International Longshore and Warehouse Union (ILWU) et al v. ICTSI Oregon, Inc.
Filing
464
Opinion and Order - The parties' motions challenging expert testimony are resolved as stated in this Opinion and Order. The parties are directed jointly to contact the Courtroom Deputy within two weeks of this Opinion and Order to schedule the Rule 104 hearing including both Mr. Sickler and Mr. Ganda. Signed on 4/9/2019 by Judge Michael H. Simon. (mja)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
ICTSI OREGON, INC.,
Plaintiff,
v.
Case No. 3:12-cv-1058-SI
OPINION AND ORDER ON MOTIONS
CHALLENTING EXPERT
TESTIMONY
INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION;
INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION Local 8; and
INTERNATIONAL LONGSHORE
AND WAREHOUSE UNION Local 40,
Defendants.
Michael H. Simon, District Judge.
ICTSI Oregon, Inc. (“ICTSI”) brings the sole remaining claim in this case against
International Longshore and Warehouse Union (“ILWU”) and International Longshore and
Warehouse Union Local 8 (“Local 8”) (collectively, “ILWU Entities”).1 ICTSI alleges that the
ILWU Entities engaged in illegal secondary boycott activities, violating § 303 of the LaborManagement Relations Act, 29 U.S.C. § 187. Specifically, ICTSI alleges that the ILWU Entities
engaged in work stoppages, slowdowns, safety gimmicks, and other coercive actions with an
1
ICTSI has informed the Court that it will dismiss its claims against Local 40 with
prejudice.
PAGE 1 – OPINION AND ORDER
object of forcing and compelling ICTSI to pressure the Port of Portland (the “Port”) to reassign
or relinquish control to ICTSI over jobs at Terminal 6 of the Port that involve the plugging,
unplugging, and monitoring of refrigerated containers. This Opinion and Order addresses the
parties’ pretrial motions challenging the admissibility of expert testimony. For the reasons
discussed below, ICTSI’s motion to exclude the testimony of William Finlay is denied as moot,
the ILWU Entities’ motion to exclude the opinion of Nolan Gimpel is granted in part, the ILWU
Entities’ motion to exclude the opinion of Samuel Estreicher is denied as moot, and the Court
will hold a Rule 104 hearing to discuss the ILWU Entities’ motion to exclude the opinion of Jay
Sickler.
1.
Standards
The United States Court of Appeals for the Ninth Circuit has discussed the standard
under which a district court should consider the admissibility of expert testimony. See City of
Pomona v. SQM N. Am. Corp., 750 F.3d 1036 (9th Cir. 2014). As explained by the Ninth Circuit:
Rule 702 of the Federal Rules of Evidence provides that expert
opinion evidence is admissible if: (1) the witness is sufficiently
qualified as an expert by knowledge, skill, experience, training, or
education; (2) the scientific, technical, or other specialized
knowledge will help the trier of fact to understand the evidence or
to determine a fact in issue; (3) the testimony is based on sufficient
facts or data; (4) the testimony is the product of reliable principles
and methods; and (5) the expert has reliably applied the relevant
principles and methods to the facts of the case. Fed. R. Evid. 702.
Under Daubert and its progeny, including Daubert II [Daubert v.
Merrell Dow Pharms, Inc., 43 F.3d 1311 (9th Cir. 1995)], a district
court’s inquiry into admissibility is a flexible one. Alaska Rent-ACar, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969 (9th
Cir. 2013). In evaluating proffered expert testimony, the trial court
is “a gatekeeper, not a fact finder.” Primiano v. Cook, 598 F.3d
558, 565 (9th Cir. 2010) (citation and quotation marks omitted).
“[T]he trial court must assure that the expert testimony ‘both rests
on a reliable foundation and is relevant to the task at hand.’” Id.
at 564 (quoting Daubert, 509 U.S. at 597). “Expert opinion
PAGE 2 – OPINION AND ORDER
testimony is relevant if the knowledge underlying it has a valid
connection to the pertinent inquiry. And it is reliable if the
knowledge underlying it has a reliable basis in the knowledge and
experience of the relevant discipline.” Id. at 565 (citation and
internal quotation marks omitted). “Shaky but admissible evidence
is to be attacked by cross examination, contrary evidence, and
attention to the burden of proof, not exclusion.” Id. at 564 (citation
omitted). The judge is “supposed to screen the jury from unreliable
nonsense opinions, but not exclude opinions merely because they
are impeachable.” Alaska Rent-A-Car, 738 F.3d at 969. Simply
put, “[t]he district court is not tasked with deciding whether the
expert is right or wrong, just whether his testimony has substance
such that it would be helpful to a jury.” Id. at 969-70.
