Abbey v. United States , 2017 U.S. Claims LEXIS 452 ( 2017 )


Menu:
  •            In the United States Court of Federal Claims
    No. 07-272C
    (E-Filed May 5, 2017) 1
    )
    MARK G. ABBEY, et al.,                   )
    )
    Plaintiffs,            )
    )      RCFC 26(e)(1) supplemental
    v.                                       )      disclosure; RCFC 37(c)(1) exclusion
    )      sanction
    THE UNITED STATES,                       )
    )
    Defendant.             )
    )
    Gregory K. McGillivary, Washington, DC, for plaintiffs. Sara L. Faulman, Washington,
    DC, of counsel.
    Hillary A. Stern, Senior Trial Counsel, with whom where Benjamin C. Mizer, Acting
    Assistant Attorney General, Robert E. Kirschman, Director, and Reginald T. Blades,
    Assistant Director, Commercial Litigation Branch, Civil Division, United States
    Department of Justice, Washington, DC, for defendant. Brett Daee and Michael Doherty,
    Senior Attorneys, Office of Chief Counsel, Federal Aviation Administration,
    Washington, DC, of counsel.
    OPINION AND ORDER
    CAMPBELL-SMITH, Judge
    Plaintiffs in this case, current and former air-traffic-control specialists or traffic-
    management coordinators, allege that they are entitled to compensation from the Federal
    Aviation Administration (FAA) for violations of the Fair Labor Standards Act, 
    29 U.S.C. §§ 201-219
     (FLSA). In the complaint, plaintiffs claim that defendant failed to properly
    compensate them for hours worked in excess of their basic work requirements. See ECF
    1
    This Opinion was filed under seal on March 31, 2017, ECF No. 339. The court
    instructed the parties to file any requests for the redaction of protected material on or
    before April 17, 2017. 
    Id. at 1, n.1
    . Neither party has proposed redactions. Accordingly,
    this opinion is published without redactions.
    No. 105 at 7 (second count of plaintiffs’ sixth amended complaint). 2 Specifically,
    plaintiffs claim that defendant “violated the FLSA by paying plaintiffs in the form of
    compensatory time or ‘credit hours’ at the rate of one hour for each hour of overtime hour
    worked.” 
    Id. at 7-8
    . Such compensation was allegedly a problem because the FLSA
    requires certain employees to be paid for overtime hours at a rate of one and one-half
    times the rate of regular pay. See 
    id.
    Now before the court is the parties’ dispute regarding defendant’s request to
    supplement the record with new evidence it claims is pertinent to the calculation of
    damages. See ECF No. 327 at 5; ECF No. 331 at 1-2. For the reasons set forth below
    defendant’s request is DENIED.
    I.     Background
    This case was originally filed on May 1, 2007. See ECF No. 1. After years of
    litigation, discovery was closed on December 14, 2011. See ECF No. 204 at 10. On
    December 27, 2011, the parties filed joint stipulations of facts. See ECF No. 207. As
    part of those facts, the parties stipulated that plaintiffs’ damages expert based his
    calculations on payroll records dated from May 2, 2004 through October 1, 2009. See 
    id. at 3-4
    . A trial was held to determine damages in March 2012. The evidence at trial
    related to credit hours used by plaintiffs up to October 1, 2009, the date on which the
    FAA discontinued the credit hour program at issue. See ECF No. 307 at 9; ECF No. 310-
    1 at 12-13.
    The parties, thereafter, submitted post-trial briefs to the court, and the court issued
    its opinion on September 6, 2012. See ECF No. 286. Following the entry of judgment,
    defendant appealed the court’s finding of liability. The Federal Circuit remanded the
    case for consideration of a narrow issue relating to whether the FAA’s overtime policies
    were fully or partly lawful, see ECF No. 326 at 3, but did not disturb the court’s method
    for calculating damages, see 
    id. at 15
    . On remand, the parties filed cross motions for
    summary judgment to assist the court in deciding the issue of liability left open by the
    Federal Circuit. See ECF Nos. 305, 306. On December 1, 2015, the court issued its
    decision on liability, and ordered the parties to cooperate in calculating damages in
    accordance with the opinion. See ECF No. 326 at 17.
