The opinion
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ZYDUS WORLDWIDE DMCC, Civil Action No.
Plaintiff, 19-cv-17086 (JXN) (JRA)
v.
OPINION
TEVA API INC.,
Defendant.
Plaintiff Zydus Worldwide DMCC (“Zydus”) filed a Motion for Leave to
Supplement Certain Expert Reports (“the Motion”). ECF Nos. 201-02, 209. Defendant
Teva API Inc. (“TAPI”) opposes the Motion. ECF No. 206. At the heart of this dispute
is whether any of the expert reports at issue are incomplete or incorrect in a material
respect, such that supplementation should be permitted under Rule 26(e) of the
Federal Rules of Civil Procedure. The Court has considered the parties’ submissions
and reaches a decision without oral argument. See Fed. R. Civ. P. 78(b); L. Civ. R.
78.1(b). For the reasons that follow, the Motion is GRANTED IN PART and
DENIED IN PART.
I. BACKGROUND AND PROCEDURAL HISTORY1
Zydus filed a complaint on August 22, 2019, claiming that TAPI breached the
terms of a Letter of Intent (“LOI”). See generally Compl., ECF No. 1. Zydus alleges
1 The Court assumes the parties’ familiarity with the factual and procedural background of this matter
given its extensive history. Therefore, the Court includes only the factual and procedural history
necessary to decide the Motion.
that it purchased assets related to the sale and manufacture of generic rotigotine
transdermal products from TAPI’s parent company, Teva Pharmaceutical Industries
Ltd. (“Teva”). Id. ¶ 1. Zydus claims to have been induced into executing the
transaction with Teva because TAPI issued a LOI, under which TAPI agreed to supply
Zydus with Form I rotigotine. See generally Compl. Form I rotigotine is the active
pharmaceutical ingredient required to obtain FDA approval for the products that
TEVA sold to Zydus. See id. ¶¶ 1-2. TAPI allegedly failed to supply Form I rotigotine
to Zydus, thereby depriving Zydus of the opportunity to obtain FDA approval for the
generic rotigotine products. See id. Through this lawsuit, Zydus seeks to recover from
TAPI the extensive losses it allegedly has suffered as a result of TAPI’s failure to
supply Form I rotigotine. Id. ¶ 4. Additionally, Zydus seeks to compel TAPI to supply
the Form I rotigotine so that Zydus may finally realize its acquisition. Id.
Procedurally, expert discovery ended on October 31, 2022 (ECF No. 140),2 and
the parties engaged in summary judgment briefing between January 27, 2023, and
May 12, 2023 (ECF Nos. 149-72). On December 12, 2023, while the motions for
summary judgment were pending, the parties informed the Court of a dispute via a
joint letter that led to the current Motion: i.e., that Zydus wanted to supplement its
expert reports, which TAPI opposed. ECF No. 190. For the sake of efficiency, the
Court ordered that Zydus file this Motion after the Court issued its summary
judgment decision, as that decision could have mooted or substantially narrowed the
2 The deadline to serve opening expert reports was March 29, 2022 (ECF No. 79); opposition expert
reports were due on May 27, 2022 (ECF No. 96); and the deadline for expert depositions was October
31, 2022 (ECF No. 140).
parties’ disputes. ECF No. 191. On March 28, 2024, the Court issued its decision on
the motions for summary judgment (ECF No. 196), and Zydus timely filed its motion
for leave to supplement its expert reports by the April 18, 2024 deadline set by the
Court (ECF Nos. 199, 201-02).3
Through the Motion, Zydus seeks permission to supplement four expert reports
with events and circumstances that Zydus claims occurred after expert discovery
closed:
(1) An appellate decision in a related patent case issued in
April 2023;
(2) The filing of another patent case in December 2022 and
summary judgment ruling in that case in March 2024;
(3) Updated data on the timing of Federal Circuit decisions,
including the fiscal year ending September 30, 2023; and
(4) The updated status of two other manufacturers’ efforts
to launch generic transdermal rotigotine products.
ECF No. 202-4 at 1. For reasons explained below, the Court only grants Zydus’s
request to supplement two expert reports with the first development listed above. The
remainder of Zydus’s requests are denied.