The test of reliability is flexible. Estate of Barabin v.
AstenJohnson, Inc., 740 F.3d 457, 463 (9th Cir. 2014) (en banc).
The court must assess the expert’s reasoning or methodology,
using as appropriate criteria such as testability, publication in peerreviewed literature, known or potential error rate, and general
acceptance. Id.; see also Primiano, 598 F.3d at 564. But these
factors are “meant to be helpful, not definitive, and the trial court
has discretion to decide how to test an expert’s reliability as well as
whether the testimony is reliable, based on the particular
circumstances of the particular case.” Primiano, 598 F.3d at 564
(citations and quotation marks omitted); see also Barabin, 740
F.3d at 463. The test “is not the correctness of the expert’s
conclusions but the soundness of his methodology,” and when an
expert meets the threshold established by Rule 702, the expert may
testify and the fact finder decides how much weight to give that
testimony. Primiano, 598 F.3d at 564-65. Challenges that go to the
weight of the evidence are within the province of a fact finder, not
a trial court judge. A district court should not make credibility
determinations that are reserved for the jury.
Id. at 1043-44 (case citation alterations added, remaining alterations in original).
“It is the proponent of the expert who has the burden of proving admissibility.” Lust v.
Merrell Dow Pharm., Inc., 89 F.3d 594, 598 (9th Cir. 1996). Admissibility of the expert’s
proposed testimony must be established by a preponderance of the evidence. See Daubert, 509
U.S. at 592 n.10 (citing Bourjaily v. United States, 483 U.S. 171, 175-76 (1987)). The party
presenting the expert must demonstrate that the expert’s findings are based on sound principles
and that they are capable of independent validation. Daubert II, 43 F.3d at 1316.
PAGE 3 – OPINION AND ORDER
2.
ICTSI’s Motion to Exclude Expert William Finlay
ICTSI moves to exclude the expert opinion and testimony of Dr. William Finlay
(“Finlay”) or, in the alternative, for a Rule 104 hearing. Dr. Finlay is a sociologist, who has spent
time studying the ILWU and has generally researched rude, dismissive, and aggressive (“RDA”)
behavior in the workplace. ICTSI argues that Dr. Finlay’s testimony regarding RDA at ICTSI,
safety issues at Terminal 6, and productivity at Terminal 6 should be excluded for three reasons:
(1) Dr. Finlay’s testimony is not helpful to the jury because it is irrelevant, offers nothing more
than a closing argument characterizing the testimony of others, and improperly vouches for the
testimony of others; (2) Dr. Finlay is not qualified to opine about port productivity; and
(3) Dr. Finlay’s opinions are unreliable because they are based on incomplete and skewed
information and are not based on any discernable methodology or reasonably connected to his
experience and expertise.
At oral argument, the ILWU Entities amended the proposed opinions to be given by
Dr. Finlay. As amended, the ILWU Entities offer the following opinion testimony by Dr. Finlay:
(1) based on the testimony of ICTSI employees, ICTSI engaged in RDA; (2) RDA demoralizes a
workforce; and (3) a demoralized workforce is less productive. The ILWU Entities represented
that Dr. Finlay will not testify that the workers at Terminal 6 were demoralized or were less
productive. The only testimony specific to ICTSI is that ICTSI engaged in RDA. Based on this
amended testimony, ICTSI stated that it no longer has objections to Dr. Finlay’s proffered
testimony. The Court agrees that this limited testimony by Dr. Finlay is admissible. Accordingly,
ICTSI’s motion regarding Dr. Finlay is denied as moot.
3.
The ILWU Entities’ Motion Challenging Nolan Gimpel
The ILWU Entities argue that two opinions of ICTSI’s expert witness Nolan Gimpel
should be excluded as speculative and inherently unreliable: (1) Terminal 6’s likely market
PAGE 4 – OPINION AND ORDER
capture rate but for the labor dispute; and (2) Terminal 6’s likely carrier service but for the labor
dispute. ICTSI does not dispute the first point and agrees to amend its expert witness statement
to delete that testimony. ICTSI, however, disputes the ILWU Entities’ second challenge to
Mr. Gimpel’s offered testimony.
