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Wai Feng Trading Co. Ltd. v. Quick Fitting, Inc.

United States District Court, D. Rhode Island

December 21, 2018

WAI FENG TRADING CO. LTD, and EASTERN FOUNDRY & FITTINGS, INC., Plaintiffs,
v.
QUICK FITTING, INC., Defendant. QUICK FITTING, INC. Plaintiff,
v.
WAI FENG TRADING CO., LTD., EASTERN FOUNDRY & FITTINGS, INC., EASTERN FOUNDRY AND FITTINGS, LLC, NINGO EFF MANUFACTORY CO, LTD., f/k/a/ NINGO W&F MANUFACTORY CO., LTD., WAI MAO COMPANY, LTD., CIXI CITY WAI FENG BALL VALVE COMPANY, LTD., W&F MANUFACTURING, and CHI YAM “ANDREW” YUNG, Defendants.

          MEMORANDUM AND ORDER

          PATRICIA A. SULLIVAN, UNITED STATES MAGISTRATE JUDGE.

         Pending before the Court for determination in these consolidated cases[1] are two motions filed by the Wai Feng parties[2] attacking the expert opinion[3] and subsequent affidavit[4] of Quick Fitting's Vice President of Engineering, Libardo Ochoa. The first motion (ECF No. 182) is focused principally on Ochoa's proposed expert testimony regarding (1) whether products the Wai Feng parties sent to Quick Fitting complied with applicable lead-content requirements and (2) whether the Wai Feng parties provided Quick Fitting's trade secrets to Cixi Welday, which used them to manufacture its own push-fit line. This motion relies on the federal rules of evidence and civil procedure, as well as the minimal prerequisites applicable to expert testimony established in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). The second motion (ECF No. 205) requests an order striking Ochoa's subsequently-filed affidavit, which contains averments that are related to his expert opinion. In addition to Daubert and the applicable rules, the second motion relies on the affidavit's alleged untimeliness.

         The Court grants in part and denies in part each of the motions. The Court finds that Ochoa's proposed expert testimony regarding whether the products manufactured by EFF Manufactory met Quick Fitting's lead-content specifications is well within his competence and experience as Quick Fitting's lead engineer, as well as that his reliance on certain alleged “hearsay” is consistent with his business practice of using the template of a well-known certifying agency when performing the lead testing to monitor specification compliance. The Court therefore denies both motions with respect to that opinion.

         By contrast, Ochoa's proposed expert opinion that the Wai Feng parties gave Quick Fitting's manufacturing molds and confidential drawings to Cixi Welday, which used them to develop a push-fit product line, is unrelated to his work experience at Quick Fitting; rather, this is testimony for which he has been specially retained to opine based on documents provided to him by counsel, so that a report was required by Fed.R.Civ.P. 26(a)(2)(B), yet no such report was provided. Further, Quick Fitting has presented nothing to establish that the hearsay Ochoa used to form this opinion is of a type “experts in the particular field would reasonably rely on . . . in forming an opinion on the subject, ” as required by Fed.R.Evid. 703. And these opinions were not fully articulated until Ochoa's affidavit was filed, long after the deadline for disclosing expert opinions, in violation of Fed.R.Civ.P. 26(a)(2)(B-C). Most troublesome, Ochoa did not use reliable facts, data, principles and methods to form this opinion; to the contrary, he piled speculation upon speculation, rather than any scientific, technical or specialized knowledge. See Fed. R. Evid. 702(a). He opined to a hypothesis with no reliable basis for ruling out other equally (or more) likely hypotheses. As to the Cixi Welday proposed opinions, the Court therefore grants both motions, striking paragraphs 7-9 of the affidavit and excluding the fourth paragraph contained in paragraph 1 of the expert opinion. The balance of the relief sought by the motions is denied.[5]

         I. BACKGROUND[6]

         A. Ochoa's Credentials and Work Experience

         At least as far as the record presented to the Court tells the tale, Ochoa has not submitted a resume, curriculum vitae or any other document summarizing his “knowledge, skill, experience, training, or education” that Quick Fitting alleges makes him an expert qualified to give his opinions. Fed.R.Evid. 702. What can be gleaned from the record - principally from Ochoa's 2015 deposition as a fact witness - is that Ochoa was hired by Quick Fitting in 2009 as an “entry level mechanical engineer.” ECF No. 213-2 at 5. There is no information about his pre-Quick Fitting work experience, education or licenses or what qualified him to be an entry level mechanical engineer; his compensation for work at this position was a modest hourly wage. At some point after he started at Quick Fitting, he received an associate's degree and was promoted to mechanical engineer. Then in 2012 or 2013, he completed his bachelor's degree, became a salaried employee and was made “director of the engineering department.” Id. at 5-7; ECF No. 182-6 at 4. The record does not disclose what licenses or certifications he holds, if any.[7] By the time of his disclosure as an expert, he had been promoted again to Quick Fitting's Vice President of Engineering. Ochoa Opin. at 6; Ochoa Aff. ¶ 2.

