*1 TO THE HONORABLE JOHN G. KOELTL, U.S.D.J.:

Currently before this Court in this contract case is a motion filed by defendant Church & Dwight Co., Inc. (“Defendant,” “Church & Dwight,” or “C&D”) (Dkt. 183), seeking an order that, as a sanction for a litany of alleged discovery abuses, plaintiff Scantibodies Laboratory Inc. (“Plaintiff,” “Scantibodies,” or “SLI”) be precluded from offering any evidence at trial to support its claimed $20 million in damages. Although this Court has supervised the discovery process and is well familiar with the alleged abuses, the requested sanction, if granted, would effectively be claim dispositive, and therefore this Court is issuing this Report and Recommendation to recommend an appropriate resolution of the motion.

For the reasons set forth below, this Court concludes that, even though, over the course of nearly two years, Plaintiff and its counsel, Rishi Bhandari, Esq. (“Bhandari”) of the law firm Mandel Bhandari LLP, did engage in significant obstruction and delay of the discovery process making misrepresentations to the Court regarding the existence and relevance of documents at issue, and repeatedly frustrating Defendant's ability to discover the basis for Plaintiff's damages claims and obtain evidence necessary to refute those claims—the preclusive sanction sought by Defendant on its motion would nonetheless be excessive. For the most part, the documents and information that should have been produced by Plaintiff in discovery have finally been produced, and thus the principal prejudice suffered by Defendant as a result of Plaintiff's obstruction has not been caused by non-disclosure, but rather by untimely disclosure. Essentially, the improper conduct of Plaintiff and its counsel caused Defendant to incur unnecessary costs in having to make repeated motions to compel production, to lose the opportunity to place relevant documents before witnesses in deposition, to be unable to understand fully, and hence to analyze the merits of Plaintiff's damages claims during the fact-discovery period, and to be unable to provide all relevant material and information to its damages expert prior to the deadline for the expert's report. None of this warrants the exceptionally harsh sanction of preclusion, as alternative sanctions would be sufficient to remedy that prejudice and to punish and deter the type of abuses at issue.

In order to address the abuses found by this Court, as detailed below, I recommend the imposition of the following discovery sanctions: (1) that Plaintiff and its counsel be required to pay the reasonable cost of Defendant's efforts to compel compliance, including the cost of Defendant's sanctions motion; (2) that fact discovery be reopened, at the expense of Plaintiff and its counsel, to the extent necessary to provide Defendant with a reasonable opportunity to examine witnesses regarding belatedly produced documents relating to Plaintiff's claimed lost-profits damages and the factual bases for Plaintiff's expert's lost-profits computation; (3) that Plaintiff and its counsel compensate Defendant's damages expert for the reasonable cost of any supplemental report needed to address the damages evidence that was not available to the expert prior to the preparation of his initial report; and (4) if Defendant believes that it would be prejudicial for a jury to learn that its expert report was modified as the result of new information, that Plaintiff be precluded from informing the jury of the contents of the original report.

*2 BACKGROUND...––––

A. Plaintiff's Complaint...––––

B. History of the Parties' Discovery Disputes...––––

C. Procedural History...––––

DISCUSSION...––––

I. APPLICABLE LEGAL STANDARDS...––––

A. Rule 26(a) and (e)...––––

B. Rule 37...––––

C. The Court's Inherent Power...––––

II. DEFENDANT'S SANCTIONS MOTION...––––

A. Plaintiff's Alleged Discovery Abuses...––––

B. Appropriate Sanctions...––––

CONCLUSION...––––

A. Plaintiff's Complaint

Plaintiff is a biomedical manufacturing company, and Defendant is a seller of consumer products. (Complaint, dated Apr. 1, 2014 (“Compl.”) (Dkt. 12) ¶¶ 10-16.) In this action, Plaintiff claims that Defendant breached two contracts (the “Supply Agreements”) relating to Plaintiff's manufacture and supply of two types of pregnancy test kits (“PTKs”) for Defendant: “digital” test kits and “non-digital” test kits. (Id. ¶¶ 1-5.) According to the Complaint, one of the Supply Agreements was effective from July 1, 2009 to July 1, 2015, and the other was effective from June 1, 2010 to June 1, 2016, provided the agreements were not properly terminated prior to their expiration dates. (Id. ¶¶ 2, 17.)

*3 Plaintiff claims that Defendant breached both of the Supply Agreements in late 2013. (See id. ¶¶ 39-46.) According to the Complaint, in October 2013, Defendant's representatives instructed Plaintiff to cease manufacturing PTKs under the Supply Agreements, informing Plaintiff that Defendant was planning to stop purchasing PTKs from Plaintiff after December 31 of that year. (Id. ¶ 39.) Plaintiff claims that, by cutting Plaintiff off as its supplier of PTKs without properly complying with the notice provisions of the Supply Agreements for termination of the contracts, and by thus stripping Plaintiff of business to which it was contractually entitled (and for which it had incurred substantial costs), Defendant caused Plaintiff to suffer damages in an amount “believed to be no less than $20,000,000.” (Id. ¶¶ 68, 86.)

The Complaint specifies that Plaintiff incurred approximately $3.6 million in costs in connection with the lost business ($1.9 million for scrapping raw materials, $1.2 million for equipment purchases and upgrades, and $471,719 for having to make severance payments allegedly required under Mexican law, when Plaintiff downsized its labor force in Mexico), but sets out no further details of Plaintiff's lost-profits claim. (See id. ¶¶ 68-80, 86, Prayer for Relief.) Accordingly, Defendant devoted much of its efforts during the discovery period seeking to learn how Plaintiff was computing its alleged $20 million in damages, and whether Plaintiff's computation was subject to challenge.

B. History of the Parties' Discovery Disputes

The discovery disputes underlying Defendant's sanctions motion largely relate to Defendant's efforts to understand whether Plaintiff's PTK business was as profitable as Plaintiff claims it was. In this regard, Defendant sought substantial discovery regarding not only the costs incurred by that line of Plaintiff's business, but also by Plaintiff's other business lines, on the theory that, for purposes of this litigation, Plaintiff may have been attempting to inflate the profits of its PTK department by improperly allocating expenses to other departments.[1] Over the course of this litigation, Plaintiff repeatedly resisted Defendant's efforts to obtain the discovery sought by arguing, among other things, that the Honorable John G. Koeltl, U.S.D.J., had already ruled that the requested discovery should not be permitted, that certain costs were irrelevant to Plaintiff's lost-profits calculation, that certain documents did not exist, and that certain documents—whose existence was subsequently demonstrated—were never specifically requested.

The parties' numerous disagreements have culminated in Defendant's sanctions motion, which, together with its supplemental briefing that this Court permitted, challenges (1) Plaintiff's purported failure to produce documents; (2) the preparedness of Plaintiff's Rule 30(b)(6) damages witness for deposition and the conduct of Plaintiff's counsel during that deposition; (3) Plaintiff's purported untimely production of documents; (4) the adequacy of Plaintiff's Rule 26(a) damages computation and related productions of documents, as ordered by this Court; and (5) the substantially shifted damages methodology and calculations contained in Plaintiff's expert report on damages and the adequacy of Plaintiff's disclosures relating to that report. This Court summarizes below the history of Defendant's efforts to obtain full damages discovery and the various discovery rulings made by this Court, as they pertain to Defendant's current motion.

*4 In or around June 2014, Plaintiff served its initial Rule 26(a) damages disclosure on Defendant. (See Letter to the Court from Baldassare Vinti, Esq., dated Nov. 19, 2014 (“11/19/14 Vinti Ltr.”)[2] (Dkt. 68), at 2.) Although the Rule requires a claimant to set forth its damages “computation,” Fed. R. Civ. P. 26(a)(1)(A)(iii), Plaintiff's disclosure apparently stated nothing more than: “In addition to a declaratory judgment, Plaintiff seeks damages, statutory damages, pre- and post-judgment interest, and costs and attorneys' fees. Plaintiff estimates its damages to be in excess of $20,000,000”[3] (11/19/14 Vinti Ltr., at 2).

Around this same time, Defendant served its first set of document requests on Plaintiff, which, inter alia, sought production of the following:

(1/26/16 Jordan B. Leader, Esq. Ltr., Ex. 1 (Defendant's First Set of Requests for Production of Documents and Things, dated June 20, 2014 (Dkt. 168-1) ), at 7-8.)

Following the Court's receipt of several letters concerning various discovery disputes between the parties, Judge Koeltl held a conference on September 4, 2014. (Transcript of Hearing, held Sept. 4, 2014 (“9/4/14 Hr'g Tr.”) (Dkt. 50).) Addressing the parties' disputes regarding Defendant's requests for documents pertaining to Plaintiff's damages, Judge Koeltl ruled as follows:

(Id. at 54.)

In November 2014, Judge Koeltl referred this matter to this Court for general pretrial supervision. (Dkt. 67.) Shortly thereafter, Defendant filed a letter, complaining that Plaintiff's Rule 26(a) damages disclosure was insufficient. (11/19/14 Vinti Ltr., at 2.) At a November 21, 2014 discovery conference, this Court advised Plaintiff's counsel, Bhandari, that Rule 26(a)(1)(A)(iii) required Plaintiff to provide a “computation of every category of damages” and the “documents or other evidence on which the computation is based.” (Transcript of Discovery Conference, held Nov. 21, 2014 (“11/21/14 Conf. Tr.”)[4] (Dkt. 76), at 14-15.) This Court further cautioned Bhandari that the fact that Plaintiff's damages computation might be “complex and lengthy” and involve “a lot of documents” would not excuse Plaintiff from complying with the requirements of the Rule. (Id. at 16.)

*5 In a subsequent written Order dated December 5, 2014, this Court further expressly cautioned Bhandari that, if Plaintiff's supplemental Rule 26(a) disclosure were found by the Court to be insufficient, then Plaintiff might “face sanctions.” (Order, dated Dec. 5, 2014 (“12/5/14 Order”) (Dkt. 84).) By way of a letter dated the same day as that Order, Bhandari provided additional information to Defendant and the Court regarding Plaintiff's alleged damages. (12/5/14 Bhandari Ltr. (Dkt. 83), at 2.) Bhandari also represented in his letter that, “to the best of SLI's knowledge, every single document that SLI has in its possession that it intends to rely upon at trial with regard to damages has already been produced to C&D.” (Id.)

On December 15, 2014, Plaintiff provided Defendant with a formal, supplemental Rule 26(a) disclosure, including the information that was contained in its December 5, 2014 letter and other, more detailed information. (See 12/15/14 Bhandari Ltr., Attachment (“Supplemental Rule 26(a) Disclosure”) (Dkt. 87-1.) ) The supplemental disclosure stated that Plaintiff was seeking five categories of damages, estimated to total in excess of $20 million, and “computed” as follows:

(Id.) Defendant later informed the Court that “the documents produced to C&D on October 14, 2014 and December 9, 2014” (as referenced by Plaintiff in this damages computation, presumably as providing support for the stated figures) encompassed over 300,000 pages of documents and constituted the entire document production that Plaintiff had made, as of that date. (See 12/23/14 Conf. Tr. (Dkt. 108-1), at 8.) Plaintiff never disputed this.

Defendant complained that Plaintiff's supplemental disclosure was inadequate (see 12/17/14 Leader Ltr (Dkt. 88), at 1), arguing, in particular, that the disclosure failed to explain “what makes up SLI's cost of sales.” (Id. at 1-2.) Defendant also faulted Plaintiff for burying the documents purportedly supporting its damages computation “among the hundreds of thousands of pages produced as part of general document discovery.” (Id.)

At a discovery conference held on December 23, 2014, Bhandari defended Plaintiff's supplemental Rule 26(a) disclosure, particularly with respect to Plaintiff's document productions as of that date. He stated, “We have produced every document that we would use in an inquest to support our claim of damages, everything is there.... [W]e would not use any documents that we have not produced to support our damages.” (12/23/14 Conf. Tr., at 10-11.)

*6 Upon hearing this, this Court informed Bhandari that Rule 26(a)(1)(A)(iii) does not simply concern the production of documents, but instead requires that a plaintiff “reasonably direct” the defendant to the documents supporting the plaintiff's damages claim, so that the defendant can replicate the plaintiff's damages computation “with ease.” (Id. at 12-13.) This Court then instructed Bhandari that Plaintiff should “rethink” and “redo” its Rule 26(a) disclosure if it believed that doing so was necessary to comply with Rule 26(a). (Id. at 13.)

Plaintiff did not revise its supplemental disclosure after the conference, and Defendant sent another letter of protest to the Court in January 2015. (See 1/8/15 Vinti Ltr. (Dkt. 98).) Bhandari replied on behalf of Plaintiff, contending that revising the disclosure was “unnecessary” because Plaintiff's damages computations were “supported by the documents SLI produced.” (1/12/15 Bhandari Ltr. (Dkt. 101), at 2.) Bhandari also noted that “there [were] tens of thousands of documents that support[ed] [Plaintiff's] damages claim[,] so a Bates Stamp list of those documents would be difficult to gather and almost totally useless.” (Id. at 2 n.2.) Nevertheless, on January 12, 2015, Plaintiff provided Defendant with a Bates Stamp list of approximately 41,000 damages-related documents. (Id.)

At a January 13, 2015 discovery conference, this Court discussed the parties' continuing dispute regarding the adequacy of Plaintiff's Rule 26(a) disclosure, as well as the scheduling of the deposition of Plaintiff's Rule 30(b)(6) damages representative. (See 1/13/15 Conf. Tr. (Dkt. 106), at 6.) This Court informed Defendant's counsel that Defendant could seek sanctions regarding Plaintiff's supplemental Rule 26(a) disclosure, if Defendant did not believe that Plaintiff's list of 41,000 damages-related documents provided a sufficient roadmap for replicating Plaintiff's damages computations, and if Defendant believed that such a motion would have merit. (Id. at 9-11, 26-27.) This Court also again advised Bhandari as to the requirements of Rule 26(a). Among other things, this Court told Bhandari:

(Id. at 10-11.)

Before proceeding to depose Plaintiff's Rule 30(b)(6) representative on the issue of damages, Defendant filed a sanctions motion regarding Plaintiff's alleged noncompliance with Rule 26(a). (See Notice of Defendant Church & Dwight Co. Inc.’s Motion for Sanctions, dated Jan. 26, 2015 (Dkt. 110).) At that time, Defendant's sanctions memorandum accused Plaintiff of “gamesmanship,” and labeled Plaintiff's list of the 41,000 damages-related documents as a “ruse” because it contained numerous facially irrelevant documents. (Memorandum of Law in Support of Defendant Church & Dwight Co., Inc.’s Motion for Sanctions, dated Jan. 26, 2015 (“1/26/15 Def. Sanctions Mem.”) (Dkt. 111), at 10-11.)

*7 Before Plaintiff could submit an opposition to Defendant's sanctions motion, this Court held another conference with counsel on February 6, 2015. (See 2/6/15 Conf. Tr. (Dkt. 128).) At the conference, this Court stated that it intended to deny Defendant's sanction motion without prejudice to renew after Defendant had deposed Plaintiff's Rule 30(b)(6) damages representative. (Id. at 11; see also Order, dated Feb. 6, 2015 (Dkt. 119).) This Court explained that the very purpose of a Rule 30(b)(6) deposition on the subject of damages is to obtain clarity on an opposing party's damages computation, and, if Defendant obtained such clarity through that deposition, then Plaintiff's Rule 26(a) disclosure could be deemed to have been further supplemented, and a sanctions motion would be unnecessary. (2/6/15 Conf. Tr., at 3-4, 11-14.) This Court also told Bhandari, though, that, based on Defendant's arguments, the Court had “real doubts” as to whether Plaintiff's current Rule 26(a) disclosure was adequate. (Id. at 12, 16-17.) In response, Bhandari stated, “There's five documents that you can figure [Plaintiff's damages computations] out from.” (Id. at 17.) This Court warned Bhandari that, if Plaintiff did not spell this out for Defendant, then the Court “might in fact impose sanctions or recommend sanctions[,] depending upon the nature of such sanctions.” (Id.)

In February 2015, Defendant wrote to the Court seeking to compel Plaintiff to produce 30 categories of documents, which Defendant described as “critical” and “core” documents that went “to the heart of SLI's lost profits claim.” (2/3/15 Nancy Sher Cohen, Esq. Ltr. (Dkt. 115), at 1.) Defendant also sought to compel Plaintiff to produce documents related to its mitigation of damages. (Id. at 3-5.) Bhandari responded on behalf of Plaintiff that all documents sought relating to Plaintiff's products other than the PTKs that it manufactured for Defendant were irrelevant to Plaintiff's damages claims. (2/12/15 Bhandari Ltr. (Dkt. 122), at 7-11.) In support of this position, Bhandari referenced Judge Koeltl's oral ruling at the September 4, 2014 hearing. (Id. at 8 (quoting the portion of the ruling excerpted above).) Bhandari also argued that Plaintiff did not have a duty to mitigate its damages as a matter of law, and thus, in its view, it was not required to produce any documents concerning its efforts to mitigate damages. (Id. at 12-13.)

