Xinuos, Inc. v. International Business Machines Corporation

Background

The defendants moved to compel Xinuos to supplement responses to three interrogatories—written questions used in discovery—about Xinuos’s damages claims. Interrogatory No. 3 requested the amount and method of calculating each category of damages. Interrogatory No. 4 requested the identities of customers Xinuos allegedly lost or failed to obtain because of the defendants’ alleged anticompetitive conduct. Interrogatory No. 5 requested the lost profits or other damages attributable to each customer identified in response to Interrogatory No. 4.

Xinuos had provided some information, including lists of customers forming the basis of its lost-profits claim and an estimated lost-profits calculation. Xinuos argued that its responses were sufficient based on the information then available, that document production had only recently been substantially completed, and that more detailed damages calculations depended on expert analysis. It argued that further supplementation should wait until expert discovery.

Court’s Analysis

The court concluded that detailed contention questions could be premature at this stage, but that Xinuos could not defer disclosure of the factual basis of its damages claims until expert discovery. Under Federal Rule of Civil Procedure 26, a party must provide a reasonable damages computation and identify supporting documents based on information currently available. Later expert analysis may refine the calculation, but it does not excuse disclosure of present knowledge. The court also relied on the Southern District of New York’s local rule treating damages computations as an appropriate subject for early discovery.

For Interrogatory No. 3, the court found that Xinuos had adequately described its methods of calculation but had not provided the amounts of each damages category. Xinuos had to supplement its response with the amounts known to it and could identify business records in enough detail for the defendants to locate the supporting information.

For Interrogatory No. 4, Xinuos had identified customers it alleged were lost. It also had to identify any customers it believed it failed to obtain because of the alleged anticompetitive conduct, based on currently available information. If the information was unknown or could not be found in the documents produced, Xinuos could say so.

For Interrogatory No. 5, the court found that Xinuos had provided an estimated total lost-profits calculation and a general explanation. A customer-by-customer breakdown was premature at this stage, but Xinuos had to provide more detail about how it reached the total estimate, including the supporting documents and the factual basis for the calculation.

Ruling

Judge Victoria Reznik granted in part and denied in part the defendants’ motion to compel. The court ordered Xinuos to supplement its responses to Interrogatory Nos. 3, 4, and 5 within 21 days after entry of the order. The responses remained subject to later supplementation after expert discovery as required by Federal Rule of Civil Procedure 26(e).