BESPOKE STUDIO INC v. GABBE PRIVATE LIMITED (2024)

ORDER

Presently before the Court is Plaintiff/Counter-Defendants Bespoke Studio, Inc. (“Bespoke”) and Morgan A. Stimson's (“Stimson”) “Motion to Strike Defendant's Supplemental Disclosures and Motion for Sanctions.” (Doc. 34). Defendant/Counter-Claimant Gabbe Private Limited (“Gabbe”) has responded in opposition. (Doc. 35). For the reasons below, the motion (Doc. 34) is GRANTED in part to the extent that the computation of damages are struck from Gabbe's “supplemental disclosures,” and Adam Ezra may not testify regarding the computation of damages. The motion (Doc. 34) is DENIED in part to the extent that monetary sanctions will not be imposed against Gabbe.

I. Background

Bespoke sued Gabbe in March of 2024. Gabbe counterclaimed against Bespoke and Stimson in June of 2024. The parties agreed to a case management schedule under which Rule 26(a)(1)(A)(iii) damages calculations and Rule 26(a)(2) expert disclosures were due on June 19, 2024, and September 30, 2024,¹ respectively. (Docs. 7, 15). The discovery deadline is December 20, 2024. (Doc. 15).

On October 24, 2024, Bespoke and Stimson moved to exclude Gabbe's damages expert and damages calculations because Gabbe failed to timely make the disclosures required by Rule 26(a)(2)(B) and (a)(1)(A)(iii). (See Doc. 26). Gabbe then withdrew the challenged expert and requested additional time to make the required disclosures, which Bespoke opposed. (Docs. 27, 30, 32).

Judge Wetherell issued an order on November 15, 2024. (Doc. 33). In that order, Judge Wetherell noted that it was “undisputed that Gabbe missed the deadlines” to make Rule 26(a)(2)(B) and (a)(1)(A)(iii) disclosures. (Doc. 33 at 2). Judge Wetherell further noted that “with less than 25 business days remaining in the discovery period, Gabbe still ha[d] not disclosed its damages calculations or an expert report on damages.” (Id.). Because of Gabbe's untimeliness and lack of diligence, Judge Wetherell ordered that Gabbe “not use the undisclosed damages information at trial or in support of a motion.” (Id. at 7). He also denied Gabbe's request for additional time to disclose its damages calculations and expert report. (Id. at 8).

Approximately five days after Judge Wetherell's order, Gabbe served Bespoke and Stimson with “supplemental disclosures” under Rule 26(e). (See Doc. 34-1). Gabbe did three things in the “supplemental disclosures.” First, it identified two individuals who were likely to have discoverable information. (Id. at 1-2). One of the individuals was Adam Ezra, who Gabbe stated was likely to have information regarding Gabbe's finances and “the calculation and substantiation” of the damages caused by Bespoke and Stimson. (Id. at 2). Second, Gabbe identified categories of documents that it may use to support its claims or defenses. (Doc. 34-2 at 2-3). Third, Gabbe provided its “computation of damages” for Counts I, III, IV, V, VI, and VIII. (Id. at 3-5).

Bespoke and Stimson have now moved to strike the testimony of Adam Ezra, as well as the computation of damages found in the “supplemental disclosures.” (Doc. 34). Additionally, they ask the Court to impose monetary sanctions on Bespoke and Stimson under Rule 37(c)(1). In support of their motion, Bespoke and Stimson argue that Bespoke and Stimson are attempting to use the “supplemental disclosures” to circumvent Judge Wetherell's prior order. They further argue that what Bespoke and Stimson have titled as “supplemental disclosures” do not qualify as such under Rule 26(e). For its part, Gabbe claims that it made the “supplemental disclosures” in good faith and without any intent to circumvent Judge Wetherell's prior order. Gabbe further claims that the “supplemental disclosures” were proper under Rule 26(e).

II. Discussion

A. Gabbe's computation of damages in the “supplemental disclosures”

One item that must be initially disclosed under Rule 26(a)(1) is “a computation of each category of damages claimed by the disclosing party.” Fed. R. Civ. P. 26(a)(1)(A)(iii); Circuitronix, LLC v. Kinwong Electronic Co., Ltd., 993 F.3d 1299, 1307 (11th Cir. 2021) (recognizing that “Rule 26 requires a party to include in its initial discovery disclosures a ‘computation of each category of damages claimed’ ”). Additionally, the disclosing party “must also make available for inspection and copying ․ the documents or other evidentiary material ․ on which each computation is based, including materials bearing on the nature and extent of injuries suffered.” Fed. R. Civ. P. 26(a)(1)(A)(iii).