With respect to Plaintiff's relevancy argument on its non-PTK costs, Defendant countered that Judge Koeltl's ruling did not deem such costs to be irrelevant; rather, Defendant argued that Judge Koeltl had only ruled that documents related to such costs could be provided in a “second production,” if a dispute arose regarding how to calculate Plaintiff's lost profits. (2/17/15 Cohen Ltr. (Dkt. 124), at 3 (quoting 9/4/14 Hr'g Tr., at 54).) Following Plaintiff's initial document production, Defendant maintained that such a dispute had arisen. (Id.) Defendant further argued the relevance of these non-PTK cost documents by explaining that a proper calculation of Plaintiff's lost profits for its PTK business would include not only “the direct costs incurred in the manufacture of the [PTKs],” but also “an apportionment of all of the various indirect costs and expenses from [Plaintiff's] overall business.” (Id. at 3-4.) With respect to Plaintiff's position that it was not obligated to produce mitigation-of-damages documents, Defendant contended that Plaintiff had not yet proven that it lacked a duty to mitigate damages, and that it would be premature, at the discovery stage, for the Court to make such a determination and deny discovery. (Id. at 8-9.)

On April 20, 2015, this Court held a conference, at which it found Defendant to have the better of the arguments. (See 4/20/15 Conf. Tr. (Dkt. 131).) In particular, this Court noted that, where a plaintiff claims damages in an amount as large as Plaintiff had claimed here (i.e., $20 million), it has a corresponding burden to permit the defendant to explore that claim, and provide the defendant with the tools to challenge the claim and its component pieces. (Id. at 83-84.) Stated differently, this Court placed a discovery burden on Plaintiff proportional to the size of its damages claim.[6] This Court further noted that the more types of costs that a plaintiff places into a loss column, the lower its profit becomes. (Id. at 128.) This Court reasoned that where, as here, a plaintiff is arguing that many of its costs are irrelevant to its lost-profits claim and should not be subtracted from lost revenues, then “defendants have a right through fact discovery and ultimately through their expert to challenge that and say [the plaintiff is] inflating [its] profits here and deflating [its] profits somewhere else in order to get more out of this lawsuit.” (Id. at 128-30; see also id. at 109, 121-23.)

*8 In light of these considerations, as well as Judge Koeltl's ruling that documents pertaining to “overhead,” “other charges from other business,” and the allocation of those costs to Plaintiff's PTK business, could come in a “second production” (see 9/4/14 Hr'g Tr., at 54), this Court ordered Plaintiff to produce additional documents. Those documents included documents relating to Plaintiff's costs outside of its PTK department, such as “overhead costs, labor costs, material costs, shipping costs, [and] utilities costs.” (4/20/15 Conf. Tr., at 128-30.) This Court also specifically ordered Plaintiff to produce documents relating to the allocation of these costs to its different departments. (See id.) In addition, this Court ordered that Plaintiff produce other financial documents, including raw-material scrapping-cost documents, for which Plaintiff had produced some requested years, but not others. (See id. at 97-98, 121-23, 125-36.) This Court also ordered Plaintiff to produce documents relating to its mitigation of damages because, in the absence of a substantive ruling as to whether Plaintiff had a duty to mitigate, Defendant had the right to pursue the issue in discovery. (See id. at 165, 172.) In terms of timing, this Court ordered Plaintiff to produce all of these documents before the deposition of Plaintiff's Rule 30(b)(6) damages representative. (Id. at 129.)

Following this Court's oral rulings at the April 20, 2015 conference, Plaintiff apparently produced some documents on a rolling basis for the next eight months, during which the deposition of Plaintiff's Rule 30(b)(6) damages representative was never scheduled. (See 1/7/16 Leader Ltr. (Dkt. 154); 1/11/16 Bhandari Ltr. (Dkt. 156).) On January 12, 2016, still dissatisfied with Plaintiff's document productions, Defendant wrote to the Court seeking to compel Plaintiff to produce four categories of documents, which Defendant described as follows:

(1/12/16 Leader Ltr. (Dkt. 157), at 3-4.)

In response, Bhandari made a series of representations that he would later contradict, or that Defendant would later allege to have been false. Regarding Defendant's request for breakdowns of Plaintiff's costs by product line, Bhandari represented that Plaintiff “does not have analogous records for [the] 2011-2013 time period.” (1/14/16 Bhandari Ltr. (Dkt. 158), at 1.) Bhandari further represented, “[w]hile it appears doubtful that these documents, breaking down costs for non-PTK product lines, would have any impact on C&D's damages calculation, SLI has diligently searched its files for such records and would have produced them if they existed.” (Id.) With respect to Defendant's request for additional scrapping-cost documents, Bhandari stated that Plaintiff had already produced “a mountain of information,” and “[t]here is simply no additional information to provide.” (Id. at 2.) For documents regarding equipment upgrades, Bhandari summarized Plaintiff's production of relevant documents to date, and stated that “no further documents exist.” (Id. at 2-3.) And finally, on the mitigation-of-damages issue, Bhandari identified the documents that Plaintiff had produced showing its alleged mitigation efforts, and described those documents as “more than sufficient.” (Id. at 3.)

*9 This Court ruled upon this round of letter briefing on January 21, 2016. (See Order, dated Jan. 21, 2016 (“1/21/16 Order”) (Dkt. 167).) With respect to Defendant's request that the Court compel Plaintiff to produce additional documents regarding raw-material scrapping costs, equipment upgrades, and Plaintiff's mitigation efforts, this Court accepted Plaintiff's representations that it had already produced all responsive documents in its possession, custody, or control. (Id. at 1.) This Court added, however, “If Defendant is eventually able to demonstrate that such representations were inaccurate and that responsive documents were, in fact, withheld by Plaintiff, then Defendant may seek sanctions or other appropriate remedies at that time.” (Id.) On Defendant's request to compel Plaintiff to produce documents showing a breakdown of its costs by product line and department from 2011-2013, this Court (a) ordered Defendant to submit a copy of its actual document requests related to this category of documents, and (b) ordered Plaintiff to clarify whether it had, “within its possession, custody, or control, any additional documents that would be responsive to those request(s) as posed, with specific reference to Rule 34(a)(1)(A).”[8] (Id. at 2.) This Court also ordered that the parties schedule the deposition of Plaintiff's Rule 30(b)(6) damages representative for the earliest date on which counsel and the witness were available, after which fact discovery would be closed.[9] (Id.)

Defendant complied with this Court's Order by submitting a copy of the document requests it had served on Plaintiff. (See Dkt. 168-1.) In its cover letter, Defendant's counsel drew attention to Requests 24, 25, and 33 (see supra ) to support Defendant's contention that the requests summarized with bullet points its January 12, 2016 letter were not new requests. (1/26/16 Leader Ltr., at 1 (Dkt. 168).)

Bhandari, however, on behalf of Plaintiff, did not address this Court's Order to clarify whether Plaintiff had possession, custody or control of responsive documents stored in an electronic medium, as described in Rule 34(a)(1)(A). (See 1/27/16 Bhandari Ltr. (Dkt. 171).) Instead, he simply maintained that Plaintiff “did not routinely create” documents breaking down costs for non-PTK products. (Id. at 2.) Bhandari also represented that Plaintiff had already fully complied with all of Defendant's document requests, even before this Court's January 21, 2016 Order. (Id.) Despite this representation, Bhandari noted that Plaintiff had, contemporaneously with his letter, produced new documents to Defendant “setting forth SLI's internal projections of [S]G&A for the PTK and non-PTK sides of the company from 2011 to 2014.” (Id. at 3.) These documents apparently revealed that SLI had allocated 20% of its SG&A costs to its PTK business and 80% to its non-PTK business. (See 2/5/16 Conf. Tr. (Dkt. 177), at 13-14; see also Memorandum of Law in Support of Defendant Church & Dwight Co., Inc.’s Motion for Sanctions, dated Mar. 4, 2016 (“3/4/16 Def. Sanctions Mem.”) (Dkt. 191),[10] at 7.) Despite the fact that these documents plainly related to Plaintiff's overhead costs, Bhandari argued that Plaintiff did not previously produce these documents because they had “never been requested before.” (1/27/16 Bhandari Ltr., at 3.)

*10 Defendant's counsel responded that Defendant had previously requested these newly produced documents, and, indeed, that the documents were precisely the type of cost-related documents for which, according to Bhandari's previous representations, Plaintiff had “diligently searched its files,” supposedly determining that the documents did not exist. (1/29/16 Leader Ltr. (Dkt. 172), at 1-2.) Defendant's counsel also argued that the existence of the newly produced SG&A documents suggested that other related information also existed and was being wrongfully withheld. (Id. at 2-3.)

This Court held another discovery conference on February 5, 2016. (See 2/5/16 Conf. Tr.) At this conference, this Court noted a pattern in Plaintiff's conduct, by which Bhandari would represent that Plaintiff's productions were complete—until threatened with sanctions. (See id. at 48-49 (THE COURT: “I kept hearing from Scantibodies, ‘I'll produce it all, I'll produce it all, I'll produce it all,’ and then, ‘Apparently we didn't produce it all; there are certain documents’ ”); see also id. at 49 (noting that certain documents faxed to the Court prior to the conference were “clearly documents that have not been produced until just now, even though you (Bhandari) have previously said you produced it all.”).) Evidence of this pattern was even borne out during the conference. (See id. at 48 (in discussing a particular, previously identified balance-and-income statement, which, according to Defendant, Plaintiff had produced for some years, but not others, Bhandari responded, “If we haven't produced this particular document, we'll produce it.... I apologize if that has not yet been produced and, you know, if that was the request, you know, and it was clear to us.”).) Further, despite representing in a January 14, 2016 letter that Plaintiff had diligently searched for a category of documents, and that such documents did not exist, Bhandari admitted that Plaintiff did not actually search for many of those documents because Bhandari believed that Defendant had improperly categorized them in its January 12, 2016 letter. (Id. at 53-55 (THE COURT: “When you got this letter on January 12 ... did you look to see if you had any [of the documents specified in the letter by Bates number] for 2011, 2012, 2013 that ... would have equivalent information?” MR. BHANDARI: “No, your Honor.” [Explaining].)

This Court made the further observation that it appeared as if Plaintiff had decided what to produce and not produce based on its own determinations of what was relevant, rather than by following the rulings of the Court. (Id. at 3, 47-48.) Even at the conference, Bhandari repeated his arguments that the outstanding documents that Defendant's sought relating to non-PTK cost breakdowns were irrelevant. (See, e.g., id. at 13, 36-37.) In a statement that Plaintiff's own expert would later contradict, Bhandari represented to the Court, “[S]G&A expenses ... according to economic analysis and accounting principles ... are fixed costs rather than variable, so ... in our estimation they should not be deducted or affect the damages calculation or the lostprofits calculation.” (Id. at 36.) In response, this Court reminded Bhandari that it had already ruled at the April 20, 2015 conference, almost a year earlier, that documents relating to Plaintiffs' costs (whether Plaintiff considered those costs “fixed” or not—something the parties' experts could debate) and to how it allocated those costs across PTK and non-PTK product lines, were relevant and had to be produced. (Id. at 23-24, 38-40, 46, 68; see also id. at 3 (THE COURT: “I am at a loss [as] to how some of the arguments that are being made here [by Plaintiff] are still being made.... [T]o the extent that these arguments are being rehashed, I consider [them] as being decided.”).)

*11 This Court also addressed the issue of whether non-PTK cost-related documents and other documents listed at the first bullet point of Defendant's January 12, 2016 letter to the Court actually existed. (Id. at 3, 50-51.) Bhandari repeated his prior representations that cost breakdowns by non-PTK product lines did not exist. (See, e.g., id. at 17-18, 22, 53 (“[W]e do not have a product breakdown of costs for the products other than the PTK pregnancy test kit business.”).) In response, this Court expressed its skepticism that a manufacturing company did not track the sales and costs associated with its different product lines (see id. at 66-67), and ordered Plaintiff to investigate further whether it maintained such information (id. at 50-52, 56-57, 65-67, 70). Specifically, this Court ordered Plaintiff to investigate whether it maintained (1) the documents described in the first bullet of Defendant's January 12, 2016 Letter (i.e., “[b]reakdowns of all different kinds of costs for different product lines”), as well as (2) documents showing “an itemization of what [Plaintiff's SG&A costs] are,” and (3) “backup documentation ... to explain why someone chose for internal purposes ... the 80/20 [allocation],” wherein 80% of SG&A costs were allocated to non-PTK business and 20% of such costs were allocated to PTK business. (Id. at 50-51, 56.) This Court further ordered that, if Plaintiff possessed documents in any of these categories, then it must produce them “promptly,” before the deposition of Plaintiff's Rule 30(b)(6) damages representative. (Id. at 68-69.)

Additionally, this Court ordered that, if Plaintiff did not possess any of these three categories of documents, then it would be required to provide an explanatory affidavit or declaration under penalty of perjury from a person at the company with knowledge of the matter. (Id. at 65-66, 69-70.) This Court specifically instructed Bhandari that it did not want the explanation to come from Plaintiff's counsel. (Id. at 50-51, 66.) This Court also emphasized its need for an explanatory affidavit or declaration no later than February 11, 2016, ahead of the deposition of Plaintiff's Rule 30(b)(6) damages representative, which had previously been scheduled for February 16, 2016. (Id. at 70 (THE COURT: “So I would say no later than the 11th if there's going to be a declaration or an affidavit from somebody, no later than the 11th. Otherwise, it's not going to be timely for me to see anything before that deposition. All right?” MR. BHANDARI: “[All right].”); see also id. (explaining to the parties that the Court was closed from February 12-15, 2016, for Lincoln's Birthday and Presidents' Day).)

With respect to the deposition of Plaintiff's 30(b)(6) damages representative, this Court cautioned Plaintiff that: “If the witness identifies documents that were not previously produced, ... [and] if I think they were previously called for and previously ruled upon and that they should have been produced prior to the deposition, at that point I may consider sanctions.” (Id. at 64.) Further, this Court added:

(Id.)

Following this Court's February 5, 2016 oral rulings, and before the deposition of Plaintiff's 30(b)(6) damages representative, Plaintiff reportedly produced to Defendant: documents that were supposedly “comparable” to the six documents specifically identified by Bates number in Defendant's January 12, 2016 letter to the Court; “monthly reports [from 2009 to 2015] showing the allocation of all expenses in all of [Plaintiff's] departments and across all product lines for the entire company,” which also contained “an allocation of [S]G&A expenses to both PTK and non-PTK business lines”; and “monthly documents showing the revenues, quantities sold, material, labor, and estimated overhead costs” for “all of [Plaintiff's] products.” (See Declaration of Rishi Bhandari, dated Mar. 18, 2016 (“Bhandari Decl.”) (Dkt. 190) ¶¶ 4-9 & Exs. C, F, I, J, K.) In other words, Plaintiff finally produced documents responsive to the first bullet point of Defendant's January 12, 2016 letter to the Court (see id.; see also 1/12/16 Leader Ltr., at 3), despite this Court's having ruled almost a year earlier that documents related to Plaintiff's non-PTK costs were relevant and had to be produced (see 4/20/15 Conf. Tr., at 97-98, 121-23, 125-36), and despite Bhandari's having previously represented that Plaintiff had diligently searched for those documents and that the documents did not exist (see 1/14/16 Bhandari Ltr., at 1; 1/27/16 Bhandari Ltr., at 2; 2/5/16 Conf. Tr., at 17-18, 22, 53). According to Plaintiff, its production also contained an “itemization” of its SG&A costs. (See Pl. Sanctions Opp., at 6-7.)

*12 Plaintiff's production did not, however, contain any documents regarding the basis of Plaintiff's decision to allocate 20% of its SG&A costs to its PTK business and 80% to its non-PTK business. (See Vinti Decl., Ex. 7 (Declaration of Marina Bradley, dated February 11, 2016 (“Bradley Decl.”) ¶ 1; Vinti Decl., Ex. 10 (emails among counsel). Plaintiff acknowledged this omission by providing Defendant with a Declaration from Marina Bradley (“Bradley”), Plaintiff's Director of Finance, on February 12, 2016. (See Vinti Decl., Ex. 10 (transmission email sent by Bhandari).) Although the Declaration was dated February 11, 2016—the day on which this Court ordered Plaintiff to provide the Declaration—Bhandari did not provide the Declaration to Defendant until the following day. (See id.) In her Declaration, Bradley stated,

(Bradley Decl. ¶ 2.)

On February 16, 2016, Defendant proceeded to depose Bradley, who Plaintiff put forward as its Rule 30(b)(6) witness on damages. (See Declaration of B. Vinti in Support of Defendant Church & Dwight Co. Inc.’s Motion for Sanctions, dated Mar. 4, 2016 (“Vinti Decl.”) (Dkt. 192), Ex. 8 (Transcript of the Deposition of Marina Bradley, conducted Feb. 16, 2016 (“Bradley Dep.”) (filed under seal) ).) During her deposition, Bradley explained that she had searched for the SG&A-allocation documents referenced in her Declaration by asking a senior cost accountant at SLI about them, searching her emails for the phrase “20 percent allocation G&A,” and opening and viewing between 20 and 50 accounting-related documents on SLI's “accounting drives.” (Id. at 11-19.) She admitted that she did nothing else to locate the documents, such as search the emails of, or speak to, current or former SLI employees like its President, Chief Operating Officer, or her predecessor Director of Finance. (Id. at 18-20.) She also admitted that she was only hired at SLI in September 2013, and that the decision to allocate 20% of SG&A expenses to the PTK department had pre-dated her hiring. (Id. at 45, 66, 205.)

