” is based on information that was unavailable at the time the report was written. The rule doesn’t say that, but the district court relied on that questionable precedent to conclude that the expert could not “learn” about flaws in his methodology that were pointed out to him when his deposition was taken.
The court concluded that the supplemental report was untimely because the changes could and should have been made before the submission deadline. The request to supplement was made about two months after the disclosure deadline passed and about a month before the deadline for filing Daubert challenges. The court found no good cause to extend the disclosure deadline.
Court Allows Supplemental Report at Trial
When disclosure of a supplemental report is untimely, Rule 37(c) provides that information in the supplemental information cannot be used at trial “unless the failure was substantially justified or is harmless.” The court decided that a supplemental report would have “imposed on” the defendants by requiring them to analyze the report a second time and possibly to depose the expert again. Using information in the supplemental report would therefore not have been harmless.
The court nevertheless weighed the harm caused by excluding the supplemental report against the demand in Rule 1 that the rules be construed and administered “to secure the just, speedy, and inexpensive determination of every action and proceeding.” It would have been unjust, the court thought, to prevent the student drivers from presenting valid expert evidence in support of a meritorious claim simply because of mistakes their expert made in the original report. The rule express a preference for cases to be resolved on their merits, not on the technical application of procedural rules.
The court therefore extended the time for filing the supplemental report. It remedied the prejudice caused by that order by allowing the defendants to take a second deposition of the expert and by awarding the defendants the expenses they incurred as a result of the untimely disclosure.
From the standpoint of placing justice ahead of procedural technicalities, the district court’s opinion is sensible. Denying a class of workers their earned wages simply because an expert made mistakes that he later corrected is a harsh result.
The court of appeals, on the other hand, saw the case differently. While appellate courts generally uphold discretionary decisions made by trial courts, discretion must be guided by a correct application of the law. The court of appeals faulted the district court for failing to apply the correct legal standard.
A scheduling order, once entered, can only be changed for cause. In reality, parties will often agree to extend deadlines and courts will often honor that agreement without inquiring deeply into whether there is good cause for changing the order.
In this case, there was no agreement to modify the order. A party who moves to extend a deadline must show that the party cannot meet the deadline despite diligent action. As the district court found, no effort was made to change the deadline to submit the expert’s report until after its flaws were exposed during a deposition. The court of appeals agreed with the district court that those circumstances did not support a finding of good cause to extend the disclosure deadline.
The court of appeals also noted that the disclosure deadline was relevant because the supplemental expert report materially changed the contents of the report. A revised report, the court concluded, is not a supplemental report, even if the report is revised to correct mistakes in the original report. Since the changes to the report were based on information that could have been obtained prior to the disclosure deadline, the report needed to be disclosed before the deadline expired.
The ultimate question was whether the district court could rely on Rules 1 and 37 to allow the late disclosure of the revised report. The court of appeals held that neither rule trumps the requirement in Rule 16 that expert reports must be disclosed within a time set by the court.
Rule 16 only permits the extension of that time for good cause. The court deemed that standard to serve the purposes of Rule 1 by assuring that cases proceed on schedule. Justice apparently takes a back seat to the prompt resolution of cases.
Rule 37 covers sanctions for disobedience of discovery orders but (the court held) does not apply to a motion to extend a disclosure deadline. The court’s logic in that regard is not self-evident. Had a supplemental report been belatedly disclosed without moving to extend the disclosure deadline, Rule 37 would plainly have applied. The court then might have allowed the late disclosure subject to the sanctions it imposed. It is difficult to know why a party that makes a late disclosure should be treated more favorably than a party that asks to make a late disclosure.
Nearly all Rule 37 violations deal with a party’s failure to make timely discovery responses that satisfy the rules. Why the untimely disclosure of an expert report should be treated differently than any other untimely document disclosure is unclear.
In any event, the court of appeals held that the court applied the wrong legal standard and was powerless to allow the student drivers to use a supplemental expert report that was not timely disclosed. The unfortunate result is that drivers, who were (in the jury’s view) cheated out of wages, will be unable to recover their losses.
The appellate court’s decision reflects a rigid belief, common in federal court, that justice equates to strict adherence to procedural rules, as opposed to assuring that injured parties receive just compensation for their losses. That belief is manifested in holdings that give experts one and only one chance to produce a report that will satisfy Daubert. Attempts to amend the report after the disclosure deadline are typically rejected, even if meritorious amendments would help an injured party achieve justice.
The lesson for lawyers is that expert reports should be scrutinized well in advance of the disclosure deadline. If the report’s methodology or factual basis is likely to be challenged, the party’s lawyer should ask the expert to address those challenges before the report is finalized and disclosed. Expert witnesses in federal court rarely get a second chance to prepare a satisfactory report.