United States v. STABL, Inc.

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 14-2050
___________________________
United States of America; State of Nebraska
lllllllllllllllllllll Plaintiffs - Appellees
v.
STABL, Inc., formerly known as Nebraska By-Products, Inc.
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the District of Nebraska - Omaha
____________
Submitted: May 13, 2015
Filed: August 27, 2015
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Before WOLLMAN, SMITH, and BENTON, Circuit Judges.
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WOLLMAN, Circuit Judge.
The United States and the State of Nebraska (collectively, the government)
brought an enforcement action against STABL, Inc., formerly Nebraska By-Products,
Inc.,1 for violations of the Clean Water Act and the Nebraska Environmental
1
Throughout this opinion, we refer to both STABL, Inc. and Nebraska By-
Products, Inc. as “STABL.”
Protection Act. The district court2 granted partial summary judgment in favor of the
government. Following a bench trial of the remaining issues, the district court
imposed a civil penalty in the amount of $2,285,874 and denied STABL’s motion for
a new trial. We affirm.
I. Background
Section 402 of the Clean Water Act, 33 U.S.C. § 1342, establishes the National
Pollutant Discharge Elimination System (NPDES), a permit program that controls
water pollution by regulating sources that discharge pollutants. States may seek
authority from the Environmental Protection Agency (EPA) to operate a state permit
program. Id. § 1342(b)-(c). States that do so must ensure that industrial users that
discharge effluent into wastewater treatment plants comply with pretreatment
requirements. See 40 C.F.R. § 403.10. Companies that discharge effluent into water
and wastewater treatment plants can be liable for pass-through, which occurs when
discharge exits a water or wastewater treatment plant and enters into waters of the
United States, causing the plant to violate its NPDES permit, 40 C.F.R. §§ 403.3(p),
403.5(a)(1); for interference, which occurs when discharge inhibits or disrupts a water
or wastewater treatment plant, causing the plant to violate its NPDES permit, id.
§§ 403.3(k), 403.5(a)(1); or for exceeding the effluent limitations3 laid out in their
pretreatment permits or otherwise failing to meet permit requirements, see 33 U.S.C.
§§ 1311(a), 1317(d).
2
The Honorable Laurie Smith Camp, Chief Judge, United States District Court
for the District of Nebraska.
3
Effluent limitations are restrictions on quantities, rates, and concentrations of
chemical, physical, biological, and other constituents of wastewater discharges. 33
U.S.C. § 1362(11).
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STABL owned and operated a rendering plant that processed dead cattle and
offal in Lexington, Nebraska. As part of Nebraska’s EPA-approved permit program,
the state issued a pretreatment permit to STABL, effective April 1, 2008, that
contained effluent limitations for the wastewater that STABL discharged from its
facility to the city of Lexington’s wastewater treatment plant (treatment plant). The
permit contained discharge parameters for ammonia, oil and grease, biochemical
oxygen demand,4 and total suspended solids.5 These parameters established daily-
maximum limitations and weekly-average limitations for measurements of each of the
regulated elements. The permit also required STABL to monitor its discharge to the
treatment plant in accordance with the foregoing requirements, to maintain records
of the monitoring, and to submit discharge monitoring reports (DMRs) reflecting the
results. The permit required that STABL perform flow measurements using
“appropriate flow measurement devices” that were “installed, calibrated and
maintained to insure [sic] . . . the accuracy of the measurements” and that STABL
maintain calibration and maintenance records.
The city controlled the valve that allowed wastewater to flow from STABL’s
facility to the treatment plant. STABL paid the city to perform effluent testing and
monitoring and used the city’s monitoring records as the basis for the DMRs that it
was required to submit to the government. Jason Fagot, STABL’s general manager,
signed the DMRs and certified under penalty of law that they were prepared “in
accordance with a system designed to assure that qualified personnel properly
gather[ed] and evaluate[d] the information submitted” and that the “information
4
Biochemical oxygen demand is the amount of oxygen consumed by
microorganisms in breaking down organic materials present in wastewater. 5.2
Dissolved Oxygen and Biochemical Oxygen Demand, U.S. Envtl. Protection Agency,
http://water.epa.gov/type/rsl/monitoring/vms52.cfm (last updated March 6, 2012).
5
Total suspended solids are solid pollutants that are suspended, rather than
dissolved, in water. Coeur Alaska, Inc. v. Se. Alaska Conservation Council, 557 U.S.
261, 278 (2009).
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submitted [was] true, accurate, and complete” to the best of his knowledge and
belief. The DMRs reflect numerous “exceedances”—instances when STABL
exceeded the limitations set forth in its permit.
In late May 2010, STABL sold its facility to Darling International Inc.
