Kleen Products LLC v. Packaging Corporation of America et al
Filing
1340
MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 5/31/2017:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KLEEN PRODUCTS LLC, et al.,
Individually and on Behalf
of all those similarly
situated,
Case No. 10 C 5711
Plaintiffs,
Judge Harry D. Leinenweber
v.
INTERNATIONAL PAPER, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court are Motions to Exclude the testimonies of
four of the Plaintiffs’ experts and seven of the Defendants’.
For
the
reasons
stated
herein,
the
Court
denies
Plaintiffs’
Motions to Exclude the testimony of Kevin Murphy [ECF No. 1101],
Steven Davis [ECF No. 1100], Robert Topel [ECF No. 1103], John
Huber [ECF No. 1109], Mark Ready [ECF No. 1110], and Donald
Skupsky [ECF No. 1111].
It likewise denies Defendants’ Motions
to Exclude the testimony of Mark Dwyer [ECF Nos. 1082 and 1089],
Douglas Zona [ECF Nos. 1104 and 1090], and Michael Harris [ECF
Nos. 1125 and 1094].
It grants in part and denies in part the
Motion to Strike Lawrence Cunningham’s opinion [ECF No. 1096].
It grants Plaintiffs’ unopposed Motion to Exclude part of the
testimony of Dennis Carlton [ECF No. 1105].
I.
BACKGROUND
This case is an antitrust class action in which Plaintiffs
accuse Defendants International Paper, Temple-Inland, GeorgiaPacific,
Westrock
Weyerhaeuser
direct
of
(f/k/a
Smurfit-Stone
conspiring
purchasers
paper companies.
of
to
fix
or
prices.
containerboard
RockTenn),
and
Plaintiffs
were
products
from
Defendant
They allege that, in between February 15, 2004
and November 8, 2010 (“the Class Period”), Defendants engaged in
a
series
of
agreed-upon
containerboard products.
of
price
increases
containerboard
production,
and
585,
589
raise
reductions
by
“cutting
downtime,
restricting inventory.”
F.R.D.
to
the
price
of
These include lock-step announcements
achieved
taking
actions
(N.D.
idling
in
the
capacity,
supply
slowing
plants,
and
of
back
tightly
Kleen Prods. LLC v. Int’l Paper, 306
Ill.
2015)
(internal
quotation
marks
omitted).
To support their contention that these actions were the
result of an illegal agreement, or conspiracy, and not legal
tacit collusion, Plaintiffs bring evidence that Defendants had
the motive, means, and opportunity to conspire.
Crucially, much
of this evidence comes in the form of expert testimonies.
example,
Plaintiffs
Defendants
operated
rely
in
on
a
experts
who
concentrated
- 2 -
would
testify
industry
where
For
that
“a
conspiracy
among
the
Defendants
could
succeed
in
increasing
prices”; that Defendants used their public announcements as a
means to coordinate their price increases and supply reductions;
and
that
Defendants
agreement,
as
they
had
many
attended
opportunities
the
same
documented contacts with each other.
to
trade
come
shows
to
and
an
had
See, Kleen Prods. LLC v.
Int’l Paper Co., 831 F.3d 919, 922 (7th Cir. 2016).
Plaintiffs
also rely on their experts to calculate the amount of damages
they say they suffered as a result of the elevated prices.
Defendants
Defendants’
counter
experts
with
their
own
expert
testimonies.
generally
opine
that
Defendants’
actions
were consistent with actions taken in unilateral self-interest
and inconsistent with conspiracy.
They offer direct rebuttals
to Plaintiffs’ expert testimonies, pointing out the weaknesses
in their counterparties’ methodologies and calling into question
their
conclusions.
Primarily
on
the
strength
of
these
rebuttals, Defendants seek to bar Plaintiffs from making use of
their experts at summary judgment or trial.
Plaintiffs respond
in kind, asking the Court to strike Defendants’ expert reports.
Both Plaintiffs and Defendants argue that the other side’s
proffered
expert
testimonies
do
not
pass
muster
under
the
standard set in Daubert v. Merrell Dow Pharms., Inc., 509 U.S.
579 (1993).
This is the Court’s first opportunity to apply
- 3 -
Daubert scrutiny to the parties’ expert reports, even though
some of the reports had been introduced into evidence earlier
for the purpose of class certification.
noted
when
class,
it
affirmed
Defendants
this
did
Court’s
not
As the Seventh Circuit
decision
challenge
testimonies at the certification stage.
F.3d at 922.
to
certify
Plaintiffs’
the
expert
See, Kleen Prods., 831
As such, both the Court and the Seventh Circuit
took the evidence at face value.
See, id.
The case no longer
allows for that luxury, and the Court must decide whether the
parties’ expert testimonies are admissible under Federal Rule of
Evidence 702 and the Daubert line of cases interpreting that
rule.
II.
While
expert
the
details
testimony
are
LEGAL STANDARD
of
the
fleshed
standard
out
as
for
the
the
Court
admission
examines
of
the
specific arguments raised in regard to each expert’s testimony,
the
Court
here
notes
the
general
outlines
of
that
standard.
First, before it may admit any expert’s testimony, the Court
“must ascertain whether the expert is qualified, whether his or
her
methodology
testimony
evidence
will
or
Louisville
to
is
scientifically
‘assist
the
determine
Ladder,
Inc.,
trier
a
fact
663
F.3d
- 4 -
reliable,
of
in
fact
and
the
understand
to
whether
the
issue.’”
887,
893
(7th
Bielskis
Cir.
v.
2011)
(quoting FED. R. EVID. 702).
Second, even evidence that meets
this standard may be excluded under other rules of evidence,
most notably Rule 403’s weighing of the probative value of the
evidence
against
the
confusing the jury.
danger
of
the
expert
misleading
See, Daubert, 509 U.S. at 595.
or
Third, the
Court must make sure not to abrogate the role of the jury as it
examines the admissibility of the evidence.
F.3d at 894.
See, Bielskis, 663
In particular, “[t]he soundness of the factual
underpinnings of the expert’s analysis and the correctness of
the
expert’s
matters
to
conclusions
be
determined
based
by
on
that
the
appropriate, on summary judgment.”
F.3d 713, 718 (7th Cir. 2000).
analysis
trier
of
are
fact,
factual
or,
where
Smith v. Ford Motor Co., 215
Thus, even when the Court is
convinced that one side’s experts have the better argument than
the
other,
it
is
to
let
“[v]igorous
cross-examination,
presentation of contrary evidence, and careful instruction on
the
burden
of
proof”
admissible evidence.”
The
Court
expose
the
weaker
side’s
“shaky
but
Daubert, 509 U.S. at 596.
exercises
discretion
in
exclude evidence under this standard.
deciding
to
admit
or
See, GE v. Joiner, 522
U.S. 136, 138-39 (1997) (holding that abuse of discretion is the
standard an appellate court should apply in reviewing a trial
court’s
decision
to
admit
or
exclude
- 5 -
expert
testimony
under
Daubert).
Ultimately, it is the proponents of the evidence who
must persuade the Court by the preponderance of the evidence
that the expert testimony should be admitted.
See, Lewis v.
CITGO Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009).
III.
ANALYSIS
Many of the experts in this case offer testimonies that
either overlap with or directly respond to the opinions of other
experts.
experts
The Court thus begins the analysis with the economic
who
opine
on
broad
issues
of
liability
and
damages,
follows the thread to those who build on or challenge those
conclusions, and ends with experts who testify as to specific
facets within the broader framework.
A.
Mark Dwyer
Mark Dwyer (“Dwyer”) is Plaintiffs’ main damages expert.
He offers a calculation on the amount of damages that Defendants
owe to Plaintiffs, assuming that Defendants are found liable.
While Dwyer insists that he does not give an opinion as to
whether Defendants indeed are liable, he nonetheless says that
the amount of damages he arrives at – a large, positive number
of
roughly
$3.9
billion
–
is
having engaged in a conspiracy.
“consistent”
with
Defendants’
Dwyer’s opinion is rebutted by
Defendants’ primary economics expert, Kevin Murphy (“Murphy”).
- 6 -
The methodology Dwyer used to arrive at his damages number
was
discussed
at
has
since
on
class
See, Kleen Prods., 306 F.R.D. at 603-05.
certification.
length
Dwyer
supplemented
in
the
his
Court’s
reports
to
opinion
respond
to
various
criticisms, but he stands steadfast by his original method.
The
Court here recaps the essential details of his analysis as well
some of the ways in which it falls short as pointed out by
Murphy.
Dwyer’s ultimate goal is to quantify how much Plaintiffs
were
harmed
by
having
to
pay
artificially
inflated
containerboard prices during the Class Period.
To do so, he
regresses
on
the
price
of
containerboard
products
a
set
of
control variables and the variable of interest, a Class Period
Dummy.
The technique that Dwyer uses is called a regression
analysis.
See generally, Daniel Rubinfeld, Reference Guide on
Multiple Regression, in Reference Manual on Scientific Evidence
(3d
ed.
2011).
The
price
of
containerboard
is
called
the
dependent variable; and the control variables and Class Period
Dummy
are
variables,
variously
or
referred
independent
to
as
regressors,
variables.
See,
id.
explanatory
at
352-56.
Running a regression produces a set of estimated coefficients on
the
independent
“line”
having
variables,
the
where
property
the
that
- 7 -
coefficients
the
sum
of
describe
the
a
squared
differences between the line and the dependent variable is as
small as possible.
Corp.,
665
F.3d
See, ATA Airlines, Inc. v. Fed. Express
882,
890-91
(7th
Cir.
2011)
basics of a regression and citing sources).
(outlining
the
The coefficients
are interpreted as the effects that the independent variables
have on the dependent variable.
See, id.
In this case, the estimated coefficient on the Class Period
Dummy is intended to capture the increase in Defendants’ prices
during
the
economic
(The
Class
factors
variable
Period
that
is
that
drive
called
a
is
unexplained
prices
dummy
in
a
because
by
any
competitive
it
takes
of
the
market.
only
two
values, a value of 1 for the months during the Class Period and
0 otherwise.
See, David Kayne & David Freedman, Reference Guide
on Statistics, in Reference Manual on Scientific Evidence, 283,
286,
294-95
(3d
ed.
2011).)
Assuming
that
it
does
so
and
assuming that the unexplained difference in prices is due to
illegal conspiracy, the coefficient yields a supra-competitive
overcharge that serves as a measure of Plaintiffs’ damages.
Defendants
grounds.
challenge
Dwyer’s
testimony
on
reliability
To beat back the challenge, Plaintiffs must show that
Dwyer’s testimony “is the product of reliable principles and
methods,” which is “based on sufficient facts and data,” and
that Dwyer “has reliably applied the principles and methods to
- 8 -
the facts of the case.”
whether
Plaintiffs
FED. R. EVID. 702(b)-(d).
have
met
this
challenge,
In determining
the
Court
may
consider such factors as: (1) whether the methods that Dwyer
employs
“can
be
(and
ha[ve]
“ha[ve]
been
subjected
to
been)
peer
tested,”
review
and
(2)
whether
publication,”
they
(3)
whether the techniques command widespread acceptance within the
relevant scientific community, (4) whether there are “standards
controlling the technique’s operation,” and (5) the “known or
potential rate of error” of the methods.
See, Daubert, 509 U.S.
at 593-94; see also, FED. R. EVID. 702, Advisory Committee’s Notes
(listing additional factors that courts have found “relevant in
determining whether expert testimony is sufficiently reliable to
be considered by the trier of fact”).
However, as the Supreme
Court has explained, “the law grants a district court the same
broad latitude when it decides how to determine reliability as
it enjoys in respect to its ultimate reliability determination.”
Kumho
Tire
Co.
v.
Carmichael,
(emphasis in original).
the
factors
“to
all
526
U.S.
137,
141-42
(1999)
As such, the Court need not apply all
experts
or
in
every
case,”
and
it
may
consider factors other than those listed. Id.
Defendants point to three features of Dwyer’s methodology
that they argue show the method to be unreliable.
First, they
argue that Dwyer’s regression produces estimated effects that
- 9 -
are “absurd.”
In particular, Defendants highlight the fact that
Dwyer obtains negative coefficients on variables that reflect
the
costs
of
producing
containerboard,
e.g.,
hourly wages, pulp prices, and energy costs.
Ex.
6
(Murphy’s
April
2016
Report)
¶
variables
like
See, ECF No. 1093,
43,
App’x
S13;
No. 1093, Ex. 2 (Dwyer’s December 2014 Report) at Ex. 3.
ECF
This
means that the costs of the inputs and the price of the output
are negatively related – the more it cost Defendants to make
containerboards,
the
more
cheaply
they
sold
those
boards.
Defendants argue that such results cannot be right.
Plaintiffs,
inter
alia,
respond
that
the
negative
coefficients should not be interpreted as the causal impact of
costs
on
prices.
According
to
Plaintiffs,
“Dr.
Dwyer
has
constructed a ‘reduce form’ model where individual variables do
not
express
effects.
specifically
supply-side
effects
or
demand-side
Instead, they express complex relationships between
supply and demand effects on the structure of a market.”
No. 1207 at 9-10.
saying
that
even
ECF
The Court understands that Plaintiffs are
though
Dwyer
chooses
the
original,
cost
variables because “they address costs of Containerboard Product
production
variables
and
delivery,”
interact
with
because
one
other
of
the
in
his
way
the
regression
different
model
–
i.e., because of the “complex relationships” – he can no longer
- 10 -
say that any of the coefficients on those variables actually
capture
the
causal
effect
“supply-side effects.”
of
costs
on
prices
ECF No. 1093, Ex. 1 ¶ 62.
–
i.e.,
the
The long and
short of it is that Plaintiffs have some argument as to why the
negative coefficients are not “absurd.”
The
reduced
Court
form,
agrees
are
that
the
estimated
counter-intuitive.
effects,
However,
the
even
in
Court
is
mindful that it “usurps the role of the jury, and therefore
abuses its discretion, if it unduly scrutinizes the quality of
the expert’s data and conclusions rather than the reliability of
the methodology the expert employed.”
