MacDermid Printing Solutions LLC v. Cortron Corp
ORDER. For the reasons set forth herein, Defendant's 299 Motion in Limine to Preclude Expert James A. Levinsohn is DENIED. Signed by Judge Michael P. Shea on 6/12/2014. (Pomeroy, K.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
MACDERMID PRINTING SOLUTIONS, INC.,
No. 3:08cv1649 (MPS)
ORDER RE: MOTION IN LIMINE TO PRECLUDE EXPERT JAMES A. LEVINSOHN
Defendant Cortron Corp. (“Cortron”) seeks to preclude the testimony of James A.
Levinsohn, an economist whom Plaintiff MacDermid Printing Solutions, Inc. (“MacDermid”)
has designated as an expert witness on antitrust and damages issues.
(Dkt. # 299.)
Levinsohn’s report discloses that he will opine at trial that an alleged conspiracy entered into
between Cortron and MacDermid’s rival, E. I. du Pont de Nemours and Company (“DuPont”), in
violation of Section 1 of the Sherman Act, harmed competition in markets in which MacDermid
and DuPont compete, and also caused millions of dollars’ worth of damage to MacDermid under
various antitrust, trade secret, and breach of contract theories. Because Dr. Levinsohn’s opinions
meet the requirements for the admission of expert opinion testimony under Fed. R. Evid. 702 and
Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993), the motion to preclude is DENIED.
On November 10, 2004, MacDermid and Cortron entered into an agreement wherein
Cortron agreed to manufacture thermal flexographic processing machines that were designed by
(See Joint Development Agreement, dkt. # 241-2.)
processing is a technology used to develop plates for use in the labeling of commercial
packaging, such as potato chip bags.
When MacDermid entered the thermal flexographic
business, the only other supplier of this technology was DuPont, which had developed its own
thermal processing system several years earlier. (See Levinsohn Report (“Report”), ¶¶ 17-22.)
On April 1, 2008, DuPont filed a lawsuit against Cortron in the United States District
Court for the District of Minnesota, alleging that Cortron’s work with MacDermid infringed one
of its patents. (See Am. Compl., dkt. # 88, ¶ 42.) After attending a meeting with DuPont on
April 1, 2008, Cortron and DuPont settled the lawsuit in an agreement that was signed in early
June 2008, effective May 30, 2008. (See id., ¶ 40; Settlement Agreement.) In the settlement
agreement, Cortron agreed, among other things, to cease manufacturing technology “related to
the thermal development of photopolymer plates without the express written consent of DuPont.”
(Settlement Agreement, ¶ 3.3.) In exchange, DuPont agreed, among other things, to indemnify
Cortron against any lawsuit brought by MacDermid. (Id., ¶ 4.2.)
Subsequent to this settlement agreement, Cortron allegedly gave DuPont the technical
information relating to MacDermid’s thermal processing technology, and then deleted this
engineering data from its computer systems. (See Am. Compl., dkt. # 88, ¶ 54, Seventh Count ¶
80.) On July 30, 2008, DuPont issued a press release announcing its settlement with Cortron:
Under the terms of the agreement, Cortron, based in Minnesota, agrees to
immediately cease manufacturing LAVA thermal flexographic printing plate
processors, as well as to immediately discontinue providing all service, spare
parts, and technical support for any LAVA equipment used to thermally develop
flexographic printing plates. Thermal processing equipment manufactured by
Cortron has been marketed and sold by MacDermid Printing Solutions, LLC
under the LAVA trade name.
(Press release, dkt. # 242-6.) At some point in 2008 or early 2009 after this press release was
issued, Cortron ceased all operations and closed its business. (See L.R. 56(a)(2), dkt. # 257-1,
Undisputed Issues of Material Fact ¶ 1.)
In 2008, MacDermid filed this lawsuit against Cortron alleging violations of the antitrust
laws, breach of contract, misappropriation of trade secrets, spoliation, and violations of
Connecticut statutes prohibiting computer crimes and unfair trade practices. (See Am. Compl.,
dkt. # 88.)1 Cortron has denied these allegations and has, in turn, counterclaimed against
MacDermid for alleged fraud and misrepresentation, breach of contract, unjust enrichment,
misappropriation of trade secrets, and violations of Connecticut statutes prohibiting computer
crimes and unfair trade practices. (See Ans., dkt. # 230.)
