*1 Defendant Chrome Federal Credit Union (“Chrome”) has filed three motions that all require the resolution of one issue: whether Plaintiff Nymbus, Inc. (“Nymbus”) can introduce at trial evidence of its alleged lost profits, which Nymbus first disclosed in Supplemental Disclosures dated March 18, 2021 – many months after the close of discovery and the dispositive motion deadline. Chrome moves: (i) in Limine to Exclude Evidence of Undisclosed Lost Profits, (ECF No. 158), (ii) in Limine to Exclude Evidence of Speculative Damages, (ECF No. 159) and (iii) to Strike Untimely Disclosures and for Sanctions, (ECF No. 193). The Motions are fully briefed. (ECF Nos. 186, 187, 192, 196, 197).

I. BACKGROUND

Nymbus filed this action in December 2018. The Court entered its first Scheduling Order in March 2019, that set a discovery deadline of September 27, 2019 and a dispositive deadline of October 4, 2019. (ECF No. 38). At the parties’ request, the Court extended these and other pretrial deadlines, as well as the trial date, three times. (ECF No. 72, 85, 93). The latest scheduling order, entered on April 6, 2020, established these pertinent deadlines: (i) July 10, 2020 to complete fact discovery, (ii) August 7, 2020 to complete expert discovery, and (iii) August 10, 2020 to file dispositive motions. (ECF No. 93). At no time did Nymbus ask the Court to extend any deadlines because it had difficulty calculating its lost profits.

The parties exchanged initial disclosures early in the case, as required by Rule 26(a) of the Federal Rules of Civil Procedure. Rule 26(a)(1)(A)(iii) requires parties to provide a computation of each category of its damages and Nymbus wrote this:

(ECF No. 193-2 at 4-5). This was consistent with the Complaint, which alleged that Chrome's alleged breach of the parties’ contract “caused damages to Nymbus, including uncompensated implementation man hours, and the transaction fees that Nymbus would have received under the Agreement, which exceed $75,000.” (ECF No. 1 at ¶ 67).

*2 Nymbus gave no indication in its Complaint, its Initial Disclosures, or in any fashion during the discovery period, which lasted more than a year, that its damages included lost profits, even though Chrome explicitly asked Nymbus to identify its alleged damages. (See ECF No. 50-2 at 3, ¶ 3) (requesting “[a]ny and all documents that relate to, concern, support, identify or summarize the damages that have been allegedly suffered by [Nymbus] or the damages [Nymbus is] seeking in this case.”).

Nymbus’ silence about alleged lost profits continued well after discovery closed, on July 10, 2020. Months later, in November 2020, Chrome filed a Motion in Limine to Exclude Evidence of Undisclosed Lost Profits. (ECF No. 158). In its response Nymbus did not claim it suffered lost profits. Rather, it identified its damages as uncompensated man hours and transaction fees:

(ECF No. 165 at ¶¶ 1-2).[1]

In February 2021, the Court ruled on the parties’ cross-motions for summary judgment. In particular, the Court granted summary judgment for Chrome on Count I of Nymbus’ Complaint, which sought a declaratory judgment that Section 16(g) of the parties’ contract allowed Nymbus to retain the nearly $3.3 million prepayment that Chrome made to Nymbus. (ECF No. 174). The Court ruled that Section 16(g) is unenforceable and does not entitle Nymbus to keep Chrome's prepayment. (Id. at 19). The Court also ruled that the parties’ respective claims for breach of contract will proceed to trial. (Id.).

