The opinion of the court was delivered by: Judge Amy J. St. Eve
MEMORANDUM IN SUPPORT OF BP AMOCO CHEMICAL COMPANY AND BP CORPORATION NORTH AMERICA INC.'S MOTION FOR STATUS CONFERENCE TO DISCUSS THE APPROPRIATE RELIEF NECESSARY IN LIGHT OF FHR'S SUPPLEMENTARY PRODUCTION LAST WEEK OF AN ADDITIONAL 48,000 PAGES OF DOCUMENTS AND 4 DVDS CONTAINING 249 VIDEO SEGMENTS OF THE JOLIET PLANT
This case is nearly four years old; it is set for trial on September 8, 2009. The parties' Pretrial Order, including a list of all trial exhibits, is due in several weeks, on July 1, 2009. Yet last week, on May 13, 2009, long after the close of fact and expert discovery, FHR produced over 15,000 documents-totaling over 48,000 individual pages-and four DVD's containing 249 different video segments consisting of 123 minutes of video footage of maintenance and repair work relating to at least six of its individual claims. FHR produced these materials more than two years after FHR first represented that its document production would be complete by the Spring of 2007, and nearly nine months after FHR represented to the Court and to BP Amoco that its document production was "finished." Moreover, FHR's recent production took place long after the documents and videotapes were created. For example, approximately 92% of the 11,761 electronic documents produced last week were created in 2008 or earlier; the previously unproduced video segments were all created between July 27, 2008 and October 10, 2008; and monthly financial reports included in this production date back to August 2008. The documents came from over twenty different FHR employees, including key witnesses in this case.
In addition, on February 13, 2009, after fact discovery had closed, after expert reports, and after all but one of the expert depositions had been completed, FHR served a supplemental interrogatory response in the form of a revised "Claim Chart," seeking to revise its alleged cost-of-repair damages for 31 of its remaining claims. In its latest revised Claim Chart, FHR seeks to increase its "cost of repairs to date" for those claims by $14 million, while decreasing its "estimated future costs" by $68 million. But the revised Claim Chart includes no facts to explain or support these revised damages claims, and FHR has refused to provide any explanation for its revised damages, either by fully supplementing its interrogatory responses or by producing a witness to answer basic questions about its revised damages claims. The only "explanation" FHR has provided for its revised damages is the production last week of over 48,000 pages of documents and 249 video segments - two months after FHR served its revised Claim Chart.
BP Amoco does not seek an extension of the trial date. Instead, as summarized in its motion, BP Amoco suggests a variety of potential remedies available to the Court under the circumstances. The facts giving rise to this motion, the resulting prejudice to BP Amoco, and the applicable case law supporting the potential remedies are discussed below.
RELEVANT PROCEDURAL HISTORY
1. Since this litigation began in September 2005, the parties have engaged in extensive discovery. Discovery served by BP Amoco has included document requests and interrogatories focusing on FHR's alleged damages and damages causation, including the amount of the alleged damages, how the alleged damages are calculated, the facts supporting the alleged damages, and the documentary support for the alleged damages. (Exs. 1-4)
2. In its responses to BP Amoco's discovery requests and the parties' discussions, FHR agreed to: (i) "conduct a reasonable search for and produce all non-privileged documents relating to its damages calculations as they become available to FHR"; and (ii) provide a "single comprehensive claim chart" describing its claimed damages with particularity and describing how such damages were calculated. (Ex. 5) FHR further agreed to "seasonably supplement" its response to BP Amoco's damages interrogatories (id.), as required in any event by Rule 26(e). FHR served its first "Master Claim Chart" on June 5, 2006, listing 73 claims. With each new revised Claim Chart thereafter, FHR changed its damages claims.
3. In December 2006, the parties jointly asked the Court for a revised schedule extending the discovery cutoff to June 29, 2007, which the Court granted. (Dkt. Nos. 97, 100) On April 2, 2007, FHR represented to BP Amoco in writing that it believed it was "on track to complete our document production by May 1st, ." (Ex. 6) Based on this representation and the assumption that FHR would not continue to revise and change its claims, the parties agreed to a close of fact discovery on September 28, 2007. (Dkt. Nos. 117, 119)
4. FHR did not complete its production by May 1, 2007, and continued to produce documents well after that date. BP Amoco filed a contested motion seeking an extension of fact discovery. (Dkt. Nos. 140-41) On August 21, 2007, the Court granted BP Amoco's motion. (Dkt. No. 147) In late 2007, based on FHR's representation that it was essentially finished with its document production, the Court set a fact discovery cut off of April 30, 2008, which was later extended to May 31, 2008, and set a trial date of October 14, 2008. (Dkt. Nos. 156, 175)
5. Despite FHR's assurances and representations to BP Amoco and the Court that its document production was complete, BP Amoco continued to question FHR regarding what appeared to be significant gaps in FHR's document production. Most importantly, as of early 2008, FHR had produced few, if any, damages and damages causation documents. Beginning in February 2008, BP Amoco sent FHR a series of letters reminding FHR of its obligations under the Federal Rules and its written discovery agreements by producing all documents supporting its damages claims. (Exs. 7-11) BP Amoco also served requests to admit, asking FHR to admit that it had no documents to support its alleged damages.