II. LEGAL STANDARD
Rule 26 of the Federal Rules of Civil Procedure governs expert disclosures.
Most relevant, Rule 26(e)(1) requires a party to supplement or correct a disclosure “in
a timely manner if the party learns that in some material respect the disclosure or
3 The parties then engaged in private mediation. ECF No. 208. The Court deferred its decision on
the Motion hoping that the parties would settle. They did not. On September 24, 2024, the parties
confirmed at a status conference that this Motion is not moot.
response is incomplete or incorrect, and if the additional or corrective information has
not otherwise been made known to the other parties during the discovery process or
in writing” or “as ordered by the court.” Fed. R. Civ. P. 26(e)(1)(A). “Not every error
and omission qualify for supplementation under the Federal Rules; rather, the expert
reports must be incomplete or incorrect in a ‘material respect.’” Raritan Baykeeper,
Inc. v. NL Indus., Inc., No. 09-4117, 2022 WL 815846, at *2 (D.N.J. Mar. 17, 2022)
(quoting Fed. R. Civ. P. 26(e)(1)(A)). Concerned about the potential for abuse and
gamesmanship, courts in this District have “repeatedly emphasized the limited scope
of supplementation permitted by Rule 26(e); such supplementation is proper only for
the narrow purpose of correcting inaccuracies or adding information that was not
available at the time of the initial report.” Dandy v. Ethicon Women’s Health &
Urology, 579 F. Supp. 3d 625, 629 (D.N.J. 2022) (quoting Ezaki Glico Kabushiki
Kaisha v. Lotte Int’l Am. Corp., No. 15-5477, 2019 WL 581544, at *3 (D.N.J. Feb. 13,
2019) (“Ezaki”)). Importantly, “Rule 26(e) is not an avenue to correct failures of
omission because the expert did an inadequate or incomplete preparation, add new
opinions, or deepen or strengthen existing opinions.” Ezaki, 2019 WL 581544, at *3
(quoting In re Asbestos Prods. Liab. Litig. (No. VI), 289 F.R.D. 424, 425 (E.D. Pa.
2013)).
These limits are crucial to the efficient administration of justice. That is so
“because a rule that allows limitless ongoing supplementation would not only erode
the court’s ability to control discovery but also ‘invite rolling discovery in a way that
would unfairly burden one party in a suit and indefinitely postpone trial.’” Raritan
Baykeeper, 2022 WL 815846, at *2 (quoting Kuhns v. City of Allentown, No. 08-2606,
2010 WL 4236873, at *3 (E.D. Pa. Oct. 26, 2010)). It is with these principles in mind
that the Court must analyze Zydus’s requests.
III. DISCUSSION
The Court must apply Rule 26(e) to each expert report that Zydus wishes to
supplement. Before doing so, however, it is important to place the current dispute in
context. Although TAPI emphasizes the age of the case and the passage of time since
the close of expert discovery, TAPI cannot dispute the timeliness of the filing of Zydus’s
Motion, as it was clearly filed in accordance with this Court’s order. See ECF Nos.
191, 199. Rather, TAPI’s main argument is that the proposed supplemental
information is not material to any of Zydus’s claims or defenses. See ECF No. 206 at
3-9.
Each of the expert reports that Zydus seeks to supplement appear to relate to
Zydus’s overall legal theory—that TAPI’s failure to supply the Form I rotigotine
deprived Zydus of the opportunity to obtain FDA approval, launch the generic
products, and reap a substantial profit. See generally Compl. At trial, Zydus plans to
argue that the FDA would have approved its generic products and that it would have
overcome any patent infringement challenges by the manufacturer of the brand
products, UCB, Inc. (“UCB”). See ECF No. 202-4 at 2-3. As for the alleged lost profits,
Zydus’s analysis hinges on experts who opine as to the likely dates by which Zydus
and two other manufacturers of generic drugs—Actavis Laboratories UT, Inc.
(“Actavis”) and Mylan Technologies Inc. (“Mylan”)—would have been able enter the
market for generic transdermal rotigotine products. Id. at 3.
