LOBSTER 207 LLC v. PETTEGROW et al

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
LOBSTER 207, LLC, 	)
)
Plaintiff 	)
)
v. 	) 	No. 1:19-cv-00552-LEW
)
WARREN B. PETTEGROW, et al., 	)
)
Defendants 	)
SECOND ORDER ON MOTION TO EXCLUDE
EVIDENCE OF UNDISCLOSED DAMAGES
On October 10, 2024, I issued an Order on Motion to Exclude Evidence of
Undisclosed Damages (ECF No. 604) in which I outlined the history of Plaintiff’s damages
disclosures. I reserved ruling to permit Plaintiff to better address the same so that I might
come to understand where certain disclosures occurred since they had not occurred in the
Rule 26 disclosures themselves.
The matter now returns post-supplement on the Pettegrow Defendants’ Motion to
Exclude (ECF No. 489), their Response to Plaintiff’s Supplemental Disclosure (ECF No.
613) and Plaintiff’s Brief in Response (ECF No. 617).
In the prior order I set out the basics of the Rule 26 disclosure requirements. 	See
also AVX Corp. v. Cabot Corp., 251 F.R.D. 70, 76 (D. Mass. 2008) (emphasizing the
expectation that supplementation of a damages computation ordinarily will occur within
the discovery period). 	It is the duty of the disclosing party, as the case progresses, “to
supplement or correct its disclosure . . . in a timely manner if the party learns that in some
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material respect the disclosure . . . 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.” Fed. R. Civ. P. 26(e)(1)(A) (emphasis added). 	Failure to fulfill this
duty calls for disallowance of the use of the information in question, “unless the failure
was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1).
Plaintiff has most recently produced its Second Supplemental Initial Disclosures.
(ECF No. 613-1/617-6). For the reasons set forth in the Pettegrow Defendants’ Response
to Plaintiff’s Supplemental Disclosure Regarding Damages (ECF No. 613), the Pettegrow
Defendants’ Motion to Exclude (ECF No. 489) is granted in part pursuant to Rule 37(c)(1)
of the Federal Rules of Civil Procedure, as set forth below. My recitation of the categories
and computations tracks Plaintiff’s November 2024 Second Supplemental Disclosure
(ECF No. 613-1), including those categories to which the Pettegrow Defendants have not
objected, for ease of future reference.
My evaluation of the Pettegrow Defendants’ objections regarding disclosure
obligations is animated in part by the reality that this case has traveled a long and winding
road. This is relevant because of the limitless opportunities the parties have undoubtedly
enjoyed to discover everything in the known universe and beyond about Plaintiff’s claims
and associated 	damages, apart 	from 	their 	skepticism 	that 	such 	damages 	are more
metaphysical than the rules of evidence and the good sense of the jury would ultimately
allow. I understand the often-irresistible temptation for defendants to knock out damages
on first contact with a judge’s signature to avoid the troublesome task of testing them in
the more dynamic atmosphere of a trial courtroom. 	Proof problems related to damages
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untethered from expert testimony are better left to substantive motion practice or better,
the adversarial process of a trial (e.g., witness examination, evidentiary objections, closing
arguments) rather than laundered through eve-of-trial protests of disclosure fouls.
Alleged Schemes
1. 	BJ Co-Op
The Pettegrow Defendants object to Plaintiff’s disclosure of a range of possible
recovery on its BJ Co-Op claim, from “$501,989.10 (had Lobster 207 paid only a $.10
premium) to $987,290.20 (had Lobster 207 paid no premium).” Pl.’s Sec. Suppl. Discl. at
2. 	The record has already demonstrated the historical payment of premiums by Trenton
Bridge to the BJ Co-Op prior to the sale of the Trenton Bridge wholesale business, making
the disclosure of the entire post-sale premium overkill. 	But the disclosure otherwise
suffices to preserve the claim for a measure of damages that comports with the evidence
disclosed in discovery, which measure of damages may exceed the lower figure even
though the evidence would not support the higher figure.
2. 	Recoupment
No objection: $58,217.40
3. 	Poseidon
No objection: $835,655.29
4. 	Mixed Lobster
No objection: $416,104.60
5. 	Dealer Upcharge
No objection: $16,862.15
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6. 	Tubed Lobster
Plaintiff’s recent categorization of alleged damages arising out of its direct payment
to Sable in January 2018 is excluded. The matter of the Sable invoice was mentioned by
Plaintiff previously, during arbitration, and the computation is as simple as looking at the
invoice itself. However, the claim falls outside of the allegations recited in support of the
Tubed Lobster Scheme at paragraphs 210 through 230 and is a late innovation that is not
substantially justified. 	Plaintiff’s effort to expand the Tubed Lobster Scheme (a fraud
claim subject to RICO’s statutory damages multiplier) beyond its original scope will be
excluded 	and 	damages 	in 	this 	category 	will 	be 	limited 	to 	the 	original 	disclosure
($110,351.79).
