The opinion of the court was delivered by: JAMES MORAN, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff class brought this action against Amsted Industries,
Inc. (Amsted), LaSalle Bank (LaSalle) and various other
defendants for violations of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. § 1001 et seq., (ERISA).
Plaintiffs now seek sanctions against Amsted and LaSalle for
discovery abuses, and request that the court strike the opinions
of three of defendants' expert witnesses concerning Amsted's
stock repurchase obligation. Plaintiffs claim that despite
numerous production requests, defendants did not disclose various
relevant documents until after the close of fact discovery and
plaintiffs' submission of their expert disclosures. Nonetheless,
defendants provided these documents to their own experts.
Plaintiffs seek to bar defendants' use of certain parts of
opinions of Robert Gross, Lawrence Levine, and Joseph Belger.
Plaintiffs' motion for sanctions is denied.
After more than sixteen months, fact-discovery in this case
closed on August 22, 2003. Plaintiffs made their expert
disclosures on September 5, 2003, and defendants made their
disclosures on December 10, 2003. During discovery, plaintiffs
made several production requests to Amsted and LaSalle. In
request no. 51 of their First Requests for Production submitted to Amsted on May 3, 2002, plaintiffs asked for:
"Documents provided by either AMSTED Industries, Inc. or the
AMSTED ESOP, to any third-party for use in the preparation of any
stock repurchase obligation feasibility study, analysis, opinion,
report and/or projection in connection with, or preparation for,
the Varlen merger." Amsted objected to the production of
documents generated before 1999, but otherwise complied with the
request. In request no. 55 of their Second Requests for
Production made to Amsted on June 13, 2002, plaintiffs requested:
"To the extent not previously produced, a copy of all documents,
data compilations and tangible things that are in your
possession, custody or control that you may use to support any
claims or defenses." Amsted responded that the "[i]nvestigation
continues." On October 21, 2002, plaintiffs served Amsted with
their Third Requests for Production, in which request no. 59
read: "To the extent not previously produced, any data, output,
report or other analysis generated by, or created with PERLS
software, that it is/was related to or made in conjunction with
any stock repurchase obligation stemming from any corporate
acquisition or merger from January 1, 1997 to the present."
Amsted once again objected to the temporal scope of the request
and referred plaintiffs to previously disclosed documents.
Plaintiffs also made requests for production on LaSalle Bank.
On October 9, 2002, plaintiffs requested "All documents
regardless of form, including all documents stored on magnetic or
digital media, provided by Amsted Industries, Inc., and/or the
Amsted Industries, Inc. Employee Stock Ownership Plan (ESOP) to
LaSalle Bank, N.A. as Trustee of the Amsted Industries, Inc.
Employee Stock Ownership Plan (ESOP) for its use in serving as
trustee of the Amsted Industries, Inc. Employee Stock Ownership
Plan (ESOP) from January 1, 1997 to the present." LaSalle stated
that it would produce all non-privileged documents responsive to
Finally, plaintiffs requested that Matthew Hower, Amsted's
treasurer, bring certain documents to his deposition, including
"[f]easibility studies, analyses, opinions, reports and/or
projections prepared in connection with the ESOP stock repurchase
obligation resulting from the, prepared at the direction of,
reviewed by, circulated to or addressed to any Amsted officer,
director and/or employee" and all documents in his control that
he may use to support his claims and defenses.
In response to Amsted's objection to the production of
documents generated before 1999, plaintiffs brought a motion to
compel. On December 18, 2002, the court ordered defendants to
supplement their previous responses to plaintiffs' production
requests with documents from January 1, 1998 to January 1, 1999.
Armstrong v. Amsted, 2002 WL 31844956 (N.D.Ill. 2002).