B. Standards for Admissibility of Expert Testimony
Rule 702 of the Federal Rules of Evidence sets forth the requirements for admission of
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the testimony is based
on sufficient facts or data; (c) the testimony is the product of reliable principles
and methods; and (d) the expert has reliably applied the principles and methods to
the facts of the case.
This language was adopted in response to, and is consistent with the principles articulated in, the
Supreme Court’s decisions in Daubert and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999),
which held that the principles of Daubert applied to non-scientific expert testimony. Daubert,
509 U.S. at 592-93 (trial judge’s inquiry “entails a preliminary assessment of whether the
reasoning or methodology underlying the testimony is scientifically valid and of whether that
reasoning or methodology properly can be applied to the facts in issue.”); see also Fed. R. Evid.
702 Advisory Committee’s Note, 2000 Amendment (“The [rule] specifically provides that the
Related litigation between MacDermid and DuPont regarding the settlement agreement and ensuing press release,
as well as issues related to patent infringement, is pending in the United States District Court for the District of New
Jersey. (See 06-cv-03383; 07-cv-04325; 10-cv-03409.)
trial court must scrutinize not only the principles and methods used by the expert, but also
whether those principles and methods have been properly applied to the facts of the case.”).
While Rule 702 and cases in the Daubert/Kumho line cast the trial judge in the role of
gatekeeper, they also warn against keeping a heavy hand on the gate. The Second Circuit has
made clear that “Daubert contemplates liberal admissibility standards,” Town of Southampton v.
Suffolk County, 367 Fed. App’x 234 (2010) (internal quotation marks omitted), and “reinforces
the idea that there should be a presumption of admissibility of evidence,” Borawick v. Shay, 68
F.3d 597, 610 (2d Cir. 1995).
“[O]ur adversary system provides the necessary tools for
challenging reliable, albeit debatable, expert testimony.” Amorgianos v. Amtrak, 303 F.3d 256,
267 (2002). The Second Circuit has frequently quoted the Supreme Court’s own admonition
against heavy-handed gate-keeping in Daubert itself, i.e., “vigorous cross-examination,
presentation of contrary evidence, and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509
U.S. at 596. Other Circuits have likewise instructed trial judges to let the gate swing open in
See, e.g., United States v. 14.38 Acres of Land Situated in Leflore County,
Mississippi, 80 F.3d 1074, 1078 (5th Cir. 1996) (“the trial court’s role as gatekeeper is not
intended to serve as a replacement for the adversary system.”); In re Paoli R.R. Yard PCB Litig.,
35 F.3d 717 (3d Cir. 1994) (“[T]he reliability requirement must not be used as a tool by which
the court excludes all questionably reliable evidence. . . . A judge frequently should find an
expert’s methodology helpful even when the judge thinks that the expert’s technique has flaws
sufficient to render the conclusions inaccurate. . . . The same standard of reliability extends to
the step in the expert’s analysis that ‘fits’ his or her conclusions to the case at hand. Once again,
we emphasize that the standard is not that high.”). It is no surprise, then, that “[a] review of the
caselaw after Daubert shows that the rejection of expert testimony is the exception rather than
the rule.” Advisory Committee Notes, 2000 Amendments to Fed. R. Evid. 702.
C. Cortron’s Challenges to Dr. Levinsohn’s Opinions
Cortron does not challenge Dr. Levinsohn’s qualifications. Rather, Cortron argues that
he did not reliably determine the relevant geographic and product markets.
1. Relevant Geographic Market
“The relevant geographic market is that area where purchasers may practically turn for
the goods comprising the relevant product market or that area where producers of the relevant
product effectively compete.” Rome Ambulatory Surgical Ctr., LLC v. Rome Mem’l Hosp., Inc.,
349 F. Supp. 2d 389, 418 (N.D.N.Y. 2004). Cortron argues that Dr. Levinsohn failed to analyze
whether the relevant geographic market was broader than just the United States and, instead,
simply assumed that the United States was the relevant geographic market. While the Court
agrees that Dr. Levinsohn did not conduct a rigorous analysis to determine the relevant
geographic market, it finds that, given the available facts, it was reasonable for Dr. Levinsohn to
assume that the United States was the relevant geographic market, and that there is no suggestion
that defining the geographic market more broadly would affect the analysis of whether Cortron’s
alleged conduct had an anti-competitive effect.