Manpower, Inc. v. Ins.
Co. of Pa., 732 F.3d 796, 806 (7th Cir. 2013).
The conclusion
that Dwyer comes to – that costs are negatively related to price
– is suspect, but the Court better trains its eyes on the method
that produces that conclusion.
challenge
the
regression
In this case, Defendants do not
itself;
instead,
they
say
that
the
methods by which Dwyer generates his independent variables and
selects the specific variables to include in the regression are
indefensible.
The Court thus directly examines those methods,
called principal components and forward selection, rather than
strike
Dwyer’s
testimony
on
the
indirect
evidence
that
the
“wrong” signs on his estimated coefficients suggest that the
model he uses is misspecified.
- 11 -
Second,
robust,
as
Defendants
small
argue
changes
in
that
how
Dwyer’s
the
produce large changes to the results.
the
credibility
are
not
defined
Such criticism goes to
into
question the reliability of the method for arriving at it.
See,
522
U.S.
Dwyer’s
variables
are
calls
Joiner,
of
results
at
146
conclusion,
that
it
“conclusions
and
methodology are not entirely distinct from one another”).
The
call is thus a close one.
(stating
and
However, as the Court believes that
Defendants can readily explain such weaknesses to a jury (if the
case goes to trial), the Court will not strike the testimony on
this ground.
See, Stollings v. Ryobi Techs., Inc., 725 F.3d
753, 766 (7th Cir. 2013) (“The judge should permit the jury to
weigh the strength of the expert’s conclusions, provided such
shortcomings
are
understanding.”).
within
the
realm
of
a
lay
juror’s
(Throughout the remainder of this memorandum,
the Court will drop the conditional “if the case goes to trial”
and speak as if the next stage of the proceeding is a trial by
jury.
This is done for ease of exposition and to account for
the possibility that the experts may testify at trial.
The
Court expresses no opinion at this time on whether Plaintiffs’
case will, in fact, survive summary judgment and proceed to be
tried.)
Furthermore,
as
the
Court
- 12 -
explained
previously,
it
ought
to
look
at
the
methods
that
produced
this
arguably
unstable result and not at the instability itself.
Finally, and perhaps most complicated to explain to a jury,
Defendants say that the methods Dwyer employs to generate his
independent variables and select which of them to include in the
final
regression
bias.”
Based
are
“unreliable
and
create
omitted
variable
This takes some explaining as to what these methods are.
on
his
economic
judgment,
Dwyer
has
opined
that
150
economic variables (not including the Class Period Dummy) drive
containerboard prices.
However, these economic variables are
highly
regression
correlated,
and
analysis
generally
cannot
estimate with precision coefficients on such highly correlated
(or “collinear”) variables.
Dwyer deals with the problem by
applying a technique called principal components.
The use of
this technique allows him to obtain independent variables from
the original, correlated variables.
The
technique
works
as
follows.
Suppose
there
are
two
variables, X and Y, with X measuring the price of crude oil and
Y the price of heating oil.
Because energy prices tend to move
together – for instance, if OPEC decides to cut production, then
the price of crude and heating oil would both rise – X and Y are
correlated.
By
applying
some
linear
algebra,
the
principal
component procedure delivers two different variables, call them
- 13 -
P1 and P2, that consist of those “components” of X and Y that do
not move together.
That is, unlike X and Y, P1 and P2 are
independent of each other.
Roughly speaking, this means that
when OPEC cuts production, P1 and P2 move in such a way such
that knowing P1 does not help one to predict what P2 will be
(and vice versa).
In
addition,
explanatory
while
variables,
his
economic
Dwyer
has
containerboard prices to explain.
judgment
only
144
calls
for
150
observations
of
His economic judgment thus
results in an over-specified model – something like a whack-amole game in which there are more mallets than mole holes.
Such
a model is impossible to estimate by a regression.
To solve the problem that he has a theoretical model (in
which all 150 variables have some causal relationship to prices)
that
cannot
more
data
be
empirically
estimated,
offers
alternative
nor
an
estimated given the data limitation.
technique
(subject
by
to
the
some
name
of
forward
restrictions
Dwyer
model
neither
that
could
be
Instead, he turns to a
selection.
imposed
collects
by
This
Dwyer
that
technique
will
be
discussed below) selects from all the independent variables a
subset
that
will
best
explain,
or
“fit,”
the
price
data.
Forward selection enables Dwyer to run a regression with fewer
than 144 independent variables while accounting for much of the
- 14 -
variation in containerboard prices.
that
forward
selection
selects
However, both experts agree
the
variables
based
on
their
mechanical fit with the data to be explained (in this case,
containerboard
prices)
rather
than
any
causal
relationship
between those variables and prices.
In
“stacks
addition,
Murphy
the
by
deck”
points
starting
out
that
forward
Dwyer
essentially
selection
with
a
base
model in which the Class Period Dummy is already present before
allowing the procedure to select other variables.
Murphy,
doing
specification
things
that
in
this
delivers
manner
a
favors
According to
a
statistically
regression
significant
coefficient on the Class Period Dummy even if prices were not
elevated beyond a level justified by economic conditions during
the Class Period.
This is because with the Class Period Dummy
in the base model, forward selection tends to omit variables
that, if included, would absorb the effects now captured by the
dummy
and
thus
result
in
a
smaller
or
statistically
insignificant coefficient on the dummy being estimated.
(In
layman’s terms, a statistically insignificant coefficient means
a
coefficient
estimate
that
is
indistinguishable
from
zero,
indicating that prices did not rise above competitive levels
during
the
Class
Period.)
The
problem
of
omitted
variables
causing the coefficients in the regression to be systematically
- 15 -
and wrongly estimated is known as omitted variable bias.
Murphy
further argues that the use of principal components worsens the
omitted variable bias in this case.
The
most
persuasive
evidence
that
Murphy
offers
to
illustrate this point is to show how principal components and
forward
selection
effect”
even
on
spuriously
data
pick
containing
up
no
a
“conspiracy-consistent
such
conspiracy.
Murphy
simulates 100 data sets in which, by construction, there was no
elevation in prices during the Class Period.
He then applies
the principal component and forward selection procedures to the
simulated
data
estimation
and
still
shows
that,
produced
a
on
this
“clean”
statistically
data,
the
significant
coefficient on the Class Period Dummy 66 to 89% of the time
(depending on how exactly the data is simulated).
This means
that the methods are prone to producing false positives, showing
that
prices
changed
in
a
statistically
significant
way
the
majority of the time even when there was no actual change in
prices.
If one were to look only at statistically significant
and positive coefficients (i.e., those interpreted as reflecting
damages), then one would still find them in as many as 35 to 47
simulations.
The Court thinks that a method that produces false results
the majority of the time cannot be reliable.
- 16 -
An error rate of
60% signifies that, given that prices were the same during the
Class Period and outside it, the method would more often than
not
lead
one
significant
various
to
way
conclude
during
technical
wrongly
the
hurdles,
Class
that
prices
Period.
Murphy
did
changed
However,
not
quite
Dwyer’s methodology in his simulated data analysis.
in
due
a
to
replicate
The Court
thus cannot say that Dwyer’s exact methodology is unreliable.
As
such,
although
Murphy’s
criticism
exposes
weaknesses
in
Dwyer’s analysis, the Court is not prepared to conclude that the
analysis
is
so
flawed
as
to
be
inadmissible.
See,
FED. R.
EVID. 702, Advisory Committee’s Notes (“A review of the caselaw
after Daubert shows that the rejection of expert testimony is
the exception rather than the rule.”).
The Court’s conclusion that Dwyer’s methods are closer to
shaky than unreliable is bolstered by comparing the methods used
in this case with those that the Seventh Circuit has found so
lacking as to be justifiably excluded.
In ATA Airlines, for
instance, the court eviscerated an analysis where the expert
opined that revenues explained costs on no other basis than that
he had data on revenues but no other “more plausible variables”;
estimated the relationship between revenues and costs with a
“tiny sample” of 10 observations; and “improperly implemented”
the flawed model he had.
See, ATA Airlines, 665 F.3d at 893-96.
- 17 -
Likewise,
in
Blue
Cross
&
Blue
Shield
United
v.
Marshfield
Clinic, the court found an expert’s testimony to be “worthless”
when
his
regression
analysis
included
only
the
variable
of
interest and a single control. See, Blue Cross & Blue Shield
United v. Marshfield Clinic, 152 F.3d 588, 593 (7th Cir. 1998).
Finally,
in
Zenith
Elec.
Corp.
v.
WH-TV
Broad.
Corp.,
the
Seventh Circuit affirmed the lower court’s decision to exclude
the expert’s testimony when the expert offered no explanation as
to
why
he
did
not
employ
the
“extensively
used”
method
of
regression analysis but rather resorted to “my expertise” to
justify his estimation.
See, Zenith Elec. Corp. v. WH-TV Broad.
Corp., 395 F.3d 416, 418-20 (7th Cir. 2005).
In contrast to these experts, Dwyer here performs extensive
quantitative
plausibly
analysis.
explain
observations,
prices,
and
regressions.
He
chooses
relies
includes
a
Court
on
thus
The
economic
number
finds
a
variables
sample
of
size
of
the
144
in
controls
that
that
his
identified
weaknesses in Dwyer’s methodologies affect the probativeness of
his
testimony
rather
than
its
admissibility.
See,
In
re
Titanium Dioxide Antitrust Litig., No. RDB-10-0318, 2013 U.S.
Dist.
LEXIS
62394,
(“[I]nadequacies
in
at
a
*56-58
multiple
(D.
Md.
regression
- 18 -
May
analysis
1,
2013)
normally
‘affect the analysis’ probativeness, not its admissibility.’”)
(quoting Bazemore v. Friday, 478 U.S. 385, 400 (1986)).
The Court nonetheless is concerned that a lay jury may not
be
able
to
grasp
the
techniques
of
principal
components
and
forward selection and so may be easily misled by the expert.
See, Daubert, 509 U.S. at 595 (“Expert evidence can be both
powerful
and
evaluating
quite
it.”)
misleading
(internal
because
quotation
of
the
marks
difficulty
omitted).
in
The
techniques are complicated, as evidenced by the many pages that
the experts took to explain them, as well as the pages that the
Court
just
methods.
now
devoted
to
lay
out
its
understanding
of
the
To alleviate the problem and avoid exclusion of the
testimony under Rule 403, the Court suggests that Plaintiffs
build up to their preferred model in incremental steps so as to
allow the jury to see what each layer of the methodology is
delivering.
Plaintiffs should first show graphs of the raw data
of containerboard prices before, during, and after the Class
Period.
prices
This will help the jury to understand whether elevated
are
visible
to
econometrics to follow.
the
“naked
eye”
or
isolated
by
the
Plaintiffs should then show an ordinary
least squares regression with the original economic variables as
independent
principal
variables,
components
of
followed
the
by
economic
- 19 -
a
regression
variables,
with
and
the
then
a
regression
with
regressors
chosen
by
the
forward
selection
technique.
Subject to the above, the Court denies Defendants’ Motions
to exclude Dwyer’s testimony.
Defendants remain free to impeach
Dwyer with the various arguments they raised in the Motions.
B.
Douglas Zona
Like Dwyer, Plaintiffs’ next expert, Douglas Zona (“Zona”),
calculates damages that Plaintiffs allegedly suffered.
Unlike
Dwyer,
–
however,
Zona
aims
to
link
Plaintiffs’
damages
the
increase in prices that Plaintiffs had to pay – to Defendants’
reductions in containerboard supply.
two-step analysis.
To do so, Zona performs a
In the first step, he assesses how much
Defendants, as a group, reduced their capacity during the Class
Period
over
and
above
reductions
predicted
for
a
comparison
group not accused of having engaged in a conspiracy.
In the
next step, he estimates how containerboard prices changed in
response to changes in containerboard supply.
By combining the
results from these two stages, Zona is able to calculate how
much containerboard prices rose because of the supply reduction
he
identified.
Assuming
that
the
additional,
more-than-
predicted reduction is attributable to Defendants’ conspiracy,
this increase in prices is a measurement of damages.
- 20 -
Defendants
The
Court
piece.
raise
takes
the
multiple
challenges
analysis,
and
to
its
Zona’s
criticisms,
analysis.
piece
by
In the first step of his analysis, Zona employs a method
called multinomial logit to show that Defendants reduced the
capacity at their paper mills by more than is predicted for a
comparison group.
behavior
that
Multinomial logit is a method for modeling
involves
discrete,
as
opposed
to
continuous,
choices, e.g., whether a person played a whack-a-mole game in
the last month (the discrete choices are yes/no), or where the
person last played a whack-a-mole game (the discrete choices may
be
at
home/at
multinomial
ordinary
a
logit
least
discrete data.
friend’s/at
as
an
squares
an
arcade).
alternative
regression
when
One
can
estimation
one
is
think
method
dealing
of
to
with
See, The Tao of Pleading: Do Twombly and Iqbal
Matter Empirically? 59 Am. U.L. Rev. 553, 616 n.280 (explaining
that “[a] multinomial logistic regression[’s] . . . purpose is
the same as the more commonly known multiple linear regression,
except that in multiple regression, the dependent variable is
linear (also called ‘continuous’ or ‘quantitative’), while in
logistic
regression,
the
dependent
variable
is
categorical”)
(citing Damodar Gujarati, Essentials of Econometrics, 451-53 (2d
ed. 1999)).
- 21 -
Of course, capacity does not present such discrete data.
A
firm’s production capacity, for all practical purposes, can take
any numerical value from zero to whatever is the upper range
imposed by total resources.
Nonetheless, Zona uses multinomial
logit because he models Defendants’ capacity as four discrete
choices:
maintain capacity, increase capacity, reduce capacity,
or close mill.
