United States District Court, E.D. Pennsylvania
STEWART DALZELL, District Judge.
In this Dickensian breach of contract suit, SuperMedia LLC ("SuperMedia") seeks payment for directory advertisements that Affordable Electric, Inc. ("AEI") contends were placed without its consent. On July 9, 2014 the parties stipulated to dismissal of the companion case between SuperMedia and Martin Morley, AEI's principal. Remaining before us are cross-motions for summary judgment, AEI's motion for expedited discovery and SuperMedia's motion to strike AEI's untimely expert report and for leave to file a sur-reply in response to AEI's opposition to its motion to strike.
For the reasons detailed below, we will deny AEI's motion for summary judgment and its motion for expedited discovery. We will grant in part SuperMedia's motion for summary judgment, and grant its motions to file a sur-reply and to strike AEI's late-filed expert report.
I. Factual and Procedural History
The parties find little common ground in this contentious litigation, now in its third year.
SuperMedia alleges that, as the successor to businesses known variously as Idearc Media LLC, Idearc Media Corp. and Verizon Directories Corp., it had a longstanding directory advertising relationship with AEI, which maintained three accounts with SuperMedia. Cmplt. at ¶¶ 1, 12, 13. SuperMedia contends that AEI owes it an aggregate $118, 162.35 in unpaid fees and interest under contracts executed in 2007 and 2008 by AEI's president and sole shareholder, Martin Morley ("Morley"). Id . ¶¶ 10, 14, 32. The contracts are governed by Texas law and provide for interest on unpaid balances to accrue at 18% annually. Pl. SOF at ¶ 10. The contracts allow publications in the directories without pre-approval unless AEI submitted changes prior to certain deadlines. Id. at ¶ 11. SuperMedia contends that AEI has produced no documents to show it communicated any pre-publication changes for publications under the 2007 contract. Id. at ¶ 14. AEI made payments on the 2008 contract through January 16, 2009 (without objecting, as Morley later would, that his signature was forged), but made no other payment. Id. at ¶ 16. On April 30, 2012 SuperMedia sued AEI, alleging a single count of breach of contract and seeking the unpaid fees plus late charges and interest accruing under the contract terms. Cmplt. at ¶¶ 35-42.
AEI and Morley respond that AEI dealt exclusively with an entity called Idearc Media Corp. ("Idearc") to place advertisements in Yellow Pages directories. Def. SOF at ¶ 7. AEI contends it did not approve the ad it was shown in 2007 and did not approve any 2008 publication. Id. at ¶ 9. AEI also contends the advertising sales personnel represented to it that no ad would be published without Morley's approval. Id. at ¶ 12. It states that the 2008 ad falsely described AEI as a member of the Better Business Bureau ("BBB"), though it was not a BBB member in either 2007 or 2008. Id. at ¶¶ 17-18. Despite instructions to fix or remove the 2008 ad, Idearc did not do so. Id. at ¶ 20. AEI and Morley assert that publication of this erroneous information, potentially confusing to the public, renders the contract illegal. Id. at ¶¶ 23-24. In addition, AEI and Morley claim that they did not contract with SuperMedia Inc. or SuperMedia LLC in 2008 or with Idearc Media Inc. in 2008 for a 2009 advertisement or with Idearc LLC in 2007 or 2008. Id. at ¶ 27. Morley claims he learned of the 2008 contract when a $30, 000 charge appeared on his personal American Express® card statement,  which he contested with American Express® and SuperMedia. Id. at ¶¶ 29-30. Morley denies that the signature on the 2008 contract was his. Id. at ¶¶ 26, 31. He states he asked for the original or a copy of the contract in order to submit the signature to analysis, but received neither because, he alleges, SuperMedia destroyed the original. Id. at ¶¶ 32, 34. AEI argues that SuperMedia, which emerged from Idearc, Inc.'s Chapter 11 bankruptcy proceeding, assumed only the contracts that belonged to Idearc Media Inc., and not those of Idearc Corp. Id. at ¶¶ 59, 61. Therefore, AEI argues, SuperMedia may not sue it for contracts entered into by Idearc Corp. Id. at ¶ 62.