A. The Appellate Decision Issued in April 2023
Zydus seeks to supplement the expert reports issued by Audra L. Stinchcomb,
Ph.D. and David L. Schwartz, J.D., to include a Federal Circuit’s decision in another
litigation, UCB, Inc. v. Actavis Labs. UT, Inc., 65 F.4th 679 (Fed. Cir. 2023) (the
“Actavis Litigation”). ECF No. 202-4 at 3-4. In the initial expert reports, Zydus’s
experts addressed UCB’s litigation efforts to enforce relevant patents against Zydus
and two other manufacturers of generic drugs: Actavis and Mylan. Id. at 3.
Specifically, the expert reports state that on March 26, 2021, a district judge found
that UCB’s asserted claims of the patent at issue were invalid. Id.; see UCB, Inc. v.
Actavis Labs. UT, Inc., No. 19-474-KAJ, 2021 WL 1880993 (D. Del. Mar. 26, 2021)
(“Delaware District Court”). Zydus’s experts appear to rely on the Delaware District
Court’s decision to show that Zydus would have been able market generic
transdermal rotigotine products had TAPI supplied the agreed upon Form I
rotigotine. ECF No. 202-4 at 3-4. After expert discovery closed and Zydus’s experts
had issued their reports, the Federal Circuit affirmed the Delaware District Court’s
decision in the Actavis Litigation. Id. at 3. As such, Zydus moves to supplement the
reports with this litigation update. See id. at 3-4. TAPI opposes those efforts. See
ECF No. 206 at 5-6.
TAPI’s main objection is that the initial expert reports are not incomplete or
incorrect in a “material” way, as required by Rule 26(e). Id. at 3-9. TAPI points to
the fact that the initial expert reports “already assumed that the [Delaware District
Court’s] decision was correct,” and therefore, any reference to the Federal Circuit’s
affirmance only “offer further support for previously offered opinions.” Id. at 5-6.
The Court disagrees. It is true that the Federal Circuit’s decision bolsters
Zydus’s initial expert reports. But just because the supplemental information bolters
an already existing opinion does not automatically render it immaterial. In all other
contexts, an appellate court’s decision affirming or reversing a district court would be
material. To make this point, assume that the Federal Circuit had reversed the
Delaware District Court. There is little doubt that TAPI would have been asking the
Court to compel Zydus to supplement its reports, or, alternatively, that TAPI would
be seeking leave to modify its own report. Regardless, the initial reports currently
state that the Delaware District Court’s decision is pending appeal, a fact that is
clearly incorrect. ECF No. 209 at 3. Moreover, although this Court has not
interpreted either the Delaware District Court or Federal Circuit decisions, Zydus
contends, and TAPI does not dispute, that the Federal Circuit affirmed the Delaware
District Court for a narrower reason: it affirmed that the patent was invalid for
obviousness but not for anticipation. Id.
The Court is convinced that Zydus is not attempting to circumvent discovery
deadlines or turn an expert report into a moving target. Rather, Zydus is seeking to
supplement expert reports for the purpose of correcting incomplete or incorrect
material information that became available only after expert discovery had closed.
See Dandy, 579 F. Supp. 3d at 629 (quoting Ezaki, 2019 WL 581544, at *3)
(“[S]upplementation is proper only for the narrow purpose of correcting inaccuracies
or adding information that was not available at the time of the initial report.”).
Therefore, Dr. Stinchcomb and Professor Schwartz may update their expert reports
to incorporate the Actavis Litigation.
B. The New Mylan Lawsuit
Next, Zydus seeks to supplement an expert report issued by Dr. Kenneth J.
Miller, who opined that “a branded company such as UCB would very likely file and
aggressively pursue a lawsuit” if Zydus were to reformulate its product to use Form II
rotigotine as the active pharmaceutical ingredient, rather than Form I rotigotine.
ECF No. 202-4 at 5. As it turned out, on December 12, 2022, UCB filed a complaint
against another manufacturer of generic products, Mylan. See UCB, Inc. v. Mylan
Techs. Inc., No. 22-cv-00216, 2024 WL 1014144 (D. Vt. Mar. 8, 2024). Accordingly,
Dr. Miller seeks to update his report to address UCB’s new lawsuit against Mylan,
which has now survived summary judgment.
