Indiana Law Review 1994 Federal Civil Practice And Procedure Update For Seventh Circuit Practitioners: A Year Of Adjustment JohnR. Maley* Introduction Indiana practitioners litigating in federal court during 1994 experienced a year of adjustment to drastic changes imposed during 1993. With the sweeping revisions to the Federal Rules ofCivil Procedure taking effect December 1, 1993, with local rules changes and civil justice reform plans in effect, and with numerous important decision from the Seventh Circuit and Indiana district courts, it has been no easy task for practitioners to keep informed. This Article analyzes these developments to assist Indiana attorneys in their federal civil litigation. The subjects are presented in the order in which they often arise in litigation. As in past years, complex or difficult issues are thoroughly analyzed, while straightforward but novel developments are merely highlighted. For ease of future reference, the following table of contents outlines the subjects discussed: Topic : Page : I. Subject-matter jurisdiction 891 II. Removal 895 III. Service of process 896 IV. Voluntary dismissal 897 V. Failure to prosecute 898 VI. Intervention 899 VII. Discovery 900 VIII. Experts 903 IX. Summary judgment 905 X. Settlement 908 XL Post-judgment 909 XII. Costs 910 XIII. Sanctions 911 I. Subject-Matter Jurisdiction A. Consenting To Magistrate Judges In one of the more remarkable decisions of the year, the Seventh Circuit held that magistrate judges lack jurisdiction to try cases unless all parties expressly—not just * Associate, Barnes & Thomburg, Indianapolis, Indiana; Adjunct Professor, Indiana University School of Law—Indianapolis; Lecturer, PEC Indiana Bar Review. Law Clerk to the Honorable Larry J. McKinney, U.S. District Court, Southern District of Indiana, 1988-90. B.A., 1985, University of Notre Dame; J.D., summa cum laude, 1988, Indiana University School of Law—Indianapolis; M.B.A., 1994, Indiana University. 892 INDIANA LAW REVIEW [Vol. 28:891 implicitly—consent to the magistrate.' In Mark I, Inc. v. Gruber, the original parties to the action had signed consent forms agreeing to have a magistrate adjudicate the action. Two new defendants were added through amendment two years later. No one raised the issue of consent, and the new defendants never expressly consented to the magistrate.^ A year later the magistrate tried the action, and one of the new defendants, Gruber, remained in the case at that point and participated in trial without objection. The magistrate found against Gruber, awarding plaintiff more than $500,000.^ Gruber appealed on the merits. The Seventh Circuit, always scrupulous in its review of jurisdiction, raised the consent issue and ordered supplemental briefing. Not surprisingly, when "[ojffered a belated opportunity to make his wishes known, Gruber . . . declined to consent.""* In line with prior Seventh Circuit authority holding that consent to a magistrate under 28 U.S.C. § 636(c) must be "on the record and unequivocal,"^ the court held that the judgment had to be vacated and the action remanded to an Article III district judge. Writing for the panel. Judge Easterbrook noted that the consent "need not be in writing" as required in some courts/ but must be "explicit and on the record."^ The Gruber decision seems overly technical, particularly given the simple language of the magistrate consent statute.* However, Gruber is consistent with the 1991 Seventh Circuit decision in Jaliwala v. United States^ in which an appeal from a $160 million judgment was dismissed because an intervening party had not consented orally nor in writing to trial by the magistrate. The practical lessons, ofcourse, are that magistrate consents should be either: (1) in writing and filed, or (2) made in open court on the record. For counsel retained to appeal ft-om an adverse judgment before a magistrate, the other lesson is to immediately check to ascertain that such consent was expressly obtained. B. Diversity Jurisdiction Two Seventh Circuit decisions reinforce the importance of ensuring that diversity of citizenship is present for diversity cases. In Dausch v. Rykse,^^ the Seventh Circuit delayed reaching the merits of an appeal to ascertain if diversity existed. Plaintiffs had alleged diversity based on residence." For diversity jurisdiction to exist, however, the parties' citizenship is what matters.'^ Because defective allegations ofjurisdiction may 1 . Mark I, Inc. v. Gruber, 38 F.3d 369, 370 (7th Cir. 1994). 2. Id. 3. W. at 370-71. 4. A/, at 371. 5. Id. at 370 (citing King v. Ionization Int'l, Inc., 825 F.2d 1 180, 1 1 85 (7th Cir. 1987); Lovelace v. Dall, 820 F.2d 223, 226 (7th Cir. 1987)). 6. E.g. , New York Chinese TV Programs, Inc. v. U.E. Enterprises, 996 F.2d 2 1 (2d Cir. 1 993). 7. GrM^er. 38 F.3d at 371. 8. 28 U.S.C. § 636(c)(1) (1988 & Supp. 1994). 9. 