With respect to other damages-related documents, Bradley testified that Plaintiff maintained certain documents which, according to Defendant, had not been previously produced, including: (1) SG&A backup documents from Plaintiffs “Made to Manage” System, which would have shown the specific expenses that made up SG&A line items (3/4/16 Def. Sanctions Mem., at 11 (citing Bradley Dep., at 197-98) ); (2) the documents needed to calculate the monthly supply of raw materials for which Plaintiff was claiming damages (id. at 12 (citing Bradley Dep., at 240-41) ); (3) the unique identifying number for each piece of equipment for which Plaintiff was claiming damages, which would have allowed Defendant to cross-reference the equipment at issue with other (produced) documents that listed equipment costs and life expectancy (id. at 13-14 (citing Bradley Dep., at 133-34, 268-69) ); (4) “quote documents,” which would have contained price quotes provided to potential new SLI customers after Plaintiff lost Defendant's business (id. at 14 (citing Bradley Dep., at 228-29) ); (5) a “payroll register,” which would have shown the extent to which Plaintiff reduced the number of its employees and overtime hours after Plaintiff stopped manufacturing PTKs for Defendant, and the extent to which an employee's salary was allocated to the PTK department (id. at 14 (citing Bradley Dep., at 95-97, 166-68, 230) ); and (6) Plaintiff's 2015 audited financial statements, which Bradley testified she would need to review in order to determine whether Plaintiff's “gross margins” decreased after it stopped manufacturing PTKs for Defendant (id. at 15 (citing Bradley Dep., at 226-28) ).

*13 Bradley also offered testimony explaining, at least in part, Plaintiff's damages claims and computations. (See, e.g., Bradley Dep., at 111-12, 121-24, 173, 224-36, 276-79.) Despite this testimony, Defendant argued that Bradley did not provide it with the clarity it required to understand Plaintiff's damages. (3/4/16 Def. Sanctions Mem., at 17-19.) Defendant also asserted that Bradley was unprepared for her deposition, and that her counsel improperly instructed her not to answer questions related to a deposition topic for which she was had been designated to testify. (Id. at 15-17.)

Dissatisfied with Bradley's deposition, Plaintiff's refusal to supplement its Rule 26(a) disclosure further, and the state of Plaintiff's document productions, Defendant moved for sanctions again on March 4, 2016. (See 3/4/16 Def. Sanctions Mem.) In this sanctions motion, which is now before the Court, Defendant alleged numerous discovery abuses, discussed further below, relating to Plaintiff's alleged repeated violations of Court Orders and the Federal Rules. (See id.) Defendant also identified several types of documents that it claimed it had requested and was entitled to receive, but that had still not been produced. (See id. at 10-14.)

In its opposition, Plaintiff—for the first time in this litigation—provided Defendant with a narrow list of previously produced documents, identified by Bates numbers, a package of seven exhibits containing examples of those documents, and a summary of the contents of the previously produced documents, which, according to Plaintiff, fully explained its damages computations. (See Plaintiff's Memorandum of Law in Opposition to Defendant's Motion for Sanctions, dated Mar. 18, 2016 (“Pl. Sanctions Opp.”) (Dkt. 189), at 17-18 (citing Bhandari Decl., Exs. J, K, O, P, S, T, and U).) Plaintiff also produced certain financial documents for which it had previously produced some years, but not all. (Id. at 11, 19 n.4.) As to the other documents that Defendant alleged were being withheld in violation of the Court's Orders, Plaintiff refused production on relevance grounds. (See id. at 10-14.)

Defendant responded that it had had the right to receive Plaintiff's damages summary, its identification of damages-related documents, and its supplemental production before it deposed Plaintiff's witnesses in this matter. (See Reply Memorandum of Law in Support of Defendant Church & Dwight Co., Inc.’s Motion for Sanctions, dated Mar. 25, 2016 (“Def. Sanctions Reply”) (Dkt. 194), at 5-7.) Defendant also contended that Plaintiff was still withholding certain documents that were needed to challenge Plaintiff's damages computations. (Id.) Additionally, Defendant noted that, despite the new damages-related information in Plaintiff's opposition brief, Plaintiff had still not identified when its purported 19-month damages period began and ended. (Id. at 4-5.)

On April 8, 2016, while Defendant's March 4, 2016 sanctions motion was still pending, Plaintiff served Defendant with its expert report on lost profits, authored by Professor John D. Finnerty (“Finnerty”). (See 4/20/16 Vinti Ltr. (Dkt. 202), Ex. 1 (Expert Report of John D. Finnerty, Ph.D., dated Apr. 7, 2016 (“Finnerty Report”) (filed under seal) ).) Through his computations, Finnerty ultimately arrived at a lost profits figure of $10.7 million—more than $5 million less than the $16 million in lost profits that Plaintiff had set forth in December 2014, in its Supplemental Rule 26(a) Disclosure. (Compare Finnerty Report, Ex. 9 with Pl. Suppl. Rule 26(a) Disclosure, at 1.) Finnerty achieved this reduction by decreasing the amount of lost sales revenue from $32.6 million to $30.3 million, and increasing the amount of costs saved following the alleged contract breaches from $16.6 million to $19.6 million. (Id.) In other words, while Plaintiff had asserted a 49% profit margin in its Supplemental Rule 26(a) Disclosure, its expert only asserted a 35% profit margin.

*14 In computing specific revenue and cost values, Finnerty diverged entirely from Plaintiff's Supplemental Rule 26(a) Disclosure, by using sales, price, and cost figures from 2013-2015 rather than 2009-2010. (Compare Pl. Suppl. Rule 26(a) Disclosure, at 1 with Finnerty Report ¶¶ 38-42.) Additionally, in computing costs, Finnerty took into account categories of costs that Plaintiff had not previously identified as relevant. Specifically, Finnerty concluded that it was appropriate to consider and subtract out certain SG&A and manufacturing support expenses to compute lost profits (Finnerty Report ¶¶ 66-72 & Ex. 9), despite Bhandari having strenuously argued, in discovery, that SG&A expenses “should not be deducted or affect the damages calculation or the lost-profits calculation” due to “economic analysis and accounting principles.” (2/5/16 Conf. Tr., at 36.)

In computing the SG&A expenses to deduct from lost revenues, Finnerty also examined the expenses of certain of Plaintiff's Mexican subsidiaries, including “SL Servicios.” (Finnerty Report ¶ 68.) According to Finnerty, he had learned from Plaintiff's management—specifically naming its Chief Operating Officer, John Van Duzer—that certain of SL Servicios's payroll, tax, rent, and depreciation expenses (collectively referred to as “management fees”) were included among Plaintiff's PTK department's expenses. (Id. ¶ 49 (“I understand from my interview with John Van Duzer ... that certain indirect, non-incremental expenses were included in the expense item ‘Manufacturing Expense—Tecate Plant’[11] ... [including] management company fees ... allocated from a separate company[12] called SL Servicios....”).) Van Duzer, however, had previously testified in this action that he knew nothing about the PTK business's overhead costs:

[Van Duzer] A. No.

(4/20/16 Vinti Ltr., Ex. 2 (Transcript of the Deposition of John Peter Van Duzer, conducted Jan. 13, 2015) (Dkt. 202-2), at 153-54 (objections omitted); see also id. at 151-52, 155-57.) Citing further “discussions with SLI's management,” Finnerty also explained in his Report that the extent of the allocation of SL Servicios's expenses to the PTK business was determined “based on employee surveys.” (Id. ¶ 68.) These surveys, in turn, supposedly resulted in SL Servicios allocating a specific percentage[13] of its expenses to Plaintiff's PTK business. (Id.) Finnerty asserted that he learned this specific percentage from SLI management. (Id.; see also id., Ex. 19.) In his lost-profits computation, he then subtracted this percentage of expenses, amounting to approximately $2 million,[14] from Plaintiff's alleged lost sales revenues. (Id. ¶ 68 & Ex. 9.)

*15 In addition to changing the sales, price, and cost variables in Plaintiff's lost profits computation, the Finnerty Report expanded the damages period from 19 to 22 months. (See 4/20/16 Vinti Ltr., at 8; Finnerty Report, Ex. 9.) According to Bhandari, Finnerty did this to account for “hidden” PTK purchases that Defendant allegedly made from a third party from September 2013 to December 2013, which Defendant supposedly concealed from Plaintiff until some late stage in discovery. (4/27/16 Bhandari Ltr. (Dkt. 201), at 4-5.) Defendant responded that it had produced data relating to these purportedly “hidden” purchases in October 2014, before Plaintiff had even filed its Supplemental Rule 26(a) Disclosure. (4/29/16 Vinti Ltr. (Dkt. 205), at 5.) Plaintiff never addressed this critique.

On April 20, 2016, after Defendant received the Finnerty Report, its counsel wrote to the Court arguing that the Report relied on information that Plaintiff had wrongfully withheld in discovery, including the SL Servicios employee surveys underlying SL Servicios's decision to allocate a percentage of its expenses to Plaintiff's PTK department. (See 4/20/16 Vinti Ltr., at 1, 3.) Defendant also argued that the Finnerty Report adopted a “brand new lost profits analysis ... completely at odds with the calculation and methodology that [Plaintiff] [had] set forth in its mandatory Rule 26 Disclosures.” (See id. at 1.) As relief, Defendant requested a stay of its deadline to submit an expert rebuttal report, and further asked that the Court consider Defendant's April 20, 2016 letter in connection with its pending March 4, 2016 sanctions motion. (See id.)

In response, Bhandari denied that the Finnerty Report “relie[d] upon information that was ‘wrongfully withheld’ in discovery,” but conceded that Finnerty's damages computation “diverge[d]” from Plaintiff's Rule 26(a) computation. (4/27/16 Bhandari Ltr., at 2-3.) Additionally, Bhandari stated that the SL Servicios employee surveys referenced in the Finnerty Report “[did] not exist.” (Id. at 4.) Defendant responded with a request that the Court order an investigation into the potential spoliation of the employee surveys. (4/29/16 Vinti Ltr., at 3.)

This Court issued an Order addressing these letters on May 5, 2016. (See Order, dated May 5, 2016 (“5/5/16 Order”) (Dkt. 206).) In the Order, this Court denied Defendant's request for a stay, noting that Defendant's expert was free to explain in a rebuttal report that he or she was unable to respond to opinions in the Finnerty Report because the underlying information had not been produced, and to challenge the Finnerty Report's conclusions as lacking demonstrable support. (Id. at 2.) The Order granted Defendant's request, though, for the Court to consider Defendant's recent letters as supplemental submissions in connection with its then-pending sanctions motion. (Id. (ruling that this Court would “consider the totality of the record in connection with that pending motion”).) This Court also permitted Defendant to submit additional supplemental briefing in light of the issues that had been raised regarding the Finnerty Report. (Id.) Finally, the Order denied Defendant's request for spoliation discovery, with the caveat that the Court might revisit that denial sua sponte in connection with Defendant's sanctions motion. (Id. at 2-3.)

As invited, Defendant submitted a letter on May 13, 2016, supplementing its sanctions briefing. (See 5/13/16 Vinti Ltr. (Dkt. 213).) Aside from requesting additional relief, discussed further below, Defendant's letter brought to the Court's attention that Plaintiff had provided it with yet another supplemental document production. (Id.) On May 12, 2016, two business days before Plaintiff's expert rebuttal report was due, Plaintiff apparently produced an additional 1,529 pages of documents consisting of Plaintiff's “payroll register, monthly budget and cost information for the Mexican subsidiaries, and documents showing the computation of certain management fees.” (5/20/16 Bhandari Ltr. (Dkt. 210), at 3.) Among the documents produced was a spreadsheet that Defendant described as corroborating the specific percentage of SL Servicios's expenses that were allocated to Plaintiff's PTK department. (5/25/16 Vinti Ltr. (Dkt. 216), at 1-2; see also id., Ex. 2.) As noted above, Finnerty had attributed his knowledge of this percentage to his discussions with SLI management, not to any documentary evidence or deposition testimony. (See Finnerty Report ¶¶ 49, 68; id., Ex. 19.) Defendant's counsel argued that the existence of this spreadsheet demonstrated that Bhandari had misled the Court when he represented that the survey data underlying the percentage allocation decision did not exist. (5/25/16 Vinti Ltr., at 2 (quoting 4/27/16 Bhandari Ltr., at 4).) Defendant's counsel also argued that the existence of the spreadsheet proved that Bhandari had been untruthful when he represented that the Finnerty Report “[did] not rely upon any documents not produced in discovery.” (Id. at 4.)

C. Procedural History

*16 As set out above, the sanctions motion that is the subject of this Report and Recommendation was filed by Defendant on March 4, 2016. (See Notice of Defendant Church & Dwight Co., Inc.’s Motion for Sanctions, dated Mar. 4, 2016 (Dkt. 183), 3/4/16 Def. Sanctions Mem. (Dkt. 191), Vinti Decl. (Dkt. 192).) Plaintiff filed an opposition on March 18, 2016 (see Pl. Sanctions Opp. (Dkt. 189), Bhandari Decl. (Dkt. 190) ), and Defendant submitted a memorandum in reply on March 25, 2016 (see Def. Sanctions Reply (Dkt. 194), Reply Declaration of Baldassare Vinti in Further Support of Church & Dwight Co., Inc.’s Motion for Sanctions, dated Mar. 25, 2016 (“Vinti Reply Decl.”) (Dkt. 195) ).

On May 5, 2016, as also noted above, this Court issued an Order stating that it would consider the totality of the record in connection with Defendant's sanctions motion. (See 5/5/16 Order.) This record now includes Defendant's letters dated April 20, 22, and 29, 2016 (Dkts. 200, 202, 203) and Plaintiff's responsive letters, dated April 21 and 27, 2016 (Dkts. 199, 201). This Court's Order also invited supplemental briefing in light of Defendant's new allegations regarding the content of Plaintiff's expert report, dated April 7, 2014. (See id. at 2.) Defendant submitted a supplemental letter in support of its sanctions motion on May 13, 2016 (see 5/13/16 Vinti Ltr. (Dkt. 213) ); Plaintiff filed an opposition on May 20, 2016 (see 5/20/16 Bhandari Ltr. (Dkt. 210) ); and Defendant filed a reply letter on May 25, 2016 (see 5/25/16 Vinti Ltr. (Dkt. 216) ).

I. APPLICABLE LEGAL STANDARDS

A. Rule 26(a) and (e)

Pursuant to Rule 26(a) of the Federal Rules of Civil Procedure, “without awaiting a discovery request,” a party seeking damages must disclose to its opposition “a computation of each category of damages claimed,” and must “make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based.” Fed. R. Civ. P. 26(a)(1)(A)(iii). This disclosure must be made “based on the information then reasonably available to [the disclosing party],” and is not excused because the disclosing party “has not fully investigated the case.” Fed. R. Civ. P. 26(a)(1)(E). Rule 26(a) “requires more than providing ... undifferentiated financial statements; it requires a ‘computation,’ supported by documents.” Design Strategy, Inc. v. Davis, 469 F.3d 284, 295 (2d Cir. 2006). Although the Rule does not indicate the level of specificity required for compliance, courts have held that the Rule “requires more than merely setting forth the figure demanded.” Max Impact, LLC v. Sherwood Grp., Inc., No. 09cv902 (JGK) (HBP), 2014 WL 902649, at *5 (S.D.N.Y. Mar. 7, 2014) (citations and internal quotation marks omitted). Courts have held the Rule “contemplates an estimate of damages and ‘some analysis.’ ” Id. (quoting U.S. Bank Nat'l Ass'n v. PHL Variable Ins. Co., No. 12cv6811 (CM) (JCF), 2013 WL 5495542, at *5 (S.D.N.Y. Oct. 3, 2013) (internal quotation marks omitted) ).

Rule 26(e) requires that disclosures under Rule 26(a) be supplemented or corrected “in a timely manner if the [disclosing] 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). “Further, as discovery progresses, ‘much greater detail than previously provided [is] necessary to satisfy Rule 26(a).’ ” Max Impact, 2014 WL 902649, at *5 (quoting Design Strategy, 469 F.3d at 295).

B. Rule 37

*17 Rule 37 of the Federal Rules of Civil Procedure provides that “[i]f a party ... fails to obey an order to provide or permit discovery, ... the court where the action is pending may issue further just orders.” Fed. R. Civ. P. 37(b)(2)(A); see also Daval Steel Prods. v. M/V Fakredine, 951 F.2d 1357, 1363 (2d Cir. 1991) (“Provided that there is a clearly articulated order of the court requiring specified discovery, the district court has the authority to impose Rule 37(b) sanctions for noncompliance with that order.”). Sanctions available under Rule 37(b) include directing that certain facts be taken as established, precluding the party from supporting its claims or introducing certain matters in evidence, striking the party's pleadings or portions of its pleadings, staying the action pending compliance, dismissing the party's claims in whole or in part, rendering a default judgment against the party, or holding the party in contempt. Fed. R. Civ. P. 37(b)(2)(A); see also Agiwal v. Mid Island Mortg. Corp., 555 F.3d 298, 303 (2d Cir. 2009) (affirming the district court's dismissal of case as a Rule 37(b) sanction where a party defied all of the court's discovery orders over a six-month period, “each of which warned of the possibility of sanctions, including dismissal”); Transatl. Bulk Shipping Ltd. v. Saudi Chartering S.A., 112 F.R.D. 185, 189 (S.D.N.Y. 1986) (holding that Rule 37(b) sanctions were appropriate due to a party's “proven dishonesty and repeated violations of three court orders”).

