One of the many things young lawyers are taught when preparing written responses to discovery is to reserve the right to supplement or amend the responses at a later date. This common reservation of rights is included and often forgotten. But this reservation of rights can turn into a requirement under the Delaware Court of Chancery rules under certain circumstances. Rule 26(e)(2) requires a party to "seasonably" supplement a discovery response if the party obtains information upon the basis of which (a) the party knows the response was incorrect when made or (b) the party knows the response was correct when made but is no longer true and a failure to supplement "is in substance a knowing concealment." Written discovery is often served early in the discovery process, so as the discovery record and other knowledge grows, it is often the case that answers given early in the case no longer become accurate. When the duty to supplement arises, and what a "seasonable" supplementation means has received scant attention in written opinions, which, not surprisingly, often leads to lawyers pushing the envelope on what "seasonably" means under the rule. In OptimisCorp v. Waite, C.A. No. 8773-VCP (Del. Ch. Jan. 28, 2015), however, the Court of Chancery had the opportunity to provide some rare guidance on when the duty to supplement arose and the outer limits of a "seasonable" supplement.
In OptimisCorp, the plaintiffs alleged the defendants and unnamed participants engaged in a conspiracy to, among other things, attempt an unlawful takeover of OptimisCorp. After the close of discovery, the parties cross-moved for summary judgment. In support of their motion for summary judgment, the plaintiffs submitted affidavits from three individuals, two of whom had entered into settlement and cooperation agreements with the plaintiffs several months before. The plaintiffs had not previously identified these individuals as co-conspirators and had not identified the third affiant as a person with knowledge. A few weeks later, the plaintiffs "supplemented" their interrogatory responses to incorporate the information in their summary judgment brief, including the three new affidavits. Later, the plaintiffs moved to amend their complaint to identify the two affiants with cooperation agreements as co-conspirators.
The defendants opposed the motion to amend and filed a motion in limine to preclude the plaintiffs from, among other things, relying on certain evidence, such as the testimony of the affiants relied on in summary judgment briefing. The defendants argued the plaintiffs never identified these co-conspirators before the close of discovery in response to properly framed interrogatories and should not be permitted to introduce evidence at trial that these individuals were co-conspirators.
The court found that although the operative complaint during the discovery period adequately pleaded a conspiracy, it did not identify the names of the conspirators and the plaintiffs had not identified all co-conspirators in response to interrogatories. The identity of the co-conspirators was particularly important in this case because the "addition of a new co-conspirator adds potential liability for all other co-conspirators for actions taken by the new co-conspirator in furtherance of the conspiracy." The court held that no later than when the plaintiffs settled with the two affiants several months before the close of discovery, the plaintiffs knew of the involvement of the affiants in the purported conspiracy. At that point, the plaintiffs' interrogatory answers were no longer correct. Because identification of the co-conspirators expands the potential liability for the defendants, failing to supplement those responses amounted to "knowing concealment" under Rule 26(e)(2).
Although the court noted that no bright-line rule dictates when supplementation is "seasonable" under Rule 26(e)(2), because addition of more co-conspirators has a significant impact on the liability of the existing members of an alleged conspiracy, the court held that the plaintiffs "had to have supplemented their interrogatory responses before the close of discovery to meet the 'seasonably'" requirement. The court noted that three full months of discovery remained after the plaintiffs settled with the affiants, but, in this case, supplementation of the interrogatory response one month after the close of discovery fell outside whatever the outer bounds of "seasonable" supplementation might be.
The court's holding in OptimisCorp shows the importance of disclosure during the discovery process. The key to the court's opinion was the dramatic effect that identification of a fellow co-conspirator can have on the potential liability for the defendant. Because these co-conspirators were identified after the close of discovery, the defendants had no way to develop a record of what these purported co-conspirators might have done for which the defendants would be liable. In situations where disclosure of information could have a similar effect on the liability of a party or the issues in the case, counsel should think very carefully about whether and when supplementation may be necessary.