The ILWU Entities argue that Mr. Gimpel’s opinion that it is “almost certain” that
another shipping carrier would have replaced Hanjin after it filed for bankruptcy but for the labor
dispute is too speculative and unreliable. The ILWU Entities argue that Mr. Gimpel based this
opinion on the fact that SM Lines took over Hanjin’s assets and absorbed some of Hanjin’s
management, and as a result SM Lines likely would have called on Terminal 6, which was a
profitable run for Hanjin. The ILWU Entities argue that because ICSTI never met with SM
Lines, either before or after Hanjin’s bankruptcy, Mr. Gimpel cannot assume without some
evidence that SM Lines would have been interested in calling on Terminal 6. The ILWU Entities
further argue that Mr. Gimpel ignores the testimony of ICTSI’s Chief Operating Officer, who
stated that carriers generally do not start calling on new ports “at the drop of a hat” and that it is a
“long, tenuous process that could take years.” The ILWU Entities additionally argue that
Mr. Gimpel ignores the many other reasons that carriers might not call at Terminal 6, particularly
at the same volume as Hanjin, including the Port’s location 100 miles up the Columbia River, the
generally “awful” state of the container industry, and that ICTSI’s management had alienated
potential carriers by charging higher rates and providing poor service.
ICTSI responds that this challenge is to factual underpinnings of Mr. Gimpel’s opinion
and as a “general rule” such challenges raise issues as “to the credibility of the testimony, not the
admissibility, and it is up to the opposing party to examine the factual basis for the opinion in
cross-examination.” Children’s Broad. Corp. v. Walt Disney Co., 357 F.3d 860, 865 (8th
PAGE 5 – OPINION AND ORDER
Cir. 2004). ICTSI also notes that § 187 “damages [do] not need to be proven with certainty.”
Int’l Longshore & Warehouse Union v. ICTSI Oregon, Inc., 2019 WL 267714, at *8 (D. Or. Jan.
17, 2019) (citing Mead v. Retail Clerks Int'l Ass'n, Local Union No. 839, AFL-CIO, 523 F.2d
1371, 1377 (9th Cir. 1975)). This is because:
while the damages may not be determined by mere speculation or
guess, it will be enough if the evidence show the extent of the
damages as a matter of just and reasonable inference, although the
result be only approximate. The wrongdoer is not entitled to
complain that they cannot be measured with the exactness and
precision that would be possible if the case, which he alone is
responsible for making, were otherwise.
Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 563 (1931) (discussing
damages in the antitrust context); see also Frito-Lay, Inc. v. Local Union No. 137, Int’l Bhd. of
Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 623 F.2d 1354, 1364 (9th Cir. 1980)
(applying the same damages standard in a case involving § 303 of the LMRA and § 8(b)(4) of
the NLRA).
ICTSI also argues that in addition to the ILWU Entities’ attacks going to credibility and
not admissibility, they are flawed for two further reasons. The first reason is that Mr. Gimpel’s
opinion that another carrier likely would have picked up substantially all of Hanjin’s volume at
Terminal 6 is not wholly based on the assumption that SM Lines would have been that carrier.
When asked why he concluded that another carrier would have replaced Hanjin post-bankruptcy,
Mr. Gimpel began with a discussion of SM Lines, but then added that he had no opinion as to
which specific carrier would have picked up Hanjin’s volume. Additionally, Mr. Gimpel’s report
provides several reasons why the volume would have been picked up, including because Portland
is a unique market with limited direct calls and a carrier desirous of a disproportionate market
share and operating smaller vessels would likely have had incentive to call on Terminal 6.
PAGE 6 – OPINION AND ORDER
Mr. Gimpel also noted that the demise of one carrier in a trade lane generally results in the
volume going to an existing carrier or a new carrier in that lane.
The second reason ICTSI argues the ILWU Entities’ challenge is flawed is because it is
based on the fact that ICTSI did not negotiate with SM Lines in the real world. ICTSI notes that
in the real world the labor dispute chased Hanjin out of Portland 17 months before Hanjin’s
bankruptcy and made Terminal 6 a toxic port. Damages, however, are assessed in the “but for”
world. In this world, asserts ICTSI, the labor dispute did not happen, Hanjin never stopped
calling on Portland, and Terminal 6 remained a unique port that was a profitable stop for Hanjin.