Rule 37(b) further provides that, “[i]nstead of or in addition to [any other sanction], the court must order the disobedient party, the attorney advising that party, or both to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(b)(2)(C). The party seeking sanctions bears the initial burden of demonstrating non-compliance with a Court Order. See Oleg Cassini, Inc. v. Electrolux Home Prods., Inc., No. 11cv1237 (LGS) (JCF), 2013 WL 3056805, at *3 (S.D.N.Y. June 19, 2013).

In order to ensure parties' compliance with the mandatory disclosure requirements of Rule 26, Rule 37(c)(1) provides that: “If a party fails to provide information ... as required by Rule 26(a) or (e), the party is not allowed to use that information ... to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). The Rule further provides, however, that:

Id.; see available Rule 37(b)(2)(A) sanctions, described supra.

Rule 37(c) has also been held to provide sanctions for the “untimely production of documents and information required to be produced.” In re Sept. 11th Liab. Ins. Coverage Cases, 243 F.R.D. 114, 125 (S.D.N.Y. 2007) (citing Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2d Cir. 2002) ). In this regard, courts have found that, for a party to demonstrate that the untimely production of documents is sanctionable under Rule 37(c), it must show:

Id. at 125 (quoting Residential Funding, 306 F.3d at 107).[15]

*18 The purpose of Rule 37(c) is to prevent the practice of “sandbagging” an adversary with new evidence. Ebewo v. Martinez, 309 F. Supp. 2d 600, 607 (S.D.N.Y. 2004); Johnson Elec. N. Am. Inc. v. Mabuchi Motor Am. Corp., 77 F. Supp. 2d 446, 458-59 (S.D.N.Y. 1999). Yet despite the seeming “self-executing” nature of the preclusion sanction contained in the Rule, see Fed. R. Civ. P. 37(c) advisory committee's note (1993 Amendment), imposition of the preclusion sanction remains within the trial court's discretion. Indeed, “the plain text” of the rule provides that, after affording the dilatory party an opportunity to be heard, the Court has the discretion to impose less severe sanctions. See Design Strategy, 469 F.3d at 298.

Further, as noted above, courts may not impose sanctions under Rule 37(c) where a party's failure to comply was “substantially justified” or where the conduct was “harmless.” See Fed. R. Civ. P. 37(c)(1). “Substantial justification” may be demonstrated where “there is ‘justification to a degree that could satisfy a reasonable person that parties could differ as to whether the party was required to comply with the disclosure request,’ or ‘if there exists a genuine dispute concerning compliance.’ ” AIG Global Asset Mgmt. Holdings v. Branch, No. 04cv8803 (RMB) (THK), 2005 WL 425494, at *1 (S.D.N.Y. Feb. 18, 2005) (quoting Jockey Int'l, Inc. v. M/V “Leverkusen Express”, 217 F. Supp. 2d 447, 452 (S.D.N.Y. 2002) ). “Harmless[ness]” means an absence of prejudice to the defendant. See Williams v. Cty. of Orange, No. 03cv5182 (LMS), 2005 WL 6001507, at *3 (S.D.N.Y. Dec. 13, 2005). The party moving for sanctions under Rule 37(c) bears the initial burden of demonstrating its adversary's discovery noncompliance. See Markey v. Lapolla Indus., Inc., No. 12cv4622 (JS) (AKT), 2015 WL 5027522, at *16 (E.D.N.Y. Aug. 25, 2015); In re Sept. 11th Liab. Ins. Coverage Cases, 243 F.R.D. at 125. The party that is the subject of the sanctions motion, though, bears the burden of proving both that its discovery non-compliance was substantially justified, see Am. Stock Exch., LLC v. Mopex, Inc., 215 F.R.D. 87, 93 (S.D.N.Y. 2002), and harmless, see Design Strategies, Inc. v. Davis, 367 F. Supp. 2d 630, 635 (S.D.N.Y. 2005), aff'd, 469 F.3d 284.

With respect to the particular sanction or sanctions to be imposed under Rule 37, “[i]t is well settled that the court has broad discretion to determine the type of sanction to impose upon a party, based on all the facts of the case.” AAIpharma Inc. v. Kremers Urban Dev. Co., No. 02cv9628 (BSJ) (RLE), 2006 WL 3096026, at *5 (S.D.N.Y. Oct. 31, 2006) (citation omitted). Sanctions under Rule 37 are intended: (1) to ensure that a party will not benefit from its failure to comply with a court order, (2) to obtain the party's compliance, and (3) to serve as a deterrent. See Update Art, Inc. v. Modiin Publ'g, Ltd., 843 F.2d 67, 71 (2d Cir. 1988) (citing Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639 (1976) ). With these purposes in mind, “Rule 37 permits the imposition of ‘just’ sanctions,” and thus “the severity of [the] sanction must be commensurate with the non-compliance.” Shcherbakovskiy v. Da Capo Al Fine, Ltd., 490 F.3d 130, 140 (2d Cir. 2007).

Although courts in this Circuit prefer to resolve litigation disputes on their merits rather than through discovery sanctions, Marfia v. T.C. Ziraat Bankasi, New York Branch, 100 F.3d 243, 249 (2d Cir. 1996) (collecting cases), “severe sanctions” such as preclusion or adverse inference instructions “are justified ... when the failure to comply with a court order is due to willfulness or bad faith, or is otherwise culpable,” Daval Steel Prods., 951 F.2d at 1367. The Court's discretion in selecting an appropriate sanction, however, should be guided by a number of factors, including: “(1) the willfulness of the noncompliant party or the reasons for noncompliance; (2) the efficacy of lesser sanctions; (3) the duration of the period of noncompliance; and (4) whether the noncompliant party had been warned of the consequences of his noncompliance.” Nieves v. City of New York, 208 F.R.D. 531, 535 (S.D.N.Y. 2002) (citing Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 852-54 (2d Cir. 1995) ); Jobe O. v. Pataki, No. 03cv8331 (RCC) (KNF), 2007 WL 844707, at *4 (S.D.N.Y. Mar. 15, 2007).

C. The Court's Inherent Power To Sanction

*19 Beyond Rule 37, a court may sanction improper conduct pursuant to its inherent power. See United States v. Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., AFL-CIO, 948 F.2d 1338, 1345 (2d Cir. 1991). The Court's inherent authority stems from its need to be able “to manage [its] own affairs so as to achieve the orderly and expeditious disposition of cases.” Chambers v. NASCO, Inc., 501 U.S. 32, 43 (1991) (citation omitted). The Supreme Court has made clear that a court's inherent power to sanction “must be exercised with restraint and discretion.” Id. at 44; see also Int'l Bhd. of Teamsters, 948 F.2d at 1345 (noting that, “because of the very potency of a court's inherent power, it should be exercised with restraint and discretion” (internal quotation marks and citation omitted) ). For this reason, the Second Circuit “has always required a particularized showing of bad faith to justify the use of the court's inherent power.” Int'l Bhd. of Teamsters, 948 F.2d at 1345. Further, the showing of bad faith must be based on “clear evidence that the challenged actions [were] entirely without color, and [were] taken for reasons of harassment or delay or for other improper purposes.” Id. (internal quotation marks and citation omitted).

II. DEFENDANT'S SANCTIONS MOTION

Through Defendant's March 4, 2016 sanctions motion and May 13, 2016 supplemental brief, Defendant moves for numerous sanctions against Plaintiff, pursuant to Rule 37 and the Court's inherent power. (3/4/16 Def. Sanctions Mem.; 5/13/16 Vinti Ltr.) Although Defendant raises a host of alleged discovery abuses as the basis for its requested sanctions, Defendant's complaints can be summed up into five categories: (1) the failure by Plaintiff to produce various types of documents relevant to damages; (2) inadequacies in Bradley's Rule 30(b)(6) deposition on damages; (3) the untimeliness of Plaintiff's production of certain damages documents; (4) Plaintiff's continued noncompliance with the requirement of Rule 26(a) to provide an adequate damages computation; and (5) improprieties in Plaintiff's expert report on damages.

The primary sanction sought by Defendant is an order precluding Plaintiff from offering any evidence to support its damages claims. (3/4/16 Def. Sanctions Mem., at 19-21; 5/13/16 Vinti Ltr., at 1.) Defendant also seeks reasonable attorney's fees and costs in connection with its effort to obtain Plaintiff's compliance with its discovery obligations and Court Orders. (3/4/16 Def. Sanctions Mem., at 24-25.) As alternative sanctions to preclusion, Defendant requests that the jury be ordered to draw an “irrebuttable” adverse inference regarding undisclosed materials or information; that the Court order that neither Plaintiff nor its expert, Finnerty, be permitted to rebut Defendant's damages expert's cost-allocation assumptions; that the Court strike the Finnerty Report or exclude Finnerty's testimony; and/or that the Court reopen fact discovery and order Plaintiff to produce outstanding discovery material and a prepared Rule 30(b)(6) witness. (Id. at 21-24; 5/13/16 Vinti Ltr., at 5-6.)

A. Plaintiff's Alleged Discovery Abuses

If, after the numerous discovery Orders that this Court has issued, Plaintiff is still withholding critical documents from Defendant, then the severe sanctions of preclusion or an adverse inference might well be appropriate. With one exception, however (on a point that does not appear serious enough to be sanctionable), Defendant has not met its burden of showing that Plaintiff is still withholding documents that this Court has ordered it to produce. This Court will consider, in turn, each category of documents where Defendant claims that Plaintiff's production remains insufficient.

Defendant contends that Plaintiff has failed to produce SG&A “backup documents,” which, according to Defendant, are documents that “would provide information about specific expenses for each year.” (3/4/16 Def. Sanctions Mem., at 10.) Defendant asserts that Bradley confirmed the existence of such documents when she testified that she could go into SLI's “Made to Manage” system and pull all SG&A transactions during a particular time period. (Id. at 10-11, n.11 (quoting Bradley Dep., at 197-98).) Plaintiff, on the other hand, argues that it has adequately complied with the Court's instructions by producing “monthly reports showing the allocation of all expenses in all departments and across all product lines for the entire company,” where such reports also “explicitly show the allocation of [S]G&A expenses to both PTK and non-PTK business lines” from 2009-2015. (See Pl. Sanctions Opp., at 10-11 (citing Bhandari Decl. ¶ 8, Ex. J (example of such reports) ).) Defendant concedes that these documents show the “ultimate allocation” of SG&A expenses, but argues they are “no substitute for the underlying backup documents that are necessary to test whether SLI's allocation is proper.” (Def. Sanctions Reply, at 5.)

*20 According to Defendant, sanctions are warranted here because, at the February 5, 2016 discovery conference, this Court specifically ordered Plaintiff to produce SG&A “backup documents.” (3/4/16 Sanctions Mem., at 10.) Defendant, however, reads too much into this Court's use of the term “backup,” and misconstrues the Court's directive. At the time, as set out above, there was a question as to why Plaintiff had made the decision to allocate only 20% of SG&A costs to its PTK business. This Court directed Plaintiff to produce documents that would itemize what those costs were (meaning the types of costs that Plaintiff was deeming “SG&A” costs), and “back-up documentation” to “explain why someone chose for internal purposes” the 20% allocation. (See 2/5/16 Conf. Tr., at 56 (noting “presumably someone did it for a reason—it's on some document, there was some reason—why somebody picked the 80/20 division”).) This Court did not order—and did not intend to order—Plaintiff to produce all of the transaction-level data demonstrating its expenses, which, based on Bradley's testimony, is what the “Made to Manage” data appears to be. Indeed, Defendant's reading of this Court's February 5, 2016 rulings as having provided it with license to continue to request more and more granular information, regardless of how much core information Plaintiff has produced in response to this Court's Orders, finds no support in the transcript of the February 5, 2016 conference or any other ruling by this Court. Although this Court has noted that Plaintiff's burden of production should be commensurate to the size of its damages claim, this Court has never granted Defendant unlimited discovery into every invoice or receipt maintained by Plaintiff in the course of its business or into every line item in Plaintiff's books and records. Plaintiff has undisputedly produced its “allocation of all expenses in all departments and across all product lines for the entire company,” including “the allocation of [S]G&A expenses to both PTK and non-PTK business lines” for the relevant time period. (See Pl. Sanctions Opp., at 10-11.) Except for its failure to produce documents regarding why its SG&A-allocation decisions were made (as discussed further below), this is sufficient under this Court's Orders, and this Court does not recommend sanctions for a failure to produce more.

Defendant also seeks sanctions on the ground that Plaintiff has not produced documents that would allow Defendant to identify the monthly supply of raw materials for which Plaintiff is seeking reimbursement. (See 3/4/16 Sanctions Mem., at 12.) While conceding that Plaintiff has disclosed the raw materials and the quantities of raw materials at issue, Defendant contends that it must also know the number of months of supply that these quantities represent. (See id.) Defendant asserts that this information is significant to its defense because the parties' Supply Agreements prohibited Plaintiff from maintaining more than a three-month supply of certain raw materials in its inventory. (See id.) Thus, without knowing how many months' worth of raw materials underlies Plaintiff's damages claim, Defendant contends that it cannot argue that Plaintiff is seeking reimbursement for more raw materials than it was permitted to maintain under the Supply Agreements. (See id. at 12-13.) On this point, Bradley testified that, while Plaintiff does not possess documents stating the numbers of months of supply that its inventory represents, it does possess documents that would allow it to back into those numbers. (Bradley Dep., at 240-41.)

As an initial matter, to the extent Defendant seeks sanctions for Plaintiff's failure to create documents that do not presently exist, this Court notes that a party has no obligation to create new documents in discovery. See, e.g., R.F.M.A.S., Inc. v. So, 271 F.R.D. 13, 44 (S.D.N.Y. 2010). Regardless, Defendant fails to mention that it has written the Court twice in the past regarding the supposed inadequacy of Plaintiff's production of documents related to its raw materials costs damages, but never before raised the issue of monthly supply information, despite the Supply Agreements being a part of this case from its inception. (See, e.g., 1/12/16 Leader Ltr., at 3; 2/17/15 Cohen Ltr., at 7.) Moreover, Defendant cannot identify any Order from the Court compelling Plaintiff to produce such monthly supply information. Nor has Defendant provided any authority as to why Rule 26(a) would have required Plaintiff to produce such information, where Plaintiff's raw-materials-cost damages are based on the price and quantity of its raw materials, not on the monthly supply of those materials.

Accordingly, I do not recommend that Plaintiff be sanctioned for failing to produce monthly supply information; nor do I recommend that Plaintiff now be ordered to produce such information (or the documents that would enable Defendant to calculate such information). See Gucci Am., Inc. v. Guess?, Inc., 790 F. Supp. 2d 136, 142 (S.D.N.Y. 2011) (denying post-fact discovery motion to compel where the moving party knew of its need for the requested information during fact discovery).[16]

*21 Defendant also complains of Plaintiff's alleged failure to provide the unique identifier number, i.e., the “sys” number, for all of the equipment for which it is seeking damages. (3/4/16 Def. Sanctions Mem., at 13-14.) Without this number, Defendant contends it cannot cross-reference the equipment at issue with another document that Plaintiff has provided, which lists, by “sys” number, equipment cost and life-expectancy information. (Id.) Defendant notes that, based on Bradley's testimony, each piece of Plaintiff's equipment has a “sys” number and Plaintiff has access to all of those numbers. (See id. (citing Bradley Dep., at 133-34, 268-69).)

In response, Plaintiff states that it has produced a spreadsheet containing the “sys” number for each asset at issue. (Pl. Sanctions Opp., at 12-13.) Plaintiff has provided that spreadsheet to the Court and has directed the Court to specific tabs and rows of the document. (See id.; Bhandari Decl., Ex. T.) Defendant concedes that this spreadsheet identifies some of the “sys” numbers it needs, but states that it is missing many of them. (Def. Sanctions Reply, at 6-7.) Defendant, however, neither cites to the record nor attaches any document to support this assertion.

This Court has reviewed the spreadsheet that the parties discuss in their filings. As far as this Court can tell, it does, indeed, include “sys” numbers for each piece of equipment listed. Defendant has not pointed to, or provided this Court with, any document to which it can compare this spreadsheet, and which would support Defendant's assertion that the spreadsheet is incomplete. Defendant, therefore, has not met its burden to demonstrate why Plaintiff's production is inadequate or that sanctions are appropriate. For these reasons, I do not recommend that Plaintiff be sanctioned for allegedly withholding “sys” numbers relating to its alleged equipment purchase damages.