DuPont and MacDermid were, at the relevant times, the only suppliers of thermal
flexographic processors in the world. (See Zoelle Decl., dkt. # 318-3, ¶ 32); Report, ¶ 66.) Both
DuPont and MacDermid are U.S.-based companies, with facilities for manufacturing thermal
flexographic processors located only in the United States at the relevant times. Further, although
Cortron points to evidence in MacDermid’s documents that MacDermid personnel referred to the
market for flexographic processors as a “global market” and that the machines were sold in Asia
and Europe as well as the United States, counsel acknowledged at oral argument that thermal
flexographic processors are large machines for which there would be significant shipping costs.
See Purex Corp. v. Procter & Gamble Co., 596 F.2d 881, 884 (9th Cir. 1979) (“Liquid bleach
cannot be shipped economically more than three hundred miles from its place of manufacture
because of high shipping costs and low sales prices. Thus, the relevant geographic market for
liquid bleach includes a series of regional markets, as well as the national market.”); see also
Brown Shoe Co. v. United States, 370 U.S. 294, 336 (1962) (“The geographic market selected
must . . . correspond to the commercial realities of the industry . . . .”). Finally, there is no
evidence – or even a suggestion by Cortron – that the market share allocation between DuPont
and MacDermid (assuming the product market is properly defined as thermal flexographic
processors) would change significantly if the market was viewed as a worldwide market rather
than a U.S. market. These facts suggest that the failure to define rigorously the geographic
market would not have made a difference in determining the anticompetitive effects in this case,
which is the ultimate goal of a “rule of reason” antitrust analysis.
In addition, the Second Circuit has held that “[i]n this Circuit, a threshold showing of
market share is not a prerequisite for bringing a § 1 claim. If a plaintiff can show an actual
adverse effect on competition, such as reduced output[,] we do not require a further showing of
market power.” Todd v. Exxon Corp., 275 F.3d 191, 207 (2d Cir. 2001); see also Republic
Tobacco Co. v. N. Atl. Trading Co., Inc., 381 F.3d 717, 737 (7th Cir. 2004) (“[T]hese cases [FTC
v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986), and Toys “R” Us, Inc. v. FTC, 221 F.3d 928
(7th Cir. 2000)] stand for the proposition that if a plaintiff can show the rough contours of a
relevant market, and show that the defendant commands a substantial share of the market, then
direct evidence of anticompetitive effects can establish the defendant’s market power – in lieu of
the usual showing of a precisely defined relevant market and a monopoly market share.”). In
pleadings filed by DuPont in the United States District Court for the District of New Jersey,
DuPont stated that MacDermid’s entry into the thermal flexographic market caused it to reduce
its prices and lose market share. (See 06-cv-3383, dkt. # 31-1 at 16.) DuPont’s reported price
decrease and loss of market share suggest that, if the allegations that DuPont conspired with
Cortron in an attempt to eliminate MacDermid from the market are true, such a conspiracy could
have actual anticompetitive effects.
Since it was reasonable for Dr. Levinsohn to assume that the United States is the relevant
geographic market, and since there is no indication that a broader geographic market definition
would have affected the analysis of anticompetitive effect, his failure to analyze rigorously the
contours of the geographic market is not a basis for excluding his testimony.
2. Relevant Product Market
“The relevant product market is comprised of products which are generally
interchangeable or for which there is cross-elasticity of demand.” Rome Ambulatory Surgical
Ctr., 349 F. Supp. 2d at 418. Cortron takes issue with Dr. Levinsohn’s definition of one of the
relevant product markets, i.e., thermal flexographic processors.2
First, Cortron points to
testimony from MacDermid fact witnesses indicating that solvent flexographic technology is a
“commercially viable substitute” for thermal flexographic technology, and argues that solvent
technology should therefore be considered as part of the relevant market. (See dkt. # 301 at 11
(quoting testimony from Dr. Timothy Gotsick and Mr. James Hennessy).) Second, Cortron
argues that there was insufficient data available to support application of the Significant and
Non-transitory Increase in Price (“SSNIP”) test. The SSNIP test is described in the Department
of Justice and Federal Trade Commission Horizontal Merger Guidelines as a methodology for
He also defined a second relevant product market as digital, thermal plates.
determining the scope of a relevant product market, and is commonly used to define relevant
markets for antitrust purposes. See Meredith Corp. v. SESAC LLC, No. 09-cv-9177, 2014 WL
812795, at *32 (S.D.N.Y. Mar. 3, 2014) (“[M]oreover, plaintiffs’ market definition is confirmed
by applying the “SSNIP” test . . . .”).
