103 Investors I, L.P. v. Square D Co.

• Decision Date: 23 June 2004
• Docket Number: No. 02-3345.,02-3345.
• Citation: 372 F.3d 1213
• Parties: 103 INVESTORS I, L.P., Plaintiff-Appellant, v. SQUARE D COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

372 F.3d 1213

103 INVESTORS I, L.P., Plaintiff-Appellant, v. SQUARE D COMPANY, Defendant-Appellee.

No. 02-3345.

United States Court of Appeals, Tenth Circuit.

June 23, 2004.

Michael A. Childs, Brown and James, P.C., Kansas City, MO, for the Plaintiff-Appellant.

James S. Kreamer (Thomas N. Sterchi and Christopher J.Stucky with him on the brief) Baker, Sterchi, Cowden, & Rice, L.L.C., Overland Park, KS, for the Defendant-Appellee.

Before EBEL, McKAY, and LUCERO, Circuit Judges.

LUCERO, Circuit Judge.

At the heart of this appeal is a dispute over the admissibility of expert testimony in relation to the cause of a fire that occurred in the building of 103 Investors I, L.P. ("Investors") on March 1, 2001. Square D Company ("Square D"), which manufactures electrical equipment, manufactured the building's busways. Investors alleges that those busways caused the fire and seeks to introduce expert testimony toward the goal of demonstrating that allegation.

Late in the discovery process, Investors attempted to add an additional party or, in the alternative, voluntarily dismiss the suit without prejudice. The district court denied both motions, and we AFFIRM on both issues. Having denied those motions, the district court granted summary judgment to Square D on the ground that Investors lacked admissible expert testimony that would demonstrate a manufacturing defect was present in the busways. Specifically, it found that Investors' initial expert reports were inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and that its subsequent report was untimely. We conclude that the district court's refusal to consider Investors' subsequent expert report was an abuse of discretion; accordingly, we REVERSE and REMAND for proceedings consistent with this opinion.

I

On March 1, 2001, a fire occurred in the electrical room on the second floor of Investors' office building. In the walls ran "busways," which are systems of four insulated aluminum bars in aluminum casing that run from the basement to the top floor and distribute electricity to various floors. Square D manufactured the busways, while another company installed them in 1978. During the months following the fire, Investors retained Carl Martin and Bryon Sherman as experts to investigate possible causes. Based on their analyses, Investors ultimately attributed the cause of the fire to a malfunction of the busways. Accordingly, it brought an action against Square D in state court on September 19, 2001, asserting theories of strict liability and negligence based on design defects, manufacturing defects, and failure to warn. Square D removed the case to federal court on October 18, 2001.

A detailed description of the discovery process is necessary to provide an understanding of the context of the present appeal. After conducting a scheduling conference, the district court issued a Scheduling Order on December 7, 2001. Among other things, the Scheduling Order set the following dates by which certain motions had to be filed and portions of discovery had to be completed: (1) Investors' submission of expert reports by January 10, 2002; (2) Square D's expert submissions by February 11, 2002; (3) any rebuttal expert reports by February 25, 2002; (4) motions to join additional parties by February 15, 2002; (5) potentially dispositive motions by May 3, 2002; and (6) all discovery completed by April 8, 2002.

These dates all changed, at the initial request of Square D and ultimately with the agreement of Investors. On April 4, 2002, the district court issued an Amended Scheduling Order, which set out the following revised dates: (1) Investors' submission of expert reports by April 1, 2002; (2) Square D's expert submissions by May 15, 2002; (3) any rebuttal expert reports by June 1, 2002; (4) motions to join additional parties by May 1, 2002; (5) potentially dispositive motions by June 3, 2002; and (6) all discovery completed by July 5, 2002.

Investors initially submitted two expert reports, one prepared on February 18, 2002, jointly by Martin and Sherman and the other prepared on March 25, 2002, by Martin. Under the Amended Scheduling Report, Investors' reports were timely, and Square D had over a month remaining to file its expert reports. Square D instead filed for another extension. On May 20, 2002, the district court granted Square D's motion to extend the deadline for its expert filings to June 14, 2002. Notably, the district court's order changed none of the other dates. Thus, all dates other than the date on which Square D's expert reports were due remained governed by the April 4 Amended Scheduling Order.