Other Categories
7. 	Double Billing of Lobster Inventory Post Asset Purchase Agreement (“APA”)
No objection: $267,598
8. 	High Tide Invoices
No objection: $37,075.04
9. 	Line of Credit Interest Incurred to Fund Upcharges
It is to be expected and reasonably would be expected by the Pettegrow Defendants
that a component of Plaintiff’s consequential damages would include line of credit interest
paid for expenditures that were unnecessary or excessive due to the alleged overcharging
of Plaintiff for lobster and other alleged financial mismanagement. 	However, what
Plaintiff has disclosed is every single dollar of interest ($919,234) paid in connection with
its full-scale operation during Warren Pettegrow’s tenure. 	That does not strike me as a
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“calculation” of damages. Nevertheless, I am not persuaded that any and all recovery tied
to interest payments on unnecessary or excessive utilization of the line of credit should be
barred and find Plaintiff’s disclosure of the gross interest figure to be substantially justified
for Rule 26 purposes even though it is inadequate to prove this damage category on its
own.
10. 	Crate Lease Expenses Post-APA
The Pettegrow Defendants complain that Plaintiff has reallocated post-sale crate
lease expenses ($422,172.10) from its Lobster Crate Scheme1 (see First Am. Compl., ECF
No. 184 ¶¶ 117-126) to other claims such as its non-competition claim without any within-
discovery explanation for this “new” approach. For present purposes, the calculated figure
was unquestionably disclosed along with the associated evidence. It is simply unclear how
the disclosure aligns with the remaining claims. This is a problem of proof rather than
nondisclosure. 	I prefer to make a ruling in the context of the evidence admitted at trial
rather than in the abstract and the request for exclusion is denied without prejudice.
11. 	Dead Loss
In the First Amended Complaint, Plaintiff alleges that Warren Pettegrow “directed
trucks carrying lobsters purchased by Lobster 207 to divert their loads to Trenton Bridge .
. . before being brought to Lobster 207’s Seal Point Facility in order to extract the highest
quality lobsters for sale at Trenton Bridge . . . without paying Lobster 207 for them.” FAC
1 As alleged in the FAC, this was an APA-adjacent misrepresentation claim involving preclosing
reliance injury, and I dismissed the claim as barred by the economic loss doctrine. See ECF No.
422 at 12-13. 	Now Plaintiff apparently wants to characterize it as a component of damages
secondary to post-closing mismanagement.
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¶ 54. 	Plaintiff also alleges that Warren Pettegrow directed agents to swap out weakened
and/or dying lobsters that were stored at Trenton Bridge for healthier lobster at Plaintiff’s
Seal Point facility, without compensating Lobster 207. 	Id. ¶ 246. 	The valuation of
Plaintiff’s total dead loss (or inventory write off) was disclosed in a timely fashion. But in
terms of disclosing a damages calculation, Plaintiff has belatedly disclosed the entirety of
its loss even though dead loss is to be expected in the absence of any misconduct.
Projecting expected loss versus actual loss is a matter requiring application of some
kind of methodology that would produce a calculation. That appears to be missing here.
Still, the disclosure should not come as a surprise to the Pettegrow Defendants. Everyone
here understands that, should the evidence support it, some reallocation of these losses
would be appropriate. I therefore decline to exclude the introduction of evidence pertaining
to Plaintiff’s alleged excessive booking of dead loss and the Trenton Bridge Lobster
Pound’s alleged minimal booking of dead loss, during Warren’s tenure with Plaintiff,
though 	I 	agree 	with 	the 	Pettegrow 	Defendants 	that 	the 	disclosed 	damages 	figure
($1,263,396.34) is not an accurate projection of Plaintiff’s alleged dead loss damages and
would not suffice on its own to prove the claim.2 Like other categories of damages, this
one may ultimately be excluded if it relies on expert testimony not previously disclosed.
2 I disagree with the contention that this category of damages is somehow constrained to Plaintiff’s
employment-related claims against Warren. 	They might also be attributed to alleged breach of the
noncompetition agreement and/or the civil conspiracy claim.
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12. 	Shipping and Handling
Plaintiff asserts that it timely disclosed damages amounting to the entirety of
Plaintiff’s shipping and handling expenses ($965,367) incurred during Warren’s tenure
because it asserted during arbitration with Warren Pettegrow that “Warren inexplicably cut
into L207’s margins in order to absorb shipping costs, even though TBLP passed its
shipping costs along to processors prior to Closing.” ECF No. 617-7 at 20.
