Reetz v. Lowe's Companies, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

STATESVILLE DIVISION

CIVIL ACTION NO. 5:18-CV-00075-KDB-DCK

BENJAMIN REETZ,

Plaintiff,

v. ORDER

LOWE'S COMPANIES, INC.;

ADMINISTRATIVE

COMMITTEE OF LOWE'S

COMPANIES, INC.; AND AON

HEWITT INVESTMENT

CONSULTING, INC.,

Defendants.

THIS MATTER is before the Court on Plaintiff’s Motion to Strike (Doc. No. 121) and

Defendant Aon Hewitt Investment Consulting, Inc.’s (“Aon”) Motions in Limine to Exclude

Expert Testimony of David Donaldson and Marcia S. Wagner (Doc Nos. 173, 174). The Court has

carefully considered these motions and the parties’ related briefs and exhibits. For the reasons

discussed below, the Court will GRANT in part and DENY in part the motion to strike and defer

ruling on the motions to exclude the experts’ testimony until the Court has the opportunity to

consider their testimony at trial.

Motion to Strike

After 9 p.m. on November 19, 2020, the final day of the discovery period set by the Court,

Defendants Lowe’s Companies, Inc. and the Administrative Committee of Lowe’s Companies,

Inc. (“Lowe’s”) served amended disclosures under Rule 26(a) identifying 35 additional individuals

who may have information that Lowe’s “may use to support its claims or defenses.” See Fed. R.

Civ. P. 26(a)(1)(A)(i). Plaintiff claims this disclosure was untimely and asks the Court to “strike” the

disclosure as unjustified and prejudicial, thereby preventing the potential witnesses from testifying at

trial. Lowe’s responds that Plaintiff already knew about the individuals from document production and

other discovery and the disclosure at the very end of the discovery period was accordingly harmless

(or could be made harmless by permitting additional discovery). Following the filing of the motion,

the Parties have narrowed their dispute1 to three third party witnesses - Billy Welsh and Christopher

Jarmusch from Gallagher Fiduciary Advisors and Jennifer Osborne from Wells Fargo.

The Court will not belabor its discussion of this dispute. Lowe’s cannot seriously or

credibly contend that disclosing almost three dozen potential witnesses shortly before the clock

struck midnight on the last day of the discovery period was timely, “substantially justified” or even

a good faith effort to respond to what the Advisory Committee Notes to Rule 26(a) describe as

“the functional equivalent of court-ordered interrogatories.” See Comments to 1993 Amendment

to Federal Rule of Civil Procedure 26 at Subdivision A, Paragraph 1. Lowe’s belated

identifications were plainly not a genuine effort to comply with any disclosure obligation –

disclosure when Plaintiff could do no further discovery would have a decidedly limited benefit.

Rather, Lowe’s amendment of the Rule 26 disclosures was simply an effort to paper over the record

to hopefully avoid being prohibited from calling the additional disclosed witnesses at trial.

Lowe’s suggests that it had no obligation to amend the disclosures because the individuals

had been identified in “thousands” of documents or were otherwise discussed in depositions or

expert reports. First, while it would be wrong to impose any sanction on the failure to “disclose”

1 Lowe’s has agreed to withdraw 22 individuals from its disclosure (Akinjide Falaki, Angela

Kirkby, Stacey Ryan, Brandon Sink, Jennifer Weber, Chris Ahearn, Mark Imhoff, Kristen

Thompson, Marshall Croom, Randy Moon, Dana Brown, Rod Bare, James O'Connor, Bo

Abesamis, James Veneruso, Beau Morrison, Brandi Wust, Kelly Waldner, Brian Donoghue, Isaac

Buchen, David Cantor, and Eric Guerci). Plaintiff has in turn agreed not to pursue the motion as

to the remaining ten individuals from Lowe’s Administrative Committee and Aon.

potential witnesses at the very center of a case (such as individual parties), there is no exception

in the language of Rule 26(a) for “witnesses the other side should already know about” and the

Rule 26(a) identification of such clearly expected witnesses is in fact routine if not nearly universal.

Moreover, the more “well known” the likelihood that a witness may be called to “support [a

party’s] claims or defenses” then the easier it is for that party to identify the witness well in advance

of the discovery deadline. Finally, it is critical to the fair and efficient litigation of civil disputes

that the parties use their disclosures and discovery responses to actually narrow the scope of further

discovery and trial preparation, particularly in large commercial disputes involving what is often

an almost infinite number of potential supporting witnesses identified among hundreds of

thousands if not millions of pages of documents.