945 F.2d 22 1 , 223 (7th Cir. 1 99 1 ). 10. 9 F.3d 1244 (7th Cir. 1993). 11. IddXMAS. 12. Id 1995] FEDERAL CIVIL PRACTICE 893 be amended on appeal,'^ the court ordered plaintiffs to submit affidavits "stating with precision" the basis for asserting diversity.''* In Pollution Control Industries ofAmerica v. Van Gundy, ^^ during discovery it was learned that one of the defendants was a citizen of the same state as the plaintiff Nonetheless, the parties focused on personal jurisdiction issues. The district court eventually dismissed for lack ofpersonal jurisdiction, and imposed sanctions against the plaintiff'^ On appeal, the Seventh Circuit addressed diversity, ruling that complete diversity was lacking because subject-matterjurisdiction did not exist. '^ The court chastised the parties for bypassing this fundamental issue and focusing on personal jurisdiction. Although the court approved of sanctions for the plaintiffs failure to determine diversity,'^ it criticized the defendants for not raising the issue earlier, and reduced the sanctions award considerably.'^ Both cases serve as painful reminders that: (1) when pleading diversity, it is citizenship—not residence—that matters; and (2) special care should be taken to ensure that diversity jurisdiction exists from the outset of a case, for the Seventh Circuit will certainly raise the issue. C. Supplemental Jurisdiction Supplemental jurisdiction exists over state law claims that are "so related to claims . . . within [the court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution."^'^ Under 28 U.S.C. § 1367(c)(3), district courts "may decline to exercise supplemental jurisdiction" if the federal or diversity claims have been dismissed.^' On its face, this law would appear to give the district courts discretion to hear—or not hear—supplemental claims after dismissal of the original claims. As noted in a previous article, however, the Seventh Circuit issued potentially conflicting opinions on this subject in 1993.^^ In Wentzka v. Gellman^^ the Seventh Circuit held that the district court abused its discretion by retaining a supplemental claim involving unsettled state law issues after dismissal ofthe federal claim.^"* By contrast, in Brazinski v. Amoco Petroleum Additives^^ Chief Judge Posner, joined by Judges Kanne and Flaum, held that supplemental claims 13. 28 U.S.C. § 1653 (Supp. 1994). 14. DaM5c/i, 9 F.3d at 1245. 15. 21F.3dl52(7thCir. 1994). 16. Id. at 153. 17. /t^. at 153-54. 18. Mat 154. 19. Id. at 155-56. 20. 28 U.S.C. § 1367(a) (Supp. 1994). 21. 28U.S.C.§ 1367(c)(3) (Supp. 1994). 22. See John R. Maley, 1993 Federal Practice and Procedure Update for the Seventh Circuit Practitioner, 27 IND. L. REV. 813, 818-20 (1994) [hereinafter "1993 Federal Practice"]. 23. 991 F.2d 423 (7th Cir. 1993). 24. Id at 426. 25. 6 F.3d 1176 (7th Cir. 1993). 894 INDIANA LAW REVIEW [Vol. 28:891 can be retained after dismissal of federal claims, even absent extraordinary circumstances.^^ In a 1 994 decision, Timm v. The Mead Corporation,^^ a panel comprised of Judges Flaum, Kanne, and Fairchild followed the Brazinski lead. The district court had granted summary judgment and dismissed an employee's federal discrimination claim, but retained and decided the supplemental state law claims in the same summary judgment ruling. On appeal, the employee argued that the state law claims should have been relinquished. The Seventh Circuit disagreed.^* Writing for the panel. Judge Flaum noted that Brazinski "retreated somewhat from strong dicta in Wentzka Instead," Judge Flaum wrote, "we recognized [in Brazinski] that especially when difficult and unsettled state law issues are not implicated by the pendent claims, it is entirely acceptable under the discretionary principle for a federal court to decide those claims even after dismissing the main claim."^^ So long as "an arguable balance of [judicial economy, convenience, fairness, and comity] points in the direction of the district court's discretionary determination whether or not to exercise jurisdiction, that decision, being discretionary, will not be disturbed."^^ Judge Flaum noted some of the factors that should be considered in deciding whether to retain a supplemental claim, including "the nature of the state law claims at issue, their ease of resolution, and the actual, and avoidable, expenditure of judicial resources.'*^' Also, a pre-trial dismissal of federal claims "informs the balance*' but is not dispositive. He added: "Exactly when before trial the federal claim is eliminated, however, is relevant. For example, dismissal at the pleading stage usually counsels strongly in favor of relinquishing jurisdiction because at that point in a case 'judicial resources' typically are yet to be heavily tapped."