Rule 37(c)(1) Sanctions: Exclusion of Witnesses for Failure to Disclose until Eve of Trial — Harmless Error Factors (6th Circuit) — Evidence: To Preserve Error on a Conditional Ruling, Counsel Must Object & Preserve Objection in Stipulated Judgment
Abrams v. Nucor Steel Marion, Inc., 2017 U.S. App. LEXIS 9323 (6th Cir. May 25, 2017):
In this diversity class-action lawsuit alleging state-law claims of indirect trespass and nuisance,1 Plaintiffs-Appellants, [*3] Randal Bush and Ronald Tolle (Plaintiffs), appeal several unfavorable pre-trial evidentiary rulings. After the district court issued these rulings, Plaintiffs and Defendant-Appellee Nucor Steel Marion, Inc. (Defendant), agreed that if they proceeded to trial, it would result in a directed verdict for Defendant. Consequently, Plaintiffs stipulated to a final judgment in favor of Defendant, which led to this appeal. For the reasons set forth below, we affirm the judgment of the district court.
1 Plaintiffs do not raise any issues on appeal specifically related to their claim for nuisance.
In 2009 and 2010 the Ohio EPA (OEPA) sent Defendant a number of "notices of violation" alleging emission-regulations infractions by Defendant at its mini-mill in Marion, Ohio (the Facility). Defendant resolved these allegations by entering into a negotiated settlement with the OEPA: the "Director's Final Findings and Orders" (DFFO). In the DFFO, Defendant agreed to comply with the OEPA's orders and waived any rights to appeal in return for full settlement of the disputed claims and without any "admission of fact, violation or liability." R. 74-2 at 1624.
In the DFFO, the OEPA noted that manganese levels in the Marion area were "at elevated levels that are unacceptable for protecting [*4] public health." Id. at 1617. However, the DFFO did not address the source of the elevated levels of manganese or find Defendant in violation of any regulatory obligation.
In the fall of 2012, Plaintiffs' attorneys held a town hall meeting in Marion, Ohio. Based on the DFFO, counsel alleged that the Facility was emitting manganese over the Marion residents' properties. As a result, a number of property owners, including Plaintiffs, agreed to be members of a class-action lawsuit against Defendant.
B. Procedural History
On December 26, 2012, Plaintiffs' attorneys filed the class-action complaint in the Marion County Court of Common Pleas, alleging nuisance and indirect-trespass claims under Ohio law. The claims were based solely on harm to their property from manganese. On January 18, 2012, Defendant timely removed this case to the United States District Court for the Northern District of Ohio, Western Division. Prior to discovery, the class action was transformed into a bellwether trial,2 and Plaintiffs were designated as the bellwether plaintiffs to test the claims of the class.
2 A bellwether trial is where a small number of class-action plaintiffs, who can adequately represent the class, test their claims and legal theories first, before proceeding with the rest of the class.
Following the close of discovery, Defendant moved to exclude Plaintiffs' expert toxicology witness, Dr. Jonathan Rutchik. [*5] 3 Dr. Rutchik was Plaintiffs' key witness, as he was to provide the evidence necessary to establish the alleged damages to Plaintiffs' property. Perhaps sensing that the district court was likely to exclude Dr. Rutchik, and that without his testimony they would not be able to make out a prima facie case, Plaintiffs attempted to bolster the record before the district court.
3 Defendant also moved to exclude the testimonies of two of Plaintiffs' other expert witnesses: Craig Cantrall, a Cleveland-based real-estate agent, and Lance Traves, an environmental-compliance expert. The district court totally excluded Cantrall's testimony, and only partially excluded Traves' testimony. Those rulings are not at issue on appeal.
First, they indicated to the district court that they would now also be relying on the DFFO to establish damages to their properties from manganese. Second, Plaintiffs "adjusted" their theory of liability by alleging property damage from Defendant's particulate-matter emissions, or PM,4 as a whole (of which the manganese here is only one component). To this end, one month before trial, and after discovery had closed, Plaintiffs (1) disclosed four OEPA fact witnesses, who presumably5 would have testified to Nucor's standing with the OEPA and testified about the DFFO; (2) began to claim and speak of harm to their properties from PM, rather than from only manganese, in documents submitted to the court;6 (3) sought judicial notice of eight U.S. EPA documents addressing PM and two more documents concerning manganese in particular [*6] (presumably to take the place of expert testimony on the subject); and (4) asked the district court to judicially estop Defendant from advancing arguments that allegedly contradicted litigation positions concerning PM that Defendant had taken in unrelated lawsuits. As a result, Defendant moved to exclude the DFFO and the OEPA witnesses, restrict Plaintiffs' claims to harm from manganese alone, and deny Plaintiffs' motions for judicial notice and judicial estoppel.
