Free Response to Motion - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ______________________________ SPARTON CORPORATION, ) ) Plaintiff, ) ) v. ) No. 92-580C ) Chief Judge Edward Damich THE UNITED STATES, ) ) Defendant. ) SPARTON CORPORATION'S RESPONSE TO THE DEFENDANT'S MOTION TO PRECLUDE PROFESSOR NASH FROM OFFERING TESTIMONY AT TRIAL Sparton Corporation ("Sparton"), responds to the defendant's motion (hereafter "DM") to preclude professor Nash from offering testimony at trial and complies with the

Court's July 20, 2006 Order requesting (1) a copy of professor Nash's prior declaration to be included with said response and (2) Sparton to specifically point out the portions of the declaration that include the subject matter of professor Nash's proposed testimony at trial. I. Procedural History There are significant omissions in the procedural history set forth in defendant's motion (DM 1-5). First,

this Court struck professor Nash's prior declaration on the patent on sale issue because he was not a patent attorney. The Court has recognized professor Nash at the last telephonic hearing as a pre-eminent government contracts expert. His testimony in the government contracts area more

than meets the standard for reliability required by Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). 1

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Second, professor Nash's prior declaration dated March 15, 1999 addressed government contract issues such as the long term use by the Navy of the changes clause to obtain development work in regard to a product it is purchasing under a supply contract. See Exhibit A, paragraph 19 of said Declaration and supporting paragraphs 14-18 and 20-21. complies with the court's July 20 Order. In Sparton's This

pretrial submissions dated January 29, 1999, Sparton indicated that professor Nash "... will testify as an expert in government contract matters, particularly those matters between Sparton and the Navy as they relate to the issues of validity (on sale) and license." Bold and/or underscored

words are for emphasis supplied unless otherwise noted. Defendant has thus been on notice for over seven years that professor Nash will testify as an expert witness on the issue of license. Third, it bears repeating (DM 2) that, on the issue of expert reports, defendant was the party that needed extra time to prepare said reports and moved to enlarge the discovery period to complete its expert reports (DM 2-3). Simultaneous exchange of expert reports was not required. Instead, Sparton was required to provide defendant with its "... experts' reports for its case in chief, infringement and accounting" by March 3, 2006 (as amended to April 17, 2006); defendant was required to provide Sparton with its "... 2

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experts' reports in rebuttal to plaintiff's case in chief and in support of all defenses and all alternate accounting theories other than the one proposed by Sparton" by April 3, 2006 (as amended to May 17, 2006); and Sparton was required to provide defendant with "[p]laintiff's rebuttal to defendant's reports" by May 3, 2006 (as amended to June 19, 2006). Docket No. 265. Sparton provided defendant with its experts' reports for its case in chief, infringement and accounting, by April 17, 2006. Defendant does not dispute this fact in its Defendant provided Sparton on May 17, 2006

motion. DM 4.

with two expert reports, one from its alleged technical expert Mr. Alan Hudson and the other from its alleged accounting expert Mr. Daniel McGavock. Defendant did not

provide Sparton with an expert report from a government contracts expert and failed to address the defendant's license defense in the experts' reports it provided Sparton. Mr. McGavock did address in his expert report (at pages 913), in brief and general terms, the sonobuoy procurement process, but had to rely upon contractor deposition testimony to explain certain government contract terms and their application. Notwithstanding his brief discussion of

the sonobuoy procurement process, Mr. McGavock did not address in his expert report the defendant's license defense, its application to the case at bar and more

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importantly the application of the facts at bar to the Christian doctrine, G. L. Christian and Assoc. v. United States, 312 F.2d 418, rehearing denied, 320 F.2d 345, (Ct. Cl. 1963), cert. denied, 375 U.S. 954 (1963), relied upon by the defendant in its answer to interrogatories. Mr.