The Court is not convinced that supplementing Dr. Miller’s report complies
with Rule 26(e). Zydus has not adequately explained how or why Dr. Miller’s report
would be incorrect or incomplete in a material way without the supplemental
information. In this case, the mere fact that a lawsuit is pending is unremarkable
and does not strike this Court as “material.” At most, the proposed information
simply bolsters Dr. Miller’s opinion. Because “Rule 26(e) is not an avenue to . . . add
new opinions, or deepen or strengthen existing opinions,” the Court denies Zydus’s
request to supplement Dr. Miller’s opinion. Ezaki, 2019 WL 581544, at *3 (quoting
In re Asbestos Prods. Liab. Litig., 289 F.R.D. at 425).
C. Empirical Data on the Timing of Federal Circuit Rulings
Zydus also seeks to supplement the expert report issued by Professor Schwartz,
who estimated the time it would take the Federal Circuit to resolve appeals. ECF No.
202-4 at 5. On September 30, 2023, well after Professor Schwartz authored his report,
the Federal Circuit updated its “Median Time to Disposition in Cases Terminated
After Hearing or Submission,” including its fiscal years 2022 and 2023. Id. Zydus
seeks to supplement Professor Schwartz’s report with this new empirical data. Id.
The Court is left to guess why this empirical data is “material,” as Zydus fails
to offer a meaningful explanation. Even assuming some level of materiality, this
District has warned against “boundless supplementation,” which could erode judicial
efficiency and fairness by creating a cycle of endless updates that would indefinitely
postpone trial. Raritan Baykeeper, 2022 WL 815846, at *3 (“Rule 26(e) is not a vehicle
for recursive discovery.”). Zydus shall not be permitted to continue to update its
reports on a rolling basis for every year as new data is released. The Court, therefore,
denies Zydus’s request to update Professor Schwartz’s report.
D. The Status of Actavis’ and Mylan’s Entry into the Market
Finally, Zydus seeks to modify the expert report issued by Dr. Laura R. Craft,
MPH, who estimated Zydus’s lost profits based on assumptions of when Zydus and
other manufacturers, namely, Actavis and Mylan, would be able to launch their
generic products. ECF No. 202-4 at 5. When Dr. Craft issued her report in March
2022, she estimated that one manufacturer would launch in January 2023 and
another in July 2023. Id. That turned out to be incorrect, as neither manufacturer
launched on those dates. Id. Zydus argues that Dr. Craft’s estimate is material to
her analysis of when Zydus would have launched its products had TAPI supplied
Form I rotigotine. Id. at 5-6. That estimate, in turn, allegedly impacts Dr. Craft’s
lost profits analysis. Id. at 6.
At the core, it appears that Zydus is looking to revise Dr. Craft’s prediction,
rather than supplement it. Again, as the Court has previously noted, in that context,
“Rule 26(e) is not an avenue to correct failures of omission because the expert did an
inadequate or incomplete preparation[.]” Ezaki, 2019 WL 581544, at *3 (quoting In
re Asbestos Prods. Liab. Litig., 289 F.R.D. at 425). The fact that Dr. Craft’s prediction
was off the mark is an insufficient basis to allow her to supplement her report.
Zydus’s request to supplement Dr. Craft’s report is denied.
