OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO STRIKE UNTIMELY REVISION OF EXPERT OPINION (Doc. 486)

CHRISTINA REISS, Chief District Judge.

This matter comes before the court on the Motion to Strike Untimely Revision of Expert Opinion filed by Defendants, Dairy Farmers of America, Inc. and Dairy Marketing Services, LLC (Doc. 486). Defendants ask the court to strike certain January 2014 supplements to the expert report of Plaintiff's economist Gordon Rausser, Ph.D. Defendants contend the supplements are untimely, impermissible, and will prejudice them as they will be forced to confront an array of new expert opinions regarding Plaintiffs' alleged damages. Plaintiffs oppose the motion, arguing that the supplementation was required under the Federal Rules of Civil Procedure and that Defendants will suffer no prejudice because they understand Dr. Rausser's revised opinions and cannot claim to have been surprised by them in light of Plaintiffs' previous disclosures. Plaintiffs contend that, if the court finds any prejudice, it can be cured by allowing Defendants to re-depose Dr. Rausser.

The court held oral argument on the motion on May 8, 2014.

I. Factual and Procedural Background.

In their Second Amended Complaint ("SAC"), Plaintiffs allege that Defendants engaged and are presently engaging in five violations of the Sherman Act, 15 U.S.C. §§ 1-2: (1) conspiracy to monopolize/monopsonize in violation of § 2 of the Sherman Act; (2) attempt to monopolize/monopsonize in violation of § 2 of the Sherman Act; (3) unlawful monopoly/monopsony in violation of § 2 of the Sherman Act; (4) price fixing in violation of § 1 of the Sherman Act; and (5) conspiracy to restrain trade in violation of § 1 of the Sherman Act.

Plaintiffs allege that Defendants engaged in a wide-ranging conspiracy at both the processor and cooperative levels to fix, stabilize, and artificially depress prices for fluid Grade A milk and to allocate markets within Federal Milk Market Order 1 ("Order 1") among the co-conspirators. Plaintiffs allege that the prices in Order 1 were suppressed when processors in Order 1 agreed with Defendants to suppress certain premiums paid to dairy farmers (which Plaintiffs call "Farmer Premiums") in exchange for Defendants and other alleged co-conspirators' agreement to guarantee and control the supply of milk to conspiring processors.

On February 7, 2012, Defendants moved to exclude certain of Dr. Rausser's opinions under Fed. R. Evid. 702 and under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), and its progeny. In response, Plaintiffs submitted a revised March 16, 2012 rebuttal declaration for Dr. Rausser (the "2012 Rausser Rebuttal"). The 2012 Rausser Rebuttal consists of certain supplementations and revisions to the "previously submitted three Declarations" (Doc. 486-4 at 2) Dr. Rausser authored in this case. The 2012 Rausser rebuttal includes Dr. Rausser's statement under oath: "In my Merits Report, I estimated that the prices paid for raw Grade A milk produced and pooled on Order 1 were suppressed by $0.69/cwt. I stand by that conclusion." (Doc. 486-4 at 6) (footnote omitted). It also includes a "model to estimate a different rate of suppression for each year in the Class Period" and states that "[t]he average of these suppression rates is $0.69/cwt, consistent with the results I reported in my Merits report." (Doc. 486-4 at 8.) In the 2012 Rausser Rebuttal, in a footnote, Dr. Rausser observes that when he "correct[s]" the damages model offered by Defendants' expert witness, economist Joseph Kalt, Ph.D., other suppression estimates are yielded:

(Doc. 486-4 at 4 n.288; 2012 Rausser Rebuttal at 101 n.288) ("footnote 288").