Specifically, Zona looks at capacity data, as
published by a third-party industry watch group called RISI, for
Defendant and non-Defendant mills during the years 1998-2010.
Based on this capacity data, he categorizes a mill as “maintain”
if its capacity changed by no more than 20% from one year to the
next;
“increase”
“decrease”
if
if
its
its
capacity
capacity
jumped
dropped
by
by
more
more
than
than
20%;
20%;
“closed” if the mill shut down production altogether.
and
After
categorizing the data in this way, Zona sums up the number of
mills falling into each category for all of the Defendants.
He
then uses multinomial logit as a means to compare how Defendants
ran
their
mills
during
the
Class
Period
against
a
benchmark
group that consists of Defendants outside the Class Period, nonDefendants outside the Class Period, and non-Defendants during
the Class Period.
Defendants raise a number of issues with this part of the
analysis.
First, they object that by lumping all Defendants
- 22 -
into one group, Zona leaves no room for any particular Defendant
to
exonerate
itself
containerboard
by
showing
that
more
than
capacity
it
did
the
not
reduce
benchmark
its
group.
Defendants present data indicating that five of seven Defendants
actually had capacity level above that of the benchmark group,
and
Georgia-Pacific
and
Temple-Inland
in
particular
emphasize
how high their production was relative to their competitors.
The Court agrees that Zona’s analysis cannot establish that
any
particular
Defendant
restricted
supply
in
consistent with either tacit collusion or conspiracy.
this
does
not
mean
that
the
analysis
is
a
manner
However,
irrelevant.
If
believed, the analysis indicates that Defendants, as a group,
behaved differently than how they behaved outside of the period
of the alleged conspiracy and how non-Defendants behaved.
This
piece of evidence increases the probability that there was a
conspiracy during the Class Period, even if it does not shed
light
on
who
among
the
Defendants
actually
accordance with the alleged conspiracy.
cut
supply
in
Defendants remain free
to put on individual defenses at trial that call into doubt the
strength of the evidence against any of them, and the jury is
entitled to find that, say, two of the Defendants conspired but
not the other five.
See, Alexander v. Phx. Bond & Indem. Co.,
149
1000
F.Supp.2d
989,
(N.D.
- 23 -
Ill.
2001)
(“[E]ven
in
a
conspiracy
case,
liability
matter
mass
application.”)
of
remains
(citing
States, 328 U.S. 750, 772 (1946)).
not inadmissible on this basis.
(“[E]xpert
testimony
need
only
factual matter in the case.
individual
and
is
v.
Kotteakos
not
a
United
In short, the evidence is
See, Smith, 215 F.3d at 720
be
relevant
to
evaluating
a
That testimony need not relate
directly to the ultimate issue that is to be resolved by the
trier of fact.”).
Second,
Defendants
argue
that
Zona
constructs
benchmark with which to compare their capacity.
the
wrong
Recall that
Zona is here comparing Defendants’ behavior during the Class
Period to that both of Defendants outside of the Class Period
and non-Defendants during all of the years for which he has
data. Defendants point out that, because the benchmark group
mixes
in
non-Defendants,
any
identified
differences
between
Defendants’ capacity choices during the Class Period and the
benchmark
group
could
be
driven
solely
by
the
differences
between Defendants and non-Defendants that have nothing to do
with the alleged conspiracy.
In fact, Defendants demonstrate
that this is the case by running what is called a difference-indifference analysis.
The analysis controls for any inherent
difference between Defendants and non-Defendants, that is, any
difference found outside the Class Period and so is unrelated to
- 24 -
the
alleged
conspiracy.
With
such
an
adjustment
in
the
benchmark group, Defendants show that any difference in capacity
attributable to the alleged collusion dissipates.
Without
difference
quibbling
analysis,
with
the
any
part
Court
of
this
nonetheless
difference-inconcludes
that
whether Zona “might have done a better job is not the test for
the admissibility of his testimony.”
Traharne v. Wayne/Scott
Fetzer Co., 156 F.Supp.2d 697, 712 (N.D. Ill. 2001).
Even if
Zona had only compared Defendants to non-Defendants during the
Class
Period
and
opined
that
any
difference
between
them
is
attributable to Defendants’ alleged collusion, still, the Court
would
not
find
his
method
unreliable.
A
comparison
between
firms accused of conspiracy and the firms not accused conspiracy
appears to the Court to be a valid method to assess the impact
of the alleged conspiracy where, as here, the two groups are
from the same industry, face the same economic conditions, and
produce the same “standardized” containerboard products.
See,
Kleen Prods., 831 F.3d at 923 (“Containerboard is a commodity,
sold
in
standardized
compositions
and
weights.
The
final
products are also standardized. . . .”).
Even if it turned out that, despite these similarities, the
two
groups
are
different
in
important
ways
such
that
the
expert’s conclusion is subject to doubt, still such doubts are
- 25 -
best left to the jury.
expert
may
provide
See, Stollings, 725 F.3d at 766 (“An
expert
testimony
based
on
a
valid
and
properly applied methodology and still offer a conclusion that
is subject to doubt.
It is the role of the jury to weigh these
sources of doubt.”).
In this case, Defendants can easily point
out
the
ways
different
and
in
so
which
argue
Defendants
that
the
and
non-Defendants
difference
between
the
are
two
groups had nothing to do with the claimed illegal collusion –
precisely as they have done in their motions.
The jury can then
decide
not
whom
complicated,
to
believe.
and
the
The
Court
matter
does
is
not
believe
particularly
that
Zona’s
testimony is “too complex for the jury to appreciate important
issues
of
credibility.”
Id.
The
Court
thus
will
let
the
testimony stand.
Third, Defendants press that Zona’s method is unreliable by
pointing
to
several
demonstrably
false.
results
In
produced
particular,
by
the
Zona’s
model
model
that
are
predicts
capacity levels for Defendants that are lower than their actual
capacity for the period during the alleged conspiracy.
That is,
Defendants’ real-world capacity levels, allegedly depressed by
the conspiracy, were in fact higher than what Zona predicts them
to be in the absence of such conspiracy.
Zona explains that
such discrepancies occurred because his model is intended to
- 26 -
estimate capacity growth rates rather than their levels.
While
the Court is not convinced this explanation puts the matter to
rest,
it
thinks
that
the
push
and
pull
of
the
adversarial
process will best expose the truth as to the correctness of
Zona’s
conclusions.
The
testimony
can
be
tested
and
the
potential for error exposed, as the Defendants have shown.
See,
Daubert, 509 U.S. at 594.
Fourth,
conceptually
Defendants
contend
unjustifiable
that
choice
by
the
expert
measuring
mill-by-mill instead of firm-by-firm basis.
makes
capacity
a
on
a
Defendants argue
that capacity decisions are made at the firm level and should be
modeled
as
such.
After
all,
a
firm
decides
how
to
run
individual mills based on the mills’ contribution to the firm’s
overall
profitability
particular mill.
and
not
just
the
profitability
at
a
The Court conceives of this as an attack on
the data that Zona uses, essentially an argument that he should
have aggregated his mill data to the firm level.
To put things this way is to give away the answer that the
testimony should go to the jury.
The Seventh Circuit has made
clear that unless there was no rational connection between the
data used and the conclusion arrived at, “arguments about how
the
selection
of
data
inputs
affect
the
merits
of
the
conclusions produced by an accepted methodology should normally
- 27 -
be left to the jury.”
Manpower, 732 F.3d at 808-09; see also,
Hannah’s Boutique, Inc. v. Surdej, No. 13-cv-2564, 2015 U.S.
Dist. LEXIS 79501, at *19-21, 25-27 (N.D. Ill. June 19, 2015).
To
illustrate
where
no
such
rational
connection
exists,
the
court gave an example where a hypothetical expert uses “changes
in the size of the white rhino population in Africa” to project
earnings for a recruiting firm headquartered in Milwaukee.
Manpower,
732
F.3d
at
808-09.
Similarly,
it
See,
described
a
situation where an expert relies on “sales to only one customer”
to estimate average gross sales. See, id.
In contrast to such
irrational
mill-level
data
to
methodologies,
study
capacity
Zona
here
changes.
uses
The
Court
thus
capacity
leaves
the
evaluation of his data-input choice to the jury.
Likewise, other criticisms that Defendants levy at Zona’s
testimony are data-related.
For example, Defendants say that
Zona should have used the Defendant-provided data rather than
third-party data from RISI.
But even if the RISI data are
flawed, “Rule 702 [] does not condition admissibility on . . . a
complete and flaw-free set of data.”
Lees v. Carthage Coll.,
714 F.3d 516, 524-25 (7th Cir. 2013) (internal quotation marks
omitted).
As another example of a data issue, Defendants criticize
how Zona chooses to code mill closures in his dataset.
- 28 -
The
Court does not find his choices to be so outrageous so as to
justify exclusion.
The decision to code a mill that closed in
the middle of the year as a “decrease” for that year and a
“closure” for the next year is a choice made to deal with the
fact that a mill’s capacity is not zero in the very year that it
closed.
While
Zona
could
have
done
things
differently,
the
choice that he did make is reasonable (even if not the most
conservative).
If
the
choice
was
driven
by
the
ex
post
discovery that, without such coding of the data, any looked-for
effect would have disappeared, then this is something Defendants
are free to point out during cross-examination or presentation
of
their
own
Caterpillar,
expert
Inc.,
No.
witnesses.
See,
10-cv-03770,
Miller
2015
UK
U.S.
Ltd.
Dist.
v.
LEXIS
147843, at *11 (N.D. Ill. Nov. 1, 2015) (“[A] party who finds an
expert’s conclusion disagreeable is entitled to challenge the
expert and his or her opinion through cross-examination and, of
course, to put on his own expert to offer a counter opinion.”).
The attack goes to the robustness and hence probativeness of
Zona’s testimony, not its reliability.
Criticisms relating to the second part of Zona’s analysis –
that
devoted
to
quantifying
how
decreases
in
supply raise the product’s price – are simpler.
the
analysis,
Zona
used
an
“off-the-shelf”
- 29 -
containerboard
In this part of
model
based
on
a
paper published in the Journal of Forest Economics.
However,
Zona made some modifications to the model, including by dropping
some control variables during his estimation.
Defendants show
that adding the controls back in undermines the magnitude and
statistical significance of Zona’s estimated coefficients.
This
is evidence that Zona’s estimated model suffers from omitted
variable bias.
While such a challenge raises concerns about the accuracy
of Zona’s results, the Court will not bar the expert testimony
on such grounds.
See, Lapsley v. Xtek, Inc., 689 F.3d 802, 805
(7th Cir. 2012) (“A Daubert inquiry is not designed to have the
district judge take the place of the jury to decide ultimate
issues
of
credibility
and
accuracy.”).
The
model
Zona
here
employs “has been subjected to peer review and publication,” and
it is a matter of his economic judgment whether and how the
model should be modified in applying it to the particular facts
of the case.
Daubert, 509 U.S. at 593-94; see also, Stollings,
725 F.3d at 768 (“The fact that an expert’s testimony contains
some
vulnerable
assumptions
irrelevant or inadmissible.”).
does
not
make
the
testimony
The Court again burdens the jury
with assessing whether that judgment is sound.
In
sum,
the
Court
denies
the
testimony.
- 30 -
Motions
to
Strike
Zona’s
C.
Kevin Murphy
Kevin Murphy (“Murphy”) is Defendants’ expert who rebuts
Dwyer’s and Zona’s testimonies.
As such, much of the content of
his reports has already been discussed.
In general, the Court
finds Murphy’s arguments to be cogent, his exposition lucid, and
his
role
as
a
sophistication
Plaintiffs’
rebuttal
of
Plaintiffs’
arguments
basically
boil
rejected
similar
witness
down
for
to
given
proffered
barring
the
opinions
crucial
offered
expert
Murphy
assertions
at
the
class
testimonies.
from
that
technical
testifying
the
Court
had
certification
and
that Murphy’s testimony will confuse or mislead the jury.
For
the reasons explained below, the Court must disagree.
The Court begins with the simplest issues:
the use of
examples and the choice of data. To explain the difference-indifference
concept,
Murphy
used
an
example
of
two
different
plants growing at different rates, irrespective of any treatment
that one but not the other plant received.
Plaintiffs object
that
relevant”
the
“hypothetical
“confusing.”
is
not
economically
The objection is without merit.
and
is
The Court read
the hypothetical, found it clear, and believes it will aid a lay
jury in understanding the technical concept of difference-indifference.
See, Stollings, 725 F.3d at 765 (“Expert testimony
is permitted to assist the trier of fact with technical issues
- 31 -
that laypeople would have difficulty resolving on their own.”);
FED. R. EVID. 702(a).
Murphy
deals
with
Likewise, Plaintiffs’ quibble about how
some
data
problems
admissibility of his testimony.
does
not
go
to
the
See, Manpower, 732 F.3d at 808-
09.
The Court next addresses issues that Plaintiffs claim were
definitively settled in the Court’s class certification order or
the
Seventh
Circuit’s
opinion
affirming
the
decision.
Two
arguments fall into this category. The first is the back-andforth
between
“economic
select
the
the
judgment”
variables
parties
about
relies
when
he
to
use
whether
on
as
‘pool’
of
candidate
variables
forward
regressors
Murphy phrases the issue thusly:
Dwyer
in
exercises
selection
his
to
analysis.
“Beyond choosing an initial
for
the
[forward
selection]
procedure to select from, the analyst exercises no additional
economic judgment as to whether the resulting model is properly
specified or whether the coefficient estimates from the model
make sense as a matter of economics.”
(Murphy’s June 2015 Report) at 57-58 n.10.
ECF No. 1093, Ex. 5
Dwyer’s disagreement
is not over the accuracy of this statement, but its emphasis.
Unsurprisingly, Dwyer emphasizes that because he chose an
initial pool of candidate variables, he has exercised economic
judgment.