IV. CONCLUSION
For the foregoing reasons, Zydus’s Motion is GRANTED IN PART and
DENIED IN PART.4 Zydus’s request to supplement the expert reports issued by
4 Zydus asks the Court consider Rule 16(b)(4) and Rule 37(c) in the event the Court rejects Zydus’s
arguments under Rule 26(e). Under the specific facts and procedural posture of this case, neither rule
changes the Court’s conclusion. Starting with Rule 16(b)(4), that Rule allows the Court to modify a
scheduling order for “good cause.” The Court is doubtful that Rule 16(b)(4)’s general provision applies
when Rule 26(e) specifies the mechanism through which parties can supplement expert reports—
which is Zydus’s ultimate goal. Specifically, Rule 26(e)(2) provides that “[a]ny additions or changes”
to expert reports must be “disclosed by the time the party’s pretrial disclosures under Rule 26(a)(3)
are due.” Rule 26(a)(3)(B), in turn, requires certain pretrial disclosures to be made “at least 30 days
before trial.” Thus, in essence, “[t]he duty to supplement continues past the discovery deadline and
up to the time of trial.” Fair Isaac Corp. v. Fed. Ins. Co., 337 F.R.D. 413, 419 (D. Minn. 2021) (citation
omitted). And, as explained above, Rule 26(e) provides its own standard for allowing supplementation:
“the expert reports must be incomplete or incorrect in a ‘material respect.’” Raritan Baykeeper, 2022
WL 815846, at *2. If Rule 16 were to apply to this case, it would render Rule 26 superfluous, an
outcome that Congress surely could not have intended. Even if the Court were to apply Rule 16(b)(4),
courts in this District consider: (1) the good faith and diligence of the moving party; (2) the importance
of the evidence; (3) the logistical burdens and benefits of reopening discovery; and (4) prejudice to the
nonmoving party. See Goldrich v. City of Jersey City, No. 15-885, 2018 WL 3360764, at *1 (D.N.J. July
10, 2018) (quoting J.G. v. C.M., No. 11-2887, 2014 WL 1652793, at *2 (D.N.J. Apr. 23, 2014)); see also
Kennedy v. Hoegh Autoliners Shipping PTE Ltd., No. 18-8599, 2021 WL 7904032, at *4-5 (D.N.J. Feb.
Audra L. Stinchcomb, Ph.D. and David L. Schwartz, J.D., to include the Actavis
Litigation is GRANTED. All other requests are DENIED. Zydus shall serve its
supplemental expert reports no later than January 17, 2025; TAPI shall serve its
responsive reports no later than February 17, 2025.
jf aerogenes □□ :
ZON. JOSE R. ALMONTE
UNITED STATES MAGISTRATE JUDGE
Dated: December 11, 2024
Orig: Clerk of the Court
ce: Counsel of Record
The Honorable Julien X. Neals, U.S.D.J.
17, 2021), report and recommendation adopted, 2021 WL 7841701 (D.N.J. May 24, 2021). Considering
all of these factors, the result under Rule 16(b)(4) would be the same as under Rule 26(e) for the reasons
articulated above and in TAPI’s brief.
Similarly, the Court is unpersuaded that it is required to alter its conclusion under Rule 37(c)(1) and
the factors within Meyers v. Pennypack Woods Home Ownership Ass‘n, 559 F.2d 894, 904-05 (8d Cir.
1977), overruled on other grounds by Goodman v. Lukens Steel Co., 777 F.2d 113 (8d Cir. 1985)
(“Pennypack”). To begin, courts in this District have noted that a Pennypack analysis is most relevant
when a court is tasked with evaluating a motion for sanctions, i.e., to strike an untimely expert report,
not a motion for leave to serve a supplemental expert report. See Otsuka Pharm. Co., Ltd. v. Aurobindo
Pharma Ltd., No. 14-3306, 2017 WL 11463663, at *4 (D.N.J. Sept. 15, 2017) (declining to apply
Pennypack because the court was not dealing with a motion to strike an untimely expert report). Like
in Otsuka Pharm. Co., this Court is well within its discretion to not apply the Pennypack factors.
Nonetheless, Zydus is correct that the Third Circuit, in ZF Meritor, LLC v. Eaton Corp., 696 F.3d 254,
297-98 (3d Cir. 2012), found the Pennypack factors “instructive” and reversed the district court’s denial
of Plaintiffs’ request to submit alternate damages calculations within a modified expert report. In ZF
Meritor, the Third Circuit found “the most important [Pennypack] factor in th[e] case [to be] the critical
nature of the evidence, and the consequences if permission to amend is denied.” Jd. at 299. This was
particularly so because “[e]xpert testimony is necessary to establish damages in an antitrust case,”
and therefore, “without additional damages calculations, it [was] clear that Plaintiffs [would] be
unable to pursue damages|.]” Jd. As explained in detail above, the Court does not find the additional
events and information proffered in three of Zydus’s requests to be “material” or “critical evidence.” In
other words, unlike in ZF Meritor, here Zydus is not being subjected to the “extreme sanction” of being
barred from pursuing damages, but rather it is being barred from correcting predictions or bolstering
certain of its expert reports with information that Zydus failed to show is material. As such, the Court
declines to apply Rule 37(c)(1) and the remaining Pennypack factors.
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