LAVA TRADING, INC., Plaintiff, v. HARTFORD FIRE INSURANCE COMPANY, Defendant No. 03 Civ.7037 PKC MHD United States District Court, S.D. New York February 24, 2005 Dolinger, Michael H., United States Magistrate Judge MEMORANDUM & ORDER AND REPORT & RECOMMENDATION *1 At the conclusion of the discovery period, defendant Hartford Fire Insurance Company has moved for the imposition of sanctions on plaintiff Lava Trading, Inc. Defendant bases its motion on the contention that plaintiff has systematically ignored its discovery obligations under the Federal Rules of Civil Procedure, has violated a series of court orders directing it to produce documents within specified deadlines, and by its conduct has irremediably prejudiced defendant's ability to prepare its case. For relief, defendant seeks dismissal of the complaint, or, in the alternative, an order (1) precluding plaintiff from presenting evidence on a series of specific topics, (2) authorizing defendant to place in evidence a quantity of e-mails produced in an untimely fashion by plaintiff and (3) requiring plaintiff to reimburse defendant for the costs of one deposition session and its current motion. Plaintiff has opposed the motion. It contends principally that it did not deliberately delay production, that Hartford was in part responsible for the delays, that defendant has not been seriously prejudiced, and that measures short of dismissal or preclusion would remedy any perceived harm. For the reasons that follow, we find that plaintiff has engaged in repeated improper discovery conduct during this litigation and that its withholding of a large quantity of relevant and damaging e-mails until nearly mid-December 2004, at the very end of fact discovery and well past the conclusion of expert discovery, was inexcusable and has harmed defendant. We conclude, however, that a combination of measures-including required submission of certain witnesses to further deposition, partial preclusion and cost-shifting-will adequately remedy the prejudice and still permit plaintiff to pursue its claims if they survive a pending dispositive motion. We therefore direct that certain corrective measures be promptly undertaken. We further recommend that defendant's request for dismissal be denied, but that plaintiff be precluded from offering into evidence at trial certain recently produced documents. The Pertinent History Plaintiff filed this lawsuit in September 2003, asserting claims for breach of insurance policies issued by defendant that covered its business premises at the World Trade Center. Lava contended that it was owed nearly sixty million dollars under a business-interruption policy that defined a potential twelve-month period of restoration for measurement of business-income losses. (See Compl. at ¶¶ 46, 51). It also sought compensatory damages, contending that Hartford had acted in bad faith in handling its claims. (Id. at ¶¶ 76-77). In this litigation, plaintiff has proffered a pair of experts who, between them, have opined that the destruction of the Trade Center on September 11, 2001 led to a multi-month period of corporate paralysis. They further state that this caused a revenue loss of more than sixty-seven million dollars through October 31, 2002 and that as a result Lava is owed between twenty-five and fifty million dollars under the business-interruption policy and approximately four million dollars for delayed payment under the policy. (See Supplemental Affidavit of Stephen E. Goldman, Esq., sworn to Dec. 21, 2004, at ¶ 48 & Exs. 14-17; Report & Recommendation (“R & R”) dated Feb. 14, 2005 at 8). *2 Hartford received a preliminary business-interruption claim from Lava in early 2002 for nearly one million dollars and ultimately paid nearly two million dollars on Lava's claim. (Goldman Supp. Aff. at ¶ 4, 7). In this lawsuit Hartford has asserted that Lava had fully resumed its business operations by October 31, 2001. (Id. at ¶ 6). On that basis, it claims that the amount it paid the plaintiff accurately reflects whatever covered business loss was sustained by Lava as a result of the September 11 attack. Plaintiff served its initial disclosure on or about December 5, 2003. (Id., Ex. 1). The disclosure notice listed four Lava officers as individuals with knowledge of the facts, including Richard Korhammer (the Chief Executive Officer), James Paddon (the Chief Financial Officer), Justin Brownhill (the Executive Vice President, Finance and Strategy) and Greg Debski (corporate counsel). Defendant did not, however, provide any documents at that time. (Id. at ¶ 19 & Ex. 1). On December 18, 2003 defendant served its first request for documents. (Id. at ¶ 20 & Ex. 2). That notice sought 54 categories of documents, encompassing virtually all of the substantive allegations found in the complaint and specifying a general time period from January 1, 1999 forward. (See id., Ex. 2 at 2). The topics defendant targeted included, inter alia, the details of Lava's pre-loss finances and business operations, the extent of the interruption of Lava's business operations as a result of September 11, Lava's search for and move to new premises, its loss of revenues and clients, its post-loss financial status throughout the relevant period, its resumption of business operations, its financial and technological recovery, its communications with clients and potential clients, and the facts underlying its assertion that it was owed sixty million dollars by Hartford and that Hartford had acted in bad faith. (Id., Ex. 2 at 3-10). Plaintiff produced five boxes of documents on January 22, 2004, identified by source rather than by the document request items to which the documents were responsive. (Id. at ¶ 23). The covering letter advised that “[a]dditional categories of documents will follow on a rolling basis as they are identified and copied.” (Id. at ¶ 23 & Ex. 3; see Pltff's Memo at 7). Although plaintiff continued to produce some documents (Certification of Jonathan O. Bauer, Esq., executed Dec. 28, 2004, Ex. H at 1), it identified them by source-that is, by employee-rather than by topic, and it failed to comply with the full scope of the first Rule 34 notice despite the passage of a number of months. (Goldman Supp. Aff. at ¶¶ 24-25 & Ex. 4 at 9). The slowness of the pace of production finally triggered correspondence from Hartford to the court. By letter dated March 15, 2004, counsel complained, inter alia, about plaintiff's so-called “wave” approach to production of documents, the substantial incompleteness of the production three months after service of the first document request, and the fact that Lava had still not produced the documents of a number of key Lava officials, including Paddon, Debski, Korhammer, Charles Allen (Lava's Chief Operating Officer), Kamran Rafieyan (Lava's Chief Information Officer) and George Hessler (Lava's Director of Broker Dealer Sales). (See id. at ¶ 25 & Ex. 4 at 9-11). He also noted Lava's failure to make clear whether it had a number of categories of documents that defendant had requested. (Id., Ex. 4 at 9-11). *3 On March 18, 2004, one day before a scheduled conference with the District Court, Lava produced a quantity of documents, including over six hundred pages of e-mails