JOHN UTNE, Plaintiff, v. HOME DEPOT U.S.A., INC., Defendant Case No. 16-cv-01854-RS (SK) United States District Court, N.D. California Filed May 09, 2022 Kim, Sallie, United States Magistrate Judge ORDER REGARDING MOTION FOR SANCTIONS On April 4, 2022, Plaintiff filed a motion for terminating sanctions or, in the alternative, to exclude Defendant's expert report pursuant to Federal Rules of Civil Procedure 26 and 37. (Dkt. No. 244.) Defendant opposed the motion. (Dkt. No. 255.) On May 2, 2022, the Court heard oral argument. (Dkt. No. 264.) Having considered the submissions of the parties, the record in the case, and the relevant legal authorities, and having had the benefit of oral argument, the Court HEREBY FINDS that Defendant engaged in misleading discovery conduct and failed to produce discoverable materials. The Court ORDERS Defendant to cure the defect by producing additional materials, allowing additional deposition time, and paying Plaintiffs' related costs, as described below. The Court declines to award further sanctions against Defendant because, with the curative measures required by the Court below, Plaintiffs will not be prejudiced. The Court therefore DENIES Plaintiffs' motion for terminating sanctions or to exclude on that basis. BACKGROUND Plaintiffs in this case bring a wage and hour class action under the California Labor Code based at least in part on a claim that Home Depot U.S.A., Inc. (“Defendant”) forced employees to wait at the end of closing shifts for doors to be unlocked to allow them to leave the stores. Plaintiffs seek wages for that time when they were unable to leave the stores. That claim is referred to as the “lock-in claim.” In addition, Plaintiffs claim wages for the time that employees spent walking from the store entrance to the clocks in the back of the stores, donning their work aprons, and clocking in. That is referred to as the “failure to pay for pre-shift time claim.” Plaintiffs filed this suit on April 8, 2016. (Dkt. No. 1.) In 2018, Defendant engaged expert witness Robert Crandall and his team at Resolution Economics, LLC to perform a pilot study. In this study, Crandall and his team placed video cameras in various of Defendant's stores in Arizona to see whether it was feasible to conduct a larger-scale study in California. (Dkt. No. 244-1 (Setareh Decl. Ex. 3 and Ex. 6 at 129:19-20).) Although Defendant had video cameras in its stores during the relevant time period, either Crandall or Defendant's counsel were concerned that the video cameras already in place were not aimed in the right direction. (Id. (Setareh Decl. Ex. 6 at 74:4-15).) Specifically, Crandall and his team in the pilot study wanted to make sure that they could identify a “common path” for employees to enter and exit Defendant's stores. (Id. (Setareh Decl. Ex. 6 at 113:6-16).) The pilot study in Arizona (the “Arizona pilot study”) was a “feasibility assessment for the study” in California and thus was applicable to the “question of whether we do video or in person.” (Id. (Setareh Decl. Ex. 6 at 127:8-12).) If it were necessary to place cameras “over all the store,” then Defendant would not have followed through with the California study. (Id. (Setareh Decl. Ex. 6 at 128:11-25.) The Arizona pilot study showed that it was possible to capture around 90% of employees with only certain strategically placed cameras. (Id.) When later placing cameras in 30 California stores, Crandall and his team “had to tell the camera people where to put” the cameras. (Id. (Setareh Decl. Ex. 6 at 76:2-4).) Crandall and/or his team did not place cameras at every entrance and exit but instead walked through each of the 30 stores to determine “the most likely path that would most likely capture everybody.” (Id. (Setareh Decl. Ex. 6 at 126:18-127:12).) Crandall claimed that he did not rely upon the pilot study in Arizona for his report: I didn't rely upon the [Arizona pilot] study at all. Obviously it was irrelevant. It was outside the state of California. It doesn't have any class members in it, not that I'm aware of, and it was really just to look at whether something could be done and this type of thing. (Id. (Setareh Decl. Ex. 6 at 130:1-8).) When asked whether he “used” the Arizona pilot study to “make decisions about how [his] report in this case would be done,” Crandall answered as follows: Other than the basic assumption that I can use cameras and I can capture people, and capture most of the exits and most of the entrances and most of the clocks, because obviously there are people that don't clock in at the back, that's what I needed to satisfy myself. So I did learn that. (Id. (Setareh Decl. Ex. 6 at 130:9-20).) Crandall and his team