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Claude Worthington Benedum Foundation v. Harley

United States District Court, W.D. Pennsylvania

August 5, 2014



LISA P. LENIHAN, Chief Magistrate Judge.

Pending before the court is a Motion for Sanctions filed by Plaintiff Claude Worthington Benedum Foundation ("Plaintiff" or "Benedum Foundation"). After considering the evidence presented and the arguments of Plaintiff and Defendants William Francis Harley, III ("Harley"), Fursa Alternative Strategies, LLC ("Fursa"), HBS Holding Company, LLC ("HBS"), and Arsenal Group, LLC ("Arsenal"), the Court denies Plaintiff's Motion for Sanctions.


Plaintiff initiated this action by filing a civil complaint in the Court of Common Pleas of Allegheny County, Pennsylvania. On September 25, 2012, Defendants removed this case to the United States District Court for the Western District of Pennsylvania. (ECF No. 1). The case was assigned to Judge Nora Barry Fischer.

During the course of discovery, on May 29, 2014 Plaintiff filed a Motion for Sanctions (ECF No. 73). Given the allegations of the motion, Judge Fischer ordered the matter referred to the undersigned on June 3, 2014.[1] (ECF No. 76). The Plaintiff's Motion for Sanctions requests disqualification of the Defendants' expert witness, Douglas King, and his expert report under 28 U.S.C. § 652(d) (2012), and Local Rule 16.2. (ECF No. 73, at ¶ 10). Plaintiff states that Defendants produced King's expert report on or about March 18, 2014. Id. at ¶ 1. King reviewed "Defendants' Confidential Early Neutral Evaluation Statement, " ("Confidential Statement") and listed the document in Appendix 1 of his report. Id. at ¶ 3. Plaintiff alleges that "Defendants' expert has, at least in part, utilized a confidential mediation paper to formulate opinions in this case." Id. at ¶ 4.

The undersigned held a status conference on June 23, 2014, and requested that the Defendants forward both the Confidential Statement and the complete expert report to the Court for in camera review. (ECF No. 79). Additionally, the parties were given until July 14, 2014 to submit any additional briefing on the issue of disclosure of the Confidential Statement. Id. Such briefing was timely submitted, and this motion is ripe for decision.


This Court must determine if sanctions should be imposed upon Defendants as a result of providing its expert witness, David King, with a copy of its Confidential Statement. The sanction Plaintiff seeks is the wholesale disqualification of King's testimony. In the alternative, in its Additional Brief in Support of Motion for Sanctions, Plaintiff requested disclosure of the Confidential Statement.

Plaintiff requests this sanction under this Court's inherent power to assess sanctions "when a party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991). See also Martin v. Brown, 63 F.3d 1252, 1265 (3d Cir. 1995).


Plaintiff alleges that, because King read the Confidential Statement and disclosed the receipt and review of the document in Appendix 1 of his expert report, the information contained in the Confidential Statement helped form the basis of King's opinion. It must be noted that an expert witness is required to list "the facts or data considered by the witness in forming [his opinions]" and "any exhibits that will be used to summarize or support [his opinions]." FED. R. CIV. P. 26(a)(2)(B)(ii)-(iii). Rule 26 does not specify the extent to which an expert witness must consider facts or review a document when forming his opinion. Because the Defendants supplied their expert witness with the Confidential Statement, and the expert witness read it, he was required to list the document in his expert report.

Defendants do not dispute that they provided King with a copy of the Confidential Statement. In Defendants' Brief in Opposition to Plaintiff's Motion for Sanctions, they allege that the document was a "succinct vehicle to provide necessary background information regarding factual and procedural history of this case, as well as Defendants' positions with respect to claims made by Plaintiff." (ECF No. 78, at 2). Defendants allege that King did not rely on the Confidential Statement when forming his opinion. Id. Rather, "[h]e merely lists it amongst the documents reviewed, in addition to many, many other documents that were reviewed but not relied upon." Id. Defendants further argue that providing the Confidential Statement to their expert was no different than discussing with him their view of the case, including background and strategy. (ECF No. 84, at 3).

Plaintiff argues that it is permissible to sanction a party for disclosing confidential mediation discussions that may have influenced witnesses, citing Hand v. Walnut Valley Sailing Club, 475 Fed.Appx. 277 (10th Cir. 2012). Plaintiff alleges that it was prejudiced, insofar as the Defendants' expert witness relied, "at least in part, on a confidential mediation paper in violation of local rules." (ECF No. 73, at ¶ 7). Plaintiff also cites Chambers v. NASCO, Inc., 501 U.S. 32, 45-46 (1991) (citations omitted) for the proposition that a court may impose attorney's fees when a party has acted in "bad faith, vexatiously, wantonly, or for oppressive reasons.'"

Defendants argue first that the Hand ruling, decided in the U.S. Court of Appeals for the 10th Circuit, is not binding on this Court. (ECF No. 78, at 2). In addition, Defendants argue that the plaintiff in Hand disclosed communications that took place during the mediation to dozens of potential witnesses. In the case at bar, Defendants supplied their own expert witness with a document prepared prior to early neutral evaluation. Id. at 3. Moreover, Defendants aver that Plaintiff has not been prejudiced. In Hand, Hand disclosed confidential settlement negotiations to potential third-party witnesses whose testimony was highly relevant to the ...

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