On May 12, 2016, well after the close of fact discovery and the submission of Plaintiff's expert's report, Plaintiff produced documents regarding “monthly budget and cost information” for its Mexican subsidiaries, SL Servicios, El Arca, and La Vina. (See 5/20/16 Bhandari Ltr., at 3.) Putting aside, for the moment, Defendant's arguments regarding the untimeliness of this production and the fact that certain employee surveys may not have been preserved (issues which this Court will address separately, below), this Court first addresses Defendant's argument that sanctions are warranted because Plaintiff has withheld certain documents relating to these subsidiaries. (See 5/13/16 Vinti Ltr., at 3-5.) In this regard, Defendant asserts that Plaintiff's production is incomplete because it has omitted “invoices or accounting entries that would show what SL Servicios actually charged as management fees to SLI's business units and what the basis of those charges was” and “books and records” of Plaintiff's other subsidiaries. (Id. at 3-4.) Defendant also asserts the production is incomplete because it has omitted “backup” documents and “underlying information” that would allow Defendant to “verify or challenge” statements made by Plaintiff's expert, Finnerty, that, according to him, were based not on his review of documents, but rather on his discussions with Plaintiff's management. (Id. at 4-5.)

With respect to Defendant's demand for “books and records,” “backup documents,” and “underlying information,” those document categories are overly broad, and the notion that the Court ordered the production of such generalized categories of documents does not find support in any of its rulings. As noted above, the Court directed Plaintiff to produce documents pertaining to the allocation of its expenses across its different departments and product lines not information regarding every transaction underlying every expense on Plaintiff's books.

*22 Further, regarding documents that would allow Defendant to “verify or challenge” certain statements by Finnerty, this Court notes that, as a general matter, there is nothing inherently improper about an expert forming an opinion based on factual information conveyed orally by a client, although, at trial, the expert's testimony about that opinion may implicate hearsay concerns. See, e.g., United States v. Dukagjini, 326 F.3d 45, 58 (2d Cir. 2002); see also Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 136 (2d Cir. 2013) (“[A] party cannot call an expert simply as a conduit for introducing hearsay under the guise that the testifying expert used the hearsay as the basis of his testimony.” (internal quotation marks and citation omitted) ). Nor does an expert's reliance on oral information necessarily imply that documents exist that would support or refute the facts conveyed orally. In this instance, Defendant's mere speculation that such documents exist is an insufficient basis to compel the production of such documents, or to award sanctions. See, e.g., Trilegiant Corp. v. Sitel, 275 F.R.D. 428, 435-36 (S.D.N.Y. 2011). This Court therefore does not recommend sanctions for the alleged incompleteness of the May 12, 2016 document production.

Defendant also argues that, although Plaintiff was ordered to produce documents related to its mitigation of damages, Plaintiff has failed to produce certain documents relevant to mitigation—specifically, documents reflecting “price quotes” that it provided to potential new customers after it stopped manufacturing PTKs for Defendant. (See 3/4/16 Def. Sanctions Mem., at 14-15; see also 4/20/15 Conf. Tr., at 165, 172; 1/21/16 Order, at 1.) Defendant points to Bradley's deposition testimony as evidence that such documents exist (see 3/4/16 Def. Sanctions Mem., at 14 (citing Bradley Dep., at 228-29) ), while Plaintiff contends, without elaboration, that these price-quote documents are “not mitigation documents,” and instead “represent competitively sensitive information that has no relevance to the claims or defenses in this action” (Pl. Sanctions Opp., at 14).

Given Bradley's explanation of the “price quote” documents, this Court is persuaded that they are relevant and should have been produced, as they relate to the issue of mitigation—i.e., the question of whether Plaintiff “took reasonable steps to cut its losses.” See Matsushita Elec. Corp. of Am. v. Gottlieb, No. 90cv3010 (CES), 1991 WL 152615, at *9 (S.D.N.Y. Aug. 1, 1991) (citation omitted). Also, Plaintiff has produced—and has now conceded the relevance of—“email correspondence from its then-Global Head of Sales, David Cantor,” “travel records showing his meetings with potential new customers,” and “the sales and marketing materials [SLI] prepared ... for various conferences, trade shows, and pitches designed to attract new business.” (See Pl. Sanctions Opp., at 13.) This Court sees no discernible difference between all of this pitch-related material and the price quotes that would presumably accompany any specific pitch for new business. Additionally, this Court is persuaded that the purportedly “competitively sensitive” nature of the documents is no reason to withhold them. There is a Protective Order in place in this case (see Stipulated Protective Order, dated Oct. 8, 2014 (Dkt. 52) ), and the parties have utilized its “Attorneys' Eyes Only” provision multiple times.

Accordingly, Plaintiff's refusal to produce the price-quote documents identified by Bradley in her deposition was improper. As noted in its January 21, 2016 Order, this Court previously accepted Plaintiff's representations that it had already produced all responsive documents in its possession, custody, or control relating to its alleged efforts to mitigate damages. (1/21/16 Order, at 1; see also 2/5/16 Conf. Tr., at 64.) Defendant has now demonstrated that those representations were inaccurate.

Nonetheless, this Court is not persuaded that these withheld documents are so critical to the case as to warrant the severe sanctions of preclusion, an adverse inference, or the striking of any aspect of Plaintiff's damages claim. An order that the documents be produced, coupled with the imposition of the other sanctions discussed below, would be sufficient to remedy Plaintiff's failure to produce these particular documents.

*23 Finally, related to Defendant's contentions that Plaintiff has failed to produce documents pursuant to Orders of this Court, Defendant raises certain issues with the adequacy of the February 11, 2016 Bradley Declaration. As set out above, this Court, at the February 5, 2016 conference, ordered Plaintiff to produce documents explaining Plaintiff's apparent decision to allocate 20% of its SG&A costs to its PTK business, or an affidavit or declaration from a person at the company with knowledge, explaining why Plaintiff was unable to produce such documents. (2/5/16 Conf. Tr., at 50-51, 56, 65-66, 69-70.) In response to that Order, Plaintiff produced a declaration from Bradley, in which she stated that she was “not aware of documents that would substantiate or otherwise back-up” why the 20% allocation decision was made. (Bradley Decl. ¶ 2.) Defendant seeks sanctions on the grounds that Bradley's supposed lack of personal awareness of the existence of documents did not sufficiently speak for Plaintiff as a “company,” and that Plaintiff's submission of the Bradley Declaration was untimely, causing Defendant prejudice. (See 3/4/16 Def. Sanctions Mem., at 7-9.)[17]

As a technical matter, Plaintiff is correct that this Court never expressly required the declarant to make representations “on behalf of the company”; rather, all the Court required was a declaration from a person “with knowledge.” (See 2/5/16 Conf. Tr., at 50-51, 65, 70.) The issue for this Court, though, is whether Bradley actually did have knowledge as to why documents could not be located, or, if she did not have such personal knowledge, whether she took adequate steps to educate herself, so as to be able to provide meaningful information in response to this Court's instruction. On these points, it is evident that, even if Bradley was then serving as Plaintiff's Director of Finance and, thus, according to Plaintiff, “the individual most knowledgeable of SLI's accounting records” (Pl. Sanctions Opp., at 8-9), she was not with the company at the time the 80/20 allocation decision was purportedly made (see Bradley Dep., at 205 (testifying that the decision to allocate 20% of SG&A expenses to the PTK department preceded her hiring), and she lacked personal knowledge of the basis of that decision (see id., at 45).

Moreover, despite Plaintiff's assertion to the contrary (Pl. Sanctions Opp., at 8-9), Bradley's efforts to locate documents or to educate herself regarding their existence can hardly be characterized as “reasonable.” In light of her deposition testimony, it appears that Bradley's search for documents was cursory at best, and not reasonably diligent. See Treppel v. Biovail Corp., 233 F.R.D. 363, 374 (S.D.N.Y. 2006) (noting that a “diligent search” might include “identifying key employees and reviewing any of their files that are likely to be relevant”). Bradley testified that all she did to search for the documents at issue was ask a single colleague (a “senior cost accountant”) about them, search her emails for a single phrase, and, seemingly at random, open and view between 20 and 50 accounting-related documents on SLI's “accounting drives.” (See Bradley Dep., at 11-19.) She did not ask anyone else at the company about the documents (or explain why there was no need to speak with anyone else), or search the files of any individuals who may have been employed by the company when the allocation decision was made. (See id. at 18-20.) In sum, Plaintiff violated this Court's February 6, 2015 Order by providing a declaration from an individual who neither possessed sufficient knowledge regarding the potential existence of the unproduced documents nor demonstrated that she made sufficient efforts to determine if those documents in fact existed.

*24 Defendant also has a legitimate argument that Bradley's Declaration was untimely. This Court required the Declaration to be provided by February 11, 2016, a date which Bhandari acknowledged on the record. (See 2/5/16 Conf. Tr., at 70.) This Court also explained why it was requiring the Declaration to be provided by that date: if it were provided even a day later, this Court would not be able to address its deficiencies, if any, before the deposition of Plaintiff's Rule 30(b)(6) damages representative. Despite this Court's instructions, Bhandari apparently provided Bradley's Declaration to Defendant on February 12th, even though it was dated February 11th. (See Vinti Decl., Ex. 10.) Through this conduct, Bhandari denied Defendant an opportunity to raise the Declaration's deficiencies with the Court before Bradley's Rule 30(b)(6) deposition, and therefore denied Defendant the opportunity to receive any relief in connection with the Declaration that the Court may have granted ahead of that deposition. Accordingly, this Court finds that Plaintiff violated the Court's February 5, 2016 rulings both with respect to the adequacy of the Bradley Declaration and the timing of its production.

On the question of the actual prejudice suffered by Defendant as a result of Plaintiff's non-compliance, the Court notes that, in opposition to Defendant's pending sanctions motion, Bhandari has now submitted his own declaration, in an apparent attempt to supplement the content of the Bradley Declaration. (See generally Bhandari Decl.) In that Declaration, Bhandari summarizes, inter alia, the steps that counsel took, and the conversations that counsel had with Plaintiff's corporate representatives, to ascertain where the documentary record of the 80/20 allocation decision could be found, and to determine the reason why Plaintiff had made that decision. (See Bhandari Decl. ¶¶ 10, 12.) Of course, this counsel declaration cannot be viewed as remedying the violations of this Court's Order, as, at the February 5, 2016 conference, this Court had instructed Bhandari repeatedly that it did not want an affidavit or declaration on this issue to come from counsel. (See 2/5/16 Conf. Tr., at 51, 66 (“[P]ut that in the mouth of somebody with personal knowledge instead of counsel: ‘We don't have it, we don't maintain it, we can't get it.’ ” (internal quotation marks added) ).) Despite this, this Court has considered the substance of Bhandari's submission, in order to determine the extent of the prejudice to Defendant that flowed from the violations.

According to Bhandari, Plaintiff's “CEO [and] COO,” as well as its Director of Finance (i.e., Bradley) each “confirmed to [him] that they did not know why the 20% allocation appeared on SLI documents.” (Bhandari Decl. ¶ 10.) Bhandari also states that, apart from any search for documents on this issue that was described by Bradley, he “directed an additional collection of email messages from all custodians in SLI's email system,” that his law firm “broadly searched the messages for any correspondence concerning allocation of G&A expenses,” and that “no email messages were found that described how or why the allocation was made.” (Id. ¶ 12.) These statements, which lack any explanation as to why only top management was consulted, and which also lack detail regarding the search parameters that were utilized to review emails, do not fully satisfy this Court that Plaintiff's search was thorough.[18]

Nonetheless, the Court also notes that, while Plaintiff's damages expert, Finnerty, mentions the 20% allocation in his report, he does not appear actually to rely on that allocation. Further, while this Court previously found that Plaintiff's basis for selecting this allocation for its internal accounting was relevant to Plaintiff's damages claim, Defendant has failed to articulate why, in light of the expert report that Plaintiff has now produced, Plaintiff's failure to produce documentary support for that allocation would, at this point, cause Defendant prejudice. In fact, since Plaintiff's expert report was produced, Defendant has largely shifted its focus with respect to the information that it claims to need in order to be able to challenge Finnerty's treatment of Plaintiff's various business expenses. (See Background, supra, at Section B(7) (regarding, inter alia, the purportedly missing employee surveys that, according to Finnerty, provided support for a greater allocation of certain SG&A expenses to Plaintiff's PTK department).) As Defendant, itself, has not explained the nature of the actual prejudice it has suffered here, this Court finds that Plaintiff's violations of this Court's February 5, 2016 rulings regarding the Bradley Declaration do not warrant preclusive or other severe sanctions. Rather, this Court recommends only monetary sanctions, discussed further below, for Plaintiff's and its counsel's failure to comply with the Court's directives regarding the content and timing of the Bradley Declaration. See Fed. R. Civ. P. 37(b)(2)(C).

*25 Defendant also seeks sanctions for alleged discovery abuses related to Bradley's deposition as a Rule 30(b)(6) witness on damages. In particular, Defendant complains (a) that Plaintiff's counsel improperly instructed Bradley not to answer certain questions, when those questions fell within one of the topics (listed on the deposition notice) as to which Bradley was designated to testify, and (b) that Bradley was inadequately prepared to testify on the specified topics. Neither of Defendant's arguments regarding the Rule 30(b)(6) deposition are persuasive.

According to Defendant, Plaintiff's counsel, Bhandari, improperly instructed Bradley not to answer deposition questions related to the following matter, listed on the Rule 30(b)(6) notice:

(3/4/16 Def. Sanctions Mem., at 15-16.)

Plaintiff does not dispute that it had designated Bradley as its Rule 30(b)(6) witness on this topic. Instead, it argues that, Bhandari, upon his review of the topic either at or ahead of Bradley's deposition, determined that the topic was objectionable due to its use of the word “termination” rather than “breach.” (See Bradley Dep., at 55-57.) Bhandari instructed Bradley not to answer questions on this topic and would not change his position even after Defendant counsel's offered to limit the topic to “the financial impact on SLI of the cessation of test kits including any impact on SLI sales, unit sales, revenues, costs, profits, losses, margins[,] and expenses.” (Id. at 56-57.) At the close of the deposition, Bhandari then denied that he had instructed Bradley not to answer questions related to any particular listed topic, and invited Defendant's counsel to ask further questions. (Id. at 287-88.) Defendant's counsel declined, noting it was already “7 o'clock at night,” and he was not going to play “this game of shifting.” (Id. at 288.)

Plaintiff now suggests that Bhandari's instruction was harmless because the deposition topic at issue was duplicative of others that Defendant was permitted to, and did, in fact, explore with Bradley. (Pl. Sanctions Opp., at 14-16.) These other topics included:

(Id.; see also Vinti Decl., Exs. 11, 12.) Defendant, on the other hand, insists that it was not able to ask all of the questions that its counsel had wanted to ask. (Def. Sanctions Reply, at 8.)

Improperly instructing a witness not to answer a question may be grounds for sanctions under Rule 30(d)(2). Applebaum v. Nat'l Westminster Bank, No. CV 2007-0916 (DLI) (MDG), 2011 WL 8771843, at *6 (E.D.N.Y. Oct. 5, 2011) (citing Fed. R. Civ. P. 30 advisory committee's note (1993 Amendment) ). The question for the Court, however, is whether the instruction “impede[d], delay[ed], or frustrate[d] the fair examination of the deponent.” See id.; Fed. R. Civ. P. 30(d)(2); see also Severstal Wheeling Inc. v. WPN Corp., No. 10cv954 (LTS) (GWG), 2012 WL 1982132, at *3 (S.D.N.Y. May 30, 2012) (holding that, although counsel's conduct at a deposition violated Rule 30, sanctions were not warranted because the conduct “was not extreme” and “had no material effect on the substance of [the witness's] testimony”); Cameron Indus., Inc. v. Mothers Work, Inc., No. 06cv1999 (BSJ) (HBP), 2007 WL 1649856, at *5 (S.D.N.Y. June 6, 2007) (holding that the absence of “a material impairment of the deposition ... precludes the imposition of sanctions” under Rule 30).

*26 Having reviewed Bradley's entire deposition transcript, this Court finds that Bhandari's instruction, although improper, did not “impede, delay, or frustrate the fair examination of” Bradley. First, topics Nos. 23 and 35, set out above, appear to have encompassed or at least overlapped with topic No. 22. (See supra.) Second, although Bhandari did give Bradley a blanket instruction not to answer questions on topic No. 22, he did not instruct Bradley to refrain from answering any specific questions that counsel posed, other than on the ground of attorney-client privilege. (See, e.g., Bradley Dep., at 50, 64-65.) Thus, Bradley was permitted to answer questions on topics Nos. 23 and 35, and, it would seem, on topic No. 22 as well. Indeed, Bradley answered questions such as: “When Church & Dwight moved away from SLI, did it impact SLI's overall revenues, company revenues?”; “And how did it impact SLI's overall revenues?”; “By how much?”; and “When SLI stopped manufacturing for Church & Dwight, did SLI's gross margins decrease?” (Id. at 224-26.) Bradley also answered a number of questions regarding actions taken or not taken by Plaintiff after it stopped manufacturing PTKs for Defendant (see id. at 228-31, 235-36), questions as to how Plaintiff's different claimed damages figures were calculated, and questions seeking to determine which documents were relevant to those calculations (see id. at 111-12, 121-24, 173, 276-79). Each of these questions appears to have fallen within the scope of topic No. 22. Finally, Defendant has provided no indication of any questions that it would have posed to this witness, but did not, in the belief that such questions were covered by Bhandari's instruction. As a result, besides a bare assertion of prejudice, Defendant has not demonstrated how Plaintiff counsel's instruction on topic No. 22 “impede[d], delay[ed], or frustrate[d] the fair examination of” Bradley. Accordingly, I do not recommend sanctions for Bhandari's deposition instruction.