The Court is still puzzled as to the question of what
- 32 -
causal reason justifies leaving some of the 150 variables out of
the final regression if, in Dwyer’s economic judgment, all 150
causally explain containerboard prices.
judgment”
is
not
some
kind
of
In any case, “economic
talismanic
shield;
Murphy
is
entitled both to call into question the soundness of Dwyer’s
judgment and to point out how far it extends.
nothing
in
its
own
or
the
Seventh
The Court finds
Circuit’s
opinions
that
warrant exclusion of Murphy’s criticism.
The second issue swirls around the effect of “baking in”
the Class Period Dummy to the forward selection method.
As may
be recalled, Dwyer ran the forward selection procedure with a
base model where the Class Period Dummy was already included.
This means not only that the procedure always had to “choose”
the dummy, but also that it chose other variables while taking
into
account
the
presence
of
the
dummy
in
the
final
model.
Plaintiffs now seek to bar Murphy from testifying as to how
performing the procedure in this way may bias the estimation of
the Class Period Dummy.
It
is
true
that
during
class
certification,
the
thought that the inclusion of the dummy was innocuous.
Court
As it
stated, “[p]resumably, if the conspiracy had no effect on price,
the model would show that the conspiracy variable had a zero or
statistically insignificant effect on price.”
- 33 -
Kleen Prods., 306
F.R.D. at 604.
However, the Court only thought this because it
had understood Dwyer to be doing something different than what
he was actually doing.
The Court thought that Dwyer was only
“manually”
Class
adding
the
Period
Dummy
into
the
final
regression, not that he was constraining the forward selection
procedure
in
presumption,
the
way
however
that
he
intuitive,
actual facts of the case.
did.
was
As
false
such,
as
the
applied
Court’s
to
the
The simulation analysis that Murphy
performed shows that even “if the conspiracy had no effect on
price,” the estimated coefficient on the dummy still may not be
zero
or
statistically
insignificant.
Since
the
Court
was
mistaken about Dwyer’s actual method, what it said cannot be a
basis to exclude testimony that corrects the mistake.
Plaintiffs nonetheless contend that Murphy’s opinion should
be excluded because it does not conclusively undermine Dwyer’s
methodology.
Plaintiffs say that Murphy did not demonstrate
that the estimated coefficient on the Class Period Dummy is, in
fact, biased since he did not identify the variables omitted
from
the
regression
estimation results.
strike
an
expert’s
that,
if
included,
would
change
the
It is true that courts generally do not
testimony
when
his
counterparty
complains
that the expert’s analysis suffers from omitted variable bias
but
goes
no
further
to
identify
- 34 -
those
specific
omitted
variables.
See,
failure
include
to
probativeness,
Bazemore,
not
478
U.S.
variables
its
at
will
400-01
affect
admissibility.”);
In
(“Normally,
the
re
analysis’
Polypropylene
Carpet Antitrust Litig., 93 F.Supp.2d 1348, 1365 (N.D. Ga. 2000)
(“Unless
the
party
evidence
that
an
challenging
omitted
a
regression
variable
is
model
correlated
proffers
with
the
[in]dependant [sic] variable and is likely to affect the result
of
the
regression
omission
of
the
analysis,
variable
the
Court
implicates
will
the
not
find
reliability
that
of
the
model.”) (internal quotation marks omitted).
However, the issue here is not whether Dwyer’s testimony
should
be
struck
criticize it.
but
whether
Murphy
should
The Court thinks he should.
be
allowed
to
Murphy’s opinion
that Dwyer’s estimation is susceptible to omitted variable bias
is not speculation. Far from “simply assert[ing] a bottom line,”
Murphy explains the econometric theory underpinning his opinion
and
goes
to
some
length
to
intelligible to a lay person.
ensure
that
the
explanation
is
See, Metavante Corp. v. Emigrant
Sav. Bank, 619 F.3d 748, 761 (7th Cir. 2010) (stating that a
qualified witness may offer an opinion where he explains the
methodologies and principles that support his opinion).
Since
the Court admits testimony even when it is demonstrated that the
results do not stand up to the inclusion of additional controls
- 35 -
(recall
Zona’s
analysis),
it
will
not
strike
testimony
that
falls just short of proving that the results do not withstand
scrutiny.
Finally, Plaintiffs focus on Murphy’s rebuttal of Dwyer’s
impact analysis.
contrary
to
law
Plaintiffs argue that Murphy’s rebuttal is
and
his
testimony
therefore
is
unreliable.
While the Court agrees that “[e]xpert opinions that are contrary
to law are inadmissible,” it does not think that Murphy here is
offering such an opinion.
Loeffel Steel Prods. v. Delta Brands,
Inc., 387 F.Supp.2d 794, 806 (N.D. Ill. 2005).
Indeed, he does
not offer a legal opinion at all. Murphy does not opine that
Dwyer’s definition of an “impacted” customer as somebody who
paid a supra-competitive price in a transaction during the Class
Period is legally inadequate.
that
Dwyer’s
method
unreliable
because
regression
residuals
customer
actually
to
it
paid
identify
relies
that
an
Rather, he offers the opinion
has
on
a
“impacted”
customers
mathematical
nothing
artificially
to
do
is
property
with
of
whether
containerboard
a
price.
That is, Murphy does not believe that Dwyer has identified any
customer who suffered harm from the alleged conspiracy or was
“impacted.”
testimony.
Such an opinion is within the scope of an expert’s
See,
FED.
R.
EVID.
704
(“An
opinion
is
objectionable just because it embraces an ultimate issue.”).
- 36 -
not
Having found no basis to exclude Murphy’s testimony, the
Court denies Plaintiffs’ Motion to Strike his reports.
D.
Michael Harris
Michael Harris (“Harris”) is Plaintiffs’ liability expert.
Using
a
framework
(“SCP”),
Harris
known
offers
as
Structure-Conduct-Performance
testimony
most
directly
intending
to
establish that Defendants had the motive, means, and opportunity
to engage in an illegal conspiracy.
Defendants argue that Harris’ testimony should be struck on
both Rule 702’s reliability grounds and Rule 403’s weighing of
the likelihood that the testimony will mislead the jury.
To
take the second argument first, the Court agrees that Harris’
opinion is capable of misleading the jury in exactly the manner
Defendants suggest – namely, it may confuse jurors into thinking
that tacit collusion is unlawful.
law
since
“[e]xpress
collusion does not.”
collusion
ought
to
express
lose
if
violates
antitrust
law;
tacit
In re Text Messaging Antitrust Litig., 782
F.3d 867, 872 (7th Cir. 2015).
establishing
This would be a mistake of
Plaintiffs’ case rests on their
collusion.
their
Put
evidence
only
differently,
shows
that
Plaintiffs
Defendants
engaged in tacit collusion, or consciously paralleled behavior,
and
not
express
collusion,
or
collusion
See, id. at 879.
- 37 -
by
prior
agreement.
Despite this burden, Plaintiffs’ experts, Harris included,
deploy the word “collusion” with imprecision, sometimes using it
interchangeably
not.
with
illegal,
express
collusion
and
sometimes
In discussing the specific details of their analysis, the
experts say that Defendants’ conduct suggests “collusion” and by
this tend to mean deliberate parallel action.
conclusion,
consistent
however,
with
they
“collusion”
say
that
and
Defendants’
mean
engaged in an illegal conspiracy.
In their final
that
conduct
Defendants
is
likely
See, e.g., ECF No. 1093,
Ex. 1 (Dwyer’s June 2014 Report) ¶¶ 3, 14, 59 (“The results of
the damages model are consistent with plaintiffs’ allegations of
collusion.”);
ECF
No.
1093,
Ex.
8
(Zona’s
February
2015
Declaration) ¶¶ 11, 20, 26, 55 (“The conclusion that defendants
acted
in
statistics
a
manner
is
consistent
supported
by
with
this
collusion
more
based
complete
on
simple
model.”);
ECF
No. 1131, Ex. 6 (Harris’ February 2015 Report) (“The economic
evidence
consistent
reveals
with
that
the
conduct
collusion.”).
This
of
the
makes
defendants
their
was
testimonies
especially prone to misinterpretation.
Imprecise language causes problems elsewhere as well.
For
instance, Plaintiffs’ and Defendants’ experts seem to talk past
each other when they use the term “unilateral self-interest.”
Plaintiffs seem to contend that a firm acts in its unilateral
- 38 -
self-interest
when
it
takes
actions
to
further
its
own
interests, assuming that other firms will not do what it does.
In contrast, Defendants appear to define the term as a firm
acting in its own best interest, assuming that other firms are
free to do whatever it is that they choose to do, which may
include
responding
to
the
first
firm’s
actions.
Thus,
Plaintiffs contend that Defendants act in a way inconsistent
with
their
“unilateral
self-interest”
and
consistent
with
conspiracy (or confusingly, “collusion”) when they take actions
that are profitable only if other firms adopt the same actions.
See, e.g., ECF No. 1131, Ex. 4 (Harris’ June 2014 Report) at 6
(“[T]he
economic
Defendants
was
independent
conduct
evidence
the
with
collusion
decision-making,
that
was
contrary
acting independently.
the
that
consistent
more
shows
Defendants
were
with
to
its
each
conduct
than
Defendant
unilateral
of
the
with
exhibiting
self-interest,
The conduct only makes economic sense if
engaged
in
collective
action.
.
.
.”).
Defendants, on the other hand, say they act in a way consistent
with their “unilateral self-interest” even if they “watch each
other
like
hawks,”
and
sometimes
follow
their
competitors’
strategy or hope that their own strategy will be followed.
See,
e.g., ECF No. 1210 (“Dr. Davis [Defendants’ expert] recognized
that
Defendants
each
had
strong
- 39 -
unilateral
incentives
to
anticipate
how
competitors
would
respond
to
pricing
and
production decisions.”) (emphasis in original).
To alleviate the problem of imprecise language confusing or
misleading the jury, the Court orders that the parties adopt a
standardized
testimonies
vocabulary
in
and
have
accordance
with
their
the
experts
phrase
stipulated
their
vocabulary.
Whatever definitions the parties settle on, their experts should
not use the same terms to mean different things.
The Court
further
unmodified
suggests
that
the
parties
avoid
the
“collusion” and instead use the unambiguous “express collusion,”
“tacit collusion,” or one of their synonyms.
clear
to
the
jury
whether
Plaintiffs’
This will make
evidence
is
that
Defendants acted in a way consistent with the illegal behavior
they
have
been
accused
of
(i.e.,
agreeing
to
fix
prices
in
violation of the Sherman Act) or in a way consistent with lawful
behavior even if inconsistent with price competition.
See, In
re Text Messaging, 782 F.3d at 873 (“[T]he Sherman Act imposes
no duty on firms to compete vigorously, or for that matter at
all, in price.”).
The Court leaves the details to the parties
and expects that they will do enough to avoid the Court having
to strike the testimonies on Rule 403 grounds.
The
Court
now
reaches
Defendants’
that
Harris’
testimony should be struck because it is unreliable.
Harris
- 40 -
argument
opines
that
Defendants’
the
Structure,
businesses
Conduct,
support
and
the
Performance
conclusion
unlawfully colluded during the Class Period.
challenge
Harris
containerboard
on
his
industry,
analysis
of
recognizing
that
the
they
Defendants do not
the
that
of
structure
this
of
piece
the
of
the
testimony is inadequate to establish that Defendants conspired
to fix prices during the Class Period.
See, Reserve Supply
Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37, 50 (7th
Cir.
1992)
(“It
is
well-established
.
.
.
that
the
mere
existence of an oligopolistic market structure in which a small
group of manufacturers engage in consciously parallel pricing of
an
identical
product
does
not
violate
the
antitrust
laws.”)
(internal quotation marks omitted).
This is only sensible.
An industry structure is shared by
Defendant and non-Defendant firms alike throughout the Class and
non-Class Periods.
As such, by itself, details of an industry
structure cannot show that Defendants conspired during the Class
Period any more than they can show that all containerboard firms
conspired at all times.
This is not to say that the evidence is
irrelevant, but that the evidence is irrelevant unless it is
accompanied
by
something
tending
to
show
unlawful
collusion
among the specific Defendants during the relevant period.
- 41 -
As the Seventh Circuit recognized in its order affirming
class certification, that necessary “something” is provided by
the Conduct and Performance prongs of the SCP analysis.
See,
Kleen Prods., 831 F.3d at 928 (naming “actual price increases, a
mechanism for those increases, the communication channels the
conspirators used, and factors suggesting that cartel discipline
can
be
maintained”
as
factors
“beyond
the
structural”
that
overcome the flaw in the SCP’s thinking that “it was enough to
know the structure of a market in order to predict what kind of
conduct
would
ensue”).
Defendants
choose
not
to
attack
the
Performance piece of Harris’ analysis since that analysis is
based on Dwyer’s testimony purporting to show that Defendants
priced above competitive levels during the Class Period, and
Defendants had separately challenged Dwyer’s testimony.
This
leaves only the Conduct prong.
As
part
of
his
Conduct
inquiry,
Harris
considers
ten
different business strategies of the Defendants that he says
support
the
conclusion
that
Defendants
conspired
containerboard prices during the Class Period.
to
raise
These include
Defendants’ “mill closures, operating rates/inventories/trades,
downtime/slowback, coordinated pricing, the use of focal points,
monitoring
inter-firm
behavior,
direct
them, and prior antitrust violations.”
- 42 -
communications
among
See, e.g., ECF No. 1131,
Ex. 4 at 34.
Defendants argue that all of these factors are as
suggestive of a lawful “follow-the-leader” strategy as they are
consistent with an unlawful agreement to collude.
They further
argue that Harris offers nothing more than his ipse dixit to
explain why, on the basis of this ambiguous evidence, he comes
to a conclusion of illegal agreement.
On the balance of the evidence, the Court believes that
Harris has not so failed to consider obvious alternatives or to
explain
his
reasoning
as
to
be
deemed
unreliable.
Whether
Harris has drawn a reasonable conclusion based on his analysis
and actually made a prima facie case for conspiracy is a matter
to be examined at summary judgment, and whether he has made a
persuasive case is a matter left to the jury.