    2
    Plaintiffs’ complaint contained four counts. See ECF No. 105. Plaintiffs
    voluntarily dismissed the first and third counts, the court entered summary judgment for
    plaintiffs on the second count, and entered summary judgment for defendant on the fourth
    count. See ECF No. 286 at 2. As such, the damages discussed in this opinion relate only
    to the second count of the complaint.
    2
    In January 2016, the parties filed individual statements outlining their respective
    positions on the damages calculations. See ECF Nos. 327, 331. The parties’ dispute
    centers on whether defendant can offset the damages award with payroll record evidence,
    dated after September 2009, which is not already part of the record. See ECF No. 327 at
    5, ECF No. 331 at 2. In its initial filing regarding this updated payroll record evidence,
    defendant represented that it provided the additional payroll record evidence regarding
    credit hours to plaintiff on two occasions, in December 2014 and December 2015. See
    ECF No. 331 at 2, n.2.
    The court responded to the parties’ submissions with an order directing defendant
    to show cause why its request to submit new evidence at this very late stage in the
    proceedings should not be denied. See ECF No. 330. In its response to the court’s order,
    defendant argues its new evidence should be admitted because the evidence is important
    and will not prejudice the plaintiffs. See ECF No. 332 at 1. Defendant also insists that it
    has a reasonable excuse for not providing the evidence before now—it claims that the
    arguments before the court until now did not call for such evidence. See 
    id. at 6-9
    .
    Plaintiffs oppose the use of new evidence on the basis that defendant’s failure to timely
    produce the evidence is unjustified and prejudicial. See ECF No. 333 at 5-7.
    The court then ordered supplemental briefing from the parties to address whether
    any prejudice created by the submission of the new evidence could be cured at this
    juncture. See ECF No. 336. In its supplemental brief, defendant maintains that the
    evidence would not be prejudicial to plaintiffs, and that additional discovery could be
    conducted. See ECF No. 338 at 8. Plaintiffs argue, however, that the prejudice created
    by the new evidence is extensive and cannot be cured. See ECF No. 337 at 6-11.
    Notably, in its supplemental brief, defendant revised its statement as to when it first
    provided updated payroll records to plaintiffs, claiming that it did so in August 2010,
    rather than its previously stated date of December 2014. ECF No. 338 at 4.
    II.    Legal Standards
    Rule 26(a) of the Rules of the United States Court of Federal Claims (RCFC)
    governs, inter alia, the disclosures a party is required to make at the outset of discovery:
    [A] party must, without awaiting a discovery request, provide to the other
    parties . . . a copy—or a description by category and location—of all
    documents, electronically stored information, and tangible things that the
    disclosing party has in its possession, custody, or control and may use to
    support its claims or defenses[.]
    RCFC 26(a)(1)(A)(ii). This duty to disclose is a continuing one. A party must
    supplement or correct a previous disclosure “in a timely manner if the party learns that in
    some material respect the disclosure or response is incomplete or incorrect, and if the
    3
    additional or corrective information has not otherwise been made known to the other
    parties during the discovery process or in writing.” RCFC 26(e)(1)(A).
    When analyzing the duty to supplement, this court considers the following factors:
    “(1) whether there was a prior response; (2) whether the response became materially
    incorrect or incomplete; (3) whether the government knew that the response was
    incomplete; and (4) whether the corrective information was otherwise made known to
    [p]laintiff through the discovery process or in writing.” Zoltek Corp. v. United States, 
    71 Fed. Cl. 160
    , 164 (2006) (citing Tritek Techs., Inc. v. United States, 
    63 Fed. Cl. 740
    , 746-
    470 (2005)). 3
    In the event that supplementation is required, but is not timely offered, the court
    may exclude the additional evidence as a sanction:
    If a party fails to provide information or identify a witness as required by
    RCFC 26(a) or (e), the 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.