6. In May and early June 2008, on the eve of and after the close of fact discovery, FHR produced over 212,000 new documents. Over 137,000 related to damages issues, including: 66,680 invoices; 5,248 Purchase Orders; 2,305 Work Orders; 80 bank statements; 22,107 cancelled checks; approximately 40,875 Work Orders; and three CD's full of electronic information, consisting of Excel spreadsheets. Conservatively estimated, the total number of pages produced by FHR after May 1, 2008, exceeded 525,000. (Ex. 12)
7. Not only did FHR produce voluminous documents with detailed information after the close of fact discovery, it also supplemented its Master Claim Chart for the first time in over a year, after scores of depositions already had been taken using the old Chart. (The Claim Chart was and is FHR's answer to BP Amoco's damages Interrogatories No. 4, 5 and 6.) FHR only supplemented its Claim Chart in response to BP Amoco's repeated queries to FHR noting that the Chart appeared to be both out of date and incomplete. (Exs. 7-11) On June 9, 2008, a week after the close of fact discovery, FHR finally served a revised Claim Chart (Ex. 13), supplementing the version that FHR had last updated more than a year earlier. FHR's revised Chart increased its alleged damages for 58 of its then-remaining 59 claims by $48.2 million.
8. Following FHR's untimely production of documents and its revised Claim Chart after the close of fact discovery, BP Amoco in July 2008 filed a motion (i) for an extension of time to complete fact discovery on damages and for a continuance of the trial date or, in the alternative, (ii) to preclude FHR's damages claims. (Dkt. Nos. 195-96) FHR opposed the motion. At the motion hearing on July 16, 2008, FHR's counsel represented to the Court that "[w]e believe we have finished our document production." (Ex. 14) After FHR's counsel explained that FHR would be producing additional de-privileged documents and certain other documents that were the subject of discovery negotiations, Judge Moran asked FHR's counsel for a specific representation that FHR's document production was complete:
THE COURT: In any event, what I'm hearing is your representation to this point is yes, we think we're done?
Mr. Stiles: Yes, your Honor.
Mr. Figliulo: Yes. (Id. at 8) Judge Moran then granted BP Amoco's request for an extension of time to complete fact discovery on FHR's damages claims, and continued the trial date, but denied BP Amoco's alternative request for preclusion of FHR's damages claims. (Dkt. No. 201) BP Amoco was permitted until September 15, 2008 to complete fact discovery on FHR's alleged damages. The additional discovery, including the review of the over half million pages of late produced materials by FHR, caused BP Amoco to incur significant expenses.
9. On September 4, 2008, FHR produced Richard Morris as its Rule 30(b)(6) witness to testify about "the damages that Flint Hills claims to have suffered, how those amounts were calculated or otherwise determined, the documents evidencing such amounts, and the accounting or other records confirming or reflecting any expenditures that Flint Hills claims to have made." (Ex. 15)
10. On October 6, 2008, BP Amoco's damages expert Craig Elson submitted his initial report. Elson's report analyzed the damages claims in the June 9, 2008 Claim Chart, as well as the documents FHR had produced as of his report, which FHR had represented to Judge Moran three months earlier was the extent of FHR's production. Elson's report included a claim-by-claim analysis of the specific damages amounts alleged by FHR in its June 9, 2008 Claim Chart. (Dkt. No. 425, Ex. 2) FHR's experts also issued reports, including opinions about the reasonableness of the damages claimed by FHR in its June 9, 2008 Claim Chart.
11. During expert depositions, all of which except one had been completed before FHR produced its revised Claim Chart on February 13th, BP Amoco questioned FHR's experts about the specific damages amounts alleged in the June 9, 2008 Claim Chart. For example:
* In his report for Claim 56, FHR expert Philip Wheeler opines that "Flint Hills' current estimate to complete this [future] work is about $30M which allows for inflation and elimination of any work on the two 138 kV lines. This cost estimate is reasonable based on the scope of work." BP Amoco questioned Wheeler about this estimate. (Ex. 16) Then, after Wheeler's deposition, FHR revised its Claim Chart and decreased its future estimated damages figure to $7 million, approximately $23 million less than what Wheeler testified was reasonable. Thus, BP Amoco never had the opportunity to ask Wheeler about FHR's latest alleged damages for this claim.
* In his report for Claim 77, FHR expert Eric Sullivan states that damages of between $6.9 to $19 million, including the $10.76 million listed in FHR's June 9, 2008 Claim Chart, are reasonable. BP Amoco questioned Sullivan about this opinion and the lack of any support for this opinion. (Ex. 17) Then, after Sullivan's deposition, FHR decreased its future estimated damages for Claim 77 to $3.6 million. BP Amoco never had the opportunity to ask Sullivan about FHR's revised damages claim or whether he now concedes that the prior claim -- which he opined was reasonable -- was, in fact, excessive and speculative.
* In his report for Claim 72, FHR expert Geoffrey Egan opines that damages of between $27 to $32 million, including the $30.25 million listed in the 2008 Claim Chart, are reasonable. FHR served the latest revised Claim Chart, which now seeks a total of $3 million for this claim, six days before Egan's deposition. When questioned about FHR's revised damages, Egan testified that he only recently learned about the revised damages and that FHR was not going to replace the Thermox, but he was not involved in that decision and did not know the reasons for it. (Ex. 18) Thus, the only expert deposed after FHR served its revised Claim Chart could not answer basic questions about FHR's revised damages.
12. In November and December 2008, following fact discovery, BP Amoco filed motions for partial summary judgment. These motions were based on the allegations and evidentiary record at the time, including the individual damages amounts alleged in the June 9, 2008 Claim Chart, the documents produced by FHR, Morris' 30(b)(6) testimony on damages, and other testimony relating to the damages amounts set forth in the June 9, 2008 Claim Chart.
13. On January 23, 2009, at the initial Status Conference following the reassignment of this case, the Court asked the parties to submit a joint report listing the claims that remain at issue. At the Status Conference, counsel for FHR indicated that certain claims may be withdrawn altogether, but FHR did not inform BP Amoco or the Court that FHR intended to significantly revise its alleged damages or that FHR ...