Thus when Hanjin filed for bankruptcy, in the but for world ICTSI would have had a lot of
options of carriers to negotiate with that in the real world ICTSI did not have in August 2016.
The ILWU Entities respond that unbid contracts are disallowed even in “but for” damages
scenarios, citing to George E. Hoffman & Sons, Inc. v. Int’l Bhd. of Teamsters, Chauffers,
Warehousemand & Helpers of Am., Local No. 627, 617 F.2d 1234, 1246 (7th Cir. 1980) and
Preferred Commc’ns, Inc. v. City of Los Angeles, 13 F.3d 1327, 1334 (9th Cir. 1994).
George E. Hoffman does not support the position argued by the ILWU Entities, but rather
holds the opposite. In that case, the Seventh Circuit noted that although damages need not be
proven to a certainty, the fact of damages still had to be proven and that it would not secondguess the factfinding of the district court based only on general assertions of error. 617 F.2d
at 1246-47. The court then noted that the district court allowed $41,860 of lost profits for
$200,000 in unbid contracts “based on a finding that if the strike had not occurred Hoffman
would have been able to do at least $200,000 of additional work that it did not bid.” Id. at 1247
(emphasis added). The district court disallowed damages from additional unbid work, finding
that “even in a prime work period of a prime season with much work available, it cannot fairly
PAGE 7 – OPINION AND ORDER
be assumed that a volume of work which was not bid would have been both bid and received in
such order as to keep the workload and facilities in reasonable balance for the whole season.” Id.
at 1246 (quoting the district court’s opinion). The Seventh Circuit stated that the employer “has
not persuaded us” that this finding was erroneous. Id. Notably, the union challenged the award of
damages for the portion of unbid work that was allowed, arguing it was inconsistent with
disallowing the remaining portion of unbid work. Id. at 1247. The Seventh Circuit found that
there was no inconsistency in the district court’s finding that the evidence supported that some,
but not all, of the unbid work would have been completed if the strike had not happened. Id. It
also held that that district court’s finding that the employer would have completed those unbid
contracts absent the strike was not clearly erroneous. Id.
Preferred Communications also does not directly support the ILWU Entities’ argument
and is distinguishable. As an initial matter, the case does not involve unfair labor practices.
Indeed, the Ninth Circuit expressly stated in discussing the plaintiff’s claim for “general and
presumed damages”:
If we could know with certainty that “but for” the city’s monopoly
policy Preferred would have received the franchise, presumed
damages might “approximate the harm that [Preferred] suffered
and thereby compensate for harms that may be impossible to
measure.” [Memphis Community School Dist. v. Stachura, 477
U.S. 299, 311 (1986)]. But we cannot know with certainty whether
Preferred would even have received the franchise; its claim for
“presumed damages” is just as speculative as its other damage
claims.
13 F.3d at 1334. Damages in unfair labor practices cases, however, need not be shown with
“certainty.”
Additionally, in discussing lost profit damages, the Ninth Circuit noted that it was “hotly”
contested whether the plaintiff had the technological or financial capacity to build and operate a
cable system if it was given the opportunity to compete for a franchise. Id. Thus, the court
PAGE 8 – OPINION AND ORDER
concluded that lost profit damages “all depend on the very speculative assumption that Preferred
would have built and operated a profitable cable franchise in South Central if it had only been
given the chance.” Id.
Moreover, the Court agrees that in a “but for” context in which there were no illegal
secondary boycott activities, the reality of Terminal 6 as of August 2016 would likely have been
quite different. Expecting ICTSI to behave in “real life” August 2016 the same as in “but for”
August 2016, or limiting ICTSI’s damages claims only to carriers it negotiated or contracted
with under the “real life” conditions renders the “but for” aspect illusory. That said, ICTSI must
still provide evidence of its damages, and the ILWU Entities can challenge the persuasiveness of
that evidence.