    RCFC 37(c)(1). This exclusion sanction is “automatic and mandatory” unless the
    violation was substantially justified or harmless. Zoltek Corp., 71 Fed. Cl. at 167
    (citations omitted).
    In considering whether a failure to disclose under RCFC 26(e) is either
    substantially justified or harmless error, the court applies a five factor test, considering:
    (1) the importance of the information withheld; (2) the prejudice or surprise to the party
    against whom the evidence is offered; (3) the likelihood of disruption of the trial; (4) the
    possibility of curing the prejudice; and (5) the explanation for the failure to disclose.
    See id. at 168. “The first four factors relate largely to the harmlessness exception,
    whereas the explanation for the failure to disclose relates to the justification
    requirement.” Id. In determining whether a party’s untimely disclosure was substantially
    justified, this court applies a reasonable person standard. Id. at 170.
    III.   Discussion
    The issue before the court is a discrete one—whether defendant should be
    permitted to submit new evidence, specifically approximately six years of payroll
    records, at this late stage in the proceedings. Defendant claims that such evidence should
    3
    In the Zoltek decision, the court cited a previous version of the rule regarding
    supplementation, then numbered RCFC 26(e)(2). The sections are substantially similar,
    imposing the same duty, and thus the court considers the same factors relevant here.
    4
    be permitted as consistent with the court’s damages calculus, and to avoid a windfall for
    plaintiffs. See ECF No. 331 at 2. As explained above, it is undisputed that the particular
    evidence defendant wishes to use in its damages calculations is not part of the record now
    before the court. In evaluating this issue, therefore, the court must determine whether
    defendant was under a duty to disclose the information at an earlier point in the
    proceedings, and if so, whether its failure to do so was harmless or justified.
    A.     Defendant failed to discharge its duty to supplement disclosures
    As an initial matter, the material at issue clearly qualifies as required disclosures
    under RCFC 26(a). Defendant has asserted as an affirmative defense that “[p]laintiffs
    have received full payment under all applicable statutes and regulations for all of the
    hours which they have worked.” ECF No. 113 at 9. The updated payroll records are
    documents or electronically stored information that defendant “has in its possession,
    custody, or control” that it now seeks to “use to support its claims or defenses.” RCFC
    26(a)(1)(A)(ii). Because the records at issue were not initially disclosed by defendant,
    the court must determine whether defendant met any obligation to supplement its
    disclosures when the information became available.
    As noted above, the court’s analysis typically involves consideration of four
    factors: “(1) whether there was a prior response; (2) whether the response became
    materially incorrect or incomplete; (3) whether the government knew that the response
    was incomplete; and (4) whether the corrective information was otherwise made known
    to [p]laintiff through the discovery process or in writing.” Zoltek Corp., 71 Fed. Cl. at
    164 (citing Tritek Techs., Inc., 63 Fed. Cl. at 746-470).
    The court need not belabor the initial part of this analysis because defendant
    concedes its duty to supplement. In its response to the court’s December 1, 2015 opinion,
    defendant states: “[I]n providing the updated credit hour usage to plaintiffs, the
    Government is properly supplementing information previously requested by plaintiffs in
    discovery, as we are required to do by the Rules of the United States Court of Federal
    Claims. RCFC 26(e).” See Doc. 331 at 6.
    The critical question, then, is “whether the corrective information was otherwise
    made known to [plaintiffs] through the discovery process or in writing,” such that it
    would excuse the complained-of delay. Zoltek Corp, 71 Fed. Cl. at 164. “While
    information may be considered to have been ‘otherwise made known’ where the alleged
    disclosure is clear and unambiguous, where the alleged disclosure is not sufficiently
    clear, it cannot satisfy the requirements of RCFC 26.” Tritek Techs., Inc. v. United
    States, 
    63 Fed. Cl. 740
    , 748 (2005).
