United States District Court, E.D. Pennsylvania
SPEAR, et al.
FENKELL, et al.
RICHARD A. LLORET, UNITED STATES MAGISTRATE JUDGE
Stonehenge parties have moved to exclude the testimony of
John Roberts, a CPA who participated in the internal
investigation of Fenkell after Fenkell left Alliance in 2011.
Doc. No. 629 (motion) 629-1 (memorandum in support). The
Alliance parties propose to have Roberts “testify about
the extensive process and procedure he undertook to
uncover [Fenkell's] scheme, not to the facts he
found.” Doc. No. 650, at 2 (emphasis in the original).
Alliance wants to introduce this testimony to demonstrate how
difficult the scheme was to uncover, which would shed light
on the issue whether the Alliance parties should have known
of Fenkell's scheme before Roberts began investigating.
Id. This bears on Stonehenge's statute of
limitations defense: they claim that the Alliance parties
knew or should have known of Fenkell's purported scheme
long ago, and that the limitations period should bar their
claims. Id.; see 29 U.S.C. § 1113.
argues that Roberts' testimony 1) is irrelevant, under
Fed.R.Evid. 401, because he has no personal knowledge of what
the Alliance parties knew or did not know, 2) is unduly
prejudicial, under Rule 403, because the Alliance parties
have not disclosed all documents relating to Roberts'
inquiry, based on claims of privilege, and 3) should be
barred because Alliance failed to disclose Roberts' name
as a person having “discoverable information, ”
as required under Fed. R. Civ. Pro. 26(b)(1). Doc. No. 629 at
4-7. The Alliance parties contend that Roberts' testimony
is relevant, that the danger of unfair prejudice does not
substantially outweigh the probative value of the evidence,
and that they had no obligation to name Roberts in their
initial disclosures, under Fed. R. Civ. Pro. 26(b)(1), since
his testimony is being used to rebut a defense by Stonehenge,
and is not being used to “support its [Alliance's]
claims or defenses, ” as Fed. R. Civ. Pro. 26(b)(1)
says. Doc. No. 650 at 3-5. Alliance also argues that the
failure to name Roberts in their initial disclosures is
harmless, because the Stonehenge parties have known of
Roberts and the scope of his knowledge for years, and have
had ample opportunity to depose him, if they wished, before
the discovery deadline. Id. at 5 n. 2.
testimony, as defined above, is relevant. The gist of
Stonehenge's statute of limitations defense is that
Alliance and its agents knew or should have known of
Fenkell's misdeeds long ago, because nothing was
concealed. See 29 U.S.C. § 1113. Roberts can
testify about the conduct of the investigation: how documents
and information came to light, where they came from, in what
order they came to light, and what steps had to be taken to
bring them to light. This information may permit reasonable
inferences about whether Alliance personnel knew or should
have known the pertinent details of Fenkell's scheme.
This information may be helpful to me as the trier of fact.
danger of unfair prejudice from this evidence does not
substantially outweigh probative value, under R. 403. The
concept of unfair prejudice, under R. 403, ordinarily
concerns the possibility that evidence will entice a trier of
fact toward some impermissible inference. See United
States v. Starnes, 583 F.3d 196, 215 (3d Cir. 2009)
(citations and internal quotations omitted). Roberts'
testimony, appropriately cabined, is not liable to entice a
trier of fact to make emotionally fraught or impermissible
inferences. Nor is this particular danger much of a concern
in a bench trial. I.B.E.W. Loc. Union 380 Pension Fund v.
Buck Consultants, CIV. A. 03-4932, 2008 WL 2265269, at
*3 (E.D. Pa. June 3, 2008) (“Rule 403 has no logical
application to bench trials”) (internal quotations and
citations omitted). I say much of a concern, because the
concept of “unfair prejudice” under Rule 403 can
encompass simple procedural unfairness, as where a party
reverses theories in the middle of trial and the opposing
party would be prejudiced unfairly by the lack of notice and
an opportunity to prepare for the evidence being introduced.