         As far as work experience, during the period beginning when he started in 2009 through to 2012, when the Wai Feng parties/Quick Fitting relationship ended, one of Ochoa's chief responsibilities was to create drawings to establish specifications for Quick Fitting's suppliers. However, during this period, his drawings were not the final version; rather, he submitted his drawings to his superiors who would review and might revise his work. ECF No. 182-3 at 5-6. The superiors decided what drawings should be sent on to the entities manufacturing for Quick Fitting. Id. Ochoa did not participate at all in those communications with suppliers. Id. After 2012, Ochoa assumed responsibility for approving the drawing to be sent to suppliers. Because he arrived at Quick Fitting after the initial design and launch of its lead push-fit product lines was completed, Ochoa has never been involved with the development of a plumbing product from conception to market and was unable to testify regarding the time it takes to launch a product. ECF No. 182-6 at 43-45. However, he was involved in designing improvement to the ProBite product line and, most recently, he has been working on designing and testing prototypes for a new push-fit product. ECF No. 213-3 at 25-32. All of Ochoa's design experience is with Quick Fitting's products; he lacks detailed knowledge of other companies' designs or design development processes. ECF No. 182-6 at 46-47.

         Another responsibility that Ochoa appears to have had from when he started at Quick Fitting in 2009 is monitoring whether each shipment of plumbing products delivered to Quick Fitting met the lead specifications that Quick Fitting had set in its order. To do so during the first years that he was on the job, Ochoa sent samples from every order to a third-party laboratory known as Massachusetts Materials Research, Inc. (“MMR”). ECF No. 182-3 at 3.[8] Initially, these MMR results were transmitted to Ochoa's superiors, who compared MMR's numbers to the specifications for lead-content and took action as appropriate. Later, Ochoa became directly involved with using the MMR data to determine compliance with lead-content specifications; to do so, he filled in an electronic template maintained by IAPMO, [9] a plumbing certification entity, and used a computer program called Solid Works. ECF No. 182-6 at 18-19. Ochoa also communicated directly with suppliers about lead-content, although he did not have such communications with EFF Manufactory because he was not communicating with suppliers directly during 2010 through July 2012. Id. at 5; ECF No. 182-3 at 9, 14. According to Ochoa, the normal practice when the lead-content was higher than the set specifications was to immediately ask the manufacturer for an explanation and to return the product. ECF No. 182-3 at 8; ECF No. 213-2 at 15. Ochoa normally did not keep copies of the lead analysis, although he thought the emails he sent regarding the lead testing of EFF Manufactory's shipments would have been available, but for his computer crashing. ECF No. 182-6 at 20. Ochoa seems to have had limited knowledge of the lead-limits set by the various states and the federal government. ECF No. 213-2 at 23 (“I might hear about it, you know.”). However, he was copied on emails written by his superior to EFF Manufactory relating to Quick Fitting's specifications, which reference various lead standards that have been adopted by industry standard-setting agencies or IAPMO. ECF No. 203-9 at 5-14.

         B. Ochoa's Opinions - Expert Disclosures, Expert Testimony and Affidavit

         On October 26, 2016, Quick Fitting produced its first (and timely) expert disclosure naming Ochoa. ECF No. 205-3 at 4-6. Pursuant to Fed.R.Civ.P. 26(a)(2)(C), Quick Fitting claimed Ochoa as an employee expert, who it alleged “has not been retained or specially employed to provide expert testimony[.]” Id. at 4. This first disclosure states that Ochoa would testify about Quick Fitting's designs and related features of its push-fit products, including how the design integration enables the product to function as intended, as well as how some products his company received from EFF Manufactory “failed to comply with specifications.” Id. at 4-5. There is no mention of Cixi Welday and no articulation of which specifications he would address. In addition, the first disclosure states that Ochoa would provide opinion testimony regarding Quick Fitting's approach to compliance with the evolving law in the United States pertaining to lead-content standards, as well as with the testing and certification requirements implemented by certifying agencies. Id. at 5-6. There is no mention of the lead-content of the product delivered by EFF Manufactory.