Defendant also contends that sanctions are warranted because Bradley, as Plaintiff's Rule 30(b)(6) witness on damages, was neither “knowledgeable [nor] prepared to testify about critical aspects of SLI's lost profits claim.” (3/4/16 Def. Sanctions Mem., at 16.)

Under Rule 30(b)(6), a corporation must designate one or more persons to testify on its behalf regarding “information known or reasonably available to the organization.” Fed. R. Civ. P. 30(b)(6); see also Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253, 268 (2d Cir. 1999). The Rule “ ‘implicitly requires such persons to review all matters known or reasonably available to [the corporation] in preparation for the Rule 30(b)(6) deposition.’ ” Twentieth Century Fox Film Corp. v. Marvel Enters., Inc., No. 01cv3016 (AGS) (HB), 2002 WL 1835439, at *2-3 (S.D.N.Y. Aug. 8, 2002) (quoting United States v. Taylor, 166 F.R.D. 356, 361-62 (M.D.N.C. 1996) ). Courts treat the production of an unprepared 30(b)(6) witness as “tantamount to a failure to appear” under Rule 37(d). See Crawford v. Franklin Credit Mgmt. Corp., 261 F.R.D. 34, 39 (S.D.N.Y. 2009) (internal quotation marks and citation omitted). “[F]or the court to impose sanctions” under Rule 37(d), however, “the inadequacies in a deponent's testimony must be egregious and not merely lacking in desired specificity in discrete areas.” Id. (internal quotation marks and citation omitted).

In describing the purported inadequacies of Bradley's testimony, Defendant first calls attention to the following excerpt from her deposition:

(Bradley Dep., at 60.) It is not entirely clear what Bradley meant by “not for testifying purposes,” but, regardless, she was able to answer numerous questions regarding Plaintiff's damages calculations and the financial consequences it experienced after it stopped manufacturing PTKs for Defendant. (See id. at 111-12, 121-24, 173, 224-36, 276-79.) Given the extent of Bradley's actual testimony on matters bearing on topic No. 35, her supposed “admission” of lack of preparation has little, if any, practical meaning.

Second, Defendant criticizes Bradley for supposedly not knowing why Plaintiff was seeking damages for a 19-month period, when that period began and ended, and why Plaintiff's lost-profits claim was based on fiscal year 2010. (3/4/16 Def. Sanctions Mem., at 16-17.) Defendant, though, mischaracterizes Bradley's testimony when it argues she did not know “why” Plaintiff was seeking damages for 19 months. Bradley testified that Plaintiff sought 19 months of damages because Plaintiff believed there were 19 “remaining months” on the Supply Agreements. (Bradley Dep., at 174-75.) Defendant also lacks a valid basis for arguing that Bradley did not know why Plaintiff's lost profits claim was based on fiscal year 2010, as Bradley testified at length as to why she understood 2010 to be an appropriate benchmark year. (See id. at 111-17.)

*27 Defendant has a fair point, though, that Bradley was unable to testify as to when the 19-month damages period began and ended. Plaintiff concedes that Bradley did not know this information, but argues in its opposition to the sanctions motion that the damages period was “readily apparent” from the Supply Agreements themselves, and that, in any event, Plaintiff produced a separate witness on the topic of “[t]he Supply Agreements ... and SLI's understanding of the terms of the Supply Agreements.” (Pl. Sanctions Opp., at 23.) As demonstrated by Plaintiff's later admission that the damages period was actually 18 months, not 19 (see 4/27/16 Bhandari Ltr., at 4 (noting a January 1, 2014 to July 1, 2015 damages period) ), Plaintiff's stated 19-month damages period was not “readily apparent.” Moreover, the fact that Plaintiff produced another witness on its interpretation of the Supply Agreements does not cure the fact that its Rule 30(b)(6) representative on damages did not know the beginning and end dates of Plaintiff's claimed damages period. This Court finds that Bradley should have been better prepared to testify as to the start and end dates of Plaintiff's damages period.

Finally, Defendant argues that Bradley was inadequately prepared to testify about Plaintiff's decision to allocate 20% of its SG&A costs to its PTK department. (3/4/16 Def. Sanctions Mem., at 17.) This is also a fair point, given that, as discussed above, Bradley apparently made only meager efforts to educate herself on this issue, despite this Court's focus on the issue, prior to the deposition.

These inadequacies in Bradley's deposition preparation, however, leading her to be unable to answer only two, narrow lines of questions, cannot be called “egregious.” See Crawford, 261 F.R.D. at 39. Bradley was able to answer questions on many issues related to Plaintiff's damages claims. The gaps in knowledge or preparation that Defendant has identified show that Bradley's testimony was “merely lacking in desired specificity in discrete areas.” See id. Even if the two identified areas of Bradley's lack of preparation were important, that limited lack of preparation, when viewed in the context of the deposition as a whole, does not, in and of itself, justify sanctions.[19]

Defendant also complains that Plaintiff has failed to produce documents on a timely basis, and, on this point, Defendant has highlighted conduct by Plaintiff and its counsel that, in fact, has been highly problematic. In its own efforts to move this case forward, this Court has experienced some of the same frustration that Defendant has described—as Plaintiff, through counsel, has repeatedly represented that its document productions were complete, when they were not, and—in violation of several Court Orders—has displayed a disturbing pattern of producing important documents incrementally, and only after being threatened with sanctions. These discovery abuses have resulted in real and substantial prejudice to Defendant, and warrant sanctions, as discussed further below.

During the conference held on April 20, 2015, this Court ordered Plaintiff to produce documents pertaining to its expenses and expense allocations across its non-PTK departments and product lines. (See, e.g., 4/20/15 Conf. Tr., at 128-30.) Plaintiff declined to do so for the next nine months, during which Bhandari argued to the Court that the documents were irrelevant, even after this Court had already ruled that they were relevant; represented to the Court that Plaintiff had “diligently” searched for the documents, only to admit later that Plaintiff had not actually searched for many of the documents; and three times represented to the Court that the documents did not exist. (See 1/14/16 Bhandari Ltr., at 1; 1/27/16 Bhandari Ltr., at 2; 2/5/16 Conf. Tr., at 3, 17-18, 22, 53-54.) Plaintiff eventually did produce a volume of expense and expense-allocation documents, but only after multiple letters from Defendant, an Order by the Court on January 21, 2016 requiring Plaintiff to clarify its representations regarding the non-existence of the documents, and this Court's repetition, on February 5, 2016, of its initial ruling of the prior April that the documents were relevant and needed to be produced.

*28 Plaintiff's and Bhandari's conduct in this regard demonstrates bad faith and is sanctionable. See Fendi Adele S.R.L. v. Filene's Basement, Inc., No. 06cv244 (RMB) (MHD), 2009 WL 855955, at *5 (S.D.N.Y. Mar. 24, 2009) (“[E]ven if the discovering party ultimately obtains, through Herculean and expensive effort, the discovery to which it was entitled, that does not preclude it from being awarded appropriate relief to remedy the injury, including monetary relief, that it has suffered.” (citation omitted) ); see also Hawley v. Mphasis Corp., 302 F.R.D. 37, 55 (S.D.N.Y. 2014) (holding that a party acted in bad faith in failing to produce relevant documents when, at various times, it argued that the documents were “irrelevant,” “never existed,” “[were] not subject to production because of confidentiality,” “[did] not exist in the form sought,” and “existed but were destroyed”); Chevron Corp. v. Donziger, 296 F.R.D. 168, 222 (S.D.N.Y. 2013) (bad faith demonstrated by selectively determining when and when not to produce documents, and asserting objections to production already rejected by the Court); PSG Poker, LLC v. DeRosa-Grund, 06cv1104, 2008 WL 19055 (DLC), at *12 (S.D.N.Y. Jan. 22, 2008) (holding that a party's “repeated failure to either produce relevant documents or a credible story regarding their whereabouts—despite the admonitions of this Court and repeated requests from the plaintiffs—can only be interpreted as an intentional and willful act.”).

Plaintiff initially withheld its “payroll register” documents on the grounds that (1) they were partially duplicative of information already produced, and (2) Defendant supposedly never requested them. (See Pl. Sanctions Opp., at 14.) Plaintiff eventually produced these documents in May 2016, following an Order from this Court inviting additional sanctions briefing. (See 5/5/16 Order; see also 5/13/16 Vinti Ltr., at 2.) May 2016, however, was three months after the end of fact discovery.

Bradley testified in February 2016 that the payroll register documents would show employee terminations and reductions in overtime hours after Plaintiff stopped manufacturing PTKs for Defendant, and the extent to which employee salaries were allocated to the PTK department. (See Bradley Dep., at 95-97, 166-68, 230). Moreover, although he did not reference the payroll registers specifically, Finnerty took into account certain employee terminations in computing Plaintiff's lost profits. (Finnerty Report ¶¶ 62-64, 69-70.) Accordingly, the payroll register documents are relevant to Plaintiff's mitigation of damages, and damages in general.

Given this Court's Order of April 20, 2015, compelling Plaintiff to produce documents related to mitigation of damages (see 4/20/15 Conf. Tr., at 165, 172), these documents should have been produced far earlier than they were. As Plaintiff's initial non-production of these documents was admittedly intentional, and as Plaintiff has provided no legitimate explanation as to why it did not produce these documents sooner, Plaintiff should be sanctioned for the belated production of these documents. See In re Sept. 11th Liab. Ins. Coverage Cases, 243 F.R.D. at 125; Short v. Manhattan Apartments, Inc., 286 F.R.D. 248, 254 (S.D.N.Y. 2012).

At the April 20, 2015 conference, this Court also ordered that Plaintiff produce all documents, including audited financial statements, for which it had produced some years at issue, but not others. (See 4/20/15 Conf. Tr., at 96-99.) In its March 2016 sanctions motion, however, Defendant complained out that Plaintiff had never supplemented its disclosures to produce its audited financial statements for 2015. (3/4/16 Def. Sanctions Mem., at 14-15.) Despite maintaining that the 2015 statements were irrelevant to its damages, Plaintiff proceeded to produce them in response to Defendant's sanctions motion. (See Pl. Sanctions Opp., at 19 n.4.)

Although, in its oral rulings of April 2015, this Court noted that Plaintiff would not have to produce certain documents if it could demonstrate their lack of relevance (see 4/20/15 Conf. Tr., at 96-99), it is unclear how Plaintiff can, in good faith, maintain that these 2015 financial statements are irrelevant to its damages, after its own Rule 30(b)(6) damages representative testified that she would need to review them to determine whether Plaintiff's gross margins had decreased after Plaintiff lost Defendant's business. (See Bradley Dep., at 226-28.) This Court therefore recommends sanctions for Plaintiff's production of these documents only after Bradley's deposition had been conducted and Defendant's sanctions motion had been filed.

*29 Three months after the close of fact discovery, Plaintiff produced, for the first time, what it describes as “monthly budget and cost information, and documents showing the computation of certain management fees” for its Mexican subsidiaries, SL Servicios, El Arca, and La Vina. (5/20/16 Bhandari Ltr., at 3.) The belated timing of this production was particularly egregious given the importance of SL Servicios to Plaintiff's lost-profits computation, as reflected in the Finnerty Report. As discussed above, in computing lost profits, Finnerty subtracted from Plaintiff's claimed revenues certain “management fees” incurred by SL Servicios, amounting to approximately $2 million, and allocated a portion of those management fees to Plaintiff's PTK department.

Despite the significance of SL Servicios to Plaintiff's damages claim, this Court's repeated Orders that Plaintiff produce all documents regarding its expenses and allocation of expenses across its company, and Plaintiff's obligations under Rule 26(a) and (e), it is undisputed that, during fact discovery, Plaintiff did not identify SL Servicios to Defendant as having any relevance to its costs or damages, or make a meaningful production of documents related to SL Servicios's expenses. Plaintiff attempts to defend these omissions, first, by listing (by Bates number), certain previously produced SL Servicios documents, and, second, by asserting that Defendant “never requested” specific information concerning SL Servicios, that SL Servicios is “a separate legal entity” and “not a party to this action,” that SL Servicios was “[n]ever served with third-party discovery,” and that Defendant has not produced the records of its own foreign affiliates. (4/27/16 Bhandari Ltr., at 3-4; 5/20/16 Bhandari Ltr., at 3.) Plaintiff also attempts to rehabilitate Van Duzer—who simultaneously denied any knowledge of Plaintiff's overhead costs in deposition and, according to Finnerty, supplied Finnerty with information regarding Plaintiff's overhead costs as they related to SL Servicios—by arguing that Defendant merely questioned Van Duzer on “the formal definition of specific accounting terms” and whether he had “ever heard of” specific types of accounting documents. (Id.) Plaintiff states that Van Duzer was “perfectly capable of testifying concerning the structure of SLI's operations, including its ownership of Mexican subsidiaries,” but Defendant's counsel, in Plaintiff's view, did not ask the right questions. (Id.)

None of these justifications for the belated production has merit. The fact that Plaintiff previously produced some documents referencing SL Servicios—none of which Plaintiff contends relate to expense allocations, and each of which appears to have been buried among the other 300,000 pages of documents Plaintiff produced in this matter—does not cure its failure to identify or produce the documents at issue. Moreover, Plaintiff's attempt to shift blame to Defendant for not requesting documents regarding an entity that, during the discovery period, Plaintiff never identified as relevant in its own damages calculations is nonsensical. Further, given Plaintiff's admission that SL Servicios is its subsidiary, and given Plaintiff's evident ability to produce SL Servicios-related documents both during and after the close of fact discovery, this Court does not accept Plaintiff's argument that, as a “separate legal entity,” SL Servicios should have been served with third-party process. Regardless, Plaintiff should have specifically identified SL Servicios at an earlier date under this Court's Orders and Plaintiff's own Rule 26 obligations, so that Defendant, if necessary, could have used formal process to obtain the relevant documents. Additionally, Plaintiff's tit-for-tat defense that it did not have to produce documents of its foreign subsidiaries because Defendant allegedly failed to produce documents of its foreign subsidiaries, is frivolous. See, e.g., Fed. R. Civ. P. 26(a)(1)(E) (“A party is not excused from making its disclosures because ... it challenges the sufficiency of another party's disclosures”). Likewise, Plaintiff's attempts to rehabilitate and revise Van Duzer's testimony are baseless and ignore the plain text of the questions that he was asked. (See supra.)

*30 In sum, this Court finds that sanctions are warranted for Plaintiff's belated disclosure of SL Servicios as relevant to Plaintiff's lost-profits calculation and Plaintiff's untimely production of SL Servicios documents. See, e.g., Chevron, 296 F.R.D. at 222 (“Where, as here, a party actively seeks legal impediments to justify its non-production, selectively determines when it will produce documents and when it will not, and continues to assert objections to discovery that have long been rejected, that party has willfully and culpably failed to produce evidence” (footnote omitted) ). Had Plaintiff identified SL Servicios and produced documents regarding SL Servicios's expenses and expense allocations during fact discovery, Defendant would have been able to investigate SL Servicios's expenses, expense-allocation decisions, and ties to Plaintiff's PTK department, and its expert would have been better positioned to challenge Finnerty's conclusions regarding SL Servicios's impact on Plaintiff's damages in his expert report as, perhaps, understated. Underscoring Plaintiff and its counsel's bad faith in this regard is the fact that Finnerty, in including SL Servicios's expenses in his lost-profits computation, characterized them as “SG&A expenses” (Finnerty Report ¶¶ 66-72), which Bhandari had previously argued to the Court were categorically irrelevant to Plaintiff's damages claim (2/5/16 Conf. Tr., at 36).

In addition to failing in its obligation to identify SL Servicios and produce documents relevant to SL Servicios's expenses during fact discovery, a document produced in Plaintiff's May 12, 2016 document production suggests that Plaintiff also failed in its obligation under Rule 26(a)(2)(B) to produce documents considered by Finnerty in connection with the preparation of his report. As noted above, although the employee surveys referenced by Finnerty as forming the basis for SL Servicios's decision to allocate a percentage of its expenses to Plaintiff's PTK department were not among the documents produced, a spreadsheet was included in the production that appears to reflect the results of the surveys. (See 5/25/16 Vinti Ltr., at 1-2 & Ex. 2.) Indeed, the spreadsheet appears to contain the exact, detailed numbers listed in Exhibit 19 of the Finnerty Report, which lists SL Servicios's expenses and the percentage of those expenses allocated to Plaintiff's PTK department. (Compare id., Ex. 2 with Finnerty Report, Ex. 19.) Significantly, however, the only source listed for this expense information in the Finnerty Report is “SLI.” (Finnerty Report, Ex. 19.) In performing basic arithmetic on relevant figures contained in the belatedly produced spreadsheet, this Court arrived at a percentage that corresponds exactly to the allocation percentage identified in the Finnerty Report.[20] For this reason, the existence of the spreadsheet casts doubt on Bhandari's representation that Finnerty's report did not rely on any documents not previously produced in discovery. Indeed, Exhibit 19 of the Finnerty Report itself casts doubt on this assertion because it contains eight numbers represented to be exact to between one and three decimal places. Effectively, Bhandari has suggested to this Court that an SLI employee committed these detailed numbers to memory and orally relayed them to Finnerty. In light of the record before the Court, that counter-narrative is not credible.