(Darling). The purchase price was reduced by $1 million to account for the costs of
a pretreatment system needed to bring STABL’s facility into compliance.
The government commenced this action in August 2011, alleging, among other
things, that beginning in April 2008, measurements of pollutants in and properties of
STABL’s discharge consistently exceeded its permit limitations; that STABL failed
to sample for oil and grease as its permit required; and that beginning in 2006,
STABL caused or contributed to problems at the treatment plant, causing the plant
to violate its own NPDES permit.6
The government moved for summary judgment, offering in support
declarations of Mark Klingenstein, an environmental engineer, and Paul Marshall, an
EPA compliance officer who focuses on the Clean Water Act pretreatment program.
Klingenstein’s original declaration contained tables setting forth the number of
violations that he believed that STABL had committed, and he submitted a
supplemental declaration stating, “I prepared and/or personally verified all of the
information in my initial declaration . . . . All tables are accurate and supported by
the evidence.” The government also attached as exhibits to its motion for summary
judgment the DMRs that STABL had been required to submit under the permit
program. There was a DMR for each month from April 2008 through May 2010. The
DMRs listed for each month the highest daily-maximum and weekly-average
6
The government also alleged that STABL’s improper abandonment of
wastewater lagoons violated the Nebraska Environmental Protection Act, but the
court dismissed this count with the parties’ consent.
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measurements for each effluent parameter, with the exception of oil and grease during
some months. STABL argued that the DMRs were inaccurate and pointed to
deposition testimony suggesting that the city’s flow meter was not calibrated, that one
of the flow meters was rusted off, and that the water was tested on Tuesday, which
may not have been an ideal day for testing because the water had been sitting in the
tanks for several days. The district court granted the government summary judgment
on liability but indicated that it would rule on the number of violations at the penalty
phase of the action. The district court later granted the government’s motion that the
remainder of the proceedings be conducted as a bench trial.
Within the time for expert disclosures, the government had submitted an expert
report by Joan Meyer, an economics and financial analyst who gave an opinion
regarding the scope of the economic benefits STABL had derived from
noncompliance with the effluent limitations in its permit. Subsequently, discovery
revealed that STABL and Darling had negotiated the $1 million discount in the sale
price of the facility to reflect the facility’s lack of compliance with its environmental
obligations. Thereafter, approximately eleven weeks before trial and well after the
deadline for disclosing expert reports had passed, the government served an updated
report by Meyer that included an analysis of the economic benefits of noncompliance
to STABL in light of the discount in the sale price of the facility. On September 4,
2013, STABL moved in limine to exclude Meyer’s testimony and moved in the
alternative for a continuance to give it time to submit its own rebuttal expert reports,
to depose Meyer, and to schedule a Daubert hearing. A magistrate judge7 denied
STABL’s motion, noting that STABL had “waited until two weeks before trial” to
move to exclude or for a continuance and that the government had offered STABL
the opportunity to depose Meyer after the update. STABL filed a written objection
7
The Honorable F.A. Gossett, III, United States Magistrate Judge for the
District of Nebraska.
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to the magistrate judge’s order, which the district court implicitly overruled by
ultimately basing its penalty calculation on Meyer’s updated analysis.
Over STABL’s objections, the government offered at trial the testimony of
Klingenstein, Marshall, and Meyer. Marshall’s testimony at trial centered around the
EPA’s inspection of STABL’s facility, the investigation of STABL’s alleged
noncompliance with its effluent obligations, and general background information
about the pretreatment permit program. With respect to the allegations of effluent-
limitation violations, Marshall testified that his review of the DMRs and monitoring
records revealed a total of 1666 daily-equivalent effluent-limitation violations, which
was slightly fewer, due to copying or arithmetical errors, than the number the
government had proposed at summary judgment. He also testified that STABL did
not record its oil and grease levels as required during a sixteen-month period,
resulting in 62 to 64 violations for failure to monitor as required under the permit
program.
Klingenstein’s testimony at trial primarily bore on the rendering process, the
process for treating STABL’s wastewater, and the effect of STABL’s discharge on
the treatment plant. He also testified that there were 1666 daily-equivalent effluent-
limitation exceedances and that this number included a small downward adjustment
from the the number of effluent-limitation exceedances he had counted at the
summary-judgment stage. He stated that his original report and declarations were
based on Marshall’s calculations and that he had only spot-checked the data before
submitting his supplemental declaration in support of summary judgment. After
noticing an error at a later date, however, he reviewed every single piece of data and
uncovered additional errors. Correcting the errors ultimately reduced the total
number of effluent-limitation exceedances by three.