However, in light of the Parties’ narrowing of the dispute to only three witnesses (none of

whom were newly revealed in the amended disclosures), Plaintiff’s strident position that the Court

is required to prohibit the witnesses’ testimony, despite an obvious opportunity to rectify any

alleged prejudice by a prompt agreement to conduct additional targeted discovery, is far from

praiseworthy. Indeed, an unreasonable and uncompromising insistence on the strictest application

of the rules with the clear effect of thwarting the search for a true decision on the merits is no less

gamesmanship than the original sin. “Gotcha” is not and cannot be a guiding principle for the

application of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 1 (“[The rules] should be

construed, administered, and employed by the court and the parties to secure the just, speedy and

inexpensive determination of every action and proceeding.”).

Accordingly, applying the multi-factor balancing test of Southern States Rack & Fixture,

Inc. v. Sherwin–Williams Co., 318 F.3d 592, 595 (4th Cir. 2003), 2 the Court exercises its

discretion to find that while the belated disclosure was not “substantially justified,” it was

“harmless” in the specific context of this action. See Fed. R. Civ. P. 37(c)(1).3 Although Plaintiff

may not have known that Lowe’s would potentially use the Gallagher witnesses, he ought not to

have been “surprised” (factor 1) by that development in light of the fact their roles were noted in

expert reports as well as depositions. This is also true, but less so, with respect to the Wells Fargo

witness. While Wells Fargo’s role with respect to the Lowe’s ERISA Plan was known, the

disclosed witness was only apparently mentioned in documents, so her particular role and

relevance to the dispute may not be fully known to Plaintiff (and indeed it is not clear to the Court

from the limited record of the motion).

Further, in this case, the second factor – the ability of the disclosing party to cure the

surprise – is significant. As noted, there are only three witnesses in dispute, all of which can easily

be deposed long before the scheduled trial of the case in May 2021. Also, with respect to Ms.

2 In exercising its broad discretion to determine whether a nondisclosure of evidence is

substantially justified or harmless for purposes of a Rule 37(c)(1) exclusion analysis, a district

court should be guided by the following factors: (1) the surprise to the party against whom the

evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which

allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the non-

disclosing party's explanation for its failure to disclose the evidence. Southern States, 318 F.3d at

596–97.

3 The Court recognizes that the Rule 37(c) advisory committee notes discuss that the “‘automatic

sanction’ of exclusion ‘provides a strong inducement for disclosure of material that the disclosing

party would expect to use as evidence,’” see Southern States, 318 F.3d at 592 n. 2 (quoting Fed.

R. Civ. P. 37(c) advisory committee note, 1993 Amendment). However, the text of the rule

specifically states that the sanction will not be applied if the failure to disclose was either

“substantially justified or harmless,” indicating that the Court should engage in a more nuanced

consideration of whether to apply the harsh sanction of disallowing potentially relevant evidence.

Osborne, the Court will require Lowe’s to promptly provide Plaintiff with a detailed disclosure of

the specific topics on which Ms. Osborne is expected to testify and the substance of her testimony

on those subjects.4 Accordingly, the Court finds that any surprise and resulting prejudice to the

Plaintiff can be fully cured. Finally, as noted, allowing the evidence will not disrupt the trial (factor

3).5 Therefore, although the Court does find that Lowe’s disclosure of these witnesses was

untimely,6 the Court will deny the motion to strike because any prejudice to Plaintiff can be

remedied, making Lowe’s conduct “harmless.”

Motions to Exclude Expert Witness Testimony

Aon, but not Lowe’s, moves to exclude the expert testimony of Plaintiff’s experts David

Donaldson and Marcia Wagner pursuant to Federal Rule of Evidence 702. Mr. Donaldson is

currently an ERISA consultant and formerly worked, among other ERISA related jobs, as a Senior

Investigator at the Department of Labor. Mr. Donaldson has been “engaged by Plaintiff’s counsel

. . . to evaluate whether conflicts of interest were present . . . and whether AHIC and the Plan’s

Administrative Committee took adequate steps to avoid or address those conflicts.” (Doc. No. 136-

6 at ¶ 1). Ms. Wagner is an experienced ERISA attorney who Plaintiff says will offer “factually-

based” opinion testimony “regarding whether Defendants acted consistent with the standard of

care that Ms. Wagner has observed over her more than 30 years of experience in the pension

industry.” Doc. No. 194 at 1.

4 This disclosure appears to the Court to be unnecessary for the Gallagher witnesses based on the

parties’ respective arguments with respect to Gallagher during summary judgment which specify

the issues on which the witnesses will likely testify. Of course, Plaintiff will be free to fully explore

their relevant knowledge and potential testimony in their depositions.

5 The remaining factors of the importance of the evidence and the party's explanation for its failure

to earlier disclose the evidence are either disputed and/or do not outweigh the factors discussed

above.

6 The Court notes that Lowe’s is a frequent litigant in this Court and trusts that this conduct will

not be repeated in future litigation.

Under Federal Rule of Evidence 702, “[a] district court considering the admissibility of

expert testimony exercises a gate-keeping function to assess whether the proffered evidence is

sufficiently reliable and relevant.” Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261 (4th Cir.

