Auraria Student Housing at the Regency, LLC v. Campus Village Apartments, LLC

Filing 219

ORDER denying 178 Plaintiff's Motion to Strike Initial Expert Report; granting 180 Plaintiff's Motion to Strike Supplemental Expert Report. The Supplemental Expert Report of Stephen D. Silberman, Ph.D. (ECF No. 181-4) is hereby STRICKEN. By Judge William J. Martinez on 1/5/2015. (alowe)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 10-cv-02516-WJM-KLM
AURARIA STUDENT HOUSING AT THE REGENCY, LLC, a Colorado limited liability
company,
Plaintiff,
v.
CAMPUS VILLAGE APARTMENTS, LLC, a Delaware limited liability company,
Defendant.

ORDER DENYING PLAINTIFF’S MOTION TO STRIKE INITIAL EXPERT REPORT
AND GRANTING PLAINTIFF’S MOTION TO STRIKE SUPPLEMENTAL
EXPERT REPORT

Plaintiff Auraria Student Housing at the Regency, LLC (“Plaintiff”) brings this
action against Campus Village Apartments, LLC (“Defendant”) for conspiracy to
monopolize under Section 2 of the Sherman Act, 15 U.S.C. § 2. This matter is before
the Court on the following motions: (1) Plaintiff’s “Motion to Strike (Initial) ‘Expert Report
of Stephen D. Silberman, Ph.D.,’ and Preclude Introduction of Facts and Data Relied
Upon By Him There and Exclude his Trial Testimony Relating to Uncharged Offense of
Monopolization and Inapplicable Elements of Monopoly Power and Relevant Market”
(“First Motion”) (ECF No. 178); and (2) Plaintiff’s “Motion to Strike Untimely and
Improper ‘Supplemental’ Expert Report of Stephen D. Silberman, Ph.D., and Preclude
Use of That Information to Supply Evidence at Trial” (“Second Motion”) (ECF No. 180).
For the reasons set forth below, the First Motion is denied, and the Second Motion is
granted.

I. LEGAL STANDARD
A district court must act as a “gatekeeper” in admitting or excluding expert
testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004). Adm ission
of expert testimony is governed by Rule 702, which provides:
If scientific, technical, or other specialized knowledge will
assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert by
knowledge, skill, experience, training, or education, may
testify thereto in the form of an opinion or otherwise, if (1)
the testimony is based upon sufficient facts or data, (2) the
testimony is the product of reliable principles and methods,
and (3) the witness has applied the principles and methods
reliably to the facts of the case.
Fed. R. Evid. 702.
The proponent of the expert testimony bears the burden of proving the
foundational requirements of Rule 702 by a preponderance of the evidence. United
States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009).
II. ANALYSIS
Plaintiff moves to strike both Dr. Silberman’s initial expert report (“Initial Report”)
(ECF No. 179-2) and his supplemental expert report (“Supplemental Report”) (ECF No.
181-4). The Court will discuss each motion in turn below.
A.

First Motion: Initial Report
Plaintiff’s First Motion raises several arguments in two general categories: (1) the

opinions in the Initial Report should be excluded as irrelevant, misleading, confusing,
and unhelpful to the jury, because they address monopolization instead of conspiracy to
monopolize; and (2) Dr. Silberman’s opinions are inadmissible because they rely on

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insufficient facts or data and are not the product of reliably applied economic principles
and methods. (ECF No. 179.)
1.

