*1 Pending before the Special Master is Plaintiff Wolverine World Wide, Inc.’s (“Wolverine”) motion to strike or exclude the expert report of Douglas Swanson (“Swanson”) and for sanctions under Rule 37(b)(2)(A)(ii), ECF No. 566. Defendants opposed the motion in ECF No. 580. Swanson is a professional hydrologist hired as an expert witness by several of the Defendant insurers. Wolverine seeks an order precluding Defendants’ use of Swanson's report or testimony in any Phase I summary judgment motions. After consideration of the pleadings filed in support of and in opposition to the instant motion, and hearing oral arguments of counsel, Plaintiff's motion is GRANTED in part and DENIED in part, for the reasons stated below.

This insurance coverage case extends back over sixty years. The underlying cases involve allegations of environmental contamination containing PFOA and/or PFOS, two chemicals in the family of compounds known as per- and polyfluoroalkyl substances (together, “PFAS”), that tanneries operated by Wolverine are alleged to have discharged.

To resolve the complex nature of this case, the Initial Case Management Order bifurcated the case into two phases for purposes of discovery, briefing, and dispositive motion practice. Phase I of this case was confined to three threshold matters: (1) Defendants’ duty to defend; (2) exhaustion of policy limits by prior settlements and releases; and (3) lost policies. Id. The “duty to defend” describes Defendants’ obligation to provide Wolverine with a defense to the underlying claims made under the various liability insurance policies. Therefore, in Phase I Wolverine need only show that there is potential coverage under the terms of the insurance policies and the claims asserted in the various underlying complaints to establish a duty to defend. This duty to defend may exist even where coverage is in doubt, the claims are frivolous, and coverage ultimately may not apply, i.e., the duty to defend is distinguishable from an insurer's “duty to indemnify” – the obligation to pay or compensate the insured for a covered loss. Orchard v. Phoenix Insurance Co., 146 F.Supp.3d 879 (E.D. Mich, 2015).

Defendants disclosed Swanson as an expert in their First Amended Disclosures, ECF No. 567-1. Swanson was designated as an expert “to evaluate data and provide opinions regarding long term environmental contamination and to opine on the sudden and accidental pollution exclusion.” Wolverine took Swanson's deposition and hired its own expert in rebuttal. At the parties’ meet-and-confer, Defendants explained to Wolverine that they could not withdraw Swanson's report because, in Defendants’ opinion, it was necessary to offer, or at least proffer, the report into evidence to preserve the evidentiary record for appeal. Plaintiff then filed the instant motion.

A. Plaintiff's Arguments.

Wolverine makes two principal arguments for striking Swanson's report: (1) the report violates past orders entered in this case; and (2) Swanson's opinions are inappropriate and inadmissible at this phase in the litigation. Significantly, Swanson opines that Wolverine's alleged contamination and pollution discharges were not ‘unexpected,’ but part of a ‘long-term practice of regularly and deliberately discharging, disposal and releasing chemicals and wastes at certain properties.’ Wolverine asserts that Swanson's opinions are mostly based on documents other than the underlying complaints and underlying insurance policies themselves. Wolverine argues that Swanson's opinions are an attempt to circumvent this Court's prior rulings on the scope of Phase 1 and underlying state law regarding the duty to defend. Finally, Wolverine objects to Swanson's conclusions as being based on inappropriate legal conclusions which should be left to the Court.

*2 Wolverine also asks this Court to sanction Defendants under Rule 37(b)(2)(A)(ii) for repeatedly propounding discovery relating to their pollution exclusions during Phase I of this case and their repeated objections to this Court's denial of their Motion to Compel, and granting of Wolverine's Protective Order. In its Memorandum of Law and at oral argument, Wolverine asserted that the proffer of Swanson's report was in direct violation to this Court's protective order, ECF No. 326, and this Court's orders at ECF Nos. 182, 313, 345, and 390. As a result of the repeated pattern of misconduct by Defendants, Wolverine claims it should be awarded attorney fees and costs for: (1) reviewing and analyzing Swanson's report; (2) preparing a rebuttal report to Swanson's report; (3) preparing for and taking the deposition of Swanson; and (4) preparing the pending motion.

B. Defendants’ Arguments.

Defendants assert that many of the underlying insurance policies clearly exclude coverage for pollution-related claims, unless Wolverine can establish that the discharges of pollutants were “sudden and accidental.” Defendants contend that there is a clear subset of pollution cases where coverage is not even arguable because the pollution exclusion plainly applies and, as a result, there is no duty to defend. This line of argument is at the heart of the disagreement between Defendants and Wolverine as to the scope of Phase 1. Defendants disagree with the Court's past discovery rulings regarding proper application of the pollution exclusion and as those rulings are interlocutory, they cannot be appealed at this time. Defendants believe that they are obligated to make a record on this issue to preserve their arguments on appeal.