Approximately one month after the Court's Order on summary judgment, Nymbus served Supplemental Disclosures. (ECF No. 193-4). Nymbus asserted that “[t]hese Disclosures are supplemented based on Nymbus’ current understanding of the claims and defenses that are proceeding to trial and on new information that has allowed Nymbus to calculate its damages.” (Id. at 1). The Supplemental Disclosures identified a new witness, James M. Modak, the President and CFO of Nymbus, who was knowledgeable about “[l]ost profits analysis.” (Id. at 4). Nymbus also revised its description of documents that it may use to support its claims to include “[d]ocuments related to the calculation of gross profit earned by clients converted to SmartCore.” (Id. at 4). And, Nymbus revised its category of damages to include “uncompensated man hours of approximately $335,312.50, and lost profits in the amount of $1,312,000, based upon the gross profits that Nymbus would have received over the seven (7) year term of the Master Agreement had Chrome not breached the Master Agreement.” (Id. at 5) (emphasis supplied). This was Nymbus’ first mention of lost profits – more than two years after it filed suit, more than eight (8) months after fact discovery closed, when the only outstanding deadlines are trial-related (the trial has been delayed because of the Covid-19 pandemic).[2]

*3 Nymbus explains its delay in disclosing lost profits this way:

(ECF No. 196 at 6). Nymbus supported this with a declaration from Mr. Modak who attests that (i) “Nymbus was not tracking revenue on an individual customer basis until the fourth quarter of 2020,” (ii) “lost profits would not have been possible to calculate with any certainty without knowing the individual revenue from each customer contract” and (iii) “Nymbus added additional staff within the last few months that allowed Nymbus to calculate profits on a customer by customer basis.” (ECF No. 196-1 at ¶¶ 5-7). That is, Nymbus claims it came by the ability to calculate its lost profits late in the game. Nymbus, however, never addresses, or attempts to justify, its failure to put Chrome on notice at the outset of this lawsuit that lost profits were among the damages caused by Chrome's alleged breach.

II. ANALYSIS

A. Motions in Limine

Chrome has filed two motions in limine: one to exclude undisclosed lost profits and one to exclude “speculative lost-profit damage calculations.” (ECF Nos. 158, 159). Given the history just summarized, a threshold question for the Court is whether Rule 37(c) of the Federal Rules of Civil Procedure bars Nymbus from using evidence of its alleged lost profits. That Rule states “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence...at trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1); see also Guevara v. NCL (Bahamas) Ltd., 920 F.3d 710, 718 (11th Cir. 2019) (“If a party violates Rule 26(a) or (e), Rule 37(c) provides for the exclusion of the...evidence ‘unless the failure was substantially justified or is harmless.’ ”). Thus, the first question the Court must resolve is whether Nymbus violated Rule 26(a) or (e). For the following reasons, I conclude that it has.

Federal Rule of Civil Procedure 26(a) requires a party, “without awaiting a discovery request” to, among other things, provide “a computation of each category of damages claimed by the disclosing party....” Fed. R. Civ. P. 26(a)(1)(A)(iii). This requires a party to, first, disclose each category of damages they want to recover and, second, provide a computation of damages with supporting documentation. American Enterprises Collision Center, Inc. v. Travelers Prop. & Cas. Co. of America, No. 2:09-cv-443-FtM-29SPC, 2010 WL 11507335, at *3 (M.D. Fla. Sept. 17, 2010) (citation omitted). As mentioned above, Nymbus’ Initial Disclosures described its damages, with some specificity, as “uncompensated, implementation man hours” and “transaction fees.” (ECF No. 193-2 at 4-5). It made no mention of lost profits. And, it provided no computation of damages, as Rule 26(a)(1)(A)(iii) explicitly requires.

*4 Nymbus argues that it complied with Rule 26(a) because it made its Initial Disclosures “based on the information then reasonably available to it.” Fed. R. Civ. P. 26(a)(1)(E); (ECF no. 196 at 4). This is disingenuous. Any challenges in calculating lost profits would not prevent Nymbus from identifying it as a category of damages. Further, its alleged inability to accurately calculate lost profits does not excuse Nymbus from providing at least a rudimentary calculation. “A party cannot shirk its obligations to provide initial disclosures based on arguments that they do not have a breakdown of damages or that a subsequent recalculation would be necessary.” Professional LED Lighting, Ltd. v. Aadyn Technology LLC, No. 14-cv-61376, 2015 WL 11578511, at *2 (S.D. Fla. July 24, 2015); see also American Enterprises Collision Center, Inc., 2010 WL 11507335, at *3 (“Although the exact amount of damages may not be known, the disclosing party must make a good faith estimate of damages and methods of calculation based on the information available at this state of the litigation, while reserving the right to amend their calculations.”) (quotation marks and citations omitted); Fed. R. Civ. P. 26(a)(1)(E) (“A party is not excused from making its disclosures because it has not fully investigated the case....”).

