Methods Research, Inc. v. Ottawa Bancshares, Inc.

District Court, D. Kansas·Decided April 30, 2025·No. 2:23-cv-02136·Unknown

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS METHODS RESEARCH, INC. Plaintiff, vs: Case No. 23-2136-JAR-BGS OTTAWA BANCSHARES, INC., FIRST BANK KANSAS, FIRST KANSAS BANK, LYON COUNTY STATE BANK, and COMMERCIAL BANK, Defendants.

MEMORANDUM & ORDER DENYING MOTION TO COMPEL EXPERT COMMUNICATIONS NOW BEFORE THE COURT ts Plaintiff's “Motion to Compel Expert Communications.” (Doc. 103.) Therein, Plaintiff argues that Defendants improperly redacted communications exchanged with their retained expert, Preston E. Herman (hereinafter “Herman’’) and withheld certain internal email from Herman’s office. For the reasons set forth herein, Plaintiffs motion (Doc. 103) ts DENIED. FACTUAL BACKGROUND I. Nature of the Case. This is a breach of contract case. In September 2015, Plaintiff presented a proposal to implement an I'T Consolidation Project (“the project’’) for the four Defendant Banks that would require Defendants to pay a “Fixed Fee” of $1,000,000, as well as a “Variable Fee” equal to 50% of any revenue enhancements, process improvements, and expense reductions recommended by Plaintiff and implemented by the Defendants (Doc. 1, at J 22.) The Fixed Fee was paid by Defendants, but no Variable Fee was paid.

According to Plaintiff, “Defendants internally calculated [the] variable fee and represented [Plaintiff] was owed $0, despite internal Bank documents showing the [Defendants] realized an increase in revenues and a decrease in expenses directly attributable to implementing [Plaintiff’s] recommendations.” (Doc. 65, at 2 (citing Doc. 1, at ¶¶ 24-25; 34-35).) Plaintiff contends that Defendants overstated their expenses and understated their savings in an effort to avoid owing any Variable Fee. Both sides have prepared calculations of the Variable Fee owed, which vary substantially. On March 24, 2023, Plaintiff filed this lawsuit to recover the Variable Fee it alleges Defendants owe. II. Deposition Notice to Herman.

Herman was designated by Defendants as a retained expert in their supplemental Rule 26 disclosures, which were served on November 21, 2024. (See Doc. 72-2, at 3; see also generally Doc. 72.) Plaintiff served a Notice of Videotaped Deposition Duces Tecum of Preston E. Herman on December 9, 2024, setting the deposition for December 19, 2024. (Doc. 76.) Listed in the duces tecum notice were ten categories of documents Plaintiff sought from the witness, including communications between him and defense counsel relating to compensation for the witness’s study or testimony, identifying facts or data that retaining counsel provided and the witness considered in forming his opinions, or identifying “assumptions that retaining counsel provided and the witness relied on in forming his opinions.”1 (Id., at 3, Category 2.) The deposition notice also requested documents consisting of communications between Herman “and any other individual regarding the facts of this case or the witness’s opinions.” (Id., at 3, Category 3.) On December 18, 2024, the day before Herman’s deposition, defense counsel served “Defendants’ Objections and Responses to Plaintiff’s Notice of Deposition Duces Tecum of Preston

E. Herman, CPA, ABV, CFE.” (Doc. 103-3.) Therein, Defendants objected that Category 2 “seeks

1 The Court notes this category mirrors the language from Fed. R. Civ. P. 26(b)(4)(C), which enumerates non-protected communications between a party’s attorney and retained witnesses. information beyond the expert report and disclosure requirements of Rule 26(a)(2) and Rule 26(b)(4), including work product, draft reports, and communications between Defendants’ attorneys and the expert witness that contain privileged/work product content not falling withing the limited exclusions enumerated in Rule 26(b)(4).” (Doc. 103-3, at 5-6 (citations omitted).) Defendants objected that Category 3 is overbroad, unduly burdensome, and “seeks documents that are work product, attorney- client communications, and/or documents that are protected under Rule 26(b)(4), including draft reports and communications between Defendants’ attorneys and the expert witness.” (Doc. 103-3, at 6 (citing Fed. R. Civ. P. 26(b)(4) and 1991 Amendments.) Contemporaneously, Defendants produced

documents pursuant to the deposition notice. (Doc. 103-2.) Plaintiff asserts, however, that the communications produced were “heavily redacted.”2 (Doc. 103, at 2.) During the deposition, while instructing the expert not to answer a question from Plaintiff’s counsel, defense counsel objected based upon “the privilege that is included in Rule 26(B)(4) which is communications with retained counsel, with retained experts.” (Doc. 103-1, at 5:17-7:3.)3 At the end of Herman’s deposition, the parties engaged in a meet & confer session regarding these redactions and the production of Herman’s file. (Id., at 273:19-281:12.) Defense counsel indicated their position that documents and communications requested from Herman were protected from disclosure by the attorney-client privilege and attorney-expert privilege.4 (Id. at 279:19-21.) Defense counsel did, however, state their willingness to provide the documents to the Court for in camera review. (Id. at 276:16-21.)

2 As discussed below, unredacted copies of the documents, in which redacted portions have been highlighted, were produced to the Court for an in camera review. 3 Plaintiff’s motion, in passing, raises concerns with instances during Herman’s deposition in which defense counsel instructed him not to answer several questions based on the work product doctrine or the argument that Plaintiff seeks discovery beyond that contemplated by Rule 26(b)(4)(C). (Doc. 103, at 1 (citing Doc. 103-1, at 5:17-6:13; 6:14-19; 7:23- 8:12; 22:18-26:9; 44:2-45:2; 45:16-23; 45:24-47:22; 48:20-50:18)). In part, Plaintiff’s motion asks this Court to intervene to “obtain … [this] testimony previously requested.” (Id.) Plaintiff has, however, failed to provide actual analysis or discussion of the deposition objections. (See generally, id.) The Court will, therefore, not address these deposition objections herein. 4 The Court notes, however, that Defendants’ brief in opposition, much like Defendants’ written objections to the deposition notice, focuses on the work product doctrine, rather than privilege-based objections. On January 21, 2025, the parties engaged in a pre-motion discovery telephone conference with the Court regarding this dispute. A week later, on January 28, 2025, defense counsel produced copies of Herman’s invoices and an additional email chain that had not been previously produced. (Doc. 103- 4.) On January 30, the parties held a further meet & confer session regarding these issues. Thereafter, the Court ordered Defendants to produce the documents for in camera review by February 10, 2025, with any related motion to be filed by March 7, 2025. (Doc. 97.) Defendants timely submitted the unredacted documents to the Court and Plaintiff’s motion (Doc. 103) was timely filed. ANALYSIS

I. Legal Standards. A. Scope of Discovery.5 The scope of discovery sought through a duces tecum deposition notice is the same as party discovery permitted by Fed. R. Civ. P. 26. See In re Syngenta AG MIR 162 Corn Litigation, MDL No. 2591, No. 14-md-2591-JWL, 2017 WL 1106257, at *16 (D. Kan. Mar. 24, 2017) (in the context of a duces tecum deposition notice and subpoena of a party’s expert) (citing Schneider v. CitiMortgage, Inc., No. 13-4094, 2014 WL 4749181, at *2 (D. Kan. Sept. 24, 2014)). “In other words, the relevancy standards set forth in Rule 26 define the permissible scope … .” In re Subpoena of Justin Works, No.

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Methods Research, Inc. v. Ottawa Bancshares, Inc., (D. Kan. 2025).

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