Failure to disclose a computation of damages as required by Rules 26(a) and (e) may result in a motion to strike a claim for actual damages as a discovery sanction under Rule 37.

Rule 26(a) requires a party to disclose “a computation of each category of damages claimed by the disclosing party,” among other information. Fed. R. Civ. P. 26(a)(1)(A)(iii). Rule 26(e) requires a party to supplement its Rule 26(a) disclosures or its other discovery responses if it “learns that in some material respect the disclosure or response is incomplete or incorrect” and the information has not otherwise been made known to the other parties. Fed. R. Civ. P. 26(e)(1)(A).

Rule 37(c) provides for sanctions against a party that fails to disclose information required under Rule 26(a) or (e). Among other sanctions, the district court may exclude a category of damages that was not properly disclosed. Sanctions are not warranted, however, if the “failure was substantially justified or harmless.” Fed. R. Civ. P. 37(c)(1).

“Bang” Goes Actual Damages

In Vital Pharmaceuticals, Inc. v. Monster Energy Company, No. 21-13264 (11th Cir. Aug. 3, 2022), Vital Pharmaceuticals (“VPX”) sued Monster for trade dress infringement, trademark infringement, and unfair competition with respect to VPX's “Bang” line of energy drinks.

On March 19, 2020, about two months before the scheduled trial date in May 2020, Monster moved to strike VPX's claim for actual damages because VPX had failed to disclose “any calculation of the amount of damages it claims to have incurred, or the bases for any belief it may have that it has suffered damages in that undisclosed amount.”

The district court observed that Monster never filed a motion to compel, which could have “nipped this in the bud,” and instead sought sanctions on “the eve of trial,” which suggested “a little bit of gamesmanship and gotcha.”

Nonetheless, in granting Monster's motion to strike, the district court observed that VPX had offered no justification for its failure, and that Monster “had no opportunity to test the Plaintiff's theory in discovery” and would have to “guess at both the amount of the Plaintiff's actual damages and the methodology.”

Sanction Affirmed

On appeal, the Eleventh Circuit affirmed that VPX's failure to provide a damage calculation was not harmless. See Mee Indus. v. Dow Chem. Co., 608 F.3d 1202, 1211 (11th Cir. 2010) (finding failure to provide a damage calculation for loss of goodwill damages was not harmless).

“Monster had been prejudiced by VPX's failure to comply with its discovery obligations, and that permitting VPX to seek actual damages would eviscerate the requirement for a party to disclose its damages computation.” Moreover, Monster was deprived of the opportunity to conduct targeted discovery to test the claimed damages.

The Court affirmed the discovery sanction of excluding VPX's claim for actual damages.

The attorneys at Thomas P. Howard, LLC litigate cases nationwide including in Colorado.