After the close of fact-discovery, and after plaintiffs had
made their expert disclosures, defendants provided plaintiffs
with three different types of documents that were previously
undisclosed. On October 1, 2003, Amsted produced twelve PERLS
reports from 1998 and two from 1999. LaSalle's expert, Robert
Gross, refers to these reports in his opinion, finding that
Amsted used PERLS software to analyze its repurchase obligation
throughout 1998 and 1999. On December 31, 2003, three days before
Amsted's expert Lawrence Levine's deposition, Amsted produced
spreadsheets documenting the company's quarterly ESOP repurchase
history from 1984 to 2000. Levine received these spreadsheets
while formulating his opinion after he requested more information
from Amsted. Another spreadsheet allegedly generated by Amsted
containing ESOP repurchase data from 1987 to 1999, appeared in
Levine's report under Tab 3. Finally, on January 5, 2004, the day
before the deposition of its expert, Joseph Belger, LaSalle produced 100 pages of employee census
spreadsheets listing various details about Amsted's ESOP
participants, including their age, years of employment, and share
account balances. To give plaintiffs time to review these census
sheets, Belger's deposition was rescheduled.
Plaintiffs argue that defendants' failures to produce the PERLS
reports, the quarterly ESOP repurchase spreadsheets and the
employee census sheets, in response to their production requests,
are discovery abuses sanctionable under both the court's inherent
powers and Federal Rule of Civil Procedure 37. Courts have an
inherent power to sanction a range of litigation abuses
including discovery abuses to ensure the "orderly and
expeditious disposition of cases." Chambers v. NASCO, Inc.,
501 U.S. 32, 43, 46 (1991). Furthermore, Rule 37 explicitly grants
the court the power to sanction discovery abuses. It states: "A
party that without substantial justification fails to disclose
information required by Rule 26(a) or 26(e)(1) shall not, unless
such failure is harmless, be permitted to use as evidence at a
trial, at a hearing, or on a motion any witness or information
not so disclosed. In addition to or in lieu of this sanction, the
court, on motion and after affording an opportunity to be heard,
may impose other appropriate sanctions. . . ." Amsted and LaSalle
argue that the circumstances do not warrant sanctions. In
separate responses each defendant addresses its alleged lapses
and the effect on its expert witnesses' reports.
Amsted first argues that plaintiffs' motion should be denied
because it does not comport with Local Rule 37.2, which requires
a statement from the movant that a consultation between the
parties was unable to resolve the discovery dispute or at least
that attempts to schedule a consultation were made but were
unsuccessful due to no fault of the movant. Though plaintiffs' motion does not contain such a statement and
apparently no consultation was attempted, we accept plaintiffs'
contention that a meeting between the parties would have been
fruitless, given plaintiffs' desired sanction.
In response to plaintiffs' allegations that defendants failed
to produce the PERLS reports, Amsted argues both that plaintiffs
never sought to compel these documents and that its failure to
produce these documents was inadvertent and rectified when they
were given to plaintiffs immediately after Amsted discovered the
lapse. Plaintiffs maintain that the PERLS reports from 1998 and
1999 should have been turned over in response to three of their
requests for production and to the document requests submitted
with Hower's deposition notice. Defendants objected to all of
these requests to the extent they sought documents generated
before January 1, 1999, leading to plaintiffs' motion to compel.
We ordered defendants to supplement their responses to include
materials from 1998. Amsted argues that plaintiffs only sought to
compel the additional documents for certain requests from its
First Requests for Production. Thus, it maintains that of the
four allegedly relevant requests it needed only to provide
documents from 1998 in response to request 51 from the First
Requests for Production. This request did not implicate the PERLS
reports, Amsted argues, because it sought documents relating to
the Varlen merger, and the PERLS reports did not relate.
Though Amsted's technical reading of plaintiffs' requests and
the motion to compel may be correct, it recognizes that this did
not relieve its obligation to produce the PERLS reports from
either 1999 (which clearly would have been implicated by
plaintiffs' cited requests) or 1998. Thus, Amsted maintains that
the failure was an inadvertent mistake by Hower, who allegedly
believed that all the PERLS reports requested were produced
Amsted also contests plaintiffs' arguments regarding Lawrence
Levine's use of data in his expert report. Plaintiffs protest the late production of
spreadsheets containing quarterly ESOP data from 1984 to
2000,*fn1 the failure to produce the spreadsheet at Tab 3 of
Levine's report, and Levine's reliance on this historical
quarterly ESOP information in his standard deviation analysis.
Amsted minimizes the significance of the tardy production of
spreadsheets, arguing that much of the data contained in the
spreadsheets had been produced in other documents and that
Levine's reliance on this information (especially in relation to
his standard deviation analysis of Amsted's repurchase
obligation) was overstated by plaintiffs. However, as plaintiffs
point out, defendant's production of some of the ...