F.3d at 718.
See, Smith, 215
As such, the Court will allow Harris to testify as
to each piece of his analysis, including the first nine of the
factors listed above.
However,
the
Court
will
bar
any
testimony
on
factor, that regarding “prior antitrust violations.”
the
tenth
With one
exception, the prior conduct that Harris mentions consists of
accusations of antitrust violations, cumulating in settlements
and consent decrees, rather than actual findings of wrongdoing.
The exception concerns a single Defendant and involves conduct
that occurred more than four decades ago.
- 43 -
As such, the evidence
is more prejudicial than probative and so excluded.
See, In re
Polypropylene
Court
Carpet,
93
F.Supp.2d
at
1354
(“The
also
excludes expert testimony based on the existence of litigation
involving allegations of price-fixing of nylon carpet products.
Such
testimony
from
an
expert
is
prejudicial
and
inadmissible.”); Aetna, Inc. v. Blue Cross Blue Shield of Mich.,
No. 11-15346, 2015 U.S. Dist. LEXIS 48534, at *30-32 (E.D. Mich.
Apr.
14,
2015)
(“The
Court
finds
that
because
the
DOJ,
the
Michigan AG and The Shane Group class action cases have been
resolved without any finding of liability against [Defendant]
Blue Cross in those cases, any reference to those cases would be
more prejudicial than probative. . . .”).
In addition, the Court will deny Harris a forum to offer
the opinion that Defendants likely engaged in illegal pricefixing rather than lawful conduct.
This is because the Court
does not think that economic expertise is needed to draw such a
conclusion from the testimony Harris offers.
Harris
testifies
that
“[i]n
six
days
For example, after
all
the
Defendants
announced identical price increases and effective dates,” ECF
No.
1131,
Ex.
4
at
48-49,
a
layperson
is
as
capable
as
an
economic expert to evaluate whether this evidence makes it more
likely than not that (1) Defendants had an agreement to announce
the same price increase, (2) Defendants followed each other’s
- 44 -
price
increase
without
agreement,
options remain equally likely.
or
(3)
neither,
as
both
The expert should not offer his
own opinion that Defendants acted in accordance with an illegal
agreement
when
the
jury
is
just
itself whether that is the case.
as
competent
to
decide
for
See, Jamsports & Entm’t, LLC
v. Paradama Prods., No. 02 C 2298, 2005 U.S. Dist. LEXIS 59, at
*30-33 (N.D. Ill. Jan. 3, 2005) (barring an expert’s testimony
when “[t]here is nothing in [the expert’s economic] expertise
that suggests that he is any more competent than the average
juror in interpreting these communications or in divining from
them” the defendants’ motivation for taking certain actions); In
re Processed Egg Prods. Antitrust Litig., 81 F.Supp.3d 412, 421
(E.D.
Pa.
2015)
(“[T]he
cases
are
clear
that
an
economist’s
testimony is not admissible where he or she simply reads and
interprets evidence of collusion as any juror might, or where an
economist
infers
intent
to
collude
from
mere
documentary
evidence, unrelated to his or her economic expertise.”).
Subject to these limitations, the Court denies the Motions
to Bar Harris’ testimony.
E.
Steven
Davis
(“Davis”)
Steven Davis
is
Defendants
International
and Temple-Inland’s answer to Harris’ testimony.
Paper
Davis examines
many of the same factors found in Harris’ comment and concludes
- 45 -
that
“an
economic
analysis
of
the
available
data
does
not
support the allegation that Defendants engaged in the alleged
conspiracy.”
ECF 1140, Ex. 2 (Davis’ June 2015 Report) ¶ 57.
As their opening salvo to why Davis’ testimony should be
struck,
Plaintiffs
recount
certain
discovery
disputes
between
the parties and argue that this “discovery gamesmanship” is a
reason for the Court to bar Davis from taking the stand.
The
discovery tussle Plaintiffs speak of was over whether Davis has
turned over notes generated during his interviews of Defendants’
employees.
Discovery has closed by this time, and Plaintiffs
appear to have gotten all the notes subject to production.
such,
the
discovery
Court
is
matter
disinclined
drag
into
to
the
let
an
current
already
As
resolved
Motion.
It
thus
considers Plaintiffs’ Motion to Strike only on the basis that
Davis’ testimony does not meet the standard set by Federal Rule
of Evidence 702.
Davis is the first expert that Plaintiffs seek to bar on
qualification grounds under Rule 702.
The Rule stipulates that
a witness may be qualified to testify as an expert by virtue of
his “knowledge, skill, experience, training, or education.”
R.
EVID.
702.
The
Seventh
determination
into
whether
applied
due
regard
with
an
for
Circuit
expert
the
- 46 -
has
is
cautioned
qualified
specialization
FED.
that
“must
of
a
be
modern
science.”
609,
614
Dura Auto. Sys. of Ind., Inc. v. CTS Corp., 285 F.3d
(7th
Cir.
2002).
Accordingly,
“[a]
theoretical
economist, however able, would not be allowed to testify to the
findings of an econometric study conducted by another economist
if
he
lacked
expertise
in
econometrics
and
the
study
raised
questions that only an econometrician could answer.” Id.
Plaintiffs
assert
that
Davis’
proffered
opinion
in
this
antitrust case is such an instance of a theoretical economist
improperly opining on an econometrics question.
In fact, Davis
is not a theoretical economist; he is an applied economist, and
so
presumably
questions
More
that
versed
in
require
substantively,
econometrics
knowledge
Plaintiffs
of
and
able
econometric
have
not
to
answer
techniques.
pointed
to
any
particular part of Davis’ report that requires the application
of principles and methods beyond the purview of Davis’ extensive
education,
Instead,
experience,
Plaintiffs
and
attendant
emphasize
that
skill
Davis’
or
primary
knowledge.
area
of
research is neither “antitrust nor industrial organization” but
macroeconomics.
This may be true, but Davis has taught and
published in the field of industrial organization and he has
consulted on antitrust matters – something Plaintiffs do not
dispute.
Being
an
expert
in
- 47 -
the
additional
field
of
macroeconomics does not detract from his qualifications to opine
on industrial organization or antitrust matters.
Putting labels of economic sub-specialties aside, the Court
further finds little merit in the examples Plaintiffs bring to
demonstrate that Davis does not understand “modern industrial
organization and antitrust economics.”
15.
See, ECF No. 1100 at 11-
The Court does not think that Davis, a tenured professor of
economics at the University of Chicago, reveals in his report
that
he
misunderstands
basic
economics
maximization or monopoly pricing.
concepts
like
profit-
See, Va. Vermiculite, Ltd. v.
W.R. Grace & Co.-Conn, 98 F.Supp.2d 729, 732 (W.D. Va. 2000)
(“Though the necessary degrees, titles or credentials do not
govern by themselves the issue of qualifications, it cannot be
denied
that
requisite
these
accomplishments
knowledge,
and
thus,
aid
are
one
in
pertinent
obtaining
in
the
determining
whether an individual qualifies as an expert.”).
For
example,
Plaintiffs
insist
that
Davis
is
equating
“profit maximization” with behavior taken in “unilateral selfinterest.”
See, ECF No. 1100 at 11.
They then argue that
“whether firms yield higher profits has no bearing on whether
conduct undertaken by these firms during the Class Period is
also the product of collusion.” Id.
what Plaintiffs claim he says.
However, Davis does not say
He is not opining that a profit-
- 48 -
maximizing firm would never conspire – after all, it is because
collusions
have
the
potential
to
sometimes break the law to collude.
boost
profits
that
firms
Rather, he testifies that
some of the actions that Plaintiffs say point to conspiracy are
actually actions a non-conspiring firm takes to maximize its
profits, e.g., a firm acting independently may decide to close
an old, inefficient plant.
Davis calls such actions those taken
in a firm’s “unilateral self-interest” or actions for which the
firm has a business justification to pursue.
Court
can
tell,
there
is
nothing
flat
out
As far as the
wrong
in
Davis’
testimony to suggest that he is unqualified to offer the opinion
at hand.
Likewise, the Court does not find that Davis’ testimony
regarding
Defendants’
business
case law, as Plaintiffs claim.
justifications
conflicts
with
See, ECF No. 1100 at 24-25. It
is true that “price fixing is a per se violation of the Sherman
Act.”
In re High Fructose Corn Syrup Antitrust Litig., 295 F.3d
651, 654 (7th Cir. 2002).
Accordingly, “an admission by the
defendants that they agreed to fix their prices is all the proof
a plaintiff needs” to hold the defendants liable, regardless of
whether the defendants had a business reason to take the actions
they did. Id.
case.
However, there has been no such admission in this
Liability
has
not
been
- 49 -
established,
and
it
remains
relevant whether Defendants engaged in the challenged conduct
for legitimate reasons.
See, Reserve, 971 F.2d at 49 (noting
that in price-fixing cases, courts should inquire into “whether
the defendants have offered evidence tending to show that the
conduct
complained
of
is
[]
compatible
legitimate business activities”).
say,
they
closed
some
mills
with
the
defendants’
If Defendants can show that,
for
reasons
of
efficiency
(a
legitimate business justification), then they will have moved
the needle away from the inference they closed the mills only to
reduce capacity in furtherance of their price-fixing scheme.
In
other
undermine
words,
Harris’
Davis’
testimony
conclusions
and
Plaintiffs’ case for liability.
is
to
relevant
challenge
both
to
head-on
See, Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (holding
that because “conduct as consistent with permissible competition
as with illegal conspiracy does not, standing alone, support an
inference of antitrust conspiracy,” a plaintiff must “must show
that the inference of conspiracy is reasonable in light of the
competing inferences of independent action”).
Far from being
contrary to law, the testimony helps to establish the classic
alibi for defendants accused of antitrust violations.
Plaintiffs complain that Davis’ opinion is contrary to law
in
another
way.
In
a
section
labeled
- 50 -
“Some
Background
and
Economics
of
the
Containerboard
discusses
certain
business.
For example, he states that “[c]ontainerboard comes
background
Products
facts
concerning
in multiple grades and basis weights.”
¶ 59.
Industry,”
Davis
Defendants’
ECF No. 1140, Ex. 2
Plaintiffs contend that this flies in face of the Seventh
Circuit’s
opinion,
“[c]ontainerboard
which,
is
in
a
the
relevant
commodity,
compositions and weights.”
part,
sold
in
said
that
standardized
Kleen Prods., 831 F.3d at 923.
The Court declines to find that the juxtaposition of such
statements compels it to strike Davis’ testimony.
First, the
Court does not see how the statements found in Davis’ report and
the
Seventh
instance,
Circuit’s
the
opinion
Seventh
contradict
Circuit
each
recognized
other.
that
there
For
are
different, even if standardized, “compositions and weights” to
containerboard, and Davis likewise says that there are multiple
“grades
and
weights”
to
the
product
even
acknowledge that they are standardized.
if
he
does
not
Second, the Seventh
Circuit’s statements that Plaintiffs cite were not holdings of
law,
but
descriptions
of
the
facts
as
they
were
then
established.
Furthermore, the appellate court noted that it was
“not
that
saying”
any
of
the
facts
it
relied
certification “have been proven.” Id. at 928.
on
for
class
The Court takes
this to mean that Defendants are entitled to try to disprove
- 51 -
such facts at the merits stage of the litigation.
Third, in
light
later
of
the
rule
that
a
certified
class
may
be
decertified, see, FED. R. CIV. P. 23(c)(1), certification should
not operate as a final finding on facts relevant to the merits.
Lastly, Plaintiffs overreach in asking the Court to strike all
of Davis’ testimony on the basis of a few statements they find
objectionable.
This is especially bold since Plaintiffs do not
even argue that those statements were crucial to what is said in
the remainder of Davis’ 350-plus page report.
Plaintiffs also hurl the same charge at Davis’ testimony
that Defendants levy at Harris’ – namely that the expert relies
on his ipse dixit to support his opinion.
The Court thinks that
the two experts employ essentially the same methodology.
They
look at certain actions that Defendant firms took during the
Class
Period
and
explain
why
inconsistent
with
those
actions
or
interest.
Davis has an easier case to make because he does not
to
rule
out
the
possibility
that
unilateral
either
consistent
need
Defendants’
were
Defendants
self-
engaged
in
tacit collusion, something that may be in the Defendants’ selfinterest and is not illegal.
Even so, the Court does not find
either expert’s approach to be unreliable.
The soundness of
their conclusions, as well as how well they reason from the
facts to the conclusion, are matters left to the merits stage.
- 52 -
The
final
ground
for
exclusion
revolves around data-selection issues.
that
Plaintiffs
bring
For instance, Plaintiffs
complain about the fact that Davis uses RISI data, the same data
their experts used, when he has criticized the reliability of
such data.
The Court incorporates its reasoning from before for
declining to exclude the expert testimony on this basis.
supra,
Section
III.B.
The
Court
thus
denies
the
See,
motion
to
strike Davis’ testimony.
F.
Robert Topel
Like Davis, Robert Topel (“Topel”) offers the opinion that
the accused acted in a manner consistent with unilateral selfinterested
conduct.
behavior
and
inconsistent
with
conspiratorial
Topel’s testimony, however, is limited to Defendant
Westrock (“Westrock”).
Westrock stands in a unique position
because it was in bankruptcy during all but the last four months
of the Class Period.
The company emerged from bankruptcy on
June 30, 2010, the date of its bankruptcy discharge.
Due to the
effect of the discharge, Westrock can be held liable only if it
joined or rejoined the alleged conspiracy after this date.
Kleen Prods., 831 F.3d at 930.
See,
That is, Westrock can be held
liable only for its post-discharge conduct.
See, id.; Kleen
Prods., 306 F.R.D. at 607-09. (But, if found liable, Westrock
would be responsible for the entire amount of damages accrued
- 53 -
during the Class Period because of the rule of joint and several
liability.