Relevance of Monopolization Opinions

Plaintiff argues that the opinions in Dr. Silberman’s Initial Report should be
excluded because they address monopolization, not Plaintiff’s claim of conspiracy to
monopolize. (ECF No. 179 at 1-3.) Plaintiff points out that Dr. Silberman’s opinions
about monopoly power in a relevant market are pertinent to a monopolization claim, but
argues that these opinions have no relevance to a conspiracy claim. (Id.)
A claim of conspiracy to monopolize under Section 2 of the Sherman Act
requires four elements: “(1) the existence of a combination or conspiracy to monopolize;
(2) overt acts done in furtherance of the combination or conspiracy; (3) an effect upon
an appreciable amount of interstate commerce; and (4) a specific intent to monopolize.”
TV Commc’ns Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022, 1026
(10th Cir. 1992) (internal citation omitted). In contrast, a Section 2 monopolization
claim requires “(1) the possession of monopoly power in the relevant market and (2) the
willful acquisition or maintenance of that power. . . .” Eastman Kodak Co. v. Image
Technical Servs., Inc., 504 U.S. 451, 481 (1992) (internal citation om itted).
Defendant does not dispute that Dr. Silberman’s Initial Report expresses
opinions about monopoly power in a relevant market, but argues that such opinions are
relevant to Plaintiff’s conspiracy claim because they permit a jury to infer whether
Defendant had a specific intent to monopolize, and thus whether the agreement
Defendant entered into had the purpose of creating a monopoly. (ECF No. 182 at 5-8.)
The Court agrees with Defendant that this evidence is relevant to Plaintiff’s
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conspiracy to monopolize claim. Dr. Silberman’s Initial Report opines that the alleged
conspiracy agreement failed to give either of the alleged co-conspirators any ability to
create a monopoly, which permits a jury to infer that the agreement was not a
conspiracy to monopolize, and that neither alleged co-conspirator intended to create a
monopoly. (See ECF No. 179-2 at 5.) Indirect evidence is permissible, and often
necessary, to prove such elements of a claim. See Shoppin’ Bag of Pueblo, Inc. v.
Dillon Cos., Inc., 783 F.2d 159, 163 (10th Cir. 1986) (“Often no direct evidence of
specific intent exists and inferences from conduct are necessary.”). Accordingly, the
Court rejects Plaintiff’s argument that the monopolization opinions in the Initial Report
are irrelevant.
Plaintiff further argues that this evidence should be excluded under Federal
Rules of Evidence 403 and 703, because it would be confusing, would mislead the jury,
and would waste time, given its limited probative value. The Court finds that such risks
do not substantially outweigh the significant probative value of Dr. Silberman’s opinions
as to specific intent to monopolize, and as to whether the agreement was one to create
a monopoly. Therefore, the Court finds that Rules 403 and 703 do not require the
Court to exclude this evidence merely because it is focused on monopolization.
2.

Facts, Data, and Reliable Principles and Methods

Plaintiff next contends that Dr. Silberman’s Initial Report should be excluded
under Federal Rule of Evidence 702 because it contains opinions that rely on
insufficient facts or data, and that they do not result from reliable application of
economic principles and methods. (ECF No. 179 at 5-8.)
Plaintiff first cites Dr. Silberman’s opinion that students’ choice of which school to
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attend is affected by the available housing options, including their price. (Id. (citing ECF
No. 179-2 at 6).) Plaintiff disapproves of the evidence Dr. Silberman cites to support
this proposition, arguing that he relies on another witness’s testimony that many
students who tour the Regency have not yet decided where to enroll, and infers from
news articles on the overall cost of education that students consider the cost of housing
as part of their enrollment decision. (Id.) The Court finds that Dr. Silberman has cited
evidence to support his statements, and that Plaintiff’s argument goes to the weight the
jury should attribute to his opinions rather than to their adm issibility under Rule 702. Dr.
Silberman’s opinion is, therefore, not inadmissible on that basis, and Plaintiff’s
arguments can be addressed by vigorous cross-examination at trial. See Daubert v.
Merrell Dow Pharm., 509 U.S. 579, 596 (1993).
Plaintiff next argues that Dr. Silberman’s opinions regarding students’ school
choices are not supported by economic principles because he disregards various
economic factors affecting such choices, such as students’ regional preferences, the
necessary limits on housing options that result from enrollment in a particular school,
and the effect of the challenged agreement on housing choices. (ECF No. 179 at 6-8.)
Again, Plaintiff’s arguments go to the weight of the evidence rather than its admissibility.
Plaintiff does not challenge Dr. Silberman’s qualifications as an economic expert, and
merely argues that Dr. Silberman has not considered all the economic factors that
Plaintiff believes are pertinent. This is not a basis for excluding Dr. Silberman’s
testimony. Accordingly, the Court rejects Plaintiff’s argument that Dr. Silberman’s
opinions are not supported by reliably applied economic principles.
At the end of Plaintiff’s First Motion, Plaintiff recites various elements of Dr.
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Silberman’s opinions and argues that each opinion is poorly supported and fails to
withstand scrutiny. (ECF No. 179 at 8-14.) The Court rejects these arguments as well.
Each one of the cited opinions has some basis in facts or data and is rooted in Dr.
Silberman’s economic expertise, and Plaintiff’s arguments are more appropriately
directed toward challenging the weight of those opinions on cross-examination.
In sum, the Court finds that Plaintiff has failed to show that Dr. Silberman’s Initial
Report or the opinions therein must be excluded. Accordingly, Plaintiff’s First Motion is
denied.
B.