ICTSI is not precluded from arguing or providing evidence that it would have been able
to replace Hanjin’s volume if the illegal secondary boycott activities had not occurred. The
ILWU Entities’ challenge to Mr. Gimpel’s opinions on this topic go to their weight, not their
admissibility. The ILWU Entities’ motion in this regard is denied. The unopposed portion
relating to market capture rate, however, is granted.
4.
The ILWU Entities’ Motion Challenging Jay Sickler
The ILWU Entities argue that Mr. Sickler’s testimony should be excluded under
Rule 702 and Daubert because his testimony is speculative and relies on assumptions that bear
no relationship to the undisputed history of Terminal 6. The ILWU Entities assert five reasons
that Mr. Sickler’s testimony requires exclusion: (1) he offers three different damages amounts,2
asking the jury to pick one, demonstrating that his testimony is inherently speculative; (2) he
2
After the motion was filed, ICTSI conceded the ILWU Entities’ argument relating
the 75 percent capture rate, which eliminates one of Mr. Sickler’s damages amounts, leaving
only two.
PAGE 9 – OPINION AND ORDER
assumes all of ICTSI’s losses are because of the unlawful labor conduct without considering any
other reason, and the evidence shows that there were lawful reasons after August 13, 2013 for
ILWU members’ conduct and that there were other reasons for ICTSI’s damages; (3) he assumes
that ICTSI would have made up the loss of Hanjin, relying on Mr. Gimpel’s improper opinion;
(4) his first damages number, $188,985,000, should be excluded because it assumes a market
capture rate of 75 percent each year starting in 2014; and (5) his second damages number,
$135,722,000, should be excluded because it relies on self-serving and unverified 2011
projections of ICTSI employee Elvis Ganda about volumes he expected ICTSI to reach. Because
ICTSI does not dispute the market capture rate argument, it concedes the ILWU Entities’ fourth
point, but disputes the rest of this motion.
a.
Multiple damages calculations
Regarding the ILWU Entities’ first point, the fact that Mr. Sickler will be offering (now)
two different damages figures based on two different models or sets of assumptions does not
render his opinion unreasonably speculative or unhelpful to the jury. John Morrell & Co. v.
Local Union 304A of United Food & Commercial Workers, AFL-CIO, 913 F.2d 544, 559 (8th
Cir. 1990) (“It was not error to permit the expert to discuss eight models of damage calculations
with a range of estimates from $20 million to $31 million. The expert provided sufficient
guidance by explaining the different assumptions upon which each model was premised.”). The
ILWU Entities can challenge Mr. Sickler’s multiple damages models on cross examination or
argue to the jury the consequences of the fact that he is not stating a single damages figure. This
goes to the weight, not admissibility, of his opinion.
b.
ILWU Entities’ proffered other reasons for conduct and damages
The ILWU Entities state they intend to argue that they have motives other than the reefer
dispute for their post-August 2013 conduct and that, for all time periods, any unfair labor
PAGE 10 – OPINION AND ORDER
practices were not a substantial factor or did not materially contribute to ICTSI’s damages. This,
however, does not mean that ICTSI’s expert must concede these arguments in his assumptions.
The ILWU Entities argue that if the jury agrees with their arguments, then Mr. Sickler’s damages
opinion will not be helpful. If, however, the jury agrees with the ILWU Entities, the jury won’t
be awarding damages. And if the jury only partly agrees with the ILWU Entities, perhaps
agreeing that there was no illegal labor practices after August 13, 2013, but finding that the
illegal labor practices from before that date materially contributed to ICTSI’s damages, or
finding that there were illegal labor practices throughout the relevant time frame, but they only
materially contributed to ICTSI’s damages until August 2016 when Hanjin filed for bankruptcy,
then the jury may still find some of the information from Mr. Sickler helpful in extrapolating and
calculating damages. Of course, the jury may disagree entirely with the ILWU Entities, and
follow Mr. Sickler’s opinion in its entirety. The underlying factual issues are up to the jury.
