In a discovery dispute, a federal court recently found the defendant had no duty to disclose to the opposing side its expert’s “intermediary” working paper that he used to prepare his damages calculation. The plaintiff claimed the defense should be sanctioned for failing to produce the document because the expert had said he “relied” on the information.
The dispute over the document arose when the plaintiff deposed the defense expert, an experienced CPA certified in financial forensics, after receipt of the expert’s report. The defendant had filed a counterclaim, and the expert was calculating damages to the defendant. The plaintiff had discovered significant discrepancies between prices in the underlying source data and the prices the expert used to compute the defendant’s damages. Asked to explain the differences, the expert said he would have to look at “the file that did the calculation,” i.e., the undisclosed document. Regarding the file, the expert said it had been created by his team and reviewed by him for quality control. When the plaintiff asked specifically whether he had relied on this information for his opinion, the expert said: “I rely on my work, yes, so.… But my schedules and my calculations, yes, that’s my work product … [and it] supports my opinions.” Ultimately, the defense produced the document, as well as a revised expert report.
Regardless, the plaintiff filed a motion for sanctions, arguing the defense had failed to produce the document in a timely manner.
Working paper exception: Federal Rule of Civil Procedure 26 governs disclosure of expert reports. Rule 26(a), among other things, requires that the expert report contain “the facts or data considered by the witness in forming them.” Rule 37, in turn, provides for sanctions where a party fails to disclose the information specified in Rule 26(a).
The plaintiff essentially argued the undisclosed document was “facts or data” the expert considered in forming his opinion. The defendant countered that this document was a working paper that need not be produced under Rule 26(a).
The court noted that, under applicable case law, Rule 26 does not “require a party to disclose all of its expert’s notes, calculations, and preliminary analysis.” Further, the purpose of the discovery rules was to give notice to the opponent of the expert’s testimony and allow for preparation of cross-examination. Here, the court said, the expert’s report discussed the methodology he used to calculate damages and, excepting the contested document, the plaintiff provided the data underlying the calculations. Failure to provide the expert’s “intermediary working paper,” which he created from data that were disclosed, did not result in a subversion of the objectives of the discovery rules, the court said. “Requiring disclosure of a document solely based upon testimony that the expert relied on it would swallow up the working paper exception to the disclosure rules,” the court added. Here, the plaintiff was justified not to produce the document as “facts or data,” and sanctions were not appropriate in this case, the court concluded.
The court also addressed other issues, including whether the expert’s calculation errors justified sanctions and whether the miscalculations made him unqualified under Daubert.
A digest of Whitesell Corp. v. Electrolux Home Products, Inc., 2021 U.S. Dist. LEXIS 39023 (March 2, 2021), as well as the court’s opinion will be available soon at BVLaw.