The district court determined that STABL’s discharges exceeded the
requirements of its permits as follows: 76 daily-maximum and 90 weekly-average
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exceedances for ammonia; 68 daily-maximum and 76 weekly-average exceedances
for biochemical oxygen demand; 42 daily-maximum and 21 weekly-average
exceedances for oil and grease; and 10 daily-maximum and 23 weekly-average
exceedances for total suspended solids. The district court concluded that this resulted
in a total of 196 daily-maximum violations and 1470 “daily violations” from the
weekly-average exceedances, calculated by multiplying the 210 total weekly-average
exceedances by seven—the number of days in a week. The district court concluded
that there were 63 failure-to-monitor violations. It agreed with the government
regarding the number of pass-through and interference violations, but disregarded the
pass-through and interference violations altogether to avoid “duplicate counting.”
The district court also reduced the total number of effluent-limitation violations by
196—the number of daily-maximum exceedances—to avoid the potential for double-
counting. The district court imposed a penalty of $2,285,874, which equaled twice
the economic value that Meyer testified that STABL had derived from
noncompliance. The district court stated that it had reached this number because “a
civil penalty in an amount twice [STABL’s] economic benefit will serve the interests
of justice and help to deter others from engaging in similar non-compliance.”
Following the denial of its motion for a new trial, STABL filed this appeal.
II. Summary Judgment
STABL challenges the district court’s grant of partial summary judgment on
liability for the effluent-limitation and failure-to-monitor violations.8 We review the
district court’s grant of summary judgment de novo. Dahl v. Rice Cty., Minn., 621
8
In its initial brief, STABL challenged several of the district court’s rulings
related to the pass-through or interference claims. Because the district court did not
assess violations for these claims, however, STABL stated at oral argument that it is
no longer seeking review of the court’s decisions regarding them. The government
contends that the district court erred in failing to assess these violations but has not
cross-appealed.
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F.3d 740, 743 (8th Cir. 2010). We view the facts and inferences derived from those
facts in the light most favorable to the nonmoving party. Id. To succeed at summary
judgment, the moving party must demonstrate that there is no genuine dispute as to
any material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ.
P. 56(a). The nonmoving party must then come forward with specific facts showing
that there is a genuine issue for trial, Dahl, 621 F.3d at 734, either by citing to parts
of the record showing that there is a genuine dispute for trial or by demonstrating that
the moving party has not established the absence of a genuine dispute or cannot
produce admissible evidence supporting the absence of a dispute, see Fed. R. Civ. P.
56(c)(1).
A. DMRs and Monitoring Records
The Clean Water Act makes it unlawful to operate a polluting source facility
in violation of pretreatment standards or a permit’s pretreatment requirements.
See 33 U.S.C. §§ 1311(a), 1317(d); 40 C.F.R. § 122.41(a). A discharge that exceeds
effluent limitations in a permit is “the archetypal Clean Water Act violation, and
subjects the discharger to strict liability.” United States v. Allegheny Ludlum Corp.,
366 F.3d 164, 175 (3d Cir. 2004). “Thus, without more, to violate a[n] NPDES
permit is to violate the Act.” Chesapeake Bay Found. v. Bethlehem Steel Corp., 608
F. Supp. 440, 451 (D. Md. 1985) (citing EPA v. State Water Res. Control Bd., 426
U.S. 200, 205 (1976)). The Nebraska Environmental Protection Act similarly makes
it unlawful to violate a permit condition or limitation. Neb. Rev. Stat. § 81-
1508.02(1)(b). As the Clean Water Act was the source of many provisions found in
the Nebraska Environmental Protection Act, see State ex rel. Wood v. Fisher Foods,
Ltd., 581 N.W.2d 409, 415 (Neb. 1998), and as the parties have not argued that the
standards for liability differ under the two acts, we assume that the requirements for
liability for violation of a permit limitation or condition under the Nebraska
Environmental Protection Act mirror the requirements for liability under the Clean
Water Act.
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The DMRs and monitoring records were the primary evidence on which the
government relied to establish the effluent-limitation violations. If the DMRs were
admissible and are sufficiently probative, they demonstrate that STABL exceeded the
effluent limitations in its permit. STABL argues that the DMRs and monitoring
records were inadmissible and did not constitute a sufficient basis for the district
court’s grant of partial summary judgment.
Permit holders have a duty to monitor their wastewater discharges, maintain
monitoring records, and submit to the government DMRs summarizing the results of
that monitoring. 40 C.F.R. §§ 122.41(j), (l)(4), 123.25. Federal regulations require
that samples and measurements taken for the purpose of monitoring be representative
of the monitored activity and that those submitting DMRs certify that, “[b]ased on
[their] inquiry of the person or persons who manage the system, or those persons
directly responsible for gathering the information, the information submitted is, to the
best of [their] knowledge and belief, true, accurate, and complete.” 40 C.F.R.