With respect to the first argument, the fact that a MacDermid witness may have stated
that solvent technology is a “commercially viable substitute” for thermal flexographic processing
technology is relevant but not dispositive. The question for purposes of defining an antitrust
market is not simply whether some customers regard an alternative as a “commercially viable
substitute,” but whether a substantial number of customers have that perception such that they
will switch their purchasing to the alternative product in response to a small but significant price
increase in the main product, and thereby constrain the pricing decisions of the supplier of the
By itself, the fact that one or two witnesses view another product as a
“commercially viable substitute” is an insufficient basis to conclude that Dr. Levinsohn’s
narrower market definition is flawed. With respect to the second argument, even accepting
Cortron’s point that there were insufficient data to support application of the SSNIP test, a robust
SSNIP test is not a sine qua non of market definition and, as seen above, evidence of actual
anticompetitive effects may supplant the need for a rigorous market definition.
Evidence of anticompetitive effects may also, in some instances, provide evidence of
market definition, although that admittedly reverses the usual sequence of antitrust analysis. For
instance, evidence that two firms compete in the same narrowly defined product market may be
found when a firm that is initially the sole supplier of a particular product must significantly
decrease its prices and/or loses significant market share upon the entry of a second firm that
makes the same product. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d
514, 522-23 (E.D.N.Y. 2005) (brand name drug manufacturer’s estimation of significant loss of
market share and expectation to “drastically reduce prices” upon entry of generic drug
manufacturer supported product market definition for ciprofloxacin, rather than an expanded
definition that would include other drugs in the same molecular family as ciprofloxacin). As
noted by Dr. Levinsohn and as discussed above, there is some evidence of such a price decrease
and loss in market share in statements made by DuPont in pleadings filed in federal court in New
Jersey: “DuPont is now beginning to experience a significant slow-down in revenue growth, a
reduction in selling prices and damage to its reputation and goodwill in the printing industry as a
result of MacDermid’s infringement of the ’859 patent.”3 (Report, ¶¶ 57, 63; 6-cv-3383, dkt. #
31-1 at 16; see also Zoelle Decl., dkt. # 318-3, ¶ 23 (“[T]he rate of growth as discussed above
has slowed since MacDermid began offering thermally-developed plates.”).) These allegedly
significant price and market share effects are at least some evidence supporting Dr. Levinsohn’s
narrow market definition.
Another piece of evidence that may speak to market definition – again, indirectly – is
profit margin. For some of DuPont’s thermal flexographic processor customers, the margin was
allegedly more than 50%. Such a high profit margin is suggestive of market power, and here at
least, the notion that DuPont has market power supports Dr. Levinsohn’s view that the market
should be defined narrowly. (Report, ¶ 65); In re Ciprofloxacin Hydrochloride Antitrust Litig.,
363 F. Supp. 2d at 523 (“[T]he pricing strategy . . . compels an inference that Bayer was reaping
an abnormally high price-cost margin, given the 95 percent price drop that was to occur almost a
The ’859 patent, which is the subject of a pending lawsuit in federal court in New Jersey that DuPont filed against
MacDermid in 2006, is DuPont’s patent for the “process for making a flexographic printing plate and a
photosensitive element for use in the process.” The alleged conspiracy between Cortron and DuPont took place
after DuPont filed a lawsuit against Cortron in federal court in Minnesota in 2008 for infringement of its ’454 patent,
a patent for the “method and apparatus for thermal processing a photosensitive element.” The technology protected
by the ’859 patent is used in conjunction with the technology protected by the ’454 patent.
full year in the future for an identical quantity of an identical strength of the identical drug.
Given Bayer’s obvious ability to control prices, and its admission that it did not anticipate a
commensurate drop in its own production costs for Cipro, it is reasonable to accept plaintiffs’
contention and conclude both that the relevant market is for ciprofloxacin and that Bayer had
market power within that market.”).
In addition, although Dr. Levinsohn does not rely on this fact in his report, there is further
support for his analysis and, in particular, his “effects” approach to market definition in the fact
that, by 2005, the U.S. sales of thermal flexographic printing plates were “faster than the growth
in the [U.S.] of solvent-type plates during this same period.” (Zoelle Decl., dkt. # 318-3 ¶ 22.)
Cortron’s expert, Dr. Harris, agreed that the fact that the thermal market was growing faster than
the solvent market is evidence that thermal flexographic technology is a discrete market:
Q. And if the growth rate of FAST was greater than the growth rate of solvent
technology, what would that tell you as an economist?