See Goldberg v. National Life Ins. Co. of Vermont,
774 F.2d 559, 564-65 (2d Cir. 1985) (excluding expert
testimony in rebuttal that would have changed plaintiff's
theory of the case). Here, unlike in Goldberg, the
proposed testimony does not represent a change in
Alliance's theory of the case, or even much of a
argument that John Roberts did not have to be named under
Rule 26(b)(1) because his information concerns only
Alliance's rebuttal to Stonehenge's defense is deft,
but unconvincing. Roberts certainly did have information
pertaining to Alliance's “claims or
defenses.” The fact that he will not be called at trial
to testify about “claims or defenses” does not
answer the language of the rule, which does not talk about
the subject matter about which a witness will be called to
testify. Roberts' investigation led to this lawsuit, in a
fairly straight line. Thus, it is fair for Stonehenge to
argue that Roberts' name should have appeared in the
Alliance parties' initial disclosure, under R. 26(b)(1).
It is true, nevertheless, that Stonehenge knew about
Roberts' information for years, and indeed fought
Alliance over disclosure of the investigative report prepared
by Roberts and Mr. Hockheimer. See Doc. No. 629-1 at
6. I do not find that Alliance acted in bad faith, but I find
that plugging Roberts in as a fact witness at this late date
does represent a change in litigating posture, vis a
vis Roberts, that operates to unfairly prejudice
Stonehenge. I am unwilling to permit Roberts to testify as a
fact witness without giving Stonehenge the opportunity to see
behind the curtain, so to speak.
juncture trial is only weeks away. In my judgment exclusion
is too drastic a remedy. See DeMarines v. KLM Royal Dutch
Airlines, 580 F.2d 1193, 1201-02 (3d Cir. 1978)
(exclusion is a drastic remedy). In the case cited to me by
Stonehenge, the district court did not actually exclude an
investigator's testimony, but conditioned it on full
disclosure of the investigator's report, which up until
that point had been undisclosed, based on its work-product
status. United States v. Nobles, 422 U.S. 225, 241
(1975). Applying the four-part test in DeMarines, I
find that 1) there is some surprise or prejudice occasioned
by Roberts' appearance as a fact witness, 2) the
potential surprise or prejudice can be remedied by limiting
the scope of Roberts' testimony and providing for some
additional disclosures by Alliance, 3) calling Roberts need
not disrupt the orderly presentation of evidence in this
case, and 4) there was no bad faith or willfulness on
Alliance's part. Id.
instance Alliance must make an election: produce Roberts'
reports, including those reports previously withheld as
privileged, on or before January 3, 2017 in unredacted form,
and waive attorney-client privilege and the work-product
doctrine, or be barred from using Roberts as a witness. I am
not willing, at this late hour, to engage in a detailed and
protracted battle over the extent to which the reports are
related (or not) to the subject matter of Roberts'
testimony. There is at least a reasonable likelihood that
Roberts' reports contain information about Alliance
personnel other than Fenkell that would bear on whether they
knew or should have known of Fenkell's misdeeds. At a
minimum the reports will provide the Stonehenge parties with
appropriate context for cross-examining Roberts at trial. I
do not rule in advance whether, or to what extent, the
reports themselves may be used as evidence at trial. Much
depends upon the nature of Roberts' testimony and the
relationship of his reports to his testimony. See,
e.g., Fed. R. Evid. 613 (impeaching with prior
inconsistent statements); Fed.R.Evid. 803(5) (past
recollection recorded); Fed.R.Evid. 801(d)(1)(a), (b) (a
declarant's prior inconsistent and consistent statements
are admissible under certain circumstances). In no event may
the reports be used by any party other than in connection
with cross-examination of Roberts at trial, nor may they be
copied or discussed with anyone other than the trial
attorneys and their assistants in this case. Alliance will
submit an appropriate protective order.
if Alliance wishes to have Roberts testify, it will produce
on or before January 3, 2017 complete information detailing
how much Roberts (and his employer, Deloitte) were paid for
the internal investigation. Third, the Alliance parties must
wait until their last allotted trial day to put on Roberts,
in order to give the Stonehenge parties sufficient time to
review the reports and statements produced on January 3,
Roberts may “testify about the extensive process and
procedure he undertook to uncover [Fenkell's] scheme, not
to the facts he found.” He may not offer opinions, lay
or expert, on these processes and procedures. Roberts may
testify to the fact that he supplied his reports verbally to
Alliance agents or directors. He ...