Plaintiff's untimely production of El Arca and La Vina documents is similarly sanctionable. As noted, in addition to considering SL Servicios's expenses, Finnerty also took into account SG&A expenses arising from El Arca and La Vina in computing lost profits. (See Finnerty Report ¶¶ 69-72.) As with SL Servicios, it appears undisputed that, during fact discovery, Plaintiff did not identify these entities as having any relevance to its expenses or lost profits claim. After fact discovery, however, Finnerty included in his lost profits computation a non-trivial six-figure sum in salary expenses saved after employees at El Arca, a childcare facility located at Plaintiff's Tecate manufacturing facility, were terminated following Plaintiff's loss of Defendant's business. (Id. ¶ 70 & Ex. 9.) Finnerty also examined SG&A expenses related to La Vina, an on-site restaurant located at Plaintiff's Tecate manufacturing facility. (Id. ¶ 69.) Despite terminations at La Vina following the loss of Defendant's business, however, Finnerty did not include the salary expenses saved in his lost profits computation, due to an understanding “from company management” that those expenses were already accounted for in a separate line item in Plaintiff's PTK department's finances. (Id.)

*31 Given Finnerty's conclusion that, at minimum, the salaries of employees at these subsidiaries were relevant to Plaintiff's PTK department's expenses, and thus to Plaintiff's lost profits claim, Plaintiff should have identified these entities during the fact-discovery period and produced documents regarding their costs pursuant to the Court's Orders and Rule 26. Such disclosures would have given Defendant an opportunity to explore these entities' expense allocations and any connection to Plaintiff's PTK department, so as to have a means for testing the factual bases of Finnerty's conclusions. Plaintiff's explanations for its non-disclosure of these entities and their documents during fact discovery largely mirror its explanations regarding its failure to produce SL Servicios documents. (See 5/20/16 Bhandari Ltr., at 3-4.) This Court therefore rejects those explanations for the same reasons discussed above, and recommends sanctions in the form discussed further below.

If nothing else, this litigation has endured a persistent drumbeat of complaints by Defendant regarding the adequacy of Plaintiff's damages computation under Rule 26(a) and any supplementations of that computation under Rule 26(e). And, indeed, Defendant's complaints on this point have had validity. Plaintiff's first Rule 26(a) damages disclosure simply stated that Plaintiff “estimate[d] its damages to be in excess of $20,000,000.” (11/19/14 Vinti Ltr., at 2.) This disclosure included no damages “computation” whatsoever, let alone “a computation of each category of damages,” as required by the Rule. See Fed. R. Civ. P. 26(a)(1)(A)(iii). It also omitted any reference to documents upon which Plaintiff's damages claim is based. See id.

Plaintiff's Supplemental Rule 26(a) Disclosure, provided to Defendant on December 15, 2014, was also inadequate. Although Plaintiff separated its alleged damages into distinct categories in this iteration, it failed to comply with the Rule in other material ways. Most obviously, the supplemental disclosure failed to provide any transparency into what “costs” were factored into the “cost of sales” figure listed under lost profits. Additionally, as Defendant pointed out, and Plaintiff did not deny, the documents referenced in the supplemental disclosure encompassed Plaintiff's entire document production of over 300,000 pages of documents. (See 12/23/14 Conf. Tr., at 8.)

Plaintiff supplemented its Rule 26(a) disclosure again in January 2015, not by making any changes to its “computation,” but by narrowing the universe of documents that supposedly supported its damages claim to 41,000 documents and providing a list of those documents to Defendant. (See 1/12/15 Bhandari Ltr., at 2 n.2.) The parties have never placed this list before the Court, but given Bhandari's representation in February 2015 that Defendant could “figure ... out” Plaintiff's damages claim by reference to five documents (2/5/16 Conf. Tr., at 17), and Plaintiff's eventual production of a revised list that identified substantially fewer than 41,000 documents related to damages (Pl. Sanctions Opp. at 17-18), this Court has doubts as to whether the 41,000-document list was compliant with Rule 26(a) or was even provided in good faith.

About a year later, the February 2016 deposition of Bradley, as Plaintiff's Rule 30(b)(6) witness, served—to some extent—to afford greater clarity to Plaintiff's Rule 26(a) damages disclosures. Contrary to Defendant's assertion that Bradley's testimony was essentially useless in this regard (see 3/4/16 Def. Sanctions Mem., at 17), it is apparent from the deposition transcript that Bradley provided at least a rough formula explaining how Plaintiff had computed its lost profits. She testified that she had “determined SLI gross profit as revenues minus labor, minus material, minus overhead.” (Bradley Dep., at 111-12.) She also stated that she had “prorated” this profit figure over the claimed 19 remaining months on the Supply Agreements. (Id.) Additionally, she explained why she chose 2010 revenues and expenses over other years, and she noted that she had relied on a document called a “PTK summary” in performing her computation. (Id. at 111-17.) As noted above, however, Bradley could not identify the beginning and end dates of Plaintiff's alleged damages period. (See id. at 175-77.) Nor did Bradley reasonably direct Defendant to all of the particular documents upon which Plaintiff's damages claim was based. See Fed. R. Civ. P. 26(a)(1)(A)(iii) (requiring party claiming damages to make available the documents “on which each computation is based”).

*32 To the extent Bradley's deposition did not bring to light all material information that would have been necessary to render Plaintiff's damages computation complete or correct, Plaintiff still had an obligation thereafter to supplement its computation under Rule 26(e). See Fed. R. Civ. P. 26(e)(1)(A). Plaintiff, however, never supplemented its Rule 26(a) disclosure to identify the specific 19-month period for which it was claiming damages. Only after Finnerty's report was produced, which, as set out above, entirely changed the purported damages period, did Plaintiff ever shed any light on the period that it used for its initial computation—and, at that point, as noted above, Plaintiff identified an 18-month period, rather than a 19-month one. (See 4/27/16 Bhandari Ltr., at 4.)

Further, subsequent to the Bradley deposition, Plaintiff failed to provide any further information regarding the documents that supported its damages computation until after Defendant filed its sanctions motion in March 2016. Only then, for the first time in this litigation, did Plaintiff provide Defendant with a particularized list of documents that purportedly supported that computation. (See Pl. Sanctions Opp., at 17-18 (citing Bhandari Decl., Exs. J, K, O, P, S, T, and U).) Plaintiff has never explained why it could not have provided this information sooner, especially in the face of multiple letters from Defendant, multiple motions directed towards the sufficiency of its proffered computation, and several Orders by the Court directing Plaintiff to provide a transparent computation. Given Bhandari's shifting representations, throughout the discovery period, as to how many documents purportedly supported Plaintiff's damages claims and the feasibility of compiling a list of those documents, Plaintiff's failure to provide this particularized information until after the close of fact discovery (and only when faced with a sanctions motion), evidences bad faith. See, e.g., Hawley, 302 F.R.D. at 54-55 (noting that shifting representations to justify discovery noncompliance demonstrated bad faith). I therefore recommend that sanctions be imposed for Plaintiff's repeated failure to comply with the requirements of Rule 26(a) and (e).

Perhaps the largest elephant in the room is Plaintiff's expert report on damages. As already noted, and as Plaintiff's counsel admits (see 4/27/16 Bhandari Ltr., at 2-3), Plaintiff's expert, Finnerty, not only increased Plaintiff's damages period from 19 to 22 months, but also altered every single variable in Plaintiff's prior lost-profits calculation, including sales, price, and cost figures, substituting 2013-15 figures for the 2009-10 figures originally used (see 4/20/16 Vinti Ltr., at 5-8 (citing to the Finnerty Report) ). Finnerty also factored additional expenses into his lost-profits computation that Plaintiff had previously denied were relevant, or had failed to disclose altogether, including SG&A expenses from Plaintiff's Mexican subsidiaries. (Compare 2/5/16 Conf. Tr., at 36 with Finnerty Report ¶¶ 66-72.)

Plaintiff defends the Finnerty Report's computations, in part, on the ground that, as an expert witness, Finnerty was required to provide an independent assessment of Plaintiff's damages rather than “slavishly copy Plaintiff's Rule 26(a) computation.” (4/27/16 Bhandari Ltr., at 2.) This is disingenuous. Plaintiff provided Defendant with a Supplemental Rule 26(a) Disclosure on December 15, 2014, and stood by and defended the lost-profits computation in that disclosure through the entirety of fact discovery, ending February 16, 2016. Plaintiff even defended that December 2014 computation in its March 18, 2016 opposition to Defendant's sanctions motion. Thus, for approximately 15 months, Defendant's damages-related discovery efforts were guided by the notion that Defendant needed to develop a defense to a lost-profits claim involving a 19-month damages period; sales, price, and cost figures from 2009 and 2010; and costs that excluded SG&A expenses. Then, in April 2016—after Defendant had already deposed all of Plaintiff's fact witnesses, written the Court numerous letter motions to compel additional discovery, and engaged in multiple discovery conferences with this Court—Plaintiff disclosed, for the first time, that all of the figures contained in its prior damages computations were being thrown out the window. From the outset of this case, one of its prime drivers has been Plaintiff's substantial lost-profits claim, and Plaintiff's sandbagging Defendant with an entirely new damages calculation after the conclusion of lengthy and costly fact discovery is exactly the type of “surprise” and “trial by ambush” that Rules 26 and 37 are designed to prevent. See Am. Stock Exch., 215 F.R.D. at 93.

*33 Also unavailing is Plaintiff's argument that Defendant “will suffer no conceivable prejudice” as a result of Finnerty's changes because Finnerty ultimately arrived at a lower lostprofits figure than Plaintiff had initially demanded. (4/27/16 Bhandari Ltr., at 2-3.) This argument ignores the prejudice suffered by Defendant in being led to investigate a separate and distinct damages computation for 15 months. This argument also ignores the prejudice suffered by Defendant in being deprived of the opportunity to explore the factual bases of Finnerty's new computation during fact discovery, so as to enable it to argue that Finnerty's computation is itself overstated.

In sum, this Court finds that Plaintiff's material alterations to its lost-profits computation, through the Finnerty Report, substantially prejudiced Defendant, violated Rule 26(e)(1)(A), and is sanctionable. See Ritchie Risk-Linked Strategy Trading (Ireland), Ltd. v. Coventry First LLC, 280 F.R.D. 147, 160 (S.D.N.Y. 2012) (“By making their damages disclosure after the close of fact discovery, Plaintiffs effectively deprived Defendants of the tools necessary to challenge the underlying assumptions of Plaintiffs' expert—i.e., the documents and/or deposition testimony that would speak to the factual matters being evaluated by the expert.” (citation omitted) ); NW Pipe Co. v. DeWolff, Boberg & Assocs., Inc., No. EDCV 10-0840-GHK, 2012 WL 137585, at *4 (C.D. Cal. Jan. 17, 2012) (holding that the disclosure of a “new damages computation” one day after the close of fact discovery was sanctionable where it “deprived [the defendant] of the opportunity to conduct discovery to investigate and evaluate [the] plaintiff's new computation of damages, including examining key fact witnesses....”).

B. Appropriate Sanctions

With minor exceptions, the conduct that this Court has found sanctionable is conduct that delayed and extended discovery, increased Defendant's litigation costs, and caused Defendant to lose opportunities to develop challenges to Plaintiff's lost-profits claim, in general, and to the report of Plaintiff's damages expert, in particular. As noted above, it is this Court's view that the appropriate sanctions to impose in this case are sanctions that are targeted to remedy those types of prejudice.

Defendant first asks the Court to preclude Plaintiff from offering any evidence of damages at the trial of this action (see 3/4/16 Def. Sanctions Mem., at 19-21; 5/13/16 Vinti Ltr., at 1), which could effectively deprive Plaintiff of any recovery, even if it is able to prove that Defendant breached its contractual obligations. Needless to say, this would be an extremely harsh sanction for Plaintiff's discovery abuses.

In fact, because of the harshness of the sanction of preclusion, such a sanction has been held to be justified only in “rare situations” evincing culpable conduct by the party against whom the sanction is to be imposed. Gurvey v. Cowan, Liebowitz & Latman, P.C., No. 06cv1202 (LGS) (HBP), 2013 WL 3718071, at *13 (S.D.N.Y. July 15, 2013); see also Hart v. Westchester Cty. Dep't of Soc. Servs., 160 F. Supp. 2d 570, 579 (S.D.N.Y. 2001) (finding preclusive sanctions appropriate “ ‘when the failure to comply with a court order is due to willfulness or bad faith, or is otherwise culpable’ ” (quoting Daval Steel Prods., 951 F.2d at 1365) ). Furthermore, before precluding a party from introducing relevant evidence because of a discovery violation, a court “should inquire more fully into the actual difficulties which the violation causes, and must consider less drastic responses.” Ritchie Risk, 280 F.R.D. at 157 (quoting Outley v. New York, 837 F.2d 587, 591 (2d Cir. 1988) ).

*34 In determining whether preclusion or some other sanction would be appropriate, courts should consider, inter alia: “(1) the party's explanation for the failure to comply with the discovery [requirement]; (2) the importance of ... the precluded [evidence]; (3) the prejudice suffered by the opposing party as a result of having to prepare to meet the new testimony; and (4) the possibility of a continuance.” Softel, Inc. v. Dragon Medical & Scientific Commc'ns, Inc., 118 F.3d 955, 961 (2d Cir. 1997). While a showing of “bad faith” is not required for preclusion to be ordered under Rule 37(c), a party's bad faith “can be taken into account” by the Court in considering the party's explanation for its failure to satisfy its discovery obligations. Design Strategy, 469 F.3d at 296.

In this case, this Court has found that, with respect to certain acts of delay and obstruction, Plaintiff—through Bhandari as its counsel—has, in fact, acted without justification and in bad faith. This Court has also found that much of the documentation that was disclosed belatedly, in violation of both Plaintiff's discovery obligations and Court Orders, was material to Plaintiff's lost-profits damages claim and important to Defendant's ability to defend against that claim, and that Defendant suffered actual prejudice as a result of Plaintiff's substantial delay in production. Similarly, this Court has found that Plaintiff's wholesale revision of its damages analysis after fact discovery had been completed was unjustifiable and significantly prejudicial.

Nonetheless, this Court is mindful of several additional factors that, in this case in particular, weigh against the issuance of an order precluding Plaintiff from offering any damages proof. First, this Court notes the case-dispositive nature of the requested sanction and the strong judicial preference for a party's claims to be resolved on their merits, rather than through a discovery sanction. See Marfia, 100 F.3d at 249. If Plaintiff were able to demonstrate, at trial, that Defendant in fact breached the Supply Agreements, then it would be an unjust result for Defendant to avoid entirely the legal consequences of its breach. Second, the eight-figure damages that Plaintiff is claiming from the alleged breaches of contract are so substantial that disallowing any remedy for those alleged breaches could work a very significant hardship on Plaintiff and effectively afford Defendant a very large windfall. Third, it is unclear to this Court whether Plaintiff, itself, is primarily at fault for the discovery violations at issue, or whether the fault lies primarily with Bhandari. While Plaintiff certainly needs to take responsibility for its conduct in litigation, many of the specific representations that caused this Court to question Plaintiff's good faith were made by Bhandari, and this Court has at least some concern that the preclusive sanction requested by Defendant would unduly penalize Plaintiff for the misconduct of its counsel. Fourth, as the discovery violations in this case have predominantly taken the form of untimely disclosures, rather than non-disclosures, Defendant's prejudice could be ameliorated with some additional time in discovery to explore the import of the documents and damages computations that were belatedly produced. On this point, this Court notes that, while this case is now supposedly past the discovery stage, and while the discovery process has been lengthy, no summary-judgment motions have yet been made and no trial is yet on the calendar, so that a continuance would be possible. Cf. Design Strategy, 469 F.3d at 295 (affirming order precluding plaintiff from proceeding on a damages theory that was disclosed for the first time “shortly before the commencement of trial”); Ebewo, 309 F. Supp. 2d at 607 (S.D.N.Y. 2004) (precluding use of expert testimony proffered for the first time in response to a summary judgment motion); Ellis v. Asset Prot. & Sec. Servs., LP, No. 09cv6555 (RJH), 2011 WL 4472331, at *1-2 (S.D.N.Y. Sept. 27, 2011) (precluding evidence of damages where no computation of any kind was ever produced).

*35 As less drastic sanctions would be sufficient to address the prejudice caused by Plaintiff's discovery abuses, I recommend that the Court deny Defendant's request that Plaintiff be precluded from introducing any evidence of its damages.

As noted above, Defendant also requests, in the alternative to preclusion, that the Court instruct the jury at trial to draw an “irrebuttable” adverse inference regarding any stillundisclosed materials or information. (See 5/13/16 Vinti Ltr., at 6.)