billed Defendant for this work. (Dkt. No. 244-1 (Setareh Decl. Ex. 2).) In an invoice dated March 31, 2019, that Defendant produced to Plaintiffs as part of discovery in this case, there is a reference to work of 30 minutes conducted by Stephan Eng of Resolution Economics on February 2, 2019, to “[r]review pilot study camera angles.” (Id.) That line entry occurs between other line entries between January 23, 2019, and February 26, 2019, showing work Eng and others performed to coordinate and assist with “study logistics,” walk through stores, review video layouts, “plan installation logistics,” and “supervise camera installations.” (Dkt. No. 261-1 (Setareh Supp. Decl. Ex. 8).) On October 16, 2019, Crandall submitted his expert report, in which he noted that Defendant had installed video cameras at 30 randomly chosen stores in California to view employees who walked from the entrance to the time clock, the break room, and the exit, for 8,200 entrances and 4,400 exits. (Dkt. No. 244-1 (Setareh Decl. Ex. 3).) Crandall opined on the average amount of time employees spent during the disputed time periods and how they spent their time before clocking in (Id.), since part of the test of whether Defendant must pay employees is whether Defendant has “control” over those employees (Dkt. No. 148 (“The primary question with respect to the Hourly Employee Class is whether workers were subject to Home Depot's control from the time they entered the store to the time they clocked-in.”)). To observe the employees during this period of time, Crandall and his team placed the cameras in places to “capture the areas of interest at the stores including: typical travel paths from entrance to the time clocks, the time clocks, the break room, and the front of the store where waiting time was alleged to have expected to occur.” (Dkt. 244-1 (Setareh Decl. Ex. 3 at page 8).) On November 22, 2019, Plaintiffs sent a discovery letter to Defendant in which Plaintiffs' counsel questioned Defendant about a line item in Crandall's invoice. The line item referred to the Arizona pilot study, and Plaintiffs objected that Defendant had not produced that pilot study. In a letter responding to that issue, Defendant's then-counsel explained: “The referenced time entry was included in the invoice in error. It relates to another Resolution Economics matter and is not related to Mr. Crandall's report.” (Id. (Setareh Decl. Ex. 4).) When Plaintiffs deposed Crandall on February 4, 2022, Plaintiffs' counsel asked Crandall about the billing entry and work performed and received the information described above. (Id. (Setareh Decl. Ex. 6).) Before February 4, 2022, Plaintiffs did not have that information about the nature of the Arizona pilot study. Since then, Plaintiffs have asked Defendant to produce documents and video from that Arizona pilot study, and Defendant has refused to produce them. At the hearing on this matter, Defendant explained that there are documents in the form of correspondence between counsel and Crandall and his team about the Arizona pilot study and possibly video footage, but it remains unclear what materials pertaining to the Arizona pilot study exist. DISCUSSION A. Production of Documents and Other Materials Under Federal Rule of Civil Procedure 26(a)(2). Defendant violated the Federal Rules of Civil Procedure by failing to produce documents or other materials related to the Arizona pilot study. Federal Rule of Civil Procedure 26(a)(2)(B) requires that a party disclose expert witnesses, and retained experts must provide reports which include, among other things, the “facts or data considered by” the expert in forming his or her opinions. Rule 26(b)(4) protects from disclosure draft reports and communications between counsel and the expert except for the following communications: (1) those that relate to the expert's compensation, (2) those that “identify facts or data” provided by the attorney and that the expert relied upon in forming the opinions to be expressed,” and (3) those that “identify assumptions that the party's attorney provided and that the expert relied on in forming the opinions.” Fed. R. Civ. P. 26(b)(4)(C)). Here, Defendant focuses incorrectly on Crandall's testimony that he did not rely on the Arizona pilot study. However, the language in Rule 26(a)(2)(B) requires disclosure of “facts and data” that the expert “considered.” Other district courts have noted the importance of the word “considered” in this context and distinguished the word “considered” from the phrase “relied on.” See, e.g., Lewert v. Boiron, Inc., 212 F. Supp. 3d 917, 931 (C.D. Cal. 2016) (party is entitled to what materials expert considered and rejected and not only