This category is like the crate lease expenses discussed previously. The problem is
not that the evidence was not disclosed in discovery but rather that there is no apparent
correspondence between the shipping and handling expense and one of the remaining
claims for relief. Plaintiff obviously wishes it had not incurred this expense, but why the
expense amounts to damages is not yet clear. 	As with the crate lease calculation, the
request for exclusion is denied without prejudice.
13. 	Disgorgement of Benefits
Disgorgement 	calculations 	comprised 	of 	Warren 	Pettegrow’s 	employment
compensation ($378,722.76 + $113,526) and Lobster 207’s payments on its promissory
note ($369,457.80 + $632,000) are not excluded for purposes of the jury trial. 	This
information is part of the record and I do not see how these figures could be characterized
as undisclosed.
14. 	Disgorgement of Wholesale Lobster Profits per Non-Competition Agreement
The Non-Competition Agreement stipulates that in the event of a breach the seller
must “account for and pay over [profits resulting from] any transaction constituting a
breach.” NCA ¶ 5(b) (ECF No. 184-2). I see no reason why the jury, if it finds that Plaintiff
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proves transactions in breach of the Non-Competition Agreement, should not afford the
“disgorgement” remedy as a matter of contract law. 	Part of the evidence the jury may
consider are the lobster-specific profit and loss statements that this disclosure ($2,660,177)
is drawn from, as the statements were exchanged in discovery and did not originate from
Plaintiff. The request for exclusion is denied.
15. 	Loss of Goodwill
The Pettegrow Defendants claim that the loss of goodwill category ($1,707,125) has
historically been pigeon-holed in a “customer data scheme” associated with the APA. This
is an accurate assessment. They object to the reallocation of the identical amount to serve
as a disclosure for a new theory of relief. I agree with them that this casual approach to the
goodwill category was improper given the nondisclosure of any corresponding effort on
the Plaintiff’s part to revisit or reexamine the calculation in relation to new theories of relief
that turn on alleged post-closing misdeeds and loss of fisherman patronage or favor. The
loss of goodwill disclosure is deficient because it reflects that Plaintiffs did not disclose a
calculation of damages calibrated to post-closing conduct rather than the original, benefit-
of-the-bargain valuation of client relationships. Still, I recognize that goodwill losses and
reputational harm are difficult to calculate, calling into question the harmfulness of a
nondisclosed “calculation.” 	Ultimately, I decline to foreclose the introduction of all
evidence concerning alleged post-sale misappropriation of goodwill or actions harmful to
Lobster 207’s standing in the community. 	This entry is made without prejudice to
Defendants’ ability to move for exclusion of discrete evidence at trial; for instance, new
expert testimony not previously disclosed.
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16. 	Reputational Damages
Plaintiff’s latest disclosure itemizes “[r]eputational damages, in an amount to be
determined.” 	Second Supp. Discl. ¶ 16. 	Likening loss of goodwill to reputational harm
arising from slander or libel, Plaintiff argues that it may request a damages award based on
reputational harm without the need for any computation.
“General damages . . . cover loss of reputation, shame, mortification, injury
to the feelings and the like and need not be alleged in detail and require no
proof.” F.A.A. v. Cooper, 566 U.S. 284, 295–96 (2012). There is no way to
quantify the reputational damages that Lobster 207 has suffered as a result of
underpaying its fishermen while simultaneously overpaying Trenton Bridge
and other non-union interests affiliated with the Pettegrows. Whether these
damages can be quantified as a loss of goodwill, a loss of Lobster 207’s
members’ equity, or otherwise, is a question for the jury. Put differently, this
category of damages is another way for Lobster 207 to prove that it has been
damaged in the form of loss of goodwill.
Brief in Response at 22.
I agree with Plaintiff that the alleged loss of fisherman patronage or member equity
is a proper category of harm to Plaintiff, but certain methods of measuring the same require
pretrial disclosure and discovery. 	This category is resolved the same way as the goodwill
category.
CONCLUSION
With limited exceptions noted above, I find that Plaintiff has essentially marshaled
long-disclosed financial figures to build out its damages disclosures. I am not persuaded
that a pretrial exclusionary remedy is appropriate because I am not convinced that these
long-disclosed financial figures add up to a “trial by ambush” or that the Pettegrow
Defendants are prejudiced in terms of their ability to “formulate a response” in the context
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of trial. Curet-Velazquez v. ACEMLA de Puerto Rico, Inc., 656 F.3d 47, 56 (1st Cir. 2011)
(quoting Macaulay v. Anas, 321 F.3d 45, 50 (1st Cir. 2002)). 	That assessment could
change, in particular if Plaintiff attempts to introduce new expert testimony at trial.
The Pettegrow Defendants’ Motion to Exclude (ECF No. 489) is GRANTED IN
PART and DENIED IN PART as set forth above.
SO ORDERED.
Dated this 18th day of December, 2024.
/s/ Lance E. Walker
Chief U.S. District Judge
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