Defendants subsequently moved to strike the 2012 Rausser Rebuttal, arguing that it was untimely and improper rebuttal because it set forth new opinions after the close of expert discovery on February 14, 2012 and because it was a transparent effort to rebuff Defendants' Daubert challenges. The court agreed that the 2012 Rausser Rebuttal was improper and untimely, but nonetheless denied Defendants' motion to strike. In so ruling, the court reasoned that because a trial date had not been set, the court could alleviate any prejudice to Defendants by allowing them to re-depose Dr. Rausser and supplement their then pending Daubert motion. See Allen v. Dairy Farmers of Am., Inc., 2013 WL 211303, at *1, *4, *5-6 (D. Vt. Jan. 18, 2013) (denying Defendants' motion to strike and allowing 2012 Rausser Rebuttal notwithstanding the court's conclusions that the revised opinions were "untimely," that Plaintiffs "should have obtained leave from the court to serve [them]," that "[c]ourts generally prohibit th[e] practice" of revising expert reports in response to Daubert motions, and that the revised opinion constituted improper rebuttal because "the Rausser Rebuttal exceeds what is necessary to simply rebut Defendants' expert opinions").

Thereafter, Defendants, who had deposed Dr. Rausser in 2011, re-deposed Dr. Rausser. At Dr. Rausser's deposition on June 26, 2013, Defendants specifically asked him if his expert damages opinion remained at the $0.69/cwt suppression estimate. Dr. Rausser answered in the affirmative:

(Doc. 486-3 at 5.)

Defendants subsequently supplemented their Daubert challenge. Of particular relevance to the pending motion, in their Daubert motion, Defendants specifically challenged Dr. Rausser's suppression estimate of $0.69/cwt.

On August 1 and 5, 2013, the court held a hearing on Defendants' Daubert motion and on Plaintiffs' cross-motion to exclude under Daubert and Fed. R. Evid. 702 certain expert opinions of Defendants' economist Dr. Kalt. Plaintiffs did not advise either Defendants or the court that Dr. Rausser's $Q.69/cwt damages estimate was preliminary, tentative, or subject to revision. Instead, they argued forcefully that Dr. Rausser's damages calculations were "reliable" (Doc. 381 at 39) and that there was "no basis" to Defendants' claim that Dr. Rausser's use of the "Boston price" as the "uniform blend reference price" for Order 1 overstated Farmer Premiums in Order 1. (Doc. 458 at 24-25.) Plaintiffs maintained that Dr. Rausser's $0.69/cwt damages estimate using the Boston base blend price should be admitted into evidence under Fed. R. Evid. 702. They did not proffer an alternative damages estimate to the court.

On December 31, 2013, the court granted in part and denied in part Defendants' motion to exclude Dr. Rausser's opinions. Among the court's rulings was a conclusion that Dr. Rausser's use of the Boston blend price of $0.69/cwt in Plaintiffs' damages model was unreliable, had the potential to artificially inflate Plaintiffs' damages, and was therefore inadmissible. See Allen v. Dairy Mktg. Servs., LLC, 2013 WL 6909953, at * 14, *15 (D. Vt. Dec. 31, 2013) (ruling that "by using the Boston base blend price, Dr. Rausser's damages model artificially inflates the damages calculation by using a baseline that is not representative of actual prices in Order 1, but rather is representative of the highest price in Order 1" and, because Dr. Rausser's "approach is virtually certain to artificially inflate Plaintiffs' damages," "use of the Boston base blend price for Order 1 in Dr. Rausser's damages model" was not reliable under Fed. R. Evid. 702).

After the court issued its Daubert opinion, on January 22, 2014, Plaintiffs forwarded by email to Defendants "a breakdown of the $.41/cwt suppression of farmer premiums set forth in [Dr. Rausser's Rebuttal Report]." (Doc. 486-1 at 2.) Included in this email were eleven pages setting forth seven tables and various spreadsheets which included calculations that Plaintiffs had not previously disclosed and that purported to "provide[] . . . calculations in light of the Court's Daubert opinion." (Doc. 486-2 at 2.) (the "January 2014 calculations"). Each of these calculations revises at least some portion of Dr. Rausser's 2012 Rebuttal Report to provide new calculations based upon Plaintiffs' adoption of a $0.41/cwt damage estimate.1

Plaintiffs claim the January 2014 calculations are neither untimely nor actual revisions because they merely "supplemented three of [Dr. Rausser's] previouslydisclosed suppression calculations, in ways entirely consistent with his analyses and opinions, to reflect the suppression price estimate ($.4 l/cwt) permitted by the Court." (Doc. 490 at 5.) They further assert that their "Supplemental Disclosure does not rework Dr. Rausser's damages analysis—it simply inputs premiums based on plant location and mailbox prices (instead of Boston and gross prices) into the identical regression model and calculations that were disclosed in 2011 and 2012." (Doc. 490 at 12.) Plaintiffs point to footnote 288 as a previous disclosure of these calculations and note that, in his deposition, Dr. Rausser reserved the right to amend his opinion in response to court rulings.

