United States District Court, D. Idaho
MEMORANDUM DECISION AND ORDER
Lynn Winmill U.S. District Court Judge.
Court has before it a motion to exclude new material filed by
defendants' expert Maggie Lyons. The motion is fully
briefed and at issue. For the reasons expressed below, the
Court will grant the motion in part and deny it in part.
Industrial Piping Inc. (IPI) brings this lawsuit to recover
payment for construction work it performed on a facility for
Hoku Materials to produce solar panels. In an earlier
decision, the Court denied a motion by defendants to exclude
the expert testimony of Maggie Lyons, a forensic accountant
who was retained by IPI to evaluate whether defendants
misrepresented Hoku's capacity to pay for work to be
performed by IPI. See Memorandum Decision (Dkt. No.
147). In that decision, the Court held that her
testimony as described in the record was within her
qualifications as a forensic accountant. Id.
briefing by the parties that preceded that decision, IPI
filed a Declaration of Lyons. In that Declaration, Lyons
conducts an analysis that was not contained in her original
report. It is that analysis that defendants seek to exclude
through the motion now pending before the Court.
new analysis was filed six months after she filed her
original expert report. It was not filed as a supplementation
to her report but was instead filed - as just discussed - in
her Declaration responding to the motion in limine.
support that Lyons' inserted into her Declaration
concerns a spreadsheet used by defendant Liu in a PowerPoint
presentation intended to convince investors to fund Hoku. The
spreadsheet, apparently created sometime in 2011, is a
“5-year Financial Forecast, ” predicting
Hoku's revenue and profits from the sales of its
polysilicon panels for calendar years 2012 to 2016. The
forecast was based on a selling price of $83 per unit, and
concluded that “[b]ased on the forecast, we could
generate sufficient cash to repay the loans during the
Lyons asserts in her Declaration that “[b]y July 2011,
the price had dropped to $51 [a unit].” See
Declaration of Lyons (Dkt. No. 114-1) at ¶ 6. So
she recalculated the numbers in the spreadsheet assuming a
price of $51 a unit rather than $83, and concluded as
follows: “The result is that the total 5-year cash flow
changes from positive $44 million to negative $306 million, a
swing of $350 million. This further illustrates my conclusion
. . . that Hoku did not have a source of cash to repay the
massive amounts of debt it faced.” Id.
issue is whether Lyons' recalculation of the figures in
the spreadsheet is proper supplementation of her original
expert report filed in January of 2018. Rule 26(a)(2)(B)
requires the original report to contain “a complete
statement of all opinions to be expressed and the basis and
reasons therefor.” Supplementation is required whenever
“the party learns that in some material respect the
disclosure . . . 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.” See Rule 26(a)(2)(e)(1).
an expert report pursuant to Rule 26(e) means
“correcting inaccuracies, or filling the interstices of
an incomplete report based on information that was not
available at the time of the initial disclosure.”
Sherwin-Williams Co. v. JB Collision Services, Inc.,
2015 WL 4742494 (S.D. Cal. August 11, 2015) at *2. For
example, courts have rejected supplemental expert reports
that were significantly different from the expert's
original report and effectively altered the expert's
theories, or attempted to deepen and strengthen the
experts' prior reports. Lindner v. Meadow Gold
Dairies, Inc., 249 F.R.D. 625, 639 (D.Haw. 2008).
Moreover, “[t]o construe supplementation to apply
whenever a party wants to bolster or submit additional expert
opinions would wreak havoc in docket control and amount to
unlimited expert opinion preparation.” Akeva LLC v.
Mizuno Corp., 212 F.R.D. 306, 310 (M.D. N.C. 2002)
begin its analysis, the Court would note that IPI did not
submit this new material from Lyons as a supplement to her
expert report. Rather, the new material was contained in a
Declaration she filed in response to a motion in limine to
exclude her original expert report. Whether intentional or
not, there is at least an appearance that the new material
concerning the spreadsheet was slipped into the record
without being properly flagged as a supplement to her report.
Nevertheless, defendants caught it, and IPI now labels it as
a supplement, so the issue is whether that is a proper
recalculation is certainly new. Her original expert report -
issued six months before her Declaration - did not discuss
Liu's spreadsheet in any way. IPI does not dispute
defendants' assertion that Lyons had access to the
spreadsheet when she filed her original expert report. There
is no explanation by IPI as to why Lyons waited from January
to July of 2018 to recalculate the figures on Li's
true that the recalculation does not alter Lyons'
original opinion that Hoku did not have a source of cash to
repay the massive amounts of debt it faced. And the
recalculation is easy to follow. Lyon copied the original
spreadsheet and then, relying on the new price of $51 per
unit, crossed out some numbers and wrote in new figures.
Defendants argue that it “is not obviously clear on its
face” how Lyons arrived at the new numbers. In fact, it
is quite clear - for example, to get the new
“Revenue” estimate she simply multiplied the new
price ($51 per unit) by the existing estimated volume of
products. Then to arrive at the new “Income Before
Tax” figure, she added the existing figures for Cost of
Goods Sold, Depreciation, and Other Expense, and subtracted
that total from the new Revenue figure. It is likewise easy
to discern how the other figures - Net Profit, Net Cash
Inflow, and Net Cash Flow - were changed. While Lyons does
not identify ...