         Less than a month later, on November 14, 2016, Quick Fitting provided its “[r]estated” disclosure. See Ochoa Opin. at 1. As to Ochoa, it adds several new opinions. These are: first, Ochoa will opine on the “extensive effort . . . required to develop, test, and certify a line of properly functioning push-fit”; second, Ochoa will explain how EFF Manufactory's product “failed to function without substantial re-working”; third, Ochoa will opine regarding “similarities between the line of push-fit plumbing pieces manufactured by [EFF Manufactory] for Quick Fitting, the line of push-fit products discussed between the [Wai Feng parties] and Cixi Welday, [10] and the line of push-fit products that Cixi Welday submitted to IAPMO for certification in 2013”; and fourth, Ochoa will offer his opinion regarding how EFF Manufactory's push-fit “failed to comply with the lead content specifications.” Id. at 6-8.[11]

         The Wai Feng parties deposed Ochoa in his expert capacity on January 27 and February 6, 2017. According to Ochoa's testimony, it was his first time testifying as an expert witness. ECF No. 182-6 at 11. During these depositions, he amplified on his lead-content and Cixi Welday opinions.

         As to lead-content, Ochoa produced reports not previously provided, which reflect testing Ochoa had ordered approximately two weeks before his January 27, 2017, deposition. The testing was of EFF Manufactory samples of ball valves and supply stops and done in coordination with MMR; using an IAPMO formula and the Solid Works computer program, Ochoa concluded that the samples exceeded the lead-content limit set out in Quick Fitting's specifications for those items. Id. at 15, 17-19. Ochoa testified that the method used for these tests was the same as what he does in the normal course of business, as previously described in his fact deposition. Id. at 2. His explanation for why Quick Fitting had not retained any of the actual testing documents that were generated in 2012 (based on which Quick Fitting accepted the product but refused to pay) was that it was not his practice to maintain them and because of a subsequent computer crash. Id. at 20 (“My computer crashed like several times[.]”); see id. at 6, 13-14, 50.

         As to Cixi Welday, Ochoa testified that Quick Fitting's counsel had supplied him with an unauthenticated document produced by IAPMO[12] in response to a subpoena for documents - a report purporting to have been prepared on March 5, 2014, by an entity named “Intertek” for its “client, ” identified as Cixi Welday. ECF No. 203-6 at 1; see ECF No. 182-6 at 9. It describes testing performed by Intertek[13] at its laboratory in Guangzhou, China. ECF No. 203-6 at 1. Among the attachments is a grainy photograph of plumbing products. Id. at 12. Using a ruler, Ochoa compared the exterior dimensions of a Quick Fitting item manufactured by EFF Manufactory to what he could divine from the photograph; based on what he could discern of the exterior dimensions, he testified, “that fitting was made from the same forging mold. Both fittings are identical.” ECF No. 182-6 at 34. However, he conceded that the exterior dimensions of the item had long been a standard used by all of Quick Fitting's suppliers, as well as that they can potentially be ascertained from buying a product off the shelf. Id. at 34-35, 55. He testified that he thought several other items in the Intertek report appeared to have “similarities” to the Quick Fitting push-fit product line. Id. at 55.

         Also from the IAPMO production, labeled “[f]or evaluation only, ” Ochoa was given by counsel a drawing of a “1/2 [inch] Push 3/4 [inch] Push Elbow, ” with text partly in Chinese and partly in English, Cixi Welday's name displayed in one box and the date “2013-12-20” in five boxes.[14] ECF No. 189-3 at 75 (hereinafter, “Push-Elbow drawing”). Ochoa testified that, “[w]hen I see this document, . . . I knew that design was made from our drawings because I made that mistake, ” referring to a design error he recalled making in 2009. ECF No. 182-6 at 23. However, cross examination revealed that the drawing Ochoa presented as a comparator, purporting to show his 2009 error, was actually “a document [he] just created [him]self.” Id. at 26-27. Further, while Ochoa testified that he searched on Google to determine whether the error he saw in the drawing produced by IAPMO was actually a standard design routinely used by other plumbing-parts designers, he could not recall any of what he looked at. Id. at 28-29. Ochoa also testified that he made the error in 2009, at a time when his drawings were submitted to his Quick Fitting superiors for possible revision, not to suppliers. He was unable to say whether his “error” drawing was ever sent to any of Quick Fitting's suppliers, if so which ones, and whether it was ever withdrawn or canceled by a communication to those that had received it. Id. at 29-31. He was unable to testify that the 2009 “error” drawing had ever gone to any of the Wai Fang parties. Ochoa also conceded that he has never seen or touched a push-fit plumbing product that had been sold by Cixi Welday. Id. at 57.