Defendants do not oppose Dr. Rausser's use of Table A-1 because it merely translates the $0.41/cwt into actual damage amounts, broken out by year as well as by data source (payroll data versus all market administrator data). On that basis, the court agrees Plaintiffs' use of Table A-1 is permissible.

Defendants oppose the remaining January 2014 calculations and argue that they represent new and previously undisclosed expert opinions that substantially increase Plaintiffs' damages. See Doc. 494 at 2 ("[T]he difference between the calculations disclosed in the March 2012 Rebuttal Report, and the new calculations disclosed in January 2014, is that the latter adds between $57 million and $75 million to Plaintiffs' damages claim during the period within four years of the filing of the Complaint. That amounts to a potential difference of $171 million to $225 million after trebling.") (internal citation omitted). As Defendants point out:

(Doc. 486 at 7).

As for prejudice, Defendants claim that, "[h]ad Dr. Rausser included this year-by-year analysis in his Rebuttal Report, then Defendants could have deposed him on that calculation, had their own experts prepare a response, and addressed it in their supplemental Daubert memorandum and expert report." (Doc. 486 at 13.) Instead, Defendants focused their Daubert challenge, and the court focused its Daubert opinion, on Dr. Rausser's use of the $0.69/cwt Boston blend price because Plaintiffs proffered this as the basis of Dr. Rausser's damages opinion.

This case has been pending since October 8, 2009 and is set for a seven week trial commencing on July 7, 2014. Pursuant to the most recent Scheduling Order, expert discovery closed on February 14, 2012.2 The parties represented to the court that they would be trial ready by April 29, 2014. The trial has been continued once, and Defendants' motion for summary judgment is pending. Plaintiffs did not and do not seek an extension of the court's Scheduling Order to authorize disclosure of Dr. Rausser's January 2014 calculations. Instead, they claim that the January 2014 calculations are permissible and even required supplementation of their expert's opinions pursuant to Fed. R. Civ. P. 26(e)(1)-(2).

II. Conclusions of Law and Analysis.

Rule 26 of the Federal Rules of Civil Procedure requires a party to disclose "a complete statement of all opinions the [expert] witness will express and the basis and reasons for them." Fed. R. Civ. P. 26(a)(2)(B)(i). The Rule imposes upon a party to supplement or correct an expert disclosure "if the party learns that in some material respect the disclosure or response is incomplete or incorrect." Fed. R. Civ. P. 26(e)(1)(2).

In essence, Plaintiffs assert that Rule 26(e) permits them to "correct" an expert opinion in response to an adverse evidentiary ruling even if the "correction" would otherwise be an untimely supplementation of an expert report. None of the cases Plaintiffs cite support this contention. Indeed, Plaintiffs' approach to expert supplementation would disrupt trials and trial preparation to the point of chaos and would render the expert disclosure rules meaningless. See Lewis v. FMC Corp., 786 F.Supp.2d 690, 705 (W.D.N.Y. 2011) (interpreting Rule 26(e) to allow an expert to supplement an inadequate expert report "would wreak havoc on docket control and amount to unlimited expert opinion preparation") (internal quotation marks and alterations omitted); Cedar Petrochem., Inc. v. Dongbu Hannong Chem. Co. Ltd., 769 F.Supp.2d 269, 278 (S.D.N.Y. 2011) (noting that "experts are not free to continually bolster, strengthen, or improve their reports by endlessly researching the issues they already opined upon, or to continually supplement their opinions") (internal quotation marks omitted). As the District of Connecticut recently observed:

Levinson v. Westport Nat'l Bank, 2013 WL 3280013, at *4-5 (D. Conn. June 27, 2013) (internal citations and quotation marks omitted). Plaintiffs' disclosure of the January 2014 calculations was not based on information previously unknown or unavailable to Dr. Rausser. Moreover, the court did not "correct" an inaccuracy in Dr. Rausser's opinion; it merely ruled a portion of that opinion inadmissible pursuant to Fed. R. Evid. 702. Plaintiffs' untimely disclosure of the January 2014 calculation is thus not permissible supplementation of an expert witness opinion under Rule 26(e).

