Key v. Qualcomm Inc, 2025 U.S. App. LEXIS 4311 (9th Cir. Feb. 25, 2025) (unpublished):

Plaintiffs sued Qualcomm Inc., tracking the Federal Trade Commission’s (FTC) theories that Qualcomm’s business practices violated state and federal antitrust law. These business practices include (1) Qualcomm’s “no license, no chips” policy, under which Qualcomm refuses to sell modem chips to cellular manufacturers that do not take licenses to practice Qualcomm’s patents, and (2) Qualcomm’s alleged exclusive dealing agreements with major device manufacturers Apple and Samsung.

 After the FTC’s action failed, Plaintiffs pivoted to state-law claims under modified theories of antitrust harm. But Plaintiffs’ state law claims—even as modified—fail. So we largely affirm the district court’s judgments against Plaintiffs. But because the district court lacked equitable jurisdiction over Plaintiffs’ UCL unfairness claim of exclusive dealing, we vacate and remand with instructions to dismiss that claim without prejudice for refiling in state court.

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C

Before considering the grant of summary judgment on what remains of Plaintiffs’ Cartwright Act claim, we consider whether the district court abused its discretion in excluding a proposed supplemental expert report. We conclude that it did not. In opposing summary judgment, Plaintiffs submitted a proposed supplemental report from proffered expert witness Dr. Flamm, written over four years after the close of expert discovery. The district court did not consider that supplemental report at summary judgment. See In re Qualcomm Antitrust Litig., 2023 WL 6301063, at *2–5.

Plaintiffs argue that the district court had an independent obligation to determine whether the supplementation would be substantially justified or harmless. And Plaintiffs argue that, because excluding the supplemental report was “tantamount to dismissal,” the district court also had to find willfulness, fault, or bad faith by Plaintiffs and consider whether lesser sanctions would be adequate.

1

Plaintiffs never explained to the district court why it would have been harmless to allow the untimely supplemental expert report. And when “the noncompliant party fails to argue harmlessness, a district court need not hold a sua sponte hearing on that issue before imposing Rule 37(c)(1)’s default sanction” of exclusion. Merchant v. Corizon Health, Inc., 993 F.3d 733, 741 (9th Cir. 2021) (citing Hoffman v. Constr. Protective Servs., Inc., 541 F.3d 1175 (9th Cir. 2008)).

Federal Rule of Civil Procedure 26(a)(2) requires parties to disclose the identity of a witness they may call at trial to present evidence. Parties that retain or hire an expert witness must disclose that expert’s written report, which must contain, among other things, a complete statement of his opinions and their basis. FED. R. CIV. P. 26(a)(2)(B). Expert reports must be disclosed “at the times and in the sequence that the court orders.” Id. 26(a)(2)(D). A party “must supplement these disclosures when required under Rule 26(e).” Id. 26(a)(2)(E). Rule 26(e), in turn, requires that a party “must supplement” disclosures “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect,” or as ordered by the court.

Rule 37(c)(1) “gives teeth to these requirements” by forbidding the use of any information not properly disclosed. Yeti by Molly, 259 F.3d at 1106. That is, when a party fails to provide information required by Rule 26, such party “is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” FED. R. CIV. P. 37(c)(1). “Implicit in Rule 37(c)(1) is that the burden is on the party facing sanctions to prove harmlessness.” Yeti by Molly, 259 F.3d at 1107. This sanction is “self-executing” and “automatic.” Id. at 1106 (quotation omitted); 8B CHARLES A. WRIGHT & ARTHUR R. MILLER, FED. PRAC. & PROC. CIV. § 2289.1 (3d ed., updated Sept. 17, 2024).

*10 After all, to place the burden on the district court to conduct such harmlessness analyses sua sponte “would collapse the rule’s provision of automatic exclusion ... into an open-ended approach that is divorced from the text of the rule.” Merchant, 993 F.3d at 741 (quoting Vanderberg v. Petco Animal Supplies Stores, Inc., 906 F.3d 698, 705 (8th Cir. 2018)).

The district court set a deadline for expert discovery. Plaintiffs’ supplemental report was four years late. In re Qualcomm Antitrust Litig., 2023 WL 6301063, at *3. The supplement was not offered because “in some material respect the disclosure or response [was] incomplete or incorrect,” FED. R. CIV. P. 26(e)(1)(A), but because Plaintiffs shifted their litigation strategy. And after Rule 37’s automatic, self-executing sanction of exclusion, Plaintiffs did not seek reconsideration or argue harmlessness. So even if the district court offered no harmlessness analysis, it would not have abused its discretion, because the burden was on Plaintiffs to invite the harmlessness analysis.

till, the district court did, in fact, find that the late supplementation was neither harmless nor substantially justified. See In re Qualcomm Antitrust Litig., 2023 WL 6301063, at *4–5. It concluded that Qualcomm “identif[ied] prejudice because Plaintiffs submitted this belated opinion four years after the close of expert discovery.” Id. at *4. And the late disclosure was not substantially justified because Plaintiffs “chose to model damages based on a novel theory rather than a traditional, longstanding antitrust theory pled in their complaint.” Id. Neither conclusion was an abuse of discretion.

2

The harmlessness analysis is modified when exclusion is tantamount to dismissal. In that case, courts must consider “whether the claimed noncompliance involved willfulness, fault, or bad faith” and “the availability of lesser sanctions.” R & R Sails, Inc. v. Ins. Co. of Pa., 673 F.3d 1240, 1247 (9th Cir. 2012). But that consideration is of no moment here. Plaintiffs suggested that their case could survive summary judgment even without Dr. Flamm’s supplemental report. So the exclusion of the evidence was not tantamount to dismissal.

Second—and more importantly—the burden remains on the party facing sanctions to show and prove harmlessness. Merchant, 993 F.3d at 741 (citing Vanderberg, 906 F.3d at 705); R & R Sails, 673 F.3d at 1246. And Plaintiffs failed to carry that burden. R & R Sails does not disturb the basic principle baked into the text of Rule 37 that a sanctioned party bears that burden, even when expert evidence is “case dispositive.” Merchant, 993 F.3d at 737; see also Yeti by Molly, 259 F.3d at 1106 (“Courts have upheld the use of the sanction even when a litigant’s entire cause of action or defense has been precluded.”).

When exclusion is tantamount to dismissal, the additional R & R Sails considerations are “incorporated” into Rule 37(c)(1)’s “harmlessness inquiry,” Merchant, 993 F.3d at 741, but a party must still carry their burden and argue harmlessness, see id. at 742.

In any event, the district court found Plaintiffs at fault for the late report. See In re Qualcomm Antitrust Litig., 2023 WL 6301063, at *4. Dr. Flamm’s report expressly disclaimed the opinions that Plaintiffs later sought to add through the supplemental report. So even if the district court were required, on its own initiative, to conduct a bad-faith analysis, it did so.

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AFFIRMED IN PART, VACATED IN PART, and REMANDED.