Chrome nonetheless filed its Motions in Limine to exclude evidence of lost profits – and it did so before Nymbus gave notice with its Supplemental Disclosures. This raises the question: was Chrome somehow on notice that Nymbus sought to recover lost profits? Chrome states that it was simply thinking ahead; that it “filed [its] motion in limine in order to bar Nymbus from doing precisely what it is now seeking to do—namely, introduce new evidence after the close of discovery.” (ECF No. 193-1 at 3). This squares with the fact that Nymbus does not argue that it indirectly or obliquely, yet timely, notified Chrome of this damage theory.[3]

For these reasons, the Court concludes that Nymbus’ Initial Disclosures did not comply with Rule 26(a). See e.g., Design Strategy, Inc v. Davis, 469 F.3d 284, 295 (2d Cir. 2006) (affirming district court's finding that plaintiff failed to comply with Rule 26(a), as it “was well within the proper range of its discretion” because “nowhere did [plaintiff] ever disclose ‘lost profits’ as even a ‘category’ of ‘damages’ sought on its Initial Disclosure Statement.”).

Federal Rule of Civil Procedure 26(e) mandates that a party supplement or correct its initial disclosures “in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing.” Fed. R. Civ. P. 26(e)(1)(A). Long after discovery closed, in March 2021, Nymbus served Supplemental Disclosures. It now asserts that its Supplemental Disclosures were timely because it “provided a supplemental disclosure with supporting documents when that information became available to it.” (ECF No. 196 at 4). Nymbus’ assertion that the information necessary to calculate lost profits was unavailable during the discovery period, (ECF No. 196 at 4-6), is unpersuasive for the reasons discussed infra.

The Court is troubled by Nymbus’ handling of its very untimely claim of lost profits. If allowed, Nymbus’ view of its obligation under Rule 26 (a) and (e) would wreak havoc on a court's ability to manage cases in an orderly and efficient manner. For pretrial deadlines to have any meaning, and for parties to adequately prepare for trial, a “timely” supplemental disclosure of an entirely new and substantial category of damages, must occur – at minimum – during the discovery period. As another division of this Court recently recognized, the obligation to supplement under Rule 26(e) “does not extend discovery in perpetuity, rendering the Court's deadlines toothless.” Stewart v. VMSB, LLC, No. 19-cv-22593, 2020 WL 4501830 at *2 (S.D. Fla. July 27, 2020) (citing Cook v. Royal Caribbean Cruises, Ltd., No. 11-20723-CIV, 2012 WL 2319089, at *1 (S.D. Fla. June 15, 20212) (“The mere fact that Plaintiff believes she is or was under a duty to supplement her discovery disclosures does not mean that complying with the duty trumps deadlines in the case and permits trial use of post-deadline disclosures, prejudicial consequences notwithstanding.”)).

*5 Nymbus’ Supplemental Disclosures were not timely and, therefore, the Court concludes that Nymbus violated its duty to supplement its initial disclosures, as required by Rule 26(e)(1)(A).

As noted already, a party who violates Rule 26(a) or (e) cannot use that information at trial “unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). Courts consider three factors in making this determination: (1) the non-disclosing party's explanation for failing to disclose the information, (2) the importance of the information, and (3) the prejudice to the opposing party if the information is admitted. Romero v. Drummond Co., Inc., 552 F.3d 1303, 1321 (11th Cir. 2008). The “first and third factors, together, can outweigh the second.” Id. at 1321 (citation omitted). Nymbus bears the burden of showing that its failure to timely disclose lost profits was substantially justified or harmless. Mitchell v. Ford Motor Co., 318 Fed.Appx. 821, 824 (11th Cir.2009) (“The burden of establishing that a failure to disclose was substantially justified or harmless rests on the nondisclosing party.”).