from the files of Paddon and Hessler, together with ninety pages of e-mails from Korhammer's files. (Id. at ¶ 26; Bauer Certif., Ex. H at 2; Pltff's Memo at 8). The District Court set a discovery cut-off of June 24, 2004 (April 1, 2004 Tr. at 2)-a deadline later extended to the end of August (June 25, 2004 Tr. at 65)[1] and then to the end of September-and then referred the case to me for pretrial supervision. For two weeks preceding our first conference with counsel in early April, Lava continued to produce documents in small quantities, including e-mails of Debski, and documents from Brownhill, Hessler, and Liz Porter. (See Bauer Certif, Ex. H at 2-3; Goldman Supp. Aff. at ¶¶ 28, 30 & Ex. 7). At a pretrial conference before us on April 5, 2004,[2] counsel for defendant again complained about Lava's identification of documents being produced, and Lava's attorney responded that the documents were being produced in the manner in which they were kept by the business. (April 5, 2004 Tr. at 13-14). Plaintiff's attorney also reported that he had previously advised his adversary that all documents responsive to the first request had been produced. (Id. at 25). Despite plaintiff's counsel's representation, Lava produced additional quantities of documents on April 8 and 12, 2004. (Goldman Supp. Aff. at ¶ 31 & Ex. 8; Bauer Certif., Ex. H at 3-4). Defendant then took the deposition of Mr. Korhammer on April 22, 2004. (Goldman Supp. Aff. at ¶ 32). On April 29, 2004 defendant served its second request for documents on plaintiff. (Id. at ¶ 33 & Ex. 9). This request more specifically targeted documents pertinent to Lava's budgets, business plans, forecasts, financial projections and “budget rollups,” communications to shareholders, and financial statements, all of which had been described or referred to by various Lava officials in deposition. (Id., Ex. 9 at 2-3). The service of this new request was triggered by a discussion between opposing counsel, in the course of which plaintiff's attorney reported that his client had not produced these documents because he did not view the defendant's first request as encompassing them. Hartford chose then to serve the second request to avoid a dispute over how to parse the first Rule 34 notice. (See id. at ¶ 33 & Ex. 10 at 1-2). Lava produced some additional documents between May 11 and 19, 2004 (Bauer Certif., Ex. H at 4), some time after the deposition of Charles Allen, the Chief Operating Officer of Lava. (Goldman Supp. Aff. at ¶ 34). Neither then nor subsequently, however, did Lava produce the budget and other financial information sought by the April 29, 2004 request. (Id. at ¶ 35). It also turned out that plaintiff had still not produced a complete set of documents from Mr. Allen or indeed from other key employees of Lava. (See, e.g., id. at ¶¶ 36, 39-41). *4 Because Lava remained in default on the second document request, defendant's counsel sought relief from the court by letter transmitted on June 23, 2004. (Id. at ¶ 35 & Ex. 10). We promptly scheduled a conference for June 25. Perhaps coincidentally, on June 25 Lava disgorged additional documents from Mr. Allen. (Id. at ¶ 36 & Ex. 11; Bauer Certif., Ex. H at 5). At our June 25 conference we directed plaintiff to produce to Hartford all budget and related documents-which included financial projections and “budget rollups”-by no later than July 2, 2004. (June 25, 2004 Tr. at 45). Plaintiff failed to comply, although defendant did not pursue a remedy at the time. (See Goldman Supp. Aff. at ¶ 38). Instead, on July 7, 2004, it deposed Mr. Rafieyan, who identified with specificity the location of and means of access to a number of categories of financial documents that had been sought in the April 29 request. (See id. at ¶ 42 & Ex. 16 at 1-2; Affidavit of Rhonda J. Tobin, Esq ., sworn to Jan. 3, 2005, Ex. 17 (Rafieyan Dep. at 205-31)). Defendant then reiterated its demand for these documents, which had still not been produced. (Goldman Supp. Aff., Ex. 16 at 2). On July 23, 2004, defendant served a third document request. This notice sought a variety of specific categories of documents, including materials reflecting Lava's rollout of its new product Color Maker and documents concerning any competition that Lava had encountered. (See id., Ex. 16 at 3-4). The parties continued to conduct depositions, and Lava produced additional documents in July and early August (Bauer Certif., Ex. H at 5), but it was not until about August 10, 2004 that plaintiff turned over a substantial set of new documents-according to defendant, 1,660 documents-pertaining to budget matters and other topics listed in the first and second document requests. (Goldman Supp. Aff. at ¶ 39; Bauer Certif, Ex. H at 5). This tardy production, which included documents from Korhammer, Paddon, and Debski, necessitated the scheduling of a second round of deposition sessions of four Lava officials-Paddon, Hessler, Rafieyan, and Korhammer. (Goldman Supp. Aff. at ¶ 40). Hessler was scheduled for his second deposition session on August 19. Only three days before, Lava produced 15,000 pages of relevant e-mails to and from him, along with a quantity of additional e-mails from Debski. (Id. at ¶ 41; Bauer Certif., Ex. H at 5). These continuing discovery problems triggered another letter to the court from defendant's counsel, this one on August 16. (Goldman Supp. Aff. at ¶ 42 & Ex. 13). He recounted (1) plaintiff's non-compliance with the court's June 25 order, (2) the July 7 deposition testimony of Mr. Rafieyan confirming the existence of a variety of unproduced financial and budget documents, (3) a small and incomplete production of budget documents on July 21, and (4) the more substantial production, on August 10, of the CD found to contain the 1,660 new documents, including documents authored by Korhammer, Paddon, and Debski, all of whom had already been deposed. The letter further noted that defendant's attorney had just received the additional 15,000 relevant e-mails to and from Hessler and more e-mails to and from Debski. (Id., Ex. 13 at 1-3). *5 On the same day, plaintiff served the report of its damages expert Eric K. Clemons. (See Report & Recommendation dated Feb. 14, 2005 at 4-5). Although the report did not disclose the bases for his opinions, a later deposition (held in October 2004) revealed that, in reaching his conclusions, Clemons had relied on documents from Lava that had not been produced to defendant until July 2004. (Goldman Supp. Aff. at ¶ 43). The deposition also disclosed that Clemons had premised the calculations reflected in his report on assumptions that Lava had been financially and technologically devastated for at least six months after September 11. (R & R at 32-33, 36-37). Because of the very substantial new production of documents by Lava in mid-August, the parties agreed to a new schedule for re-deposing various Lava officials. (Goldman Supp. Aff. at ¶ 44). In exchange for this agreement, defendant chose to forego seeking court intervention at the time. In accordance with the parties' agreement, the court signed a revised scheduling order on September 15 that permitted Hartford to pursue the needed follow-up discovery past the previous fact-discovery deadline of September 30, 