Judge Wetherell has already concluded that Gabbe failed to disclose its computation of damages in a timely fashion as required by Rule 26(a)(1)(A)(iii). (Doc. 33 at 2) (“It is undisputed that Gabbe missed the deadlines to disclose the information required by ․ [Rule 26]). And because—as of November 15, 2024—Gabbe had still not disclosed its computation of damages, Judge Wetherell stated that “Gabbe cannot use the information that should have been included in those disclosures unless its failure to make the required disclosures was substantially justified or harmless.” (Id. at 2-3) (emphasis added). He further found that Gabbe's failure to timely disclose its computation of damages was neither substantially justified nor harmless. (Id. at 5).

There is no ambiguity in Judge Wetherell's order—he held that Gabbe “cannot use” any computation of damages because that information was not timely disclosed. Gabbe's inclusion of a computation of damages in its recent “supplemental disclosures” is a clever attempt to sneak in the back door what Judge Wetherell barred from coming through the front door. The Court will not permit such an end-run around the November 15, 2024, order.

Aside from being inconsistent with Judge Wetherell's order, Gabbe's “supplemental disclosures” do not qualify as actual supplemental disclosures under Rule 26(e). Rule 26(e) provides in pertinent part that a “party who has made a disclosure under Rule 26(a) ․ must supplement or correct its disclosure or response: (A) 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) (emphasis added).

Here, there was no initially disclosed computation of damages for Gabbe to supplement. Through their so called “supplemental disclosures,” Gabbe was not correcting or completing something that it had been previously disclosed; rather, it was disclosing something for the first time. But Rule 26(e) does not “create a loophole” through a which a party who failed to initially disclose information can disclose it “after the [C]ourt's deadline for doing so has passed.” Dayton Valley Invs., LLC v. Union Pac. R. Co., No. 2:08-CV-00127-ECR, 2010 WL 3829219, at *3 (D. Nev. Sept. 24, 2010) (excluding a computation of damages that was provided for the first time in a supplemental disclosure submitted months after expiration of the deadline for initial disclosures). Put another way, Rule 26(e) permits a party to “supplement or correct a disclosure upon information later acquired,” but it “does not give license to sandbag one's opponent” by belatedly disclosing information that should have been included in the initial disclosures. Beller ex rel. Beller v. United States, 221 F.R.D. 689, 695 (D.N.M. 2003); see also TIC - The Indus. Co. Wyoming v. Factory Mut. Ins. Co., No. 4:10CV3153, 2012 WL 2830867, at *10 (D. Neb. July 10, 2012) (explaining that Rule 26(e) “does not permit adding claims and issues which could have, and should have been included in the original report”).

Gabbe argues that the computation of damages information is of substantial importance to its case. (Doc. 35 at 8). It further argues that Bespoke and Stimson have not been prejudiced by Gabbe's disclosure of the damages computation for the first time in the “supplemental disclosures.” (Id. at 8-10). Nearly identical arguments have already been considered and rejected by Judge Wetherell. (See Doc. 33 at 4-5). And there has been no extraordinary change in circumstances since November 15, 2024, that would justify a different conclusion today. In fact, the prejudice to Bespoke and Stimson that Judge Wetherell previously identified is even greater today because there is less time on the discovery clock now than there was when he issued his order.

At bottom, Gabbe failed to timely disclose a computation of damages as required by Rule 26(a)(1)(A)(iii).² Because of that, Judge Wetherell held that “Gabbe may not use the undisclosed damages information at trial or in support of a motion.” (Doc. 33 at 7). Gabbe's attempt to get that undisclosed damages information in through so called “supplemental disclosures” under Rule 26(e) fails.³

B. Testimony of Adam Ezra who is first identified in the “supplemental disclosures”

Aside from the computation of damages, Gabbe's “supplemental disclosures” identified Adam Ezra as an individual with discoverable information. According to the “supplemental disclosures,” Mr. Ezra has information about Gabbe's “corporate finances and operations,” including how Bespoke and Stimson's actions contributed to Gabbe's “damages, as well as the calculation and substantiation of such damages.” (Doc. 34-1 at 2). Recognizing that Judge Wetherell has ruled that Gabbe may not present expert testimony on damages, Gabbe argues that Mr. Ezra is a lay witness who would be providing lay opinion testimony under Rule 701. More specifically, Gabbe says Mr. Ezra's testimony would be based on “his personal observations and the documents already produced in this case.”⁴ (Doc. 35 at 10).