On December 11, 2012 we denied AEI's motion to dismiss. On January 7, 2013, we ordered the parties to conclude discovery by March 1, 2013 in anticipation of arbitration. Three days later, SuperMedia sued Morley because AEI contended in its answer to SuperMedia's complaint that Morley lacked the capacity to "enter into or bind the corporation to a contract." Ans. at 6. We then consolidated the two actions on January 23, 2013. Amid discovery squabbles, Morley and AEI sought to enforce the arbitration clause in the contract whose validity they contested and on September 5, 2013 we denied their motions and resolved the parties' discovery disputes. Morley and AEI timely appealed our denial of their motions to enforce the contract's arbitration clause and we stayed the present proceedings pending the appeal.
On April 30, 2014, our Court of Appeals affirmed our denial of defendants' motions to enforce the arbitration clause. SuperMedia v. Affordable Electric, Inc., 565 F.Appx. 146 (2014). On June 18, 2014, a week after our scheduling order limiting discovery and setting July 14, 2014 as the deadline for dispositive motions, AEI moved to expedite response time for plaintiff to answer defendants' interrogatories. On June 23, 2014, SuperMedia moved to compel production and impose sanctions. On July 9, 2014, the parties stipulated to dismiss SuperMedia's complaint against Morley without prejudice to its reinstatement should AEI seek to introduce any evidence of Morley's purported psychiatric disability "in any respect whether in support of or in defense of the parties' prospective cross motions for summary judgment, and/or in defense of the collection action at arbitration or trial." Stip. at ¶ 2. Under the stipulation, SuperMedia also advised the Court that its motions to compel and for sanctions were moot as it received the discovery to which it was entitled. Id. at ¶¶ 3-4.
We now resolve the remaining motions.
II. Standard of Review
1. Summary Judgment
Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A party moving for summary judgment bears the burden of proving no genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586 n. 10 (1986). To that end, the movant must inform the district court of the basis for its argument by "identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact, " Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986). Where the movant is the defendant or the party that does not have the burden of proof on the underlying claim, it "has no obligation to produce evidence negating its opponent's case, " National State Bank v. Federal Reserve Bank of New York , 979 F.2d 1579, 1582 (3d Cir. 1992). The movant need only point to the lack of evidence supporting the non-movant's claim. Id.
When both parties move for summary judgment, our task is no different. As our Court of Appeals has cautioned,
Cross-motions are no more than a claim by each side that it alone is entitled to summary judgment, and the making of such inherently contradictory claims does not constitute an agreement that if one is rejected the other is necessarily justified or that the losing party waives judicial consideration and determination whether genuine issues of material fact exist. If any such issue exists it must be disposed of by a plenary trial and not on summary judgment.
Rains v. Cascade Industries, Inc. , 402 F.2d 241, 245 (3d Cir. 1968). Cross-motions must be considered separately and should not be interpreted necessarily to mean that judgment should be entered on either one of them. Each party, as a movant for summary judgment, bears the burden of establishing that no genuine issue of material fact exists and that he is entitled to a judgment as a matter of law. 10A Charles Alan Wright and Arthur R. Miller, Federal Practice & Procedure, §2720 (3d ed. 2014). As in any summary judgment motion, the determination whether a genuine issue concerning a material fact exists is itself a question of law that the Court must decide. It does not depend upon what either or both of the parties may have thought about the matter. A party moving for summary judgment concedes the absence of a factual issue and the truth of the nonmoving party's allegations only for purposes of his own motion. Id . As Wright and Miller observe, "It follows that the legal theories the movant advances in support of a Rule 56 motion and the assertion that there is no issue of material fact may not be used against the movant when the court rules on his adversary's motion." Id.
It is well-established that Rule 56 obliges the nonmoving party "to go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, ' designate specific facts showing that there is a genuine issue for trial.'" Celotex , 477 U.S. at 324; see also Fed.R.Civ.P. 56(c). The nonmoving party must identify specific facts and affirmative evidence that contradict those offered by the moving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 256-57 (1986). To prevail on a motion for summary judgment, "the non-moving party must present more than a mere scintilla of evidence; there must be evidence on which the jury could reasonably find for the [non-movant].'" S.H. ex rel. Durrell v. Lower Merion School Dist. , 729 F.3d 248, 256 (3d Cir. 2013) (quoting Anderson , 477 U.S. at 252) (internal citation omitted).
