Peerless Network, Inc. v. AT&T Corp.

Background

Peerless Network, Inc., et al. sued AT&T Corp. to collect unpaid charges for telecommunications services. In 2018, the parties reported that they had reached a confidential settlement agreement, and the case was dismissed with prejudice under that agreement. The court retained jurisdiction solely to resolve disputes arising under the settlement agreement.

In 2020, Peerless asked the court to enforce the settlement agreement, claiming that AT&T had not met its obligations to purchase services from Peerless. During discovery, AT&T served interrogatories seeking information about routes and services that Peerless claimed AT&T could have purchased from Peerless, as well as Peerless’s associated costs and profits.

Peerless later submitted a declaration from its expert, James D. Webber, in support of its enforcement motion. The declaration included five paragraphs describing a methodology and an exhibit containing a chart. The chart identified routes where Peerless claimed to be the least-cost provider and calculated monthly revenue that AT&T allegedly could have sent to Peerless. Webber stated that he used information from 11 analytics spreadsheets produced by AT&T and performed addition and division to calculate average monthly revenue.

AT&T’s Motion

AT&T moved to strike paragraphs 22 through 26 and Exhibit 2 of the Webber Declaration. AT&T argued that the chart and methodology were expert opinion evidence disclosed after the expert-disclosure deadline. Alternatively, AT&T argued that Peerless should have provided the information in response to AT&T’s interrogatories. AT&T asserted that the late disclosure prejudiced its ability to prepare depositions and an expert rebuttal.

Peerless argued that the materials were not expert opinion evidence requiring disclosure under Federal Rule of Civil Procedure 26. Peerless characterized the chart as a summary of information in AT&T’s spreadsheets and the methodology as an explanation of Webber’s calculations. The parties agreed that the chart and methodology did not affect Webber’s damages calculations.

Court’s Analysis

The court did not decide whether the chart and methodology were expert opinion evidence. Instead, it concluded that the information was sought by AT&T’s interrogatories and that Peerless had not previously provided it. The court therefore considered whether the late disclosure should be excluded under the factors used to assess late evidence: the reason for the delay, the importance of the evidence, prejudice to the opposing party, and whether a continuance could address the problem.

The reason for the delay favored excluding the evidence. The court found that Peerless had not adequately explained why it could not have provided the chart and methodology earlier, either in response to the interrogatories or in a supplemental expert report. The importance of the evidence favored allowing it because Peerless relied on the chart to support its claim that AT&T breached the settlement agreement.

The prejudice factor favored exclusion because AT&T had specifically requested the information and needed to know which routes Peerless claimed it should have received. AT&T also explained that it could not have predicted how Peerless would use the spreadsheet data, including its reliance on estimated traffic volumes and monthly averages. The possibility of a continuance, however, favored allowing the evidence. The court concluded that additional time for AT&T to re-engage its experts and prepare a response would adequately address the prejudice and would be less severe than striking potentially important evidence.

Rulings

The court denied AT&T’s letter motion to strike the chart and methodology from the Webber Declaration. It directed the parties to submit a proposed schedule allowing AT&T additional time to prepare its opposition to Peerless’s motion to enforce the settlement agreement.

The court also denied AT&T’s request to reopen Webber’s deposition. It found that Webber had explained where he obtained the numbers and how he performed the calculations, and AT&T had not shown why another deposition was necessary.

Finally, under Rule 37 and the court’s inherent authority, the court ordered Peerless to pay AT&T’s reasonable attorneys’ fees and costs incurred in preparing the motion to strike. The opinion does not resolve the underlying dispute over whether AT&T breached the settlement agreement.