§§ 122.22(d), 122.41(j)(1), (k)(1), 123.25. STABL’s permit imposed monitoring and
certification requirements consistent with these standards.
STABL argues that the DMRs were not admissible because they are hearsay
and lack foundation. We disagree. Statements that an opposing party “manifested
that it adopted or believed to be true” are not hearsay. See Fed. R. Evid.
801(d)(2)(B). Because the regulations and STABL’s permit required STABL to
certify their truth and accuracy, the DMRs are nonhearsay adoptive admissions.
Moreover, the only foundation required for 801(d)(2)(B) adoptive admissions is a
showing that they were made or adopted by the opposing party or by its agent on a
matter within the scope of that agency; there is no personal-knowledge requirement.
Pillsbury Co. v. Cleaver-Brooks Div. of Aqua-Chem, Inc., 646 F.2d 1216, 1218 n.2
(8th Cir. 1981); see also Mahlandt v. Wild Canid Survival & Research Ctr., Inc., 588
F.2d 626, 630-31 (8th Cir. 1978). STABL failed to respond to the government’s
requests for admission regarding the authenticity of the DMRs. It thus admitted their
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authenticity and that they were what they purported to be: STABL’s DMRs, signed
by its general manager. See Fed. R. Evid. 901; Quasius v. Schwan Food Co., 596
F.3d 947, 951 (8th Cir. 2010). This was sufficient to establish foundation for the
DMRs as 801(d)(2)(B) admissions.
STABL also challenges the reliability of the DMRs. It does not directly
dispute that the DMRs reflect effluent-limitation exceedances, but instead argues that
the data on which the reports were based was so unreliable that there is a genuine
dispute regarding whether STABL’s discharges ever exceeded its permit limitations.
STABL claims that its DMRs did not accurately record the pollutant levels in its
discharge because the flow meters, which measure quantities of water passing
through the plant, were rusted off and were not calibrated. STABL also cites
deposition testimony by Jess Bliven, the treatment plant superintendent, who stated
that the city tested STABL’s water on Tuesdays, which “probably wasn’t a good day”
for testing because the “terrible water” had been sitting for “a couple extra days.”
The government responds that the DMRs are unassailable admissions and that
STABL either cannot impeach its own DMRs or has not presented sufficient evidence
to meet its heavy burden of proving laboratory error in its own reports.
When a defendant’s own DMRs demonstrate permit exceedances, they
constitute sufficient evidence to meet a Clean Water Act plaintiff’s burden of
production on liability and in some circumstances may be sufficient to entitle the
plaintiff to summary judgment.9 See Allegheny, 366 F.3d at 174; Friends of the Earth
v. Eastman Kodak Co., 834 F.2d 295, 298 (2d Cir. 1987). Whether STABL offered
9
Furthermore, because a permit holder has an obligation to monitor its
compliance with its permit and to report the results, we conclude that the absence of
reporting for a required parameter in a permit holder’s DMRs is sufficient to meet a
plaintiff’s initial burden of production on liability for failure to monitor. Aside from
arguing that the DMRs were inadmissible, STABL has made no persuasive challenge
to summary judgment on the failure-to-monitor violations.
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sufficient evidence to rebut the effluent-limitation exceedences recorded in its DMRs
depends upon the proper amount of weight to accord those reports. The Ninth Circuit
has stated that a permit holder may never impeach its own DMRs by claiming
laboratory error. Sierra Club v. Union Oil Co. of Cal., 813 F.2d 1480, 1491-92 (9th
Cir. 1987), vacated on other grounds, 485 U.S. 931 (1988), reinstated as amended,
853 F.2d 667 (9th Cir. 1988). By contrast, the Third Circuit has held that “[e]vidence
that the reports inaccurately overreported the level of discharge are certainly relevant
to show that no violation occurred.” Allegheny, 366 F.3d at 174.
We agree with the Third Circuit that evidence of overreporting can be relevant
to show that there were no violations, but we also agree that a defendant who wishes
to assert laboratory error as a defense has a heavy burden. See, e.g., id. at 173-74
(citing Pub. Interest Research Grp. of N.J., Inc. v. Elf Atochem N. Am., Inc., 817 F.
Supp. 1164 (D.N.J. 1993)) (finding persuasive the reasoning of a district court that
held that a defendant has a “heavy burden” when impeaching its own DMRs); Pub.
Interest Research Grp. of N.J. v. Yates Indus., Inc., 757 F. Supp. 438, 447 (D.N.J.