The heart of the ILWU Entities’ argument is that because they may prevail on their
argument that they are not liable for some of ICTSI damages, or for ICTSI’s damages for some
of the relevant time period, ICTSI’s expert must disaggregate damages or his entire testimony is
not helpful to the jury. The most important factor in disaggregation involves lawful, primary
labor activity combined with unlawful, secondary activity. “[W]here a union has engaged in both
lawful and unlawful conduct, and the consequences of those activities are separable, the Union is
liable under section 303 only for injuries proximately caused by the illegal activity.” Mead, 523
F.2d at 1378. Disaggregation in this context stems from “the dual congressional objectives of
preserving the right of labor organizations to bring pressure to bear on offending employers in
primary labor disputes and of shielding unoffending employers and others from pressures in
controversies not their own.” Id. at 1378 (quoting NLRB v. Denver Building Trades Council, 341
PAGE 11 – OPINION AND ORDER
U.S. 675, 692 (1951)). Thus, § 303 damages must be apportioned, or disaggregated, when there
is lawful and unlawful conduct and the consequences are separable. When “the consequences are
not separable, and the damages cannot be apportioned,” however, then the union is responsible
for all damages so long as the unlawful secondary conduct materially contributed to or was a
substantial factor in causing the damages. Id. at 1379.
Concerns regarding lawful, primary conduct alongside unlawful, secondary conduct do
not arise in this case for the period before August 13, 2013. The Court has already determined
that issue preclusion prevents the ILWU Entities from arguing that they engaged in the
slowdowns and stoppages during this time for any reason other than the reefer dispute. For the
period after August 13, 2013, the ILWU Entities can argue, and the jury might agree, that the
ILWU Entities engaged in lawful primary conduct. If the jury finds that only lawful primary
conduct occurred, then disaggregation would be unnecessary. If the jury finds that both lawful
and unlawful conduct occurred and the consequences were not separable, then disaggregation
would be unnecessary. If the jury disagrees and does not find any lawful primary conduct, then
disaggregation would be unnecessary. Only if the jury concludes that both lawful and unlawful
conduct occurred after August 13, 2013, and the consequences were separable, would
disaggregation be required. The fact that if the jury finds a narrow set of circumstances as argued
by the ILWU Entities disaggregation would be required, however, does not mean that
Mr. Sickler is required to provide a damages estimate that includes that precise scenario.
Similarly, the ILWU Entities argue that outside forces other than labor activity caused
ICTSI’s damages. These arguments for disaggregation are even less compelling than the § 303
requirement to apportion damages between lawful and unlawful labor activity. Defendants in
civil cases regularly argue that conduct other than their own caused damages. That does not
PAGE 12 – OPINION AND ORDER
require the plaintiff’s expert to offer damages calculations that agree with the defendant’s theory
of the case. What the ILWU Entities characterize as “disaggregation” is really an assertion that
ICTSI’s expert must accept the facts of the case as argued by the ILWU Entities and offer a
damages number under those facts for his testimony to be helpful. That is not required.
The cases cited by the ILWU Entities do not hold otherwise. Moreover, they are
distinguishable or inapposite. In Sebastian International, Inc. v. Russolillo, it was not in dispute
that the claims involved only diversion of genuine goods and not counterfeit goods and yet the
expert admitted that his report did not distinguish between the two. 2005 WL 1323127, at *8
(C.D. Cal Feb. 2005). In Infusion Resource, Inc. v. Minimed, Inc., the district court dismissed the
antitrust claims and allowed the plaintiff to submit an amended expert report to segregate nonantitrust damages from antitrust damages. 351 F.3d 688, 695 (5th Cir. 2003). The plaintiff
“simply repackaged its original report, which claimed its damages flowed from MiniMed’s
antitrust conduct, to assert that essentially the same damages now flowed from the remaining
non-antitrust claims.” Id. Thus, the amended report was stricken. Id.
These cases are distinguishable because the need to disaggregate was not in dispute and
the issues were segregable. Here, ICTSI disputes that the ILWU Entities’ conduct after
August 13, 2013 was lawful or that reasons other than the illegal labor actions caused ICTSI’s
damages. Only if the jury accepts some of the ILWU Entities’ theory of the case might there be a
need to disaggregate, and then likely only for a limited period of time. The fact that under some
factual scenario disaggregation might become necessary does not mean that ICTSI’s expert is
required to present damages calculations assuming each possible scenario, including one in
which the jury accepts enough of the ILWU Entities’ arguments to necessitate disaggregation.