629,
632
See, Paper Sys. v. Nippon Paper Indus. Co., 281 F.3d
(7th
Cir.
2002)
(“If
Nippon
Paper
was
among
those
conspirators, then it is responsible for the entire overcharge
of all five [defendant] manufacturers – and any direct purchaser
from
any
conspirator
can
collect
its
own
portion
of
damages
(that is, the damages attributable to its direct purchases) from
any conspirator.”) (emphasis in original).)
Westrock’s bankruptcy is important for the current Motion
because
Topel
examines
Westrock’s
conduct
pre-
and
post-
bankruptcy discharge in coming to the conclusion that Westrock
acted
in
a
discharge.
manner
indicative
of
independent
action
post-
As Topel states in one of his opinions, “there is no
evidence that Smurfit changed its behavior in any way after it
emerged from bankruptcy protection on June 30, 2010 that would
suggest
it
participated
in
the
alleged
conspiracy.”
No. 1211, Ex. 1 (Topel’s April 2016 Report) ¶ 10.
ECF
(Topel refers
to Westrock as Smurfit, while Plaintiffs in their briefs refer
to it as SSCC.
The Court presumes that the parties will have
settled on a single name by the time the case goes to trial, if
indeed
various
it
does.)
grounds,
Plaintiffs
including
challenge
Topel’s
qualifications,
testimony
reliability,
on
and
helpfulness in assisting the trier of fact to understand the
- 54 -
evidence.
Despite the different labels, however, Plaintiffs’
arguments boil down to the assertion that because Topel is not a
bankruptcy expert, he cannot reliably establish that Westrock’s
bankruptcy was a “clean” benchmark with which to compare the
company’s post-discharge conduct.
The Court finds Plaintiffs’ arguments unavailing as a basis
for
striking
Topel’s
of
the
testimony draw on facts unrelated to Westrock’s bankruptcy.
For
example,
any
Topel
testimony.
points
out
that
Substantial
Westrock
“did
parts
not
close
mills” and did not take “any economic downtime” during the postdischarge
period
–
behavior
inconsistent
with
the
economic
prediction that the company would reduce capacity or restrict
supply once it joined the alleged conspiracy.
¶¶ 66-68, 80-84.
See, ECF No. 1211
Similarly, Topel opines that when Westrock
closed a mill during the period in which it was in bankruptcy,
it “considered all the factors that I, as an economist, would
expect a firm acting in its unilateral interest to consider:
the cost of the closed mills relative to the cost of Smurfit’s
other mills; the lost profits on foregone sale, if any; the
fixed
cost
conditions.”
savings;
and
expected
future
demand
and
cost
See, id. ¶¶ 52-63.
In short, Topel gives economic reasons for why he thinks
Westrock’s behavior was inconsistent with it being part of the
- 55 -
alleged cartel during both the pre- and post-discharge period.
Crucially, these reasons do not depend on any fact specific to
the bankruptcy context.
As such, that Topel is not a bankruptcy
expert is immaterial to his ability or qualifications to give
such testimony.
See, Shirley Carroll v. Otis Elevator Co., 896
F.2d 210, 212 (7th Cir. 1990) (“Whether a witness is qualified
as an expert can only be determined by comparing the area in
which the witness has superior knowledge, skill, experience, or
education with the subject matter of the witness’s testimony.”).
It
is
also
immaterial
to
the
reliability
of
his
opinion.
Indeed, what Topel is doing – looking at certain conduct to see
if it more likely indicates cartelized behavior or unilateral
interest – is sufficiently similar to what Harris and Davis do
that the Court feels it need not repeat itself as to why his
methodology is reliable.
See, supra, Section III.D & E.
This is not to deny that Topel’s analysis also makes use of
constraints
on
Westrock’s
behavior
that
are
unique
to
bankruptcy.
For instance, Topel opines that “the oversight of
the bankruptcy court and the unsecured creditors’ committee make
it highly unlikely that Smurfit participated in a cartel during
the bankruptcy period.”
See, ECF No. 1211 ¶¶ 47-51.
Plaintiffs
argue that Topel may not give such opinions because he has no
understanding
of
the
bankruptcy
process.
- 56 -
As
an
example
to
illustrate their point, Plaintiffs point to Topel’s statement
that
the
unsecured
creditors’
committee
(“UCC”)
Smurfit’s decision to reduce its capacity.” Id. ¶ 47.
“approved
This is
false, Plaintiffs assert, because Smurfit “retained control over
all of its business decisions” and so had no need for such
approval from the UCC.
See, ECF No. 1103 at 8-9.
The parties appear to be splitting hairs.
dispute
that
Westrock
needed
the
UCC
and
They do not
various
oversight
personnel to approve its plan of reorganization, without which
it
could
not
be
discharged
from
bankruptcy.
Accordingly,
Westrock presumably took the views of these supervisory entities
into
account
when
it
made
its
business
decisions.
Whether
Westrock’s decisions, made in the face of such constraints and
disclosed to the relevant authorities, can be said to have been
“approved” by them is a dispute that the parties can air during
cross-examinations
or
presentation
of
rebuttal
testimonies.
See, Smith, 215 F.3d at 718-19; Miller, 2015 U.S. Dist. LEXIS
147843 at *11 (“The law entrusts the powers of cross-examination
to highlight lapses in logic and good sense.”).
Such a dispute
is not a reason to keep Topel from taking the stand.
Moreover, even if Topel is wrong in some details as to how
the bankruptcy process works, then still that does not render
his testimony inadmissible.
Westrock’s bankruptcy is relevant
- 57 -
to Topel’s testimony insofar as it allows him to infer that the
scrutiny the company faced in bankruptcy prevented it from being
a part of the conspiracy during that time.
As such, says Topel,
decisions that the company made while in bankruptcy, and carried
out post-discharge, are scrubbed of the conspiratorial taint.
If Topel is wrong and the company was not as constrained as he
asserts, then this makes his testimony “less powerful” but does
not affect its admissibility.
See, Stollings, 725 F.3d at 768;
see also, In re Pool Prods. Distrib. Mkt. Antitrust Litig., 166
F.Supp.3d 654, 678-80 (E.D. La. 2016) (rejecting the argument
that
if
a
benchmark
completely
clean,
unreliable”).
the
period
[then
(here,
the]
the
analysis
bankruptcy)
should
be
“is
excluded
not
as
Simply put, because the Court does not examine
“soundness
of
the
factual
underpinnings
of
the
expert’s
analysis and the correctness of the expert’s conclusions based
on
that
analysis,”
it
must
accept
that
some
of
the
facts
underpinning the expert’s testimony may be wrong but still allow
the testimony.
Smith, 215 F.3d at 718.
For these reasons, the Court declines to bar Topel from
testifying.
G.
John Huber
John Huber (“Huber”) is the first of Defendants’ experts to
opine
on
a
relatively
narrow
issue
- 58 -
in
the
case
–
whether
Defendants used their public statements as a means to signal
“confidential
competitive
information”
furtherance of the alleged conspiracy.
such
confidential
information
to
each
other
in
According to Plaintiffs,
includes
the
Defendants’
“production, capacity, downtime, inventory, pricing and business
strategies,” all of which Defendants revealed in their public
filings, earning calls, and other industry events.
at 1.
made
ECF No. 1109
Plaintiffs further allege that such communications were
for
the
improper
purpose
of
coordinating
Defendants’
actions and facilitating the conspiracy.
Huber seeks to rebut this allegation.
He argues that the
disclosures serve a legitimate purpose and so provides support
for the inference that they were not done for the surreptitious
reason of leaking information to alleged co-conspirators.
In
particular, Huber opines that Defendants’ formal public filings
with
the
Securities
Exchange
Commission
(“SEC”)
and
their
informal, public and non-public (invitees only) communications
with investors and industry analysts were either required by the
SEC or expected by the agency.
Huber bases this opinion on his
review of Defendants’ public disclosures and an assessment of
how
the
securities
those
content
laws,
rules,
and
of
SEC
its
those
disclosures
rules,
the
expectations
- 59 -
fits
agency’s
for
the
with
specific
interpretations
entities
that
of
it
oversees.
In
performing
this
analysis,
Huber
relies
on
his
experience, which includes more than a decade working as an SEC
attorney,
25
regulatory
years
and
in
private
compliance
practice
issues,
advising
and
another
clients
five
as
on
a
consultant in the area of corporate public disclosure.
Plaintiffs
fronts
of
attack
Huber’s
helpfulness,
opinion
on
the
qualifications,
now-familiar
and
reliability.
Plaintiffs’ most persuasive argument may be that, even assuming
what Huber says is true, he cannot dispel the possibility that
Defendants
used
the
SEC’s
requirements
and
either pretext or post hoc rationalization.
expectations
as
That is, even if
the disclosed information was arguably required or expected by
the
SEC,
that
was
not
why
Defendants
actually
released
it.
Plaintiffs claim that if Defendants want to argue about their
motivation for making the disclosures, they should call to the
stand their own employees, the people who made the disclosures,
and not rely on Huber’s testimony.
Plaintiffs’ argument is beguiling.
legal merit.
For one, it has some
See, Jamsports, 2005 U.S. Dist. LEXIS 59 at *33
(“[T]he relevant issue for purposes of antitrust liability is
whether
[the
defendant]
actually
engaged
in
the
challenged
conduct for legitimate reasons, not whether, after the fact, the
conduct can, in hindsight, be rationalized in some way.”).
- 60 -
For
another,
it
has
some
factual
basis.
Huber
indeed
does
not
testify to Defendants’ actual motivation in making a disclosure
(something which likely would be impermissible anyway).
id.
See,
Instead, he says that, from a “hindsight” “after the fact”
review, he thinks the disclosures were proper.
Upon closer inspection, however, Plaintiffs’ argument must
fail.
Despite
what
provide
a
for
basis
Plaintiffs
inferring
say,
that
Huber’s
testimony
Defendants
are
not
does
using
legitimate business reasons as ad hoc rationalizations for their
public statements.
In formulating his opinion, Huber reviews
both disclosures that are suspect – that is, those made during
the Class Period and touched on containerboard products – and
those that are not – i.e., those involving non-containerboard
products
or
that
were
made
outside
the
Class
Period.
He
concludes that these disclosures were similar to each other.
See, e.g., ECF No. 1109, Ex. 1 (Huber’s June 2015 Report) ¶ 4
(“SSCC’s containerboard disclosures in Forms 10-K and 10-Q were
similar
to
disclosures
containerboard
segments
made
in
during
the
SSCC’s
Class
comparable
Period.”).
nonThus,
insofar as Defendants only had legitimate reasons to announce
one
set
of
statements,
they
likely
did
not
make
the
other,
similar set of statements for inappropriate reasons, using the
SEC’s requirements only as a cover.
- 61 -
Furthermore,
that
Defendants’
employees
may
not render Huber’s expert testimony irrelevant.
testify
does
Instead, the
lay witnesses’ and expert’s evidence may complement each other.
Suppose that Defendants’ employees testify that they made public
certain information to comply with the law.
In such a case,
Huber’s testimony bolsters the employees’ credibility by showing
that
the
disclosures
did,
in
fact,
comply
securities laws, SEC rules, or expectations.
a
complicated
subject,
and
the
expert
with
specific
Securities law is
testimony
here
is
appropriate because it does not simply “regurgitate facts . . .
that are readily understandable by an average person.”
Aponte
v. City of Chi., No. 09-CV-8082, 2011 U.S. Dist. LEXIS 52130, at
*6-8 (N.D. Ill. May 12, 2011).
That is, it is not the case that
after Defendants’ employees testify, the jury can simply take a
look
at
the
communications,
the
securities
regulations,
and
decide whether the employees likely told the truth because the
communications really did or did not satisfy the regulations.
Cf., SEC v. Lipson, 46 F.Supp.2d 758, 761, 764 (N.D. Ill. 1998)
(finding
that
an
expert’s
proffered
testimony
would
not
be
helpful when a fact witness “will testify to fundamentally the
same points that are the subject of Mr. Perks’ [the expert’s]
opinion” and “Defendant has not established that the financial
evidence
he
[the
fact
witness]
- 62 -
will
testify
about
is
so
complicated
that
the
jury
will
be
unable
to
understand
it
without repetition by Mr. Perks”).
Plaintiffs
also
object
that
impermissible legal conclusions.
Huber’s
opinions
are
They base this objection on
the principle that “expert testimony as to legal conclusions
that will determine the outcome of the case is inadmissible.”
Good Shepherd Manor Found., Inc. v. City of Momence, 323 F.3d
557, 564 (7th Cir. 2003).
But the legal conclusion that Huber
here offers – that regarding the propriety of Defendants’ public
communications – is not the kind of legal conclusion “that will
determine the outcome of the case,” except through the indirect
channel of weakening Plaintiffs’ prima facie case.
See, Mkt.
Force, Inc. v. Wauwatosa Realty Co., 906 F.2d 1167, 1171, 1174
(7th Cir. 1990) (articulating a two-part test that has become
the standard for deciding antitrust cases at the merits stage
and holding that “[a] defendant is entitled to summary judgment
when
it
‘provides
interpretation
of
conspiracy’”).
conspiracy,
that
a
plausible
its
Huber
and
conduct
is
not
Defendants
justifiable
that
rebuts
opining
that
engaged
in
alternative
the
there
lawful
alleged
was
no
conscious
parallelism, or otherwise giving an opinion on any matter for
which the Court is likely to give an instruction as part of its
duty to instruct the jury.
Cf., Dowe v. AMTRAK, No. 01 C 5808,
- 63 -
2004 U.S. Dist. LEXIS 7233, at *5-6 (N.D. Ill. Apr. 26, 2004)
(“An expert cannot testify about legal issues on which the court
will instruct the jury.”) (citing United States v. Sinclair, 74
F.3d 753, 757 n.1 (7th Cir. 1996)).
Huber’s
testimony
thus
excluded in Good Shepherd.
is
distinguishable
from
that
In that case, the plaintiff had
brought suit alleging violations of the Fair Housing Amendment
Act (“FHAA”).