         The last leg of Ochoa's opinions - his affidavit - was filed on January 16, 2018, as part of Quick Fitting's opposition to the Wai Feng parties' motions for summary judgment.[15] See Ochoa Aff. As to the lead opinion, it simply recaps, with somewhat more clarity, his testimony from a year before; copies of the MMR reports and the IAPMO spreadsheet that he used are attached. Ochoa Aff. ¶ 4-6, Tabs 1-2. As to Cixi Welday, the affidavit takes the opinion far beyond what was in the expert disclosure, which states he would opine to “similarities, ” and somewhat further than what he stated in his deposition. In the affidavit, Ochoa's opinion is unequivocal: “the Welday piece was manufactured utilizing the same mold as used to manufacture Quick Fitting's product using the same dimensional drawings[, ]” and that “[another] Welday piece was manufactured utilizing the same drawings that contained my original error [from 2009].” Ochoa Aff. ¶¶ 8-9.

         C. Motions to Strike and Exclude

         The Ochoa opinions support two aspects of Quick Fitting's claims and defenses against the Wai Feng parties. First, Quick Fitting defends its decision to accept but not pay for the push-fit product delivered by EFF Manufactory with its allegation that the products it received were out of compliance with the specifications in the purchase order, particularly for lead-content. And second, Quick Fitting asserts that the Wai Feng parties breached certain restrictive covenants barring them from using any of Quick Fitting's trade secrets or other information or materials (such as Quick Fitting-supplied manufacturing molds) to manufacture and sell push-fit products to any entity other than Quick Fitting, or from disclosing Quick Fitting's trade secrets to any third party. Ochoa's proposed expert testimony is central to these claims and defenses.

         The first of the two motions (ECF No. 182) is the Wai Feng parties' motion to exclude Ochoa as an expert witness. It features five arguments, three of which are worthy of serious consideration.[16] First, the Wai Feng parties argue that Ochoa is a “retained or specially employed” expert, (ECF No. 182-1 at 14), who should have provided an expert report as required by Fed.R.Civ.P. 26(a)(2)(B). Second, they contend that noncompliance with the reliability standard for a Fed.R.Evid. 702 expert dooms Ochoa's opinions. And third, they point to the inadmissible hearsay on which Ochoa's testimony is based and argue that it transgresses Fed.R.Evid. 703's mandate that an expert may rely on inadmissible evidence only to the degree that experts in the particular field would so rely.

         The second motion (ECF No. 205) - Wai Feng parties' motion to strike Ochoa's affidavit - was filed after Ochoa's affidavit was added to the record. Focused only on the affidavit, it advances similar substantive arguments to those raised in the first motion, including noncompliance with Fed.R.Civ.P. 26(a)(2)(B)'s written report requirement, reliance on hearsay without a proper foundation and the failure to meet the reliability standard in Fed.R.Evid. 702/Daubert. The second motion adds a challenge to the affidavit as encompassing opinions that are well beyond the scope of Ochoa's expert disclosure. It also includes arguments that do not merit further consideration, such as that the affidavit was untimely.[17]