Second Motion: Supplemental Report
Plaintiff’s Second Motion argues that Dr. Silberman’s Supplemental Report

should be stricken or the opinions therein excluded because the Supplemental Report
is not a proper supplement, and because it was untimely disclosed. (ECF No. 181 at 614.) As the Court finds the timeliness argument dispositive, its analysis will begin there.
Pursuant to Federal Rule of Civil Procedure 26(e)(2), any supplement to an
expert report “must be disclosed by the time the party’s pretrial disclosures under Rule
26(a)(3) are due.” Plaintiff contends that the deadline for such supplementation was
April 1, 2014, the date of the Final Pretrial Order, because this district’s local rules
provide that “[d]isclosures under Fed. R. Civ. P. 26(a)(3) shall be made in the proposed
final pretrial order”. (ECF No. 181 at 8 (citing D.C.Colo.LCivR 26.1(b)).) In contrast,
Defendant argues that the deadline for expert supplementation was December 30,
2014, because Rule 26(a)(3) requires disclosure of witness identification information,
deposition designations, and exhibit identification, and pursuant to this Court’s Practice
Standards, witness and exhibit lists were due on December 29, 2014, and deposition
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designations were due on December 30, 2014. (ECF No. 184 at 2-3.)
The Court agrees with Plaintiff’s interpretation of the supplementation deadline
and finds that supplements to expert reports were required to be disclosed in the
parties’ proposed final pretrial orders. While Defendant’s interpretation is not illogical, it
ignores the mandate of this district’s local rules explicitly specifying a deadline for all
disclosures under Rule 26(a)(3), which in turn establishes the same deadline to
supplement expert reports under Rule 26(e)(2). Given these rules, this Court’s
extension, via its Revised Practice Standards, of certain specified deadlines—those for
final witness lists, exhibit lists, and deposition designations—does not implicitly or
automatically grant any such extension for supplemental expert reports. Accordingly,
the Court finds that the disclosure of the Supplemental Report, made on October 2,
2014, was untimely under Rule 26(e)(2).
Rule 37(c)(1) provides that a failure to comply with Rule 26(e) precludes the use
of the expert information at issue “to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is harmless.” The determination of
whether an untimely disclosure “is justified or harmless is entrusted to the broad
discretion of the district court.” Woodworker’s Supply, Inc. v. Principal Mut. Life Ins.
Co., 170 F.3d 985, 993 (10th Cir. 1999). The Court must consider four factors in
making such a determination: (1) the prejudice or surprise to the impacted party; (2) the
ability to cure the prejudice; (3) the potential for trial disruption; and (4) the erring party’s
bad faith or willfulness. Id. “‘The burden of establishing substantial justification and
harmlessness is upon the party who is claimed to have failed to make the required
disclosures.’” See Contour PAK, Inc. v. Expedice, Inc., 2009 WL 2490138, at *1 (D.
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Colo. Aug. 14, 2009) (quoting Nguyen v. IBP, Inc., 162 F.R.D. 675, 680 (D. Kan.1995)).
Plaintiff argues that three of the four Woodworker’s Supply factors weigh against
a finding of justification or harmlessness, because the Supplemental Report’s tardiness
results in prejudice and surprise that cannot be cured without significant disruption to
the impending trial. (ECF No. 181 at 10-13.) Specifically, Plaintiff contends that it is
prejudiced and surprised by the Supplemental Report’s disclosure of new evidence on
the subjects of tying and tied product markets, and that such prejudice can only be
cured by reopening discovery to permit Plaintiff to rebut such testimony, requiring a
continuance of the trial date. (Id.)
In response, Defendant argues that no prejudice or surprise exists because
Plaintiff was apprised long ago of Defendant’s tying arrangement defense. (ECF No.
184 at 10-11.) However, in reliance on its interpretation of the disclosure deadline for
supplemental expert reports, Defendant raises no other arguments as to harmlessness
or any of the Woodworker’s Supply factors. (Id.) Furthermore, Plaintiff’s prior
awareness of Defendant’s legal theories does not eliminate any prejudice or surprise
caused by late-disclosed expert opinion evidence in support of such theories. The
Court agrees with Plaintiff that the only cure for such prejudice would require reopening
discovery and continuing the trial date. Thus, the first three Woodworker’s Supply
factors weigh in favor of excluding the Supplemental Report.
Notably, Defendant admits that the Supplemental Report was prompted by the
Court’s ruling on summary judgment, which clarified that Defendant would bear the
burden of proof on the elements of its tying defense. (Id. at 8-9.) Defendant argues

