The opinion of the court was delivered by: GLADYS KESSLER, District Judge
Defendants have filed an Emergency Motion to Prohibit Plaintiff's
Untimely Addition of 650 New Racketeering Acts to the Case ("Emergency
Motion").*fn1 Upon consideration of the Motion, the Government's
Opposition, the Reply, and the entire record herein, the Court concludes
that the Motion should be granted in part and denied in part.
As all parties know, the Government's Complaint, filed on September 22,
1999, was accompanied by an Appendix listing 116 "Racketeering Acts" of
mail or wire fraud allegedly committed by the Defendants. Those
Racketeering Acts were incorporated by
reference into Counts III and IV, which allege that Defendants
engaged in, or conspired to engage in, a "pattern of Racketeering
activity." On February 28, 2001, when the Government filed its Amended
Complaint, it incorporated by reference the same 116 Racketeering Acts.
In response to Defendants' interrogatory #35 which expressly required the
Government to list "any alleged act of racketeering not set forth in the
Appendix," the Government identified an additional 32 Racketeering Acts
on December 10, 2001 (numbered as Racketeering Acts 117-148).*fn2 Mem.
in Support of Defs' Emergency Motion at 2 (citing United States' Suppl.
Resps. to Jt. Defs.' First Set of Continuing Interrog Nos. 29-31 and
33-35). The Government has not further supplemented Interrogatory #35.
Accordingly, for the last two years, the Defendants have expected the
Government's case to involve 148 Racketeering Acts.
It is fair to say that this case has been subject to extraordinary and
intensive case management and monitoring because of its size, its
complexity, and its public interest. In the course of that case
management, numerous case management orders have been entered dealing
with all aspects of discovery, deadlines for summary judgment motions,
submission of proposed findings of
fact and conclusions of law ("Preliminary Proposed Findings"), etc.
See, e.g., Order #51, Order #230 (Tenth Case Management Order),
Order #264 (Amendments to Order #230). The underlying purpose has been to
ensure efficient and orderly management of the case so that trial would
proceed on September 13, 2004, and to avoid last-minute "trial by ambush"
tactics which might jeopardize that trial date.
In Order #230, the Court set October 1, 2003 as the deadline for filing
all summary judgment motions (later extended to October 8, 2003 in Order
#408). On October 8, 2003, the United States filed a Motion for Partial
Summary Judgment on Element that Defendants Have Caused Mailing and Wire
Transmissions ("Mailings Motion"), seeking summary judgment that
Defendants caused certain documents, advertisements, statements and
website content to be mailed or communicated by interstate wire
transmission. In that motion, Plaintiff referred for the first
time to 650 Racketeering Acts, in addition to the 148 it had
previously identified. Thus, Plaintiff contended that at trial, it would
be establishing a total of 795 Racketeering Acts.*fn3 In support of its
Mailings Motion, Plaintiff also submitted 29 declarations from 19
While the number of new Racketeering Acts seems extraordinarily high,
it is important to note exactly what is contained in the Government's
filing. Of the 650 newly alleged Racketeering Acts, 640 consist of
additional cigarette brand
advertisements and statements that Defendants themselves paid for
and placed for publication. U.S. Opp'n to Defs. Emergency Motion at 4.
Significantly, more than two-thirds of the 640 advertisements (70%)
identified as Racketeering Acts in the Mailings Motion are simply later
advertisements from the same campaigns named in the original 148
Racketeering Acts. See U.S. Opp'n to Defs' Emergency Motion at
5-6. In short, the advertisements and statements covered by the 650 new
Racketeering Acts were all placed in widely circulated, published
newspapers or magazines, or on the Defendants' own websites.
The Defendants ask that the Court prohibit Plaintiff's additional 650
Racketeering Acts, as well as exclude the evidentiary materials upon
which they are based. In support of their position, Defendants argue that
by adding the additional 650 Racketeering Acts, the United States has
violated both the spirit and letter of the Court's case management and
discovery orders, has greatly prejudiced the Defendants, and threatens to
delay the Court's trial schedule. They also assert that if the
Racketeering Acts are admitted, they are entitled to further discovery, a
prospect which threatens the scheduled trial date. The United States
denies that it violated any procedural or discovery obligation, and
argues that Defendants suffered no prejudice because they are fully aware
of their own advertising campaigns,
that there is no need for further discovery by Joint Defendants
and, therefore, there is no jeopardy to the Court's trial schedule. After
cutting through the verbal underbrush of these arguments, the Court finds
that there is some merit on all sides.
A. The United States Has Violated Its Obligation to Supplement
Discovery Responses under Fed.R.Civ.P. 26(e)(2)
Fed.R.Civ.P. 26(e)(2) states that a "party is under a duty
seasonably to amend a prior response to an interrogatory . . . if the
party learns that the response is in some material respect incomplete or
incorrect. . . ." Early on in discovery, as noted earlier, Defendants
directed interrogatories to the Government specifically focusing on the
Racketeering Acts charged in this case. Other than providing one
supplement to its original answers on December 10, 2001, the Government
has provided no other information regarding additional Racketeering Acts.
There is simply no justification whatsoever for the Government's failure
to appropriately inform the Defendants, by formal supplementation of its
interrogatory responses as required by the Rules, of its intention to
rely on 650 additional Racketeering Acts to support its RICO claims.
Moreover, in light of the intensive case management and oversight that
this case has received, there is no question that Plaintiff's inclusion,
at virtually the last minute, of 650 new Racketeering Acts in its summary
judgment motion undermines the
comprehensive efforts of the Court to ensure an orderly march to
trial by avoiding last minute surprises of this nature. For these
reasons, the Court concludes that it is appropriate to preclude the
Plaintiff under Fed.R.Civ.P. 37(c) from adding the additional 650
Defendants have also asked for a much more severe sanction, namely,
exclusion of all evidentiary materials relating to the 650 Racketeering
Acts. The Court now turns to that issue.
B. Evidence Relating to the 650 New Racketeering Acts Is Not
Excluded for All Purposes
Defendants ask that all evidence supporting the 650 Racketeering Acts
be barred for all purposes. They even ask for the exclusion of that
portion of the evidence that goes to the issue of the mailing or wire
transmission of the previously identified 148 Acts. Mem. in Supp. of
Defs' Emergency Motion at 20 n. 22. That sanction for the violations
already outlined is too draconian, is not mandated by whatever minor
prejudice Defendants will suffer, if any, and is not supported by case
law. Even though the proposed acts may not be added as Racketeering Acts,
the evidence underlying them may well be admissible to prove other RICO
elements. Uncharged, unlawful conduct may be proven to establish, for
example, continuity and pattern of racketeering activity,*fn4
RICO enterprise or conspiracy, and the Defendants' participation
Moreover, the Government points out in its papers that knowledge of the
substance of this additional evidence comes as no surprise to the
Defendants, even though the Government ...