The reviewing court should view the facts in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Scheidemantle v. Slippery Rock Univ. State Sys. of Higher Educ. , 470 F.3d 535, 538 (3d Cir. 2006). A factual dispute is "genuine" if it turns on "evidence on which the jury could reasonably find for the plaintiff." Anderson , 477 U.S. at 252. A fact is "material" if it "might affect the outcome of the suit under the governing law." Id. at 248. That is, "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude" summary judgment. Boyle v. County of Allegheny Pennsylvania , 139 F.3d 386, 393 (3d Cir. 1998) (quoting Anderson , 477 U.S. at 248).
Because we consider cross-motions before us, "[t]he fact that one party fails to satisfy that burden on his own Rule 56 motion does not automatically indicate that the opposing party has satisfied his burden and should be granted summary judgment on the other motion." 10A Wright & Miller at §2720. Both motions must be denied if we find there is a genuine issue of material fact, but if there is no genuine issue and one or the other party is entitled to prevail as a matter of law, the court may render judgment. Id.
If the nonmoving party fails to make a sufficient showing on an essential element of its case on which it has the burden of proof, the moving party is entitled to judgment as a matter of law. See Celotex , 477 U.S. at 322. Specifically, Rule 56(e) provides in relevant part that "[i]f a party fails to properly... address another party's assertion of fact as required by Rule 56(c), the court may... consider the fact undisputed for purposes of the motion [or] grant summary judgment if the motion and supporting materials-including the facts considered undisputed- show that the movant is entitled to it." Fed.R.Civ.P. 56(e).
2. Motion To Strike
Before us is also SuperMedia's motion to strike AEI's untimely expert report. Fed.R.Civ.P. 26(a)(2) governs expert testimony disclosure and requires a party to disclose the identity of any witness it may use at trial to present evidence. This disclosure "must be accompanied by a written report... if the witness is one retained or specially employed to provide expert testimony in the case." Id. at (a)(2)(B). "A party must make these disclosures at the times... the court orders." Id. at (a)(2)(D). We may impose sanctions if a party does not comply with these disclosure requirements. Fed.R.Civ.P. 37(c)(1). Specifically, "[i]f a party fails to provide information... as required by Rule 26(a) or (e), the party is not allowed to use that information... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Id . Sanctions may include payment of "the reasonable expenses, including attorney's fees, caused by the failure", or striking the pleadings in whole or in part. Id. at (c)(1)(A) and (C). "The imposition of sanctions for abuse of discovery under [Rule 37] is a matter within the discretion of the trial court." Newman v. GHS Osteopathic, Inc., Parkview Hosp. Div. , 60 F.3d 153, 156 (3d Cir. 1995) (internal citation omitted).
Our Court of Appeals has held that, prior to excluding evidence, we must consider: (1) the prejudice or surprise of the party against whom the excluded evidence would have been admitted; (2) the ability of the party to cure that prejudice; (3) the extent to which allowing the evidence would disrupt the orderly and efficient trial of the case or other cases in the court; and (4) bad faith or willfulness in failing to comply with a court order or discovery obligation. Nicholas v. Pennsylvania State University , 227 F.3d 133, 148 (3d Cir. 2000). Further, "the importance of the excluded testimony should be considered." Konstantopoulos v. Westvaco Corp.. 112 F.3d 710 , 719 (3d Cir. 1997) (internal citation and quotation marks omitted).
1. AEI's Motions
We turn first to AEI's June 18, 2014 motion to expedite discovery in which AEI contends that the discovery schedule we set in our June 11, 2014 Order was too short and that it disadvantaged AEI in relation to SuperMedia.
We will deny this disingenuous motion. A quick glance at the docket reveals that we issued our first discovery order in January of 2013. The parties engaged in vigorous, if acrimonious, discovery for eight months thereafter, culminating in discovery disputes we resolved in our September 5, 2013 Order directing both parties to behave themselves and exchange the required pretrial discovery under the Federal Rules of Civil Procedure. It is well-established that parties have an ongoing duty to supplement disclosures under Fed.R.Civ.P. 26(e). See, e.g., Reith v. Trevi Icos Corp., 2013 WL 5574467 (E.D.Pa. Oct. 9, 2013) (Jones, J.). In short, discovery in this matter has been ongoing for a very long time, interrupted only by defendants' appeal, which stayed this proceeding. Further, Rule 26, with which AEI liberally seasons its motion, requires parties to act without awaiting a discovery request or court order. Fed.R.Civ.P. 26(a)(1)(A). They must each provide information on all individuals with ...