2004, with a new deadline of November 18. (See Order dated Sept. 15, 2004 at ¶ 4; Sept. 17, 2004 Tr. at 2-3). On September 17 we conducted still another conference. Defendant's counsel raised a lengthy series of open issues concerning document production, many involving requests emanating from the July 23 document request. Others, however, concerned financial documents, presentations to and minutes of the Lava Board of Directors and an audit committee, and documents pertaining to the reinstallation of T1 lines-all materials that had first been sought in the December 2003 and April 2004 requests. (Id. at 8-42). The court specified that the remaining production by Lava must be completed in part by September 23 and the balance by September 29, and it warned Lava's counsel that further delay would not be tolerated. (Id. at 12). Three days later, on September 20, plaintiff served amended expert reports. As noted in our February 14 Report and Recommendation, the second report of Dr. Clemons was virtually unchanged from its predecessor, except for the size of his estimate of revenue loss. Thus, his factual premises about the severity and temporal extent of Lava's technological and financial paralysis from the September 11 attack also remained unchanged. (R & R at 7-8). Lava failed in large measure to comply with the court's directives at the September 17 conference and failed to respond to the July 23 document notice. These twin failures triggered another letter request by defendant's attorney to the court, on October 6, this time seeking dismissal of the complaint. (Goldman Supp. Aff. at ¶ 47 & Ex. 16). Of particular concern to defendant was Lava's failure to produce (1) unredacted documents of presentations made to the Lava Board after September 11, (2) e-mails concerning the re-installation of telecommunication lines after September 11 (documents the existence of which was revealed only by a third-party subpoena), (3) audit committee documents, and (4) documents pertinent to Lava's release of new products after September 11 and to its contention that other companies had gained a competitive advantage as a result of delays that it encountered in new product release. (Id., Ex. 16 at 1-3). As recounted by defendant, Lava had only just produced some of these items on October 5, when it provided a CD to Hartford that proved to contain 8,000 new documents relating to product development. Defendant also reported the untimely production, on October 5, of customer spreadsheets totaling 3,045 pages. (Id.). *6 Defendant eventually withdrew its request for dismissal. That change of position was premised in part on another adjustment of the discovery schedule to provide more time for defendant to tie its expert case together in light of the delayed production by plaintiff and in part on agreements on further production of documents by plaintiff. (See Nov. 17, 2004 Tr. at 16-17, 18). In addition to these difficulties, Hartford encountered resistance from Lava to producing Mr. Korhammer for his next deposition session, which had been necessitated by the untimely production of documents in August. The deposition was first scheduled for November 5, but Lava then postponed it to December 3. On December 1 Lava again cancelled the deposition, but agreed to a “so-ordered” rescheduled deposition session on December 13. (Goldman Supp. Aff. at ¶¶ 50-54). On December 2, 2004, Hartford's attorney sent plaintiff's counsel a letter, which read as follows: A few days before the Hessler deposition in August you produced several thousand e-mails of Mr. Hessler which were generated between September and December 2001. In the past week you have produced a thousand relevant Steve Maas e-mails in Streamline. Please confirm that all of Mr. Korhammer's e-mails from the period September 11, 2001 to April 30, 2002 have been produced previously. If they have not, I request production of these e-mails no later than Wednesday, December 8, 2004. I recall that the Hessler e-mails were produced by CD. That is acceptable, but if you intend to produce them by CD please Fed Ex them overnight for arrival no later than December 8 in our Hartford office. If all Korhammer e-mails for the period have been produced please confirm that fact. (Id., Ex. 18). This letter did not trigger an immediate response, but on December 10 Lava produced a box containing approximately 1,400 pages of e-mails. (Id. at ¶ 57). Just before the start of the re-deposition of Mr. Korhammer on December 13, Lava produced still another three boxes of e-mails from Korhammer's file. (Id. at ¶ 59). In view of the last-minute production of these documents, which included highly relevant and very detailed items concerning Lava's recovery efforts and performance in the days, weeks, and months after September 11, defendant agreed to make Korhammer available for still another deposition session, on December 16. (Id. at ¶ 60; see Bauer Certif., Ex. U). This December production of e-mails totaled between 11,000 and 12,000 pages. (See Certification of Rebecca Levy-Sachs, Esq., executed Dec. 30, 2004, at ¶ 3). Of that quantity, there is no real dispute that a significant number of these documents (defendant estimates one-third) were relevant to the issues in this case. (See Goldman Supp. Aff. at ¶¶ 62-63 & Ex. 19 at 2-3; Deft's Reply Memo at 1). Moreover, many of the relevant documents appear to undercut in substantial ways some of Lava's key contentions about the extent of the impact of September 11 on its ability to conduct business and on its financial condition in the months following the attack. The areas of particular interest included Lava's identification and acquisition of alternative premises, the speed of reconnection of lines to customers, the timing and volume of resumed trading, the generation of revenues in the weeks of October and November and in succeeding months, the promptness with which Lava resumed product development and marketing of new products to current and potential clients, the rapidity with which Lava began efforts to hire new personnel, and Lava's own estimation of the amount of its covered business losses up to the time that it submitted its completed business-interruption claim in late 2002. *7 Among the documents produced in December 2004 were e-mails that reflected, inter alia, that within a few days after September 11, Lava had located available alternative premises; that it had moved into office and data center space by early to mid-October; that by the week of October 9, 2001 it had resumed trading; that by mid-October it was rapidly reconnecting its clients; that in November 2001 it traded more than one billion shares and-according to its Chief Executive Officer, Richard Korhammer-was trading by mid-November at a level twenty-five percent higher than before September 11;[3] that it was undertaking renewed product development and marketing by October 2001; and that it was hiring new people, including sales personnel, by mid-October. (See Affidavit of Stephen E. Goldman, Esq., sworn to Dec. 16, 2004, at Exs. 14-21; Tobin Aff., at Exs. 2, 4, 5, 6, 7, 8, 11, 12, 13, 14, 16, 22, 23).