Rule 37 of the Federal Rules of Civil Procedure provides in relevant part that, "[i]f a party fails to provide information . . . as required by Rule 26(a) or (e), the party is not allowed to use that information . . . to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). In the Second Circuit, prior to determining whether exclusion is the appropriate sanction, the court must consider:

Softel, Inc. v. Dragon Med. & Scientific Commc'ns, Inc., 118 F.3d 955, 961 (2d Cir. 1997) (quoting Outley v. City of New York, 837 F.2d 587, 590-91 (2d Cir. 1988)).

Application of the Outley factors to the instant case reveals that Plaintiffs' failure to comply with the court's Scheduling Order is inexcusable, that a continuance is not reasonably available, and that only the sanction of exclusion will prevent unfair and substantial prejudice to Defendants.

With regard to the first Outley factor, Plaintiffs offer no explanation for their failure to comply with the court's Scheduling Order—perhaps because they erroneously contend the January 2014 calculations are permissible supplementation. They therefore do not squarely address Defendants' argument that Plaintiffs had an obligation to disclose the January 2014 calculations in accordance with the Scheduling Order on February 14, 2012.3

Plaintiffs' characterization of the January 2014 calculations as unsurprising and even required is both factually and legally untenable.4 Their further suggestion that Defendants, themselves, are at fault because they failed to sufficiently probe Dr. Rausser about his alternative damages estimates at deposition cannot be asserted in good faith. See Doc. 490 at 20 ("Likewise, Defendants cannot claim `prejudice' now that they regret their decision to ignore Dr. Rausser's alternative damages opinions."). Dr. Rausser's deposition testimony was unequivocal in affirming that the $0.69/cwt damage estimate was his expert opinion and that it remained unchanged in his 2012 Rebuttal. The fact that he erroneously arrogated to himself the right to change his expert witness opinion in response to an adverse evidentiary ruling does not rise to the level of an affirmative disclosure of the $0.41/cwt opinion. Indeed, footnote 288 does not contain any indication that Dr. Rausser agrees with Dr. Kalt's "corrected" damages opinion or that any one of the calculations offered in that footnote is preferable to the others. The January 2014 calculations thus represent "new" opinions, even if they represent adjustments to Dr. Rausser's previously disclosed damages tables. Plaintiffs therefore should have sought an extension of the court's Scheduling Order to permit them.

In light of the court's ruling on Defendants' motion to strike the 2012 Rausser Rebuttal, Plaintiffs had clear notice that the court was unlikely to permit further untimely expert disclosures. In the absence of any rational explanation for failing to disclose the January 2014 calculations sooner, Plaintiffs fall far short of establishing either good cause or good faith in their failure to comply with the court's Scheduling Order.

With regard to the second Outley factor, Plaintiffs urge the court to find the January 2014 calculations are "important to Plaintiffs' case." (Doc. 490 at 18). In support of this conclusory statement, they do not explain any likely impact on their case if the January 2014 calculations are excluded. The 2012 Rebuttal Report contains the information Dr. Rausser will use to testify in support of his new damages estimate of $0.4/cwt and he may use Table A-1 to illustrate that opinion. Plaintiffs do not need the January 2014 calculations for Dr. Rausser's damages opinion; however, they could undoubtedly present a more complete (and substantially different) damages analysis with the revised calculations. As Plaintiffs make no claim that the January 2014 calculations are essential to the presentation of their damages claim at trial, the second Outley factor also weighs in favor of exclusion.