ones expert relied on); United States v. City of Torrance, 163 F.R.D. 590, 593-94 (C.D. Cal. 1995) (citations and quotation marks omitted) (scope of expert discovery extends to rejected documents because “the documents considered but rejected by the expert trial witness could be even more important for cross-examination than those actually relied upon by him.”); In re Google Adwords Litig., No. C08-03369-JW-HRL, 2010 WL 5185738, at *3 (“is worded specifically to provide the opposing party with access to all materials reviewed or considered by the expert.”) (quotations omitted). Crandall did not rely on the Arizona pilot study in forming his opinion, but he considered it in doing so. Even though he characterized the Arizona pilot study as a feasibility study, it was a study that he considered it in creating the ultimate study and his opinion. Here, Defendant must produce any “facts or data” that Crandall “considered.” Crandall's team's time records indicated that they consulted records from the Arizona pilot study as they set up the California study, and Crandall's deposition testimony indicates that he considered the Arizona pilot study to determine if he could create a feasible study in California. Thus, Defendant must produce the “facts and data” from the Arizona pilot study. Defendant argues that the Arizona pilot study is protected by the work product doctrine. Defendant is only partially correct. As noted above, Rule 26(b)(4)(C) protects from disclosure draft reports and communications between the expert and counsel unless the communications contain “facts and data” from the Arizona pilot study that Crandall “relied on,” documents related to compensation, and facts or assumptions that Defendant provided to counsel. Here, Rule 26(b)(4)(C) specifically uses the term “relied on” in carving out the materials protected by the work product doctrine. Plaintiffs argue that Defendant waived the right to assert work product protection over the materials from the Arizona pilot study because Defendant first asserted the work product doctrine on March 2, 2022, and never provided a privilege log to include those materials. (Dkt. No. 261-1 (Setareh Supp. Decl. Ex. 8).) Federal Rule of Civil Procedure 26(b)(5) requires a party to make a claim of protection under the work product doctrine and to describe the nature of the documents or materials not produced to enable the opposing party to assess the claim. However, Defendant was not required to provide a log of expert materials or for work product created after the litigation began. United States v. Al-Shawaf, No. EDCV 16-1539-ODWSPX, 2017 WL 5997440, at *9 (C.D. Cal. Sept. 5, 2017), on reconsideration, No. 5:16-cv-01539-ODWSPX, 2017 WL 6001273 (C.D. Cal. Nov. 8, 2017); Hiramanek v. Clark, No. 13-cv-00228-RMW, 2016 WL 217255, at *6 (N.D. Cal. Jan. 19, 2016). Defendant also points out that Plaintiffs did not produce a log of their work product materials associated with their expert witness. Under these circumstances, Defendant did not waive the ability to seek protection under the work product doctrine. When challenged on these specific materials, Defendant claimed the protection of the work product doctrine appropriately. The Court finds that Home Depot violated Federal Rule of Civil Procedure 26(a)(2)(B)(ii) by failing to disclose the facts and data from the Arizona pilot study which Crandall considered in forming his expert opinion. B. Sanctions. Given that Defendants violated Federal Rule of Civil Procedure 26(a)(2)(B)(ii), the question is what sanction should follow. Plaintiffs argue for terminating sanctions pursuant to Federal Rule of Civil Procedure 37. Alternatively, Plaintiffs ask the Court to exclude Crandall's report from evidence. Neither is appropriate, for the reasons below. Federal courts have the discretion “to impose a wide range of sanctions when a party fails to comply with the rules of discovery or with court orders enforcing those rules.” Wyle v. R.J. Reynolds Indus., Inc., 709 F.2d 585, 589 (9th Cir. 1983). Federal Rule of Civil Procedure 37 “gives teeth” to the discovery requirements of Rule 26 “by forbidding the use at trial of any information required to be disclosed by Rule 26(a) that is not properly disclosed.” Yetti by Molly Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). Rule 37 provides in pertinent part: “A party that without substantial justification fails to disclose information required by Rule 26(a) or 26(e)(1), or to amend a prior response to discovery as required by Rule 26(e)(2), is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed.” Fed. R. Civ. Proc. 37(c)(1). This rule provides for the exclusion of improperly disclosed expert witness