[4] The same set of belatedly produced documents reflect that by January 2002 Lava had more than doubled its share volume from the record level of November 2001, and that its revenues were climbing in tandem with the volume of trading. (See Tobin Aff., Ex. 22-LBM0000000098; id., Ex. 7-LKR106050). These e-mails also document the fact that Lava was engaging in promotion of its newest product, Color Maker, in mid-October, and that a number of clients who declined to contract with Lava were doing so for their own reasons, seemingly divorced from the impact of September 11. Finally, they also demonstrate that Lava officials were advising the Board of Directors in early 2002 that the company's anticipated business-interruption insurance claim was likely to be in the amount of one million dollars and that even by August 2002 it anticipated that the claim-not yet finalized-would total somewhere between three and five million dollars. (Id., Ex. 22-LBM0000000139). From the testimony of Korhammer and other submissions on this motion, it appears that this last-minute disclosure of documents resulted from the fact that plaintiff and its counsel took a narrow view of defendant's December 2003 document request and then apparently failed to have anyone review Korhammer's files in response to either defendant's April and July 2004 document requests or the many follow-up requests and complaints by defendants' attorney or the multiple conferences with the court, all of which resulted in directives for further production. (See, e.g., Bauer Certif., Ex. U (Korhammer Dec. 16, 2004 Dep.) at 193-99, 282-84, 291-92). Thus, until December 2004 Lava had produced only about ninety pages of documents from the files of its Chief Executive Officer. (Korhammer Dep. at 195). This failure by plaintiff has led to adverse effects on defendant's posture in this litigation. By the timing of this latest production, plaintiff has foreshortened Hartford's ability to utilize the newly-disclosed documents. Since fact discovery ended as of November 18, except for the deposition of Korhammer, defendant has been denied the opportunity to question other Lava officials and non-parties in deposition about the contents of these documents. Moreover, since discovery of plaintiff's damages experts ended in October, defendant has also been prevented from deposing those experts concerning information in the documents that appears to contradict the factual premises of their analysis. *8 Finally, in view of the pattern of partial and delayed production of documents by plaintiff throughout this litigation, it is still unclear whether plaintiff has thoroughly searched its files and produced all non-privileged documents responsive to outstanding document requests and logged all assertedly privileged responsive documents. The record suggests that all documents from Korhammer's files now have been disgorged, and plaintiff previously represented that the 15,000-document production from Hessler's files was comprehensive, but plaintiff has avoided making any clear and specific representations about the extent of its searches for other documents. ANALYSIS In seeking relief on its current motion, Hartford notes the extent of the delays in Lava's production of documents, the impact that those delays have had on its own ability to defend itself in pretrial proceedings, the financial cost of being required to depose and then repeatedly re-depose witnesses, and the prejudice that it claims to have suffered in presenting its case on pre-trial substantive motions. For relief it seeks outright dismissal of the complaint. Alternatively, it requests an order granting the following remedies: (1) precluding Lava from disputing or explaining admissions and statements contained in the newly produced e-mails concerning the dates when Lava's data center resumed operations; (2) precluding Lava from offering any testimony about delays in product development and release purportedly caused by the September 11 attack; (3) precluding Lava from presenting testimony to the effect that September 11 impaired its ability to compete with other companies; (4) precluding Lava from offering testimony to the effect that as a result of September 11 it was required to divert personnel from marketing or product development; (5) precluding Lava from disputing admissions in the recently produced e-mails that Lava resumed marketing efforts in early October; (6) precluding Lava from offering testimony that it was unable to hire new personnel after September 11 because of either the financial effects of the attack or misconduct by Hartford; (7) precluding Lava from presenting testimony by the authors or recipients of the newly produced e-mails concerning the contents of the e-mails; (8) permitting Hartford to introduce the recently produced e-mails without further foundation and subject only to a relevance objection; (9) precluding Lava from offering into evidence any of the newly produced e-mails; (10) imposing on Lava all of the costs of the last session of the deposition of Korhammer; and (11) imposing on Lava the costs to Hartford of the current sanctions motion. (Deft's Memo at 1-2). The basis for these alternative applications is defendant's assertion that Lava's delay in producing the e-mails turned over in December has prevented Hartford from fully exploring their provenance and significance with potential Lava witnesses and with non-parties who have been deposed in the case, and has further precluded defendant from questioning Lava's damages experts about the apparent disconnect between some of their factual assumptions and the contents of the e-mails. *9 We start by noting that dismissal is a disfavored remedy for all but the most extreme misconduct, although it is certainly within the court's arsenal, if needed, to remedy otherwise irremediable prejudice or to address persistent bad-faith pretrial conduct by a litigant. See, e.g., Friends of Animals, Inc. v. United States Surgical Corp., 131 F.3d 332, 334 (2d Cir.1997); Bobal v. Renssellaer Polytechnic Inst., 916 F.2d 759, 764 (2d Cir.1990); Rotblut v. Thaler, 1998 WL 846124, *6 (S.D.N.Y. Dec. 3, 1998). In determining the scope of appropriate relief, we first make a practical assessment of the extent of the misconduct by plaintiff, what prejudice defendant has suffered, and what remedies are available to cure the prejudice. We also bear in mind the appropriate role of sanctions in deterring similar misconduct both by the erring party and by other litigants. 1. Plaintiff's Conduct Plaintiff produced large quantities of e-mails in December 2004, and many appear to have been called for in defendant's December 2003 document request, as well as in Hartford's two later Rule 34 notices. This failing by Lava was not an isolated occurrence. As we have noted, plaintiff has engaged in an excruciatingly slow and disjointed disclosure of documents, stretching over a period of one year, under the guise of a “rolling” production or a production in “waves.” This pattern-which has involved substantially untimely production of the vast majority of documents turned over-is well documented in plaintiff's own memorandum on this motion. In that memorandum, plaintiff charts each stage of its document production, including the volume of documents produced on each occasion-a list of dates that covers nearly seven pages, beginning with January 22, 2004 and ending with December 13, 2004. (See Pltff's Memo at 7-14; Bauer Certif, Ex. H). Plaintiff has never offered a coherent justification for this approach to production, and we see no legitimate excuse for it.