Defendants further argue that sanctions are unwarranted and Wolverine's reliance on Rule 37(b)(2)(A)(ii) is misplaced. Defendants, with citation to largely out of circuit authority, argue that Rule 37(b)(2) only applies in cases where there is an order to provide discovery that is later disobeyed. As Defendants have not failed to provide discovery, nor have they violated a discovery order, they contend that no sanctionable abuse of discovery occurred.

Whether to admit or exclude expert evidence is within the sound discretion of the trial court. United States v. Semrau, 693 F.3d 510, 520 (6th Cir. 2012). Federal Rule of Evidence 704 provides that if scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion.

In Daubert v. Merrell Dow Pharmaceuticals, Inc., the Supreme Court explained that Rule 702 confers a “gatekeeping role” on trial judges to “ensur[e] that an expert's testimony both rests on a reliable foundation and is relevant to the task at hand.” 509 U.S. 579, 597 (1993). Rule 702 is to be broadly interpreted based on whether the use of expert testimony will assist the trier of fact. Mactec, Inc. v. Bechtel Jacobs Co., LLC, 346 F. App'x 59, 77 (6th Cir. 2009) (quoting Morales v. Am. Honda Motor Co., 151 F.3d 500, 516 (6th Cir. 1998)).

Federal Rule of Civil Procedure 37 governs sanctions for various discovery abuses. The court may, on a motion by the opposing party, award reasonable fees and expenses or impose certain other sanctions, including prohibiting the disobedient party from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence. Fed. R. Civ. P. 37(c)(1)(C) and 37(b)(2)(A)(ii).

A. Expert Report of Douglas Swanson.

Wolverine argues that the Court should strike or exclude Swanson's report on the basis that Swanson's opinions violate prior orders of this court limiting discovery during Phase I to the duty to defend/exhaustion and missing policies. None of the parties have pointed to any case involving the striking of expert reports or exclusion of expert testimony based on a court's prior legal rulings. However, it is beyond meaningful dispute that the court has the authority to restrict expert testimony that is at odds with the Court's own purely legal rulings. See Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 574 U.S. 318 (2015), Berry v. City of Detroit, 25 F.3d 1342 (6th Cir. 1994).

*3 This Court has previously ruled that under Michigan law, an insurer's duty to defend depends on the allegations made in the complaint by a third party against the insured, and a review of the applicable policy of insurance. As it is not permissible to look beyond the policies and underlying complaints to determine the duty to defend (or the applicability of a pollution exclusion to the duty to defend), Swanson's proffered report is not “helpful” to resolving the issues at hand in Phase I of this litigation. The Special Master understands Defendants’ arguments to the contrary, and notes that these issues are sufficiently preserved in the record. For the above reasons, Wolverine's motion to exclude Swanson's Report at this stage in the litigation is granted.

B. Rule 37(b)(2)(A)(ii) Sanctions.

Federal Rule of Civil Procedure 37 governs sanctions for various discovery abuses including the failure to obey a court's discovery orders. Wolverine argues that Defendants continually seek to relitigate the scope of the duty to defend during Phase I, repeatedly challenging this Special Master's and the Court's prior rulings. Defendants counter that sanctions under FRCP 37(b)(2) only apply when a party has failed to provide or produce discovery or violated an order to make discovery available, which is then disobeyed.

It is noteworthy that Wolverine was aware of Defendants’ stance prior to filing this motion as defense counsel Daniel F. Gourash wrote Wolverine's counsel a letter on June 25, 2020 regarding submitting Swanson's report, and stated: “In light of the Court's prior rulings, with respect to the report of Swanson, Insurers that have retained Swanson specifically reserve their right to proffer it into evidence for record purposes.....in the event any of it is stricken by the Court or held not to apply to some or all Phase I issues.” Affidavit of Daniel F. Gourash, ECF No. 580 Exhibit I.

Defendants further point to the Gourash Affidavit to show that they informed Plaintiff counsel at the meet and confer, held prior to this motion being filed, that they could not withdraw the Swanson report because of the necessity to preserve the evidentiary record on appeal and that to not proffer the report could form the basis for legal malpractice claims by their clients.

FRCP 37(b)(2) permits the court to impose a wide range of sanctions for the violation of discovery orders. Kearns v. Ford Motor Co., 114 F.R.D. 57 (E.D.Mich 1987). In addition, the court may impose sanctions under its own equitable powers. Link v. Wabash Railroad Co., 370 U.S. 626 (1962). While Defendants seek another bite of the apple, it is clear they have not violated a discovery order, nor have they failed to provide or permit any discovery. Nor does the Special Master find Defendants’ advocacy an abuse of the discovery process sufficient to merit invoking its equitable powers, particularly where Plaintiff was given notice by Defendants of their intention to proffer Swanson to preserve appealable issues relative to the bifurcation of this case.

For the reasons discussed above, Plaintiff's motion to exclude the report and opinions of Mr. Swanson in this stage of litigation is GRANTED. The Court hereby STRIKES the report of Defendants’ expert witness Douglas Swanson from use during Phase I summary judgment motions. Plaintiff's motions for sanction under Rule 37(b)(2)(A)(ii) is DENIED.

IT IS SO ORDERED.