1991) (holding that there is a “heavy burden to establish faulty analysis”). To hold
otherwise would give permit holders an incentive to employ lax laboratory
techniques. Although it is true that no company that is actually in compliance with
its permit obligations would want to employ laboratory techniques that would result
in overreporting of pollutant levels, see Allegheny, 366 F.3d at 175, a company that
wished to circumvent its effluent-limitation obligations could simply ensure that its
laboratory results were impeachable. Furthermore, Congress imposed the monitoring
and reporting requirements in part to “avoid the necessity of lengthy fact finding,
investigations, and negotiations at the time of enforcement.” S. Rep. No. 92-414, at
64 (1972). Allowing a permit holder to impeach its own DMRs simply by pointing
to potential laboratory error, without specific evidence demonstrating that the
laboratory error likely resulted in overreporting of pollutant levels that were in fact
within permit limitations, would subvert Congress’s purpose in enacting the
monitoring and reporting requirements.
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To impeach its own DMRs, a party must, at the very least, offer evidence that
corroborates its claim that the pollutant levels were overreported and were actually
within permit limitations. Cf. Elf Atochem, 817 F. Supp. at 1178 (allowing the
defendant’s claims of laboratory error to defeat summary judgment when parallel
testing by another laboratory produced results within permit limitations); Allegheny,
366 F.3d at 173-74 (discussing Elf Atochem). Evidence of unreliable testing methods
alone is insufficient. STABL has offered no evidence demonstrating that the correct
measurements would in fact have fallen within its permit limitations, nor has it
offered evidence demonstrating that the supposedly uncalibrated or faulty flow meter
was more likely to result in overreporting than underreporting. STABL’s claim of
overreporting is thus nothing more than sheer speculation. Furthermore, Bliven’s
statement that Tuesday was not a good day for sampling does not undermine the
probative value of the DMRs, because it was STABL’s obligation to ensure that the
effluent samples used for measurements were representative of the activities it was
monitoring. In sum, STABL did not offer sufficient evidence to impeach its own
DMRs, and the DMRs were sufficient evidence of liability to grant summary
judgment on at least some effluent-limitation violations.
B. Klingenstein’s Declarations
STABL argues that the district court erred by considering Klingenstein’s
declarations regarding the effluent-limitation violations. Although Klingenstein did
opine that, based on the DMRs, STABL’s discharges exceeded the limitations in its
permit, his declarations were not necessary to establish those violations. The DMRs,
which were not sufficiently impeached, themselves established liability for at least
some of the effluent-limitation violations by way of a simple comparison of the
reported data with STABL’s permit. STABL argues that the DMRs are
indecipherable without Klingenstein’s explanatory declarations. We disagree. Even
if the underlying monitoring records containing the sampling data required
explanation, STABL’s actual DMRs are legible, and the meaning of the data reported
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therein is straightforward. Thus, the district court’s consideration of Klingenstein’s
declarations constituted harmless error, if error at all. See Winter v. Novartis Pharm.
Corp., 739 F.3d 405, 411 (8th Cir. 2014) (holding that considering inadmissible
evidence is harmless error when that evidence is cumulative of other, admissible
evidence).
III. Post-Summary Judgment and Trial
STABL challenges several of the district court’s decisions to allow certain
evidence to be presented at the bench trial. STABL also asserts that Klingenstein’s
supposed misrepresentations should result in dismissal or remand of this case.
Finally, STABL claims that the district court deprived it of its right to a jury trial
under the Seventh Amendment by conducting a bench trial to determine the number
of STABL’s violations.
A. Marshall’s Testimony
STABL argues that Marshall, an EPA compliance officer and one of the
government’s witnesses at the bench trial, was not disclosed or qualified as an expert
witness, yet offered an opinion based on “scientific, technical, or other specialized
knowledge” in contravention of Federal Rule of Evidence 701. The government
argues that Marshall was properly characterized as a lay witness.
We review the district court’s decision to admit Marshall’s testimony for abuse
of discretion. See US Salt, Inc. v. Broken Arrow, Inc., 563 F.3d 687, 689-90 (8th Cir.
2009). Determining whether a witness is offering an expert or lay opinion requires
a case-by-case analysis of both the witness and the witness’s opinion. United States
v. Smith, 591 F.3d 974, 982-83 (8th Cir. 2010) (citing In re Air Crash at Little Rock
Ark. on June 1, 1999, 291 F.3d 503, 515-16 (8th Cir. 2002)). Although lay witnesses
may not testify about scientific knowledge within the scope of Federal Rule of
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Evidence 702, “[p]erceptions based on industry experience [are] a sufficient
foundation for lay opinion testimony.” Id. (second alteration in original) (quoting US
Salt, Inc., 563 F.3d at 690).