[5] Although the documents in question were certainly voluminous, the relevant categories were not difficult to define-indeed they are, for the most part, adequately described in defendant's first document request-and competent counsel certainly should have had no great difficulty in specifying to their client most of what needed to be produced from the very outset of discovery. Moreover, although more than the normal thirty days might well have been required for full compliance with the first request, plaintiff surely did not require one year, nor were many months needed to comply with the far narrower second and third requests. Indeed, since plaintiff had presumably reviewed many of these documents either in 2002 in preparing its final insurance claim or later, in 2003, when planning its lawsuit for filing, far greater efficiency should plainly have been possible. In any event, plaintiff had an obligation to seek appropriate extensions, if needed, which it failed to do. It also should have been able to produce substantially all its documents early in the discovery period rather than in fragments throughout-and then long after-fact and expert discovery had concluded. It also had an obligation to ensure that document searches, when initially made, were careful and thorough, still another obligation that it failed to satisfy. *10 In assessing the degree of blame for the current situation, we note a discernible pattern in plaintiff's document production. This includes large-scale productions shortly before several scheduled court conferences;[6] large-scale production on the eve of key depositions;[7] professions by counsel of their belief (typically vague) that all documents in a given category had been produced, followed by very belated production of substantially more documents in the same category; and, most pertinent, an evident failure by counsel to vet their client adequately to determine whether documents either arguably or clearly called for by a document request had been properly searched for and found. (See, e.g., Bauer Certif. Ex. U (Korhammer Dep. at 282-84, 291-92)). We also note repeated representations by counsel that documents were being produced in the manner in which they were retained by the business, a representation that is belied by the testimony of Mr. Korhammer that he was told to review his e-mails in late 2003 or early 2004 and pull out those that seemed to involve the company's recovery post-September 11. All of this said, we do not have a sufficient basis to justify a conclusion-suggested by defendant in its reply memorandum-that this behavior was deliberately designed to obstruct discovery and trial preparation. We can, however, safely say that plaintiff's conduct in this respect reflects at least considerable indifference to its discovery obligations. The discovery demands were clear enough, defendant had more than ample time to produce in an orderly and timely fashion what was requested, and it failed to come even close to what was required for nearly a year. Such a performance reflects, at best, gross negligence. In seeking to justify its course, plaintiff argues principally that delays in production, and particularly the belated December production, were attributable to failings by Hartford. In particular, Lava appears to suggest that the defendant failed to request the most recently produced documents in its formal requests, and that plaintiff's December 2004 production was in response to the December 2, 2004 letter request of defendant's counsel, which it characterizes as seeking vast quantities of e-mails for the first time. (Pltff's Memo at 3). In addition, Lava observes that some of the e-mails initially listed by defendant on this motion as newly produced in December 2004 had been previously disclosed in August 2004 as part of the so-called Hessler production. Finally, plaintiff says that even if it was derelict in producing the Korhammer e-mails, that failing was insignificant because it had earlier produced other documents on the same topics. (See id. at 20-28). Plaintiff's arguments do not salvage its position. The December 2003 document request was adequate to encompass most, if not all, of the document categories that later became the subject of contention between the parties. If the plaintiff's counsel had any doubts as to the scope of those requested items, they were required to discuss them with defendant's attorneys and bring any irremediable disagreements to the court for resolution. That is not what happened. Instead, plaintiff persisted in an unreasonable reading of the first set of requests, and chose not to air the matter with defendant until defendant's own attorney raised the issue with respect to budget and other planning or projection documents in April 2004. *11 By not seeking such clarification, plaintiff managed to avoid facing the necessity for production of plainly relevant documents for very extended periods of time. Moreover, even as to the documents unquestionably and unambiguously demanded in the first, second and then third requests, plaintiff failed to comply for many months, and indeed it is still unclear whether it has fully done so. As for the December 2004 production, plaintiff's argument that it was simply responding to a very late demand by defendant's counsel is frivolous. Mr. Korhammer testified that early in the case he had been told to review his e-mails in response to defendant's December 2003 request and to pull out what appears to have been only a limited range of such documents, concerning Lava's recovery from September 11. He further reported that he had not subsequently pulled any other documents, even in response to the defendant's second and third document requests, until December 2004. The initial instruction to Korhammer as to the scope of the search was improper in view of the breadth of defendant's initial request, and hence it is not surprising that the December 2004 production contained a substantial quantity of new and responsive documents on a variety of pertinent topics covered by the first Rule 34 notice. Moreover, the recent production encompassed many documents directly pertinent even to the limited area that Korhammer was supposedly told to search for; these included numerous e-mails, for example, specifying efforts in seeking new space, describing in detail and on a daily basis Lava's progress reconnecting its clients, noting Lava's achievement in equaling and then vastly surpassing previous revenue levels, documenting Lava's marketing of new products, and reflecting its hiring efforts begun as early as October 2001. As for Lava's failure to produce documents from Korhammer's files in response to the second and third document requests, that default is equally clear. Plaintiff's attempt to shift the blame to Hartford also fails because the December 2 letter from defendant's counsel was plainly not seeking new categories of documents. The letter makes clear that defendant was simply attempting to confirm that there