The prejudice to Defendants in allowing the January 2014 calculations is substantial, unwarranted, and at this point not easily remediable without considerable burden upon both Defendants and the court. If the court allows Plaintiffs to present the January 2014 calculations to the jury, Defendants will inevitably incur the time and expense to depose Dr. Rausser yet again. They will also need to prepare their own expert witness to respond to them, and it is quite possible that another Daubert challenge will ensue. This would inevitably interfere with Defendants' trial preparation and trial strategy. Plaintiffs' suggestion that the court merely permit Defendants to re-depose Dr. Rausser and allow additional motion practice thus fails to cure the substantial prejudice to Defendants and ignores the proximity of trial. See Bowers v. NCAA, 564 F.Supp.2d 322, 345 (D. N.J. 2008) (holding that "reconvening expert depositions where so much water is already under the bridge is not a suitable remedy of the pattern of non-disclosure of important discovery" and that the court should not "be forced by Plaintiff's last-minute disclosures to reopen discovery and eventually reargument upon the Daubert in limine motions, lest this case . . . be literally without end"); see also Design Strategy, Inc. v. Davis, 469 F.3d 284, 296-97 (2d Cir. 2006) (affirming exclusion of untimely damages opinion where "discovery had been closed for `approximately one and a half years,' and at the time of the offer of expert testimony there was only `a short time left before trial").

Under the third Outley factor, the prejudice to Defendants is substantial and cannot be fully redressed by permitting another deposition. See Shea v. Royal Enters. Inc., 2011 WL 2436709, at *8 (S.D.N.Y. June 16, 2011) ("Given the numerous extensions of the discovery deadline, the further delay of this two-year-old litigation is neither deserved nor warranted, and the additional costs such delay would impose on Defendants amounts to real prejudice.").

For similar reasons, a continuance is no longer reasonably available in this case. The trial has already been continued once, and the court has allocated almost two months of court time to it, during which no other cases can be heard and during which no other cases have been scheduled. In addition, the court is in the process of ruling on Defendants' voluminous summary judgment motion and Plaintiffs' equally voluminous opposition to it. It is anticipated that both parties will seek to file motions in limine in advance of trial. Re-opening discovery to allow Dr. Rausser's remaining January 2014 calculations and continuing the trial dates so that Defendants can challenge Dr. Rausser's revised opinions under Daubert would thus prejudice not only Defendants, but would significantly impact the court's own schedule and its administration of justice. See Fed. R. Civ. P. 1 (directing that the Federal Rules of Civil Procedure "should be construed and administered to secure the just, speedy, and inexpensive determination of every action and proceeding").

In summary, each of the Outley factors weighs in favor of granting Defendants' motion to strike. The court has considered whether a lesser sanction would suffice and has concluded that, in the facts and circumstances of this case, it would not. See Softel, Inc., 118 F.3d at 962-63 (concluding lesser sanctions unwarranted when, on "balance," the Outley factors favored the sanction of preclusion, particularly when the burden on the court in granting a continuance would be great, and noting that the "expeditious management of discovery schedules is especially important in cases [that] require extensive expert involvement over lengthy periods of time"); see also Lodge v. United Homes, LLC, 787 F.Supp.2d 247, 263 (E.D.N.Y. 2011) (finding preclusion warranted when "lesser sanctions would be ineffective"). Indeed, any sanction short of preclusion would reward Plaintiffs for their tactical decision not to timely disclose Dr. Rausser's opinions regarding the $0.41/cwt damages estimate in hopes that his $0.69/cwt damages estimate, which they knew Defendants challenged, would survive Daubert scrutiny. See World Wide Polymers, Inc. v. Shinkong Synthetic Fibers Corp., 694 F.3d 155, 159 (2d Cir. 2012) (directing courts considering Rule 37 sanctions to consider "`whether a tactical benefit was sought' by the conduct warranting the sanctions) (quoting Dodson v. Runyon, 86 F.3d 37, 40 (2d Cir. 1996) (considering whether a party's delay was "designed to benefit [the party's] strategic interests")). In light of the court's previous response to Plaintiffs' untimely disclosure of the 2012 Rausser Rebuttal, Plaintiffs cannot claim to be unfairly surprised by the sanction of exclusion now that trial is imminent.

CONCLUSION

For the foregoing reasons, the court GRANTS Defendants' Motion to Strike Untimely Revision of Expert Opinion (Doc. 486). Plaintiffs may advance the $0.41/cwt damage estimate and use Table A-1 of the January 2014 calculations to support it. No other revised damages opinions by Dr. Rausser based upon the January 2014 calculations will be permitted at trial.

SO ORDERED.