    Here, defendant initially stated that updated payroll records were first provided to
    plaintiff in December 2014. See ECF No. 331 at 2 n.2, 7. In its supplemental brief,
    5
    however, defendant revised this statement, and represented to the court that in August
    2010, it provided “plaintiffs with updated credit hour usage data demonstrating credit
    hour usage and accrual by plaintiffs up to and including April 24, 2010.” ECF No. 338 at
    4.
    As a foundation for this revision, defendant cites to the following statement, which
    appears twice in the documents plaintiff filed in support of its partial motion for summary
    judgment: “On August 13, 2010, after the production of plaintiffs’ expert report, the FAA
    provided additional data for the Abbey plaintiffs to cover the time period up to April 24,
    2010.” ECF No. 152-5 at 7 (McGillivary declaration); ECF No. 154 at 16 (plaintiff’s
    proposed findings of fact). Defendant’s characterization of this statement is too
    ambitious. Plaintiff’s admission that it received “additional data” does not demonstrate a
    clear and unambiguous disclosure of “credit hour usage and accrual.” Furthermore, the
    fact that in December 2011, the parties stipulated that plaintiffs’ damages expert based
    his calculations on records dated from May 2, 2004 through October 1, 2009, cuts against
    any inference that updated credit hour usage and accrual was part of that August 2010
    disclosure.
    As a further attempt to demonstrate timely disclosure, defendant points to the trial
    testimony of Ms. Sherri Jensen, and plaintiffs’ general knowledge of the credit hour
    system:
    Ms. Sherri Jensen, a Management and Program Analyst in the Office of
    Human Resource Management, Federal Aviation Administration (FAA),
    testified on March 5, 2012, that, pursuant to the parties[’] 2009 Collective
    Bargaining Agreement, air traffic controllers could no longer earn credit
    hours but could continue to use credit hours earned prior to October 1, 2009.
    Thus, plaintiffs were on notice that credit hour usage was continuing (which,
    of course, they knew because they were the ones using credit hours.)
    ECF No. 331 at 6-7.
    The weakness in defendant’s argument here is two-fold. First, even assuming Ms.
    Jensen’s testimony was sufficient to make plaintiffs aware of the existence of additional,
    potentially relevant payroll records, that awareness is not the same as actually producing
    those records. After all, she testified only that plaintiffs could use previously-accrued
    credit hours, not that they did so. See ECF No. 263, Tr. at 510:9-10. But perhaps more
    problematic is the fact that the evidence about which Ms. Jensen testified was available
    long before trial. Defendant offers no justification for its failure to supplement before
    Ms. Jensen testified. Plaintiffs’ general awareness of the credit hour system is simply not
    equivalent to a “clear and unambiguous disclosure,” sufficient to put plaintiffs on notice
    of defendant’s intention to submit specific, previously undisclosed offsets.
    6
    Defendant makes much of emphasizing that the court’s methodology for
    calculating damages, laid out in the September 2012 opinion, included an offset for credit
    hours. See ECF No. 331 at 2-3; ECF No. 332 at 4. It argues that consideration of the
    new records is entirely consistent with, and indeed necessary to, the court’s approach.
    See ECF No. 332 at 5. In the court’s view, however, this point actually undercuts
    defendant’s position that its December 2014 supplemental disclosure was timely. Even
    assuming, for the sake of argument, that defendant did not have a duty to disclose the
    information prior to the March 2012 trial, the methodology laid out in the September
    2012 opinion, should have immediately put defendant on notice that the record on which
    it wished to base its damages calculations was incomplete.
    For these reasons, the court finds that defendant had a duty to make supplemental
    disclosures, and that it did not discharge that duty in a timely manner.