^^ After Timm, district judges in this circuit should be fi'eer to exercise discretion under 28 U.S.C. § 1367(c) and retain supplemental jurisdiction where it is deemed appropriate. To lessen the chances of reversal, the Timm factors should be recited in any order retaining supplemental jurisdiction. D. Miscellaneous Jurisdictional Items The following developments, although not strictly jurisdictional, are worthy of brief mention: (1) The Seventh Circuit held that the standard of review for Younger-hdiS&d abstention dismissals is de novo?^ After noting that prior Seventh Circuit decisions had suggested or applied an abuse of discretion standard,^"^ the court 26. W. at 1182. 27. 32 F.3d 273 (7th Cir. 1994). 28. Id. at 274. 29. Id. at 277. 30. Id. 31. Id. 32. Id at n.2 (citing Wright v. Associated Ins. Cos., 29 F.3d 1244, 1251 (7th Cir. 1994)). 33. See Younger v. Harris, 401 U.S. 37 (1971). 34. A.G. Edwards & Sons, Inc. v. Public Bldg. Comm'n, 921 F.2d 1 18, 121 (7th Cir. 1990) (suggesting 1 995] FEDERAL CIVIL PRACTICE 895 held that de novo review is mandatory for Younger abstention because, unlike other forms of abstention, "application of the Younger doctrine is absolute/'^^ When a case fits within Younger, abstention is mandatory, so there is no discretion to exercise.^^ (2) Where a forum selection clause required suit in "the state of Indiana in the courts of general jurisdiction for Evansville, Indiana," Judge Brooks remanded a removed action to state court on the basis that federal courts are courts of limited jurisdiction, whereas Indiana trial courts are courts of general jurisdiction.^^ II. Removal Although it should be a simple process, removal continues to be a hotly litigated matter. Key developments during 1994 include: (1) Defendant's receipt ofa copy ofthe complaint will ordinarily start the thirty- day clock of 28 U.S.C. § 1446(b) for removal, regardless of whether formal service has been effected.^^ (2) Examples of "non-service" receipt that will start the removal clock include: (a) delivery of the complaint by a process server that is not otherwise effective as service ofprocess; (b) attempted service by mail where the recipient refuses to sign and return the acknowledgement; and (c) transmission of a copy of the complaint by one defendant to a co-defendant before service is effected on the co-defendant.^^ (3) Removal ordinarily requires "joinder" of all defendants, and the Seventh Circuit interprets this mandate to require such joinder to be in writing; a removing defendant cannot simply recite that other defendants do not object to removal.'*® (4) Removal of a facially non-diverse action may be possible where a non- diverse defendant is fraudulently joined, which arises either when there is "no possibility that plaintiff can state a cause of action against the non-diverse that abuse ofdiscretion governs all abstention decisions); Sekerez v. Supreme Court of Ind., 685 F.2d 202, 205- 06 (7th Cir. 1982) (applying abuse of discretion standard to a yb««ger-based abstention). 35. Trust &, Inv. Advisers, Inc. v. Hogsett, 43 F.3d 290, 294 (7th Cir. 1994). 36. Id. 37. Wats/800, Inc. v. Voice America, 867 F. Supp. 811,812-13 (S.D. Ind. 1 993). 38. Rose V. O'Donahue, 38 F.3d 298, 303 (7th Cir. 1994). 39. Id. at 302-03. 40. Id. at 302. As noted in the 1993 Federal Practice Article, the mechanics for expressing suchjoinder {e.g., whether through separate removal notices or one notice signed by all defendants) are unclear in this Circuit. See 1993 Federal Practice, supra note 22, at 821-23. To be safe, defendants should seek to obtain each defendant's signature on the removal notice. If that is not possible, each defendant's oral consent to removal should be obtained within the 30-day period, and each should promptly file a brief notice noting their joinder in removal and the date it was given. 896 INDIANA LAW REVIEW [Vol. 28:891 defendant, or where there has been outright fraud in the pleading ofjurisdictional facts."'^' (5) In one of his first published opinions, Judge Hamilton held that an Indiana garnishment action is sufficiently independent of the underlying state court action to be separately removable to federal court."^^ Finally, in a case of first impression, the Seventh Circuit held that a district court may not remand a case on its own motion for a defect in removal procedure."^^ The district judge had remanded the case to state court sua sponte, and the case came to the Seventh Circuit on a writ ofmandamus. Writing for the panel in In re Continental Casualty Co., Judge Easterbrook began by quoting 28 U.S.C. § 1447(c), which reads in part: "A motion to remand the case on the basis of any defect in the removal procedure must be made within [thirty] days after the filing of the notice of the removal . . . .'"