Although Marshall testified on a number of subjects, a substantial portion of
his testimony offered background information that was irrelevant to the district
court’s determination of the number of effluent-limitation and failure-to-monitor
violations. The number of violations could be determined by a review and
comparison of STABL’s DMRs, its permit limitations and obligations, and the city’s
sampling data contained in the monitoring records. Marshall’s relevant testimony
established that, although STABL’s discharge was tested weekly, the monthly DMRs
reflected the highest daily-maximum and highest weekly-average readings from each
month. He further testified that one must therefore review the city’s sampling data
to determine the additional number of effluent-limitation violations in any month in
which the DMRs reflected one or more exceedances of the daily-maximum or
weekly-average limits for any parameter. Marshall then testified as to the number of
violations he counted in the city’s monitoring records and the number of weeks for
which oil and grease monitoring results were missing from the records. In addition,
Marshall testified regarding the EPA’s investigation of STABL and the treatment
plant. This testimony may properly be viewed as primarily related to Marshall’s
industry experience as an EPA compliance officer rather than expert knowledge.
Furthermore, mere tabulation does not require scientific, technical, or other
specialized knowledge. Accordingly, the district court did not abuse its discretion in
admitting Marshall’s testimony as lay testimony under Federal Rule of Evidence 701.
B. Meyer’s Economic-Benefit Opinion
STABL argues that the district court erred in considering Meyer’s testimony
and updated expert report and in denying its motion in limine and request for a
continuance.
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A party must disclose expert opinions “at the times and in the sequence that the
court orders.” Fed. R. Civ. P. 26(a)(2)(D). Under Rule 26(e), a party has a duty to
supplement disclosed information “in a timely manner if the party learns that in some
material respect the disclosure or response is incomplete or incorrect.” Fed. R. Civ.
P. 26(e)(1)(A). A party who fails to provide information as required by Rule 26(a)
or (e), or fails to do so in a timely manner, may not use that information or witness
unless its failure to comply with the Rule is harmless or substantially justified. Fed.
R. Civ. P. 37(c)(1); see Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008 (8th Cir.
1998) (“[F]ailure to disclose in a timely manner is equivalent to failure to disclose
. . . .”). We review for abuse of discretion a district court’s decision not to exclude
expert testimony under Rule 37(c)(1). Primrose Operating Co. v. Nat’l Am. Ins. Co.,
382 F.3d 546, 563 (5th Cir. 2004). We review a district court’s 26(e) ruling for gross
abuse of discretion and reverse only if it resulted in fundamental unfairness. Kahle
v. Leonard, 563 F.3d 736, 740 (8th Cir. 2009). We review the district court’s denial
of a motion for continuance for abuse of discretion. Farmers Co-Op Co. v. Senske
& Son Transfer Co., 572 F.3d 492, 499 (8th Cir. 2009).
In April 2012, the government disclosed Meyer’s original expert report
analyzing the economic benefit that STABL derived from noncompliance with its
permit obligations. In May 2012, the government deposed Leon Johnson, who
testified that he accepted a $1 million reduction in the sale price of STABL, Inc.
based on the costs Darling would incur to take on the pretreatment project. In
November 2012, STABL disclosed financial records reflecting this sale-price
reduction. On July 2, 2013—eleven weeks before the anticipated September 17,
2013, trial date—the government served Meyer’s “Updated Report” on STABL, using
the $1 million sale-price reduction to propose an alternative calculation of the
economic benefits of noncompliance.
In her original report, Meyer used a “discounted cash flow model” to estimate
the financial benefit STABL derived from noncompliance with its permit. Because
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she had no information regarding how STABL and Darling had addressed compliance
costs when negotiating the sale price of the facility, she assumed that STABL derived
economic benefits from delaying the costs of compliance and that, in some form,
STABL had eventually incurred the cost of building a wastewater treatment system.
In her updated report, Meyer took into account the fact that STABL had negotiated
a specific discount in the facility’s sale price that reflected the facility’s
noncompliance with pretreatment obligations. She determined that this would
increase STABL’s economic benefit because it meant that STABL did not merely
delay the construction and one-time costs of building a treatment system, but rather
avoided those costs altogether in exchange for $1 million. Meyer opined that the
actual million-dollar price reduction could be substituted for the estimated delayed
costs used in her original report, and that “[t]his alternative scenario more precisely
models the financial impacts of noncompliance actually realized by STABL.” Meyer
also updated her report to adjust for the passage of time, to include company-specific
financial information provided by STABL, and to remove the construction-cost
contingency from estimates of treatment equipment costs.
STABL argues that Meyer’s “Updated Report” included a materially altered
opinion and was untimely. But the report itself suggests that in her revised analysis,
Meyer simply changed the assumptions in her original report based on the new
information she had received. Johnson’s deposition, and STABL’s subsequent
production of financial documents, occurred after Meyer’s original expert disclosure.
