United States District Court, N.D. Illinois, Eastern Division
PARAMOUNT MEDIA GROUP, INC., an Illinois corporation, Plaintiff,
VILLAGE OF BELLWOOD, an Illinois municipal corporation, and IMAGE MEDIA ADVERTISING, INC., an Illinois corporation, Defendants.
MEMORANDUM OPINION AND ORDER
JORGE L. ALONSO, District Judge.
Before the Court are plaintiff's objections to three of Magistrate Judge Cole's rulings. For the reasons stated below, the Court overrules plaintiff's objections [183, 185] to the May 28, 2015 memorandum opinion and order and the June 2, 2015 memorandum opinion and order and overrules in part and sustains in part plaintiff's objection  to the June 10, 2015 memorandum opinion and order.
Paramount Media Group, Inc. ("Paramount") is a company that buys and leases property, builds outdoor billboards on the property, and sells advertising on those billboards. (R. 81, First Am. Compl. ¶ 2.) Paramount brought this action against the Village of Bellwood ("Bellwood") and Image Media Advertising, Inc. ("Image Media") alleging that defendants have violated Paramount's First and Fourteenth Amendment rights and that they have conspired to restrain trade and monopolize the billboard market in Bellwood. Paramount also alleges that Image Media tortiously interfered with Paramount's contract with third parties to lease the property at 1133-35 Bellwood Avenue in Bellwood for the purpose of building and maintaining a billboard.
Judge Norgle, to whom this case was previously assigned, referred the case to Magistrate Judge Cole for all pretrial issues except dispositive motions. (R. 53.) Recently, the parties have conducted expert discovery and have been briefing various discovery and evidentiary disputes. On May 28, June 2, and June 10, 2015, Judge Cole issued rulings [169, 176, 182] on certain of Image Media's motions. Paramount has filed objections to those rulings.
A. Legal Standards
As Paramount and Image Media recognize, where, as here, a district court considers timely objections to a magistrate judge's rulings on nondispositive matters, the magistrate judge's rulings will be modified or set aside only if they are "clearly erroneous or... contrary to law." Fed.R.Civ.P. 72(a); see also Domanus v. Lewicki, 742 F.3d 290, 295 (7th Cir. 2014). Under the clear-error standard of review, "the district court can overturn the magistrate judge's ruling only if the district court is left with the definite and firm conviction that a mistake has been made." Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir. 1997).
B. Damages Claim for a Digital Billboard
On May 28, 2015, Judge Cole issued a memorandum opinion and order granting Image Media's motion to bar Paramount's damages claim for a digital billboard (as opposed to a static billboard). (R. 169.) Judge Cole held that Paramount failed to show that its untimely disclosure of this claim was either substantially justified or harmless.
Federal Rule of Civil Procedure 26(a)(1)(A)(iii) requires parties to initially disclose to the other parties, without waiting for a discovery request, "a computation of each category of damages claimed by the disclosing party-who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered." A party must supplement its initial disclosures and discovery responses "in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed.R.Civ.P. 26(e)(1)(A). "If a party does not follow these rules, the party is not allowed to use that information... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or was harmless.'" Dynegy Mktg. & Trade v. Multiut Corp., 648 F.3d 506, 514 (7th Cir. 2011) (quoting Fed.R.Civ.P. 37(c)(1)). The following factors guide the court's discretion: "(1) the prejudice or surprise to the party against whom the evidence is offered; (2) the ability of the party to cure the prejudice; (3) the likelihood of disruption to the trial; and (4) the bad faith or willfulness involved in not disclosing the evidence at an earlier date." David v. Caterpillar, Inc., 324 F.3d 851, 857 (7th Cir. 2003).
This case was filed on May 30, 2013. In the complaint, Paramount alleged that defendants are "taking away Paramount's rights under its lease and IDOT [Illinois Department of Transportation] permit to construct a billboard on" the property at 1133-35 Bellwood Avenue in Bellwood (the "Property"). (R.1, Compl. at 12 ¶ 11, 35.) Attached to the complaint is Paramount's IDOT "Application for Outdoor Advertising Permit, " in which Paramount checked the "Painted bulletin" box under "Description of Proposed Sign" and "Type." Another possible sign type on the form that Paramount did not check was "Multiple Message." (R. 1-2, Compl., Ex. 2.) As Judge Cole noted, when Paramount filed its amended complaint on January 28, 2014, "nothing had changed-the sign at issue was a static one." (R. 169 at 2 (citing R. 81-2, First Am. Compl., Ex. 2).) On February 21, 2014, Paramount made its amended Rule 26(a)(1) damages disclosure, stating that in addition to declaratory and injunctive relief, it was "seeking damages in the amount of $1, 678, 000.00, the fair market value of the outdoor advertising sign, and its attorneys' fees and costs." (R. 151-1 at 3.) The same day, Paramount stated the same figure in response to defendants' interrogatory that asked Paramount to "[i]dentify and itemize all lost profits and monies that Paramount claims to have lost from its inability to construct and operate a billboard" on the Property. (R. 151-2 at 10 ¶ 12.) Paramount did not supplement or update its damages computation again before the close of fact discovery on August 31, 2014.
On October 20, 2014, the last day for plaintiff to disclose its expert witnesses, Paramount served a set of "Second Amended" Rule 26 disclosures that included the following addition to the $1, 678, 000.00 claim: "It is also believed that the present value of projected net income for a double faced 20' × 60' vinyl sign at 1133-35 Bellwood Avenue, Bellwood, Illinois is $3, 611, 173.00 and for a double faced 20' × 60' digital sign is "$13, 993, 808." (R. 151-3 at 3.) This set of disclosures was served in conjunction with the Amended Report of plaintiff's president and CEO, David Quas. (R. 121, Pl.'s Resp. Image Media's Mot. Bar Evidence at 4-5.) Evidently, the first mention of a digital billboard in this case had occurred in Quas's original report of March 13, 2014, where he had stated as follows regarding damages:
In my opinion, based on my experience of owning and operating billboards, that [sic] a billboard structure and two 20'×60' advertising faces generate approximately $7, 500 net per face per year at 70% occupancy (which is an industry average) or $180, 000 in gross revenues per year.... [After accounting for certain itemized expenses, ] it is my belief that the expected profits from the sign each year would be $105, 180.00.
Further, in my opinion of [sic] the fair market value of the outdoor advertising will be approximately $1.6 million and could be significantly more if a digital billboard space is installed. Current revenues for a digital face in this location should total $470, 000.00 per year. This is based on my over 20 years of experience selling and purchasing billboards in the Chicagoland area.
(R. 183-1, Paramount's Objection, Ex. 1, Quas Report 3.) In contrast, Quas's October 20, 2014 amended report states as follows in pertinent part:
In my opinion, based on my experience of purchasing, selling, owning and operating billboards, a double sided 20'×60' vinyl sign located at 1133-35 Bellwood Avenue, Bellwood, Illinois should produce income with a net present value of $3, 611, 673....
Also, in my opinion, based on the same calculations and analysis, the net present value of projected net income of a double faced 20' × 60' structure with a ...