*'* In light of this "motion" language, settled authority that procedural removal defects can be waived, and the policy in favor of vesting a case in one forum. Judge Easterbrook concluded that district courts lack authority to remand cases for defects in removal procedure absent a motion from the plaintiff. Judge Easterbrook concluded the opinion, writing: District judges who look carefully at newly filed or removed cases, and identify potential defects in their institution or removal, do both the parties and the legal system a great service. We commend the district judge for his care and alertness in spotting the potential problem. But because not all potential problems are fatal, the court should alert the parties before dismissing or remanding the cases. Litigants may have sufficient answers to the court's concerns .... Or litigants may elect to surrender their entitlement to insist on procedural perfection Quick notice is a boon; quick action without inviting the parties' submissions may illustrate the adage that haste makes waste.'*^ III. Service OF Process Insufficient service must be raised in the answer or responsive motion to dismiss or it is waived."*^ But even if the defense is timely raised in the answer, insufficient service still can be waived. The defendant learned that lesson in Leslie v. St. Vincent New Hope, Inc.^^ in which Judge Hamilton ruled that the defendant had waived the defense, even though it had been timely raised in the answer, by participating substantially in the litigation before moving to dismiss. 4 1 . Hoosier Energy Rural Elec. Coop. v. Amoco Tax Leasing IV Corp., 34 F.3d 1 3 1 0, 1 3 1 5 (7th Cir. 1994). 42. Harding Hospital v. Sovchen, 868 F. Supp. 1074, 1078 (S.D. Ind. 1994). 43. In re Continental Casualty Co., 29 F.3d 292 (7th Cir. 1994). 44. 28 U.S.C. § 1 447(c) ( 1 988 & Supp. 1 994). 45. In re Continental Casualty Co., 29 F.3d at 295. 46. Fed. R. Civ. P. 12(h). 47. 873 F. Supp. 1250 (S.D. Ind. 1995). 1995] FEDERAL CIVIL PRACTICE 897 In Leslie, the plaintiff filed the action in June 1994. The defendant timely filed its answer two months later in August, raising insufficient service as a defense. In November, the defendant moved to dismiss on this basis. Judge Hamilton denied the motion, not on its merits (indeed, service had not been effected), but based on waiver. The defendant had appeared in the action, submitted a case management plan, and submitted preliminary witness and exhibit lists and contentions. Citing a 1991 Seventh Circuit decision explaining that this defense may be waived by "submission through conduct,'"*^ Judge Hamilton determined that the defendant "ha[d] participated extensively in preparing [the] case for trial," and thus had waived the defense. The Seventh Circuit upheld a district court's finding of waiver of a similar defense (personal jurisdiction) based on less complicated facts. In Continental Bank v. Meyer, ^"^ the defendants fully participated in litigating the merits for over two-and-a-half years without actively contesting personal jurisdiction. They participated in lengthy discovery, and engaged in motions practice. Although the defendants literally complied with Rule 12(h) by raising the defense in their answer, the Seventh Circuit affirmed the finding of waiver, noting that defendants "did not comply with the spirit of the rule, which is to expedite and simplify proceedings in the Federal Courts."^^ The decisions in Leslie and Continental Bank teach that waivable defenses must not only be raised in the answer, but should also be promptly asserted in a separate motion to dismiss. IV. Voluntary Dismissal Rule 41(a)(2) ofthe Federal Rules of Civil Procedure provides that "an action shall not be dismissed at the plaintiffs instance save upon order of the court and upon such terms and conditions as the court deems proper." In Marlow v. Winston & Strawn,^^ the plaintiff moved to dismiss without prejudice under this rule after several years of litigation. The defendants asked the district court to require payment of their fees as a condition ofsuch a dismissal. The district court instead dismissed the case with prejudice. On appeal, the Seventh Circuit reversed. Although dismissal with prejudice is a permissible condition, the Seventh Circuit held that the plaintiff moving for voluntary dismissal under Rule 41(a)(2) must first have the "option of withdrawing his motion if the district court's conditions are too onerous."" Because the district court never gave the plaintiffthe chance to reject the "condition" of dismissal with prejudice, the dismissal was reversed. 48. Id. at 1252 (quoting Trustees ofCentral Laborers' Welfare Fund v. Lowery, 924 F.2d 73 1 , 732 (7th Cir. 1991)). 49. 10 F.3d 1293 (7th Cir. 1993). 50. Id. at 1297 (citation omitted). 51. 19 F.3d 300 (7th Cir. 1 994). 52. Id at 304. 898 INDIANA LAW REVIEW [Vol. 28:891 V. Failure TO Prosecute Rule 41(b) provides that for "failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant."^^ This rule came into play in several cases. In McMahan v. CCCExpress^^ plaintiffs filed their action, effected service, and then reached an agreement with defendant's insurance carrier for an indefinite extension of time for the defendant to respond to pending settlement discussions. After six months of no activity, the court had no notice of the extension, and ordered the plaintiffs to show cause why the action should not be dismissed for failure to prosecute. The plaintiffs advised the court of the extension, and asked forgiveness. After noting the parties' failure to comply with local rules regarding extension. Judge Moody allowed the case to proceed without dismissal. He issued the following warning that should be heeded: The court will ... not dismiss this action. To do so would unfairly penalize plaintiffs where defendants are equally culpable. In addition, the court is aware that litigants in the past have circumvented the above-discussed rules through agreements similar to the one here. That will no longer be the case in this court. Agreements between parties to ignore the Rules ofCivil Procedure will not be allowed to sidetrack the orderly progress oflitigation.^^ In Johnson v. Kamminga,^^ the Seventh Circuit affirmed a Rule 41(b) dismissal with prejudice in a case that had been pending for seven years due to plaintiffs delays, and in which plaintiff failed to appear for the first day of trial. In this respect the decision is unremarkable, but it provides a good summary of Seventh Circuit standards for Rule 41(b), including: (1) Rule 41(b) dismissals are reviewed for abuse of discretion, with the district court's findings of fact reversed only if clearly erroneous.^^ (2) The Seventh Circuit "presumes . . . that the district judge acted reasonably and will reverse 'only if it is plain either that the dismissal was a mistake or that the judge did not consider factors essential to the exercise of a sound discretion.'"^* 53. Fed. R. Civ. P. 41(b), In both the Northern and Southern Districts of Indiana, identical local rules supplement this rule as follows: Civil cases in which no action of record has been taken for a period of six (6) months may be dismissed for want ofprosecution with judgment for costs after thirty (30) days notice given by the clerk to the attorneys of record (or, in the case ofa pro se party, to the party) unless, for good cause shown, the court orders otherwise. 5'eeS.D.lND.LR41.1;N.D.lND.LR41.1. 54. 1 53 F.R.D. 633 (N.D. Ind. 1 994). 55. Id. at 634 (emphasis added). 56. 34 F.3d 466 (7th Cir. 1994). 57. Id. at 468. 58. Id. (citations omitted). 1 995] FEDERAL CIVIL PRACTICE 899 (3) District judges are not required to employ "progressive discipline" before ultimately dismissing a case for want ofprosecution.^' (4) Although district courts are encouraged to warn litigants before dismissing a case for failure to prosecute, whether they in fact do so is clearly within their discretion.^® VI. Intervention Several important intervention decisions were rendered during 1994. In NBD Bank V. Bennett,^^ Magistrate Judge Shields, in one ofher first published opinions on the federal bench, denied intervention in an important insurance and banking case. NBD sought to enjoin the Indiana Insurance Commissioner's geographic restrictions on NBD's sale of insurance. The Indiana State Association of Life Underwriters and the Independent Insurance Agents of Indiana sought to intervene or alternatively appear as amici. Not surprisingly, the intervenors opposed NBD's requested relief, and claimed that if granted the requested relief would harm their insurance sales. Judge Shields denied intervention, first holding that the standards for intervention as ofright under Rule 24(a)(2) were not satisfied. The key issue was whether the intervenors "claim[ed] an interest relating to the property or transaction at issue."^^ Judge Shields held that the interest necessary for Rule 24(a)(2) must be a "direct, significant legally protectable interest."^^ Noting no Seventh Circuit authority on point, she held that an "economic interest that might be adversely affected by the outcome of the case alone is insufficient to warrant intervention under Rule 24(a)(2)."^'* In addition, the intervenors failed to show that the Insurance Commissioner did hot adequately represent their interests. As for permissive intervention under Rule 24(b), Judge Shields observed that the intervenors presented no additional claims, but simply sought to defend the claims raised by NBD. As a result. Judge Shields found intervention inappropriate, but did allow participation as amici. ^^ In Shea v. Angulo,^^ appeal was taken from denial of intervention. In the clearest statement on the point from the Seventh Circuit, the court wrote, "We have jurisdiction pursuant to 28 U.S.C. § 1291 because the denial of a motion to intervene, whether as of 59. Id. (citations omitted). 60. Id. (citations omitted). 61. 159 F.R.D. 505 (S.D. Ind. 1 994). 