An adverse inference instruction is another “severe sanction.” R.F.M.A.S., Inc., 271 F.R.D. at 52 (citing Residential Funding Corp., 306 F.3d at 108). “Although adverse inference instructions ‘usually [are] employed in cases involving spoliation of evidence,’ a court also may grant an adverse inference instruction for the non-production of evidence.” Hawley, 302 F.R.D. at 54 (quoting Residential Funding, 306 F.3d at 107). A court may grant an adverse inference instruction as a sanction for the non-production of evidence, upon a showing “(1) that the party having control over the evidence had an obligation to timely produce it; (2) that the party that failed to timely produce the evidence had ‘a culpable state of mind’; and (3) that the missing evidence is ‘relevant’ to the ... claim or defense [of the other party] such that a reasonable trier of fact could find that it would support that claim or defense.” Residential Funding, 306 F.3d at 108 (quoting Byrnie v. Town of Cromwell, Bd. of Educ., 243 F.3d 93, 107 (2d Cir. 2001) ). As for the nature of the instruction, a court may “simply [tell] the jury” that the evidence was destroyed or wrongfully withheld, or it may “add[ ] that the jury could, but need not, draw inferences” against the sanctioned party based on those facts, or it may instruct the jury that it “should draw [an] adverse inference” based on the facts. Mali v. Fed. Ins. Co., 720 F.3d 387, 392 (2d Cir. 2013) (emphasis in original; citing Fed. R. Civ. P. 37(b)(2)(A) ).

Here, as discussed above, there are only a few categories of documents where this Court has considered non-production (or, potentially, spoliation) still to be an issue:

First, there are the price-quote documents, which this Court has found relevant to the issue of mitigation. As to these documents, as discussed above, it is this Court's view that they should simply be ordered produced; this Court has no reason to believe that Plaintiff would continue to withhold these documents, if specifically directed to produce them.

Second, there are the documents supporting Plaintiff's internal decision to allocate 20% of its SG&A expenses to the PTK department—documents which, according to Bhandari, either do not exist or cannot be located. Despite the fact that this Court has expressed dissatisfaction with the extent of Plaintiff's document search, this Court has found that Defendant has failed to explain how it has been prejudiced by the non-disclosure of these documents (assuming they do exist), in light of the entirely different treatment of SG&A expenses in the Finnerty Report. Absent a showing of prejudice at this stage, this Court sees no rationale for imposing an adverse inference sanction.

*36 Finally, there are the “employee surveys” that supposedly supported Finnerty's decision to allocate a certain percentage of SL Servicios's expenses to Plaintiff's PTK department. Plaintiff asserts that these documents have been destroyed (see 4/27/16 Bhandari Ltr., at 4 (“Once the fees were calculated, this underlying survey data was not compiled or recorded”) ), but the circumstances of such destruction have never been the subject of discovery. As the employee surveys clearly would be relevant to the damages computations contained in the Finnerty Report, Defendant should, at a minimum, be given an opportunity to determine when and how it came to be that the surveys were not preserved. I therefore recommend that Defendant's earlier request for “spoliation discovery” regarding the surveys be granted.[21] At this point, however, this Court has no basis for concluding that Plaintiff destroyed these documents with a “culpable state of mind,” and thus no basis for recommending an adverse-inference charge.

Otherwise, the bulk of Plaintiff's conduct that this Court has found sanctionable relates to late disclosure, rather than non-disclosure, and thus an adverse-inference charge would not fit the circumstances presented. Accordingly, I do not recommend that any such charge be given.

Defendant's request that the Court strike the Finnerty Report, in whole or in part (see 5/13/16 Vinti Ltr., at 5-6) should also be denied. Striking an expert report may be an appropriate sanction where, for example, a party fails to provide its adversary with “a clear understanding of the data upon which [the expert] relied,” see Koppell v. N.Y. State Bd. of Elections, 97 F. Supp. 2d 477, 481-82 (S.D.N.Y. 2000), or the report itself, at a late stage in the litigation, sets forth a brand new theory of liability never previously disclosed, see Parrish v. Freightliner, LLC, 471 F. Supp. 2d 1262, 1270 (M.D. Fla. 2006). In this case, however, the Finnerty Report provides record citations for most of its factual assertions. Indeed, the report contains 77 paragraphs, 19 exhibits, and two appendices, the vast majority of which Defendant has not challenged as unsupported by documentary evidence. Moreover, although the report materially revises the figures used in Plaintiff's lost-profits computation, it does not present a new claim of liability, or assert a new theory of damages.

Further, there are again special considerations here that militate against striking Plaintiff's expert report. For one thing, it seems that striking the Finnerty Report and requiring Plaintiff to rely, instead, on its earlier computations could actually result in an increase to Plaintiff's claimed damages. As discussed above, this Court does not accept Plaintiff's argument that any prejudice to Defendant from Plaintiff's changed calculations was eliminated by the fact that the Finnerty Report adjusted Plaintiff's previous damages calculation downward, but it is still worth noting that the report did just that. Also, given the complexity of the evidence on lost profits in this case, a jury—and the Court—may well benefit from expert testimony on the issue.

For all of these reasons, while it is tempting to recommend that, given the Finnerty Report's material variation from Plaintiff's earlier lost-profits computation, the report or portions of it should be stricken, such a remedy would not, in this Court's view, be the best solution to the problems the report presents. Nor does this Court conclude that, as Defendant also suggests (see 5/13/16 Vinti Ltr., at 6), Plaintiff should be precluded from challenging certain assumptions about Plaintiff's expense allocations that have been made by Defendant's competing expert. Defendant has not even informed this Court what these assumptions are or why they are reasonable. Defendant has also provided no authority for the proposition that, as a discovery sanction, the Court should abandon its gatekeeping obligations under Fed. R. Evid. 702. This Court therefore recommends that this request be denied as well. Instead, this Court recommends alternative sanctions, discussed below.

*37 It is generally appropriate, at a minimum, to require a party that has not complied with its discovery obligations to pay the reasonable fees and costs incurred by the moving party in seeking disclosure and/or in seeking discovery sanctions. See Izzo v. ING Life Ins. & Annuity Co., 235 F.R.D. 177, 188 (E.D.N.Y. 2005) (noting that the Second Circuit has characterized the imposition of reasonable expenses, including attorney's fees, on the disobedient party as “ ‘the mildest’ of the sanctions authorized by Rule 37” (quoting Cine Forty-Second St. Theatre Corp. v. Allied Artists Pictures Corp., 602 F.2d 1062, 1066 (2d Cir. 1979) ). In addition, where excusing a party's dilatory conduct would have the effect of causing another party to incur additional costs that it would not have otherwise incurred, it may be appropriate for the court to shift those costs to the party at fault. See Phoenix Four, Inc. v. Strategic Res. Corp., No. 05cv4837 (HB), 2006 WL 1409413, at *9 (S.D.N.Y. May 23, 2006) (ordering dilatory party and its counsel to pay costs of sanctions motion and $10,000 for each re-deposition) (citing Zubulake v. UBS Warburg LLC, 220 F.R.D. 212, 220 (S.D.N.Y. 2003) ); see also Tse v. UBS Fin. Servs., Inc., 568 F. Supp. 2d 274, 321-22 (S.D.N.Y. 2008) (awarding fees and costs incurred in connection with the sanctions motion; noting that “[c]ourts in this circuit have often awarded attorney's fees to sanction a party who disregards [its] discovery obligations”) (collecting cases); Zubulake, 229 F.R.D. at 439 (imposing Rule 37 sanctions including fees and costs associated with making motion).

“Monetary sanctions are appropriate ‘to punish the offending party for its actions [and] to deter the litigant's conduct, sending the message that egregious conduct will not be tolerated.’ ” Green v. McClendon, No. 08cv8496 (JGK) (JCF), 262 F.R.D. 284, 292 (S.D.N.Y. 2009) (alteration in original) (citing In re WRT Energy Sec. Litig., 246 F.R.D. 185, 201 (S.D.N.Y. 2007) ). Such sanctions may be imposed on a party, its counsel, or both. See Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 526-28 (2d Cir. 1990) (holding that the district court properly exercised its discretion in imposing Rule 37 monetary sanctions jointly and severally upon a party and its counsel); Phoenix Four, Inc., 2006 WL 1409413, at *9 (ordering a party and its counsel to share equally in paying cost of sanctions motion and depositions); see also Yeboah v. United States, No. 99cv4923 (JFK) (THK), 2000 WL 1576886, at *4 (S.D.N.Y. Oct. 20, 2000) (imposing Rule 37(c)(1) monetary sanctions on counsel only).

In this case, the imposition of a Rule 37 award of attorneys' fees and costs would be appropriate, as against both Plaintiff and its counsel, the law firm of Mandel Bhandari LLP. See Fed. R. Civ. P. 37(b)(2)(C); Fed. R. Civ. P. 37(c)(1)(A). Although this Court has rejected a few of Defendant's complaints about the non-production of documents, it is plain that Defendant's efforts to conduct damages discovery in this case were significantly frustrated by Plaintiff and its counsel, and that Defendant had a valid basis for repeatedly seeking this Court's intervention. It is also apparent that Plaintiff and its counsel persisted in dilatory and obstructionist conduct in discovery, including violating the Court's February 5, 2016 rulings, despite receiving multiple warnings of sanctions from this Court.

Finding nothing unjust about awarding monetary sanctions under the facts set forth above, this Court recommends that Plaintiff and Mandel Bhandari LLP be ordered, in equal shares, to reimburse Defendant for the reasonable attorney's fees and costs that it incurred in preparing letters to the Court regarding Plaintiff's discovery noncompliance relating to the matters discussed at the February 5, 2016 conference (Dkts. 157, 166, 168, and 172); preparing for and participating in the February 5, 2016 conference; preparing its March 4, 2016 sanctions motion, supporting submission, and reply (Dkts. 183, 191, 192, 194, 195); and preparing letters and supplemental sanctions briefing following service of the Finnerty Report (Dkts. 200, 202, 213, and 216).

*38 If Plaintiff or its counsel dispute the reasonableness of Defendant's fees and costs with respect to Defendant's identified applications for relief, then I recommend that Defendant be permitted to submit a fee application to this Court for resolution.

Apart from the fact that Defendant incurred significant cost in having to seek judicial intervention for Plaintiff's discovery abuses, Defendant suffered real prejudice here, in losing the opportunity to depose witnesses regarding belatedly produced documents, and in wasting time and money in developing a defense to a damages computation that Plaintiff then entirely changed, through the Finnerty Report, after fact discovery had been completed. This prejudice should be remedied.

At the February 5, 2016 conference, this Court expressly cautioned Plaintiff that, if it failed to comply with the Court's Orders to produce cost-related documents prior to Plaintiff's Rule 30(b)(6) deposition on damages, then Plaintiff's witness might have to reappear later for a reopened deposition, at Plaintiff's expense. (See 2/5/16 Conf. Tr., at 64.) It is readily apparent that Plaintiff did, in fact, produce documents after Bradley's deposition that, pursuant to the Court's rulings, should have been produced before—including, inter alia, over 1500 pages of documents produced on May 12, 2016, consisting of payroll-register documents and documents regarding SL Servicios, El Arca, and La Vina. Given Finnerty's express consideration of SG&A expenses relating to SL Servicios, El Arca, and La Vina in computing Plaintiff's lost profits, Defendant should be afforded the opportunity to depose fact witnesses regarding these belatedly produced documents, as well as any other damages-related documents (such as the spreadsheet relating to the missing employee surveys) that were only produced after the close of fact discovery.

Further, given Plaintiff's failure to articulate any legitimate reason for failing to produce these documents sooner, Plaintiff should bear the cost of the additional, or reopened depositions. See Schiller v. City of New York, No. 04cv7921 (KMK) (JCF), 2007 WL 735010, at *4-5 (S.D.N.Y. Mar. 12, 2007), aff'd sub nom. In re Consol. RNC Cases, No. 127, 2009 WL 130178 (S.D.N.Y. Jan. 8, 2009) (where a party, without a “legitimate excuse,” breached its obligations under Rule 26(a) and 26(e) by identifying witnesses and producing relevant documents both near and after the fact discovery cutoff, the court held that the opposing party was “entitled to reopen discovery to explore fully the newly disclosed information, and the costs of that discovery [would] be borne by [the disclosing party]”); Lee Valley Tools, Ltd. v. Indus. Blade Co., 288 F.R.D. 254, 262 (W.D.N.Y. 2013) (holding that a party's “discovery delinquencies ... justif[ied] reopening the discovery period to allow [the opposing party] to conduct additional discovery relating to the untimely disclosures,” and that the fees resulting from the additional discovery would be borne by the disclosing party).

Reopening fact discovery at Plaintiff's expense would also be appropriate in light of Finnerty's material alterations to Plaintiff's initial lost-profits computation, after Plaintiff had maintained, for the prior 15 months, that it was relying on that initial computation. As Finnerty abandoned all of the sales, revenue, and cost figures for the time period underlying Plaintiff's initial computation, and replaced them with figures from a wholly different time period, Defendant should be given an opportunity to inquire—of a Rule 30(b)(6) witness, and, potentially, of other fact witnesses—about the bases for the new figures. Among other things, Defendant should be afforded an opportunity to depose one or more witnesses regarding the SG&A expenses that Finnerty included in his report—expenses that Bhandari had previously argued, repeatedly, were irrelevant. See NW Pipe Co., 2012 WL 137585, at *5-6 (reopening discovery at the plaintiff's expense to allow the defendant depose additional fact witnesses and conduct “additional discovery regarding [the] plaintiff's revised damages computation,” which was only disclosed after the fact discovery cutoff).

*39 Specifically, to address these issues, this Court recommends that fact discovery be reopened for a period of 60 days, within the following parameters:

(1) Depositions: Defendant should be granted leave to reopen depositions, or to conduct additional depositions, of fact witnesses—including Rule 30(b)(6) witnesses, if desired—regarding documents or information relating to the factual basis for Plaintiff's lost-profits claim, as computed in the Finnerty Report. I recommend that such depositions be limited to a maximum of 21 hours of questioning (comprised, at Defendant's option, of full and/or part-day depositions), and that the questioning be restricted to the exploration of (a) any documents relating to Plaintiff's sales, revenues, or expenses that were produced by Plaintiff subsequent to the Bradley Rule 30(b)(6) deposition, (b) the factual underpinnings of Finnerty's lost-profits computation, to the extent it differs from Plaintiff's earlier-proffered computation, and (c) the spoliation issues suggested by Plaintiff's apparent failure to preserve the employee surveys that purportedly support SL Servicios's allocation of expenses to Plaintiff's PTK department.

(2) Document Requests and Interrogatories: Having already served document requests seeking all documents relevant to Plaintiff's claimed lost profits (including its expense allocations), this Court does not envision that, in a reopened discovery period, Defendant would need to serve additional document requests. This Court recognizes, however, that a witness, at deposition, may identify relevant documents not previously produced, and that Defendant should then be permitted to make a follow-up request for such documents. Defendant should also be granted leave to serve a modest number of additional interrogatories (I recommend not more than 10, including sub-parts), if it determines in good faith that this would be a cost-efficient way to obtain information related to Plaintiff's belatedly produced documents or the changed lost-profits computation contained in the Finnerty Report.

(3) Shifting of Attorneys' Fees and Costs: So as to remedy the prejudice caused by Plaintiff's discovery abuses and violations of Court Orders, the cost of this reopened or additional discovery, up to a cap of $30,000 in attorneys' fees, plus reasonable expenses, should be shifted to Plaintiff and its counsel, Mandel Bhandari LLP, in equal shares. The shifted attorneys' fees should include fees both for Defendant's counsel's conducting of the reopened or new depositions and preparing for the same, although I recommend that any fees for attorney-preparation time, for any given deposition, be limited so as not to exceed the time spent questioning the witness. Reimbursable expenses should include court-reporter and transcript fees for the depositions, as well as other reasonable costs.

As a corollary to the above recommendations, this Court recommends that (1) within three weeks of the completion of the reopened fact discovery described above, Defendant's damages expert be permitted to submit a supplemental report, analyzing any factual information that is newly developed through the additional discovery period, and (2) Plaintiff and its counsel, Mandel Bhandari LLP, in equal shares, be required to pay the reasonable cost of such a supplemental report, not to exceed $15,000.

*40 This Court also recommends that, if Defendant's expert does submit a supplemental report, and if Defendant believes that it would be prejudicial for a jury to learn that its earlier expert's report or reports were modified as a result of any new information, then Plaintiff be prohibited from informing the jury that the expert had prepared any previous report, and from seeking to impeach the expert's credibility based on any changes from such previous report(s).[22]

For all of the foregoing reasons, I respectfully recommend that Defendants' motion for sanctions (Dkt. 183), as modified by the parties' supplemental briefing, be resolved as follows:

*41 Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report to file written objections. See also Fed. R. Civ. P. 6 (allowing three (3) additional days for service by mail). Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable John G. Koeltl, United States Courthouse, 500 Pearl Street, New York, New York 10007, Room 2220, and to the chambers of the undersigned, United States Courthouse, 500 Pearl Street, Room 1660, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Koeltl. FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBEJCTIONS AND WILL PRECULDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140, 155 (1985); JUEAFL-CIO Pension Fundv. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).

SO ORDERED.