PAGE 13 – OPINION AND ORDER
In Farley Transportation Co. v. Santa Fe Trail Transportation Co., two companies
competed in offering various trucking and railroad shipping services and one engaged in a
conspiracy that allowed for a form of predatory pricing for a particular combined trucking and
rail service (“Plan V”). 786 F.2d 1342, 1344, 1347-48 (9th Cir. 1985). This scheme was found to
cause an antitrust injury. Id. at 1348. In reviewing post-trial motions, the Ninth Circuit found that
the expert opinion on damages was insufficient because both methods offered by the expert were
flawed. Id. at 1351-52. The first method was flawed because it assumed all the Plan V shipping
of the defendant was infected by the unlawful scheme, and yet “[n]o evidence was produced
showing the number of trailers that were diverted from the plaintiffs because of the illegal pricecutting activities, as opposed to legitimate competition.” Id. at 1351. The second method was
flawed because it was based on a study by an economist who assumed that the plaintiff’s lost
profits were caused by the illegal scheme, without showing any nexus between the illegal
activity and the lost profits. Id. The Ninth Circuit emphasized that the plaintiff failed to produce
evidence of direct causation. Id. at 1352. The critical missing piece was evidence that the
shippers used Plan V shipping because of the unlawful scheme, versus without regard to the
unlawful scheme, because the plaintiff’s evidence focused on the conduct of the schemers
instead of the customers. Id. The Ninth Circuit concluded:
In sum, although Farley produced evidence it had suffered some
injury due to Santa Fe's antitrust violation, Farley provided no
evidence on the amount of damages attributable only to the
unlawful conduct. Farley's utter failure to make any segregation
between damages attributable to lawful competition and that
attributable to the unlawful scheme to deviate from the tariff rate
requires reversal of the verdict and remand for a new trial on the
amount of damages.
Id. The Ninth Circuit focused on the evidence that was presented at trial, and what was lacking to
support the underlying damages assumptions.
PAGE 14 – OPINION AND ORDER
Mr. Sickler calculated how much, if any, profits Terminal 6 would have generated if the
ILWU Entities had not engaged in their illegal labor activities. The ILWU Entities have already
been adjudicated as engaging in illegal labor activities from May 21, 2012 through August 13,
2013. The parties disagree whether this conduct materially contributed to ICTSI’s damages
during this time. The parties also dispute whether the ILWU Entities engaged in illegal labor
activities after August 13, 2013, and if so, whether such conduct materially contributed to
ICTSI’s damages during this later period or whether its damages were caused by other factors.
At this point, the Court cannot conclude that there will be no evidence at trial to support that the
ILWU Entities engaged in unlawful secondary conduct after August 13, 2013, the unlawful
secondary conduct throughout the relevant period materially contributed to ICTSI’s damages,
and it was such conduct and not outside forces that caused ICTSI’s damages. Those are the
underlying assumptions made by Mr. Sickler that the ILWU Entities argue render Mr. Sickler’s
opinion inadmissible. ICTSI’s expert is not required to accept the ILWU Entities’ assumptions
and theories. Accordingly, the fact that Mr. Sickler did not provide a damages estimate that
presumes the facts argued by the ILWU Entities does not require excluding his testimony.
c.
Hanjin’s replacement
The ILWU Entities argue that Mr. Sickler improperly assumed that Hanjin’s volume
would be replaced, relying on the opinion of Mr. Gimpel. Because the ILWU Entities move to
exclude the opinion of Mr. Gimpel, they also argue Mr. Sickler cannot rely on Mr. Gimpel’s
opinion. The Court denies the motion to exclude Mr. Gimpel’s opinion that Hanjin’s volume
would be replaced and thus denies the motion that Mr. Sickler cannot rely on the opinion by
Mr. Gimpel.
PAGE 15 – OPINION AND ORDER
d.
Assumptions of Elvis Ganda
The ILWU Entities’ last challenge to Mr. Sickler’s testimony relates to his remaining
highest damages number. The ILWU Entities argue that this number relies on the “self-serving”
and “unverified” 2011 projections of Mr. Ganda and ignores the realities of business at
Terminal 6. ICTSI responds that Mr. Ganda’s assumptions will be proven at trial and that the
ILWU Entities did not properly raise a Rule 7033 challenge to Mr. Sickler’s opinion on these
grounds. The Court disagrees that the ILWU Entities failed to raise a challenge under Rule 703
of the Federal Rules of Evidence. The ILWU Entities argue that Mr. Sickler’s “Scenario 2”
growth projection improperly relied on Mr. Ganda’s internal projections, and the ILWU Entities
cited cases discussing how such reliance is improper under Rule 703 or renders an expert’s
opinion unreliable under Rule 702.