McGavock has not been qualified as a government contracts expert. Sparton provided defendant with its "rebuttal to defendant's reports" on June 19, 2006. dispute this fact. Defendant does not

No rebuttal report was provided by

Sparton to defendant on the defendant's license defense because the only rebuttal expert report required of Sparton was "to defendant's reports", and defendant provided Sparton NO expert report regarding its license defense. Sparton is

thus unaware of the manner by which the defendant will attempt to convert a supply contract into a fixed price research and development contract merely because Sparton conducted development work pursuant to the Navy's decision to issue an engineering change to its supply contract. II. ARGUMENT Defendant relies upon RCFC 26(a)(2)(B) and RCFC 37(c)(1) to preclude professor Nash from testifying because "[a] party that without substantial justification fails to disclose information required by RCFC 26(a) ... is not, unless such failure is harmless, permitted to use as evidence at a

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trial, at a hearing, or on a motion any witness or information not so disclosed." RCFC 37(c)(1). Defendant

supports its argument by citing Saudi v. Northrop Grumman Corp., 427 F.3d 271, 278 (4th Cir. 2005). DM 5-6. Defendant

argues that (1) "[a]s ultimately ordered by the court, Sparton's expert reports were due April 19, 2006 and its rebuttal reports were due on June 19, 2006 [and] [w]hile producing reports for other experts on the scheduled dates, Sparton did not produce a report for Professor Nash" and (2) "... Professor Nash's declaration cannot substitute for a report [because] [t]hat report cannot be any more reliable today than it was on the date that it was struck ... [and] it cannot form the basis for admissible expert opinions under Fed. R. of Evid. 702." DM 6. Defendant concludes its

argument that Professor Nash should not be allowed to testify by contending that, since the court has already provided Sparton with additional time to comply after Sparton's original reports were allegedly inadequate and cautioned Sparton that it would be disinclined to extend any deadlines in the future, "[a]llowing Sparton additional time to present an expert report for Professor Nash would unnecessarily prolong this litigation and disrupt preparation for trial." DM 7. In response to defendant's motion, Sparton submits that it has complied with the Court's February 2, 2006 order as

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amended on March 21, 2006.

Sparton's case in chief expert

reports were timely provided to defendant by April 17, 2006, and its "rebuttal to defendant's reports" was timely provided to defendant on June 19, 2006. DM 3-4. First,

defendant has misrepresented the April 17, 2006 experts reports due date in its motion where it states to this court that the due date for the reports was April 19, 2006. DM 6. The due date was April 17, 2006. Second, an expert report

from professor Nash on the issue of license was not required because (1) defendant did not provide Sparton with an expert report on the issue of license to rebut and (2) Sparton could not rebut defendant's nonexistent expert report on that issue. Sparton was only required under this court's

order to rebut "defendant's reports." A case similar to the one presented here was ABB Air v. Reeco, 167 F.R.D. 668 (D.N.J. 1996). In ABB, plaintiff (the

alleged infringer) sought to preclude defendant (the patentee) from offering any expert testimony regarding secondary considerations on the issue of validity on the ground that defendant failed to comply with both the disclosure requirements of Fed. R. Civ. P. 26(a)(2), warranting exclusion of the evidence under Rule 37(c)(1), and with the court's scheduling order. In ABB, the

defendant did not provide in its first timely submitted expert report its expert's testimony concerning secondary

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considerations, but defendant did provide such testimony in its rebuttal report after plaintiff raised the issue of obviousness in its first expert report. In ABB at 673, the

court noted the recommendation of the Advisory Committee on the federal rules: "[i]n most cases, the party with the burden of proof on an issue should disclose its expert testimony on that issue before other parties are required to make their disclosures with respect to that issue." The

court in ABB at 673, stating that "[r]ebuttal is merely `a showing of facts supporting the opposite conclusion, and may relate to any of the Graham factors including the socalled secondary considerations," found that defendant properly submitted its expert's opinions concerning secondary considerations in rebuttal to plaintiff's expert's opinions concerning invalidity. Id. Distinguishable from