A lay witness with “adequate personal knowledge,” may testify “about ․ general topics.” Gov't Emps. Ins. Co. v. Seco, 644 F. Supp. 3d 1309, 1315 (S.D. Fla. 2022) (cleaned up). And a lay witness may provide opinion testimony, so long as it meets the requirements of Fed. R. Evid. 701. Thus, to the extent that he has personal knowledge and his testimony does not exceed the boundaries of Fed. R. Evid. 701, Mr. Ezra can testify about Gabbe's “corporate finances and operations.” Consistent with the discussion above and Judge Wetherell's November 15, 2024, order, Mr. Ezra may not, however, testify regarding the computation of Gabbe's damages. (See Doc. 33 at 7) (“Gabbe may not use the undisclosed damages information at trial or in support of a motion.”).

C. The request for monetary sanctions

Bespoke and Stimson also ask the Court to order Gabbe to pay their reasonable attorney's fees and expenses as a monetary sanction under Rule 37(c)(1). (Doc. 34 at 25-27). Rule 37(c)(1) provides that when a party fails to timely disclose information under Rule 26(a), a district court—in addition to excluding the information—“may order payment of the reasonable expenses, including attorney's fees ․” Fed. R. Civ. P. 37(c)(1)(A). District courts have “broad discretion to fashion appropriate sanctions for the violation of discovery orders.” U.S. v. Certain Real Prop. Located at Rt. 1, Bryant, Ala., 126 F.3d 1314, 1317 (11th Cir. 1997). Here, the Court does not believe that monetary sanctions are necessary. The Court believes that Gabbe has already been sufficiently sanctioned by having its computation of damages stricken. See generally Dayton Valley Investors, 2010 WL 3829219, at *7 (refusing to “impose a monetary sanction in addition to the exclusion sanction” where party failed to timely disclose computation of damages and attempted to do so by filing a supplemental disclosure). Thus, the Court will not order Gabbe to pay Bespoke and Stimson's attorney's fees and expenses.

III. Conclusion

Accordingly, it is ORDERED that:

1. The motion to strike (Doc. 34) is GRANTED in part to the extent that the computation of damages relating to Counts I, III, IV, V, VI, and VIII, are struck from Gabbe's “supplemental disclosures.” Adam Ezra may testify as a lay witness to the extent he has personal knowledge and his testimony complies with Fed. R. Evid. 701, but Mr. Ezra may not testify regarding the computation of damages for the counts referenced above.

2. The motion to strike (Doc. 34) is DENIED in part to the extent that monetary sanctions will not be imposed against Gabbe.

SO ORDERED. This the 16th day of December 2024.

FOOTNOTES

1.   The deadline was originally September 3, 2024, but Bespoke and Stimson agreed to Gabbe's request for an extension of the deadline to September 30, 2024. (Doc. 32 at 5).

2.   Bespoke and Stimson concede that Gabbe timely disclosed a computation of $37,297.49 in damages for Count II (Breach of Purchase Orders). The computation of damages for Count II was not mentioned in Gabbe's “supplemental disclosures” and, therefore, is not at issue today.

3.   It bears mentioning that even if a party could use a Rule 26(e) supplemental disclosure to belatedly disclose a computation of damages for the first time, the computation of damages provided in Gabbe's “supplemental disclosures” would be insufficient. Nowhere in its “supplemental disclosures” does Gabbe explain how it calculated the amount of $10,701,331.00 in damages for six separate claims. Under Rule 26(a)(1)(A)(iii), a party must disclose “a computation of each category of damages claimed.” Courts have recognized that the “rule requires something more than a specific dollar amount of damages which a plaintiff seeks.” Pipeline Prods., Inc. v. S&A Pizza, Inc., No. 4:20-cv-130, 2023 WL 11950652, at *6 (W.D. Mo. July 27, 2023). A “computation of damages under Rule 26(a) should include some analysis, specific dollar amounts and the computations supporting the amounts requested.” Adams v. City of Kansas City, Mo., 2022 WL 210385, at *6 (W.D. Mo. Jan. 24, 2022). The rule requires “more than a mere dollar amount or a lump sum or the basic method or formula for calculating damages.” Id.; see also Liberty Ins. Underwriters, Inc. v. Beaufurn, LLC, No. 1:16CV1377, 2021 WL 2109479, at *5 (M.D.N.C. May 25, 2021) (stating that “courts require more than a mere dollar amount to satisfy the computation requirement” because Rule 26 “contemplates some analysis”) (cleaned up). In this case, Gabbe has provided no calculations or analysis explaining how it arrived at the amount of $10,701,331.00 as the damages for six different claims. Thus, the computation of damages Gabbe has provided in its “supplemental disclosures” are inadequate to satisfy the requirements of Rule 26(a)(1)(A)(iii).

4.   Gabbe has not explained how Mr. Ezra has obtained personal knowledge regarding its finances or the damages it has suffered. According to Bespoke and Stimson, Mr. Ezra is the brother of Gabbe's principal, but they say he is not an employee or officer of Gabbe. (Doc. 34 at 24).

Zachary C. Bolitho, United States Magistrate Judge