In TK-7 Corporation v. Estate of Barbouti, the Tenth Circuit discussed two ways in
which expert testimony that relies on an underlying assumption relating to lost profits may be
admissible. 993 F.2d 722 (10th Cir. 1993). The first way in which such expert testimony may be
admissible is when the underlying assumption is proven at trial. Id. at 731-32. In TK-7, which
involved post-trial motions, the Tenth Circuit noted that the plaintiff had failed to introduce at
trial evidence tending to establish the underlying assumption. Id. at 732. The second way is when
the underlying assumption, even if itself inadmissible, complies with Rule 703 because it is of
the type of assumption reasonably relied upon by experts in the particular field in forming
Rule 703 provides: “An expert may base an opinion on facts or data in the case that the
expert has been made aware of or personally observed. If experts in the particular field would
reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need
not be admissible for the opinion to be admitted. But if the facts or data would otherwise be
inadmissible, the proponent of the opinion may disclose them to the jury only if their probative
value in helping the jury evaluate the opinion substantially outweighs their prejudicial effect.”
Fed. R. Evid. 703.
3
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opinions or inferences upon the subject. Id. The Tenth Circuit excluded the expert testimony in
TK-7, holding that it did not comply with Rule 703 because the expert “failed to demonstrate any
basis for concluding that another individual’s opinion on a subjective financial prediction was
reliable” and that the expert’s “lack of familiarity with the methods and the reasons underlying
[the] projections virtually precluded any assessment of the validity of the projections through
cross-examination of [the expert].” Id.
ICTSI appears to be arguing the first scenario—that the validity of Mr. Ganda’s 2011
projections will be proven at trial. It is not clear, however, whether ICTSI also is arguing that
such assumptions, even if not admissible, are the type reasonably relied upon by experts in
evaluating lost profits in this type of situation. Either way, the Court needs further information to
determine whether there is an evidentiary basis to conclude that Mr. Ganda’s 2011 projections
will be proven at trial and were more than Mr. Ganda’s hopes, or if not admissible they are
nevertheless the type of assumptions that experts reasonably rely on in calculating lost profits.
Accordingly, the Court will hold a Rule 104 hearing relating to this aspect of Mr. Sickler’s
report. AT that hearing, the Court will need to hear from both Mr. Ganda and Mr. Sickler. The
Court also notes that although ICTSI’s management of Terminal 6 was new, the Port, either
directly or through hired management companies, had been managing Terminal 6 for decades.
Thus, the operation of Terminal 6 was not a new “business.” Questions arise whether profit and
loss figures from the Port’s management are relevant to calculating ICTSI’s lost profits, in
addition to profit and loss figures from the first year of ICTSI’s management before the reefer
dispute. The Court anticipates hearing from Mr. Sickler regarding generally accepted methods
for calculating lost profits, including for a new or unestablished business, and how those methods
were (or were not) applied in his report. If such methods were not applied in his report, the Court
PAGE 17 – OPINION AND ORDER
expects an explanation as to why the methods that were applied in Mr. Sickler’s “Scenario 2”
growth assumption are reasonable and reliable under Rule 702.4
5.
The ILWU Entities’ Motion Challenging Samuel Estreicher
The ILWU Entities move to exclude the opinions of Samuel Estreicher, ICSTI’s legal
expert, because he was not listed on ICSTI’s expert witness list and because his report consists of
improper legal opinions. ICTSI responds that it will not be calling Mr. Estreicher as a witness,
which is why he was not listed on the witness list. Accordingly, this motion is denied as moot.
CONCLUSION
The parties’ motions challenging expert testimony are resolved as stated in this Opinion
and Order. The parties are directed jointly to contact the Courtroom Deputy within two weeks of
this Opinion and Order to schedule the Rule 104 hearing including both Mr. Sickler and Mr.
Ganda.
IT IS SO ORDERED.
DATED this 9th day of April, 2019.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge
The ILWU Entities do not specifically challenge Mr. Sickler’s “Scenario 3” growth
assumption, and ICTSI has withdrawn Mr. Sickler’s “Scenario 1” growth assumption in
conceding the 75 percent capture rate.
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