4 Particulate matter, or PM, is "a mixture of solid particles and liquid droplets found in the air." Particulate Matter (PM) Basics, US Environmental Protection Agency (Sept. 12, 2016), https://www.epa.gov/pm-pollution/particulate-matter-pm-basics#PM. These particles "can be made up of hundreds of different chemicals." Id. Particles come in many forms, such as dust, dirt, soot, or smoke. Id. Smokestacks are a common source of PM. Id. PM can be the delivery agent for hazardous air pollutants. See Sierra Club v. EPA, 479 F.3d 875, 879 (D.C. Cir. 2007).
5 The content of these witnesses' testimony has never been revealed.
6 These documents include Plaintiffs' response to Defendant's Motion to Exclude Expert Testimony, Plaintiffs' response to Defendant's Motion to Exclude the DFFO and OEPA Witnesses, and Plaintiffs' brief on appeal.
The district court issued two orders. In the first order, after "clarif[ying] Plaintiffs' burden of proof on each claim," R. 86 at 2883, the district court granted Defendant's motion to exclude the expert testimony of Dr. Rutchik. It found Dr. Rutchik's opinion inadmissible because Dr. Rutchik failed to "test [his] hypothesis in a timely and reliable manner or to validate [his] hypotheses by reference to generally accepted scientific principles as applied to the facts of the case." Id. at 2885 (alteration in original) (quoting Pride v. BIC Corp., 218 F.3d 566, 578 (6th Cir. 2000)). The district court further prohibited Plaintiffs from altering their theory of liability from harm based on the emission of manganese to harm from PM. Id. at 2880. In this same order, the [*7] district court also denied without prejudice Plaintiffs' request for judicial notice and judicial estoppel because Plaintiffs had failed to articulate how any of the documents in question related to their claims. Nonetheless, the court indicated that it would allow Plaintiffs to impeach Defendant's corporate witnesses with relevant prior inconsistent statements, and that it would admit the EPA publications if Plaintiffs showed how the specific information they sought to introduce related to their claims. Id. at 2888.
In the second order, the district court first excluded the DFFO because it is a consent decree and is therefore inadmissible under Federal Rules of Evidence 403 and 408 and Ohio Revised Code § 3704.09. R. 102 at 3176. Plaintiffs do not challenge this ruling on appeal. Next, the district court excluded the four OEPA fact witnesses because Plaintiffs did not disclose them until after the close of discovery, and on the eve of trial. Id. at 3177.
On appeal, Plaintiffs challenge the district court's: (1) characterization of the proofs needed to establish damages in an Ohio indirect-trespass claim; (2) exclusion of Dr. Rutchik as an expert witness; (3) exclusion of the four OEPA fact witnesses; (4) restriction of their theory of liability; and (5) denial, [*8] without prejudice, of their motion for judicial notice and request for judicial estoppel.
Unless Plaintiffs can prevail on the first two issues here, it is extremely doubtful that they will be able to show damages and make out a prima facie case under a theory of harm from manganese. Plaintiffs' last three challenges on appeal, much like their corresponding course of action on these issues in the district court, represent a "Hail Mary" attempt to get their case to trial in the absence of Dr. Rutchik.
C. Exclusion of OEPA Fact Witnesses
Plaintiffs challenge [*16] the district court's sanction imposed under Federal Rule of Civil Procedure 37(c)(1), excluding as witnesses four OEPA employees Plaintiffs first disclosed in Plaintiffs' proposed trial order on the eve of trial, after the close of discovery. Rule 37 sanctions are reviewed for abuse of discretion. Sommer v. Davis, 317 F.3d 686, 692 (6th Cir. 2003).