As for the first factor – Nymbus’ explanation – it argues that its failure to disclose lost profits was substantially justified because“[b]efore hiring its new President and CFO in June 2020, Nymbus’ method of recording profits was not susceptible to calculating profits based on individual customers.” (ECF No. 196 at 8). This explanation is insufficient for several reasons. First, it does nothing to explain Nymbus’ failure to mention lost profits as a category of damages during the discovery period, irrespective of its ability to calculate them at that time. Second, the notion that Nymbus’ accounting methods “were not susceptible” to calculating lost profits does not mean that Nymbus could not have done so. Mr. Modak explains that “Nymbus was not tracking revenue on an individual customer basis until the fourth quarter of 2020” and that “Nymbus added additional staff within the last few months that allowed Nymbus to calculate profits on a customer by customer basis.” (ECF No. 196-1 at ¶¶ 5, 7). Nymbus does not justify its not having taken these steps sooner. Nymbus filed this action for damages and knew it would have to identify and prove its damages. Its decision to hire more skilled executives after discovery closed is not a substantial justification for its failure to timely and adequately compute its alleged damages and share that information with Chrome. See Romero, 552 F.2d at 1322 (finding no abuse of discretion in exclusion of evidence when failure to disclose was based in part on plaintiff's own lack of diligence).

Additionally, the notion that a party can avoid disclosing its damages computation until it can calculate damages with certainty, lacks merit. In City of Rome v. Hotels.com, L.P., the plaintiffs argued that their failure to provide “a calculation of breakage damages was ‘substantially justified’ because (1) they did not have certified data to calculate breakage damages, and (2) a final recalculation would have been necessary since there was a pending dispute over how to properly calculate damages.” 549 Fed. App'x 896, 905 (11th Cir. 2013). The Eleventh Circuit “reject[ed] this attempt to shirk [plaintiffs’] responsibility under Rule 26(a)” and held that the district court did not abuse its discretion in concluding that the plaintiffs were not substantially justified in failing to provide a damages computation. Id. at 905.

*6 For the foregoing reasons, I conclude that Nymbus’ explanation for failing to timely disclose its lost profits damages does not substantially justify that failure.

The second factor examines the importance of the information that was not timely disclosed. Lost profits are clearly important to Nymbus today, as it constitutes a substantial amount of the damages that Nymbus now seeks. But it does not appear that these damages were important to Nymbus during the nearly two and half years this case was pending before it served its Supplemental Disclosures. Nymbus sued Chrome for breach of a multi-year contract which had to beg the question whether that breach caused Nymbus to lose profits. Indeed, one of the first questions a plaintiff must answer for itself before filing suit is what kind of damages, if any, it suffered because of the defendant's conduct. Given Nymbus’ long silence on such a fundamental issue, the Court concludes that the second factor weighs somewhat in favor of Nymbus.

The third factor, which asks whether Chrome would suffer prejudice if Nymbus could introduce evidence of its lost profits at trial, plainly weighs in favor of Chrome. Nymbus claims that any prejudice can easily be cured by Chrome taking Mr. Modak's deposition. (ECF No. 196 at 12-13). Not so. Nymbus now calculates its lost profits using “historical data of annual revenue and operating costs from Nymbus’ customers who are operating on the SmartCore platform.” (Id. at 5). Chrome would be entitled to test the accuracy of Nymbus’ calculations, which would necessarily include discovery into the financial data Nymbus relies upon, the other customers Nymbus is using to calculate its lost profits,[4] and Nymbus personnel who have calculated revenue and costs. Chrome would also be entitled to retain an expert witness to opine on Nymbus’ alleged lost profits – if it believes expert testimony is necessary – which would open up expert discovery and possibly new motion practice. The Court would have to restart the clock on this case - when discovery long ago closed and the case is ready for trial. Nymbus’ arguments and explanations do not justify this.

The Court has considered that a trial date has not been set, as jury trials are currently continued until July 6, 2021 due to the Covid-19 pandemic. See Administrative Order 2021-33. This is not a reason to allow introduction of an entirely new damages theory into the case, particularly one that is complex. As another division of this court recently stated when it struck a party's post-discovery disclosures, “the Court would not permit further discovery and pretrial motion practice just because the trial date has been delayed.” Stewart, 2020 WL 4501830 at *2.