62. FED. R. Civ. P. 24(a)(2). 63. NBD, 159 F.R.D. at 506 (quoting American Nat'l Bank & Trust Co. of Chicago v. City of Chicago, 865 F.2d 144, 145 (7th Cir. 1989)). 64. Id. (quoting Getty Oil Co. v. Department of Energy, 865 F.2d 270, 276 (Tern. Em. Ct. App. 1988)). 65. Id at 508. 66. 19 F.3d 343 (7th Cir. 1 994). 900 INDIANA LAW REVIEW [Vol. 28:891 "67 right or by permission of the court, is treated in this Circuit as a final appealable order. Thus, unsuccessful intervention must be appealed immediately, if at all. VII. Discovery As in the last few years, numerous developments occurred in the discovery area during the Survey period. A. Mandatory Disclosure With Rule 26(a) 's mandatory disclosure rules taking effect at the national level on December 1, 1993, the Northern and Southern Districts of Indiana determined to what extent mandatory disclosure would occur in each District.^* In the Northern District, mandatory disclosure is alive and well. Although each judge is handling mandatory disclosure somewhat differently, neither the Northern District nor any judge in the Northern District has opted out of mandatory disclosure on a wholesale basis.^^ Indeed, the Northern District had experimented with mandatory disclosure in its Civil Justice Reform Plan as early as 1991,^° and apparently approved of the experience. In the Southern District, the court has adopted a flexible approach. Mandatory initial disclosure under Rule 26(a)(1) is not required unless agreed to by the parties or specifically ordered by the court.^' Expert disclosure under Rule 26(a)(2) is required,^^ as it should be, given the rule's lack of an opt-out provision.^^ 67. Id. at 344 (citing B.H. by Pierce v. Murphy, 984 F.2(l 196, 199, 200 (7th Cir. 1993); Peacock v. Board of Sch. Comm'rs of Indianapolis, 721 F.2d 210, 212 n.2 (7th Cir. 1983)). 68. Mandatory disclosure under FED. R. Civ. P. 26(a) is broken into three parts. Rule 26(a)(1) requires initial disclosure of certain core information, except to the extent "otherwise stipulated or directed by order or local rule." Rule 26(a)(2) requires disclosure of testifying experts, including preparation and disclosure of written reports and background information. Unlike Rule 26(a)(1), Rule 26(a)(2) does not allow an opt out by local rule. Rule 26(a)(3) requires certain disclosures (witnesses, exhibits, etc.) prior to trial. 69. The Northern District has not opted out of any portions of Rule 26(a) by local rule, and indeed is pressing ahead with Rule 26(a)'s requirements, although to different degrees and in somewhat different ways depending upon the case and the judge. 70. Civil Justice Expense and Delay Reduction Plan (N.D. Ind. 1991). 7 1 . S.D. Ind. LR 26.3 provides: All czises pending or filed in the Southern District shall be exempt from the requirements of the following provisions of the Federal Rules of Civil Procedure as amended effective December 1, 1993: Fed. R. Civ. P. 26(a)(1); Fed. R. Civ. P. 26(d); Fed. R. Civ. P. 26(f). This rule does not preclude parties from entering into voluntary stipulations to comply with any or all of the above- referenced amended Federal Rule in a particular case, nor does it preclude the Court from ordering compliance with Fed. R. Civ. P. 26(a)(1) in a particular case. 72. Id. 73. See Fed. R. Civ. P. 26(a)(2). Parties may, however, stipulate away this requirement. 1995] FEDERAL CIVIL PRACTICE 901 B. Case Law Highlights Noteworthy developments in discovery case law include the following: (1) Judge Moody held that a subpoena can be served by certified mail under Rule 45(b)(l)'s "delivery" requirement/"^ (2) Magistrate Judge Hussmann held that defense counsel in a personal injury action could conduct ex parte interviews with plaintiffs physicians where there was no showing that the physician had "potentially embarrassing or ruinous" information unrelated to the injuries at issue/^ (3) In a thorough opinion outlining key standards for the issue, Magistrate Judge Cosbey held that analysis done by an environmental consulting firm prior to litigation was protected from discovery because the firm was retained in anticipation of litigation, and no exceptional circumstances were shown for disclosure.^^ (4) Where a plaintiff did not have the power to order a third party to surrender documents, the plaintiff did not have "possession, custody or control" under Rule 34, and thus was not obligated to produce the requested documents/^ (5) In Jepson, Inc. v. Makita Electric WorksJ^ two parties entered into a protective order to preserve the confidentiality of certain discovery materials. The order was challenged but enforced in the district court/^ The Seventh Circuit reversed, holding that protective orders cannot be issued under Rule 26(c) without an express finding of "good cause" for confidentiality.