After Ten Years of Litigation, Trucking Company and Former Drivers Head Back to Court, Again
ABSTRACT: Over 10 years of litigation, the parties learn that federal rules concerning amendments to scheduling orders and timely disclosures by experts are not a mere formality.
Tradition holds that couples should exchange paper gifts on their first anniversary. The third anniversary gift is leather; the fifth, wood. And those fortunate enough to reach their tenth anniversary are advised to exchange aluminum or tin, symbolizing the strength and resilience of their bond. But for the parties in Petrone, et al v. Werner Enterprises, Inc., as their litigation approaches its tenth year, and a second mandate from the Eighth Circuit sends the case back to the District of Nebraska, an exchange of gifts is probably not top of mind.
In 2012, a group of plaintiffs filed a putative collective action under the Fair Labor Standards Act, alleging Werner’s pay policies for over-the-road trucking student-drivers violated the FLSA by failing to properly compensate student drivers for off-duty time during their work day. Under FLSA regulations, short rest breaks of less than 20 minutes were required to be compensated. Additionally, as over-the-road truck drivers, the plaintiffs were often “working” around the clock, so time spent sleeping in their truck’s sleeper berth was also compensable but improperly paid.
Following discovery on the plaintiffs’ class claims, the District Court certified a class under Rule 23(b)(3), of 55,000 student-drivers who had participated in the program, finding that they were all subject to the same policies. Maybe the Court jinxed the case, writing in the certification order (in 2013), that calculation of damages would be uniform for all class members, and be a simple matter of multiplying the hourly rate by the uncompensated hours worked.
The First Appeal
In July 2013, the District Court set a January 2014 deadline for disclosing expert reports. The plaintiffs timely disclosed their expert report. However, deposition of the plaintiffs’ expert revealed serious flaws with the expert’s methodology. Those flaws included the double-counting of breaks that started before and ended after midnight, which appeared in payroll reports as two separate breaks, artificially inflating the plaintiffs’ damages. After expiration of the expert deadline, the plaintiffs moved to amend the scheduling order to permit them to submit a “supplemental” expert report, which purported to correct the flaws uncovered in the expert deposition.
The District Court correctly found that the new expert report was just that – a brand new report that materially altered the first, rather than merely correcting the report based on, say, newly discovered information. The District Court found that plaintiffs had violated Rule 26 by disclosing their expert report after the deadline in the scheduling order, potentially subjecting them to sanctions under Rule 37. However, it declined to impose the harsh sanction of exclusion of the expert report. Although the court did not make a determination that plaintiffs had demonstrated “good cause” to amend the scheduling order under Rule 16, it entered a new scheduling order allowing the plaintiffs to submit the report and allowing the defendants to conduct additional expert discovery and depositions at plaintiffs’ expense. The case proceeded to trial, and following a three-day trial, the jury awarded the plaintiffs $779,127in damages on the rest-break claims. Importantly, this was the exact number the plaintiffs’ expert reached. The jury found for the defendants on the sleeper berth claims.
In 2019, the Court of Appeals held that Rule 16(b) requires that a scheduling order can only be amended out of time based upon a showing of “good cause, and that the District Court abused its discretion by failing to evaluate the existence of good cause before entering a new scheduling order Because the jury clearly relied upon the expert’s calculations, the error was not harmless. The Court of Appeals vacated the judgment and remanded the case to the District Court “for proceedings consistent with this opinion.”
The Second Appeal
On remand, the plaintiffs moved for a new trial, for the appointment of an expert witness under Federal Rule of Evidence 706, and for permission to present a summary of their damages calculations pursuant to FRE 1006. Plaintiffs argued they could establish their damages without expert testimony. The District Court denied the motions and a request for additional time for expert discovery, as the deadline had expired 6 years before. The District Court then entered judgment in favor of the defendants, finding that without the untimely expert report, the plaintiffs could not prove their damages, a result it felt was demanded by the Court of Appeals’ mandate.
The plaintiffs then appealed the denial of their motions for a new trial, arguing that the Court of Appeals’ mandate did not require entry of judgment in favor of defendants. The Court of Appeals agreed, finding that the District Court’s refusal to exercise its discretion under the Rules was itself an abuse of discretion. First, the District Court abused its discretion in not conducting the requisite analysis under Rule 37(c)(1) in determining the appropriate sanction for the plaintiffs’ failure to timely disclose the expert report. Second, the District Court abused its discretion in failing to consider the plaintiffs’ request for appointment of an expert witness.
The Court of Appeals also, correctly, found that the time and payroll records were too voluminous and complicated to be readily summarized under FRE 1006. The plaintiffs’ expert had ably demonstrated this difficulty by the prior miscalculation of damages. The Court of Appeals remanded the case again, with instructions to the District Court to determine the appropriate sanction under Rule 37(c)(1) for plaintiffs’ failure to timely disclose the expert reports (i.e., whether to exclude the expert reports entirely), and determine whether to appoint an expert under FRE 706, concluding with that ominous phrase “and further proceedings consistent with this opinion.”
With the Court of Appeals affirming that the plaintiffs cannot establish damages without an expert witness, the plaintiffs’ prospects are rather bleak. But on remand, the District Court might exercise its discretion to appoint an expert witness on the issue of damages, and on this decision, the case will hinge. The defendants have strong arguments against appointment of an expert, including the plaintiffs’ ample opportunities to prove their case within the original deadlines. But, if the judge is inclined to give the plaintiffs yet another day in court, the parties may see another jury.
For practitioners, the procedural history of this case contains some important lessons:
- Scheduling orders and disclosure deadlines matter. Although courts have traditionally exercised generous discretion and flexibility in scheduling matters, that flexibility is not – and should not be – unlimited and cannot be assumed.
- Expert witnesses are not infallible. Experienced and tenacious counsel can, through expert depositions, change the trajectory of a case. It is incumbent upon anyone seeking admission of an expert report to review it with an extremely critical eye and promptly supplement and correct errors.
- Where the rules require the court to make a specific finding, such as “good cause,” review the court’s order to make sure it actually made such a finding. If not, there may be grounds for an appeal later on.