Since Johnson revealed information that altered Meyer’s expert analysis and rendered
her original opinion incomplete, the government was obligated under Rule 26(e) to
provide an updated expert report based on that information. It would have taken time
for Meyer to prepare her updated analysis and make the additional revisions to her
report.
Furthermore, even if Meyer’s updated report was untimely, the district court
did not abuse its discretion in determining that the delay was harmless and that
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STABL was not entitled to a continuance. STABL never disclosed its own expert to
rebut Meyer’s original opinion and methodology—a methodology that was not
fundamentally altered in the updated report. Even if the government delayed in
submitting the updates, STABL also delayed by waiting more than nine weeks after
receiving the updated expert opinion and until about two weeks before trial to move
to exclude Meyer’s testimony or for a continuance. The district court could have
properly concluded that the updated numbers in Meyer’s report did not prejudice
STABL and that STABL’s motion was itself an attempt to delay or to insert new
experts into the litigation on the eve of trial. The cases STABL cites—Wegener v.
Johnson, 527 F.3d 687, 690 (8th Cir. 2008); White v. Howmedica, Inc., 490 F.3d
1014, 1016 (8th Cir. 2007); and Trost v. Trek Bicycle Corp., 162 F.3d 1004, 1008
(8th Cir. 1998)—all involved instances in which we affirmed a district court’s
discretionary decision to exclude untimely expert testimony. They do not establish
that a district court abuses its discretion by permitting untimely updates to expert
reports, and thus we conclude that the district court did not abuse its discretion by
determining that any delay in updating the report was harmless, by allowing Meyer’s
testimony based on the updated report, and by denying STABL’s request for a
continuance.
C. Klingenstein’s Corrected Calculation of Total Violations
STABL argues that because Klingenstein verified the accuracy of his original
declaration in support of summary judgment, but later found errors because of
mistakes made by Marshall, the government should be estopped from using his expert
testimony or the case should be dismissed or remanded for a new trial. STABL’s
argument is without merit. At the time of his original expert declaration at summary
judgment, Klingenstein was simply relying on Marshall and on the EPA’s work to
form his opinion. When Klingenstein corrected the data, he disclosed the changes
soon thereafter at trial, and the corrections actually favored STABL, resulting in three
fewer violations. STABL has not shown there was “affirmative misconduct,” as
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required to establish estoppel against the government. See Bartlett v. U.S. Dep’t of
Agric., 716 F.3d 464, 475-76 (8th Cir. 2013).
D. Monitoring Records
STABL challenges the reliability and admissibility of the city’s monitoring
records, which contained the sampling data on which the DMRs were based. Even
if the government had not established sufficient foundation for the monitoring records
at summary judgment, it had done so by the end of trial. Although STABL did not
create the monitoring records, it admitted their authenticity. Fagot testified at trial
that STABL used the monitoring records to prepare its DMRs, and he certified on the
DMRs that the reports were “prepared . . . in accordance with a system designed to
assure that qualified personnel properly gather[ed] and evaluate[d] the information
submitted.” Fagot also certified that, based on his inquiry of the persons who
managed the system or were responsible for gathering the information, the
information in the DMRs was “true, accurate, and complete” to the best of his
knowledge and belief. The certification on the DMRs thus served as a manifestation
of STABL’s belief that the underlying monitoring records were accurate. The
monitoring records, like the DMRs, were therefore admissible as adoptive
admissions. See Fed. R. Evid. 801(d)(2)(B). Furthermore, STABL’s permit, as well
as federal regulations, 40 C.F.R. §§ 122.41(j)(1), 123.25, required that the samples
and measurements used to create the requisite monitoring records be representative
of the discharge, and the permit required that monitoring utilize flow measurement
devices that are consistent with accepted scientific practices and “installed, calibrated
and maintained to insure that [sic] the accuracy of the measurements.” Because
STABL had an obligation to ensure that the sampling data in the monitoring records,
on which the DMRs were based, was accurate and representative of its discharge
activities, its attempt to impeach the monitoring records fails for the same reason as
its attempt to impeach the DMRs.
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E. STABL’s Right to a Jury Trial
In its memorandum and order granting partial summary judgment, the district
court stated, “The issue of the total number of violations committed . . . is intertwined
with the issue of the appropriate penalties the Court may award pursuant to 33 U.S.C.
§ 1319(d). Therefore, at this time, the Court will not rule on the exact number of
violations committed.” The district court instead ruled on the number of violations
at the conclusion of the bench trial.