had been full production from Korhammer, a concern explicitly premised on the unfortunate experience from the Hessler re-deposition, when plaintiff dumped 15,000 pages of documents on defendant only a few days before Hessler was to be deposed. Indeed, defendant's concern about the Korhammer documents proved to be well-founded, since it turned out that Lava had never determined whether Korhammer had additional documents after his plainly inadequate production in response to the December 2003 request and had not obtained documents from him in response to the April and July requests even though he had numerous responsive e-mails. Plaintiff's next point is that some of the documents annexed to defendant's original sanctions motion papers as having first been produced to defendant in December had in fact been produced in August. Defendant concedes the point in part, noting that this occurred because of the rush of events between December 10 and 13, 2004. (Levy-Sachs Certif. at ¶ 3). In that short period of time, defendant received up to 12,000 more pages of documents from Lava and was required to use them both to prepare for the renewed deposition of Korhammer-on December 13 and then on December 16-and at the same time to prepare its sanctions motion, which had to be filed, at the court's direction, by December 16. In the process, counsel did not note that some documents produced were duplicates of documents previously produced on a CD just before the Hessler deposition in August. As is clear, however, from even plaintiff's analysis, a substantial number of such documents were not previously produced (see Pltff's Memo at 17 (asserting that 24 of 62 documents attached to defendant's motion papers as examples were previously produced)), and they included some of the most significant December 2004 documents, which were discussed in defendant's sanctions memorandum. (See Levy-Sachs Certif. at ¶ 3).[8] *12 As a final riposte, plaintiff suggests that defendant received other documents earlier in discovery that covered the same topics as those withheld until December 2004. (See generally Pltff's Memo at 20-28). That may be true in a generic sense, but it says nothing whatever to justify plaintiff's failure in producing key documents. Plaintiff was required to produce, early in this litigation, the documents that it withheld until nearly mid-December, and the fact that other documents that it had earlier produced may have referred to the same general topics does not excuse plaintiff's non-compliance with its discovery obligations.[9] 2. Prejudice to Defendant The failure of plaintiff to produce significant documents to defendant until December 2004 has unquestionably had repercussions for defendant's preparation of its case. As we have noted, this occurred long after both fact and expert discovery had closed, other than for the deposition of Mr. Korhammer. As a result, defendant has been denied the opportunity to use these documents in various ways that it could have done had the documents been timely produced. First, Hartford could have utilized the documents at depositions of various Lava employees (1) to seek their explanation of the contents and context of some of the documents, (2) to refresh the recollections of those witnesses who reported at their depositions that they were unable to recall important facts, including the timing of Lava's restoration of business operations, and (3) to challenge at deposition those witnesses whose testimony was inconsistent with the contents of some of the documents.[10] Second, defendant could have utilized the documents to question non-party witnesses for the same purposes. Third, with the documents in hand, defendant could have shaped its deposition questioning of those plaintiff's experts whose analyses were premised on factual assumptions possibly contradicted by information in the recently-produced documents. Fourth, defendant could have used the documents to provide its own experts further information in order to shape or support their opinions and analysis. Fifth, depending upon the nature of the deposition testimony that defendant could have obtained from plaintiff's various witnesses, defendant might have been able to reinforce or expand its summary judgment motion, Daubert motions, and other pretrial applications. Sixth, if the case went to trial, defendant might have used the deposition testimony derived from the new documents both to cross-examine plaintiff's fact and expert witnesses more effectively and to prepare its own trial witnesses more thoroughly, as well as to offer more effective testimony by those witnesses. In resisting the notion that the delay in producing the Korhammer e-mails harmed defendant, plaintiff argues principally that it had previously produced other documents on some of the same topics or had offered deposition testimony that was the functional equivalent of the information found in the December documents. This argument fails because plaintiff does not demonstrate that other documents or testimony gave defendant the same information as the December documents. *13 Plaintiff does not identify previously produced documents from Lava that clearly demonstrate, for example, that Lava had started trading by October 11, that it traded more than one billion shares in November 2001, that its chief executive officer had admitted by mid-November that Lava was exceeding all prior sales volume by about twenty-five percent, that Lava had begun hiring new personnel by mid-October, that it was already marketing new products by October, that its volume in January was double the record volume of November, that Lava had internally estimated its business-interruption insurance claim at between one and five million dollars, etc. Plaintiff equally fails to show that any prior deposition testimony by Lava officials or designated experts conceded these or other key facts reflected in the last batch of documents. Moreover, even if there were references to such facts in other documents, that would not entirely cure the problem. A litigant is entitled to all pertinent documents on a given topic, so that it can choose from among them those that most clearly and effectively support its case. Thus, for example, a document-when carefully parsed-may suggest that Lava was undertaking efforts to reconnect its transmission lines and that some of its customers were in fact reconnected on a given date, but such a document is no substitute for a raft of e-mails to and from Lava's chief executive officer summarizing on a daily basis the progress that Lava was making and the many clients that were “relit” in a short space of time. Moreover, if the disclosing party withheld documents that contained, for example, expressions by the CEO himself that Lava was “up and running” at an early date and otherwise communicating great satisfaction with the pace of recovery, the discovering party would have been deprived of useful ammunition for deposition, motion, or trial. A telling example of the weakness of Lava's argument-apart from its lack of specific documentation of truly equivalent documents or testimony-is found in its discussion of its funding efforts. As noted, one key claim that it advances is that it was cash starved until April 2002. (R & R at 47-49). Among the documents not produced until December 2004 are a set that reflect that Lava was offered a loan of $500,000 by one of its clients, apparently in early January 2002, and that it followed up briefly and then decided not to pursue the transaction because it anticipated other cash infusions. (Goldman Aff., Ex. 19). (See also Bauer Certif., Ex. U (Korhammer Dep. at 258-59)). In seeking to establish that this “topic” was covered by other disclosures, plaintiff notes that a witness had referred in deposition to the fact that Lava had been seeking sources of cash. (Pltff's Memo at 27). Plainly, though, the fact that Lava was seeking cash is not the equivalent of the fact that it was actually offered cash and turned it down because it believed that it did not need the money at the time.