ABB is Saudi, supra, wherein the expert witnesses identified by plaintiff supported its case in chief, a situation inapposite to the case at bar. The court in ABB also applied the following factors in determining whether evidence should be excluded under Fed. R. Civ. P. 26(a)(2) and 37(c)(1): (1) the prejudice or surprise in fact of the party against whom the excluded witnesses would have testified; (2) the ability of that party to cure the prejudice; (3) the extent to which waiver of the rule against calling unlisted witnesses would disrupt

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the orderly and efficient trial of the case in the court; and (4) bad faith or willfulness in failing to comply with the district court's order. Id. at 672. See also Moore's Federal Practice 3D, Provisions Governing Discovery, §26.27[2][b], p. 26-91. In Tritek Technologies, Inc. v. United States, 63 Fed. Cl. 740 (2005), the factors determining evidence exclusion under RCFC 26 and 37(c) were (1) surprise to the party against whom the evidence would be offered, (2) the importance of the information withheld (e.g. prejudice), and (3) the explanation for the failure to disclose the information. Id. at 750. Footnote 10 in Tritek, supra at

752, is significant to the case at bar: Were this a case where Plaintiff was merely attempting to justify its failure to abide by the Claim Chart requirement by accusing Defendants' of a similar failure to follow the rules, the result would undoubtedly be different. Each part's duty to abide by the rules stands independently of the other. One party's failure to abide by the rules is not excused by similar behavior on the part of its opponent. The difference here, however, is that Defendants' failure to answer the contention interrogatories likely caused Plaintiff's failure to abide by the Claim Chart rule. Professor Nash's testimony is certainly no surprise to defendant. He is listed in Sparton's pretrial submissions

as a government contacts expert witness who will testify on the license issue. His testimony in his Declaration

established that the Navy procurement policy in the sonobuoy art permitted the Navy for decades (a Christian doctrine 8

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factor) to use the "changes" clause in its supply contracts to improve the performance of the supplied product. By

using the "changes" clause in its supply contracts, the Navy is and was not required to include a patent rights clause therein. The use by the Navy of the changes clause does not

convert a supply contract, or amendments thereto, to a fixed price research and development contract. See Newman v. GHS

Osteopathic, 60 F.3d 153 (3d Cir. 1995)(trial court correctly refused to exclude testimony when nondisclosure was harmless inasmuch as party was aware of witness and his scope of knowledge). Defendant's contention that the Nash

Declaration can not substitute as an expert report ignores those cases holding the nondisclosure to be harmless. Inasmuch as defendant is able to depose professor Nash because expert discovery is not closed until September 19, 2006, defendant is not prejudiced by allowing professor Nash to testify at trial. Defendant can thus cure any potential

prejudice it believes it is experiencing, even if that belief is misplaced. Allowing professor Nash to testify

will not disrupt the orderly and efficient trial of the case in this court. Although the court indicated that December

2006 or January 2007 would be the target trial dates, no interference with those dates will occur regardless of whether or not defendant deposes professor Nash.

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We turn now to the bad faith factor which implicates footnote 10 in Tritek. The defendant bears the burden of Defendant

proof on the affirmative defense of license.

proferred no expert report in support of its affirmative license defense. Defendant's failure to provide Sparton

such a report caused Sparton's failure to provide one. Sparton is not relying upon defendant's failure to follow the rules. Sparton is relying upon the causal relationship

between defendant's failure to provide an expert report and Sparton's inability to rebut a nonexistent report. See

Sherrod v. Lingle, 223 F.3d 605 (7th Cir. 2000)(trial court abused its discretion by issuing expert testimony preclusion order where plaintiff disclosed expert names and reports prior to discovery deadline and both sides were at fault for deficiencies in scheduling depositions). It appears to Sparton that defendant's motive in filing its motion to preclude may be to present new license defense counsel arguments without worry about professor Nash's rebuttal. Respectfully submitted, Sparton Corporation, Plaintiff Dated: July 31, 2006 s/Steven Kreiss Steven Kreiss Attorney for Plaintiff 1120 Connecticut Avenue NW Suite 240 Washington D.C. 20036 Telephone: (202) 347-6382 Facsimile: (202) 347-7711

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