    B.     The evidence should be excluded under RCFC 37(c)(1)
    Because defendant failed to supplement its disclosures in a timely manner, the
    court must exclude the evidence it now seeks to use “unless the failure was substantially
    justified or is harmless.” RCFC 37(c)(1). See also Zoltek Corp., 71 Fed. Cl. at 167
    (noting that exclusion is “automatic and mandatory unless the party violating [RCFC] 26
    shows that the violation was justified or harmless”) (citations omitted). Defendant bears
    the burden to prove that its failure was substantially justified or harmless. Id. at 167.
    To determine whether defendant’s failure to supplement its disclosures was
    substantially justified or harmless, the court looks to the factors identified in Zoltek Corp.
    v. United States: (1) the importance of the information withheld; (2) the prejudice or
    surprise to the party against whom the evidence is offered; (3) the likelihood of disruption
    of the trial; (4) the possibility of curing the prejudice; and (5) the explanation for the
    failure to disclose. See Zoltek Corp., 71 Fed. Cl. at 168. See also MicroStrategy Inc. v.
    Business Objects, S.A., 
    429 F.3d 1344
    , 1357 (Fed. Cir. 2005) (citing S. States Rack &
    Fixture, Inc. v. Sherwin-Williams Co., 
    318 F.3d 592
    , 596 (4th Cir. 2003)). “The first
    four factors relate largely to the harmlessness exception, whereas the explanation for the
    failure to disclose relates to the justification requirement.” Zoltek Corp., 71 Fed. Cl. at
    168. (citing S. States Rack & Fixture, 
    318 F.3d at 596-597
    ).
    1.     Defendant’s failure was not substantially justified
    Defendant offers several explanations for its failure to supplement its disclosures
    at an earlier point in the proceedings. First, defendant notes that at the time of the March
    2012 trial, payroll records dated after March 2012 did not yet exist. See ECF No. 332 at
    7. This explanation is facially insufficient, as it fails entirely to account for the data
    between October 2009 and March 2012 that did exist.
    7
    Second, defendant argues that withholding relevant data was reasonable because
    had it prevailed on remand, plaintiffs would not be entitled to recover any damages. See
    id. at 7-8. But permitting a party to violate its duty under the discovery rules because that
    party believes it will ultimately prevail on the merits of its position is simply illogical.
    Finally, defendant asserts that while its appeal was pending, the issue of damages
    was irrelevant. “Once the Court issued its December 1, 2015, [sic] decision finding that
    the FAA’s credit hour policies were not entirely within its authority, the issues of
    damages again became relevant, as confirmed by the Court’s order that the parties
    attempt to reach agreement as to the amount of damages due.” Id. at 9. Defendant
    reasoned that, “[a]lthough this evidence could, perhaps, have been submitted earlier,
    there was no practical reason to do so, and the Government’s reasons for why it did not
    do so are reasonable.” Id. The court disagrees with defendant’s position in the strongest
    terms. Not only do the rules of this court require supplementation, the idea that the
    relevance of certain information depends on the stage of the proceedings is antithetical to
    the orderly, efficient, and fair management of litigation.
    The court finds that none of the explanations offered by defendant as bases for its
    failure to supplement could reasonably be considered sufficient to excuse its violation of
    Rule 26(e). See Zoltek, 71 Fed. Cl. at 170 (“Substantial justification is justification
    sufficient to satisfy a reasonable person that parties could disagree as to whether
    compliance with the disclosure requirement was required.”).
    2.     Defendant’s failure is not harmless
    Upon consideration of the present circumstances, the court finds that: (1) the
    information withheld by defendant is important; (2) the late disclosure of the evidence
    significantly prejudices plaintiffs; (3) allowing the evidence in would certainly cause
    substantial disruption; and (4) a sufficient cure for the prejudice is not available.
