Federal Trade Commission v. Meta Platforms Inc.

Background

The Federal Trade Commission (FTC) filed a motion in limine, meaning a request to decide before a hearing whether certain evidence may be used. The FTC asked the court to exclude all evidence concerning third-party witnesses Eric Janszen, Jaime Pichardo Garcia, and Preston Lewis, arguing that the defendants disclosed the witnesses too late.

Legal standard

Federal Rule of Civil Procedure 26 requires parties to disclose people who may have information they could use to support their claims or defenses and to update those disclosures in a timely way. Under Rule 37, a party that fails to identify a required witness generally may not use that witness’s information at trial unless the failure was substantially justified or harmless. The party facing the possible sanction bears the burden of showing substantial justification or harmlessness.

Rulings on Janszen and Garcia

The FTC identified Janszen and Garcia in its initial disclosures. The defendants indirectly disclosed them by identifying the individuals listed in the FTC’s initial disclosures. The court therefore found that the defendants timely disclosed both witnesses. The court added that, even if the disclosures had been late, the FTC’s prior identification of the witnesses would have made any delay harmless. The court denied the FTC’s motion as to Janszen and Garcia.

Ruling on Lewis

The court found that the FTC did not know about Lewis before the defendants served his declaration and deposition notice on November 5, 2022, even though the defendants had repeatedly contacted him after September 6, 2022. The court rejected the defendants’ argument that they did not have to disclose Lewis until they had definitely decided to use his declaration. The court stated that Rule 26 requires disclosure when a party may use a person as a witness, not only after the party has made a final decision to do so.

The defendants also served Lewis’s declaration one day after the November 4, 2022 deadline for serving third-party declarations. The court found the disclosure untimely. It further found that the delay was not substantially justified because it surprised the FTC, left too little time for the FTC to conduct full document discovery before Lewis’s deposition, and would significantly affect the schedule for the preliminary-injunction hearing. The importance of Lewis’s evidence about the virtual-reality dedicated fitness market did not outweigh those factors, particularly because Janszen and Garcia would testify about the same topic.

The court also found that the delay was not harmless. The late disclosure prevented the FTC from obtaining information from Lewis during party discovery, which had ended on October 26, 2022, and forced the FTC to make last-minute preparations. The court therefore granted the FTC’s motion to exclude Lewis’s live testimony, declaration, and deposition transcript.

Disposition

Judge Edward J. Davila ordered that the FTC’s motion was granted in part and denied in part. It was denied as to Janszen and Garcia and granted as to Lewis. The defendants were ordered not to submit any declaration, testimony, or other evidence from Lewis in the action.