On June 3, 2002 (the due date for dispositive motions under the Amended Scheduling Order), Square D moved for summary judgment, alleging that Investors lacked any admissible expert testimony or other evidence to establish liability. In accordance with the most recent time extension that it had received, on June 14, 2002, Square D filed its expert witness report. In response to Square D's June 3 motion for summary judgment, on June 25, 2002, Investors filed an extensive motion requesting the following: (1) leave to amend the scheduling order; (2) leave to amend its complaint to join an additional party defendant; and (3) in the alternative, voluntary dismissal of its complaint without prejudice. On July 11, 2002, Investors submitted a third expert report, in which it attempts to rebut Square D's expert report.

In a Memorandum and Order of September 2, 2002, the district court denied Investors' procedural motions and granted summary judgment to Square D. In so doing, the district court refused to consider Investors' July 11, 2002, expert report, explaining that it was untimely and that it espoused a "totally new theory of negligence." 103 Investors I, L.P. v. Square D Company, 222 F.Supp.2d 1263, 1274 n. 10 (D.Kan.2002). Investors appealed, asserting inter alia the following claims of district court error: (1) the exclusion of the July 11, 2002 expert report; (2) the decision to grant Square D's Daubert and summary judgment motions; (3) the refusal to allow Investors to amend its pleadings and add a party; and (4) the refusal to allow Investors to voluntarily dismiss its suit against Square D.

II

We allow a district court substantial latitude in its management of the discovery process, particularly in the context of our review of a decision to sanction the parties before it. Summers v. Missouri Pac. R.R. Sys., 132 F.3d 599, 604 (10th Cir.1997). Our standard of review is abuse of discretion.¹ Id.

The analytical process of the district court instructs our consideration of its decision to grant summary judgment to Square D. In granting summary judgment to Square D, the district court reasoned as follows, each decision depending on the one preceding it: (1) it refused to consider Investors' July 11 expert report on the basis of its untimeliness; (2) citing its unwillingness to consider that report, it granted Square D's Daubert motion; and (3) there being no expert testimony remaining, it granted Square D's motion for summary judgment. That is to say, the court's summary judgment grant was dependent on its decision to grant the Daubert motion, and the decision to grant the Daubert motion was similarly dependent on the court's refusal to consider Investors' rebuttal expert report. Therefore, our initial task is to examine whether the district court's exclusion of the expert report of July 11, 2002 constituted an abuse of discretion.

Explaining its exclusion of the report, the district court stated that "[t]he third report is untimely: under the second amended scheduling order, plaintiff's initial expert reports were due April 1, 2002 and rebuttal expert reports were due June 1, 2002." 103 Investors I, 222 F.Supp.2d at 1275. It also expressed the concern that the July 11 report expressed totally new theories from those asserted in the previous two reports.

The district court is correct that Investors' July 11 report was technically untimely. After all, the latest set of deadlines set out in the Amended Scheduling Order required that expert reports be submitted by June 1, 2002. However, as outlined above, the district court twice granted Square D extensions of time to file its expert reports. First, the district court amended the Scheduling Order, allowing Square D to submit its motions on May 15 rather than February 11. Subsequently, although Investors complied with the deadlines set forth in the Amended Scheduling Order, Square D filed for an additional extension of the date by which its reports were due. In its Second Amended Scheduling Order, the district court granted Square D's request, this time allowing Square D until June 14, 2002 to submit its expert reports.²

What is most notable about the Second Amended Scheduling Order, however, is the change that it did not make to the discovery dates. Specifically, while the Second Amended Scheduling Order extended Square D's deadline for filing its expert reports from May 15, 2002 to June 14, 2002, it did not grant a parallel extension to Investors to file a rebuttal expert report. It is not apparent from the record why such a change was not implemented in the Second Amended Scheduling Order.

Both the Scheduling Order and Amended Scheduling Order include a provision which addresses the need to allow Investors time to file a rebuttal expert report. Once the district court filed its Second Amended Scheduling Order, however, Investors' rebuttal reports remained due on June 1 while Square D's reports were not due until June 14. We see no reason why the Second Amended Scheduling Order should have created a situation in which Investors' rebuttal reports would be due prior to the deadline for Square D's initial expert reports. Such a scenario would...