For these reasons, the Court concludes that Nymbus’ failure to timely disclose lost profits is not harmless. See e.g., City of Rome, 549 Fed. App'x at 905 (district court did not abuse its “broad discretion” in concluding that failure to provide damages calculation was not harmless because “we agree with the district court that reopening discovery at this stage in the proceedings would constitute significant harm.”); Managed Care Solutions, Inc. v. Essent Healthcare, Inc., No. 09-60351-CIV, 2010 WL 3385391, at *2 (S.D. Fla. Aug. 23, 2010) (defendant prejudiced by plaintiff's supplemental disclosures setting forth analysis of claimed damages because discovery had ended); Mee Industries v. Dow Chemical Co., 608 F.3d 1202, 1222 (11th Cir. 2010) (“Because calculating [goodwill damages] will often involve complex financial calculations, the district court did not abuse its discretion in finding that [plaintiff's] failure to provide a damages calculation was not harmless.”); Bowe v. Public Storage, 106 F.Supp.3d 1252, 1260 (S.D. Fla. 2015) (“Prejudice generally occurs when late disclosure deprives the opposing party of a meaningful opportunity to perform discovery and depositions related to the documents or witnesses in question.”) (citation omitted).

*7 Having found that Nymbus’ failure to timely disclose lost profits was not substantially justified or harmless, the Court concludes that Rule 37(c)(1) bars Nymbus from introducing evidence of its lost profits at trial. The Court therefore grants Chrome's motions in limine. (ECF Nos. 159, 159).

Last, the Court considers Chrome's request, pursuant to Rule 37(c)(1)(A), that the Court award it its attorneys’ fees. See Fed. R. Civ. P. 37(c)(1)(A) (“In addition to or instead of this sanction, the court...may order payment of the reasonable expenses, including attorney's fees, caused by the failure [to timely disclose or supplement].”). Upon careful consideration, the Court declines to exercise its discretion to award attorney's fees.

B. Motion to Strike Untimely Disclosures

Chrome has filed a motion to strike Nymbus’ Supplemental Disclosures under Rule 37(c). (ECF No. 193). Given the Court's decision to exclude, at trial, evidence of Nymbus’ alleged lost profits, the Court questions the necessity of this relief. Nonetheless, given the Court's conclusion that Nymbus’ Supplemental Disclosures were untimely, and that this was not substantially justified or harmless, the Court grants Chrome's motion to strike. (ECF No. 193).

III. CONCLUSION

For the foregoing reasons, the Court hereby ORDERS that (i) Defendant Chrome's Motion in Limine to Exclude Evidence of Undisclosed Lost Profits, (ECF No. 158), is GRANTED, (ii) Defendant Chrome's Motion in Limine to Exclude Evidence of Speculative Damages, (ECF No. 159), is GRANTED, (iii) evidence of Nymbus’ lost profits is not admissible at trial, and (iv) Defendant Chrome's Motion to Strike Nymbus’ Untimely Disclosures and for Sanctions, (ECF No. 193), is GRANTED.

DONE AND ORDERED in chambers at Miami, Florida, this 3rd day of June 2021.

It was only after this Court entered summary judgment in favor of Chrome on the declaratory judgment claims, that Nymbus revised its response to this Motion in Limine. (ECF No. 186). It argued that it should be permitted to introduce evidence of lost profits as, that very same day, it gave Chrome a supplemental disclosure with a calculation of lost profits.

Those outstanding deadlines are: (i) Joint Pretrial Stipulation, (ii) Joint Proposed Jury Instructions, (iii) proposed Voir Dire questions, and (iv) deposition designations and cross-designations).

Such an argument would be unpersuasive, as Rule 26 requires clear disclosures.

Notably, Nymbus successfully opposed discovery into its other customers, (see ECF No. 60, Transcript of Discovery Hearing at pp. 15, 49), thereby contributing to the prejudice Chrome would now suffer if Nymbus could rely upon its other customer relationships to prove damages.