^'^ (6) Where a plaintiffs deposition was repeatedly rescheduled to accommodate him but he failed to attend, the Seventh Circuit affirmed the district court's dismissal of his action with prejudice as a discovery sanction under Rule 37(b)(2).'' Finally, in addressing a question of first impression in the Seventh Circuit, Judge Tinder issued a comprehensive opinion addressing discovery of defense surveillance videos by plaintiffs. His decision in Fisher v. National Railroad Passenger Corp}^ is a "must-read" for practitioners involved in litigation that might involve surveillance. 74. Doe V. Hersemann, 1 55 F.R.D. 630 (N.D. Ind. 1994). 75. Garcia v. Abbott Lab., No. TH93-97-C, slip op. (S.D. Ind. March 29, 1994). Garcia was decided as a matter of federal procedural law. As a matter of Indiana procedural law, the Indiana Court of Appeals has held that ex parte communications with physicians are disfavored. Cua v. Morrison, 626 N.E.2d 581 (Ind. Ct. App. 1993). 76. Hartford Fire Ins. v. Pure Air On The Lake Ltd., 1 54 F.R.D. 202 (N.D. Ind. 1 993). 77. Chaveriat v. Williams Pipe Line Co., 1 1 F.3d 1420, 1426 (7th Cir. 1993). 78. 30 F.3d 854 (7th Cir. 1994). 79. See Jepson, Inc. v. Makita Elec. Works, 143 F.R.D. 657 (N.D. 111. 1 992). 80. Jepson, 30 F.3d at 860. 81. Halas v. Consumer Services, Inc., 16 F.3d 161, 164-165 (7th Cir. 1994). 82. 152 F.R.D. 145 (S.D. Ind. 1993). 902 INDIANA LAW REVIEW [Vol. 28:891 Fisher involved an action under the Federal Employers* Liability Act (FELA)^^ for injuries sustained by a railroad worker. The defendant conducted secret surveillance to monitor the plaintiffs physical activities. The plaintiff served interrogatories asking whether any such surveillance had been taken.^"* The defendant objected on the grounds that such evidence constituted trial preparation materials, and also encompassed impeachment material not discoverable under local rules.^^ The plaintiff initially did not challenge the objection. After the plaintiffs deposition, the defendant produced a single videotape, noting that it was the only tape the defendant intended to introduce at trial. The plaintiff moved to compel disclosure of all videotapes, not just those to be used at trial. After noting that courts "[a]lmost uniformly" require evidentiary videos to be produced, Judge Tinder turned to the issue at hand: whether "surveillance tapes of a [pjlaintiff which [d]efendant does not intend to introduce at trial, but which it possesses, are discoverable by the [pjlaintiff prior to trial."^^ Judge Tinder determined that the work- product doctrine precluded discovery of the tapes that the defendant did not intend to introduce at trial and that the plaintiff had not shown a "substantial need" for the videos.^^ He concluded: "Although today's decision is, of course, confined to the facts and arguments presented by the present parties, it is difficult to conceive ofany circumstances which might prove so compelling as to justify disclosure of non-evidentiary videotapes and the concomitant intrusion into attorney work product."^* Fisher is an excellent primer on the issue, and strikes an appropriate balance between open discovery and the work-product doctrine. The only uncertainty left by the posture of the case is whether surveillance tapes that are solely for impeachment or rebuttal would actually be protected by the Southem District's Local Rule 16.1(f)(5) and (7). On its face, Fisher only addresses surveillance videotapes to be used as substantive evidence, and not "solely for impeachment or rebuttal" per the Southem District's Local Rule 16.1(f)(5) and (7). In the surveillance context, however, it is difficult to imagine a tape that would be used solely for impeachment or rebuttal; most tapes would not only impair the plaintiffs credibility, but they would also be relevant to the substantive issue of damages. Defense counsel should thus presume that any tapes to be used at trial will be discoverable. 83. Federal Employers' Liability Act, 45 U.S.C. §§ 51-60 (1988). 84. As will be seen, this was a prudent course of action that should be taken by every plaintiff. 85. See S.D. IND. LR 1 6. 1 (f)(5),(7) (As directed by the court, each party shall submit to the court and opposing counsel a "list of exhibits to be offered at trial, except those to be used solely for impeachment or rebuttal," and a "list of names and addresses of witnesses to be called, except for those to be called solely for impeachment or rebuttal."). The Northern District's local rule is identical. See N.D. iND. LR 16.1(f)(5), (7). 86. Fw/ier, 152F.R.D. at 145. 87. /f/. at 158. 88. Id. 1 995] FEDERAL CIVIL PRACTICE 903 VIII. Experts As discussed in the 1993 Federal Practice Article,^^ the Supreme Court's 1993 decision in Daubert v. Merrell Dow Pharmaceuticals^^ changed the standard for addressing the admissibility of expert testimony. The old Frye rule of "general acceptance" was abandoned in favor of a more flexible, but probably more restrictive, standard that focuses on the scientific, technical, or otherwise specialized basis of the testimony.