         II. APPLICABLE LAW

         A. Compliance with Rule 26(a)(2)

         Rule 26(a)(2)(B) splits experts into two varieties - those “retained or specially employed” to provide expert testimony, who must provide a detailed written report at the time of the expert disclosure pursuant to Fed.R.Civ.P. 26(a)(2)(B), and those who may provide the truncated disclosure set out in Fed.R.Civ.P. 26(a)(2)(C). As described in Downey v. Bob's Disc. Furniture Holdings, Inc., 633 F.3d 1 (1st Cir. 2011), if the expert was directly involved in the ongoing sequence of events, his opinion testimony is not that of a retained or specially employed expert, but if he comes to the case as a stranger and draws the opinion from the facts supplied by others, he should be viewed as retained or specially employed. Id. at 6-7. “[I]n some cases an on-the-scene expert whose views are not subject to the written report requirement of Rule 26(a)(2)(B) might also be retained or specially employed to develop additional opinions for purposes of trial (and would, to that extent, trigger the written report requirement).” Id. at 8, n.5 (emphasis in original). To determine whether testimony “falls outside the compass of Rule 26(a)(2)(B)[, ]” id. at 6, the Court may separate the testimony, finding some parts require a written report and others do not. See Beechgrove Redevelopment, L.L.C. v. Carter & Sons Plumbing, Heating & Air-Conditioning, Inc., Civil Action No. 07-8446, 2009 WL 981724, at *6 (E.D. La. Apr. 9, 2009) (applying this approach for experts with “hybrid fact-opinion testimony” and “opinions that they may have developed in preparation for the litigation”); see also Doctors Licensure Grp., Inc. v. Cont'l Cas. Co., Case No.: 3:10-cv-98-RV/MD, 2011 WL 13182969, at *6-7 (N.D. Fla. Sept. 26, 2011) (citing Beechgrove).

         At bottom, opinions beyond those formed during the events in issue must be excluded under Rule 26(a)(2)(B) “unless [the party] provided . . . an expert report stating them and containing the other information required by [the Rule].” Westerdahl v. Williams, 276 F.R.D. 405, 409 (D.N.H. 2011) (where treating medical expert anticipated testifying to opinions about injuries formed after he stopped treating, opinion excluded based failure to provide report); see Beane v. Util. Trailer Mfg. Co., No. 2:10 CV 781, 2013 WL 1344763, at *3 (W.D. La. Feb. 25, 2013) (“There is no evidence that these experts have any firsthand knowledge on UTM's trailer design or Beane's specific side underride accident, and thus any comparisons the experts might make between their companies' trailer and UTM's trailer must arise by examining the relevant information from this case, indicating that they were specifically recruited after-the-fact just to provide expert testimony.”). On the other hand, that the proposed expert has never been retained as an expert witness before is a factor that may support a finding the written report requirement is not applicable. See Saucedo v. Gardner, Civil No. 17-cv-183-LM, 2018 WL 1175066, at *1-2 (D.N.H. Mar. 5, 2018); Southard v. State Farm Fire & Cas. Co., No. 4:11-CV-243, 2013 WL 209224, at *3 (S.D. Ga. Jan. 17, 2013).

         The court may exclude an expert opinion based on the proponent's failure to comply with the Fed.R.Civ.P. 26(a)(2) expert disclosure requirement, unless the failure is shown to have been substantially justified or harmless. Fed.R.Civ.P. 37(c)(1); Harriman v. Hancock Cty., 627 F.3d 22, 30 (1st Cir. 2010) (“the baseline rule is that the required sanction in the ordinary case is mandatory preclusion” of late or non-disclosed information); see Providence Piers, LLC v. SMM New England, Inc., C.A. No. 12-532 S, 2014 WL 5775663, at *3 (D.R.I. Nov. 6, 2014). The failure is not cured by the post-disclosure opportunity to depose the expert; that simply shifts the burden of compliance to the opposing party. Providence Piers, 2014 WL 5775663, at *3. Similarly, the Advisory Committee Note to the 1993 Amendment to Rule 37(c)(1) narrows the meaning of harmlessness in this setting, making clear that it is “fairly limited” to such errors as the inadvertent omission of a name already known to all parties. Id. at *4. However, “preclusion ‘is not a strictly mechanical exercise,' and th[e] Court has discretion to choose a less severe sanction.” Id. (quoting Gay v. Stonebridge Life Ins. Co., 660 F.3d 58, 62 (1st Cir. 2011)). When a witness who was not designated to speak as an expert nevertheless is proposed (out-of-time) to present an opinion, and the delay is not “justifi[ed]” by the explanation, a court may exclude the proffered evidence. Samaan v. St. Joseph Hosp., 670 F.3d 21, 35-38 (1st Cir. 2012) (Daubert-exclusion of the prior proposed expert not justification). Courts balance “an array of factors” in determining whether to impose the baseline rule of exclusion, including “the sanctioned party's justification for the late disclosure; the opponent-party's ability to overcome its adverse effects (i.e., harmlessness); the history of the litigation; the late disclosure's impact on the district court's docket; and the sanctioned party's need for the precluded evidence.” Harriman, 627 F.3d at 30; Westerdahl, 276 F.R.D. at 410.

         B. Compliance with Fed.R.Evid. ...


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