[11] *14 In sum, plaintiff does not come close to sustaining its contention that earlier disclosures had given defendant information fully equivalent to that disclosed by the December document production. Necessarily, then, plaintiff does not meaningfully undercut defendant's showing of prejudice. Apart from creating practical impediments to mounting defendant's trial preparation, plaintiff's course of conduct in producing documents has plainly imposed added burdens and expenses on the defendant that it should not have been required to bear. In particular, the delays in production have triggered not only the need for numerous applications by defendant to the court-including this motion-but repeated depositions of the same witnesses, who had to be called back to be questioned about significant and voluminous sets of documents produced out of time and after the witnesses had originally been deposed. Furthermore, the late production of documents, particularly in the period from September through December 2004, appears to have required further work on the part of defendant's experts. In sum, the injury to defendant from plaintiff's failure to adhere to the procedures and standards imposed by the federal discovery rules and by court orders is significant. The question remains whether and to what extent those injuries can be remedied short of the requested dismissal of the complaint. 3. Remedies As we have noted, defendant's request for dismissal of plaintiff's suit seeks relief that is generally disfavored, in view of the courts' recognized preference for merits-based disposition of cases. See, e.g., Enron Oil Co. v. Diakuhara, 10 F.3d 90, 95 (2d Cir.1993); Traguth v. Zuck, 710 F.2d 90, 94 (2d Cir.1983). In view of the expected timing of the trial, which has been tentatively scheduled to begin on April 25, 2005 (see Endorsed Order dated Feb. 18, 2005), we believe that there are certain steps that can be taken before the anticipated trial date to remedy much, if not all, of the prejudice that defendant appears to have suffered as a result of the delayed document production in December 2004.[12] We start with the premise that those of the newly-produced documents that are relevant to the issues in this case are, by and large, helpful to defendant's position on the issues. Such an inference follows from the simple fact that all of the examples proffered and highlighted by defendant and responded to by plaintiff are at least potentially-and in some instances strikingly-supportive of various aspects of defendant's case. This fact somewhat eases the burden of remediation here, since the scope of additional pre-trial inquiry needed to level the playing field may be somewhat more circumscribed. The first step is to authorize defendant to reopen the depositions of those Lava employees (1) who are most likely to be able to authenticate and/or explain the substance or context of those documents, or (2) who have previously testified in a manner inconsistent with the substance of one or more of the documents. We leave the selection of those witnesses to defendant, but anticipate that, for present purposes, no more than five such depositions will be required.[13] *15 The authorized depositions are to be limited to four hours each and are to be completed by no later than March 22, 2005. Defendant is to select the dates, and plaintiff will be required to produce the witnesses in accordance with defendant's schedule. Because plaintiff's conduct has necessitated this additional set of depositions, plaintiff will be required to reimburse defendant for the expenses, including reasonable attorney's fees, incurred in preparing for and conducting these additional deposition sessions. As a second step, defendant will be authorized to re-open the depositions of those of plaintiff's expert witnesses whose analysis may be affected by the contents of the newly-produced documents. Those depositions are to be noticed by defendant at a time of its choosing, but they are to be completed by no later than April 5, 2005, and are not to exceed four hours each. Again, plaintiff will be required to make the witnesses available, and will be required to reimburse defendant for the expenses (including reasonable attorney's fees) incurred in preparing for and conducting those depositions. In addition, plaintiff will be responsible for any fees charged by these expert witnesses. Third, if plaintiff calls any non-parties as fact witnesses at trial, defendant will be permitted, insofar as it deems it desirable, to depose (or re-depose) those witnesses before they testify. The depositions are to be on matters raised by the new documents, with the depositions to last no longer than two hours. Plaintiff is to make those witnesses available for deposition at least seventy-two hours before they are scheduled to testify. Again, plaintiff is to bear the expenses incurred by defendant (including reasonable fees) in preparing for and conducting those depositions. Fourth, by no later than April 12 defendant may serve supplemental expert reports for any of its expert witnesses who propose to offer additional or revised opinions based on the contents of the newly produced documents. Because any such need to revisit the opinions of the experts is a product of plaintiff's delayed production of documents, plaintiff is to reimburse defendant for any reasonable expert-witness fees charged exclusively in connection with such a supplementation of the expert reports. Fifth, plaintiff should be precluded from introducing the newly produced documents at trial.