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that the Court’s ruling raised new issues requiring consideration by Dr. Silberman. (Id.
at 8-9.) The Court rejects the implication that a party’s legal disagreement with the
Court constitutes a substantial justification for a late disclosure. Defendant’s lack of
bad faith or willfulness in its late disclosure is only one of the four factors that must be
considered, and the burden is on Defendant to establish a substantial justification or
harmlessness. See Contour PAK, 2009 WL 2490138, at *1. The Court finds that the
other three Woodworker’s Supply factors establish that Defendant’s late disclosure of
the Supplemental Report was not harmless or substantially justified, and Defendant has
failed to meet its burden to show otherwise.
Accordingly, Plaintiff’s Second Motion is granted, and the Supplemental Report
shall be stricken and the evidence therein excluded under Rule 37(c)(1). Thus, the
Court need not consider Plaintiff’s alternative arguments for excluding the opinions
contained in the Supplemental Report.
III. CONCLUSION
For the foregoing reasons, the Court ORDERS as follows:
1.

Plaintiff’s “Motion to Strike (Initial) ‘Expert Report of Stephen D. Silberman,
Ph.D.,’ and Preclude Introduction of Facts and Data Relied Upon By Him There
and Exclude his Trial Testimony Relating to Uncharged Offense of
Monopolization and Inapplicable Elements of Monopoly Power and Relevant
Market” (ECF No. 178) is DENIED;

2.

Plaintiff’s “Motion to Strike Untimely and Improper ‘Supplemental’ Expert Report
of Stephen D. Silberman, Ph.D., and Preclude Use of That Information to Supply

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Evidence at Trial” (ECF No. 180) is GRANTED;
3.

The Supplemental Expert Report of Stephen D. Silberman, Ph.D. (ECF No. 1814) is hereby STRICKEN; and

4.

The parties are ON NOTICE that the Court’s rulings on the instant Motions are
not self-executing at trial, and the parties will be expected to raise a timely
objection at trial if the opposing party violates any portion of this Order.
Dated this 5th day of January, 2015.
BY THE COURT:

__________________________
William J. Martínez
United States District Judge

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