See, Good Shepherd, 323 F.3d at 560.
The Seventh
Circuit affirmed the lower court’s decision to bar the expert
when
her
matters
proffered
and
made
testimony
up
“was
solely
of
largely
legal
on
purely
conclusions,
legal
such
conclusions that the city’s actions violated the FHAA.”
564.
In
contrast,
conclusion
as
to
Huber
whether
here
offers
Defendants
Section 1 of the Sherman Act.
no
did
Id. at
bottom-line,
or
did
not
as
legal
violate
In fact, as Plaintiffs readily
admit, he does not testify to an antitrust issue at all.
Yet Plaintiffs also complain that Huber is not an antitrust
expert, asserting that this makes him unqualified to testify in
this case.
However, Huber does not need antitrust expertise to
offer the opinion that he does.
At bottom, Huber’s testimony is
relevant
it
in
this
case
because
helps
Defendants
“rebut
an
allegation of conspiracy by showing a plausible and justifiable
reason
for
[their]
conduct
that
- 64 -
is
consistent
with
proper
business practice.”
Mkt. Force, 906 F.2d at 1171 (quoting with
approval from Richards v. Neilsen Freight Lines, 810 F.2d 898,
902 (9th Cir. 1987)).
In this particular instance, the “proper
business practice” is making disclosures that comply with the
SEC’s
rules
or
expectations.
Given
the
subject
matter
of
Huber’s testimony and his experience in the areas of securities
law
and
corporate
public
disclosures,
the
qualified to give the opinion at hand.
Court
finds
him
See, Shirley, 896 F.2d
at 212; Crawford Supply Grp., Inc. v. Bank of Am., N.A., No. 09
C
2513,
2011
U.S.
Dist.
LEXIS
117670,
at
*7-8
(N.D.
Ill.
Oct. 12, 2011) (“There can be no doubt that ‘an expert might
draw a conclusion from a set of observations based on extensive
and specialized experience.’”) (quoting Kumho, 526 U.S. at 156).
Likewise,
Plaintiffs’
reasons
for
challenging
reliability of Huber’s methodology are unavailing.
to
arguments
about
the
quality
of
accuracy of the generated outputs.
exclusion.
the
data
the
They amount
inputs
and
the
Neither is a ground for
See, Manpower, 732 F.3d at 806; Daubert, 509 U.S. at
594-95 (“The focus [of a Rule 702 inquiry] must be solely on
principles and methodology, not on the conclusions that they
generate.”).
that
Huber
The arguments regarding inputs – for instance,
did
not
consider
Defendants’
internal
antitrust
policies – are analogous to charges that an expert used too few
- 65 -
data
points
or
unreliable
data
sources
instead of Defendant-provided data).
(e.g.,
RISI
numbers
Similarly, the arguments
regarding outputs – for instance, that Huber’s conclusions are
inconsistent
estimated
with
each
other
coefficients
–
having
are
the
like
arguments
signs.
wrong
about
The
the
Court
rejected such arguments as a proper basis for striking expert
evidence
previously,
and
it
rejects
them
now.
See,
supra,
Section III. A and B.
H.
Mark Ready
On the theory that its status as a privately held company
distinguishes
Mark
Ready
it
from
(“Ready”)
other
to
Defendants,
examine
its
Georgia-Pacific
own
public
hired
disclosures.
Ready addresses a specific allegation Plaintiffs make, namely
that
“Defendants
coordinated
conspiracy
through
securities
analysts
analyst
formerly
various
and
and
furthered
primarily
employed
by
‘signaling’ in earnings calls.”
alleged
including
means,
the
(1)
through
Mark
Deutsche
Wilde,
Bank;
a
securities
and
(2)
ECF No. 1110, Ex. 1 ¶ 7.
by
Ready
concludes that Plaintiffs have not “identified any communication
between
Georgia-Pacific
and
a
securities
analyst”
nor
“any
statement by Georgia-Pacific” or the other Defendants “on an
earnings call that is inconsistent with normal behavior observed
in public securities markets.”
Id. ¶ 8.
- 66 -
As
far
arriving
takes
at
the
the
these
Court
can
conclusions
tell,
is
communications
indicative
phrases
as
that
of
that
capacity,”
quite
signaling
Defendants
purportedly
and
uses
phrases
to
have
each
the
methodology
straightforward.
Plaintiffs
contain
these
Ready’s
alleged
other,
signals,
as
search
He
to
picks
e.g.,
terms
for
be
out
“reduce
to
locate
other analyst reports and earnings call transcripts that contain
the same terms.
Ready finds that there are numerous reports and
calls fitting the search parameters that are not attributable to
Georgia-Pacific or the other Defendants.
these
returned
results
and
determines
He reads a sample of
that
they
are
indeed
similar in content to those communications that Plaintiffs have
said
indicated
collusive
behavior.
Ready
concludes
that,
because many other companies talk about the topics covered by
the search terms, that Georgia-Pacific and other Defendants did
the same is not suggestive of wrongdoing.
Of course, Ready does not quite phrase his conclusions in
the way the Court just did.
earnings
calls
analysts
as
markets.”
and
“normal
Instead, he describes Defendants’
Georgia-Pacific’s
behavior
communications
observed
ECF No. 1110, Ex. 1 ¶ 8.
in
public
with
the
securities
Plaintiffs object that
Ready never defined “normal,” and what he calls “normal” appears
to be based only on his subjective views.
- 67 -
The
easily
because
Court
thinks
remedied.
his
search
that
Ready
such
criticism
calls
uncovers
so
the
is
well
taken
communications
many
instances
but
“normal”
where
the
key
terms from those communications appear that discussions on those
topics do not seem to indicate anything out of the ordinary.
Ready’s judgment is thus based on a quantitative count – e.g.,
“there
were
14,935
analyst
reports
that
included
the
words
‘capacity reduction’ or similar phrases” – not his ineffable
subjective belief or speculation.
ECF No. 1110, Ex. 1 ¶ 52;
cf., Metavante, 619 F.3d at 761 (“Nor may the testimony be based
on subjective belief or speculation.”).
judgment,
precise
and
quantitative
But he must convey that
in
nature,
with
some
precision, and “normal” appears too fraught with subjectivity to
do the job.
The Court thinks that what Ready means by “normal”
is something like “frequently occurring,” “commonly found,” or
simply, “common,” but with this guidance, it will leave him to
choose the appropriate verbiage.
Assuming that he does so, the
Court believes that his testimony will not run afoul of the
rules governing the admissibility of expert evidence.
Plaintiffs
contend
otherwise.
They
raise
a
number
of
arguments, some of which were bandied about in the motion to bar
Huber’s testimony as well.
experts
cherry-picked
These include the charge that the
facts
to
- 68 -
support
their
opinions.
Specifically, Plaintiffs say that Ready, like Huber, failed to
consider
things
like
Defendants’
own
internal
antitrust
policies, the Federal Trade Commission (“FTC”) consent decrees,
and other documents relating to the limits that antitrust law
places
on
corporate
disclosures.
Plaintiffs
claim
that
the
exclusion of such evidence amounts to “a selective use of facts
[that] fails to satisfy the scientific method and Daubert,” and
so urge the Court to strike Ready’s and Huber’s testimonies.
Barber v. United Airlines, Inc., 17 F. App’x 433, 437 (7th Cir.
2001).
The Court is unpersuaded by Plaintiffs’ argument, resting,
as it does, on inapposite authorities.
For example, Plaintiffs
cite Barber, but the facts from that case are much different
from those found here.
In Barber, the Seventh Circuit found
that it was not error for the district court to have excluded
the expert testimony when the expert:
(1) “relied on weather
data,
that
but
[]
rejected
weather
data
contradicted
his
opinion”; (2) “did not present any other data which supported
his opinion”; and (3) “did not adequately explain why he ignored
certain facts and data, while accepting others.”
Barber, 17 F.
App’x at 437 (internal quotation marks omitted).
In contrast to
Barber, here Ready and Topel have spoken at length as to the
“data
or
information”
that
they
- 69 -
draw
on
in
their
reports.
Although both churned through reams of documents, they do not
opine on antitrust matters and so do not consider any antitrust
evidence.
They explain that they are not antitrust experts, are
not giving opinions on antitrust matters, and so do not rely
(and should not have relied) on antitrust documents.
In short,
Ready and Huber (1) did not cherry-pick the antitrust records to
favor their conclusions, selecting some and ignoring others; (2)
did present many data sources supporting their opinions; and (3)
adequately explained why they did not take account of certain
documents.
Likewise,
LeClercq
Plaintiffs’ position.
v.
Lockformer
Co.
does
not
support
In LeClercq, this Court only faulted the
expert for ignoring evidence that was “clearly material.”
See,
LeClercq v. Lockformer Co., 2005 U.S. Dist. LEXIS 7602, at *1415 (N.D. Ill. Apr. 28, 2005) (emphasis in original).
As the
Court stated, the expert’s “failure to discuss the import of, or
even mention, these material facts in his reports amounts to
‘cherry-picking
the
facts’”.
Id.
barred the expert from testifying.
is
much
outcome.
different
Topel
from
and
LeClercq
Ready
here
On
this
basis,
the
Court
It is clear that this case
and
are
calls
not
for
a
different
giving
antitrust
opinions, so it can hardly be said that the antitrust evidence
- 70 -
is material to their testimonies.
The Court thus sees no reason
to strike the proffered evidence.
Plaintiffs also raise a host of other arguments specific to
Ready.
work
The Court swiftly dispatches of them.
history
with
the
SEC,
his
research
Based on Ready’s
record,
and
his
involvement in training analysts, the Court finds that he is
qualified to give the opinion at hand.
See, Smith, 215 F.3d at
718 (stating that the trial court is to consider an expert’s
“full range” of experience when assessing his qualifications).
It further finds that Ready’s testimony would be helpful to the
jury
to
evaluate
Plaintiffs’
allegations
regarding
the
impropriety of Defendants’ communications.
Finally, the Court
determines that Ready’s method is reliable.
Plaintiffs complain
that Ready (1) does not adequately explain how he comes to use
the search terms that he does, (2) should have used different
search terms, and (3) cannot guarantee that his sample from the
search results is random.
These arguments, however, go to the
weight that a factfinder should give to Ready’s opinion rather
than its reliability.
See, Apple, Inc. v. Motorola Mobility,
Inc., No. 11-cv-178-bbc, 2012 U.S. Dist. LEXIS 181854, at *71-72
(W.D. Wis. Oct. 29, 2012) (denying a party’s Daubert motion when
it argued that the expert “should have looked harder and used
different search terms”).
- 71 -
Given these findings, the Court denies the Motion to Strike
Ready’s testimony.
I.
Lawrence
rebut
Huber’s
Lawrence Cunningham
Cunningham’s
and
Ready’s
(“Cunningham”)
opinion
testimonies.
serves
Defendants,
to
however,
only object to the portion of Cunningham’s report that calls
Huber’s
opinion
into
question.
Cunningham
examines
the
documents that Plaintiffs argue that Huber (and Ready) should
have considered.
These include Defendants’ internal antitrust
policies,
5
brought
Section
under
that
of
the
FTC
section,
Act,
and
“securities and antitrust harmony.”
FTC
enforcement
various
actions
publications
on
See, ECF No. 1097, Ex. 1
(Cunningham’s December 2016 Report) ¶¶ 37-58.
After examining
these documents, Cunningham concludes that Huber’s opinion is
fatally flawed as he did not account for the “vital limits” that
such antitrust policies put on companies’ public disclosures.
Cunningham
thus
attacks
Huber
for
failing
“to
consider
the
antitrust implications” of Defendants’ disclosures, calling this
an indefensible omission given the “central importance” that the
“intersection
of
securities
disclosure practice.”
Given
securities
that
and
and
antitrust
laws
[play]
in
intersection
of
Id. ¶ 24.
Cunningham
antitrust
opines
laws,
one
- 72 -
on
would
the
expect
that
he
has
expertise in both areas.
an antitrust expert.
Yet, Cunningham admits that he is not
In particular, Cunningham testified to the
following during his deposition:
Q:
A:
Q:
A:
Q:
A:
Do you consider yourself an expert on conspiracy
law?
No.
The Sherman Act?
No.
The FTC Act?
No.
ECF No. 1097, Ex. 3 (Cunningham’s Dep.) 84:6-12; see also, id.
at 14:3-9 (“Q:
You’ve never authored an article or book solely
on antitrust issues or antitrust law?
A:
No.
Q:
You’ve never
been qualified by a court as an expert on antitrust law?
No.”); 28:7-10 (“Q:
A:
In the five years you spent at BC Law
School, how many times did you teach a full credit course on
antitrust law? A:
None.”); 28:15-17(“Q:
In the five years you
spent at GW, how many times have you taught a full credit course
on antitrust law?
A:
None.”).
Given such an admission, the Court entertains serious doubt
about Cunningham’s qualifications to offer the conclusion that
antitrust law limits the disclosures that Defendants may make
(and that Huber should have accounted for those limits).
The
Court’s reservations are only compounded when it delves into the
details
of
Cunningham’s
purported
expertise.
Cunningham
has
opined that “[t]he Huber Report . . . fails to consider vital
- 73 -
limits
on
the
securities
law
anticompetitive disclosures.”
framework
that
restrict
ECF No. 1097, Ex. 1 ¶ 12.
Yet,
when pressed on how he became an expert qualified to give such a
view, Cunningham said, “I’ve become an expert as a result of
this case, this research.”
(emphasis
added).
ECF No. 1097, Ex. 3 at 88:18-24
Cunningham’s
admission
that
he
did
not
possess expertise on the issue before being retained for “this
case” jibes with the following exchange:
Q:
A:
Q:
Have you ever been qualified as an expert
previously to offer an opinion on these vital
limits?
No.
Have you ever written article on the topic of
these vital limits?
No.
