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Everett Financial, Inc. v. Primary Residential Mortgage, Inc.

United States District Court, N.D. Texas, Dallas Division

January 10, 2017

EVERETT FINANCIAL, INC. d/b/a SUPREME LENDING, Plaintiff-counterdefendant,
v.
PRIMARY RESIDENTIAL MORTGAGE, INC., Defendant, and BARRY G. JONES, JAMES DURHAM, and SHANNON FORTNER, Defendants-counterplaintiffs. SCOTT EVERETT, individually, Counterdefendant.

         *This memorandum opinion and order was originally filed under seal on December 19, 2016 . It was filed unsealed on January 10, 2017. after the parties agreed that no part needed to remain under seal.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

         In this memorandum opinion and order, the court addresses six motions to strike expert testimony.

         I

         This is an action by plaintiff-counterdefendant Everett Financial, Inc. d/b/a Supreme Lending (“Supreme”) against defendant Primary Residential Mortgage, Inc. (“PRMI”) and defendants-counterplaintiffs Barry G. Jones (“Jones”), James Durham (“Durham”), and Shannon Fortner (“Fortner”) (collectively, the “Branch Managers”), arising from conduct related to the Branch Managers' resignations from Supreme and moves to PRMI. Supreme's chief executive officer, Scott Everett (“Everett”), is a counterclaim defendant.[1] The factual background of this case is set out in the court's December 6, 2016 memorandum opinion and order. Everett Fin. Inc. v. Primary Residential Mortg., Inc., 2016 WL____, No. 3:14-CV-1028-D, slip op. at *1-13 (N.D. Tex. Dec. 6, 2016) (Fitzwater, J.). The court will limit its discussion of the background facts and procedural history to what is pertinent to the court's resolution of the instant motions.

         The deadline for Supreme and Everett to designate experts was August 14, 2015. On that date, Supreme and Everett served expert disclosures designating their retained expert, Jeffrey Matthews (“Matthews”), and three nonretained or “Percipient Experts”: Everett, Rick Hogle (“Hogle”), and Tony Schmeck (“Schmeck”). PRMI App. [123-1] 5-9. On December 11, 2015 Supreme and Everett disclosed Patrick Flood (“Flood”) as a fourth nonretained expert. Flood's designation closely followed his deposition, which was taken on December 2, 2015. Matthews submitted an expert report contemporaneously with his designation.

         The following motions are pending for decision: the motions of PRMI and the Branch Managers to strike Everett, Hogle, and Schmeck for insufficient disclosure under Fed.R.Civ.P. 26(a)(2)(C); the motions of PRMI and the Branch Managers to strike Flood for the same reason, and for untimely designation under the court's scheduling order; and the motions of PRMI and the Branch Managers to strike Matthews' expert opinions as unreliable under the Daubert[2] standard.

         II

         The court first examines the motions of PRMI and the Branch Managers to strike nonretained experts Everett, Hogle, and Schmeck.

         A

         Rule 26(a)(2) governs disclosures of expert testimony. Rule 26(a)(2)(C)-which prescribes the disclosure requirements for nonretained experts (i.e., experts who are neither retained or specially employed to provide expert testimony in the case nor ones whose duties as the party's employee regularly involve giving expert testimony)-provides:

Witnesses Who Do Not Provide a Written Report. Unless otherwise stipulated or ordered by the court, if the witness is not required to provide a written report, this disclosure must state:
(i) the subject matter on which the witness is expected to present evidence under Federal Rule of Evidence 702, 703, or 705; and
(ii) a summary of the facts and opinions to which the witness is expected to testify.

         Nonretained experts are not required to submit reports. This Rule, adopted in 2010, is intended to ensure that an opposing party has some notice of what the nonretained expert will testify about. See 8A Charles Alan Wright, et al., Federal Practice and Procedure § 2031.2, at 92 (3d ed. 2010 & Supp. 2016).

         Although the court is not aware of any controlling precedent that governs the level of detail required in disclosures under this Rule, some principles are found in persuasive authority. The court “must take care against requiring undue detail, keeping in mind that these witnesses have not been specially retained and may not be as responsive to counsel as those who have.” Rule 26(a)(2)(C) advisory committee's note. The disclosure must state opinions, not merely topics of testimony. See Carr v. Montgomery Cty., Tex., 2015 WL 5838862, at *3 (S.D. Tex. Oct. 7, 2015) (holding that disclosures at issue were insufficient); Tolan v. Cotton, 2015 WL 5332171, at *7 (S.D. Tex. Sept. 14, 2015) (same); Brown v. Joseph Cory Holdings, LLC, 2014 WL 12585673, at *1 (N.D. Tex. Apr. 1, 2014) (Means, J.) (same). And the disclosure must contain at least a summary of the facts upon which the opinions are based. See Carr, 2015 WL 5838862, at *3; Tolan, 2015 WL 5332171, at *7; Brown, 2014 WL 12585673, at *1. But the requirement of a “summary” may be satisfied by an “abstract, abridgement, or compendium of the opinion and facts supporting the opinion.” Anders v. Hercules Offshore Servs., LLC, 311 F.R.D. 161, 164 (E.D. La. 2015) (quoting Rea v. Wis. Coach Lines, Inc., 2014 WL 4981803, at *5 (E.D. La. Oct. 3, 2014)) (holding that disclosures at issue were sufficient).

         B

         PRMI and the Branch Managers maintain that the testimony of Everett, Hogle, and Schmeck must be excluded because the disclosures of Supreme and Everett do not satisfy the requirements of Rule 26(a)(2)(C). The disclosures Supreme and Everett regarding Everett, Hogle, and Schmeck state:

As to the subject matter, facts, and opinions on which the Percipient Experts are expected to testify, Supreme Lending hereby refers the parties to the transcripts of the depositions of each witness, the transcript of the deposition of Supreme Lending's corporate representatives, and other discovery and documents produced. In conjunction with and/or addition to the foregoing, the Percipient Experts are expected to testify, inter alia, that:
• Supreme Lending's confidential information and trade secrets are not generally known outside of the business;
• Supreme Lending's confidential information and trade secrets are only known by select employees;
• Supreme Lending takes significant measures to safeguard the secrecy of its confidential information and trade secrets;
• Supreme Lending's confidential information and trade secrets would be valuable in the hands of its competitors;
• Supreme Lending has expended significant effort and expense developing its confidential information and trade secrets;
• Supreme Lending's confidential information and trade secrets could not be easily acquired or ...

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