1999). “Relevant evidence, of course, is evidence that helps ‘the trier of fact to understand the

evidence or to determine a fact in issue.’” Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir.

2017) (quoting Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 591 (1993)). “Rule 702 was

intended to liberalize the introduction of relevant expert evidence.” Westberry, 178 F.3d at 261

(citing Cavallo v. Star Enter., 100 F.3d 1150, 1158-59 (4th Cir. 1996)). Therefore, the court “need

not determine that the expert testimony ... is irrefutable or certainly correct.... As with all other

admissible evidence, expert testimony is subject to being tested by ‘[v]igorous cross-examination,

presentation of contrary evidence, and careful instruction on the burden of proof.’ ” Id. (citation

omitted) (quoting Daubert, 509 U.S. at 596).

Although Rule 702 applies in bench trials, “the Court has increased discretion in how to

perform its gatekeeping role.” Acosta v. Vinoskey, 310 F. Supp. 3d 662, 667 (W.D. Va. 2018). The

thrust of Rule 702 is to protect the jury from “evidence that is unreliable for reasons they may have

difficulty understanding.” Quality Plus Servs., Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA.,

No. 3:18-cv-454, 2020 WL 239598, at *13 (E.D. Va. Jan. 15, 2020) (quoting 29 Charles A. Wright

& Victor J. Gold, Federal Practice and Procedure § 6270 (2d ed. 2019)); see also In re Zurn Pex

Plumbing Prods. Liab. Litig., 644 F.3d 604, 613 (8th Cir. 2011) (“The main purpose

of Daubert exclusion is to protect juries from being swayed by dubious testimony.”). However,

when the judge serves as the factfinder, this risk of confusion presents significantly less of a

concern, if any at all. See United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005) (“There

is less need for the gatekeeper to keep the gate when the gatekeeper is keeping the gate only for

himself.”).

Thus, the Court has discretion to admit the expert evidence “subject to the ability later to

exclude it or disregard it” at trial. Hewett v. City of King, 2014 WL 7642093, at *1 (M.D.N.C.

Sept. 8, 2014) (quotation omitted); see also Pender v. Bank of Am. Corp., 2016 WL 6133850,

at *3 (W.D.N.C. Oct. 20, 2016) (“As this is a bench trial, the Court can freely accept or reject an

expert’s testimony at trial as the trier of fact.”); In re Salem, 465 F.3d 767, 777 (7th Cir. 2006)

(“[W]here the factfinder and the gatekeeper are the same, the court does not err in admitting the

evidence subject to the ability later to exclude it or disregard it if it turns out not to meet the

standard of reliability established by Rule 702.”).

Aon argues that the Court must exclude these witnesses because their testimony is

irrelevant and/or they will be offering “legal opinions” that invade the province of the Court to

decide the ultimate legal issues in dispute. Plaintiff disavows any intent to present expert legal

opinions on the ultimate issues, and the Court will hold Plaintiff to that representation.7 The Court

understands that these experts intend to testify, based on their ESISA experience, how the alleged

conflicts of interest and other fiduciary questions and situations involved in this dispute are

typically handled. In turn, the Court expects Aon (and perhaps also Lowe’s at trial) to vigorously

challenge the relevance and weight of this testimony. In light of the discretion afforded the Court

by a bench trial, the Court declines to decide these objections and arguments at this time. Instead,

the Court will allow the challenged witnesses to testify and defer a final ruling on the admissibility

and weight to give their testimony until it can evaluate their testimony at trial.

7 Further, with all due respect and great humility the Court does not need the witnesses from either

party to provide the Court with a primer on the applicable ERISA law or legal standards,

notwithstanding ERISA’s acknowledged “complexity.” See Doc. No. 194 at 8-9.

ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. Plaintiff's Motion to Strike (Doc. No. 121) is GRANTED as to the individuals

identified in footnote one above who the Parties have agreed will not be called as

witnesses and DENIED as to the remaining potential witnesses disclosed for the

first time in Lowe’s November 19, 2020 Rule 26(a) disclosures;

2. Plaintiff is permitted to depose Billy Welsh and Christopher Jarmusch from

Gallagher Fiduciary Advisors and Jennifer Osborne from Wells Fargo outside the

discovery period, and the Parties are directed to cooperate in holding those

depositions, if requested, as soon as practicable;

3. Lowe’s shall provide to Plaintiff on or before February 26, 2021 a detailed

disclosure of the specific topics on which Ms. Osborne will testify and the expected

substance of her testimony on those subjects; and

4. Aon’s Motions in Limine to Exclude Expert Testimony of David Donaldson and

Marcia S. Wagner (Doc. Nos. 173, 174) are deferred for final ruling until trial.

SO ORDERED ADJUDGED AND DECREED.

Signed: February 22, 2021

Kenneth D. Bell Cy,

United States District Judge i f