    The payroll records at issue here are clearly important. This fact is amply
    demonstrated both by defendant’s vociferous argument in support of its desire to admit
    the evidence, and the apparent practical implications of that evidence on plaintiff’s
    recovery. Indeed, in defendant’s own words: “The value of the updated payroll
    information is great; this payroll information is critical to the accurate calculation of
    damages in this case.” ECF No. 332 at 4. Defendant insists that plaintiff’s opposition is
    “absurd[ ]” see id. at 11, and that failing to permit consideration of the records at issue
    would result in an “improper windfall” recovery, see id. at 10. Notably, the possibility
    of a materially different recovery is supported by defendant’s expert’s conclusion that
    more than 186,000 credit hours were used by plaintiffs between September 27, 2009 and
    2014. See ECF No. 331 at 7.
    8
    The late disclosure of the payroll records both significantly prejudices plaintiffs
    and would cause substantial disruption in the case. Defendant suggests that accounting
    for the new information would be a simple matter of making additional mathematical
    calculations, thus not causing material inconvenience to plaintiffs. See ECF No. 332 at
    5-6; ECF No. 338 at 6. Plaintiffs disagree. They claim that “the new evidence raises
    more questions than it answers,” and that dealing with those questions “will require a
    substantial amount of additional discovery, unnecessarily causing further delay to the
    ultimate resolution of this case.” ECF No. 333 at 15. Specifically, plaintiffs claim they
    would be entitled to an opportunity to explore:
    how the credit hour system that defendant previously represented had ended
    on October 1, 2009, was being used, who was eligible, how credit hours were
    somehow accrued as well as used, and significantly, whether liquidated
    damages should be awarded for credit hours used throughout the case as the
    unjustified late payment of overtime.
    Id. If even a relatively small portion of the discovery plaintiffs outline is ultimately
    necessary, the effort, time, and money it would take is likely to materially prejudice
    plaintiffs. This is particularly true, and particularly disruptive, given the exceedingly
    advanced stage of the proceedings.
    Defendant suggests that reopening discovery would cure any prejudice suffered by
    plaintiffs. See ECF No. 338 at 8. Plaintiffs argue that the resulting delay of this case, in
    which discovery closed and trial was held more than five years ago, would effect
    incurable prejudice if the court admitted defendant’s updated payroll records. See ECF
    No. 337 at 9-11. The court agrees. Allowing defendant to use the updated payroll
    records in its calculations would be patently unfair without permitting plaintiffs to
    prepare any opposition to those records. Doing so would require, at minimum, reopening
    discovery. Reopening discovery at this stage would unjustifiably cost plaintiffs time and
    resources for which the court cannot provide compensation.
    Because defendant’s failure to timely supplement its disclosures was harmful and
    was not justified, the updated payroll records must be excluded. See also Zoltek Corp.,
    71 Fed. Cl. at 167 (noting that exclusion is “automatic and mandatory unless the party
    violating [RCFC] 26 shows that the violation was justified or harmless”) (citations
    omitted).
    IV.    Conclusion
    9
    Defendant had numerous opportunities to disclose some or all of the payroll
    records it now seeks to admit—during discovery, at the trial on damages, or even in the
    post-trial briefing. Disclosure at any of those points in time would have been both more
    sensible and fairer than disclosure at this exceedingly late stage. The court does not find
    that defendant’s failure to supplement its disclosures was intentional or malicious.
    Nevertheless it was a mistake that cannot now be corrected, and defendant must bear the
    consequences. For these and the reasons explained above, defendant’s request to file new
    payroll record evidence of damages offsets is DENIED.
    On or before July 30, 2017, the parties shall jointly calculate and file a stipulation
    with the court for the amount of compensation to which each representative plaintiff is
    entitled.
    IT IS SO ORDERED
    s/ Patricia Campbell-Smith
    PATRICIA CAMPBELL-SMITH
    Judge
    10
    

Document Info

Docket Number: 07-272C

Citation Numbers: 132 Fed. Cl. 307, 2017 U.S. Claims LEXIS 452, 2017 WL 1788446

Judges: Patricia E. Campbell-Smith

Filed Date: 5/5/2017

Precedential Status: Precedential

Modified Date: 10/19/2024