Niazi Licensing Corporation v. St. Jude Medical S.C., Inc.

Background

Niazi Licensing Corporation (NLC) sued St. Jude Medical S.C., Inc. for infringement of a single patent. Fact discovery closed on September 13, 2019. On October 15, NLC provided St. Jude with reports from its liability expert, Dr. Martin Burke, and damages expert, Brad Carlson.

St. Jude moved to exclude facts in the reports that NLC had not disclosed before the fact-discovery deadline. NLC did not dispute that it had failed to disclose Dr. Burke as a fact witness or disclose alleged instances of his direct infringement during discovery. NLC also did not dispute that it had not previously disclosed facts about two license agreements that Carlson relied on in estimating reasonable royalties. NLC argued that it had learned the information only shortly before providing the reports.

Magistrate Judge’s Order

Magistrate Judge Becky R. Thorson granted St. Jude’s motion under Rule 37 of the Federal Rules of Civil Procedure. Rule 37 allows a court to exclude information or testimony that a party failed to disclose as required by Rule 26, unless the failure was substantially justified or harmless.

Judge Thorson found that NLC’s disclosures were neither substantially justified nor harmless. She concluded that NLC had not been diligent in obtaining the information, that St. Jude was unfairly surprised, and that reopening fact discovery could require significant additional expense. The order excluded the untimely disclosures.

District Court Review

NLC appealed the magistrate judge’s order, arguing that Judge Thorson misapplied the relevant factors and improperly relied on a case that the parties had not cited. The district court reviewed the nondispositive discovery ruling under a highly deferential standard and would change it only if it were clearly erroneous or contrary to law.

Judge Wright rejected NLC’s arguments. She explained that there is no fixed four-factor test governing every Rule 37 exclusion decision, although courts may consider factors such as the reason for the delay, surprise and prejudice, disruption to the case, and the importance of the evidence. She also held that timeliness depends both on the party’s diligence in discovering information and on the time between discovery and disclosure.

The court concluded that NLC was not diligent and that the late disclosures were not harmless merely because a continuance or additional depositions might address the prejudice. The court also ruled that Judge Thorson could conduct independent legal research and rely on a case not cited by the parties. The December 2, 2019 order was AFFIRMED, and NLC’s objections were overruled. The opinion did not decide the underlying patent-infringement claim.