Have you ever lectured on the topic of these
vital limits?
No.
Have you ever discussed these vital limits in any
law school class that you’ve given?
No.
A:
Q:
A:
Q:
A:
Id. at 88:25-89:14; see also, id. at 40:19-23 (“Q:
lectured
on
how
antitrust
law
constrains
Have you
the
disclosures that public companies may legally make?
scope
A:
of
No.”).
Faced with such damaging deposition testimony, Plaintiffs
choose to sidestep the issue altogether.
in
their
contention
context,
briefs
that
to
address
Cunningham’s
improperly
portrayed,
these
They offer no response
statements,
statements
or
- 74 -
should
making
were
taken
be
treated
no
out
of
as
of
limited significance. Instead, Plaintiffs emphasize Cunningham’s
time in private practice, which involved dealing with securities
law and corporate disclosures.
The Court notes that Cunningham
has six years of full-time practice experience in total, that he
has let his law license lapse for about a decade now, and that
he last practiced law 22 years ago.
10:20-12:3, 14:11-14.
See, ECF No. 1097, Ex. 3 at
All this said, the Court recognizes such
experience is still more than “a single hedging decision made
more
than
twenty
insufficient
strategies.
to
years
ago”
that
it
allow
the
expert
previously
to
comment
found
on
to
be
hedging
See, Vigortone Ag Prods. v. PM Ag Prods., No. 99 C
7049, 2004 U.S. Dist. LEXIS 456, at *10-11 (N.D. Ill. Jan. 14,
2004).
The problem is that Cunningham’s experience, even if long,
is not pertinent.
See, Sommerfield v. City of Chi., 254 F.R.D.
317, 319-20 (N.D. Ill. 2008) (“Just as proof of negligence in
the air will not do, neither will proof of expertise in the
abstract
[not
relevant
citation
omitted).
to
Not
the
even
task
at
Cunningham
hand].”)
contends
(internal
that
he
practiced antitrust law (except in a very indirect manner) while
employed as a lawyer.
Yet,
his
testimony
See, ECF No. 1097, Ex. 3 at 22:10-25:20.
is
that
antitrust
concerns
limit
disclosures, and for this he needs antitrust expertise.
- 75 -
public
Cf.,
supra, Section
experience
III.
and
E
that
(noting
both
“Plaintiffs
that
have
Davis
not
has
antitrust
pointed
to
any
particular part of Davis’ report that requires the application
of principles and methods beyond the purview of Davis’ extensive
education, experience, and attendant skill or knowledge”).
The Court also finds that the research Cunningham did in
preparation for this case does not qualify him as an antitrust
expert.
Cunningham testified that he read antitrust materials,
including the FTC opinions, after he was retained in the case.
But given that Cunningham had no antitrust expertise prior to
studying these materials, reading them does not endow him with
the requisite qualifications.
See, Charter Nat’l Bank & Tr. v.
Charter One Fin., No. 01 C 0905, 2001 U.S. Dist. LEXIS 13919, at
*17-20
(N.D.
Ill.
Aug.
31,
2001).
Indeed,
Cunningham
is
remarkably like the law professor in Charter Nat’l Bank whom the
court refused to qualify as an expert in trademark law.
judge there explained:
to
certify
him
as
an
“Professor Lichtman is asking this Court
expert
because
he
has
done
motivated lawyer could do, namely, study precedent.
special
or
unique
As the
perspective,
other
than
his
what
any
There is no
intelligence,
which Professor Lichtman can bring to the court.”
Id. at *19.
That is not enough, and the court concluded that it “cannot find
Professor Lichtman qualified as an expert.” Id.
- 76 -
Like Lichtman,
Cunningham
is
a
“motivated”
law
professor
with
impressive
academic credentials, but, like Lichtman, he is not qualified to
give the specific opinion he proffers.
In addition, the Court is not swayed by certain comments
tending
to
expertise
suggest
in
that
antitrust.
Cunningham
During
does
his
not
need
deposition,
to
have
Cunningham
stated that, “I’m not really making an opinion on antitrust law
or policy.”
ECF No. 1097, Ex. 3 at 106:21-107:6.
Similarly, he
testified that “[m]y opinion is about the securities disclosure
regime.
I’m
not
giving
opinions
disclose under antitrust laws.”
on
what’s
appropriate
Id. at 118:21-24.
to
But this is
unconvincing since the thrust of Cunningham’s testimony is that
antitrust law intersects with the “securities disclosure regime”
and so “vitally limits” what companies may lawfully disclose.
Given that Cunningham has an entire section in his report under
the heading of “antitrust and disclosure,” that he repeatedly
refers to the FTC (an antitrust authority), its statute, views,
and enforcement actions, and that he mentions no other limits on
disclosures
but
antitrust
(or
what
he
calls
anticompetitive)
concerns, it is impossible to see how Cunningham is “not really
making an opinion on antitrust law or policy.”
The Court thus strikes Cunningham’s testimony to the extent
that
testimony
relies
on
antitrust
- 77 -
expertise.
Accordingly,
Cunningham may not offer any testimony resting on Section 5 of
the
FTC
Act,
FTC
enforcement
actions
or
consent
decrees,
Defendants’ internal antitrust policies, or any other materials
specific to antitrust law.
However,
insofar
as
Cunningham’s
report
survives
this
excision, he may opine on matters requiring expertise only in
securities law.
While Cunningham’s background does not evidence
antitrust
expertise,
securities
issues.
Cunningham’s
activities,
it
does
The
Court
teaching,
that
securities law.
he
indicate
finds,
research,
is
and
qualified
to
familiarity
on
the
strength
other
give
with
an
of
professional
opinion
on
It further finds that, insofar as Cunningham
did not read Defendants’ disclosures in their entirety before
attacking Huber’s analysis, such a deficiency may be explored
during the adversarial process.
See, In re Urethane Antitrust
Litig., No. 04-1616-JWL, 2012 U.S. Dist. LEXIS 181506, at *34
(D.
Kan.
Dec.
21,
2012)
(“The
extent
to
which
Dr.
Solow
considered the entirety of the evidence in the case is a matter
for
cross-examination.”).
Likewise,
if
Cunningham
lacks
experience with specific securities regulations, e.g., Reg. FD
or Release 8350, then Defendants may use cross-examination to
point out how his conclusions are undermined by these rules.
- 78 -
The
Court
thus
grants
in
part
and
denies
in
part
ECF
No. 1096.
J.
Donald Skupsky
Donald Skupsky (“Skupsky”), like Mark Ready, is GeorgiaPacific’s expert.
upon
in
policy.
“as
this
Skupsky propounds on a topic so far untouched
opinion:
Georgia-Pacific’s
record
retention
The issue arises because Plaintiffs have alleged that
a
result
of
Defendants’
lawsuits . . . Defendants
have
exposure
taken
to
steps
prior
to
antitrust
conceal
their
anticompetitive communications,” including by adopting policies
that allowed for “short retention periods for email resulting in
destruction of any evidence of collusion.”
2-3.
Skupsky
aims
Georgia-Pacific’s
general
to
defuse
Records
practice.”
See,
this
Management
ECF
No.
See, ECF No. 1111 at
contention,
Program
1111,
opining
that
“complies
with
Ex.
1
(Skupsky’s
June 2015 Report) ¶ 5.
Before delving into Skupsky’s testimony, the Court reminds
Plaintiffs that, in keeping with its previous instruction, they
may not present evidence of prior antitrust lawsuits brought
against Defendants.
that
Plaintiffs
See, supra Section III. D.
speak
of
here
are
the
class
The lawsuits
action
In
re
Linerboard Antitrust Litig., 305 F.3d 145 (3d Cir. 2002), which
resulted
in
a
settlement,
and
a
- 79 -
consent
decree
entered
into
between
Westrock
and
the
FTC.
The
Court
believes
that
the
probative value of these lawsuits is substantially outweighed by
the
danger
of
undue
references to them.
argue
that
prejudice
to
Defendants
See, FED. R. EVID. 403.
Defendants
adopted
new
record
and
so
bars
Plaintiffs may still
management
policies
around 2005 to “minimize the risk of antitrust investigations
and
litigation,”
particular
as
lawsuits,
there
that
taking up these policies.
quotation
marks
omitted).
is
this
evidence,
was
independent
Defendants’
of
motivation
the
in
See, ECF No. 1263 at 2 (internal
But
Plaintiffs
may
not
present
evidence of specific litigation which Defendants settled with
private parties or regulatory agencies.
Plaintiffs fire a smorgasbord of objections at Skupsky’s
report.
The thrust of the criticism, however, is that while
Skupsky studied Georgia-Pacific’s records management program, he
did not do the kind of investigation that would allow him to
opine
on
whether
Georgia-Pacific
policies of that program.
actually
complied
with
the
In response, Georgia-Pacific freely
admits that its expert “offers no testimony about . . . whether
GP
[Georgia-Pacific]
retention policy.”
employees
complied
ECF No. 1203 at 3.
with
the
company’s
However, it points out
that this is immaterial as “Plaintiffs’ argument is that GP’s
- 80 -
document
retention
behavior.”
policy
is
itself
evidence
of
unlawful
Id. (emphasis in original).
The Court agrees.
Plaintiffs spend pages of their briefs
detailing how the policies that Defendants adopted allowed them
to “hide collusive conduct and thereby minimize their exposure
to lawsuits.”
ECF No. 1263 at 1.
For instance, they emphasize
that Defendants’ policies were based on a guideline promulgated
by an industry group, which was written to “reduce the risk of
antitrust litigation,” “avoid [the] appearance of wrongdoing,”
and
stop
the
“ammunition”
given
to
“federal
enforcement agencies and those plaintiffs’ lawyers.”
(internal quotation marks omitted).
and
state
Id. at 2
They deposed the industry
group’s general counsel, asked him specifically about the email
retention policy (which they call a deletion policy), and quoted
his answers in their briefs.
In sum, Plaintiffs assert that
they have “ampl[y]” demonstrated that the “document retention
policies were used to aid Defendants in concealing collusion.”
Id. at 3.
Given this line of attack, Plaintiffs are unconvincing when
they say that they take no issue with any Defendant’s record
retention
policies,
only
their
implementation.
This
is
especially so since by “implementation” Plaintiffs seem to mean
nothing
more
than
Defendants
- 81 -
adopted
the
policies
that
Plaintiffs have been complaining about.
puzzling:
it
be
if the policies are not suspect in some way, how can
that
policies
Plaintiffs’ argument is
their
were
adoption
innocuous,
is
how
somehow
could
suspicious?
they
“aid
If
Defendants
the
in
concealing collusion”?
Although Plaintiffs are entitled to make
the
that
separate
argument
however
suspect
were
Defendants’
formal policies, their employees engaged in even more egregious
behavior to “hide collusive conduct,” this does not detract from
the
fact
that
Plaintiffs
have
introduced
Defendants’
record
retention programs into dispute.
In sum, the Court rejects Plaintiffs’ claim that Skupsky’s
opinion is unreliable or unhelpful to the trier of fact because
it restricts itself to an evaluation of Georgia-Pacific’s record
keeping
policy.
Likewise,
the
Court
finds
no
merit
in
the
argument that Skupsky’s opinions impermissibly encroach upon the
Court’s duty to instruct the jury as to the law in this case.
Succinctly
put,
the
opinions
do
not
encompass
inadmissible
“legal conclusions that will determine the outcome of the case.”
See, Good Shepherd, 323 F.3d at 564; supra, Section III. G.
Rather,
they
professional
are
properly
standards
departures from them.”
and
limited
identifying
to
“describing
[that
there
sound
were
no]
West v. Waymire, 114 F.3d 646, 652 (7th
Cir. 1997) (internal quotation marks omitted).
- 82 -
Finally, the Court does not think that Skupsky’s report
conveys the impression that he is opining either on antitrust
issues (an area for which he has no expertise) or how GeorgiaPacific’s employees actually treated the record retention policy
(an area that he did not examine).
If the language of the
report is not as clear as Plaintiffs would like – e.g., that
when Skupsky says that “GP’s employees are required to identify
and
preserve
Official
Business
Records,”
he
means
only
that
“under the formal record retention policy, GP’s employees are
required to identify and preserve Official Business Records” –
then
Plaintiffs
testimony,
are
e.g.,
free
to
by
asking
make
whether
clear
Skupsky
the
can
limit
say
of
his
that
the
employees actually did as they were required to do.
For
these
reasons,
the
Motion
to
Bar
Skupsky
from
testifying is denied.
K.
The
Court
Plaintiffs’
has
Motion
saved
to
Dennis Carlton
the
bar
shortest
Dennis
disposition
Carlton
for
(“Carlton”)
last.
from
offering a specific opinion is unopposed and therefore granted.
See,
Scottsdale
Ins.
Co.
v.
City
of
Waukegan,
689
F.Supp.2d
1018, 1022 (N.D. Ill. 2010) (“A judge is not obliged to look
into the questions posed by Rule 702 when neither side either
requests or assists.”) (quoting United States v. Moore, 521 F.3d
- 83 -
681, 685 (7th Cir. 2008)) (internal quotation marks omitted).
Accordingly,
the
Court
bars
the
proffered
testimony
that
Plaintiffs’ impact analysis needs to account for the possibility
that class members’ overcharge may have been reduced by lower
prices paid in other transactions.
IV. CONCLUSION
For the reasons stated herein, the Court rules as follows:
1.
Denies the Daubert Motions found at ECF Nos. 1082,
1089, 1090, 1094, 1100, 1101, 1103, 1104, 1109, 1110, 1111, and
1125;
2.
Grants in part and denies in part the Motion at ECF
No. 1096; and
3.
Grants the remaining Motion at ECF No. 1105.
While the Court has admitted most of the expert opinions at
issue in the case, it cautions the parties that whether the
evidence admitted is sufficient to carry the case to trial is
another matter.
The Court will take up that issue when it rules
on the pending Motions for Summary Judgment.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: 5/31/2017
- 84 -
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