Rule 26(a)(1) requires parties to disclose early in discovery persons likely to have discoverable information if the disclosing party may use that information or person to support its claim or defense. Fed. R. Civ. P. 26(a)(1)(A)(i). Rule 37 requires trial courts to punish parties that violate this provision in Rule 26 with exclusion of evidence or witnesses, unless the sanctioned party can show that the violation is substantially justified or harmless, or the trial court opts to impose an alternative sanction instead. Fed. R. Civ. P. 37(c)(1); R. C. Olmstead, Inc. v. CU Interface, LLC, 606 F.3d 262, 271 (6th Cir. 2010). In determining harmlessness, the Sixth Circuit looks to five factors:
(1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the non-disclosing party's explanation for its failure to disclose the evidence.
Howe v. City of Akron, 801 F.3d 718, 748 (6th Cir. 2015).
The district court determined that Plaintiffs' last-minute disclosure of the OEPA witnesses [*17] was not harmless or substantially justified. We agree, as none of the abovementioned factors weigh in Plaintiffs' favor.
First, Defendant could only have known about three of the witnesses because they had authored one of the notices of violation sent to Defendant in 2009 or 2010, or they had been carbon copied on one of those notices. Nothing in the record indicates that Defendant knew or could have known about the existence of the fourth witness. Further, there is no evidence that Defendant knew, or could have known, what these witnesses would say at trial. The surprise to Defendant is obvious.
Additionally, at this stage of litigation, allowing the witnesses to testify would delay and disrupt the trial. Not only would Defendant need time to depose the four witnesses, but Defendant would also have to be given the opportunity and time to find rebuttal evidence or testimony. Moreover, given that the content of the proposed testimony of these witnesses has never been disclosed or even hinted at by Plaintiffs, it is impossible to weigh the importance of this evidence. Finally, Plaintiffs did not offer any justification for their tardiness, but simply alleged that Defendant could "easily [*18] guess what the substance of [the witnesses'] testimony would be."
In short, we find no abuse of discretion.
E. Denial of Plaintiffs' Motion for Judicial Notice and Request for Judicial Estoppel
Lastly, Plaintiffs challenge the district court's denial without prejudice of their motion for judicial notice and judicial estoppel. Plaintiffs asked the district court to take judicial notice of 451 pages of U.S. EPA documents concerning PM and manganese, and of court documents from other litigation concerning Defendant's alleged emission of PM. Based upon these latter set of documents, Plaintiffs also asked the district court to judicially estop Defendant from making allegedly contradictory assertions in this litigation. The district court refused to take judicial notice of either set of documents because Plaintiffs failed to show [*22] how these documents were relevant to their claims concerning damage to property caused by Defendant's emission of manganese, as it had already ruled that Plaintiffs could not claim harm based on PM. However, the district court made this denial without prejudice, subject to a later showing of relevance, and invited Plaintiffs to "confer [with Defendant] regarding joint stipulations to be read to the jury, including any EPA findings or matters of public record relevant to this case." R. 86 at 2888 (emphasis added). As the parties entered into a stipulated judgment prior to trial, the parties never produced jury stipulations.
To preserve an alleged error on a conditional ruling by the trial court, counsel must affirmatively raise the objection. United States v. Brawner, 173 F.3d 966, 970 (6th Cir. 1999). Because Plaintiffs failed to preserve their objection to this error in the stipulated judgment, they cannot raise it now. See Jolivette v. Husted, 694 F.3d 760, 770 (6th Cir. 2012) ("As a rule, we will not review issues if they are raised for the first time on appeal."). And although an appellate court may take notice of a plain error by the lower court affecting a substantial right, despite the issue not properly being preserved, Fed. R. Evid. 103(e), the "burden of establishing entitlement to relief for plain error [*23] is on the [party] claiming it," United States v. Dominguez Benitez, 542 U.S. 74, 83 (2004) (holding this in a criminal context).
Plaintiffs have "ma[d]e no argument" about plain error, and therefore have "not satisfied [their] burden to establish [their] entitlement to relief." United States v. Threadgill, 572 F. App'x 372, 389 (6th Cir. 2014). Therefore, we decline to consider the issue, and we affirm the district court's denial of Plaintiffs' motion for judicial notice and request for judicial estoppel.
For the foregoing reasons, Plaintiffs are unable to make out a prima facie case. Therefore, the judgment of the district court is AFFIRMED.
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