^' Daubert also emphasized the district judge's responsibility to serve as "gatekeeper" and screen out expert testimony that does not satisfy the Daubert standards. As expected, there has been much litigation on the issue since Daubert, and the real battlefield is in the trial court. The following cases illustrate the profound effects of Daubert: (1) In O 'Conner v. Commonwealth Edison Co.^^ the plaintiff sued the operator of a nuclear power plant for allegedly causing cataracts. The defendant moved for summary judgment on a number of grounds, including causation. The district court granted the summary judgment motion, ruling, in part, that the plaintiffs expert's testimony was inadmissible. The Seventh Circuit affirmed, holding that the expert's opinions did not satisfy Daubert and Federal Rule of Evidence 702. The doctor's testimony that he "know[s] what cataracts look like when they've been induced by radiation" was held to be unscientific.^^ No other sources supported the opinion that mere observation could discern whether cataracts were caused by radiation, and the "expert" had not tested his opinion.^"* (2) In Pries v. Honda Motor Co.^^ the Seventh Circuit similarly rejected an expert's methodology as unscientific. The plaintiff sued Honda for an allegedly defective seatbelt. The district court granted summary judgment. On appeal, the plaintiffpointed to her expert's opinion that the seatbelt latch opened during the crash. However, the expert conducted no tests and could not explain the forces that would cause the latch to open. In affirming summary judgment. Judge Easterbrook cited Daubert and concluded, "Evidence ofthis kind is not scientific and does not satisfy Federal Rule of Evidence 702."^^ (3) In Bradley v. Brown,^^ Judge Moody applied Daubert to reject two expert opinions that the plaintiff suffered from "multiple chemical sensitivity" due to exposure to defendant's products. In a thorough opinion tracing Daubert and its progeny. Judge Moody concluded that "the 'science' ofMCS's etiology has not 89. 1993 Federal Practice, supra note 22, at 833-36. 90. 1 13 S.Ct. 2786 (1993). 91. The Frye rule stemmed from Frye v. United States, 293 F. 1 1 3 ( 1 923). 92. 13 F.3d 1090 (7th Cir. 1994). 93. /f/. at 1107. 94. Mat 1106-07. 95. 31 F.3d 543 (7th Cir. 1 994). 96. Id. at 545. 97. 852 F. Supp. 690 (N.D. Ind. 1994). 904 INDIANA LAW REVIEW [Vol. 28:891 progressed from the plausible, that is, the hypothetical, to knowledge capable of assisting a fact-finder, jury or judge."^* (4) On appeal, the Seventh Circuit affirmed, and refiised to disturb Judge Moody's evidentiary ruling.^ The court applied a two-tiered standard ofreview, asking first by de novo review whether the district court properly followed the framework set forth in Daubert}^ Upon finding no error in that regard, the court stated that it would "not disturb the district court's findings unless they [were] clearly erroneous."'^' The Seventh Circuit ultimately concluded that it would "not replace the district court's careful decision with our own judgment."' °^ (5) The Seventh Circuit, through Chief Judge Posner, blasted an expert in a trademark infringement case involving the Indianapolis Colts. '^-^ Judge Posner noted that the expert provided a "perfunctory affidavit," that it was a "kindness" for Judge McKinney to give the affidavit any weight at all, and that the expert had been criticized by another federal court for his methodology.'^"^ Judge Posner added, "[W]e hope that he will take these criticisms to heart in his next courtroom appearance."'^^ (6) In the most telling post-Daubert decision, on remand from the Supreme Court's decision in Daubert itself, the Ninth Circuit rejected the plaintiffs expert opinions that Bendectin causes birth defects. '^^ Ofparticular note is the Ninth Circuit's skepticism of experts who offer opinions for the first time in litigation without any prior testing or experience in the matter at issue. '^^ Finally, in what may be the most significant development in expert testimony during the Survey period, the Federal Judicial Center published its Reference Manual on Scientific Evidence ("the Manual"). '^^ The Federal Judicial Center began work on the Manual in 1990 after the Federal Courts Study Committee recommended such a work.'^ The stated purpose of the 637-page Manual "is to assist judges in managing expert evidence, primarily in cases involving issues of science or technology.""^ The Manual was distributed to all federal judges in early 1995. It is being provided at no or low cost to subscribers of Weinstein 's Evidence or Professors Wright and Miller's 98. Id. at 700. 99. Bradley v. Brown, 42 F.3d 434 (7th Cir. 1 994). 100. Id. at 436. 101. /