A. It would tell me that thermal was a very competitive technology; that whereas -because it was a newer technology, whereas there was a very, very large installed base of
solvent processors, where people could continue and did continue to use them, if all one
has to do is look at the sales of solvent plates to know that solvent continued to be
successful, if you have a new technology which is literally new, and you have an older
technology which has a very large embedded base, you are going to expect to see a fairly
large share of the new processors sold via the newer technology.
Q. Would that be a factor to consider; namely, the relative growth rates of one versus the
other when defining a relevant market?
Q. So if the growth rate of FAST was substantially greater than the growth rate of
solvent, that would be one factor to consider in defining the relevant market; is that right?
(Harris Dep. at 134-35.)
While Cortron’s grievances about Dr. Levinsohn’s product market definition are
appropriate issues to explore during cross-examination, he has applied accepted principles of
market definition in a manner that is sufficiently reliable to pass through the Daubert gate.
3. Other Arguments
Cortron makes a number of other arguments in support of its Motion in Limine. First, it
argues that Dr. Levinsohn’s analysis is unreliable because it is inconsistent to opine that
MacDermid lost sales when his analysis shows that MacDermid gained sales of the 2530 LAVA
machines. This argument goes to weight rather than admissibility, as it amounts to an attack on
the correctness of Dr. Levinsohn’s conclusions. As seen in Exhibit 1c of Dr. Levinsohn’s
Report, sales of the 2530 LAVA machine flat-lined for over a year after the announcement of the
DuPont/Cortron settlement agreement, and did not increase significantly until the spring of 2010.
Further, Dr. Levinsohn’s report shows that the monthly demand for the 4260 LAVA processors
did drop for the two years following DuPont’s announcement of its settlement agreement with
Cortron. (Report, Ex. 1b.) Dr. Levinsohn also opines that the actual sales data do not account
for the additional number of machines that MacDermid anticipates that it would have placed had
it not been for the DuPont/Cortron settlement agreement.
(Id., ¶ 77; see also id., ¶ 45
(summarizing testimony and communications of MacDermid witness that consumers were
hesitant to purchase MacDermid’s LAVA products after the DuPont/Cortron settlement
agreement was announced).)
Next, Cortron argues that Dr. Levinsohn failed to account for the negative impact of the
recession and the design defects of MacDermid’s products in his regression analysis. At his
deposition, Dr. Levinsohn testified that he had considered the issue of macroeconomic effects.
(Levinsohn Dep., dkt. # 258-8 at 28, 37-38.) Dr. Levinsohn also explained why he thought that
his analysis was appropriate, even if there were design defects in the product lines. (Levinsohn
Dep., dkt. # 322-1 at 215-16.) Again, whether his responses to Cortron’s arguments about the
conclusions he reached are persuasive will be for the jury to decide.
Finally, Cortron attacks Dr. Levinsohn’s conclusion that Cortron’s conduct resulted in an
antitrust injury, i.e., harm to competition.
First, the price effects that MacDermid’s entry
reportedly had upon DuPont’s thermal flexographic products suggest that there might also have
been price effects on consumers from DuPont’s alleged attempts to exclude MacDermid.
Second, Dr. Levinsohn presents the theory that DuPont’s announcement of the DuPont/Cortron
settlement agreement sowed seeds of doubt in the mind of consumers who were interested in
purchasing thermal flexographic technology from MacDermid. (See Report, ¶ 45 (citing an
August 19, 2008 email from MacDermid’s Director of Global Project Management that stated
that “[t]he last DuPont press release [Cortron-DuPont settlement announcement] is having a
greater effect on [MacDermid] customers than we would like.”).) This suggests that, to the
extent that consumers were dissuaded from entering into business with MacDermid, consumers
were injured by having fewer product choices with DuPont, since DuPont only leased thermal
flexographic machines, and required customers to use only DuPont’s thermal plates, i.e., it
allegedly engaged in bundling or tying, while MacDermid offered more options by allowing
customers to buy or lease the machines and to purchase the plates separately if they chose to do
(See id., ¶¶ 18, 18 n.13, 19, 24.)
Once again, any issue that Cortron has with Dr.
Levinsohn’s analysis of the impact on competition is appropriate to take up on crossexamination.
For the foregoing reasons, the motion to preclude the expert testimony of James A.
Levinsohn is DENIED.
IT IS SO ORDERED.
/s/ Michael P. Shea
Michael P. Shea, U.S.D.J.
June 12, 2014
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