Whether a party has a right to trial by jury is a question of law that we review
de novo. Smith Flooring, Inc. v. Pa. Lumbermens Mut. Ins. Co., 713 F.3d 933, 936
(8th Cir. 2013). In a Clean Water Act suit, the defendant is entitled to a jury trial on
issues of liability but is not entitled to have a jury determine the amount of the
penalty. See Tull v. United States, 481 U.S. 412, 425-27 (1987).
STABL argues, and the government does not dispute, that the total number of
Clean Water Act violations is an issue of liability that falls within a defendant’s
Seventh Amendment right to a jury trial. We therefore assume that the parties are
correct. Cf. U.S. E.P.A. v. City of Green Forest, 921 F.2d 1394, 1406-07 (8th Cir.
1990) (approving jury determination of the number of violations, but noting district
court committed harmless error in failing to instruct on the correct method of
calculation). We also assume for purposes of this appeal that STABL has preserved
its argument on this issue, even though it did not raise this specific argument below
in opposition to the government’s motion for a bench trial. The government argues
that to determine the number of violations, the district court relied principally on the
DMRs and underlying monitoring data from April 2008 to May 2010, and therefore
judgment as a matter of law on the number of violations was appropriate.
“The erroneous denial of a jury trial in a civil case is subject to harmless error
analysis.” Ind. Lumbermens Mut. Ins. Co. v. Timberland Pallet & Lumber Co., 195
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F.3d 368, 375 (8th Cir. 1999) (quoting Fuller v. City of Oakland, 47 F.3d 1522, 1533
(9th Cir. 1995)). We will affirm if the evidence offered at the bench trial would have
allowed the court to grant judgment as a matter of law on the number of violations.
See Fuller, 47 F.3d at 1533 (noting that the standard for harmless-error review of the
denial of a jury trial is whether the court could have granted judgment as a matter of
law).10
Although the district court did not allow the parties to present any evidence on
“liability” at the bench trial, the court made it clear that a primary purpose of the
bench trial was to determine the number of violations, and the parties had every
opportunity to present evidence on that issue. STABL challenged the court’s
consideration of Marshall’s and Klingenstein’s testimony and the reliability and
admissibility of the DMRs and monitoring records, but STABL neither disputed the
final number of violations reflected in the DMRs and monitoring records nor offered
an alternative methodology for calculating the number of violations. Nor does
STABL on appeal point to any actual errors in the tabulation of the number of
10
The government contends that the district court’s ruling on the number of
violations was in fact a reserved ruling on summary judgment. Whether we
characterize the district court’s ruling on the number of violations as a reserved ruling
on, or reconsideration of, summary judgment, or as a finding following a bench trial
subject to harmless-error analysis, our review is essentially the same. See Tatum v.
City of Berkeley, 408 F.3d 543, 549 (8th Cir. 2005) (recognizing that the court
applies an identical legal standard in deciding a motion for summary judgment and
a motion for judgment as a matter of law); see also Macquarie Bank Ltd. v. Knickel,
Nos. 14-1683, 14-1684, slip op. at 14, 2015 WL 4385677, at *7 (8th Cir. July 17,
2015) (noting that a district court is free to reconsider its ruling denying summary
judgment); Conkling v. Turner, 18 F.3d 1285, 1296 (5th Cir. 1994) (concluding that
after trial, a district court may sua sponte reconsider partial denials of summary
judgment); Warner Bros. Inc. v. Am. Broad. Cos., Inc., 720 F.2d 231, 245-46 (2d Cir.
1983) (holding that a trial court has discretion to reconsider, sua sponte, a denial of
summary judgment when the non-moving party had a full opportunity to oppose the
original motion and the court considered all of the party’s proposed evidence).
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violations reflected in the DMRs and monitoring records. Instead, STABL simply
asserts that there was a genuine dispute over the number of effluent-limitation
violations, entitling it to try the issue before a jury. This is insufficient to demonstrate
a factual dispute. Because STABL’s challenges to the witness testimony and the
admissibility of the DMRs and monitoring records fail, and because STABL has not
sufficiently impeached the DMRs and monitoring records, the evidence would have
allowed the district court to grant judgment as a matter of law on the number of
effluent-limitation violations. Any error in denying a jury trial was harmless.
IV. Other Arguments
STABL asserts a number of additional arguments in its brief. Having
considered them, we conclude that they either are meritless or relate solely to the
district court’s rulings on the pass-through and interference claims, which are no
longer the subject of review.
V. Conclusion
The district court’s evidentiary rulings and grant of partial summary judgment
were not in error or were harmless error. The district court’s reservation or
reconsideration of summary judgment after trial was proper, or, in the alternative, its
decision to hold a bench trial on the number of Clean Water Act violations was
harmless error. The orders and the judgment are affirmed.
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