[14] This step serves several purposes. As a matter of fairness, a party should not be permitted to utilize at trial any document in its possession that it has not produced to the other side, and if it produces such a document in a manner that deprives the other side of its right to conduct follow-up discovery, the producing party should also not reap the tactical benefit of its own misconduct. That is in fact the case here. Although we are permitting defendant to conduct last-minute follow-up depositions on documents that may favor its case, we anticipate that conducting such needed corrective depositions will absorb a substantial amount of attorney time and impose otherwise avoidable burdens on defendant's preparation of its case for trial. If plaintiff's late production contains documents supportive of plaintiff's contentions in this case,[15] permitting plaintiff to use those documents at trial would necessitate still longer depositions and impose a further burden on defendant, since its attorneys would have to question witnesses about a still larger universe of documents and issues. Since that added burden would be imposed only to permit plaintiff to use the documents in question, plaintiff would be doubly, and unfairly, benefitted, by being allowed (1) to use documents untimely produced and, (2) in the process, to make defendant's effort to prepare for trial more difficult. *16 In justifying this preclusion, we also take note of the fact that plaintiff has asserted that the substance of the newly produced documents is also covered by other documents produced earlier in the case. We have rejected plaintiff's assertion on this point as not proven, but if plaintiff is in fact correct, then it will not be prejudiced by this ruling, since it can prove the same facts from the previously disclosed documents. Sixth, since we have determined that defendant's position on the current sanctions motion was justified in all material respects (other than for its request for dispositive relief), plaintiff is to reimburse defendant for the expenses, including reasonable attorney's fees, that Hartford incurred in preparing the motion. In addition, plaintiff is to reimburse defendant for the expenses (including reasonable fees) incurred in preparing for and conducting the December 16 session of the Korhammer deposition.[16] Finally, to clear up any ambiguity about the completeness of plaintiff's production at this late date, plaintiff will be required to provide an affidavit by one or more Lava officials with knowledge of the facts detailing the scope of the document searches undertaken in response to defendant's three Rule 34 notices and the completeness of the production of all responsive documents. This is to be done by March 4, 2005, and defendant will be permitted to depose the affiants, if desired, to inquire into the details of all searches. CONCLUSION For the reasons noted, we grant defendant's sanctions motion to the extent noted. On the same basis, we recommend that defendant's request that the complaint be dismissed should be denied but that plaintiff should be precluded from introducing at trial any of the documents that it produced to defendant in December 2004. Pursuant to Rule 72 of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from this date to file written objections to the portions of this documents that constitute a Report and Recommendation. Such objections shall be filed with the Clerk of the Court and served on all adversaries, with extra copies to be delivered to the chambers of the Honorable P. Kevin Castel, Room 2260, 500 Pearl Street, New York, New York, and to the chambers of the undersigned, Room 1670, 500 Pearl Street, New York, New York. Failure to file timely objections may constitute a waiver of those objections both in the District Court and on later appeal to the United States Court of Appeals. See Thomas v. Arn, 474 U.S. 140, 150 (1985); Small v. Secretary of Health and Human Services, 892 F.2d 15, 16 (2d Cir.1989); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e). Footnotes [1] Plaintiff's expert reports were then due by July 16, 2004 and defendant's were scheduled for July 30. (June 25, 2004 Tr. at 65). These deadlines were later pushed back by one month. [2] Our first conference, conducted on April 1, was focused on issues arising in both this case and the parallel Streamline litigation. [3] “Our volume is about 25% higher than it was before the disaster now. We're back up and running.” (Tobin Aff., Ex. 5 at LKR107748). [4] Among the more pertinent of the recently produced documents, all drawn from the Tobin Affidavit, are the following: Ex. 2-LKR103890, 103765, 103760, 107978, 107986; Ex. 4-LSM000000001-4; Ex. 5-LKR103454, LKR107748; Ex. 6-LKR107883; Ex. 7-LKR107050; Ex. 8-LKR108305-6; Ex. 11-LKR0000000501; Ex. 12-LKR0000001115; Ex. 14-LKR107450, 103293; Ex. 16-LKR107326; Ex. 22-LBM0000000021, LBM0000000087, LBM0000000098, LBM0000000139; Ex. 23-LKR101920-2). [5] Indeed, justifications aside, plaintiff also fails to offer any explanation for the incoherence and incompleteness of its production efforts. Throughout the litigation, including on this motion, it has simply insisted that it could not do better. [6] See Bauer Certif, Ex. H at 2-3 (production items dated March 18, 2004 and March 25-29, 2004); id. at 5 (production item dated June 25, 2004). [7] See, e.g., Bauer Certif., Ex. H at 2, 5, 7 (production items dated Mar. 18, 2004, Aug. 12, 2004, Dec. 13, 2004); Pltff's Memo at 12 (production items dated Aug. 12 & 13, 2004); id. at 13-14 (production items dated Dec. 9 and 13, 2004). [8] Plaintiff asserts that some of the documents were also produced in the so-called Cadmus production from November 11, 2004. (Pltff's Memo at 17). Defendant's counsel notes, however, that the CD provided on that date appears not to contain any e-mails. (Levy-Sachs Certif. at ¶ 4). [9] To the extent that plaintiff's argument is intended to suggest that defendant was not harmed because some of the other documents addressed the same topics, we discuss that issue in connection with our assessment of prejudice to defendant. As we will see, plaintiff fails to demonstrate that the documents previously produced were the functional equivalent of documents that it withheld until December. [10] Another important benefit of access to documents prior to depositions is that the discovering party may use the deposition to authenticate the documents and thus to eliminate at least one potential obstacle to admission of the documents at trial. Defendant was able to authenticate a few of the relevant documents in question through Mr. Korhammer (see, e.g., Bauer Certif., Ex. U) (Korhammer Dep. at 258-65, 274-75, 313, 319-20)), but we include authentication as one goal of the remedies that we specify to ensure that the lateness of the production not hamper defendant's effort to have the documents admitted. [11] Plaintiff also notes that defendant subpoenaed documents from the client in question-an entity known as LaBranche-and suggests that defendant therefore had the opportunity to discover LaBranche's financial offer. (Pltff's Memo at 28). Absent any indication from plaintiff that such an offer had been made, however, defendant had no reason to question LaBranche about it. [12] Because all but one of the remedies outlined below are discovery-related and non-dispositive, these are deemed to be part of a binding order. One remedy, involving a limited preclusion on plaintiff's use of the recently produced documents, amounts to a trial ruling and hence is offered solely as a recommendation to the trial court. [13] If more are required, defendant may make an appropriate application. [14] This remedy is offered as a recommendation rather than an order, since it would constitute a trial evidentiary ruling. [15] The record before us is silent on that question. [16] Plaintiff reports that it has agreed to cover the expenses of that deposition session. (Pltff's Memo at 34). Plaintiff does not indicate, however, whether it has agreed to cover the fees generated by that session.