testimony, unless the “parties' failure to disclose the required information is substantially justified or harmless.” Id.; see also Carson Harbor Village, Ltd. v. Unocal Corp., No. CV 96-3281-MMMRCX, 2003 WL 22038700, *2 (C.D. Cal. 2003) (“Excluding expert evidence as a sanction for failure to disclose expert witnesses in a timely fashion is automatic and mandatory unless the party can show the violation is either justified or harmless.”) (internal quotation marks and citation omitted). “Nondisclosure is harmless if it does not prejudice the other party.” Auto. Indus. Pension Tr. Fund v. Tractor Equip. Sales, Inc., 73 F. Supp. 3d 1173, 1182 (N.D. Cal. 2014) (citing Yeti by Molly, 259 F.3d at 1106). In assessing harmlessness, the Court may consider 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 nondisclosing party's explanation for its failure to disclose the evidence.” Id. (citing Unionamerica Ins. Co., Ltd. v. Fort Miller Grp., Inc., No. 05-01912-BZ, 2009 WL 275104, at *1 (N.D. Cal. Feb. 4, 2009)). The decision to impose “sanctions under Rule 37(b) is left to the sound discretion of the trial judge.” Potlach Corp. v. United States, 679 F.2d 153, 157 (9th Cir. 1982). A court may impose adverse jury instructions as a sanction whenever it deems appropriate; the sanction is not limited “to any particular set of facts.” Knudsen v. City and Cnty. of San Francisco, No. 12-cv-01944-JST, 2014 WL 295756, at *5 (N.D. Cal. Jan. 27, 2014). An examination of the five harmlessness factors shows that relief short of exclusion of Crandall's report and short of terminating sanctions can cure any prejudice to Plaintiffs. There are two factors that shows that Defendant's failure was not harmless, but three factors, including the most important factor, weigh in favor of harmlessness. The first and fifth factors, surprise and the nondisclosing party's explanation, weigh against harmlessness. Plaintiffs were genuinely surprised by Defendant's failure to disclose the Arizona pilot study, and in its explanation for the nondisclosure, Defendant expressly denied any relation to this case. Defendant, whether intentionally or not, misled Plaintiffs regarding the existence of the Arizona pilot study.[1] In responding to Plaintiffs' question about the billing entry, Defendant responded that the Arizona pilot study “is not related to Mr. Crandall's report.” That statement is clearly inaccurate, as even Crandall explained how the Arizona pilot study is related to the California study. Plaintiffs could not have discovered the true nature of the Arizona pilot study until they took Crandall's deposition in March 2022. And Defendant's explanation is weak, as the simple language used does not support Defendant's position. The fourth factor, importance to the case, is either neutral or shows harmlessness. Although the final study and its results are important, the feasibility study is far less critical to Crandall's opinion. Plaintiffs are entitled to know the results, but those results likely do not constitute the important part of Crandall's opinion. The third factor, the extent to which allowing the evidence will disrupt trial, weighs in favor of harmlessness. On May 5, 2022, the District Court vacated the trial date and has not yet set a new date for trial. Finally, the second and most important factor, the ability to cure the surprise, weighs in favor of harmlessness because there is sufficient time to obtain the information before trial. The nondisclosure here will not prejudice Plaintiffs because the relief ordered here will cure any prejudice. The Court thus ORDERS Defendant to produce facts and data from the Arizona pilot study, as required by Federal Rule of Civil Procedure 26(a)(2)(B)(ii), by May 16, 2022, accompanied by a privilege log for any materials for which Defendant claims work product protection. Plaintiffs may take another deposition of Crandall by May 31, 2022, for two hours. The Court awards attorneys' fees and costs to Plaintiffs for the preparing and arguing this motion, for taking the additional deposition of Crandall, and for expert fees for reviewing the materials produced regarding the Arizona pilot study. Plaintiffs may submit their request for these attorneys' fees by June 20, 2022, with a memorandum not to exceed five pages. Defendant may submit an opposing memorandum, not to exceed five pages, by June 27, 2022. There will be no reply and no hearing. IT IS SO ORDERED. Footnotes [1] Defendant argues that it should not be held responsible for the actions of prior counsel, who made the statement, but the issue here is the potential prejudice to Plaintiffs. Moreover, new counsel did not correct the mistake when new counsel took over.